UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB
(Mark One)
          (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2007

                                       OR

( )  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 - None

                        TIAN'AN PHARMACEUTICAL CO., LTD.
                 ---------------------------------------------

          Nevada                                            None
---------------------------                 ------------------------------------
State or other jurisdiction                 (I.R.S.) Employer Identification No.
    of incorporation

                      Level 11, International Trade Centre,
                           No. 196 Xiaozhai East Road
                                  Xi'an, China
                        --------------------------------
                     Address of principal executive offices

                                0086-29-85381586
                       ----------------------------------
               Registrant's telephone number, including area code

                                       N/A
           ----------------------------------------------------------
                  Former address of principal executive offices

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) had been subject to such filing
requirements for the past 90 days.


            Yes        X                              No         __
                  ------------                              ------------

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act):

            Yes                                             No    __X___
                  ------------------                                -

     As of May 15, 2007 the Company had 13,994,850 outstanding shares of common
stock.


<PAGE>





                        TIAN'AN PHARMACEUTICAL CO., LTD.
                   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                   THREE MONTHS ENDED MARCH 31, 2007 AND 2006



<PAGE>


                          INDEX TO FINANCIAL STATEMENTS

                                                                         Page(s)
                                                                         -------

Report of Independent Registered Public Accounting Firm                     1

Condensed Consolidated Balance Sheet as of March 31, 2007 (Unaudited)       2

Condensed Consolidated Statements of Income and Accumulated Other
  Comprehensive Income for the Three Months Ended March 31, 2007
  and 2006 (Unaudited)                                                      3

Condensed Consolidated Statements of Changes in Stockholders' Equity
  for the Years Ended December 31, 2006 and 2005 and Three Months
  Ended March 31, 2007 (Unaudited)                                          4

Condensed Consolidated Statements of Cash Flows for the Three Months
  Ended March 31, 2007 and 2006 (Unaudited)                                 5

Notes to Condensed Consolidated Financial Statements                     6-24





<PAGE>

                               MICHAEL POLLACK CPA
                               46 EQUESTRIAN LANE
                              CHERRY HILL, NJ 08003
                               TEL (215) 588-5299
                               FAX (609) 482-8018

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
Tian'An Pharmaceutical Co., Ltd.

I have reviewed the accompanying condensed consolidated balance sheet of Tian'
An Pharmaceutical Co., Ltd. (the "Company") as of March 31, 2007 and the related
condensed consolidated statements of income and accumulated other comprehensive
income, changes in stockholders' equity, and cash flows for the three months
ended March 31, 2007 and 2006. These interim condensed consolidated financial
statements are the responsibility of the Company's management.

I conducted the reviews in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in accordance with standards
of the Public Company Accounting Oversight Board (United States), the objective
of which is the expression of an opinion regarding the condensed consolidated
financial statements taken as a whole. Accordingly, I do not express such an
opinion.

Based on my reviews, I am not aware of any material modifications that should be
made to the accompanying interim condensed consolidated financial statements for
them to be in conformity with U.S. generally accepted accounting principles.



/s/ Michael Pollack CPA
Cherry Hill, NJ
May 8, 2007




<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                           MARCH 31, 2007 (UNAUDITED)
                                    (IN US$)

                                     ASSETS

Current Assets:
  Cash and cash equivalents                         $   5,760,132
  Accounts receivable, net                              2,031,171
  Inventories                                             639,289
  Other receivables                                     1,034,368
  Prepaid expenses and other current assets                15,745
                                                  ---------------

   Total Current Assets                                 9,480,705
                                                  ---------------

Fixed assets, net of depreciation                       1,226,165
                                                  ---------------

Other Assets:
  Intangible assets, net                                1,374,174
                                                  ---------------

   Total Other Assets                                   1,374,174
                                                  ---------------

TOTAL ASSETS                                      $    12,081,044
                                                  ===============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
Current Liabilities:
  Accounts payable and accrued expenses           $       438,099
  Accrued taxes                                           202,359
                                                  ---------------

   Total Current Liabilities                              640,458
                                                  ---------------

   Total Liabilities                                      640,458
                                                  ---------------

Minority interest                                         103,112
                                                  ---------------
STOCKHOLDERS' EQUITY
 Preferred stock, $.001 Par Value; 20,000,000
  shares authorized and 0 shares issued and
  outstanding                                                   -
 Common stock, $.001 Par Value; 50,000,000 shares
  authorized and 13,994,850 shares issued and
  outstanding, respectively                                13,995
 Additional paid-in capital                             7,287,451
 Statutory reserves                                       380,632
 Retained earnings                                      3,116,924
 Accumulated other comprehensive income                   538,472
                                                  ---------------

      Total Stockholders' Equity                       11,337,474
                                                  ---------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY         $   12,081,044
                                                  ===============


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       2

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND
                     ACCUMULATED OTHER COMPREHENSIVE INCOME
         FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
                                    (IN US $)


                                                     2007             2006
                                                     ----             ----

 OPERATING REVENUES                             $ 2,397,688       $ 1,691,059
                                                ------------      ------------
 COST OF SALES
   Inventory, beginning of period                   608,490           473,294
   Depreciation and amortization expense            114,329           107,976
   Purchases                                        708,244           376,222
   Inventory, end of period                        (639,289)         (355,733)
                                                ------------      ------------
        Total Cost of Sales                         791,774           601,759
                                                ------------      ------------
 GROSS PROFIT                                     1,605,914         1,089,300
                                                ------------      ------------
 OPERATING EXPENSES
    Selling and promotion                           547,670           564,492
    General and administrative fees                 101,648            80,111
    Depreciation, amortization and impairment         7,189             2,770
                                                ------------      ------------
        Total Operating Expenses                    656,507           647,373
                                                ------------      ------------
 INCOME BEFORE OTHER INCOME                         949,407           441,927

 OTHER INCOME
    Rental income                                    10,633                 -
    Interest income                                   9,415             6,535
                                                ------------      ------------
        Total Other Income                           20,048             6,535
                                                ------------      ------------
 NET INCOME BEFORE PROVISION FOR INCOME TAXES
    AND MINORITY INTEREST                           969,455           448,462
 Minority interest                                   (4,358)              211
                                                ------------      ------------
 NET INCOME BEFORE PROVISION FOR INCOME TAXES       965,097           448,673
 Provision for Income Taxes                        (144,410)          (72,443)
                                                ------------      ------------
 NET INCOME APPLICABLE TO COMMON SHARES         $   820,687       $   376,230
                                                ============      ============
 NET INCOME PER BASIC AND DILUTED SHARES        $      0.06       $      0.03
                                                ============      ============

 WEIGHTED AVERAGE NUMBER OF COMMON
     SHARES OUTSTANDING                          13,994,850        13,994,850
                                                ============      ============
 COMPREHENSIVE INCOME
     Net income                                 $   820,687       $   376,230
     Other comprehensive income
     Currency translation adjustments               111,933            62,117
 Comprehensive income                           $   932,620       $   438,347


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       3

<PAGE>


                        TIAN' AN PHARMACEUTICAL CO., LTD.
      CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
            FOR THE THREE MONTHS ENDED MARCH 31, 2007 (UNAUDITED) AND
                 FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
                                    (IN US $)
<TABLE>
<S>                                     <C>              <C>       <C>        <C>       <C>          <C>          <C>

                                                                                                 Accumulated
                                                                Additional                          Other
                                             Common Stock        Paid-in   Statutory  Retained  Comprehenisve
                                        Shares          Amount   Capital    Reserves  Earnings   Income(Loss)    Total
                                        ---------------------------------------------------------------------------------

Balance January 1, 2005                5,445,000     $5,445,000  $       --  $  13,686  $  77,555  $       --    $ 5,536,241
                                     ------------  ------------- ----------- ---------- ---------- -----------   ------------
Capital contributions                  1,856,445      1,856,445          --         --         --          --      1,856,445

Shares cancelled upon merger with
   Tian An (Nevada)                   (7,301,445)    (7,301,445)         --         --         --          --     (7,301,445)

Shares issued for services                   100             --           1         --         --          --              1

Shares issued in merger with Xi' An
Tian'An                               13,994,750         13,995   7,287,450         --         --          --      7,301,445

Transfer of statutory reserves                --             --          --    139,364   (139,364)         --             --

Net income for the year ended
December 31, 2005                             --             --          --         --  1,061,050     129,553      1,190,603
                                     ------------  ------------- ----------- ---------- ---------- -----------   ------------
Balance December 31, 2005             13,994,850         13,995   7,287,451    153,050    999,241     129,553      8,583,290

Transfer of statutory reserves                --             --          --    227,582   (227,582)         --             --

Net income for the year ended
December 31, 2006                             --             --          --         --  1,520,220     296,986      1,817,206
                                     ------------  ------------- ----------- ---------- ---------- -----------   ------------
Balance December 31, 2006
                                      13,994,850         13,995   7,287,451    380,632  2,291,879     426,539     10,400,496

Net income for the period ended
March 31, 2007                                --             --          --         --    825,045     111,933        936,978
                                     ------------  ------------- ----------- ---------- ---------- -----------   ------------
Balance March 31, 2007                13,994,850   $     13,995  $7,287,451  $ 380,632 $3,116,924  $  538,472    $11,337,474
                                     ============  ============= =========== ===================== ===========   ============
</TABLE>


The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       4

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
         FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006 (UNAUDITED)
                                    (IN US $)

                                                      2007             2006
                                                 --------------   --------------

CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                    $    820,687     $    376,230
                                                 -------------    -------------
Adjustments to reconcile net income (loss)
 to net cash provided by (used in) operating
 activities:
  Depreciation, amortization and impairment           121,518          109,558
   Minority interest                                    4,358             (211)

Changes in assets and liabilities
  (Increase) in accounts receivable                  (519,778)         (96,006)
  (Increase) decrease in inventory                    (30,799)         117,561
  (Increase) in other receivables                     (11,568)          (7,443)
  Decrease in prepaid expenses and other
   current assets                                      40,702           35,579
  Decrease in other assets                                  -           28,720
  (Decrease) in accounts payable and and
   accrued expenses                                   (18,665)         (72,049)
     Increase in accrued taxes                         76,543            1,145
                                                 -------------    -------------
     Total adjustments                               (337,689)         116,854
                                                 -------------    -------------
     Net cash provided by operating activities        482,998          493,084
                                                 -------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES
   (Acquisitions) disposals of fixed assets                 -          (14,036)
                                                 -------------    -------------
     Net cash (used in) investing activities                -          (14,036)
                                                 -------------    -------------
Effect of foreign currency translation                 86,531           43,817
                                                 -------------    -------------
NET INCREASE IN
    CASH AND CASH EQUIVALENTS                         569,529          522,865

CASH AND CASH EQUIVALENTS -
    BEGINNING OF PERIOD                             5,190,603        3,561,148
                                                 -------------    -------------
CASH AND CASH EQUIVALENTS - END OF PERIOD        $  5,760,132     $  4,084,013
                                                 =============    =============
CASH PAID DURING THE PERIOD FOR:
    Income taxes                                 $          -     $          -
                                                 =============    =============

The  accompanying  notes  are an  integral  part of the  condensed  consolidated
financial statements.

                                       5

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2007 AND 2006

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION

            The unaudited condensed financial statements included herein have
            been prepared, without audit, pursuant to the rules and regulations
            of the Securities and Exchange Commission ("SEC"). The condensed
            financial statements and notes are presented as permitted on Form
            10-QSB and do not contain information included in the Company's
            annual statements and notes. Certain information and footnote
            disclosures normally included in financial statements prepared in
            accordance with accounting principles generally accepted in the
            United States of America have been condensed or omitted pursuant to
            such rules and regulations, although the Company believes that the
            disclosures are adequate to make the information presented not
            misleading. It is suggested that these condensed consolidated
            financial statements be read in conjunction with the December 31,
            2006 audited financial statements and the accompanying notes
            thereto. While management believes the procedures followed in
            preparing these condensed consolidated financial statements are
            reasonable, the accuracy of the amounts are in some respects
            dependent upon the facts that will exist, and procedures that will
            be accomplished by the Company later in the year.

            These condensed unaudited condensed consolidated financial
            statements reflect all adjustments, including normal recurring
            adjustments which, in the opinion of management, are necessary to
            present fairly the consolidated operations and cash flows for the
            periods presented.

            Tian' An Pharmaceutical  Co. Ltd. ("Tian' An") was established in
            Xi'An of the Peoples Republic of China ("PRC") by Shaanxi Bafang
            Science and Technology Investment Co., Ltd, Shaanxi Economic
            Cooperation Property Company, Shaanxi Ruike Investment Co., Ltd.,
            Xi'An Green Health Products Research Center, Xi'An Green Science and
            Technology and nineteen individuals on January 17,  2003.  In 2005,
            Shaanxi Bafang Science and Technology Investment Co., Ltd. and
            Shaanxi Ruike Investment Co., Ltd. transferred a portion of their
            ownership interest to two individuals, and an additional  1,856,445
            shares were purchased by two individuals and one company.

            Tian' An was first organized for the purpose of the development,
            manufacturing and commercialization of traditional Chinese herbal
            medicines and biological pharmaceuticals. The main business line of
            Tian' An is production and sales of hard capsule, soft ointment, as
            well as research and development of biology goods and health care
            products. The Company conducts its business exclusively in the PRC.

            In December 2005, Tian' An and another individual set up a
            subsidiary company, Xi' An Tianan Pharmacy Marketing Co., Ltd (the
            "Subsidiary"). Tian' An injected cash amounting to approximately
            $2,600,000 as its capital contribution, accounting for 96.3% of the
            total registered capital of the Subsidiary (See Note 7).

            On August 15, 2005, the officers of Tian' An filed Articles of
            Incorporation in the State of Nevada which was approved August 23,
            2005 to create Tian' An Pharmaceutical Co., Ltd, a Nevada
            corporation (the "Company") and also established T2 Pharmaceutical
            Inc., a Colorado corporation ("T2") and wholly owned subsidiary of
            the Company.

                                       6

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

            On August 25, 2005, Tian' An merged into and with T2 and became the
            surviving entity and wholly owned subsidiary of the Company. The
            Company incorporated with 50,000,000 shares of common stock and
            20,000,000 shares of preferred stock both with a par value of
            $0.001. The Company issued 100 shares of common stock to its founder
            for $1.00, then issued 13,994,750 shares of common stock in exchange
            for 100% of the issued and outstanding shares of Tian' An.
            Thereafter and for purposes of these consolidated financial
            statements the "Company" and "Tian' An" are used to refer to the
            operations of Tian' An Pharmaceutical Co. Ltd. For accounting
            purposes, the Company accounted for the acquisition of Tian' An as a
            recapitalization. The transaction involved entities under common
            control as defined in Statement of Financial Standard 141, "Business
            Combinations". As such, the net assets of Tian' An were acquired at
            their carrying values at the time of the acquisition. The
            comparative figures for 2004 are those of Tian' An.

            As modern medical science is experiencing a change from biological
            research to biological-psychological-social research with
            traditional medical science playing a more important role than ever,
            the Company has positioned itself with the products they currently
            manufacture as well as the products under development to be
            successful. Many modern chemical medicines contain high toxicities
            and present numerous side effects. Purely chemical medicines are
            difficult, time consuming and expensive to develop.

            The Company's Traditional Chinese Medicines represent advantages
            over chemical medicines and the process of combining herbal
            extraction and chemical medicines is becoming a popular alternative,
            following the current trends of "natural" and "green" products in a
            variety of industries.

            The Company sells its products on a wholesale basis to distributors
            who resell the product to customers located in China. The Company
            has five major sales agents, Huayuan Life Pharmacy, Shaanxi Guangda
            Pharmacy, Hubiaohang Nanyang Tonic, Gansu Fuhe and Guangzhou Jidong
            Pharmacy, which distribute approximately 91% of the products. In
            general, sales are made under a purchase order arrangement with
            payment in full on the order due prior to shipment. The Company does
            not sell its products directly to end-users.

            The Company employs Good Manufacturing Practice "GMP" approved
            methods in processing and manufacturing its products. The Company
            obtains its raw materials from company-approved vendors and then
            process the materials into Traditional Chinese Medicine formulas in
            its facility. In the case of batch manufacturing, the Company
            employs a fully automated production line to produce the
            bio-engineered neutraceuticals. Post Production, the product is
            shipped to vendors. The raw materials are subjected to a combined
            process involving a solid/liquid extraction step, followed by a
            liquid/liquid-purifying step to obtain the purified extract.


                                       7


<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 1-     ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

            Once the purification process has been completed, the extract is
            concentrated and re-filtering at which time it is packaged and
            shipped to its customers. The Company maintains approximately one
            month of finished product on hand, and approximately two months of
            raw materials for production.

            The GMP inspection was performed by State Food and Drug
            Administration. The Chinese central government mandates
            manufacturers of Chinese herbs to comply with GMP standards by
            December 31, 2005. Starting on January 1, 2006, only products
            manufactured within GMP certified facilities are available for sale
            in China. Currently, approximately one third of Chinese
            manufacturers in this industry are in compliance with the new
            mandate. The Company has invested substantial capital in its
            manufacturing facility in order to comply with the more stringent
            standards mandated by the central government in order to pass the
            GMP inspection.

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

            Principles of Consolidation

            The condensed consolidated financial statements include the accounts
            of the Company and its subsidiaries. All significant intercompany
            accounts and transactions have been eliminated in consolidation. The
            3.7% interest not owned by the Company in its joint venture with Xi'
            An Tian'An Pharmacy Marketing Co., Ltd. is reflected as a minority
            interest in the consolidated financial statements.

            Use of Estimates

            The preparation of financial statements in conformity with
            accounting principles generally accepted in the United States of
            America requires management to make estimates and assumptions that
            affect the reported amounts of assets and liabilities and disclosure
            of contingent assets and liabilities at the date of the financial
            statements and the reported amounts of revenues and expenses during
            the reporting period. On an on-going basis, the Company evaluates
            its estimates, including, but not limited to, those related to bad
            debts, income taxes and contingencies. The Company bases its
            estimates on historical experience and on various other assumptions
            that are believed to be reasonable under the circumstances, the
            results of which form the basis for making judgments about the
            carrying value of assets and liabilities that are not readily
            apparent from other sources. Actual results could differ from those
            estimates.


                                       8


<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Economic and Political Risks

            The Company's operations are conducted in the PRC. Accordingly, the
            Company's business, financial condition and results of operations
            may be influenced by the political, economic and legal environment
            in the PRC, and by the general state of the PRC economy.

            The Company's operations in the PRC are subject to special
            considerations and significant risks not typically associated with
            companies in North America and Western Europe. These include risks
            associated with, among others, the political, economic and legal
            environment and foreign currency exchange. The Company's results may
            be adversely affected by changes in governmental policies with
            respect to laws and regulations, anti-inflationary measures,
            currency conversion, remittances abroad, and rates and methods of
            taxation, among other things.

            Cash and Cash Equivalents

            The Company considers all highly liquid debt instruments and other
            short-term investments with an initial maturity of three months or
            less to be cash equivalents. The Company maintained $727 as of March
            31, 2007 in cash on hand. The remainder of the cash was in financial
            institutions.

            Comprehensive Income

            The Company adopted Statement of Financial  Accounting  Standards
            No, 130, "Reporting Comprehensive Income," (SFAS No. 130).  SFAS No.
            130 requires the reporting of comprehensive income in addition to
            net income from operations.

            Comprehensive income is a more inclusive financial reporting
            methodology that includes disclosure of information that
            historically has not been recognized in the calculation of net
            income.

            Inventory

            Inventory is valued at the lower of cost or market (using the
            weighted average method) and net realizable value. Inventory
            includes raw material, work in process and finished goods.

            The net realizable value is the estimated selling price in the
            ordinary course of business less the estimated costs of completion,
            selling expenses and related taxes.

                                       9

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Fair Value of Financial Instruments

            The carrying amounts reported in the condensed consolidated balance
            sheet for cash and cash equivalents, and accounts payable
            approximate fair value because of the immediate or short-term
            maturity of these financial instruments.

            Currency Translation

            The Company's functional currency is that of the PRC which is the
            Chinese Renminbi (RMB). The reporting currency is that of the US
            Dollar. Capital accounts of the condensed consolidated financial
            statements are translated into United States dollars from RMB at
            their historical exchange rates when the capital transactions
            occurred. Assets and liabilities are translated at the exchange
            rates as of the balance sheet date. Income and expenditures are
            translated at the average exchange rate of the year. The period end
            RMB to US dollar as of March 31, 2007 was 7.7342 and the average
            period RMB to the US dollar for the three months ended March 31,
            2007 and 2006 were 7.7780 and 8.1734, respectively. The RMB is not
            freely convertible into foreign currency and all foreign currency
            exchange transactions must take place through authorized
            institutions. No representation is made that the RMB amounts could
            have been, or could be, converted into US dollar at the rates used
            in translation. The Company records these translation adjustments as
            accumulated other comprehensive income (loss). Gains and losses from
            foreign currency transactions are included in other income (expense)
            in the results of operations. For the three months ended March 31,
            2007 and 2006, the Company recorded approximately $111,933 and
            $62,117 in transaction gains (losses) as a result of currency
            translation.


            Research and Development

            The Company annually incurs costs on activities that relate to
            research and development of new products. Research and development
            costs are expensed as incurred.

            Retirement Benefits

            Retirement benefits in the form of contributions under defined
            contribution retirement plans to the relevant authorities are
            charged to the consolidated statements of income as incurred.

                                       10


<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Revenue Recognition

            The Company generates revenue from the sale of its nutritional
            herbal products.

            Revenue for the sale of its goods are recognized in accordance with
            Staff Accounting Bulletin 101. Revenue is recognized when:

                    1)   Persuasive evidence of an arrangement exists;
                    2)   Delivery has occurred or services have been rendered;
                    3)   The seller's price to the buyer is fixed or
                         determinable, and
                    4)   Collectibility is reasonably assured.

            The Company's customers consist primarily of large pharmaceutical
            wholesalers who sell directly into the retail channel.

            Accounts Receivable

            The Company conducts business and extends credit based on an
            evaluation of the customers' financial condition, generally without
            requiring collateral. Exposure to losses on receivables is expected
            to vary by customer due to the financial condition of each customer.
            The Company monitors exposure to credit losses and maintains
            allowances for anticipated losses considered necessary under the
            circumstances. The Company has established a reserve for
            uncollectibles of $7,681 as of March 31, 2007.

            Accounts receivable are generally due within 30 days and collateral
            is not required.

            Advertising Costs

            The Company expenses the costs associated with advertising as
            incurred. Advertising expenses for the three months ended March 31,
            2007 and 2006 of $547,670 and $564,492, respectively are included in
            selling and promotional expenses in the condensed consolidated
            statements of income. Advertising costs include marketing brochures
            and displays for retail outlets.

            Advance to Suppliers

            Advances to suppliers represent the cash paid in advance for
            purchasing raw materials.

                                       11


<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Fixed Assets

            Fixed assets are stated at cost. Depreciation is computed using the
            straight-line method over the estimated useful lives of the assets,
            net of the estimated residual values; building - 35 years (5%
            estimated residual value), equipment - 5 years (5% residual value),
            machinery- 10 years (5% residual value), leasehold improvements - 5
            years (no residual value) and vehicles - 8 years (5% residual
            value).

            When assets are retired or otherwise disposed of, the costs and
            related accumulated depreciation are removed from the accounts, and
            any resulting gain or loss is recognized in income for the period.
            The cost of maintenance and repairs is charged to income as
            incurred; significant renewals and betterments are capitalized.
            Deduction is made for retirements resulting from renewals or
            betterments.

            Land Use Rights

            According to the laws of China, the government owns all the land in
            China. Companies or individuals are authorized to possess and use
            the land only through land use rights granted by the Chinese
            government. Land use rights would be amortized using the
            straight-line method over the respective lease term. The Company
            does not have nay land use rights.

            Construction in Progress

            Construction in progress represents direct costs of construction or
            acquisition and design fees incurred, as well as interest charges
            directly related to debt incurred on behalf of particular
            construction projects. Capitalization of these costs ceases and the
            construction in progress is transferred to fixed assets (building or
            equipment) when substantially all the activities necessary to
            prepare the assets for their intended use are completed. No
            depreciation is provided until it is completed and ready for
            intended use.

            Impairment of Long-Lived Assets

            Long-lived assets, primarily fixed assets and intangible assets, are
            reviewed for impairment whenever events or changes in circumstances
            indicate that the carrying amount of the assets might not be
            recoverable. The Company does perform a periodic assessment of
            assets for impairment in the absence of such information or
            indicators. Conditions that would necessitate an impairment
            assessment include a significant decline in the observable market
            value of an asset, a significant change in the extent or manner in
            which an asset is used, or a significant adverse change that would
            indicate that the carrying amount of an asset or group of assets is
            not recoverable. For long-lived assets to be held and used, the
            Company recognizes an impairment loss only if its carrying amount is
            not recoverable through its undiscounted cash flows and measures the
            impairment loss based on the difference between the carrying amount
            and estimated fair value.

                                       12

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Intangible Assets

            Intangible assets consist of pharmaceutical licenses and are
            initially recorded at acquisition cost and amortized on a
            straight-line basis over their estimated useful lives of between
            five and eight years. Amortization expense is included in cost of
            sales in the consolidated statements of operations.

            Costs incurred in creating products are charged to expense when
            incurred as research and development until technological feasibility
            is established upon completion of a working model. Thereafter, all
            production costs are capitalized and carried at cost. Capitalized
            costs are amortized based on straight-line amortization over the
            remaining estimated economic life of the product.

            Identified intangible assets are regularly reviewed to determine
            whether facts and circumstances exist which indicate that the useful
            life is shorter than originally estimated or the carrying amount of
            assets may not be recoverable. The Company assesses the
            recoverability of its identifiable intangible assets by comparing
            the fair value of the intangible assets against the respective
            carrying amounts of these intangible assets. Impairment, if any, is
            based on the excess of the carrying amount over the fair value of
            those assets.

                                            As of March 31, 2007
                                            Gross
                                           Carrying    Accumulated
                                            Amount     Amortization     Net
                                           --------    ------------     ---

 Amortized Intangible Assets:

   Pharmaceutical licenses                $ 2,521,272  $ 1,147,098  $ 1,374,174
                                          ===========  ============ ============
 Amortization Expense:

   For the three months ended
    March 31, 2007                                       $  92,810
   For the three months ended
    March 31, 2006                                          89,676

 Estimated Amortization Expense:

   For the nine months ended
    December 31, 2007                                    $ 280,007
   For the year ended December 31, 2008                    373,342
   For the year ended December 31, 2009                    373,342
   For the year ended December 31, 2010                    347,483
                                                        -----------
                 Total                                  $1,374,174
                                                        ===========

                                       13

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Earnings Per Share of Common Stock

            Basic net earnings per common share is computed using the weighted
            average number of common shares outstanding. Diluted earnings per
            share (EPS) includes additional dilution from common stock
            equivalents, such as stock issuable pursuant to the exercise of
            stock options and warrants. Common stock equivalents are not
            included in the computation of diluted earnings per share when the
            Company reports a loss because to do so would be antidilutive for
            periods presented. The Company did not have a loss for either
            period.

            The following is a reconciliation of the computation for basic and
            diluted EPS:

                                                      March 31,      March 31,
                                                        2007           2006
                                                   -------------  -------------

            Net income                              $  820,687     $  376,230
                                                    -----------    -----------

            Weighted-average common shares
            Outstanding (Basic)                     13,994,850     13,994,850

            Weighted-average common stock
            Equivalents
              Stock options                                  -              -
              Warrants                                       -              -
                                                    -----------    -----------
            Weighted-average common shares
            Outstanding (Diluted)                   13,994,850     13,994,850
                                                    ===========    ===========

            Major Customers

            A major customer is a customer that represents 10% of the Company's
            sales.

            For the three months ended March 31, 2007 and 2006, the Company had
            five and four major customers that represented approximately 92% and
            85% of the Company's sales, respectively.

                                       14

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Income Taxes

            The Company accounts for income tax using an asset and liability
            approach and allows for recognition of deferred tax benefits in
            future years. Under the asset and liability approach, deferred taxes
            are provided for the net tax effects of temporary differences
            between the carrying amounts of assets and liabilities for financial
            reporting purposes and the amounts used for income tax purposes. A
            valuation allowance is provided for deferred tax assets if it is
            more likely than not these items will either expire before the
            Company is able to realize their benefits, or that future
            realization is uncertain.

            In accordance with the relevant tax laws and regulations of PRC and
            US, the corporation income tax rate applicable ranges from 15% to
            34%.

            Stock-Based Compensation

            The Company follows FASB 123R in accounting for its stock based
            compensation (see Recent Accounting Pronouncements). This measures
            compensation expense for its employee stock-based compensation using
            the intrinsic-value method. Under the intrinsic-value method of
            accounting for stock-based compensation, when the exercise price of
            options granted to employees and common stock issuances are less
            than the estimated fair value of the underlying stock on the date of
            grant, deferred compensation is recognized and is amortized to
            compensation expense over the applicable vesting period. The Company
            for 2007 and 2006 did not grant any options or warrants that would
            need to be valued under such method. The following represents the
            effect on net income attributable to common shareholders per share
            if the fair value method had been applied to all awards.

            On January 1, 2006, the Company adopted the provisions of FAS No.
            123R "Share-Based Payment" ("FAS 123R") which requires recognition
            of stock-based compensation expense for all share-based payments
            based on fair value. Prior to January 1, 2006, the Company measured
            compensation expense for all of its share-based compensation using
            the intrinsic value method prescribed by Accounting Principles Board
            ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees"
            ("APB 25") and related interpretations. The Company has provided pro
            forma disclosure amounts in accordance with FAS No. 148, "Accounting
            for Stock-Based Compensation - Transition and Disclosure - an
            amendment of FASB Statement No. 123" ("FAS 148"), as if the fair
            value method defined by FAS No. 123, "Accounting for Stock Based
            Compensation" ("FAS 123") had been applied to its stock-based
            compensation.

                                       15

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Stock-Based Compensation (Continued)

            The Company has elected to use the modified-prospective approach
            method. Under that transition method, the calculated expense in 2006
            is equivalent to compensation expense for all awards granted prior
            to, but not yet vested as of January 1, 2006, based on the
            grant-date fair values estimated in accordance with the original
            provisions of FAS 123. Stock-based compensation expense for all
            awards granted after January 1, 2006 is based on the grant-date fair
            values estimated in accordance with the provisions of FAS 123R. The
            Company recognizes these compensation costs, net of an estimated
            forfeiture rate, on a pro rata basis over the requisite service
            period of each vesting tranche of each award. The Company considers
            voluntary termination behavior as well as trends of actual option
            forfeitures when estimating the forfeiture rate.

            The Company measures compensation expense for its non-employee
            stock-based compensation under the Financial Accounting Standards
            Board (FASB) Emerging Issues Task Force (EITF) Issue No. 96-18,
            "Accounting for Equity Instruments that are Issued to Other Than
            Employees for Acquiring, or in Conjunction with Selling, Goods or
            Services". The fair value of the option issued is used to measure
            the transaction, as this is more reliable than the fair value of the
            services received. The fair value is measured at the value of the
            Company's common stock on the date that the commitment for
            performance by the counterparty has been reached or the
            counterparty's performance is complete. The fair value of the equity
            instrument is charged directly to compensation expense and
            additional paid-in capital.

                                       16


<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Segment Information

            The Company follows the provisions of SFAS No. 131, "Disclosures
            about Segments of an Enterprise and Related Information". This
            standard requires that companies disclose operating segments based
            on the manner in which management disaggregates the Company in
            making internal operating decisions. For 2007 and 2006, the Company
            operated in one segment and one geographical location.

            Recent Accounting Pronouncements

            In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
            "Consolidation of Variable Interest Entities," an interpretation of
            Accounting Research Bulletin No. 51, "Consolidated Financial
            Statements." FIN 46 establishes accounting guidance for
            consolidation of variable interest entities that function to support
            the activities of the primary beneficiary. In December 2003, the
            FASB revised FIN 46 and issued FIN 46 (revised December 2003) ("FIN
            46R"). In addition to conforming to previously issued FASB Staff
            Positions, FIN No. 46R deferred the implementation date for certain
            variable interest entities. This revised interpretation is effective
            for all entities no later than the end of the first reporting period
            that ends after March 15, 2004. The Company does not have any
            investments in or contractual relationship or other business
            relationship with a variable interest entity and therefore the
            adoption of this interpretation will not have any impact on the
            Company's results of operations, financial position or cash flows.

            On December 16, 2004, FASB issued SFAS No. 153, "Exchanges of
            Non-monetary Assets, an amendment of APB Opinion 29, Accounting for
            Non-monetary Transaction" ("SFAS 153"). This statement amends APB
            Opinion 29 to eliminate the exception for non-monetary exchanges of
            similar productive assets and replaces it with a general exception
            for exchanges of non-monetary assets that do not have commercial
            substance. Under SFAS 153, if a non-monetary exchange of similar
            productive assets meets a commercial-substance criterion and fair
            value is determinable, the transaction must be accounted for at fair
            value resulting in recognition of any gain or loss. SFAS 153 is
            effective for non-monetary transactions in fiscal periods that begin
            after June 15, 2005. The Company does not anticipate that the
            implementation of this standard will have a material impact on its
            financial position, results of operations or cash flows.

            In May 2005, the FASB issued Statement of Financial Accounting
            Standard No. 154, "Accounting Changes and Error Corrections" ("SFAS
            154"). SFAS 154 is a replacement of APB No. 20, "Accounting
            Changes", and SFAS No. 3, "Reporting Accounting Changes in Interim
            Financial Statements". SFAS 154 applies to all voluntary changes in
            accounting principle and changes the requirements for accounting and
            reporting of a change in accounting principle. This statement
            establishes that, unless impracticable, retrospective application is
            the required method for reporting of a change in accounting
            principle in the absence of explicit transition requirements
            specific to the newly adopted accounting principle. It also requires
            the reporting of an error correction which involves adjustments to
            previously issued financial statements similar to those generally
            applicable to reporting an accounting change retrospectively.

                                       17

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Recent Accounting Pronouncements (Continued)

            SFAS 154 is effective for accounting changes and corrections of
            errors made in fiscal years beginning after December 15, 2005. The
            Company believes the adoption of SFAS 154 will not have a material
            impact on its consolidated financial statements.

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

            In September 2006, the FASB issued SFAS 157, "Fair Value
            Measurements." This standard defines fair value, establishes a
            framework for measuring fair value in generally accepted accounting
            principles, and expands disclosure about fair value measurements.
            This statement is effective for financial statements issued for
            fiscal years beginning after November 15, 2007. Early adoption is
            encouraged. The adoption of SFAS 157 is not expected to have a
            material impact on the consolidated financial statements.

            In September 2006, the FASB issued SFAS 158, "Employers' Accounting
            for Defined Benefit Pension and Other Postretirement Plans, an
            amendment of FASB Statements 87, 88, 106 and 132(R)" ("SFAS 158").
            SFAS 158 requires an employer to recognize the over-funded or
            under-funded status of a defined benefit postretirement plan (other
            than a multiemployer plan) as an asset or liability in its statement
            of financial position and to recognize changes in that funded status
            in the year in which the changes occur through comprehensive income.
            SFAS 158 also requires the measurement of defined benefit plan
            assets and obligations as of the date of the employer's fiscal
            year-end statement of financial position (with limited exceptions).
            Management does not expect adoption of SFAS 158 to have a material
            impact on the Company's consolidated financial statements.

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


                                       18

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 2-     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

            Recent Accounting Pronouncements (Continued)

            In July 2006, the FASB issued Interpretation No. 48 (FIN No. 48),
            "Accounting for Uncertainty in Income Taxes."  This interpretation
            requires recognition and measurement of uncertain income tax
            positions using a "more-likely-than-not" approach. FIN No. 48 is
            effective for fiscal years beginning after December 15, 2006.
            Management is still evaluating what effect this will have on the
            Company's consolidated financial statements.

            In September 2006, the United States Securities and Exchange
            Commission ("SEC") issued SAB 108, "Considering the Effects of Prior
            Year Misstatements when Quantifying Misstatements in Current Year
            Financial Statements."

            This SAB provides guidance on the consideration of the effects of
            prior year misstatements in quantifying current year misstatements
            for the purpose of a materiality assessment. SAB 108 establishes an
            approach that requires quantification of financial statement errors
            based on the effects of each of the company's financial statements
            and the related financial statement disclosures. SAB 108 permits
            existing public companies to record the cumulative effect of
            initially applying this approach in the first year ending after
            November 15, 2006 by recording the necessary correcting adjustments
            to the carrying values of assets and liabilities as of the beginning
            of that year with the offsetting adjustment recorded to the opening
            balance of retained earnings. Additionally, the use of the
            cumulative effect transition method requires detailed disclosure of
            the nature and amount of each individual error being corrected
            through the cumulative adjustment and how and when it arose. The
            Company does not anticipate that SAB 108 will have a material impact
            on its consolidated financial statements.



                                       19

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 3-     FIXED ASSETS

            Fixed assets as of March 31, 2007 were as follows:

                                       Estimated
                                         Useful
                                      Lives (Years)
                                      -------------

            Land use right                  50            $0
            Building                        35       621,155
            Equipment                       5         44,715
            Machinery                       10       647,402
            Vehicles                        8         25,859
            Leasehold improvements          5        122,831
                                                     -------

                                                   1,461,962
            Less: accumulated depreciation           235,797
                                                   ---------

            Property and equipment, net           $1,226,165
                                                  ==========


            There was $28,708 and $21,070 charged to operations for depreciation
            expense for the three months ended March 31, 2007 and 2006,
            respectively, of which $21,519 and $18,300 is included in cost of
            goods sold. There was no impairment for these assets during the
            three months ended March 31, 2007 and 2006.

            The Company leased a factory in the Xi' An High-and new tech
            Industrial Development Zone in November 2004 to engage in pharmacy
            production. In May 2005, the Company passed its Good Manufacturing
            Practice, which as of June 1, 2005, was mandatory for all
            pharmaceutical companies in PRC. The Company employs Good
            Manufacturing Practice "GMP" approved methods in processing and
            manufacturing its products. The Company obtains its raw materials
            from company-approved vendors and then process the materials into
            Traditional Chinese Medicine formulas in its facility. In the case
            of batch manufacturing, the Company employs a fully automated
            production line to produce the bio-engineered neutraceuticals. Post
            Production, the product is shipped to vendors. The raw materials are
            subjected to a combined process involving a solid/liquid extraction
            step, followed by a liquid/liquid-purifying step to obtain the
            purified extract.

            The Company has leased a portion of their buildings to two
            non-related parties. The lease term runs from November 2005 to
            November 2006 and has been extended for another year. Rental income
            earned by the Company approximates $40,420 RMB per month ($3,370
            US$). These amounts are included in other income in the condensed
            consolidated financial statements.


                                       20

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 4-     INVENTORIES

            Inventories consisted of the following as of March 31, 2007:



            Raw materials                           $128,796
            Work in process                           25,209
            Finished goods                           485,284
                                                     -------

                                                     639,289
            Less:     provision    for
            write-down of inventory                        -
                                                           -
            Inventory, net                          $639,289
                                                    ========

            There was no obsolescence of inventory or write-downs of inventory
            for the three months ended March 31, 2007 and 2006.

NOTE 5-     STOCKHOLDERS' EQUITY

            Common Stock

            As of March 31, 2007, the Company has 50,000,000 shares of common
            stock authorized with a par value of $0.001.

            The Company issued 100 shares of common stock to its founder for
            $1.00, then exchanged 13,994,750 shares of common stock in exchange
            of 100% of the authorized capital of Tian' An Pharmaceutical Co.,
            Ltd (CHINA).

            Tian'An Pharmaceutical Co., Ltd (CHINA) in 2003 issued 5,445,000
            shares.

            During 2005, Tian' An issued an additional 1,856,445 shares
            pre-merger with the Nevada corporation to have 7,301,445 shares
            issued. These shares were exchanged for 13,994,750 shares of the
            Nevada corporation. No shares were issued in 2006 or 2007, however,
            two shareholders of the Company privately sold 666,950 shares to
            another entity. The transaction had no impact on new issued shares,
            and no value added to treasury stock.

            The Company has not granted any options or warrants during 2007 or
            2006.

                                       21

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 5-     STOCKHOLDERS' EQUITY (CONTINUED)

            Preferred Stock

            As of March 31, 2007, the Company has 20,000,000 shares of preferred
            stock authorized with a par value of $0.001. There are no shares
            issued and outstanding.

            Statutory Reserves

            Statutory reserves include a statutory surplus reserve and a
            statutory public welfare fund, which are maintained in accordance
            with the legal requirements of the PRC. Pursuant to the Articles of
            Association, the Company has to appropriate 15% of the net income,
            based on the accounts prepared in accordance with accounting
            principles generally accepted in the PRC, to the statutory surplus
            reserve and statutory public welfare fund. The statutory surplus
            reserve can be utilized to offset prior years' losses or for
            capitalization as additional paid-in capital, whereas the statutory
            public welfare fund shall be utilized for collective staff welfare
            benefits such as building of staff quarters or housing. No
            distribution of the statutory reserves shall be made other than on a
            liquidation of the Company.


NOTE 6-     PROVISION FOR INCOME TAXES

            Corporate Income Taxes

            In accordance with the relevant tax laws and regulations of PRC, the
            corporate income tax rate is 15% and 33%. The corporate income tax
            for 2007 and 2006 was 15%, respectively, because Tian' An is
            considered a high technology company by the Chinese government. For
            2004, the Company was provided tax relief by the government and
            their tax was at 0%. For 2007, it is anticipated that the Company
            will be taxed at the 15% rate, and then commencing 2008, the Company
            will apply for approval to be taxed as a high technology company
            again for another three years to be taxed at 15%. Should they not be
            considered a high technology company they will be taxed at the 33%
            tax rate.

            At March 31, 2007 and 2006, corporate income tax consists of the
            following:

                                                2007            2006
                                                ----            ----

            Tax expense - current             $144,410        $72,443

            The surcharge on taxes not deductible for PRC purposes represents
            permanent differences due to salary and welfare items exceeding the
            ceiling based on PRC regulations regarding headcount. In addition,
            there are some very small tax surcharges included here such as a
            business tax on the rental income, water conservancy funds and
            educational assessments.

                                       22

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 6-     PROVISION FOR INCOME TAXES (CONTINUED)

            Corporate Income Taxes (Continued)

            A reconciliation of the PRC enterprise income tax rate to the
            effective income tax rate is as follows:

                                                    ---------------------------
                                                       2007         2006
                                                    -----------  ------------

            Statutory rate - corporate income tax      15%           15%

            Surcharge on taxes not deductible for
            PRC purposes                               0.0           1.1
                                                    -----------  ------------
                                                      15.0%         16.1%
                                                    ===========  ============

            Deferred income taxes are determined using the liability method for
            the temporary differences between the financial reporting basis and
            income tax basis of the Company's assets and liabilities. Deferred
            income taxes are measured based on the tax rates expected to be in
            effect when the temporary differences are included in the Company's
            tax return. Deferred tax assets and liabilities are recognized based
            on anticipated future tax consequences attributable to differences
            between financial statement carrying amounts of assets and
            liabilities and their respective tax bases. The Company has no
            temporary or permanent differences. Therefore, no deferred tax
            assets and liabilities have been recognized and no valuation
            allowance has been established.

            The depreciation and amortization methods and lives the Company
            utilizes are identical for book and tax purposes. Additionally,
            there is no income or expense included in books not included in tax.

            Value Added Tax

            In accordance with the relevant taxation laws in the PRC, the Value
            Added tax ("VAT") rate for export sales is 0% and domestic sales is
            17%. VAT is levied at 17% on the invoiced value of sales and is
            payable by the purchaser. The Company is required to remit the VAT
            it collects to the tax authority, but may deduct therefrom the VAT
            it has paid on eligible purchases. The VAT that the Company collects
            on sales is not included in sales. The amount of VAT payable as of
            March 31, 2007 is $98,317 and is included in accounts payable and
            accrued expenses.

NOTE 7-     SUBSIDIARY

            As noted in Note 1, the Company and an individual in December 2005
            established a subsidiary company through a joint venture, Xi' An
            Tian'an Pharmacy Marketing Co., Ltd (the "Subsidiary"). Tian' An
            injected cash amounting to approximately $2,600,000 as its capital
            contribution, accounting for 96.3% of the total registered capital
            of the Subsidiary. The capital infusion will be utilized for
            start-up costs of the Subsidiary as well as the hiring of staff and
            an extensive marketing campaign for the Company. The remaining 3.7%
            ownership is reflected as minority interest in the consolidated
            financial statements.

                                       23

<PAGE>

                        TIAN' AN PHARMACEUTICAL CO., LTD.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2007 AND 2006

NOTE 8-     RELATED PARTY TRANSACTIONS

            In July 2005, the Tian'an entered into a Pharmaceutical License
            Purchase Contract with Xi' An Gelin Healthy Production Research
            Institute for the development of Tian' An Pain Relief capsule. Xi'
            An Gelin Healthy Production Research Institute is a shareholder of
            the Company and contributed their license for Compound Ginseng
            Capsule for their shares in Tian' An (see Note 2 - Intangible
            Assets). The Company has valued the intangibles at historical cost.

            Tian' An paid Xi' An Gelin Healthy Production Research Institute
            approximately $1,000,000 (US$) (8,000,000 RMB). Xi' An Gelin Healthy
            Production Research Institute in accordance with the agreement must
            offer the result of their research and development of the new
            medicine by August 2011, and have it licensed by December 2011.
            Should Xi' An Gelin Healthy Production Research Institute fail to
            obtain a license for the product, they must return the fee. The
            Company has recorded this fee in other receivables on its condensed
            consolidated balance sheet as of March 31, 2007.

            Should Tian' An receive the license, the payment will be
            reclassified to Intangible Assets and amortized over the term of the
            license and tested for impairment quarterly by Management.

NOTE 9-     COMMITMENTS

            Rental

            Tian' An has entered into lease agreements for their manufacturing
            plant and office space that expire through October 2009. Rentals
            vary in amounts ranging up to $8,000 (US) per month.

            Minimum lease payments under operating leases at March 31, 2007 are
            as follows:

              Period ending March 31, 2008                   $164,432
                                      2009                    110,992
                                      2010                     92,512

                                       24

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ITEM 2.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
         OPERATION

      You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with our financial statements
and the related notes included elsewhere in this report. Our financial
statements have been prepared in accordance with U.S. GAAP. In addition, our
financial statements and the financial data included in this report reflect our
reorganization and have been prepared as if our current corporate structure had
been in place throughout the relevant periods. The following discussion and
analysis contains forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those projected in
the forward-looking statements.

                                    Overview

      We were organized as a Nevada corporation on August 15, 2005. In September
2005 we issued 13,994,750 shares of our common stock to acquire all outstanding
shares of Tian'an Pharmaceutical Co., which we refer to as "Tian Pharma," a PRC
company which was formed in January 2003. The purpose of the transaction was to
redomicile us as a U.S. corporation. Unless otherwise indicated, all references
to us throughout this report includes the operations of Tian Pharma.

      We develop, manufacture and sell Traditional Chinese Medicine herbal
products for the treatment and prevention of diseases and to improve the
functions of the human body.

Three Months Ended March 31, 2007
---------------------------------

      Material changes of items in our Statement of Operations for the three
months ended March 31, 2007, as compared to the three months ended March 31,
2006, are discussed below:

      Operating Revenue: Our second product, the Tianan soft capsule, came to
market in January 2006. Our third product, the Nizhuanie soft capsule, came to
market in January 2007. As a result, revenues increased significantly during the
current quarter.

      Gross Profit: Our gross profit percentage was 67% during March 31, 2007,
which was comparable to our gross profit percentage of 64% during March 31,
2006.

      General and Administrative Expenses: Salaries, benefits, travel and
entertainment increased as the result of higher sales activity.

      Net Income: Net income during the three months ended March 31, 2007 was
34% of our Operating Revenues. In comparison, our net income was 22% of our
Operating Revenues during the three months ended March 31, 2006. The increase,
from a percentage standpoint, was due to a higher gross profit percentage during
the quarter and the fact that Operating Expenses were relatively the same amount
as in the quarter ended March 31, 2006 despite a significant increase in sales
during the current period.



<PAGE>


Trends, Events and Uncertainties
--------------------------------

      We anticipate that revenues will continue to increase since we received
government approval to sell our Nizhuanle soft capsule in December 2007.
Revenues are also expected to increase once we receive government approval to
market all of our products through our subsidiary, Xian Tianan Pharmacy
Marketing Co., Ltd.

      The TCM market may not be as large as reported and expected growth in this
market may not continue. Market data and projections are inherently uncertain
and subject to change. In addition, underlying market conditions are subject to
change based on economic conditions, consumer references and other factors that
are beyond our control. A slow-down in sales of TCM products could have a
material adverse effect on our business.


      Other than the factors listed above we do not know of any trends, events
or uncertainties that have had or are reasonably expected to have a material
impact on our net sales or revenues or income from continuing operations. Our
business is not seasonal in nature.

Liquidity and Capital Resources
-------------------------------

      Future payments due on our contractual obligations as of September 30,
2006 are as follows:

Item               Total        2006      2007        2008        2009
----               -----        ----      ----        ----        ----

Lease Payments   $336,043     $62,143   $96,700     $96,700     $80,500

      Except as shown in the foregoing table, as of December 31, 2006 we did not
have any material capital commitments.

      If sufficient capital is available, during the next twelve months we plan
to spend approximately $1,300,000 to market our products through Xian Tianan
Pharmacy Marketing Co., Ltd., the subsidiary we formed in December 2005, and
approximately $3,700,000 to expand our product line and our manufacturing
facility.

      If cash generated by or operations is not sufficient to fund any future
capital requirements, we will attempt to raise any capital which we may need
through the sale of our equity securities or borrowings from third parties.

      We do not have any commitments or arrangements from any person to provide
us with any additional capital. Additional capital may not be available to us on
a timely basis, or if available, on acceptable terms.

                                       2

<PAGE>


Our material sources and (uses) of cash during the three months ended March 31,
2007 were:

                                                          2007
                                                          ----

         Cash provided by operations                    $482,998
         Changes in foreign exchange rate              $  86,531

       Our material sources and (uses) of cash during the three months ended
March 31, 2006 were:

                                                          2006
                                                          ----

         Cash provided by operations                   $493,084
         Purchase of manufacturing equipment          $ (14,036)
         Changes in foreign exchange rate             $  43,817

      Income from our operations has been, and is expected to be in the future,
our primary source of cash.

Off-Balance Sheet Arrangements
------------------------------

      We do not have any off-balance sheet items reasonably likely to have a
material effect on our financial condition.

Accounting Policies
-------------------

      Our critical accounting policies, as well as recent accounting
pronouncements which apply to us, are described in Note 2 to our financial
statements which are included as part of this report.

ITEM 3. CONTROLS AND PROCEDURES
-------------------------------

      Weng Jianjun, the Company's Chief Executive and Financial Officer, has
evaluated the effectiveness of the Company's disclosure controls and procedures
as of a date prior to the filing date of this report, and in her opinion the
Company's disclosure controls and procedures are effective to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to her by others within those entities, particularly
during the period in which this report is being prepared, so as to allow timely
decisions regarding required disclosure. There have been no changes in the
Company's internal controls or in other factors that could significantly affect
the Company's internal controls. As a result, no corrective actions with regard
to significant deficiencies or material weakness in the Company's internal
controls were required.

                                       3

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                                     PART II

                                OTHER INFORMATION


Item 6. Exhibits

      Number      Exhibit
      ------      -------

        31        Rule 13a-14(a) Certifications

        32        Section 1350 Certifications






<PAGE>


                                   SIGNATURES


      In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized on May 14, 2007.

                               TIAN'AN PHARMACEUTICAL CO., LTD.



                                          By:  /s/ Weng Jianjun
                                               ------------------------------
                                               Weng Jianjun, Principal Executive
                                               Officer,


                                          By:  /s/ Zhu Jie
                                               ------------------------------
                                               Zhu Jie, Principal Financial and
                                               Accounting Officer












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