UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 8-K

                                 Current Report
     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934


       Date of Report (Date of earliest event reported): January 12, 2005



                           DRAGON PHARMACEUTICAL INC.
             (Exact name of registrant as specified in its charter)


           Florida                          0-27937              65-0142474
           -------                          -------              ----------
(State or Other Jurisdiction of    (Commission File Number)     (IRS Employer
         Incorporation)                                      Identification No.)

            1055 Hastings Street, Suite 1900
              Vancouver, British Columbia                      V6E 2E9
              ----------------------------                     -------
        (Address of Principal Executive Offices)               (Zip Code)


                                 (604) 669-8817
                                 --------------
              (Registrant's telephone number, including area code)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[]   Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

[]   Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[]   Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

[]   Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))


<PAGE>


Section 2 - Financial Information

Item 2.01  Completion of Acquisition or Disposition of Assets

     Dragon  Pharmaceutical Inc. is filing the financial  statements of Oriental
Wave  Holding  Limited  for the year ended  December  31,  2004,  and  pro-forma
financial  statements related thereto,  in connection with the completion of the
acquisition of Oriental Wave Holding Limited on January 12, 2005.

Section 9 - Financial Statements and Exhibits

Item 9.01  Financial Statements and Exhibits

     a.   Financial Statements for the year ended December 31, 2004 for Oriental
          Wave Holding Limited and Subsidiary.

     b.   Pro-forma  financial  information for Dragon  Pharmaceutical  Inc. and
          Oriental Wave Holding Limited.


<PAGE>


                                    SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.


                                           DRAGON PHARMACEUTICAL INC.,
                                           a Florida Corporation



Dated:  September 27, 2005                 /s/ Maggie Deng
                                           -------------------------------------
                                           Maggie Deng
                                           Chief Operating Officer



<PAGE>




                          ORIENTAL WAVE HOLDING LIMITED
                                 AND SUBSIDIARY
                       CONSOLIDATED FINANCIAL STATEMENTS
                   AS OF DECEMBER 31, 2004 (RESTATED) AND 2003



                                    CONTENTS


PAGE      1    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTI

PAGE      2    CONSOLIDATED  BALANCE  SHEETS AS OF DECEMBER 31, 2004  (RESTATED)
               AND 2003

PAGE      3    CONSOLIDATED  STATEMENTS OF OPERATIONS AND  COMPREHENSIVE  INCOME
               FOR THE YEARS ENDED DECEMBER 31, 2004 (RESTATED) AND 2003

PAGE      4    CONSOLIDATED  STATEMENTS  OF  STOCKHOLDERS'  EQUITY FOR THE YEARS
               ENDED DECEMBER 31, 2004 (RESTATED) AND 2003

PAGE      5    CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS  FOR  THE  YEARS  ENDED
               DECEMBER 31, 2004 (RESTATED) AND 2003

PAGES  6 - 19  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)




<PAGE>




             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors of:
  Oriental Wave Holding Limited and Subsidiary

We have audited the  accompanying  consolidated  balance sheets of Oriental Wave
Holding Limited and subsidiary as of December 31, 2004 and 2003, and the related
statements of operations  and  comprehensive  income,  changes in  stockholders'
equity and cash flows for the years then ended.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly in all material respects, the financial position of Oriental Wave Holding
Limited and  subsidiary  as of December 31, 2004 and 2003 and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

As  discussed  in  Note 2,  the  Company  restated  its  consolidated  financial
statements for the year ended December 31, 2004.


WEBB & COMPANY, P.A.

Boynton Beach, Florida
March 14, 2005, except for Note 2, to
which the date is September 16, 2005


                                       1
<PAGE>


                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>


                                                                     ASSETS                       RESTATED
                                                                     ------
                                                                                                  (NOTE 2)
                                                                               Note                 2004                    2003
                                                                             ----------       ------------------     ---------------
CURRENT ASSETS
  Cash and cash equivalents                                                                $           910,425     $        515,791
  Accounts receivable, net of allowances                                         3                   6,675,298            4,267,353
  Inventories, net                                                               4                  16,623,906            7,488,085
  Value added tax receivable                                                                            162,443                   -
  Prepaid expenses                                                                                     911,228              119,070
                                                                                              ------------------      --------------
      Total Current Assets                                                                          25,283,300           12,390,299
                                                                                              ------------------      --------------

 PROPERTY AND EQUIPMENT, NET                                                     5                  62,396,316           37,996,606

 OTHER ASSETS
  Intangible assets, net                                                         7                     432,769              493,155
  Other receivables                                                                                  2,213,842              890,659
  Deposits                                                                                                -               1,355,793
  Investments -cost                                                                                     12,077                    -
                                                                                              ------------------      --------------
      Total Other Assets                                                                             2,658,688            2,739,607
                                                                                              ------------------      --------------
TOTAL ASSETS                                                                               $        90,338,304     $     53,126,512
------------                                                                                  ==================      ==============


                       LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                         $         3,047,485     $      7,658,652
  Accrued retirement benefits                                                    8                     114,432              565,618
  Other payables and accrued liabilities                                         9                  17,705,163           13,295,691
  Notes payable - short-term                                                    10                  12,884,057              806,763
  Due to related companies                                                      12                   4,660,984            5,509,135
                                                                                              ------------------      --------------
      Total Current Liabilities                                                                     38,412,121           27,835,859
                                                                                              ------------------      --------------
LONG-TERM LIABILITIES
  Long term accounts payable                                                    11                  21,873,147                    -
  Long term retirement benefits                                                  8                     870,321            1,837,182
  Notes payable - long-term                                                     10                   6,316,426            8,454,106
  Due to related companies                                                      12                   1,328,502                    -
                                                                                              ------------------      --------------
      Total Long-Term Liabilities                                                                   30,388,396           10,291,288
                                                                                              ------------------      --------------
TOTAL LIABILITIES                                                                                   68,800,517           38,127,147
                                                                                              ------------------      --------------

COMMITMENTS AND CONTINGENCIES                                                                             -                      -

STOCKHOLDERS' EQUITY
  $1.00 par value, 50,000 shares authorized, 50,000 shares issued
   and outstanding                                                                                      50,000               50,000
  Additional paid-in capital                                                                        13,977,504            7,835,865
  Retained earnings
    Unappropriated                                                                                        -               6,054,864
    Appropriated                                                                                     7,562,432            1,286,784
  Due from stockholder                                                                                 (52,149)            (228,148)
                                                                                              ------------------      --------------
       Total Stockholders' Equity                                                                   21,537,787           14,999,365
                                                                                              ------------------      --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $        90,338,304     $     53,126,512
------------------------------------------                                                    ==================      ==============

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                        2
<PAGE>


                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>

                                                                                          RESTATED (NOTE 2)
                                                                         Note                     2004                        2003
                                                                       ----------       -------------------      -------------------

NET SALES                                                                 13         $           29,023,130    $         26,086,092

COST OF SALES                                                                                    16,140,305              14,053,421
                                                                                        --------------------      ------------------
GROSS PROFIT                                                                                     12,882,825              12,032,671
                                                                                        --------------------      ------------------
PERATING EXPENSES
  Selling expense                                                                                 3,666,839               2,674,884
  General and administrative expenses                                                             1,911,308               1,481,489
  Depreciation                                                                                      198,154                 283,617
  Amortization of land use rights                                                                    80,295                  20,306
                                                                                        --------------------      ------------------
          Total Operating Expenses                                                                 5,856,596              4,460,296
                                                                                        --------------------      ------------------

INCOME FROM OPERATIONS                                                                            7,026,229               7,572,375

OTHER INCOME (EXPENSE)
  Interest expense                                                                                (216,634)                 (32,404)
  Other income                                                                                       61,881                  63,675
  Other expense                                                                                    (57,230)                 (19,694)
                                                                                        --------------------      ------------------
         Total Other Income (expense)                                                             (211,983)                  11,577
                                                                                        --------------------      ------------------
INCOME FROM OPERATIONS BEFORE TAXES                                                               6,814,246               7,583,952

INCOME TAX EXPENSE                                                       1(M)                       451,823                    -
                                                                                        --------------------      ------------------
NET INCOME                                                                                        6,362,423               7,583,952

OTHER COMPREHENSIVE INCOME
  Foreign currency translation loss                                                                       -                    -
                                                                                        --------------------      ------------------
COMPREHENSIVE INCOME                                                                 $            6,362,423    $          7,583,952
                                                                                        ====================      ==================
Net income per share - basic and diluted                                             $               127.25    $             151.68
                                                                                        ====================      ==================
Weighted average number of shares outstanding during the period -
  basic and diluted                                                                                  50,000                  50,000
                                                                                        ====================      ==================

The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                       3
<PAGE>


                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>    <C>   <C>


                                                                        RESTATED       RESTATED
                                                                         NOTE 2)       (NOTE 2)
                                                         Additional  Unappropriated  Appropriated                       RESTATED
                                         Common Stock      Paid-In      Retained       Retained       Due From          (NOTE 2)
                                      Shares     Amount    Capital      Earnings       Earnings      Stockholder        Total
                                     -------   ---------  ----------  ----------   -------------  --------------    ---------------
Balance, December 31, 2002            50,000   $ 50,000   $1,157,730   $(242,324)   $         -    $(1,033,418)     $   (68,012)
Capital contribution from
stockholders                               -          -    6,678,135            -             -              -        6,678,135

Notes receivable - stockholders            -          -            -            -             -        805,270          805,270

Net income for the year ended
 December 31, 2003                         -          -            -    7,583,972             -              -        7,583,972

Transfer to retained earnings for
 appropriated statutory and
 staff welfare reserves                    -           -            -  (1,286,784)    1,286,784              -                -
                                      -------   --------   ----------  -----------  -----------    -----------    -------------
Balance, December 31, 2003             50,000     50,000    7,835,865    6,054,864    1,286,784      (228,148)       14,999,365

Registered capital appropriation            -          -    6,141,639   (6,141,639)           -              -                -

Notes receivable - stockholders             -          -            -            -            -        175,999          175,999

Net income for the year ended
 December 31, 2004                          -          -            -    6,362,423            -              -        6,362,423

Transfer to retained earnings for
 appropriated statutory and staff
 welfare reserves                           -          -            -   (6,275,648)   6,275,648              -                -
                                       -------   --------  -----------  -----------  ----------   ------------    --------------
BALANCE, DECEMBER 31, 2004              50,000   $ 50,000  $13,977,504  $        -   $7,562,432   $   (52,149)    $   21,537,787
--------------------------             =======   ========  ===========  ===========  ==========   ============    ==============


The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                        4


<PAGE>


                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
<TABLE>
<CAPTION>
<S>     <C>                                                                                             <C>                 <C>
                                                                                                     RESTATED
                                                                                                     (NOTE 2)
                                                                                                       2004                2003
                                                                                                -----------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                                      $       6,362,423    $    7,583,952
   Adjustments to reconcile net income to cash provided by operating activities:
    Depreciation and amortization                                                                       2,673,367           540,046
    Allowance for doubtful accounts                                                                       124,574                 -
    Provision for excess and obsolete inventories                                                         613,378           213,244
   Changes in operating assets and liabilities:
    (Increase) decrease in:
     Accounts receivable                                                                               (2,532,519)       (1,938,499)
     Inventories                                                                                       (9,749,199)       (2,815,076)
     Value added tax receivable                                                                          (162,443)                -
     Prepaid expenses                                                                                    (792,158)           61,942
     Other assets                                                                                      (1,323,183)         (147,520)
     Deposits                                                                                           1,355,793        (1,355,793)
    Increase (decrease) in:
     Accounts payable                                                                                  (4,611,167)        1,773,132
     Other payables and accrued liabilities                                                            25,999,810        12,739,601
     Due to related companies                                                                             480,351          (873,205)
                                                                                                -------------------    -------------
         Net Cash Provided By Operating Activities                                                     18,439,027        15,781,844
                                                                                                -------------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                                                  (28,147,929)      (32,709,127)
  Purchase of investments                                                                                 (12,077)                -
                                                                                                -------------------    -------------
          Net Cash Used In Investing Activities                                                       (28,160,006)      (32,709,127)
                                                                                                -------------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                                                        -         6,678,135
  Proceeds from notes payable                                                                           9,939,614         9,260,869
  Due from stockholder                                                                                    175,999           805,270
                                                                                                -------------------    -------------
         Net Cash Provided By Financing Activities                                                     10,115,613        16,744,274
                                                                                                -------------------    -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                     394,634           (183,009)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                           515,791            698,800
                                                                                                -------------------    -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                                        $        910,425       $    515,791
                                                                                                ===================    =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for interest expense                                                  $        216,634       $     31,252
                                                                                                ===================    =============

Cash paid during the year for income taxes                                                      $        285,328       $          -
                                                                                                ===================    =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During 2004,  the Company's  subsidiary  appropriated  $6,141,639  from retained
earnings to registered  capital and reduced the Land Use Rights by $1,135,238 to
reflect the extinguishment of Accrued Retirement Benefits (Note 6).


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

</TABLE>

                                       5

<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

     (A) Organization and Basis of Presentation

     Oriental Wave Holding  Limited  ("Oriental  Wave") was  incorporated in the
     British  Virgin Islands on January 7, 2003.  Shanxi Weiqida  Pharmaceutical
     Company Limited ("Shanxi  Weiqida"),  a People's  Republic of China limited
     liability  company was incorporated on January 22, 2002.  Shanxi Weiqida is
     principally engaged in research and development, manufacturing, and selling
     of pharmaceutical products in the People's Republic of China ("PRC").

     During  2003,  Shanxi  Weiqida's   shareholders  exchanged  100%  of  their
     ownership  of Shanxi  Weiqida for 50,000  shares of  Oriental  Wave under a
     reorganization   plan.   The   transfer  has  been   accounted   for  as  a
     reorganization  of entities  under  common  control as the  companies  were
     beneficially  owned by identical  shareholders and share common management.
     The financial  statements have been prepared as if the  reorganization  had
     occurred  retroactively.  Oriental  Wave and Shanxi  Weiqida are  hereafter
     referred to as (the "Company").

     The accompanying 2004 and 2003 consolidated  financial  statements  include
     the accounts of Oriental Wave and its 100% owned subsidiary Shanxi Weiqida.
     All significant intercompany balances and transactions have been eliminated
     in consolidation.

     (B) Use of Estimates

     In preparing  financial  statements in conformity  with generally  accepted
     accounting  principles,  management  is  required  to  make  estimates  and
     assumptions  that affect the reported amounts of assets and liabilities and
     the  disclosure of  contingent  assets and  liabilities  at the date of the
     financial  statements and revenues and expenses during the reported period.
     Actual results could differ from those estimates.

     (C) Cash Equivalents

     For purposes of the cash flow statements,  the Company considers all highly
     liquid investments with original  maturities of three months or less at the
     time of purchase to be cash equivalents.

     (D) Accounts Receivable

     The Company  extends  unsecured  credit to its  customers  in the  ordinary
     course of business but mitigates the associated risks by performing  credit
     checks and actively  pursuing past due accounts.  An allowance for doubtful
     accounts is established  and recorded based on  management's  assessment of
     the credit history with the customer and current  relationships  with them.

                                       6
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


     (E) Investments

     During the twelve  months  ended  December  31,  2004,  the Company  made a
     strategic  investment  in a private  company  of  $12,077.  The  investment
     represents  less than 1% of the total  equity  outstanding  of the  private
     company outstanding as of December 31, 2004. The private company investment
     is carried at cost and written down to fair market  value when  indications
     exist that this investment has other than temporarily declined in value. As
     of December 31, 2004, no impairment in the value of the investment has been
     recorded.

     (F) Inventories

     Inventories  are  stated at the lower of cost or market  value,  cost being
     determined on a first-in,  first-out method. The Company provides inventory
     allowances based on excess and obsolete inventories  determined principally
     by customer demand and product expiration dates.

     (G) Property and Equipment

     Property and equipment are stated at cost, less  accumulated  depreciation.
     Expenditures for additions,  major renewals and betterments are capitalized
     and  expenditures  for  maintenance  and  repairs are charged to expense as
     incurred.

     Depreciation is provided on a straight-line  basis, less estimated residual
     value over the assets  estimated  useful lives.  The estimated useful lives
     are as follows:

               Buildings                                 50 Years
               Plant and machinery                       10 Years
               Motor vehicles                            8 Years
               Furniture, fixtures and equipment         5 Years

     Land use rights are stated at cost, less accumulated amortization,  and are
     further reduced by the amount of the Accrued  Retirement Benefit obligation
     extinguished  through the Company's rehiring of employees (Note6). The land
     use rights are amortized  over the term of the relevant  rights of 50 years
     from date of acquisition.

     (H) Fair Value of Financial Instruments

     Depreciable  assets are reviewed for impairment  whenever events or changes
     in  circumstances  indicate that the carrying amount may not be recoverable
     based on projected  undiscounted  cash flows  associated with the assets. A
     loss is  recognized  for the  difference  between  the fair  value  and the
     carrying amount of the assets.  Fair value is determined  based upon market
     quote, if available, or is based on valuation techniques.

                                       7
<PAGE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     The carrying  amount of the Company's  cash,  receivables  and payables and
     short-term  bank  loan  approximates  their  fair  value  due to the  short
     maturity of those instruments.

     (I) Intangible Assets

     Under the Statement of Accounting Standards ("SFAS") No. 142, "Goodwill and
     Other  Intangible  Assets",  all  goodwill  and certain  intangible  assets
     determined  to have  indefinite  lives  will not be  amortized  but will be
     tested for  impairment  at least  annually.  Intangible  assets  other than
     goodwill will be amortized over their useful lives of 10 years and reviewed
     for impairment in accordance with SFAS No. 144,  "Accounting for Impairment
     or Disposal of Long-Lived Assets".

     (J) Revenue Recognition

     The Company recognizes revenue from the sale of pharmaceutical  products at
     the time when  title to the  products  transfers,  the  amount is fixed and
     determinable,  evidence of an agreement exists,  and the customer bears the
     risk of loss, net of estimated  provisions  for returns,  rebates and sales
     allowances.

     (K) Advertising Costs

     Advertising  costs are expensed as incurred.  Advertising  expense  totaled
     $63,692  and  $26,145  for the  years  ended  December  31,  2004 and 2003,
     respectively.

     (L) Research and Development

     Research and development  costs related to both present and future products
     are expensed as incurred.  Total  expenditures  on research and development
     charged to selling, general and administrative expenses for the years ended
     December 31, 2004 and 2003 were $193,188 and $19,555, respectively.

     (M) Income Taxes

     The Company  accounts  for income  taxes under the  Statement  of Financial
     Accounting  Standards No. 109,  "Accounting  for Income Taxes"  ("Statement
     109").  Under  Statement  109,  deferred  tax  assets and  liabilities  are
     recognized  for the future tax  consequences  attributable  to  differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
     liabilities  are  measured  using  enacted  tax rates  expected to apply to
     taxable  income  in the  years in which  those  temporary  differences  are
     expected to be recovered  or settled.  Under  Statement  109, the effect on
     deferred tax assets and  liabilities of a change in tax rates is recognized
     in income in the period that includes the enactment date. The Company

                                       8
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     is organized  in the British  Virgin  Islands and the People's  Republic of
     China and no tax  benefit is  expected  from the tax credits in the future.
     The Company  located its factories in a special  economic  region in China.
     This economic  region  allows  foreign  enterprises  a two-year  income tax
     exemption  from central  government  tax  beginning in the first year after
     they become  profitable  and a 50% income tax  reduction  for the following
     three years. The Company was approved as a wholly owned foreign  enterprise
     in October 2002. Pursuant to a new regulation, "No. 142 enacted during 2004
     by  the  Shanxi  Province   National  Taxation   Administration",   foreign
     investment  enterprises  established  after  January  31,  2002 will not be
     exempted from the Provincial  income tax, which is 3% of the taxable income
     (derived under Chinese  GAAP).  The Company will continue to be exempt from
     central government tax as a foreign enterprise. The Company was established
     as a wholly foreign owned  enterprise on September 30, 2002. The income tax
     expense for the years ended December 31, 2004 and 2003 was $451,823 and $0,
     respectively.

     (N) Foreign Currency Translation

     The  functional  currency of the Company is the Chinese  Renminbi  ("RMB").
     Transactions  denominated in currencies  other than RMB are translated into
     United  States  dollars  using period end  exchange  rates as to assets and
     liabilities and average exchange rates as to revenues and expenses. Capital
     accounts are translated at their historical exchange rates when the capital
     transaction occurred.  Net gains and losses resulting from foreign exchange
     translations are included in the statements of operations and stockholder's
     equity as other comprehensive gain (loss).

     (O) Comprehensive Income

     The foreign currency translation gain or loss resulting from translation of
     the  financial  statements  expressed  in RMB to  United  States  Dollar is
     reported as other comprehensive  income in the statements of operations and
     stockholders' equity.

     (P) Segments

     The Company  operates in two  reportable  segments,  Chemical  Division and
     Pharma Division.

     (Q) Reclassifications

     Certain  2003  balances  have been  reclassified  to conform  with the 2004
     presentation.

                                       9
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     (R) Recent Accounting Pronouncements

     Statement of Financial  Accounting  Standards ("SFAS") No. 151,  "Inventory
     Costs - an amendment of ARB No. 43, Chapter 4 SFAS No. 152, "Accounting for
     Real Estate Time-Sharing Transactions - an amendment of FASB Statements No.
     66 and 67," SFAS No. 153,  "Exchanges of Non-monetary Assets - an amendment
     of APB  Opinion  No.  29," and SFAS No. 123  (revised  2004),  "Share-Based
     Payment,"  were  recently  issued.  SFAS No. 151, 152, 153 and 123 (revised
     2004) have no current  applicability  to the  Company and have no effect on
     the financial statements.

NOTE 2 RESTATEMENT

     The Company had originally determined under SFAS 141 that it had identified
     and  measured  the fair value of the assets  acquired  and the  liabilities
     assumed in the acquisition of the Land Use Rights.  During  September 2005,
     the Company has determined that $1,135,238 of the extinguishment of Accrued
     Retirement  Benefit  should have been  accounted  for as a reduction of the
     Land Use Rights acquired rather than as a gain as previously recorded. As a
     result of the change in asset value,  the Company has reduced  depreciation
     expense by $11,352.  The Company has restated the  financial  statements to
     account  for this  non-cash  adjustment  in  accordance  with  SFAS 141 and
     changed  its policy to record  the  extinguishment  of  Accrued  Retirement
     Benefits as a reduction of the carrying value of the Land Use Rights.

     This  reduction  in Land Use Rights will also result in a reduction  of the
     depreciation expense in subsequent periods. The restatement did not have an
     effect on the cash flow or liabilities  of the Company.  The changes to the
     financial statements are as follows:

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>


                                                                      As of December 31, 2004
                                            ------------------------------------------------------------------
                                                          Previously
                                                          Reported           Adjustment           Restated
                                            ---------------------------- -------------------- ----------------

          Current assets                                   25,283,300                              25,283,300
          Property and equipment                           63,520,202         (1,123,886)          62,396,316
          Other assets                                      2,658,688                               2,658,688
                                            --------------------------                         ---------------
          Total assets                                     91,462,190                              90,338,304
                                            ==========================                         ===============
          Liabilities                                      68,800,517                              68,800,517
                                            --------------------------                         ---------------
          Share capital                                    14,027,504                              14,027,504
          Retained earnings                                 8,686,318         (1,123,886)           7,562,432
          Due from shareholder                               (52,149)                                (52,149)
                                            --------------------------                         ---------------
          Total equity                                     22,661,673                              21,537,787
                                            --------------------------                         ---------------
          Total liabilities and equity                     91,462,190                              90,338,304
                                            ==========================                         ===============
</TABLE>
                                       10
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>

                                                                  Year ended December 31, 2004
                                            -----------------------------------------------------------------
                                                        Previously
                                                         Reported          Adjustment            Restated
                                            -------------------------- ------------------ -------------------

        Net Sales                                        $29,023,130                             $29,023,130
        Cost of sales                                     16,140,305                              16,140,305
                                            --------------------------                         ---------------
        Gross profit                                      12,882,825                              12,882,825
        Operating expenses                                 5,867,948            (11,352)           5,856,596
                                            --------------------------                         ---------------
        Income from operations                             7,014,877                               7,026,229
        Other income (expenses)                              923,255         (1,135,238)           (211,983)
                                            --------------------------                         ---------------
        Income before taxes                                7,938,132                               6,814,246
        Income tax expense                                   451,823                                 451,823
                                            --------------------------                         ---------------
        Net income                                       $ 7,486,309                              $6,362,423
                                            =========================                          ===============

        Net income per share                               $  149.73                               $  127.25
                                            =========================                          ===============

</TABLE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 3 ACCOUNTS RECEIVABLE

     Accounts  receivable  at  December  31,  2004  and  2003  consisted  of the
     following:

                                                   2004                2003
                                             ----------------   ----------------
     Trade and other receivables             $    6,799,872     $     4,267,353
     Less: allowance for doubtful accounts          124,574                   -
                                             ----------------   ----------------
     Accounts receivable, net                $    6,675,298     $     4,267,353
                                             ================   ================

     For the years ended  December  31, 2004 and 2003,  the Company  recorded an
     allowance for doubtful accounts of $124,574 and nil, respectively.

NOTE 4 INVENTORIES

     Inventories at December 31, 2004 and 2003 consisted of the following:

                                                  2004                   2003
                                             ----------------    ---------------
     Raw materials                           $    4,287,604      $    2,729,091
     Work-in-progress                            10,994,088           1,423,182
     Finished goods                               2,302,073           3,682,293
                                             ----------------    ---------------
                                                 17,583,765           7,834,566
     Less: provision for obsolescence and
        impairment                                  959,859              46,481
                                             ----------------    ---------------
                                             $   16,623,906      $    7,488,085
                                             ================    ===============
                                       11
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     For the years  ended  December  31, 2004 and 2003,  the Company  recorded a
     provision for obsolete inventories of $613,378 and $346,481, respectively.

NOTE 5 PROPERTY AND EQUIPMENT

     The  following is a summary of property and  equipment at December 31, 2004
     and 2003:

                                             RESTATED
                                             (NOTE 2)
                                               2004                  2003
                                        ------------------     -----------------
       Plant and machinery              $     41,154,014       $     22,997,197
       Land and Buildings                     18,552,438              5,161,270
       Motor vehicles                            611,261                355,616
       Furniture and office equipment          2,499,188                729,165
       Construction in progress                2,691,179              9,252,141
                                        ------------------     -----------------
                                              65,508,080             38,495,389
       Less: accumulated depreciation          3,111,764                498,783
                                        ------------------     -----------------
       Property and equipment, net      $     62,396,316       $     37,996,606
                                        ==================     =================

     Depreciation  expense  for the years ended  December  31, 2004 and 2003 was
     $2,612,981 and $479,659 respectively.

NOTE 6 ACQUISITIONS

     During July 2003, the Company acquired land use rights and buildings from a
     government  liquidator in exchange for assuming certain future  employment,
     healthcare  and  land  acquisition  costs  of the  factory  and its  former
     employees.  The agreement requires the Company to pay certain minimum wages
     and health care costs  until the date of their  employment,  retirement  or
     death,  whichever occurs first. The total amount of the liabilities assumed
     on the closing date was $8,897,685.  The Company has calculated the related
     asset  value by  computing  the net  present  value of the future  expected
     payments to the remaining employees assuming an interest rate of 3% and has
     recorded  the land at a net present  value of  $3,332,907  (See Notes 8 and
     14). As of December 31, 2004, the Company had employed 651 former employees
     and 207 former  employees have retired.  Subsequent to the  acquisition the
     Company  rehired a number of the former  employees,  reducing  the expected
     future  payments  required.  The Company has accounted for the reduction of
     the obligation by reducing the amount of Land Use Rights recorded.

                                       12
<PAGE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


     The cost of Land Use Rights is as follows:

                                                       RESTATED
                                                       (NOTE 2)
                                                        2004            2003
                                                    ------------  --------------
     Original cost recorded                         $  3,332,907   $  3,332,907
     Less: reduction of  accrued retirement benefit    1,135,238              -
                                                    ------------- --------------
     Cost of Land Use Rights                        $  2,197,669   $  3,332,907
                                                    ============= ==============

     The  Company  intends  to reduce  the Land Use  Rights  should  the  future
     payments  be further  reduced  due to  additional  former  employees  being
     rehired.

NOTE 7 INTANGIBLE ASSETS

     During May 2002, the Company acquired  licenses from a company related to a
     director.

     Intangible  assets  consist of the  following  as of December  31, 2004 and
     2003:

                                                        2004            2003
                                                    ------------   -------------
     Licenses                                       $   603,865     $  603,865
     Less: accumulated amortization                     171,096        110,710
                                                    ------------   -------------
                                                    $   432,769     $  493,155
                                                    ============   =============

     Amortization  expense  for the years ended  December  31, 2004 and 2003 was
     $60,386, and $60,387, respectively.

                                       13
<PAGE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 8 ACCRUED RETIREMENT BENEFITS

     During July 2003, the Company acquired land use rights and buildings from a
     government liquidator.  The present value of accrued expected land costs is
     recorded at December 31, 2004 and 2003 as follows:
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>
                                                                           2004                   2003
                                                                     -----------------      ------------------
     Total liabilities assumed at closing date                       $   8,897,685          $    8,897,685
     Less:  net present value of  liabilities  not expected
       to be paid                                                        5,564,778               5,564,778
                                                                     -----------------      ------------------
     Present value of expected liabilities                               3,332,907               3,332,907
     Less: amounts paid and liabilities not expected
       to be paid                                                        2,348,154                 930,107
                                                                     -----------------      ------------------
                                                                           984,753               2,402,800
     Less: current portion                                                 114,432                 565,618
                                                                     -----------------      ------------------
                                                                     $     870,321          $    1,837,182
                                                                     =================      ==================
</TABLE>

     Under the terms of the  contract  with the  liquidator,  the  Company  will
     remain  contingently  liable  for  these  liabilities  until  the  date  of
     retirement or re-employment for each employee (See Notes 6 and 14).

NOTE 9 OTHER PAYABLES AND ACCRUED LIABILITIES

     Other  payables  and  accrued  liabilities  at  December  31, 2004 and 2003
     consist of the following:

                                               2004               2003
                                      -----------------    ------------------
     Machinery and equipment payable    $   7,050,243      $    8,510,372
     Accrued expenses                       6,360,198           2,905,155
     Value added tax payables                       -             187,083
     Income taxes payable                     166,495                   -
     Other taxes payable                      121,054               1,429
     Deposits received from customers       4,007,173           1,691,652
                                      -----------------    ------------------
                                        $  17,705,163      $   13,295,691
                                      =================    ==================

                                       14

<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 10  NOTES PAYABLE

     Balance at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>
                                                                                 2004                    2003
                                                                          -----------------      -----------------
     Note  payable  to a  bank,  interest  rate of  6.372%  per           $      420,290         $       420,290
        annum, guaranteed by a third party, due June 2005

     Note  payable  to a  bank,  interest  rate of  6.372%  per
        annum, guaranteed by a third party, due June 2005                        386,473                 386,473

     Note  payable  to a  bank,  interest  rate of  6.138%  per
        annum, guaranteed by a third party, due June 2005                      3,623,188                       -

     Note payable to a bank, interest rate of 6.039% per annum, secured by
        leasehold land and fixed assets, due
        April 2005                                                             8,454,106               8,454,106

     Note payable to a bank,  interest rate of 5.76% per annum,
        guaranteed by a third party, due November 2006                         6,316,426                       -
                                                                         -----------------       ------------------
                                                                              19,200,483               9,260,869
        Less current maturities                                               12,884,057                 806,763
                                                                         -----------------       ------------------
                                                                         $     6,316,426         $     8,454,106
                                                                         =================       ==================
     Maturities are as follows:

                                For the Year Ending December 31,
                                              2005                                               $      12,884,057
                                              2006                                                       6,316,426
                                                                                                 -------------------
                                                                                                 $      19,200,483
                                                                                                 ===================
</TABLE>

NOTE 11 LONG TERM ACCOUNTS PAYABLE

     Long term  accounts  payable  balance  at  December  31,  2004 is the final
     payment of construction  contracts which had been finished through December
     31,  2004.  According  to the  contract  terms,  the final  payments on the
     contracts will be settled as follows:

                  Settlement Arrangement

     Accounts payable due 2006                         $  21,873,147
                                                       =============
                                         15
<PAGE>

                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 12 DUE TO RELATED PARTIES

     Accounts payable - related party balances at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>
                                                                               2004                     2003
                                                                         -----------------       -------------------
     Due to a company owned by a stockholder and director due
        March 2006                                                       $    1,328,502          $              -
     Due to a company owned by a stockholder and director                         -                     5,239,360
     Due to a company owned by a stockholder and director                     4,660,984                   269,775
                                                                         -----------------       -------------------
                                                                              5,989,486                 5,509,135
       Less: current maturities                                               4,660,984                 5,509,135
                                                                         -----------------       -------------------
                                                                         $    1,328,502          $              -
                                                                         =================       ===================
</TABLE>

NOTE 13 SEGMENTS

     The Company  operates  in two  reportable  segments,  Pharma  Division  and
     Chemical Division.  The accounting policies of the segments are the same as
     described in the summary of significant  accounting  policies.  The Company
     evaluates  segment  performance  based  on  income  from  operations.   All
     intercompany  transactions  between  segments  have been  eliminated.  As a
     result,  the  components  of  operating  income for one  segment may not be
     comparable to another segment.  The following is a summary of the Company's
     segment information for the years ended December 31, 2004 and 2003.

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>
                                                          Chemical                Pharma
                                                          Division               Division               Total
                                                     -------------------     -----------------     -----------------
       2004
       Sales                                      $          4,248,906             24,774,224           29,023,130
       Gross profit                                            216,380             12,666,445           12,882,825
       Total assets (RESTATED-NOTE 2)                       66,726,390            23,611,914            90,338,304
       Additions to long-lived assets                       27,295,156               852,773            28,147,929
       Intangible assets                                          -                  432,769               432,769
       Depreciation and                                      2,033,933               639,434              2,673,367
        amortization(RESTATED-NOTE 2)

                                       16
<PAGE>

</TABLE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>

       2003
       Sales                                      $               -       $       26,086,092            26,086,092
       Gross profit                                               -               12,032,671            12,032,671
       Total assets                                         29,553,673            23,572,839            53,126,512
       Additions to long-lived assets                       29,553,673             3,155,454            32,709,127
       Intangible assets                                          -                  493,155               493,155
       Depreciation and amortization                              -                  540,046               540,046

</TABLE>

NOTE 14   COMMITMENTS AND CONTINGENCIES

     (A) Employee Benefits

     The full time  employees of the Company are  entitled to employee  benefits
     including  medical  care,  welfare  subsidies,  unemployment  insurance and
     pension  benefits  through a  Chinese  government  mandated  multi-employer
     defined  contribution  plan.  The  Company is  required to accrue for those
     benefits based on certain percentages of the employees' salaries. The total
     provision  for such  employee  benefits  was  $642,856 and $294,136 for the
     years  ended  December  31,  2004 and 2003,  respectively.  The  Company is
     required to make  contributions to the plans out of the amounts accrued for
     medical and pension benefits. The Chinese government is responsible for the
     medical benefits and the pension liability to be paid to these employees.

     (B) Loan Guarantee

     The Company has issued a  guarantee  to a bank as security  for a loan to a
     third party  vendor.  The total loan  guarantee as of December 31, 2004 was
     $2,596,618.

     The Company has also issued a guarantee to a bank as security for a loan to
     a third party vendor.  The total loan guarantee as of December 31, 2004 was
     $6,036,647.  The vendor  pledged  its  assets  totaling  $8,484,101  to the
     Company for this guarantee.

     (C) Capital Commitments

     According to the Articles of Association of Shanxi  Weiqida,  Oriental Wave
     has to fulfill registered  capital of $19,205,116 (RMB 159,018,360)  within
     five years from December 16, 2003. As of December 31, 2004, the Company has
     fulfilled  $13,977,504 (RMB 115,733,733) of registered capital  requirement
     and has registered  capital  commitments of $5,227,612 (See Notes 15(A) and
     18 (A) & (B)).

                                       17
<PAGE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     (D)  Contingent Employment Benefits

     During July 2003, the Company acquired land and buildings from a government
     liquidator in exchange for assuming certain future  employment,  healthcare
     and land acquisition costs of the factory and its former  employees.  Under
     the terms of the  contract  with the  liquidator,  the Company  will remain
     contingently  liable for these  liabilities  until the date of  retirement,
     re-employment  or death for each  employee.  As of December 31,  2004,  the
     Company has rehired 651 former employees and 207 employees have retired. If
     the Company is unable to provide continued employment to these individuals,
     it will be liable to pay each former employee  approximately  $49 per month
     until his or her date of  retirement or death,  whichever  comes first (See
     Notes 6 & 8).

NOTE 15  STOCKHOLDERS' EQUITY

     (A) Capital Contribution

     On  January 5,  2004,  Shanxi  Weiqida  declared  a  one-time  dividend  of
     $6,141,639 to be used to satisfy its registered  capital  requirement  (See
     Note 14(C)).

     (B) Appropriated Retained Earnings

     Shanxi  Weiqida is  required  to make  appropriations  to  reserves  funds,
     comprising the statutory surplus reserve, statutory public welfare fund and
     discretionary surplus reserve,  based on after-tax net income determined in
     accordance with generally  accepted  accounting  principles of the People's
     Republic of China (the "PRC GAAP").  Appropriation to the statutory surplus
     reserve  should be at least 10% of the after tax net income  determined  in
     accordance  with  the PRC GAAP  until  the  reserve  is equal to 50% of the
     entities'  registered  capital.  Appropriations  to  the  statutory  public
     welfare  fund are at 5% to 10% of the after tax net  income  determined  in
     accordance  with  the  PRC  GAAP.  The  statutory  public  welfare  fund is
     established  for the purpose of  providing  employee  facilities  and other
     collective benefits to the employees and is non-distributable other than in
     liquidation.  Appropriations to the discretionary  surplus reserve are made
     at the discretion of the Board of Directors.

     The Company appropriated  $6,275,648 to the reserves funds based on its net
     income under PRC GAAP.

NOTE 16   RELATED PARTY TRANSACTIONS

     See Notes 7 and 12.

                                       18

<PAGE>
                  ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003


NOTE 17   CONCENTRATIONS AND RISKS

     During  the  years  ended  December  31,  2004  and  2003,  95%  and  100%,
     respectively, of the Company's revenues were derived from companies located
     in China and 100% its assets are located in China.

NOTE 18   SUBSEQUENT EVENTS

     (A) Acquisition

     On June 11, 2004, the Company entered into a share purchase  agreement with
     a pharmaceutical  company.  The transaction will result in the shareholders
     of the Company owning the majority of the issued and outstanding  shares of
     the  new  combined  entity.  The  transaction  will be  accounted  for as a
     purchase by the Company.  On January 12, 2005,  the Company  completed  the
     acquisition  with Dragon  Pharmaceutical,  Inc. The Company's  stockholders
     received  44,502,004 shares or 68.35 % of the outstanding  shares of common
     stock.

     Concurrent with the acquisition agreement, the principal stockholder of the
     Company  agreed to convert  approximately  $2,415,500 of loans payable to a
     related entity into equity of the Company.

     (B) Contribution of Capital

     On January 31, 2005 Oriental Wave paid Shanxi Weiqida  $479,988 towards its
     registered capital requirement under Chinese law.

                                       19

<PAGE>








                         PRO-FORMA FINANCIAL INFORMATION



                                       1
<PAGE>
                    DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                      PRO-FORMA CONSOLIDATED BALANCE SHEET
                             As of December 31, 2004
                            (Expressed in US Dollars)
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>   <C>

                                                    ORIENTAL                                  PRO-FORMA               PRO-FORMA
                                                      WAVE              DRAGON               ADJUSTMENT             CONSOLIDATED
                                                -----------------    --------------       ------------------    --------------------
                  ASSETS
Current
    Cash and short term securities                    $  910,425        $2,161,781                                   $  3,072,206
    Accounts and other receivable                      6,837,741         1,382,019                                      8,219,760
    Inventories                                       16,623,906           585,565                                     17,209,471
Due from director                                                              100                                            100

    Prepaid and deposits                                 911,228           401,727   (a)          (301,306)             1,011,649
                                                -----------------    --------------                             --------------------
          Total Current Assets                        25,283,300         4,531,192                                     29,513,186
                                                -----------------    --------------                             --------------------
Fixed Assets                                          62,396,316           873,036                                     63,269,352

Other Tangible Assets                                  2,225,919                                                        2,225,919

Other Assets

    Patent rights and Hep B Vaccine                                                                                            -
    Intangible and other assets, net                     432,769         2,372,207                                     2,804,976
                                                -----------------    --------------                             --------------------
          Total Other Assets                             432,769         2,372,207                                     2,804,976
                                                -----------------    --------------                             --------------------
Total Assets                                         $90,338,304        $7,776,435                                   $97,813,433
                                                =================    ==============                             ====================

LIABILITIES AND STOCKHOLDERS' EQUITY (DIFFICIENCY)
Current Liabilities
   Accounts payables and accrued liabilities        $ 20,867,080       $ 1,548,144                                   $22,415,224
   Notes payable - short-term                         12,884,058                                                      12,884,058
   Due to related companies                            4,660,984                     (b)        (2,420,000)            2,240,984
                                                -----------------    --------------                             --------------------
          Total Current Liabilities                   38,412,122         1,548,144                                    37,540,266
                                                -----------------    --------------                             --------------------
Long-term Liabilities
    Long-term account payable                         22,743,468                                                      22,743,468
    Notes payable - long-term                          6,316,425                                                       6,316,425
    Due to related companies                           1,328,502                                                       1,328,502
                                                -----------------    --------------                             --------------------
          Total Liabilities                           68,800,517         1,548,144                                    67,928,661
                                                -----------------    --------------                             --------------------
Minority Interest
                                                -----------------    --------------                             --------------------
Stockholders' Equity (Deficiency)
    Share Capital                                         50,000            18,376   (a)            (5,498)               62,878
    Additional paid in capital                        13,977,504        24,176,970   (a)       (18,262,863)           22,311,611
                                                                                     (b)          2,420,000
    Due from a stockholder                              (52,149)                                                         (52,149)
    Accumulated other comprehensive (loss)                               (34,807)    (a)             34,807                    -
    Retained earnings (deficit)                        7,562,432      (17,932,248)   (a)         17,932,248            7,562,432
                                                -----------------    --------------                             --------------------
          Total stockholders' equity                  21,537,787         6,228,291                                    29,884,772
                                                -----------------    --------------                             --------------------
Total liabilities and equity                         $90,338,304        $7,776,435                                   $97,813,433
                                                =================    ==============                             ====================

</TABLE>

                                       2
<PAGE>

                    DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2004
                            (Expressed in US Dollars)

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>
                                                             ORIENTAL                           PRO-FORMA            PRO-FORMA
                                                                                                 ADJUST-             CONSOLI-
                                                               WAVE             DRAGON            MENT                 DATED
                                                          ---------------    -------------   ----------------    ------------------

Sales                                                       $ 29,023,130       $3,705,261                             $ 32,728,391
Cost of Sales                                                 16,140,305        1,546,028                               17,686,333
                                                          ---------------    -------------                       ------------------

Gross Profit                                                  12,882,825        2,159,233                               15,042,058

Operating Expenses
    Selling, general and
     administrative expenses                                   5,578,147        3,354,522                                8,932,669
    Depreciation and amortization of fixed assets                278,449          706,941                                  985,390
                                                          ---------------    -------------                       ------------------

    Total operating expenses                                   5,856,596        4,061,463                                9,918,059
                                                          ---------------    -------------                       ------------------

                                                               7,026,229      (1,902,230)                                5,123,999

    Net write off of land-use right and fixed assets                            (937,777)                                (937,777)
    New market and EPO development expenses                                     (246,080)                                (246,080)
    Provision for doubtful debts                                                                                                 -
    Loan interest expense                                      (216,634)          (4,223)                                (220,857)
                                                          ---------------    -------------                       ------------------

Income (Loss) from Operations                                  6,809,595      (3,090,310)                                3,719,285

Other Income (Expenses)
    Interest Income (expense)                                                      41,106                                   41,106
    Other income                                                  61,881        2,106,486                                2,168,367
    Other expense                                               (57,230)                                                  (57,230)
                                                          ---------------    -------------                       ------------------

Income (Loss) before income taxes and minority interest        6,814,246        (942,718)                                5,871,528
  Minority interest
    Income Tax Expense                                         (451,823)                -                                (451,823)
                                                          ---------------    -------------                       ------------------

Net Income (Loss) for the year                                 6,362,423        (942,718)                                5,419,705
                                                          ===============    =============                       ==================
                                                                                                                               $
Net Income (Loss) per share - basic                             $ 127.25         $ (0.05)                                      0.08
                                                          ===============    =============                       ==================
Weighted average number of common shares
outstanding   - basic                                             50,000       20,551,440                               65,053,444
                                                          ===============    =============                       ==================
</TABLE>

                                       3
<PAGE>

                    DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                      PRO-FORMA CONSOLIDATED BALANCE SHEET
                             As of December 31, 2003
                            (Expressed in US Dollars)

<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>

                                                      ORIENTAL                                   PRO-FORMA            PRO-FORMA
                                                        WAVE              DRAGON                 ADJUSTMENT         CONSOLIDATED
                                                  -----------------    --------------          ---------------    ------------------
ASSETS
Current
    Cash and short term securities                     $   515,791       $ 3,126,667                                   $  3,642,458
    Accounts receivable                                  4,267,353         1,265,676                                      5,533,029
    Inventories                                          7,488,085         1,090,464                                      8,578,549

  Due from director                                                                       (a)         500,100               500,100
    Prepaid and deposits                                   119,070           139,595                                        258,665
                                                  -----------------    --------------
                                                                                                                  ------------------
          Total Current Assets                          12,390,299         5,622,402                                     18,512,801
                                                  -----------------    --------------                             ------------------

Fixed Assets                                            37,996,606         2,089,352                                     40,085,958

Other Tangible Assets                                    2,246,452                                                        2,246,452

Other Assets
    Patent rights and Hep B Vaccine                                          500,100      (a)       (500,100)                     -
    Intangible and other assets, net                       493,155         2,924,198      (a)               -             3,417,353
                                                  -----------------    --------------                             ------------------
          Total Other Assets                               493,155         3,424,298                                      3,417,353
                                                  -----------------    --------------                             ------------------

Total Assets                                           $53,126,512       $11,136,052                                    $64,262,564
                                                  =================    ==============                             ==================

LIABILITIES AND STOCKHOLDERS' EQUITY (DIFFICIENCY)
Current Liabilities
   Accounts payables and accrued liabilities          $ 21,519,961        $1,428,257                                   $ 22,948,218
   Notes payable - short-term                              806,763                                                          806,763
   Due to a stockholder and related companies            5,509,135                        (b)     (5,100,000)               409,135
                                                  -----------------    --------------
                                                                                                                  ------------------
          Total Current Liabilities                     27,835,859         1,428,257                                     24,164,116
                                                  -----------------    --------------                             ------------------

Long-term Liabilities
   Long-term account payable                             1,837,182                                                        1,837,182
   Notes payable - long-term                             8,454,106                                                        8,454,106
   Due to related companies                                                               (b)       2,680,000             2,680,000
                                                  -----------------    --------------                             ------------------

          Total Liabilities                             38,127,147         1,428,257                                     37,135,404
                                                  -----------------    --------------                             ------------------

Minority Interest
                                                  -----------------    --------------                             ------------------

Stockholders' Equity (Deficiency)

    Share Capital                                           50,000            20,462      (a)         (5,509)                64,953
    Additional paid in capital                           7,835,865        26,708,870      (a)    (17,016,028)            19,948,707
                                                                                          (b)      2,420,000
    Due from a stockholder                               (228,148)                                                        (228,148)
    Accumulated other comprehensive (loss)                                  (32,007)      (a)          32,007                     -
    Retained earnings (deficit)                          7,341,648      (16,989,530)      (a)      16,989,530             7,341,648
                                                  -----------------    --------------                             ------------------
          Total stockholders' equity                    14,999,365         9,707,795                                     27,127,160
                                                  -----------------    --------------                             ------------------

Total liabilities and equity                           $53,126,512       $11,136,052                                    $64,262,564
                                                  =================    ==============                             ==================

</TABLE>
                                       4
<PAGE>

                    DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2003
                            (Expressed in US Dollars)
<TABLE>
<CAPTION>
<S>     <C>    <C>    <C>    <C>    <C>
                                                           ORIENTAL                          PRO-FORMA               PRO-FORMA
                                                             WAVE           DRAGON           ADJUSTMENT            CONSOLIDATED
                                                        ------------        -------           ----------            ------------


Sales                                                   $ 26,086,092     $   3,648,149                              $  29,734,241
Cost of Sales                                             13,817,298         1,184,896                                 15,002,194
                                                       ---------------    ---------------                         ---------------
Gross Profit                                              12,268,794         2,463,253                                 14,732,047

Operating Expenses
    Selling, general and
     administrative expenses                               4,156,373         3,391,430                                  7,547,803
    Depreciation and amortization of fixed assets            540,046           743,080                                  1,283,126
                                                       ----------------   ---------------                       -------------------

    Total operating expenses                               4,696,419         4,134,510                                  8,830,929
                                                       ----------------   ---------------                       -------------------
                                                           7,572,375        (1,671,257)                                 5,901,118


    Net write off of land-use right and fixed assets                          (165,912)                                  (165,912)
    New market and EPO development expenses                                   (216,560)                                  (216,560)
    Provision for doubtful debts                                               (29,450)                                   (29,450)
    Loan interest expense                                                       (6,357)                                    (6,357)
                                                       ----------------   ---------------                       -------------------
Income (Loss) from Operations                               7,572,375       (2,089,536)                                  5,482,839

Other Income (Expenses)
    Interest Income (expense)                                 (32,384)         138,802                                     106,418
    Other income                                               63,675                                                       63,675
    Other expense                                             (19,694)                                                     (19,694)
                                                       ----------------   ---------------                       -------------------

Income (Loss) before income taxes and minority
interest                                                    7,583,972        (1,950,734)                                  5,633,238
    Minority interest
    Income Tax Expense                                                          (44,000)                                   (44,000)
                                                      ------------------  ----------------                       -------------------

Net Income (Loss) for the year                              7,583,972        (1,994,734)                                  5,589,238
                                                       =================  ===============                        ===================

Net Income (Loss) per share - basic                    $       151.68      $      (0.10)                                       0.09
                                                       =================  ===============                        ===================
Weighted average number of common shares
outstanding   - basic                                          50,000         20,348,195                                 64,839,402
                                                       =================  ===============                        ===================
</TABLE>
                                       5
<PAGE>

                    Dragon Pharmaceutical Inc. & Subsidiaries
     Notes to Unaudited Pro Forma Combined Consolidated Financial Statements
                  As of December 31, 2004 and December 31, 2003
                            (Expressed in US Dollars)


1.   Basis of Presentation

     The accompanying unaudited pro-forma consolidated financial statements have
been  prepared by management of Dragon in  accordance  with  generally  accepted
accounting  principles of the United States.  In the opinion of the  management,
the pro-forma consolidated financial statements include all material adjustments
necessary for fair presentation in accordance with generally accepted accounting
principles of the United States.

     These pro forma  consolidated  financial  statements  have been prepared to
give  effect to Dragon  Pharmaceutical,  Inc.'s  acquisition  of  Oriental  Wave
Holding Limited which occurred on January 12, 2005. These pro forma consolidated
financial statements are not necessarily  indicative of the actual results which
would  have  been  attained  had the  combination  been in  effect  on the  date
indicated or may be attained in the future.

     These pro forma consolidated  financial  statements have been prepared from
information  derived  from  information  derived  from the audited  consolidated
financial  statements  of Dragon and  Oriental  Wave as at December 31, 2004 and
2003.  These  pro  forma  consolidated  financial  statements  should be read in
conjunction with the historical  financial  statements and notes thereto of both
Dragon and Oriental Wave for the year, ended December 31, 2004 and 2003.

2.   Share Purchase Agreement and Assumptions

     Pursuant to a Share Purchase  Agreement dated June 11, 2004,  Dragon agreed
to  issue  44,502,004  shares  of  common  stock  in  exchange  for  100% of the
outstanding  shares of Oriental Wave. The  acquisition  was completed on January
12, 2005.  The exchange  resulted in the former  shareholders  of Oriental  Wave
owning a majority of Dragon's shares and,  consequently,  accounting  principles
applicable to a reverse  take-over have been applied to record the  transaction.
Under  this  basis of  accounting,  Oriental  Wave has  been  identified  as the
acquirer  and,  accordingly,   the  combined  company  is  considered  to  be  a
continuation  of the operations of Oriental Wave and include  Dragon's  accounts
from the  acquisition  date.  The pro forma  consolidated  balance  sheets as of
December  31,  2004 and 2003 have been  prepared as though the  acquisition  had
occurred  on  December  31,  2004 and the pro forma  consolidated  statement  of
operations  for the years ended December 31, 2004 and 2003 have been prepared as
though the acquisition had occurred on January 1, 2003.

3.   Pro Forma Adjustments

     These unaudited pro forma  consolidated  financial  statements  reflect the
following pro forma adjustments:

     (a)  Adjustment  to  record  acquisition  of the net  assets  of  Dragon by
     Oriental Wave as though the acquisition occurred December 31, 2004. The net
     assets acquired are:


                                       6
<PAGE>


                    Dragon Pharmaceutical Inc. & Subsidiaries
     Notes to Unaudited Pro Forma Combined Consolidated Financial Statements
                        As of December 31, 2004 and 2003
                            (Expressed in US Dollars)




     Cash and short term securities.........................   $  2,161,781
     Accounts receivable....................................       1382,019
     Inventories............................................        585,565
     Due from director......................................            100
     Prepaid and deposits...................................        100,421
                                                               ------------

        Total Current Assets................................      4,531,192
     Fixed Assets...........................................        873,036
     Other Assets...........................................
     Intangible and other assets, net.......................       2372,207
                                                              -------------
        Total Assets........................................      7,475,129
     Less accounts payables and accrued liabilities.........     (1,548,144)
                                                              --------------
        Net assets acquired................................    $  5,926,985
                                                              ==============

                 .

     (b) Oriental Wave's stockholders agreed to the conversion of 20 million RMB
     (US$2,420,000)   of  the  debt  to  equity  upon  the   completion  of  the
     acquisition. These pro forma consolidated financial statements reflect this
     transaction having occurred on December 31, 2004.


                                       7
[{"type": "8-K", "sequence": "1", "filename": "for011205.txt", "secsgml_size_bytes": 98143}]
{"company-data": {"conformed-name": "DRAGON PHARMACEUTICAL INC", "cik": "0001075206", "assigned-sic": "2834", "irs-number": "650142474", "state-of-incorporation": "FL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-27937", "film-number": "051107377"}, "business-address": {"street1": "543 GRANVILLE STREET SUITE 1200", "city": "VANCOUVER BC V6C 1X8", "state": "A1", "zip": "V6E 2E9", "phone": "6046698817"}, "mail-address": {"street1": "543 GRANVILLE STREET SUITE 1200", "street2": "VANCOUVER BRITISH COLUMBIA CANADA V6C1X", "city": "VANCOUVER BRITISH CO", "state": "A1", "zip": "V6E 2E9"}, "former-company": {"former-conformed-name": "DRAGON PHARMACEUTICALS INC", "date-changed": "19991022"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 8-K

                                 Current Report
     Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported): January 12, 2005

                           DRAGON PHARMACEUTICAL INC.
             (Exact name of registrant as specified in its charter)

           Florida                          0-27937              65-0142474
           -------                          -------              ----------
(State or Other Jurisdiction of    (Commission File Number)     (IRS Employer
         Incorporation)                                      Identification No.)

            1055 Hastings Street, Suite 1900
              Vancouver, British Columbia                      V6E 2E9
              ----------------------------                     -------
        (Address of Principal Executive Offices)               (Zip Code)

                                 (604) 669-8817
                                 --------------
              (Registrant's telephone number, including area code)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

[]   Written  communications  pursuant to Rule 425 under the  Securities Act (17
     CFR 230.425)

[]   Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
     240.14a-12)

[]   Pre-commencement   communications  pursuant  to  Rule  14d-2(b)  under  the
     Exchange Act (17 CFR 240.14d-2(b))

[]   Pre-commencement   communications  pursuant  to  Rule  13e-4(c)  under  the
     Exchange Act (17 CFR 240.13e-4(c))
Section 2 - Financial Information

Item 2.01  Completion of Acquisition or Disposition of Assets

     Dragon  Pharmaceutical Inc. is filing the financial  statements of Oriental
Wave  Holding  Limited  for the year ended  December  31,  2004,  and  pro-forma
financial  statements related thereto,  in connection with the completion of the
acquisition of Oriental Wave Holding Limited on January 12, 2005.

Section 9 - Financial Statements and Exhibits

Item 9.01  Financial Statements and Exhibits

     a.   Financial Statements for the year ended December 31, 2004 for Oriental
          Wave Holding Limited and Subsidiary.

     b.   Pro-forma  financial  information for Dragon  Pharmaceutical  Inc. and
          Oriental Wave Holding Limited.
SIGNATURE

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned hereunto duly authorized.

                                           DRAGON PHARMACEUTICAL INC.,
                                           a Florida Corporation

Dated:  September 27, 2005                 /s/ Maggie Deng
                                           -------------------------------------
                                           Maggie Deng
                                           Chief Operating Officer
ORIENTAL WAVE HOLDING LIMITED
                                 AND SUBSIDIARY
                       CONSOLIDATED FINANCIAL STATEMENTS
                   AS OF DECEMBER 31, 2004 (RESTATED) AND 2003

                                    CONTENTS

PAGE      1    REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTI

PAGE      2    CONSOLIDATED  BALANCE  SHEETS AS OF DECEMBER 31, 2004  (RESTATED)
               AND 2003

PAGE      3    CONSOLIDATED  STATEMENTS OF OPERATIONS AND  COMPREHENSIVE  INCOME
               FOR THE YEARS ENDED DECEMBER 31, 2004 (RESTATED) AND 2003

PAGE      4    CONSOLIDATED  STATEMENTS  OF  STOCKHOLDERS'  EQUITY FOR THE YEARS
               ENDED DECEMBER 31, 2004 (RESTATED) AND 2003

PAGE      5    CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS  FOR  THE  YEARS  ENDED
               DECEMBER 31, 2004 (RESTATED) AND 2003

PAGES  6 - 19  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (RESTATED)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of:
  Oriental Wave Holding Limited and Subsidiary

We have audited the  accompanying  consolidated  balance sheets of Oriental Wave
Holding Limited and subsidiary as of December 31, 2004 and 2003, and the related
statements of operations  and  comprehensive  income,  changes in  stockholders'
equity and cash flows for the years then ended.  These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We conducted our audits in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly in all material respects, the financial position of Oriental Wave Holding
Limited and  subsidiary  as of December 31, 2004 and 2003 and the results of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

As  discussed  in  Note 2,  the  Company  restated  its  consolidated  financial
statements for the year ended December 31, 2004.

WEBB & COMPANY, P.A.

Boynton Beach, Florida
March 14, 2005, except for Note 2, to
which the date is September 16, 2005

                                       1
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 2004 AND 2003
ASSETS                       RESTATED
                                                                     ------
                                                                                                  (NOTE 2)
                                                                               Note                 2004                    2003
                                                                             ----------       ------------------     ---------------
CURRENT ASSETS
  Cash and cash equivalents                                                                $           910,425     $        515,791
  Accounts receivable, net of allowances                                         3                   6,675,298            4,267,353
  Inventories, net                                                               4                  16,623,906            7,488,085
  Value added tax receivable                                                                            162,443                   -
  Prepaid expenses                                                                                     911,228              119,070
                                                                                              ------------------      --------------
      Total Current Assets                                                                          25,283,300           12,390,299
                                                                                              ------------------      --------------

 PROPERTY AND EQUIPMENT, NET                                                     5                  62,396,316           37,996,606

 OTHER ASSETS
  Intangible assets, net                                                         7                     432,769              493,155
  Other receivables                                                                                  2,213,842              890,659
  Deposits                                                                                                -               1,355,793
  Investments -cost                                                                                     12,077                    -
                                                                                              ------------------      --------------
      Total Other Assets                                                                             2,658,688            2,739,607
                                                                                              ------------------      --------------
TOTAL ASSETS                                                                               $        90,338,304     $     53,126,512
------------                                                                                  ==================      ==============

                       LIABILITIES AND STOCKHOLDERS EQUITY

CURRENT LIABILITIES
  Accounts payable                                                                         $         3,047,485     $      7,658,652
  Accrued retirement benefits                                                    8                     114,432              565,618
  Other payables and accrued liabilities                                         9                  17,705,163           13,295,691
  Notes payable - short-term                                                    10                  12,884,057              806,763
  Due to related companies                                                      12                   4,660,984            5,509,135
                                                                                              ------------------      --------------
      Total Current Liabilities                                                                     38,412,121           27,835,859
                                                                                              ------------------      --------------
LONG-TERM LIABILITIES
  Long term accounts payable                                                    11                  21,873,147                    -
  Long term retirement benefits                                                  8                     870,321            1,837,182
  Notes payable - long-term                                                     10                   6,316,426            8,454,106
  Due to related companies                                                      12                   1,328,502                    -
                                                                                              ------------------      --------------
      Total Long-Term Liabilities                                                                   30,388,396           10,291,288
                                                                                              ------------------      --------------
TOTAL LIABILITIES                                                                                   68,800,517           38,127,147
                                                                                              ------------------      --------------

COMMITMENTS AND CONTINGENCIES                                                                             -                      -

STOCKHOLDERS' EQUITY
  $1.00 par value, 50,000 shares authorized, 50,000 shares issued
   and outstanding                                                                                      50,000               50,000
  Additional paid-in capital                                                                        13,977,504            7,835,865
  Retained earnings
    Unappropriated                                                                                        -               6,054,864
    Appropriated                                                                                     7,562,432            1,286,784
  Due from stockholder                                                                                 (52,149)            (228,148)
                                                                                              ------------------      --------------
       Total Stockholders' Equity                                                                   21,537,787           14,999,365
                                                                                              ------------------      --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                 $        90,338,304     $     53,126,512
------------------------------------------                                                    ==================      ==============

The accompanying notes are an integral part of these consolidated financial statements.
2
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
RESTATED (NOTE 2)
                                                                         Note                     2004                        2003
                                                                       ----------       -------------------      -------------------

NET SALES                                                                 13         $           29,023,130    $         26,086,092

COST OF SALES                                                                                    16,140,305              14,053,421
                                                                                        --------------------      ------------------
GROSS PROFIT                                                                                     12,882,825              12,032,671
                                                                                        --------------------      ------------------
PERATING EXPENSES
  Selling expense                                                                                 3,666,839               2,674,884
  General and administrative expenses                                                             1,911,308               1,481,489
  Depreciation                                                                                      198,154                 283,617
  Amortization of land use rights                                                                    80,295                  20,306
                                                                                        --------------------      ------------------
          Total Operating Expenses                                                                 5,856,596              4,460,296
                                                                                        --------------------      ------------------

INCOME FROM OPERATIONS                                                                            7,026,229               7,572,375

OTHER INCOME (EXPENSE)
  Interest expense                                                                                (216,634)                 (32,404)
  Other income                                                                                       61,881                  63,675
  Other expense                                                                                    (57,230)                 (19,694)
                                                                                        --------------------      ------------------
         Total Other Income (expense)                                                             (211,983)                  11,577
                                                                                        --------------------      ------------------
INCOME FROM OPERATIONS BEFORE TAXES                                                               6,814,246               7,583,952

INCOME TAX EXPENSE                                                       1(M)                       451,823                    -
                                                                                        --------------------      ------------------
NET INCOME                                                                                        6,362,423               7,583,952

OTHER COMPREHENSIVE INCOME
  Foreign currency translation loss                                                                       -                    -
                                                                                        --------------------      ------------------
COMPREHENSIVE INCOME                                                                 $            6,362,423    $          7,583,952
                                                                                        ====================      ==================
Net income per share - basic and diluted                                             $               127.25    $             151.68
                                                                                        ====================      ==================
Weighted average number of shares outstanding during the period -
  basic and diluted                                                                                  50,000                  50,000
                                                                                        ====================      ==================

The accompanying notes are an integral part of these consolidated financial statements.
3
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
RESTATED       RESTATED
                                                                         NOTE 2)       (NOTE 2)
                                                         Additional  Unappropriated  Appropriated                       RESTATED
                                         Common Stock      Paid-In      Retained       Retained       Due From          (NOTE 2)
                                      Shares     Amount    Capital      Earnings       Earnings      Stockholder        Total
                                     -------   ---------  ----------  ----------   -------------  --------------    ---------------
Balance, December 31, 2002            50,000   $ 50,000   $1,157,730   $(242,324)   $         -    $(1,033,418)     $   (68,012)
Capital contribution from
stockholders                               -          -    6,678,135            -             -              -        6,678,135

Notes receivable - stockholders            -          -            -            -             -        805,270          805,270

Net income for the year ended
 December 31, 2003                         -          -            -    7,583,972             -              -        7,583,972

Transfer to retained earnings for
 appropriated statutory and
 staff welfare reserves                    -           -            -  (1,286,784)    1,286,784              -                -
                                      -------   --------   ----------  -----------  -----------    -----------    -------------
Balance, December 31, 2003             50,000     50,000    7,835,865    6,054,864    1,286,784      (228,148)       14,999,365

Registered capital appropriation            -          -    6,141,639   (6,141,639)           -              -                -

Notes receivable - stockholders             -          -            -            -            -        175,999          175,999

Net income for the year ended
 December 31, 2004                          -          -            -    6,362,423            -              -        6,362,423

Transfer to retained earnings for
 appropriated statutory and staff
 welfare reserves                           -          -            -   (6,275,648)   6,275,648              -                -
                                       -------   --------  -----------  -----------  ----------   ------------    --------------
BALANCE, DECEMBER 31, 2004              50,000   $ 50,000  $13,977,504  $        -   $7,562,432   $   (52,149)    $   21,537,787
--------------------------             =======   ========  ===========  ===========  ==========   ============    ==============

The accompanying notes are an integral part of these consolidated financial statements.
4
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
RESTATED
                                                                                                     (NOTE 2)
                                                                                                       2004                2003
                                                                                                -----------------    --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                                      $       6,362,423    $    7,583,952
   Adjustments to reconcile net income to cash provided by operating activities:
    Depreciation and amortization                                                                       2,673,367           540,046
    Allowance for doubtful accounts                                                                       124,574                 -
    Provision for excess and obsolete inventories                                                         613,378           213,244
   Changes in operating assets and liabilities:
    (Increase) decrease in:
     Accounts receivable                                                                               (2,532,519)       (1,938,499)
     Inventories                                                                                       (9,749,199)       (2,815,076)
     Value added tax receivable                                                                          (162,443)                -
     Prepaid expenses                                                                                    (792,158)           61,942
     Other assets                                                                                      (1,323,183)         (147,520)
     Deposits                                                                                           1,355,793        (1,355,793)
    Increase (decrease) in:
     Accounts payable                                                                                  (4,611,167)        1,773,132
     Other payables and accrued liabilities                                                            25,999,810        12,739,601
     Due to related companies                                                                             480,351          (873,205)
                                                                                                -------------------    -------------
         Net Cash Provided By Operating Activities                                                     18,439,027        15,781,844
                                                                                                -------------------    -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                                                                  (28,147,929)      (32,709,127)
  Purchase of investments                                                                                 (12,077)                -
                                                                                                -------------------    -------------
          Net Cash Used In Investing Activities                                                       (28,160,006)      (32,709,127)
                                                                                                -------------------    -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                                                        -         6,678,135
  Proceeds from notes payable                                                                           9,939,614         9,260,869
  Due from stockholder                                                                                    175,999           805,270
                                                                                                -------------------    -------------
         Net Cash Provided By Financing Activities                                                     10,115,613        16,744,274
                                                                                                -------------------    -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                                     394,634           (183,009)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                                           515,791            698,800
                                                                                                -------------------    -------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                                        $        910,425       $    515,791
                                                                                                ===================    =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for interest expense                                                  $        216,634       $     31,252
                                                                                                ===================    =============

Cash paid during the year for income taxes                                                      $        285,328       $          -
                                                                                                ===================    =============

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

During 2004,  the Company's  subsidiary  appropriated  $6,141,639  from retained
earnings to registered  capital and reduced the Land Use Rights by $1,135,238 to
reflect the extinguishment of Accrued Retirement Benefits (Note 6).

The accompanying notes are an integral part of these consolidated financial statements.
5
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

     (A) Organization and Basis of Presentation

     Oriental Wave Holding  Limited  ("Oriental  Wave") was  incorporated in the
     British  Virgin Islands on January 7, 2003.  Shanxi Weiqida  Pharmaceutical
     Company Limited ("Shanxi  Weiqida"),  a People's  Republic of China limited
     liability  company was incorporated on January 22, 2002.  Shanxi Weiqida is
     principally engaged in research and development, manufacturing, and selling
     of pharmaceutical products in the People's Republic of China ("PRC").

     During  2003,  Shanxi  Weiqida's   shareholders  exchanged  100%  of  their
     ownership  of Shanxi  Weiqida for 50,000  shares of  Oriental  Wave under a
     reorganization   plan.   The   transfer  has  been   accounted   for  as  a
     reorganization  of entities  under  common  control as the  companies  were
     beneficially  owned by identical  shareholders and share common management.
     The financial  statements have been prepared as if the  reorganization  had
     occurred  retroactively.  Oriental  Wave and Shanxi  Weiqida are  hereafter
     referred to as (the "Company").

     The accompanying 2004 and 2003 consolidated  financial  statements  include
     the accounts of Oriental Wave and its 100% owned subsidiary Shanxi Weiqida.
     All significant intercompany balances and transactions have been eliminated
     in consolidation.

     (B) Use of Estimates

     In preparing  financial  statements in conformity  with generally  accepted
     accounting  principles,  management  is  required  to  make  estimates  and
     assumptions  that affect the reported amounts of assets and liabilities and
     the  disclosure of  contingent  assets and  liabilities  at the date of the
     financial  statements and revenues and expenses during the reported period.
     Actual results could differ from those estimates.

     (C) Cash Equivalents

     For purposes of the cash flow statements,  the Company considers all highly
     liquid investments with original  maturities of three months or less at the
     time of purchase to be cash equivalents.

     (D) Accounts Receivable

     The Company  extends  unsecured  credit to its  customers  in the  ordinary
     course of business but mitigates the associated risks by performing  credit
     checks and actively  pursuing past due accounts.  An allowance for doubtful
     accounts is established  and recorded based on  management's  assessment of
     the credit history with the customer and current  relationships  with them.

                                       6
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     (E) Investments

     During the twelve  months  ended  December  31,  2004,  the Company  made a
     strategic  investment  in a private  company  of  $12,077.  The  investment
     represents  less than 1% of the total  equity  outstanding  of the  private
     company outstanding as of December 31, 2004. The private company investment
     is carried at cost and written down to fair market  value when  indications
     exist that this investment has other than temporarily declined in value. As
     of December 31, 2004, no impairment in the value of the investment has been
     recorded.

     (F) Inventories

     Inventories  are  stated at the lower of cost or market  value,  cost being
     determined on a first-in,  first-out method. The Company provides inventory
     allowances based on excess and obsolete inventories  determined principally
     by customer demand and product expiration dates.

     (G) Property and Equipment

     Property and equipment are stated at cost, less  accumulated  depreciation.
     Expenditures for additions,  major renewals and betterments are capitalized
     and  expenditures  for  maintenance  and  repairs are charged to expense as
     incurred.

     Depreciation is provided on a straight-line  basis, less estimated residual
     value over the assets  estimated  useful lives.  The estimated useful lives
     are as follows:

               Buildings                                 50 Years
               Plant and machinery                       10 Years
               Motor vehicles                            8 Years
               Furniture, fixtures and equipment         5 Years

     Land use rights are stated at cost, less accumulated amortization,  and are
     further reduced by the amount of the Accrued  Retirement Benefit obligation
     extinguished  through the Company's rehiring of employees (Note6). The land
     use rights are amortized  over the term of the relevant  rights of 50 years
     from date of acquisition.

     (H) Fair Value of Financial Instruments

     Depreciable  assets are reviewed for impairment  whenever events or changes
     in  circumstances  indicate that the carrying amount may not be recoverable
     based on projected  undiscounted  cash flows  associated with the assets. A
     loss is  recognized  for the  difference  between  the fair  value  and the
     carrying amount of the assets.  Fair value is determined  based upon market
     quote, if available, or is based on valuation techniques.

                                       7
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     The carrying  amount of the Company's  cash,  receivables  and payables and
     short-term  bank  loan  approximates  their  fair  value  due to the  short
     maturity of those instruments.

     (I) Intangible Assets

     Under the Statement of Accounting Standards ("SFAS") No. 142, "Goodwill and
     Other  Intangible  Assets",  all  goodwill  and certain  intangible  assets
     determined  to have  indefinite  lives  will not be  amortized  but will be
     tested for  impairment  at least  annually.  Intangible  assets  other than
     goodwill will be amortized over their useful lives of 10 years and reviewed
     for impairment in accordance with SFAS No. 144,  "Accounting for Impairment
     or Disposal of Long-Lived Assets".

     (J) Revenue Recognition

     The Company recognizes revenue from the sale of pharmaceutical  products at
     the time when  title to the  products  transfers,  the  amount is fixed and
     determinable,  evidence of an agreement exists,  and the customer bears the
     risk of loss, net of estimated  provisions  for returns,  rebates and sales
     allowances.

     (K) Advertising Costs

     Advertising  costs are expensed as incurred.  Advertising  expense  totaled
     $63,692  and  $26,145  for the  years  ended  December  31,  2004 and 2003,
     respectively.

     (L) Research and Development

     Research and development  costs related to both present and future products
     are expensed as incurred.  Total  expenditures  on research and development
     charged to selling, general and administrative expenses for the years ended
     December 31, 2004 and 2003 were $193,188 and $19,555, respectively.

     (M) Income Taxes

     The Company  accounts  for income  taxes under the  Statement  of Financial
     Accounting  Standards No. 109,  "Accounting  for Income Taxes"  ("Statement
     109").  Under  Statement  109,  deferred  tax  assets and  liabilities  are
     recognized  for the future tax  consequences  attributable  to  differences
     between the financial  statement  carrying  amounts of existing  assets and
     liabilities  and their  respective  tax  bases.  Deferred  tax  assets  and
     liabilities  are  measured  using  enacted  tax rates  expected to apply to
     taxable  income  in the  years in which  those  temporary  differences  are
     expected to be recovered  or settled.  Under  Statement  109, the effect on
     deferred tax assets and  liabilities of a change in tax rates is recognized
     in income in the period that includes the enactment date. The Company

                                       8
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     is organized  in the British  Virgin  Islands and the People's  Republic of
     China and no tax  benefit is  expected  from the tax credits in the future.
     The Company  located its factories in a special  economic  region in China.
     This economic  region  allows  foreign  enterprises  a two-year  income tax
     exemption  from central  government  tax  beginning in the first year after
     they become  profitable  and a 50% income tax  reduction  for the following
     three years. The Company was approved as a wholly owned foreign  enterprise
     in October 2002. Pursuant to a new regulation, "No. 142 enacted during 2004
     by  the  Shanxi  Province   National  Taxation   Administration",   foreign
     investment  enterprises  established  after  January  31,  2002 will not be
     exempted from the Provincial  income tax, which is 3% of the taxable income
     (derived under Chinese  GAAP).  The Company will continue to be exempt from
     central government tax as a foreign enterprise. The Company was established
     as a wholly foreign owned  enterprise on September 30, 2002. The income tax
     expense for the years ended December 31, 2004 and 2003 was $451,823 and $0,
     respectively.

     (N) Foreign Currency Translation

     The  functional  currency of the Company is the Chinese  Renminbi  ("RMB").
     Transactions  denominated in currencies  other than RMB are translated into
     United  States  dollars  using period end  exchange  rates as to assets and
     liabilities and average exchange rates as to revenues and expenses. Capital
     accounts are translated at their historical exchange rates when the capital
     transaction occurred.  Net gains and losses resulting from foreign exchange
     translations are included in the statements of operations and stockholder's
     equity as other comprehensive gain (loss).

     (O) Comprehensive Income

     The foreign currency translation gain or loss resulting from translation of
     the  financial  statements  expressed  in RMB to  United  States  Dollar is
     reported as other comprehensive  income in the statements of operations and
     stockholders' equity.

     (P) Segments

     The Company  operates in two  reportable  segments,  Chemical  Division and
     Pharma Division.

     (Q) Reclassifications

     Certain  2003  balances  have been  reclassified  to conform  with the 2004
     presentation.

                                       9
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     (R) Recent Accounting Pronouncements

     Statement of Financial  Accounting  Standards ("SFAS") No. 151,  "Inventory
     Costs - an amendment of ARB No. 43, Chapter 4 SFAS No. 152, "Accounting for
     Real Estate Time-Sharing Transactions - an amendment of FASB Statements No.
     66 and 67," SFAS No. 153,  "Exchanges of Non-monetary Assets - an amendment
     of APB  Opinion  No.  29," and SFAS No. 123  (revised  2004),  "Share-Based
     Payment,"  were  recently  issued.  SFAS No. 151, 152, 153 and 123 (revised
     2004) have no current  applicability  to the  Company and have no effect on
     the financial statements.

NOTE 2 RESTATEMENT

     The Company had originally determined under SFAS 141 that it had identified
     and  measured  the fair value of the assets  acquired  and the  liabilities
     assumed in the acquisition of the Land Use Rights.  During  September 2005,
     the Company has determined that $1,135,238 of the extinguishment of Accrued
     Retirement  Benefit  should have been  accounted  for as a reduction of the
     Land Use Rights acquired rather than as a gain as previously recorded. As a
     result of the change in asset value,  the Company has reduced  depreciation
     expense by $11,352.  The Company has restated the  financial  statements to
     account  for this  non-cash  adjustment  in  accordance  with  SFAS 141 and
     changed  its policy to record  the  extinguishment  of  Accrued  Retirement
     Benefits as a reduction of the carrying value of the Land Use Rights.

     This  reduction  in Land Use Rights will also result in a reduction  of the
     depreciation expense in subsequent periods. The restatement did not have an
     effect on the cash flow or liabilities  of the Company.  The changes to the
     financial statements are as follows:
As of December 31, 2004
                                            ------------------------------------------------------------------
                                                          Previously
                                                          Reported           Adjustment           Restated
                                            ---------------------------- -------------------- ----------------

          Current assets                                   25,283,300                              25,283,300
          Property and equipment                           63,520,202         (1,123,886)          62,396,316
          Other assets                                      2,658,688                               2,658,688
                                            --------------------------                         ---------------
          Total assets                                     91,462,190                              90,338,304
                                            ==========================                         ===============
          Liabilities                                      68,800,517                              68,800,517
                                            --------------------------                         ---------------
          Share capital                                    14,027,504                              14,027,504
          Retained earnings                                 8,686,318         (1,123,886)           7,562,432
          Due from shareholder                               (52,149)                                (52,149)
                                            --------------------------                         ---------------
          Total equity                                     22,661,673                              21,537,787
                                            --------------------------                         ---------------
          Total liabilities and equity                     91,462,190                              90,338,304
                                            ==========================                         ===============
10
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
Year ended December 31, 2004
                                            -----------------------------------------------------------------
                                                        Previously
                                                         Reported          Adjustment            Restated
                                            -------------------------- ------------------ -------------------

        Net Sales                                        $29,023,130                             $29,023,130
        Cost of sales                                     16,140,305                              16,140,305
                                            --------------------------                         ---------------
        Gross profit                                      12,882,825                              12,882,825
        Operating expenses                                 5,867,948            (11,352)           5,856,596
                                            --------------------------                         ---------------
        Income from operations                             7,014,877                               7,026,229
        Other income (expenses)                              923,255         (1,135,238)           (211,983)
                                            --------------------------                         ---------------
        Income before taxes                                7,938,132                               6,814,246
        Income tax expense                                   451,823                                 451,823
                                            --------------------------                         ---------------
        Net income                                       $ 7,486,309                              $6,362,423
                                            =========================                          ===============

        Net income per share                               $  149.73                               $  127.25
                                            =========================                          ===============
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 3 ACCOUNTS RECEIVABLE

     Accounts  receivable  at  December  31,  2004  and  2003  consisted  of the
     following:

                                                   2004                2003
                                             ----------------   ----------------
     Trade and other receivables             $    6,799,872     $     4,267,353
     Less: allowance for doubtful accounts          124,574                   -
                                             ----------------   ----------------
     Accounts receivable, net                $    6,675,298     $     4,267,353
                                             ================   ================

     For the years ended  December  31, 2004 and 2003,  the Company  recorded an
     allowance for doubtful accounts of $124,574 and nil, respectively.

NOTE 4 INVENTORIES

     Inventories at December 31, 2004 and 2003 consisted of the following:

                                                  2004                   2003
                                             ----------------    ---------------
     Raw materials                           $    4,287,604      $    2,729,091
     Work-in-progress                            10,994,088           1,423,182
     Finished goods                               2,302,073           3,682,293
                                             ----------------    ---------------
                                                 17,583,765           7,834,566
     Less: provision for obsolescence and
        impairment                                  959,859              46,481
                                             ----------------    ---------------
                                             $   16,623,906      $    7,488,085
                                             ================    ===============
                                       11
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     For the years  ended  December  31, 2004 and 2003,  the Company  recorded a
     provision for obsolete inventories of $613,378 and $346,481, respectively.

NOTE 5 PROPERTY AND EQUIPMENT

     The  following is a summary of property and  equipment at December 31, 2004
     and 2003:

                                             RESTATED
                                             (NOTE 2)
                                               2004                  2003
                                        ------------------     -----------------
       Plant and machinery              $     41,154,014       $     22,997,197
       Land and Buildings                     18,552,438              5,161,270
       Motor vehicles                            611,261                355,616
       Furniture and office equipment          2,499,188                729,165
       Construction in progress                2,691,179              9,252,141
                                        ------------------     -----------------
                                              65,508,080             38,495,389
       Less: accumulated depreciation          3,111,764                498,783
                                        ------------------     -----------------
       Property and equipment, net      $     62,396,316       $     37,996,606
                                        ==================     =================

     Depreciation  expense  for the years ended  December  31, 2004 and 2003 was
     $2,612,981 and $479,659 respectively.

NOTE 6 ACQUISITIONS

     During July 2003, the Company acquired land use rights and buildings from a
     government  liquidator in exchange for assuming certain future  employment,
     healthcare  and  land  acquisition  costs  of the  factory  and its  former
     employees.  The agreement requires the Company to pay certain minimum wages
     and health care costs  until the date of their  employment,  retirement  or
     death,  whichever occurs first. The total amount of the liabilities assumed
     on the closing date was $8,897,685.  The Company has calculated the related
     asset  value by  computing  the net  present  value of the future  expected
     payments to the remaining employees assuming an interest rate of 3% and has
     recorded  the land at a net present  value of  $3,332,907  (See Notes 8 and
     14). As of December 31, 2004, the Company had employed 651 former employees
     and 207 former  employees have retired.  Subsequent to the  acquisition the
     Company  rehired a number of the former  employees,  reducing  the expected
     future  payments  required.  The Company has accounted for the reduction of
     the obligation by reducing the amount of Land Use Rights recorded.

                                       12
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     The cost of Land Use Rights is as follows:

                                                       RESTATED
                                                       (NOTE 2)
                                                        2004            2003
                                                    ------------  --------------
     Original cost recorded                         $  3,332,907   $  3,332,907
     Less: reduction of  accrued retirement benefit    1,135,238              -
                                                    ------------- --------------
     Cost of Land Use Rights                        $  2,197,669   $  3,332,907
                                                    ============= ==============

     The  Company  intends  to reduce  the Land Use  Rights  should  the  future
     payments  be further  reduced  due to  additional  former  employees  being
     rehired.

NOTE 7 INTANGIBLE ASSETS

     During May 2002, the Company acquired  licenses from a company related to a
     director.

     Intangible  assets  consist of the  following  as of December  31, 2004 and
     2003:

                                                        2004            2003
                                                    ------------   -------------
     Licenses                                       $   603,865     $  603,865
     Less: accumulated amortization                     171,096        110,710
                                                    ------------   -------------
                                                    $   432,769     $  493,155
                                                    ============   =============

     Amortization  expense  for the years ended  December  31, 2004 and 2003 was
     $60,386, and $60,387, respectively.

                                       13
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 8 ACCRUED RETIREMENT BENEFITS

     During July 2003, the Company acquired land use rights and buildings from a
     government liquidator.  The present value of accrued expected land costs is
     recorded at December 31, 2004 and 2003 as follows:
2004                   2003
                                                                     -----------------      ------------------
     Total liabilities assumed at closing date                       $   8,897,685          $    8,897,685
     Less:  net present value of  liabilities  not expected
       to be paid                                                        5,564,778               5,564,778
                                                                     -----------------      ------------------
     Present value of expected liabilities                               3,332,907               3,332,907
     Less: amounts paid and liabilities not expected
       to be paid                                                        2,348,154                 930,107
                                                                     -----------------      ------------------
                                                                           984,753               2,402,800
     Less: current portion                                                 114,432                 565,618
                                                                     -----------------      ------------------
                                                                     $     870,321          $    1,837,182
                                                                     =================      ==================
Under the terms of the  contract  with the  liquidator,  the  Company  will
     remain  contingently  liable  for  these  liabilities  until  the  date  of
     retirement or re-employment for each employee (See Notes 6 and 14).

NOTE 9 OTHER PAYABLES AND ACCRUED LIABILITIES

     Other  payables  and  accrued  liabilities  at  December  31, 2004 and 2003
     consist of the following:

                                               2004               2003
                                      -----------------    ------------------
     Machinery and equipment payable    $   7,050,243      $    8,510,372
     Accrued expenses                       6,360,198           2,905,155
     Value added tax payables                       -             187,083
     Income taxes payable                     166,495                   -
     Other taxes payable                      121,054               1,429
     Deposits received from customers       4,007,173           1,691,652
                                      -----------------    ------------------
                                        $  17,705,163      $   13,295,691
                                      =================    ==================

                                       14
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 10  NOTES PAYABLE

     Balance at December 31, 2004 and 2003:
2004                    2003
                                                                          -----------------      -----------------
     Note  payable  to a  bank,  interest  rate of  6.372%  per           $      420,290         $       420,290
        annum, guaranteed by a third party, due June 2005

     Note  payable  to a  bank,  interest  rate of  6.372%  per
        annum, guaranteed by a third party, due June 2005                        386,473                 386,473

     Note  payable  to a  bank,  interest  rate of  6.138%  per
        annum, guaranteed by a third party, due June 2005                      3,623,188                       -

     Note payable to a bank, interest rate of 6.039% per annum, secured by
        leasehold land and fixed assets, due
        April 2005                                                             8,454,106               8,454,106

     Note payable to a bank,  interest rate of 5.76% per annum,
        guaranteed by a third party, due November 2006                         6,316,426                       -
                                                                         -----------------       ------------------
                                                                              19,200,483               9,260,869
        Less current maturities                                               12,884,057                 806,763
                                                                         -----------------       ------------------
                                                                         $     6,316,426         $     8,454,106
                                                                         =================       ==================
     Maturities are as follows:

                                For the Year Ending December 31,
                                              2005                                               $      12,884,057
                                              2006                                                       6,316,426
                                                                                                 -------------------
                                                                                                 $      19,200,483
                                                                                                 ===================
NOTE 11 LONG TERM ACCOUNTS PAYABLE

     Long term  accounts  payable  balance  at  December  31,  2004 is the final
     payment of construction  contracts which had been finished through December
     31,  2004.  According  to the  contract  terms,  the final  payments on the
     contracts will be settled as follows:

                  Settlement Arrangement

     Accounts payable due 2006                         $  21,873,147
                                                       =============
                                         15
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 12 DUE TO RELATED PARTIES

     Accounts payable - related party balances at December 31, 2004 and 2003:
2004                     2003
                                                                         -----------------       -------------------
     Due to a company owned by a stockholder and director due
        March 2006                                                       $    1,328,502          $              -
     Due to a company owned by a stockholder and director                         -                     5,239,360
     Due to a company owned by a stockholder and director                     4,660,984                   269,775
                                                                         -----------------       -------------------
                                                                              5,989,486                 5,509,135
       Less: current maturities                                               4,660,984                 5,509,135
                                                                         -----------------       -------------------
                                                                         $    1,328,502          $              -
                                                                         =================       ===================
NOTE 13 SEGMENTS

     The Company  operates  in two  reportable  segments,  Pharma  Division  and
     Chemical Division.  The accounting policies of the segments are the same as
     described in the summary of significant  accounting  policies.  The Company
     evaluates  segment  performance  based  on  income  from  operations.   All
     intercompany  transactions  between  segments  have been  eliminated.  As a
     result,  the  components  of  operating  income for one  segment may not be
     comparable to another segment.  The following is a summary of the Company's
     segment information for the years ended December 31, 2004 and 2003.
Chemical                Pharma
                                                          Division               Division               Total
                                                     -------------------     -----------------     -----------------
       2004
       Sales                                      $          4,248,906             24,774,224           29,023,130
       Gross profit                                            216,380             12,666,445           12,882,825
       Total assets (RESTATED-NOTE 2)                       66,726,390            23,611,914            90,338,304
       Additions to long-lived assets                       27,295,156               852,773            28,147,929
       Intangible assets                                          -                  432,769               432,769
       Depreciation and                                      2,033,933               639,434              2,673,367
        amortization(RESTATED-NOTE 2)

                                       16
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003
2003
       Sales                                      $               -       $       26,086,092            26,086,092
       Gross profit                                               -               12,032,671            12,032,671
       Total assets                                         29,553,673            23,572,839            53,126,512
       Additions to long-lived assets                       29,553,673             3,155,454            32,709,127
       Intangible assets                                          -                  493,155               493,155
       Depreciation and amortization                              -                  540,046               540,046
NOTE 14   COMMITMENTS AND CONTINGENCIES

     (A) Employee Benefits

     The full time  employees of the Company are  entitled to employee  benefits
     including  medical  care,  welfare  subsidies,  unemployment  insurance and
     pension  benefits  through a  Chinese  government  mandated  multi-employer
     defined  contribution  plan.  The  Company is  required to accrue for those
     benefits based on certain percentages of the employees' salaries. The total
     provision  for such  employee  benefits  was  $642,856 and $294,136 for the
     years  ended  December  31,  2004 and 2003,  respectively.  The  Company is
     required to make  contributions to the plans out of the amounts accrued for
     medical and pension benefits. The Chinese government is responsible for the
     medical benefits and the pension liability to be paid to these employees.

     (B) Loan Guarantee

     The Company has issued a  guarantee  to a bank as security  for a loan to a
     third party  vendor.  The total loan  guarantee as of December 31, 2004 was
     $2,596,618.

     The Company has also issued a guarantee to a bank as security for a loan to
     a third party vendor.  The total loan guarantee as of December 31, 2004 was
     $6,036,647.  The vendor  pledged  its  assets  totaling  $8,484,101  to the
     Company for this guarantee.

     (C) Capital Commitments

     According to the Articles of Association of Shanxi  Weiqida,  Oriental Wave
     has to fulfill registered  capital of $19,205,116 (RMB 159,018,360)  within
     five years from December 16, 2003. As of December 31, 2004, the Company has
     fulfilled  $13,977,504 (RMB 115,733,733) of registered capital  requirement
     and has registered  capital  commitments of $5,227,612 (See Notes 15(A) and
     18 (A) & (B)).

                                       17
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

     (D)  Contingent Employment Benefits

     During July 2003, the Company acquired land and buildings from a government
     liquidator in exchange for assuming certain future  employment,  healthcare
     and land acquisition costs of the factory and its former  employees.  Under
     the terms of the  contract  with the  liquidator,  the Company  will remain
     contingently  liable for these  liabilities  until the date of  retirement,
     re-employment  or death for each  employee.  As of December 31,  2004,  the
     Company has rehired 651 former employees and 207 employees have retired. If
     the Company is unable to provide continued employment to these individuals,
     it will be liable to pay each former employee  approximately  $49 per month
     until his or her date of  retirement or death,  whichever  comes first (See
     Notes 6 & 8).

NOTE 15  STOCKHOLDERS' EQUITY

     (A) Capital Contribution

     On  January 5,  2004,  Shanxi  Weiqida  declared  a  one-time  dividend  of
     $6,141,639 to be used to satisfy its registered  capital  requirement  (See
     Note 14(C)).

     (B) Appropriated Retained Earnings

     Shanxi  Weiqida is  required  to make  appropriations  to  reserves  funds,
     comprising the statutory surplus reserve, statutory public welfare fund and
     discretionary surplus reserve,  based on after-tax net income determined in
     accordance with generally  accepted  accounting  principles of the People's
     Republic of China (the "PRC GAAP").  Appropriation to the statutory surplus
     reserve  should be at least 10% of the after tax net income  determined  in
     accordance  with  the PRC GAAP  until  the  reserve  is equal to 50% of the
     entities'  registered  capital.  Appropriations  to  the  statutory  public
     welfare  fund are at 5% to 10% of the after tax net  income  determined  in
     accordance  with  the  PRC  GAAP.  The  statutory  public  welfare  fund is
     established  for the purpose of  providing  employee  facilities  and other
     collective benefits to the employees and is non-distributable other than in
     liquidation.  Appropriations to the discretionary  surplus reserve are made
     at the discretion of the Board of Directors.

     The Company appropriated  $6,275,648 to the reserves funds based on its net
     income under PRC GAAP.

NOTE 16   RELATED PARTY TRANSACTIONS

     See Notes 7 and 12.

                                       18
ORIENTAL WAVE HOLDING LIMITED AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

NOTE 17   CONCENTRATIONS AND RISKS

     During  the  years  ended  December  31,  2004  and  2003,  95%  and  100%,
     respectively, of the Company's revenues were derived from companies located
     in China and 100% its assets are located in China.

NOTE 18   SUBSEQUENT EVENTS

     (A) Acquisition

     On June 11, 2004, the Company entered into a share purchase  agreement with
     a pharmaceutical  company.  The transaction will result in the shareholders
     of the Company owning the majority of the issued and outstanding  shares of
     the  new  combined  entity.  The  transaction  will be  accounted  for as a
     purchase by the Company.  On January 12, 2005,  the Company  completed  the
     acquisition  with Dragon  Pharmaceutical,  Inc. The Company's  stockholders
     received  44,502,004 shares or 68.35 % of the outstanding  shares of common
     stock.

     Concurrent with the acquisition agreement, the principal stockholder of the
     Company  agreed to convert  approximately  $2,415,500 of loans payable to a
     related entity into equity of the Company.

     (B) Contribution of Capital

     On January 31, 2005 Oriental Wave paid Shanxi Weiqida  $479,988 towards its
     registered capital requirement under Chinese law.

                                       19
PRO-FORMA FINANCIAL INFORMATION

                                       1
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                      PRO-FORMA CONSOLIDATED BALANCE SHEET
                             As of December 31, 2004
                            (Expressed in US Dollars)
ORIENTAL                                  PRO-FORMA               PRO-FORMA
                                                      WAVE              DRAGON               ADJUSTMENT             CONSOLIDATED
                                                -----------------    --------------       ------------------    --------------------
                  ASSETS
Current
    Cash and short term securities                    $  910,425        $2,161,781                                   $  3,072,206
    Accounts and other receivable                      6,837,741         1,382,019                                      8,219,760
    Inventories                                       16,623,906           585,565                                     17,209,471
Due from director                                                              100                                            100

    Prepaid and deposits                                 911,228           401,727   (a)          (301,306)             1,011,649
                                                -----------------    --------------                             --------------------
          Total Current Assets                        25,283,300         4,531,192                                     29,513,186
                                                -----------------    --------------                             --------------------
Fixed Assets                                          62,396,316           873,036                                     63,269,352

Other Tangible Assets                                  2,225,919                                                        2,225,919

Other Assets

    Patent rights and Hep B Vaccine                                                                                            -
    Intangible and other assets, net                     432,769         2,372,207                                     2,804,976
                                                -----------------    --------------                             --------------------
          Total Other Assets                             432,769         2,372,207                                     2,804,976
                                                -----------------    --------------                             --------------------
Total Assets                                         $90,338,304        $7,776,435                                   $97,813,433
                                                =================    ==============                             ====================

LIABILITIES AND STOCKHOLDERS' EQUITY (DIFFICIENCY)
Current Liabilities
   Accounts payables and accrued liabilities        $ 20,867,080       $ 1,548,144                                   $22,415,224
   Notes payable - short-term                         12,884,058                                                      12,884,058
   Due to related companies                            4,660,984                     (b)        (2,420,000)            2,240,984
                                                -----------------    --------------                             --------------------
          Total Current Liabilities                   38,412,122         1,548,144                                    37,540,266
                                                -----------------    --------------                             --------------------
Long-term Liabilities
    Long-term account payable                         22,743,468                                                      22,743,468
    Notes payable - long-term                          6,316,425                                                       6,316,425
    Due to related companies                           1,328,502                                                       1,328,502
                                                -----------------    --------------                             --------------------
          Total Liabilities                           68,800,517         1,548,144                                    67,928,661
                                                -----------------    --------------                             --------------------
Minority Interest
                                                -----------------    --------------                             --------------------
Stockholders' Equity (Deficiency)
    Share Capital                                         50,000            18,376   (a)            (5,498)               62,878
    Additional paid in capital                        13,977,504        24,176,970   (a)       (18,262,863)           22,311,611
                                                                                     (b)          2,420,000
    Due from a stockholder                              (52,149)                                                         (52,149)
    Accumulated other comprehensive (loss)                               (34,807)    (a)             34,807                    -
    Retained earnings (deficit)                        7,562,432      (17,932,248)   (a)         17,932,248            7,562,432
                                                -----------------    --------------                             --------------------
          Total stockholders' equity                  21,537,787         6,228,291                                    29,884,772
                                                -----------------    --------------                             --------------------
Total liabilities and equity                         $90,338,304        $7,776,435                                   $97,813,433
                                                =================    ==============                             ====================
2
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2004
                            (Expressed in US Dollars)
ORIENTAL                           PRO-FORMA            PRO-FORMA
                                                                                                 ADJUST-             CONSOLI-
                                                               WAVE             DRAGON            MENT                 DATED
                                                          ---------------    -------------   ----------------    ------------------

Sales                                                       $ 29,023,130       $3,705,261                             $ 32,728,391
Cost of Sales                                                 16,140,305        1,546,028                               17,686,333
                                                          ---------------    -------------                       ------------------

Gross Profit                                                  12,882,825        2,159,233                               15,042,058

Operating Expenses
    Selling, general and
     administrative expenses                                   5,578,147        3,354,522                                8,932,669
    Depreciation and amortization of fixed assets                278,449          706,941                                  985,390
                                                          ---------------    -------------                       ------------------

    Total operating expenses                                   5,856,596        4,061,463                                9,918,059
                                                          ---------------    -------------                       ------------------

                                                               7,026,229      (1,902,230)                                5,123,999

    Net write off of land-use right and fixed assets                            (937,777)                                (937,777)
    New market and EPO development expenses                                     (246,080)                                (246,080)
    Provision for doubtful debts                                                                                                 -
    Loan interest expense                                      (216,634)          (4,223)                                (220,857)
                                                          ---------------    -------------                       ------------------

Income (Loss) from Operations                                  6,809,595      (3,090,310)                                3,719,285

Other Income (Expenses)
    Interest Income (expense)                                                      41,106                                   41,106
    Other income                                                  61,881        2,106,486                                2,168,367
    Other expense                                               (57,230)                                                  (57,230)
                                                          ---------------    -------------                       ------------------

Income (Loss) before income taxes and minority interest        6,814,246        (942,718)                                5,871,528
  Minority interest
    Income Tax Expense                                         (451,823)                -                                (451,823)
                                                          ---------------    -------------                       ------------------

Net Income (Loss) for the year                                 6,362,423        (942,718)                                5,419,705
                                                          ===============    =============                       ==================
                                                                                                                               $
Net Income (Loss) per share - basic                             $ 127.25         $ (0.05)                                      0.08
                                                          ===============    =============                       ==================
Weighted average number of common shares
outstanding   - basic                                             50,000       20,551,440                               65,053,444
                                                          ===============    =============                       ==================
3
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                      PRO-FORMA CONSOLIDATED BALANCE SHEET
                             As of December 31, 2003
                            (Expressed in US Dollars)
ORIENTAL                                   PRO-FORMA            PRO-FORMA
                                                        WAVE              DRAGON                 ADJUSTMENT         CONSOLIDATED
                                                  -----------------    --------------          ---------------    ------------------
ASSETS
Current
    Cash and short term securities                     $   515,791       $ 3,126,667                                   $  3,642,458
    Accounts receivable                                  4,267,353         1,265,676                                      5,533,029
    Inventories                                          7,488,085         1,090,464                                      8,578,549

  Due from director                                                                       (a)         500,100               500,100
    Prepaid and deposits                                   119,070           139,595                                        258,665
                                                  -----------------    --------------
                                                                                                                  ------------------
          Total Current Assets                          12,390,299         5,622,402                                     18,512,801
                                                  -----------------    --------------                             ------------------

Fixed Assets                                            37,996,606         2,089,352                                     40,085,958

Other Tangible Assets                                    2,246,452                                                        2,246,452

Other Assets
    Patent rights and Hep B Vaccine                                          500,100      (a)       (500,100)                     -
    Intangible and other assets, net                       493,155         2,924,198      (a)               -             3,417,353
                                                  -----------------    --------------                             ------------------
          Total Other Assets                               493,155         3,424,298                                      3,417,353
                                                  -----------------    --------------                             ------------------

Total Assets                                           $53,126,512       $11,136,052                                    $64,262,564
                                                  =================    ==============                             ==================

LIABILITIES AND STOCKHOLDERS' EQUITY (DIFFICIENCY)
Current Liabilities
   Accounts payables and accrued liabilities          $ 21,519,961        $1,428,257                                   $ 22,948,218
   Notes payable - short-term                              806,763                                                          806,763
   Due to a stockholder and related companies            5,509,135                        (b)     (5,100,000)               409,135
                                                  -----------------    --------------
                                                                                                                  ------------------
          Total Current Liabilities                     27,835,859         1,428,257                                     24,164,116
                                                  -----------------    --------------                             ------------------

Long-term Liabilities
   Long-term account payable                             1,837,182                                                        1,837,182
   Notes payable - long-term                             8,454,106                                                        8,454,106
   Due to related companies                                                               (b)       2,680,000             2,680,000
                                                  -----------------    --------------                             ------------------

          Total Liabilities                             38,127,147         1,428,257                                     37,135,404
                                                  -----------------    --------------                             ------------------

Minority Interest
                                                  -----------------    --------------                             ------------------

Stockholders' Equity (Deficiency)

    Share Capital                                           50,000            20,462      (a)         (5,509)                64,953
    Additional paid in capital                           7,835,865        26,708,870      (a)    (17,016,028)            19,948,707
                                                                                          (b)      2,420,000
    Due from a stockholder                               (228,148)                                                        (228,148)
    Accumulated other comprehensive (loss)                                  (32,007)      (a)          32,007                     -
    Retained earnings (deficit)                          7,341,648      (16,989,530)      (a)      16,989,530             7,341,648
                                                  -----------------    --------------                             ------------------
          Total stockholders' equity                    14,999,365         9,707,795                                     27,127,160
                                                  -----------------    --------------                             ------------------

Total liabilities and equity                           $53,126,512       $11,136,052                                    $64,262,564
                                                  =================    ==============                             ==================
4
DRAGON PHARMACEUTICAL INC. & SUBSIDIARIES
                 PRO-FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                      For the Year Ended December 31, 2003
                            (Expressed in US Dollars)
ORIENTAL                          PRO-FORMA               PRO-FORMA
                                                             WAVE           DRAGON           ADJUSTMENT            CONSOLIDATED
                                                        ------------        -------           ----------            ------------

Sales                                                   $ 26,086,092     $   3,648,149                              $  29,734,241
Cost of Sales                                             13,817,298         1,184,896                                 15,002,194
                                                       ---------------    ---------------                         ---------------
Gross Profit                                              12,268,794         2,463,253                                 14,732,047

Operating Expenses
    Selling, general and
     administrative expenses                               4,156,373         3,391,430                                  7,547,803
    Depreciation and amortization of fixed assets            540,046           743,080                                  1,283,126
                                                       ----------------   ---------------                       -------------------

    Total operating expenses                               4,696,419         4,134,510                                  8,830,929
                                                       ----------------   ---------------                       -------------------
                                                           7,572,375        (1,671,257)                                 5,901,118

    Net write off of land-use right and fixed assets                          (165,912)                                  (165,912)
    New market and EPO development expenses                                   (216,560)                                  (216,560)
    Provision for doubtful debts                                               (29,450)                                   (29,450)
    Loan interest expense                                                       (6,357)                                    (6,357)
                                                       ----------------   ---------------                       -------------------
Income (Loss) from Operations                               7,572,375       (2,089,536)                                  5,482,839

Other Income (Expenses)
    Interest Income (expense)                                 (32,384)         138,802                                     106,418
    Other income                                               63,675                                                       63,675
    Other expense                                             (19,694)                                                     (19,694)
                                                       ----------------   ---------------                       -------------------

Income (Loss) before income taxes and minority
interest                                                    7,583,972        (1,950,734)                                  5,633,238
    Minority interest
    Income Tax Expense                                                          (44,000)                                   (44,000)
                                                      ------------------  ----------------                       -------------------

Net Income (Loss) for the year                              7,583,972        (1,994,734)                                  5,589,238
                                                       =================  ===============                        ===================

Net Income (Loss) per share - basic                    $       151.68      $      (0.10)                                       0.09
                                                       =================  ===============                        ===================
Weighted average number of common shares
outstanding   - basic                                          50,000         20,348,195                                 64,839,402
                                                       =================  ===============                        ===================
5
Dragon Pharmaceutical Inc. & Subsidiaries
     Notes to Unaudited Pro Forma Combined Consolidated Financial Statements
                  As of December 31, 2004 and December 31, 2003
                            (Expressed in US Dollars)

1.   Basis of Presentation

     The accompanying unaudited pro-forma consolidated financial statements have
been  prepared by management of Dragon in  accordance  with  generally  accepted
accounting  principles of the United States.  In the opinion of the  management,
the pro-forma consolidated financial statements include all material adjustments
necessary for fair presentation in accordance with generally accepted accounting
principles of the United States.

     These pro forma  consolidated  financial  statements  have been prepared to
give  effect to Dragon  Pharmaceutical,  Inc.'s  acquisition  of  Oriental  Wave
Holding Limited which occurred on January 12, 2005. These pro forma consolidated
financial statements are not necessarily  indicative of the actual results which
would  have  been  attained  had the  combination  been in  effect  on the  date
indicated or may be attained in the future.

     These pro forma consolidated  financial  statements have been prepared from
information  derived  from  information  derived  from the audited  consolidated
financial  statements  of Dragon and  Oriental  Wave as at December 31, 2004 and
2003.  These  pro  forma  consolidated  financial  statements  should be read in
conjunction with the historical  financial  statements and notes thereto of both
Dragon and Oriental Wave for the year, ended December 31, 2004 and 2003.

2.   Share Purchase Agreement and Assumptions

     Pursuant to a Share Purchase  Agreement dated June 11, 2004,  Dragon agreed
to  issue  44,502,004  shares  of  common  stock  in  exchange  for  100% of the
outstanding  shares of Oriental Wave. The  acquisition  was completed on January
12, 2005.  The exchange  resulted in the former  shareholders  of Oriental  Wave
owning a majority of Dragon's shares and,  consequently,  accounting  principles
applicable to a reverse  take-over have been applied to record the  transaction.
Under  this  basis of  accounting,  Oriental  Wave has  been  identified  as the
acquirer  and,  accordingly,   the  combined  company  is  considered  to  be  a
continuation  of the operations of Oriental Wave and include  Dragon's  accounts
from the  acquisition  date.  The pro forma  consolidated  balance  sheets as of
December  31,  2004 and 2003 have been  prepared as though the  acquisition  had
occurred  on  December  31,  2004 and the pro forma  consolidated  statement  of
operations  for the years ended December 31, 2004 and 2003 have been prepared as
though the acquisition had occurred on January 1, 2003.

3.   Pro Forma Adjustments

     These unaudited pro forma  consolidated  financial  statements  reflect the
following pro forma adjustments:

     (a)  Adjustment  to  record  acquisition  of the net  assets  of  Dragon by
     Oriental Wave as though the acquisition occurred December 31, 2004. The net
     assets acquired are:

                                       6
Dragon Pharmaceutical Inc. & Subsidiaries
     Notes to Unaudited Pro Forma Combined Consolidated Financial Statements
                        As of December 31, 2004 and 2003
                            (Expressed in US Dollars)

     Cash and short term securities.........................   $  2,161,781
     Accounts receivable....................................       1382,019
     Inventories............................................        585,565
     Due from director......................................            100
     Prepaid and deposits...................................        100,421
                                                               ------------

        Total Current Assets................................      4,531,192
     Fixed Assets...........................................        873,036
     Other Assets...........................................
     Intangible and other assets, net.......................       2372,207
                                                              -------------
        Total Assets........................................      7,475,129
     Less accounts payables and accrued liabilities.........     (1,548,144)
                                                              --------------
        Net assets acquired................................    $  5,926,985
                                                              ==============

                 .

     (b) Oriental Wave's stockholders agreed to the conversion of 20 million RMB
     (US$2,420,000)   of  the  debt  to  equity  upon  the   completion  of  the
     acquisition. These pro forma consolidated financial statements reflect this
     transaction having occurred on December 31, 2004.

                                       7