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 September 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
November 19, 2008, the Registrant had 25,229,800 shares of Common Stock
outstanding.





Table of Contents





WEIKANG
BIO-TECHNOLOGY GROUP CO, INC.




FORM 10-Q




INDEX




Page NumberSPECIAL NOTE REGARDING FORWARD-LOOKING
      STATEMENTS
                3PART
      I.  FINANCIAL INFORMATIONItem 1.
                Financial
      Statements (unaudited)
                F-1Consolidated
      Balance Sheets as of September 30, 2008 and December 31,
    2007
                F-2Consolidated
      Statements of Income and Other Comprehensive Income for the Nine Months
      and Three Months Ended September 30, 2008
                F-3Consolidated
      Statement of Cash Flows for the Nine Months Ended September 30,
      2008
                F-4Notes
      to the Consolidated Financial Statements as of September 30,
      2008
                F-5Item 2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                4Item 3.
                Quantitative
      and Qualitative Disclosures About Market Risk
                12Item 4.
                Controls
      and Procedures
                12PART
      II.  OTHER INFORMATIONItem 1.
                Legal
      Proceedings
                13Item 1A.
                Risk
      Factors
                13Item 2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                13Item 3.
                Defaults
      Upon Senior Securities
                13Item 4.
                Submission
      of Matters to a Vote of Security Holders
                13Item 5.
                Other
      Information
                13Item 6.
                Exhibits
                14SIGNATURES
                15











Table of Contents


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.





-3-
 Table of Contents


PART
I.                      FINANCIAL
INFORMATION





ITEM
1.                  FINANCIAL
STATEMENTS.




WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      BALANCE SHEETSSEPTEMBER
      30,
                              
                              
                              DECEMBER
      31,2008
                              
                              
                              2007(UNAUDITED)ASSETSCURRENT
      ASSETSCash
      & cash equivalents
                              
                              $
                              1,135,997
                              
                              
                              $
                              117,240Accounts
      receivable
                              
                              
                              1,032,768
                              
                              
                              
                              25,711Advance
      to suppliers
                              
                              
                              106,921
                              
                              
                              
                              73,033Inventory
                              
                              
                              236,976
                              
                              
                              
                              199,160Other
      receivables
                              
                              
                              12,091
                              
                              
                              
                              66,082Due
      from officer
                              
                              
                              485,268
                              
                              
                              
                              2,818,265Due
      from related party
                              
                              
                              157,607
                              
                              
                              
                              135,777Total
      current assets
                              
                              
                              3,167,628
                              
                              
                              
                              3,435,268NONCURRENT
      ASSETSProperty
      and equipment, net
                              
                              
                              11,010,024
                              
                              
                              
                              3,771,188Construction
      in progress
                              
                              
                              340,202
                              
                              
                              
                              275,832Intangible
      assets
                              
                              
                              12,294,820
                              
                              
                              
                              538,355Deferred
      tax asset
                              
                              
                              -
                              
                              
                              
                              27,726Total
      noncurrent assets
                              
                              
                              23,645,046
                              
                              
                              
                              4,613,101TOTAL
      ASSETS
                              
                              $
                              26,812,674
                              
                              
                              $
                              8,048,369LIABILITIES
      AND STOCKHOLDERS' EQUITYCURRENT
      LIABILITIESAccounts
      payable
                              
                              $
                              38,555
                              
                              
                              $
                              24,417Unearned
      revenue
                              
                              
                              4,811Value
      added tax payable
                              
                              
                              914,241
                              
                              
                              
                              -Accrued
      liabilities and other payables
                              
                              
                              17,735,595
                              
                              
                              
                              7,627,907Advance
      from officer
                              
                              
                              650,000
                              
                              
                              
                              650,000Total
      current liabilities
                              
                              
                              19,343,202
                              
                              
                              
                              8,302,324CONTINGENCIESDEFERRED
      TAX LIABILITY
                              
                              
                              3,597,520
                              
                              
                              
                              -STOCKHOLDERS'
      EQUITYCommon
      stock,  $.00001 par value;  authorized
      shares100,000,000;  issued
      and outstanding 25,229,800 shares
                              
                              
                              252
                              
                              
                              
                              252Additional
      paid in capital
                              
                              
                              (1,514,370
                              )
                              
                              
                              (241,551
                              )Statutory
      reserve
                              
                              
                              1,883,599
                              
                              
                              
                              261,260Accumulated
      other comprehensive income
                              
                              
                              829,945
                              
                              
                              
                              196,432Retained
      earnings
                              
                              
                              2,672,526
                              
                              
                              
                              (470,348
                              )Total
      stockholders' equity
                              
                              
                              3,871,952
                              
                              
                              
                              (253,955
                              )TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY
                              
                              $
                              26,812,674
                              
                              
                              $
                              8,048,369
  F-1
 Table of Contents
  WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOMEFOR
      THE NINE MONTHS ENDED
                              
                              
                              FOR
      THE THREE MONTHS ENDEDSEPTEMBER
      30, 2008
                              
                              
                              SEPTEMBER
      30, 2008(UNAUDITED)
                              
                              
                              (UNAUDITED)Net
      sales
                              
                              $
                              6,651,947
                              
                              
                              $
                              3,452,049Cost
      of goods sold
                              
                              
                              2,214,935
                              
                              
                              
                              1,048,897Gross
      profit
                              
                              
                              4,437,012
                              
                              
                              
                              2,403,152Operating
      expensesSelling
      expenses
                              
                              
                              18,242
                              
                              
                              
                              12,683General
      and administrative expenses
                              
                              
                              569,472
                              
                              
                              
                              201,609Total
      operating expenses
                              
                              
                              587,714
                              
                              
                              
                              214,292Income
      from operations
                              
                              
                              3,849,298
                              
                              
                              
                              2,188,860Non-operating
      income (expenses)Interest
      income
                              
                              
                              198
                              
                              
                              
                              31Financial
      expense
                              
                              
                              (4,473
                              )
                              
                              
                              (3,868
                              )Other
      income
                              
                              
                              343
                              
                              
                              
                              343Other
      expenses
                              
                              
                              (716
                              )
                              
                              
                              (8
                              )Total
      non-operating expenses
                              
                              
                              (4,648
                              )
                              
                              
                              (3,502
                              )Income
      before income tax
                              
                              
                              3,844,650
                              
                              
                              
                              2,185,358Income
      tax
                              
                              
                              352,255
                              
                              
                              
                              352,255Net
      income
                              
                              
                              3,492,395
                              
                              
                              
                              1,833,103Other
      comprehensive itemForeign
      currency translation
                              
                              
                              633,512
                              
                              
                              
                              76,268Comprehensive
      Income
                              
                              $
                              4,125,907
                              
                              
                              $
                              1,909,371Basic
      and diluted weighted average shares outstanding
                              
                              
                              25,229,800
                              
                              
                              
                              25,229,800Basic
      and diluted net earnings per share
                              
                              $
                              0.14
                              
                              
                              $
                              0.07


F-2
 Table of Contents







WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIESCONSOLIDATED
      STATEMENT OF CASH FLOWSFOR
      THE NINE MONTHS ENDED SEPTEMBER 30, 2008(UNAUDITED)CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      income
                                        
                                        $
                                        3,492,395Adjustments
      to reconcile net income to net cashprovided
      by operating activities:Depreciation
      and amortization
                                        
                                        
                                        333,702(Increase)
      decrease in current assets:Accounts
      receivable
                                        
                                        
                                        (612,712
                                        )Other
      receivables and advances to suppliers
                                        
                                        
                                        14,097Inventory
                                        
                                        
                                        20,751Increase
      (decrease) in current liabilities:Accounts
      payable
                                        
                                        
                                        12,138Unearned
      revenue
                                        
                                        
                                        4,697Accrued
      liabilities and other payables
                                        
                                        
                                        3,897Value
      added tax payable
                                        
                                        
                                        429,827Net
      cash provided by operating activities
                                        
                                        
                                        3,698,792CASH
      FLOWS FROM INVESTING ACTIVITIES:Purchase
      of business
                                        
                                        
                                        (4,868,967
                                        )Acquisition
      of property & equipment
                                        
                                        
                                        (34,616
                                        )Construction
      in progress
                                        
                                        
                                        (44,022
                                        )Cash
      acquired at purchase of business
                                        
                                        
                                        10,176Net
      cash used in investing activities
                                        
                                        
                                        (4,937,429
                                        )CASH
      FLOWS FROM FINANCING ACTIVITIES:Repayment
      from officer
                                        
                                        
                                        2,459,922Due
      from related party
                                        
                                        
                                        (234,408
                                        )Net
      cash used in financing activities
                                        
                                        
                                        2,225,514EFFECT
      OF EXCHANGE RATE CHANGE ON CASH & CASH EQUIVALENTS
                                        
                                        
                                        31,880INCREASE
      IN CASH & CASH EQUIVALENTS
                                        
                                        
                                        1,018,757CASH
      & CASH EQUIVALENTS, BEGINNING OF PERIOD
                                        
                                        
                                        117,240CASH
      & CASH EQUIVALENTS, END OF PERIOD
                                        
                                        $
                                        1,135,997Supplemental
      Cash flow data:Income
      tax paid
                                        
                                        $
                                        -Interest
      paid
                                        
                                        $
                                        -


F-3
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
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.




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”).





Tianfang
was incorporated in the Guizhou Province, PRC in 1998. Tianfang is engaged in
the development, manufacture and distribution of Chinese herbal extract products
and GMP certified western prescriptive medicine.




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 nine and
three months ended September 30, 2008 do not necessarily indicate the results
for the full year ended December 31, 2008.


F-4
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
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, Tianfang, Weikang’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 September 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 salvage value of 10% and estimated lives ranging from
3 to 20 years as follows:




F-5
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




Building
                20
      yearsVehicle
                5
      yearsOffice
      Equipment
                3-7
      yearsProduction
      Equipment
                3-10
      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.





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 September 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. Tax positions 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.


F-6
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




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.





Heilongjiang
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. Heilongjiang Weikang is exempt from income tax for
three years from 2006 to 2008.  Tianfang is subject to 25% income tax
rate.





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 collectability 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 nine and three months ended September 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.











F-7
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




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. Cash flows from operating, investing and financing
activities exclude the effect of the acquisition of Tianfang.





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.





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 nine and three
months ended September 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.


F-8
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




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 nine and three months ended September 30, 2008 the
research and development expense were $0.





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





Accounting for Financial
Guarantee Insurance Contracts





In May
2008, the FASB issued SFAS No. 163, “Accounting for Financial Guarantee
Insurance Contracts, an interpretation of FASB Statement No. 60.”  The
scope of this Statement is limited to financial guarantee insurance (and
reinsurance) contracts, as described in this Statement, issued by enterprises
included within the scope of Statement 60. Accordingly, this Statement does not
apply to financial guarantee contracts issued by enterprises excluded from the
scope of Statement 60 or to some insurance contracts that seem similar to
financial guarantee insurance contracts issued by insurance enterprises (such as
mortgage guaranty insurance or credit insurance on trade receivables). This
Statement also does not apply to financial guarantee insurance contracts that
are derivative instruments included within the scope of FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” This Statement
will not have an impact on the Company’s financial statements.





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.


F-9
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




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 is 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.





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.














F-10
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007


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.





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 September 30, 2008 and December 31, 2007 was as follows:





September
      30,
                  2008
      (Unaudited)
                
                
                December
      31,
                  2007Raw
      materials
                
                $
                75,891
                
                
                $
                136,010packing
      materials
                
                
                62,245
                
                
                
                28,258Finished
      Goods
                
                
                98,840
                
                
                
                34,892Total
                
                $
                236,976
                
                
                $
                199,160




















F-11
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007





4.
PROPERTY AND EQUIPMENT, NET





Property
and equipment consisted of the following at September 30, 2008 and December 31,
2007:





September
      30,
                      2008
      (Unaudited)
                    
                    
                    December
      31,
                      2008Building
                    
                    $
                    7,869,899
                    
                    
                    $
                    2,736,841Building
      improvements
                    
                    
                    913,681
                    
                    
                    
                    508,184Production
      equipment
                    
                    
                    2,272,332
                    
                    
                    
                    482,062Office
      furniture and equipment
                    
                    
                    180,103
                    
                    
                    
                    24,193Vehicles
                    
                    
                    118,736
                    
                    
                    
                    63,89411,354,751
                    
                    
                    
                    3,815,174Less:
      Accumulated depreciation
                    
                    
                    (344,727
                    )
                    
                    
                    (43,986
                    )$
                    11,010,024
                    
                    
                    $
                    3,771,188





Depreciation
expense for the nine and three months ended September 30, 2008 was $291,000 and
$153,000, respectively.





5.
CONSTRUCTION IN PROGRESS





Construction
in progress mainly represented payment made for the construction of a new plant
for Heilongjiang Weikang.





6.
OTHER RECEIVABLES





Other
receivables represented cash advances to employees and sales representatives for
normal business purposes such as advances for traveling expense.





7.
RELATED PARTY TRANSACTIONS




Due
from Officer





Due from
officer represented funds provided to an officer of the Company who used the
funds to pay for the partial payment on behalf of Heilongjiang Weikang in
connection with the acquisition of Tianfang.





Due from Related Party





Due from
related party represented accounts receivable arising from sales made to a
related company owned by the Company’s chief executive officer. As of September
30, 2008 and December 31, 2007, due from this related party was $157,607 and
$135,777, respectively. Sales to this related party during the nine and three
months ended September 30, 2008 was approximately $96,000 and $11,000,
respectively.





Sales
to Related Party





During
the nine and three months ended September 30, 2008, sales were made to another
related company owned by the Company’s chief executive officer in the amount of
approximately $729,000 and $157,000, respectively. The receivables from this
related party was $0 as of September 30, 2008 and December 31,
2007.





F-12
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007


Advance
from officer





Advance
from officer represented 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.





8.
INTANGIBLE ASSETS





Intangible
assets consisted of the following at September 30, 2008 and December 31,
2007:





September
      30,
                  2008
      (Unaudited)
                
                
                December
      31,
                  2008Land
      use right
                
                $
                8,744,650
                
                
                $
                540,263Goodwill
      arising from acquisition of Tianfang
                
                
                3,587,072
                
                
                
                -Software
                
                
                7,226
                
                
                
                -12,338,948
                
                
                
                540,263Less:
      Accumulated amortization
                
                
                (44,128
                )
                
                
                (1,908
                )$
                12,294,820
                
                
                $
                538,355





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 nine and three months ended September 30, 2008 was $41,100 and
$35,100, respectively.  Amortization expense for the next five years
is expected to be $203,500, $203,500, $203,500, $203,500 and $203,500
respectively.




9. MAJOR CUSTOMERS AND VENDORS




Five and
three major customers who are dealers of the Company collectively
accounted for 70% and 32% of the Company’s net revenue for the nine and
three months ended September 30,
2008,    respectively.  These customers accounted for
about 18%, 16%, 13%, 12% & 11% of the sales for the nine months ended
September 30, 2008, respectively, including a related party owned by the
Company's chief executive officer,  which accounted for about 11% of the
total sales. Three customers accounted for about 11%, 11%, and 10% of the sales
for the three months ended September 30, 2008, respectively. At September 30,
2008 and December 31, 2007, the total receivable balance due from these five
customers was $0.




Five and
one vendors collectively provided 57% and 10% of the Company’s purchase of
raw materials for the nine and three months ended September 30, 2008,
respectively. These vendors counted for about 13%, 12%, 11%, 11%, and 10% of the
purchases for the nine months ended September 30, 2008, respectively. The
Company did not have accounts payable to these vendors at September 30, 2008 and
December 31, 2007.





10. 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.


F-13
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007




Other
payables also consisted of the unpaid portion of the purchase price of
approximately $10,104,000 that Heilongjiang Weikang obligated to pay to
Tianfang’s former owners within one year from the acquisition
date.  This payable does not bear any 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.





11.
DEFFERED TAX ASSET (LIABILITY), NET





Deferred
tax represented differences between the tax bases and book bases of property,
equipment and land.





At
September 30, 2008 and December 31, 2007, deferred tax asset (liability)
consisted of the following:





September
      30,
                  2008
                  (Unaudited)
                
                
                December
      31,
                  2007Deferred
      tax asset arising from the acquisition of Heilongjiang
    Weikang
                
                $
                29,664
                
                
                $
                27,726Deferred
      tax liability arising from the acquisition of Tianfang
                
                
                (3,627,184)
                
                
                
                -Deferred
      tax asset (liability)
                
                $
                (3,597,520)
                
                
                $
                27,726





12.
INCOME TAXES





Heilongjiang
Weikang is exempt from income tax for three years from 2006 to
2008.  Net income for the nine and three months ended September 30,
2008 would have been lower by approximately $650,000 and $238,000, respectively
if Heilongjiang Weikang was not subject an income tax holiday.





Sinary
had net operating loss of approximately $650,000 at September 30, 2008 and
December 31, 2007. A 100% valuation allowance has been established due to the
uncertainty of its realization.





Tianfang
is subject to normal PRC corporate income tax rate of 25%.





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 nine and three months ended September 30, 2008,
the Company’s effective income tax rate differs from the US statutory rate 
due to the effect of tax holiday.





13.
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.








F-14
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007


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.





14.
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.





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.





15.
ACQUISITION OF TIANFANG AND 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.





On July
22, 2008, Heilongjiang Weikang completed the acquisition of 100% of the issued
and outstanding equity interests of Tianfang for the aggregate purchase price of
$15,000,000 (RMB 102,886,500).





The
operating results of the Company for the nine months ended September 30, 2008
and Tianfang for the two months ended September 30, 2008 are included in the
accompanying consolidated statements of operations from the acquisition
date.  For convenience of reporting the acquisition for accounting
purposes, August 1, 2008 has been designated as the acquisition
date.



































F-15
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007





The
following table summarizes the fair values of the assets acquired and
liabilities assumed of Tianfang, at the date of acquisition.   The
total consideration for acquisition exceeded fair value of the net assets
acquired by $3,565,578. The excess was recorded as goodwill.





Cash
                
                $
                10,146Accounts
      receivable
                
                
                388,641Other
      receivables
                
                
                3,988Inventory
                
                
                45,161Property
      and equipment
                
                
                7,194,302Land
      use right
                
                
                8,117,686Goodwill
                
                
                3,565,578Tax
      payable
                
                
                (498,259
                )Advances
      from shareholder
                
                
                (221,794
                )Deferred
      tax liability
                
                
                (3,605,449
                )Purchase
      price
                
                $
                15,000,000




The
following unaudited pro forma consolidated results of operations of the Company
for the nine months ended September 30, 2008 and 2007 present the Company’s
operations as if the acquisition of Sinary, Heilongjiang Weikang and Tianfang
had occurred on January 1, 2008 and 2007, respectively.  The pro forma
results are not necessarily indicative of the actual results that would have
occurred had the acquisitions been completed as of the beginning of the periods
presented, nor are they necessarily indicative of future consolidated
results.





For
      the nine months ended September 30, 2008
                                                                                                            
                                                                                                            
                                                                                                            Sinary
                                                                                                            
                                                                                                            Heilongjiang
                                                                                                              Weikang
                                                                                                            
                                                                                                            
                                                                                                            Tianfang
                                                                                                            
                                                                                                            
                                                                                                            Pro
      forma
                                                                                                              Adjustments
      (a)
                                                                                                            
                                                                                                            
                                                                                                            Pro
      forma
                                                                                                              ConsolidatedNet
      Revenue
                                                                                                            
                                                                                                            $
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            4,828,811
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            2,937,129
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            7,765,940Cost
      of Revenue
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,737,747
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            951,097
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            144,193
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            2,833,037Gross
      Profit
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            3,091,064
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,986,032
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (144,193
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            4,932,903Operating
      expenses:Selling
      expenses
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            5,660
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            16,522
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            22,182General
      and administrative expenses
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            467,592
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            196,287
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            216,289
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            880,168Total
      operating expenses
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            473,252
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            212,809
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            216,289
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            902,350Income
      from operations
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            2,617,812
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,773,223
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (360,482
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            4,030,553Total
      non-operating expenses
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (4,989
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            (372
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (5,361
                                                                                                            )Income
      (loss) before income tax
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            2,612,823
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            1,772,851
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (360,482
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            4,025,192Income
      tax
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            487,667
                                                                                                            
                                                                                                            
                                                                                                            
                                                                                                            (90,120
                                                                                                            )
                                                                                                            
                                                                                                            
                                                                                                            397,547Net
      income (loss)
                                                                                                            
                                                                                                            $
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            2,612,823
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            1,285,184
                                                                                                            
                                                                                                            
                                                                                                            $
                                                                                                            (270,361
                                                                                                            )
                                                                                                            
                                                                                                            $
                                                                                                            3,627,646





a) Pro
forma adjustment is to record additional amortization of $132,023 for the land
use right and increased depreciation of $228,459 for the fixed assets and
related income tax effect of $90,120 as a result of the purchase of
Tianfang.














F-16
 Table of Contents
 WEIKANG
BIO-TECHNOLOGY GROUP CO. INC. AND SUBSIDIARIES
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
 SEPTEMBER
30, 2008 (UNAUDITED) AND DECEMBER 31, 2007





For
      the nine months ended September 30, 2007
              
              
              Sinary
              
              Heilongjiang
                Weikang
              
              
              Tianfang
              
              
              Pro
      forma
                Adjustments
      (b)
              
              
              Pro
      forma
                ConsolidatedNet
      Revenue
              
              $
              
              
              $
              2,935,010
              
              
              $
              10,323,968
              
              
              $
              
              
              $
              13,258,978Cost
      of Revenue
              
              
              
              
              
              1,474,004
              
              
              
              4,707,287
              
              
              
              89,375
              
              
              
              6,270,666Gross
      Profit
              
              
              
              
              
              1,461,006
              
              
              
              5,616,681
              
              
              
              (89,375
              )
              
              
              6,988,312Operating
      expenses:Selling
      expenses
              
              
              
              
              
              7,651
              
              
              
              1,110,861
              
              
              
              
              
              
              
              1,118,512General
      and administrative expenses
              
              
              
              
              
              230,816
              
              
              
              243,586
              
              
              
              177,811
              
              
              
              652,213Total
      operating expenses
              
              
              
              
              
              238,467
              
              
              
              1,354,447
              
              
              
              177,811
              
              
              
              1,770,725Income
      from operations
              
              
              
              
              
              1,222,539
              
              
              
              4,262,234
              
              
              
              (267,187
              )
              
              
              5,217,586Total
      non-operating expenses
              
              
              
              
              
              (1,849
              )
              
              
              7,689
              
              
              
              
              
              
              
              5,840Income
      (loss) before income tax
              
              
              
              
              
              1,220,690
              
              
              
              4,269,923
              
              
              
              (267,187
              )
              
              
              5,223,426Income
      tax
              
              
              
              
              
              
              
              
              
              1,029,377
              
              
              
              (106,800
              )
              
              
              922,577Net
      income (loss)
              
              $
              
              
              $
              1,220,690
              
              
              $
              3,240,546
              
              
              $
              (160,387
              )
              
              $
              4,300,849





b) Pro
forma adjustment is to record additional amortization of $123,495 for the land
use right and increased depreciation of $143,692 for the fixed assets and
related income tax effect of $106,800 as a result of the purchase of
Heilongjiang Weikang and Tianfang.





16.
RECLASSIFICATIONS





Certain
prior period amounts have been reclassified to conform to the nine month periods
ended September 30, 2008 presentation.




























F-17
 Table of Contents


ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.




Note Regarding
Forward-Looking Statements




This
quarterly report on Form 10-Q and other reports filed by the Company from time
to time with the Securities and Exchange Commission (collectively called the
"Filings") contain or may contain forward-looking statements and information
that are based upon beliefs of and information currently available to, Company's
management as well as estimates and assumptions made by Company's management.
Readers are urged not to place undue reliance on these forward-looking
statements, which are  only predictions and speak only as of the date
hereof. When used in the filings, the words "anticipate", "believe", "estimate",
"expect", "future", "intend", "plan", or the negative of these terms and similar
expressions as they relate to Company or Company's management identify
forward-looking statements. Such statements reflect the current view of Company
with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors (including the risk contained in the section of
operations and results of operations, and any businesses that Company may
acquire.) Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended,
or planned.




Although Company believes that the expectations
reflected in the forward-looking statements are reasonable, Company cannot
guarantee future results, levels of activity, performance, or achievements.
Except as required by applicable law, including the securities laws of the
United States, the Company does not intend to update any of the forward-looking
statements to conform to these statements to actual results. Readers are urged
to carefully review and consider the various disclosures made throughout
the  entirety of this quarterly report, which attempt to advise interested
parties of the risks and factors that may affect our business, financial
condition,  results of operations, and prospects.




Our financial statements are prepared in US Dollars and
in accordance with accounting principles generally accepted in the United
States. See "Foreign Currency Translation and Comprehensive Income (Loss)" and
"Foreign Exchange Rates" below for information concerning the exchange rates at
the  Renminbi ("RMB") were translated into US Dollars ("USD") at various
pertinent dates and for pertinent periods.




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 Sinary Bio-Technology Holdings Group, Inc.
(“Sinary”), a Nevada corporation and, as a result, Sinary’s wholly owned
subsidiary Heilongjiang Weikang Bio-Technology Group Co., Ltd. (“Heilongjiang
Weikang”), 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.





Having no
substantive operation of its own, Sinary, through Heilongjiang Weikang, engages
in the research, development, manufacturing, marketing, and sales of health and
nutritional supplements in China. 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.





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, 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.





Tianfang
was incorporated in the Guizhou Province, PRC in 1998.  Tianfang is
engaged in the development, manufacture and distribution of Chinese herbal
extract products and GMP certified western prescriptive
medicine.

















-4-
 Table of Contents


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 August 9,
2008, the Heilongjiang 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, and Tianfang, Weikang’s wholly-owned subsidiary, from
the date of Weikang’s acquisition of Tianfang. 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.




-5-
 Table of Contents


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 salvage value of 10% and estimated lives ranging from
3 to 20 years as follows:




Building
                20
      yearsVehicle
                5
      yearsOffice
      Equipment
                3-7
      yearsProduction
      Equipment
                3-10
      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 collectability 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.





Recent
Accounting Pronouncements





Accounting
for Financial Guarantee Insurance Contracts




In May 2008,
the FASB issued SFAS No. 163, “Accounting for Financial Guarantee Insurance
Contracts, an interpretation of FASB Statement No. 60.”  The scope of this
Statement is limited to financial guarantee insurance (and reinsurance)
contracts, as described in this Statement, issued by enterprises included within
the scope of Statement 60. Accordingly, this Statement does not apply to
financial guarantee contracts issued by enterprises excluded from the scope of
Statement 60 or to some insurance contracts that seem similar to financial
guarantee insurance contracts issued by insurance enterprises (such as mortgage
guaranty insurance or credit insurance on trade receivables). This Statement
also does not apply to financial guarantee insurance contracts that are
derivative instruments included within the scope of FASB Statement No. 133,
“Accounting for Derivative Instruments and Hedging Activities.” This Statement
will not have an impact on the Company’s financial statements.


-6-
 Table of Contents




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.





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 is 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;





-7-
 Table of Contents





·
            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.





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 September 30, 2008 and September 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 15 to our unaudited consolidated financial statements included
in this report.





-8-
 Table of Contents




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.




Three
      Months Ended September 30,2008
                            
                            
                            2007
      (pro forma)(in
      U.S. Dollars, except for percentages)Sales
                            
                            $
                            3,452,049
                            
                            
                            
                            100
                            %
                            
                            $
                            1,063,733
                            
                            
                            
                            100
                            %Cost
      of sales
                            
                            $
                            1,048,897
                            
                            
                            
                            30
                            %
                            
                            $
                            568,172
                            
                            
                            
                            53
                            %Gross
      Profit
                            
                            $
                            2,403,152
                            
                            
                            
                            70
                            %
                            
                            $
                            495,561
                            
                            
                            
                            47
                            %Operating
      Expense
                            
                            $
                            214,292
                            
                            
                            
                            6
                            %
                            
                            $
                            79,622
                            
                            
                            
                            7.5
                            %Income
      From Operations
                            
                            $
                            2,188,860
                            
                            
                            
                            63
                            %
                            
                            $
                            415,939
                            
                            
                            
                            39
                            %Other
      Expenses
                            
                            $
                            3,502
                            
                            
                            
                            0.1
                            %
                            
                            $
                            1,792
                            
                            
                            
                            0.17
                            %Income
      tax expenses
                            
                            $
                            352,255
                            
                            
                            
                            10
                            %
                            
                            $
                            -
                            
                            
                            
                            -
                            %Net
      Income
                            
                            $
                            1,833,103
                            
                            
                            
                            53
                            %
                            
                            $
                            414,147
                            
                            
                            
                            39
                            %





Revenues. During the three
months ended September 30, 2008, we had revenues of $3.45 million as compared to
revenues of $1.06 million for the three months ended September 30, 2007, an
increase of approximately $2.39 million or 225%. This increase is attributable
to increased demand of our products from our dealers and distributors and
combined operations of Heilongjiang Weikang and Tianfang following the
acquisition of 100% of Tianfang by Weikang on July 22, 2008. 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 $480,725 or 85%, from $568,172 for the three months ended
September 30, 2007 to $1,048,897 for the same period in 2008. The increase was
mainly due to the increase of production and sales activities during the third
fiscal quarter in 2008. We had decrease in cost of revenue as a percentage of
net revenues for the three months ended September 30, 2008, approximately 30% as
compared to approximately 53% for the three months ended June 30, 2007, which
was attributable to increased production volume with decreased average
production cost.




Gross Profits. Gross profit
was $2.4 million for the three months ended September 30, 2008 as compared to
$0.5 million for the same period in 2007, representing gross margins of
approximately 70% and 47% 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
$214,292 for the three months ended September 30, 2008 as compare to $79,622 for
the three months ended September 30, 2007, an increase of $134,670 or 169%. This
increase is in proportion with our increased sales and production
activities.





Net Income. Our net income
for the three months ended September 30, 2008 was $1.83 million as compared to
$0.41 million for the same period in 2007. While this is in part due to
increased sales volume with decreased average production cost, Heilongjiang
Weikang 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.




-9-
 Table of Contents




Comparison of Nine Months Ended
September 30, 2008 and September 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 15 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.




Nine Months
      Ended September 30,2008
                          
                          
                          2007
      (pro forma)(in
      U.S. Dollars, except for percentages)Sales
                          
                          $
                          6,651,947
                          
                          
                          
                          100
                          %
                          
                          $
                          2,935,010
                          
                          
                          
                          100
                          %Cost
      of sales
                          
                          $
                          2,214,935
                          
                          
                          
                          33
                          %
                          
                          $
                          1,474,004
                          
                          
                          
                          50
                          %Gross
      Profit
                          
                          $
                          4,437,012
                          
                          
                          
                          67
                          %
                          
                          $
                          1,461,006
                          
                          
                          
                          50
                          %Operating
      Expense
                          
                          $
                          587,714
                          
                          
                          
                          9
                          %
                          
                          $
                          238,467
                          
                          
                          
                          8
                          %Income
      From Operations
                          
                          $
                          3,849,298
                          
                          
                          
                          58
                          %
                          
                          $
                          1,222,539
                          
                          
                          
                          42
                          %Other
      Expenses
                          
                          $
                          4,648
                          
                          
                          
                          0.07
                          %
                          
                          $
                          1,849
                          
                          
                          
                          0.06
                          %Income
      tax expenses
                          
                          $
                          352,255
                          
                          
                          
                          5.3
                          %
                          
                          $
                          -
                          
                          
                          
                          -
                          %Net
      Income
                          
                          $
                          3,492,395
                          
                          
                          
                          52.5
                          %
                          
                          $
                          1,220,690
                          
                          
                          
                          42
                          %





Revenues. During the nine
months ended September 30, 2008, we had revenues of $6.65 million as compared to
revenues of $2.94 million for the nine months ended September 30, 2007, an
increase of approximately $3.72 million or 127%. This increase is attributable
to increased demand from our dealers and distributors and combined operations of
Heilongjiang Weikang and Tianfang following the acquisition of 100% of Tianfang
by Weikang on July 22, 2008. 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 $740,931 or 50%, from $1.47 million for the nine months ended
September 30, 2007 to $2.21 million for the same period in 2008. The increase
was mainly due to the increase of production and sales activities during the
nine months ended September 30, 2008. We had decrease in cost of revenue as a
percentage of net revenues for the nine months ended September 30, 2008,
approximately 33% as compared to approximately 50% for the nine months ended
September 30, 2007, which was attributable to increased production volume with
decreased average production cost.





Gross Profit. Gross profit
was $4.44 million for the nine months ended September 30, 2008 as compared to
$1.46 million for the same period in 2007, representing gross margins of
approximately 67% and 50% 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
$587,714 for the nine months ended September 30, 2008 as compare to $238,467 for
the nine months ended September 30, 2007, an increase of $349,247 or 146%. This
increase is in proportion to our increased sales and production
activities.





Net Income. Our net income
for the nine months ended September 30, 2008 was $3.49 million as compared to
$1.22 million for the same period in 2007. While this is in part due to
increased sales volume with decreased average production cost, we also continued
to benefit from our exemption from income tax for Heilongjiang Weikang. 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.





-10-
 Table of Contents




Liquidity
and Capital Resources





As of
September 30, 2008, the Company had cash and cash equivalents of approximately
$1.14 million, other current assets of approximately $2.03 million, and current
liabilities of approximately $19.34 million. Negative working capital amounted
to $16.18 million at September 30, 2008. The ratio of current assets to current
liabilities was 0.16-to-1 as of September 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; and the remaining purchase
price of approximately $10,104,000 that Heilongjiang Weikang obligated to pay to
Tianfang’s former owners within one year from the acquisition date. This payable
also does not bear any 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, the remaining balance, is due on
the first anniversary of the agreement date.





The
following is a summary of cash provided by or used in each of the indicated
types of activities during the period ended September 30,
2008:




2008
                
                
                2007Cash provided by (used
      in):
                
                
                
                
                (Pro
      Forma)Operating
      Activities
                
                $
                3,698,792
                
                
                $
                1,896,456Investing
      Activities
                
                $
                (4,937,429
                )
                
                $
                (95,242
                )Financing
      Activities
                
                $
                2,225,514
                
                
                $
                (1,740,146
                )





Net cash
provided by operating activities was $3.7 million for the nine months ended
September 30, 2008, as compared to net cash provided by operating activities of
$1.9 million for the nine months ended September 30, 2007. The increase in net
cash flow from operating activities for the nine months ended September 30, 2008
was mainly due to an increase in value added tax payable and accounts
payables.  In addition, our net income for nine months ended September
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 $4.94 million for the nine months ended
September 30, 2008, as compared to net cash used in investing activities of
$95,242 for the same period of 2007.  The increase of net cash used in
investing activities during the nine months ended September 30, 2008 was mainly
due to the partial payment made for the acquisition of Tianfang during the nine
months ended September 30, 2008. The acquisition was completed on July 22, 2008,
and Heilongjiang Weikang now owns 100% of Tianfang.





Net cash
provided by financing activities was $2.23 million for the nine months ended
September 30, 2008 as compared to net cash used in financing
activities of $1.74 million for the same period of 2007. The increase of net
cash from financing activities for the nine months ended September 30, 2008 was
mainly due to repayment of Weikang’s management for the sales receipts that was
originally received by Weikang’s management on behalf of Weikang.





We do not
believe that inflation had a significant negative impact on our results of
operations during 2008.




-11-
 Table of Contents


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.





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 $633,512 and $76,268 during the nine and three
months ending September 30, 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:





September
      30, 2008Balance
      sheet items, except for the registered and paid-up capital, as of
      September 30, 2008
                
                USD0.1467: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 September 30, 2008
                
                USD0.1432: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
September 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.


-12-
 Table of Contents




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
September 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
September 30, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.





PART
II.                      OTHER
INFORMATION





ITEM 1.   LEGAL PROCEEDINGS





None





ITEM 1A.  RISK FACTORS




Not
required





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





-13-
 Table of Contents




ITEM 6.  EXHIBITS





The
following exhibits are filed
herewith:





Exhibit No.
            Description2.1
            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. (1)3.1
            Articles
      of Merger filed with the Secretary of State of Nevada on June 10, 2008
      (2)3.2
            Articles
      of Merger filed with the Secretary of State of Florida on June 12, 2008
      (2)4
            2008
      Stock Incentive Plan (3)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. (4)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 July 24, 2008 and incorporated herein by
    reference.(2)
            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.(3)
            Filed
      as an Exhibit to the Registrant’s Form S-8 filed with the SEC on June 24,
      2008 and incorporated herein by reference.(4)
            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.


-14-
 Table of Contents


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.











November 19,
      2008
            WEIKANG
      BIO-TECHNOLOGY GROUP CO, INC.By:
            /s/
      Yin WangYin
      Wang
              Chief
      Executive Officer
              (Principal
      Executive Officer)