----

----

----

----

| x | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934   For the quarterly period ended September 30, 2010 |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------|

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

----

----

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

----

|                              |                                                            |                                |   |
|-----------------------------------|-----------------------------------------------------------------|-------------------------------------|--------|
| Large accelerated filer |  ̈                                                          | Accelerated filer              | x      |
| Non-accelerated filer             |  ̈  (Do not check if a smaller reporting company) | Smaller reporting company |  ̈ |

|                                |   |                               |
|-------------------------------------|--------|------------------------------------|
| Title of each class of common stock |   | Outstanding as of November 2, 2010 |
| Common Stock, $0.001 par value      |   | 78,590,138                         |

----

----

|                                                                                                                                           |     |
|------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| PART I – FINANCIAL INFORMATION                                                                                                           | 3        |
|                                                                                                                                           |     |
| ITEM 1 – Financial Statements                                                                                                       |  3  |
|                                                                                                                                           |     |
| Unaudited condensed consolidated balance sheet as of September 30, 2010 and condensed consolidated balance sheet as of December 31, 2009       | 3        |
|                                                                                                                                           |     |
| Unaudited condensed consolidated statements of income and comprehensive income for the three and nine months ended September 30, 2010 and 2009 | 5        |
|                                                                                                                                           |     |
| Unaudited condensed statements of cash flow for the nine months ended September 30, 2010 and 2009                                              | 6        |
|                                                                                                                                           |     |
| Notes to unaudited condensed consolidated financial statements - September 30, 2010                                                            | 7        |
|                                                                                                                                           |     |
| ITEM 2 – Management's Discussion and Analysis of Financial Condition and Results of Operations                                      | 25       |
|                                                                                                                                           |     |
| ITEM 3 – Quantitative and Qualitative Disclosures About Market Risk                                                                 | 38       |
|                                                                                                                                           |     |
| ITEM 4 – Controls and Procedures                                                                                                    | 38       |
|                                                                                                                                           |     |
| PART II – OTHER INFORMATION                                                                                                              |  38 |
|                                                                                                                                           |     |
| ITEM 1 – Legal Proceedings                                                                                                          |  38 |
|                                                                                                                                           |     |
| ITEM 1A – Risk Factors                                                                                                              |  38 |
|                                                                                                                                           |     |
| ITEM 2 – Unregistered Sales of Equity Securities and Use of Proceeds                                                                |  38 |
|                                                                                                                                           |     |
| ITEM 3 – Defaults upon Senior Securities                                                                                            |  38 |
|                                                                                                                                           |     |
| ITEM 4 – (Removed and Reserved)                                                                                                     | 39       |
|                                                                                                                                           |     |
| ITEM 5 – Other Information                                                                                                          | 39       |
|                                                                                                                                           |     |
| ITEM 6 – Exhibits                                                                                                                        | 39       |
|                                                                                                                                           |     |
| Signatures                                                                                                                                     | 40       |

----

|                                              |   | SEPTEMBER 30,2010 |        |   | DECEMBER 31,2009 |   |
|---------------------------------------------------|--------|-------------------|-------------|--------|------------------|--------|
| CURRENT ASSETS                                    |   |              |        |   |             |   |   |   |
| Cash and cash equivalents                         |   | $                 | 92,456,775  |   |             | $      | 91,126,486 |   |
| Restricted cash                                   |   |              | 459,617     |   |             |   | 3,298,379 |   |
| Accounts and notes receivable, net                |   |              | 80,126,191  |   |             |   | 57,504,454 |   |
| Inventories, net                                  |   |              | 18,027,877  |   |             |   | 10,015,711 |   |
| Advances to suppliers and prepaid expenses        |   |              | 8,209,243   |   |             |   | 13,901,180 |   |
| Deferred tax assets                               |   |              | 799,048     |   |             |   | 824,451 |   |
| Other current assets                              |   |              | 1,141,107   |   |             |   | 1,246,647 |   |
| Total Current Assets                              |   |              | 201,219,858 |   |             |   | 177,917,308 |   |
|                                              |   |              |        |   |             |   |   |   |
| LONG-TERM ASSETS                                  |   |              |        |   |             |   |   |   |
| Property, plant and equipment, net                |   |              | 106,586,480 |   |             |   | 95,468,265 |   |
| Land use rights, net                              |   |              | 154,271,528 |   |             |   | 153,604,196 |   |
| Other long term assets                            |   |              | 8,069,583   |   |             |   | 7,909,086 |   |
| Construction in progress                          |   |              | 24,177,850  |   |             |   | 28,975,386 |   |
| Other intangible assets, net                      |   |              | 15,578,956  |   |             |   | 18,695,554 |   |
| Goodwill                                          |   |              | 33,164,121  |   |             |   | 33,164,121 |   |
| Investments in and advances to equity investments |   |              | 58,326,603  |   |             |   | 57,325,887 |   |
| Deferred tax assets                               |   |              | 150,702     |   |             |   | 134,268 |   |
| Unamortized financing cost                        |   |              | 2,591,477   |   |             |   | 3,287,694 |   |
| Total Long-Term Assets                            |   |              | 402,917,300 |   |             |   | 398,564,457 |   |
| TOTAL ASSETS                                      |   | $                 | 604,137,158 |   |             | $      | 576,481,765 |   |

----

|                                                                                                                                                                                             |   | SEPTEMBER 30,2010 |            |   | DECEMBER 31,2009 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------------|--------|------------------|--------|
|                                                                                                                                                                                             |   |              |            |   |             |   |
| CURRENT LIABILITIES                                                                                                                                                                              |   |              |            |   |             |   |
| Accounts payable                                                                                                                                                                                 |   | $                 | 12,580,972      |   |             | $      | 7,497,143 |   |
| Notes payable                                                                                                                                                                                    |   |              | 459,617         |   |             |   | 3,392,575 |   |
| Other payables and accrued expenses                                                                                                                                                              |   |              | 20,899,302      |   |             |   | 22,320,757 |   |
| Taxes payable                                                                                                                                                                                    |   |              |  1,557,206 |   |             |   | 947,338 |   |
| Short-term bank loans                                                                                                                                                                            |   |              | 6,867,619       |   |             |   | 10,384,368 |   |
| Current portion of long-term bank loans                                                                                                                                                          |   |              | 61,221          |   |             |   | 60,108 |   |
| Other liabilities                                                                                                                                                                                |   |              | 4,656,604       |   |             |   | 2,199,280 |   |
| Deferred tax liabilities                                                                                                                                                                         |   |              | 164,683         |   |             |   | 172,473 |   |
| Total Current Liabilities                                                                                                                                                                        |   |              | 47,247,224      |   |             |   | 46,974,042 |   |
|                                                                                                                                                                                             |   |              |            |   |             |   |   |   |
| LONG-TERM LIABILITIES                                                                                                                                                                            |   |              |            |   |             |   |   |   |
| Long-term bank loans, net of current portion                                                                                                                                                     |   |              | 697,613         |   |             |   | 743,957 |   |
| Deferred tax liabilities                                                                                                                                                                         |   |              | 15,762,175      |   |             |   | 15,961,465 |   |
| Unrecognized tax benefits                                                                                                                                                                        |   |              | 4,459,427       |   |             |   | 2,746,561 |   |
| Convertible notes                                                                                                                                                                                |   |              | 115,000,000     |   |             |   | 115,000,000 |   |
| Total Long-Term Liabilities                                                                                                                                                                      |   |              | 135,919,215     |   |             |   | 134,451,983 |   |
| TOTAL LIABILITIES                                                                                                                                                                                |   |              | 183,166,439     |   |             |   | 181,426,025 |   |
|                                                                                                                                                                                             |   |              |            |   |             |   |   |   |
| COMMITMENTS AND CONTINGENCIES                                                                                                                                                                    |   |              |            |   |             |   |   |   |
|                                                                                                                                                                                             |   |              |            |   |             |   |   |   |
| EQUITY                                                                                                                                                                                           |   |              |            |   |             |   |   |   |
| SHAREHOLDERS’ EQUITY                                                                                                                                                                       |   |              |            |   |             |   |   |   |
| Preferred stock, $0.001 par value; 2,000,000 shares authorized; 1,000,000 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively                           |   |              | 1,000           |   |             |   | 1,000 |   |
| Common stock, $0.001 par value; 150,000,000 shares authorized; 78,590,138 and 78,321,439 shares issued and outstanding at September 30, 2010 and December 31, 2009,  respectively |   |              | 78,590          |   |             |   | 78,321 |   |
| Common stock to be issued                                                                                                                                                                        |   |              | 266,000         |   |             |   | 388,000 |   |
| Prepaid forward repurchase contract                                                                                                                                                              |   |              | (29,998,616)    |   |             |   | (29,998,616) |   |
| Additional paid-in capital                                                                                                                                                                       |   |              | 202,582,088     |   |             |   | 199,829,921 |   |
| Retained earnings (the restricted portion of retained earnings is $23,757,901 at both September 30, 2010 and December 31, 2009)                                                             |   |              | 204,751,964     |   |             |   | 191,173,754 |   |
| Accumulated other comprehensive income                                                                                                                                                           |   |              | 42,776,112      |   |             |   | 33,050,224 |   |
| Total Shareholders’ Equity                                                                                                                                                                 |   |              | 420,457,138     |   |             |   | 394,522,604 |   |
| Non-controlling Interest                                                                                                                                                                         |   |              | 513,581         |   |             |   | 533,136 |   |
| TOTAL EQUITY                                                                                                                                                                                     |   |              | 420,970,719     |   |             |   | 395,055,740 |   |
| TOTAL LIABILITIES AND EQUITY                                                                                                                                                                     |   | $                 | 604,137,158     |   |             | $      | 576,481,765 |   |

----

|                                                       |   | THREE MONTHS ENDEDSEPTEMBER 30, |        |   | NINE MONTHS ENDEDSEPTEMBER 30, |   |
|------------------------------------------------------------|--------|---------------------------------|-------------|--------|--------------------------------|--------|
|                                                       |   | 2010                            |        |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |
| Revenues                                                   |   | $                               | 91,533,044  |   |                           | $      | 78,818,666 |   |   | $ | 222,579,024 |   |   | $ | 196,117,893 |   |
| Cost of sales                                              |   |                            | 44,250,846  |   |                           |   | 34,687,505 |   |   |   | 107,219,753 |   |   |   | 81,942,766 |   |
| GROSS PROFIT                                               |   |                            | 47,282,198  |   |                           |   | 44,131,161 |   |   |   | 115,359,271 |   |   |   | 114,175,127 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Selling and marketing expenses                             |   |                            | 13,931,448  |   |                           |   | 12,245,746 |   |   |   | 31,413,136 |   |   |   | 26,853,377 |   |
| Advertising costs                                          |   |                            | 10,983,946  |   |                           |   | 9,013,087 |   |   |   | 26,949,663 |   |   |   | 22,360,380 |   |
| Research and development costs                             |   |                            | 4,724,703   |   |                           |   | 945,141 |   |   |   | 10,754,394 |   |   |   | 2,504,523 |   |
| General and administrative expenses                        |   |                            | 6,989,074   |   |                           |   | 5,730,570 |   |   |   | 16,913,664 |   |   |   | 14,147,696 |   |
| Depreciation and amortization                              |   |                            | 1,682,058   |   |                           |   | 1,191,422 |   |   |   | 4,902,005 |   |   |   | 4,447,564 |   |
| Total operating expenses                                   |   |                            | 38,311,229  |   |                           |   | 29,125,966 |   |   |   | 90,932,862 |   |   |   | 70,313,540 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                     |   |                            | 8,970,969   |   |                           |   | 15,005,195 |   |   |   | 24,426,409 |   |   |   | 43,861,587 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Equity in earnings (loss) from unconsolidated entities     |   |                            | 242,183     |   |                           |   | (563,608) |   |   |   | 188,857 |   |   |   | (299,072) |   |
| Interest expense, net                                      |   |                            | (1,456,062) |   |                           |   | (1,106,805) |   |   |   | (4,393,093) |   |   |   | (4,306,143) |   |
| Other expenses, net                                        |   |                            | (67,548)    |   |                           |   | (49,165) |   |   |   | (85,340) |   |   |   | (164,103) |   |
| INCOME BEFORE INCOME TAX                                   |   |                            | 7,689,542   |   |                           |   | 13,285,617 |   |   |   | 20,136,833 |   |   |   | 39,092,269 |   |
| Income tax                                                 |   |                            | 2,366,398   |   |                           |   | 3,257,771 |   |   |   | 6,578,178 |   |   |   | 9,463,093 |   |
| NET INCOME                                                 |   |                            | 5,323,144   |   |                           |   | 10,027,846 |   |   |   | 13,558,655 |   |   |   | 29,629,176 |   |
| Net loss (income) attributable to non-controlling interest |   |                            | 7,679       |   |                           |   | (651) |   |   |   | 19,555 |   |   |   | 118,866 |   |
| NET INCOME ATTRIBUTABLE TO CONTROLLING  INTEREST |   |                            | 5,330,823   |   |                           |   | 10,027,195 |   |   |   | 13,578,210 |   |   |   | 29,748,042 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME                                 |   |                            | 7,789,385   |   |                           |   | 142,118 |   |   |   | 9,725,888 |   |   |   | 655,400 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| COMPREHENSIVE INCOME                                       |   | $                               | 13,120,208  |   |                           | $      | 10,169,313 |   |   | $ | 23,304,098 |   |   | $ | 30,403,442 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| EARNINGS PER COMMON SHARE                                  |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                      |   | $                               | 0.07        |   |                           | $      | 0.13 |   |   | $ | 0.18 |   |   | $ | 0.40 |   |
| Diluted                                                    |   | $                               | 0.07        |   |                           | $      | 0.13 |   |   | $ | 0.18 |   |   | $ | 0.39 |   |
|                                                       |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                 |   |                            |        |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                      |   |                            | 74,934,428  |   |                           |   | 74,636,155 |   |   |   | 74,765,028 |   |   |   | 74,592,447 |   |
| Diluted                                                    |   |                            | 75,965,266  |   |                           |   | 88,868,828 |   |   |   | 75,647,024 |   |   |   | 88,825,120 |   |

----

|                                                                              |   | NINE MONTHS ENDEDSEPTEMBER 30 |            |
|-----------------------------------------------------------------------------------|--------|-------------------------------|-----------------|
|                                                                              |   | 2010                          |            |   |   | 2009 |   |
|                                                                              |   |                          |            |   |   |   |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                             |   |                          |            |   |   |   |   |
| Net income                                                                        |   | $                             | 13,558,655      |   |   | $ | 29,629,176 |   |
| Adjustments to reconcile net income to net cash provided by operating activities: |   |                          |            |   |   |   |   |   |
| Depreciation and amortization                                                     |   |                          | 9,595,579       |   |   |   | 9,228,771 |   |
| Amortization of deferred issuance cost                                            |   |                          | 696,216         |   |   |   | 696,216 |   |
| Loss (gain) on disposal of property, plant and equipment                          |   |                          | 370             |   |   |   | (2,283) |   |
| Stock-based consulting expenses                                                   |   |                          | 93,917          |   |   |   | 184,800 |   |
| Provision for doubtful accounts and slow moving inventories                       |   |                          | 12,722          |   |   |   | 155,205 |   |
| Deferred taxes                                                                    |   |                          |  (508,000) |   |   |   | (1,001,284) |   |
| Amortization of stock-based compensation expense                                  |   |                          | 1,983,421       |   |   |   | 1,780,028 |   |
| Equity in loss(gain) from unconsolidated entities                                 |   |                          | (188,857)       |   |   |   | 299,072 |   |
| Independent director stock compensation                                           |   |                          | 266,000         |   |   |   | 291,000 |   |
| Changes in operating assets and liabilities:                                      |   |                          |            |   |   |   |   |   |
| (Increase) decrease in:                                                           |   |                          |            |   |   |   |   |   |
| Accounts and notes receivable                                                     |   |                          | (22,638,890)    |   |   |   | (679,670) |   |
| Inventories                                                                       |   |                          | (8,007,819)     |   |   |   | (2,124,681) |   |
| Advances to suppliers and prepaid expenses                                        |   |                          | 5,732,837       |   |   |   | 838,971 |   |
| Other current assets                                                              |   |                          | 89,782          |   |   |   | (433,412) |   |
| Increase (decrease) in:                                                           |   |                          |            |   |   |   |   |   |
| Accounts payable                                                                  |   |                          | 4,077,922       |   |   |   | (2,205,758) |   |
| Other payables and accrued expenses                                               |   |                          | (2,206,738)     |   |   |   | (769,293) |   |
| Taxes payable                                                                     |   |                          | 609,868         |   |   |   | 688,112 |   |
| Other liabilities                                                                 |   |                          | 2,454,682       |   |   |   | 81,348 |   |
| Unrecognized tax benefits                                                         |   |                          | 1,712,866       |   |   |   | 1,903,342 |   |
| Net cash provided by operating activities                                         |   |                          | 7,334,533       |   |   |   | 38,559,660 |   |
|                                                                              |   |                          |            |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                             |   |                          |            |   |   |   |   |   |
| Purchases of property, plant and equipment                                        |   |                          | (609,818)       |   |   |   | (756,009) |   |
| Purchases of construction in progress                                             |   |                          | (4,747,741)     |   |   |   | (742,477) |   |
| Purchase of land use right                                                        |   |                          | -               |   |   |   | (757,662) |   |
| Refundable deposit                                                                |   |                          | -               |   |   |   | 6,397,106 |   |
| Deposit for long-term assets                                                      |   |                          | (29,022)        |   |   |   | (361,602) |   |
| Advances to equity investments                                                    |   |                          | (21,368)        |   |   |   | (238,795) |   |
| Proceeds from disposal of property, plant and equipment                           |   |                          | -               |   |   |   | 52,229 |   |
| Net cash (used in) provided by investing activities                               |   |                          | (5,407,949)     |   |   |   | 3,592,790 |   |
|                                                                              |   |                          |            |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                             |   |                          |            |   |   |   |   |   |
| Proceeds from bank loans                                                          |   |                          | 6,764,562       |   |   |   | 9,951,673 |   |
| Repayment of bank loans                                                           |   |                          | (10,612,644)    |   |   |   |  (8,270,163) |   |
| Net cash (used in) provided by financing activities                               |   |                          | (3,848,082)     |   |   |   |  1,681,510 |   |
| Effect of exchange rate changes on cash and cash equivalents                      |   |                          | 3,251,787       |   |   |   | 124,952 |   |
| NET INCREASE IN CASH AND CASH EQUIVALENTS                                         |   |                          | 1,330,289       |   |   |   | 43,958,912 |   |
| Cash and cash equivalents, beginning of period                                    |   |                          | 91,126,486      |   |   |   | 68,060,769 |   |
| CASH AND CASH EQUIVALENTS, END OF PERIOD                                          |   | $                             | 92,456,775      |   |   | $ | 112,019,681 |   |

----

----

|   | ● | Persuasive evidence of an arrangement exists,                       |
|--------|---------|---------------------------------------------------------------------|
|   |    |                                                                |
|   | ● | Delivery has occurred or services have been rendered,               |
|   |    |                                                                |
|   | ● | The seller’s price to the buyer is fixed or determinable, and |
|   |    |                                                                |
|   | ● | Collectability is reasonably assured.                               |

----

----

|   | ● | Level 1 - defined as observable inputs such as quoted prices in active markets;                                                                  |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                             |
|   | ● | Level 2 - defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and                    |
|   |    |                                                                                                                                             |
|   | ● | Level 3 - defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. |

----

| Buildings               |                40 years                         |
|-------------------------|---------------------------------------------------------------------------------------------------------------------------------|
| Machinery and equipment |                10 years                              |
| Motor vehicles          |                5 years                               |
| Office equipment        |                5 years                               |
| Other equipment         |                5 years                               |
| Leasehold improvements  |                Shorter of 10 years or the lease term |

| a.     | The aggregate of the following:                                                                                                                   |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                              |   |
|   | 1.                                                                                                                                                | The consideration transferred measured in accordance ASC 805, which generally requires acquisition-date fair value. |
|   | 2.                                                                                                                                                | The fair value of any non-controlling interest in the acquiree. |
|   | 3.                                                                                                                                                | In a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree. |
|   |                                                                                                                                              |   |
| b.     | The net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured in accordance with FASB ASC 805. |

----

----

----

|                                                       |   | Three Months EndedSeptember 30, |       |   | Nine Months EndedSeptember 30, |   |
|------------------------------------------------------------|--------|---------------------------------|------------|--------|--------------------------------|--------|
|                                                       |   | 2010                            |       |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| EPS Numerator:                                             |   |                            |       |   |                           |   |   |   |   |   |   |   |
| Net income attributable to controlling interest            |   | $                               | 5,330,823  |   |                           | $      | 10,027,195 |   |   | $ | 13,578,210 |   |   | $ | 29,748,042 |   |
| Interest expense on convertible securities, net of taxes   |   |                            | -          |   |                           |   | 1,437,500 |   |   |   | - |   |   |   | 4,312,500 |   |
| Amortization of financing costs, net of taxes         |   |                            | -          |   |                           |   | 232,072 |   |   |   | - |   |   |   | 696,217 |   |
| Less: capitalization of interest on convertible securities |   |                            | -          |   |                           |   | (543,254) |   |   |   | - |   |   |   | (543,254) |   |
| Net income, as adjusted                                    |   | $                               | 5,330,823  |   |                           | $      | 11,153,513 |   |   | $ | 13,578,210 |   |   | $ | 34,213,505 |   |
|                                                       |   |                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| EPS Denominator:                                           |   |                            |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average common shares outstanding – Basic   |   |                            | 74,934,428 |   |                           |   | 74,636,155 |   |   |   | 74,765,028 |   |   |   | 74,592,447 |   |
| Effect of dilutive instruments:                            |   |                            | -          |   |                           |   | - |   |   |   | - |   |   |   | - |   |
| Convertible notes                                          |   |                            | -          |   |                           |   | 14,232,673 |   |   |   | - |   |   |   | 14,232,673 |   |
| Common stock awards to be issued                           |   |                            | 1,030,838  |   |                           |   | - |   |   |   | 881,996 |   |   |   | - |   |
| Weighted average common shares outstanding – Diluted |   |                            | 75,965,266 |   |                           |   | 88,868,828 |   |   |   | 75,647,024 |   |   |   | 88,825,120 |   |

| EPS - Basic   |   | $ | 0.07 |   |   | $ | 0.13 |   |   | $ | 0.18 |   |   | $ | 0.40 |   |
|---------------|--------|---|------|--------|--------|---|------|--------|--------|---|------|--------|--------|---|------|--------|
| EPS - Diluted |   | $ | 0.07 |   |   | $ | 0.13 |   |   | $ | 0.18 |   |   | $ | 0.39 |   |

----

|                                             |   | Three Months Ended September 30, |             |
|--------------------------------------------------|--------|----------------------------------|------------------|
|                                             |   | 2010                             |             |   | 2009 |   |
| Manufacturing Segment                            |   |                             |             |   |   |   |
| Revenue from pharmaceutical products             |   | $                                | 77,171,414       |   |   |   | 66,023,106 |   |
| Revenue from nutraceutical products              |   |                             | 10,294,564       |   |   |   | 9,241,744 |   |
| Total manufacturing revenue                      |   |                             | 87,465,978       |   |   |   | 75,264,850 |   |
| Total manufacturing costs                        |   |                             | 40,307,771       |   |   |   | 31,289,242 |   |
| Interest expense, net                            |   |                             | (130,364)        |   |   |   | (2,020) |   |
| Depreciation, depletion and amortization expense |   |                             | 1,244,031        |   |   |   | 821,749 |   |
| Other operating expenses                         |   |                             |  33,834,283 |   |   |   | 23,526,451 |   |
| Income tax expense                               |   |                             | 2,366,398        |   |   |   | 3,257,289 |   |
| Operating income of manufacturing segment        |   |                             | 9,583,131        |   |   |   | 16,368,099 |   |

|                                                                            |   | Three Months EndedSeptember 30, |        |
|---------------------------------------------------------------------------------|--------|---------------------------------|-------------|
|                                                                            |   | 2010                            |        |   | 2009 |   |
| Distribution Segment                                                            |   |                            |        |   |   |   |
| Distribution revenue                                                            |   | $                               | 4,067,066   |   |   | $ | 3,553,816 |   |
| Distribution costs                                                              |   |                            | 3,943,075   |   |   |   | 3,398,263 |   |
| Interest income, net                                                            |   |                            | 5,911       |   |   |   | 22,456 |   |
| Depreciation, depletion and amortization expense                                |   |                            | 10,102      |   |   |   | 1,339 |   |
| Equity in earnings from unconsolidated entities                                 |   |                            | 773,038     |   |   |   | 644,897 |   |
| Other operating expenses                                                        |   |                            | 211,908     |   |   |   | 186,354 |   |
| Income tax expense                                                              |   |                            | -           |   |   |   | 482 |   |
| Operating income of distribution segment                                        |   |                            | 680,930     |   |   |   | 634,731 |   |
|                                                                            |   |                            |        |   |   |   |   |   |
| Reconciliation to Consolidated Net Income Attributable to Controlling Interest: |   |
| Total net operating income, as defined, for reportable segments                 |   |                            | 10,264,061  |   |   |   | 17,002,830 |   |
| Unallocated                                                                     |   |                            | (4,933,238) |   |   |   | (6,975,635) |   |
| Consolidated Net Income Attributable to Controlling Interest                    |   | $                               | 5,330,823   |   |   | $ | 10,027,195 |   |

|                                             |   | Nine Months EndedSeptember 30, |            |
|--------------------------------------------------|--------|--------------------------------|-----------------|
|                                             |   | 2010                           |            |   | 2009 |   |
| Manufacturing Segment                            |   |                           |            |   |   |   |
| Revenue from pharmaceutical products             |   | $                              | 181,813,000     |   |   |   | 159,141,380 |   |
| Revenue from nutraceutical products              |   |                           | 29,894,355      |   |   |   | 27,677,227 |   |
| Total manufacturing revenue                      |   |                           | 211,707,355     |   |   |   | 186,818,607 |   |
| Total manufacturing costs                        |   |                           | 96,675,330      |   |   |   | 73,008,280 |   |
| Interest (expense) income, net                   |   |                           |  (293,948) |   |   |   | 18,277 |   |
| Depreciation, depletion and amortization expense |   |                           | 3,659,475       |   |   |   | 3,315,092 |   |
| Other operating expenses                         |   |                           | 78,668,115      |   |   |   | 56,826,505 |   |
| Income tax expense                               |   |                           | 6,201,804       |   |   |   | 9,551,143 |   |
| Operating income of manufacturing segment        |   |                           | 26,208,683      |   |   |   | 44,135,864 |   |

----

|                                                                            |   | Nine Months EndedSeptember 30, |         |
|---------------------------------------------------------------------------------|--------|--------------------------------|--------------|
|                                                                            |   | 2010                           |         |   | 2009 |   |
| Distribution Segment                                                            |   |                           |         |   |   |   |   |   |
| Distribution revenue                                                            |   | $                              | 10,871,669   |   |   | $ | 9,299,286 |   |
| Distribution costs                                                              |   |                           | 10,544,423   |   |   |   | 8,934,486 |   |
| Interest income, net                                                            |   |                           | 37,573       |   |   |   | 129,875 |   |
| Depreciation, depletion and amortization expense                                |   |                           | 29,027       |   |   |   | 18,242 |   |
| Equity in earnings from unconsolidated entities                                 |   |                           | 2,117,833    |   |   |   | 1,740,770 |   |
| Other operating expenses                                                        |   |                           | 833,758      |   |   |   | 722,895 |   |
| Income tax benefit                                                              |   |                           | -            |   |   |   | (88,050) |   |
| Operating income of distribution segment                                        |   |                           | 1,619,867    |   |   |   | 1,582,358 |   |
|                                                                            |   |                           |         |   |   |   |   |   |
| Reconciliation to Consolidated Net Income Attributable to Controlling Interest: |
| Total net operating income, as defined, for reportable segments                 |   |                           | 27,828,550   |   |   |   | 45,718,222 |   |
| Unallocated                                                                     |   |                           | (14,250,340) |   |   |   | (15,970,180) |   |
| Consolidated Net Income Attributable to Controlling Interest                    |   | $                              | 13,578,210   |   |   | $ | 29,748,042 |   |

|                                            |   | SEPTEMBER 30,2010 |       |   | DECEMBER 31,2009 |   |
|-------------------------------------------------|--------|-------------------|------------|--------|------------------|--------|
| Raw materials                                   |   | $                 | 7,052,118  |   |             | $      | 4,599,700 |   |
| Work in progress                                |   |              | 2,654,015  |   |             |   | 2,407,927 |   |
| Finished goods                                  |   |              | 8,342,157  |   |             |   | 3,043,926 |   |
| Total inventories                               |   |              | 18,048,290 |   |             |   | 10,051,553 |   |
| Less: provision against slow-moving inventories |   |              | (20,413)   |   |             |   | (35,842 | )  |
| Inventories, net                                |   | $                 | 18,027,877 |   |             | $      | 10,015,711 |   |

|                           |   | SEPTEMBER 30,2010 |        |   | DECEMBER 31,2009 |   |
|--------------------------------|--------|-------------------|-------------|--------|------------------|--------|
| Cost of land use rights        |   | $                 | 163,491,717 |   |             | $      | 160,165,545 |   |
| Less: Accumulated amortization |   |              | (9,220,189) |   |             |   | (6,561,349 | )  |
| Land use rights, net           |   | $                 | 154,271,528 |   |             | $      | 153,604,196 |   |

----

|                               |   | SEPTEMBER 30,2010 |         |   | DECEMBER 31,2009 |   |
|------------------------------------|--------|-------------------|--------------|--------|------------------|--------|
| At cost:                           |   |              |         |   |             |   |
| Buildings                          |   | $                 | 103,448,449  |   |             | $      | 91,565,622 |   |
| Machinery and equipment            |   |              | 22,747,895   |   |             |   | 21,016,658 |   |
| Motor vehicles                     |   |              | 1,575,872    |   |             |   | 1,535,238 |   |
| Office equipment                   |   |              | 2,457,306    |   |             |   | 2,157,528 |   |
| Other equipment                    |   |              | 1,721,145    |   |             |   | 610,945 |   |
|                               |   |              | 131,950,667  |   |             |   | 116,885,991 |   |
| Less : Accumulated depreciation    |   |              |         |   |             |   |   |   |
| Buildings                          |   |              | (8,510,246)  |   |             |   | (6,600,971 | )  |
| Machinery and equipment            |   |              | (13,874,356) |   |             |   | (12,483,002 | )  |
| Motor vehicles                     |   |              | (1,308,423)  |   |             |   | (1,130,968 | )  |
| Office equipment                   |   |              | (1,344,219)  |   |             |   | (1,037,234 | )  |
| Other equipment                    |   |              | (326,943)    |   |             |   | (165,551 | )  |
|                               |   |              | (25,364,187) |   |             |   | (21,417,726 | )  |
| Property, plant and equipment, net |   | $                 | 106,586,480  |   |             | $      | 95,468,265 |   |

----

|                           |   | SEPTEMBER 30,2010 |         |   | DECEMBER 31,2009 |   |
|--------------------------------|--------|-------------------|--------------|--------|------------------|--------|
| At cost:                       |   |              |         |   |             |   |
| Product licenses               |   | $                 | 15,846,840   |   |             | $      | 15,524,443 |   |
| Trademarks                     |   |              | 10,804,731   |   |             |   | 10,584,914 |   |
| Patents                        |   |              | 4,907,955    |   |             |   | 4,808,103 |   |
| Proprietary technology         |   |              | 288,228      |   |             |   | 282,364 |   |
| Software                       |   |              | 75,356       |   |             |   | 73,822 |   |
|                           |   |              | 31,923,110   |   |             |   | 31,273,646 |   |
| Less: Accumulated amortization |   |              |         |   |             |   |   |   |
| Product licenses               |   | $                 | (8,416,472)  |   |             | $      | (6,396,185 | )  |
| Trademarks                     |   |              | (5,512,564)  |   |             |   | (4,168,125 | )  |
| Patents                        |   |              | (2,306,266)  |   |             |   | (1,935,171 | )  |
| Proprietary technology         |   |              | (91,825)     |   |             |   | (67,468 | )  |
| Software                       |   |              | (17,027)     |   |             |   | (11,143 | )  |
|                           |   |              | (16,344,154) |   |             |   | (12,578,092 | )  |
| Other intangible assets, net   |   | $                 | 15,578,956   |   |             | $      | 18,695,554 |   |

----

|                                                            |   | AXN    |       |   | Nuo HuaAffiliate |   |       | Jinji  |   |   | Total   |   |
|-----------------------------------------------------------------|--------|--------|------------|--------|------------------|--------|------------|--------|--------|--------|---------|--------|
| At June 30, 2010                                                |   |   |       |   |             |   |       |   |   |   |    |   |
| Cost of investments:                                            |   | $      | 22,759,612 |   |             | $      | 32,999,023 |   |   | $      | 86,067  |   |   | $ | 55,844,702 |   |
| Share of equity income (loss):                                  |   |   | (3,310,270 | )      |             |   | 4,761,692  |   |   |   | 48,943  |   |   |   | 1,500,365 |   |
| Advances:                                                       |   |   | (3,300     | )      |             |   | -          |   |   |   | 99,281  |   |   |   | 95,981 |   |
| Long-term investments and advances:                             |   |   | 19,446,042 |   |             |   | 37,760,715 |   |   |   | 234,291 |   |   |   | 57,441,048 |   |
|                                                            |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Add (subtract) during the three months ended September 30, 2010 |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Cost of investments:                                            |   |   | -          |   |             |   | -          |   |   |   | -       |   |   |   | - |   |
| Share of equity income (loss):                                  |   |   | (527,763   | )      |             |   | 773,038    |   |   |   | (3,093  | )      |   |   | 242,182 |   |
| Advances:                                                       |   |   | 3,300      |   |             |   | -          |   |   |   | 8,542   |   |   |   | 11,842 |   |
| Foreign currency translation gain                               |   |   | -          |   |             |   | 629,328    |   |   |   | 2,203   |   |   |   | 631,531 |   |
|                                                            |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| At September 30, 2010                                           |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Cost of investments:                                            |   |   | 22,759,612 |   |             |   | 32,999,023 |   |   |   | 86,067  |   |   |   | 55,844,702 |   |
| Share of equity income (loss):                                  |   |   | (3,838,033 | )      |             |   | 6,164,058  |   |   |   | 48,053  |   |   |   | 2,374,078 |   |
| Advances:                                                       |   |   | -          |   |             |   | -          |   |   |   | 107,823 |   |   |   | 107,823 |   |
| Long-term investments and advances:                             |   | $      | 18,921,579 |   |             | $      | 39,163,081 |   |   | $      | 241,943 |   |   | $ | 58,326,603 |   |

|                                                           |   | AXN    |       |   | Nuo HuaAffiliate |   |       | Jinji  |   |   | Total   |   |
|----------------------------------------------------------------|--------|--------|------------|--------|------------------|--------|------------|--------|--------|--------|---------|--------|
| At December 31, 2009                                           |   |   |       |   |             |   |       |   |   |   |    |   |
| Cost of investments:                                           |   | $      | 22,759,612 |   |             | $      | 32,999,023 |   |   | $      | 86,067  |   |   | $ | 55,844,702 |   |
| Share of equity income (loss):                                 |   |   | (1,909,244 | )      |             |   | 3,260,590  |   |   |   | 45,480  |   |   |   | 1,396,826 |   |
| Advances:                                                      |   |   | 3,300      |   |             |   | -          |   |   |   | 81,059  |   |   |   | 84,359 |   |
| Long-term investments and advances:                            |   |   | 20,853,668 |   |             |   | 36,259,613 |   |   |   | 212,606 |   |   |   | 57,325,887 |   |
|                                                           |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Add (subtract) during the nine months ended September 30, 2010 |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Cost of investments:                                           |   |   | -          |   |             |   | -          |   |   |   | -       |   |   |   | - |   |
| Share of equity income (loss):                                 |   |   | (1,928,789 | )      |             |   | 2,117,833  |   |   |   | (187    | )      |   |   | 188,857 |   |
| Advances:                                                      |   |   | (3,300     | )      |             |   | -          |   |   |   | 26,764  |   |   |   | 23,464 |   |
| Foreign currency translation gain                              |   |   | -          |   |             |   | 785,635    |   |   |   | 2,760   |   |   |   | 788,395 |   |
|                                                           |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| At September 30, 2010                                          |   |   |       |   |             |   |       |   |   |   |    |   |   |   |   |   |
| Cost of investments:                                           |   |   | 22,759,612 |   |             |   | 32,999,023 |   |   |   | 86,067  |   |   |   | 55,844,702 |   |
| Share of equity income (loss):                                 |   |   | (3,838,033 | )      |             |   | 6,164,058  |   |   |   | 48,053  |   |   |   | 2,374,078 |   |
| Advances:                                                      |   |   | -          |   |             |   | -          |   |   |   | 107,823 |   |   |   | 107,823 |   |
| Long-term investments and advances:                            |   | $      | 18,921,579 |   |             | $      | 39,163,081 |   |   | $      | 241,943 |   |   | $ | 58,326,603 |   |

|                                           |   | September 30,2010 |       |   | December 31,2009 |   |
|------------------------------------------------|--------|-------------------|------------|--------|------------------|--------|
| Investment in AXN based on quoted market price |   | $                 | 51,374,960 |   |             | $      | 33,578,405 |   |
| Carrying amount of investment in AXN           |   | $                 | 18,921,579 |   |             | $      | 20,850,368 |   |

----

|                                  |   | SEPTEMBER 30,2010 |      |   | DECEMBER 31,2009 |   |
|---------------------------------------|--------|-------------------|-----------|--------|------------------|--------|
| Payment for long-term supply contract |   | $                 | 7,624,550 |   |             | $      | 7,469,432 |   |
| Deposits for long-term assets         |   |              | 445,033   |   |             |   | 439,654 |   |
| Total other long-term assets          |   | $                 | 8,069,583 |   |             | $      | 7,909,086 |   |

|   | ● | Total offering is $115,000,000 aggregate principal amount of 5.00% Convertible Senior Notes due on July 15, 2015.                                                                                                                                                                                                                                 |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                              |
|   | ● | Interest at 5.00% per year, payable semiannually in arrears in cash.                                                                                                                                                                                                                                                                              |
|   |    |                                                                                                                                                                                                                                                                                                                                              |
|   | ● | The Notes are convertible, at the option of the holder, at any time prior to the close of business on the second business day preceding the maturity date based on an initial conversion rate of 107.6195 shares per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $9.29 per share. (See below) |
|   |    |                                                                                                                                                                                                                                                                                                                                              |
|   | ● | The conversion rate is subject to certain adjustments. In particular, holders who convert their Notes in connection with certain events of fundamental changes, as defined pursuant to the convertible notes agreement, may be entitled to a make whole premium in the form of additional shares of our common stock.                             |

----

|   | ● | The initial conversion rate may also be adjusted on January 15, 2009 if the volume weighted average price (“VWAP”) of common stock for each of the 30 consecutive trading days ended on January 15, 2009 is less than $8.08 per share. In such an event, the conversion rate will be increased as a one-time conversion price adjustment such that the conversion price as adjusted would represent the greater of (1) 115.0% of such arithmetic average of the daily VWAP and (2) $8.08. |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | Holders may require the Company to repurchase all or a portion of their Notes on July 15, 2013 for cash at a price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest, if any, up to, but excluding, the repurchase date.                                                                                                                                                                                                                                          |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | If a fundamental change event occurs, holders will have the right to require the Company to repurchase for cash all or any portion of their notes. The fundamental change purchase price will be 100% of the principal amount of the Notes to be purchased plus accrued and unpaid interest, if any, up to, but excluding, the fundamental change repurchase date.                                                                                                                                                        |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | The Notes are unsecured, unsubordinated obligations and rank equal in right of payment to all of the Company’s existing and future unsecured and unsubordinated indebtedness. The Notes will be effectively subordinated to all of the Company’s existing and future secured indebtedness.                                                                                                                                                                                                               |

----

| Grant Date                 |   | April 10,2009 |   |    | November 25,2008 |   |   | April 9,2008 |    |   | August 20,2007 |   |   | April 20,2007 |   |
|----------------------------|--------|---------------|--------|---------|------------------|--------|--------|--------------|---------|--------|----------------|--------|--------|---------------|--------|
|                       |   |          |   |    |             |   |   |         |    |   |           |   |   |          |   |   |   |   |   |   |
| Risk-free interest rates   |   |          | 2.33   | %  |             |   |   | 2.41         | %  |   |           |   | 2.93   | %        |   |   |   | 4.45 | %  |   |   |   | 4.59 | % |   |
| Expected term              |   |          | 6.5    |    |             |   |   | 6.5          |    |   |           |   | 6.5    |          |   |   |   | 6.5 |   |   |   |   | 6.5 |   |   |
| Expected volatility        |   |          | 65.70  | %  |             |   |   | 64.81        | %  |   |           |   | 56.89  | %        |   |   |   | 71.71 | %  |   |   |   | 74.69 | %  |   |
| Expected dividend yield    |   |          | 0.00   | %  |             |   |   | 0.00         | %  |   |           |   | 0.00   | %        |   |   |   | 0.00 | %  |   |   |   | 0.00 | % |   |
| Fair value of share option |   |          | 2.64   |    |             |   |   | 3.34         |    |   |           |   | 4.81   |          |   |   |   | 5.87 |   |   |   |   | 7.44 |   |   |

----

----

----

----

----

|                                                       |    | Three Months EndedSeptember 30, |        |   | Three Months EndedSeptember 30, |    |
|------------------------------------------------------------|--------------|---------------------------------|-------------|--------|---------------------------------|--------------|
|                                                  |    | 2010                            |        |   | 2009                            |         |   | 2010 |    |    | 2009 |    |
|                                                  |    |                            |        |   |                            |         |   |   |    |    |   |    |
| Revenues                                                   |    | $                               | 91,533,044  |   |                            |         | 78,818,666 |   |    |    | 100% |    |    |    |  100% |    |
| Cost of sales                                              |    |                       | 44,250,846  |   |                            |         | 34,687,505 |   |    |    | 48 |   |   |   | 44 |   |
| GROSS PROFIT                                               |    |                       | 47,282,198  |   |                            |         | 44,131,161 |   |    |    | 52 |   |   |   | 56 |   |
|                                                       |         |                            |        |   |                            |         |   |   |   |   |   |   |   |   |   |   |
| Selling and marketing expenses                             |    |                       | 13,931,448  |   |                            |         | 12,245,746 |   |    |    | 15 |   |   |   | 16 |   |
| Advertising costs                                          |    |                       | 10,983,946  |   |                            |         | 9,013,087 |   |    |    | 12 |   |   |   | 11 |   |
| Research and development costs                             |         |                            | 4,724,703   |   |                            |         | 945,141 |   |   |   | 5 |   |   |   | 1 |   |
| General and administrative expenses                        |    |                       | 6,989,074   |   |                            |         | 5,730,570 |   |    |    | 8 |   |   |   | 7 |   |
| Depreciation and amortization                              |    |                       | 1,682,058   |   |                            |         | 1,191,422 |   |    |    | 2 |   |   |   | 2 |   |
| Total operating expenses                                   |    |                       | 38,311,229  |   |                            |         | 29,125,966 |   |    |    | 42 |   |   |   | 37 |   |
|                                                  |    |                       |        |   |                            |         |   |   |    |    |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                     |    |                       | 8,970,969   |   |                            |         | 15,005,195 |   |    |    | 10 |   |   |   | 19 |   |
| Equity in earnings (loss) from unconsolidated entities     |    |                       | 242,183     |   |                            |         | (563,608) |   |    |    | 0 |   |   |   | 1 |   |
| Interest expense, net                                      |    |                       | (1,456,062) |   |                            |         | (1,106,805) |   |    |    | 2 |   |   |   | 1 |   |
| Other expenses, net                                        |    |                       | (67,548)    |   |                            |         | (49,165) |   |    |    | 0 |   |   |   | 0 |   |
| INCOME BEFORE INCOME TAX                                   |    |                       | 7,689,542   |   |                            |         | 13,285,617 |   |    |    | 8 |   |   |   | 17 |   |
| Income tax                                                 |    |                       | 2,366,398   |   |                            |         | 3,257,771 |   |    |    | 3 |   |   |   | 4 |   |
| NET INCOME                                                 |    |                            | 5,323,144   |   |                            |         | 10,027,846 |   |    |    | 5 |   |   |   | 13 |   |
| Net loss (income) attributable to non-controlling interest |    |                       | 7,679       |   |                            |         | (651) |   |    |    | 0 |   |   |   | 0 |   |
| NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST            |         | $                               | 5,330,823   |   |                            |         | 10,027,195 |   |   |   | 5% |   |   |   | 13% |   |
| EARNINGS PER COMMON SHARE                                  |    |                       |        |   |                            |         |   |   |    |    |    |    |    |    |    |    |
| Basic                                                      |         | $                               | 0.07        |   |                            |         | 0.13 |   |    |    |    |    |    |    |    |   |
| Diluted                                                    |         | $                               | 0.07        |   |                            |         | 0.13 |   |   |   |   |   |   |   |   |   |

|                                 |    | Three Months EndedSeptember 30, |    |         | Increase/ |         |         | Increase/  |         |
|--------------------------------------|--------------|---------------------------------|--------------|--------------|-----------|--------------|--------------|------------|--------------|
|                            |    | 2010                            |    |    | 2009      |    |    | (Decrease) |    |    | (Decrease) |    |
| Revenue from pharmaceutical products |    | $                               | 77,171,414   |         |      |         | 66,023,106   |       |         |   | 11,148,308 |   |   |   | 17% |   |
| Revenue from nutraceutical products  |    |                       | 10,294,564   |         |      |         | 9,241,744    |       |         |   | 1,052,820 |   |   |   | 11 |    |
| Total manufacturing revenue          |    |                       | 87,465,978   |         |      |         | 75,264,850   |       |         |   | 12,201,128 |   |   |   | 16 |   |
| Distribution revenue                 |    |                       | 4,067,066    |         |      |         | 3,553,816    |       |         |   | 513,250 |   |   |   | 14 |    |
| Total revenues                       |    | $                               | 91,533,044   |         |      |         | 78,818,666   |       |         |   | 12,714,378 |   |   |   | 16% |    |

----

|   | ● | Sales from our prescription pharmaceutical products increased from $29,825,894 in the third quarter of 2009 to $37,324,901 in the same period of 2010, or a 25% increase. The increase was primarily due to the double digit increase in sales from our prescription formulated Jinji capsule, SHL powder, YYQH capsule and the expansion of CCXA generic pharmaceutical products in the rural market.   |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                          |
|   | ● | Sales from our OTC pharmaceutical products increased from $36,197,212 in the third quarter of 2009 to $39,846,513 in the same period of 2010, or a 10% increase. This was mainly due to the increased sales volume of CCXA and GLP generic drugs, and the sales through the expansion distribution channel of HQPL.                                                                                           |

|                     |    | Three Months EndedSeptember 30, |    |         | Increase/ |         |       | Increase/    |         |
|--------------------------|--------------|---------------------------------|--------------|--------------|-----------|--------------|------------|--------------|--------------|
|                |    | 2010                            |    |    | 2009      |    |       | (Decrease)   |         |   | (Decrease) |   |
| Pharmaceutical products  |    | $                               | 35,068,249   |         |      |         | 26,901,622 |    |    | $ | 8,166,627 |   |   |   | 30% |    |
| Nutraceutical products   |    |                       | 5,239,522    |         |      |         | 4,387,620  |    |    |    | 851,902 |   |   |   | 19 |    |
| Total manufacturing cost |    |                       | 40,307,771   |         |      |         | 31,289,242 |    |    |    | 9,018,529 |   |   |   | 29 |    |
| Distribution cost        |    |                       | 3,943,075    |         |      |         | 3,398,263  |    |    |    | 544,812 |   |   |   | 16 |    |
| Total cost               |    | $                               | 44,250,846   |         |      |         | 34,687,505 |    |    | $ | 9,563,341 |   |   |   | 28% |    |

|                           |   | Three Months EndedSeptember 30, |         |         | Increase/ |   |       | Increase/  |
|--------------------------------|--------|---------------------------------|--------------|--------------|-----------|--------|------------|------------|
|                           |   | 2010                            |    |    | 2009      |   |       | (Decrease) |   |   | (Decrease) |
| Promotional materials and fees |   | $                               | 8,473,031    |         |      |   | 8,899,928  |       |   | $ | (426,897) |   |   |   | (5)% |   |
| Payroll                        |   |                            | 2,414,107    |         |      |   | 1,341,682  |       |   |   | 1,072,425 |   |   |   | 80 |   |
| Staff welfare and insurance    |   |                            | 390,345      |         |      |   | 6,359      |       |   |   | 383,986 |   |   |   | 6038 |   |
| Shipping                       |   |                            | 1,604,280    |         |      |   | 1,273,117  |       |   |   | 331,163 |   |   |   | 26 |   |
| Trips and traveling            |   |                            | 820,450      |         |      |   | 523,683    |       |   |   | 296,767 |   |   |   | 57 |   |
| Office supplies                |   |                            | 159,942      |         |      |   | 156,117    |       |   |   | 3,825 |   |   |   | 2 |   |
| Miscellaneous                  |   |                            | 69,293       |         |      |   | 44,860     |       |   |   | 24,433 |   |   |   | 54 |   |
| TOTAL                          |   | $                               | 13,931,448   |         |      |   | 12,245,746 |       |   | $ | 1,685,702 |   |   |   | 14% |   |

----

|   | ● | Payroll expenses and staff welfare and insurance expenses increased significantly in the third quarter of 2010 as compared to the same period of 2009. This was primarily due to the increase of the average salaries and bonuses for our sales people as a result of our business expanding in the rural market as well as the increase in sales volume. In addition, the increased market need for salespeople and China’s increased labor costs also contributed to the increase of payroll expenses and staff welfare and insurance expenses; |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   | ● | Shipping expenses increased $331,163, or 26% in the third quarter of 2010, as compared to the same period of 2009. This was primarily due to the increase in sales volume and the increase in logistics costs;                                                                                                                                                                                                                                                                                                                                          |

|   | ● | Trips and traveling expenses increased $296,767, or 57% in the third quarter of 2010 as compared to the same period of 2009. This was primarily due to the increase in promotional activities of a sales people; and                                                                                                                                                                                                                                              |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   | ● | The increase was partially offset by a decrease of promotional materials and fees by $426,897, or 5% in the third quarter of 2010 as compared to the same period of 2009. This was primarily due to the change of our promotional activity for promoting our products. The Company reduced its promotional activities during this quarter but increased the coverage and frequency of TV and outdoor advertising to support the continuous growth of our revenue. |

----

|                          |    | Three Months EndedSeptember 30, |    |         | Increase/ |         |      | Increase/    |         |
|-------------------------------|--------------|---------------------------------|--------------|--------------|-----------|--------------|-----------|--------------|--------------|
|                     |    | 2010                            |    |    | 2009      |    |      | (Decrease)   |         |   | (Decrease) |   |
| Payroll                       |    | $                               | 1,293,484    |         |      |         | 758,636   |    |    | $ | 534,848 |   |   |    | 71% |   |
| Staff welfare and insurance   |    |                       | 772,497      |         |      |         | 388,242   |    |    |    | 384,255 |   |   |    | 99 |   |
| Professional fees             |    |                       | 1,124,727    |         |      |         | 1,054,006 |    |    |    | 70,721 |   |   |    | 7 |   |
| Directors’ remuneration |    |                       | 153,124      |         |      |         | 230,000   |    |    |    | (76,876) |   |   |    | (33) |   |
| Stock based compensation      |    |                       | 806,417      |         |      |         | 769,735   |    |    |    | 36,682 |   |   |    | 5 |   |
| Trip and traveling            |    |                       | 177,290      |         |      |         | 242,616   |    |    |    | (65,326) |   |   |    | (27) |   |
| Maintenance and repair        |    |                       | 71,105       |         |      |         | 756,373   |    |    |    | (685,268) |   |   |    | (91) |   |
| Office supplies               |    |                       | 215,762      |         |      |         | 175,758   |    |    |    | 40,004 |   |   |    | 23 |   |
| Vehicles and utilities        |    |                       | 313,059      |         |      |         | 152,716   |    |    |    | 160,343 |   |   |    | 105 |   |
| Conference fee                |    |                       | 140,685      |         |      |         | 72,343    |    |    |    | 68,342 |   |   |    | 94 |   |
| Miscellaneous                 |    |                       | 1,920,924    |         |      |         | 1,130,145 |    |    |    | 790,779 |   |   |    | 70 |   |
| TOTAL                         |    | $                               | 6,989,074    |         |      |         | 5,730,570 |    |    | $ | 1,258,504 |   |   |    | 22% |   |

|   | ● | Payroll expenses and staff welfare and insurance expenses increased significantly in the third quarter of 2010 as compared to the third quarter of 2009. This was primarily due to the increase of the average salaries and bonuses for our general management as a result of an increase in China’s labor costs and our expanding business coverage.                                                                                                                           |
|--------|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | ● | The increase was partially offset by a decrease of maintenance and repair fees by $685,268, or 91%, as compared to the third quarter of 2009. We incurred costs for upgrading our equipment and technologies in the third quarter of 2009 to comply with more stringent good manufacturing standards, or GMP standards, as well as to improve production efficiency. Since we finished such upgrading work in the first half year of 2010, the maintenance and repair fees decreased. |

----

|                                                   |    | Nine Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |    |
|--------------------------------------------------------|--------------|--------------------------------|-------------|--------|--------------------------------|--------------|
|                                              |    | 2010                           |        |   | 2009                           |         |   | 2010 |    |    | 2009 |    |
|                                              |    |                           |        |   |                           |         |   |   |    |    |   |    |
| Revenues                                               |    | $                              | 222,579,024 |   |                           |         | 196,117,893 |   |    |    | 100% |    |    |    |  100% |    |
| Cost of sales                                          |    |                      | 107,219,753 |   |                           |         | 81,942,766 |   |    |    | 48 |   |   |   | 42 |   |
| GROSS PROFIT                                           |    |                      | 115,359,271 |   |                           |         | 114,175,127 |   |    |    | 52 |   |   |   | 58 |   |
|                                                   |         |                           |        |   |                           |         |   |   |   |   |   |   |   |   |   |   |
| Selling and marketing expenses                         |    |                      | 31,413,136  |   |                           |         | 26,853,377 |   |    |    | 14 |   |   |   | 14 |   |
| Advertising costs                                      |    |                      | 26,949,663  |   |                           |         | 22,360,380 |   |    |    | 12 |   |   |   | 11 |   |
| Research and development costs                         |         |                           | 10,754,394  |   |                           |         | 2,504,523 |   |   |   | 5 |   |   |   | 1 |   |
| General and administrative expenses                    |    |                      | 16,913,664  |   |                           |         | 14,147,696 |   |    |    | 8 |   |   |   | 7 |   |
| Depreciation and amortization                          |    |                      | 4,902,005   |   |                           |         | 4,447,564 |   |    |    | 2 |   |   |   | 2 |   |
| Total operating expenses                               |    |                      | 90,932,862  |   |                           |         | 70,313,540 |   |    |    | 41 |   |   |   | 35 |   |
|                                              |    |                      |        |   |                           |         |   |   |    |    |   |   |   |   |   |   |
| INCOME FROM OPERATIONS                                 |    |                      | 24,426,409  |   |                           |         | 43,861,587 |   |    |    | 11 |   |   |   | 23 |   |
| Equity in earnings (loss) from unconsolidated entities |    |                      | 188,857     |   |                           |         | (299,072) |   |    |    | 0 |   |   |   | 0 |   |
| Interest expense, net                                  |    |                      | (4,393,093) |   |                           |         | (4,306,143) |   |    |    | 2 |   |   |   | 2 |   |
| Other expenses, net                                    |    |                      | (85,340)    |   |                           |         | (164,103) |   |    |    | 0 |   |   |   | 0 |   |
| INCOME BEFORE INCOME TAX                               |    |                      | 20,136,833  |   |                           |         | 39,092,269 |   |    |    | 9 |   |   |   | 21 |   |
| Income tax                                             |    |                      | 6,578,178   |   |                           |         | 9,463,093 |   |    |    | 3 |   |   |   | 5 |   |
| NET INCOME                                             |    |                           | 13,558,655  |   |                           |         | 29,629,176 |   |    |    | 6 |   |   |   | 16 |   |
| Net loss attributable to non-controlling interest      |    |                      | 19,555      |   |                           |         | 118,866 |   |    |    | 0 |   |   |   | 0 |   |
| NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST        |         | $                              | 13,578,210  |   |                           |         | 29,748,042 |   |   |   | 6 |   |   |   | 16 |   |
| EARNINGS PER COMMON SHARE                              |    |                      |        |   |                           |         |   |   |    |    |    |    |    |    |    |    |
| Basic                                                  |         | $                              | 0.18        |   |                           |         | 0.40 |   |    |    |    |    |    |    |    |   |
| Diluted                                                |         | $                              | 0.18        |   |                           |         | 0.39 |   |   |   |   |   |   |   |   |   |

|                                 |    | Nine Months EndedSeptember 30, |    |         | Increase/ |         |         | Increase/  |         |
|--------------------------------------|--------------|--------------------------------|--------------|--------------|-----------|--------------|--------------|------------|--------------|
|                            |    | 2010                           |    |    | 2009      |    |    | (Decrease) |    |    | (Decrease) |    |
| Revenue from pharmaceutical products |    | $                              | 181,813,000  |         |      |         | 159,141,380  |       |         |   | 22,671,620 |   |   |   | 14% |   |
| Revenue from nutraceutical products  |    |                      | 29,894,355   |         |      |         | 27,677,227   |       |         |   | 2,217,128 |   |   |   | 8% |    |
| Total manufacturing revenue          |    |                      | 211,707,355  |         |      |         | 186,818,607  |       |         |   | 24,888,748 |   |   |   | 13% |    |
| Distribution revenue                 |    |                      | 10,871,669   |         |      |         | 9,299,286    |       |         |   | 1,572,383 |   |   |   | 17% |    |
| Total revenues                       |    | $                              | 222,579,024  |         |      |         | 196,117,893  |       |         |   | 26,461,131 |   |   |   | 13% |    |

----

|   | ● | Sales from our prescription pharmaceutical products increased from $71,192,969, in the nine months ended September 30, 2009 to $88,667,804 in the same period of 2010, or a 25% increase. This is primarily due to the double digit increase in sales of our prescription formulated Jinji capsule, SHL powder, YYQH capsule and the expansion of CCXA generic pharmaceutical products in the rural market. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                        |
|   | ● | Sales from our OTC pharmaceutical products increased from $87,948,411 to $93,145,196, or a 6% increase. This was mainly due to the increased sales volume of CCXA generic drugs, and the sales through the expansion distribution channel of HQPL.                                                                                                                                                          |

|                     |    | Nine Months EndedSeptember 30, |    |         | Increase/ |         |       | Increase/    |         |
|--------------------------|--------------|--------------------------------|--------------|--------------|-----------|--------------|------------|--------------|--------------|
|                |    | 2010                           |    |    | 2009      |    |       | (Decrease)   |         |   | (Decrease) |   |
| Pharmaceutical products  |    | $                              | 81,646,090   |         |      |         | 61,195,896 |    |    | $ | 20,450,194 |   |   |   | 33% |    |
| Nutraceutical products   |    |                      | 15,029,240   |         |      |         | 11,812,384 |    |    |    | 3,216,856 |   |   |   | 27% |    |
| Total manufacturing cost |    |                      | 96,675,330   |         |      |         | 73,008,280 |    |    |    | 23,667,050 |   |   |   | 32% |    |
| Distribution cost        |    |                      | 10,544,423   |         |      |         | 8,934,486  |    |    |    | 1,609,937 |   |   |   | 18% |    |
| Total cost               |    | $                              | 107,219,753  |         |      |         | 81,942,766 |    |    | $ | 25,276,987 |   |   |   | 31% |    |

|                           |   | Nine Months EndedSeptember 30, |         |         | Increase/ |   |       | Increase/  |
|--------------------------------|--------|--------------------------------|--------------|--------------|-----------|--------|------------|------------|
|                           |   | 2010                           |    |    | 2009      |   |       | (Decrease) |   |   | (Decrease) |
| Promotional materials and fees |   | $                              | 17,884,830   |         |      |   | 17,153,211 |       |   | $ | 731,619 |   |   |   | 4% |   |
| Payroll                        |   |                           | 6,152,591    |         |      |   | 4,066,574  |       |   |   | 2,086,017 |   |   |   | 51 |   |
| Staff welfare and insurance    |   |                           | 409,711      |         |      |   | 34,772     |       |   |   | 374,939 |   |   |   | 1078 |   |
| Shipping                       |   |                           | 4,045,843    |         |      |   | 3,127,419  |       |   |   | 918,424 |   |   |   | 29 |   |
| Trips and traveling            |   |                           | 2,339,646    |         |      |   | 1,790,547  |       |   |   | 549,099 |   |   |   | 31 |   |
| Office supplies                |   |                           | 400,383      |         |      |   | 466,440    |       |   |   | (66,057) |   |   |   | (14) |   |
| Miscellaneous                  |   |                           | 180,132      |         |      |   | 214,414    |       |   |   | (34,282) |   |   |   | (16) |   |
| TOTAL                          |   | $                              | 31,413,136   |         |      |   | 26,853,377 |       |   | $ | 4,559,759 |   |   |   | 17% |   |

----

|   | ● | Promotional materials and fees increased $731,619, or 4% in the nine months ended September 30, 2010 as compared to the same period of 2009. The increase percentage in the promotional materials and fees was lower than the sales increase percentage for those comparative periods mainly due to the change of our promotional activity for promoting our products. The Company reduced its promotional activities during the quarter ended September 30, 2010 but increased the coverage and frequency of TV and outdoor advertising to support the continuous growth of its revenue; |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | Payroll expenses and staff welfare and insurance expenses increased significantly during the nine months ended September 30, 2010 as compared to the same period of 2009. This was primarily due to the increase of the average salaries and bonuses for our sales people as a result of our business expanding in the rural market as well as the increase in sales volume. In addition, the increased market need for salespeople and the China’s increased labor costs also contributed to the increase of payroll expenses and staff welfare and insurance expenses;            |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | Shipping expenses increased $918,424, or 29% during the nine months ended September 30, 2010 as compared to the same period of 2009. This was primarily due to the increase in sales volume and the increase in logistics costs; and                                                                                                                                                                                                                                                                                                                                                      |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   | ● | Trips and traveling expenses increased $549,099, or 31% during the nine months ended September 30, 2010 as compared to the same period of 2009. This was primarily due to the increase in promotional activities of salespeople.                                                                                                                                                                                                                                                                                                                                                          |

----

|                          |    | Nine Months EndedSeptember 30, |    |         | Increase/ |         |       | Increase/    |         |
|-------------------------------|--------------|--------------------------------|--------------|--------------|-----------|--------------|------------|--------------|--------------|
|                     |    | 2010                           |    |    | 2009      |    |       | (Decrease)   |         |   | (Decrease) |   |
| Payroll                       |    | $                              | 3,041,468    |         |      |         | 2,128,613  |    |    | $ | 912,855 |   |   |    | 43% |   |
| Staff welfare and insurance   |    |                      | 1,540,075    |         |      |         | 1,004,220  |    |    |    | 535,855 |   |   |    | 53 |   |
| Professional fees             |    |                      | 2,675,680    |         |      |         | 2,614,116  |    |    |    | 61,564 |   |   |    | 2 |   |
| Directors’ remuneration |    |                      | 642,499      |         |      |         | 695,230    |    |    |    | (52,731) |   |   |    | (8) |   |
| Stock based compensation      |    |                      | 2,311,921    |         |      |         | 2,135,435  |    |    |    | 176,486 |   |   |    | 8 |   |
| Trip and traveling            |    |                      | 526,539      |         |      |         | 728,641    |    |    |    | (202,102) |   |   |    | (28) |   |
| Maintenance and repair        |    |                      | 374,411      |         |      |         | 798,267    |    |    |    | (423,856) |   |   |    | (53) |   |
| Office supplies               |    |                      | 697,803      |         |      |         | 502,910    |    |    |    | 194,893 |   |   |    | 39 |   |
| Vehicles and utilities        |    |                      | 822,940      |         |      |         | 420,341    |    |    |    | 402,599 |   |   |    | 96 |   |
| Conference fee                |    |                      | 264,590      |         |      |         | 261,427    |    |    |    | 3,163 |   |   |    | 1 |   |
| Miscellaneous                 |    |                      | 4,015,738    |         |      |         | 2,858,496  |    |    |    | 1,157,242 |   |   |    | 40 |   |
| TOTAL                         |    | $                              | 16,913,664   |         |      |         | 14,147,696 |    |    | $ | 2,765,968 |   |   |    | 20% |   |

|   | ● | Payroll expenses and staff welfare and insurance expenses increased significantly during the nine months ended September 30, 2010 as compared to the same period of 2009. This was primarily due to the increase of the average salaries and bonuses for our general management as a result of the increase in China’s labor costs and our expanding business coverage. |
|--------|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● | Maintenance and repair fees decreased by $423,856, or 53%, as compared to the nine months ended September 30, 2009. We incurred costs for upgrading our equipment and technologies during the nine months ended September 30, 2009 to comply with more stringent GMP manufacturing standards as well as to improve production efficiency. Since we finished such upgrading work in the first half year of 2010, the maintenance and repair fees decreased; |
|--------|---------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | Trip and traveling expenses decreased by $202,102 or 28%, as compared to the nine months ended September 30, 2009.                                                                                                                                                                                                                                                                                                                                         |

----

|                        | Nine Months EndedSeptember 30, |   |
|-----------------------------|--------------------------------|--------|
|                        | 2010                           |   |   | 2009 |   |
| Cash provided by (used in): |                           |   |   |   |   |
| Operating activities        |                           |   | 7,334,533 |   |   |   | 38,559,660 |   |
| Investing activities        |                           |   | (5,407,949) |   |   |   | 3,592,790 |   |
| Financing activities        |                           |   | (3,848,082) |   |   |   | 1,681,510 |   |

|   | ● | Cash outflow from accounts and notes receivable amounted to $22,636,890 primarily affected by the increase of our sales revenue during the nine months ended September 30, 2010;                                                                                                                                                                                                                                                           |
|--------|---------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | Cash outflows from inventories amounted to $8,007,819 mainly due to the increased purchases of raw materials and finished goods for planned inventory build-up for the peak sales season;                                                                                                                                                                                                                                             |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | Cash inflow from advances to suppliers and prepaid expenses amounted to $5,732,837 primarily attributed to the decrease in advanced payments in purchasing certain raw materials at the end of 2009. These advanced payments were expected to offset for a potential increase of raw materials’ future purchase prices and most of them were settled with inventories by our suppliers during the first half  of 2010; and |
|   |    |                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   | ● | Cash inflows from accounts payable amounted to $4,077,922 primarily attributed to the increased purchases of raw materials for planned inventory build-up.                                                                                                                                                                                                                                                                                 |

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|                                       |   | Payments due by period |        |
|--------------------------------------------|--------|------------------------|-------------|
|                                       |   | Total                  |        |   | Less than 1year |   |   | 1-3 years |   |   | 3-5 years |   |   | More than 5years |   |
| Purchase obligations                       |   |                   | 34,914      |   |   |   | 34,914 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Capital expenditure  commitments |   |                   | 15,097,577  |   |   |   | 6,339,870 |   |   |   | 8,757,707 |   |   |   |   | - |   |   | - |   |
| Advertising commitments                    |   |                   | 13,354,089  |   |   |   | 13,354,089 |   |   |   | - |   |   |   |   | - |   |   | - |   |
| R&D commitments                        |   |                   | 4,711,941   |   |   |   | 3,816,165 |   |   |   | 895,776 |   |   |   |   | - |   |   | - |   |
| Long-term loan                             |   |                   | 758,834     |   |   |   | 61,221 |   |   |   | 127,123 |   |   |   | 133,636 |   |   |   | 436,854 |   |
| Convertible Notes                          |   |                   | 142,552,083 |   |   |   | 5,750,000 |   |   |   | 11,500,000 |   |   |   | 11,500,000 |   |   |   | 113,802,083 |   |
| Total                                      |   |                   | 176,509,438 |   |   |   | 29,356,259 |   |   |   | 21,280,606 |   |   |   | 11,633,636 |   |   |   | 114,238,937 |   |

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| Exhibit No. |   | Description                                                                                                                                                              |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1        |   | Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a – 14(a) of the Securities Exchange Act, as amended.                    |
| 31.2        |   | Certification of Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a – 14(a) of the Securities Exchange Act, as amended.                    |
| 32.1        |   | Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to 18 U.S.C. 1350, as adopted. |

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| Exhibit No. |   | Description                                                                                                                                                              |
|-------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1        |   | Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a – 14(a) of the Securities Exchange Act, as amended.                    |
| 31.2        |   | Certification of Chief Financial Officer (Principal Financial Officer) pursuant to Rule 13a – 14(a) of the Securities Exchange Act, as amended.                    |
| 32.1        |   | Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) pursuant to 18 U.S.C. 1350, as adopted. |

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