U.
S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON,
DC 20549
 
 FORM
10-Q
 
 þ
                Quarterly
      report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
      1934
 For
      the quarterly period ended June 30,
      2008
 
  ̈           Transition
report pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
 For the transition period from __ to _.
  
 Commission
File Number 000-1365354
 
 WEIKANG
BIO-TECHNOLOGY GROUP COMPANY, INC.
 (Exact
name of small business issuer as specified in its charter)
 
 Nevada
                  (State
      or other jurisdiction of
                  incorporation
      or organization)
                26-2816569
                  (I.R.S.
      employer
                  identification
      number)1Economic
      & Technology Development Zone
                  Chengxu
      Village
                  Shuangcheng
      Town, Shuangcheng City
                  Heilongjiang
      Province, PRC
                  (Address
      of principal executive offices and zip code)
                  (86)
      0451-88355530
                  (Registrant’s
      telephone number, including area
code)
 
 Securities
      registered pursuant to Section 12(b) of the Act:
                None
 Securities
      registered pursuant to Section 12(g) of the Act:
                Common Stock, par value
      $0.00001 per share
 
 Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes o   No
þ
 
 Indicate
by check mark whether the registrant is required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes þ   No
o
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes þ     No
o
 
 Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained to the best of
the registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  o
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check one):
 
 Large Accelerated
Filer  o                                                                           Accelerated
Filer  o
 Non-accelerated filer  o                                                                Smaller
reporting company  þ
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
 Yes o   No
þ
  
  
 APPLICABLE
ONLY TO CORPORATE ISSUERS:
 
 As of
August 11, 2008, the Registrant had 25,229,800 shares of Common Stock
outstanding.
 
  
  
 WEIKANG
BIO-TECHNOLOGY GROUP CO, INC.
  FORM 10-Q
  
  INDEX
  Page
      NumberSPECIAL
      NOTE REGARDING FORWARD-LOOKING STATEMENTSPART
      I.  FINANCIAL INFORMATIONItem
      1.
                Financial
      Statements (unaudited)
                3Consolidated
      Balance Sheet as of June 30, 2008
                3Consolidated
      Statements of Income and Other Comprehensive Income for the Six Months and
      Three Months Ended June 30, 2008
                4Consolidated
      Statements of Cash Flows for the Six Months Ended June 30, 2008
                5Notes
      to the Consolidated Financial Statements as of June 30,
    2008
                6-17Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                18-26Item
      3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                26Item
      4.
                Controls
      and Procedures
                26-27PART
      II.  OTHER INFORMATION
                28Item
      1.
                Legal
      Proceedings
                28Item
      1A.
                Risk
      Factors
                28-37Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                38Item
      3.
                Defaults
      Upon Senior Securities
                38Item
      4.
                Submission
      of Matters to a Vote of Security Holders
                38Item
      5.
                Other
      Information
                38Item
      6.
                Exhibits
                39SIGNATURES
                40
  
 
  -1-
  SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
 
 Some of
the statements made by us in this Quarterly Report on Form 10-Q are
forward-looking in nature, including but not limited to, statements relating to
our future revenue, product development, demand, acceptance and market share,
gross margins, levels of research and development, our management's plans and
objectives for our current and future operations, and other statements that are
not historical facts. Forward-looking statements include, but are not limited
to, statements that are not historical facts, and statements including forms of
the words "intend", "believe", "will", "may", "could", "expect", "anticipate",
"plan", "possible", and similar terms. Actual results could differ materially
from the results implied by the forward looking statements due to a variety of
factors, many of which are discussed throughout this Quarterly Report. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. We undertake no obligation to publicly
release any revisions to these forward-looking statements that may reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events. Factors that could cause actual results to differ
materially from those expressed in any forward-looking statement made by us
include, but are not limited to:
  ●
                our
      ability to finance our activities and maintain our financial
      liquidity;●
                our
      ability to attract and retain qualified, knowledgeable
      employees;
 ●
                the
      impact of general economic conditions on our business;●
                postponements,
      reductions, or cancellations in orders from new or existing
      customers;
 ●
                the
      limited number of potential customers for our products;●
                the
      variability in gross margins on our
products;
 ●
                our
      ability to develop and market new products
successfully;●
                our
      ability to acquire new customers in the future;
  and
 ●
                deterioration
      of business and economic conditions in our
  markets.
  Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company undertakes no obligation to
update this forward-looking information. Nonetheless, the Company reserves the
right to make such updates from time to time by press release, periodic report
or other method of public disclosure without the need for specific reference to
this Report. No such update shall be deemed to indicate that other statements
not addressed by such update remain correct or create an obligation to provide
any other updates.
 
  In this
document, the words "we," "our," "ours," "us," and “Company” refer to Weikang
Bio-Technology Group Co, Inc. and our subsidiaries.
 
  -2-
  PART
I.                      FINANCIAL
INFORMATION
 
 ITEM
1. FINANCIAL
STATEMENTS.
 
 WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSJune
      30, 2008
                
                
                December
      31, 2007(Unaudited)ASSETSCURRENT
      ASSETSCash
      & cash equivalents
                
                $
                24,704
                
                
                $
                117,240Accounts
      receivable
                
                
                75,938
                
                
                
                25,711Advance
      to suppliers
                
                
                72,568
                
                
                
                73,033Inventory
                
                
                151,590
                
                
                
                199,160Other
      receivables
                
                
                32,231
                
                
                
                66,082Due
      from officer
                
                
                4,939,352
                
                
                
                2,818,265Due
      from related party
                
                
                181,691
                
                
                
                135,777Total
      current assets
                
                
                5,478,074
                
                
                
                3,435,268NONCURRENT
      ASSETSProperty
      and equipment, net
                
                
                3,890,554
                
                
                
                3,771,188Construction
      in progress
                
                
                338,168
                
                
                
                275,832Intangible
      assets
                
                
                565,730
                
                
                
                538,355Deferred
      tax asset
                
                
                29,487
                
                
                
                27,726Total
      noncurrent assets
                
                
                4,823,939
                
                
                
                4,613,101TOTAL
      ASSETS
                
                $
                10,302,013
                
                
                $
                8,048,369LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payable
                
                $
                38,918
                
                
                $
                24,417Value
      added tax payable
                
                
                22,379
                
                
                
                -Accrued
      liabilities and other payables
                
                
                7,628,137
                
                
                
                7,627,907Advance
      from officer
                
                
                650,000
                
                
                
                650,000Total
      current liabilities
                
                
                8,339,434
                
                
                
                8,302,324CONTINGENCIESSTOCKHOLDERS'
      EQUITYCommon
      stock, $.00001 par value; authorized shares100,000,000;  issued
      and outstanding 25,229,800 shares
                
                
                252
                
                
                
                252Additional
      paid in capital
                
                
                (252
                )
                
                
                (252
                )Statutory
      reserve
                
                
                180,411
                
                
                
                19,961Accumulated
      other comprehensive income
                
                
                753,676
                
                
                
                196,432Retained
      earnings(accumulated
      deficit)
                
                
                1,028,492
                
                
                
                (470,348
                )Total
      stockholders' equity
                
                
                1,962,579
                
                
                
                (253,955
                )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                
                $
                10,302,013
                
                
                $
                8,048,369
 The accompanying notes are an integral part of these consolidated financial statements
 -3-
 
 WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME(Unaudited)FOR
      THE SIX MONTHS ENDED
                
                
                FOR
      THE THREE MONTHS ENDEDJUNE
      30, 2008
                
                
                JUNE
      30, 2008Net
      sales
                
                $
                3,199,898
                
                
                $
                2,053,680Cost
      of goods sold
                
                
                1,166,038
                
                
                
                711,365Gross
      profit
                
                
                2,033,860
                
                
                
                1,342,315Operating
      expensesSelling
      expenses
                
                
                5,559
                
                
                
                359General
      and administrative expenses
                
                
                367,863
                
                
                
                239,951Total
      operating expenses
                
                
                373,422
                
                
                
                240,310Income
      from operations
                
                
                1,660,438
                
                
                
                1,102,005Non-operating
      income (expenses)Interest
      income
                
                
                167
                
                
                
                65Financial
      expense
                
                
                (605
                )
                
                
                (114
                )Other
      expenses
                
                
                (708
                )
                
                
                (708
                )Total
      non-operating expenses
                
                
                (1,146
                )
                
                
                (757
                )Net
      income
                
                
                1,659,292
                
                
                
                1,101,248Other
      comprehensive itemForeign
      currency translation
                
                
                557,244
                
                
                
                231,065Comprehensive
      Income
                
                $
                2,216,536
                
                
                $
                1,332,313Basic
      and diluted weighted average shares outstanding
                
                
                25,229,800
                
                
                
                25,229,800Basic
      and diluted net earnings per share
                
                $
                0.07
                
                
                $
                0.04
 
 
  -4-
 
 WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF CASH FLOWSFOR
      THE SIX MONTHS ENDED JUNE 30, 2008(Unaudited)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                  
                  $
                  1,659,292Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                  
                  
                  144,584(Increase)
      decrease in current assets:Accounts
      receivable
                  
                  
                  (47,224
                  )Other
      receivables and advances to suppliers
                  
                  
                  23,429Inventory
                  
                  
                  58,520Increase
      (decrease) in current liabilities:Accounts
      payable
                  
                  
                  12,585Other
      payables
                  
                  
                  (245
                  )Value
      added tax payable
                  
                  
                  40,253Net
      cash provided by operating activities
                  
                  
                  1,891,194CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property & equipment
                  
                  
                  (21,215
                  )Construction
      in progress
                  
                  
                  (43,555
                  )Net
      cash used in investing activities
                  
                  
                  (64,770
                  )CASH
      FLOWS FROM FINANCING ACTIVITIES:Due
      from officer
                  
                  
                  (1,887,347
                  )Due
      from related party
                  
                  
                  (36,240
                  )Net
      cash used in financing activities
                  
                  
                  (1,923,587
                  )EFFECT
      OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS
                  
                  
                  4,627DECREASE
      IN CASH & CASH EQUIVALENTS
                  
                  
                  (92,536
                  )CASH
      & CASH EQUIVALENTS, BEGINNING OF PERIOD
                  
                  
                  117,240CASH
      & CASH EQUIVALENTS, END OF PERIOD
                  
                  $
                  24,704Supplemental
      Cash flow data:Income
      tax paid
                  
                  $
                  -Interest
      paid
                  
                  $
                  -
 
 
  -5-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  1.
ORGANIZATION AND DESCRIPTION OF BUSINESS
  Weikang
Bio-Technology Group Co., Inc., a Nevada corporation (“Weikang” or “the Company)
was originally incorporated on May 12, 2004 in the State of Florida as
Expedition Leasing, Inc. (“Expedition”). The Company reincorporated to Nevada
and changed to its present name on July 12, 2008, pursuant to a merger with
Weikang, a wholly owned subsidiary, with Weikang as the surviving entity. The
Company is engaged in the development, manufacture and distribution of health
and nutritional supplements through its indirect wholly owned operating
subsidiary, Heilongjiang Weikang Biotechnology Group Co., Ltd. (“Heilongjiang
Weikang”) in the People’s Republic of China (“PRC” of
“China”).
  On
December 7, 2007, the Company (as Expedition) entered into an exchange agreement
with Sinary Bio-Technology Holdings Group, Inc., a Nevada corporation (“Sinary”)
and its sole shareholder (the “Sinary Stockholder”) on December 7, 2007,
pursuant to which the Company issued 24,725,200 shares of its common stock to
the Sinary Stockholder in exchange for all of the issued and outstanding common
shares of Sinary. Concurrently, Sinary paid $650,000 to certain former
shareholders of the Company, who surrendered an aggregate of 24,725,200 shares
of the Company’s common stock held by them to the Company for cancellation. As a
result, the Sinary Stockholder currently owns 98% shares of the Company. Since
the Closing Date, Sinary has become a wholly owned subsidiary of the
Company.
  Prior to
the acquisition of Sinary, the Company was a non-operating public shell
corporation. Pursuant to Securities and Exchange Commission (“SEC”) rules, the
merger or acquisition of a private operating company into a non-operating public
shell corporation with nominal net assets is considered a capital transaction in
substance, rather than a business combination. Accordingly, for accounting
purposes, the transaction has been treated as a reverse acquisition and a
recapitalization, and pro forma information is not presented. Transaction costs
incurred in the reverse acquisition have been charged to expense.
  Sinary
was incorporated under the laws of the State of Nevada on August 31, 2007. On
October 25, 2007, Sinary entered into an equity interests transfer agreement
with the stockholders of Heilongjiang Weikang, a limited liability company in
the PRC, to acquire 100% of the equity interests of Heilongjiang Weikang for the
sum of 57 million Renminbi (“RMB”), or approximately 7.6 million US
dollars.
  Heilongjiang
Weikang was incorporated in the Heilongjiang Province, PRC on March 29, 2005,
and formerly known as Heilongjiang Province Weikang Bio-Engineering Co., Ltd.
Heilongjiang Weikang is engaged in development, manufacture and
distribution of health and nutritional supplements in the
PRC.
  The
unaudited financial statements have been prepared by the Company
pursuant to the rules and regulations of the SEC. The information furnished
herein reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to fairly
present the operating results for the respective periods. Certain information
and footnote disclosures normally presented in annual financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been omitted pursuant to such rules and
regulations. These financial statements should be read in conjunction with
the audited financial statements and footnotes included in the
Company’s 2007 audited financial statements. The results for the six and
three months ended June 30, 2008 do not necessarily indicate the results for the
full year ended December 31, 2008.
  
 
 
 
  -6-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
  Principle
of Consolidation
 
 The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Sinary, and the results of operations
of Weikang, Sinary’s wholly-owned subsidiary, from the date of acquisition. All
significant inter-company accounts and transactions have been eliminated in
consolidation.
 
 Use
of Estimates
 
 In
preparing the financial statements in conformity with accounting principles
generally accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the dates of the financial
statements, as well as the reported amounts of revenues and expenses during the
reporting year. Significant estimates, required by management, include the
recoverability of long-lived assets and the valuation of inventories. Actual
results could differ from those estimates.
 
 Cash
and Cash Equivalents
 
 For
purposes of the statement of cash flows, the Company considers all highly liquid
investments with an original maturity of three months or less as cash
equivalents.
 
 Accounts
Receivable
  The
Company’s policy is to maintain reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves. There were no allowances for bad debts
at June 30, 2008 and December 31, 2007.
 
 Inventory
 
 Inventories
are valued at a lower cost or market with cost determined on a moving weighted
average basis. Costs of work in progress and finished goods comprise direct
material, direct production cost and an allocated portion of production
overheads.
  Property
and Equipment
 
 Property
and equipment are stated at cost, net of accumulated depreciation. Expenditures
for maintenance and repairs are expensed as incurred; additions, renewals and
betterments are capitalized. When property and equipment are retired or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for all assets with estimated lives ranging from 3 to 20 years as
follows:
 
 Building
                    20
      yearsVehicle
                    5
      yearsOffice
      Equipment
                    3-7
      yearsProduction
      Equipment
                    3-6
      years
 Land
Use Right
  Right to
use land is stated at cost less accumulated amortization. Amortization is
provided using the straight-line method over 50 years.
  -7-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Impairment
of Long-Lived Assets
  Long-lived
assets, which include property, plant and equipment and intangible assets, are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
  Recoverability
of long-lived assets to be held and used is measured by a comparison between the
carrying amount of an asset and the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated undiscounted future cash flows, an impairment charge is
the amount that the carrying amount of the asset exceeds the fair value of the
assets. Fair value is generally determined by the asset’s expected future
discounted cash flows or market value, if readily determinable. Based on its
review, the Company believes that, as of June 30, 2008 and December 31, 2007,
there were no significant impairments of its long-lived assets.
  Income
Taxes
 
 The
Company uses Statement of Financial Accounting Standards (“SFAS”) No. 109,
“Accounting for Income Taxes,” which requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred income taxes are considered as the tax consequences in future
years for differences between the tax bases of assets and liabilities and their
financial reporting amounts at each period end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized.
 
 The
Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, on January 1, 2007. Based on FIN 48, the Company
made a comprehensive review of its portfolio of tax positions in accordance with
recognition standards established by FIN 48. Based on Interpretation 48, the
Company recognized no material adjustments to liabilities or stockholders
equity. When tax returns are filed, it is highly certain that some positions
taken would be sustained upon examination by the taxing authorities, while
others are subject to uncertainty about the merits of the positions taken or the
amount of the positions that would be ultimately sustained. The benefit of a tax
position is recognized in the financial statements in the period during which,
based on all available evidence, management believes it is more likely than not
that the position will be sustained upon examination, including the resolution
of appeals or litigation processes, if any. Taxpositions taken are not
offset or aggregated with other positions. Tax positions that meet the
more-likely-than-not recognition threshold are measured as the largest amount of
tax benefit that is more than 50 percent likely to be realized upon settlement
with the applicable taxing authority. The portion of the benefits associated
with tax positions taken that exceeds the amount measured as described above is
reflected as a liability for unrecognized tax benefits in the accompanying
balance sheets along with any associated interest and penalties that would be
payable to the taxing authorities upon examination.
 
 Interests
associated with unrecognized tax benefits are classified as interest expenses
and penalties are classified in selling, general and administrative expenses in
the statements of income. The adoption of FIN 48 did not have a material impact
on the Company’s financial statements.
 
 Weikang
is governed by the Income Tax Law of the PRC concerning the private enterprises
that are generally subject to tax at a statutory rate of 25% (33% prior to 2008)
on income reported in the statutory financial statements after appropriate tax
adjustments. Weikang is exempt from income tax for three years from 2006 to
2008.
 
 
 
  -8-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Revenue
Recognition
 
 The
Company's revenue recognition policies are in compliance with SEC Staff
Accounting Bulletin (“SAB”) 104.  Sales revenue is recognized at the
date of shipment to customers when a formal arrangement exists, the price is
fixed or determinable, the delivery is completed, no other significant
obligations of the Company exist and collectibility is reasonably assured.
Payments received before all the relevant criteria for revenue recognition is
met are recorded as unearned revenue.
 
 Sales
revenue represents the invoiced value of goods, which is subject to net of
value-added tax (“VAT”). All of the Company’s products are sold in the PRC and
are subject to Chinese value-added tax of 17% of the gross sales price. This VAT
may be offset by VAT paid by the Company on raw materials and other materials
included in the cost of producing their end product. The Company recorded VAT
payable and VAT receivable net of payments in the financial statements. The VAT
tax return is filed offsetting the payables against the
receivables.
 
 Sales and
purchases are recorded net of VAT collected and paid as the Company acts as an
agent for the government.  VAT taxes are not affected by the income
tax holiday.
 
 Sales
returns and allowances was $0 for the six months ended June 30, 2008. The
Company does not provide unconditional right of return, price protection or any
other concessions to its dealers or other customers.
 
 Cost
of Goods Sold
  Cost of
goods sold consists primarily of material costs, employee compensation,
depreciation and related expenses, which are directly attributable to the
production of products. Write-down of inventory to lower cost or market is
also recorded in cost of goods sold.
 
 Concentration
of Credit Risk
 
 Financial
instruments that potentially subject the Company to credit risk consist
primarily of accounts receivable and other receivables. The Company does not
require collateral or other security to support these receivables. The Company
conducts periodic reviews of its clients' financial condition and customer
payment practices to minimize collecting risk on accounts
receivable.
 
 The
operations of the Company are located in the PRC. Accordingly, the Company's
business, financial condition, and results of operations may be influenced by
the political, economic, and legal environments in the PRC, as well as by the
overall performance of the PRC’s economy.
 
 Statement
of Cash Flows
 
 In
accordance with SFAS No. 95, “Statement of Cash Flows,” cash flows from the
Company's operations are calculated based upon the local currencies. As a
result, amounts related to assets and liabilities reported on the statement of
cash flows may not necessarily agree with changes in the corresponding balances
on the balance sheet.
 
 Fair
Value of Financial Instruments
 
 SFAS No.
107, “Disclosures about Fair Value of Financial Instruments,” requires that the
Company disclose estimated fair values of financial instruments. The carrying
amounts reported in the statements of financial position for current assets and
current liabilities qualifying as financial instruments are a reasonable
estimate of fair value.
 
  -9-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Foreign
Currency Translation and Comprehensive Income (Loss)
  The
Company’s functional currency is the Renminbi (“RMB”). For financial reporting
purposes, RMB has been translated into United States dollars ("USD") as the
reporting currency. Assets and liabilities are translated at the exchange rate
in effect at the balance sheet date. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period. Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated other
comprehensive income".
 
 Gains and
losses resulting from foreign currency transactions are included in income.
There has been no significant fluctuation in exchange rate for the conversion of
RMB to USD after the balance sheet date.
 
 The
Company uses SFAS No 130, “Reporting Comprehensive Income”. Comprehensive income
is comprised of net income and all changes to the statements of stockholders’
equity, except the changes in paid-in capital and distributions to stockholders
due to investments by stockholders. Comprehensive income for the six months
ended June 30, 2008 included net income and foreign currency translation
adjustments.
 
 Basic
and Diluted Earning Per Share (EPS)
 
 Basic EPS
is computed by dividing income available to common shareholders by the weighted
average number of common shares outstanding for the period. Diluted EPS is
computed similarly to basic net income per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. Diluted net earning per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
 
 Segment
Reporting
 
 SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
requires a use of the “management approach” model for segment reporting. The
management approach model is based on the way a company's management organizes
segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography,
legal structure, management structure, or any other manners in which management
disaggregates a company.
 
 SFAS 131
has no effect on the Company's financial statements as substantially all of the
Company's operations are conducted in one industry segment. The Company has one
reportable business segment. All of the Company's assets are located in the
PRC.
 
 Research
and Development
 
 Research
and development costs are related primarily to the development of new
nutritional and health supplements products. Research and development costs are
expenses as incurred. For the six months ended June 30, 2008 the research and
development expense was $0.
 
 
 
 
  -10-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Start-up Costs
  In
accordance with the American Institute of Certified Public Accountants Statement
of Position 98-5, “Reporting on the Costs of Start-up Activities”, the Company
expenses all costs incurred in connection with the start-up and organization of
the Company.
  New
Accounting Pronouncements
 
 The
Hierarchy of Generally Accepted Accounting Principles
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.” This Statement identifies the sources of accounting
principles and the framework for selecting the principles to be used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy). This Statement will not have an
impact on the Company’s financial statements.
 
 Disclosures
about Derivative Instruments and Hedging Activities
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities an amendment of FASB Statement No. 133.” This
Statement changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows. Based on current conditions, the Company does not believe that
the adoption of SFAS 161 will have a significant impact on its results of
operations or financial position.
 
 Noncontrolling
Interests in Consolidated Financial Statements – An Amendment of ARB No.
51
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements - An Amendment of ARB No. 51 (“SFAS
160”). SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. Specifically, this statement requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements separated from the parent’s equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. SFAS 160 clarifies
that changes in a parent’s ownership interest in a subsidiary that do not result
in deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, this statement requires that a parent recognize
a gain or loss in net income when a subsidiary is deconsolidated. Such gain or
loss will be measured by the fair value of the noncontrolling equity investment
on the deconsolidation date. SFAS 160 also includes expanded disclosure
requirements regarding the interests of the parent and its noncontrolling
interest. SFAS 160 are effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. Based on
current conditions, the Company does not believe that the adoption of SFAS 160
will have a significant impact on its results of operations or financial
position.
 
 
 
 
 
 
  -11-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Business
Combinations
 
 In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting
for business combinations. Under SFAS 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS 141R will change
the accounting treatment for certain specific items, including:
 
 ·
                Acquisition
      costs will be generally expensed as
incurred;
 ·
                Noncontrolling
      interests (formerly known as “minority interests” – see SFAS 160
      discussion below) will be valued at fair value at the acquisition
      date;
 ·
                Acquired
      contingent liabilities will be recorded at fair value at the acquisition
      date and subsequently measured at either the higher of such amount or the
      amount determined under existing guidance for non-acquired
      contingencies;
 ·
                In-process
      research and development will be recorded at fair value as an
      indefinite-lived intangible asset at the acquisition
  date;
 ·
                Restructuring
      costs associated with a business combination will be generally expensed
      subsequent to the acquisition date;
and
 ·
                Changes
      in deferred tax asset valuation allowances and income tax uncertainties
      after the acquisition date generally will affect income tax
      expense.
 
 SFAS 141R
also includes a substantial number of new disclosure requirements. SFAS 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. Earlier adoption is prohibited. Accordingly, since
we are a calendar year-end company we will continue to record and disclose
business combinations following existing GAAP until January 1, 2009. The
Company believes that SFAS 141R will have an impact on accounting for business
combinations once adopted but the effect depends on acquisitions at that
time.
 
 Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans, an
Amendment of FASB Statements No. 87, 88, 106, and 132R
 
 In
September 2006, the FASB, issued SFAS, No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans, an Amendment of FASB
Statements No. 87, 88, 106, and 132R,” which requires employers to recognize the
underfunded or overfunded status of a defined benefit postretirement plan as an
asset or liability in its statement of financial position and to recognize
changes in the funded status in the year in which the changes occur through
other accumulated comprehensive income. Additionally, SFAS No. 158 requires
employers to measure the funded status of a plan as of the date of its year-end
statement of financial position. The new reporting requirements and related new
footnote disclosure rules of SFAS No. 158 are effective for fiscal years ending
after December 15, 2006. The Company adopted the provisions of SFAS No. 158 for
the year end 2006, and the effect of recognizing the funded status in other
accumulated comprehensive income was not significant. The new measurement date
requirement applies for fiscal years ending after December 15,
2008.
 
  
  
  
 
 
  -12-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Accounting
for Nonrefundable Advance Payments for Goods or Services Received for use in
Future Research and Development Activities
 
 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.  Management is currently evaluating the effect of this
pronouncement on financial statements.
  3.
INVENTORY
 
 Inventory
at June 30, 2008 and December 31, 2007 was as follows:
 
 June
      30,
                  2008
                
                
                December
      31,
                  2007Raw
      materials
                
                $
                71,716
                
                
                $
                136,010packing
      materials
                
                
                34,620
                
                
                
                28,258Finished
      Goods
                
                
                45,254
                
                
                
                34,892Total
                
                $
                151,590
                
                
                $
                199,160
 
 4.
PROPERTY AND EQUIPMENT, NET
 
 Property
and equipment consisted of the following at June 30, 2008 and December 31,
2007:
 
 June
      30,
                  2008
                
                
                December
      31,
                  2008Building
                
                $
                2,888,642
                
                
                $
                2,736,841Building
      improvements
                
                
                562,467
                
                
                
                508,184Production
      equipment
                
                
                533,861
                
                
                
                482,062Office
      furniture and equipment
                
                
                26,375
                
                
                
                24,193Vehicles
                
                
                67,951
                
                
                
                63,8944,079,296
                
                
                
                3,815,174Less:
      Accumulated depreciation
                
                
                (188,742
                )
                
                
                (43,986
                )$
                3,890,554
                
                
                $
                3,771,188
 
 Depreciation
expense for the six months ended June 30, 2008 was $137,962.
 
 5.
OTHER RECEIVABLES
 
 Other
receivables represent cash advances to employees and sales representatives for
normal business purposes such as advance for traveling expense.
 
 
 
 
  -13-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  6.
RELATED PARTY TRANSACTIONS
  Due
from Officer
 
 Due from
officer represents funds provided to an officer of the Company who used the
funds to pay a refundable  deposit in the officer’s name on behalf of
Heilongjiang Weikang in connection with the acquisition of a pharmaceutical
factory. The acquisition was completed on July 22, 2008 (see note 14 –
subsequent event).
 
 Due from Related Party
 
 Due from
related party represents accounts receivable arising from sales made to a
related company owned by the Company’s chief executive officer. As of June 30,
2008 and December 31, 2007, due from this related party was $181,691 and
$135,777, respectively. Sales to this related party during the six and three
months ended June 30, 2008 was $83,692 and $52,172, respectively.
 
 Sales
to Related Party
 
 During
the six and three months ended June 30, 2008, sales were made to another related
company owned by the Company’s chief executive officer in the amount of $559,494
and $205,977, respectively. The receivables from this related party was $0 as of
June 30, 2008 and December 31, 2007.
 
 Advance
from officer
 
 Advance
from officer represents the payment made by an officer of Heilongjiang Weikang
on behalf of Sinary to certain former shareholders of the Company in
connection with the reverse acquisition between the Company and
Sinary on December 7, 2007.
 
 7.
INTANGIBLE ASSETS
 
 Intangible
assets mainly consist of land use right. All land in the PRC is government owned
and can not be sold to any individual or company. However, the government grants
the user a “land use right” to use the land. The Company has the right to use
the land for 50 years and is amortizing the right on a straight-line basis for
50 years.
  Amortization
expense for six and three months ended June 30, 2008 was $5,878 and $2,982,
respectively. Amortization expense for the next five years is expected to
be$11,500, $11,500, $11,500, $11,500 and $11,500 respectively.
  8. MAJOR
CUSTOMERS AND
VENDORS
  Five
major customers who are dealers of the Company collectively accounted  for
95% and 93% of the Company’s net revenue for the six and three months ended June
30, 2008, respectively.  These customers accounted for about 24%, 21%, 18%,
17% & 15% of the sales for the six months ended June 30, 2008, respectively,
including, a related party owned by the Company's chief executive officer, 
which accounted for about 18% of the total sales. These customers accounted for
about 24%, 23%, 19%, 17% & 10% of the sales for the three months ended June
30, 2008, respectively, including the related party owned by the Company's chief
executive officer which accounted for about 10% of the total sales. At June 30,
2008 and December 31, 2007, the total receivable balance due from these five
customers was $0.
  Six
vendors collectively provided 74% of the Company’s purchase of raw
materials for the six and three months ended June 30, 2008, respectively. These
vendors counted for about 14%, 14%, 12%, 12%, 12% and 10% of the purchases for
the six and three months ended June 30, 2008, respectively. The Company did not
have accounts payable to these vendors at June 30, 2008 and December 31,
2007.
  -14-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  9.
OTHER PAYABLES
 
 Other
payables mainly consisted of the purchase price of approximately $7,620,000 that
Sinary was originally obligated to pay to Heilongjiang Weikang’s
former owners within one year for the acquisition of Heilongjiang Weikang. This
payable does not bear any interest.  On August 9, 2008, the State
Administration for Industry and Commerce reissued Heilongjiang Weikang
a "Foreign Invested Enterprise" business license to expire on February 9, 2009,
effectively extending the payment date of the purchase price to the expiration
date of the reissued
license.
 
 10.
INCOME TAXES
 
 Heilongjiang
Weikang is exempt from income tax for three years from 2006 to 2008. Net income
for the six and three months ended June 30, 2008 would have been lower by
$410,000 and $270,000, respectively if Heilongjiang Weikang was not exempt
from income taxes.
 
 Sinary
had net operating loss of approximately $650,000 at June 30, 2008 and December
31, 2007. A 100% valuation allowance has been established due to the uncertainty
of its realization.
 
 Heilongjiang
Weikang is governed by the Income Tax Law of the PRC concerning the private
enterprises, which are generally subject to tax at a statutory rate of 25% on
income reported in the statutory financial statements after appropriate tax
adjustments. For the six and three months ended June 30, 2008, the Company’s
effective income tax rate differs from the US statutory rate  due to the
effect of tax holiday.
 
 11.
STATUTORY RESERVES
 
 Pursuant
to the new corporate law of the PRC effective on January 1, 2006, the Company is
now only required to maintain one statutory reserve by appropriating from its
after-tax profit before declaration or payment of dividends. The statutory
reserve represents restricted retained earnings.
 
 Surplus
Reserve Fund
 
 The
Company is now only required to transfer 10% of its net income, as determined
under the PRC accounting rules and regulations, to a statutory surplus reserve
fund until such reserve balance reaches 50% of the Company’s registered
capital.
 
 The
surplus reserve fund is non-distributable other than during liquidation and can
be used to fund previous years’ losses, if any, and may be utilized for business
expansion or converted into share capital by issuing new shares to existing
shareholders in proportion to their shareholding or by increasing the par value
of the shares currently held by them, provided that the remaining reserve
balance after such issue is not less than 25% of the registered
capital.
 
 Common
Welfare Fund
 
 Common
welfare fund is a voluntary fund that the Company can elect to transfer 5% to
10% of its net income to this fund. This fund can only be utilized on capital
items for the collective benefit of the Company’s employees, such as
construction of dormitories, cafeteria facilities, and other staff welfare
facilities. This fund is non-distributable other than upon
liquidation.
 
 12.
CONTINGENCIES
  The
Company’s operations in the PRC are subject to specific considerations and
significant risks not typically associated with companies in the North America
and Western Europe. These include risks associated with, among others, the
political, economic and legal environments and foreign currency exchange. The
Company’ s operations may be adversely affected by changes in governmental
policies with respect to laws and regulations, anti-inflationary measures,
currency conversion and remittance abroad, and rates and methods of taxation,
among other things.
  -15-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  
 12.
CONTINGENCIES (CONTINUED)
  The
Company’s sales, purchases and expenses transactions are denominated in RMB and
all of the Company’s assets and liabilities are also denominated in RMB. The RMB
is not freely convertible into foreign currencies under the current law. In
China, foreign exchange transactions are required by law to be conducted only by
authorized financial institutions. Remittances in currencies other than RMB may
require certain supporting documentation in order to affect the
remittance.
 
 13.
COMPARATIVE PRO FORMA CONSOLIDATED STATEMENT OF INCOME
 
 On
October 25, 2007, Sinary entered into an equity interests transfer agreement
with the owners of Heilongjiang Weikang to acquire 100% of the equity interests
of Heilongjiang Weikang for the sum of 57 million RMB, or approximately 7.6
million US dollars.
 
 The pro
forma financial information of the consolidated statement of income of the
Company as if the acquisition of Sinary and Heilongjiang Weikang had occurred as
of the beginning of the 2007 is presented below:
 
 For
      the six months ended June 30, 2007
                
                
                
                
                
                
                
                Pro
      forma
                
                
                
                Pro
      formaSinary
                
                
                Weikang
                
                
                Adjustments
                
                
                
                ConsolidatedNet
      Revenue
                
                $
                -
                
                
                $
                1,871,277
                
                
                $
                -
                
                
                
                $
                1,871,277Cost
      of Revenue
                
                
                -
                
                
                
                905,832
                
                
                
                -
                
                
                
                
                905,832Gross
      Profit
                
                
                -
                
                
                
                965,445
                
                
                
                -
                
                
                
                
                965,445Operating
      expenses:Selling
      expenses
                
                
                -
                
                
                
                7,598
                
                
                
                -
                
                
                
                
                7,598General
      and administrative expenses
                
                
                -
                
                
                
                151,247
                
                
                
                (10,232
                )
                (a)
                
                
                141,015Total
      operating expenses
                
                
                -
                
                
                
                158,845
                
                
                
                (10,232
                )
                
                
                
                148,613Income
      from operations
                
                
                -
                
                
                
                806,600
                
                
                
                10,232
                
                
                
                
                816,832Non-operating
      income (expenses):Other
      expense
                
                
                -
                
                
                
                (57
                )
                
                
                -
                
                
                
                
                (57
                )Total
      non-operating expenses
                
                
                -
                
                
                
                (57
                )
                
                
                -
                
                
                
                
                (57
                )Net
      income
                
                $
                -
                
                
                $
                806,543
                
                
                $
                10,232
                
                
                
                $
                816,775Basic
      and diluted weighted average shares outstanding
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                25,229,800Basic
      and diluted net earnings per share
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                
                $
                0.03
 
 a) Pro
forma adjustment is to record additional amortization of $4,942 for the land use
rights and decreased depreciation of $715,174 for the fixed assets as a result
of the purchase.
 
 
 
 
 
 
 
  -16-
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007
  
 13.
COMPARATIVE PRO FORMA CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
 
 For
      the three months ended June 30, 2007
                
                
                
                
                
                
                
                Pro
      forma
                
                
                
                Pro
      formaSinary
                
                
                Weikang
                
                
                Adjustments
                
                
                
                ConsolidatedNet
      Revenue
                
                $
                -
                
                
                $
                877,340
                
                
                $
                -
                
                
                
                $
                877,340Cost
      of Revenue
                
                
                -
                
                
                
                403,233
                
                
                
                -
                
                
                
                
                403,233Gross
      Profit
                
                
                -
                
                
                
                474,107
                
                
                
                -
                
                
                
                
                474,107Operating
      expenses:Selling
      expenses
                
                
                -
                
                
                
                40
                
                
                
                -
                
                
                
                
                40General
      and administrative expenses
                
                
                -
                
                
                
                84,410
                
                
                
                (5,116
                )
                (a)
                
                
                79,294Total
      operating expenses
                
                
                -
                
                
                
                84,450
                
                
                
                (5,116
                )
                
                
                
                79,334Income
      from operations
                
                
                -
                
                
                
                389,657
                
                
                
                5,116
                
                
                
                
                394,773Non-operating
      income (expenses):Other
      expense
                
                
                -
                
                
                
                (16
                )
                
                
                -
                
                
                
                
                (16
                )Total
      non-operating expenses
                
                
                -
                
                
                
                (16
                )
                
                
                -
                
                
                
                
                (16
                )Net
      income
                
                $
                -
                
                
                $
                389,641
                
                
                $
                5,116
                
                
                
                $
                394,757Basic
      and diluted weighted average shares outstanding
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                
                25,229,800Basic
      and diluted net earnings per share
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                
                $
                0.02
 
 a) Pro
forma adjustment is to record additional amortization of $2,471 for the land use
rights and decreased depreciation of $7,587 for the fixed assets as a result of
the purchase.
 
 14.
SUBSEQUENT EVENT
 
 On July
22, 2008, Heilongjiang Weikang completed the acquisition of 100% of the issued
and outstanding equity interests of Tianfang (Guizhou) Pharmaceutical Co., Ltd.
(“Tianfang”), a Chinese limited liability company, for the aggregate purchase
price of $15,000,000 (the “Consideration”), pursuant to a stock transfer
agreement dated and entered into on June 30, 2008 by and among the Heilongjiang
Weikang, Tianfang, and Tianfang’s two shareholders: Beijing Shiji Qisheng
Trading Co., Ltd., a Chinese limited liability company (“Shiji Qisheng”) and
Tri-H Trade (U.S.A.) Co., Ltd., a California corporation (“Tri-H”, and together
with Shiji Qisheng collectively as the “Selling Shareholders”).
 
 A
refundable deposit was previously made to Tianfang by an officer of the Company
on behalf of Heilongjiang Weikang for the purpose of accessing and examining the
financial books and records of Tianfang. At the closing of the acquisition, the
entire amount of the refundable deposit was applied toward the Consideration and
paid to Tri-H together with $810,000 for Tri-H’s pro rata ownership interests of
Tianfang. Additionally, Heilongjiang Weikang issued a promissory note to Shiji
Qisheng in the amount of $11,190,000 for Shiji Qisheng’s pro rata ownership
interests of Tianfang. The promissory note is without interest, and is payable
in two installments, the first, in the amount of $2,000,000, is due 90 calendar
days after the date of the stock transfer agreement, and the second, in the
amount of $9,190,000, is due on the first anniversary of the agreement
date.
 
 
 
 
  -17-
  ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
 
 The
following discussion and analysis of our financial condition and results of
operations for the six months ended June 30, 2008 should be read in conjunction
with the Financial Statements and corresponding notes included in this Quarterly
Report on Form 10-Q. Our discussion includes forward-looking statements based
upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations, and intentions. Actual results and the timing
of events could differ materially from those anticipated in these
forward-looking statements as a result of a number of factors, including those
set forth under the Risk Factors and Special Note Regarding Forward-Looking
Statements in this report. We use words such as “anticipate,” “estimate,”
“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,”
“may,” “will,” “should,” “could,” and similar expressions to identify
forward-looking statements.
 
 Overview
 
 Weikang
Bio-Technology Company, Inc. (“we”, “us”, the “Company”) was originally
incorporated in Florida on May 12, 2004 under the name Expedition Leasing, Inc.
On December 7, 2007, we acquired SinaryBio-Technology
Holdings Group, Inc. (“Sinary”), a Nevada corporation and, as a result, Sinary’s
wholly owned subsidiary Heilongjiang Weikang Bio-Technology Group
Co., Ltd. (“HeilongjiangWeikang”), a limited liability
company in the People’s Republic of China
(“China”or “PRC”), by way of the
exchange of 24,725,200 shares of our common stock for 100% of the issued and
outstanding common stock of Sinary. We accounted for this share exchange
transaction as a reverse acquisition and recapitalization and, as a result, our
consolidated financial statements include the historical assets and liabilities
of Sinary in our capital structure. Please see Note 1 to our unaudited
consolidated financial statements included in this report for further details of
this stock exchange transaction. (Please see the risk factors
concerning the acquisition ofHeilongjiangWeikang under the sections
titled “Risks
Related to Our Corporate Structure”and “Risks Related to an
Investment in Our Securities”in the Risk Factor section
of this current report beginning onpage28.)
 
 Having no
substantive operation of its own, Sinary, through Heilongjiang Weikang, engages
in the research, development, manufacturing, marketing, and sales ofhealth and nutritional
supplements inChina. Heilongjiang
Weikang is located in Heilongjiang Province in Northeastern China, with our
principal office and manufacturing facility located in the Economic and
Technology Development Zone in the city of Shuangcheng, approximately 42
kilometers south of the provincial capital Harbin. All of our products are
Chinese herbal-based health and nutritional supplements. We actively seek to
maintain and improve the quality of its products, and since April 2006, Weikang
has implemented the “GB/T19001-2000 idt ISO9001:2000” quality assurance
management system to all of its manufacturing processes.
 
 Through
Heilongjiang Weikang, we currently manufacture and distribute in China a series
of internally developed health supplements under a Chinese trade name which
English transliteration is “Rongrun”. The “Rongrun”-line presently include seven
products. We also developed two new products during the end of 2007, which have
been approved by the Heilongjiang Department of Health.
 
 Recent
Events
 
 As
reported on our current report on Form 8-K filed with the SEC on June 18, 2008,
on June 10, 2008, the Company effected a merger, after stockholder approval by
written consent, between the Company (as Expedition Leasing, Inc.) and its
wholly-owned subsidiary, Weikang Bio-Technology Group Company, Inc., a Nevada
corporation, by filing its Articles of Merger with the Secretary of State of
Nevada, with the subsidiary as the surviving corporation. In connection with
this merger, the Company has changed its name to “Weikang Bio-Technology Group
Company, Inc.” to better reflect our business.
 
 On July
22, 2008, Heilongjiang Weikang, our operating subsidiary in China, completed the
acquisition (the “Acquisition”) of 100% of the issued and outstanding equity
interests of Tianfang (Guizhou) Pharmaceutical Co., Ltd. (“Tianfang”), a Chinese
limited liability company, for the aggregate purchase price of $15,000,000,
pursuant to a Stock
Transfer Agreement dated and entered into on June 30, 2008 by and among the
Heilongjiang Weikang, Tianfang, and Tianfang’s two shareholders, Beijing Shiji
Qisheng Trading Co., Ltd. and Tri-H Trade (U.S.A.) Co., Ltd.
  -18-
   On August 9, 2008, theHeilongjiang Office of the State Administration for Industry and Commerce
(“SAIC”) reissued to Heilongjiang Weikang a business license to expire on
February 9, 2009. When Sinary first acquired Heilongjiang Weikang in November
2007, SAIC issued a business license to Heilongjiang Weikang as a foreign
invested enterprise. Under applicable PRC regulations, Sinary had three months
from the issuance date of that license to remit the purchase price of
Heilongjiang Weikang to the sellers, provided that Sinary may apply for an
extension. The reissued license effectively extends the payment due date now to
the expiration date of the reissued license.
 
 Critical
Accounting Policies and Estimates
 
 Our
management's discussion and analysis of our financial condition and results of
operations are based on our combined financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements as well as the reported net sales and expenses
during the reporting periods. On an ongoing basis, we evaluate our estimates and
assumptions. We base our estimates on historical experience and on various other
factors that we believe are reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying value of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or
conditions.
 
 While our
significant accounting policies are more fully described in Note 2 to our
combined financial statements, we believe that the following accounting policies
are the most critical to aid you in fully understanding and evaluating this
management discussion and analysis:
 
 Basis
of Presentation on Principle of Consolidation
 
 The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Sinary, and the results of operations
of Weikang, Sinary’s wholly-owned subsidiary, from the date of Sinary’s
acquisition of Weikang. All significant inter-company accounts and transactions
have been eliminated in consolidation.
 
 Accounts
Receivable
  The
Company’s policy is to maintain reserves for potential credit losses on accounts
receivable. Management reviews the composition of accounts receivable and
analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to
evaluate the adequacy of these reserves.
 
 Inventories
 
 Inventories
are valued at the lower of cost or market with cost determined on a moving
weighted average basis. Cost of work in progress and finished goods comprises
direct material, direct production cost and an allocated portion of production
overheads.
  Property
and Equipment
 
 Property
and equipment are stated at cost, net of accumulated depreciation. Expenditures
for maintenance and repairs are expensed as incurred; additions, renewals and
betterments are capitalized. When property and equipment are retired or
otherwise disposed of, the related cost and accumulated depreciation are removed
from the respective accounts, and any gain or loss is included in operations.
Depreciation of property and equipment is provided using the straight-line
method for substantially all assets with estimated lives ranging from 3 to 20
years as follows:
  -19-
  
 Building
                20
      yearsVehicle
                5
      yearsOffice
      Equipment
                3-7
      yearsProduction
      Equipment
                3-6
      years
 
 Revenue
Recognition
 
 The
Company's revenue recognition policies are in compliance with Securities and
Exchange Commission (SEC) Staff Accounting Bulletin (“SAB”) 104. Sales revenue
is recognized at the date of shipment to customers when a formal arrangement
exists, the price is fixed or determinable, the delivery is completed, no other
significant obligations of the Company exist and collectibility is reasonably
assured. Payments received before all of the relevant criteria for revenue
recognition are recorded as unearned revenue.
 
 Sales
revenue represents the invoiced value of goods, net of value-added tax (“VAT”).
All of the Company’s products that are sold in the PRC are subject to Chinese
value-added tax of 17% of the gross sales price. This VAT may be offset by VAT
paid by the Company on raw materials and other materials included in the cost of
producing their finished product. The Company recorded VAT payable and VAT
receivable net of payments in the financial statements. The VAT tax return is
filed offsetting the payables against the receivables.
 
 Foreign
Currency Translation and Comprehensive Income (Loss)
  The
Company’s functional currency is the Renminbi (“RMB”). For financial reporting
purposes, RMB has been translated into United States dollars ("USD") as the
reporting currency. Assets and liabilities are translated at the exchange rate
in effect at the balance sheet date. Revenues and expenses are translated at the
average rate of exchange prevailing during the reporting period. Translation
adjustments arising from the use of different exchange rates from period to
period are included as a component of stockholders' equity as "Accumulated other
comprehensive income". Gains and losses resulting from foreign currency
transactions are included in income. There has been no significant fluctuation
in exchange rate for the conversion of RMB to USD after the balance sheet
date.
 
 The
Company uses SFAS No 130, “Reporting Comprehensive Income”. Comprehensive income
is comprised of net income and all changes to the statements of stockholders’
equity, except those due to investments by stockholders, changes in paid-in
capital and distributions to stockholders. Comprehensive income for the six
months ended June 30, 2008 included net income and foreign currency translation
adjustments.
 
 Recent
Accounting Pronouncements
 
 The
Hierarchy of Generally Accepted Accounting Principles
 
 In May
2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted
Accounting Principles.”  This Statement identifies the sources of
accounting principles and the framework for selecting the principles to be used
in the preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in
the United States (the GAAP hierarchy).  This Statement will not have an
impact on the Company’s financial statements.
 
 Disclosures
about Derivative Instruments and Hedging Activities
 
 In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities an amendment of FASB Statement No. 133.”  This
Statement changes the disclosure requirements for derivative instruments and
hedging activities. Entities are required to provide enhanced disclosures about
(a) how and why an entity uses derivative instruments, (b) how derivative
instruments and related hedged items are accounted for under Statement 133 and
its related interpretations, and (c) how derivative instruments and related
hedged items affect an entity’s financial position, financial performance, and
cash flows.  Based on current conditions,
the Company does not expect the adoption of SFAS 161 to have a significant
impact on its results of operations or financial
position.
  -20-
   Noncontrolling
Interests in Consolidated Financial Statements – An Amendment of ARB No.
51
 
 In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements - An Amendment of ARB No. 51 (“SFAS
160”). SFAS 160 establishes new accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. Specifically, this statement requires the recognition of a
noncontrolling interest (minority interest) as equity in the consolidated
financial statements and separate from the parent’s equity. The amount of net
income attributable to the noncontrolling interest will be included in
consolidated net income on the face of the income statement. SFAS 160 clarifies
that changes in a parent’s ownership interest in a subsidiary that do not result
in deconsolidation are equity transactions if the parent retains its controlling
financial interest. In addition, this statement requires that a parent recognize
a gain or loss in net income when a subsidiary is deconsolidated. Such gain or
loss will be measured using the fair value of the noncontrolling equity
investment on the deconsolidation date. SFAS 160 also includes expanded
disclosure requirements regarding the interests of the parent and its
noncontrolling interest. SFAS 160 are effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15, 2008.
Based on current conditions, the Company does not expect the adoption of SFAS
160 to have a significant impact on its results of operations or financial
position.
 
 Business
Combinations
 
 In
December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations (“SFAS 141R”). SFAS 141R will significantly change the accounting
for business combinations. Under SFAS 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS 141R will change
the accounting treatment for certain specific items, including:
 
 ·
                Acquisition
      costs will be generally expensed as
incurred;
 ·
                Noncontrolling
      interests (formerly known as “minority interests” – see SFAS 160
      discussion below) will be valued at fair value at the acquisition
      date;
 ·
                Acquired
      contingent liabilities will be recorded at fair value at the acquisition
      date and subsequently measured at either the higher of such amount or the
      amount determined under existing guidance for non-acquired
      contingencies;
 ·
                In-process
      research and development will be recorded at fair value as an
      indefinite-lived intangible asset at the acquisition
  date;
 ·
                Restructuring
      costs associated with a business combination will be generally expensed
      subsequent to the acquisition date;
and
 ·
                Changes
      in deferred tax asset valuation allowances and income tax uncertainties
      after the acquisition date generally will affect income tax
      expense.
 
 SFAS 141R
also includes a substantial number of new disclosure requirements. SFAS 141R
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after December 15, 2008. Earlier adoption is prohibited. Accordingly, since
we are a calendar year-end company we will continue to record and disclose
business combinations following existing GAAP until January 1, 2009. The
Company expects SFAS 141R will have an impact on accounting for business
combinations once adopted but the effect is dependent upon acquisitions at that
time.
 
 Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans, an
Amendment of FASB Statements No. 87, 88, 106, and 132R
 
 In
September 2006, the FASB, issued SFAS, No. 158, “Employers’ Accounting for
Defined Benefit Pension and Other Postretirement Plans, an Amendment of FASB
Statements No. 87, 88, 106, and 132R,” which requires employers to recognize the
underfunded or overfunded status of a defined benefit postretirement plan as an
asset or liability
in its statement of financial position and to recognize changes in the funded
status in the year in which the changes occur through accumulated other
comprehensive income. Additionally, SFAS No. 158 requires employers to measure
the funded status of a plan as of the date of its year-end statement of
financial position. The new reporting requirements and related new footnote
disclosure rules of SFAS No. 158 are effective for fiscal years ending after
December 15, 2006. The Company adopted the provisions of SFAS No. 158 for the
year end 2006, and the effect of recognizing the funded status in accumulated
other comprehensive income was not significant. The new measurement date
requirement applies for fiscal years ending after December 15,
2008.
  -21-
  
 Accounting
for Nonrefundable Advance Payments for Goods or Services Received for use in
Future Research and Development Activities
 
 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.  Management is currently evaluating the effect of this
pronouncement on financial statements.
 
 Results
of Operations
 
 Comparison
of Three Months Ended June 30, 2008 and June 30, 2007.
 
 On
October 25, 2007, Sinary entered into an equity interests transfer agreement
with the owners of Heilongjiang Weikang to acquire 100% of the equity interests
of Heilongjiang Weikang for the sum of 57 million RMB, or approximately 7.6
million US dollars. The pro forma financial information of the consolidated
statement of income of the Company as if the acquisition of Sinary and
Heilongjiang Weikang had occurred as of the beginning of fiscal 2007 is
presented in Note 13 to our unaudited consolidated financial statements included
in this report.
 
 The
following table summarizes our results of operations. The table and the
discussion below should be read in conjunction with the unaudited financial
statements and the notes thereto appearing elsewhere in this
report.
  -22-
 
  Three
      Months Ended June 30,2008
                
                
                2007
      (pro forma)(in
      U.S. Dollars, except for percentages)Sales
                
                $
                2,053,680
                
                
                
                100
                %
                
                $
                877,340
                
                
                
                100
                %Cost
      of sales
                
                $
                (711,365
                )
                
                
                35
                %
                
                $
                (403,233
                )
                
                
                46
                %Gross
      Profit
                
                $
                1,342,315
                
                
                
                65
                %
                
                $
                474,107
                
                
                
                54
                %Operating
      Expense
                
                $
                (240,310
                )
                
                
                12
                %
                
                $
                (84,450
                )
                
                
                10
                %Income
      From Operations
                
                $
                1,102,005
                
                
                
                53
                %
                
                $
                389,657
                
                
                
                44
                %Other
      Expenses
                
                $
                (757
                )
                
                
                0.04
                %
                
                $
                (41
                )
                
                
                -
                %Income
      tax expenses
                
                $
                -
                
                
                
                -
                %
                
                $
                -
                
                
                
                -
                %Net
      Income
                
                $
                1,101,248
                
                
                
                54
                %
                
                $
                389,698
                
                
                
                44
                %
 
 Revenues. During the three
months ended June 30, 2008, we had revenues of $2.05 million as compared to
revenues of $0.88 million for the three months ended June 30, 2007, an increase
of approximately $1.18 million or 134%. This increase is attributable to
increased demand of our products from our dealers and distributors. We believe
that our sales will continue to grow as we continue to improve the quality of
our existing products and to develop new products.
 
 Cost of Revenues. Cost of
revenues increased $308,132 or 76%, from $403,233 for the three months ended
June 30, 2007 to $711,365 for the same period in 2008. The increase was mainly
due to the increase of production and sales activities during the second fiscal
quarter in 2008. We had decrease in cost of revenue as a percentage of net
revenues for the three months ended June 30, 2008, approximately 35% as compared
to approximately 46% for the three
months ended June 30, 2007, which was attributable to increased production
volume with decreased average production cost.
  -23-
  
 Gross Profits. Gross profit
was $1.34 million for the three months ended June 30, 2008 as compared to $0.47
million for the same period in 2007, representing gross margins of approximately
65% and 54% of revenues, respectively. The increase in our gross profits was
mainly due to decrease in cost of revenue as a percentage of net
revenue.
 
 Operating Expenses. Total
operating expenses consists of selling, general and administrative expenses of
$240,310 for the three months ended June 30, 2008 as compare to $84,450 for the
three months ended June 30, 2007, an increase of $155,860 or 185%. This increase
is in proportion with our increased sales and production
activities.
 
 Net Income. Our net income
for the three months ended June 30, 2008 was $1.1 million as compared to $0.39
million for the same period in 2007. While this is in part due to increased
sales volume, we also continued to benefit from our exemption from income tax.
Our management believes that net income will continue to increase as we continue
to offer better quality and more variety of products and to improve our
manufacturing efficiency.
 
 Comparison
of Six Months Ended June 30, 2008 and June 30, 2007.
 
 On
October 25, 2007, Sinary entered into an equity interests transfer agreement
with the owners of Heilongjiang Weikang to acquire 100% of the equity interests
of Heilongjiang Weikang for the sum of 57 million RMB, or approximately 7.6
million US dollars. The pro forma financial information of the consolidated
statement of income of the Company as if the acquisition of Sinary and
Heilongjiang Weikang had occurred as of the beginning of fiscal 2007 is
presented in Note 13 to our unaudited consolidated financial statements included
in this report.
 
 The
following table summarizes our results of operations. The table and the
discussion below should be read in conjunction with the unaudited financial
statements and the notes thereto appearing elsewhere in this
report.
 Six Months
      Ended June 30,2008
                  
                  
                  2007
      (pro forma)(in
      U.S. Dollars, except for percentages)Sales
                  
                  $
                  3,199,898
                  
                  
                  
                  100
                  %
                  
                  $
                  1,871,277
                  
                  
                  
                  100
                  %Cost
      of sales
                  
                  $
                  (1,166,038
                  )
                  
                  
                  36
                  %
                  
                  $
                  (905,832
                  )
                  
                  
                  48
                  %Gross
      Profit
                  
                  $
                  2,033,860
                  
                  
                  
                  64
                  %
                  
                  $
                  965,445
                  
                  
                  
                  52
                  %Operating
      Expense
                  
                  $
                  (373,422
                  )
                  
                  
                  12
                  %
                  
                  $
                  (158,845
                  )
                  
                  
                  8
                  %Income
      From Operations
                  
                  $
                  1,660,438
                  
                  
                  
                  52
                  %
                  
                  $
                  806,600
                  
                  
                  
                  44
                  %Other
      Expenses
                  
                  $
                  (1,146
                  )
                  
                  
                  0.04
                  %
                  
                  $
                  (57
                  )
                  
                  
                  -
                  %Income
      tax expenses
                  
                  $
                  -
                  
                  
                  
                  -
                  %
                  
                  $
                  -
                  
                  
                  
                  -
                  %Net
      Income
                  
                  $
                  1,659,292
                  
                  
                  
                  52
                  %
                  
                  $
                  806,543
                  
                  
                  
                  44
                  %
 
 Revenues. During the six
months ended June 30, 2008, we had revenues of $3.2 million as compared to
revenues of $1.87 million for the six months ended June 30, 2007, an increase of
approximately $1.33 million or 71%. This increase is attributable to increased
demand from our dealers and distributors. We believe that our sales will
continue to grow as we continue to improve the quality of our existing products
and to develop new products.
 
 Cost of Revenues.Cost of
revenues increased $260,206 or 29%, from $905,832 for the six months ended June
30, 2007 to $1,166,038 for the same period in 2008. The increase was mainly due
to the increase of production and sales activities during the six months ended
June 30, 2008. We had decrease in cost of revenue as a percentage of net
revenues for the six months ended June 30, 2008, approximately 36% as compared
to approximately 48% for the six months ended June 30, 2007, which was
attributable to increased production volume with decreased average production
cost.
  -24-
  
 Gross Profit. Gross profit
was $2.03 million for the six months ended June 30, 2008 as compared to $0.97
million for the same period in 2007, representing gross margins of approximately
64% and 52% of revenues, respectively. The increase in our gross profits was
mainly due to decrease in cost of revenue as a percentage of net
revenue.
 
 Operating Expenses. Total
operating expenses consists of selling, general and administrative expenses of
$373,422 for the six months ended June 30, 2008 as compare to $158,845 for the
six months ended June 30, 2007, an increase of $214,577 or 135%. This increase
is in proportion to our increased sales and production activities.
 
 Net Income. Our net income
for the six months ended June 30, 2008 was $1.66 million as compared to $806,543
for the same period in 2007. While this is in part due to increased sales
volume, we also continued to benefit from our exemption from income tax. Our
management believes that net income will continue to increase as we continue to
offer better quality and more variety of products and to improve our
manufacturing efficiency.
 
 Liquidity and Capital Resources
 
 As of
June 30, 2008, the Company had cash and cash equivalents of approximately
$24,704, other current assets of approximately $5.45 million, and current
liabilities of approximately $8.34 million. Negative working capital amounted to
$2.86 million at June 30, 2008. The ratio of current assets to current
liabilities was 0.66-to-1 as of June 30, 2008. The negative working capital and
the ratio of current assets to current liabilities are primarily related to
other payable of approximately $7,620,000 that Sinary is obligated to pay to the
prior owners of Heilongjiang Weikang on or before February 9, 2009, which is
non-interest bearing.
 
 The
following is a summary of cash provided by or used in each of the indicated
types of activities during the period ended June 30, 2008:
  2008
                    
                    
                    2007Cash provided by (used
      in):
                    
                    
                    
                    
                    (ProForma)Operating
      Activities
                    
                    $
                    1,891,194
                    
                    
                    $
                    1,006,247Investing
      Activities
                    
                    $
                    (64,770
                    )
                    
                    $
                    (35,775
                    )Financing
      Activities
                    
                    $
                    (1,923,587
                    )
                    
                    $
                    (837,267
                    )
 
 Net cash
provided by operating activities was $1.89 million for the six months ended June
30, 2008, as compared to net cash provided by operating activities of $1.01
million for the six months ended June 30, 2007. The increase in net cash flow
from operating activities for the six months ended June 30, 2008 was mainly due
to decrease in inventory and advance to suppliers, despite an increase in
accounts payables.  In addition, our net income for six months ended
June 30, 2008 increased significantly as compared to the same period of 2007,
which provided more cash to the Company.
 
 Net cash
used in investing activities was $64,770 for the six months ended June 30, 2008,
as compared to net cash used in investing activities of $35,775 for the same
period of 2007.  The increase of net cash used in investing activities
during the six months ended June 30, 2008 was mainly due to construction in
progress of a new product line during the six months ended June 30,
2008.
 
 Net cash
used in financing activities was $1.92 million for the six months ended June 30,
2008 as compared to net cash used in by financing activities of $0.84
million for the same period of 2007. The decrease of net cash from financing
activities for the six months ended June 30, 2008 was mainly due to advance
to an officer to pay a refundable deposit on behalf of Heilongjiang Weikang
in connection with an acquisition of Tianfang. The acquisition was completed on
July 22, 2008, and Heilongjiang Weikang now owns 100% of Tianfang.
 
 We do not
believe that inflation had a significant negative impact on our results of
operations during 2008.
 
  -25-
  Foreign
Exchange Rates
 All of
our sales are denominated in Renminbi (“RMB”). As a result, changes in the
relative values of U.S. Dollars and RMB affect our reported levels of revenues
and profitability as the results are translated into U.S. Dollars for reporting
purposes. Fluctuations in exchange rates between the U.S. dollar and RMB
affect our gross and net profit margins and could result in foreign exchange and
operating losses.
 
 Our
results of operations and cash flow are translated at average exchange rates
during the period, and assets and liabilities are translated at the unified
exchange rate as quoted by the People’s Bank of China at the end of the period.
Translation adjustments resulting from this process are included in accumulated
other comprehensive income in our statement of shareholders’ equity. We recorded
net foreign currency gains of $557,244 and $231,065 during the six and three
months of fiscal 2008, respectively. We have not used any forward contracts,
currency options or borrowings to hedge our exposure to foreign currency
exchange risk. We cannot predict the impact of future exchange rate fluctuations
on our results of operations and may incur net foreign currency losses in the
future.
 
 Our
financial statements are expressed in U.S. dollars but the functional
currency of our operating subsidiary is RMB. The value of your investment in our
stock will be affected by the foreign exchange rate between U.S. dollars
and RMB. To the extent we hold assets denominated in U.S. dollars,
including the net proceeds to us from this offering, any appreciation of the RMB
against the U.S. dollar could result in a change to our statement of
operations and a reduction in the value of our U.S. dollar denominated
assets. On the other hand, a decline in the value of RMB against the
U.S. dollar could reduce the U.S. dollar equivalent amounts of our
financial results, the value of your investment in our company and the dividends
we may pay in the future, if any, all of which may have a material adverse
effect on the price of our stock.
 
 The
exchange rates used to translate amounts in RMB into U.S. Dollars for the
purposes of preparing the consolidated financial statements or otherwise stated
in this MD&A were as follows:
 
 June
      30, 2008Balance
      sheet items, except for the registered and paid-up capital, as of June
      30
                
                
                USD0.1458:RMB1Amounts
      included in the statement of operations, statement of changes in
      stockholders’ equity and statement of cash flows for the period January 1,
      2008 to June 30, 2008
                
                
                USD0.1417:RMB1
 
 Off-Balance
Sheet Arrangements
  We have
not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
stockholder’s equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or engages in leasing, hedging or research and development
services with us.
   ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
  Not Applicable
  
 ITEM
4. CONTROLS AND
PROCEDURES
 
 Evaluation of Disclosure Controls and Procedures
 
 As of
June 30, 2008, we carried out an evaluation, under the supervision and with the
participation of our management, including our chief executive officer and our
chief financial officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on the foregoing, our
chief executive officer and chief financial officer concluded that our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities Exchange Act of 1934) were effective.
 
 -26-
 
 
 Management’s
Assessment of Significant Deficiency in Internal Control over Financial
Reporting
 
 In our
annual report on Form 10-K for the year ended December 31, 2007, we reported
certain significant deficiency in our accounting and finance personnel.
Specifically, although our accounting staff is professional
and experienced in accounting requirements andprocedures generally accepted in the PRC, management has
determined that they require substantial training and assistance in U.S. GAAP
matters so as to meet with the higher demands of being a U.S. public company.
Our management’s assessment of the effectiveness of internal control over
financial reporting is that this significant deficiency continues to exist as of
June 30, 2008. In order to correct such deficiency, we are committed to hiring
additional accounting and operations personnel and engaging outside contractors
with technical accounting expertise, as needed, and reorganizing the accounting
and finance department to ensure that accounting personnel with adequate
experience, skills and knowledge relating to complex, non-routine transactions
are directly involved in the review and accounting evaluation of our complex,
non-routine transactions.
 
 We
believe that the foregoing steps will remediate the significant deficiency
identified above, and we will continue to monitor the effectiveness of these
steps and make any changes that our management deems appropriate.
 
 Changes
in Internal Control over Financial Reporting
 
 There
were no changes in our internal control over financial reporting (as defined in
Rule 13a-15(f) of the Securities Exchange Act of 1934) during the quarter ended
June 30, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
 
 
 
 
 -27-
 
 PART
II.     OTHER INFORMATION
 
 ITEM
1. LEGAL
PROCEEDINGS
 
 None
 
 ITEM
1A.         RISK FACTORS
 
 You
should carefully consider the risks described below together with all of the
other information included in this Annual 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. Although Weikang commenced operations in 2005, the
company was a developmental stage company until May 2006 when it began selling
its products. Accordingly, you should consider our future prospects in light of
the risks and uncertainties experienced by early stage companies such as
ours  in China. Some of these risks and uncertainties relate to our
ability to:
  ·
              maintain
      our market position in the health supplements 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.
   
 -28-
  We
may need additional financing to execute our business
plan.
 The
revenues from the production and sale of health supplements 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 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 may 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 of our rights to the related technology or
products.
  There are
no assurances that future funding will be available to us 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
certificates, permits, and licenses are subject to governmental control and
renewal, and Weikang will not be able to operate if they are not
maintained.
 
 Weikang
has attained the certificates, permits, and licenses required for the
manufacturing, processing and distribution of health supplement products in the
PRC. In the event that we are not able to renew the certificates, permits and
licenses, all or part of our operations may be terminated. Furthermore, if
escalating compliance costs associated with governmental standards and
regulations restrict or prohibit any part of our operations, it may adversely
affect our operation and profitability.
 
 Our
profitability will be adversely affected if we lose preferential tax
treatment.
 
 Weikang
is exempt from income tax for a period of three years. The preferential tax
concession was granted by the Shuangcheng Municipal Government and is set to
expire in 2008, and there is no assurance that the preferential treatment can be
renewed or if another similar tax concession may be granted. Weikang’s tax
liabilities will increase and its profits may accordingly decline once the
current income tax exemption expires.
 
 We
cannot guarantee the protection of our intellectual property
rights.
 
 To protect the reputation of
our products, we have applied for registration of our trademarks in the PRC
where our sole operating business is located. Presently,
all of our products are sold under the brand name “Rongrun”. Since we
launched our products in May 2006, we have not experienced any infringements of
such trademark for sales of health supplement products. However, there is no
assurance that there will not be any infringement of our brand name or other
trademarks or counterfeiting of our products in the future. Should any such
infringement or counterfeiting occur, our reputation and business may be
adversely affected. We may also incur significant expenses and substantial
amount of time and effort to enforce our intellectual property rights in the
future. Such diversion of our resources may adversely affect our existing
business and future expansion plan.
 
 We
rely on a few suppliers and any disruption with our suppliers could have an
adverse effect on our business.
  We have
developed good working relationships with a limited number of suppliers for our
raw materials that are otherwise generally available. Although we believe that
alternative suppliers are available to supply materials, should any of these
suppliers terminate its business arrangements with us or increase the prices of
materials supplied by these suppliers, it could delay product shipments and
adversely affect our business operations and profitability.
 
 
 -29-
 
 We
are subject to the environmental protection laws of the PRC, which may result in
restrictions on our operations or liabilities for pollution.
 Our
manufacturing process may produce by-products such as effluent, gases and noise,
which are harmful to the environment. We are subject to multiple laws governing
environmental protection, such as “The Law on Environmental Protection in the
PRC” and “The Law on Prevention of Effluent Pollution in the PRC”, as well as
standards set by the relevant governmental bodies determining the classification
of different wastes and proper disposal. China is experiencing substantial
problems with environmental pollution. Accordingly, it is likely that the
national, provincial and local governmental agencies will adopt stricter
pollution controls. There can be no assurance that future changes in
environmental laws and regulations will not impose costly compliance
requirements on us or otherwise subject us to future liabilities. Our business’s
profitability may be adversely affected if additional or modified environmental
control regulations are imposed upon us.
 
 We
may suffer as a result of product liability or defective products.
 
 We may
produce products which, despite proper testing, inadvertently have an adverse
pharmaceutical effect on the health of individuals. The existing PRC laws and
regulations do not require us to maintain third party liability insurance to
cover product liability claims. However, if a product liability claim is brought
against us, it may, regardless of merit or eventual outcome, result in damage to
our reputation, breach of contract with our customers, decreased demand for our
products, costly litigation, product recalls, loss of revenue, and the inability
to commercialize our some products. We currently are not aware of any existing
or anticipated product liability claims with respect to our
products.
 
 There
are no conclusive studies regarding the medical benefits of nutritional
supplements.
 
 We
currently manufacture, market and distribute seven products: (1) Rongrun Youth
Keeping Capsules; (2) Rongrun Energy Keeping Capsules; (3) Rongrun Vitamin Sugar
Capsules; (4) Rongrun Intestine Cleansing Capsules; (5) Rongrun Artery Cleansing
Capsules; (6) Rongrun Royal Jelly Extract; and (7) Rongrun Kidney Boost Tonic.
Some of the ingredients in our current products (and we anticipate in our future
products) are vitamins, minerals, herbs and other substances for which there is
not a long history of human consumption. Although we believe all of our products
to be safe when taken as directed by us, there is little experience with human
consumption of certain of these product ingredients in concentrated form. In
addition, we are highly dependent upon consumers' perception of the safety and
quality of our products as well as similar products distributed by other
companies. We could be adversely affected in the event any of our products or
any similar products distributed by other companies should prove or be asserted
to be harmful to consumers. In addition, because of our dependence upon consumer
perceptions, adverse publicity associated with illness or other adverse effects
resulting from consumers' failure to consume our products as we suggest or other
misuse or abuse of our products or any similar products distributed by other
companies could have a material adverse effect on the results of our operations
and financial condition.
 
 The
manufacture and distribution of nutritional supplements could result in product
liability claims.
 
 We, like
any other retailer, distributor and manufacturer of products that are designed
to be ingested, face an inherent risk of exposure to product liability claims in
the event that the use of our products results in injury. Such claims may
include, among others, that our products contain contaminants or include
inadequate instructions as to use or inadequate warnings concerning side effects
and interactions with other substances. While we may obtain product liability
insurance in the future, we may not be able to obtain such insurance at a
reasonable cost, or, if available, cannot assure that it will be adequate
to cover liabilities. We do not anticipate obtaining contractual indemnification
from parties supplying raw materials or marketing our products. In any event,
any such indemnification if obtained will be limited by our terms and, as a
practical matter, to the creditworthiness of the indemnifying party. In the
event that we do not have adequate insurance or contractual indemnification,
product liabilities relating to defective products could have a material adverse
effect on our operations and financial conditions.
 
 
 -30-
 
 Adverse
publicity due to unfavorable research findings in connection with our products
could adversely affect our sales and financial condition.
 We
believe the growth experienced by the nutritional supplement market is based in
part on national media attention regarding scientific research suggesting
potential health benefits from regular consumption of certain vitamins and other
nutritional products. Such research has been described in major medical
journals, magazines, newspapers and television programs. The scientific research
to date is preliminary.
 
 In the
future, scientific research and/or publicity may not be favorable to the
nutritional supplement market or any particular product, or may be inconsistent
with earlier favorable research or publicity. Future reports of research that
are perceived as less favorable or that question earlier research could
have a material adverse effect on our operations and financial condition.
Because of our dependence upon consumer perceptions, adverse publicity
associated with illness or other adverse effects resulting from the consumption
of our products or any similar products distributed by other companies could
have a material adverse effect on our operations. Such adverse publicity could
arise even if the adverse effects associated with such products resulted from
consumers' failure to consume such products as directed. In addition, we may not
be able to counter the effects of negative publicity concerning the efficacy of
our products. Any such occurrence could have a negative effect on our
operations.
 
 Risks
Related to Our Corporate Structure
  If
we are unable to timely remit the purchase price for the acquisition of
Heilongjiang Weikang, the approval and designation of Heilongjiang Weikang as a
foreign investment enterprise and Sinary as the 100% owner of Weikang may be
revoked, and the acquisition of Heilongjiang Weikang may be deemed
void.
 
 Under
applicable PRC regulations, Sinary's acquisition of Heilongjiang Weikang
 is deemed completed as of November 9, 2007 (the “Issuance
Date”), when the Heilongjiang Office of the State Administration for
Industry and Commerce (“SAIC”)
issued a business license to Heilongjiang Weikang as a foreign invested
enterprise, with Sinary as the 100% owner of Heilongjiang Weikang’s registered
capital, after approval of the acquisition by the Heilongjiang Provincial
Government on November 6, 2007. Sinary orignally  had three months from the
Issuance Date to remit the purchase price, in accordance with the
requirements of applicable PRC regulations, provided that Sinary may apply for
an extension, subject to governmental approval. On August 9, 2008, the SAIC
reissued Heilongjiang Weikang a business license to expire on February 9, 2009,
effectively extending the payment date of the purchase price to the 
expiration date of the reissued license. If we are unable to remit
the purchase price by February 9, 2009, we cannot guarantee that we will be
able to secure the necessary governmental approval for an extension, nor can we
determine, at this time, the length of the extension we may receive
assuming that we are able to secure the necessary governmental approval. In the
event that we are unable to timely remit the purchase price, the
Heilongjiang Provincial Government and the SAIC may revoke the approval and
license of Heilongjiang Weikang as a foreign invested enterprise, and Sinary as
the 100% owner of Heilongjiang Weikang, thereby voiding the acquisition. In the
event that the acquisition is voided, we will not be the owner of any equity
interests in Heilongjiang Weikang, and as a result, Heilongjiang Weikang will no
longer be our operating business. Should this occur, we may seek to acquire the
equity interests of Heilongjiang Weikang through other means, although we cannot
guarantee that we will do so, nor can we guarantee that we will be successful if
we do.
 
 PRC
laws and regulations governing our business 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. 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.
  
 -31-
 
 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.
 
 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.
 
 Uncertainties
with respect to the PRC legal system could adversely affect us.
  We
conduct our business primarily through our affiliated Chinese entity,
Heilongjiang Weikang. 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 this
current report.
  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 of 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.
 
 -32-
 
  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 Heilongjiang Weikang. 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. Our revenue is
based entirely on that generated 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.
 
 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
  In
the event the acquisition of Heilongjiang Weikang is voided, the price of our
common stock may be dramatically and adversely impacted.
 
 From and
after the closing of the share exchange transaction with
Sinary, Heilongjiang Weikang is our only operating business, from which all
of our revenues are derived. Although Sinary’s acquisition of Heilongjiang
Weikang is deemed completed as of November 9, 2007 (the “Issuance Date”), when
the Heilongjiang Office of the State Administration for Industry and Commerce
(“SAIC”) issued
a license, following approval of the acquisition transaction from the
Heilongjiang Provincial Government, that designates Heilongjiang Weikang as a
foreign invested
enterprise and Sinary as the 100% owner of Heilongjiang Weikang’s registered
capital, Sinary has not yet remitted the acquisition price for Heilongjiang
Weikang (the “Acquisition Price”)
as of the date of this current report. While we now have until February 9,
2009 to remit the Acquisition Price, in light of Heilongjiang Weikang’s business
license reissued by the SAIC on August 9, 2008, there is no guarantee that we
will be able to do so in a timely manner. If we are unable to timely remit the
Acquisition Price by February 9, 2009 or to secure further extension, the
acquisition of Weikang may be voided in accordance with applicable PRC
regulations. As a result, we will not own of any equity interests in
Heilongjiang Weikang, and Heilongjiang Weikang will no longer be our operating
business. Should this occur, our revenues will be negatively impacted, as we
will have to exclude those of Heilongjiang Weikang, which, in
turn, may cause a dramatic decrease the price of our common
stock.
 
 -33-
 
 
 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 from 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 our 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.
  
 -34-
 
 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,
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.
  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.
  
 -35-
   Our
corporate actions are substantially controlled by a single
stockholder.
  As a
result of the share exchange transaction with Sinary, the Sinary Stockholder
currently owns approximately 98% of our outstanding common shares, representing
approximately 98% of our voting power. This stockholder
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 the principal
stockholder, elections of our board of directors will generally be within the
control of this stockholder. 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 this principal stockholder. As
such, it would be extremely difficult for shareholders to propose and have
approved proposals not supported by the Sinary Stockholder. There can be no
assurances that matters voted upon by the Sinary Stockholder will be viewed
favorably by all shareholders of our company.
  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.
 
 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.
   -36-
  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, or 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.
 
 -37-
 
 
 ITEM
2.                      UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  None
 
 ITEM
3.                      DEFAULTS
UPON SENIOR SECURITIES
  None
 
 ITEM
4.                      SUBMISSION OF MATTERS TO A VOTE OF
SECURITYHOLDERS
 
 Reference is made to our Information
Statement on Form DEF14C filed with the SEC on May 14, 2008, and the information
contained in the Information Statement is incorporated herein by
reference.
 
 ITEM
5.                      OTHER
INFORMATION
  None
 
 
 
 -38-
 
 ITEM
6.  EXHIBITS
 
 The
following exhibits are filed herewith:
 Exhibit No.
                Description2.1
                Share
      Exchange Agreement among Expedition Leasing Inc. (“Expedition Leasing”),
      certain stockholders of Expedition Leasing, Sinary Bio-Technology Holding
      Group, Inc. (“Sinary”) and the sole stockholder of Sinary dated December
      7, 2007 (1)3.1
                Articles
      of Incorporation of Expedition Leasing as filed with the State of Florida
      (2)3.2
                Articles
      of Amendment to Articles of Incorporation of Expedition Leasing as filed
      with the State of Florida (2)3.3
                Amended
      and Restated Articles of Incorporation of Expedition Leasing as filed with
      the State of Florida (2)3.4
                Articles
      of Merger filed with the Secretary of State of Nevada on June 10, 2008
      (3)3.5
                Articles
      of Merger filed with the Secretary of State of Florida on June 12, 2008
      (3)3.6
                Bylaws
      of Weikang Bio-Technology Group Co., Inc. (4)4
                2008
      Stock Incentive Plan (5)10.1
                Stock
      Transfer Agreement dated as of June 30, 2008 by and among Heilongjiang
      Weikang Bio-Technology Group Co., Ltd., Beijing Shiji Qisheng Trading Co.,
      Ltd., Tri-H Trade (U.S.A.) Co., Ltd., and Tianfang (Guizhou)
      Pharmaceutical Co., Ltd. (6)31.1
                Certifications
      pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act
      of 1934, as amended, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 *31.2
                Certifications
      pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act
      of 1934, as amended, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002 *32.1
                Certifications
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 *32.2
                Certifications
      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002 *
 
 * Filed
herewith.
 
 (1)
                Filed
      as an exhibit to the Registrant’s Current Report on Form 8-K filed with
      the SEC on December 10, 2007 and incorporated herein by
      reference.(2)
                Filed
      as an exhibit to the Registrant’s Registration Statement on Form SB-2
      filed with the SEC on June 30, 2006 and incorporated herein by
      reference.(3)
                Filed
      as an Exhibit to the Registrant’s Current Report on Form 8-K filed with
      the SEC on June 18, 2008 and incorporated herein by
    reference.(4)
                Filed
      as an Exhibit to the Registrant’s Information Statement on Schedule 14C
      filed with the SEC on May 14, 2008 and incorporated herein by
      reference.(5)
                Filed
      as an Exhibit to the Registrant’s Form S-8 filed with the SEC on June 24,
      2008 and incorporated herein by reference.(6)
                Filed
      as an Exhibit to the Registrant’s Current Report on Form 8-K filed with
      the SEC on July 24, 2008 and incorporated herein by
    reference.
 -39-
 
 SIGNATURES
 
 In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
 
 
 
 August 14,
      2008
              WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC.By:
              /s/
      Yin WangYin
      Wang
                Chief
      Executive Officer
                (Principal
      Executive Officer)
           -40-