<PAGE>

                    STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)
[X]      Quarterly report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934 For the quarterly period ended September 30, 2003

[ ]      Transition report under Section 13 or 15(d) of the Securities
         Exchange Act of 1934 For the transition period from _________ to
         _________

                           Commission File No. 0-29015

                     AMERICAN ORIENTAL BIOENGINEERING, INC.
                 (Name of Small Business Issuer in Its Charter)

            NEVADA                                       84-0605867
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

           NO.12 JIANCE ROAD, NANGANG DISTRICT, HARBIN, CHINA, 150086
                    (Address of principal executive offices)
                                 86-451-666-6601
                (Issuer'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 :
                        Preferred Stock, par value $0.001
                         Common Stock, par value $0.001
                                (Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports); and (2) has been
subject to such filing requirements for the past 90 days.
                                                  Yes  [X]     No  [ ]

Indicate the number of shares outstanding of each of the issuer's class of
common stock as of the latest practicable date:

Title of each class of Common Stock            Outstanding as September 30, 2003
--------------------------------------------------------------------------------
Preferred Stock, $0.001 par value                         1,000,000
Common Stock, $0.01 par value                            31,625,827

Transitional Small Business Disclosure Format (check one):
Yes [ ]    No  [X]

<PAGE>

                        --------------------------------
                                TABLE OF CONTENTS
                        --------------------------------

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.
         o   Balance Sheet                                           F-1
         o   Statement of Operations                                 F-2
         o   Cash Flow Statement                                     F-3
         o   Notes to Financial Statements                           F-4 to 5
Item 2.  Management Discussions & Analysis of Financial
           Condition and Results of Operations.                      3

PART II - OTHER INFORMATION

Item  1.     Legal Proceedings.                                      7
Item  2.     Changes in Securities.                                  7
Item  3.     Defaults Upon Senior Securities.                        8
Item  4.     Submission of Matters to a Vote of Security Holders.    8
Item  5.     Other Information.                                      8
Item  6.     Exhibits and Reports on Form 8-K.                       8

                                       2
<PAGE>

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.           FINANCIAL STATEMENTS

<TABLE>
                     AMERICAN ORIENTAL BIOENGINEERING, INC.
                   (FORMERLY INTERNET GOLF ASSOCIATION, INC.)
                           CONSOLIDATED BALANCE SHEETS
                             (UNITED STATES DOLLARS)
--------------------------------------------------------------------------------

<CAPTION>
                                     ASSETS
                                                            September 30,  December 31,
                                                                2003          2002
                                                            ------------  ------------
                                                             Unaudited      Audited
                                                            ------------  ------------
<S>                                                         <C>           <C>
CURRENT ASSETS
    Cash and bank balances                                  $ 4,264,055   $ 2,816,723
    Trade receivables, net of provisions                      2,715,485     1,472,694
    Inventory                                                 3,407,284       495,749
    Prepayments for goods                                       322,646       143,584
    Due from related parties                                     22,832       288,793
    Advances to employees                                       147,188        95,788
    Deferred taxes                                               68,772        68,772
    Deferred merger costs                                        41,667        66,666
    Deferred consulting expenses                              1,900,625       415,625
                                                            ------------  ------------

TOTAL CURRENT ASSETS                                         12,890,554     5,864,394

FIXED ASSETS, net of depreciation                             7,158,034     4,260,718

OTHER ASSETS, net of amortization                               678,309       722,892
                                                            ------------  ------------

TOTAL ASSETS                                                $20,726,897   $10,848,004
                                                            ============  ============

                      LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable and accrued expenses                   $ 2,768,924   $   582,242
    Prepayments for materials                                   213,876       153,830
    Bank loans                                                1,445,783     1,445,783
    Taxes payable                                               393,497        49,163
    Payable to related party                                      7,133       182,226
                                                            ------------  ------------

TOTAL CURRENT LIABILITIES                                     4,829,213     2,413,244
                                                            ------------  ------------

SHAREHOLDERS' EQUITY
    Preferred stock
        $0.001 par value;2,000,000 authorized;
        1,000,000 shares outstanding at December 31, 2002         1,000            --
    Common stock
       $.001 par value, 60,000,000 shares authorized
       31,625,827 and 11,341,017 issued and
       outstanding at September 30, 2003 and Dec 31, 2002        31,626        11,341
    Additional paid-in capital                                8,335,978     4,597,263
    Retained Earnings                                         7,529,080     3,826,156
    Equity in the amount of $807,501 is restricted
       at September 30, 2003 and December 31, 2002
                                                            ------------  ------------

TOTAL EQUITY                                                 15,897,684     8,434,760
                                                            ------------  ------------

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                  $20,726,897   $10,848,004
                                                            ============  ============

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

                                       F-1
</TABLE>
<PAGE>

<TABLE>
                               AMERICAN ORIENTAL BIOENGINEERING, INC.
                             (FORMERLY INTERNET GOLF ASSOCIATION, INC.)
                                CONSOLIDATED STATEMENTS OF OPERATIONS
                                             (UNAUDITED)
                                       (United States Dollars)
-------------------------------------------------------------------------------------------------------------

<CAPTION>
                                                     THREE MONTHS ENDED                NINE MONTHS ENDED
                                                       September 30,                     September 30,
                                                -----------------------------   -----------------------------
                                                    2003             2002            2003            2002
                                                -----------------------------   -----------------------------
                                                  Unaudited       Unaudited       Unaudited       Unaudited
                                                -------------   -------------   -------------   -------------

<S>                                             <C>             <C>             <C>             <C>
SALES                                           $  5,426,568    $  2,898,373    $ 14,802,208    $  7,671,287

COST OF SALES                                      1,956,309       1,054,656       5,509,981       2,931,092
                                                -------------   -------------   -------------   -------------

GROSS PROFIT                                       3,470,259       1,843,717       9,292,227       4,740,195

SELLING AND ADMINISTRATIVE EXPENSE                   440,322         285,157       1,144,636         720,737

ADVERTISING                                          420,987         601,926       1,593,682       1,087,507

GENERAL AND ADMINISTRATIVE EXPENSES                  882,504         498,580       1,655,667         923,302

DEPRECIATION AND AMORTIZATION                        134,580         100,235         396,290         317,369
                                                -------------   -------------   -------------   -------------

INCOME FROM OPERATIONS                             1,591,866         357,819       4,501,952       1,691,280

MERGER COSTS                                          (8,333)             --         (24,999)       (589,824)

INTEREST                                              (3,554)        (23,442)        (50,261)        (69,960)

OTHER INCOME (EXPENSE)                                  (679)         14,918          79,473          87,441
                                                -------------   -------------   -------------   -------------

INCOME BEFORE INCOME TAXES                         1,579,300         349,295       4,506,165       1,118,937

INCOME TAXES                                         335,645          76,032         803,242         235,245
                                                -------------   -------------   -------------   -------------

NET INCOME                                      $  1,243,655    $    273,263    $  3,702,923    $    883,692
                                                =============   =============   =============   =============

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
  BASIC                                           31,625,827      10,141,017      27,762,034      10,141,017
  DILUTED                                         33,237,240      10,141,017      28,777,621      10,141,017

NET INCOME (LOSS) PER SHARE
  BASIC                                         $       0.04    $       0.03    $       0.13    $       0.08
                                                =============   =============   =============   =============
  DILUTED                                       $       0.04    $       0.03    $       0.13    $       0.08
                                                =============   =============   =============   =============

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

                                                 F-2
</TABLE>

<PAGE>
                     AMERICAN ORIENTAL BIOENGINEERING, INC.
                   (FORMERLY INTERNET GOLF ASSOCIATION, INC.)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                             (UNITED STATES DOLLARS)
--------------------------------------------------------------------------------

                                                          Nine Months Ended
                                                           September 30,
                                                     ---------------------------
                                                         2003           2002
                                                     ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                           $ 3,702,923    $   883,692
Adjustments to reconcile net income to
 net cash provided by operations:
    Depreciation and amortization                        396,290        317,369
    Deferred merger costs                                 24,999        312,514
    Stock issued for services                                 --        600,000
    Deferred consulting expenses                         225,000       (452,211)
    Stock warrants issued                                555,000             --
(Increase) decrease in assets:
    Inventory                                         (2,911,535)       (90,323)
    Trade receivables                                 (1,242,791)      (600,935)
    Prepayments for goods                               (179,062)      (559,308)
    Due from related parties                             265,961         98,218
    Deferred taxes                                            --         63,049
    Other                                                (26,042)            --
Increase (decrease) in liabilities:
    Trade payables and accrued expenses                  476,682        223,614
    Payable to related party                            (175,093)       167,961
    Income taxes payable                                 344,334        (12,000)
    Prepayments for materials                             60,046       (108,240)
                                                     ------------   ------------

Net cash provided by operating activities              1,516,712        843,400
                                                     ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of fixed assets                             (69,380)       (42,910)
                                                     ------------   ------------
    Net cash used in investing activities                (69,380)       (42,910)
                                                     ------------   ------------

NET INCREASE IN CASH AND BANK BALANCES                 1,447,332        800,490
    Cash and bank balances, beginning of period        2,816,723      1,325,453
                                                     ------------   ------------

    Cash and bank balances, at end of period         $ 4,264,055    $ 2,125,943
                                                     ============   ============

SUPPLEMENTARY CASH FLOWS DISCLOSURES
     1. Interest paid                                $    50,261    $    62,018
                                                     ============   ============
     2. Taxes paid                                   $   344,334    $   247,213
                                                     ============   ============

     3. The Company issued 20,284,810 shares of
         Common Stock and 1,000,000 shares of
         Class A Preferred Stock February 22, 2003
         valued at approximately $3,205,000 for the
         purchase of 100% ownership in a peptide
         protein project.
     4. On June 26, 2002 the reverse merger with
         Harbin Three Happiness was finalized.
         The following amounts represent the
         non-cash portion of this transaction:
                         Other                       $    83,333
                         Merger costs                $   312,514
                         Accrued Expense             $      (800)
     5. On August 2, 2002 the Company issued
         1,200,000 shares common stock for
         consulting services.
     6. During the nine months ended September
         30, 2003 the Company recorded diferred
         consulting expenses with an offset to
         accrued expenses of $1,710,000.

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

                                       F-3
<PAGE>

                      AMERICAN ORIENTAL BIOENGINEERING, INC
                   (FORMERLY INTERNET GOLF ASSOCIATION, INC.)
                        NOTES TO THE FINANCIAL STATEMENTS
                                    UNAUDITED
                               SEPTEMBER 30, 2003
--------------------------------------------------------------------------------

NOTE 1. - BASIS OF PRESENTATION

The unaudited consolidated financial statements of American Oriental
Bioengineering, Inc. (formerly Internet Golf Association, Inc.) have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the requirements for reporting on Form
10QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. However, such information reflects
all adjustments (consisting solely of normal recurring adjustments), which are,
in the opinion of management, necessary for a fair statement of results for the
interim periods. Results shown for interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. These interim
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Form 10-KSB for the year
ended December 31, 2002 and Form 10Q-SB for the period ended March 31, 2003.

NOTE 2. - NATURE OF COMPANY

On December 18, 2001, the Company and Harbin Bioengineering entered into an
agreement whereby the Company acquired 100% of the equity interest of Harbin
Bioengineering. As a result, Harbin Bioengineering became a wholly owned
subsidiary of the Company (the "Acquisition"). The Company exchanged 8,538,943
shares of its common stock for that number of shares of Harbin Bioengineering
that constitutes 100% of the equity interest of Harbin Bioengineering. On
December 18, 2001, the directors and executive officers of the Company resigned
and Shujun Liu was appointed Chairman of the Board of Directors and President of
the Company. On June 26, 2002, the Acquisition became effective when the Company
filed Articles of Exchange with the Secretary of State of Nevada.

On October 15, 2002, the Company filed a Information Statement of Schedule 14C
reporting the issuance of 20,284,810 shares of common stock and 1,000,000 shares
of class A preferred stock in consideration for all of the ownership interest in
a soybean protein peptide biochemical engineering project (the "Project") as
described in the purchase agreement, dated as of August 17, 2002 by Shujun Liu
and the Company ("Purchase Agreement"). The value of the common stock issued was
approximately $3,205,000, which was equivalent to $0.158 per share of common
stock, the average of the closing price for the five-day period immediately
following the date of the Purchase Agreement, i.e, from August 19, 2002 to
August 23, 2002. By acquiring the Project, among other assets, the Company had
also acquired the ownership of the building housing of the Project's
manufacturing plant, manufacturing equipment, and environmental control
equipment the historical cost of which was approximately $3,205,000. In
addition, the Company had also received the right to produce the products that
resulted from the Project as well as ownership rights on a pending patent in PRC
for the process of the extraction and production of soybean peptide. The shares
were issued on February 22, 2003.

                                      F-4
<PAGE>

NOTE 3. - FOREIGN CURRENCY CONVERSION

The Company's financial information is presented in US dollars. People's
Republic of China currency (Reminbi dollars) has been converted into US dollars
at the exchange rate of 8.3 to 1.

NOTE 4. - INCOME TAXES

Income taxes are provided on Harbin Three Happiness Bioengineering Limited in
accordance with taxation principles currently effective in the People's Republic
of China as it relates to the Company.

NOTE 5. - INVESTMENT AGREEMENT

On July 18, 2003, the Company entered into an investment agreement (the
Investment Agreement) with BH Capital Investment, LP and Excalibur Limited
Partnership (the Investors). Under the terms of the Investment Agreement, the
Investors agreed to invest up to $3.0 million to purchase the Company's common
stock, $0.001 par value per share at a purchase price of 90% of the
then-prevailing market price with attached registration rights. In conjunction
with the Investment Agreement, the Company and the Investors executed two stock
purchase warrant agreements, which provided non-returnable 450,000 five-year
warrants with an exercise price of $0.30 per share and in accordance with the
Investment Agreement, the Investors are entitled to receive from the Company a
five-year warrant to purchase that number of shares of the Company's common
stock of equal value to 15% of the value of the shares the Company puts to the
Investors under the Investment Agreement and such warrants have an exercise
price equal to 120% of the average of the closing bid price over the pricing
period with provisions for cashless exercise at the Investor's option.

Upon execution of the Investment Agreement, the Company issued non-returnable
warrants to purchase 300,000 shares of the Company's common stock to FirsTrust
Group, Inc. (FirsTrust) or its designees for commitment and advisory fees. The
warrants have an exercise price of $0.30 per share and a cashless exercise
provision. In accordance with Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation" (SFAS 123) and the Emerging
Issues Task Force Consensus in 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" (EITF 96-18), the Company has
accounted for these warrants issued based on the fair value of the Company's
stock at the commencement date of the Investment Agreement. The warrants are
exercisable immediately and expire 5 years after issuance unless extended by the
Company. The fair value of the warrants granted is $1.85 using the Black-Scholes
pricing model. The following assumptions were included in this method: no
expected dividend yield; volatility rate of 252%; risk free interest rate of
2.89% and expected life of five years. For the three months and nine months
ended September 30, 2003, the Company expensed $555,000 associated with these
warrants with an offset to paid-in-capital.

In addition, as disclosed in a September 18, 2003 Form SB-2 Filing with the
Securities and Exchange Commission, the Company has agreed to issue to FirsTrust
five year warrants to purchase 250,000 shares of the Company's common stock for
every $1,000,000 the Company draws down on the equity line. The warrants have an
exercise price of 120% of the average of the closing bid price over the pricing
period with provisions exerciseable immediately upon issuance. The Company
believes that all $3,000,000 of the equity line established by the Investment
Agreement will be drawn down and therefore 750,000 shares will be issued. The

                                      F-5
<PAGE>

Company has also agreed to pay a cash fee of 9% of the total investment and
common stock of 2% of the total investment. The issuance of the above warrants
and common stock and the payment of cash are all contingent upon the From SB-2
becoming effective. The Company does believe an amended Form SB-2 will become
effective, however no expense has been incurred since there is uncertainty. The
Company has valued the issuance of the warrant and common stock and cash payment
based on the above assumptions and recorded deferred consulting fees and accrued
expenses of $1,710,000. The warrants to be issued have been valued in accordance
with SFAS 123 and EITF 96-18.

NOTE 6. - SUBSEQUENT EVENT

On October 1, 2003 the company entered into various consulting agreement with
various individuals. The services to be rendered include research and
development, sales and marketing, and various corporate services including
implementation and monitoring of the Company's internal controls. As
consideration for the services to be rendered, the company will issue a total of
800,000 shares of the Company's common stock. In accordance with SFAS 123 and
FITF 96-18, the total value of the services is approximately $1,568,000 and will
be expensed over the terms of the agreements.

                                      F-6
<PAGE>

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

The following discussion should be read in conjunction with the information
contained in the financial statements of the Company and the notes thereto
appearing elsewhere herein and in conjunction with the Management's Discussion
and Analysis set forth in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 2002 and Quarterly Report on Form 10-QSB for the quarter
ended September 30, 2002.

PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
-----------------------------------------------------

Statements made in this report other than statements of historical or current
fact, including, without limitation, statements relating to our plans,
strategies, objectives, expectations, intentions and adequacy of resources, are
considered "forward-looking statements" as defined in the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve know and
unknown risks, uncertainties and other factors that may cause our actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking
statements.

We undertake no obligation to update any forward-looking statements, but
investors are advised to consult any further disclosures by us on the subject in
our filings with the Securities and Exchange Commission, especially on Forms
10-KSB, 10-QSB and 8-K, in which we discuss in more detail various important
factors that could cause actual results to differ from expected or historic
results. It is not possible to foresee or identify all such factors. As such,
investors should not consider any list of such factors to be an exhaustive
statement of all risk, and certainties or potentially inaccurate assumptions.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES
------------------------------------------

Our discussion and analysis of operations is based upon our consolidated
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, including those related to inventory and accounts
receivable reserves, provisions for impairment losses of affiliated companies
and other intangible assets, income taxes and contingencies. We base our
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 values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these estimates under different assumptions or conditions.

                                       3
<PAGE>

RECENT DEVELOPMENTS
-------------------

On January 10, 2002, the Company filed a Current Report on Form 8-K reporting
the acquisition (the "Acquisition") by the Company of all of the equity interest
of Harbin Three Happiness Bioengineering Co., Ltd. ("Harbin Bioengineering"), a
People's Republic of China company. On June 26, 2002, the Acquisition became
effective when the Company filed Articles of Exchange with the Secretary of
State of Nevada. On July 1, 2002, the Company filed an Amendment No. 2 to the
Company's Current Report on Form 8-K in order to report the effectiveness of the
Acquisition.

On October 15, 2002, the Company filed another Information Statement Pursuant to
Section 14(c) of the Securities Exchange Act of 1934 the acquisition of a
soybean protein peptide biochemical engineering project ("Project") of which the
transaction was closed in February, 2003.

The Project covers derivatives and extractions of soybean protein peptides,
substances derived from soybeans through a biochemical engineering process
involving cutting, decomposition, conversion and synthesis of soybean protein
that can be absorbed by the body. In addition to absorbing soybean peptide
directly in the form of various tablets or powders, soybean peptide can also be
used as an additive in various foods and beverages including milk, tea and
coffee. By acquiring the Project, the Company acquired ownership of the
properties associated with the Project, the manufacturing plant, manufacturing
equipment and environmental control equipment. The purchased Project was crucial
to the Company's expansion and growth in the field of bioengineering. It was
also important to the Company's over-all technological strategy. Acquiring the
Project enabled the Company to develop new products and will increase the
Company's revenue in the future.

RESULTS OF OPERATION - THREE MONTHS ENDED SEPTEMBER 30, 2003 AS COMPARED TO
---------------------------------------------------------------------------
THREE MONTHS ENDED SEPTEMBER 30, 2002
-------------------------------------

For the quarter ended September 30, 2003 revenues increased by $2,528,195 or 87%
to $5,426,568 from $2,898,373 as compared to the corresponding period of the
prior year. This increase is attributed primarily to: 1) increased sales of
existing products; 2) new product lines from newly acquired soybean protein
peptide project.

Cost of sales increased by $901,653 or 85% to $1,956,309 from $1,054,656 for the
three months ended September 30, 2003, as compared to the corresponding period
of the prior year. This increase resulted from increased production volume costs
associated with increase in sales of existing product lines and soybean protein
peptide products.

Selling expenses increased by $155,165 or 54% to $440,322 as compared to the
corresponding period of the prior year. This increase is attributed primarily to
increased selling and marketing efforts on existing line of products and soybean
protein peptide products.

Advertising expenses decreased by $180,939 or 30% to $420,987 as compared to the
corresponding period of the prior year. This decrease is attributed to decrease
advertising efforts as extensive advertising efforts have been conducted in the
first half of the year to support the increase in sales and marketing activities
for existing product lines and soybean protein peptide products that enabled
increase in revenue in current quarter and previous quarters and as a result,
less resources were needed for advertising for this quarter ended September 30,
2003.

                                       4
<PAGE>

General and administrative expenses increased by $383,924 or 77% to $882,504 as
compared to the corresponding period of the prior year. This increase is
primarily the result of recognition of warrant expense related to the Investment
Agreement dated July 18, 2003.

Depreciation and amortization increased by $34,345 or 34% as compared to the
corresponding period to the prior year. This is the result of purchase of
soybean protein peptide asset.

Our net income increased by $970,392 to a net income of $1,243,655 from a net
income of $273,263. The increase in net income is basically attributed to: 1)
increase in product sales from existing product lines and soybean protein
peptide products; 2) less than proportion increase in sales administration,
decrease advertising and general administration expenses as compared to increase
in revenue as a result of improve in operation efficiency of the Company

RESULTS OF OPERATION - NINE MONTHS ENDED SEPTEMBER 30, 2003 AS COMPARED TO NINE
-------------------------------------------------------------------------------
MONTHS ENDED SEPTEMBER 30, 2002
-------------------------------

For the nine month ended September 30, 2003 revenues increased by $7,130,921 or
93% from $7,671,287 as compared to the corresponding period of the prior year.
This increase is attributed primarily to: 1) increased sales of existing
products; 2) new product lines from newly acquired soybean protein peptide
project.

Cost of sales increased by $2,578,889 or 88% to $5,509,981 from $2,931,092 for
the nine months ended September 30, 2003, as compared to the corresponding
period of the prior year. This increase resulted from increased production
volume costs associated with increase in sales of existing product lines and
soybean protein peptide products.

Selling expenses increased by $423,899 or 59% to $1,144,636 as compared to the
corresponding period of the prior year. This increase is attributed primarily to
increased selling and marketing efforts on existing line of products and soybean
protein peptide products.

Advertising expenses increased by $506,175 or 47% to $1,144,636 as compared to
the corresponding period of the prior year. This increase is attributed to
increase advertising efforts in order to support the increase in sales and
marketing activities for existing product lines and soybean protein peptide
products that enabled increase in revenue in nine months' period ended September
30, 2003 as compared to September 30, 2002.

General and administrative expenses increased by $732,365 or 79% to $1,655,667
as compared to the corresponding period of the prior year. This increase is
primarily the result of recognition of warrant expense related to the Investment
Agreement dated July 18, 2003

Depreciation and amortization increased by $78,921 or 25% as compared to the
corresponding period to the prior year. This is the result of purchase of
soybean protein peptide asset at the beginning of year 2003.

                                       5
<PAGE>

Our net income increased by $2,818,231 to a net income of $3,702,923 from a net
profit of $883,692 for the period ending September 30, 2002. The increase in net
income is basically attributed to: 1) increase in product sales from existing
product lines and soybean protein peptide products; 2) less than proportion
increase in sales administration, advertising and general administration
expenses as compared to increase in revenue as a result of improve in operation
efficiency of the Company.; 3) reduction in merger cost and other related
expenses.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

We have funded capital requirements through cash flow from operations. As of
September 30, 2003 we had a cash balance of $4,264,055 and a working surplus of
$8,061,341. This compares with a cash balance of $2,816,723 and a working
capital surplus of $3,451,150 for the end of the prior year.

                                       6
<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1 - LEGAL PROCEEDINGS

The Company may from time to time be involved in various claims, lawsuits, and
disputes with third parties, actions involving allegations of discrimination, or
breach of contract actions incidental to the operation of its business. The
Company is not currently involved in any such litigation that it believes could
have a materially adverse effect on its financial condition or results of
operations.

ITEM 2 - CHANGES IN SECURITIES

On October 11, 2002, an Information Statement pursuant to Section 14 ( c ) of
the Securities Exchange Act of 1934 was filed to announce that the Company would
acquire all of the ownership interest in a soybean protein peptide biochemical
engineering project (the "Project") as described in the Purchase Agreement dated
as of August 17, 2002 between Shujun Liu and the Company. Another information
Statement pursuant to Section 14 ( c ) of the Securities Exchange Act of 1934
was then filed by the Company on January 28, 2003 to announce that the board of
directors of the Company had duly signed an unanimously written consent to
declare that the Board was satisfied with the due diligence process on a project
and that the transaction was effective immediately.

Consideration shares aggregate of 1,000,000 shares of its class A preferred
stock and 20,284,810 shares of common stick in connected with the Purchase
Agreement has been issued to the following persons on February 22, 2003 through
the company's share transfer agent subsequent to the Board Approval and the
filing of the related Form 8-K.

      Shujun Liu                            11,484,810 shares of Common Stock
                                             1,000,000 shares of Preferred Stock
      Chang Min Wang                         1,500,000 shares of Common Stock
      Gui Xiang Qiu                          1,500,000 shares of Common Stock
      Wei Hu                                 1,400,000 shares of Common Stock
      Yan Wang                               1,400,000 shares of Common Stock
      Zi Yun Zhou                            1,500,000 shares of Common Stock
      Sheng Jiang                            1,500,000 shares of Common Stock

On July 22, 2003, the Company filed a form 8K current report pursuant to section
13 or 15(D) of the Securities Exchange Act of 1934, to announce that BH Capital
Investments, LP and Excalibur Limited Partnership (together, the "Investors")
and the Company entered into an investment agreement (the "Investment
Agreement"). Under the terms of the Investment Agreement, the Investor agreed to
invest up to US$ 3.0 million to purchase the Company's common stock, $.01 par
value per share (the "Common Stocks") at a purchase price of 90% of the
then-prevailing market price with attached registration rights. In conjunction
with the Investment Agreement, the Company and the Investors executed two stock
purchase warrant agreements, which provided 450,000 five-year warrants with and
exercise price of $0.30 per share. (The "Warrants") A total of 750,000
non-returnable Warrants were issued on July 18, 2003 in conjunction with the
Investment Agreement:

                                       7
<PAGE>

<TABLE>
<CAPTION>
         Name of holder                       No. of warrants      Exercise price    Issue date      Expiry date
         --------------                       ---------------      --------------    ----------      -----------
<S>                                                  <C>               <C>           <C>              <C>
         BH Capital                                  225,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         Excalibur                                   225,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         FirsTrust Group, Inc.                       276,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         Wyrick Robbins Yates & Ponton LLP             3,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         Jian Zhang                                   10,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         DSF Capita                                    5,000           US$ 0.3       Jul 18, 03       Jul 17, 08
         RADA Advisors,Inc.                            6,000           US$ 0.3       Jul 18, 03       Jul 17, 08
</TABLE>

On September 18, 2003, in conjunction with the Investment Agreement, the Company
filed a form SB-2 registration statement under the Security Exchange Act of 1933
("Registration Statement") to register the Common Stocks and the Warrants
associated with the Investment Agreement. The total number of Common Stocks and
Warrants to be registered amounted to Registration Statement was under the
review of SEC and was awaiting approval.


ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

There have been no material defaults.


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

No matters were submitted to the security holders for a vote during the period
covered by this report.


ITEM 5 - OTHER INFORMATION

None.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

On July 22, 2003, the Company filed a form 8K current report pursuant to section
13 or 15(D) of the Securities Exchange Act of 1934, to announce that BH Capital
Investments, LP and Excalibur Limited Partnership (together, the "Investors")
and the Company entered into an investment agreement (the "Investment
Agreement"). Under the terms of the Investment Agreement, the Investor agreed to
invest up to US$ 3.0 million to purchase the Company's common stock, $.01 par
value per share (the "Common Stock") at a purchase price of 90% of the
then-prevailing market price with attached registration rights.

                                       8
<PAGE>

                                   SIGNATURES

         In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.



AMERICAN ORIENTAL BIOENGINEERING, INC.



By  /s/  Shujun Liu
---------------------------------------
SHUJUN LIU
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
DATED: November 14, 2003

                                       9
<PAGE>

                                  CERTIFICATION


I, Shujun Liu, certify that:

1.    I have reviewed this quarterly report on Form 10-QSB of American Oriental
      Bioengineering, Inc;
2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;
3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;
4.    The registrant's other certifying officer and I are responsible for
      establishing and maintaining disclosure controls and procedures (as
      defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
      have:

      a.    designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;
      b.    evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "EVALUATION DATE"); and
      c.    presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

5.    The registrant's other certifying officer and I have disclosed, based on
      our most recent evaluation, to the registrant's auditors and the audit
      committee of registrant's board of directors (or persons performing the
      equivalent function):

      a.    all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and
      b.    any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

6.    The registrant's other certifying officer and I have indicated in this
      quarterly report whether or not there were significant changes in internal
      controls or in other factors that could significantly affect internal
      controls subsequent to the date of our most recent evaluation, including
      any corrective actions with regard to significant deficiencies and
      material weaknesses.

Date: November 14, 2003


/s/ Shujun Liu
--------------------------------------
Shujun Liu
Chairman and Chief Executive Officer

                                       10
<PAGE>

                                  CERTIFICATION


I, Yanchun Li, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of American Oriental
     Bioengineering, Inc;
2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;
3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;
4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     i.   designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;
     ii.  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "EVALUATION DATE"); and
     iii. presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     i.   all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and
     ii.  any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date: November 14, 2003


/s/ Yanchun Li
-------------------------------
Yanchun Li
Acting Chief Financial Officer

                                       11