**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**


**Washington,
      D.C. 20549**




**FORM
      10-KSB**




(Mark
      One)




xANNUAL
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For
      the
      fiscal year ended: **September
      30, 2007**




oTRANSITION
      REPORT UNDER
      SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934




For
      the
      transition period from _____ to _____




Commission
      file number: **333-86347**





**GENESIS
      PHARMACEUTICALS ENTERPRISES, INC.**


(Name
      of
      small business issuer in its charter)





**Florida**
            
            **65-1130026**(State
                or other jurisdiction of incorporation or organization)
            
            (IRS
                Employer Identification No.)





**Middle
      Section, Longmao Street, Area A, Laiyang Waixiangxing Industrial
      Park**


**Laiyang
      City, Yantai, Shandong Province, People’s Republic of China
      710075**


(Address
      of principle executive offices)





**(0086)
      535-7282997**


(Issuer's
      telephone number)





Securities
      registered under Section 12(b) of the Exchange Act: **None**


Securities
      registered under Section 12(g) of the Exchange Act: **None**





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





Check
      whether the registrant (1) has filed all reports required to be filed by Section
      13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
      period that the registrant was required to file such reports), and (2) has
      been
      subject to such filing requirement for the past 90 days. x Yes o
      No





Check
      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





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





State
      issuer’s revenue for its most recent fiscal year: $3,035,000





State
      the
      aggregate market value of the voting and non-voting common equity held by
      non-affiliates computed by reference to the price at which the common equity
      was
      sold, or the average bid and asked price of such common equity, as of a
      specified date within the past 60 days: The aggregate market value of the
      issuer’s common stock held by non-affiliates, as of January 14, 2008, based upon
      the average bid and asked price of such common stock as reported on the OTC
      Bulletin Board, was $ 97.2 million (388,968,760 shares at $.253 per
      share).





As
      of
      January 14, 2008, there were 388,968,760 shares of the issuer's common stock
      outstanding.





Documents
      incorporated by reference: None





Transitional
      Small Business Disclosure Format (Check one): o Yes x No












**TABLE
        OF CONTENTS**


**PART
                I**Item
                1. Description of Business
            
            
            4Item
                2. Description of Property
            
            
            24Item
                3. Legal Proceedings
            
            
            25Item
                4. Submission of Matters to a Vote of Security Holders
            
            
            25**PART
                II**Item
                5. Market for Common Equity and Related Shareholder
                Matters
            
            
            25Item
                6. Management's Discussion and Analysis or Plan of
                Operation
            
            
            27Item
                7. Financial Statements
            
            
            41Item
                8. Changes in and Disagreements with Accountants on Accounting and
                Financial Disclosure
            
            
            41Item
                8A. Controls and Procedures
            
            
            41Item
                8B. Other Information
            
            
            42**PART
                III**Item
                9. Directors, Executive Officers, Promoters and Control Persons;
                Compliance with Section 16(a) of the Exchange Act
            
            
            42Item
                10. Executive Compensation
            
            
            46Item
                11. Security Ownership of Certain Beneficial Owners and Management
                and
                Related Shareholder Matters
            
            
            51Item
                12. Certain Relationships and Related Transactions
            
            
            53Item
                13. Exhibits
            
            
            54Item
                14. Principal Accountant Fees and Services
            
            
            56INDEX
                TO FINANCIAL STATEMENTS
            
            
            F-1




2




**CAUTIONARY
      STATEMENT REGARDING FORWARD-LOOKING INFORMATION**





Certain
      statements in this annual report on Form 10-KSB contain or may contain
      forward-looking statements that are subject to known and unknown risks,
      uncertainties and other factors which may cause actual results, performance
      or
      achievements to be materially different from any future results, performance
      or
      achievements expressed or implied by such forward-looking statements. These
      forward-looking statements were based on various factors and were derived
      utilizing numerous assumptions and other factors that could cause our actual
      results to differ materially from those in the forward-looking statements.
      These
      factors include, but are not limited to, economic, political and market
      conditions and fluctuations, government and industry regulation, interest rate
      risk, global competition, and other factors as relate to our doing business
      within the People's Republic of China. Most of these factors are difficult
      to
      predict accurately and are generally beyond our control. You should consider
      the
      areas of risk described in connection with any forward-looking statements that
      may be made herein. Readers are cautioned not to place undue reliance on these
      forward-looking statements, which speak only as of the date of this report.
      Readers should carefully review this annual report in its entirety, including
      but not limited to our financial statements and the notes thereto and the risks
      described in "Item 1. Description of Business--Risk Factors." Except for our
      ongoing obligations to disclose material information under the Federal
      securities laws, we undertake no obligation to release publicly any revisions
      to
      any forward-looking statements, to report events or to report the occurrence
      of
      unanticipated events.





When
      used
      in this annual report, the terms the "Company," "Genesis," "GTEC," "we," "us,"
      "our," and similar terms refer to Genesis Pharmaceuticals Enterprises, Inc.,
      a
      Florida corporation, and our subsidiaries. The information which appears on
      our
      website www.genesis-china.net is not part of this report.




3




**PART
      I**





**ITEM
      1. DESCRIPTION OF BUSINESS**




We
      were
      originally incorporated in Florida on August 15, 2001 under the name Genesis
      Technology Group, Inc. with a principal business objective to operate as a
      business development and marketing firm specializing in advising and providing
      turn-key solutions for Chinese small and mid-sized companies entering Western
      markets. On October 12, 2001, we consummated a merger with NewAgeCities.com,
      an
      Idaho public corporation originally formed in 1969. We were the surviving entity
      after the merger with the Idaho public corporation.




On
      October 1, 2007, we executed a Share Acquisition and Exchange Agreement
      (“Exchange Agreement”) by and among us, Karmoya International Ltd., a British
      Virgin Islands company (“Karmoya”), and the shareholders of 100% of Karmoya’s
      capital stock (the “Karmoya Shareholders”). Separately, Karmoya owns 100% of the
      capital stock of Union Well International Limited, a Cayman Islands company
      (“Union Well”), which has established and owns 100% of the equity in Genesis
      Jiangbo (Laiyang) Biotech Technologies Co., Ltd., a wholly foreign owned
      enterprise in the People’s Republic of China (“GJBT”). GJBT has entered into
      consulting service agreements and equity-related agreements with Laiyang Jiangbo
      Pharmaceutical Co., Ltd. (“Laiyang Jiangbo”), a limited liability company
      headquartered in, and organized under the laws of, China. Throughout this Form
      10-KSB, Karmoya, Union Well, GJBT and Laiyang Jiangbo are sometimes collectively
      referred to as the “LJ Group.”




Under
      the
      Exchange Agreement, on the Closing Date, we issued 5,995,780 shares of our
      Series B Voting Convertible Preferred Stock (the “Series B Preferred Stock”) to
      the Karmoya Shareholders and 597 shares of our common stock in exchange for
      100%
      of the capital stock of Karmoya. The shares of Series B Preferred Stock issued
      are convertible, in the aggregate, into a number of shares of our common stock
      that, when combined with the common stock issued to the Karmoya Shareholders,
      would equal 75% of the issued and outstanding shares of our common stock, if
      the
      shares were to be converted on the Closing Date. The closing of the Exchange
      Agreement and the transactions contemplated thereunder (the “Exchange
      Transaction”) occurred on October 1, 2007 (the “Closing Date”).




As
      a
      result of the Exchange Transaction, the Karmoya Shareholders became our
      controlling shareholders and Karmoya became our wholly owned subsidiary. In
      connection with Karmoya becoming our wholly owned subsidiary, we acquired the
      business and operations of the LJ Group. From and after the Closing Date,
      through various consulting service agreements and equity-related agreements
      between certain LJ Group entities (the “LJ Agreements”), our principal business
      activities shall continue to be conducted through the LJ Group’s operating
      company in China, Laiyang Jiangbo.




The
      Exchange Transaction was accounted for as a reverse merger (recapitalization)
      with Karmoya deemed to be the accounting acquirer, and us as the legal acquirer.
      Accordingly, the historical financial information presented in future financial
      statements will be that of Karmoya as adjusted to give effect to any difference
      in the par value of ours and Karmoya’s stock with an offset to capital in excess
      of par value. The basis of the assets, liabilities and retained earnings of
      Karmoya, the accounting acquirer, have been carried over in the
      recapitalization. Upon the closing of the Exchange Transaction, we became a
      Chinese pharmaceutical company that researches, develops, manufactures, markets
      and sells pharmaceutical products and health supplements in the People's
      Republic of China (“PRC” or “China”)




4


**DESCRIPTION
      OF OUR PRIOR BUSINESS - GENESIS TECHNOLOGY GROUP, INC.**




Prior
      to
      the Exchange Transaction, we were a business development and marketing firm
      that
      specialized in advising and providing a turn key solution for Chinese small
      and
      mid-sized companies entering Western markets. We fostered development projects
      that required marketing, manufacturing, finance, and product deployment
      expertise for companies in the United States and China. Our core competency
      was
      sourcing merger and acquisitions opportunities for both us and our contract
      clients.




Effective
      June 20, 2005, we established Genesis Equity Partners, LLC, a Florida limited
      liability company (“GEP”), in which we owned 51% and strategic partners owned
      the remaining 49%. On May 15, 2007, GEP amended its membership agreement and
      accordingly, as of March 1, 2007, we own 71%. Subsequently, we organized
      additional limited liability companies, dedicated to specific Chinese partner
      companies. While our equity position in these LLCs varied, the minimum ownership
      was maintained at 51%, to ensure reporting of consolidated earnings. The
      following limited liability companies were established during our fiscal year
      ended September 30, 2007:




o
      Genesis
      Equity Partners, LLC (Huayang) - established in the State of Delaware on
      February 1, 2007 and which we own 100%.




o
      Genesis
      Equity Partners, LLC (Liziyuan) -established in the State of Delaware on
      February 27, 2007 and which we own 100%.




o
      Genesis
      Equity Partners, LLC (Site) - established in the State of Delaware on March
      28,
      2007 and which we own 100%.




o
      Genesis
      Equity Partners II, LLC (GEP II) - established in the State of Florida on August
      8, 2007 and which we own 71%.  The
      minority members of GEP II include China West II, LLC, holding 24.5% of GEP
      II,
      and Shaohua Tan, Inc., a company owned by Dr. Shaohua Tan, a former member
      of
      our board of directors, holding 24.5%.




Collectively,
      the above LLCs are referred to as the "GEP Companies". The GEP Companies are
      full service advisory companies specializing in small Chinese-based companies,
      which are traded on or are expected to be traded on the U.S. public markets.
      The
      GEP Companies offer a comprehensive suite of services tailored to the specific
      needs of their clients, including:




*
      U.S.
      representative offices




*
      General
      business consulting services




*
      Merger
      and acquisition strategy planning and analysis




*
      Advice
      on U.S. capital markets, including assessment of potential sources of investment
      capital




*
      Coordination of professional resources




*
      Corporate asset evaluation




*
      Public
      relations




*
      Advice
      and structure assistance for strategic alliances, partnerships and joint
      ventures




Because
      the Exchange Transaction occurred subsequent to our fiscal year ended September
      30, 2007, we are disclosing the consolidated results, assets and liabilities
      of
      our prior businesses, including GEP and the GEP Companies, in the section titled
      “Management’s Discussion and Analysis” and the financial statements accompanying
      this annual report on Form 10-KSB. We will disclose the consolidated results,
      assets and liabilities of our current Pharmaceutical  business in future
      quarterly and annual reports.




5




**DESCRIPTION
      OF OUR CURRENT BUSINESS - GENESIS PHARMACEUTICALS ENTERPRISES,
      INC.**




On
      October 1, 2007, we executed a Share Acquisition and Exchange Agreement
      (“Exchange Agreement”) by and among us, Karmoya International Ltd., a British
      Virgin Islands company (“Karmoya”), and the shareholders of 100% of Karmoya’s
      capital stock (the “Karmoya Shareholders”). Separately, Karmoya owns 100% of the
      capital stock of Union Well International Limited, a Cayman Islands company
      (“Union Well”), which has established and owns 100% of the equity in Genesis
      Jiangbo (Laiyang) Biotech Technologies Co., Ltd., a wholly foreign owned
      enterprise in the People’s Republic of China (“GJBT”). GJBT has entered into
      consulting service agreements and equity-related agreements with Laiyang Jiangbo
      Pharmaceutical Co., Ltd. (“Laiyang Jiangbo”), a limited liability company
      headquartered in, and organized under the laws of, the People's Republic of
      China (“PRC” or “China”). Throughout this Form 10-KSB, Karmoya, Union Well, GJBT
      and Laiyang Jiangbo are sometimes collectively referred to as the “LJ
      Group.”




Under
      the
      Exchange Agreement, on the Closing Date, we issued 5,995,780 shares of our
      Series B Voting Convertible Preferred Stock (the “Series B Preferred Stock”) to
      the Karmoya Shareholders and 597 shares of our common stock in exchange for
      100%
      of the capital stock of Karmoya. The shares of Series B Preferred Stock issued
      were convertible, in the aggregate, into a number of shares of our common stock
      that, when combined with the common stock issued to the Karmoya Shareholders,
      would equal 75% of the issued and outstanding shares of our common stock, if
      the
      shares were to be converted on the Closing Date. The closing of the Exchange
      Agreement and the transactions contemplated thereunder (the “Exchange
      Transaction”) occurred on October 1, 2007 (the “Closing Date”). On October 26,
      2007, the 5,995,780 shares of Series B Voting Convertible Preferred Stok were
      converted into 299,789,000 shares of our common stock.




As
      a
      result of the Exchange Transaction, the Karmoya Shareholders became our
      controlling shareholders and Karmoya became our wholly owned subsidiary. In
      connection with Karmoya becoming our wholly owned subsidiary, we acquired the
      business and operations of the LJ Group. From and after the Closing Date,
      through various consulting service agreements and equity-related agreements
      between certain LJ Group entities (the “LJ Agreements”), our principal business
      activities shall continue to be conducted through the LJ Group’s operating
      company in China, Laiyang Jiangbo.




The
      Exchange Transaction was accounted for as a reverse merger (recapitalization)
      with Karmoya deemed to be the accounting acquirer, and us as the legal acquirer.
      Accordingly, the historical financial information presented in future financial
      statements will be that of Karmoya as adjusted to give effect to any difference
      in the par value of ours and Karmoya’s stock with an offset to capital in excess
      of par value. The basis of the assets, liabilities and retained earnings of
      Karmoya, the accounting acquirer, have been carried over in the
      recapitalization. Upon the closing of the Exchange Transaction, through the
      contractual relationship with Laiyang Jiangbo, we became a Chinese
      pharmaceutical company that researches, develops, manufactures, markets and
      sells pharmaceutical products and health supplements in China.




Karmoya
      was incorporated under the laws of the British Virgin Islands on July 17, 2007.
      Since incorporation, Karmoya has not conducted any substantive operations of
      its
      own and conducts its primary business operations through its variable interest
      entity (“VIE”), Laiyang Jiangbo. PRC law currently has limits on foreign
      ownership of certain companies. To comply with these foreign ownership
      restrictions, we operate our pharmaceutical business in China through Laiyang
      Jiangbo. Laiyang Jiangbo holds the licenses and approvals necessary to operate
      our pharmaceutical business in China. We have contractual arrangements with
      Laiyang Jiangbo and its shareholders pursuant to which we provide technology
      consulting and other general business operation services to Laiyang Jiangbo.
      Through these contractual arrangements, we also have the ability to
      substantially influence Laiyang Jiangbo’s daily operations and financial
      affairs, appoint its senior executives and approve all matters requiring
      shareholder approval. As a result of these contractual arrangements, which
      enable us to control Laiyang Jiangbo, we are considered the primary beneficiary
      of Laiyang Jiangbo. Accordingly, we will consolidate Laiyang Jiangbo's results,
      assets and liabilities in our future financial statements. For a description
      of
      these contractual arrangements, see “Contractual Arrangements with Laiyang
      Jiangbo and its Shareholders” below.




Laiyaing
      Jiangbo was incorporated under the laws of the PRC as a limited liability
      company on August 18, 2003. The paid-in capital of Laiyang Jiangbo was funded
      by
      the majority shareholders of Karmoya. PRC law currently has limits on foreign
      ownership of certain companies. To comply with these foreign ownership
      restrictions, on September 21, 2007 Karmoya’s wholly owned subsidiary, GJBT (a
      wholly foreign owned enterprise registered in the PRC on September 19, 2007),
      entered into certain exclusive agreements with Laiyang Jiangbo and its
      shareholders. Laiyang Jiangbo holds the licenses and approvals necessary to
      operate our pharmaceutical business in China. Pursuant to these agreements,
      GJBT
      provides exclusive technology consulting and other general business operation
      services to Laiyang Jiangbo in return for a consulting services fee which is
      equal to Laiyang Jiangbo’s revenue. In addition, Laiyang Jiangbo’s shareholders
      have pledged their equity interests in Laiyang Jiangbo to GJBT, irrevocably
      granted GJBT an exclusive option to purchase, to the extent permitted under
      PRC
      law, all or part of the equity interests in Laiyang Jiangbo and agreed to
      entrust all the rights to exercise their voting power to the person(s) appointed
      by GJBT. Through these contractual arrangements, Karmoya, through its wholly
      owned subsidiary GJBT, has the ability to substantially influence Laiyang
      Jiangbo’s daily operations and financial affairs, appoint its senior executives
      and approve all matters requiring shareholder approval.




6




As
      a
      result of these contractual arrangements, which obligate Karmoya to absorb
      a
      majority of the risk of loss from Laiyang Jiangbo’s activities and enable
      Karmoya to receive a majority of its expected residual returns, we believe
      Laiyang Jiangbo is a VIE under FASB Interpretation No. 46R (“FIN 46R”),
“Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51”,
      because the equity investors in Laiyang Jiangbo do not have the characteristics
      of a controlling financial interest and we should be considered the primary
      beneficiary of Laiyang Jiangbo. Accordingly, we will consolidate Laiyang
      Jiangbo’s results, assets and liabilities in the financial statements
      accompanying our future annual and quarterly reports.




On
      October 11, 2007, our board of directors and the majority holders of our capital
      stock approved amendments to our Articles of Incorporation by written consent,
      including: (1) a change of our corporate name to our current name, Genesis
      Pharmaceuticals Enterprises, Inc. (the “Name Change”), (2) a change of our
      principal offices and mailing address to our current address in the PRC (the
      “Address Change”), (3) a change in our registered agent and registered office in
      Florida (the “Registered Agent Change”), and (4) an increase in our authorized
      common stock from 200,000,000 to 600,000,000 shares (the “Authorized Share
      Amendment”). The Certificate of Amendment and Certificate of Change to our
      Articles of Incorporation to effect the Name Change, Address Change, Registered
      Agent Change and the Authorized Share Amendment was filed with Florida’s
      Secretary of State on October 16, 2007.




On
      November 14, 2007, our Board of Directors, acting pursuant to the authority
      granted by our Bylaws and the Florida Business Corporation Act, determined
      by
      unanimous written consent to change our fiscal year end from September 30 to
      June 30.




**CONTRACTUAL
      ARRANGEMENTS WITH LAIYANG JIANGBO AND ITS SHAREHOLDERS**




Our
      relationships with Laiyang Jiangbo and its shareholders are governed by a series
      of contractual arrangements primarily between two entities associated with
      our
      wholly owned subsidiary Karmoya: (1) GJBT, Karmoya’s wholly foreign owned
      enterprise in PRC, and (2) Laiyang Jiangbo, Karmoya’s operating company in PRC.
      Under PRC laws, each of GJBT and Laiyang Jiangbo is an independent legal person
      and neither of them is exposed to liabilities incurred by the other party.
      The
      contractual arrangements constitute valid and binding obligations of the parties
      of such agreements. Each of the contractual arrangements, as amended and
      restated, and the rights and obligations of the parties thereto are enforceable
      and valid in accordance with the laws of the PRC. Other than pursuant to the
      contractual arrangements described below, Laiyang Jiangbo does not transfer
      any
      other funds generated from its operations to any other member of the LJ Group.
      On September 21, 2007, we entered into the following contractual arrangements
      (collectively, the “ LJ
      Agreements ”):




Consulting
      Services Agreement .
      Pursuant to the exclusive consulting services agreement between GJBT and Laiyang
      Jiangbo, GJBT has the exclusive right to provide to Laiyang Jiangbo general
      consulting services related to pharmaceutical business operations, as well
      as
      consulting services related to human resources and technological research and
      development of pharmaceutical products and health supplements (the “ Services ”).
      Under
      this agreement, GJBT owns the intellectual property rights developed or
      discovered through research and development while providing the Services for
      Laiyang Jiangbo. Laiyang Jiangbo pays a quarterly consulting service fee in
      Chinese Renminbi (“ RMB ”)
      to
      GJBT that is equal to all of Laiyang Jiangbo's revenue for such quarter.




Operating
      Agreement .
      Pursuant to the operating agreement among GJBT, Laiyang Jiangbo and the
      shareholders of Laiyang Jiangbo who collectively hold 100% of the outstanding
      shares of Laiyang Jiangbo (collectively, the “ Laiyang
      Shareholders ”),
      GJBT
      provides guidance and instructions on Laiyang Jiangbo's daily operations,
      financial management and employment issues. The Laiyang Shareholders must
      appoint the candidates recommended by GJBT as members of Laiyang Jiangbo's
      board
      of directors. GJBT has the right to appoint senior executives of Laiyang
      Jiangbo. In addition, GJBT agrees to guarantee Laiyang Jiangbo's performance
      under any agreements or arrangements relating to Laiyang Jiangbo's business
      arrangements with any third party. Laiyang Jiangbo, in return, agrees to pledge
      its accounts receivable and all of its assets to GJBT. Moreover, Laiyang Jiangbo
      agrees that without the prior consent of GJBT, Laiyang Jiangbo will not engage
      in any transactions that could materially affect the assets, liabilities, rights
      or operations of Laiyang Jiangbo, including, but not limited to, incurrence
      or
      assumption of any indebtedness, sale or purchase of any assets or rights,
      incurrence of any encumbrance on any of its assets or intellectual property
      rights in favor of a third party, or transfer of any agreements relating to
      its
      business operation to any third party. The term of this agreement is ten (10)
      years from September 21, 2007 unless early termination occurs in accordance
      with
      the provisions of the agreement and may be extended only upon GJBT's written
      confirmation prior to the expiration of the this agreement, with the extended
      term to be mutually agreed upon by the parties.




7




Equity
      Pledge Agreement .
      Pursuant to the equity pledge agreement among GJBT, Laiyang Jiangbo and the
      Laiyang Shareholders, the Laiyang Shareholders pledged all of their equity
      interests in Laiyang Jiangbo to GJBT to guarantee Laiyang Jiangbo's performance
      of its obligations under the consulting services agreement. If either Laiyang
      Jiangbo or any of the Laiyang Shareholders breaches its respective contractual
      obligations, GJBT, as pledgee, will be entitled to certain rights, including
      the
      right to sell the pledged equity interests. The Laiyang Shareholders also
      granted GJBT an exclusive, irrevocable power of attorney to take actions in
      the
      place and stead of the Laiyang Shareholders to carry out the security provisions
      of the equity pledge agreement and take any action and execute any instrument
      that GJBT may deem necessary or advisable to accomplish the purposes of the
      equity pledge agreement. The Laiyang Shareholders agreed, among other things,
      not to dispose of the pledged equity interests or take any actions that would
      prejudice GJBT's interest. The equity pledge agreement will expire two (2)
      years
      after Laiyang Jiangbo obligations under the exclusive consulting services
      agreement have been fulfilled.




Option
      Agreement .
      Pursuant to the option agreement among GJBT, Laiyang Jiangbo and the Laiyang
      Shareholders, the Laiyang Shareholders irrevocably granted GJBT or its
      designated person an exclusive option to purchase, to the extent permitted
      under
      PRC law, all or part of the equity interests in Laiyang Jiangbo for the cost
      of
      the initial contributions to the registered capital or the minimum amount of
      consideration permitted by applicable PRC law. GJBT or its designated person
      has
      sole discretion to decide when to exercise the option, whether in part or in
      full. The term of this agreement is ten (10) years from September 21, 2007
      unless early termination occurs in accordance with the provisions of the
      agreement and may be extended only upon GJBT's written confirmation prior to
      the
      expiration of the this agreement, with the extended term to be mutually agreed
      upon by the parties.




Proxy
      Agreement .
      Pursuant to the proxy agreement among GJBT and the Laiyang Shareholders, the
      Laiyang Shareholders agreed to irrevocably grant and entrust all the rights
      to
      exercise their voting power to the person(s) appointed by GJBT. GJBT may from
      time to time establish and amend rules to govern how GJBT shall exercise the
      powers granted to it by the Laiyang Shareholders, and GJBT shall take action
      only in accordance with such rules. The Laiyang Shareholders shall not transfer
      their equity interests in Laiyang Jiangbo to any individual or company (other
      than GJBT or the individuals or entities designated by GJBT). The Laiyang
      Shareholders acknowledged that they will continue to perform this agreement
      even
      if one or more than one of them no longer hold the equity interests of Laiyang
      Jiangbo. This agreement may not be terminated without the unanimous consent
      of
      all of the parties, except that GJBT may terminate this agreement by giving
      thirty (30) days prior written notice to the Laiyang Shareholders.




**LAIYANG
      JIANGBO PHARMACEUTICAL CO., LTD.**




As
      discussed above, our operations are conducted through Laiyang Jiangbo
      Pharmaceutical Co., Ltd., a limited liability company headquartered in PRC
      and
      organized under the laws of PRC (“ Laiyang
      Jiangbo ”).
      Laiyang Jiangbo was organized on August 18, 2003 and its fiscal year ended
      June
      30.




**PRINCIPAL
      PRODUCTS OR SERVICES**




Laiyang
      Jiangbo is engaged in research, development, production, marketing and sales
      of
      pharmaceutical products. It is located in Northeast China in an Economic
      Development Zone in Laiyang City, Shandong province and is one of the major
      pharmaceutical companies in China producing tablets, capsules, and granules
      for
      both Western medical drugs and Chinese herbal-based medical drugs. Laiyang
      Jiangbo is also a major manufacturer of liquid chemical supply for medical
      use
      in China. Approximately 20% of its current products are Chinese herbal-based
      drugs and 80% are Western medical drugs and liquid chemicals. Laiyang Jiangbo
      has several Certificates of Good Manufacturing Practices for Pharmaceutical
      Products (GMP Certificates) issued by the Shandong State Drug Administration
      (SDA) and currently produces over five types of drugs.




8




Laiyang
      Jiangbo’s top four products in fiscal 2007 include Clarithromycin
      sustained-release tablets, Itopride Hydrochloride granules, Ciprofloxacin
      Hydrochloride tablets, and Paracetamol tablets.




**Drug
      Development and Production**




Development
      and production of pharmaceutical products is Laiyang Jiangbo’s largest and most
      profitable business. Its principal pharmaceutical products include:




*Clarithromycin
      sustained-release tablets*




Clarithromycin
      sustained-release tablets, Chinese Drug Approval Number H20052746, are
      semi-synthetic antibiotics for curing Clarithromycin sensitive microorganism
      infections. Laiyang Jiangbo is one of only two domestic Chinese pharmaceutical
      companies having the technology to manufacture this drug. Laiyang Jiangbo’s
      sales of this drug were over RMB 248.4 million (US $31.82 million) in fiscal
      2007, which is approximately 50% of the market share in China for this type
      of
      drug.




Clarithromycin
      is the second generation of macrolide antibiotic and replaces the older
      generation of Erythromycin. Clarithromycin first entered the pharmaceutical
      market in Ireland in 1989, and as of 2007, it is one of thirty medicines which
      generate the greatest sales revenue all over the world. Chemically,
      Clarithromycin has a wider antimicrobial spectrum and longer duration of acid
      resistance. Its activity is 2 to 4 times better than Erythromycin, but the
      toxicity is 2-12 times lower.




Clarithromycin
      sustained-release tablets utilize sustained-release technology, which requires
      a
      high degree of production technology. Because of the high degree of technology
      required to produce this product, PRC production requirements are very strict
      and there are very few manufacturers who gain permission to produce this
      product. Therefore, there is a significant barrier to entry in the PRC market.
      Currently, our Clarithromycin sustained-release tablets are the leading product
      in the PRC domestic antibiotic sustained-release tablets market. Our goal is
      to
      maintain our current market share for this product.




*Itopride
      Hydrochloride granules*




Itopride
      Hydrochloride granules, Chinese Drug Approval Number H20050932, are a stomach
      and intestinal drug for curing digestive system-related diseases. Laiyang
      Jiangbo’s sales for this drug reached RMB 228.08 million (US $29.22 million) in
      fiscal 2007, which is approximately 12.6% of the market share in China for
      this
      type of drug. This product is widely regarded for its pharmacological
      properties, i.e. rapid absorption, positive clinical effects, and few side
      effects. Based on clinical observation, it has been shown that Itopride
      Hydrochloride granules can improve 95.1% of gastrointestinal indigestion
      symptoms.




Itopride
      Hydrochloride granules are the fourth generation of gastrointestinal double
      dynamic medicines, which are used for curing most symptoms due to functional
      indigestion. The older generations are Metoclopramide Paspertin, Domperidone
      and
      Cisapride.




Itopride
      Hydrochloride granules are SDA-approved and entered the PRC pharmaceutical
      market in June 2005. Since 2005, Laiyang Jiangbo has seized the opportunity
      presented by this product by rapidly establishing a domestic sales network
      and
      developing the market for this product. Currently, this product has competition
      from two other famous stomach medicines, namely Dompendone Tablets and Vitamin
      U
      Belladonna and Aluminum Capsules II. Itopride Hydrochloride granules are a
      new
      product for Laiyang Jiangbo, but it already has a nationwide sales network
      in
      China. Laiyang Jiangbo’s goal is to have sales of Itopride Hydrochloride
      granules exceed sales of the other two medicines in the near
      future.




*Ciprofloxacin
      Hydrochloride tablets*




Ciprofloxacin
      Hydrochloride tablets, Chinese Drug Approval Number H37022737, are an antibiotic
      drug used to cure infection caused by bacteria. Laiyang Jiangbo’s sales for this
      drug reached RMB 91.73 million (US $11.75 million) in fiscal 2007, which is
      approximately 19.61% of the total market for this type of antibiotic drug in
      China.




Due
      to a
      stoppage in production of raw material manufacturing in PRC in 2004, the price
      of certain raw materials which are used to produce Ciprofloxacin Hydrochloride
      tablets rose rapidly and Laiyang Jiangbo seized this opportunity by using its
      stored raw materials to produce a significant amount of Ciprofloxacin
      Hydrochloride tablets. As a result, Laiyang Jiangbo’s sales of this product won
      a large percentage of the market in PRC from 2004 to 2006. However, other
      companies resumed production in 2007, which has lead to stronger competition
      and
      a decrease in Laiyang Jiangbo’s profits for this product. Despite the recent
      decrease in profits for this product, Laiyang Jiangbo’s goal is to continue
      producing Ciprofloxacin Hydrochloride tablets as a principal product to promote
      the popularity of its product and brand.




9




*Paracetamol
      tablets*




Paracetamol
      tablets, Chinese Drug Approval Number H37022733, are a nonprescription analgesic
      drug, mainly used for curing fever due to common flu or influenza. It is also
      used for relief of aches and pains. Laiyang Jiangbo’s sales for this drug
      reached RMB 26.61 million (US $3.41 million) in fiscal 2007, which is
      approximately 0.6% of the total market for similar types of drugs in
      China.




Laiyang
      Jiangbo is authorized by the PRC Ministry of Health to be an appointed producer
      of common antibiotics in Jiangsu Province, Guangdong Province, Zhejiang
      Province, Fujian Province, Shandong Province and Guangxi Province. Paracetamol
      tablets are one of PRC’s national A-level Medicare medicines. This product
      entered the Chinese market in July 2004.




*Baobaole
      Chewable tablets*




Baobaole
      Chewable tablets, Chinese Drug Approval Number Z20060294, are a new product
      of
      Laiyang Jiangbo and entered the market in August 2007. Baobaole Chewable tablets
      are nonprescription drugs for gastric cavity aches. This drug stimulates the
      appetite and promotes digestion. Baobaole is used to cure deficiencies in the
      spleen and stomach, abdomen aches, loss of appetite, and loose bowels. Its
      effects are mild and lasting.




As
      of December 2007, Laiyang Jiangbo has completed its entire distribution
      network for this product and its goal is to reach sales volume of RMB 140
      million (US $17.93 million) for this product for the fiscal year ended June
      30,
      2008.




**DISTRIBUTION
      METHODS OF THE PRODUCTS OR SERVICES AND OUR CUSTOMERS**




Laiyang
      Jiangbo has a well-established sales network across China. It has a distribution
      network covering 26 provinces in the PRC. Currently, Laiyang Jiangbo has
      approximately 1,060 distribution agents throughout the PRC. Laiyang Jiangbo
      will
      continue to establish more representative offices and engage additional
      distribution agents in order to strengthen its distribution network.




Laiyang
      Jiangbo recognizes the importance of branding as well as packaging. All of
      Laiyang Jiangbo’s products bear a uniform brand but have specialized designs to
      differentiate the different categories of Laiyang Jiangbo's
      products.




Laiyang
      Jiangbo conducts promotional marketing activities to publicize and enhance
      its
      image as well as to reinforce the recognition of its brand name
      including:





1.
            publishing
                advertisements and articles in national as well as specialized and
                provincial newspapers, magazines, and in other media, including the
                Internet;





2.
            participating
                in national meetings, seminars, symposiums, exhibitions for pharmaceutical
                and other related industries;





3.
            organizing
                cooperative promotional activities with distributors;
                and





4.
            sending
                direct mail to major physician offices and
                laboratories.




Currently,
      Laiyang Jiangbo has approximately 1,200 terminal clients. Terminal clients
      are
      hospitals and medical institutions which purchase large supplies of
      pharmaceutical drugs. Laiyang Jiangbo is also authorized by the PRC Ministry
      of
      Health as an appointed Medicare medication supplier in six provinces, namely
      Jiangsu Province, Shandong Province, Zhejiang Province, Fujian Province,
      Guangdong Province and Guangxi Province.




10




For
      the
      fiscal years ended June 30, 2007, 2006 and 2005, five customers accounted for
      approximately 33.3%, 30.5% and 47.39%, respectively, of Laiyang Jiangbo’s sales.
      These five customers represent 28.9% and 26.5% of Laiyang Jiangbo’s total
      accounts receivable as of June 30, 2007 and 2006, respectively.




**COMPETITION**




Laiyang
      Jiangbo has two major competitors in the PRC: Zhuhai Lizhu and Beijing Nohua.
      These companies have strong assets and a large market share in the
      pharmaceutical industry. Laiyang Jiangbo is able to compete with these
      competitors because of its favorable geographic position, strong R&D
      capability, unique products, extensive sales network, and lower prices. Other
      than these two competitors, most other competitors produce only one or two
      products.




**SOURCES
      AND AVAILABILITY OF RAW MATERIALS AND THE PRINCIPAL
      SUPPLIERS**




Laiyang
      Jiangbo has strategic relationships with many research institutions in PRC
      developing new drugs, such as Jiangsu Drug Research Institute, Pharmaceutical
      Institute of Shandong University, Chinese Traditional Medicine Institute,
      Shandong Chinese Traditional Medicine Technical School, and the Institute for
      Drug Control Departments. These relationships help to ensure that Laiyang
      Jiangbo maintains a continuing pipeline of high quality drugs into the future.
      Laiyang Jiangbo’s own production facilities supply most of the raw materials
      used to manufacture its products. Laiyang Jiangbo designs, creates prototypes
      and manufactures its products at its manufacturing facilities located in Laiyang
      City, Shandong province. Its principal raw materials include Ciprofloxacin
      Hydrochloride tablets. The prices for these raw materials are subject to market
      forces largely beyond our control, including energy costs, organic chemical
      prices, market demand, and freight costs. The prices for these raw materials
      have varied significantly in the past and may vary significantly in the
      future.




**PATENTS,
      TRADEMARKS, LICENSES, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS OR LABOR
      CONTRACTS**




Laiyang
      Jiangbo relies on a combination of trademark, copyright and trade secret
      protection laws in PRC and other jurisdictions, as well as confidentiality
      procedures and contractual provisions to protect its intellectual property
      and
      brand. Laiyang Jiangbo has been issued design patents in PRC for drug packaging
      and drug containers, each valid for 10 years, and it intends to apply for more
      patents to protect its core technologies. Laiyang Jiangbo is currently in the
      process of acquiring the rights to a new Class I drug recently patented and
      made
      available to Laiyang Jiangbo through its relationship with the Pharmaceutical
      Institute of Shandong University. This is a Class I drug which means that all
      PRC national hospitals and other major medical facilities must carry this drug.
      Laiyang Jiangbo also enters into confidentiality, non-compete and invention
      assignment agreements with its employees and consultants and nondisclosure
      agreements with third parties. “Jiangbo” and a certain circular design
      affiliated with our brand are our registered trademarks in the PRC.




Pharmaceutical
      companies are at times involved in litigation based on allegations of
      infringement or other violations of intellectual property rights. Furthermore,
      the application of laws governing intellectual property rights in the PRC and
      abroad is uncertain and evolving and could involve substantial risks to
      us.




**GOVERNMENT
      APPROVAL AND REGULATION OF LAIYANG JIANGBO'S PRINCIPAL PRODUCTS OR
      SERVICES**




*General
      PRC Government Approval*




The
      Drug
      Administration Law of the PRC governs Laiyang Jiangbo and its products. The
      State Food & Drug Administration of the PRC regulates and implements PRC
      drug laws. The State FDA has granted Laiyang Jiangbo government permits to
      produce the following products: Clarithromycin sustained-released tablets,
      Itopride Hydrochloride granules, Ciprofloxacin Hydrochloride tablets,
      Paracetamol tablets, Baobaole Chewable tablets, Compound Sufamethoxazole
      tablets, and Vitamin C tablets.




The
      drug
      approval process takes about two years: including local SFDA approval, Local
      SFDA test, State SFDA processing, state SFDA expert valuation, clinical trial,
      final approval.




11




No
      enterprise may start production at its facilities until it receives approval
      from the PRC Ministry of Agriculture to begin operations. Laiyang Jiangbo
      currently has obtained the requisite approval and licenses from the Ministry
      of
      Agriculture in order to operate its production facilities.




*Circular
      106 Compliance and Approval*




On
      May
      31, 2007, the PRC State Administration of Foreign Exchange (“ SAFE ”)
      issued
      an official notice known as "Circular 106," which requires the owners of any
      Chinese companies to obtain SAFE’s approval before establishing any offshore
      holding company structure for foreign financing as well as subsequent
      acquisition matters in China.




In
      early
      September 2007, the three owners of 100% of the equity in Laiyang Jiangbo,
      Cao
      Wubo, Xun Guihong and Zhang Yihua, submitted their application to SAFE. On
      September 19, 2007, SAFE approved their application, permitting these Chinese
      citizens to establish an offshore company, Karmoya International Ltd., as a
      “special purpose vehicle” for any foreign ownership and capital raising
      activities by Laiyang Jiangbo.




After
      SAFE’s approval, Cao Wubo, Xun Guihong and Zhang Yihua became the majority
      owners of Karmoya International Ltd. on September 20, 2007.




**RESEARCH
      AND DEVELOPMENT**




Laiyang
      Jiangbo places great emphasis on product research and development and maintains
      strategic relationships with many research institutions in PRC developing new
      drugs, such as Jiangsu Drug Research Institute, Pharmaceutical Institute of
      Shandong University, Chinese Traditional Medicine Institute, Shandong Chinese
      Traditional Medicine Technical School, and the Institute for Drug Control
      Departments. These relationships help to ensure that Laiyang Jiangbo maintains
      a
      continuing pipeline of high quality drugs into the future. Major projects
      currently being undertaken by Laiyang Jiangbo focus on the following
      products:




*Ligustrazine
      Ferulic Acid Acetate (LFAA)*




LFAA
      is a
      Cardiac Cerebral Vascular innovative medicine, researched by Pharmaceutical
      Institute of Shandong University. It is protected by patent. Its PRC invention
      patent application number is 02135989X, publication number is CN1424313A and
      patent number is ZL02135989X filed in December 2005.




LFAA
      is a
      synthetic innovation medicine based on Liqustrazine. It is the successor of
      Liqustrazine, which has independent intellectual property rights. LFAA helps
      to
      reduce blood clotting and prevent platelets in the blood from clumping together.
      Based on clinical studies, LFAA’s artery endothelium cell proliferation
      stimulating function is 20 times better than Liqustrazine, its protecting
      function for endothelium cell is 40 times better than Liqustrazine, and its
      anti-cerebral ischemia activity is 4 times better than Liqustrazine. Laiyang
      Jiangbo’s goal is to reach sales revenue of RMB $300 million for LFAA after it
      is put into production.




*Compound
      Salvia Miltiorrhiza Cold Powder Injection*




Compound
      Salvia Miltiorrhiza Cold Powder Injection is a PRC “Level B” new medicine. It
      has the effect of decreasing blood pressure, reducing blood fat and protecting
      heart. It is an improved generation drug with higher content of active
      ingredients, better stability and better clinical effectiveness than the older
      generation drug. Laiyang Jiangbo’s goal is to reach sales revenue of RMB $300
      million RMB for this product after it is put into production.




For
      the
      fiscal year ended June 30, 2007, Laiyang Jiangbo spent approximately US $11
      million or approximately 14.6% of its fiscal 2007 revenue on research and
      development of various pharmaceutical products. For the fiscal year ended June
      30, 2006, Laiyang Jiangbo spent approximately US $13.6 million or approximately
      27.8% of its fiscal 2006 revenue on research and development of
      products.




12




**COSTS
      AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS**




In
      compliance with PRC environmental regulations, Laiyang Jiangbo spent
      approximately $1,500 in fiscal 2005, $1,600 in fiscal 2006, and approximately
      $2,000 in fiscal 2007, mainly for the wastewater treatment in connection with
      its production facilities.




**EMPLOYEES**




Laiyang
      Jiangbo currently has more than 1,280 employees, including 220 production crew,
      440 full-time salespersons and 620 part-time salespersons. Approximately 200
      of
      these employees are represented by Laiyang City Jiangbo Pharmaceuticals Union,
      which is governed by the City of Laiyang. Laiyang Jiangbo has not experienced
      a
      work stoppage since inception and does not anticipate any work stoppage in
      the
      foreseeable future. Management believes that its relations with its employees
      and the union are good.




**CORPORATE
      INFORMATION**




Laiyang
      Jiangbo’s principal executive offices are located at Middle Section, Longmao
      Street, Area A, Laiyang Waixiangxing Industrial Park, Laiyang City, Yantai,
      Shandong Province, PRC 710075.




**RISK
      FACTORS**




*You
      should carefully consider the risks described below together with all of the
      other information included in this report before making an investment decision
      with regard to our securities. The statements contained in or incorporated
      into
      this offering that are not historic facts are forward-looking statements that
      are subject to risks and uncertainties that could cause actual results to differ
      materially from those set forth in or implied by forward-looking statements.
      If
      any of the following risks actually occurs, our business, financial condition
      or
      results of operations could be harmed. In that case, the trading price of our
      common stock could decline, and you may lose all or part of your investment.*




***Risks
      Relating to Our Business***




**Our
      limited operating history makes it difficult to evaluate our future prospects
      and results of operations.**




We
      have a
      limited operating history. Laiyang Jiangbo commenced operations in 2003 and
      first achieved profitability in the fiscal year ended June 30, 2005.
      Accordingly, you should consider our future prospects in light of the risks
      and
      uncertainties experienced by early stage companies in evolving industries such
      as the pharmaceutical industry in China. Some of these risks and uncertainties
      relate to our ability to:





.
            maintain
                our market position in the pharmaceuticals business in
                China;


.
            offer
                new and innovative products to attract and retain a larger customer
                base;


.
            attract
                additional customers and increase spending per
                customer;


.
            increase
                awareness of our brand and continue to develop user and customer
                loyalty;


.
            respond
                to competitive market conditions;


.
            respond
                to changes in our regulatory
                environment;


.
            manage
                risks associated with intellectual property
                rights;


.
            maintain
                effective control of our costs and
                expenses;


.
            raise
                sufficient capital to sustain and expand our
                business;


.
            attract,
                retain and motivate qualified personnel;
                and


.
            upgrade
                our technology to support additional research and development of
                new
                products.




If
      we are
      unsuccessful in addressing any of these risks and uncertainties, our business
      may be materially and adversely affected.




**We
      May Need Additional Financing to Execute Our Business Plan**




The
      revenues from the production and sale of pharmaceutical products and the
      projected revenues from these products may not be adequate to support our
      expansion and product development programs. We may need substantial additional
      funds to build our new production facilities, pursue further research and
      development, obtain regulatory approvals, market our products, and file,
      prosecute, defend and enforce our intellectual property rights. We will seek
      additional funds through public or private equity or debt financing, strategic
      transactions and/or from other sources. We could enter into collaborative
      arrangements for the development of particular products that would lead to
      our
      relinquishing some or all rights to the related technology or
      products.




13




There
      are
      no assurances that future funding will be available on favorable terms or at
      all. If additional funding is not obtained, we will need to reduce, defer or
      cancel development programs, planned initiatives or overhead expenditures,
      to
      the extent necessary. The failure to fund our capital requirements would have
      a
      material adverse effect on our business, financial condition and results of
      operations.




**Our
      Success Depends On Collaborative Partners, Licensees and Other Third Parties
      Over Whom We Have Limited Control**




Due
      to
      the complexity of the process of developing pharmaceuticals, our core business
      depends on arrangements with pharmaceutical institutes, corporate and academic
      collaborators, licensors, licensees and others for the research, development,
      clinical testing, technology rights, manufacturing, marketing and
      commercialization of our products. We have several research collaborations.
      Our
      license agreements could obligate us to diligently bring potential products
      to
      market, make milestone payments and royalties that, in some instances, could
      be
      substantial, and incur the costs of filing and prosecuting patent applications.
      There are no assurances that we will be able to establish or maintain
      collaborations that are important to our business on favorable terms, or at
      all.




A
      number
      of risks arise from our dependence on collaborative agreements with third
      parties. Product development and commercialization efforts could be adversely
      affected if any collaborative partner:




.
            terminates
                or suspends its agreement with us


.
            causes
                delays


.
            fails
                to timely develop or manufacture in adequate quantities a substance
                needed
                in order to conduct clinical trials


.
            fails
                to adequately perform clinical
                trials


.
            determines
                not to develop, manufacture or commercialize a product to which it
                has
                rights or


.
            otherwise
                fails to meet its contractual
                obligations.




Our
      collaborative partners could pursue other technologies or develop alternative
      products that could compete with the products we are developing.




**The
      Profitability of Our Products Will Depend in Part on Our Ability to Protect
      Proprietary Rights and Operate Without Infringing the Proprietary Rights of
      Others**




The
      profitability of our products will depend in part on our ability to obtain
      and
      maintain patents and licenses and preserve trade secrets, and the period our
      intellectual property remains exclusive. We must also operate without infringing
      the proprietary rights of third parties and without third parties circumventing
      our rights. The patent positions of pharmaceutical enterprises, including ours,
      are uncertain and involve complex legal and factual questions for which
      important legal principles are largely unresolved. The pharmaceutical patent
      situation outside the PRC is uncertain, is currently undergoing review and
      revision in many countries, and may not protect our intellectual property rights
      to the same extent as the laws of the PRC. Because patent applications are
      maintained in secrecy in some cases, we cannot be certain that we or our
      licensors are the first creators of inventions described in our pending patent
      applications or patents or the first to file patent applications for such
      inventions.




Most
      of
      our drug products have been approved by the PRC's Food and Drug Administration
      (SFDA) but have not received patent protection. For instance, Clarithromycin
      sustained-release tablets, one of our most profitable products, are produced
      by
      other companies in China. If any other company were to obtain patent protection
      for Clarithromycin sustained-release tablets in China, or for any of our other
      drug products, it would have a material adverse effect on our
      revenue.




Other
      companies may independently develop similar products and design around any
      patented products we develop. We cannot assure you that:




.
            any
                of our patent applications will result in the issuance of
                patents


.
            we
                will develop additional patentable
                products


.
            the
                patents we have been issued will provide us with any competitive
                advantages


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


.
            third
                parties will not be able to circumvent our
                patents.




14




A
      number
      of pharmaceutical, research, and academic companies and institutions have
      developed technologies, filed patent applications or received patents on
      technologies that may relate to our business. If these technologies,
      applications or patents conflict with ours, the scope of our current or future
      patents could be limited or our patent applications could be denied. Our
      business may be adversely affected if competitors independently develop
      competing technologies, especially if we do not obtain, or obtain only narrow,
      patent protection. If patents that cover our activities are issued to other
      companies, we may not be able to obtain licenses at a reasonable cost, or at
      all; develop our technology; or introduce, manufacture or sell the products
      we
      have planned.




Patent
      litigation is becoming widespread in the pharmaceutical industry. Such
      litigation may affect our efforts to form collaborations, to conduct research
      or
      development, to conduct clinical testing or to manufacture or market any
      products under development. There are no assurances that our patents would
      be
      held valid or enforceable by a court or that a competitor's technology or
      product would be found to infringe our patents in the event of patent
      litigation. Our business could be materially affected by an adverse outcome
      to
      such litigation. Similarly, we may need to participate in interference
      proceedings declared by the U.S. Patent and Trademark Office or equivalent
      international authorities to determine priority of invention. We could incur
      substantial costs and devote significant management resources to defend our
      patent position or to seek a declaration that another company's patents are
      invalid.




Much
      of
      our know-how and technology may not be patentable, though it may constitute
      trade secrets. There are no assurances that we will be able to meaningfully
      protect our trade secrets. We cannot assure you that any of our existing
      confidentiality agreements with employees, consultants, advisors or
      collaborators will provide meaningful protection for our trade secrets, know-how
      or other proprietary information in the event of any unauthorized use or
      disclosure. Collaborators, advisors or consultants may dispute the ownership
      of
      proprietary rights to our technology, for example by asserting that they
      developed the technology independently.




**We
      May Encounter Difficulties in Manufacturing our Products**




Before
      our products can be profitable, they must be produced in commercial quantities
      in a cost-effective manufacturing process that complies with regulatory
      requirements, including GMP, production and quality control regulations. If
      we
      cannot arrange for or maintain commercial-scale manufacturing on acceptable
      terms, or if there are delays or difficulties in the manufacturing process,
      we
      may not be able to conduct clinical trials, obtain regulatory approval or meet
      demand for our products. Production of our products could require raw materials
      which are scarce or which can be obtained only from a limited number of sources.
      If we are unable to obtain adequate supplies of such raw materials, the
      development, regulatory approval and marketing of our products could be
      delayed.




**We
      Could Need More Clinical Trials or Take More Time to Complete Our Clinical
      Trials Than We Have Planned**




Clinical
      trials vary in design by factors including dosage, end points, length, and
      controls. We may need to conduct a series of trials to demonstrate the safety
      and efficacy of our products. The results of these trials may not demonstrate
      safety or efficacy sufficiently for regulatory authorities to approve our
      products. Further, the actual schedules for our clinical trials could vary
      dramatically from the forecasted schedules due to factors including changes
      in
      trial design, conflicts with the schedules of participating clinicians and
      clinical institutions, and changes affecting product supplies for clinical
      trials.




We
      rely
      on collaborators, including academic institutions, governmental agencies and
      clinical research organizations, to conduct, supervise, monitor and design
      some
      or all aspects of clinical trials involving our products. Since these trials
      depend on governmental participation and funding, we have less control over
      their timing and design than trials we sponsor. Delays in or failure to commence
      or complete any planned clinical trials could delay the ultimate timelines
      for
      our product releases. Such delays could reduce investors' confidence in our
      ability to develop products, likely causing our share price to
      decrease.




**We
      May Not Be Able to Obtain the Regulatory Approvals or Clearances That Are
      Necessary to Commercialize Our Products**




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




15




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




.
            the
                commercialization of our products could be adversely
                affected;


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


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




Governmental
      and regulatory authorities may approve a product candidate for fewer indications
      or narrower circumstances than requested or may condition approval on the
      performance of post-marketing studies for a product candidate. Even if a product
      receives regulatory approval and clearance, it may later exhibit adverse side
      effects that limit or prevent its widespread use or that force us to withdraw
      the product from the market.




Any
      marketed product and its manufacturer will continue to be subject to strict
      regulation after approval. Results of post-marketing programs may limit or
      expand the further marketing of products. Unforeseen problems with an approved
      product or any violation of regulations could result in restrictions on the
      product, including its withdrawal from the market and possible civil
      actions.




In
      manufacturing our products we will be required to comply with applicable good
      manufacturing practices regulations, which include requirements relating to
      quality control and quality assurance, as well as the maintenance of records
      and
      documentation. We cannot comply with regulatory requirements, including
      applicable good manufacturing practice requirements, we may not be allowed
      to
      develop or market the product candidates. If we or our manufacturers fail to
      comply with applicable regulatory requirements at any stage during the
      regulatory process, we may be subject to sanctions, including fines, product
      recalls or seizures, injunctions, refusal of regulatory agencies to review
      pending market approval applications or supplements to approve applications,
      total or partial suspension of production, civil penalties, withdrawals of
      previously approved marketing applications and criminal
      prosecution.




**Competitors
      May Develop and Market Pharmaceutical Products That Are Less Expensive, More
      Effective or Safer, Making Our Products Obsolete or
      Uncompetitive**




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




**Our
      Products May Not Gain Market Acceptance**




Our
      products may not gain market acceptance in the pharmaceutical community. The
      degree of market acceptance of any product depends on a number of factors,
      including establishment and demonstration of clinical efficacy and safety,
      cost-effectiveness, clinical advantages over alternative products, and marketing
      and distribution support for the products. Limited information regarding these
      factors is available in connection with our products or products that may
      compete with ours.




To
      directly market and distribute our pharmaceutical products, we or our
      collaborators require a marketing and sales force with appropriate technical
      expertise and supporting distribution capabilities. We may not be able to
      further establish sales, marketing and distribution capabilities or enter into
      arrangements with third parties on acceptable terms. If we or our partners
      cannot successfully market and sell our products, our ability to generate
      revenue will be limited.




16




**Our
      Operations and the Use of Our Products Could Subject Us to Damages Relating
      to
      Injuries or Accidental Contamination.**




Our
      research and development processes involve the controlled use of hazardous
      materials. We are subject to PRC national, provincial and local laws and
      regulations governing the use, manufacture, storage, handling and disposal
      of
      such materials and waste products. The risk of accidental contamination or
      injury from handling and disposing of such materials cannot be completely
      eliminated. In the event of an accident involving hazardous materials, we could
      be held liable for resulting damages. We are not insured with respect to this
      liability. Such liability could exceed our resources. In the future we could
      incur significant costs to comply with environmental laws and
      regulations.




**If
      We Were Successfully Sued for Product Liability, We Could Face Substantial
      Liabilities That May Exceed Our Resources.**




We
      may be
      held liable if any product we develop, or any product which is made using our
      technologies, causes injury or is found unsuitable during product testing,
      manufacturing, marketing, sale or use. These risks are inherent in the
      development of agricultural and pharmaceutical products. We currently do not
      have product liability insurance. We are not insured with respect to this
      liability. If we choose to obtain product liability insurance but cannot obtain
      sufficient insurance coverage at an acceptable cost or otherwise protect against
      potential product liability claims, the commercialization of products that
      we
      develop may be prevented or inhibited. If we are sued for any injury caused
      by
      our products, our liability could exceed our total assets.




**We
      Have Limited Business Insurance Coverage.**




The
      insurance industry in China is still at an early stage of development. Insurance
      companies in China offer limited business insurance products. We do not have
      any
      business liability or disruption insurance coverage for our operations in China.
      Any business disruption, litigation or natural disaster may result in our
      incurring substantial costs and the diversion of our resources.




**Our
      Success Depends on Attracting and Retaining Qualified
      Personnel**




We
      depend
      on a core management and scientific team. The loss of any of these individuals
      could prevent us from achieving our business objective of commercializing our
      product candidates. Our future success will depend in large part on our
      continued ability to attract and retain other highly qualified scientific,
      technical and management personnel, as well as personnel with expertise in
      clinical testing and government regulation. We face competition for personnel
      from other companies, universities, public and private research institutions,
      government entities and other organizations. If our recruitment and retention
      efforts are unsuccessful, our business operations could suffer.




***Risks
      Related to Our Corporate Structure***




**PRC
      laws and regulations governing our businesses and the validity of certain of
      our
      contractual arrangements are uncertain. If we are found to be in violation,
      we
      could be subject to sanctions. In addition, changes in such PRC laws and
      regulations may materially and adversely affect our
      business.**




There
      are
      substantial uncertainties regarding the interpretation and application of PRC
      laws and regulations, including, but not limited to, the laws and regulations
      governing our business, or the enforcement and performance of our contractual
      arrangements with our affiliated Chinese entity, Laiyang Jiangbo, and its
      shareholders. We are considered a foreign person or foreign invested enterprise
      under PRC law. As a result, we are subject to PRC law limitations on foreign
      ownership of Chinese companies. These laws and regulations are relatively new
      and may be subject to change, and their official interpretation and enforcement
      may involve substantial uncertainty. The effectiveness of newly enacted laws,
      regulations or amendments may be delayed, resulting in detrimental reliance
      by
      foreign investors. New laws and regulations that affect existing and proposed
      future businesses may also be applied retroactively.




17




The
      PRC
      government has broad discretion in dealing with violations of laws and
      regulations, including levying fines, revoking business and other licenses
      and
      requiring actions necessary for compliance. In particular, licenses and permits
      issued or granted to us by relevant governmental bodies may be revoked at a
      later time by higher regulatory bodies. We cannot predict the effect of the
      interpretation of existing or new PRC laws or regulations on our businesses.
      We
      cannot assure you that our current ownership and operating structure would
      not
      be found in violation of any current or future PRC laws or regulations. As
      a
      result, we may be subject to sanctions, including fines, and could be required
      to restructure our operations or cease to provide certain services. Any of
      these
      or similar actions could significantly disrupt our business operations or
      restrict us from conducting a substantial portion of our business operations,
      which could materially and adversely affect our business, financial condition
      and results of operations.




**We
      may be adversely affected by complexity, uncertainties and changes in PRC
      regulation of pharmaceutical business and companies, including limitations
      on
      our ability to own key assets.**




The
      PRC
      government regulates the pharmaceutical industry including foreign ownership
      of,
      and the licensing and permit requirements pertaining to, companies in the
      pharmaceutical industry. These laws and regulations are relatively new and
      evolving, and their interpretation and enforcement involve significant
      uncertainty. As a result, in certain circumstances it may be difficult to
      determine what actions or omissions may be deemed to be a violation of
      applicable laws and regulations. Issues, risks and uncertainties relating to
      PRC
      government regulation of the pharmaceutical industry include the
      following:




.
            we
                only have contractual control over Laiyang Jiangbo. We do not own
                it due
                to the restriction of foreign investment in Chinese businesses;
                and


.
            uncertainties
                relating to the regulation of the pharmaceutical business in China,
                including evolving licensing practices, means that permits, licenses
                or
                operations at our company may be subject to challenge. This may disrupt
                our business, or subject us to sanctions, requirements to increase
                capital
                or other conditions or enforcement, or compromise enforceability
                of
                related contractual arrangements, or have other harmful effects on
                us.




The
      interpretation and application of existing PRC laws, regulations and policies
      and possible new laws, regulations or policies have created substantial
      uncertainties regarding the legality of existing and future foreign investments
      in, and the businesses and activities of, pharmaceutical businesses in China,
      including our business.




**In
      order to comply with PRC laws limiting foreign ownership of Chinese companies,
      we conduct our pharmaceutical business through Laiyang Jiangbo by means of
      contractual arrangements. If the PRC government determines that these
      contractual arrangements do not comply with applicable regulations, our business
      could be adversely affected.**




The
      PRC
      government restricts foreign investment in pharmaceutical businesses in China.
      Accordingly, we operate our business in China through Laiyang Jiangbo. Laiyang
      Jiangbo holds the licenses and approvals necessary to operate our pharmaceutical
      business in China. We have contractual arrangements with Laiyang Jiangbo and
      its
      shareholders that allow us to substantially control Laiyang Jiangbo. We cannot
      assure you, however, that we will be able to enforce these
      contracts.




Although
      we believe we comply with current PRC regulations, we cannot assure you that
      the
      PRC government would agree that these operating arrangements comply with PRC
      licensing, registration or other regulatory requirements, with existing policies
      or with requirements or policies that may be adopted in the future. If the
      PRC
      government determines that we do not comply with applicable law, it could revoke
      our business and operating licenses, require us to discontinue or restrict
      our
      operations, restrict our right to collect revenues, require us to restructure
      our operations, impose additional conditions or requirements with which we
      may
      not be able to comply, impose restrictions on our business operations or on
      our
      customers, or take other regulatory or enforcement actions against us that
      could
      be harmful to our business.




**Our
      contractual arrangements with Laiyang Jiangbo and its shareholders may not
      be as
      effective in providing control over these entities as direct
      ownership.**




Since
      PRC
      law limits foreign equity ownership in companies in China, we operate our
      pharmaceutical business through an affiliated Chinese company, Laiyang Jiangbo.
      We have no equity ownership interest in Laiyang Jiangbo and rely on contractual
      arrangements to control and operate such business. These contractual
      arrangements may not be as effective in providing control over Laiyang Jiangbo
      as direct ownership. For example, Laiyang Jiangbo could fail to take actions
      required for our business despite its contractual obligation to do so. If
      Laiyang Jiangbo fails to perform under their agreements with us, we may have
      to
      rely on legal remedies under PRC law, which may not be effective. In addition,
      we cannot assure you that Laiyang Jiangbo's shareholders would always act in
      our
      best interests.




18




**The
      Chairman of the Board of Directors of Laiyang Jiangbo has potential conflicts
      of
      interest with us, which may adversely affect our business.**




Mr.
      Cao
      Wubo, our Chairman and Chief Executive Officer, is also the Chairman of the
      Board of Directors and General Manager of Laiyang Jiangbo. Conflicts of
      interests between his duties to our company and Laiyang Jiangbo may arise.
      As
      Mr. Cao is a director and executive officer of our company, he has a duty of
      loyalty and care to us under Florida law when there are any potential conflicts
      of interests between our company and Laiyang Jiangbo. We cannot assure you,
      however, that when conflicts of interest arise, Mr. Cao will act completely
      in
      our interests or that conflicts of interests will be resolved in our favor.
      In
      addition, Mr. Cao could violate his legal duties by diverting business
      opportunities from us to others. If we cannot resolve any conflicts of interest
      between us and Mr. Cao, we would have to rely on legal proceedings, which could
      result in the disruption of our business.




***Risks
      Related to Doing Business in China***




**Adverse
      changes in economic and political policies of the PRC government could have
      a
      material adverse effect on the overall economic growth of China, which could
      adversely affect our business.**




Substantially
      all of our business operations are conducted in China. Accordingly, our results
      of operations, financial condition and prospects are subject to a significant
      degree to economic, political and legal developments in China. China's economy
      differs from the economies of most developed countries in many respects,
      including with respect to the amount of government involvement, level of
      development, growth rate, control of foreign exchange and allocation of
      resources. While the PRC economy has experienced significant growth in the past
      20 years, growth has been uneven across different regions and among various
      economic sectors of China. The PRC government has implemented various measures
      to encourage economic development and guide the allocation of resources. Some
      of
      these measures benefit the overall PRC economy, but may also have a negative
      effect on us. For example, our financial condition and results of operations
      may
      be adversely affected by government control over capital investments or changes
      in tax regulations that are applicable to us. Since early 2004, the PRC
      government has implemented certain measures to control the pace of economic
      growth. Such measures may cause a decrease in the level of economic activity
      in
      China, which in turn could adversely affect our results of operations and
      financial condition.




**If
      PRC law were to phase out the preferential tax benefits currently being extended
      to foreign invested enterprises and “new or high-technology enterprises” located
      in a high-tech zone, we would have to pay more taxes, which could have a
      material and adverse effect on our financial condition and results of
      operations.**




Under
      PRC
      laws and regulations, a foreign invested enterprise may enjoy preferential
      tax
      benefits if it is registered in a high-tech zone and also qualifies as “new or
      high-technology enterprise”. As a foreign invested enterprise as well as a
      certified “new or high-technology enterprise” located in an economic development
      zone in Laiyang City, GJBT is entitled to a three-year exemption from enterprise
      income tax beginning from its first year of operation, a 7.5% enterprise income
      tax rate for another three years followed by a 15% tax rate so long as it
      continues to qualify as a “new or high-technology enterprise.” Laiyang Jiangbo
      is currently subject to a 15% enterprise income tax rate for so long as its
      status as a “new or high-technology enterprise” remains unchanged. Furthermore,
      GJBT may apply for a refund of the 5% business tax levied on its total revenues
      derived from its technology consulting services. If the PRC law were to phase
      out preferential tax benefits currently granted to “new or high-technology
      enterprises” and technology consulting services, we would be subject to the
      standard statutory tax rate, which currently is 33%, and we would be unable
      to
      obtain business tax refunds for our provision of technology consulting services.
      Loss of these preferential tax treatments could have a material and adverse
      effect on our financial condition and results of operations.




**Laiyang
      Jiangbo is subject to restrictions on making payments to
      us.**




We
      are a
      holding company incorporated in the State of Florida and do not have any assets
      or conduct any business operations other than our investments in our affiliated
      entity in China, Laiyang Jiangbo. As a result of our holding company structure,
      we rely entirely on payments from Laiyang Jiangbo under our contractual
      arrangements. The PRC government also imposes controls on the conversion of
      RMB
      into foreign currencies and the remittance of currencies out of China. We may
      experience difficulties in completing the administrative procedures necessary
      to
      obtain and remit foreign currency. See “Government control of currency
      conversion may affect the value of your investment.” Furthermore, if our
      affiliated entity in China incurs debt on its own in the future, the instruments
      governing the debt may restrict its ability to make payments. If we are unable
      to receive all of the revenues from our operations through these contractual
      or
      dividend arrangements, we may be unable to pay dividends on our ordinary
      shares.




19




**Uncertainties
      with respect to the PRC legal system could adversely affect
      us.**




We
      conduct our business primarily through our affiliated Chinese entity, Laiyang
      Jiangbo. Our operations in China are governed by PRC laws and regulations.
      We
      are generally subject to laws and regulations applicable to foreign investments
      in China and, in particular, laws applicable to wholly foreign-owned
      enterprises. The PRC legal system is based on written statutes. Prior court
      decisions may be cited for reference but have limited precedential
      value.




Since
      1979, PRC legislation and regulations have significantly enhanced the
      protections afforded to various forms of foreign investments in China. However,
      China has not developed a fully integrated legal system and recently enacted
      laws and regulations may not sufficiently cover all aspects of economic
      activities in China. In particular, because these laws and regulations are
      relatively new, and because of the limited volume of published decisions and
      their nonbinding nature, the interpretation and enforcement of these laws and
      regulations involve uncertainties. In addition, the PRC legal system is based
      in
      part on government policies and internal rules (some of which are not published
      on a timely basis or at all) that may have a retroactive effect. As a result,
      we
      may not be aware of our violation of these policies and rules until some time
      after the violation. In addition, any litigation in China may be protracted
      and
      result in substantial costs and diversion of resources and management
      attention.




**You
      may experience difficulties in effecting service of legal process, enforcing
      foreign judgments or bringing original actions in China based on United States
      or other foreign laws against us, our management or the experts named in the
      prospectus.**




We
      conduct substantially all of our operations in China and substantially all
      of
      our assets are located in China. In addition, most of our senior executive
      officers reside within China. As a result, it may not be possible to effect
      service of process within the United States or elsewhere outside China upon
      our
      senior executive officers, including with respect to matters arising under
      U.S.
      federal securities laws or applicable state securities laws. Moreover, our
      PRC
      counsel has advised us that the PRC does not have treaties with the United
      States or many other countries providing for the reciprocal recognition and
      enforcement of judgment of courts.




**Governmental
      control of currency conversion may affect the value of your
      investment.**




The
      PRC
      government imposes controls on the convertibility of RMB into foreign currencies
      and, in certain cases, the remittance of currency out of China. We receive
      substantially all of our revenues in RMB. Under our current structure, our
      income is primarily derived from payments from Laiyang Jiangbo. Shortages in
      the
      availability of foreign currency may restrict the ability of our PRC
      subsidiaries and our affiliated entity to remit sufficient foreign currency
      to
      pay dividends or other payments to us, or otherwise satisfy their foreign
      currency denominated obligations. Under existing PRC foreign exchange
      regulations, payments of current account items, including profit distributions,
      interest payments and expenditures from trade-related transactions, can be
      made
      in foreign currencies without prior approval from the PRC State Administration
      of Foreign Exchange by complying with certain procedural requirements. However,
      approval from appropriate government authorities is required where RMB is to
      be
      converted into foreign currency and remitted out of China to pay capital
      expenses such as the repayment of bank loans denominated in foreign currencies.
      The PRC government may also at its discretion restrict access in the future
      to
      foreign currencies for current account transactions. If the foreign exchange
      control system prevents us from obtaining sufficient foreign currency to satisfy
      our currency demands, we may not be able to pay dividends in foreign currencies
      to our shareholders.




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




The
      value
      of RMB against the U.S. dollar and other currencies may fluctuate and is
      affected by, among other things, changes in political and economic conditions.
      Our revenues and costs are mostly denominated in RMB, while a significant
      portion of our financial assets are denominated in U.S. dollars. We rely
      entirely on fees paid to us by our affiliated entity in China. Any significant
      fluctuation in value of RMB may materially and adversely affect our cash flows,
      revenues, earnings and financial position, and the value of, and any dividends
      payable on, our stock in U.S. dollars. For example, an appreciation of RMB
      against the U.S. dollar would make any new RMB denominated investments or
      expenditures more costly to us, to the extent that we need to convert U.S.
      dollars into RMB for such purposes. An appreciation of RMB against the U.S.
      dollar would also result in foreign currency translation losses for financial
      reporting purposes when we translate our U.S. dollar denominated financial
      assets into RMB, as RMB is our reporting currency.




20




**We
      face risks related to health epidemics and other
      outbreaks.**




Our
      business could be adversely affected by the effects of SARS or another epidemic
      or outbreak. China reported a number of cases of SARS in April 2004. Any
      prolonged recurrence of SARS or other adverse public health developments in
      China may have a material adverse effect on our business operations. For
      instance, health or other government regulations adopted in response may require
      temporary closure of our production facilities or of our offices. Such closures
      would severely disrupt our business operations and adversely affect our results
      of operations. We have not adopted any written preventive measures or
      contingency plans to combat any future outbreak of SARS or any other
      epidemic.




***Risks
      Related to an Investment in Our Securities***




**To
      Date, We Have Not Paid Any Cash Dividends and No Cash Dividends Will be Paid
      in
      the Foreseeable Future.**




We
      do not
      anticipate paying cash dividends on our common stock in the foreseeable future
      and we may not have sufficient funds legally available to pay dividends. Even
      if
      the funds are legally available for distribution, we may nevertheless decide
      not
      to pay any dividends. We intend to retain all earnings for our
      operations.




**The
      Application of the "Penny Stock" Rules Could Adversely Affect the Market Price
      of Our Common Stock and Increase Your Transaction Costs to Sell Those
      Shares.**




As
      long
      as the trading price of our common shares is below $5 per share, the open-market
      trading of our common shares will be subject to the "penny stock" rules. The
      "penny stock" rules impose additional sales practice requirements on
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of $1,000,000
      or
      annual income exceeding $200,000 or $300,000 together with their spouse). For
      transactions covered by these rules, the broker-dealer must make a special
      suitability determination for the purchase of securities and have received
      the
      purchaser's written consent to the transaction before the purchase.
      Additionally, for any transaction involving a penny stock, unless exempt, the
      broker-dealer must deliver, before the transaction, a disclosure schedule
      prescribed by the Securities and Exchange Commission relating to the penny
      stock
      market. The broker-dealer also must disclose the commissions payable to both
      the
      broker-dealer and the registered representative and current quotations for
      the
      securities. Finally, monthly statements must be sent disclosing recent price
      information on the limited market in penny stocks. These additional burdens
      imposed on broker-dealers may restrict the ability or decrease the willingness
      of broker-dealers to sell our common shares, and may result in decreased
      liquidity for our common shares and increased transaction costs for sales and
      purchases of our common shares as compared to other securities.




**Our
      Common Shares are Thinly Traded and, You May be Unable to Sell at or Near Ask
      Prices or at All if You Need to Sell Your Shares to Raise Money or Otherwise
      Desire to Liquidate Your Shares.**




We
      cannot
      predict the extent to which an active public market for its common stock will
      develop or be sustained. However, we do not rule out the possibility of applying
      for listing on the Nasdaq National Market or other exchanges.




Our
      common shares have historically been sporadically or "thinly-traded" on the
      “Over-the-Counter Bulletin Board”, meaning that the number of persons interested
      in purchasing our common shares at or near bid prices at any given time may
      be
      relatively small or non-existent. This situation is attributable to a number
      of
      factors, including the fact that we are a small company which is relatively
      unknown to stock analysts, stock brokers, institutional investors and others
      in
      the investment community that generate or influence sales volume, and that
      even
      if we came to the attention of such persons, they tend to be risk-averse and
      would be reluctant to follow an unproven company such as ours or purchase or
      recommend the purchase of our shares until such time as we became more seasoned
      and viable. As a consequence, there may be periods of several days or more
      when
      trading activity in our shares is minimal or non-existent, as compared to a
      seasoned issuer which has a large and steady volume of trading activity that
      will generally support continuous sales without an adverse effect on share
      price. We cannot give you any assurance that a broader or more active public
      trading market for our common stock will develop or be sustained, or that
      current trading levels will be sustained.




21




The
      market price for our common stock is particularly volatile given our status
      as a
      relatively small company with a small and thinly traded “float” and lack of
      current revenues that could lead to wide fluctuations in our share price. The
      price at which you purchase our common stock may not be indicative of the price
      that will prevail in the trading market. You may be unable to sell your common
      stock at or above your purchase price if at all, which may result in substantial
      losses to you.




The
      market for our common shares is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The volatility in our share price is attributable to a number of factors. First,
      as noted above, our common shares are sporadically and/or thinly traded. As
      a
      consequence of this lack of liquidity, the trading of relatively small
      quantities of shares by our shareholders may disproportionately influence the
      price of those shares in either direction. The price for our shares could,
      for
      example, decline precipitously in the event that a large number of our common
      shares are sold on the market without commensurate demand, as compared to a
      seasoned issuer which could better absorb those sales without adverse impact
      on
      its share price. Secondly, we are a speculative or "risky" investment due to
      our
      lack of revenues or profits to date and uncertainty of future market acceptance
      for our current and potential products. As a consequence of this enhanced risk,
      more risk-adverse investors may, under the fear of losing all or most of their
      investment in the event of negative news or lack of progress, be more inclined
      to sell their shares on the market more quickly and at greater discounts than
      would be the case with the stock of a seasoned issuer. The following factors
      may
      add to the volatility in the price of our common shares: actual or anticipated
      variations in our quarterly or annual operating results; adverse outcomes;
      the
      termination of our contractual agreements with Laiyang Jiangbo; and additions
      or
      departures of our key personnel, as well as other items discussed under this
      "Risk Factors" section, as well as elsewhere in this Current Report. Many of
      these factors are beyond our control and may decrease the market price of our
      common shares, regardless of our operating performance. We cannot make any
      predictions or projections as to what the prevailing market price for our common
      shares will be at any time, including as to whether our common shares will
      sustain their current market prices, or as to what effect that the sale of
      shares or the availability of common shares for sale at any time will have
      on
      the prevailing market price. However, we do not rule out the possibility of
      applying for listing on the Nasdaq National Market or other
      exchanges.




Shareholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through prearranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.




**Volatility
      in Our Common Share Price May Subject Us To Securities
      Litigation.**




The
      market for our common stock is characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price will
      continue to be more volatile than a seasoned issuer for the indefinite future.
      In the past, plaintiffs have often initiated securities class action litigation
      against a company following periods of volatility in the market price of its
      securities. We may, in the future, be the target of similar litigation.
      Securities litigation could result in substantial costs and liabilities and
      could divert management's attention and resources.




**Our
      Corporate Actions are Substantially Controlled by our Principal Shareholders
      and
      Affiliated Entities.**




Our
      principal shareholders and their affiliated entities will own approximately
      75%
      of our outstanding ordinary shares, representing approximately 75% of our voting
      power. These shareholders, acting individually or as a group, could exert
      substantial influence over matters such as electing directors and approving
      mergers or other business combination transactions. In addition, because of
      the
      percentage of ownership and voting concentration in these principal shareholders
      and their affiliated entities, elections of our board of directors will
      generally be within the control of these shareholders and their affiliated
      entities. While all of our shareholders are entitled to vote on matters
      submitted to our shareholders for approval, the concentration of shares and
      voting control presently lies with these principal shareholders and their
      affiliated entities. As such, it would be difficult for shareholders to propose
      and have approved proposals not supported by management. There can be no
      assurances that matters voted upon by our officers and directors in their
      capacity as shareholders will be viewed favorably by all shareholders of our
      company.




22




**The
      Elimination of Monetary Liability Against our Directors, Officers and Employees
      under Florida law and the Existence of Indemnification Rights to our Directors,
      Officers and Employees may Result in Substantial Expenditures by Us and May
      Discourage Lawsuits Against our Directors, Officers and
      Employees.**




Our
      articles of incorporation contain specific provisions that eliminate the
      liability of our directors for monetary damages to our company and shareholders,
      and we are prepared to give such indemnification to our directors and officers
      to the extent provided by Florida law. We may also have contractual
      indemnification obligations under our employment agreements with our officers.
      The foregoing indemnification obligations could result in our company incurring
      substantial expenditures to cover the cost of settlement or damage awards
      against directors and officers, which we may be unable to recoup. These
      provisions and resultant costs may also discourage our company from bringing
      a
      lawsuit against directors and officers for breaches of their fiduciary duties,
      and may similarly discourage the filing of derivative litigation by our
      shareholders against our directors and officers even though such actions, if
      successful, might otherwise benefit our company and shareholders.




**Legislative
      Actions, Higher Insurance Costs and Potential New Accounting Pronouncements
      May
      Impact our Future Financial Position and Results of
      Operations.**




There
      have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
      there may potentially be new accounting pronouncements or additional regulatory
      rulings that will have an impact on our future financial position and results
      of
      operations. The Sarbanes-Oxley Act of 2002 and other rule changes as well as
      proposed legislative initiatives following the Enron bankruptcy are likely
      to
      increase general and administrative costs and expenses. In addition, insurers
      are likely to increase premiums as a result of high claims rates over the past
      several years, which we expect will increase our premiums for insurance
      policies. Further, there could be changes in certain accounting rules. These
      and
      other potential changes could materially increase the expenses we report under
      generally accepted accounting principles, and adversely affect our operating
      results.




**Past
      Activities Of Genesis And Its Affiliates May Lead To Future
      Liability.**




Prior
      to
      the Exchange Agreement among Genesis, Karmoya and the Karmoya Shareholders
      executed on October 1, 2007, we engaged in businesses unrelated to our current
      operations. Neither Genesis’s prior management nor any of its shareholders prior
      to the Exchange Transaction are providing indemnifications against any loss,
      liability, claim, damage or expense arising out of or based on any breach of
      or
      inaccuracy in any of their representations and warranties made regarding such
      acquisition, and any liabilities relating to such prior business against which
      we are not completely indemnified may have a material adverse effect on our
      company.


For
        example,
        we are aware of three lawsuits arising from past activities of Genesis, alleging
        breach of contract. Please see Item 3, “Legal Proceedings” for more information.


**The
      market price for our stock may be volatile.**




The
      market price for our stock may be volatile and subject to wide fluctuations
      in
      response to factors including the following:




.
            actual
                or anticipated fluctuations in our quarterly operating
                results;


.
            changes
                in financial estimates by securities research
                analysts;


.
            conditions
                in pharmaceutical and agricultural
                markets;


.
            changes
                in the economic performance or market valuations of other pharmaceutical
                companies;


.
            announcements
                by us or our competitors of new products, acquisitions, strategic
                partnerships, joint ventures or capital
                commitments;


.
            addition
                or departure of key personnel;


.
            fluctuations
                of exchange rates between RMB and the U.S.
                dollar;


.
            intellectual
                property litigation;


.
            general
                economic or political conditions in
                China.




23




In
      addition, the securities market has from time to time experienced significant
      price and volume fluctuations that are not related to the operating performance
      of particular companies. These market fluctuations may also materially and
      adversely affect the market price of our stock.




**We
      may need additional capital, and the sale of additional shares or other equity
      securities could result in additional dilution to our
      shareholders.**




We
      believe that our current cash and cash equivalents, anticipated cash flow from
      operations and the net proceeds from a proposed offering will be sufficient
      to
      meet our anticipated cash needs for the near future. We may, however, require
      additional cash resources due to changed business conditions or other future
      developments, including any investments or acquisitions we may decide to pursue.
      If our resources are insufficient to satisfy our cash requirements, we may
      seek
      to sell additional equity or debt securities or obtain a credit facility. The
      sale of additional equity securities could result in additional dilution to
      our
      shareholders. The incurrence of indebtedness would result in increased debt
      service obligations and could result in operating and financing covenants that
      would restrict our operations. We cannot assure you that financing will be
      available in amounts or on terms acceptable to us, if at all.




**If
      we fail to maintain an effective system of internal controls, we may not be
      able
      to accurately report our financial results or prevent
      fraud.**




We
      will
      be subject to reporting obligations under the U.S. securities laws. The
      Securities and Exchange Commission (the “SEC”), as required by Section 404 of
      the Sarbanes-Oxley Act of 2002, adopted rules requiring every public company
      to
      include a management report on such company's internal controls over financial
      reporting in its annual report, which contains management's assessment of the
      effectiveness of our internal controls over financial reporting. In addition,
      an
      independent registered public accounting firm must attest to and report on
      management's assessment of the effectiveness of our internal controls over
      financial reporting. Our management may conclude that our internal controls
      over
      our financial reporting are not effective. Moreover, even if our management
      concludes that our internal controls over financial reporting are effective,
      our
      independent registered public accounting firm may still decline to attest to
      our
      management's assessment or may issue a report that is qualified if it is not
      satisfied with our controls or the level at which our controls are documented,
      designed, operated or reviewed, or if it interprets the relevant requirements
      differently from us. Our reporting obligations as a public company will place
      a
      significant strain on our management, operational and financial resources and
      systems for the foreseeable future. Effective internal controls, particularly
      those related to revenue recognition, are necessary for us to produce reliable
      financial reports and are important to help prevent fraud. As a result, our
      failure to achieve and maintain effective internal controls over financial
      reporting could result in the loss of investor confidence in the reliability
      of
      our financial statements, which in turn could harm our business and negatively
      impact the trading price of our stock. Furthermore, we anticipate that we will
      incur considerable costs and use significant management time and other resources
      in an effort to comply with Section 404 and other requirements of the
      Sarbanes-Oxley Act.




**We
      will incur increased costs as a result of being a public
      company.**




As
      a
      public company, we will incur significant legal, accounting and other expenses
      that we did not incur as a private company. In addition, the Sarbanes-Oxley
      Act,
      as well as new rules subsequently implemented by SEC have required changes
      in
      corporate governance practices of public companies. We expect these new rules
      and regulations to increase our legal, accounting and financial compliance
      costs
      and to make certain corporate activities more time-consuming and costly. In
      addition, we will incur additional costs associated with our public company
      reporting requirements. We are currently evaluating and monitoring developments
      with respect to these new rules, and we cannot predict or estimate the amount
      of
      additional costs we may incur or the timing of such costs.




**ITEM
      2. DESCRIPTION OF PROPERTY**




Our
      principal executive offices are located at Middle Section, Longmao Street,
      Area
      A, Laiyang Waixiangxing Industrial Park, Laiyang City, Yantai, Shandong
      Province, PRC 710075, where we have developed approximately 45,356 square meters
      of production, office, and garage space. Our
      total
      building area is 7172 square meters and our production workshop area is more
      than 3132 square meters.




On
      August
      13, 2003, the Laiyang Development Planning Agency approved Laiyang Jiangbo’s
      plan to invest in Section A of the Industrial Park for construction of garage
      and office space. On August 18, 2003, the Laiyang Industrial Park Administration
      certified Laiyang Jiangbo’s investment of RMB $10 million (US $1.33 million) in
      Section A of the Industrial Park for a total construction of 13,000 square
      meters.




24




We
      currently do not lease any real property.




**ITEM
      3. LEGAL PROCEEDINGS**




Except
      as
      discussed below, we are not a party to any pending legal proceeding, nor are
      we
      aware of any legal proceedings being contemplated against us by any governmental
      authority:




Elizabeth
      Hiromoto et al v. Telecom Communications, Inc. et al. - Case No.
      2:07-cv-07858-PSG-E, United States District Court, Central District of
      California (Western Division - Los Angeles)




On
      December 3, 2007, two individuals filed a lawsuit against the Company, our
      former Chief Executive Officer James Wang, and certain others, alleging breach
      of contract. As of the date of this report, neither we nor our registered agent
      have been served with a complaint in this action, and we have only become aware
      of this lawsuit as a result of recent due diligence performed by one of our
      potential financing sources. As of the date of this report, we are
      unable to estimate a loss, if any, we may incur related to this lawsuit. We
      plan
      to vigorously defend our position.




Kenneth
      Clinton vs. Genesis Pharmaceuticals Enterprises, Inc., GTEC Holdings, Capital
      Growth Financial, Inc., Gary L. Wolfson and Pacific Rim Consultants, Inc. -
      Case
      No. 50 2007 CA 023923, Palm Beach County, Florida




On
      December 21, 2007, Kenneth Clinton, a former director and former President
      of
      the Company, filed a lawsuit against the Company and certain entities and
      persons related to our predecessor Genesis Technology Group, Inc. The complaint
      alleges, among other things, breach of contract against the Company for an
      agreement to pay the plaintiff certain shares of other public companies
      (collectively, the “Reverse Merger Shares”) in connection with reverse merger
      transactions arranged by our predecessor, and breach of contract against the
      Company for failure to allow the plaintiff to exercise certain stock options
      for
      shares in the Company or exchange such options for new shares in the Company.
      The plaintiff is seeking relief in the form of (1) delivery of the Reverse
      Merger Shares, or in the alternative damages in the amount of those shares,
      (2)
      a judgment against the Company to allow the plaintiff to exchange and exercise
      his stock option for shares in the Company, or in the alternative damages in
      the
      amount of those shares, and (3) a declaratory judgment regarding a pledge and
      escrow agreement with defendant Capital Growth Financial. As of the date of
      this
      report, we are unable to estimate a loss, if any, we may incur related to this
      lawsuit. We plan to vigorously defend our position.




CRG
      Partners, Inc. and Genesis Technology Group, Inc., n/k/a Genesis Pharmaceuticals
      Enterprises, Inc. (ARBITRATION) - Case No. 32 145 Y 00976 07, American
      Arbitration Association, Southeast Case Management Center




On
      December 4, 2007, CRG Partners, Inc. (“CRG”), a former consultant of the
      Company, filed a demand for arbitration against the Company alleging breach
      of
      contract and seeking damages of approximately $10 million as compensation for
      consulting services rendered to the Company. The amount of damages sought by
      the
      claimant is equal to the dollar value as of 29,978,900 shares of the Company’s
      common stock which the claimant alleges are due and owing to CRG. On December
      5,
      2007, we gave notice of termination of our relationship with CRG under the
      consulting agreement. The arbitration is scheduled to be conducted in Miami
      Dade
      County, Florida. We plan to vigorously defend our position.




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




We
      have
      not submitted any matters to a vote of security holders during the fourth
      quarter of the fiscal year covered by this annual report on Form
      10-KSB .




**PART
      II**




**Item
      5.**  **MARKET
      FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS**




**Market
      Information**




Our
      common stock is not listed on any stock exchange. Our common stock is traded
      over-the-counter on the Over-the-Counter Electronic Bulletin Board under the
      symbol “GTEC.OB”. The following table sets forth the high and low bid
      information for our common stock for each quarter within our last two fiscal
      years, as reported by the Over-the-Counter Electronic Bulletin Board. The bid
      prices reflect inter-dealer quotations, do not include retail markups, markdowns
      or commissions and do not necessarily reflect actual transactions.




25




**LOW**
            **HIGH****2007**Quarter
                ended September 30, 2007
            $0.085
            $0.15Quarter
                ended June 30, 2007
            $0.101
            $0.185Quarter
                ended March 31, 2007
            $0.12
            $0.185**2006**Quarter
                ended December 31, 2006
            $0.08
            $0.179Quarter
                ended September 30, 2006
            $0.09
            $0.185Quarter
                ended June 30, 2006
            $0.16
            $0.361Quarter
                ended March 31, 2006
            $0.031
            $0.55**2005**Quarter
                ended December 31, 2005
            $0.03
            $0.64




As
      of
      January 14, 2008, the closing sales price for shares of our common stock was
      $0.25 per share on the Over-The-Counter Bulletin Board.




**Holders**




As
      of
      January 1, 2008, there were approximately 881 shareholders of record of our
      common stock based upon the shareholders’ listing provided by our transfer
      agent. Our transfer agent is Computershare Trust Company, 350 Indiana St.,
      #800,
      Golden, Colorado 80401, and its telephone number is (303) 262-0600.




**Dividend
      Policy**




We
      have
      never paid cash dividends on our common stock. We intend to keep future
      earnings, if any, to finance the expansion of our business, and we do not
      anticipate that any cash dividends will be paid in the foreseeable future.
      In
      the past our board of directors has declared dividends on our then outstanding
      preferred stock. We paid these preferred stock dividends with common stock.




Our
      future payment of dividends will depend on our earnings, capital requirements,
      expansion plans, financial condition and other relevant factors that our board
      of directors may deem relevant. Our retained earnings deficit currently limits
      our ability to pay dividends.




**Recent
      Sales of Unregistered Securities**




This
      information has been previously included in a current report on Form 8-K and
      therefore need not be furnished pursuant to SEC rules regarding Form 10-KSB.
      Reference is made to Item 3.02 of our Current Report on Form 8-K filed on
      October 5, 2007, which is hereby incorporated by reference, for a description
      of
      our recent sales of unregistered securities during the period covered by this
      annual report on Form 10-KSB.




26


**ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS**





The
      following analysis of our consolidated financial condition and results of
      operations for the years ended September 30, 2007 and 2006, should be read
      in
      conjunction with the consolidated financial statements, including footnotes,
      and
      other information presented elsewhere in this annual report on Form 10-KSB.
      When
      used in this section, "fiscal 2007" means our fiscal year ended September 30,
      2007 and "fiscal 2006" means our fiscal year ended September 30,
      2006.





OVERVIEW





We
      were
      originally incorporated in Florida on August 15, 2001 under the name Genesis
      Technology Group, Inc. with a principal business objective to operate as a
      business development and marketing firm specializing in advising and providing
      turn-key solutions for Chinese small and mid-sized companies entering Western
      markets. On October 12, 2001, we consummated a merger with NewAgeCities.com,
      an
      Idaho public corporation originally formed in 1969. We were the surviving entity
      after the merger with the Idaho public corporation.




Effective
      June 20, 2005, we established Genesis Equity Partners, LLC, a Florida limited
      liability company (“GEP”), in which we owned 51% and strategic partners owned
      the remaining 49%. On May 15, 2007, GEP amended its membership agreement and
      accordingly, as of March 1, 2007, we own 71%. Subsequently, we organized
      additional limited liability companies, dedicated to specific Chinese partner
      companies. While our equity position in these LLCs varied, the minimum ownership
      was maintained at 51%, to ensure reporting of consolidated earnings. The
      following limited liability companies were established during fiscal
      2007:




o
      Genesis
      Equity Partners, LLC (Huayang) - established in the State of Delaware on
      February 1, 2007 and which we own 100%.




o
      Genesis
      Equity Partners, LLC (Liziyuan) -established in the State of Delaware on
      February 27, 2007 and which we own 100%.




o
      Genesis
      Equity Partners, LLC (Site) - established in the State of Delaware on March
      28,
      2007 and which we own 100%.




o
      Genesis
      Equity Partners II, LLC (GEP II) - established in the State of Florida on August
      8, 2007 and which we own 71%.  The
      minority members of GEP II include China West II, LLC, holding 24.5% of GEP
      II,
      and Shaohua Tan, Inc., a company owned by Dr. Shaohua Tan, a former member
      of
      our board of directors, holding 24.5%.




Collectively,
      the above LLCs are referred to as the "GEP Companies". The GEP Companies are
      full service advisory companies specializing in small Chinese-based companies,
      which are traded on or are expected to be traded on the U.S. public markets.
      The
      GEP Companies offer a comprehensive suite of services tailored to the specific
      needs of their clients, including:




*
      U.S.
      representative offices




*
      General
      business consulting services




*
      Merger
      and acquisition strategy planning and analysis




*
      Advice
      on U.S. capital markets, including assessment of potential sources of investment
      capital




*
      Coordination of professional resources




*
      Corporate asset evaluation




*
      Public
      relations




*
      Advice
      and structure assistance for strategic alliances, partnerships and joint
      ventures




27






GEP
      and the GEP Companies





The
      GEP
      Companies enter into agreements with their consulting clients which provide
      for
      a fixed fee to it for its services. The amount of fee varies based upon the
      scope of the services GEP renders. For the year ended September 30. 2006, all
      of
      the GEP Companies' fees were paid in shares of their clients' securities which
      are valued at fair market value for the purposes of revenue recognition. The
      shares received are unregistered shares. Our policy is to sell securities we
      receive as compensation as soon as we remove any restriction and not to hold
      these securities as investments.





In
      March
      2006, GEP, organized in the State of Florida, signed a General Partnership
      Agreement with Liang Fang Pharmaceutical, Ltd. ("Liang"), a company registered
      in the People's Republic of China. In August 2006, GEP and the members of Liang
      established Lotus Pharmaceutical International, Inc., a Nevada company ("Lotus")
      and in September 2006, Lotus and its stockholders closed a reverse merger with
      Lotus Pharmaceuticals, Inc. (formerly S.E. Asia Trading Company, Inc.), a
      publicly-trading company ("LTUS"). At closing, GEP received 13,209,600
      restricted common shares of LTUS for services performed in assisting Lotus
      facilitate the merger with LTUS and for other business development services.
      We
      valued the 13,209,600 shares received at $.51 per share based on an accredited
      business valuation performed by an independent party. Accordingly, during fiscal
      year 2006, we recorded revenue of $6,736,896 related to the receipt of these
      restricted marketable equity securities. On September 28, 2006, GEP immediately
      distributed 3,170,304 shares of LTUS valued at $1,616,855 to Shaohua Tan, Inc.,
      a company owned by Dr. Tan, which represented 24% of the shares received as
      compensation for our services. In addition, during year ended September 30,
      2007
      we distributed 3,469,067 shares of LTUS valued at $1,850,891 to the beneficial
      owner, China West, LLC.





In
      the
      fall of 2005, GEP signed a General Partnership Agreement with Inner Mongolia
      Jin
      Ma Construction Co., Ltd. and its related companies, Inner Mongolia Jin Ma
      Real
      Estate Development Co., Ltd and Inner Mongolia Jin Ma Hotel Co., Ltd., (the
      "Jin
      Ma companies"), a construction, real estate development, and hospitality company
      in Western China. On August 28, 2006, the members of Jin Ma established Gold
      Horse International, Inc., a Nevada company ("Gold Horse"). On June 29, 2007,
      Gold Horse and the stockholders of 100% of Gold Horse's common stock executed
      a
      Share Exchange Agreement ("Gold Horse Exchange Agreement") with Speedhaul
      Holdings, Inc., Inc., a publicly-trading company ("SPEH"). The Gold Horse
      Exchange Agreement closed on June 29, 2007 and GEP received 16,750,000
      restricted common shares of SPEH for services performed in helping Gold Horse
      facilitate the merger with SPEH and for other business development services.
      Gold Horse owns 100% of Global Rise International, Limited ("Global Rise"),
      a
      Cayman Islands corporation. Through Global Rise, Gold Horse operates, controls
      and beneficially owns the Jin Ma Companies under a series of contractual
      arrangements.





In
      order
      to complete the transaction and to provide funds necessary to satisfy our
      obligations under our agreement with the Jin Ma Companies, we borrowed $325,000
      from a former officer of the Company under a secured promissory note due
      December 31, 2007. We valued the 16,750,000 shares we received as our
      compensation at $0.18 per share based on an accredited business valuation
      performed by an independent party. We believe that it was appropriate to use
      an
      independent valuation for purposes of valuing the shares of SPEH received in
      as
      much as SPEH was essentially a shell corporation with no sales and assets.
      The
      essential basis for the valuation of the restricted common shares received
      by us
      was predicated on the valuation of the operation, history and prospects of
      the
      Jin Ma Companies, in as much as the common shares received by us occurred in
      conjunction with the completed merger.





Based
      on
      the circumstances, we believe that in order to determine the fair value of
      the
      restricted shares of SPEH received on June 29, 2007, the valuation report would
      provide a more cogent estimation of the value of the restricted common shares
      received than the lack of trading prices posted for SPEH prior to the merger.
      In
      connection with the receipt of the restricted common shares of SPEH, the Company
      recorded revenue of $3,015,000, which accounts for approximately 99.3% of our
      revenues for the year ended September 30, 2007. We immediately distributed
      an
      aggregate of 4,857,500 shares of SPEH valued at $874,350 to the minority members
      of GEP, and we transferred an additional 3,350,000 shares of SPEH valued at
      $603,000 to a former officer of the Company as compensation expense in
      connection with a short-term promissory note.




28




On
      November 20, 2006, one of the GEP Companies organized in the State of Delaware
      signed a contract with a Chinese environmental technologies company in the
      power
      generation and industrial dyeing sectors. GEP could receive a significant equity
      position and ongoing consulting fees for coordination and oversight of the
      U.S.
      business activities of the Chinese company. This Chinese company required that
      the GEP Company refrain from publicizing its name or exact location until the
      audit by an accredited U.S. accounting firm has been completed. We were
      responsible for paying for the audit and other expenses, and the procedure
      typically takes 60-120 days, unless unforeseen complexities are discovered
      during the process. A New York-based auditing firm was engaged in early February
      2007. In September 2007, we determined that this transaction could not be
      completed and related deferred contract costs should be fully written
      off.





On
      March
      11, 2007, one of the GEP Companies organized in the State of Delaware, signed
      a
      contract with a Chinese health foods beverage company. GEP could receive a
      significant equity position and ongoing consulting fees for coordination and
      oversight of the U.S. business activities of the Chinese Company. This Chinese
      company required that GEP refrain from publicizing its name or exact location
      until the audit by an accredited U.S. accounting firm has been completed. GEP
      was responsible for paying for the audit and other expenses, and the procedure
      typically takes 60-120 days, unless unforeseen complexities are discovered
      during the process. In July 2007, we determined that this transaction could
      not
      be completed and related deferred contract costs should be fully written
      off.





In
      May
      2007, GEP of Florida, signed a General Partnership Agreement with Laiyang
      Jiangbo Pharmaceutical Co., Ltd. (“Laiyang Jiangbo”), a company registered in
      the People's Republic of China. Our wholly-owned subsidiary, Karmoya
      International Ltd., a British Virgin Islands company (“Karmoya”), was
      established as a “special purpose vehicle” for the purpose of engaging in
      foreign capital-raising for Laiyang Jiangbo. China’s State Administration of
      Foreign Exchange (“SAFE”) requires the owners of any Chinese companies to obtain
      SAFE’s approval before establishing any offshore holding company structure for
      foreign financing as well as subsequent acquisition matter under the “Circular
      106” in PRC. On September 19, 2007, Karmoya was approved by local Chinese SAFE
      as a “special purpose vehicle” offshore company.





On
      September 20, 2007, Karmoya acquired 100% of Union Well International Limited
      (“Union Well”), a Cayman Islands corporation established on May 9, 2007. On
      September 17, 2007, Union Well established a 100% subsidiary, Genesis Jiangbo
      (Laiyang) Biotech Technology Co., Ltd. (“GJBT”), in PRC as a wholly owned
      foreign limited liability company.





On
      October 1, 2007, we executed a Share Acquisition and Exchange Agreement by
      and
      among us, Karmoya, and the shareholders of 100% of Karmoya’s capital stock (the
“Karmoya Shareholders”). As a result of this exchange transaction, the Karmoya
      Shareholders became our controlling shareholders and Karmoya became our
      wholly-owned subsidiary. In connection with Karmoya becoming our wholly owned
      subsidiary, we acquired the business and operations of Karmoya, Union Well,
      GJBT
      and Laiyang Jiangbo (the “LJ Group”). Through various consulting service
      agreements and equity-related agreements between certain LJ Group entities,
      our
      principal business activities shall be conducted through the LJ Group’s
      operating company in China, Laiyang Jiangbo. Laiyang Jiangbo is engaged in
      the business of developing, manufacturing and selling healthy
      medicines.





While
      it
      is not our policy to hold securities we accept as payment for services as
      long-term investments, we are not always able to immediately liquidate such
      securities as a result of either market conditions or restrictions on resale
      imposed by Federal securities laws. These unsold securities comprise
      substantially all of our assets at September 30, 2007. Our balance sheet
      reflects investments in marketable securities, which are securities which are
      freely saleable by us, and restricted investments in marketable securities
      held
      for sale, which represent securities which are not freely saleable under Federal
      securities laws. Realized gains or losses on securities are recognized at the
      time the securities are sold. Unrealized gains or losses on trading securities
      are recognized on a monthly basis in our statement of operations based upon
      the
      changes in the fair market value of the securities. Unrealized gains or losses
      on investment in marketable securities held for sale are recognized as a
      component of comprehensive income on a monthly basis based on changes in the
      fair market value of the securities. These changes in valuations of the
      securities can have the effect of significantly increasing our net income and
      comprehensive income, if the price of the securities increases from the original
      value assigned to it at the time the related revenue was recognized. Conversely,
      if the price were to decline, such decreases could negatively impact our net
      income and comprehensive income.





Our
      revenues for fiscal 2006 and fiscal 2007 were materially dependent on a limited
      number of consulting clients. In addition, under our present business model,
      our
      ability to generate revenues from our consulting contracts is dependent upon
      factors which may be out of our control. Accordingly, while we could enter
      into
      agreement with companies which may produce revenue for us in future periods,
      it
      is also possible that the events necessary for us to receive payment for our
      services may never occur. In addition, we are responsible for the payment of
      various fees and expenses to third parties related to the services we provide,
      which such payments are not conditioned upon our receipt of payment from our
      client. While we do not believe it to be likely, it is possible that we could
      expend significant funds on behalf of a particular client and never earn our
      fee
      from that client.




29




SPECIAL
      CONSIDERATIONS REGARDING THE INVESTMENT ACT OF 1940





It
      has
      not been our intention to function as an investment company and to be primarily
      engaged and operate in a manner in which our asset base would be comprised
      in
      substantial part of securities and passive investments in which we would not
      have a significant control relationship. As is evidenced from our historical
      experience, our primary asset until mid-February 2006 was our 80% owned
      subsidiary, Chorry Technology Development Co., Ltd. In addition, we held at
      least a majority owned interest in several other companies which we disposed
      of
      or discontinued their operations between the end of 2004 and September 30,
      2006.





U.S.
      companies that have more than 100 shareholders or are publicly traded in the
      U.S. and are, or hold themselves out as being, engaged primarily in the business
      of investing, reinvesting or trading in securities, are subject to regulation
      under the Investment Company Act of 1940. While we do not believe our company
      is
      an "investment company" within the scope of the Investment Company Act of 1940,
      by virtue of the percentage of the value of securities that we hold to our
      total
      assets, under certain circumstances we could be subject to the provisions of
      the
      Investment Company Act of 1940 in the event we are unable to fulfill our
      business model in a timely manner.





Because
      Investment Company Act regulation is, for the most part, inconsistent with
      our
      business model, we cannot feasibly operate our business as a registered
      investment company. Our board of directors has adopted a resolution stating
      that
      it is not our intent to become subject to the Investment Company Act of 1940
      and
      authorizing our officers to take such actions as are necessary, including the
      periodic liquidation of any marketable equity securities we may own to reduce
      those holdings below the threshold level as prescribed by the Investment Company
      Act of 1940. There are no assurances we will be able to timely liquidate a
      sufficient number of these shares or increase our asset base in a manner so
      as
      to reduce our holdings to a level below the necessary threshold.





If
      we are
      deemed to be, and are required to register as, an investment company, we will
      be
      forced to comply with substantive requirements under the Investment Company
      Act
      of 1940, including:





o
      limitations on our ability to borrow;





o
      limitations on our capital structure;





o
      restrictions on acquisitions of interests in associated companies;





o
      prohibitions on transactions with affiliates;





o
      restrictions on specific investments; and





o
      compliance with reporting, record keeping, voting, proxy disclosure and other
      rules and regulations.





CRITICAL
      ACCOUNTING POLICIES





The
      discussion and analysis of our financial condition and results of operations
      are
      based upon our consolidated financial statements, which have been prepared
      in
      accordance with accounting principles generally accepted in the United States.
      The preparation of these consolidated financial statements requires us to make
      estimates and judgments that affect the reported amounts of assets, liabilities,
      revenues and expenses, and related disclosure of contingent assets and
      liabilities. On an on-going basis, we evaluate our estimates based on historical
      experience and on various other assumptions that are believed to be reasonable
      under the circumstances, the results of which form the basis for making
      judgments about the carrying values of assets and liabilities that are not
      readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.





A
      summary
      of significant accounting policies is included in Note 1 to the audited
      consolidated financial statements included in this Form 10-KSB. Management
      believes that the application of these policies on a consistent basis enables
      us
      to provide useful and reliable financial information about the company's
      operating results and financial condition.




30




Accounting
      for Stock Based Compensation - Effective October 1, 2005, we adopted Statement
      of Financial Accounting Standards No. 123 (revised 2004), Share Based Payment
      ("SFAS No. 123R"). SFAS No. 123R establishes the financial accounting and
      reporting standards for stock-based compensation plans. As required by SFAS
      No.
      123R, we recognize the cost resulting from all stock-based payment transactions
      including shares issued under our stock option plans in the financial
      statements. The adoption of SFAS No. 123R will have a negative impact on our
      future results of operations.





Marketable
      equity securities consist of investments in equity of publicly traded and
      non-public domestic companies and are stated at market value based on the most
      recently traded price of these securities at September 30, 2006. We have
      marketable securities classified as trading and available for sale securities
      at
      September 30, 2007. Realized and unrealized gains and losses on trading
      securities are included in earnings. Unrealized gains and losses on available
      for sale securities, determined by the difference between historical purchase
      price and the market value at each balance sheet date, are recorded as a
      component of Accumulated Other Comprehensive Income in Stockholders' Equity.
      Realized gains and losses are determined by the difference between historical
      purchase price and gross proceeds received when the marketable securities are
      sold. Realized gains or losses on the sale or exchange of equity securities
      and
      declines in value judged to be other than temporary are recorded in gains
      (losses) on equity securities, net. Marketable equity securities are presumed
      to
      be impaired if the fair value is less than the cost basis continuously for
      three
      consecutive quarters, absent evidence to the contrary.





Our
      investment impairment analysis generally included and will include in the future
      review and analysis of several factors, including:





1.
      Discussions with each company's respective management to review the status
      of
      key internally established development milestones. As a result of our strategic
      alliance with partner companies, we regularly had access to information
      regarding technology developments and business initiatives that was generally
      not available to the investor community.





2.
      Our
      knowledge of partner company's activities relating to new agreements, new
      investor funding and milestone achievements.





3.
      Our
      review of financial position, primarily the cash resources and operating cash
      flow, to determine if cash levels were sufficient to continue to fund projected
      operations and ongoing technology development.





Additionally,
      we consider EITF Issue No. 03-01, "The Meaning of Other-Than-Temporary
      Impairment and Its Application to Certain Investments" ("EITF 03-01"). According
      to EITF 03-01, a security is impaired when its fair value
      is
      less than its carrying value, and an impairment is other than- temporary if
      the
      investor does not have the "ability and intent" to hold the investment until
      a
      forecasted recovery of its carrying amount. EITF 03-01 holds that the impairment
      of each security must be assessed using the ability-and-intent-to-hold criterion
      regardless of the severity or amount of the impairment. We intend to hold its
      investment in marketable securities for a period of time sufficient to allow for
      any anticipated recovery in market value.





Paragraph
      16 of SFAS 115 and SAB Topic 5M provide that numerous factors must be
      considered, including the following, in determining whether a decline in value
      requires a write-down to a new cost basis for an individual security, which
      we
      consider:





o
      The
      length of time and extent to which the market value has been less than
      cost;





o
      The
      financial condition and near-term prospects of the issuer, including any
      specific events that may influence the operations of the issuer (e.g., changes
      in technology, or the planned discontinuance of a line of business);
      and





o
      The
      intent and ability of the holder to retain its investment in the issuer for
      a
      period of time sufficient to allow for any anticipated recovery in market
      value.





Revenue
      recognition - We follow the guidance of the securities and Exchange Commission's
      Staff Accounting Bulletin 104 for revenue recognition. In general, we record
      revenue when persuasive evidence of an arrangement exists, services have been
      rendered or product delivery has occurred, the sales price to the customer
      is
      fixed or determinable, and collectability is reasonably assured. The following
      policies reflect specific criteria for our revenues stream:





Consulting
      income is recognized on a straight-line basis over the period of the service
      agreement. Deferred revenues relates to consulting revenues that is being
      recognized over the period of the service agreement.




31




Substantially
      all of the services we provide are paid in common shares issued by our clients.
      These instruments are classified as marketable equity securities on the
      consolidated balance sheet, if still held at the financial reporting date.
      These
      instruments are stated at fair value in accordance with the provision of
      Statement of Financial Accounting Standards No. 115,"Accounting for Certain
      Investments in Debt and Equity Securities" (SFAS No. 115) and EITF 00-8
      "Accounting by a grantee for an equity instrument to be received in conjunction
      with providing goods or services." Primarily all of the equity instruments
      are
      received from small public companies.





RESULTS
      OF OPERATIONS





YEAR
      ENDED SEPTEMBER 30, 2007 COMPARED THE YEAR ENDED SEPTEMBER 30, 2006




**2007**
                
                
                **2006**
                
                
                $
                    Change
                
                
                Change
                    (+/-)Net
                    revenues
                
                $
                3,305,000
                
                $
                6,750,229
                
                $
                (3,71,229
                )
                
                (55
                %Operating
                    expenses:Cost
                    of services performed
                
                
                659,066
                
                
                318,916
                
                
                340,
                    150
                
                
                106.7
                %Consulting
                    expense
                
                
                1,195,147
                
                
                137,506
                
                
                1,057,641
                
                
                769.2
                %Salaries
                    and non-cash compensation
                
                
                5,084,451
                
                
                965,803
                
                
                4,118,648
                
                
                426.5
                %Impairment
                    loss on deferred contract cost
                
                
                632,357
                
                
                -
                
                
                632,357
                
                
                100
                %Other
                    selling and general and administrative expenses
                
                
                1,301,745
                
                
                652,219
                
                
                649,526
                
                
                99.6
                %Total
                    operating expenses
                
                
                8,872,766
                
                
                2,074,444
                
                
                6,798,322
                
                
                327.7
                %Income
                    (loss )from operations
                
                
                (5,837,766
                )
                
                4,675,785
                
                
                (10,513,551
                )
                
                (224.6
                %)Other
                    income (expense):Gain
                    (loss) on sale of marketable securities
                
                
                154,020
                
                
                1,046,916
                
                
                (892,896
                )
                
                (85.3
                %)Loss
                    on impairment of none marketable securities
                
                
                (26,000
                )
                
                (20,300
                )
                
                (5,700
                )
                
                28.1
                %Unrealized
                    gain on trading securities
                
                
                547,811
                
                
                -
                
                
                (547,811
                )
                
                100
                %Settlement
                    expense
                
                
                (184,540
                )
                
                -
                
                
                -
                
                
                100
                %Interest
                    income
                
                
                6,631
                
                
                17,351
                
                
                (10,720
                )
                
                (61.8
                %)Interest
                    expense- related party
                
                
                (3,287
                )
                
                -
                
                
                (3,287
                )
                
                (100
                %)Total
                    other income (expense)
                
                
                494,635
                
                
                1,043,967
                
                
                (549,332
                )
                
                (52.3
                %)Income
                    (loss) before discontinued operations, income taxes, and minority
                    interest
                
                
                (5,434,131
                )
                
                5,719,752
                
                
                (11,062,883
                )
                
                (193.4
                %)Total
                    gain (loss) from discontinued operations
                
                
                -
                
                
                246,501
                
                
                (246,501
                )
                
                (100
                %)Provision
                    for income taxes
                
                
                -
                
                
                -
                
                
                -
                
                
                -Minority
                    interest in income (loss) of subsidiary
                
                
                (477,453
                )
                
                (3,056,647
                )
                
                2,579,194
                
                
                (84.4
                %)Net
                    income (loss)
                
                
                (5,820,584
                )
                
                2,909,606
                
                
                (8,730,190
                )
                
                (300.1
                %)




32




REVENUES





For
      the
      year ended September 30, 2007, we had consolidated revenues of $3,035,000 as
      compared to $6,750,220 for the year ended September 30, 2006, an decrease of
      $3,715,220 or 55%. The decrease in revenue is primarily attributable to a Share
      Exchange Agreement closed on June 29, 2007 by and among SPEH whereby GEP, our
      51%-owned subsidiary, received 16,750,000 restricted common shares of SPEH
      for
      services performed in helping Gold Horse facilitate the merger with SPEH and
      for
      other business development services. We valued these shares at $.18 per share
      based on an accredited business valuation performed by an independent party.
      Accordingly, we recorded revenue of $3,015,000 related to the receipt of these
      restricted marketable equity securities. These revenues do not represent
      recurring revenues. As set forth above, GEP immediately distributed 4,857,500
      shares of SPEH valued at $874,350 to the minority members of GEP which
      represented 29% of the shares received as compensation for our services.
      Additionally, in connection with a loan of $325,000 to us made by a former
      officer of the Company which is secured by additional stock we own and due
      on
      December 31, 2007, we distributed 3,350,000 shares of SPEH common stock valued
      at $603,000 to him as compensation expense. Accordingly, we own the remaining
      8,542,500 shares of SPEH which we received as compensation for our services.
      As
      described later in this report, there are no assurances when or if we will
      be
      able to liquidate these shares to generate cash to fund our
      operations.





OPERATING
      EXPENSES





For
      the
      year ended September 30, 2007, operating expenses which  includes
      cost of services performed, consulting fees, compensation expense,  professional
      fees and other selling, general and administrative, were $8,872,766 compared
      to
      $2,074,444 for the year ended September 30, 2006, an increase of $6,798,322
      or
      327,7%.





The
      increase in operating expenses was primarily attributable to the
      following:





*
      Our
      cost of services performed increased to $659,006 for the year ended September
      30, 2007 as compared to $318,916 for the year ended September 30, 2006. The
      increase in the cost of services was primarily attributable to increase in
      direct costs incurred in rendering the services to our client companies, which
      include marketing, travel, legal, accounting fees, and third party consultants
      fees directly related to SPEH.





*
      Our
      consulting expense increased to $1,195,147 for the year ended September 30,
      2007
      from $137,506 for the year ended September 30, 2006, an increase of $1,057,641
      or 769.2%. The increase was due to an increase in the use of consultants to
      actively pursuit small to medium size China -base client companies for business
      opportunities as well as corporate financing activities. For the year ended
      September 30, 2007, stock-based consulting expense amounted to $281,345 as
      compared to $122,581 in fiscal 2006. Cash payments to consultants amount to
      $894,828 as compared to $14,925 in fiscal 2006.





*
      Compensation expense, which includes salaries and stock-based compensation
      expense, increase to $5,084,451
      for the year ended September 30, 2007 from $965,803 for year ended September
      30,
      2006, an increase of $4,118,648 or 426.5%. The increase in salaries and
      stock-based compensation expense was attributable to-





1.
            An
                increase in the amount of stock-based compensation of $2,608,128
                in fiscal
                2007 as compared to the fiscal 2006 of $851,301 recognized from
                amortization of deferred compensation in connection with the granting
                of
                stock options to officers, employees, and directors in fiscal
                2007.




33




2.
            In
                fiscal 2007, we paid a bonus to two former officers of the Company
                in the
                aggregate amount of $733,506 consisting of a distribution of 653,690
                shares (326,845 each) of common stock of LTUS held by the Company
                to the
                two former officers with a fair value of $653,690 and cash payments
                of
                $79,816. We also paid a compensation expense in the aggregate amount
                of
                $136,750 consisting of a distribution of 2,200,001shares of common
                stock
                of Dragon Capital Group (DRGV) with a fair value of $66,000 and a
                cash
                payments of $42,075.





3.
            In
                connection with a loan of $325,000 to us made by a former officer
                of the
                Company which is secured by additional stock we own and due on December
                31, 2007, we distributed 3,350,000 shares of SPEH common stock valued
                at
                $603,000 to him as compensation
                expense.





4.
            We
                recorded compensation expense of $435,269 to a former director in
                connection with the distribution of restricted marketable equity
                securities to this former director in excess of his basis in GEP.
                On April
                13, 2007, our then-current board of directors unanimously consented
                that
                GEP member Shaohua Tan, Inc., owned by a former director of the Company,
                shall bear no direct, indirect or personal expenses for managing
                the GEP
                program and shall be reimbursed, on a timely basis, for any charges
                that
                he bears and incurs. Accordingly, we recorded compensation expense
                of
                $435,269 which represents the distribution of his proportionate percentage
                of restricted common stock received by GEP for services rendered
                in excess
                of the former director's basis in
                GEP.




5.
            We
                incurred an increase in overall salary expense of 10% for our executive
                officers, and we reduced stock-based compensation by $48,119 due
                to a
                one-time cancellation of common stock. At September 30, 2007, we
                had
                deferred compensation of $28,750. Included in our compensation expense
                for
                fiscal 2007 is approximately $718,000 in cash compensation, approximately
                $2,608,000 in stock-based compensation, and approximately $ 1,758,000
                in
                distribution of our investment stocks as compared to approximately
                $115,000, $851,000 and $0 in fiscal
                2006





*We
      recorded impairment loss on deferred contract costs of $608,357 in fiscal 2007.
      In an effort to preserve and enhance stockholder value, we sought
      to
      identify, evaluate and consider various companies and compatible or alternative
      business opportunities pursuant to which we would acquire a target company
      with
      an operating business and continue the acquired company’s business as a
      publicly-held entity. We identified the target company, Laiyang Jiangbo, in
      May
      2007. In September 2007, we determined to complete the Laiyang Jiangbo
      acquisition and subsequently decided to cease our business development and
      marketing operations. We deemed the carrying value of our deferred contract
      costs was not recoverable. As a result, we wrote down the carrying value of
      deferred acquisition cost of $608,357 and recorded this expense as an impairment
      loss on deferred contract cost.





*
      Other
      selling, general and administrative expenses increased to $1,301,745 for the
      year ended September 30, 2007 from $652,219 for the year ended September 30,
      2006, an increase of $27,086 or 4%. Other selling, general and administrative
      expenses included the following:




2007
              
              2006Professional
                  fees
              
              $
              816,021
              
              $
              250,171Rent
              
              
              55,214
              
              
              50,536Travel
                  and entertainment
              
              
              159,555
              
              
              88,883Other
                  selling, general and administrative
              
              
              264,956
              
              
              262,629Total
              
              $
              1,295,746
              
              $
              652,219




In
      fiscal
      2006, professional fees increased by $610,850 or 297.7% due to an increase
      in
      legal fees of $254,000 related to general corporate matters, acquisition,
      litigation matter against two former employees, and other legal matters in
      which
      we are the plaintiff, and an increase in accounting and auditing fee of
      approximately $378,000 primarily due to acquisition related activities.





Rent
      expense increase to $55,214 for the year ended September 30, 2007 from $50,536
      for year ended September 30, 2006, a slight increase decrease of $4,678 or
      9.3%.
      The increase was due to increase in rate related charges.




34




During
      the year ended September 30, 2007, travel related expenses  increased
      by $70,672 or 79.5% as compared to fiscal 2006 and was attributable to increase
      in executives’ travel to China.





Other
      selling, general and administrative expenses include office  expenses
      and supplies, telephone and communications, and other expenses. In  fiscal
      2007, other selling, general and administrative expenses amounted to $264,956
      compared to $262,629 during fiscal 2006, a slight increase of $2,327 or 0.9%.





GAIN
      FROM
      SALE/DISPOSAL OF MARKETABLE SECURITIES





In
      fiscal
      2007, we recorded a gain from the sale of marketable securities of $154,020
      compared to $1,046,916 for the year ended September 30, 2006. The gain from
      the
      sale of marketable securities relates to marketable securities that we had
      previously received for business development services rendered by us and which
      we had previously valued and recorded as revenue over the contract period.
      The
      gain represents the difference in the sale price of the marketable securities
      and the fair value of services provided which was previously recorded as
      revenue. Additionally, in connection with services previously rendered, we
      were
      granted warrants to purchase marketable securities which we exercised at a
      price
      less than fair market value. These marketable securities were sold and
      contributed to the gain from sale of marketable securities.





UNREALIZED
      GAIN ON TRADING SECURITIES





We
      recorded an unrealized gain on trading securities of $547,811 for the year
      ended
      September 30, 2007 as compared to $0 for the year ended September 30, 2006.
      The
      unrealized gain on trading securities relates to marketable securities that
      we
      had previously received for business development services rendered by us and
      which we had previously valued and recorded as revenue over the contract period.
      The gain represents the difference between the fair values at the end of each
      reporting period.





LOSS
      ON
      IMPAIRMENT OF MARKETABLE SECURITIES





In
      fiscal
      2007, we recorded an impairment loss of $26,000 as compared to $20,300 in 2006
      related to the reduction in the fair market value of certain marketable equity
      securities that management deemed to be other than temporary. These securities
      represented shares which we had received as compensation for our services in
      fiscal 2004. At the time of receipt we recognized revenue of $22,000 related
      to
      these securities





INTEREST
      INCOME





Interest
      income was $6,631for the year ended September 30, 2006 as compared to interest
      income of $17,351for the year ended September 30, 2005, a decrease of $10,720
      or
      61.8%. The decrease was attributable to an decrease in interest-bearing cash
      balances.





INCOME
      BEFORE DISCONTINUED OPERATIONS, INCOME TAXES AND MINORITY INTEREST





For
      the
      year ended September 30, 2007 our loss before discontinued operations, income
      taxes and minority interest is $5,343,131 as compared to an income before
      discontinued operations, income taxes and minority interest of $5,719,752 for
      the year ended September 30, 2006, a decrease of $11,062,883 as a result of
      decrease net revenues and increased expenses.





GAIN
      (LOSS) FROM DISCONTINUED OPERATIONS





For
      the
      year ended September 30, 2006, we recorded a gain from discontinued operations
      of $9,124 associated with the discontinuation of our Chorry subsidiary which
      was
      sold on February 14, 2006 and from Extrema.





On
      November 2, 2005, we entered into a stock purchase agreement with Dragon
      Ventures (OTC: DRGV), a Nevada public corporation, for the sale of our
      majority-owned subsidiary, Chorry Technology Development Co., Inc (“Chorry”). In
      connection with this agreement, we delivered 100% of our shares in Chorry,
      representing our 80% ownership of that subsidiary, to DRGV, we received
      17,159,965 common shares of DRGV valued at closing at approximately $463,000
      calculated at the average closing price of $.027 per share on December 15,
      2005.
      In connection with the sale of Chorry, for the year ended September 30, 2006,
      we
      reported a gain from the sale of Chorry of $237,377.





The
      following table sets forth for the fiscal years indicated selected  financial
      data of our discontinued operations.





35




2006Revenue
            
            $
            7,398,358Cost
                of sales
            
            
            7,259,500Gross
                profit
            
            
            138,858Operating
                and other non-operating expenses
            
            
            129,734Gain
                (loss) from discontinued operations
            
            
            9,124Gain
                (loss) from disposal of discontinued operations
            
            
            237,377Total
                gain (loss) from discontinued operations
            
            
            246,501




Minority
      interest





For
      the
      year ended September 30, 2007, we reported a minority interest expense of
      $477,453 as compared to minority interest income of $3,056,647 for the year
      ended September 30, 2006. The minority interest is attributable to GEP's
      minority LLC members, and had the effect of reducing our net
      income.





OVERALL





We
      reported a net loss for the year ended September 30, 2007 of $5,820,584 compared
      to a net loss for the year ended September 30, 2005 of $2,909,606. This
      translates to an overall basic and diluted per-share loss available
      to shareholders of $.07 for the year ended September 30, 2007, respectively,
      compared to basic and diluted per-share income of $.04 for year ended September
      30, 2006.





LIQUIDITY
      AND CAPITAL RESOURCES





Liquidity
      is the ability of a company to generate funds to support its current and future
      operations, satisfy its obligations and otherwise operate on an ongoing basis.
      The following table provides certain selected balance sheet comparisons between
      September 30, 2007 and September 30, 2006:





September
                30
            
            2007
                v.s.
            
            %
                Change2007
            
            2006
            
            2006
            
            (+/-)Working
                capital
            
            
            (1,106,424
            )
            
            868,915
            
            
            (1,975,339
            )
            
            -227.3
            %Cash
            
            
            534,950
            
            
            592,610
            
            
            (57,660
            )
            
            -9.7
            %Marketable
                equity securities, at market
            
            
            370,330
            
            
            601,565
            
            
            (231,235
            )
            
            -38.4
            %Deferred
                contract cost
            
            
            
            
            
            100,503
            
            
            (100,503
            )
            
            -100.0
            %Total
                current assets
            
            
            945,900
            
            
            1,301,408
            
            
            (355,508
            )
            
            -27.3
            %Restricted
                marketable securities, at market
            
            
            1,746,809
            
            
            4,184,917
            
            
            (2,438,108
            )
            
            -58.3
            %Restricted
                marketable securities, at market- related party
            
            
            -
            
            
            1,684,224
            
            
            (1,684,224
            )
            
            -100.0
            %Other
                receivable- related party
            
            
            3,250,000
            
            
            -
            
            
            3,250,000
            
            
            100.0
            %Total
                assets
            
            
            5,949,792
            
            
            7,231,773
            
            
            (1,281,981
            )
            
            -17.7
            %Loan
                payable- related parties
            
            
            515,000
            
            
            -
            
            $
            515,000
            
            
            100.0
            %Accounts
                payable and accrued expense
            
            
            1,085,323
            
            
            207,504
            
            
            877,819
            
            
            423.0
            %Liabilities
                from discontinued operationgs
            
            
            120,709
            
            
            150,709
            
            
            (30,000
            )
            
            -19.9
            %Due
                to related party
            
            
            331,292
            
            
            75,000
            
            
            256,292
            
            
            341.7
            %Total
                current liabiltiies
            
            
            2,052,324
            
            
            433,213
            
            
            1,619,111
            
            
            373.7
            %Minority
                interest
            
            
            121,063
            
            
            1,577,395
            
            
            (1,456,332
            )
            
            -92.3
            %Total
                stockholders' equity
            
            
            3,776,405
            
            
            5,221,165
            
            
            (1,444,760
            )
            
            -27.7
            %





36





At
      September 30, 2007, we had cash on hand of approximately $545,000 and working
      capital of approximately $(1,106,000). Our current assets primarily include
      approximately $370,000 in investments in trading marketable equity securities.
      Our current liabilities primarily consist of $1,085,000 of accounts payable
      and
      accrued expenses, $331,000 due to a former director for services rendered,
      and
      $121,000 of liabilities from discontinued operations. Subsequent to September
      30, 2007, we effectively sold all of our investments in trading marketable
      equity securities to satisfy our accounts payable and accrued expense
      obligation.





At
      September 30, 2007, our marketable equity securities consist of the
      following:




Description
              
              Fair
                  Market ValueUn-restricted
                  marketable equity securities:Lotus
                  Pharmaceuticals Inc.
              
              $
              320,621Dragon
                  International Corp
              
              
              13,112Com-guard.com,
                  Inc.
              
              
              140Other
                  mutual funds
              
              
              36,457$
              370,330Restricted
                  marketable equity securities:Gold
                  Horse International (GHII, formally SPEH)
              
              $
              1,474,650Dragon
                  Capital Group (DRGV.PK)
              
              
              272,159$
              1,746,809





While
      the
      value of investments in restricted marketable equity securities held for sale
      represent substantially all of our assets, we are not presently able to
      liquidate these securities and generate cash to pay our operating expenses.
      Under Federal securities laws these securities cannot be readily resold by
      us
      generally absent a registration of those securities under the Securities Act
      of
      1933. We cannot predict when, if ever, that we will be able to liquidate those
      securities or the amount of proceeds we can expect to receive from the sale.
      While under generally accepted accounting principles we are required to reflect
      the fair value of these securities on our balance sheet, they are not readily
      convertible into cash. We have met our obligations from cash proceeds received
      from the sale of marketable equity securities. Although proceeds from sales
      of
      marketable equity securities have allowed us to meet our obligations in the
      recent past, there can be no assurances that our present methods of generating
      cash flow will be sufficient to meet future obligations. Historically, we have,
      from time to time, been able to raise additional capital from sales of our
      capital stock, but there can be no assurances that we will be able to raise
      additional capital in this manner.





Net
      cash
      used in operations was $2,054,137 for the year ended September 30, 2007 as
      compared to net cash used in operations of $914,353 for the year ended September
      30, 2006. For the year ended September 30, 2007, we used cash to fund our net
      loss of $5,820,584 and recorded revenues from the receipt of restricted
      marketable securities for services of $3,035,000, add back of non-cash items
      such as stock-based compensation and consulting expense of $3,015,000,
      depreciation and amortization expense of $17,561, loss on impairment of deferred
      contract cost of $608,357, loss on impairment of cost-method investment of
      $26,000, minority interest expense of $154,020, compensation expense from
      distribution of restricted marketable equity securities of $1,691,856 as well
      as
      changes in assets and liabilities of $1,608,658 offset by gain on sale of
      marketable securities of $154,020, unrealized gain on trading securities of
      $547,811. For the year ended September 30, 2006, we used cash to fund our net
      income of $2,909,606 ($2,663,105 from continuing operations and $246,501 from
      discontinued operations) and recorded revenues from the receipt of restricted
      marketable securities for services of $6,736,896, add back of non-cash items
      such as stock-based compensation of $981,672, depreciation and amortization
      expense of $7,915, loss on impairment of marketable securities of $20,300,
      loss
      on impairment of cost-method investment of $34,000, minority interest expense
      of
      $3,056,647 as well as changes in assets and liabilities of $113,488 offset
      by
      gain on sale of marketable securities of $1,046,916.




37




Net
      cash
      provided by investing activities for the year ended September 30, 2007 was
      $,1849876 as compared to net cash used in investing activities for the year
      ended September 30, 2006 of $812,976. For the year ended September 30, 2007,
      we
      received cash from the sales of marketable securities of $1,851,796 as compared
      to $1,413,307 in 2006 In fiscal 2006, we exercised stock warrants and purchased
      marketable securities for $600,331.





Net
      cash
      provided by financing activities was $176,601 for the year ended September
      30,
      2007 as compared to net cash provided by financing activities of $675,930 for
      the year ended September 30, 2006. For the year ended September 30, 2007, net
      cash provided by financing activities related to contributions from LLC members
      of $176,601as compared to net cash provided by financing activities related
      to
      proceeds received from the exercise of stock options and warrants of $548,380
      and contributions from LLC members of $127,550 in fiscal 2006.





We
      currently have no material commitments for capital expenditures.





Our
      future growth is dependent on our ability to raise capital for working capital
      purposes and expansion, and to seek additional revenue sources. In order to
      fund
      our GEP contracts or if we decide to pursue any acquisition opportunities or
      other expansion opportunities, we may need to raise additional capital, although
      there can be no assurance such capital-raising activities would be successful.
      There are no assurances that such capital will be available to us when needed
      or
      upon terms and conditions which are acceptable to us. If we are able to secure
      additional working capital through the sale of equity securities, the ownership
      interests of our current stockholders will be diluted. If we raise additional
      working capital through the issuance of debt or additional dividend paying
      securities our future interest and dividend expenses will increase. If we are
      unable to secure additional working capital as needed, our ability to grow
      our
      sales or meet our operating obligations as they become due and continue our
      business and operations could be in jeopardy and we could be forced to limit
      or
      cease our operations.





RELATED
      PARTY TRANSACTIONS





Distribution
      of marketable equity securities





On
      May
      21, 2007, our then-current board of directors approved the distribution of
      an
      aggregate of 653,690 shares (326,845 each) of common stock of LTUS held by
      us to
      two former officers of the Company. In connection with the distribution of
      the
      LTUS shares, we recorded compensation expense of $653,690, which was based
      on
      the fair market value of the LTUS shares on the distribution date.





On
      June
      29, 2007, in connection with the receipt of 16,750,000 common shares of SPEH
      for
      services rendered, we immediately distributed 4,020,000 of these shares to
      a
      company that owns 24% of GEP II, our partially-owned subsidiary and is owned
      by
      Shaohua Tan, a former director of the Company. We also immediately distributed
      837,500 of these shares to a member of GEP II that owns 5% of GEP II.





In
      August
      2007, we distributed 2,200,001 shares of Dragon Capital Group Corp. (“DRGV”) to
      one of our former directors for services provide to us. The shares were valued
      at $66,002 or $0.03 per share.





During
      the year ended September 30, 2007, we distributed 3,469,067 shares of LTUS
      to
      China West, LLC, a member of GEP, an LLC organized in the State of Florida,
      valued at $1,850,891.





Other
      receivables - related party





In
      connection with a $325,000 secured promissory note issued to the former
      director/officer and in June 2007 (see “Loan payable” section below), 3,250,000
      shares of Lotus Pharmaceuticals, Inc.'s ("LTUS") common stock owned by us are
      held in escrow account in the name of the former director/officer. The LTUS
      shares were valued at $3,250,000 or $1 per share at September 30, 2007 and
      are
      recorded as other receivable-related party in the accompanying consolidated
      balance sheet since the shares are in the name of the former director/officer.
      In December 2007, we placed $325,000 loan repayment fund in a trust account
      and
      notified the former director/officer that we intended to repay the loan amount
      in full. The former director /officer has since declined to receive the $325,000
      loan repayment and refused to return the 3,250,000 LTUS shares in escrow and
      subsequently filed a complaint against us and our former CEO for breach of
      contract. In his complaint, the former director/officer demanded that we issue
      an additional 740,000 shares to him and allow him to exercise the options issued
      to him in 2007 with a promissory note and agree to register his shares, or, in
      the alternative, damages. We believe the claims of the former director/officer
      are without merit and the possibility of any adverse decision to the Company,
      with any contingent liability, to be remote, as the term is used in FASB 5 *Accounting
      for Contingencies* .
      As
      such, we have not accrued a related loss contingency in the accompanying
      financial statements pursuant to FAS 5.




38




Due
      to
      related party





At
      September 30, 2007, we owed $331,292 to Shaohua Tan, a former director, for
      services rendered during the year ended September 30, 2007.





Loan
      payable





On
      June
      29, 2007, we issued a $325,000 secured promissory note to one of our former
      officers in connection with a loan to provide us with cash to satisfy certain
      contractual obligations under our agreement with the Jin Ma Companies. The
      principal balance is and payable on December 31, 2007. In lieu of interest,
      the
      former officer received 20% interest in the capital stock position in SPEH
      obtained by GEP. Accordingly, this former officer received 3,350,000 shares
      of
      SPEH common stock obtained by GEP. We valued these shares at $0.18 per share
      or
      $603,000 and for the six months ended June 30, 2007 recorded as compensation
      expense of $603,000. The note is secured by 3,250,000 shares of Lotus
      Pharmaceuticals, Inc.'s ("LTUS") common stock owned by us, which are held in
      escrow.





On
      July
      31, 2007, our 71% owned subsidiary, GEP II, issued a promissory note to a
      member of GEP II in the amount of $190,000 for working capital purposes. The
      note bears interest at 10% per annum and is due on July 31, 2008. Upon receipt
      by us of shares or other equity distribution in connection with the reverse
      merger transaction with a certain GEP II client and distribution of 24.5% of
      the
      reverse merger distribution to the note holder in accordance with GEP II
      operating agreement, our obligation under this note shall terminate. The note
      is
      secured by 2,000,000 shares of our common stock which may be adjusted from
      time
      to time.





Other





During
      the year ended September 30, 2007, we incurred $77,148 in accounting fees to
      a
      company owned by Mr. Adam Wasserman, our former chief financial officer for
      accounting services rendered related to contract clients of the various GEP
      LLCs.





On
      January 22, 2007, we entered into a consulting agreement with Venture Spark,
      LLC, a company owned by Robert D. Cain, a member of our board of directors.
      Venture Spark, LLC agreed to develop a business prospectus and other materials
      for us to be used in business development activities. In connection with this
      agreement, we paid Venture Sparks, LLC $18,000. Additionally, on April 13,
      2007,
      we entered into a one-year Financing Representation Agreement with this director
      for financing and financial advisory services. In connection with this
      agreement, the director is entitled to success fees of 5% of the financing
      and
      warrants to purchase our common stock. In August, 2007, we distributed 8,000
      shares of LTUS to Mr. Cain for services provided to us and recorded $8,000
      consulting expense accordingly.





On
      April
      13, 2007, our then-current board of directors unanimously consented that GEP
      member Shaohua Tan, Inc., owned by our former director Dr. Joshua Tan shall
      bear
      no direct, indirect or personal expenses for managing the GEP program and shall
      be reimbursed, on a timely basis, for any charges that he bears and incurs.
      Accordingly, we recorded compensation expense of $435,269 which represents
      the
      distribution of his proportionate percentage of restricted common stock received
      by GEP for services rendered in excess of the former director's basis in
      GEP.




RECENT
      ACCOUNTING PRONOUNCEMENTS





The
      Financial Accounting Standards Board has recently issued several new accounting
      pronouncements:




39




In
      February 2006, the FASB issued Statement of Financial Accounting Standard No.
      155, "Accounting for Certain Hybrid Instruments" ("SFAS 155"). FASB 155 allows
      financial instruments that have embedded derivatives to be accounted for as
      a
      whole (eliminating the need to bifurcate the derivative from its host) if the
      holder elects to account for the whole instrument on a fair value basis. This
      statement is effective for all financial instruments acquired or issued after
      the beginning of an entity's first fiscal year that begins after September
      15,
      2006.




In
      July
      2006, the FASB issued Interpretation No. 48 (FIN No. 48), "Accounting for
      Uncertainty in Income Taxes." This interpretation requires recognition and
      measurement of uncertain income tax positions using a "more-likely-than-not"
      approach. FIN No. 48 is effective for fiscal years beginning after December
      15,
      2006. Our management is still evaluating what effect this will have on the
      our
      financial statements. In September 2006, the SEC issued SAB 108, "Considering
      the Effects of Prior Year Misstatements when Quantifying Misstatements in
      Current Year Financial Statements." This SAB provides guidance on the
      consideration of the effects of prior year misstatements in quantifying current
      year misstatements for the purpose of a materiality assessment. SAB 108
      establishes an approach that requires quantification of financial statement
      errors based on the effects of each of the company's financial statements and
      the related financial statement disclosures. SAB 108 permits existing public
      companies to record the cumulative effect of initially applying this approach
      in
      the first year ending after November 15, 2006 by recording the necessary
      correcting adjustments to the carrying values of assets and liabilities as
      of
      the beginning of that year with the offsetting adjustment recorded to the
      opening balance of retained earnings. Additionally, the use of the cumulative
      effect transition method requires detailed disclosure of the nature and amount
      of each individual error being corrected through the cumulative adjustment
      and
      how and when it arose. We do not anticipate that SAB 108 will have a material
      impact on our financial statements.





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair value
      as
      used in numerous accounting pronouncements, establishes a framework for
      measuring fair value in generally accepted accounting principles and expands
      disclosure related to the use of fair value measures in financial statements.
      This Statement is to be effective for our financial statements which will be
      issued in 2008; however, earlier application is encouraged. We are currently
      evaluating the timing of adoption and the impact that adoption might have on
      its
      financial position or results of operations.





In
      February 2007, the FASB issued FAS No. 159, "The Fair Value Option for Financial
      Assets and Financial Liabilities - Including an amendment of FASB Statement
      No.
      115", ("FAS 159") which permits entities to choose to measure many financial
      instruments and certain other items at fair value at specified election dates.
      A
      business entity is required to report unrealized gains and losses on items
      for
      which the fair value option has been elected in earnings at each subsequent
      reporting date. This statement is expected to expand the use of fair value
      measurement. FAS 159 is effective for financial statements issued for fiscal
      years beginning after November 15, 2007, and interim periods within those fiscal
      years.





In
      December 2007 FASB issued FAS 141(R) “Business Combinations” and FAS
      160 “Noncontrolling Interests in Consolidated Financial Statements”  These
      statements are effective for fiscal years, and interim periods within those
      fiscal years in case of FAS 160, beginning on or after December 15,
      2008.  Earlier adoption is prohibited.   Together these
      statements revise the accounting rules with respect to accounting for
      business combinations. Specifically, the objective of FAS 141(R) is to improve
      the relevance, representational faithfulness and comparability of the
      information that the reporting entity provides in its financial reports about
      a
      business combination and its effects.  This statement thus establishes
      principles and requirements for how the acquirer:





·
            Recognizes
                and measures in its financial statements the identifiable assets
                acquired,
                the liabilities assumed, and any noncontrolling interest in the
                acquiree





·
            Recognizes
                and measures the goodwill acquired in the business combination or
                a gain
                from a bargain purchase





·
            Determines
                what information to disclose to enable users of the financial statements
                to evaluate the nature and financial effects of the business
                combination.




The
      objective of FAS 160 is to improve the relevance, comparability, and
      transparency of the financial information that a reporting entity provides
      in
      its consolidated financial statements by establishing accounting and reporting
      standards that require:





40




·
            The
                ownership interests in subsidiaries held by parties other than the
                parent
                be clearly identified, labeled, and presented in the consolidated
                statement of financial position within equity, but separate from
                the
                parent’s equity.





·
            The
                amount of consolidated net income attributable to the parent and
                to the
                noncontrolling interest be clearly identified and presented on the
                face of
                the consolidated statement of
                income.





·
            Changes
                in a parent’s ownership interest while the parent retains its controlling
                financial interest in its subsidiary be accounted for consistently.
                A
                parent’s ownership interest in a subsidiary changes if the parent
                purchases additional ownership interests in its subsidiary or if
                the
                parent sells some of its ownership interests in its subsidiary. It
                also
                changes if the subsidiary reacquires some of its ownership interests
                or
                the subsidiary issues additional ownership interests. All of those
                transactions are economically similar, and this Statement requires
                that
                they be accounted for similarly, as equity
                transactions.





·
                When
                    a subsidiary is deconsolidated, any retained noncontrolling equity
                    investment in the former subsidiary be initially measured at
                    fair value.
                    The gain or loss on the deconsolidation of the subsidiary is
                    measured
                    using the fair value of any noncontrolling equity investment
                    rather than
                    the carrying amount of that retained
                    investment.





·
            Entities
                provide sufficient disclosures that clearly identify and distinguish
                between the interests of the parent and the interests of the
                noncontrolling owners.





Together
      these statements are not currently expected to have a significant impact on
      the
      entity consolidated financial statements.  A significant impact may however
      be realized on any future acquisition(s) by this company.  The amounts
      of such impact cannot be currently determined and will depend on the nature
      and
      terms of such future acquisition(s), if any.





Other
      accounting standards that have been issued or proposed by the FASB or other
      standards-setting bodies that do not require adoption until a future date are
      not expected to have a material impact on the consolidated


financial
      statements upon adoption.




**ITEM
      7. FINANCIAL STATEMENTS**




See
      "Index to Financial Statements" beginning on page F-1 below for our financial
      statements included in this annual report on Form 10-KSB.




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




There
      have been no changes in or disagreements with our independent auditors. We
      engaged our independent auditors, Sherb & Co., LLP, on May 11,
      2002.




**ITEM
      8A. CONTROLS AND PROCEDURES**




Our
      Chief
      Executive Officer and Chief Financial Officer (collectively, the "Certifying
      Officers") are responsible for establishing and maintaining disclosure controls
      and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
      Exchange Act of 1934, as amended) for us. Based upon such officers' evaluation
      of these controls and procedures as of a date as of the end of the period
      covered by this annual report, and subject to the limitations noted hereinafter,
      the Certifying Officers have concluded that our disclosure controls and
      procedures are effective to ensure that information required to be disclosed
      by
      us in this annual report is accumulated and communicated to management,
      including our principal executive officers as appropriate, to allow timely
      decisions regarding required disclosure.




The
      Certifying Officers' evaluation has also concluded that there have been no
      occurrences during the fourth quarter of the fiscal year covered by this annual
      report that has materially affected, or is reasonably likely to materially
      affect, our internal control over financial reporting (as defined in Rule
      13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934).




Our
      management, including each of the Certifying Officers, does not expect that
      our
      disclosure controls or our internal controls will prevent all error and fraud.
      A
      control system, no matter how well conceived and operated, can provide only
      reasonable, not absolute, assurance that the objectives of the control system
      are met. In addition, the design of a control system must reflect the fact
      that
      there are resource constraints, and the benefits of controls must be considered
      relative to their costs. Because of the inherent limitations in all control
      systems, no evaluation of controls can provide absolute assurance that all
      control issues and instances of fraud, if any, within a company have been
      detected. These inherent limitations include the realities that judgments in
      decision-making can be faulty, and that breakdowns can occur because of simple
      error or mistake. Additionally, controls can be circumvented by the individual
      acts of some persons, by collusion of two or more people or by management
      override of the control. The design of any systems of controls also is based
      in
      part upon certain assumptions about the likelihood of future events, and there
      can be no assurance that any design will succeed in achieving its stated goals
      under all potential future conditions. Over time, control may become inadequate
      because of changes in conditions, or the degree of compliance with the policies
      or procedures may deteriorate. Because of these inherent limitations in a
      cost-effective control system, misstatements due to error or fraud may occur
      and
      not be detected.




41




**ITEM
      8B. OTHER INFORMATION**




None.




**PART
      III**




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




**Current
      Management**




The
      following table sets forth the name, age and position of each of our directors,
      executive officers and significant employees:




**Name**
            
            **Age**
            
            **Position**Cao
                Wubo
            
            43
            
            Chief
                Executive Officer and Chairman of the BoardElsa
                Sung
            
            34
            
            Chief
                Financial OfficerXu
                Haibo
            
            36
            
            Vice
                President, Chief Operating Officer and DirectorDong
                Lining
            
            47
            
            Vice
                President, Director of TechnologyYang
                Weidong
            
            36
            
            Vice
                President, Director of SalesXin
                Jingsheng
            
            52
            
            Director
                of EquipmentXue
                Hong
            
            39
            
            ControllerFeng
                Xiaowei
            
            40
            
            DirectorHuang
                Lei
            
            26
            
            DirectorGe
                Jian
            
            36
            
            DirectorZhang
                Yihua
            
            26
            
            DirectorRodrigo
                Arboleda
            
            65
            
            DirectorRobert
                Cain
            
            45
            
            Director




**Cao
      Wubo,** age 43,
      has served as the chairman and general manager of Laiyang Jiangbo since 2003,
      and shall serve as Chairman and CEO of the combined entity. Mr. Cao was born
      in
      September 1965 and is of Chinese nationality. He graduated from Tsinghua
      University with a masters degree. From 1981 to 1988, Mr. Cao completed his
      military service in the Chinese Army, during which he was sales section director
      in Laiyang Yongkang Pharmaceutical Factory. From 1988 to 1998, he continued
      working in Laiyang Yongkang Pharmaceutical Factory as Marketing Manager. From
      1998 until 2003, he was general manager of Laiyang Jiangbo Pharmacy Co. Ltd.
      and
      Laiyang Jiangbo Chinese and Western Pharmacy Co. Ltd. Since 2003, he has been
      chairman and general manager of Laiyang Jiangbo Pharmaceutical Co. Ltd. He
      is
      the founder of Laiyang Jiangbo Pharmacy Co. Ltd., Laiyang Jiangbo Chinese and
      Western Pharmacy Co. Ltd., and Laiyang Jiangbo Pharmaceutical Co.
      Ltd.




**Elsa
      Sung,** age 34,
      has served as Chief Financial Officer of the combined entity since October
      2007.
      She is also Vice President of CFO Oncall, Inc. Prior to joining CFO Oncall,
      Inc., Ms. Sung was an Audit Manager at Sherb & Co., Boca Raton, Florida,
      responsible for managing, monitoring, as well as performing audits for domestic
      and international clients. Before joining Sherb & Co., Ms. Sung was a Senior
      Internal Auditor at Applica Consumer Products, Inc., a U.S. public traded
      company. Prior to this, Ms. Sung was with Ernst & Young, LLP in West Palm
      Beach, Florida as a Senior Auditor in the Assurance and Advisory Business
      Service Group. Ms. Sung is a licensed CPA in the State of Georgia and a member
      of the American Institute of Certified Public Accountants. She received her
      Master of Business Administration and Bachelor’s Degree, graduated “Cum Laude”,
      in Accounting from Florida Atlantic University. She also holds a Bachelor’s
      Degree in Sociology from National Chengchi University in Taipei,
      Taiwan.




42




**Xu
      Haibo,** age 36,
      has served as a deputy general manager of Laiyang Jiangbo since August 2006,
      and
      shall serve as Vice President and COO of the combined entity. Mr. Xu was born
      in
      October 1970 and is of Chinese nationality. He graduated from Shanghai Financial
      and Economic University on July 1, 1993 and has engaged in a banking career
      for
      more than ten years. From July 1993 to July 2004, he worked in the Bank of
      China
      Yantai Branch as Credit Clerk in the Credit Department, Section Chief in the
      Operation Department, Governor of the Bank of China Yantai Fushan Branch, and
      Director of the Risk Control Department in the Bank of China Yantai Branch.
      From
      August 2004 to July 2006, he was general manager of Shandong Province Licheng
      Investment Co. Ltd. From August 2006 until the present, he has been the deputy
      general manager of Laiyang Jiangbo Pharmaceutical Co. Ltd. Mr. Xu has a national
      registered accountant certificate in China.




**Dong
      Lining** ***,*** age 47,
      has served as deputy manager of Laiyang Jiangbo since July 2003 and shall
      continue to serve as Vice President and Director of Technology of the combined
      entity. Mr. Dong Lining was born in January 1960 and is of Chinese nationality.
      He graduated from Shandong Pharmacy University in 1995. From July 1986 to July
      2003, he worked in Laiyang Biochemistry Pharmaceutical Factory, where he was
      a
      checker, technologist, workshop director, product technology section chief,
      technology deputy factory director, and factory director. He has been deputy
      manager of Laiyang Jiangbo Pharmaceutical Co. Ltd. from July 2003 until now.
      He
      has published several pharmaceutical thesis articles in magazines such as,
      Chinese Biochemical Medical Magazine, Food and Drug, and China New Clinical
      Medicine.




**Yang
      Weidong,** age 36,
      has served as a deputy general manager for Laiyang Jiangbo since August 2004
      and
      shall continue to serve as Vice President and Director of Sales of the combined
      entity. Mr. Yang was born in 1971 and is of Chinese nationality. He graduated
      from Nanjing University with a masters degree. From February 1995 to March
      2000,
      he worked at Jiangsu Yangtze Pharmaceutical Co. Ltd as a sales clerk. From
      April
      2000 to July 2004, he was area director in Jiangsu Jizhou Pharmaceutical Co.
      Ltd. Since August 2004, he has been deputy general manager in Laiyang Jiangbo
      Pharmaceutical Co. Ltd.




**Xin
      Jingsheng** ,
      age 52,
      has served as a deputy general manager of Laiyang Jiangbo since October 2003
      and
      shall continue to serve as Director of Equipment of the combined entity. Mr.
      Xin
      was born in July 1955 and is of Chinese nationality. He graduated from the
      Chinese People’s Liberation Army Shengqing Engineering Institute in August 1978.
      Mr. Xin has experience as a member of a group of trained personnel at 54685
      Army
      Pharmacy from April 1983 to August 2001 and at China Laiyang Construction Bureau
      from August 2001 to September 2003. Since October 2003, he has been deputy
      general manager in China Laiyang Jiangbo Pharmaceutical Co. Ltd. He has been
      engaged in the pharmaceutical industry for more than 20 years, and his varied
      experience includes positions as a technician, engineer assistant, engineer,
      deputy factory director, factory director and deputy general manager. He has
      participated in industry training held by the Chinese National Drug Supervising
      Department and Shandong Drug Supervising Department and is very familiar with
      laws and statutes in the Chinese pharmaceutical industry.




**Xue
      Hong,** age 39,
      has served as finance controller of Laiyang Jiangbo since April 2003 and shall
      continue to serve as Controller of the combined entity. Ms. Xue was born in
      November 1967 and is of Chinese nationality. From July 1988 to March 1989,
      she
      worked in Qingzhou Iron and Steel Works as quality control inspector and
      auditor. From March 1999 to March 2000, she worked as an accountant at Laiyang
      Yongkang Company. From March 2000 to September 2003, she was the chief
      accountant of Laiyang Jiangbo Pharmacy. From April 2003 until now, she has
      served as the finance controller for Laiyang Jiangbo Pharmaceutical Co.
      Ltd.




**Feng
      Xiaowei** ,
      age 40,
      was born in August 1967 and is of Chinese nationality. Mr. Feng graduated from
      Dalian Jiaotong University Railway Locomotive & Car Department with a
      bachelors degree and Jilin University Postgraduate Research Institute Foreign
      Economic Law Department with a masters degree. Over the course of his career,
      he
      has been procurator in Shenyang Railroad Transportation Procuratorate, associate
      professor in Jilin University, counsel in China Jilin International Trust and
      Investment Corporation, expert commissary of China Strategy and Administration
      Association, and deputy secretary-general of the “China Strengthening
      Self-Innovative Capacity and Building Innovative Nation Forum”. He has
      participated in the Research on National Economic Development Strategy and
      in
      the subject investigation of Beijing Olympic Games, Guangzhou Development Zone
      and Tianjin Development Zone. He has been commissioner of Yunnan Province Policy
      and Economic Development Task Team, commissioner of the Xinjiang Uygur
      Autonomous Region Policy and Economic Development Task Team and commissioner
      of
      the China Shi Hezi National Economic Development Zone Task Team. He is the
      founder of the Chinese Young People Network Home Co. Ltd., and has presided
      over
      the China Young People Card Project.




43




**Huang
      Lei,** age 26,
      was born in July 1983 and is of Chinese nationality. Ms. Huang graduated from
      Kwantlen University College in Canada. She also earned her MBA degree from
      the
      University of British Columbia in October 2006. From November 2006 to 2007,
      she
      was a marketing manager in CúC Top Enterprises Ltd. While a student, Ms. Huang
      has published articles on business administration at Canada Weekly and school
      magazines, and earned the Best International Student Scholarship and a full
      scholarship. Ms. Huang speaks English, French, Mandarin and Cantonese, and
      has a
      working knowledge of accountancy and business administration.




**Ge
      Jian,** age 36,
      was born in January 1971 and is of Chinese nationality. Mr. Ge Jian graduated
      from Shandong University Management Sciences Department with a Bachelor of
      Business Administration in 1992. From 1992 to the end of 2000, he worked for
      the
      Development and Reform Commission of Yantai. From 2001 to 2006, he was the
      minister of the Capital Operation Department and the minister of the Development
      Department in Zhenghai Group Co. Ltd., and a director of Yantai Hualian
      Development Group Co. Ltd. At present, he is general manager of Yantai Zhenghai
      Pawn Co. Ltd.




**Zhang
      Yihua,** age 29,
      has served as a director of Laiyang Jiangbo since November 2003. Ms. Zhang
      was
      born in July 1978 and is of Chinese nationality. She graduated from Shandong
      Economic Institute in July 2001. From September 2001 to August 2003, she was
      minister of human resources department in Yantai Huafa Pharmaceutical Co. Ltd.,
      and from September 2002 to October 2003, she was also manager of the Labor
      and
      Personnel Department and General Manager Assistant. Since November 2003, she
      has
      been a director of Laiyang Jiangbo Pharmaceutical Co. Ltd. After years of
      dealing with enterprise administration and management work, she has a deep
      understanding about enterprise operations of administration and
      management.




**Rodrigo
      Arboleda** ,
      age 65,
      has served as a director of the Registrant since November 30, 2006 and shall
      continue to serve as a director of the combined entity. Mr. Arboleda has 40
      years of experience in top executive positions in the private sector and is
      currently a partner in Miami-based Globis Group, LLC (“ Globis ”).
      Globis is a business development firm for the Ibero-American market, China
      and
      the United States. Among its current projects is securing a network of
      distributorships in Latin America for AMI-First Automotive Works, the largest
      vehicle manufacturer in China. In addition, Globis seeks opportunities for
      the
      Exxel Group, a large private equity fund based in Argentina. Prior to forming
      Globis, Mr. Arboleda was the Executive VP of Ogden Corporation of NY, a Fortune
      100 Service multinational corporation with worldwide interests in Aviation,
      Energy and Entertainment. Mr. Arboleda was responsible for the Business
      Development efforts in Latin America and Spain for almost 10 years. He lead
      the
      efforts of opening 10 bases of airport services in Latin America and in Spain,
      of being awarded the largest airport management privatization project in the
      world, 33 airports in Argentina, in consortium with Malpensa 2000 of Milan,
      Italy, and a local Argentinean entrepreneur. He directed the construction of
      the
      largest Fair and Exhibit complex in Latin America, at La Rural de Palermo,
      in
      Buenos Aires, Argentina, a joint venture with the emblematic Sociedad Rural
      Argentina. Mr. Arboleda holds a Bachelor of Architecture degree from
      MIT.




**Robert
      D. Cain** ,
      age 45,
      has served as a director of the Registrant since January 2007 and shall continue
      to serve as a director of the combined entity. Mr. Cain has sixteen years of
      experience in the entertainment and Internet industries, primarily as a
      production, finance, strategy and corporate development expert. He has consulted
      to most of Hollywood's major studios and talent guilds, and to numerous
      entertainment, Internet and software industry startups. Mr. Cain earned his
      MBA
      from the Wharton School at the University of Pennsylvania, after completing
      his
      undergraduate work in East Asian Studies at Harvard University. With decades
      of
      study, he speaks Chinese and has traveled extensively throughout the country
      since 1987. Mr. Cain resides in Los Angeles, California.




**Board
      of Directors**




Our
      board
      of directors is currently composed of eight members, two of whom, Mr. Cao Wubo
      and Mr. Xu Haibo, are employees. All members of our board of directors serve
      in
      this capacity until their terms expire or until their successors are duly
      elected and qualified. Our bylaws provide that the authorized number of
      directors will be between three (3) and ten (10).




Mr. Cao
      Wubo has been elected as the Chairman of our board of directors. In this
      capacity he is responsible for meeting with our Chief Financial Officer to
      review financial and operating results, reviewing agendas and minutes of board
      and committee meetings, and presiding at the meetings of the committees of
      our
      board of directors.




44




**Family
      Relationships**




There
      are
      no family relationships between or among any of the current directors, executive
      officers or persons nominated or charged by the Company to become directors
      or
      executive officers.




**Involvement
      in Certain Legal Proceedings**




There
      are
      no orders, judgments, or decrees of any governmental agency or administrator,
      or
      of any court of competent jurisdiction, revoking or suspending for cause any
      license, permit or other authority to engage in the securities business or
      in
      the sale of a particular security or temporarily or permanently restraining
      any
      of our officers or directors from engaging in or continuing any conduct,
      practice or employment in connection with the purchase or sale of securities,
      or
      convicting such person of any felony or misdemeanor involving a security, or
      any
      aspect of the securities business or of theft or of any felony. Nor are any
      of
      the officers or directors of any corporation or entity affiliated with us so
      enjoined.




**Board
      Committees and Director Independence**




As
      of
      this date our board of directors has not appointed an audit, nominating or
      compensation committee, however, we are not currently required to have such
      committees. Accordingly, we do not have an “audit committee financial expert” as
      such term is defined in the rules promulgated under the Securities Act of 1933
      and the Securities and Exchange Act of 1934. The functions ordinarily handled
      by
      these committees are currently handled by our entire board of directors. Our
      board of directors intends, however, to review our governance structure and
      institute board committees as necessary and advisable in the future, to
      facilitate the management of our business.




We
      do not
      believe that any of our current directors are considered “independent” under
      Rule 4200(a)(15) of the National Association of Securities Dealers listing
      standards. We are not currently subject to any law, rule or regulation, however,
      requiring that all or any portion of our board of directors include
      "independent" directors.




**Code
      of Ethics**




In
      January 2006, we adopted a Code of Ethics and Business Conduct to provide
      guiding principles to our officers, directors and employees. Our Code of Ethics
      and Business Conduct also strongly recommends that all directors and employees
      of our company comply with the code in the performance of their duties.
      Generally, our Code of Ethics and Business Conduct provides guidelines
      regarding:




o
            compliance
                with laws, rules and regulations,


o
            conflicts
                of interest,


o
            insider
                trading,


o
            corporate
                opportunities


o
            competition
                and fair dealing,


o
            discrimination
                and harassment,


o
            health
                and safety,


o
            record-keeping,


o
            confidentiality,


o
            protection
                and proper use of company assets,
                and


o
            payments
                to government personnel.




Our
      Code
      of Ethics and Business Conduct also provides guiding principles to our Chief
      Executive Officer and Chief Financial Office in the performance of their duties.
      A copy of our Code of Ethics and Business Conduct is incorporated by reference
      as an exhibit to this annual report on Form 10-KSB.




**Compliance
      with Section 16(a) of the Securities Exchange Act of 1934**




We
      are
      not subject to Section 16(a) of the Securities Exchange Act of 1934, which
      requires our directors and executive officers, and persons who own more than
      10%
      of our common stock to file with the Securities and Exchange Commission initial
      reports of ownership and reports of changes in ownership of our common
      stock.




45




**ITEM
      10. EXECUTIVE COMPENSATION**




**Director
      Compensation**




Our
      directors do not currently receive any cash compensation for service on our
      board of directors or any committee. Directors are eligible for option and
      stock
      grants under our 2002 Stock Option Plan, our 2003 Stock Option and our 2004
      Stock Plan, as amended, and any compensation plans not previously approved
      by
      our shareholders. See “Equity Compensation Plans” below.




The
      following table sets forth information concerning the compensation of each
      person who served as a non-employee director during our fiscal year ended
      September 30, 2007. The compensation for each of our executive officers who
      also
      served as a director during fiscal year ended September 30, 2007 is fully
      reflected under our “Summary Compensation of Named Executive Officers”
disclosure below.




**Director
      Compensation of Non-Employee Directors**


**for
      Fiscal Year Ended September 30, 2007**





**Name**
            **Fees**
              **Earned**
              **or
                Paid in**
              **Cash**
              **($)**
            **Stock**
              **Awards**
              **($)**
            **Option**
              **Awards**
              **($)**
            **Non-Equity**
              **Incentive
                Plan**
              **Compensation**
              **($)**
            **Nonqualified**
              **Deferred**
              **Compensation**
              **Earnings
                ($)**
            **All
                Other**
              **Compensation**
              **($)**
            **Total**
              **($)**Feng
                Xiaowei (1)
            --
            --
            --
            --
            --
            --
            --Huang
                Lei (1)
            --
            --
            --
            --
            --
            --
            --Ge
                Jian (1)
            --
            --
            --
            --
            --
            --
            --Zhang
                Yihua (1)
            --
            --
            --
            --
            --
            --
            --Rodrigo
                Arboleda
            
            56,250
            
            --
            --
            --
            $
                56,250Robert
                D. Cain
            
            52,500
            
            --
            --
            $8,000
            $
                60,500Shaohua
                Tan, Former Director (2)
            $35,304
            $0
              (3)
            $369,135
              (3)
                (4)
            --
            --
            $572,019
            $976,458





(1)
            This
                individual was appointed as a director in connection with the Exchange
                Transaction on October 1, 2007, and therefore did not receive any
                compensation from the Company for the most recent fiscal year ended
                September 30, 2007.





(2)
            Effective
                October 1, 2007, Mr. Tan resigned as a member of our board of directors.




(3)
            The
                aggregate number of stock awards and option awards issued to Mr.
                Tan and
                outstanding as of September 30, 2007 are 0 and 4,394,531,
                respectively.




46




(4)
            During
                our fiscal year ended September 30, 2007, we granted Mr. Tan options
                for
                2,894,531 shares exercisable at a price of $0.105 per share, which
                was the
                lowest closing price of our common stock on the OTC Bulletin Board
                in the
                5 trading days immediately preceding the grant date. These options
                were
                granted to Mr. Tan on July 1, 2007 pursuant to our 2007 Stock Option
                Plan,
                and they expire on December 31, 2010. The value of the option award
                was
                calculated using the Black-Scholes option pricing model based on
                the
                following assumptions: weighted average life of 3.5 years; risk-free
                interest rate of4.5%; volatility rate of 195%; and fair market value
                of
                $0.128 per share at date of grant.


(5)
              Mr.
                  Tan’s fiscal 2006 and 2005 compensations were as
                  following-
 **Fiscal
                    Year**
                **Fees**
                  **Earned**
                  **or
                    Paid in**
                  **Cash**
                  **($)**
                **Stock**
                  **Awards**
                  **($)**
                **Option**
                  **Awards**
                  **($)**
                **Non-Equity**
                  **Incentive
                    Plan**
                  **Compensation**
                  **($)**
                **Nonqualified**
                  **Deferred**
                  **Compensation**
                  **Earnings
                    ($)**
                **All
                    Other**
                  **Compensation**
                  **($)**
                **Total**
                  **($)**2006
                  2005
                $75,000
                --
                $232,500
                --
                --
                --
                307,500




Effective
      October 1, 2007, we do not pay any compensation to members of our board of
      directors for their service on our board of directors. However, we intend to
      review and consider future proposals regarding board compensation.




**Executive
      Compensation**




The
      following executive compensation disclosures reflect all compensation for our
      fiscal years ended September 30, 2007, 2006 and 2006 received by our principal
      executive officer, principal financial officer, and three most highly
      compensated executive officers whose salary exceeded $100,000. We refer to
      these
      individuals in this annual report as “named executive officers.”




**Summary
      Compensation of Named Executive Officers**




The
      following table reflects all compensation awarded to, earned by or paid to
      our
      named executive officers for our fiscal years ended September 30, 2007, 2006,
      and 2005




**Summary
      Compensation** **of Named Executive Officers**


**for
      Fiscal Year Ended September 30**





**Name
                and Principal Position**
            **Fiscal
                Year Ended**
            **Salary**
              **($)**
            **Bonus**
              **($)**
            **Other
                Annual Compensation ($)**
            **Restricted
                Stock Awards**
            **Non-Equity
                Incentive Plan Compensa-tion**
              **($)**
            **Nonqualified
                Deferred Compensa-tion Earnings**
              **($)**
            **All
                Other Compensa-tion ($)**
            **Total**
              **($)**Cao
                Wubo,
              Chairman
                of the Board, Chief Executive Officer, and President (1)
            2007
            --
            --
            --
            --
            --
            --
            --
            --Elsa
                Sung,
              Chief
                Financial Officer (2)
            2007
            --
            --
            --
            --
            --
            --
            --
            --Xu
                Haibo,
              Director,
                Vice President, and Chief Operating Officer (3)
            2007
            --
            --
            --
            --
            --
            --
            --
            --Gary
                Wolfson,
              Former
                Director and Former Chief Executive Officer (4)
            2007
                (5)
              2006
                (6)
              2005
                (7)
            $181,500
              $167,750
              $152,500
            $
                415,970
              --
              --
            $311,348(8)
              $815,408
              $
                50,781
            --
              --
              $359,
                375
            --
            --
            --
              --
              $77,676
            $908,818
              $983,158
              $640,332Adam
                Wasserman,
              Former
                Chief Financial Officer (9)
            2007
                (9)
            $107,
                210
            $36,500
            --
            --
            --
            --
            --
            $143,710Kenneth
                Clinton,
              Former
                Director and Former President (10)
            2007
                (11)
              2006
                (12)
              2005
                (13)
            $181,500
              $167,750
              $131,660
            $
                350,112
              $
                -
              $
                -
            $311,348(14)
              $815,408
              $50,781
            $
                --
              --
              $359,375
            --
              --
            --
              --
            $603,000
              --
              $77,826
            $1,445,960
              $983,158
              $619,642James
                Wang, Former Chairman of the Board and President
            2005
                (14)
            $29,165
            
            
            
            
            
            $184,675
            $213,804




47




(1)
      Mr.
      Cao was appointed as our President and Chief Executive Officer in connection
      with the Exchange Transaction on October 1, 2007, and therefore did not receive
      any compensation from the Company for the most recent fiscal year ended
      September 30, 2007.




(2)
      Ms.
      Sung was appointed as our Chief Financial Officer in connection with the
      Exchange Transaction on October 1, 2007, and therefore did not receive any
      compensation from the Company for the most recent fiscal year ended September
      30, 2007. A description of her employment agreement can be found below in the
      section titled “Employment Agreements”.




(3)
      Mr.
      Xu was appointed as our Vice President and Chief Operating Officer in connection
      with the Exchange Transaction on October 1, 2007, and therefore did not receive
      any compensation from the Company for the most recent fiscal year ended
      September 30, 2007.




(4)
      Effective October 1, 2007, Mr. Wolfson resigned from his positions as Chief
      Executive Officer and a director of the Company.




(5) Mr.
      Wolfson's compensation for fiscal 2007 included $181,000 salary payable under
      the terms of his employment agreement, $415,970 bonus payment, of which $326,845
      was paid through the distribution of LTUS shares that were held in our
      investment securities account, and options to purchase 2,441,406 shares of
      our
      common stock at an exercise price of $0.105 per share representing other annual
      compensation which were valued at $311,348 pursuant to the terms of his
      employment




(6) Mr.
      Wolfson's compensation for fiscal 2006 included $167,750 salary payable under
      the terms of his employment agreement, of which $80,078 was paid through the
      issuance of 1,953,125 shares of ou common stock upon the exercise of stock
      options and 1,697,916 shares of our common stock valued at $84,896 issued to
      him
      in September 2005, options to purchase 3,700,000 shares of our common stock
      at
      an exercise price of $0.145 per share representing other annual compensation
      which were valued at $512,675 pursuant to the terms of his employment agreement.
      Options to purchase 1,953,125 shares of our common stock at an exercise price
      of
      $0.093 per share representing other annual compensation which were valued at
      $302,733 pursuant to the terms of his employment agreement,




(7) Mr.
      Wolfson's compensation for fiscal 2005 included $152,500 salary payable under
      the terms of his employment agreement, of which $50,000 was paid through the
      issuance of 773,810 shares of our common stock, options to purchase 1,953,125
      shares of our common stock at an exercise price of $0.041 per share representing
      other annual compensation which were valued at $50,781 pursuant to the terms
      of
      his employment agreement, 3,125,000 shares of our common stock valued at
      $359,375 which represent pursuant to the terms of his employment agreement,
      and
      1,140,319 shares of our common stock valued at $77,646 issued as other
      compensation. Mr. Wolfson's fiscal 2005 compensation reported above excludes
      1,697,916 shares of our common stock valued at $84,896 issued to him in
      September 2005 for services to be rendered to us during fiscal
      2006.




(8)
      The
      aggregate number of stock awards and option awards issued to Mr. Wolfson and
      outstanding as of September 30, 2007 is 0 and 5,644,531, respectively. During
      our fiscal year ended September 30, 2007, we granted Mr. Wolfson options for
      2,441,406 shares exercisable at a price of $0.105 per share, which was the
      lowest closing price of our common stock on the OTC Bulletin Board in the 5
      trading days immediately preceding the grant date. These options were granted
      to
      Mr. Wolfson on July 1, 2007 pursuant to our 2007 Stock Option Plan. The options
      expire on December 31, 2010. The value of the option award was calculated using
      the Black-Scholes option pricing model based on the following assumptions:
      weighted average life of 3.5 years; risk-free interest rate of4.5%; volatility
      rate of 195%; and fair market value of $0.128 per share at date of
      grant.




48




(9)
      Effective October 1, 2007, Mr. Wasserman resigned as Chief Financial Officer
      of
      the Company. The aggregate number of stock awards and option awards issued
      to
      Mr. Wasserman and outstanding as of September 30, 2007 is 0 and 250,000,
      respectively.




(10)
      Effective October 1, 2007, Mr. Clinton resigned from his positions as President
      and a director of the Company.




(10)
      The
      aggregate number of stock awards and option awards issued to Mr. Clinton and
      outstanding as of September 30, 2007 is 0 and 5,644,531, respectively.




(11) Mr.
      Clinton's compensation for fiscal 2007 included $181,000 salary payable under
      the terms of his employment agreement, $350,112 bonus payment, of which $326,845
      was paid through the distribution of LTUS shares that were held in our
      investment securities account, an one time distribution of 3,350,000 shares
      of
      SPEH common stock, and options to purchase 2,441,406 shares of our common stock
      at an exercise price of $0.105 per share representing other annual compensation
      which were valued at $311,348 pursuant to the terms of his employment.




(12 )
      Mr.
      Clinton's compensation for fiscal 2006 included $167,750 salary payable under
      the terms of his employment agreement, of which $80,078 was paid through the
      issuance of 1,953,125 shares of our common stock upon the exercise of stock
      options and 1,697,916 shares of our common stock valued at $84,896 issued to
      him
      in September 2005, options to purchase 3,700,000 shares of our common stock
      at
      an exercise price of $0.145 per share representing other annual compensation
      which were valued at $512,675 pursuant to the terms of his employment agreement,
      and options to purchase 1,953,125 shares of our common stock at an exercise
      price of $0.093 per share representing other annual compensation which were
      valued at $302,733 pursuant to the terms of his employment
      agreement,




(13)
      Mr.
      Clinton's fiscal 2005 compensation included: $131,660 salary payable under
      the
      terms of his employment agreement, of which $41,664 was paid through the
      issuance of 664,800 shares of our common stock, options to purchase 1,953,125
      shares of our common stock at an exercise price of $0.041 per share representing
      other annual compensation which were valued at $50,781 pursuant to the terms
      of
      his employment agreement, 3,125,000 shares of our common stock valued at
      $359,375 which represent pursuant to the terms of his employment agreement,
      and
      1,161,675 shares of our common stock valued at $77,826 issued as other
      compensation.  Mr.
      Clinton's fiscal 2005 compensation reported above excludes 1,697,916 shares
      of
      our common stock valued at $84,896 issued to him in September 2005 for services
      to be rendered to us during fiscal 2006.




(14)
      During our fiscal year ended September 30, 2007, we granted Mr. Clinton options
      for 2,441,406 shares exercisable at a price of $0.105 per share, which was
      the
      lowest closing price of our common stock on the OTC Bulletin Board in the 5
      trading days immediately preceding the grant date. These options were granted
      to
      Mr. Clinton on July 1, 2007 pursuant to our 2007 Stock Option Plan. The options
      expire on December 31, 2010. The value of the option award was calculated using
      the Black-Scholes option pricing model based on the following assumptions:
      weighted average life of 3.5 years; risk-free interest rate of4.5%; volatility
      rate of 195%; and fair market value of $0.128 per share at date of
      grant.




(15)
      Dr.
      Wang served as our Chairman of the Board and President until December 13, 2004.
      Dr. Wang's compensation for fiscal 2005 included $29,165 of salary and severance
      payments equal to cash of $100,000, $95,000 worth of marketable securities
      held
      by the Company and 562,500 shares of our common stock valued at $61,875.




**Outstanding
      Equity Awards**




The
      following table sets forth certain information concerning unexercised options,
      stock that has not vested, and equity incentive plan awards outstanding as
      of
      September 30, 2007 for the named executive officers below:




49




**Outstanding
      Equity Awards at Fiscal Year Ended**


**September
      30, 2007**





**Option
                Awards**
            **Stock
                Awards****Name**
            **Number**
              **of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Options**
              **Exercisable**
            **Number
                of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Options**
              **Unexercisable**
            **Equity**
              **Incentive
                Plan**
              **Awards:**
              **Number
                of**
              **Securities**
              **Underlying**
              **Unexercised**
              **Unearned**
              **Options**
            **Option**
              **Exercise**
              **Price**
              **($)**
            **Option**
              **Expiration**
              **Date**
            **Number
                of**
              **Shares
                or**
              **Units
                of**
              **Stock
                That**
              **Have
                Not**
              **Vested**
            **Market
                Value**
              **of
                Shares or**
              **Units
                of Stock**
              **That
                Have Not**
              **Vested**
              **($)**
            **Equity
                Incentive**
              **Plan
                Awards:**
              **Number
                of**
              **Unearned**
              **Shares,
                Units or**
              **Other
                Rights**
              **That
                Have Not**
              **Vested**
            **Equity
                Incentive**
              **Plan
                Awards:**
              **Market
                or**
              **Payout
                Value of**
              **Unearned**
              **Shares,
                Units or**
              **Other
                Rights**
              **That
                Have Not**
              **Vested**
              **($)**Gary
                Wolfson (1)
            1,953,125
            0
            0
            $0.093
            8/1/2011
            0
            0
            0
            0Gary
                Wolfson (2)
            1,250,000
            0
            0
            $0.14
            8/1/2008
            0
            0
            0
            0Gary
                Wolfson (3)
            2,441,406
            0
            0
            $0.105
            12/31/2010
            0
            0
            0
            0Adam
                Wasserman (4)
            250,000
            0
            0
            $0.31
            2/14/2011
            0
            0
            0
            0Shaohua
                Tan (5)
            1,500,000
            0
            0
            $0.093
            8/1/2011
            0
            0
            0
            0Shaohua
                Tan (6)
            2,894,531
            0
            0
            $0.105
            12/31/2010
            0
            0
            0
            0Kenneth
                Clinton (7)
            1,953,125
            0
            0
            $0.093
            8/1/2011
            0
            0
            0
            0Kenneth
                Clinton (8)
            1,250,000
            0
            0
            $0.14
            8/1/2008
            0
            0
            0
            0Kenneth
                Clinton (9)
            2,441,406
            0
            0
            $0.105
            12/31/2010
            0
            0
            0
            0





(1)
            These
                options were fully vested as of August 1,
                2006.





(2)
            These
                options were fully vested as of August 1, 2003.





(3)
            These
                options were fully vested as of July 1,
                2007.





(4)
            These
                options were fully vested as of February, 14, 2006.





(5)
            These
                options were fully vested as of August 1, 2006.





(6)
            These
                options were fully vested as of July 1,
                2007.





(7)
            These
                options were fully vested as of August 1,
                2006.





(8)
            These
                options were fully vested as of August 1, 2003.





(9)
            These
                options were fully vested as of July 1,
                2007.





50




**Pension
      Benefits**




We
      currently have no plans that provide for payments or other benefits at,
      following, or in connection with retirement of our named executive
      officers.




**Nonqualified
      defined contribution and other nonqualified deferred compensation
      plans.**




We
      currently have no defined contribution or other plans that provide for the
      deferral of compensation to our named executive officers on a basis that is
      not
      tax-qualified.




**Potential
      payments upon termination or change-in-control.**




We
      currently have no contract, agreement, plan or arrangement, whether written
      or
      unwritten, that provides for payments to a named executive officer at,
      following, or in connection with any termination, including without limitation
      resignation, severance, retirement or a constructive termination of a named
      executive officer, or a change in control of the registrant or a change in
      the
      named executive officer's responsibilities, with respect to each named executive
      officer.




**Employment
      Agreements.**




Our
      written employment agreements with our former Chief Executive Officer, Gary
      Wolfson, and our former President, Kenneth Clinton, expired on August 1, 2007.
      Effective October 1, 2007, Gary Wolfson resigned as our Chief Executive Officer,
      Adam Wasserman resigned as our Chief Financial Officer, and Kenneth Clinton
      resigned as our President.




We
      have
      an employment agreement with our current Chief Financial Officer, Elsa Sung.
      Under the terms of the employment agreement, Ms. Sung provides general services
      to us as CFO, including but not limited to advising our management about
      financial issues related to being a public company. We pay Ms. Sung for her
      services at an hourly rate of approximately $135 per hour. We estimate that
      our
      CFO fees will approximate $10,500 per month, of which $3,000 may be paid in
      shares of our common stock at the beginning of each quarterly period. The share
      price used to calculate the number of shares for our CFO fees are tied to the
      most recent price of our common shares in any financing by us. We reimburse
      Ms.
      Sung for any out of pocket expenses, including travel expenses.




**ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      SHAREHOLDER MATTERS**




**Security
      Ownership of Certain Beneficial Owners and Management**




The
      following table sets forth information regarding the beneficial ownership of
      our
      common stock as of December 31, 2007 for each of the following persons, after
      giving effect to the transaction under the Exchange Agreement:




•  each
      of
      our directors and officers;




•  all
      directors and officers as a group; and




•  each
      person who is known by us to own beneficially five percent or more of our common
      stock prior to this offering.




Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission. Unless otherwise indicated in the table, the persons and
      entities named in the table have sole voting and sole investment power with
      respect to the shares set forth opposite the shareholder’s name. Unless
      otherwise indicated, the address of each beneficial owner listed below is c/o
      Karmoya International Ltd., Middle Section, Longmao Street, Area A, Laiyang
      Waixiangxing Industrial Park, Laiyang City, Yantai, Shandong Province, PRC
      710075. The percentage of class beneficially owned set forth below is based
      on
      388,968,760 shares of common stock outstanding on December 31, 2007. The
      issued and outstanding shares do not include 40,740,611 shares of our common
      stock issuable upon the exercise of our outstanding warrants and
      options.





51




**Common
                Stock Beneficially Owned****Named
                executive officers and directors:**
            
            **Number
                of**
              **Shares**
              **beneficially**
              **owned**
            
            **Percentage of**
              **class beneficially**
              **owned after the**
              **Transaction**Cao
                Wubo (1)
            
            
            194,263,661
            
            
            49.9
            %Elsa
                Sung
            
            
            0
            
            
            *Xu
                Haibo
            
            
            0
            
            
            *Dong
                Lining
            
            
            0
            
            
            *Yang
                Weidong
            
            
            0
            
            
            *Xin
                Jingsheng
            
            
            0
            
            
            *Xue
                Hong
            
            
            0
            
            
            *Feng
                Xiaowei
            
            
            0
            
            
            *Huang
                Lei
            
            
            0
            
            
            *Ge
                Jian
            
            
            399,719
            
            
            *Zhang
                Yihua
            
            
            0
            
            
            *Rodrigo
                Arboleda
            
            
            500,000
            
            
            *Robert
                Cain
            
            
            500,000
            
            
            *All
                directors and executive officers as a group (13 persons)
            
            
            195,663,380
            
            
            50.3
            %**5%
                Shareholders:**Verda
                International Limited (2)
            
            
            194,263,661
            
            
            49.9
            %Wang
                Renhui (3)
            
            
            22,384,290
            
            
            5.7
            %Pope
                Investments, LLC (4)
            
            
            30,000,000
            
            
            7.0
            %







*  Represents
      less than one percent (1%).




(1)
            Includes
                194,263,661 shares of common stock owned by Verda International Limited,
                a
                company of which Mr. Cao is the Executive Director and owner of 100%
                of
                the equity interest. The address for Verda International Limited
                is A-1
                Building Dasi Street,Laiyang City, Shandong province,
                China.




(2)
            The
                address for Verda International Limited is A-1 Building Dasi
                Street,Laiyang City, Shandong province, China. The natural person
                with
                voting power and investment power on behalf of Verda International
                Limited
                is Mr. Cao Wubo.




(3)
            The
                mailing address for Wang Renhui is No. 57-2-14-1 Chaoyang Street,
                Dalin,
                China.




(4)
            Includes
                20,000,000 shares of our common stock issuable to Pope Investments
                LLC, a
                Delaware limited liability company (“Pope Investments”), upon conversion
                of $5 million aggregate principal amount of our 6% Convertible Debentures
                due November 30, 2010 and 10,000,000 shares of our common stock issuable
                upon exercise of warrants issued in connection with the 6% Convertible
                Debentures. Pope Investments acquired the Convertible Debentures
                and
                warrants pursuant to a Stock Purchase Agreement dated November 6,
                2007.
                Pope Asset Management LLC, a Tennessee limited liability company
                (“Pope
                Asset”) serves as an investment adviser and/or manager to Pope
                Investments. Pope Asset is the sole manager for Pope Investments
                and has
                sole voting control and investment and disposition power and discretion
                with respect to all securities held by Pope Investments. Pope Asset
                may be
                deemed to beneficially own shares owned or held by, or held for the
                account or benefit of, Pope Investments. Mr. William P. Wells is
                the sole
                manager of Pope Asset. Mr. Wells may be deemed to own shares owned
                or held
                by, or held for the account or benefit of, Pope Investments. Pope
                Asset
                and Mr. Wells do not directly own any shares our common stock. The
                address
                for Pope Investments is 5100 Poplar Avenue, Suite 805, Memphis, Tennessee
                38137.




**Securities
      Authorized for Issuance Under Equity Compensation Plans or Individual
      Compensation Arrangements**




The
      following table sets forth information as of September 30, 2007 regarding
      securities authorized for issuance under equity compensation plans, including
      individual compensation arrangements, by us under our 2002 Stock Option Plan
      and
      our 2003 Stock Option, our 2004 Stock Plan as amended and any compensation
      plans
      not previously approved by our shareholders as of September 30,
      2007.




52




**Equity
      Compensation as of September 30, 2007**





Plan
                Category
            Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            Weighted
                average exercise price of outstanding options, warrants and
                rights
            Number
                of securities remaining available for future issuance under equity
                compensation plans (excluding securities reflected in column
                2)2002
                Stock Option Plan and 2003 Stock Option Plan
            3,150,000
            $0.079
            02004
                Stock Plan
            0
            $0
            0Equity
                Compensation Plans or Individual Compensation Arrangements Not Approved
                by
                Security Holders (1)
            16,396,954
            $0.13
            0**TOTAL**
            19,546,954
            $0.122
            0





(1)
            Equity
                compensation plan not approved by shareholders is comprised of options
                granted and/or restricted stock to be issued to employees and
                non-employees, including directors, consultants, advisers, suppliers,
                vendors, customers and lenders for purposes including to provide
                continued
                incentives, as compensation for services and/or to satisfy outstanding
                indebtedness to them.




**ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
      INDEPENDENCE**




**Agreement
      and Plan of Share Exchange**




On
      October 1, 2007, we executed a Share Acquisition and Exchange Agreement
      (“Exchange Agreement”) by and among us, Karmoya International Ltd., a British
      Virgin Islands company (“Karmoya”), and the shareholders of 100% of Karmoya’s
      capital stock (the “Karmoya Shareholders”). Separately, Karmoya owns 100% of the
      capital stock of Union Well International Limited, a Cayman Islands company
      (“Union Well”), which has established and owns 100% of the equity in Genesis
      Jiangbo (Laiyang) Biotech Technologies Co., Ltd., a wholly foreign owned
      enterprise in the People’s Republic of China (“GJBT”). GJBT has entered into
      consulting service agreements and equity-related agreements with Laiyang Jiangbo
      Pharmaceutical Co., Ltd. (“Laiyang Jiangbo”), a limited liability company
      headquartered in, and organized under the laws of, China. Throughout this Form
      10-KSB, Karmoya, Union Well, GJBT and Laiyang Jiangbo are sometimes collectively
      referred to as the “LJ Group.”




Under
      the
      Exchange Agreement, on the Closing Date, we issued 5,995,780 shares of our
      Series B Voting Convertible Preferred Stock (the “Series B Preferred Stock”) to
      the Karmoya Shareholders and 597 shares of our common stock in exchange for
      100%
      of the capital stock of Karmoya. The shares of Series B Preferred Stock issued
      are convertible, in the aggregate, into a number of shares of our common stock
      that, when combined with the common stock issued to the Karmoya Shareholders,
      would equal 75% of the issued and outstanding shares of our common stock, if
      the
      shares were to be converted on the Closing Date. The closing of the Exchange
      Agreement and the transactions contemplated thereunder (the “Exchange
      Transaction”) occurred on October 1, 2007 (the “Closing Date”).




**Our
      Contractual Arrangements with Laiyang Jiangbo and Its
      Shareholders**




PRC
      law
      currently limits foreign equity ownership of Chinese companies. To comply with
      these foreign ownership restrictions, we operate our business in China through
      a
      series of contractual arrangements with Laiyang Jiangbo and its shareholders
      that were executed on September 21, 2007. For a description of these contractual
      arrangements, see “Contractual Arrangements with Laiyang Jiangbo and Its
      Shareholders” under the “Business” section above.




As
      a
      result of the Exchange Transaction, we have contractual arrangements with
      Laiyang Jiangbo which give us the ability to substantially influence Laiyang
      Jiangbo's daily operations and financial affairs, appoint its senior executives
      and approve all matters requiring shareholder approval.




53




**Director
      Independence**




For
      our
      description of director independence, see “Board Committees and Director
      Independence” under the section entitled “Directors, Executive Officers,
      Promoters, Control Persons and Corporate Governance; Compliance with Section
      16(a) of the Exchange Act” above.




**ITEM
      13. EXHIBITS**




**Exhibit**
                **Number**
              
              **Description**2.1
              
              Articles
                  of Merger between Genesis Technology Group and Newagecities.com
                  *2.2
              
              Share
                  Acquisition and Exchange Agreement by and among Genesis, Karmoya
                  and
                  Karmoya Shareholders dated October 1, 2007 (1)3.1
              
              Articles
                  of Incorporation of Genesis Technology Group, Inc., a Florida corporation
                  *3.2
              
              Amended
                  and Restated Articles of Incorporation *3.3
              
              Articles
                  of Amendment to Articles of Incorporation (2)3.4
              
              Bylaws
                  of Genesis Technology Group, Inc., a Florida corporation
                  *4.1
              
              Articles
                  of Amendment to Articles of Incorporation, Preferences and Rights
                  of
                  Series A Preferred Stock (3)4.2
              
              Articles
                  of Amendment to Articles of Incorporation, Preferences and Rights
                  of
                  Series B Voting Convertible Preferred Stock (4)4.3
              
              6%
                  Convertible Subordinated Debenture, dated November 7, 2007
                  (5)4.4
              
              Common
                  Stock Purchase Warrant, dated November 7, 2007 (5)10.1
              
              Genesis
                  Technology Group, Inc. 2002 Stock Option Plan (6)10.2
              
              Genesis
                  Technology Group 2002 Stock Option Plan, as amended (7)10.3
              
              Genesis
                  Technology Group 2003 Stock Option Plan (8)10.4
              
              Genesis
                  Technology Group 2004 Stock Option Plan, as amended (9)10.5
              
              Employment
                  Agreement with Elsa Sung dated October 1, 2007 (4)10.6
              
              Securities
                  Purchase Agreement, dated as of November 6, 2007, between Genesis
                  Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
                  (5)10.7
              
              Registration
                  Rights Agreement, dated as of November 6, 2007, between Genesis
                  Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
                  (5)10.8
              
              Closing
                  Escrow Agreement, dated as of November 6, 2007, by and among Genesis
                  Pharmaceuticals Enterprises, Inc., Pope Investments, LLC and Sichenzia
                  Ross Friedman Ference LLP (5)14.1
              
              Code
                  of Business Conduct and Ethics (10)
  54
  21.1
              List
                  of Subsidiaries *31.1
              Section
                  302 Certificate of Chief Executive Officer *31.2
              Section
                  302 Certificate of Chief Financial Officer *32.1
              Section
                  906 Certificate of Chief Executive Officer *32.2
              Section
                  906 Certificate of Chief Financial Officer *99.1
              Consulting
                  Services Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
                  Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
                  21, 2007 (English Translation) (1)99.2
              Equity
                  Pledge Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
                  Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
                  21, 2007 (English Translation) (1)99.3
              Operating
                  Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
                  Co.,
                  Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
                  21,
                  2007 (English Translation) (1)99.4
              Proxy
                  Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
                  Co.,
                  Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
                  21,
                  2007 (English Translation) (1)99.5
              Option
                  Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
                  Co.,
                  Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
                  21,
                  2007 (English Translation) (1)99.6
              Letter
                  of Resignation from Gary Wolfson to the Board of Directors
                  (1)99.7
              Letter
                  of Resignation from Kenneth Clinton to the Board of Directors
                  (1)99.8
              Letter
                  of Resignation from Shaohua Tan to the Board of Directors
                  (1)99.9
              Letter
                  of Resignation from Adam Wasserman to the Board of Directors
                  (1)









*Filed
      Herewith




(1)
            Incorporated
                by reference to exhibits filed with our Current Report on Form 8-K
                as
                filed on October 2, 2007.




(2)
            Incorporated
                by reference to exhibits filed with our Current Report on Form 8-K
                as
                filed on October 26, 2007.




(3)
            Incorporated
                by reference to exhibits filed with our Current Report on Form 8-K
                as
                filed on January 22, 2004.




(4)
            Incorporated
                by reference to exhibits filed with our Current Report on Form 8-K
                as
                filed on October 9, 2007.




(5)
            Incorporated
                by reference to exhibits filed with our Current Report on Form 8-K
                as
                filed on November 9, 2007.




(6)
            Incorporated
                by reference to exhibits filed with our registration statement on
                Form S-8
                filed on March 26, 2002.




(7)
                Incorporated
                    by reference to exhibits filed with our registration statement
                    on Form S-8
                    as filed on December 17,
                    2002.




(8)
            Incorporated
                by reference to exhibits filed with our registration statement on
                Form S-8
                as filed on June 5, 2003.




55




(9)
                Incorporated
                    by reference to exhibit filed with our registration statement
                    on Form S-8
                    as filed on September 30,
                    2005.




(10)
                Incorporated
                    by reference to exhibits filed with our Annual Report on Form
                    10-KSB for
                    the fiscal year ended September 30,
                    2005.




**ITEM
      14 PRINCIPAL ACCOUNTANT FEES AND SERVICES**




Sherb
      & Co., LLP served as our independent registered public accounting firm for
      fiscal 2007 and 2006. The following table shows the fees that were billed for
      the audit and other services provided by each of this firm for the 2007 and
      2006
      fiscal years:




**Fiscal
                2007**
            **Fiscal
                2006**Audit
                Fees
            $82,500
            $66,000Audit-Related
                Fees
            $0
            $0Tax
                Fees
            $12,500
            $0All
                Other Fees
            $0
            $0Total
            $95,000
            $66,000




**Audit
      Fees** -- This
      category includes the audit of our annual financial statements, review of
      financial statements included in our Form 10-QSB Quarterly Reports and services
      that are normally provided by the independent auditors in connection with
      engagements for those fiscal years. This category also includes advice on audit
      and accounting matters that arose during, or as a result of, the audit or the
      review of interim financial statements.




**Audit-Related
      Fees** -- This
      category consists of assurance and related services by the independent auditors
      that are reasonably related to the performance of the audit or review of our
      financial statements and are not reported above under "Audit Fees." The services
      for the fees disclosed under this category include consultation regarding our
      correspondence with the SEC and other accounting consulting.




**Tax
      Fees** --
      This
      category consists of professional services rendered by our independent auditors
      for tax compliance and tax advice. The services for the fees disclosed under
      this category include tax return preparation and technical tax
      advice.




**All
      Other Fees** -- This
      category consists of fees for other miscellaneous items.




**Pre-Approval
      Policies and Procedures** --
      Prior
      to engaging its accountants to perform particular services, our board of
      directors obtains an estimate for the service to be performed. All of the
      services described above were approved by the board of directors in accordance
      with its procedure.




56




**INDEX
      TO FINANCIAL STATEMENTS**




Page**GENESIS
                PHARMACEUTICALS ENTERPRISES, INC.**
            
            NumberReport
                of Independent Certified Public Accounting Firm
            
            
            F-2Consolidated
                Balance Sheet as of September 30, 2007
            
            
            F-3Consolidated
                Statements of Operations for the Years Ended September 30, 2007
                and 2006
            
            
            F-4Consolidated
                Statements of Shareholders' Equity for the Years Ended September
                30, 2007
                and 2006
            
            
            F-5Consolidated
                Statements of Cash Flows for the Years Ended September 30, 2007 and
                2006
            
            
            F-6Notes
                to the Consolidated Financial Statements
            
            
            F-7
                throughF-39




F-1




**REPORT
      OF INDEPENDENT REGISTERED ACCOUNTING FIRM**




**To
      the Board of Directors of**


**Genesis
      Pharmaceuticals Enterprises, Inc. and Subsidiaries**


**(Formerly
      known as Genesis Technology Group, Inc.)**




To
      the
      Board of Directors


Genesis
      Technology Group, Inc


Boca
      Raton, Florida





We
      have
      audited the accompanying consolidated balance sheet of Genesis Technology
      Group, Inc. and Subsidiaries as of September 30, 2007, and the related
      consolidated statements of operations, shareholders' equity and cash flows
      for
      the years ended September 30, 2007 and 2006. These consolidated financial
      statements are the responsibility of the Company's management. Our responsibility
      is to express an opinion on these consolidated 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. The Company is not required
      to have, nor were we engaged to perform, an audit of its internal control
      over financial reporting. Our audit included consideration of internal control
      over financial reporting as a basis for designing audit procedures that are
      appropriate in the circumstances, but not for the purposes of expressing an opinion
      on the effectiveness of the Company's internal control over financial reporting.
      Accordingly, we express no such opinion. An audit includes examining on
      a test
      basis, evidence supporting the amount and disclosures in the consolidated
      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 consolidated financial statements referred to above present
      fairly, in all material respects, the financial position of Genesis Technology
      Group, Inc. and Subsidiaries as of September 30, 2007, and the results
      of their operations and their cash flows for the years ended September 30,
      2007
      and 2006, in conformity with accounting principles generally accepted in
      the
      United States of America.





The
      accompanying financial statements have been prepared assuming that the
      Company will continue as a going concern. As discussed in Note 10 to the consolidated
      financial statements, the Company has an accumulated deficit of $22,389,203
      and has net loss of $5,820,584 for the year ended September
      30, 2007. This raises substantial doubt about its ability to continue as
      a
      going concern. Management's plans in regards to these matters are also described
      in Note 10. The consolidated financial statements do not include
      any


adjustments
      that might result from the outcome of this uncertainty.





/s/
      Sherb
& Co., LLP


Certified
      Public Accountants





Boca
      Raton, Florida


January 7,
      2008




F-2




GENESIS
        TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
 CONSOLIDATED
        BALANCE SHEET
 September
        30, 2007
  ASSETSCURRENT
                  ASSETS:Cash
                  and cash equivalents
              
              $
              534,950Marketable
                  equity securities, at market
              
              
              370,330Prepaid
                  expenses and other current assets
              
              
              40,620Total
                  Current Assets
              
              
              945,900OTHER
                  ASSETS:Restricted
                  marketable equity securities, at market
              
              
              1,746,809Other
                  receivable- related party
              
              
              3,250,000Other
                  assets
              
              
              7,083Total
                  Assets
              
              $
              5,949,792LIABILITIES
                  AND SHAREHOLDERS' EQUITYCURRENT
                  LIABILITIES:Loans
                  payable - related parties
              
              $
              515,000Accounts
                  payable and accrued expenses
              
              
              1,085,323Due
                  to related party
              
              
              331,292Liabilities
                  of discontinued operations
              
              
              120,709Total
                  Current Liabilities
              
              
              2,052,324MINORITY
                  INTEREST
              
              
              121,063SHAREHOLDERS'
                  EQUITY:Preferred
                  stock ($.001 Par Value; 20,000,000 Shares Authorized)Convertible
                  preferred stock Series A ($.001 Par Value; 218,000 Shares
                  Authorized;15,400
                  shares issued and outstanding)
              
              
              15Common
                  stock ($.001 Par Value; 200,000,000 Shares Authorized;85,264,120
                  shares issued and outstanding)
              
              
              85,265Additional
                  paid-in capital
              
              
              24,568,084Accumulated
                  deficit
              
              
              (22,389,203
              )Less:
                  treasury stock, at cost (10,000 shares)
              
              
              (2,805
              )Less:
                  deferred compensation
              
              
              -Accumulated
                  other comprehensive income
              
              
              1,515,049Total
                  Shareholders' Equity
              
              
              3,776,405Total
                  Liabilities and Shareholders' Equity
              
              $
              5,949,792




See
        notes
        to consolidated financial statements




F-3




GENESIS
        TECHNOLOGY GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
        STATEMENTS OF OPERATIONS
  For
                  the Year EndedSeptember
                  30,2007
              
              
              2006NET
                  REVENUES
              
              $
              3,035,000
              
              $
              6,750,229COST
                  OF SALES
              
              
              659,066
              
              
              318,916GROSS
                  PROFIT
              
              
              2,375,934
              
              
              6,431,313OPERATING
                  EXPENSES:Consulting
              
              
              1,195,147
              
              
              137,506Salaries
                  and stock-based compensation
              
              
              5,084,451
              
              
              965,803Impairment
                  of deferred contract costs
              
              
              632,357
              
              
              -Selling,
                  general and administrative
              
              
              1,301,745
              
              
              652,219Total
                  Operating Expenses
              
              
              8,213,700
              
              
              1,755,528INCOME
                  (LOSS) FROM OPERATIONS
              
              
              (5,837,766
              )
                  -
              
              4,675,785OTHER
                  INCOME (EXPENSE):Gain
                  (loss) from sale of marketable securities
              
              
              154,020
              
              
              1,046,916Loss
                  on impairment of marketable securities
              
              
              (26,000
              )
              
              (20,300
              )Unrealized
                  gain on trading securities
              
              
              547,811
              
              
              -Settlement
                  expense, net
              
              
              (184,540
              )
              
              -Interest
                  income
              
              
              6,631
              
              
              17,351Interest
                  expense - related party
              
              
              (3,287
              )
              
              -Total
                  Other Income
              
              
              494,635
              
              
              1,043,967INCOME
                  (LOSS) BEFORE DISCONTINUED OPERATIONS, INCOMETAXES
                  AND MINORITY INTEREST
              
              
              (5,343,131
              )
              
              5,719,752DISCONTINUED
                  OPERATIONS:Gain
                  from disposal of discontinued operations
              
              
              -
              
              
              237,377Gain
                  from discontinued operations
              
              
              -
              
              
              9,124Total
                  Gain from Discontinued Operations
              
              
              -
              
              
              246,501INCOME
                  (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST
              
              
              (5,343,131
              )
              
              5,966,253PROVISION
                  FOR INCOME TAXES
              
              
              -
              
              
              -INCOME
                  (LOSS) BEFORE MINORITY INTEREST
              
              
              (5,343,131
              )
              
              5,966,253MINORITY
                  INTEREST IN INCOME OF SUBSIDIARY
              
              
              (477,453
              )
              
              (3,056,647
              )NET
                  INCOME (LOSS)
              
              $
              (5,820,584
              )
              $
              2,909,606NET
                  INCOME (LOSS) PER COMMON SHARE - BASIC AND DILUTED:Net
                  income (loss) from continuing operations
              
              $
              (0.07
              )
              $
              0.04Net
                  income from discontinued operations
              
              
              -
              
              
              -Basic
                  earnings (loss) per share
              
              $
              (0.07
              )
              $
              0.04Diluted
                  earnings (loss) per share
              
              $
              (0.07
              )
              $
              0.04Weighted
                  common shares outstanding - basic
              
              
              84,425,728
              
              
              77,523,502Weighted
                  common shares outstanding - diluted
              
              
              84,425,728
              
              
              81,381,921


See
        notes
        to consolidated financial statements


F-4




GENESIS
      TECHNOLOGY GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
        STATEMENT OF SHAREHOLDERS' EQUITY
 For
        the
        Years Ended September 30, 2007 and 2006
  Preferred
                    Stock Series A $.001
                  Par
                    Value
                
                Common
                    Stock, $.001 Par ValueNumber
                    of Shares
                
                Amount
                
                Number
                    of Shares
                
                Amount
                
                Additional
                    Paid-in Capital
                
                Accumulated
                    Deficit
                
                Treasury
                    Stock
                
                Subscriptions
                    Receivable
                
                Comprehensive
                    Income (Loss)
                
                Total
                    Shareholders' EquityBalance,
                    September 30, 2005
                
                
                97,500
                
                $
                97
                
                
                69,462,097
                
                $
                69,462
                
                $
                19,803,654
                
                $
                (19,389,921
                )
                $
                -
                
                $
                -
                
                $
                (109,068
                )
                $
                374,224Stock
                    options granted to director and employees
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                351,929
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                351,929Stock
                    options granted to consultants for services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                124,718
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                124,718Common
                    stock issued for services and accounts payable
                
                
                -
                
                
                -
                
                
                2,006,869
                
                
                2,007
                
                
                278,338
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                280,345Conversion
                    of preferred stock to common stock
                
                
                (82,100
                )
                
                (82
                )
                
                3,538,792
                
                
                3,540
                
                
                (3,458
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Shares
                    issued from exercise of stock options
                
                
                -
                
                
                -
                
                
                6,996,750
                
                
                6,997
                
                
                382,374
                
                
                -
                
                
                -
                
                
                (182,340
                )
                
                -
                
                
                207,031Purchase
                    of treasury stock
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (2,805
                )
                
                -
                
                
                -
                
                
                (2,805
                )Shares
                    issued from exercise of stock warrants
                
                
                -
                
                
                -
                
                
                1,646,983
                
                
                1,647
                
                
                499,859
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                501,506Preferred
                    stock dividend
                
                
                -
                
                
                -
                
                
                380,621
                
                
                380
                
                
                87,924
                
                
                (88,304
                )
                
                -
                
                
                -
                
                
                -
                
                
                -Amortization
                    of deferred compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Effects
                    of adoption of FAS 123( R) / Unamortized costs associated with
                    the
                    issuance of common stock and grand of warrants and options for
                    services
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                78,425
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                78,425Other
                    comprehensive income:
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Net
                    income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                2,909,606
                
                
                -
                
                
                -
                
                
                -
                
                
                2,909,606Comprehensive
                    income - change in unrealized gain on marketable equity securities
                    and
                    foreign currency exchange-net of taxes of $0
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                396,186
                
                
                396,186Total
                    comprehensive income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                3,305,792Balance,
                    September 30, 2006
                
                
                15,400
                
                
                15
                
                
                84,032,112
                
                
                84,033
                
                
                21,603,763
                
                
                (16,568,619
                )
                
                (2,805
                )
                
                (182,340
                )
                
                287,118
                
                
                5,221,165Common
                    stock issued for services to directors
                
                
                -
                
                
                -
                
                
                1,000,000
                
                
                1,000
                
                
                136,500
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                137,500Common
                    stock issued for services to consultant
                
                
                -
                
                
                -
                
                
                2,150,714
                
                
                2,151
                
                
                280,639
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                282,790Stock
                    options granted to director and officers
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                991,831
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                991,831Liabilities
                    used to offset subscription receivable
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                182,340
                
                
                -
                
                
                182,340Shares
                    cancelled in connection with settlement
                
                
                -
                
                
                -
                
                
                (1,575,000
                )
                
                (1,575
                )
                
                (155,925
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (157,500
                )Shares
                    cancelled
                
                
                -
                
                
                -
                
                
                (343,706
                )
                
                (344
                )
                
                (47,775
                )
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (48,119
                )Amortization
                    of deferred compensation in connection with options granted executives
                    and
                    directors in 2007
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,552,769
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,552,769Amortization
                    of deferred compensation
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -Effects
                    of adoption of FAS 123( R) / Unamortized costs associated with
                    the
                    issuance of common stock and grant of warrants and options for
                    services
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                206,282
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                206,282Other
                    comprehensive income:Net
                    loss
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (5,820,584
                )
                
                -
                
                
                -
                
                
                -
                
                
                (5,820,584
                )Comprehensive
                    income - change in unrealized gain on marketable equity securities,
                    net of
                    tax of $0
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                1,227,931
                
                
                1,227,931Total
                    comprehensive income
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                -
                
                
                (4,592,653
                )Balance,
                    September 30, 2007
                
                
                15,400
                
                $
                15
                
                
                85,264,120
                
                $
                85,265
                
                $
                24,568,084
                
                $
                (22,389,203
                )
                $
                (2,805
                )
                $
                -
                
                $
                1,515,049
                
                $
                3,776,405




See
        notes
        to consolidated financial statements




F-5




GENESIS
        TECHNOLOGY GROUP, INC AND SUBSIDIARIES
 CONSOLIDATED
        STATEMENTS OF CASH FLOWS
  For
                  the Year EndedSeptember
                  30,2007
              
              2006CASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  income (loss)
              
              $
              (5,820,584
              )
              $
              2,909,606Income
                  from discontinued operations
              
              
              -
              
              
              246,501Income
                  (loss) from continuing operations
              
              
              (5,820,584
              )
              
              2,663,105Adjustments
                  to reconcile net income (loss) to net cash used in operating
                  activities:Depreciation
              
              
              17,561
              
              
              7,915Minority
                  interest income
              
              
              477,453
              
              
              3,056,647Gain
                  on sale of marketable securities
              
              
              (154,020
              )
              
              (1,046,916
              )Loss
                  on impariment of marketable securities
              
              
              26,000
              
              
              20,300Unrealized
                  gain on trading securities
              
              
              (547,811
              )
              
              -Marketable
                  equity securities received for services
              
              
              (3,015,000
              )
              
              (6,736,896
              )Stock-based
                  compensation and consulting
              
              
              3,123,053
              
              
              981,672Loss
                  on impariment of cost-method investment
              
              
              -
              
              
              34,000Compensation
                  expense from distribution of restricted marketable equity
                  securities
              
              
              1,691,856
              
              
              -Settlement
                  income, net
              
              
              (141,660
              )
              
              -Impairment
                  on deferred contract costs
              
              
              632,357
              
              
              -Changes
                  in assets and liabilities:Prepaid
                  and other current assets
              
              
              (33,890
              )
              
              (6,730
              )Due
                  from related party
              
              
              394,291
              
              
              -Deferred
                  contract costs
              
              
              (16,854
              )
              
              (100,503
              )Other
                  assets
              
              
              12,500
              
              
              (8,173
              )Accounts
                  payable and accrued expenses
              
              
              877,819
              
              
              167,227Due
                  to related party
              
              
              422,792
              
              
              75,000Deferred
                  revenue
              
              
              -
              
              
              (13,333
              )Net
                  cash used in continuing operations activities
              
              
              (2,054,137
              )
              
              (906,685
              )Net
                  cash used in discontinued operations
              
              
              (30,000
              )
              
              (7,668
              )NET
                  CASH USED IN OPERATING ACTIVITIES
              
              
              (2,084,137
              )
              
              (914,353
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Capital
                  expenditures
              
              
              (1,920
              )
              
              -Purchase
                  of marketable securities
              
              
              -
              
              
              (600,331
              )Proceeds
                  from sale of marketable securities
              
              
              1,851,796
              
              
              1,413,307NET
                  CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
              
              
              1,849,876
              
              
              812,976CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from exercise of stock options and warrants
              
              
              -
              
              
              548,380Contributions
                  from LLC members
              
              
              176,601
              
              
              127,550NET
                  CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
              
              
              176,601
              
              
              675,930EFFECT
                  OF EXCHANGE RATE CHANGES IN CASH
              
              
              -
              
              
              170NET
                  (DECREASE) INCREASE IN CASH
              
              
              (57,660
              )
              
              574,723CASH
                  - beginning of year
              
              
              592,610
              
              
              17,887CASH
                  - end of year
              
              $
              534,950
              
              $
              592,610SUPPLEMENTAL
                  DISCLOSURE OF CASH FLOW INFORMATION:Cash
                  paid for:Interest
              
              $
              -
              
              $
              -Income
                  taxes
              
              $
              -
              
              $
              -Non-cash
                  investing and financing activities:Distribution
                  of marketable securities to LLC member for minority
                  interest
              
              $
              3,092,899
              
              $
              -Issuance
                  of common stock for deferred contract costs
              
              $
              233,571
              
              $
              -Preferred
                  stock dividend paid with common stock
              
              $
              -
              
              $
              88,304Common
                  stock issued for debt
              
              $
              -
              
              $
              13,902Common
                  stock issued for subscription receivable
              
              $
              -
              
              $
              182,340Subscription
                  receivable offset by accured expenses
              
              $
              182,340
              
              $
              -




See
      notes
      to consolidated financial statements.




F-6




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007




NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
      Company





Genesis
      Pharmaceuticals Enterprises, Inc., formally known as Genesis Technology Group,
      Inc. (the "Company" or "Genesis"), was a business development and marketing
      firm
      that specializes in advising and providing a turnkey solution for Chinese small
      and mid-sized companies entering Western markets.





Effective
      June 20, 2005, the Company formally established Genesis Equity Partners LLC
      ("GEP") in which it owns 51% and its strategic partners, China West, LLC and
      Joshua Tan, Inc., owned, the remaining 49%.  On
      May
      15, 2007, GEP amended its membership agreement and accordingly, as of the March
      1, 2007, the Company owns 71%. Subsequently, the Company organized additional
      limited liability companies,dedicated to specific Chinese partner companies.
      While its equity position in these LLC's may vary, the minimum ownership shall
      be maintained at 51%, to ensure reporting of consolidated earnings. The
      following limited liability companies have been established during the year
      ended September 30, 2007:





o
            Genesis
                Equity Partners, LLC (Huayang) - established in the State of Delaware
                on
                February 1, 2007 and currently owned 100% by the
                Company.





o
            Genesis
                Equity Partners, LLC (Liziyuan) -established in the State of Delaware
                on
                February 27, 2007 and currently owned 100% by the
                Company.





·
            Genesis
                Equity Partners, LLC (Site) - established in the State of Delaware
                on
                March 28, 2007 and currently owned 100% by the
                Company.





o
            Genesis
                Equity Partners II, LLC (GEP II) - established in the State of Florida
                on
                August 8, 2007 and currently owned 71% by the
                Company.





GEP
      incurs legal, audit and other related fees and expenses in connection with
      the
      signing of these agreements, which have been recorded as deferred contract
      costs
      in the accompanying balance sheet. While the earning of a significant equity
      position in these partner companies could positively impact the earnings and
      assets of the Company, it also carries significant risks, including--but not
      limited to--such circumstances as (1) the audit may conclude that the Chinese
      partner companies do not have the value or potential estimated in the screening
      and pre-audit stages; (2) the Chinese partner companies maintain the right
      to
      cancel the GEP contracts, with just 60 days' notice, until it reaches public
      company status; and (3), for a variety of reasons, the Chinese partner companies
      may never reach public company status.




F-7


GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
      Company (continued)





On
      October 1, 2007(the “Closing Date”), Genesis executed a Share Acquisition and
      Exchange Agreement (“ Exchange Agreement ”)
      by and
      among Genesis, Karmoya International Ltd., a British Virgin Islands company
      (“ Karmoya ”),
      and
      the shareholders of 100% of Karmoya’s capital stock (the “ Karmoya Shareholders ”).
      After
      the Closing Date, Karmoya became the Company’s wholly owned
      subsidiary.





Karmoya
      International Limited (“Karmoya”) was established on July 18, 2007, under the
      laws of British Virgin Islands. Prior to the Closing Date of the
      exchange transaction, the majority shareholders of Karmoya were Chinese citizens
      who own 100% of Laiyang Jiangbo Pharmaceutical Co., Ltd (“Laiyang Jiangbo”)
      which is a limited liability company and was formed under laws of the People’s
      Republic of China (“PRC”). Karmoya was established as a “special purpose
      vehicle” for the foreign fund rising for Laiyang Jiangbo. China State
      Administration of Foreign Exchange (“SAFE”) requires the owners of any Chinese
      companies to obtain SAFE’s approval before establishing any offshore holding
      company structure for foreign financing as well as subsequent acquisition
      matters under the “Circular 106” regulation in PRC. On September 19, 2007,
      Karmoya was approved by local Chinese SAFE as a “special purpose vehicle”
offshore company.




On
      September 20, 2007, Karmoya acquired 100% of Union Well International Limited
      (“Union Well”), a Cayman Islands corporation established on May 9, 2007. On
      September 17, 2007, Union Well established a 100% subsidiary, Genesis Jiangbo
      (Laiyang) Biotech Technology Co., Ltd. (“GJBT”), in PRC as a wholly owned
      foreign limited liability company with registered capital of $12 million. GJBT
      is engaged in the developing, manufacturing and selling healthy
      medicines.




Laiyang
      Jiangbo was formed under laws of the PRC in August, 2003 with a registered
      capital of $1,210,000 (RMB 10,000,000). On December 1, 2006, Laiyang Jiangbo’s
      registered capital increased to $6,664,000 (RMB 50,000,000). Laiyang Jiangbo
      produces and sells western pharmaceuticals. Further, Laiyang Jiangbo is focused
      on the development of innovative medicines to address various medical needs
      for
      patients worldwide. Laiyang Jiangbo operates in 26 provinces in the PRC and
      is headquartered in Laiyang City, Shandong province, China.





F-8




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





The
      Company (continued)





On
      September 21, 2007, GJBT entered a series of contractual arrangements (the
      “Contractual Arrangements”) with Laiyang Jiangbo and its shareholders in which
      GJBT takes over management of business activities of Laiyang Jiangbo and holds
      a
      100% variable interest in Laiyang Jiangbo. As current PRC regulations restricted
      foreign ownerships of domestic companies in PRC, the Company entered the series
      contractual arrangements to control and operate the Laiyang Jiangbo. The
      Contractual Arrangements are comprised of a series of agreements, including
      a
      Consulting Services Agreement and an Operating Agreement, through which GJBT
      has
      the right to advise, consult, manage and operate each of Laiyang Jiangbo, and
      collect and own all of their respective net profits. Additionally, Laiyang
      Jiangbo’s Shareholders have granted their voting rights over Laiyang Jiangbo to
      GJBT. In order to further reinforce GJBT’s rights to control and operate Laiyang
      Jiangbo, Laiyang Jiangbo and its shareholders have granted GJBT, the exclusive
      right and option to acquire all of their equity interests in Laiyang Jiangbo
      or,
      alternatively, all of the assets of Laiyang Jiangbo. Further Laiyang Jiangbo
      Shareholders have pledged all of their rights, titles and interests in the
      Laiyang Jiangbo to GJBT. As both companies are under common control, this has
      been accounted for as a reorganization of entities and the financial statements
      have been prepared as if the reorganization had occurred retroactively. Karmoya
      consolidates Laiyang Jiangbo’s results, assets and liabilities in its financial
      statements.





On
      October 11, 2007, after the Closing Date of the exchange transaction, the
      Company’s board of directors and the majority holders of the capital stock
      approved amendments to the Company’s Articles of Incorporation by written
      consent to change the corporate name to Genesis Pharmaceuticals Enterprises,
      Inc.





Discontinued
      operations





On
      November 15, 2001, the Company entered into a Stock Purchase Agreement with
      Shanghai Chorry Technology Development Co., Limited ("Chorry") and Chorry's
      shareholder and acquired an 80% interest in Chorry. Chorry was formerly known
      as
      Shanghai Zhaoli Technology Development Company Ltd. Chorry is a Chinese company
      with principal offices in Shanghai, China. On November 2, 2005, the Company
      entered into a stock purchase agreement with Dragon Ventures (OTC: DRGV), a
      Nevada public corporation, for the sale of Chorry. The Company closed on this
      transaction on February 14, 2006 (See Note 2 - Discontinued Operations).
      Accordingly, Chorry is reported as a discontinued operation, and prior periods
      have been restated in the Company's financial statements and related footnotes
      to conform to this presentation.




F-9


GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis
      of
      presentation





The
      consolidated financial statements include the accounts of Genesis Technology
      Group, Inc. and is wholly and partially-owned subsidiaries and are prepared
      in
      accordance with generally accepted accounting principles in the United States
      of
      America ("US GAAP"). All significant inter-company balances and transactions
      have been eliminated.





Use
      of
      estimates





The
      preparation of financial statements in conformity with US GAAP requires
      management to make estimates and assumptions that affect the reported amounts
      of
      assets and liabilities and disclosure of contingent assets and liabilities
      at
      the date of the financial statements and the reported amounts of revenue and
      expenses during the reporting period. Actual results could differ from those
      estimates. Significant estimates in 2007 and 2006 include the valuation of
      stock-based compensation, the useful life of property and equipment, valuation
      of deferred acquisition costs and the valuation of its restricted marketable
      equity securities.





Cash
      and
      cash equivalents





For
      purposes of the consolidated statements of cash flows, the Company considers
      all
      highly liquid instruments purchased with a maturity of three months or less
      and
      money market accounts to be cash equivalents.





Fair
      value of financial instruments





Statement
      of Financial Accounting Standards No. 107, "Disclosures about Fair Value of
      Financial Instruments," requires disclosures of information about the fair
      value
      of certain financial instruments for which it is practicable to estimate the
      value. For purpose of this disclosure, the fair value of a financial instrument
      is the amount at which the instrument could be exchanged in a current
      transaction between willing parties, other than in a forced sale or
      liquidation.





The
      carrying amounts reported in the consolidated balance sheet for cash and
      accounts payable and accrued expenses approximate their fair market value based
      on the short-term maturity of these instruments.





F-10





GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


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





Property
      and equipment





Property
      and equipment are stated at cost. Depreciation and amortization are provided
      using the straight-line method over the estimated economic lives of the assets,
      which are from five to seven years. Expenditures for major renewals and
      betterments that extend the useful lives of property and equipment are
      capitalized. Expenditures for maintenance and repairs are charged to expense
      as
      incurred. In accordance with Statement of Financial Accounting Standards (SFAS)
      No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
      the
      Company examines the possibility of decreases in the value of property and
      equipment when events or changes in circumstances reflect the fact that their
      recorded value may not be recoverable.





Marketable
      equity securities





Marketable
      equity securities consist of investments in equity of publicly traded companies
      and are stated at market value based on the most recently traded price of these
      securities at September 30, 2007. The Company has marketable securities
      classified as trading and available for sale securities at September 30, 2007.
      Realized and unrealized gains and losses on trading securities are included
      in
      earnings. Unrealized gains and losses on available for sale securities,
      determined by the difference between historical purchase price and the market
      value at each balance sheet date, are recorded as a component of Accumulated
      Other Comprehensive Income in Stockholders' Equity. Realized gains and losses
      are determined by the difference between historical purchase price and gross
      proceeds received when the marketable securities are sold. Restricted marketable
      equity securities are shown as long-term assets. For the purpose of computing
      realized gains and losses, cost is identified on a specific identification
      basis. For marketable equity securities for which there is an
      other-than-temporary impairment, an impairment loss is recognized as a realized
      loss. The Company's investment impairment analysis generally include review
      and
      analysis of several factors, including:





F-11




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Marketable
      equity securities (continued)





1.
            Discussions
                with respective each company's management to review the status of
                key
                internally established development milestones. As a result of the
                Company's strategic alliance with partner companies, the Company
                regularly
                has access to information regarding technology developments and business
                initiatives that was generally not available to the investor
                community.


2.
              The
                  Company's knowledge of partner company's activities relating to
                  new
                  agreements, new investor funding and milestone
                  achievements.
 3.
                The
                    Company's review of financial position, primarily the cash resources
                    and operating cash flow, to determine if cash levels were sufficient
                    to
                    continue to fund projected operations and ongoing technology
                    development.


Additionally,
      the Company considers EITF Issue No. 03-01, "The Meaning of Other-Than-Temporary
      Impairment and Its Application to Certain Investments" ("EITF 03-01"). According
      to EITF 03-01, a security is impaired when its fair value is less than its
      carrying value, and an impairment is other than-temporary if the investor does
      not have the "ability and intent" to hold the investment until a forecasted
      recovery of its carrying amount. EITF 03-01 holds that the impairment of each
      security must be assessed using the ability-and-intent-to-hold criterion
      regardless of the severity or amount of the impairment. The Company intends
      to
      hold its investment in marketable securities for a period of time sufficient
      to
      allow for any anticipated recovery in market value.





Investment
      in non-marketable equity securities





Certain
      securities that the Company may invest in can be determined to be
      non-marketable. Non-marketable securities where the Company owns less than
      20%
      of the investee are accounted for at cost pursuant to APB No. 18, "The Equity
      Method of Accounting for Investments in Common Stock" ("APB 18"). The Company
      periodically reviews its investments in non-marketable securities and impairs
      any securities whose value is considered non-recoverable. For the year ended
      September 30, 2007, the Company recorded an impairment loss of $26,000 related
      to its investment in a Chinese limited liability company which has been included
      in other selling, general and administrative expenses on the accompanying
      consolidated statement of operations. At September 30, 2007, the Company valued
      its investment in non-marketable equity securities at $ 0.




F-12




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(CONTINUED)





Income
      taxes





The
      Company files federal and state income tax returns in the United States for
      its
      domestic operations, and files separate foreign tax returns for the Company's
      Chinese subsidiaries. Income taxes are accounted for under Statement of
      Financial Accounting Standards No. 109, "Accounting for Income Taxes," which
      is
      an asset and liability approach that requires the recognition of deferred tax
      assets and liabilities for the expected future tax consequences of events that
      have been recognized in the Company's financial statements or tax
      returns.





Net
      income (loss) per common share





Basic
      income (loss) per share is computed by dividing net income (loss) by weighted
      average number of shares of common stock outstanding during each period. Diluted
      income per share is computed by dividing net income by the weighted average
      number of shares of common stock, common stock equivalents and potentially
      dilutive securities outstanding during each period. The Company's common stock
      equivalents at September 30, 2007 include 19,546,954 unexercised warrants and
      options and 663,793 shares issuable upon conversion of Series A preferred
      stock . Diluted
      loss per common share is not presented because it is anti-dilutive. The
      following table presents a reconciliation of basic and diluted earnings per
      share:




For
                the Year
              Ended
                September 30,2007
            
            
            2006Net
                income (loss)
            
            $
            (5,820,
                584
            )
            $
            2,909,606Weighted
                average shares outstanding - basic
            
            
            84,452,728
            
            
            77,523,502Net
                income (loss) per common shares - basic
            
            $
            (0.07
            )
            $
            0.04Net
                income (loss)
            
            $
            (5,820,584
            )
            $
            2,909,606Weighted
                average shares outstanding - basic
            
            
            84,452,728
            
            
            77,523,502Effect
                of dilutive securitiesUnexercised
                options and warrants
            
            
            -
            
            
            3,858,419Weighted
                average shares outstanding- diluted
            
            
            84,452,728
            
            
            81,381,921Net
                income (loss) per common shares - diluted
            
            $
            (0.07
            )
            $
            0.04





F-13




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


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





Stock-based
      compensation





Effective
      October 1, 2005, the Company adopted Statement of Financial Accounting Standards
      No. 123 (revised 2004), Share Based Payment ("SFAS No. 123R"). SFAS No. 123R
      establishes the financial accounting and reporting standards for stock-based
      compensation plans. As required by SFAS No. 123R, the Company recognized the
      cost resulting from all stock-based payment transactions including shares issued
      under its stock option plans in the financial statements.





Concentration
      of credit risk





Financial
      instruments which potentially subject the Company to concentrations of credit
      risk consist principally of cash and marketable equity securities. The Company
      places its cash and marketable securities with high credit quality financial
      institutions. Almost all of the Company's sales are credit sales which are
      primarily to customers whose ability to pay is dependent upon the industry
      economics prevailing in these areas. The Company also performs ongoing credit
      evaluations of its customers to help further reduce credit risk.





The
      Company places its cash with high credit quality financial institutions. At
      September 30, 2007, the Company’s cash and cash equivalent amounted to $563,792
      is maintained in Bank of America, of which $463,792 is at risk.





The
      Company's investments in restricted marketable equity securities are held in
      two
      publicly-traded companies with substantial portion of their assets located
      in
      China. These investments in marketable equity securities accounted for 29.4%
      of
      the Company's total assets at September 30, 2007.





F-14




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007




NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Concentration
      of credit risk (continued)





The
      Company has a receivable from a former director and officer of the Company
      amount to $3,250,000. In connection with a $325,000 secured promissory note
      to
      the former officer, 3,250,000 shares of Lotus Pharmaceuticals, Inc.'s ("LTUS")
      common stock owned by the Company are held in escrow account in the name of
      the
      former officer(see Note 9 and Note 11). The LTUS shares were valued at
      $3,250,000 or $1 per share at September 30, 2007 and are recorded as other
      receivable-related party in the accompanying consolidated balance sheet. The
      receivable from the former director and officer of the Company accounted for
      54.6 % of the Company’s total assets at September 30, 2007.





For
      the
      year ended September 30, 2007, one customer accounted for 99.9% of the Company's
      net revenues.





Research
      and development





Research
      and development costs, if any, are expensed as incurred. For the year ended
      September 30, 2007 and 2006, the company did not incur any research and
      development costs.





Advertising





Advertising
      is expensed as incurred. Advertising expenses for the years ended September
      30,
      2007 and 2006 was not material.





Revenue
      recognition





The
      Company follows the guidance of the Securities and Exchange Commission's Staff
      Accounting Bulletin 104 for revenue recognition. In general, the Company records
      revenue when persuasive evidence of an arrangement exists, services have been
      rendered or product delivery has occurred, the sales price to the customer
      is
      fixed or determinable, and collectability is reasonably assured. The following
      policies reflect specific criteria for the various revenues streams of the
      Company:





Consulting
      income is recognized on a straight-line basis over the period of the service
      agreement. Deferred revenues relates to consulting revenues that is being
      recognized over the period of the service agreement.





F-15


GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Revenue
      recognition (continued)





Substantially
      all of the services the Company provides are paid in common shares issued by
      its
      clients. These instruments are classified as marketable equity securities on
      the
      consolidated balance sheet, if still held at the financial reporting date.
      These
      instruments are stated at fair value in accordance with the provision of
      Statement of Financial Accounting Standards No. 115, "Accounting for Certain
      Investments in Debt and Equity Securities" (SFAS No. 115) and EITF 00-8
      "Accounting by a grantee for an equity instrument to be received in conjunction
      with providing goods or services." Primarily all of the equity instruments
      are
      received from small public companies.





Recent
      accounting pronouncements





In
      September 2006, the FASB issued Statement of Financial Accounting Standards
      No.
      157, "Fair Value Measurements" ("FAS 157"). This Statement defines fair value
      as
      used in numerous accounting pronouncements, establishes a framework for
      measuring fair value in generally accepted accounting principles and expands
      disclosure related to the use of fair value measures in financial statements.
      The Statement is to be effective for the Company's financial statements issued
      in 2008; however, earlier application is encouraged. The Company is currently
      evaluating the timing of adoption and the impact that adoption might have on
      its
      financial position or results of operations





In
      February 2007, the FASB issued SFAS No. 159, *“The
      Fair Value Option for Financial Assets and Financial Liabilities, Including
      an
      Amendment of FASB Statement No. 115”* , under
      which entities will now be permitted to measure many financial instruments
      and
      certain other assets and liabilities at fair value on an
      instrument-by-instrument basis. This Statement is effective as of the beginning
      of an entity’s first fiscal year that begins after November 15, 2007. Early
      adoption is permitted as of the beginning of a fiscal year that begins on or
      before November 15, 2007, provided the entity also elects to apply the
      provisions of SFAS 157. The Company is currently assessing the impact, if
      any, the adoption of SFAS 159 will have on its financial
      statements.





F-16





GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007




NOTE
      1 -
      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Recent
      accounting pronouncements (continued)





In
      June
      2007, the FASB issued FASB Staff Position No. EITF 07-3, “Accounting for
      Nonrefundable Advance Payments for Goods or Services Received for use in Future
      Research and Development Activities” (“FSP EITF 07-3”), which addresses whether
      nonrefundable advance payments for goods or services that used or rendered
      for
      research and development activities should be expensed when the advance payment
      is made or when the research and development activity has been performed. The
      Company is currently evaluating the effect of this pronouncement on financial
      statements.





In
      December 2007, the FASB issued SFAS No. 141(R), *“Business
      Combinations”* (“SFAS
      141(R)”), which replaces SFAS No. 141. SFAS No. 141(R) establishes principles
      and requirements for how an acquirer recognizes and measures in its financial
      statements the identifiable assets acquired, the liabilities assumed, any
      non-controlling interest in the acquiree and the goodwill acquired. The
      Statement also establishes disclosure requirements which will enable users
      to
      evaluate the nature and financial effects of the business combination. SFAS
      141(R) is effective for fiscal years beginning after December 15, 2008. The
      adoption of SFAS 141(R) will have an impact on accounting for business
      combinations once adopted, but the effect is dependent upon acquisitions at
      that
      time.





In
      December 2007, the FASB issued SFAS No. 160, *“Noncontrolling
      Interests in Consolidated Financial Statements - an amendment of Accounting
      Research Bulletin No. 51”* (“SFAS
      160”), which establishes accounting and reporting standards for ownership
      interests in subsidiaries held by parties other than the parent, the amount
      of
      consolidated net income attributable to the parent and to the noncontrolling
      interest, changes in a parent’s ownership interest and the valuation of retained
      non-controlling equity investments when a subsidiary is deconsolidated. The
      Statement also establishes reporting requirements that provide sufficient
      disclosures that clearly identify and distinguish between the interests of
      the
      parent and the interests of the non-controlling owners. SFAS 160 is effective
      for fiscal years beginning after December 15, 2008. The Company has not
      determined the effect that the application of SFAS 160 will have on its
      consolidated financial statements.





Other
      accounting standards that have been issued or proposed by the FASB or other
      standards-setting bodies that do not require adoption until a future date are
      not expected to have a material impact on the consolidated financial statements
      upon adoption.





F-17





GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      2 -
      DISCONTINUED OPERATIONS





On
      November 2, 2005, the Company entered into a stock purchase agreement with
      Dragon Ventures (Pink sheets symbol: DRGV), a Nevada public corporation, for
      the
      sale of its majority-owned subsidiary, Chorry Technology Development Co., Inc.
      “Chorry”). The Company closed on this transaction on February 14, 2006. The
      agreement includes the following provisions:





(1)
            The
                Company delivered 100% of its shares in Chorry, representing its
                80%
                ownership of that subsidiary, to
                DRGV.





(2)
            DRGV
                paid to the Company 17,159,965 shares of DRGV's common stock at a
                price
                calculated at the average closing price at the initial closing date
                on
                December 15, 2005 of $.027 per share or $463,319. Accordingly,in
                connection with the sale of Chorry, for the year ended September
                30, 2006,
                the Company recorded a gain from sale of discontinued operations
                of
                $237,377.





Accordingly,
      Chorry is reported as a discontinued operation, and prior periods have been
      restated in the Company's financial statements and related footnotes to conform
      to this presentation.





The
      remaining liabilities of discontinued operations are presented in the balance
      sheet under the caption "Liabilities of discontinued operation", totaling
      $120,709.





The
      following table sets forth for the fiscal years indicated selected financial
      data of the Company's discontinued operations.




2007
              
              2006Revenues
              
              $
              -
              
              $
              7,398,358Cost
                  of sales
              
              
              -
              
              
              7,259,500Gross
                  profit
              
              
              -
              
              
              138,858Operating
                  and other non-operating expenses
              
              
              -
              
              
              129,734Gain
                  from discontinued operations
              
              
              -
              
              
              9,124Gain
                  from disposal of discontinued operations
              
              
              -
              
              
              237,377Total
                  gain from discontinued operations
              
              $
              -
              
              $
              246,501




F-18




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      3 -
      MARKETABLE EQUITY SECURITIES





Marketable
      equity securities consist of investments in equity of publicly traded companies
      and are stated at market value based on the most recently traded price of these
      securities at September 30, 2007. The Company has marketable securities
      classified as trading and available for sale securities at September 30, 2007.
      Realized and unrealized gains and losses on trading securities are included
      in
      earnings. Unrealized gains and losses on available for sale securities,
      determined by the difference between historical purchase price and the market
      value at each balance sheet date, are recorded as a component of Accumulated
      Other Comprehensive Income in Stockholders' Equity. When the Company reclassify
      its securities from available for sale securities to trading securities, the
      unrealized gains and losses on those reclassified securities are reclassified
      from the Accumulated Other Comprehensive Income in Stockholders’ Equity to the
      earnings. Realized gains and losses are determined by the difference between
      historical purchase price and gross proceeds received when the marketable
      securities are sold. Restricted marketable equity securities are shown as
      long-term assets. For the purpose of computing realized gains and losses, cost
      is identified on a specific identification basis. For marketable equity
      securities for which there is an other-than-temporary impairment, an impairment
      loss is recognized as a realized loss.





For
      the
      years ended September 30, 2007 and 2006, the Company recognized a gain of
      $154,020 and $1,046,916 from the sale of trading marketable equity securities,
      respectively, which has been reflected in the accompanying consolidated
      statement of operations. Additionally, the Company recognized an unrealized
      gain
      on trading securities of $547,811 and $0, respectively, which has been reflected
      as a component of accumulated other comprehensive income in stockholders’
equity.





NOTE
      4 -
      INVESTMENT IN NON-MARKETABLE EQUITY SECURITIES





Certain
      securities that the Company may receive for services can be determined to be
      non-marketable. Non-marketable securities where the Company owns less than
      20%
      of the investee are accounted for at cost pursuant to APB No. 18, "The Equity
      Method of Accounting for Investments in Common Stock" ("APB 18")The Company
      periodically reviews its investments in non-marketable securities and impairs
      any securities whose value is considered non-recoverable. For the years ended
      September 30, 2007 and 2006, the Company recorded an impairment loss of $26,000
      and $20,300 related to its remaining securities in a Chinese limited liability
      company which has been included in other selling, general and administrative
      expenses on the accompanying consolidated statement of operations.





F-19




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      5 -
      MARKETABLE SECURITIES RECEIVED FOR SERVICES RENDERED





In
      the
      fall of 2005, GEP signed a General Partnership Agreement with Inner Mongolia
      Jin Ma Construction Co., Ltd. and its related companies, Inner Mongolia Jin
      Ma
      Real Estate Development Co., Ltd and Inner Mongolia Jin Ma Hotel Co.,Ltd.,
      (the
      "Jin Ma Companies"), a construction, real estate development, and hospitality
      company in Western China. On August 28, 2006, the members of Jin Ma established
      Gold Horse International, Inc., a Nevada company ("Gold Horse"). In June 2007,
      Gold Horse GJBT entered a series of contractual arrangements with Jin Ma
      Companies and its shareholders in which Gold Horse takes over management of
      business activities of Jin Ma Companies and holds a 100% variable interest
      in
      Jin Ma Companies. On June 29, 2007, Gold Horse and the stockholders of 100%
      of
      Gold Horse's common stock executed a Share Exchange Agreement ("Exchange
      Agreement") with Speedhaul Holdings, Inc., Inc., a publicly-trading company
      ("SPEH"). The Exchange Agreement closed on June 29, 2007 and GEP received
      16,750,000 restricted common shares of SPEH for services performed in helping
      Gold Horse facilitate the merger with SPEH and for other business development
      services. Gold Horse owns 100% of Global Rise International, Limited ("Global
      Rise"), a Cayman Islands corporation. Through Global Rise, Gold Horse operates,
      controls and beneficially owns the Jin Ma Companies under a series of
      contractual arrangements.





The
      Company valued the 16,750,000 shares of SPEH at $0.18 per share based on an
      accredited business valuation performed by an independent party. The Company
      believes that it was appropriate to use an independent valuation for purposes
      of
      valuing the shares of SPEH received inasmuch as SPEH was essentially a shell
      corporation with no sales and assets. The essential basis for the valuation
      of
      the restricted common shares received by the Company was predicated on the
      valuation of the operation, history and prospects of the Jin Ma Companies,
      inasmuch as the common shares received by the Company occurred in conjunction
      with the completed merger. Based on the circumstances, the Company believes
      that
      in order to determine the fair value of the restricted shares of SPEH received
      on June 29, 2007, the valuation report would provide a more cogent estimation
      of
      the value of the restricted common shares received than the lack of trading
      prices posted for SPEH prior to the merger.





In
      connection with the receipt of the restricted common shares of SPEH, the Company
      recorded revenue of $3,015,000, which accounts for approximately 99.3% of the
      Company's revenues for the year ended September 30, 2007.





F-20




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      5 -
      MARKETABLE SECURITIES RECEIVED FOR SERVICES RENDERED (CONTINUED)





In
      March
      2006, the Company's 51%-owned subsidiary, GEP, signed a General Partnership
      Agreement with Liang Fang Pharmaceutical, Ltd. ("Liang"), a company registered
      in the People's Republic of China. On August 28, 2006, GEP and the members
      of
      Liang established Lotus Pharmaceutical International, Inc., a Nevada company
      ("Lotus"). On September 6, 2006, Lotus and the stockholders of 100% of Lotus'
      common stock (the "Lotus Stockholders") executed a Share Exchange Agreement
      ("Exchange Agreement") by and among Lotus Pharmaceutical International, Inc.,
      a
      Nevada corporation ("Lotus") with S.E. Asia Trading Company, Inc., a
      publicly-trading company ("SEAA"). The Exchange Agreement closed on September
      28, 2006 and GEP received 13,209,600 restricted common shares of SEAA for
      services performed in helping Lotus facilitate the merger with SEAA and for
      other business development services. The Company valued these shares at $.51
      per
      share based on an accredited business valuation performed by an independent
      party. Accordingly, for the year ended September 30, 2006, the Company recorded
      revenue of $6,736,896 related to the receipt of these restricted marketable
      equity securities.





NOTE
      6-
      IMPAIRMENT IN DEFERRED CONTRACT COSTS





During
      the year ended September 30, 2007, i n
      an
      effort to preserve and enhance stockholder value,  the
      Company sought to identify, evaluate and consider various companies and
      compatible or alternative business opportunities pursuant to which the Company
      would acquire a target company with an operating business and continue the
      acquired company’s business as a publicly-held entity. Upon identifying the
      target company, the Company decided to cease its business development and
      marketing operations and determined that the carrying value of deferred
      acquisition costs was not recoverable. As a result, the Company wrote down
      the
      carrying value of deferred contract cost of $608,357 and accrued additional
      $24,000 expenses related to the acquisitions. The expenses are recorded as
      an
      impairment loss on deferred contract cost in the statement of operation.





NOTE
      7 -
      SETTLEMENT INCOME/EXPENSES





On
      November 21, 2006, in connection with the settlement of a lawsuit with the
      Company former director and employee, the former director and employee returned
      1,575,000 shares of the Company's common stock owned by him. The Company
      cancelled these shares. The parties agreed to release each other from further
      action and have dismissed the lawsuit with prejudice. In connection with the
      return of the 1,575,000 shares of common stock, for the year ended September,
      2007, the Company recorded settlement income of $157,500 based on the fair
      market value of the common stock on the date of settlement of $0.10 per share
      or
      $157,500 based on the trading price of common shares.




F-21


GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      7 -
      SETTLEMENT INCOME/EXPENSES (CONTINUED)





In
      September 2007, the Company’s Board approved to pay Mr. Yang Lainkaun, majority
      owner of Jin Ma Companies 840,000 SPEH shares and $120,000 in cash to
      settle on the Company’s obligation related to financing of SPEH. In conjunction
      with SPEH reverse merger in June 2007, GEP
      received 16,750,000 restricted common shares of SPEH and the
      Company was obligated to assist SPEH to complete a financing deal. In August
      2007, Mr. Yang Lainkaun disputed the partnership agreement with GEP as the
      Company was unable to secure the financing deal for SPEH. In September 2007,
      the
      Company reached an agreement with Mr. Yang Liankaun and agreed to pay him
      840,000 SPEH shares (valued at $151,200) and $120,000 in cash. The Company
      recorded a contract settlement expense of $271,200 at September 30, 2007.





On
      October 9, 2007, in connection to a former employee of the Company’s lawsuit
      against the Company and its Chief Executive Officer , the Company and the former
      employee entered into a settlement agreement in which the Company agreed to
      pay
      $55,000 to its former employee and released the former employee from all claims
      against her, including forgiving her $15,840 stock
      subscription receivable from options exercised in November 2005 (see Note 9),
      and the former employee also agreed to release all claims against the Company
      and Mr. Gary L. Wolfson. This forgiveness has been recorded as settlement
      expense of $70,840 in the year ended September 30, 2007





NOTE
      8 -
      INCOME TAXES





The
      Company accounts for income taxes under Statement of Financial Accounting
      Standards No. 109, "Accounting for Income Taxes" "SFAS 109". SFAS 109 requires
      the recognition of deferred tax assets and liabilities for both the expected
      impact of differences between the financial statements and the tax basis of
      assets and liabilities, and for the expected future tax benefit to be derived
      from tax losses and tax credit carryforwards. SFAS 109 additionally require
      s
      the establishment of a valuation allowance to reflect the likelihood of
      realization of deferred tax assets.





The
      Company has a net operating loss carryforward for tax purposes totaling approximately
      $3.4 million at September 30, 2007 expiring through the year 2027.Internal
      Revenue Code Section 382 places a limitation on the amount of taxable income
      that can be offset by carryforwards after a change in control (generally greater
      than a 50% change in ownership).





F-22




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007
  NOTE
        8 -
        INCOME TAXES (CONTINUED)





Temporary
      differences, which give rise to a net deferred tax asset, are as
      follows:




2007
              
              2006Deferred
                  tax benefits - noncurrentNet
                  operating loss carryforward
              
              $
              1,292,000
              
              $
              1,671,000Capital
                  loss carryforward
              
              
              -
              
              
              -Total
                  deferred tax assets
              
              
              1,292,000
              
              
              1,671,000Less:
                  Valuation allowance
              
              
              (1,292,000
              )
              
              (1,671,000
              )$
              -
              
              $
              -




The
      table
      below summarizes the differences between the Company's effective tax rate and
      the statutory federal rate as follows for fiscal 2007 and 2006:




2007
              
              2006Computed
                  "expected" tax expense (benefit)
              
              
              (34.0
              )%
              
              34.0
              %State
                  income taxes
              
              
              (4.0
              )%
              
              4.0
              %Net
                  operating and capital losses used
              
              
              0
              %
              
              (38.0
              )%Change
                  in valuation allowance
              
              
              38.0
              %
              
              0.0
              %Effective
                  tax rate
              
              
              0.0
              %
              
              0.0
              %




The
      valuation allowance at September 30, 2007 was $1,292,000. The decrease during
      fiscal 2007 was approximately $379,000.





NOTE
      9 -
      STOCKHOLDERS' EQUITY





Common
      stock





On
      November 30, 2005, in connection with the exercise of stock options, the Company
      issued 528,000 shares of common stock to an employee for a subscription
      receivable of $15,840 due in March 2006. In April 2006, this employee filed
      a
      lawsuit against the Company. The subscription receivable was subsequently
      forgiven in September 2007 as a result of the settlement of the lawsuit (see
      note 7).




F-23




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Common
      stock (continued)





On
      November 30, 2005, in connection with the exercise of stock options, the Company
      issued 528,000 shares of common stock to an employee for a subscription
      receivable of $15,840 due in March 2006. In April 2006, this employee filed
      a
      lawsuit against the Company (see note 10). On October 9, 2007 the Company
      forgave this stock subscription receivable as part of the settlement of this
      lawsuit. This forgiveness has been recorded as settlement expense in the year
      ended September 30, 2007.





On
      December 9, 2005, Series A preferred stockholders' converted 11,600 share of
      Series A Preferred Stock into 500,000 shares of common stock.





In
      January 2006, the Company issued 1,006,869 shares of common stock to its chief
      financial officer for services rendered. The Company valued these common shares
      at the fair market value on the dates of grant of $.05 per share or $50,345
      based on the trading price of common shares. Accordingly, the Company recorded
      stock-based compensation expense of $36,443 and reduced accounts payable by
      $13,900.





In
      March
      2006, Series A preferred stockholders' converted 70,000 share of Series A
      Preferred Stock into 3,017,241 shares of common stock. Additionally, in
      connection with the conversion, the Company issued 380,621 shares of common
      stock for preferred stock dividends of $88,304.





In
      March
      2006, in connection with the exercise of stock options, the Company issued
      1,562,500 shares of common stock to a director for cash proceeds of
      $46,875.





In
      March
      2006, in connection with the exercise of 3,906,250 stock options with an
      exercise price of $.041 per share, the Company issued 3,906,250 shares of common
      stock to two executives. In lieu of the collection of cash for these stock
      options, the amount due of $160,156 was offset against future compensation
      due
      to these executives under employment agreements. Accordingly, for the year
      ended
      September 30, 2007, the Company recorded stock-based compensation expense of
      $160,156.





In
      March
      2006, in connection with the exercise of warrants, the Company issued 1,646,983
      shares of common stock for proceeds of $501,506.





In
      July
      2007,Series A preferred stockholders' converted 500 share of Series A Preferred
      Stock into 21,551 shares of common stock.





F-24




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Common
      stock (continued)





On
      November 20, 2006, the Company issued 600,000 shares to a Beijing-based consultant
      for business development services rendered in connection with its GEP
      operations. The Company valued these common shares at the fair market value
      on
      the date of grant of $0.10 per share or $60,000 based on the trading price
      of
      common shares. Accordingly, the Company recorded deferred contract costs of
      $60,000, which was fully expensed during the year ended September 30, 2007.





On
      November 30, 2006, in connection with the appointment of a new board of
      director, Rodrigo Arboleda, the Company issued 500,000 shares of restricted
      common stock to the new board of director member for services to be rendered
      for
      a one-year period. The Company valued these common shares at the fair market
      value on the date of grant of $0.135 per share or $67,500 based on the trading
      price of common shares. Accordingly, for the year ended September 30, 2007,
      the
      Company recorded stock-based compensation expense of $56,250 and deferred
      compensation of $11,250, which will be amortized over the remaining service
      period.





On
      November 21, 2006, in connection with the settlement of a lawsuit with the
      Company former director and employee, the Company entered into a settlement
      and
      Release Agreement (the "Release Agreement"), whereby the former director and
      employee returned 1,575,000 shares of the Company's common stock owned by him.
      The Company cancelled these shares. The parties agreed to release each other
      from further action and have dismissed the lawsuit with prejudice. In connection
      with the return of the 1,575,000 shares of common stock, for the year ended
      September, 2007, the Company recorded settlement income of $157,500 based on
      the
      fair market value of the common stock on the date of settlement of $0.10 per
      share or $157,500 based on the trading price of common shares.





On
      December 11, 2006, the Company issued 500,000 shares to a Beijing-based consultant
      for business development services rendered in connection with its GEP
      operations. The Company valued these common shares at the fair market value
      on
      the date of grant of $0.12 per share or $60,000 based on the trading price
      of
      common shares. Accordingly, the Company recorded deferred contract costs of
      $60,000, which was fully expensed during the year ended September 30, 2007.





F-25




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Common
      stock (continued)





On
      January 1, 2007, in connection with the appointment of a new board of director,
      Robert D. Cain, the Company issued 500,000 shares of restricted common stock
      to
      the new board of director member for services to be rendered for a one-year
      period. The Company valued these common shares at the fair market value on
      the
      date of grant of $.14 per share or $70,000 based on the trading price of common
      shares. Accordingly, for the year ended September 30, 2007, the Company recorded
      stock-based compensation expense of $52,500 and deferred compensation of
      $17,500, which will be amortized over the remaining service period.





On
      March
      29, 2007, the Company cancelled 343,706 shares of common stock previously
      issued to officers of the Company. In connection with the return of the 343,706
      shares of common stock, for the year ended September 30, 2007, the Company
      reduced stock-based compensation expense by $48,119 based on the fair market
      value of the common stock on the date of cancellation of $0.14 per share or
      $48,119 based on the trading price of common shares.





On
      April
      13, 2007, the Company issued 428,571 common shares to a Beijing-based consultant
      for business development services rendered in connection with its GEP
      operations. The Company valued these common shares at the fair market value
      on
      the date of grant of $0.14 per share or $60,000 based on the trading price
      of
      common shares. Accordingly, the Company recorded deferred contract costs of
      $60,000, which was fully expensed during the year ended September 30, 2007.





On
      May
      15, 2007, in connection with a 90 day consulting agreement, the Company issued
      265,000 shares of its common stock to a consultant for investor relations
      services. The Company valued these common shares at the fair market value on
      the
      date of grant of $0.155 per share or $41,075 based on the trading price of
      common shares. Accordingly, for the year ended September 30, 2007, the Company
      recorded stock-based compensation expense of $41,075.





On
      May
      17, 2007, the Company issued 357,143 shares of its common stock to a
      Beijing-based consultant for business development services rendered in
      connection with its GEP operations. The Company valued these common shares
      at
      the fair market value on the date of grant of $0.15 per share or $53,571 based
      on the trading price of common shares. Accordingly, the Company recorded
      deferred contract costs of $53,571, which was fully expensed during the year
      ended September 30, 2007.





F-26




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Common
      stock (continued)





For
      the
      year ended September 30, 2007, in connection with the issuance of the Company's
      common stock, stock-based compensation expense amounted to $335,277, deferred
      compensation costs of $28,750, and settlement income of $157,500.





Stock
      options and warrants





On
      November 30, 2005, the Company granted 528,000 stock options to an employee
      at
      an exercise price of $.03 per share. These options were immediately exercised
      for a subscription receivable of $15,840, although the employee failed to
      deliver this required payment (See note 8). The Company accounts for stock
      options issued to employees in accordance with the provisions of SFAS 123R
      and
      related interpretations. The fair value of this option grant was estimated
      on
      the date of grant using the Black-Scholes option-pricing model with the
      following weighted-average assumptions dividend yield of -0- percent; expected
      volatility of 373 percent; risk-free interest rate of 3.75 percent and an
      expected holding periods of 3.00 years. In connection with these options, the
      Company recorded stock-based compensation expense of $26,376.





On
      February 14, 2006, the Company granted 250,000 stock options to an executive
      at
      an exercise price of $.31 per share. The Company accounts for stock options
      issued to employees in accordance with the provisions of SFAS 123R and related
      interpretations. The fair value of this option grant was estimated on the date
      of grant using the Black-Scholes option-pricing model with the following
      weighted-average assumptions dividend yield of -0- percent; expected volatility
      of 379 percent; risk-free interest rate of 3.75 percent and an expected holding
      periods of 5.00 years. In connection with these options, the Company recorded
      stock-based compensation expense of $15,000.





On
      May
      18, 2006, the Company granted 500,000 stock options to a consultant at an
      exercise price of $.18 per share. The options were immediately exercised for
      a
      subscription receivable of $90,000. The Company valued these warrants utilizing
      the Black-Scholes options pricing model at approximately $0.12 or $61,000 and
      recorded a stock-based consulting expense of approximately $61,000 for the
      year
      ended September 30, 2007.





F-27




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Stock
      options and warrants (continued)





On
      July
      13, 2006, the Company granted 500,000 stock options to a consultant at an
      exercise price of $.153 per share. The options were immediately exercised for
      a
      subscription receivable of $76,500. The Company valued these warrants utilizing
      the Black-Scholes options pricing model at approximately $0.13 or
      $63,000.





On
      July
      31, 2006, the Company granted an aggregate of 7,400,000 stock options (3,700,000
      stock options each) to purchase 7,400,000 shares of the Company's common
      stock to two officers of the Company at an exercise price of $.145 per share.
      These options expire on July 31, 2007. These stock options were granted to
      these
      executives in lieu of common share due to these executives under their
      respective employment agreements. The Company accounts for stock options issued
      to employees in accordance with the provisions of SFAS 123R and related
      interpretations. The fair value of this option grant was estimated on the date
      of grant using the Black-Scholes option-pricing model with the following
      weighted-average assumptions dividend yield of -0- percent; expected volatility
      of 400 percent; risk-free interest rate of 4.91 percent and an expected holding
      periods of one year. In connection with these options, the Company recorded
      stock-based compensation expense of $170,892.





On
      August
      1, 2006, in connection with employment agreements, 3,906,250 five-year stock
      options were granted to officers of the Company with an exercise price of $.093
      per share. The Company accounts for stock options issued to employees in
      accordance with the provisions of SFAS 123R and related interpretations. The
      fair value of this option grant was estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted-average
      assumptions dividend yield of -0- percent; expected volatility of 401 percent;
      risk-free interest rate of 4.90 percent and an expected holding periods of
      5.00
      years. In connection with these options, the Company recorded stock-based
      compensation expense of $100,911.





On
      August
      1, 2006, the Company granted 1,500,000 five-year stock options to a director
      of
      the Company at an exercise price of $.093 per share. The Company accounts for
      stock options issued to employees in accordance with the provisions of SFAS
      123R
      and related interpretations. The fair value of this option grant was estimated
      on the date of grant using the Black-Scholes option-pricing model with the
      following weighted-average assumptions dividend yield of -0- percent; expected
      volatility of 401 percent; risk-free interest rate of 4.91 percent and an
      expected holding periods of 5.00 years. In connection with these options, the
      Company recorded stock-based compensation expense of approximately
      $38,750.




F-28




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Stock
      options and warrants (Continued)





On
      July
      1, 2007, the Company an aggregate of 7,777,343 fourty-two months stock options
      to two officers and a director at an exercise price of $.105 per share. The
      Company accounts for stock options issued to employees in accordance with the
      provisions of SFAS 123R and related interpretations. The fair value of this
      option grant was estimated on the date of grant using the Black-Scholes
      option-pricing model with the following weighted-average assumptions dividend
      yield of -0- percent; expected volatility of 195 percent; risk-free interest
      rate of 4.5 percent and an expected holding periods of 3.5 years. In connection
      with these options, the Company recorded stock-based compensation expense of
      approximately $992,000.





The
      exercised prices of common stock purchase warrants issued in 2004 to purchase
      2,963,361 shares of common stocks were reduced to $.25 per share in November
      2007. The 2004 warrants contain full ratchet anti-dilution provisions to the
      exercise price, which due to the Company’s November 2007 financing, resulted in
      the 2004 warrants to be exercisable at $.25 per share. The provisions of the
      2004 Warrants which result in the reduction of the exercise price remain in
      place. Of the 2,963,361 warrants, 2,305,172 shares are exercisable through
      January 15, 2009 and 658,189 are exercisable through March 29,
      2009.





For
      the
      year ended September 30, 2007, the Company recorded stock-based compensation
      expense of $1,397,509. A summary of the stock options and warrants as of
      September 30, 2007 and 2006 and changes during the periods is presented
      below:





F-29




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007
  NOTE
        9 -
        STOCKHOLDERS' EQUITY





Stock
      options and warrants (continued)





Year
                Ended
            
            Year
                EndedSeptember
                30, 2007
            
            September
                30, 2006Number
                of options and Warrants
            
            Weighted
                Average Exercise Price
            
            Number
                of options and Warrants
            
            Weighted
                Average Exercise PriceStock
                options and warrantsBalance
                at beginning of year
            
            
            22,911,611
            
            $
            0.1
            
            
            19,188,526
            
            $
            0.1Granted
            
            
            7,777,343
            
            $
            0.1
            
            
            14,584,250
            
            $
            0.1Exercised
            
            
            -
            
            $
            -
            
            
            (8,643,733
            )
            $
            0.1Forfeited
            
            
            11,141,996
            
            $
            0.1
            
            
            (2,217,432
            )
            $
            0.2Balance
                at end of year.
            
            
            19,546,954
            
            $
            0.1
            
            
            22,911,611
            
            $
            0.1Options
                exercisable at end of year
            
            
            19,546,954
            
            $
            0.1
            
            
            22,911,611
            
            $
            0.1Weighted
                average fair value of options granted during the year
            
            
            
            
            $
            0.128
            
            
            
            
            $
            0.126





F-30




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      9 -
      STOCKHOLDERS' EQUITY





Stock
      options and warrants (continued)





The
      following table summarizes information about employee stock options and
      consultant warrants outstanding at September 30, 2007:




Options
                and WarrantsOptions
                and Warrants Outstanding
            
            ExercisableRange
                of Exercise Price
            
            Number
                Outstanding at September 30, 2007
            
            Weighted
                Average Remaining Contractual Life
            
            Weighted
                Average Exercise Price
            
            Number
                Exercisable at Sepembter 30, 2007
            
            Weighted
                Average Exercise Price$
            0.31
            
            
            250,000
            
            
            3.38
            
            
            0.305
            
            
            250,000
            
            
            0.310$
            0.25
            
            
            2,963,361
            
            
            1.45
            
            
            0.250
            
            
            2,963,361
            
            
            0.250$
            0.105
            
            
            7,777,343
            
            
            3.25
            
            
            0.105
            
            
            7,777,343
            
            
            0.105$
            0.085-0.10
            
            
            7,306,250
            
            
            3.37
            
            
            0.093
            
            
            7,306,250
            
            
            0.093$
            0.056-0.06
            
            
            1,250,000
            
            
            0.84
            
            
            0.056
            
            
            1,250,000
            
            
            0.056$
            
            
            
            19,546,954
            
            
            2.76
            
            
            0.13
            
            
            19,546,954
            
            
            0.13





NOTE
      10 -
      COMMITMENTS AND CONTINGENCIES





Operating
      Leases





The
      Company leases office space under an operating lease that expires on June 1,
      2008. The office lease agreement has certain escalation clauses and renewal
      options. Future minimum rental payments required under the operating lease
      are as
      follows:




Period
              Ended September 30, 2008
            
            $
            19,411Total
            
            $
            19,411




Rent
      expense for the years ended September 30, 2007 and 2006 was $55,214 and $50,536,
      respectively.




F-31


GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE 10
      - COMMITMENTS AND CONTINGENCIES (CONTINUED)





Litigation





Keke
      Zhang a/k/a Katherine Zhang vs. Genesis Technology Group, Inc., a Florida
      Corporation and Gary L. Wolfson - Case No. 50 2006 CA 003447, Palm Beach County,
      Florida





In
      April
      2006, a former employee of the Company filed a lawsuit against the Company
      and its former Chief Executive Officer Gary Wolfson, alleging
      breach of an employment agreement, loss of compensation, and losses from the
      value associated with denied stock options. On October 9, 2007, subsequent
      to
      year end, the Company and the former employee entered into a settlement
      agreement in which the Company agreed to pay $55,000 to its former employee
      and
      released the former employee from all claims against her, including forgiving
      her $15,840 stock
      subscription receivable from options exercised is in November 2005 (see Note
      8),
      and the former employee also agreed to release all claims against the Company
      and Mr. Wolfson. This forgiveness has been recorded as settlement expense
      in the year ended September 30, 2007




Elizabeth
      Hiromoto et al v. Telecom Communications, Inc. et al. - Case No.
      2:07-cv-07858-PSG-E, United States District Court, Central District of
      California (Western Division - Los Angeles)





On
      December 3, 2007, two individuals filed a lawsuit against the Company, its
      former Chief Executive Officer James Wang, and certain others, alleging breach
      of contract. As of the date of this report, neither the Company nor its
      registered agent have been served with a complaint in this action, and the
      Company has only become aware of this lawsuit as a result of recent due
      diligence performed by one of its potential financing sources. The Company
      is
      unable to estimate a loss, if any, the Company may incur related to this
      lawsuit. The Company plans to vigorously defend its position.





Kenneth
      Clinton vs. Genesis Pharmaceuticals Enterprieses, formerly known as Genesis
      Technology Group, Inc., a Florida corporation, GTEC Holdings, a Florida
      corporation, Capital Growth Financial, Inc., a Florida corporation, Gary L.
      Wolfson and Pacific Rim Consultants, Inc. - Case No. 50 2007 CA 023923, Palm
      Beach County, Florida







F-32




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE 10
      - COMMITMENTS AND CONTINGENCIES





Litigation
      (Continued)




On
      December 21, 2007, Kenneth Clinton, a former director and former President
      of
      the Company, filed a lawsuit against the Company and certain entities and
      persons related to our predecessor Genesis Technology Group, Inc. The complaint
      alleges, among other things, breach of contract against the Company for an
      agreement to pay the plaintiff certain shares of other public companies
      (collectively, the “Reverse Merger Shares”) in connection with reverse merger
      transactions arranged by our predecessor, and breach of contract against the
      Company for failure to allow the plaintiff to exercise certain stock options
      for
      shares in the Company or exchange such options for new shares in the Company.
      The plaintiff is seeking relief in the form of (1) delivery of the Reverse
      Merger Shares, or in the alternative damages in the amount of those shares,
      (2)
      a judgment against the Company to allow the plaintiff to exchange and exercise
      his stock option for shares in the Company, or in the alternative damages in
      the
      amount of those shares, and (3) a declaratory judgment regarding a pledge and
      escrow agreement with defendant Capital Growth Financial. The Company plans
      to vigorously defend its position.




Other
      litigation




The
      Company currently has pending before the American Arbitration Association the
      case of *CRG
      Partners, Inc.(“CRG”) and Genesis Technology Group, Inc. n/k/a Genesis
      Pharmaceuticals Enterprises, Inc.* In
      that
      matter, CRG seeks breach of contract damages from the Company for approximately
      30 million shares of the Company’s stock or a dollar amount equal to the value
      of the stock, estimated by CRG at approximately $10 million. As
      of the
      date of this report, the Company is unable to estimate a loss, if any, the
      Company may incur related expenses to this lawsuit. The Company plans to
      vigorously defend its position.




F-33





GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      11 -
      GOING CONCERN





The
      accompanying consolidated financial statements are prepared assuming the Company
      will continue as a going concern. As reflected in the accompanying consolidated
      financial statements, the Company had an accumulated deficit of $22,389,203
      and
      working capital of $(1,106,424) at September 30, 2007, net losses for the year
      ended September 30, 2007 of $5,820,584 and cash used in operations during the
      year ended September 30, 2007 of $2,054,137. The Company’s operating results for
      future periods will include significant expenses, including compensation
      expense, travel expense, professional fees, marketing costs, and administrative
      and general overhead expenses, and costs related to the fulfillment of
      obligations related to its client contracts, which the Company will incur as
      it
      continues to implement its business model. As a result, the Company is unable
      to
      predict whether it will continue to achieve profitability in the future. There
      can be no assurances whatsoever that the Company will be able to successfully
      implement its business model, identify and close acquisitions of operating
      companies, identify and close contract clients, penetrate its target markets
      or
      attain a wide following for its services. In an effort to preserve and enhance
      stockholder value,  the
      Company sought to identify, evaluate and consider various companies and
      compatible or alternative business opportunities pursuant to which the Company
      would acquire a target company with an operating business and continue the
      acquired company’s business as a publicly-held entity. Additionally, the Company
      is also attempting to increase revenues and cash flows and control costs. While
      the Company believes in the viability of its strategy, there can be no
      assurances to that effect. The ability of the Company to continue as a going
      concern is dependent on the Company's ability to further implement its business
      plan and obtain operating cash from the sale of marketable equity securities
      received for services.





The
      consolidated financial statements do not include any adjustments that might
      be
      necessary if the Company is unable to continue as a going concern. Management
      believes that the actions presently being taken to further implement its
      business plan and generate additional revenues provide the opportunity for
      the
      Company to continue as a going concern.





NOTE
      12 -
      RELATED PARTY TRANSACTIONS





Distribution
      of marketable equity securities





On
      May
      21, 2007, the Company's Board of Directors approved the distribution of an
      aggregate of 653,690 shares (326,845 each) of common stock of LTUS held by
      the
      Company to two officers of the Company. In connection with the distribution
      of
      the LTUS shares, the Company recorded compensation expense of $653,690, which
      was based on the fair market value of the LTUS shares on the distribution
      date.




F-34




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      12 -
      RELATED PARTY TRANSACTIONS





Distribution
      of marketable equity securities (continued)





On
      June
      29, 2007, in connection with the receipt of 16,750,000 common shares of SPEH
      for
      services rendered, the Company immediately distributed 4,020,000 of these shares
      to a company that owns 24% of GEP II, the Company's partially-owned subsidiary
      and is owned by Shaohua Tan, a Director of the Company. The Company also
      immediately distributed 837,500 of these shares to a member of GEP II that
      owns
      5% of GEP II.





In
      August
      2007, the Company distributed 2,200,001 shares of Dragon Capital Group
      Corp(DRGV) to a director of the Company for services provide to the Company.
      The
      shares were valued at $66,002 or $0.03 per share.





During
      the year ended September 30, 2007, the Company distributed 3,469,067 shares
      of
      LTUS to China West, LLC, a member of GEP LLC, organized in the State of Florida
      valued at $1,850,891.





Other
      receivables - related party





In
      connection with a $325,000 secured promissory note payable issued to the former
      director/officer and in June 2007 (see Loan payable section below), 3,250,000
      shares of Lotus Pharmaceuticals, Inc.'s ("LTUS") common stock owned by the
      Company are held in an escrow account in the name of the former officer. The
      LTUS shares were valued at $3,250,000 or $1 per share at September 30, 2007
      and
      are recorded as other receivable-related party in the accompanying consolidated
      balance sheet since the shares are in the name of the former officer. In
      December 2007, the Company placed $325,000 loan repayment fund in a trust
      account and notified the former director and former officer that the Company
      intended to repay the loan amount in full. The former director and former
      officer has since declined to receive the $325,000 loan repayment and refused
      to
      return the 3,250,000 LTUS shares in escrow and subsequently filed a complaint
      (see Note 10) against the Company and its former CEO for breach of contract.
      The
      former director/officer demanded that the Company to issue additional 740,000
      shares and allow him to exercise the options issued to him in 2007 with a
      promissory note and agree to register his shares or in the alternative
      damage.





The
      management believes the claims of the former director and officer are without
      merit and the possibility of any adverse decision to the Company, with any
      contingent liability, to be remote, as the term is used in FASB 5 *Accounting
      for Contingencies* .
      As
      such, the Company has not accrued a related loss contingency in the accompanying
      financial statements pursuant to FAS 5.





F-35




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      12 -
      RELATED PARTY TRANSACTIONS(CONTINUED)





Other
      Receivable





Due
      to
      related party





At
      September 30, 2007, the Company owed $331,292 to Shaohua Tan, a director, for
      services rendered during the year ended September 30, 2007. The amount is due
      on
      demand.





Loan
      payable





On
      June
      29, 2007, the Company issued a $325,000 secured promissory note to an officer
      of
      the Company in connection with a loan to provide the Company with cash to
      satisfy certain contractual obligations under its agreement with the Jin Ma
      Companies. The principal balance is and payable on December 31, 2007. In lieu
      of
      interest, the officer received 20% interest in the capital stock position in
      SPEH obtained by GEP. Accordingly, this officer received 3,350,000 shares of
      SPEH common stock obtained by GEP. The Company valued these shares at $0.18
      per
      share or $603,000 and for the six months ended June 30, 2007 recorded as
      compensation expense of $603,000. The note is secured by 3,250,000 shares of
      Lotus Pharmaceuticals, Inc.'s ("LTUS") common stock owned by the Company, which
      are held in escrow.





On
      July
      31, 2007, the Company's 51% owned subsidiary, GEP II, issued a promissory
      note to a member of GEP II in the amount of $190,000 for working capital
      purposes. The note bears interest at 10% per annum and is due on July 31, 2008.
      Upon receipt by the Company of shares or other equity distribution in connection
      with the reverse merger transaction with a certain GEP II client and
      distribution of 24.5% of the reverse merger distribution to the note holder
      in
      accordance with GEP II operating agreement, the obligation of the Company under
      this note shall terminate. The note is secured by 2,000,000 shares of the
      Company's common stock which may be adjusted from time to time.





Other





During
      the year ended September 30, 2007, the Company incurred $77,148 in accounting
      fees to a company owned by Mr. Adam Wasserman, the Company's chief financial
      officer for accounting services rendered related to contract clients of the
      various GEP LLCs.





F-36




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      12 -
      RELATED PARTY TRANSACTIONS





Other
      (Continued)





On
      January 22, 2007, the Company entered into a consulting agreement with Venture
      Spark, LLC, a company owned by Robert D. Cain, a member of the Company's Board
      of
      Directors. Venture Spark, LLC agreed to develop a business prospectus and
      other
      materials for the Company to be used in business development activities.
      In connection with this agreement, the Company paid Venture Sparks,LLC $18,000.
      Additionally, on April 13, 2007, the Company entered into a one-year Financing
      Representation Agreement with this director for financing and financial advisory
      services. In connection with this agreement, the director is entitled to success
      fees of 5% of the financing and warrants to purchase the Company's stock. In
      August, 2007, the Company distributed 8,000 shares of LTUS to Mr. Cain for
      services provided to the Company and recorded $8,000 consulting expense
      accordingly.





On
      April
      13, 2007, the Board of directors of the Company unanimously consented that
      GEP
      member Shaohua Tan, Inc., owned by a director of the Company or Dr. Shaohua
      Tan
      shall bear no direct, indirect or personal expenses for managing the GEP program
      and shall be reimbursed, on a timely basis, for any charges that he bears and
      incurs. Accordingly, the Company recorded compensation expense of $448,188
      which
      represents the distribution of his proportionate percentage of restricted common
      stock received by GEP for services rendered in excess of the director's basis
      in
      GEP.





On
      July
      23, 2007, the Company entered into a one year consulting agreement with a
      company related to a member of GEP for business advisory and investor relations
      services. In connection with this agreement, the Company transferred 100,000
      shares of LTUS to this consultant with a fair market value of $100,000. 200,000
      shares of SPEH were also transferred to the consultant with a fair market value
      of $36,000.





NOTE
      13-
      SUBSEQUENT EVENTS





On
      October 1, 2007, the Company executed a Share Acquisition and Exchange Agreement
      by and among the Company and Karmoya and the shareholders of 100% of the
      Karmoya’s capital stock. At closing, the Company issued 5,995,780 shares of its
      Series B Voting Convertible Preferred Stock and 597 shares of its common stock
      to Karmoya’s shareholders in exchange for 100% of Karmoya’s capital stock. The
      shares of Series B Preferred Stock issued were subsequently converted , in
      the
      aggregate, into 299,789,000 shares of the Company's common stock that, when
      combined with the 597 common shares issued to Karmoya’s shareholders, would
      equal approximately 75% of the issued and outstanding shares of the Company's
      common stock on a fully-diluted basis.




F-37




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      13-
      SUBSEQUENT EVENTS (CONTINUED)





On
      October 1, 2007, three of the Company’s directors resigned as members of the
      board of directors. There were no disagreements between any resigned directors
      and any of the Company’s officers or directors. Concurrently, Gary Wolfson,
      Chief Executive Officer, Adam Wasserman, Chief Financial Officer, and Kenneth
      Clinton, President, also resigned as the Company’s officers.





On
      October 1, 2007, the following persons were appointed as new members of the
      board of directors: Cao Wubo, Xuhaibo, Feng Xiaowei, Huang Lei, Ge Jian and
      Zhang Yihua. Concurrently, the Company also appointed Cao Wubo, Chief Executive
      Officer, Elsa Sung, Chief Financial Officer and Xu Haibo, Chief Operating
      officer as its newly appointed o fficers.


On
      October 1, 2007, holders of 8,806,250 options converted the options into
      1,761,250 shares of common stock, which reduced the Company’s total number of
      outstanding options and warrants to 10,740,704.





In
      October 2007, the Company received $180,000,000 in funding from Greenview
      Capital through the sale of its common stock and issued 1,500,002 shares of
      its
      common stock with a Rule 144 restrictive legend.





In
      October 2007, Series A preferred stockholder converted 15,400 share of Series
      A
      Preferred Stock into 663,793 shares of common stock.


On
        October 11,2007, our board of directors and the majority holders of our capital
        stock approved amendments to our Articles of Incorporation by written consent,
        including: (1) a change of our corporate name to our current name, Genesis
        Pharmaceuticals Enterprises, Inc, (the “Name Change”), (2) a change of our
        principal officers and mailing address to our current address in the PRC
        (the
“Address Change”), (3) a change in our registered agent and registered office in
        Florida (the “Registered Agent Change”), and (4) an increase in our authorized
        common stock from 200,000,000 to 600,000,000 shares (the “Authorized Share
        Amendment”). The Certificate of Amendment and Certificate of change to our
        Articles of Incorporation to effect the Name Change, Address Change, Registered
        Agent Change and the Authorized Share Amendment was filed with Florida’s
        Secretary of State on October 16, 2007.


F-38




GENESIS
        PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
 NOTES
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 September
        30, 2007


NOTE
      13-
      SUBSEQUENT EVENTS (CONTINUED)





On
      November 7, 2007, the Company entered into a Securities Purchase Agreement
      with
      Pope Investments, LLC (the “Investor”) pursuant to the agreement, the Company
      issued and sold to the Investor, for $5,000,000 (a) 6% convertible subordinated
      debentures due November 30, 2010 (the “Debenture”) and (b) a three-year warrant
      to purchase 10,000,000 shares of Genesis’s common stock, par value $0.001 per
      share, at an exercise price of $0.32 per share, subject to adjustment as
      provided therein. The Debenture bears interest at the rate of 6% per annum
      and
      the initial conversion price of the Debentures is $0.25 per share. In connection
      with the offering, the Company placed in escrow 20,000,000 shares of its common
      stock. As the result of the financing, the exercised
      prices of common stock purchase warrants issued in 2004 to purchase 2,963,361
      shares of common stocks were reduced to $.25 per share.





On
      November 14, 2007, the Company’s Board of Directors, acting pursuant to the
      authority granted by the Company’s Bylaws and the Florida Business Corporation
      Act, determined by unanimous written consent to change the Company’s fiscal year
      end from September 30 to June 30.





F-39




**SIGNATURES**





In
      accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
      the
      registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized on January 15, 2008.




**GENESIS
                PHARMACEUTICALS ENTERPISES, INC.**/s/*Cao
                Wubo*Cao
                Wubo, Chief Executive Officer and President






In
      accordance with the Securities Exchange of 1934, this report has been signed
      below by the following persons on behalf of the registrant and in the capacities
      and on the dates indicated.





**NAME**
            
            **TITLE**
            
            **DATE***/s/
                Cao Wubo*
            
            Chairman
                of the Board, Chief Executive Officer and President
            
            January
                15, 2008Cao
                Wubo*/s/
                Xu Haibo*
            
            Vice
                President, Chief Operating Officer and Director
            
            January
                15, 2008Xu
                Haibo*/s/
                Elsa Sung*
            
            Chief
                Financial Officer
            
            January
                15, 2008Elsa
                Sung*/s/
                Feng Xiaowei*
            
            Director
            
            January
                15, 2008Feng
                Xiaowei*/s/
                Huang Lei*
            
            Director
            
            January
                15, 2008Huang
                Lei*/s/
                Ge Jian*
            
            Director
            
            January
                15, 2008Ge
                Jian*/s/
                Zhang Yihua*
            
            Director
            
            January
                15, 2008Zhang
                Yihua*Robert
              Cain*
            
            Director
            
            January
                15, 2008Robert Cain*Rodrigo
              Arboleda*
            
            Director
            
            January
                15, 2008Rodrigo
              Arboleda