<html>
  <head>
    <title>
      Unassociated Document
</title><!-- Licensed to: vf-->
<!-- Document Created using EDGARizer HTML 3.0.4.0 -->
<!-- Copyright 2006 EDGARfilings, Ltd., an IEC company.-->
<!-- All rights reserved EDGARfilings.com -->
</head>
  <body bgcolor="#ffffff">
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNITED
      STATES</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">WASHINGTON,
      DC 20549</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>FORM
      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CURRENT
      REPORT </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PURSUANT
      TO SECTION 13 OR 15(D) OF </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
      SECURITIES EXCHANGE ACT OF 1934</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
      of
      Report (Date of earliest event reported): September 8, 2006</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Renhuang
      Pharmaceuticals, Inc.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Nevada</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(State
      or
      Other Jurisdiction of Incorporation)</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff"><strong>0-24512</strong></font></div>
            </td>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff"><strong>88-1273503</strong></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff">(Commission
                File Number)</font></div>
            </td>
            <td valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff">(IRS
                Employer Identification Number)</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>No.
      281, Taiping Road, Taiping District,</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Harbin,
      Heilongjiang Province, 150050</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>P.
      R. China</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address
      of Principal Executive Offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>+86-451-5762-0378
      </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Registrant&#8217;s
      Telephone Number, Including Area Code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>c/o
      Viking Investments</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>65
      Broadway, Suite 888</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>New
      York, NY 10006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Former
      Name or Former Address, if Changed Since Last Report)</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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):</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14-12)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17&#160;CFR
      240.14d-2(b))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="FONT-FAMILY: Wingdings">o</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;Pre-commencement
      communications pursuant to Rule 13-e-4(c) under the Exchange Act (17&#160;CFR
      240.13e-4(c))</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;&#160;&#160;&#160;</strong></font></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Entry
      into a Material Definitive Agreement.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      28, 2006, Renhuang Pharmaceuticals, Inc., a Nevada corporation (the
&#8216;&#8216;Company&#8217;&#8217;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">)
      and
      Harbin Renhuang Pharmaceutical Company Limited, a</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Corporation incorporated under the laws of the British Virgin Island,
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(the
      &#8220;BVI&#8221;) </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">entered
      into a Share Exchange Agreement (the &#8220;Agreement&#8221;) pursuant to which the Company
      acquired all of the outstanding capital stock of BVI in exchange for issuing
      29,750,000 shares of the Company&#8217;s </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">common
      stock, par value $0.001 per share (the &#8216;&#8216;Common Stock&#8217;&#8217;) to BVI&#8217;s stockholders,
      representing 85% of the Company&#8217;s capital stock on a fully diluted basis after
      taking into account the contemplated transaction. BVI is a holding company
      and
      owns 100% of Harbin Renhuang Pharmaceutical Co. Ltd., incorporated under the
      laws of the Peoples Republic of China (&#8220;Renhuang</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      China&#8221;).
      This transaction is referred to throughout this report as the &#8220;Merger&#8221;.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      2.01. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Completion
      of Acquisition or Disposition of Assets</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 7, 2006, the Merger described in Item 1.01 was completed.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      closing of the Merger, BVI became a wholly owned subsidiary of the Company.
      In
      exchange for all of the issued and outstanding shares of BVI, the Company issued
      to the former shareholders of BVI 29,750,000 unregistered and restricted shares
      of Common Stock, par value $0.001 of the Company. After giving effect to the
      Merger, the Company has 35,000,000 shares issued and outstanding and the former
      stockholders of BVI own approximately 85% of the issued and outstanding Common
      Stock of the Company. Accordingly, the Merger represents a change in control
      of
      the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares
      of
      the Company&#8217;s Common Stock are trading on the Over the Counter (OTC) Bulletin
      Board Market under the symbol RHGP.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      accounting purposes, the Merger has been accounted for as a reverse acquisition
      with the Company as the accounting acquirer and the BVI as the accounting
      acquiree. Upon effectiveness of the Merger, Renhuang China&#8217;s business plan
      became the business plan of the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Merger agreement was filed as Exhibit 10.1 to the Company&#8217;s Current Report on
      Form 8-K filed with the Securities and Exchange Commission on August 29, 2006
      and is incorporated herein by reference. The foregoing description of the Merger
      and the transactions contemplated thereby do not purport to be complete and
      are
      qualified in their entireties to the Merger agreement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      31, 2006, the Company&#8217;s Board of Directors approved the Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
      otherwise provided in this current report, all references in this current report
      to &#8220;we&#8221;, &#8220;us&#8221;, &#8220;our company&#8221;, &#8220;our&#8221;, or the &#8220;Company&#8221; refer to the combined
      Renhuang Pharmaceuticals, Inc. entity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Changes
      Resulting From the Merger</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to carry on Renhuang China&#8217;s business as its sole line of
      business. Renhuang BVI is a holding company and owns 100% of Harbin Renhuang
      Pharmaceutical Co., Ltd., incorporated under the laws of the Peoples Republic
      of
      China (&#8220;Renhuang PRC&#8221;). Renhuang PRC is based in Harbin, Heilongjiang
      Province</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Peoples
      Republic of China and is a Biotechnology company focusing on products and
      services related to Pharmaceuticals. The Company has relocated its principal
      executive offices to those of Renhuang PRC at No. 281, Taiping Road, Taiping
      District, Harbin, Heilongjiang Province, 150050 P. R. China</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      and its
      telephone number is +86-451-5762-0378. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company maintains a representative office at 65 Broadway, Suite 888, New York,
      NY 10006. Telephone (212) 430 6548. Telefax (646) 356 7034.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Merger and its related transactions were approved by the requisite number of
      Renhuang Pharmaceuticals&#8217; stockholders by written consent in lieu of a meeting
      on August 30, 2006 and to:</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="3%">&#160;</td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Symbol">&#183;</font>&#160;</font></div>
            </td>
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ratify
                all actions taken by the Board of the Company prior to closing, in
                connection with the Merger; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="3%">&#160;</td>
            <td align="left" valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Symbol">&#183;</font>&#160;</font></div>
            </td>
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">take
                such other action as is necessary or appropriate to consummate the
                transactions consisting of the Merger and related
                transactions.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Company
      History of Renhuang Pharmaceuticals, Inc., (the &#8220;Company&#8221;)</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      Pharmaceuticals, Inc., (&#8220;Renhuang&#8221;) or the ("Company") was incorporated in the
      State of Nevada on August 18, 1988 as Solutions, Incorporated. Since that time,
      we have undergone a series of name changes as follows: Suarro Communications,
      Inc., e-Net Corporation, e-Net Financial Corp., e-Net.Com Corporation, e-Net
      Financial.Com Corporation, Anza Capital, Inc. and finally on July 28, 2006
      we
      changed our name to Renhuang Pharmaceuticals, Inc. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      March
      3, 2006, we completed the disposition of substantially all of our assets and
      discontinued our operations, including but not limited to, all of our ownership
      interest in our subsidiary, American Residential Funding, Inc., a Nevada
      corporation ("AMRES") to AMRES Holding, LLC, a Nevada limited liability company
      ("AMRES Holding") under control of Vince Rinehart, a shareholder and, at that
      time, our sole officer and director ("Rinehart"). Effective on September 30,
      2005, the disposition was approved by written consent of a majority of our
      stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      exchange for substantially all of our assets, including but not limited to,
      all
      of our ownership interest in AMRES, (i) Rinehart delivered a majority of his
      ownership interest in Anza, consisting of 831,375 shares of common stock and
      1,880,000 shares of our common stock acquired upon the conversion of 18,800
      shares of Series F Convertible Preferred Stock, to Viking Investments USA,
      Inc.,
      a Delaware corporation ("Viking"). Rinehart kept 156,900 shares of our common
      stock; (ii) Rinehart terminated that certain Employment Agreement dated June
      1,
      2001, by and between Rinehart and Anza; (iii) AMRES assumed all obligations
      under that certain real property lease by and between Anza and Fifth Street
      Properties-DS, LLC; (iv) AMRES delivered to Viking its ownership interest in
      Anza, consisting of 4,137,500 shares of our common stock; and (v) AMRES Holding
      delivered warrants to acquire 250,000 shares of our common stock to Viking.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing description of the disposition of our assets and discontinuation
      of
      our operations, and the transactions contemplated thereby do not purport to
      be
      complete and are qualified in their entireties to the Common Stock Purchase
      Agreement and the Securities Purchase Agreement that were filed as Exhibit
      10.1
      and Exhibit 10.2 respectively in our Current Report Form 8-K with the Commission
      on September 23, 2005 and is hereby incorporated by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      11, 2006, our outstanding common stock underwent a thirty-for-one stock split
      reversal resulting in a decrease in our outstanding common stock at that time
      from 13,355,181 shares to approximately 445,240 shares as further described
      in
      our Current Report 14 C filed with the Commission on April 25,
      2006.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Company
      History of Harbin Renhuang Pharmaceutical Co. Ltd. and Harbin Renhuang
      Pharmaceutical Stock Co. Ltd. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Harbin
      Renhuang Pharmaceutical Stock Co. Ltd. was incorporated in 1996 in the Peoples
      Republic of China (&#8220;Old Renhuang&#8221;). Harbin Renhuang Pharmaceutical Co. Ltd. was
      incorporated in February 2006 in the Peoples Republic of China (&#8220;Renhuang
      China&#8221;). On March 3, 2006 Renhuang Medicine for Animals, a company controlled by
      Mr. Li Shaoming, invested 25 million RMB ($3.3 million) in cash in Renhuang
      China. On March 3, 2006 Old Renhuang transferred the majority of its operating
      assets, except buildings, to Renhuang China. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result, as of May 1, 2006, nearly 100% of revenue producing activities in Old
      Renhuang have been migrated to Renhuang China. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description
      of Business of Renhuang China </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward
      Looking Statements</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Current Report on Form 8-K contains forward-looking information. Forward-looking
      information includes statements relating to future actions, future performance,
      costs and expenses, outcome of contingencies, financial condition, results
      of
      operations, liquidity, business strategies, objectives of management, and other
      such matters of the Company. The Private Securities Litigation Reform Act of
      1995 provides a "safe harbor" for forward-looking information to encourage
      companies to provide prospective information about themselves without fear
      of
      litigation so long as that information is identified as forward-looking and
      is
      accompanied by meaningful cautionary statements identifying important factors
      that could cause actual results to differ materially from those projected in
      the
      information. Forward-looking information may be included in this Current Report
      on Form 8-K or may be incorporated by reference from other documents filed
      with
      the Securities and Exchange Commission the "SEC") by the Company. You can find
      many of these statements by looking for words including, for example,
      "believes," "expects," "anticipates," "estimates" or similar expressions in
      this
      Current Report on Form 8-K or in documents incorporated by reference in this
      Report. The Company undertakes no obligation to publicly update or revise any
      forward-looking statements, whether as a result of new information, future
      events, or otherwise. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has based the forward-looking statements relating to the Company&#8217;s
      operations on management's current expectations, estimates, and projections
      about the Company and the industry in which it operates. These statements are
      not guarantees of future performance and involve risks, uncertainties, and
      assumptions that the Company cannot predict. In particular, The Company has
      based any of these forward-looking statements on assumptions about future events
      that may prove to be inaccurate. Accordingly, the Company's actual results
      may
      differ materially from those contemplated by these forward-looking statements.
      Any differences could result from a variety of factors, including, but not
      limited to, failure to effectuate its business plan, inability to maintain
      costs, loss of customers, regulatory issues, general economic and business
      conditions, competition, and other factors.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description
      of Business of Harbin Renhuang Pharmaceutical Co. Ltd. and Harbin Renhuang
      Pharmaceutical Stock Co. Ltd. </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Harbin
      Renhuang Pharmaceutical Stock Co. Ltd., incorporated in 1996 in the Peoples
      Republic of China, is a venture capital backed pharmaceutical company, located
      in the capital of the province of Heilongjiang Province, in the northeastern
      corner of China. Renhuang is mainly engaged in the fields of research,
      manufacturing and distribution of Chinese medical products and
      bio-pharmaceutical products in Mainland China. Our niche market is traditional
      Chinese medical products and bio-pharmaceutical products, and our goal is to
      become the dominant entity within a few carefully selected groups of
      products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      is a high-tech company with its niche market in Greater China area. It
      differentiates from its peers with the most advanced monoclonal antibody
      technology and a few carefully selected groups of products dominant in the
      market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has the ability to produce more than 100 types of products. The product sales
      have reached more than 50 provinces and cities in China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      beginning of 2003, Renhuang purchased 100,000 square meters (about 1 million
      square feet) of land and has built &#8220;City Biotech Medicine Park" located in the
      City of "A" in the Province of Heilongjiang. The project was called "Renhuang
      City Bio-tech Medicine Construction Project", which has been supported by the
      China government. Renhuang obtained a zero percent interest rate three-year
      loan
      in the amount of 30 million RMB (about US $3.7 million). The whole project
      was
      finished in 2004, and "City Bio-tech Medicine Park" received &#8220;Good Manufacturing
      Practice&#8221; (GMP) certification on Dec. 30, 2004. In the park, Renhuang produces
      enzyme engineering series products, including SOD (Super Oxide Dismutase),
      Lysozyme enzyme; Shark Power health care products and some other traditional
      medicine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2003,
      Renhuang&#160;acquired DongFangHong (&#8220;DFH&#8221;) Pharmaceutical Co., which controls
      70% of all Acanthopanax wild resource (commonly known as &#8220;Siberian Ginseng&#8221;) in
      the Heilongjiang Province. About&#160;90% of all wild Acanthopanax resource in
      China grows in&#160;Heilongjiang.&#160; Additionally, the acquisition came
      with&#160;73 GMP approved medicines from DHF.&#160;&#160;Due to the insufficient
      resource of Acanthopanax and increased&#160;demand, Acanthopanax resource is
      expected to generate substantial profit&#160;and cash flow to
      Renhuang.&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company&#8217;s medical product portfolio can be divided into three different
      categories: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      medical products - 45%*</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shark
      Power Healthcare products, and - 25%</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Traditional
      medical products. - 30%</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><img src="productpiechart.jpg" alt="productpiechart photo"></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 108pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">n&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chart
                is based on numbers of 2005</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 90pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
      Percentage of the total revenue of 2005</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      (also known as Siberian Ginseng) referred to as Eleutherococcus in Soviet
      sources, comes from the northernmost province of China, Heilongjiang, which
      is a
      frigid area adjacent to Soviet Siberia, has become one of the most popular
      and
      widely respected herbal tonics in the world containing chemical components
      proven to promote good health in humans. The plant is common in Heilongjiang,
      but does not grow in any abundance elsewhere in China. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      has been used regularly as a tonic by the people of far northern China for
      over
      two thousand years. Because of its profound adaptogenic functions, Acanthopanax
      has grown enormously in reputation, importance and popularity in the Chinese
      and
      Western herbal systems in the last few decades. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is now
      routinely used by people required to engage in high stress, high
      energy-demanding activities such as high altitude flying, long-distance sailing,
      working in high or low temperature environments or in deep water. Acanthopanax
      is used by all Russian (cosmonauts) astronauts. The use of the extract of this
      herb in these endeavors has been reported to increase physical strength, sharpen
      concentration, improve various parameters of mental power, increase visual
      acuity, improve color vision and promote healing power.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      is especially popular among athletes or physical workers who require substantial
      sources of adaptive energy and endurance, such as long distance runners, rock
      climbers, bicyclists, scuba divers, dancers, tennis players and by others
      seeking to enhance physical and mental performance, endurance and
      adaptability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dongfanghong
      acquisition </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of its acquisition of Dongfanghong Pharmaceutical in 2003, the company
      now controls around 70% of China&#8217;s natural supply of Acanthopanax. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      this
      plant, the company has developed a line of Acanthopanax-based products: the
      company&#8217;s sale of these products account for 25% of the 400 million RMB (US $50
      million dollars) market for Acanthopanax-based products and could reach 50%
      of
      the Acanthopanax-based medical product market over the next three to five years.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax
      Revenue</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the fiscal year of 2005, Acanthopanax medical products have generated 45% of
      the
      total revenue and profit of the company. Due to the company&#8217;s dominating
      position of Acanthopanax wild resource, and its cutting-edge technology, the
      company will, within the next 3-5 years, control more than 50% share of the
      market of Acanthopanax medical products in China. It is further anticipated
      that
      the market for Acanthopanax products will grow with an average annual rate
      of
      30% and thereby becoming the dominating profit center of the company.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shark
      Power Healthcare Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shark
      Power Healthcare products, are made from Squalene, the scientific name for
      'Nose
      Oil', a low density compound stored in the liver </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
      sharks</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      These
      medicines contain extracts of shark liver oil and are used to improve oxygen
      level of human blood. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Squalene,
      when taken into the body, removes animal fat and various waste materials whilst
      circulating in the blood so that it cleans blood vessels and blood. It is good
      for the treatment and prevention of arteriosclerosis, improving the function
      of
      the kidneys and livers. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Squalene
      is an extract from sharks that habitat in frolics in cool, clean deep-sea of
      southern ocean waters fully derived. Squalene manufactured and processed in
      Australia is known for its purity and high quality, and also found to be
      extremely low in heavy metals. These products are becoming increasingly popular
      in Japanese and Chinese markets, where premium quality and purity are of utmost
      importance. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      widely believed that the human consumption of Squalene may be of assistance
      in:
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">improving
      the function of kidneys and livers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">keeping
      skin moist with a healthier complexion</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">healing
      of wounds</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">reducing
      stress and heart disease</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">maintaining
      cholesterol</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">arthritis
      suffers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">gastritis
      suffers</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">maintaining
      healthy eyesight</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">maintaining
      memory capacity</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      segment of the company&#8217;s business grew more than 30% as compared to 2004.
      Through a unique production and raw materials resource, the company&#8217;s production
      cost is 30% lower than its competition&#8217;s cost, which savings is partly passed on
      to the consumer, which in turn results in higher volumes and increased profit
      for the company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax
      and Shark Power Expansion</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company will, for both the above segments, continue its expansion with increased
      market activities, which will have a significant impact on the
      sales.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Traditional
      Medical Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Traditional
      medical products provide the company with low risk and stable cash flow. Among
      them, the company produces three market-leading products, which all achieved
      more than 100% growth rate in the fiscal year of 2005, and will do in 2006.
      Such
      products include:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tianma
      pills (treating headaches)</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tornado
      pills (treating headaches)</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shengmai
      granulate (treating female venereal diseases) </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Lysozyme
      Enzyme Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2007,
      the company plans to launch Lysozyme Enzyme Products in the food antiseptic
      area, the largest potential market for Lysozyme. The company is able to achieve
      up to 80% of cost savings compared with competitive products, produced outside
      of China. The company&#8217;s products from this group have proved to be 60% more
      reliable with 50% lower production costs than competitive products. With a
      huge
      potential market, management conservatively estimates the company will achieve
      annual 100% revenue growth rate in the next 5 years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Monoclonal
      Antibody Reagent Box Series Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company also plans to launch Monoclonal Antibody Reagent Box series products.
      More than five Monoclonal Antibody Reagent Box products from the company are
      estimated to receive GMP certificates and to be launched at the end of 2006
      or
      at the beginning of 2007. These products are 60% more reliable than those from
      its competitors. Moreover, the company is on the process of building its own
      monoclonal antibody center, the necessary raw material for the products.
      Therefore, the company is able to achieve 50% of cost savings compared with
      most
      of its competitors, who have to purchase their raw materials from third parties.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
      high
      and sustained demand in China, and insufficient supply, the company believes
      that the Monoclonal Antibody Reagent Box segment has a substantial upside
      potential. Management conservatively estimates that the products will achieve
      100% annual growth rate in sales over the next 5 years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company&#8217;s sales network is very big. With more than 70 sales centers organized
      under 24 districts with more than 2000 sales people, the company&#8217;s product sales
      offices of Renhuang cover 50% of the Great China area and an estimated 80%
      of
      its geographical target area. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      &amp; Development Centers </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company owns its R&amp;D centers, including Information Center, Cooperation
      Center, Research Center, and Harbin Renhuang Marine Healthcare Medicine Center.
      The company also owns and runs a Post-doctor Research Working Station, which
      is
      set up by the company and approved by the government, where post PhD students
      conduct research. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      R&amp;D centers simulate real assembly lines, have advanced equipment, and
      substantial and advanced examination analysis instruments. A number of well
      recognized and respected pharmaceutical professors and research scientists
      in
      China are employed in the R&amp;D centers. Over 50% of the employees in the
      centers have an advanced degree.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax
      (Siberian Ginseng)</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Overview:</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax,
      which is known in the United States as Siberian Ginseng, has been used for
      centuries in China and Russia. Although a distant relative of American and
      Asian
      ginsengs (</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Panax
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sp</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">),
      with
      some overlap in its uses, Acanthopanax is a distinct plant with different active
      chemical components. Known for its ability to restore vigor, increase longevity,
      enhance overall health, and stimulate both a healthy appetite and a good memory,
      it is widely used in Russia to help the body adapt to stressful conditions
      and
      to enhance productivity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      Chinese medicine, it is valued for its beneficial effects on "qi" </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>(Qi&#8217;s
      definition: The Chinese term for vital energy or life force. It is pronounced
      &#8220;chee.&#8221;.)</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and its
      ability to treat "yang" </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>(Yang&#8217;s
      definition: One of the two fundamental forces, Yang represents the male or
      active force.)</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      deficiency in the spleen </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>(Spleen&#8217;s
      definition: As distinct from the Western medical concept of Spleen, this concept
      from Traditional Chinese Medicine is more a way of describing a set of
      interrelated parts than an anatomical organ.)</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      kidney. Like the panax ginsengs, Acanthopanax is considered to be an adaptogen,
      which means it helps in stressful circumstances and returns the body to a normal
      balance. For example, an adaptogen might lower blood pressure in someone who
      has
      high blood pressure, but raise it in another person who has low blood pressure.
      The active ingredients in Acanthopanax, eleutherosides (similar to ginsenosides
      in the panax species), are thought to increase stamina and to stimulate the
      immune system.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Until
      recently, most scientific research on Acanthopanax took place in Russia. This
      research has largely supported its use to maintain health and strengthen the
      system rather than to treat particular disorders. Acanthopanax may help the
      body
      deal with physically and mentally stressful exposures such as heat, cold,
      physical exhaustion, viruses, bacteria, chemicals, extreme working conditions,
      noise, and pollution. By strengthening the system, it may also help prevent
      illness. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
      on Acanthopanax has included studies on the following: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Immune
      System</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      4-week
      study in healthy subjects found that those who received Acanthopanax extract
      had
      improvements in a number of measures that reflect the functioning of the immune
      system. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Mental
      Performance</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
      3-month
      human study of Acanthopanax among middle-aged volunteers found that there was
      a
      significant improvement in memory and concentration as compared to a placebo.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Another
      popular but unproven use of Acanthopanax is to maintain or restore mental
      alertness. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Physical
      Performance </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      Acanthopanax is frequently used to enhance physical stamina and increase muscle
      strength, studies have shown mixed results for these purposes. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Male
      Fertility</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      has a long history of folkloric use for male infertility. Animal studies suggest
      that Acanthopanax may be helpful in increasing reproductive capacity.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Viral
      Infection </em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      a
      laboratory study, an extract of Acanthopanax slowed the replication of certain
      viruses, including influenza A (which causes the flu) as well as human
      rhinovirus and respiratory syncytial virus (both of which cause symptoms of
      the
      common cold). It had no effect, however, in test tubes on adenovirus (another
      cause of the common cold and other respiratory infections) or herpes simplex
      virus type 1 (which generally causes oral herpes lesions). But, a 6-month study
      of 93 people with herpes simplex virus type 2 (which generally causes genital
      herpes lesions) found that Acanthopanax reduced frequency, severity, and
      duration of outbreaks.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Market
      analysis on Acanthopanax in China:</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wild
      Acanthopanax grows in some provinces in North and North-Eastern China,
      especially in Heilongjiang Province, where 90% of all wild Acanthopanax
      resources in China are located. In 1980s, the annual production level was around
      10,000 tons. Due to excessive harvesting and damage, the production of
      Acanthopanax has significantly decreased. At the end of 1990s, the production
      of
      wild Acanthopanax was around 2,000 tons and declining. In 2004, the production
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">decreased</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      to 1,000
      tons. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      resources for Acanthopanax medicine are mostly derived from wild Acanthopanax.
      Due to favorable conditions and temperature in the Heilongjiang Province, where
      Renhuang is located, 90% of the wild Acanthopanax suitable for medicine comes
      from Heilongjiang Province. (Note: human cultivated Acanthopanax in other areas
      does not reach the same drug efficacy as wild Acanthopanax). Therefore, most
      of
      the pharmaceutical companies producing Acanthopanax are located in the
      Heilongjiang Province. Due to the limited supply of wild Acanthopanax, and
      increased recognition of its medical benefits, the demand for Acanthopanax
      is
      higher than the supply. It is estimated that the demand for Acanthopanax
      worldwide increased tenfold </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">in
      the
      next</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      five
      years. As a result, the price of raw Acanthopanax has gradually
      increased.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2000,
      the price of a kilogram of raw Acanthopanax was around 0.5 RMB (around US
      $0.062), which increased to 2.5 RMB (around US $0.31) 2004. It is estimated
      that
      the price for Acanthopanax will continue to increase. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      to
      its increasing popularity in United States, Japan and European countries,
      exporting Acanthopanax medicine is expected to generate additional revenue
      for
      Renhuang in the near future.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>The
      Dongfanghong Acquisition:</u></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2003,
      Renhuang acquired Dongfanghong Pharmaceutical Co. (DFH), a previously
      state-owned pharmaceutical company, located in Harbin, Heilongjiang Province,
      which owns 70% of all wild Acanthopanax resources in China. In 2004, one year
      after the acquisition, Renhuang increased efficiency and production capabilities
      to generate US $3.75 million in revenue in a 10% market share. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      fiscal year of 2005, the plant generated US $8.8 million in revenue, at a growth
      rate of more than 200%. In the first six months of the fiscal year of 2006,
      the
      plant generated US $9.6 million in revenue, which is more than the total revenue
      from the full previous year. Renhuang expects to obtain a market share of 50%
      of
      Acanthopanax products in China within 3-5 years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Competitive
      Advantages of Renhuang:</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to the resource advantage, Renhuang has the following competitive
      edges
      related to Acanthopanax: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Farm
      Production</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wild
      Acanthopanax resources might not be able to fulfill the rapid growing demand.
      Therefore, Renhuang has started to cultivate Acanthopanax manually with 60
      million square feet cultivation area. Cultivated Acanthopanax from Renhuang
      achieves in all material respect</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">s
      the
      same effects as wild, mainly due to Renhuang&#8217;s use of wild Acanthopanax seeds
      and other production methods as well as its extraordinarily favorable climate
      conditions in Heilongjiang Province. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Lower
      Production Costs</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has successfully developed new withdrawing technology during the process of
      Acanthopanax that lowers the production cost by 30% compared to its competitors.
      Regulatory bodies have granted the right to Renhuang to set the standards for
      new Acanthopanax medicine, which will enhance the industry quality standard.
      There are a number of smaller unregulated companies in the industry that, due
      to
      the increased regulation and standards, we believe will not be able to comply
      with the new requirements. As a consequence, Renhuang will likely see its market
      share increase. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Future
      development plan for Acanthopanax products in Renhuang</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
      its
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">resource
      dominating position, Renhuang plans to capitalize on its increased brand
      recognition. By a controlled expansion plan, Renhuang plans to expand its market
      shares in local provinces and eventually in all of China. Renhuang plans to
      be
      identified as the leading manufacturer of Acanthopanax products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      increased market awareness, it is further anticipated that Renhuang's unique
      edge in Acanthopanax will be recognized outside of China. In doing so, Renhuang
      anticipates entering into strategic foreign partnership, which Renhuang expects
      will result in increased international sale of Acanthopanax medicine in the
      near
      future.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shark
      Power Healthcare Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shark
      Power Healthcare products are made from squalene, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">an
      extract of shark liver oil from the Aizame shark whose natural Pacific habitat
      is in unpolluted ocean depths of 3,000 feet in 35 degree waters</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      R&amp;D center of Renhuang has developed a pure natural marine biology medicine
      -- Shark Power Healthcare Series. It is the only medicine in China approved
      for
      use in treating secondary health problems due to oxygen deficit. It was awarded
      the "special golden prize at Ninth Chinese Patent Technology New Product
      Exhibition", and "Golden metal at London International Patent Technology
      Exhibition".</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Clinical
      research has proven that this medicine can improve the carrying and transporting
      oxygen ability of blood, enhance the oxygen absorption and utilization factor
      of
      the organism organs, dredge the blood vessels, increase the speed of blood's
      oxygen transportation, and specially supply oxygen to heart, brain, lung and
      liver. It is able to effectively cure all kinds of symptoms caused by secondary
      health problem like dizzy, insomnia and forgetfulness, low energy and immunity,
      back pain, easy to get tired, caught cold. The effect is stable and
      safe.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Competitive
      Advantages of Renhuang:</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      Shark Power Healthcare Products have the following major advantages compared
      with its competition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>State
      Drug Administration (SDA) Approval</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      Shark Power Healthcare Products has received Good Manufacturing Practice (&#8220;GMP&#8221;)
      certificates from the State Drug Administration (&#8220;SDA&#8221;). As most healthcare
      products produced in China have not obtained GMP certificates, our Shark Power
      Healthcare Products have a very strong competitive advantage. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Shark
      Power Products are also distributed through hospital channels, which is not
      the
      case for most of other health care products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Lower
      production Costs</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      retail price of Shark Power Healthcare products has historically been lower
      than
      the price of competitors&#8217; products, because Renhuang&#8217;s raw material costs are
      lower. This means Renhuang can pass the savings on to the customers. Renhuang
      purchases raw materials directly from Australia at prices which are 20% lower
      than those from coastal areas in China, where most competitors purchase their
      materials. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2005,
      the revenue from Shark Power Healthcare products has accounted for approximately
      25% of the total revenue of Renhuang, which represented a 20% of market share
      for equivalent products. With increased promotion and improved marketing
      strategy, Renhuang believes that it can increase its market share to over 50%
      in
      the next 3 to 5 years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Traditional
      medicine</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to Acanthopanax medical and Shark Power Healthcare products, Renhuang
      produces traditional medicine products, such as medicine for cold, flu,
      headache, etc. Revenue from traditional medical products accounted for 30%
      of
      the total revenue of Renhuang in the fiscal year of 2005, and 36% in the first
      half of fiscal year of 2006. Renhuang owns 40 medical products with GMP
      certificates, of which some "Star" products reach top sales among the same
      products and most of the others generate a stable stream of revenue.
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Three
      &#8220;Star&#8221; products</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">"Tianma
      pills" and "Tornado pills" are the "Star" Chinese traditional medicines for
      treating headache in China. Although western headaches medicines have larger
      market share in China, they have also been showing to have larger side effects.
      Research reveals that most other Chinese traditional medicines have fewer side
      effects, but cannot reach the same curative effects as western medicines.
      Renhuang's &#8220;Tianma&#8221; and &#8220;Tornado&#8221; are not only superior with strong visible
      curative effects, but with little or no side effects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      fiscal year of 2005, with more than 100% growth rate from the fiscal year of
      2004, revenue from sale of &#8220;Tianma pills&#8221; reached more than US $2.1 million, and
      that of &#8220;Tornado pills&#8221; reached US $2 million; and in the first half of fiscal
      year of 2006, revenue from sale of &#8220;Tianma pills&#8221; reached more than US $2.45
      million, and that of &#8220;Tornado pills&#8221; reached US $2.07 million. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Another
      "Star" medicine is "Shengmai" granulate, with sales of US $1.04 million dollars
      in 2004 and US $1.16 million dollars in 2005, which was higher than any of
      its
      competitors for the same period; in the first half of fiscal year of 2006,
      the
      revenue has reached US $1.65 million. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      produces several additional traditional medical products that each accounts
      for
      lesser amounts. These products, through brand recognition, generate stable
      and
      risk free revenue for the company. When Renhuang expands its product offerings,
      it is anticipated that these additional products will be replaced by higher
      margin products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products
      in the developing stage</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Lysozyme
      Enzyme Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lysozyme
      is an enzyme occurring naturally in egg white, human tears, saliva, and other
      body fluids, capable of destroying the cell walls of certain bacteria and
      thereby acting as a mild antiseptic. Lysozyme protects us from the ever-present
      danger of bacterial infection. It is a small enzyme that attacks the protective
      cell walls of bacteria. Bacteria build a tough skin of carbohydrate chains,
      interlocked by short peptide strands, that braces their delicate membrane
      against the cell's high osmotic pressure. Lysozyme breaks these carbohydrate
      chains, destroying the structural integrity of the cell wall. The bacteria
      then
      burst under their own internal pressure.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Alexander
      Fleming discovered lysozyme during a deliberate search for medical antibiotics.
      Over a period of years, he added everything that he could think of to bacterial
      cultures, looking for anything that would slow their growth. He discovered
      lysozyme by chance. One day, when he had a cold, he added a drop of mucus to
      the
      culture and, much to his surprise, it killed the bacteria. He had discovered
      one
      of our own natural defenses against infection. Unfortunately, lysozyme is a
      large molecule that is not particularly useful as a drug. It can be applied
      topically, but cannot rid the entire body of disease, because it is too large
      to
      travel between cells. Fortunately, Fleming continued his search, finding a
      true
      antibiotic drug five years later: penicillin.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hen
      egg
      white has a high content of lysozyme which protects the integrity of the
      delicate yolk, thus making egg white (albumen), the preferred raw material
      for
      industrial production of the Lysozyme enzyme.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Currently,
      there is no company in China with the ability to produce Lysozyme on a large
      scale, despite the fact that it has a big potential market. Lysozyme can be
      used
      in food antiseptic, which will alter sterilization effects with 40% compared
      with chemistry antiseptic at a cost of 80% lower than similar products produced
      outside of China. The large-scale production of Lysozyme products will speed
      the
      development of cultivation industry. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      major
      uses of Lysozyme products are as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1)
      Lysozyme compound biology antiseptic (food packing coating, food bag,
      etc)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2)
      Lysozyme drug preparation (troche, oral liquid etc)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3)
      Lysozyme Biotech Pesticide</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4)
      Lysozyme home-using disinfect series products (paper tower, detergent,
      etc)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5)
      Lysozyme biotech Veterinary medicine</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6)
      Lysozyme biotech preparation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Monoclonal
      Antibody Reagent Box series products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      to statistics, the total sales volume of China's biotechnology products was
      about 20 billion RMB (US $2.42 billion) in 2000, among which the sales volume
      of
      medicine and health-care products including medicine of gene products, vaccines,
      diagnosis reagents, some antibiotics, amino acids for medical use, vitamins,
      blood products, bio-chemical medicines and some functional food was 9 billion
      RMB (US $1.09 billion), accounting for 45 percent of the total sales volume.
      The
      sales volume of diagnosis reagent products was 3 billion RMB (US $0.36 billion),
      one third of above volume.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      believes that the Monoclonal Antibody Reagent Box segment has a huge upside
      potential. Chinese companies in the Monoclonal Antibody Reagent Box industry
      are
      small to mid sized privately-owned enterprises without any government support.
      The production scale in China is still very small. The estimated production
      ability is around 185 million dollars in 2004, which is a niche market when
      compared with other developed countries. Due to the huge population and
      potential market in China, this area is already being pursued by some
      pharmaceutical companies. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has recently hired a competent team of research scientists, who are graduates
      of
      top universities in the United States and therefore trained on the most advanced
      technology in this field. Troponin T Diagnostic Kit and some other products
      from
      this group have proved to be 60% more effective at 50% less production cost
      when
      compared with other products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Of
      an
      estimated ten new products under development, Renhuang plans to launch all
      of
      them during 2007 and 2008. Renhuang conservatively estimates that Monoclonal
      Antibody Reagent Box series will achieve a growth rate of 100% annually in
      the
      next five years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Market
      Analysis Summary</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Traditionally,
      the pharmaceutical market is defined based on the different medical usage
      prescription drug market and non-prescription medicine market
      (OTC).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      annual revenue of the medicine market in China is estimated to be 500 billion
      RMB (US$ 62.5 billion), of which 440 billion RMB (88 %) is derived</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">from
      the
      prescription medicine market and the balance, 60 billion RMB (around US$ 7.5
      billion)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">relates
      to the non-prescription medicine market which constitutes 12%</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
      the
      whole medical sales market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      7,600 pharmaceutical companies in China, of which only 2,700 have received
      GMP
      Certificates. Renhuang is one of them. Renhuang&#8217;s</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">annual
      production capacity is currently 1.5 billion RMB (almost US $200 million),
      which
      equals to a market share of 3%. As Renhuang approaches full capacity, the
      company anticipates increased production volume by acquisitions and / or added
      additional production facilities. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company&#8217;s first and primary target market is China, where a growing middle class
      with demand for improved healthcare has created a sustainable need for quality
      healthcare products. Our secondary market within the long-term future is the
      United States and the rest of the world. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      focuses on three market segments:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.Over
      The Counter - OTC market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.Other
      drug stores located across the nation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.Hospitals,
      clinics and other medical institutions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Industry
      Analysis</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>World
      Trade Organization</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      in
      part to the relaxation of trade barriers and China&#8217;s access to the World Trade
      Organization (&#8220;WTO&#8221;) in January 2002, Renhuang believes that China will become
      one of the world's largest pharmaceutical markets by the middle of the
      twenty-first century. As a result, the Chinese market presents a significant
      opportunity for both domestic and foreign drug manufacturers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      State Drug Administration (&#8220;SDA&#8221;)</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      State
      Drug Administration ("SDA") of China has set up a classification administrative
      system in 1999 for prescription and OTC drugs. Since then, the SDA has issued
      a
      series of guidelines on the interpretation of the new classification system
      for
      labeling, usage instructions and packaging of OTC products. The SDA currently
      requires that pharmaceutical manufacturers clearly label drugs for OTC sales
      and
      distinguish them from those to be sold in hospitals as ethical drugs. Renhuang
      has instituted this policy as required by the SDA. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      Current Chinese Pharmaceutical Market</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      introduction of the Chinese pharmaceutical industry</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Most
      of
      the recognized brands in China are manufactured by multi-national drug companies
      with higher market share than domestic brands. Based on statistics, there are
      a
      total of 2,700 drug companies approved by GMP producing a variety of traditional
      and modern Chinese medical products. The total productivity is about 370
      thousand tons of 8000 different types of finished products. Furthermore, Chinese
      drug companies produce 300 different types biotech products including vaccine,
      toxoid, antiserum, blood products, diagnosing reagent for internal and external
      use. Chinese drug companies are producing more than 11,000 types of medical
      instruments, including X-ray fault scanning imagery equipments and magnetic
      resonance equipments. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><img src="marketsharepiechart.jpg" alt="marketsharepiechart photo"></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>--Market
      Shares of various pharmaceutical products</em></font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>
      current problems in the Chinese pharmaceutical industry</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Most
                drug companies in China produce low quantities of a large number
                of
                products. Therefore, many big companies are producing similar drugs.
                Many
                of those products are based on low technology and obsolete production
                methods. It is common that companies have minimal R&amp;D departments, and
                therefore, do not bring new drugs into the market. As a result, many
                of
                these companies with inefficient management have lower productivity.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Many
                drug companies do not qualify to reach approval by GMP, which prevent
                those companies from reaching the national and international drug
                markets.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patents
                and other intellectual property are not well protected well in
                China.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Limited
                access to financial markets makes it difficult to obtain financing
                for
                drug companies.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                competition in drug industry has growth space.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>The
      development trend in the Chinese drug market</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                pharmaceutical market will continue to grow at a stable
                pace.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                net growth of the aging population supports the demand for drug
                consumption. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                rising living standard improves the demand for drugs. Average drug
                consumption per capita in China is 50% lower than other mid-developed
                countries. Therefore, following the development of rural areas, it
                is
                anticipated that the Chinese drug market offers great opportunities.
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Habitual
                changes inside the drug consuming
                population.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
                reasonable drug consuming habits.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Non-prescription
                drugs will enter the fast development
                phase.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Drug
                prices on the market will be more
                rational.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
                will be fewer drug companies, but with large
                capacity.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
                advanced circulation of medical
                products.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">More
                competition in China&#8217;s drug market</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      current state of the biotech industry in China</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Introduction
      of biotech industry in China</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      biotech industry in China has undergone fundamental improvements. The biotech
      industry started in 1980s, and the sales in 2000 reached US $2.5 billion with
      the average growth rate of 33.58% and have since then developed dramatically.
      In
      1996, the sales of gene engineering drugs and vaccines reached US $26 million,
      which increased to US $90 million in 1998 and reached US $270 million in 2000.
      The average growth rate has been 79.42%.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Biotech
      R&amp;D has achieved big successes. In order to accelerate the development of
      the biotech industry, which is one of the most supported industries, the
      government has invested in biotech R&amp;D. Biotech engineering and bio-drugs
      are making great progress and a series of key technologies has been built.
      The
      gene transfer technology between zoology and botany is mature. The hybrid rice
      has been promoted in large scale, and anti-gene cotton and tomato have become
      a
      reality. Tens of gene drugs are fast approaching the area of practical use.
      Therefore, the Chinese biotech R&amp;D industry is rapidly becoming more mature
      and competitive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Some
      common problems in the Chinese biotech industry</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Compared
      with the development of the international biotech industry, the domestic Chinese
      industry is still immature. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insufficient
      self-owned Intellectual property rights and limited competing
      ability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      United States, it is common that founders of bio-tech companies control more
      than 50% of equity and technology during the first and second stage of financing
      and the Venture Capital firms control less. With the expansion, including
      additional financing, the initial founders start to lose the control position.
      In China, intangible assets usually represent less than 35% of the total value.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Essential
      key technologies and equipments such as important laboratories equipments,
      instruments and dosage etc are still lagging in biotech industry and most users
      rely on import. Companies who have the ability to produce those special
      equipments and instruments have earned international market recognition.
      Renhuang owns substantial intangible assets.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insufficient
      Capital investment and very limited R&amp;D capability</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Biotech
      industry is a high-tech investment in a high-risk and a high-reward industry.
      Therefore, insufficient capital is the most important problem which needs to
      be
      solved. At present, there are only six ways to provide capital to bio-tech
      companies: (i) founders' own money; (ii) public company investment (iii) third
      party investment; (iv) government venture capital; (v) mid to small-size company
      security fund from state science administration; and (vi) mid to small-size
      technology venture capital. The United States, which has the most advanced
      bio-tech development and bio-tech companies provides more financing
      opportunities to this industry. Despite this problem in the industry Renhuang
      successfully obtain capital and build a new state of the art R&amp;D facility.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insufficient
      educated human resources cause a gap between research and practical
      areas.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due
      to
      the long training period of R&amp;D personnel staffs, high quality research
      scientists stay outside of China. Therefore, there are not sufficient highly
      qualified research scientists available, especially those in combination of
      research and management skills. Renhuang has United States educated research
      scientists. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competitors</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax
      product series</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Wusuli
      River Pharmacy Group </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Main
      Acanthopanax products are fluid acupuncture; secondary one is Acanthopanax
      pills, with 15 million RMB (about US $7.8 million) revenue from
      Acanthopanax.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Heilongjiang
      Wandashan Pharmacy </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Main
      Acanthopanax products are fluid acupuncture, powder acupuncture and Acanthopanax
      drinks, with 50 million RMB (about US $6.2 million) revenue from fluid
      acupuncture, and 30 million RMB (about US $3.8 million) revenue from powder
      acupuncture, and both of which have been built their brand names. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Heilongjiang
      Zhenbaodao Pharmacy</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Main
      Acanthopanax products are fluid acupuncture and Acanthopanax drop pill (waiting
      for its GMP approval), with 12 million RMB (about US $1.5 million) revenue
      from
      Acanthopanax products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Heilongjiang
      Tielihongye Pharmacy</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Main
      Acanthopanax products are Acanthopanax pills, and Acanthopanax syrup, with
      6
      million RMB (about US $750 thousand) revenue from Acanthopanax
      products</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Monoclonal
      Antibody Reagent Box series products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beijing
      BGI-GBI Bio-tech Co., Ltd </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shanghai
      Shisheng Cell Bio-tech Co., Ltd </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beijing
      Wantai Biological Pharmacy Enterprise Co., Ltd.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>&#160;</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      present, none of the competitors have large-scale production ability. Speed
      Monoclonal Antibody Reagent Box for Muscle Calcium Protein Myocardial Infarction
      of Renhuang is very competitive in the market because of its advance technology.
      The core technology is from Chinese research scientists educated in United
      States, and Renhuang will build antigen antibody store base with self-owned
      intellectual property rights, therefore the product will become more reliable,
      and the price will be 50% lower than that from its competitors with 60%
      improvement in effects. This product is easy to use.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Lysozyme
      Products</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      few companies with the ability to produce in large scale. It has big potential
      market. Lysozyme can be used in food antiseptic, which will 40% higher
      sterilization effects than chemistry antiseptic with 80% lower costs than same
      kind products produced outside of China. The large-scale production of Lysozyme
      products will speed the development of cultivation industry. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Shark
      Power Healthcare Series</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sirio
      Pharma Co., LTD </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shanghai
      Jonya Marine Biological Engineering Co., LTD </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Guangzhou
      Xingqun Pharmaceutical Co., LTD</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>&#160;</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      raw materials for Shark Power Healthcare products are directly imported from
      Australia at a price which is 20% lower than that what the competitors pay,
      whose raw materials are from coastal areas in China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competitive
      Edge</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>General</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has a top level and stable management team with a proven track record that
      generated </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">around</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      100%
      annual growth rate on both sales and profits over the past years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Acanthopanax</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      the acquisition of Dongfanghong during 2003, Renhuang controls 70% of the wild
      resources of Acanthopanax, which product group has increased to account for
      45%
      of Renhuang&#8217;s revenue </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">in</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      2005.
      The demand for products derived from Acanthopanax is at all time high.
      Renhuang&#8217;s current market share is 10% and its goal is to increase the market
      share to 50% within 3-5 years. Of the total wild resource of Acanthopanax in
      China, 94% is located in the Heilongjiang Province, most of which are controlled
      by Dongfanghong in the Wanda Mountain. Renhuang develops Acanthopanax products
      in its plant and benefits from its relative dominant position through its
      resource control. Renhuang has reduced the cost of absorbing and producing
      Acanthopanax with 50%. Current comparisons show that Renhuang's cost of
      production is 30% lower than the competition. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      Advantages over the competition</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition to advantages related specifically to Acanthopanax, Renhuang&#8217;s business
      possesses the following advantages: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      ability to upgrade our products by using our follow-up research projects enables
      Renhuang to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">continue
      its product developments.</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has developed a unique independent innovation system, which will provide a
      powerful </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">support
      to the R&amp;D of new products. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has excellent relations with provincial, city and regional our government and
      have been </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">awarded
      outstanding levels of status. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      owns a state of the art research and production facility. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      credit rating is AAA by the major banks in China </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has United States educated research scientists. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 27pt; TEXT-INDENT: -27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      efficiency and state of the art production facilities, its production costs,
      is
      as an average, 30- </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">50%
      lower
      then competition. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      owns more then 70 regional sales offices, covering 50% of Mainland China staffed
      with a </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">sales
      force of more then 2,000. </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has a top-level management team, which will lead the company into higher levels
      of </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">revenue
      and profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      &amp; Development</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has constructed a strong independent innovation system, which will provide
      a
      powerful support to the R&amp;D of new products as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Through
      Renhuang&#8217;s research control and relative dominant position related to the
      Acanthopanax products, Renhuang is on its verge to position Acanthopanax as
      an
      independent segment in the Chinese drug industry. In order to achieve this
      goal,
      Renhuang will build an Acanthopanax base including six parts: (1) Wild
      Acanthopanax protection; (2) research; (3) seeding; (4) cultivating; (5)
      processing; and (6) exporting. Pursuant to plan, this will become the largest
      Good Manufacturing Practice (&#8220;GMP&#8221;) approved Acanthopanax base in
      China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      plans to continually upgrade its products by using its follow-up research
      project. This continued development will be focusing on the following three
      areas; (1) The development of biotech products. The focus will be for practical
      applications of Lysozyme and Hyperoxide mutase, and the research and development
      of gene engineering drugs just to mention a few; (2) The research and
      development of Chinese traditional medicine products, including but not limited
      to additional use of Acanthopanax and Shizandra Berry; and (3) Research and
      development of Western drugs for generic production, where Renhuang is able
      to
      complete the generation replacement of traditional drugs shortly.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Information
      center</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      utilizes the marketing network system and direction oriented information system
      to provide fixed period and in-fixed period market feedback information, market
      demand information, evaluation of new products inside and outside of China,
      domestic and foreign authority research topic and product technology feedback
      information. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Teamwork
      Center</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has contracted and hired specialists comprising a group of reputable professors
      and research scientists from the marine biotech drug segment, the natural
      biotech drug segment and the gene engineering area to evaluate and support
      research topics and results. Renhuang has also formed long-term strategic
      partnerships and other research and work related relationships with some of
      the
      most prominent research organizations with the purpose of researching and
      developing new products together. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Currently,
      Renhuang have partnerships or are in other way closely related to the National
      Navy Pharmaceutical Research Center located in Shanghai, China bio-tech drug
      research center (Shanghai Research Base), Second Military Medicine University
      in
      Shanghai, and Beijing Ellionbio Research Center, Beijing to mention a few.
      Furthermore, Renhuang has research topic cooperation with Russia Academic School
      Far-east division and Australia Scientific Research Center. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      Center and Mid-testing Base</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Formed
      by
      different labs, these research and mid-testing facilities are simulating the
      assembly lines. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Renhuang
      Bio-tech drugs and healthcare products research center </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      facility is mainly focused R&amp;D on bio-tech drugs and healthcare products,
      and medicine intermediates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Post-doc
      Research Workstation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      major
      task is to do R&amp;D on Acanthopanax and other North-China medical products and
      to develop medicine qualified to international standard. This unit also performs
      R&amp;D on gene engineering drugs, like tumor Chalone. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Official
      accomplishments</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
                has a well-established and excellent working relationship with the
                government on various levels. For example, Renhuang has obtained
                support
                from different level governments including provincial, city and regional
                government, which enabled Renhuang&#8217;s rapid development. Renhuang
                undertakes various research projects on a national level, where the
                government has appraised Renhuang&#8217;s
                accomplishments.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Government
                has appraised Renhuang as &#8220;The Best Quality and Credit Company&#8221;, &#8220;The
                Company with The Best Social Image&#8221;, and &#8220;The Most Trustful Consumer
                Products Company&#8221;. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;</td>
            <td valign="middle">&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="FONT-FAMILY: Symbol" size="2">&#183;
</font>&#160;</td>
            <td valign="middle"><font size="2">The bank credit rating of Renhuang
              is
              AAA.</font></td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;<font style="FONT-FAMILY: Symbol" size="2">&#183;
</font>&#160;</td>
            <td><font size="2">Lysozyme and Hyperoxide mutase projects from Renhuang
              have been included into the most <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">important
              nation level project in State Scientific Administration.
              </font></font></td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;</td>
            <td>&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="FONT-FAMILY: Symbol" size="2">&#183;
</font>&#160;</td>
            <td><font size="2">Biotech drug garden has been included into the national
              transforming projects of North Eastern China <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">heavy
              industry base, and in the projects which can get zero interests loan
              from
              government. </font></font></td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;">&#160;</td>
            <td valign="middle">&#160;</td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 27pt;"><font style="FONT-FAMILY: Symbol" size="2">&#183;
</font>&#160;</td>
            <td valign="middle"><font size="2">Renhuang has been appraised by State
              Scientific Administration as national high-tech company, <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">which
              enables it to obtain tax-free
              benefits.</font></font></td>
          </tr>

      </table>
    </div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Marketing
      Strategy</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      addresses the market through four business segments: OTC Market, Direct Sales,
      Wholesale and Raw Material. Renhuang is a highly technology oriented niche
      company that has developed name recognition for its quality products. Its
      products are being sold by more than 2,000 sales people divided into 70 sales
      offices in 24 regions across Mainland China. Furthermore, Renhuang has strong
      alliances with distributors who have powerful channel relationships but lack
      manufacturing or product development capabilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Renhuang
      is using a four-pronged approach to achieve its market
      goals</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>First</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      the
      goal is to build brand names for products, which is well under way. In non-urban
      areas, 90% of the Chinese population lives is in the countryside with lower
      income. Due to a variety of strategy, adjusted to the lower income consumer,
      Renhuang's traditional drugs will have a relatively high level of penetration
      in
      those areas. Distribution to end-consumers is obtained through Renhuang&#8217;s own
      sales personnel without middlemen cost. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Second</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      Renhuang is using key cities like Beijing and Shanghai as geographical sales
      centers with the purpose to establish its brands with the established
      distribution centers that distribute to major drug chain stores in the urban
      and
      suburban areas around the city. Renhuang approach is to use selected cities
      as
      sample target, supported by initial promotion and investments enabling the
      products entry into the well-known drug chain stores. In addition, Renhuang
      is
      exploring multiple sales channels.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Third</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      Renhuang focuses on top-level hospitals in the country, which has the highest
      quality standard and stringent approval procedures for new products and brands.
      Traditionally, hospitals in China are divided into different levels due to
      different functions. Junior level hospital only take care small areas, mid-level
      one will take care several areas combination, and senior level one will handle
      different regions. By focusing on the top tier of the hospital industry,
      Renhuang&#8217;s strategy is to work from top down and gain access to mid and low
      level hospitals when it brands and products have been established in the higher
      ranks. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Fourth</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      Renhuang use its exclusive technology and absolute resource control
      (Acanthopanax) to promote itself in the domestic media, including TV, Radio,
      newspaper, magazine and trade publications. At a more mature stage of Renhuang&#8217;s
      domestic coverage, it is anticipated that Renhuang will have a substantial
      impact of Lysozyme and Hyperoxide mutase, through innovations and core
      technology, developed and owned by Renhuang have been appraised by established
      specialists as the primary technology and innovations in the world related
      thereto. The biggest advantages are cost and quality when compared to
      traditional products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sales
      Strategy</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      sales network is very big. With more than 70 sales centers organized under
      24
      districts and more than 2,000 sales people, its product sales offices of
      Renhuang covers 50% of the greater China and an estimated 80% of its
      geographical target area. Due to less populated and rural areas in the western
      part of China, Renhuang has chosen to concentrate its main efforts on the
      eastern China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Sales
      Team</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      sales team uses quantity targets to realize the management of sales of products,
      from where the sales team is rewarded. Each sales office is organized with
      full
      time managerial and financial functions organized under a general representative
      officer. The vast majority of the regular sales force is commission based.
      The
      products from Renhuang will reach drug stores, hospitals and end consumer across
      China through the sales network. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><img src="locationmap.jpg" alt="Location of Renhuang Sales Offices in China MAP"></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 90pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Wingdings">n&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                Location of Renhuang&#8217;s Sales Offices in China.
</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Conjunction
      with the general sales managers, provincial managers and regional managers,
      the
      company sets the sales target at the beginning of every year. Based on monthly
      sales reports and general control mechanisms, budget is thereafter revised
      as
      needed. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Sales
      channels related to leading products</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Marketing
                Model</strong></font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="top" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Share
                of revenues</strong></font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="top" width="19%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Products
                selling</strong></font></div>
            </td>
            <td align="justify" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="justify" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Payment
                Time Frame</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raw
                Materials</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">7%
                of total revenue</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
                raw materials</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Payment
                schedule, between 1 - 5 months. </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OTC</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">48%
                of total revenue</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
                final products, </font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Tianmai
                Pills&#8221; and &#8220;Shengmai&#8221; granulate. </font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Payment
                for first shipment in conjunction with second delivery, 1 - 3 months.
                </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Direct
                Selling method</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">30%
                of total revenue</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shark
                Power health care products,</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
                final products.</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cash
                Payment</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Whole
                Sale products</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15%
                of total revenue</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
                final products and &#8220;Tornodo Pills&#8221;.</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Payment
                similar to consignment, calculated and paid monthly when products
                sold.</font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Corporate
      Information</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employees</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company employs approximately 371 full time individuals, which include 36 people
      in managerial positions, 22 individuals as sales managers at the company&#8217;s
      various sales offices across China, 52 people in R&amp;D department, and 261
      workers. The company also has approximately 2,217 commission based sales staff
      at the various sales offices that work as independent contractors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Properties</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      to Chinese legislation, the government owns all the land in China. The
      government grants Land Use Rights to individuals and legal entities, which
      holders of Land Use Rights have the right to build and erect
      constructions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      owns the following constructions on Land Use Rights in China:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Headquarters
      of Renhuang. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Location:
      No. 281, Peach Avenue, Daowai District, Harbin, Heilongjiang Province,
</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 34.2pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">China.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Size
      of
      Property: 21,000 Square feet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Biotech
      Medicine Park of &#8220;A&#8221; City</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Location:
      No. 16, Renhuang Road, A City, Heilongjiang Province, China</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Size
      of
      Property: 150,000 square feet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Size
      of
      Land: 1 million square feet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dongfanghong
      Branch</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Location:
      No. 2, Red Flag Road, Dongfanghong Town, Heilongjiang Province,
      China</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Size
      of
      Property: 100,000 square feet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Size
      of
      Land: 206,630 square feet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      properties are being used as offices and production.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      May
      1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      2006,
      at which time Harbin Renhuang Pharmaceutical Co. Ltd. (Renhuang China) commenced
      its operations, Renhuang China entered into lease agreements with Harbin
      Renhuang Pharmaceutical Stock Co. regarding the above properties on below market
      price and favorable conditions to the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Government
      Regulation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Pharmaceutical industry is a strong emerging area with the highest growth rate
      in output value. However, all government regulation is still on the improving
      stage. The Ministry of Public Health used to oversee drug approval and
      registration, but the SFDA (which is modeled from the US Food and Drug
      Administration) was specially set up to streamline this process. However, it
      has
      a relatively inexperienced staff and got off to a rather low start, and the
      resulting regulatory gap might cause potential problems. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      successfully passed all GMP (Good Manufacturing Practice) certificates
      investigation by SFDA, and got the approval. In September 2005, Renhuang got
      the
      investigation for exporting products certificates by Entry-Exit Inspection
      and
      Quarantine Administration, and received the self-reporting inspection
      registration certificates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sept
      30</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup>th</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      2005,
      Renhuang Pharmaceutical Stock Co. obtained 30 million RMB (US $3.75 million)
      zero-interest rate loan from state government that was mainly used for
      construction purposes of the buildings leased by Renhuang
      China.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has also been titled to &#8220;high-tech&#8221; company in Heilongjiang Province, so the
      company will enjoy three-year zero-tax support from Provincial government.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legal
      Proceedings</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither,
      the Company nor its subsidiaries are a party to any pending or potential legal
      proceedings.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cautionary
      Note Regarding Forward-Looking Statements </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      report contains certain statements that are &#8220;forward-looking statements,&#8221;
including, among other things, discussions of our business strategies, future
      operations and capital resources. Words such as, but not limited to, &#8220;may,&#8221;
&#8220;likely,&#8221; &#8221;anticipate,&#8221; &#8220;expect and &#8220;believes&#8221; indicate forward-looking
      statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Forward-looking
      statements are included in the section of this report entitled &#8220;Description of
      Business&#8221;. Although we believe that the expectations reflected in such
      forward-looking statements are generally reasonable, we cannot assure you that
      such expectations will ultimately prove to he correct. Generally, these
      statements relate to our business plans and strategies, projected or anticipated
      benefits or other consequences of market conditions and opportunities, business
      plans or strategies, projections involving anticipated sales and revenues,
      expenses, projected future earnings and other aspects of operational results.
      All phases of our operations are subject to a number of uncertainties, risks
      and
      other influences, most of which are outside our control, and any one or
      combination of which could materially and adversely affect the results of our
      operations, and also, could affect whether any such forward-looking statements
      contained herein ultimately prove to be accurate. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISK
      FACTORS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      will need to raise additional capital to expand our
      business</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      foreseeable future, we will fund all of our operations and capital expenditures
      from cash on hand and potential future internally generated cash flow.
      Currently, we believe we have cash on hand to fund our operations and planned
      expansions. However, changes may occur that would consume our available capital
      before that time, including changes in and progress of our development
      activities, acquisitions of additional candidates and changes in regulation.
      We
      will then need to seek additional sources of financing, which may not be
      available on favorable terms, if at all. If we do not succeed in raising
      additional funds on acceptable terms, we may be unable to complete our expansion
      and future growth. In addition, we could be forced to discontinue product
      development, reduce or forego sales and marketing efforts and forego attractive
      business opportunities. Any additional sources of financing will likely involve
      the issuance of our equity securities, which will have a dilutive effect on
      our
      stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      profitability is limited</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      need to generate significant revenues in order to achieve and maintain
      profitability. We may not be able to generate these revenues or achieve
      profitability in the future. Our failure to achieve or maintain profitability
      could negatively impact the value of our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have a limited operating history as a publicly company, upon which to base
      an
      investment decision</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      being a publicly listed company in the United States, we were a privately held
      corporation in the Peoples Republic of China and we have not demonstrated an
      ability to perform the functions necessary for the successful listing. The
      successful listing will require us to perform a variety of functions, including
      but not limited to the following: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
                &#160;</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">continuing
                to efficiently manage our business domestically and in any new
                markets;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
                &#160;</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">disclose
                and report information in a timely manner to the Securities and Exchange
                Commission and to the general public about our company and our business;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
                &#160;</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">communicate
                with our shareholders.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      need to obtain and maintain the necessary Chinese or worldwide regulatory
      approvals to commercialize our products</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">commercialize</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">some
      of
      our current and future products, we require approvals from SFDA and any
      FDA-equivalent regulatory authorities in foreign jurisdictions to commercialize
      our product candidate in those jurisdictions. Currently, we do not sell our
      products to the United States, but if we in the future plan to commercialize
      our
      products to the U.S. we will need FDA approval for some of our products. To
      apply for approval, we must submit to the FDA a New Drug Application, or NDA,
      demonstrating that the product candidate is safe for humans and effective for
      its intended use. This demonstration requires significant research and animal
      tests, which are referred to as pre-clinical studies, as well as human tests,
      which are referred to as clinical trials. Satisfaction of the FDA&#8217;s regulatory
      requirements typically takes many years, depends upon the type, complexity
      and
      novelty of the product candidate and requires substantial resources for
      research, development and testing. We cannot predict whether our research and
      clinical approaches will result in drugs that the FDA or FDA-equivalent in
      other
      jurisdictions, consider safe for humans and effective for indicated uses. The
      FDA has substantial discretion in the drug approval process and may require
      us
      to conduct additional pre-clinical and clinical testing or to perform
      post-marketing studies. The approval process may also be delayed by changes
      in
      government regulation, future legislation or administrative action or changes
      in
      FDA policy that occur prior to or during our regulatory review. Delays in
      obtaining regulatory approvals may:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
                &#160;</font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">delay
                commercialization of, and our ability to derive product revenues
                from, our
                product candidate;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;
                &#160; </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">impose
                costly procedures on us; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#160;&#183;
                &#160; </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">diminish
                any competitive advantages that we may otherwise
                enjoy.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      foreign jurisdictions, we must receive approval from the appropriate regulatory
      authorities before we can commercialize any drugs. Foreign regulatory approval
      processes generally include all of the risks associated with the FDA approval
      procedures described above. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      cannot
      guarantee that we will maintain and receive the approvals necessary to
      commercialize our current and future products for sale in China, United States
      or elsewhere.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Clinical
      trials are very expensive, time-consuming and difficult to design and
      implement</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Human
      clinical trials are very expensive and difficult to design and implement, in
      part because they are subject to rigorous regulatory requirements. The clinical
      trial process is also time consuming. We estimate that clinical trials of our
      product candidate will take at least several years to complete. Furthermore,
      failure can occur at any stage of the trials, and we could encounter problems
      that cause us to abandon or repeat clinical trials. The commencement and
      completion of clinical trials may be delayed by several factors,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">unforeseen
                safety issues;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">determination
                of dosing issues;</font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">lack
                of effectiveness during clinical
                trials;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">slower
                than expected rates of patient
                recruitment;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inability
                to monitor patients adequately during or after treatment;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">inability
                or unwillingness of medical investigators to follow our clinical
                protocols.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, we, SFDA (State FDA), FDA or FDA-equivalent in foreign jurisdictions,
      may suspend our clinical trials at any time if it appears that we are exposing
      participants to unacceptable health risks or if the regulatory bodies find
      deficiencies in our Investigational New Drug, or IND, submissions or the conduct
      of these trials. Therefore, we cannot predict with any certainty the schedule
      for future clinical trials. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      results of our clinical trials may not support our product candidate
      claims</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Even
      if
      our clinical trials are completed as planned, we cannot be certain that their
      results will support our product candidate claims. Success in pre-clinical
      testing and early clinical trials does not ensure that later clinical trials
      will be successful, and we cannot be sure that the results of later clinical
      trials will replicate the results of prior clinical trials and pre-clinical
      testing. The clinical trial process may fail to demonstrate that our product
      candidates are safe for humans and effective for indicated uses. This failure
      would cause us to abandon a product candidate and may delay development of
      other
      product candidates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Physicians,
      patients and other end consumer may abandon existing or chose not to accept
      and
      use our new drugs</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Physicians
      and patients may not accept and use our products. Acceptance and use of our
      product will depend upon a number of factors including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">perceptions
                by members of the health care community, including physicians, about
                the
                safety and effectiveness of our
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">cost-effectiveness
                of our product relative to competing products;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">effectiveness
                of marketing and distribution efforts by us and our licensees and
                distributors, if any. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      we expect sales of our current and future products to generate substantially
      all
      of our product revenues for the foreseeable future, the failure to find market
      acceptance would harm our business and could require us to seek additional
      financing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      drug-development program depends upon third-party research scientists who are
      out of our control</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      depend
      upon independent investigators and collaborators, such as universities and
      medical institutions, to conduct our pre-clinical and clinical trials under
      agreements with us. These collaborators are not our employees and we cannot
      control the amount or timing of resources that they devote to our programs.
      These investigators may not assign as great a priority to our programs or pursue
      them as diligently as we would if we were undertaking such programs ourselves.
      If outside collaborators fail to devote sufficient time and resources to our
      drug-development programs, or if their performance is substandard, the approval
      of our applications, if any, and our introduction of new drugs, if any, will
      be
      delayed. These collaborators may also have relationships with other commercial
      entities, some of whom may compete with us. If our collaborators assist our
      competitors at our expense, our competitive position would be
      harmed.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      need to increase our selling, marketing and distributing
      network</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      need
      significant capital expenditures, time and management resources to market our
      products and to establish and develop an in-house marketing and sales force
      with
      technical expertise. There can be no assurance that we will be able to
      establish, maintain or develop in-house sales and distribution capabilities.
      To
      the extent that we depend on third parties for marketing and distribution,
      any
      revenues we receive will depend upon the efforts of such third parties, and
      there can be no assurance that such efforts will be successful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we cannot compete successfully for market share against other similar product
      oriented companies, we may not achieve sufficient product revenues and our
      business will suffer</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      market for our product candidates is characterized by intense competition and
      rapid technological advances. We will compete with a number of existing and
      future drugs and therapies developed, manufactured and marketed by others.
      Existing or future competing products may provide greater therapeutic
      convenience or clinical or other benefits for a specific indication than our
      products, or may offer comparable performance at a lower cost. If our products
      fail to capture and maintain market share, we may not achieve sufficient product
      revenues and our business will suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      will
      compete against fully integrated pharmaceutical companies and smaller companies
      that are collaborating with larger pharmaceutical companies, academic
      institutions, government agencies and other public and private research
      organizations. Many of these competitors have either alone or together with
      their collaborative partners, operate larger research and development programs
      or have substantially greater financial resources than we do, as well as
      significantly greater experience in:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">developing
                drugs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">undertaking
                pre-clinical testing and human clinical
                trials;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">obtaining
                regulatory approvals of drugs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">formulating
                and manufacturing drugs; and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="right" valign="top" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;&#160;&#160;
                </font></div>
            </td>
            <td align="left" valign="top" width="60%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">launching,
                marketing and selling drugs.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Developments
      by competitors may render our products or technologies obsolete or
      non-competitive</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      biotechnology and pharmaceutical industries are intensely competitive and
      subject to rapid and significant technological change. A large number of
      companies are pursuing the development of pharmaceuticals that target the same
      diseases and conditions that we are targeting. We face competition from
      pharmaceutical and biotechnology companies in China and other countries. In
      addition, companies pursuing different but related fields represent substantial
      competition. Many of these organizations competing with us have substantially
      greater capital resources, larger research and development staffs and
      facilities, longer drug development history in obtaining regulatory approvals
      and greater manufacturing and marketing capabilities than we do. These
      organizations also compete with us to attract qualified personnel and parties
      for acquisitions, joint ventures or other collaborations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      we fail to adequately protect or enforce our intellectual property, the value
      of
      our intellectual property rights would diminish</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success, competitive position and future revenues will depend in part on our
      ability and the abilities of our licensors to obtain and maintain patent
      protection for our products, methods, processes and other technologies, to
      preserve our trade secrets, to prevent third parties from infringing on our
      proprietary rights and to operate without infringing the proprietary rights
      of
      third parties. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success is partly dependent upon the skills, knowledge and experience of our
      scientific and technical personnel, our consultants and advisors as well as
      our
      licensors and contractors. To help protect our proprietary know-how and our
      inventions for which patents may be unobtainable or difficult to obtain, we
      rely
      on trade secret protection and confidentiality agreements. To this end, it
      is
      our policy to require all of our employees, consultants, advisors and
      contractors to enter into agreements which prohibit the disclosure of
      confidential information and, where applicable, require disclosure and
      assignment to us of the ideas, developments, discoveries and inventions
      important to our business. These agreements may not provide adequate protection
      for our trade secrets, know-how or other proprietary information in the event
      of
      any unauthorized use or disclosure or the lawful development by others of such
      information. If any of our trade secrets, know-how or other proprietary
      information is disclosed, the value of our trade secrets, know-how and other
      proprietary rights would be significantly impaired and our business and
      competitive position would suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may not successfully manage our growth</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      would
      be harmed.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      rely on key executive officers and scientific advisors, and their knowledge
      of
      our business and technical expertise would be difficult to
      replace</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      highly dependent on our principal scientific, regulatory and medical advisors.
      We do not have &#8220;key person&#8221; life insurance policies for any of our officers. The
      loss of the technical knowledge and management and industry expertise of any
      of
      our key personnel could result in delays in product development, loss of
      customers and sales and diversion of management resources, which could adversely
      affect our operating results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.01 Management Discussion and Analysis or Plan of
      Operation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following discussion of the financial condition and results of operation of
      Renhuang Pharmaceuticals, Inc. should be read in conjunction with the financial
      statements and the notes to those statements included in this 8-K. This
      discussion includes forward-looking statements that involve risk and
      uncertainties. As a result of many factors, such as those set forth under &#8220;Risk
      Factors&#8221;, actual results may differ materially from those anticipated in the
      forward-looking statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      Pharmaceuticals, Inc., (&#8220;Renhuang&#8221;) or the ("Company") was incorporated in the
      State of Nevada on August 18, 1988 as Solutions, Incorporated. Since that time,
      we have undergone a series of name changes as follows: Suarro Communications,
      Inc., e-Net Corporation, e-Net Financial Corp., e-Net.Com Corporation, e-Net
      Financial.Com Corporation, Anza Capital, Inc. and finally on August 28, 2006
      we
      changed our name to Renhuang Pharmaceuticals, Inc. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      March
      3, 2006, we discontinued our operations and completed the disposition of
      substantially all of our assets, including but not limited to, all of our
      ownership interest in our subsidiary, American Residential Funding, Inc., a
      Nevada corporation ("AMRES") to AMRES Holding, LLC, a Nevada limited liability
      company ("AMRES Holding") under control of Vince Rinehart, a shareholder and,
      at
      that time, our sole officer and director ("Rinehart"). Effective on September
      30, 2005, the disposition was approved by written consent of a majority of
      our
      stockholders.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 7, 2006 the Company acquired 100% of the issued and outstanding shares
      of Harbin Renhuang Pharmaceutical Company Limited, a corporation incorporated
      under the laws of the British Virgin Island, (&#8216;&#8216;Renhuang BVI&#8217;&#8217;), whose only
      assets are 100% of Harbin Renhuang Pharmaceutical Co. Ltd, incorporated under
      the laws of the Peoples Republic of China (&#8220;Renhuang China&#8221;) involved in the
      research, production and sales of traditional Chinese and Western medical
      products in China. On May 1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      2006,
      Harbin Renhuang Pharmaceutical Stock Co. Ltd., (founded in 1996) transferred
      all
      its business operations, to Renhuang China. The products are distributed through
      more then 60 sales offices with more then 2,000 commission-based sales people.
      Upon the effectiveness of the Merger, the Company succeeded to the business
      of
      Renhuang China, which will be continued as its sole line of
      business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      closing of the Merger, Renhuang BVI became a wholly owned subsidiary of the
      Company. The former stockholders of BVI own approximately 85% of the issued
      and
      outstanding Common Stock of the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      the
      Company will operate Renhuang China as its sole line of business, the following
      discussion and analysis is of the financial condition and results of operations
      for the twelve months ended on October 31, 2005 and the six months ended on
      April 30, 2006 is the operation of Harbin Renhuang Pharmaceutical Stock Co.
      Ltd., the predecessor of Renhuang China. The following discussion and analysis
      should be read in conjunction with the financial statements, including
      footnotes, and other information presented in this report Form 8-K.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      purposes of the following discussion and analysis, references to &#8216;&#8216;we&#8217;&#8217;,
&#8216;&#8216;our&#8217;&#8217;, &#8216;&#8216;us&#8217;&#8217; refers to Renhuang Pharmaceuticals, Inc., (the &#8220;Company&#8221;). An
      analysis of the Company&#8217;s financial condition and the results of operations for
      the 12 months ended April 30, 2006 was reported on Form 10-KSB on August 14,
      2006 and is incorporated herein by reference.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      acquisition of the Renhuang BVI company was accounted for as a reverse merger,
      because, after giving effect to the share exchanges, the former stockholders
      of
      Renhuang BVI hold a majority of our outstanding common stock on a voting and
      fully diluted basis. As a result of the share exchanges, Renhuang was deemed
      to
      be the acquirer for accounting purposes. Accordingly, the financial statements
      presented are those of Renhuang China for all periods prior to our acquisition
      of the Renhuang BVI company on September 7, 2006, and the financial statements
      of the consolidated companies from the acquisition date forward. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
      and development expenses consist primarily of salaries and related personnel
      costs, fees paid to consultants and outside service providers for regulatory
      and
      quality assurance support and other expenses relating to the manufacture,
      development, testing, enhancement, sales, marketing, warehousing and
      distribution of our products. We expense our research and development costs
      as
      they are incurred.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
      and administrative expenses consist primarily of salaries and related expense
      for executive, finance and other administrative personnel, professional fees,
      business insurance, rent, general legal activities, and other corporate
      expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Result
      of Operations</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Critical
      Accounting Policies</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      discussion and analysis of our financial condition and results of operations
      are
      based on our consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States,
      US GAAP. The preparation of these consolidated financial statements requires
      us
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. On an on-going basis, we evaluate our estimates based on
      historical experience and on various other assumptions that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      follow
      the guidance of the Securities and Exchange Commission&#8217;s Staff Accounting
      Bulletin 104 for revenue recognition.&#160;In general, we record revenue when
      persuasive evidence of an arrangement exists, services have been rendered or
      product delivery has occurred, the sales price to the customer is fixed or
      determinable, and collectability is reasonably assured.&#160;We have identified
      the policy below as critical to our business operations and understanding of
      our
      financial results:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>A.
      CASH AND CASH EQUIVALENTS </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company considers cash and cash equivalents to include cash on hand and demand
      deposits with banks with an original maturity of three months or less.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>B.
      INVENTORIES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Inventories
      are stated at the lower of cost and net realizable value. Cost is calculated
      on
      the weighted average basis and includes all costs to acquire and other costs
      incurred in bringing the inventories to their present location and condition.
      The Company evaluates the net realizable value of its inventories on a regular
      basis and records a provision for loss to reduce the computed weighted average
      cost if it exceeds the net realizable value.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>C.
      LAND USE RIGHTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
      to the law of China, the government owns all the land in China. Companies or
      individuals are authorized to possess and use the land only through land use
      rights granted by the Chinese government. Land use rights are being amortized
      using the straight-line method over the lease term of 40 to 50
      years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>D.
      PROPERTY, PLANT AND EQUIPMENT </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property,
      plant and equipment are carried at cost. The cost of repairs and maintenance
      is
      expensed as incurred; major replacements and improvements are capitalized.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">When
      assets are retired or disposed of, the cost and accumulated depreciation are
      removed from the accounts, and any resulting gains or losses are included in
      income in the year of disposition. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Depreciation
      is calculated on a straight-line basis over the estimated useful lives of the
      assets. The useful lives for property, plant and equipment are as follows:
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="40%">

          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Buildings
                and leasehold improvement</font></div>
            </td>
            <td valign="top" width="2%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20
                years</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Plant
                and machinery</font></div>
            </td>
            <td valign="top" width="2%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10
                years</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Office
                equipment and furnishings</font></div>
            </td>
            <td valign="top" width="2%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5
                to10 years</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Motor
                vehicles</font></div>
            </td>
            <td valign="top" width="2%">&#160;</td>
            <td valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5
                to10 years</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>E.
      CONSTRUCTION IN PROGRESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Construction
      in progress represents direct costs of construction or acquisition and design
      fees incurred. Capitalization of these costs ceases and the construction in
      progress is transferred to plant and equipment when substantially all the
      activities necessary to prepare the assets for their intended use are completed.
      No depreciation is provided until it is completed and ready for intended
      use.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>F.
      ACCOUNT RECEIVABLES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An estimate for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">An
      account is considered past due after sixty (60)&#160;days from the invoice date.
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      allowance on the doubtful accounts was $656,685 and $765,078 as at April 30,
      2006 and October 31, 2005, respectively. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>G.
      INCOME TAXES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Taxes
      are
      calculated in accordance with taxation principles currently effective in the
      PRC. The Company accounts for income taxes using the liability method. 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. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized as income in the period that includes the
      enactment date. A valuation allowance is provided for the amount of deferred
      tax
      assets that, based on available evidence, are not expected to be
      realized.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>H.
      GOVERNMENT SUBSIDIES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsidies
      from the government are recognized at their fair values when received or there
      is reasonable assurance that they will be received, and all attached conditions
      are complied with. Subsides are for Company&#8217;s research and development
      activities and they will continue in the following years. The amount of
      subsidies received for six months ended April 30, 2006 and the year ended
      October 31, 2005 were$155,316 and $326,092, respectively. The amounts granted
      and timing of receipts do vary every year, depending on the policies from the
      local authorities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>I.
      RELATED PARTIES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Parties
      are considered to be related if one party has the ability, directly or
      indirectly, to control the other party or exercise significant influence over
      the other party in making financial and operational decisions. Parties are
      also
      considered to be related if they are subject to common control or common
      significant influence. Related parties may be individuals or corporate
      entities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>J.
      FOREIGN CURRENCY TRANSLATION </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company maintains its books and accounting records in Renminbi ("RMB"), the
      PRC's currency, being the functional currency. Transactions denominated in
      foreign currencies are translated into the functional currency at the exchange
      rates prevailing on the transaction dates. Assets and liabilities denominated
      in
      foreign currencies are translated into the functional currency at the exchange
      rates prevailing at the balance sheet date. Income and expenditures are
      translated at the average exchange rate of the year.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      January 1, 1994, the PRC government introduced a single rate of exchange as
      quoted daily by the People's Bank of China (the "Unified Exchange Rate"). The
      quotation of the exchange rates does not imply free convertibility of RMB to
      other foreign currencies. All foreign exchange transactions continue to take
      place either through the Bank of China or other banks authorized to buy and
      sell
      foreign currencies at the exchange rates quoted by the People's Bank of China.
      Approval of foreign currency payments by the Bank of China or other institutions
      requires submitting a payment application form together with supplier's
      invoices, shipping documents and signed contracts.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>April
                30, 2006</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>October
                31, 2005</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td align="left" valign="bottom" width="71%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Period/year
                end RMB : US$ exchange rate</font></div>
            </td>
            <td width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.0139</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ccffcc;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.0680</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="71%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Average
                RMB : US$ exchange rate</font></div>
            </td>
            <td width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.0481</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: white;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.2308</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>K.
      USE OF ESTIMATES </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenue and expenses
      during the reporting period. Actual results when ultimately realized could
      differ from those estimates. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>L.
      FAIR VALUE OF FINANCIAL INSTRUMENTS </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      carrying value of financial instruments including cash, receivables, accounts
      payable and accrued expenses and debt, approximates their fair value at April
      30, 2006 and October 31, 2005 due to the relatively short-term nature of these
      instruments. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>M.
      REVENUE RECOGNITION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the provisions of Staff Accounting Bulletin No. 103, revenue
      is
      recognized when merchandise is shipped and title passes to the customer and
      collectibility is reasonably assured.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>N.
      RESEARCH AND DEVELOPMENT</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Research
      and development costs are expensed as incurred. Engineers and technical staff
      are involved in the production of our products as well as on-going research,
      with no segregation of the portion of their salaries relating to research and
      development from the portion of their salaries relating to production. The
      total
      salaries are included in cost of sales. Other research is performed on a future
      profit sharing basis conducted by universities and research
      institutions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>O.
      SHIPPING AND HANDLING</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      shipping and handling are expensed as incurred and outbound freight is not
      billed to customers. Shipping and handling expenses included in selling and
      distribution expenses were $643,471 and $748,438 for the 6 months ended April
      30, 2006 and year ended October 31, 2005, respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>P.
      ADVERTISING </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Advertising
      costs are expensed as incurred. They are separately disclosed in income
      statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Q.
      EMPLOYEES' BENEFITS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mandatory
      contributions are made to the Government's health, retirement benefit and
      unemployment schemes at the statutory rates in force during the period, based
      on
      gross salary payments. The cost of these payments is charged to the statement
      of
      income in the same period as the related salary cost.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>R.
      SEGMENTS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No
      business segment analysis is provided for the year end October 31, 2005 and
      for
      the six months ended April 30, 2006 and 2005, as less than 10% of revenue and
      less than 10% of income from operations is attributable to the segment other
      than sales of pharmaceutical products.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Further,
      no geographical segment analysis is provided for the year ended October 31,
      2005
      and for the six months ended April 30, 2006 and 2005, as less than 10% of
      revenue and less than 10% income from operations is attributable to the segment
      other than the Mainland China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>S.
      COMPREHENSIVE INCOME (LOSS) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has adopted the provisions of Statement of Financial Accounting
      Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS
      No.
      130 establishes standards for the reporting and display of comprehensive income,
      its components and accumulated balances in a full set of general-purpose
      financial statements. SFAS No. 130 defines comprehensive income (loss) to
      include all changes in equity except those resulting from investments by owners
      and distributions to owners, including adjustments to minimum pension
      liabilities, accumulated foreign currency translation, and unrealized gains
      or
      losses on marketable securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>T.
      CONCENTRATION OF CREDIT RISK </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
      instruments that potentially subject the Company to significant concentrations
      of credit risk consist primarily of trade accounts receivable. The Company
      performs ongoing credit evaluations with respect to the financial condition
      of
      its creditors, but does not require collateral. In order to determine the value
      of the Company's accounts receivable, the Company records a provision for
      doubtful accounts to cover probable credit losses. Management reviews and
      adjusts this allowance periodically based on historical experience and its
      evaluation of the collectibility of outstanding accounts
      receivable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Management&#8217;s
      Discussion and Analysis of Operations</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Fiscal
      years ended October 31, 2005</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company achieved significant sales growth and higher gross margins in fiscal
      2005. As a result, it turned the loss of fiscal 2004 into a net profit of over
      $2 million. The company&#8217;s operating results demonstrate the benefits of the
      management&#8217;s continued focus on growing market shares while keeping costs under
      control.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Revenue
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      year ended October 31, 2005 increased by 84% to a record $18,915,064, compared
      with $10,296,230 for the previous year. The increase in sales was a direct
      result of new product launches starting in January 2005 (after a new factory
      began operations), as well as our ability to continue to attract customers
      with
      competitive pricing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      income attributable to shareholders </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">was
      $2,182,415 for the year ended October 31, 2005, compared with a </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>loss</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      of
      $526,195 for the previous year. The turn-around resulted from significantly
      higher sales volume and higher gross margins compared with the previous year.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cost
      of sales </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      year ended October 31, 2005 increased by 43% to $8,868,845, compared with
      $6,190,503 for the previous year. Proportionately, the cost increase was just
      over half of the 84% increase in sales, reflecting better cost control from
      management along with new and more efficient production processes. For some
      products, cost of sales actually decreased by over 20% because of the above
      controls. Finally, cost of sales also included obsolescent inventories of
      $138,638 (compared with $508,858 for the previous year). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gross
      profit margin </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">was
      53%
      for the year ended October 31, 2005, compared with 40% for the previous year.
      The improvement in gross margin reflects better cost control and more efficient
      production processes. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Selling
      and distribution expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 127% to $3,347,094 for the year ended October 31, 2005, compared with
      $1,477,548 for the previous year. The increase was a result of increased
      transportation due to higher sales volume, as well as increased bonus payments
      to salespeople. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Advertising
      expenses</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      increased about 69 times to $1,518,686 for the year ended October 31, 2005,
      compared with only $2,189 for the previous year. The sharp increase was a direct
      result of major advertising campaigns and promotional initiatives started during
      the year. Major forms of advertising were TV commercials and advertisements
      in
      magazines and newspapers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>General
      and administrative expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">decreased
      by 51% to $773,757 for the year ended October 31, 2005, compared with $1,578,423
      for the previous year. The decline was mostly due to lower office and travel
      expenses. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Provision
      for doubtful accounts </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(for
      trade receivables) for the years ended October 31, 2005 and 2004 were $138,638
      and $592,736, respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Depreciation
      and amortization </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 3 times to $800,305 for the year ended October 31, 2005, compared with
      $193,461 for the previous year. The increase was consistent with a
      more-than-6-times increase in property, plant and equipment (PPE) to $12,845,679
      from $1,960,242 the previous year. The bulk of the increase in PPE was due
      to
      the completion of $7 million of construction in progress during
      2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      and development (R&amp;D) expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 37% to $1,233,504 for the year ended October 31, 2005, compared with $897,210
      for the previous year. The increase was largely due to the launch of several
      early-stage R&amp;D initiatives to be carried out jointly with local
      universities to develop new products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Government
      subsidies </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      year ended October 31, 2005 were $326,092, compared with $295,536 for the
      previous year. Government subsidies were given in support of our R&amp;D
      efforts. They were unconditional and with no commitments from local authorities.
      We are not sure how long the subsidies can be expected to continue or if they
      will continue at the present levels. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Finance
      costs </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 2 times to $377,467 for the year ended October 31, 2005, compared with
      $124,643 for the previous year. The increase was due to interest payments on
      a
      new long-term bank loan of $3.7 million that was initiated in 2005.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Income
      taxes </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      zero
      for 2005 and 2004, as the Company was exempted from corporate income taxes.
      It
      is currently entitled to full exemption from corporate income taxes through
      the
      end of December 2006. From 2007 onwards, the Company will enjoy a preferential
      income tax rate of 15%, based on its being in a high-tech development industry
      to be promoted by the local authorities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Management&#8217;s
      Discussion of Financial Resources and Liquidity</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Fiscal
      years ended October 31, 2005</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company experienced significant expansion of its assets in fiscal 2005. Current
      assets increased to meet the increasing need for working capital as sales grew
      at a fast pace. Fixed assets also grew significantly after the completion of
      major production facilities. As a result of such asset expansion, both operating
      and investing activities experienced net cash outflow, while financing
      activities generated net cash inflow to finance the expansion. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cash
      and cash equivalents</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      aggregated $3.44 million on October 31, 2005, down $1.33 million from the end
      of
      fiscal 2004. Operating and investing activities together used more cash than
      generated by the company&#8217;s financing activities, causing the decline in cash
      balance. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Trade
      receivables </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      $4.06 million on October 31, 2005, up $3.73 million from the end of fiscal
      2004,
      reflecting the company&#8217;s significant growth in sales. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Inventories</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      stood at
      $3.51 million on October 31, 2005, up $1.39 million from the end of fiscal
      2004,
      as the company meets significant growth in sales by increasing its stock of
      raw
      materials and finished goods. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Prepayments</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $0.44 million on October 31, 2005, up $0.32 million from the end of fiscal
      2004,
      as the company increased its purchases of goods and supplies (and prepayments
      thereof) to meet increasing sales volume. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      receivables</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $0.38 million on October 31, 2005, up $0.32 million from the end of fiscal
      2004,
      again reflecting increased sales volume and activities at the company.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Land
      use rights </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      valued at $0.14 million, slightly higher than the previous year due to
      fluctuation in the USD/RMB exchange rate. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Property,
      plant and equipment</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $11.66 million on October 31, 2005, up $10.09 million from the end of fiscal
      2004, as the company completed a major facilities construction of about $7.6
      million and added other fixed assets.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Consolidated
      borrowings </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">aggregated
      $13.09 million, up from $8.44 million at the end of fiscal 2004. The increase
      was due to a $3.72 million bank loan to finance the completion of major
      production facilities, and increased current liabilities to meet working capital
      needs amid increasing sales volume. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      cash flow</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      was
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>negative</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      $1.58
      million during fiscal 2005. The company used $1.17 million net in cash in
      operating activities, largely to meet increasing sales volume. It used $3.81
      million net in cash in investing activities, mainly to complete the construction
      of major new facilities and add fixed assets. The company generated $3.40
      million net in cash in its financing activities, mainly through bank
      loans.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Management&#8217;s
      Discussion and Analysis of Operations</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Six
      Months Ended April 30, 2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company achieved significant sales growth and higher gross margins during the
      six months ended April 30, 2006. As a result, net income increased by almost
      11%
      compared to the same period a year ago, despite significant increases in
      SG&amp;A and advertising expenses during the period. The company&#8217;s operating
      results demonstrate that the management&#8217;s strategy to launch new products, grow
      market shares and keep costs under control continued to pay
      off.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Revenue
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      six months ended April 30, 2006 increased by 179% to $20,052,818, compared
      with
      $7,193,313 for the same period a year ago. The increase was due to continued
      success with new products launched since January 2005 (after a new factory
      began
      operations), as well as our ability to continue to attract customers with
      competitive pricing. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      income attributable to shareholders</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      increased by almost 11% to $457,900, compared with $413,039 for the same period
      a year ago. The increase resulted from significantly higher sales volume and
      higher gross margins compared with the same period a year ago. Net income would
      have been higher had it not been for significant increases in SG&amp;A and
      advertising expenses during the period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cost
      of sales </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      six months ended April 30, 2006 increased by 131% to $8,863,227, compared with
      $3,989,857 for the same period a year ago. Note that cost increased
      proportionately much less than sales, reflecting better cost control from
      management along with new and more efficient production processes. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gross
      profit margin </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">was
      56%
      for the six months ended April 30, 2006, compared with 45% for the same period
      a
      year ago. The improvement in gross margin reflects better cost control and
      more
      efficient production processes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Selling
      and distribution expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 242% to $4,202,267 for the six months ended April 30, 2006, compared with
      $1,228,724 for the same period a year ago. The increase was a result of
      increased transportation due to significantly higher sales volume, as well
      as
      increased bonus payments to salespeople. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Advertising
      expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      6.3 times to $2,917,988 for the six months ended April 30, 2006, compared with
      $398,714 for the same period a year ago. The sharp increase was a direct result
      of continued spending on major advertising campaigns and promotional initiatives
      started in fiscal 2005. Major forms of advertising were TV commercials and
      advertisements in magazines and newspapers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>General
      and administrative expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      2.7 times to $1,632,290 for the six months ended April 30, 2006, compared with
      $446,791 for the same period a year ago. The increase was mainly due to
      significantly higher office and travel expenses as well as service payments.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Provision
      for doubtful accounts </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(for
      trade receivables) for the six months ended April 30, 2006 and 2005 were
      $622,618 and zero, respectively.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Depreciation
      and amortization </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">decreased
      by 7% to $328,051 for the six months ended April 30, 2006, compared with
      $351,427 for the same period a year ago. The decrease reflected the transfer
      of
      approximately $2.7 million of property, plant and equipment to a newly set-up
      entity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Research
      and development (R&amp;D) expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 39% to $817,547 for the six months ended April 30, 2006, compared with
      $586,113 for the same period a year ago. The increase was largely due to the
      launch of several early-stage R&amp;D initiatives to be carried out jointly with
      local universities to develop new products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Government
      subsidies </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">for
      the
      six months ended April 30, 2006 were $155,316, compared with $342,411 for the
      same period a year ago. Government subsidies were given in support of our
      R&amp;D efforts. They were unconditional and with no commitments from local
      authorities. We are not sure how long the subsidies can be expected to continue
      or if they will continue at the present levels. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Finance
      costs </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">increased
      by 1.9 times to $359,465 for the six months ended April 30, 2006, compared
      with
      $125,047 for the same period a year ago. The increase was due to interest
      payments on a new long-term bank loan of $3.7 million that was initiated in
      November 2005.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Income
      taxes </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      zero
      for the six months ended April 30, 2006 and 2005, as the Company was exempted
      from corporate income taxes. It is currently entitled to full exemption from
      corporate income taxes through the end of December 2006. From 2007 onwards,
      the
      Company will enjoy a preferential income tax rate of 15%, based on its being
      in
      a high-tech development industry to be promoted by the local
      authorities.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>Management&#8217;s
      Discussion of Financial Resources and Liquidity</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Six
      Months Ended April 30, 2006</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      company continued to expand its asset base during the six months ended April
      30,
      2006, largely due to current asset expansion (by $1.76 million) to meet the
      increasing need for working capital amid continued rapid growth in sales. Fixed
      assets declined as disposition exceeded acquisition. During the period, both
      operating and financing activities experienced net cash outflow, while investing
      activities generated net cash inflow. Net cash flow was </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>negative</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      $1.31
      million during the period. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Cash
      and cash equivalents</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      aggregated $2.23 million on April 30, 2006, down $1.21 million from the
      beginning of the period. Operating and financing activities together used more
      cash than generated by the company&#8217;s investing activities, causing the decline
      in cash balance. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Trade
      receivables </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      $5.38 million </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">on
      April
      30, 2006</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      up
      $1.32 million from the </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">beginning
      of the period</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      reflecting the company&#8217;s continued growth in sales. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Inventories</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      stood at
      $2.40 million on April 30, 2006, down $1.11 million from the beginning of the
      period, as the company drew down its stock of finished goods to meet continued
      rapid growth in sales. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Prepayments</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $0.95 million on April 30, 2006, up $0.51 million from the beginning of the
      period, as the company increased its purchases of goods and supplies (and
      prepayments thereof) to meet increasing sales volume. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Other
      receivables</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $0.49 million on April 30, 2006, up $0.11 million from the beginning of the
      period, again reflecting increased sales volume and activities at the company.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Due
      from related parties</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      aggregated $0.28 million on April 30, 2006, up from zero at the beginning of
      the
      period. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      amounts are unsecured, interest-free and repayable within one year. They were
      mainly used for the operation of the company during the period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Due
      from directors</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      aggregated $1.16 million on April 30, 2006, up from zero at the beginning of
      the
      period. The amounts are unsecured, interest-free and repayable within one year.
      They were mainly used for the operation of the Company during the
      period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Deferred
      expenses </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      $0.69 million on April 30, 2006, up from zero at the beginning of the period,
      due to expenses related to the pending reverse merger of the company.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Land
      use rights </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">were
      valued at $0.14 million, slightly up from the beginning of the period due to
      fluctuation in the USD/RMB exchange rate. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Property,
      plant and equipment</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      were
      $10.47 million on April 30, 2006, down $1.19 million from the beginning of
      the
      period, mainly due to the disposition of machinery and equipments. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Consolidated
      borrowings </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">aggregated
      $13.12 million, slightly up from $13.09 million at the beginning of the period,
      as fluctuation in the USD/RMB exchange rate led to slightly higher valuation
      of
      the company&#8217;s long-term bank loan. Current liabilities also increased slightly
      to meet working capital needs amid increasing sales volume. Advance from
      customers and other payables went up, while the company reduced its account
      payables and repaid some of its short-term bank loans. </font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      cash flow</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      was
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>negative</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      $1.31
      million during the period. The company used $0.50 million net in cash in
      operating activities, largely to meet increasing sales volume. It used $1.68
      million net in cash in its financing activities, paying back dues to directors
      and related parties and repaying some of its short-term bank loans. The company
      generated $0.86 million net in cash in investing activities, as disposition
      of
      fixed assets generated more cash than the amount of cash used in the acquisition
      of fixed assets. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Plan
      of Operation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      plan
      of operation for the year ending April 30, 2007 is to continue implementing
      our
      business strategy, including the planned expansion and the fully implementation
      of our new production facility. We also intend to expand our product portfolio
      through research and development. We expect our revenue and net profit to grow
      significant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      part
      of our planned expansion, we anticipate hiring additional full-time employees
      devoted to research and development activities and additional full-time
      employees for sales, general and administrative activities. In addition, we
      intend to use clinical research organizations and third parties to perform
      our
      clinical studies and manufacturing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Overview</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Historically,
      the Chinese population is interested in natural health care products, and it
      is
      estimated that with a growing middle class and an aging population, the demand
      for natural products will increase.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      is estimated to be Renhuang&#8217;s leading product, which accounted for 45% of
      Renhuang&#8217;s total revenue for the fiscal year of 2005, and 50% for the first half
      of fiscal year of 2006. Shark Power Healthcare products accounted for 25% of
      Renhuang&#8217;s total revenue in 2005, and less in 2006. The remaining balance was
      dominated by traditional Western medicine products, led by Tornado Pills and
      Tianma Headache pills that reached top three in China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      total
      market share of Renhuang&#8217;s Acanthopanax products is approximately 10% and its
      Shark Power Healthcare products accounts for 20% in China. The Company estimates
      that, within 3-5 years, Renhuang&#8217;s Acanthopanax products will account for 50%
      market share and that its market share of Shark Power Healthcare products can
      reach 60% with more investment in advertisement. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      further estimated that, due to the high growth rate of the Chinese economy,
      including increased health consciousness, the demand of Acanthopanax products
      and Shark Power Healthy Care products will increase with a 30% annual growth
      rate, which is. This is a major opportunity for Renhuang.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Acanthopanax
      Products</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acanthopanax
      products are the most important product segment of Renhuang because Renhuang
      controls 70% of all wild Acanthopanax resources in China, and has developed
      new
      withdrawing technology to reduce 30% of its production cost. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      2004,
      the revenue from Acanthopanax products was 30% of the total revenue, which
      was
      close to $3.75 million. In the fiscal year of 2005, the revenue from
      Acanthopanax products rose 200%, to nearly $8.8 million. In the first half
      of
      fiscal year of 2006, the revenue was US $9.6 million, which is higher than
      that
      from the full previous year. Based on the foregoing, Renhuang conservatively
      estimates that sales of Acanthopanax products will grow with an average of
      50%
      annually in the next 5 years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company estimates that revenue of Acanthopanax will reach US 18 million dollars
      in 2006, 27.7 million dollars in 2007, and 41.6 million dollars in 2008.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Shark
      Power Healthcare products</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue
      from Shark Power Healthcare products was close to US $5 million dollars in
      the
      fiscal year of 2005 compared to US $3.3 million for the first six months of
      fiscal year of 2006. Shark Power is popular among many students supported by
      their parents. This target market, which is substantial in China, is however
      neglected in many other countries. Additionally, seniors are another target
      segment for these products. Outdoor exercise is not as popular in China as
      in
      the United States. Therefore, senior aged people in China consume a larger
      amount of health care products in order to keep themselves healthy.
</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
      health care products usually provide a long-term effect and its immediate result
      is not visible, promotions become key factors to increase branding and market
      share. Commercials on TV and radio, and advertising in magazine etc are all
      trusted media that converts into increased sales. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      has a substantial market plan for its Shark Power products that will be
      implemented commencing 2007. Our conservative estimate accounts for a growth
      rate of 30% for the next 5 years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      estimated that revenue of Shark Power Healthcare products in 2006 will reach
      6
      million dollars, 8 million dollars in 2007, and 10 million dollars in
      2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Traditional
      Medicine</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the fiscal year of 2005, traditional medicine accounted for 30% of the total
      revenue in Renhuang, and during the first half of fiscal year of 2006, it
      accounted for 36% of the total revenue. In the future, after implementing more
      new products, Renhuang does not see traditional medicine as its main focus.
      Profit margins in this segment are lower compared with its other segments.
      However, most customers of its traditional medicine products are recurring,
      which generates cash flow with low risk. By utilizing stable sales channels,
      Renhuang will lower its cost for acquisition of new customers for its newer
      products. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Despite
      increased marketing activities as a whole, Renhuang will not focus on the growth
      of traditional medical products. As a result, the growth rate will be less
      than
      its other products and revenue will be estimated to peak during 2009 or
      2010.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      estimated that revenue of traditional medicine in 2006 will reach 14 million
      dollars, 20 million dollars in 2007, and 22 million dollars in 2008.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Lysozyme
      Enzyme</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      is a
      new product for Renhuang, with an estimated substantial growth potential. The
      product is highly demanded, especially in food preservation area, where Renhuang
      conservatively estimates that Lysozyme Enzyme products will be achieve the
      growth rate of 100% annually during the next five years starting
      2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company estimates that revenue of Lysozyme Enzyme in 2007 will reach $0.6
      million dollars, and 1.2 million dollars in 2008. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Reagent
      Box series</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reagent
      box is an emerging market segment with a huge potential. Renhuang recently
      employed a team of research scientists graduated from top schools in the United
      States that owns several patents related to this segment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
      estimates that of a total of 10 products, Renhuang plans to launch all of them
      during 2007 and 2008. Renhuang estimates that Reagent Box series will sustain
      a
      growth rate of 100% annually in the next five years. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
      is
      estimated that revenue of Reagent Box series in 2007 will reach 1.2 million
      dollars, and 2.4 million dollars in 2008. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Critical
      Accounting Policies</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2001, the SEC request that all registrants discuss their most &#8220;critical
      accounting policies&#8221; in management&#8217;s discussion and analysis of financial
      condition and results of operations. The SEC indicated that a &#8220;critical
      accounting policy&#8221; is one which is both important to the portrayal of the
      company&#8217;s financial condition and results and requires management&#8217;s most
      difficult, subjective or complex judgments, often as a result of the need to
      make estimates about the effect of matters that are inherently
      uncertain.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Use
      of estimates</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America, US GAAP requires management
      to make estimates and assumptions that affect reported amounts of assets and
      liabilities as of the date of the balance sheet and reported amounts of expenses
      for the periods presented. Accordingly, actual results could differ from those
      estimates.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Net
      profit per share:</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Basic
      net
      profit per share is computed by dividing net profit by the weighted-average
      number of common shares outstanding during the periods presented as required
      by
      SFAS No. 128, &#8220;Earnings Per Share&#8221;. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      six months ended April 30, 2006, the Company had a net income of $0.01 per
      share, despite significant increases in SG&amp;A and advertising expenses. For
      the fiscal year 2005 the Company reported a net income of $0.06 per share.
      The
      company had a net loss of $0.02 per share for the year ended October 31, 2004.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subsequently,
      the company launched new products to expand market share and increase sales
      volume. It also adopted cost control measures to improve gross margin.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Stock-based
      compensation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SFAS
      No.
      123, &#8220;Accounting for Stock-Based Compensation&#8221; (&#8220;SFAS 123&#8221;), provides for the
      use of a fair value-based method of accounting for stock-based compensation.
      However, SFAS 123 allows an entity to continue to measure compensation cost
      for
      stock options granted to employees using the intrinsic value method of
      accounting prescribed by Accounting Principles Board Opinion No. 25 &#8220;Accounting
      for Stock Issued to Employees&#8221; (&#8220;APB 25&#8221;). The Company accounts for its employee
      and director stock options using the intrinsic value method in accordance with
      APB 25 and related interpretations. The Company measures compensation expense
      for employee and director stock options as the aggregate excess of the market
      value of its common stock over the exercise prices of the options on the date
      that both the number of shares the grantee is entitled to receive and the
      exercise prices are known. Such excess is amortized over the vesting
      period.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      accordance with the provisions of SFAS 123 and Emerging Issues Task Force
      (&#8220;EITF&#8221;) No. 96-18, &#8220;Accounting for Equity Instruments That are Issued to Other
      Than Employees for Acquiring or in Conjunction with Selling, Goods or Services,&#8221;
all other issuances of common stock, stock options or other equity instruments
      to non-employees (including consultants and all members of the Scientific
      Advisory Board) as the consideration for goods or services received by the
      Company are accounted for based on the fair value of the equity instruments
      issued (unless the fair value of the consideration received can be more reliably
      measured). Any options issued to non-employees are recorded in expense and
      additional paid-in capital in stockholders&#8217; equity (deficiency) over the
      applicable service periods using variable accounting through the vesting date
      based on the fair value of the options at the end of each period. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description
      of Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upon
      closing the acquisition of Renhuang Pharmaceuticals, Ltd., Inc. (BVI), the
      total
      number of shares that the Company will be </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">authorized
      to issue will be 100 million shares of common stock, par value $0.001 per share,
      and 10 million shares of preferred stock, no par value. The Company will have
      a
      total of 35,000,000 shares of common stock issued and outstanding and no shares
      of preferred shares issued.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Common
      stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      shares of common stock have equal rights and privileges with respect to voting,
      liquidation and dividend rights. Each share of common stock entitled the hold
      thereof (a) to one non-cumulative vote for each share held of record on all
      matters submitted to a vote of the stockholders; (b) to participate equally
      and
      to receive any and all such dividends as may be declared by the board of
      directors; and (c) to participate pro rata in any distribution of assets
      available for distribution upon liquidation. Holders of our common stock have
      no
      preemptive rights to acquire additional shares of common stock or any other
      securities. Our common stock is not subject to redemption and carries no
      subscription or conversion rights.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s amended certificate of incorporation also provides that the board of
      directors has the flexibility to set new classes, series, and other terms and
      conditions of the preferred shares. Preferred shares may be issued from time
      to
      time in one or more series in the discretion of the board of directors. The
      board has the authority to establish the number of shares to be included in
      each
      such series, and to fix the designation, powers, preferences and rights of
      the
      shares of each such series and the qualifications, limitations and restrictions
      thereof.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Preferred
      stock</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Preferred
      shares may be issued in the future by the board without further stockholder
      approval and for such purposes as the board deems in the best interest of our
      company</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">including
      future stock</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">splits
      and split-ups, stock dividends, equity financings and issuances for acquisitions
      and business combinations. In addition, such authorized but unissued common
      and
      preferred shares could be used by the board of directors for defensive purposes
      against a hostile takeover attempt, including (by way of example) the private
      placement of shares or the granting of options to purchase shares to persons
      or
      entities sympathetic to, or contractually bound to support, management. We
      have
      no such present arrangement or understanding with any person. Further, the
      common and preferred shares may be reserved for issuance upon exercise of stock
      purchase rights designed to deter hostile takeovers, commonly known as a
&#8216;&#8216;poison pill.&#8217;&#8217;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Share
      structure and major shareholders</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><img src="sharestructurechart4.jpg" alt=""></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Notes
      to the above chart:</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Note
      1. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      March
      3rd, 2006 Harbin Renhuang Pharmaceutical Stock Co. Ltd. (&#8220;Old Renhuang&#8221;)
      transferred all of its operating assets (except buildings) independent valued
      by
      Hei Long Jiang Haohua Certified Public Accountants Co., LTD. at 25 million
      RMB
      ($3.3 million) to a newly organized company, Harbin Renhuang Pharmaceuticals
      Co.
      Ltd. (&#8220;Renhuang China&#8221;). On March 3, 2006 Renhuang Medicine for Animals, a
      corporation controlled by Mr. Li Shaoming, invested 25 million RMB ($3.3
      million) in cash in Renhuang China. Renhuang China has entered into a long-term
      lease agreement with option to buy the buildings from Old Renhuang on favorable
      conditions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Note
      2.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      On March
      16, 2006, the following five individuals and their designated nominee
      corporations: Mr. Li Shaoming with Celebrate Fortune Company Limited (BVI),
      Mr.
      Pi Dianjun with China Wealth Source Company Limited (BVI), Mr. Cheung Yiu Man
      with Total Prosperity Company Limited, Mr. Wulantuya with New BVI Co. and Ms.
      Ding Xiuhua with Benevolent Sovereign Intl Company Limited, as further described
      elsewhere in this Current Report acquired 100% of the shares in New Renhuang
      from Harbin Renhuang Pharmaceutical Stock Co. Ltd. and Harbin Renhuang Medicine
      for Animals Co. Ltd. The transaction has been settled via cash
      payment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Note
      3.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      On April
      11th, 2006 Harbin Renhuang Pharmaceutical Company Limited, a corporation
      incorporated in the British Virgin Island (Renhuang BVI) executed a share
      exchange with the five corporate entities as referred to above and consequently
      became the 100% shareholder of Renhuang BVI.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Note
      4.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      On
      August 28, 2006, Renhuang BVI entered into a Share Exchange Agreement with
      the
      Company, whereby the Company issued 29,750,000 shares of Common Stock
      representing 85% of the total issued and outstanding shares of the Company
      as
      further described in our Current Report 8 K, dated and filed on August 29,
      2006
      and is hereby incorporated by reference. On September 7, the transaction closed
      and the Company became the 100% shareholder of Renhuang BVI. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Security
      Ownership of Certain Beneficial Owners and Management</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth information regarding the number of shares of Common
      Stock beneficially owned on September 7, 2006, the Closing Date, by each person
      who is known by the Company to beneficially own 5% or more of the Company&#8217;s
      Common Stock, each of the Company&#8217;s directors and executive officers, and all of
      the Company&#8217;s directors and executive officers, as a group:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Name
                of Beneficial Owner</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>No.
                of Shares</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Percentage
                of Shares</strong></font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><strong>Outstanding</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shaoming
                Li - Celebrate Fortune Company Limited</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">17,850,000</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(1)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">51.0000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dianjun
                Pi - Total Prosperity Company Ltd. </font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3,159,450</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(2)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">9.0270</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Yun
                Man Cheung - China Wealth Source Company Ltd.</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,278,050</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(3)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">12.2230</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Tuya
                Wulan - New BVI Co.</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,975,000</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(4)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">8.5000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Xiuhua
                Ding - Benevolent Sovereign International Company Ltd</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,487,500</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 8pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman"><sup>(5)</sup></font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4.2500</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="71%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Directors
                and officers as a group (5 persons):</strong></font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29,750,000</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">85.000</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">%</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td align="left" valign="middle" width="81%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Includes
                17,850,000 shares of Common Stock owned by Celebrate Fortune Company
                Limited, an entity controlled by Mr. Shaoming Li.
                &#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td align="left" valign="middle" width="83%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Includes
                3,159,450 shares of Common Stock owned by Total Prosperity Ltd.,
                an entity
                controlled by Mr. Dianjun Pi.
&#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td align="left" valign="middle" width="83%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Includes
                4,278,050 shares of Common Stock owned by China Wealth Source Company
                Ltd., an entity controlled by Mr. Yun Man Cheung.
&#160;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="middle" width="2%">&#160;</td>
            <td align="left" valign="middle" width="83%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td align="left" valign="middle" width="83%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Includes
                2,975,000 shares of Common Stock owned by New BVI Co., an entity
                controlled by Mr. Tuya Wulan.
&#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">(4)</font></div>
            </td>
            <td align="left" valign="middle" width="83%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">Includes
                1,487,500 shares of Common Stock owned by Benevolent Sovereign
                International Company Ltd. an entity controlled by Ms. Xiuhua Ding.
                &#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Directors
      and Executive Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s Board of Directors is composed of four directors, all of whom are
      currently directors of Renhuang China: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang&#8217;s
      Board of Directors is comprised of four people: Mr. Li Shaoming, Mr. Pi Dianjun,
      Mr. Meng Fanrong and Dr. Leo Wang. Renhuang have vacancies for two independent
      directors that will be filled shortly.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
      directors hold office until the next annual meeting of stockholders and the
      election and qualification of their successors. The Company intends to appoint
      two additional directors that are considered &#8216;&#8216;independent&#8217;&#8217; under the SEC&#8217;s
      independence standards. Officers are elected annually by the board of directors
      and serve at the discretion of the board. In addition, certain of the officers
      of Renhuang China were named to serve as officers of the Company in the same
      positions they served at Renhuang China upon the closing of the
      Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth information regarding the members of the Company&#8217;s
      Board of Directors and its executive officers following the Closing Date. The
      directors listed below will serve until the next annual meeting of the Company&#8217;s
      stockholders. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="80%">

          <tr>
            <td align="justify" valign="top" width="14%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
            </td>
            <td align="justify" valign="top" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="justify" valign="top" width="8%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
            </td>
            <td align="justify" valign="top" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="justify" valign="top" width="20%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Position</strong></font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Li,
                Shaoming</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">44</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chairman
                and Chief Executive Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pi,
                Dianjun</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">55</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director
                and Chief Operating Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
                Leo Wang</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">38</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Financial Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Meng,
                Fanrong</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">35</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      principal occupation for the past five years (and, in some instances, for prior
      years) of each of our directors and officers are as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      LI SHAOMING</strong> has served as the Chairman of the Board of Directors since
      the inception of Harbin Renhuang Pharmaceutical Stock Co. Ltd in 1996, the
      Chairman of the Board of Director of Harbin Renhuang Pharmaceutical Co. Ltd.
      starting May 1<sup>st</sup>, 2006 and director, Chairman and Chief Executive
      Officer of the Company since April 2006. Mr. Li has more than 20 years
      experience from the pharmaceutical and finance industry. From 1984 to 1996,
      Mr.
      Li served as Vice Chairman of Shenzhen Health Pharmaceutical Co. Ltd, a company
      dedicated to drug research, production, and sales. Mr. Li is a professor at
      Harbin Business University and Northeastern Agriculture University. Mr. Li
      also
      served as Vice Chairman of Heilongjiang Provincial Chinese Traditional Medicine
      Association and Heilongjiang Provincial Medicine Association. Mr. Li Shaoming
      graduated from Central University of Finance and Economics in Beijing, China
      with a bachelor&#8217;s degree in finance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      PI DIANJUN</strong> has served as the Chief Operation Officer of Harbin Renhuang
      Pharmaceutical Stock Co. Ltd. since 2003, and the Chief Operation Officer of
      Harbin Renhuang Pharmaceutical Co. Ltd. commencing May 1<sup>st</sup>, 2006,
      including responsibilities for the human resource department, information
      management, the center of management, and the office of the president in
      Renhuang and director of the Company since April 2006. From 1992 to 2001, Mr.
      Pi
      served as the Chief Operation Officer of China Resource Breweries Limited,
      Harbin Office; from 2002 to 2004, Mr. Pi served as Vice Chairman of Kuihua
      Pharmaceutical Co. Ltd. Mr. Pi Dianjun graduated from Heilongjiang
      University.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      MENG FANRONG</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      the
      director of the board of Harbin Renhuang Pharmaceutical Stock Co. Ltd. and
      Harbin Renhuang Pharmaceutical Co. Ltd. starting May 1</font><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman"><sup>st</sup></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">,
      2006,
      and director of the Company since April 2006 has served as the Chief Executive
      Officer of Harbin Venture Capital Ltd since 2001. Mr. Meng has more than 15
      years investment experience in China. In 1997, he participated in the successful
      Initial Public Listing of Asiapower Investment in Singapore. Mr. Meng also
      has
      participated in various international investment banking transactions with
      private and publicly listed companies. Mr. Meng Fanrong graduated from Xiamen
      University with a master&#8217;s degree in Finance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Dr.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LEO
      WANG</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      served as the director of and Chief Financial officer of Renhuang China. An
      expert on international business, finance and investment, Dr. Wang pioneered
      the
      study of foreign investments and multinational companies in China before the
      current wave of international business flows into China. Prior to Dr. Wang&#8217;s
      current position, he worked in investment management at a New York hedge fund
      that invested for senior executives of Citigroup Morgan Stanley, UBS and the
      Federal Reserve. He also developed investment strategies at Fleet Boston
      Financial Corporation (Bank of America), and provided strategy consulting for
      Raytheon Company. Previously, he was an Assistant Professor of Economics at
      the
      University of Copenhagen in Denmark, and an Economic Advisor to the Ministry
      of
      Finance in Norway. Dr. Wang holds an M.B.A. in Finance and Management from
      MIT
      and a Ph.D. in Economics from the University of Oslo. He was also a National
      Science Foundation Scholar at Harvard University. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Director
      Compensation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to compensate non-management directors through the issuance
      of
      stock awards including, without limitation, stock options, restricted stock
      awards, stock grants and/or stock appreciation rights.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Executive
      Officer Employment Agreements</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company has entered into employment agreements with each of its senior executive
      officers. The Company expects that the employment agreements will be for an
      initial term of one year ending at the end of 2006 and provide for automatic
      successive one-year renewal terms thereafter unless terminated by either party
      upon 30 prior written notice. The agreements will provide customary provisions
      for earlier termination for reasons such as termination by the Company for
      cause, death or disability of executive, certain events of change in control
      or
      termination by the executive upon good reason. The definition of &#8216;&#8216;cause&#8217;&#8217; will
      include termination for conduct amounting to: fraud, embezzlement, willful
      or
      illegal misconduct; indictment or conviction of the executive by a court of
      proper jurisdiction (or his written, voluntary and freely confession of same)
      of
      a crime which constitutes a felony or results in material injury to the
      property, operation or reputation of the Company or its affiliates; and other
      forms of misconduct customarily amounting to a termination for cause. Each
      executive officer will provide venture deposit with different amounts depending
      on the different job responsibilities. The venture deposit will return to the
      executive officer(s) after the executive officer(s) leave. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Executive
      Compensation</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following executives, except Leo Wang, received compensation from Harbin
      Renhuang Pharmaceutical Stock Co., Ltd prior to April 30, 2006. No other item
      of
      compensation was paid to any officer or director of the Company other than
      reimbursement of expenses.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="bottom" width="13%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="15%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Job
                Title</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="10%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date
                of Hiring</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Revenue</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="17%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Job
                description</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Li,
                Shaoming</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chairman/CEO</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1996</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">250,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $31,250</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oversee
                the company operation</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Han,
                Yulin</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Producing Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1996</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oversee
                the company producing</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Gao,
                Zhimin</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Accounting Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1996</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oversee
                the company accounting system</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Luo,
                Jingwang</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Marketing Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">100,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $12,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oversee
                the marketing issue</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cui,
                Yuhai</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                R&amp;D Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">R&amp;D
                on new products</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Liu,
                Guangming</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Strategic Planning Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Strategic
                Planning </font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">He,
                Jiang</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CEO
                assistant</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legal
                and Asset Management</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pi,
                Dianjun</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Operating Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">36,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $4,500</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
                Operating</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Leo
                Wang</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Financial Officer</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">480,000
                RMB</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">US
                $60,000</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="top" width="17%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Oversee
                the company financial system</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Indemnification
      of Directors and Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      permitted by the provisions of the Nevada Corporation Law (the &#8216;&#8216;NCL&#8217;&#8217;), the
      Company has the power to indemnify any person made a party to an action, suit
      or
      proceeding by reason of the fact that they are or were a director, officer,
      employee or agent of the Company, against expenses, judgments, fines and amounts
      paid in settlement actually and reasonably incurred by them in connection with
      any such action, suit or proceeding if they acted in good faith and in a manner
      which they reasonably believed to be in, or not opposed to, our best interest
      and, in any criminal action or proceeding, they had no reasonable cause to
      believe their conduct was unlawful. Termination of any action, suit or
      proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
      contendere or its equivalent, does not, of itself, create a presumption that
      the
      person did not act in good faith and in a manner which they reasonably believed
      to be in or not opposed to our best interests, and, in any criminal action
      or
      proceeding, they had no reasonable cause to believe their conduct was
      unlawful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company must indemnify a director, officer, employee or agent who is successful,
      on the merits or otherwise, in the defense of any action, suit or proceeding,
      or
      in defense of any claim, issue, or matter in the proceeding, to which they
      are a
      party because they are or were a director, officer, employee or agent, against
      expenses actually and reasonably incurred by them in connection with the
      defense.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may provide to pay the expenses of officers and directors incurred
      in
      defending a civil or criminal action, suit or proceeding as the expenses are
      incurred and in advance of the final </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">disposition
      of the action, suit or proceeding, upon receipt of an undertaking by or on
      behalf of the director or officer to repay the amount if it is ultimately
      determined by a court of competent jurisdiction that they are not entitled
      to be
      indemnified by the Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      NCL
      also permits a corporation to purchase and maintain liability insurance or
      make
      other financial arrangements on behalf of any person who is or was</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Wingdings"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">l</font></font></div>
            </td>
            <td align="left" valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a
                director, officer, employee or agent of the
                corporation,</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Wingdings"><font style="DISPLAY: inline; FONT-FAMILY: Wingdings">l</font></font></div>
            </td>
            <td align="left" valign="top" width="69%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">or
                is or was serving at the request of the corporation as a director,
                officer, employee or agent of another corporation, partnership, joint
                venture, trust or other
                enterprises.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Such
      coverage may be for any liability asserted against them and liability and
      expenses incurred by them in their capacity as a director, officer, employee
      or
      agent, or arising out of their status as such, whether or not the corporation
      has the authority to indemnify them against such liability and
      expenses.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
      as indemnification for liabilities arising under the Securities Act, as amended,
      may be permitted to officers, directors or persons controlling our company
      pursuant to the foregoing provisions, the Company has been informed that in
      the
      opinion of the SEC such indemnification is against public policy as expressed
      in
      such Act and is therefore unenforceable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Senior
      Managers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following individuals are senior managers reporting directly to the President
      and the Board of Directors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="80%">

          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Han,
                Yulin</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">37</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Producing Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cui,
                Yuhai</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">35</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                R&amp;D Officer</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lou,
                Jingwang</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">48</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Deputy
                General Manager in Sales Department</font></div>
            </td>
          </tr>
          <tr>
            <td align="justify" valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Liu,
                Guangming</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">38</font></div>
            </td>
            <td align="justify" valign="top" width="2%">&#160;</td>
            <td align="justify" valign="top" width="20%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                Strategy Officer</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MS.
      HAN, YULIN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      served as the Chief Producing Officer of Harbin Renhuang Pharmaceutical Stock
      Co. Ltd since 1996, including responsibility for drug production. During the
      time working in Renhuang, Ms. Han has made following substantial achievements:
      </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms.
      Han
      obtained the patent (with patent number 99116838.0) regarding producing
      technology improvement of cold capsule, effectively solving the problem of
      Aspirin Hydrolyzing problem of this product; </font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms.
      Han
      obtained the patent (with patent number </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ZL00310682</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#244;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ZL00310035.9,
      ZL99321756.7) regarding designing the holding box of Squalene capsule, which
      was
      awarded golden patent award in China;</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Published
      Paper in Chinese: &#8220;Discussion of best withdrawing technology of heart curing
      pills via Orthogonal Law&#8221;;</font></div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Symbol, serif">&#183;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 9pt">&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Published
      Paper in Chinese: &#8220;Discussion of Best production technology of Spore Ammonia
      Pill via orthogonal Law&#8221;;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms.
      Han
      has finished R&amp;D, testing and application for approval of more than 30 new
      products in Renhuang. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Ms.
      Han
      graduated from Jiamusi Medical School in Heilongjiang Province with a bachelor
      degree in Chemical Medicine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      CUI, YUHAN</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      served as the Chief R&amp;D Officer of Harbin Renhuang Pharmaceutical Stock Co.
      Ltd since 2004. Before that, Mr. Cui has served as the Chief Project Manager
      in
      Harbin Renhuang Pharmaceutical Co. Ltd for 7 years. During the time working
      in
      Renhuang, Mr. Cui was awarded to top tier award of Science Technology Progress
      from Changchun Division of Chinese Academy of Sciences in 1997 and third tier
      award of Science Technology Progress from Heilongjiang Science Commission in
      1998. Mr. Cui graduated from Northeastern Agricultural University in Harbin
      with
      a bachelor degree in Biotechnology in 1994, and received his Master degree
      in
      Microorganism and biochemistry pharmacy from China Pharmaceutical University
      in
      China.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      LOU, JINGWANG </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">has
      served as Deputy General Manager in Sales Department of Harbin Renhuang
      Pharmaceutical Stock Co. Ltd since 2003. From 1999 to 2003, Mr. Lou served
      as
      the Sales Manager of Beijing Tong Ren Tang, which is the biggest and most famous
      pharmaceutical company in China. Mr. Pi Dianjun graduated from Heilongjiang
      University.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Mr.
      LIU GUANGMING</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      has
      served as the Chief Strategy Officer of Harbin Renhuang Pharmaceutical Stock
      Co.
      Ltd since 2003, including responsibilities for the strategy planning, finance,
      and capital operation in Renhuang. From 2001 to 2003, Mr. Liu served as the
      Vice
      President of Investment Banking Division of Harbin Time Group. Mr. Liu Guangming
      graduated from Anshan University of Science and Technology with Bachelor degree
      in Industrial Engineering.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      3.02 Unregistered Sales of Equity Securities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosure as set forth in Item 2.01 are hereby incorporated by reference into
      this Item 3.02</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      4.01 Changes in Registrant&#8217;s Certified Accountant.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosure as set forth in our Current Report dated and filed on April 10,
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2006
      is
      hereby incorporated by reference into this Item 4.01.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01 Changes in Control of Registrant </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      disclosure as set forth in Item 2.01 are hereby incorporated by reference into
      this Item 5.01</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>Accounting
      Treatment; Change of Control</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      merger is being accounted for as a &#8220;reverse merger,&#8217;&#8217; since the former
      stockholders of BVI own a majority of the outstanding shares of the Company&#8217;s
      Common Stock immediately following the Merger. No arrangements or understandings
      exist among present or former controlling stockholders with respect to the
      election of members of the Company&#8217;s board of directors and, to the Company&#8217;s
      knowledge, no other arrangements exist that might result in a change of control
      in the future</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      a
      result of the issuance of the 29,750,000 shares of Common Stock, a change in
      control occurred on the date of the consummation of the Merger</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of the
      time immediately following the closing, the Company continued to be a &#8216;&#8216;small
      business issuer,&#8217;&#8217; as defined under the Securities Exchange Act of 1934, as
      amended.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      time of disposition of the Company&#8217;s assets and discontinued operations on March
      3, 2006, the Company&#8217;s then current sole director and officer, Mr. Vincent
      Rinehart elected Mr. Shaoming Li, Mr. Fanrong Meng and Dianjun Pi as the
      Company&#8217;s new directors and thereafter resigned. On July 6, 2006 Dr. Leo Wang
      was elected as the Chief Financial Officer and to the Board of Directors. The
      Company has two vacancies to be filled by independent directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06 Change in Shell Company Status</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      described in Item 2.01 above, which is incorporated by reference into this
      Item
      5.06, the Company ceased being a shell company (as defined in Rule 12b-2 under
      the Exchange Act of 1934, as amended) upon completion of the
      Merger.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01. Financial Statements and Exhibits.</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;&#160;
              &#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
                a result of its acquisition of Harbin Renhuang Pharmaceutical Company
                Limited (&#8220;BVI&#8221;) and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">its
                subsidiary Harbin Renhuang Pharmaceutical&#160;Co. Ltd., (&#8220;Renhuang
                China&#8221;) (as described in Item 2.01), the registrant is filing Renhuang&#8217;s
                audited and unaudited financial information as Exhibit 99.1 and Exhibit
                99.2 to this Current Report. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;&#160;&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                registrant is filing p</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff">ro
                forma financial information after giving effect to the acquisition
                of
                Renhuang BVI and its subsidiary Renhuang China (as described in Item
                2.01)&#160;in this</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
                Current Report</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff">.
                </font></div>
            </td>
          </tr>

      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBITS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Exhibit</font></div>
            </td>
            <td align="left" valign="middle" width="1%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="65%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.1</font></div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Audited
                financial statements of Harbin Renhuang Stock. Co Ltd. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">October
                31, 2005 and 2004</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">&#160;</td>
            <td align="left" valign="middle" width="1%">&#160;</td>
            <td align="left" valign="top" width="65%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">99.2</font></div>
            </td>
            <td align="left" valign="middle" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                financial statements of Harbin Renhuang Stock. Co Ltd. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">April
                30, 2006 and 2005</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SIGNATURE</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" colspan="2" valign="top" width="37%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Renhuang
                Pharmaceuticals, Inc.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="34%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="35%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Date:&#160;September
                8, 2006</font></div>
            </td>
            <td align="left" valign="top" width="3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">By:&#160;&#160;</font></div>
            </td>
            <td align="left" valign="top" width="34%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">/</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>s/&#160;Shaoming
                Li</em></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="2" valign="top" width="38%">&#160;</td>
            <td align="left" valign="top" width="34%">
              <hr style="COLOR: black" align="left" noshade size="2" width="80%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shaoming
                Li</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
                  Executive Officer and
                  President</font></div>
              </div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>EXHIBIT
      INDEX</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="5%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
                No.</font></div>
            </td>
            <td align="left" valign="top" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="middle" width="65%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Description</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
                1.02, Item 5.01 and Item 5.03 Completion of Acquisition or Disposition
                of
                Assets, incorporated by reference to our Current Report on Form 8-K
                dated
                and filed with the Commission on 2006-08-29.</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Item
                4.01 and 9.01: Changes in Registrant's Certifying Accountant, incorporated
                by reference to our Current Report on Form 8-K/A filed and dated
                with the
                Commission on 2006-05-03.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">&#160;</td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></div>
            </td>
            <td align="left" valign="top" width="2%">&#160;</td>
            <td align="left" valign="middle" width="65%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffffff">Current
                Report 10-KSB dated and filed on August 15, 2006 and is hereby
                incorporated by reference. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN">
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
  </body>
</html>
{"company-data": {"conformed-name": "RENHUANG PHARMACEUTICALS INC", "cik": "0000926844", "assigned-sic": "6199", "irs-number": "881273503", "state-of-incorporation": "NV", "fiscal-year-end": "0430"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-24512", "film-number": "061082872"}, "business-address": {"street1": "3200 BRISTOL STREET", "street2": "SUITE 710", "city": "COSTA MESA", "state": "CA", "zip": "92626", "phone": "7148662100"}, "mail-address": {"street1": "3200 BRISTOL STREET", "street2": "SUITE 710", "city": "COSTA MESA", "state": "CA", "zip": "92626"}, "former-company": [{"former-conformed-name": "ANZA CAPITAL INC", "date-changed": "20020521"}, {"former-conformed-name": "E-NET FINANCIAL COM CORP", "date-changed": "20000317"}, {"former-conformed-name": "E-NET COM CORP", "date-changed": "20000127"}]}
Unassociated Document
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      DC 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): September 8, 2006
Renhuang
      Pharmaceuticals, Inc.
(Exact
      name of registrant as specified in its charter)
Nevada
(State
      or
      Other Jurisdiction of Incorporation)
0-24512
88-1273503
(Commission
                File Number)
(IRS
                Employer Identification Number)
No.
      281, Taiping Road, Taiping District,
Harbin,
      Heilongjiang Province, 150050
P.
      R. China
(Address
      of Principal Executive Offices)
+86-451-5762-0378
(Registrant's
      Telephone Number, Including Area Code)
c/o
      Viking Investments
65
      Broadway, Suite 888
New
      York, NY 10006
(Former
      Name or Former Address, if Changed Since Last Report)
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):
o
Written
      communications pursuant to Rule 425 under the Securities Act (17 CFR
      230.425)
o
Soliciting
      material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14-12)
o
Pre-commencement
      communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
      240.14d-2(b))
o
Pre-commencement
      communications pursuant to Rule 13-e-4(c) under the Exchange Act (17 CFR
      240.13e-4(c))
Item
      1.01.
Entry
      into a Material Definitive Agreement.
On
      August
      28, 2006, Renhuang Pharmaceuticals, Inc., a Nevada corporation (the
''Company''
)
      and
      Harbin Renhuang Pharmaceutical Company Limited, a
Corporation incorporated under the laws of the British Virgin Island,
(the
      "BVI")
entered
      into a Share Exchange Agreement (the "Agreement") pursuant to which the Company
      acquired all of the outstanding capital stock of BVI in exchange for issuing
      29,750,000 shares of the Company's
common
      stock, par value $0.001 per share (the ''Common Stock'') to BVI's stockholders,
      representing 85% of the Company's capital stock on a fully diluted basis after
      taking into account the contemplated transaction. BVI is a holding company
      and
      owns 100% of Harbin Renhuang Pharmaceutical Co. Ltd., incorporated under the
      laws of the Peoples Republic of China ("Renhuang
China").
      This transaction is referred to throughout this report as the "Merger".
Item
      2.01.
Completion
      of Acquisition or Disposition of Assets
.
On
      September 7, 2006, the Merger described in Item 1.01 was completed.
Upon
      closing of the Merger, BVI became a wholly owned subsidiary of the Company.
      In
      exchange for all of the issued and outstanding shares of BVI, the Company issued
      to the former shareholders of BVI 29,750,000 unregistered and restricted shares
      of Common Stock, par value $0.001 of the Company. After giving effect to the
      Merger, the Company has 35,000,000 shares issued and outstanding and the former
      stockholders of BVI own approximately 85% of the issued and outstanding Common
      Stock of the Company. Accordingly, the Merger represents a change in control
      of
      the Company.
Shares
      of
      the Company's Common Stock are trading on the Over the Counter (OTC) Bulletin
      Board Market under the symbol RHGP.
For
      accounting purposes, the Merger has been accounted for as a reverse acquisition
      with the Company as the accounting acquirer and the BVI as the accounting
      acquiree. Upon effectiveness of the Merger, Renhuang China's business plan
      became the business plan of the Company.
The
      Merger agreement was filed as Exhibit 10.1 to the Company's Current Report on
      Form 8-K filed with the Securities and Exchange Commission on August 29, 2006
      and is incorporated herein by reference. The foregoing description of the Merger
      and the transactions contemplated thereby do not purport to be complete and
      are
      qualified in their entireties to the Merger agreement.
On
      August
      31, 2006, the Company's Board of Directors approved the Merger.
Unless
      otherwise provided in this current report, all references in this current report
      to "we", "us", "our company", "our", or the "Company" refer to the combined
      Renhuang Pharmaceuticals, Inc. entity.
Changes
      Resulting From the Merger
The
      Company intends to carry on Renhuang China's business as its sole line of
      business. Renhuang BVI is a holding company and owns 100% of Harbin Renhuang
      Pharmaceutical Co., Ltd., incorporated under the laws of the Peoples Republic
      of
      China ("Renhuang PRC"). Renhuang PRC is based in Harbin, Heilongjiang
      Province
,
Peoples
      Republic of China and is a Biotechnology company focusing on products and
      services related to Pharmaceuticals. The Company has relocated its principal
      executive offices to those of Renhuang PRC at No. 281, Taiping Road, Taiping
      District, Harbin, Heilongjiang Province, 150050 P. R. China
,
      and its
      telephone number is +86-451-5762-0378.
The
      Company maintains a representative office at 65 Broadway, Suite 888, New York,
      NY 10006. Telephone (212) 430 6548. Telefax (646) 356 7034.
The
      Merger and its related transactions were approved by the requisite number of
      Renhuang Pharmaceuticals' stockholders by written consent in lieu of a meeting
      on August 30, 2006 and to:
·
ratify
                all actions taken by the Board of the Company prior to closing, in
                connection with the Merger; and
·
take
                such other action as is necessary or appropriate to consummate the
                transactions consisting of the Merger and related
                transactions.
Company
      History of Renhuang Pharmaceuticals, Inc., (the "Company")
Renhuang
      Pharmaceuticals, Inc., ("Renhuang") or the ("Company") was incorporated in the
      State of Nevada on August 18, 1988 as Solutions, Incorporated. Since that time,
      we have undergone a series of name changes as follows: Suarro Communications,
      Inc., e-Net Corporation, e-Net Financial Corp., e-Net.Com Corporation, e-Net
      Financial.Com Corporation, Anza Capital, Inc. and finally on July 28, 2006
      we
      changed our name to Renhuang Pharmaceuticals, Inc.
On
      March
      3, 2006, we completed the disposition of substantially all of our assets and
      discontinued our operations, including but not limited to, all of our ownership
      interest in our subsidiary, American Residential Funding, Inc., a Nevada
      corporation ("AMRES") to AMRES Holding, LLC, a Nevada limited liability company
      ("AMRES Holding") under control of Vince Rinehart, a shareholder and, at that
      time, our sole officer and director ("Rinehart"). Effective on September 30,
      2005, the disposition was approved by written consent of a majority of our
      stockholders.
In
      exchange for substantially all of our assets, including but not limited to,
      all
      of our ownership interest in AMRES, (i) Rinehart delivered a majority of his
      ownership interest in Anza, consisting of 831,375 shares of common stock and
      1,880,000 shares of our common stock acquired upon the conversion of 18,800
      shares of Series F Convertible Preferred Stock, to Viking Investments USA,
      Inc.,
      a Delaware corporation ("Viking"). Rinehart kept 156,900 shares of our common
      stock; (ii) Rinehart terminated that certain Employment Agreement dated June
      1,
      2001, by and between Rinehart and Anza; (iii) AMRES assumed all obligations
      under that certain real property lease by and between Anza and Fifth Street
      Properties-DS, LLC; (iv) AMRES delivered to Viking its ownership interest in
      Anza, consisting of 4,137,500 shares of our common stock; and (v) AMRES Holding
      delivered warrants to acquire 250,000 shares of our common stock to Viking.
The
      foregoing description of the disposition of our assets and discontinuation
      of
      our operations, and the transactions contemplated thereby do not purport to
      be
      complete and are qualified in their entireties to the Common Stock Purchase
      Agreement and the Securities Purchase Agreement that were filed as Exhibit
      10.1
      and Exhibit 10.2 respectively in our Current Report Form 8-K with the Commission
      on September 23, 2005 and is hereby incorporated by reference.
On
      August
      11, 2006, our outstanding common stock underwent a thirty-for-one stock split
      reversal resulting in a decrease in our outstanding common stock at that time
      from 13,355,181 shares to approximately 445,240 shares as further described
      in
      our Current Report 14 C filed with the Commission on April 25,
      2006.
Company
      History of Harbin Renhuang Pharmaceutical Co. Ltd. and Harbin Renhuang
      Pharmaceutical Stock Co. Ltd.
Harbin
      Renhuang Pharmaceutical Stock Co. Ltd. was incorporated in 1996 in the Peoples
      Republic of China ("Old Renhuang"). Harbin Renhuang Pharmaceutical Co. Ltd. was
      incorporated in February 2006 in the Peoples Republic of China ("Renhuang
      China"). On March 3, 2006 Renhuang Medicine for Animals, a company controlled by
      Mr. Li Shaoming, invested 25 million RMB ($3.3 million) in cash in Renhuang
      China. On March 3, 2006 Old Renhuang transferred the majority of its operating
      assets, except buildings, to Renhuang China.
As
      a
      result, as of May 1, 2006, nearly 100% of revenue producing activities in Old
      Renhuang have been migrated to Renhuang China.
Description
      of Business of Renhuang China
Forward
      Looking Statements
This
      Current Report on Form 8-K contains forward-looking information. Forward-looking
      information includes statements relating to future actions, future performance,
      costs and expenses, outcome of contingencies, financial condition, results
      of
      operations, liquidity, business strategies, objectives of management, and other
      such matters of the Company. The Private Securities Litigation Reform Act of
      1995 provides a "safe harbor" for forward-looking information to encourage
      companies to provide prospective information about themselves without fear
      of
      litigation so long as that information is identified as forward-looking and
      is
      accompanied by meaningful cautionary statements identifying important factors
      that could cause actual results to differ materially from those projected in
      the
      information. Forward-looking information may be included in this Current Report
      on Form 8-K or may be incorporated by reference from other documents filed
      with
      the Securities and Exchange Commission the "SEC") by the Company. You can find
      many of these statements by looking for words including, for example,
      "believes," "expects," "anticipates," "estimates" or similar expressions in
      this
      Current Report on Form 8-K or in documents incorporated by reference in this
      Report. The Company undertakes no obligation to publicly update or revise any
      forward-looking statements, whether as a result of new information, future
      events, or otherwise.
The
      Company has based the forward-looking statements relating to the Company's
      operations on management's current expectations, estimates, and projections
      about the Company and the industry in which it operates. These statements are
      not guarantees of future performance and involve risks, uncertainties, and
      assumptions that the Company cannot predict. In particular, The Company has
      based any of these forward-looking statements on assumptions about future events
      that may prove to be inaccurate. Accordingly, the Company's actual results
      may
      differ materially from those contemplated by these forward-looking statements.
      Any differences could result from a variety of factors, including, but not
      limited to, failure to effectuate its business plan, inability to maintain
      costs, loss of customers, regulatory issues, general economic and business
      conditions, competition, and other factors.
Description
      of Business of Harbin Renhuang Pharmaceutical Co. Ltd. and Harbin Renhuang
      Pharmaceutical Stock Co. Ltd.
Harbin
      Renhuang Pharmaceutical Stock Co. Ltd., incorporated in 1996 in the Peoples
      Republic of China, is a venture capital backed pharmaceutical company, located
      in the capital of the province of Heilongjiang Province, in the northeastern
      corner of China. Renhuang is mainly engaged in the fields of research,
      manufacturing and distribution of Chinese medical products and
      bio-pharmaceutical products in Mainland China. Our niche market is traditional
      Chinese medical products and bio-pharmaceutical products, and our goal is to
      become the dominant entity within a few carefully selected groups of
      products.
Renhuang
      is a high-tech company with its niche market in Greater China area. It
      differentiates from its peers with the most advanced monoclonal antibody
      technology and a few carefully selected groups of products dominant in the
      market.
Renhuang
      has the ability to produce more than 100 types of products. The product sales
      have reached more than 50 provinces and cities in China.
In
      the
      beginning of 2003, Renhuang purchased 100,000 square meters (about 1 million
      square feet) of land and has built "City Biotech Medicine Park" located in the
      City of "A" in the Province of Heilongjiang. The project was called "Renhuang
      City Bio-tech Medicine Construction Project", which has been supported by the
      China government. Renhuang obtained a zero percent interest rate three-year
      loan
      in the amount of 30 million RMB (about US $3.7 million). The whole project
      was
      finished in 2004, and "City Bio-tech Medicine Park" received "Good Manufacturing
      Practice" (GMP) certification on Dec. 30, 2004. In the park, Renhuang produces
      enzyme engineering series products, including SOD (Super Oxide Dismutase),
      Lysozyme enzyme; Shark Power health care products and some other traditional
      medicine.
In
      2003,
      Renhuang acquired DongFangHong ("DFH") Pharmaceutical Co., which controls
      70% of all Acanthopanax wild resource (commonly known as "Siberian Ginseng") in
      the Heilongjiang Province. About 90% of all wild Acanthopanax resource in
      China grows in Heilongjiang.  Additionally, the acquisition came
      with 73 GMP approved medicines from DHF.  Due to the insufficient
      resource of Acanthopanax and increased demand, Acanthopanax resource is
      expected to generate substantial profit and cash flow to
      Renhuang.
Products
The
      company's medical product portfolio can be divided into three different
      categories:
1.
Acanthopanax
      medical products - 45%*
2.
Shark
      Power Healthcare products, and - 25%
3.
Traditional
      medical products. - 30%
n
Chart
                is based on numbers of 2005
*
      Percentage of the total revenue of 2005
Acanthopanax
Acanthopanax
      (also known as Siberian Ginseng) referred to as Eleutherococcus in Soviet
      sources, comes from the northernmost province of China, Heilongjiang, which
      is a
      frigid area adjacent to Soviet Siberia, has become one of the most popular
      and
      widely respected herbal tonics in the world containing chemical components
      proven to promote good health in humans. The plant is common in Heilongjiang,
      but does not grow in any abundance elsewhere in China.
Acanthopanax
      has been used regularly as a tonic by the people of far northern China for
      over
      two thousand years. Because of its profound adaptogenic functions, Acanthopanax
      has grown enormously in reputation, importance and popularity in the Chinese
      and
      Western herbal systems in the last few decades.
It
      is now
      routinely used by people required to engage in high stress, high
      energy-demanding activities such as high altitude flying, long-distance sailing,
      working in high or low temperature environments or in deep water. Acanthopanax
      is used by all Russian (cosmonauts) astronauts. The use of the extract of this
      herb in these endeavors has been reported to increase physical strength, sharpen
      concentration, improve various parameters of mental power, increase visual
      acuity, improve color vision and promote healing power.
Acanthopanax
      is especially popular among athletes or physical workers who require substantial
      sources of adaptive energy and endurance, such as long distance runners, rock
      climbers, bicyclists, scuba divers, dancers, tennis players and by others
      seeking to enhance physical and mental performance, endurance and
      adaptability.
Dongfanghong
      acquisition
As
      a
      result of its acquisition of Dongfanghong Pharmaceutical in 2003, the company
      now controls around 70% of China's natural supply of Acanthopanax.
From
      this
      plant, the company has developed a line of Acanthopanax-based products: the
      company's sale of these products account for 25% of the 400 million RMB (US $50
      million dollars) market for Acanthopanax-based products and could reach 50%
      of
      the Acanthopanax-based medical product market over the next three to five years.
Acanthopanax
      Revenue
During
      the fiscal year of 2005, Acanthopanax medical products have generated 45% of
      the
      total revenue and profit of the company. Due to the company's dominating
      position of Acanthopanax wild resource, and its cutting-edge technology, the
      company will, within the next 3-5 years, control more than 50% share of the
      market of Acanthopanax medical products in China. It is further anticipated
      that
      the market for Acanthopanax products will grow with an average annual rate
      of
      30% and thereby becoming the dominating profit center of the company.
Shark
      Power Healthcare Products
Shark
      Power Healthcare products, are made from Squalene, the scientific name for
      'Nose
      Oil', a low density compound stored in the liver
of
      sharks
.
      These
      medicines contain extracts of shark liver oil and are used to improve oxygen
      level of human blood.
Squalene,
      when taken into the body, removes animal fat and various waste materials whilst
      circulating in the blood so that it cleans blood vessels and blood. It is good
      for the treatment and prevention of arteriosclerosis, improving the function
      of
      the kidneys and livers.
Squalene
      is an extract from sharks that habitat in frolics in cool, clean deep-sea of
      southern ocean waters fully derived. Squalene manufactured and processed in
      Australia is known for its purity and high quality, and also found to be
      extremely low in heavy metals. These products are becoming increasingly popular
      in Japanese and Chinese markets, where premium quality and purity are of utmost
      importance.
It
      is
      widely believed that the human consumption of Squalene may be of assistance
      in:
·
improving
      the function of kidneys and livers
·
keeping
      skin moist with a healthier complexion
·
healing
      of wounds
·
reducing
      stress and heart disease
·
maintaining
      cholesterol
·
arthritis
      suffers
·
gastritis
      suffers
·
maintaining
      healthy eyesight
·
maintaining
      memory capacity
This
      segment of the company's business grew more than 30% as compared to 2004.
      Through a unique production and raw materials resource, the company's production
      cost is 30% lower than its competition's cost, which savings is partly passed on
      to the consumer, which in turn results in higher volumes and increased profit
      for the company.
Acanthopanax
      and Shark Power Expansion
The
      company will, for both the above segments, continue its expansion with increased
      market activities, which will have a significant impact on the
      sales.
Traditional
      Medical Products
Traditional
      medical products provide the company with low risk and stable cash flow. Among
      them, the company produces three market-leading products, which all achieved
      more than 100% growth rate in the fiscal year of 2005, and will do in 2006.
      Such
      products include:
·
Tianma
      pills (treating headaches)
·
Tornado
      pills (treating headaches)
·
Shengmai
      granulate (treating female venereal diseases)
Lysozyme
      Enzyme Products
In
      2007,
      the company plans to launch Lysozyme Enzyme Products in the food antiseptic
      area, the largest potential market for Lysozyme. The company is able to achieve
      up to 80% of cost savings compared with competitive products, produced outside
      of China. The company's products from this group have proved to be 60% more
      reliable with 50% lower production costs than competitive products. With a
      huge
      potential market, management conservatively estimates the company will achieve
      annual 100% revenue growth rate in the next 5 years.
Monoclonal
      Antibody Reagent Box Series Products
The
      company also plans to launch Monoclonal Antibody Reagent Box series products.
      More than five Monoclonal Antibody Reagent Box products from the company are
      estimated to receive GMP certificates and to be launched at the end of 2006
      or
      at the beginning of 2007. These products are 60% more reliable than those from
      its competitors. Moreover, the company is on the process of building its own
      monoclonal antibody center, the necessary raw material for the products.
      Therefore, the company is able to achieve 50% of cost savings compared with
      most
      of its competitors, who have to purchase their raw materials from third parties.
With
      high
      and sustained demand in China, and insufficient supply, the company believes
      that the Monoclonal Antibody Reagent Box segment has a substantial upside
      potential. Management conservatively estimates that the products will achieve
      100% annual growth rate in sales over the next 5 years.
Sales
The
      company's sales network is very big. With more than 70 sales centers organized
      under 24 districts with more than 2000 sales people, the company's product sales
      offices of Renhuang cover 50% of the Great China area and an estimated 80%
      of
      its geographical target area.
Research
      & Development Centers
The
      company owns its R&D centers, including Information Center, Cooperation
      Center, Research Center, and Harbin Renhuang Marine Healthcare Medicine Center.
      The company also owns and runs a Post-doctor Research Working Station, which
      is
      set up by the company and approved by the government, where post PhD students
      conduct research.
The
      R&D centers simulate real assembly lines, have advanced equipment, and
      substantial and advanced examination analysis instruments. A number of well
      recognized and respected pharmaceutical professors and research scientists
      in
      China are employed in the R&D centers. Over 50% of the employees in the
      centers have an advanced degree.
Products
Acanthopanax
      (Siberian Ginseng)
Overview:
Acanthopanax,
      which is known in the United States as Siberian Ginseng, has been used for
      centuries in China and Russia. Although a distant relative of American and
      Asian
      ginsengs (
Panax
sp
.
),
      with
      some overlap in its uses, Acanthopanax is a distinct plant with different active
      chemical components. Known for its ability to restore vigor, increase longevity,
      enhance overall health, and stimulate both a healthy appetite and a good memory,
      it is widely used in Russia to help the body adapt to stressful conditions
      and
      to enhance productivity.
In
      Chinese medicine, it is valued for its beneficial effects on "qi"
(Qi's
      definition: The Chinese term for vital energy or life force. It is pronounced
      "chee.".)
and its
      ability to treat "yang"
(Yang's
      definition: One of the two fundamental forces, Yang represents the male or
      active force.)
deficiency in the spleen
(Spleen's
      definition: As distinct from the Western medical concept of Spleen, this concept
      from Traditional Chinese Medicine is more a way of describing a set of
      interrelated parts than an anatomical organ.)
and
      kidney. Like the panax ginsengs, Acanthopanax is considered to be an adaptogen,
      which means it helps in stressful circumstances and returns the body to a normal
      balance. For example, an adaptogen might lower blood pressure in someone who
      has
      high blood pressure, but raise it in another person who has low blood pressure.
      The active ingredients in Acanthopanax, eleutherosides (similar to ginsenosides
      in the panax species), are thought to increase stamina and to stimulate the
      immune system.
Until
      recently, most scientific research on Acanthopanax took place in Russia. This
      research has largely supported its use to maintain health and strengthen the
      system rather than to treat particular disorders. Acanthopanax may help the
      body
      deal with physically and mentally stressful exposures such as heat, cold,
      physical exhaustion, viruses, bacteria, chemicals, extreme working conditions,
      noise, and pollution. By strengthening the system, it may also help prevent
      illness.
Research
      on Acanthopanax has included studies on the following:
Immune
      System
A
      4-week
      study in healthy subjects found that those who received Acanthopanax extract
      had
      improvements in a number of measures that reflect the functioning of the immune
      system.
Mental
      Performance
A
      3-month
      human study of Acanthopanax among middle-aged volunteers found that there was
      a
      significant improvement in memory and concentration as compared to a placebo.
Another
      popular but unproven use of Acanthopanax is to maintain or restore mental
      alertness.
Physical
      Performance
Although
      Acanthopanax is frequently used to enhance physical stamina and increase muscle
      strength, studies have shown mixed results for these purposes.
Male
      Fertility
Acanthopanax
      has a long history of folkloric use for male infertility. Animal studies suggest
      that Acanthopanax may be helpful in increasing reproductive capacity.
Viral
      Infection
In
      a
      laboratory study, an extract of Acanthopanax slowed the replication of certain
      viruses, including influenza A (which causes the flu) as well as human
      rhinovirus and respiratory syncytial virus (both of which cause symptoms of
      the
      common cold). It had no effect, however, in test tubes on adenovirus (another
      cause of the common cold and other respiratory infections) or herpes simplex
      virus type 1 (which generally causes oral herpes lesions). But, a 6-month study
      of 93 people with herpes simplex virus type 2 (which generally causes genital
      herpes lesions) found that Acanthopanax reduced frequency, severity, and
      duration of outbreaks.
Market
      analysis on Acanthopanax in China:
Wild
      Acanthopanax grows in some provinces in North and North-Eastern China,
      especially in Heilongjiang Province, where 90% of all wild Acanthopanax
      resources in China are located. In 1980s, the annual production level was around
      10,000 tons. Due to excessive harvesting and damage, the production of
      Acanthopanax has significantly decreased. At the end of 1990s, the production
      of
      wild Acanthopanax was around 2,000 tons and declining. In 2004, the production
decreased
to 1,000
      tons.
The
      resources for Acanthopanax medicine are mostly derived from wild Acanthopanax.
      Due to favorable conditions and temperature in the Heilongjiang Province, where
      Renhuang is located, 90% of the wild Acanthopanax suitable for medicine comes
      from Heilongjiang Province. (Note: human cultivated Acanthopanax in other areas
      does not reach the same drug efficacy as wild Acanthopanax). Therefore, most
      of
      the pharmaceutical companies producing Acanthopanax are located in the
      Heilongjiang Province. Due to the limited supply of wild Acanthopanax, and
      increased recognition of its medical benefits, the demand for Acanthopanax
      is
      higher than the supply. It is estimated that the demand for Acanthopanax
      worldwide increased tenfold
in
      the
      next
five
      years. As a result, the price of raw Acanthopanax has gradually
      increased.
In
      2000,
      the price of a kilogram of raw Acanthopanax was around 0.5 RMB (around US
      $0.062), which increased to 2.5 RMB (around US $0.31) 2004. It is estimated
      that
      the price for Acanthopanax will continue to increase.
Due
      to
      its increasing popularity in United States, Japan and European countries,
      exporting Acanthopanax medicine is expected to generate additional revenue
      for
      Renhuang in the near future.
The
      Dongfanghong Acquisition:
In
      2003,
      Renhuang acquired Dongfanghong Pharmaceutical Co. (DFH), a previously
      state-owned pharmaceutical company, located in Harbin, Heilongjiang Province,
      which owns 70% of all wild Acanthopanax resources in China. In 2004, one year
      after the acquisition, Renhuang increased efficiency and production capabilities
      to generate US $3.75 million in revenue in a 10% market share.
In
      the
      fiscal year of 2005, the plant generated US $8.8 million in revenue, at a growth
      rate of more than 200%. In the first six months of the fiscal year of 2006,
      the
      plant generated US $9.6 million in revenue, which is more than the total revenue
      from the full previous year. Renhuang expects to obtain a market share of 50%
      of
      Acanthopanax products in China within 3-5 years.
Competitive
      Advantages of Renhuang:
In
      addition to the resource advantage, Renhuang has the following competitive
      edges
      related to Acanthopanax:
Farm
      Production
Wild
      Acanthopanax resources might not be able to fulfill the rapid growing demand.
      Therefore, Renhuang has started to cultivate Acanthopanax manually with 60
      million square feet cultivation area. Cultivated Acanthopanax from Renhuang
      achieves in all material respect
s
      the
      same effects as wild, mainly due to Renhuang's use of wild Acanthopanax seeds
      and other production methods as well as its extraordinarily favorable climate
      conditions in Heilongjiang Province.
Lower
      Production Costs
Renhuang
      has successfully developed new withdrawing technology during the process of
      Acanthopanax that lowers the production cost by 30% compared to its competitors.
      Regulatory bodies have granted the right to Renhuang to set the standards for
      new Acanthopanax medicine, which will enhance the industry quality standard.
      There are a number of smaller unregulated companies in the industry that, due
      to
      the increased regulation and standards, we believe will not be able to comply
      with the new requirements. As a consequence, Renhuang will likely see its market
      share increase.
Future
      development plan for Acanthopanax products in Renhuang
With
      its
resource
      dominating position, Renhuang plans to capitalize on its increased brand
      recognition. By a controlled expansion plan, Renhuang plans to expand its market
      shares in local provinces and eventually in all of China. Renhuang plans to
      be
      identified as the leading manufacturer of Acanthopanax products.
Through
      increased market awareness, it is further anticipated that Renhuang's unique
      edge in Acanthopanax will be recognized outside of China. In doing so, Renhuang
      anticipates entering into strategic foreign partnership, which Renhuang expects
      will result in increased international sale of Acanthopanax medicine in the
      near
      future.
Shark
      Power Healthcare Products
Shark
      Power Healthcare products are made from squalene,
an
      extract of shark liver oil from the Aizame shark whose natural Pacific habitat
      is in unpolluted ocean depths of 3,000 feet in 35 degree waters
.
      The
      R&D center of Renhuang has developed a pure natural marine biology medicine
      -- Shark Power Healthcare Series. It is the only medicine in China approved
      for
      use in treating secondary health problems due to oxygen deficit. It was awarded
      the "special golden prize at Ninth Chinese Patent Technology New Product
      Exhibition", and "Golden metal at London International Patent Technology
      Exhibition".
Clinical
      research has proven that this medicine can improve the carrying and transporting
      oxygen ability of blood, enhance the oxygen absorption and utilization factor
      of
      the organism organs, dredge the blood vessels, increase the speed of blood's
      oxygen transportation, and specially supply oxygen to heart, brain, lung and
      liver. It is able to effectively cure all kinds of symptoms caused by secondary
      health problem like dizzy, insomnia and forgetfulness, low energy and immunity,
      back pain, easy to get tired, caught cold. The effect is stable and
      safe.
Competitive
      Advantages of Renhuang:
Renhuang's
      Shark Power Healthcare Products have the following major advantages compared
      with its competition.
State
      Drug Administration (SDA) Approval
Renhuang's
      Shark Power Healthcare Products has received Good Manufacturing Practice ("GMP")
      certificates from the State Drug Administration ("SDA"). As most healthcare
      products produced in China have not obtained GMP certificates, our Shark Power
      Healthcare Products have a very strong competitive advantage.
Our
Shark
      Power Products are also distributed through hospital channels, which is not
      the
      case for most of other health care products.
Lower
      production Costs
The
      retail price of Shark Power Healthcare products has historically been lower
      than
      the price of competitors' products, because Renhuang's raw material costs are
      lower. This means Renhuang can pass the savings on to the customers. Renhuang
      purchases raw materials directly from Australia at prices which are 20% lower
      than those from coastal areas in China, where most competitors purchase their
      materials.
In
      2005,
      the revenue from Shark Power Healthcare products has accounted for approximately
      25% of the total revenue of Renhuang, which represented a 20% of market share
      for equivalent products. With increased promotion and improved marketing
      strategy, Renhuang believes that it can increase its market share to over 50%
      in
      the next 3 to 5 years.
Traditional
      medicine
In
      addition to Acanthopanax medical and Shark Power Healthcare products, Renhuang
      produces traditional medicine products, such as medicine for cold, flu,
      headache, etc. Revenue from traditional medical products accounted for 30%
      of
      the total revenue of Renhuang in the fiscal year of 2005, and 36% in the first
      half of fiscal year of 2006. Renhuang owns 40 medical products with GMP
      certificates, of which some "Star" products reach top sales among the same
      products and most of the others generate a stable stream of revenue.
Three
      "Star" products
"Tianma
      pills" and "Tornado pills" are the "Star" Chinese traditional medicines for
      treating headache in China. Although western headaches medicines have larger
      market share in China, they have also been showing to have larger side effects.
      Research reveals that most other Chinese traditional medicines have fewer side
      effects, but cannot reach the same curative effects as western medicines.
      Renhuang's "Tianma" and "Tornado" are not only superior with strong visible
      curative effects, but with little or no side effects.
In
      the
      fiscal year of 2005, with more than 100% growth rate from the fiscal year of
      2004, revenue from sale of "Tianma pills" reached more than US $2.1 million, and
      that of "Tornado pills" reached US $2 million; and in the first half of fiscal
      year of 2006, revenue from sale of "Tianma pills" reached more than US $2.45
      million, and that of "Tornado pills" reached US $2.07 million.
Another
      "Star" medicine is "Shengmai" granulate, with sales of US $1.04 million dollars
      in 2004 and US $1.16 million dollars in 2005, which was higher than any of
      its
      competitors for the same period; in the first half of fiscal year of 2006,
      the
      revenue has reached US $1.65 million.
Renhuang
      produces several additional traditional medical products that each accounts
      for
      lesser amounts. These products, through brand recognition, generate stable
      and
      risk free revenue for the company. When Renhuang expands its product offerings,
      it is anticipated that these additional products will be replaced by higher
      margin products.
Products
      in the developing stage
Lysozyme
      Enzyme Products
Lysozyme
      is an enzyme occurring naturally in egg white, human tears, saliva, and other
      body fluids, capable of destroying the cell walls of certain bacteria and
      thereby acting as a mild antiseptic. Lysozyme protects us from the ever-present
      danger of bacterial infection. It is a small enzyme that attacks the protective
      cell walls of bacteria. Bacteria build a tough skin of carbohydrate chains,
      interlocked by short peptide strands, that braces their delicate membrane
      against the cell's high osmotic pressure. Lysozyme breaks these carbohydrate
      chains, destroying the structural integrity of the cell wall. The bacteria
      then
      burst under their own internal pressure.
Alexander
      Fleming discovered lysozyme during a deliberate search for medical antibiotics.
      Over a period of years, he added everything that he could think of to bacterial
      cultures, looking for anything that would slow their growth. He discovered
      lysozyme by chance. One day, when he had a cold, he added a drop of mucus to
      the
      culture and, much to his surprise, it killed the bacteria. He had discovered
      one
      of our own natural defenses against infection. Unfortunately, lysozyme is a
      large molecule that is not particularly useful as a drug. It can be applied
      topically, but cannot rid the entire body of disease, because it is too large
      to
      travel between cells. Fortunately, Fleming continued his search, finding a
      true
      antibiotic drug five years later: penicillin.
Hen
      egg
      white has a high content of lysozyme which protects the integrity of the
      delicate yolk, thus making egg white (albumen), the preferred raw material
      for
      industrial production of the Lysozyme enzyme.
Currently,
      there is no company in China with the ability to produce Lysozyme on a large
      scale, despite the fact that it has a big potential market. Lysozyme can be
      used
      in food antiseptic, which will alter sterilization effects with 40% compared
      with chemistry antiseptic at a cost of 80% lower than similar products produced
      outside of China. The large-scale production of Lysozyme products will speed
      the
      development of cultivation industry.
The
      major
      uses of Lysozyme products are as follows:
1)
      Lysozyme compound biology antiseptic (food packing coating, food bag,
      etc)
2)
      Lysozyme drug preparation (troche, oral liquid etc)
3)
      Lysozyme Biotech Pesticide
4)
      Lysozyme home-using disinfect series products (paper tower, detergent,
      etc)
5)
      Lysozyme biotech Veterinary medicine
6)
      Lysozyme biotech preparation
Monoclonal
      Antibody Reagent Box series products
According
      to statistics, the total sales volume of China's biotechnology products was
      about 20 billion RMB (US $2.42 billion) in 2000, among which the sales volume
      of
      medicine and health-care products including medicine of gene products, vaccines,
      diagnosis reagents, some antibiotics, amino acids for medical use, vitamins,
      blood products, bio-chemical medicines and some functional food was 9 billion
      RMB (US $1.09 billion), accounting for 45 percent of the total sales volume.
      The
      sales volume of diagnosis reagent products was 3 billion RMB (US $0.36 billion),
      one third of above volume.
Renhuang
      believes that the Monoclonal Antibody Reagent Box segment has a huge upside
      potential. Chinese companies in the Monoclonal Antibody Reagent Box industry
      are
      small to mid sized privately-owned enterprises without any government support.
      The production scale in China is still very small. The estimated production
      ability is around 185 million dollars in 2004, which is a niche market when
      compared with other developed countries. Due to the huge population and
      potential market in China, this area is already being pursued by some
      pharmaceutical companies.
Renhuang
      has recently hired a competent team of research scientists, who are graduates
      of
      top universities in the United States and therefore trained on the most advanced
      technology in this field. Troponin T Diagnostic Kit and some other products
      from
      this group have proved to be 60% more effective at 50% less production cost
      when
      compared with other products.
Of
      an
      estimated ten new products under development, Renhuang plans to launch all
      of
      them during 2007 and 2008. Renhuang conservatively estimates that Monoclonal
      Antibody Reagent Box series will achieve a growth rate of 100% annually in
      the
      next five years.
Market
      Analysis Summary
Traditionally,
      the pharmaceutical market is defined based on the different medical usage
      prescription drug market and non-prescription medicine market
      (OTC).
The
      annual revenue of the medicine market in China is estimated to be 500 billion
      RMB (US$ 62.5 billion), of which 440 billion RMB (88 %) is derived
from
      the
      prescription medicine market and the balance, 60 billion RMB (around US$ 7.5
      billion)
relates
      to the non-prescription medicine market which constitutes 12%
of
      the
      whole medical sales market.
There
      are
      7,600 pharmaceutical companies in China, of which only 2,700 have received
      GMP
      Certificates. Renhuang is one of them. Renhuang's
annual
      production capacity is currently 1.5 billion RMB (almost US $200 million),
      which
      equals to a market share of 3%. As Renhuang approaches full capacity, the
      company anticipates increased production volume by acquisitions and / or added
      additional production facilities.
The
      company's first and primary target market is China, where a growing middle class
      with demand for improved healthcare has created a sustainable need for quality
      healthcare products. Our secondary market within the long-term future is the
      United States and the rest of the world.
Renhuang
      focuses on three market segments:
1.Over
      The Counter - OTC market.
2.Other
      drug stores located across the nation.
3.Hospitals,
      clinics and other medical institutions.
Industry
      Analysis
World
      Trade Organization
Due
      in
      part to the relaxation of trade barriers and China's access to the World Trade
      Organization ("WTO") in January 2002, Renhuang believes that China will become
      one of the world's largest pharmaceutical markets by the middle of the
      twenty-first century. As a result, the Chinese market presents a significant
      opportunity for both domestic and foreign drug manufacturers.
The
      State Drug Administration ("SDA")
The
      State
      Drug Administration ("SDA") of China has set up a classification administrative
      system in 1999 for prescription and OTC drugs. Since then, the SDA has issued
      a
      series of guidelines on the interpretation of the new classification system
      for
      labeling, usage instructions and packaging of OTC products. The SDA currently
      requires that pharmaceutical manufacturers clearly label drugs for OTC sales
      and
      distinguish them from those to be sold in hospitals as ethical drugs. Renhuang
      has instituted this policy as required by the SDA.
The
      Current Chinese Pharmaceutical Market
The
      introduction of the Chinese pharmaceutical industry
Most
      of
      the recognized brands in China are manufactured by multi-national drug companies
      with higher market share than domestic brands. Based on statistics, there are
      a
      total of 2,700 drug companies approved by GMP producing a variety of traditional
      and modern Chinese medical products. The total productivity is about 370
      thousand tons of 8000 different types of finished products. Furthermore, Chinese
      drug companies produce 300 different types biotech products including vaccine,
      toxoid, antiserum, blood products, diagnosing reagent for internal and external
      use. Chinese drug companies are producing more than 11,000 types of medical
      instruments, including X-ray fault scanning imagery equipments and magnetic
      resonance equipments.
--Market
      Shares of various pharmaceutical products
The
current problems in the Chinese pharmaceutical industry
·
Most
                drug companies in China produce low quantities of a large number
                of
                products. Therefore, many big companies are producing similar drugs.
                Many
                of those products are based on low technology and obsolete production
                methods. It is common that companies have minimal R&D departments, and
                therefore, do not bring new drugs into the market. As a result, many
                of
                these companies with inefficient management have lower productivity.
·
Many
                drug companies do not qualify to reach approval by GMP, which prevent
                those companies from reaching the national and international drug
                markets.
·
Patents
                and other intellectual property are not well protected well in
                China.
·
Limited
                access to financial markets makes it difficult to obtain financing
                for
                drug companies.
·
The
                competition in drug industry has growth space.
The
      development trend in the Chinese drug market
·
The
                pharmaceutical market will continue to grow at a stable
                pace.
·
The
                net growth of the aging population supports the demand for drug
                consumption.
·
The
                rising living standard improves the demand for drugs. Average drug
                consumption per capita in China is 50% lower than other mid-developed
                countries. Therefore, following the development of rural areas, it
                is
                anticipated that the Chinese drug market offers great opportunities.
·
Habitual
                changes inside the drug consuming
                population.
·
More
                reasonable drug consuming habits.
·
Non-prescription
                drugs will enter the fast development
                phase.
·
Drug
                prices on the market will be more
                rational.
·
There
                will be fewer drug companies, but with large
                capacity.
·
More
                advanced circulation of medical
                products.
·
More
                competition in China's drug market
The
      current state of the biotech industry in China
Introduction
      of biotech industry in China
The
      biotech industry in China has undergone fundamental improvements. The biotech
      industry started in 1980s, and the sales in 2000 reached US $2.5 billion with
      the average growth rate of 33.58% and have since then developed dramatically.
      In
      1996, the sales of gene engineering drugs and vaccines reached US $26 million,
      which increased to US $90 million in 1998 and reached US $270 million in 2000.
      The average growth rate has been 79.42%.
Biotech
      R&D has achieved big successes. In order to accelerate the development of
      the biotech industry, which is one of the most supported industries, the
      government has invested in biotech R&D. Biotech engineering and bio-drugs
      are making great progress and a series of key technologies has been built.
      The
      gene transfer technology between zoology and botany is mature. The hybrid rice
      has been promoted in large scale, and anti-gene cotton and tomato have become
      a
      reality. Tens of gene drugs are fast approaching the area of practical use.
      Therefore, the Chinese biotech R&D industry is rapidly becoming more mature
      and competitive.
Some
      common problems in the Chinese biotech industry
Compared
      with the development of the international biotech industry, the domestic Chinese
      industry is still immature.
·
Insufficient
      self-owned Intellectual property rights and limited competing
      ability.
·
In
      the
      United States, it is common that founders of bio-tech companies control more
      than 50% of equity and technology during the first and second stage of financing
      and the Venture Capital firms control less. With the expansion, including
      additional financing, the initial founders start to lose the control position.
      In China, intangible assets usually represent less than 35% of the total value.
·
Essential
      key technologies and equipments such as important laboratories equipments,
      instruments and dosage etc are still lagging in biotech industry and most users
      rely on import. Companies who have the ability to produce those special
      equipments and instruments have earned international market recognition.
      Renhuang owns substantial intangible assets.
Insufficient
      Capital investment and very limited R&D capability
·
Biotech
      industry is a high-tech investment in a high-risk and a high-reward industry.
      Therefore, insufficient capital is the most important problem which needs to
      be
      solved. At present, there are only six ways to provide capital to bio-tech
      companies: (i) founders' own money; (ii) public company investment (iii) third
      party investment; (iv) government venture capital; (v) mid to small-size company
      security fund from state science administration; and (vi) mid to small-size
      technology venture capital. The United States, which has the most advanced
      bio-tech development and bio-tech companies provides more financing
      opportunities to this industry. Despite this problem in the industry Renhuang
      successfully obtain capital and build a new state of the art R&D facility.
Insufficient
      educated human resources cause a gap between research and practical
      areas.
·
Due
      to
      the long training period of R&D personnel staffs, high quality research
      scientists stay outside of China. Therefore, there are not sufficient highly
      qualified research scientists available, especially those in combination of
      research and management skills. Renhuang has United States educated research
      scientists.
Competitors
Acanthopanax
      product series
·
Wusuli
      River Pharmacy Group
Main
      Acanthopanax products are fluid acupuncture; secondary one is Acanthopanax
      pills, with 15 million RMB (about US $7.8 million) revenue from
      Acanthopanax.
·
Heilongjiang
      Wandashan Pharmacy
Main
      Acanthopanax products are fluid acupuncture, powder acupuncture and Acanthopanax
      drinks, with 50 million RMB (about US $6.2 million) revenue from fluid
      acupuncture, and 30 million RMB (about US $3.8 million) revenue from powder
      acupuncture, and both of which have been built their brand names.
·
Heilongjiang
      Zhenbaodao Pharmacy
Main
      Acanthopanax products are fluid acupuncture and Acanthopanax drop pill (waiting
      for its GMP approval), with 12 million RMB (about US $1.5 million) revenue
      from
      Acanthopanax products.
·
Heilongjiang
      Tielihongye Pharmacy
Main
      Acanthopanax products are Acanthopanax pills, and Acanthopanax syrup, with
      6
      million RMB (about US $750 thousand) revenue from Acanthopanax
      products
Monoclonal
      Antibody Reagent Box series products
·
Beijing
      BGI-GBI Bio-tech Co., Ltd
·
Shanghai
      Shisheng Cell Bio-tech Co., Ltd
·
Beijing
      Wantai Biological Pharmacy Enterprise Co., Ltd.
At
      present, none of the competitors have large-scale production ability. Speed
      Monoclonal Antibody Reagent Box for Muscle Calcium Protein Myocardial Infarction
      of Renhuang is very competitive in the market because of its advance technology.
      The core technology is from Chinese research scientists educated in United
      States, and Renhuang will build antigen antibody store base with self-owned
      intellectual property rights, therefore the product will become more reliable,
      and the price will be 50% lower than that from its competitors with 60%
      improvement in effects. This product is easy to use.
Lysozyme
      Products
There
      are
      few companies with the ability to produce in large scale. It has big potential
      market. Lysozyme can be used in food antiseptic, which will 40% higher
      sterilization effects than chemistry antiseptic with 80% lower costs than same
      kind products produced outside of China. The large-scale production of Lysozyme
      products will speed the development of cultivation industry.
Shark
      Power Healthcare Series
·
Sirio
      Pharma Co., LTD
·
Shanghai
      Jonya Marine Biological Engineering Co., LTD
·
Guangzhou
      Xingqun Pharmaceutical Co., LTD
Renhuang's
      raw materials for Shark Power Healthcare products are directly imported from
      Australia at a price which is 20% lower than that what the competitors pay,
      whose raw materials are from coastal areas in China.
Competitive
      Edge
General
Renhuang
      has a top level and stable management team with a proven track record that
      generated
around
100%
      annual growth rate on both sales and profits over the past years.
Acanthopanax
Through
      the acquisition of Dongfanghong during 2003, Renhuang controls 70% of the wild
      resources of Acanthopanax, which product group has increased to account for
      45%
      of Renhuang's revenue
in
2005.
      The demand for products derived from Acanthopanax is at all time high.
      Renhuang's current market share is 10% and its goal is to increase the market
      share to 50% within 3-5 years. Of the total wild resource of Acanthopanax in
      China, 94% is located in the Heilongjiang Province, most of which are controlled
      by Dongfanghong in the Wanda Mountain. Renhuang develops Acanthopanax products
      in its plant and benefits from its relative dominant position through its
      resource control. Renhuang has reduced the cost of absorbing and producing
      Acanthopanax with 50%. Current comparisons show that Renhuang's cost of
      production is 30% lower than the competition.
Other
      Advantages over the competition
In
      addition to advantages related specifically to Acanthopanax, Renhuang's business
      possesses the following advantages:
·
The
      ability to upgrade our products by using our follow-up research projects enables
      Renhuang to
continue
      its product developments.
·
Renhuang
      has developed a unique independent innovation system, which will provide a
      powerful
support
      to the R&D of new products.
·
Renhuang
      has excellent relations with provincial, city and regional our government and
      have been
awarded
      outstanding levels of status.
·
Renhuang
      owns a state of the art research and production facility.
·
Renhuang's
      credit rating is AAA by the major banks in China
·
Renhuang
      has United States educated research scientists.
·
Through
      efficiency and state of the art production facilities, its production costs,
      is
      as an average, 30-
50%
      lower
      then competition.
·
Renhuang
      owns more then 70 regional sales offices, covering 50% of Mainland China staffed
      with a
sales
      force of more then 2,000.
·
Renhuang
      has a top-level management team, which will lead the company into higher levels
      of
revenue
      and profitability.
Research
      & Development
Renhuang
      has constructed a strong independent innovation system, which will provide
      a
      powerful support to the R&D of new products as follows:
Through
      Renhuang's research control and relative dominant position related to the
      Acanthopanax products, Renhuang is on its verge to position Acanthopanax as
      an
      independent segment in the Chinese drug industry. In order to achieve this
      goal,
      Renhuang will build an Acanthopanax base including six parts: (1) Wild
      Acanthopanax protection; (2) research; (3) seeding; (4) cultivating; (5)
      processing; and (6) exporting. Pursuant to plan, this will become the largest
      Good Manufacturing Practice ("GMP") approved Acanthopanax base in
      China.
Renhuang
      plans to continually upgrade its products by using its follow-up research
      project. This continued development will be focusing on the following three
      areas; (1) The development of biotech products. The focus will be for practical
      applications of Lysozyme and Hyperoxide mutase, and the research and development
      of gene engineering drugs just to mention a few; (2) The research and
      development of Chinese traditional medicine products, including but not limited
      to additional use of Acanthopanax and Shizandra Berry; and (3) Research and
      development of Western drugs for generic production, where Renhuang is able
      to
      complete the generation replacement of traditional drugs shortly.
Information
      center
Renhuang
      utilizes the marketing network system and direction oriented information system
      to provide fixed period and in-fixed period market feedback information, market
      demand information, evaluation of new products inside and outside of China,
      domestic and foreign authority research topic and product technology feedback
      information.
Teamwork
      Center
Renhuang
      has contracted and hired specialists comprising a group of reputable professors
      and research scientists from the marine biotech drug segment, the natural
      biotech drug segment and the gene engineering area to evaluate and support
      research topics and results. Renhuang has also formed long-term strategic
      partnerships and other research and work related relationships with some of
      the
      most prominent research organizations with the purpose of researching and
      developing new products together.
Currently,
      Renhuang have partnerships or are in other way closely related to the National
      Navy Pharmaceutical Research Center located in Shanghai, China bio-tech drug
      research center (Shanghai Research Base), Second Military Medicine University
      in
      Shanghai, and Beijing Ellionbio Research Center, Beijing to mention a few.
      Furthermore, Renhuang has research topic cooperation with Russia Academic School
      Far-east division and Australia Scientific Research Center.
Research
      Center and Mid-testing Base
Formed
      by
      different labs, these research and mid-testing facilities are simulating the
      assembly lines.
Renhuang
      Bio-tech drugs and healthcare products research center
This
      facility is mainly focused R&D on bio-tech drugs and healthcare products,
      and medicine intermediates.
Post-doc
      Research Workstation
The
      major
      task is to do R&D on Acanthopanax and other North-China medical products and
      to develop medicine qualified to international standard. This unit also performs
      R&D on gene engineering drugs, like tumor Chalone.
Official
      accomplishments
·
Renhuang
                has a well-established and excellent working relationship with the
                government on various levels. For example, Renhuang has obtained
                support
                from different level governments including provincial, city and regional
                government, which enabled Renhuang's rapid development. Renhuang
                undertakes various research projects on a national level, where the
                government has appraised Renhuang's
                accomplishments.
·
Government
                has appraised Renhuang as "The Best Quality and Credit Company", "The
                Company with The Best Social Image", and "The Most Trustful Consumer
                Products Company".
·
The bank credit rating of Renhuang
              is
              AAA.
·
Lysozyme and Hyperoxide mutase projects from Renhuang
              have been included into the most
important
              nation level project in State Scientific Administration.
·
Biotech drug garden has been included into the national
              transforming projects of North Eastern China
heavy
              industry base, and in the projects which can get zero interests loan
              from
              government.
·
Renhuang has been appraised by State
              Scientific Administration as national high-tech company,
which
              enables it to obtain tax-free
              benefits.
Marketing
      Strategy
Renhuang
      addresses the market through four business segments: OTC Market, Direct Sales,
      Wholesale and Raw Material. Renhuang is a highly technology oriented niche
      company that has developed name recognition for its quality products. Its
      products are being sold by more than 2,000 sales people divided into 70 sales
      offices in 24 regions across Mainland China. Furthermore, Renhuang has strong
      alliances with distributors who have powerful channel relationships but lack
      manufacturing or product development capabilities.
Renhuang
      is using a four-pronged approach to achieve its market
      goals
First
,
      the
      goal is to build brand names for products, which is well under way. In non-urban
      areas, 90% of the Chinese population lives is in the countryside with lower
      income. Due to a variety of strategy, adjusted to the lower income consumer,
      Renhuang's traditional drugs will have a relatively high level of penetration
      in
      those areas. Distribution to end-consumers is obtained through Renhuang's own
      sales personnel without middlemen cost.
Second
,
      Renhuang is using key cities like Beijing and Shanghai as geographical sales
      centers with the purpose to establish its brands with the established
      distribution centers that distribute to major drug chain stores in the urban
      and
      suburban areas around the city. Renhuang approach is to use selected cities
      as
      sample target, supported by initial promotion and investments enabling the
      products entry into the well-known drug chain stores. In addition, Renhuang
      is
      exploring multiple sales channels.
Third
,
      Renhuang focuses on top-level hospitals in the country, which has the highest
      quality standard and stringent approval procedures for new products and brands.
      Traditionally, hospitals in China are divided into different levels due to
      different functions. Junior level hospital only take care small areas, mid-level
      one will take care several areas combination, and senior level one will handle
      different regions. By focusing on the top tier of the hospital industry,
      Renhuang's strategy is to work from top down and gain access to mid and low
      level hospitals when it brands and products have been established in the higher
      ranks.
Fourth
,
      Renhuang use its exclusive technology and absolute resource control
      (Acanthopanax) to promote itself in the domestic media, including TV, Radio,
      newspaper, magazine and trade publications. At a more mature stage of Renhuang's
      domestic coverage, it is anticipated that Renhuang will have a substantial
      impact of Lysozyme and Hyperoxide mutase, through innovations and core
      technology, developed and owned by Renhuang have been appraised by established
      specialists as the primary technology and innovations in the world related
      thereto. The biggest advantages are cost and quality when compared to
      traditional products.
Sales
      Strategy
Renhuang's
      sales network is very big. With more than 70 sales centers organized under
      24
      districts and more than 2,000 sales people, its product sales offices of
      Renhuang covers 50% of the greater China and an estimated 80% of its
      geographical target area. Due to less populated and rural areas in the western
      part of China, Renhuang has chosen to concentrate its main efforts on the
      eastern China.
Sales
      Team
Renhuang's
      sales team uses quantity targets to realize the management of sales of products,
      from where the sales team is rewarded. Each sales office is organized with
      full
      time managerial and financial functions organized under a general representative
      officer. The vast majority of the regular sales force is commission based.
      The
      products from Renhuang will reach drug stores, hospitals and end consumer across
      China through the sales network.
n
The
                Location of Renhuang's Sales Offices in China.
Conjunction
      with the general sales managers, provincial managers and regional managers,
      the
      company sets the sales target at the beginning of every year. Based on monthly
      sales reports and general control mechanisms, budget is thereafter revised
      as
      needed.
Sales
      channels related to leading products
Marketing
                Model
Share
                of revenues
Products
                selling
Payment
                Time Frame
Raw
                Materials
7%
                of total revenue
Acanthopanax
                raw materials
Payment
                schedule, between 1 - 5 months.
OTC
48%
                of total revenue
Acanthopanax
                final products,
"Tianmai
                Pills" and "Shengmai" granulate.
Payment
                for first shipment in conjunction with second delivery, 1 - 3 months.
Direct
                Selling method
30%
                of total revenue
Shark
                Power health care products,
Acanthopanax
                final products.
Cash
                Payment
Whole
                Sale products
15%
                of total revenue
Acanthopanax
                final products and "Tornodo Pills".
Payment
                similar to consignment, calculated and paid monthly when products
                sold.
Corporate
      Information
Employees
The
      Company employs approximately 371 full time individuals, which include 36 people
      in managerial positions, 22 individuals as sales managers at the company's
      various sales offices across China, 52 people in R&D department, and 261
      workers. The company also has approximately 2,217 commission based sales staff
      at the various sales offices that work as independent contractors.
Properties
According
      to Chinese legislation, the government owns all the land in China. The
      government grants Land Use Rights to individuals and legal entities, which
      holders of Land Use Rights have the right to build and erect
      constructions.
Renhuang
      owns the following constructions on Land Use Rights in China:
1.
Headquarters
      of Renhuang.
Location:
      No. 281, Peach Avenue, Daowai District, Harbin, Heilongjiang Province,
China.
Size
      of
      Property: 21,000 Square feet
2.
Biotech
      Medicine Park of "A" City
Location:
      No. 16, Renhuang Road, A City, Heilongjiang Province, China
Size
      of
      Property: 150,000 square feet
Size
      of
      Land: 1 million square feet
3.
Dongfanghong
      Branch
Location:
      No. 2, Red Flag Road, Dongfanghong Town, Heilongjiang Province,
      China
Size
      of
      Property: 100,000 square feet
Size
      of
      Land: 206,630 square feet
All
      properties are being used as offices and production.
On
      May
      1
st
,
      2006,
      at which time Harbin Renhuang Pharmaceutical Co. Ltd. (Renhuang China) commenced
      its operations, Renhuang China entered into lease agreements with Harbin
      Renhuang Pharmaceutical Stock Co. regarding the above properties on below market
      price and favorable conditions to the Company.
Government
      Regulation
The
      Pharmaceutical industry is a strong emerging area with the highest growth rate
      in output value. However, all government regulation is still on the improving
      stage. The Ministry of Public Health used to oversee drug approval and
      registration, but the SFDA (which is modeled from the US Food and Drug
      Administration) was specially set up to streamline this process. However, it
      has
      a relatively inexperienced staff and got off to a rather low start, and the
      resulting regulatory gap might cause potential problems.
Renhuang
      successfully passed all GMP (Good Manufacturing Practice) certificates
      investigation by SFDA, and got the approval. In September 2005, Renhuang got
      the
      investigation for exporting products certificates by Entry-Exit Inspection
      and
      Quarantine Administration, and received the self-reporting inspection
      registration certificates.
Sept
      30
th
,
      2005,
      Renhuang Pharmaceutical Stock Co. obtained 30 million RMB (US $3.75 million)
      zero-interest rate loan from state government that was mainly used for
      construction purposes of the buildings leased by Renhuang
      China.
Renhuang
      has also been titled to "high-tech" company in Heilongjiang Province, so the
      company will enjoy three-year zero-tax support from Provincial government.
Legal
      Proceedings
Neither,
      the Company nor its subsidiaries are a party to any pending or potential legal
      proceedings.
Cautionary
      Note Regarding Forward-Looking Statements
This
      report contains certain statements that are "forward-looking statements,"
including, among other things, discussions of our business strategies, future
      operations and capital resources. Words such as, but not limited to, "may,"
"likely," "anticipate," "expect and "believes" indicate forward-looking
      statements.
Forward-looking
      statements are included in the section of this report entitled "Description of
      Business". Although we believe that the expectations reflected in such
      forward-looking statements are generally reasonable, we cannot assure you that
      such expectations will ultimately prove to he correct. Generally, these
      statements relate to our business plans and strategies, projected or anticipated
      benefits or other consequences of market conditions and opportunities, business
      plans or strategies, projections involving anticipated sales and revenues,
      expenses, projected future earnings and other aspects of operational results.
      All phases of our operations are subject to a number of uncertainties, risks
      and
      other influences, most of which are outside our control, and any one or
      combination of which could materially and adversely affect the results of our
      operations, and also, could affect whether any such forward-looking statements
      contained herein ultimately prove to be accurate.
RISK
      FACTORS
We
      will need to raise additional capital to expand our
      business
For
      the
      foreseeable future, we will fund all of our operations and capital expenditures
      from cash on hand and potential future internally generated cash flow.
      Currently, we believe we have cash on hand to fund our operations and planned
      expansions. However, changes may occur that would consume our available capital
      before that time, including changes in and progress of our development
      activities, acquisitions of additional candidates and changes in regulation.
      We
      will then need to seek additional sources of financing, which may not be
      available on favorable terms, if at all. If we do not succeed in raising
      additional funds on acceptable terms, we may be unable to complete our expansion
      and future growth. In addition, we could be forced to discontinue product
      development, reduce or forego sales and marketing efforts and forego attractive
      business opportunities. Any additional sources of financing will likely involve
      the issuance of our equity securities, which will have a dilutive effect on
      our
      stockholders.
Our
      profitability is limited
We
      will
      need to generate significant revenues in order to achieve and maintain
      profitability. We may not be able to generate these revenues or achieve
      profitability in the future. Our failure to achieve or maintain profitability
      could negatively impact the value of our securities.
We
      have a limited operating history as a publicly company, upon which to base
      an
      investment decision
Prior
      to
      being a publicly listed company in the United States, we were a privately held
      corporation in the Peoples Republic of China and we have not demonstrated an
      ability to perform the functions necessary for the successful listing. The
      successful listing will require us to perform a variety of functions, including
      but not limited to the following:
·
continuing
                to efficiently manage our business domestically and in any new
                markets;
·
disclose
                and report information in a timely manner to the Securities and Exchange
                Commission and to the general public about our company and our business;
                and
·
communicate
                with our shareholders.
We
      need to obtain and maintain the necessary Chinese or worldwide regulatory
      approvals to commercialize our products
To
commercialize
some
      of
      our current and future products, we require approvals from SFDA and any
      FDA-equivalent regulatory authorities in foreign jurisdictions to commercialize
      our product candidate in those jurisdictions. Currently, we do not sell our
      products to the United States, but if we in the future plan to commercialize
      our
      products to the U.S. we will need FDA approval for some of our products. To
      apply for approval, we must submit to the FDA a New Drug Application, or NDA,
      demonstrating that the product candidate is safe for humans and effective for
      its intended use. This demonstration requires significant research and animal
      tests, which are referred to as pre-clinical studies, as well as human tests,
      which are referred to as clinical trials. Satisfaction of the FDA's regulatory
      requirements typically takes many years, depends upon the type, complexity
      and
      novelty of the product candidate and requires substantial resources for
      research, development and testing. We cannot predict whether our research and
      clinical approaches will result in drugs that the FDA or FDA-equivalent in
      other
      jurisdictions, consider safe for humans and effective for indicated uses. The
      FDA has substantial discretion in the drug approval process and may require
      us
      to conduct additional pre-clinical and clinical testing or to perform
      post-marketing studies. The approval process may also be delayed by changes
      in
      government regulation, future legislation or administrative action or changes
      in
      FDA policy that occur prior to or during our regulatory review. Delays in
      obtaining regulatory approvals may:
·
delay
                commercialization of, and our ability to derive product revenues
                from, our
                product candidate;
·
impose
                costly procedures on us; and
·
diminish
                any competitive advantages that we may otherwise
                enjoy.
In
      foreign jurisdictions, we must receive approval from the appropriate regulatory
      authorities before we can commercialize any drugs. Foreign regulatory approval
      processes generally include all of the risks associated with the FDA approval
      procedures described above.
We
      cannot
      guarantee that we will maintain and receive the approvals necessary to
      commercialize our current and future products for sale in China, United States
      or elsewhere.
Clinical
      trials are very expensive, time-consuming and difficult to design and
      implement
.
Human
      clinical trials are very expensive and difficult to design and implement, in
      part because they are subject to rigorous regulatory requirements. The clinical
      trial process is also time consuming. We estimate that clinical trials of our
      product candidate will take at least several years to complete. Furthermore,
      failure can occur at any stage of the trials, and we could encounter problems
      that cause us to abandon or repeat clinical trials. The commencement and
      completion of clinical trials may be delayed by several factors,
      including:
·
unforeseen
                safety issues;
·
determination
                of dosing issues;
·
lack
                of effectiveness during clinical
                trials;
·
slower
                than expected rates of patient
                recruitment;
·
inability
                to monitor patients adequately during or after treatment;
                and
·
inability
                or unwillingness of medical investigators to follow our clinical
                protocols.
In
      addition, we, SFDA (State FDA), FDA or FDA-equivalent in foreign jurisdictions,
      may suspend our clinical trials at any time if it appears that we are exposing
      participants to unacceptable health risks or if the regulatory bodies find
      deficiencies in our Investigational New Drug, or IND, submissions or the conduct
      of these trials. Therefore, we cannot predict with any certainty the schedule
      for future clinical trials.
The
      results of our clinical trials may not support our product candidate
      claims
Even
      if
      our clinical trials are completed as planned, we cannot be certain that their
      results will support our product candidate claims. Success in pre-clinical
      testing and early clinical trials does not ensure that later clinical trials
      will be successful, and we cannot be sure that the results of later clinical
      trials will replicate the results of prior clinical trials and pre-clinical
      testing. The clinical trial process may fail to demonstrate that our product
      candidates are safe for humans and effective for indicated uses. This failure
      would cause us to abandon a product candidate and may delay development of
      other
      product candidates.
Physicians,
      patients and other end consumer may abandon existing or chose not to accept
      and
      use our new drugs
Physicians
      and patients may not accept and use our products. Acceptance and use of our
      product will depend upon a number of factors including:
·
perceptions
                by members of the health care community, including physicians, about
                the
                safety and effectiveness of our
                products;
·
cost-effectiveness
                of our product relative to competing products;
                and
·
effectiveness
                of marketing and distribution efforts by us and our licensees and
                distributors, if any.
Because
      we expect sales of our current and future products to generate substantially
      all
      of our product revenues for the foreseeable future, the failure to find market
      acceptance would harm our business and could require us to seek additional
      financing.
Our
      drug-development program depends upon third-party research scientists who are
      out of our control
We
      depend
      upon independent investigators and collaborators, such as universities and
      medical institutions, to conduct our pre-clinical and clinical trials under
      agreements with us. These collaborators are not our employees and we cannot
      control the amount or timing of resources that they devote to our programs.
      These investigators may not assign as great a priority to our programs or pursue
      them as diligently as we would if we were undertaking such programs ourselves.
      If outside collaborators fail to devote sufficient time and resources to our
      drug-development programs, or if their performance is substandard, the approval
      of our applications, if any, and our introduction of new drugs, if any, will
      be
      delayed. These collaborators may also have relationships with other commercial
      entities, some of whom may compete with us. If our collaborators assist our
      competitors at our expense, our competitive position would be
      harmed.
We
      need to increase our selling, marketing and distributing
      network
We
      need
      significant capital expenditures, time and management resources to market our
      products and to establish and develop an in-house marketing and sales force
      with
      technical expertise. There can be no assurance that we will be able to
      establish, maintain or develop in-house sales and distribution capabilities.
      To
      the extent that we depend on third parties for marketing and distribution,
      any
      revenues we receive will depend upon the efforts of such third parties, and
      there can be no assurance that such efforts will be successful.
If
      we cannot compete successfully for market share against other similar product
      oriented companies, we may not achieve sufficient product revenues and our
      business will suffer
The
      market for our product candidates is characterized by intense competition and
      rapid technological advances. We will compete with a number of existing and
      future drugs and therapies developed, manufactured and marketed by others.
      Existing or future competing products may provide greater therapeutic
      convenience or clinical or other benefits for a specific indication than our
      products, or may offer comparable performance at a lower cost. If our products
      fail to capture and maintain market share, we may not achieve sufficient product
      revenues and our business will suffer.
We
      will
      compete against fully integrated pharmaceutical companies and smaller companies
      that are collaborating with larger pharmaceutical companies, academic
      institutions, government agencies and other public and private research
      organizations. Many of these competitors have either alone or together with
      their collaborative partners, operate larger research and development programs
      or have substantially greater financial resources than we do, as well as
      significantly greater experience in:
·
developing
                drugs;
·
undertaking
                pre-clinical testing and human clinical
                trials;
·
obtaining
                regulatory approvals of drugs;
·
formulating
                and manufacturing drugs; and
·
launching,
                marketing and selling drugs.
Developments
      by competitors may render our products or technologies obsolete or
      non-competitive
The
      biotechnology and pharmaceutical industries are intensely competitive and
      subject to rapid and significant technological change. A large number of
      companies are pursuing the development of pharmaceuticals that target the same
      diseases and conditions that we are targeting. We face competition from
      pharmaceutical and biotechnology companies in China and other countries. In
      addition, companies pursuing different but related fields represent substantial
      competition. Many of these organizations competing with us have substantially
      greater capital resources, larger research and development staffs and
      facilities, longer drug development history in obtaining regulatory approvals
      and greater manufacturing and marketing capabilities than we do. These
      organizations also compete with us to attract qualified personnel and parties
      for acquisitions, joint ventures or other collaborations.
If
      we fail to adequately protect or enforce our intellectual property, the value
      of
      our intellectual property rights would diminish
Our
      success, competitive position and future revenues will depend in part on our
      ability and the abilities of our licensors to obtain and maintain patent
      protection for our products, methods, processes and other technologies, to
      preserve our trade secrets, to prevent third parties from infringing on our
      proprietary rights and to operate without infringing the proprietary rights
      of
      third parties.
Our
      success is partly dependent upon the skills, knowledge and experience of our
      scientific and technical personnel, our consultants and advisors as well as
      our
      licensors and contractors. To help protect our proprietary know-how and our
      inventions for which patents may be unobtainable or difficult to obtain, we
      rely
      on trade secret protection and confidentiality agreements. To this end, it
      is
      our policy to require all of our employees, consultants, advisors and
      contractors to enter into agreements which prohibit the disclosure of
      confidential information and, where applicable, require disclosure and
      assignment to us of the ideas, developments, discoveries and inventions
      important to our business. These agreements may not provide adequate protection
      for our trade secrets, know-how or other proprietary information in the event
      of
      any unauthorized use or disclosure or the lawful development by others of such
      information. If any of our trade secrets, know-how or other proprietary
      information is disclosed, the value of our trade secrets, know-how and other
      proprietary rights would be significantly impaired and our business and
      competitive position would suffer.
We
      may not successfully manage our growth
Our
      success will depend upon the expansion of our operations and the effective
      management of our growth, which will place a significant strain on our
      management and on our administrative, operational and financial resources.
      To
      manage this growth, we must expand our facilities, augment our operational,
      financial and management systems and hire and train additional qualified
      personnel. If we are unable to manage our growth effectively, our business
      would
      be harmed.
We
      rely on key executive officers and scientific advisors, and their knowledge
      of
      our business and technical expertise would be difficult to
      replace
We
      are
      highly dependent on our principal scientific, regulatory and medical advisors.
      We do not have "key person" life insurance policies for any of our officers. The
      loss of the technical knowledge and management and industry expertise of any
      of
      our key personnel could result in delays in product development, loss of
      customers and sales and diversion of management resources, which could adversely
      affect our operating results.
Item
      3.01 Management Discussion and Analysis or Plan of
      Operation
Overview
The
      following discussion of the financial condition and results of operation of
      Renhuang Pharmaceuticals, Inc. should be read in conjunction with the financial
      statements and the notes to those statements included in this 8-K. This
      discussion includes forward-looking statements that involve risk and
      uncertainties. As a result of many factors, such as those set forth under "Risk
      Factors", actual results may differ materially from those anticipated in the
      forward-looking statements.
Renhuang
      Pharmaceuticals, Inc., ("Renhuang") or the ("Company") was incorporated in the
      State of Nevada on August 18, 1988 as Solutions, Incorporated. Since that time,
      we have undergone a series of name changes as follows: Suarro Communications,
      Inc., e-Net Corporation, e-Net Financial Corp., e-Net.Com Corporation, e-Net
      Financial.Com Corporation, Anza Capital, Inc. and finally on August 28, 2006
      we
      changed our name to Renhuang Pharmaceuticals, Inc.
On
      March
      3, 2006, we discontinued our operations and completed the disposition of
      substantially all of our assets, including but not limited to, all of our
      ownership interest in our subsidiary, American Residential Funding, Inc., a
      Nevada corporation ("AMRES") to AMRES Holding, LLC, a Nevada limited liability
      company ("AMRES Holding") under control of Vince Rinehart, a shareholder and,
      at
      that time, our sole officer and director ("Rinehart"). Effective on September
      30, 2005, the disposition was approved by written consent of a majority of
      our
      stockholders.
On
      September 7, 2006 the Company acquired 100% of the issued and outstanding shares
      of Harbin Renhuang Pharmaceutical Company Limited, a corporation incorporated
      under the laws of the British Virgin Island, (''Renhuang BVI''), whose only
      assets are 100% of Harbin Renhuang Pharmaceutical Co. Ltd, incorporated under
      the laws of the Peoples Republic of China ("Renhuang China") involved in the
      research, production and sales of traditional Chinese and Western medical
      products in China. On May 1
st
2006,
      Harbin Renhuang Pharmaceutical Stock Co. Ltd., (founded in 1996) transferred
      all
      its business operations, to Renhuang China. The products are distributed through
      more then 60 sales offices with more then 2,000 commission-based sales people.
      Upon the effectiveness of the Merger, the Company succeeded to the business
      of
      Renhuang China, which will be continued as its sole line of
      business.
Upon
      closing of the Merger, Renhuang BVI became a wholly owned subsidiary of the
      Company. The former stockholders of BVI own approximately 85% of the issued
      and
      outstanding Common Stock of the Company.
As
      the
      Company will operate Renhuang China as its sole line of business, the following
      discussion and analysis is of the financial condition and results of operations
      for the twelve months ended on October 31, 2005 and the six months ended on
      April 30, 2006 is the operation of Harbin Renhuang Pharmaceutical Stock Co.
      Ltd., the predecessor of Renhuang China. The following discussion and analysis
      should be read in conjunction with the financial statements, including
      footnotes, and other information presented in this report Form 8-K.
For
      purposes of the following discussion and analysis, references to ''we'',
''our'', ''us'' refers to Renhuang Pharmaceuticals, Inc., (the "Company"). An
      analysis of the Company's financial condition and the results of operations for
      the 12 months ended April 30, 2006 was reported on Form 10-KSB on August 14,
      2006 and is incorporated herein by reference.
Our
      acquisition of the Renhuang BVI company was accounted for as a reverse merger,
      because, after giving effect to the share exchanges, the former stockholders
      of
      Renhuang BVI hold a majority of our outstanding common stock on a voting and
      fully diluted basis. As a result of the share exchanges, Renhuang was deemed
      to
      be the acquirer for accounting purposes. Accordingly, the financial statements
      presented are those of Renhuang China for all periods prior to our acquisition
      of the Renhuang BVI company on September 7, 2006, and the financial statements
      of the consolidated companies from the acquisition date forward.
Research
      and development expenses consist primarily of salaries and related personnel
      costs, fees paid to consultants and outside service providers for regulatory
      and
      quality assurance support and other expenses relating to the manufacture,
      development, testing, enhancement, sales, marketing, warehousing and
      distribution of our products. We expense our research and development costs
      as
      they are incurred.
General
      and administrative expenses consist primarily of salaries and related expense
      for executive, finance and other administrative personnel, professional fees,
      business insurance, rent, general legal activities, and other corporate
      expenses.
Result
      of Operations
Critical
      Accounting Policies
The
      discussion and analysis of our financial condition and results of operations
      are
      based on our consolidated financial statements, which have been prepared in
      accordance with accounting principles generally accepted in the United States,
      US GAAP. The preparation of these consolidated financial statements requires
      us
      to make estimates and judgments that affect the reported amounts of assets,
      liabilities, revenues and expenses, and related disclosure of contingent assets
      and liabilities. On an on-going basis, we evaluate our estimates based on
      historical experience and on various other assumptions that are believed to
      be
      reasonable under the circumstances, the results of which form the basis for
      making judgments about the carrying values of assets and liabilities that are
      not readily apparent from other sources. Actual results may differ from these
      estimates under different assumptions or conditions.
We
      follow
      the guidance of the Securities and Exchange Commission's Staff Accounting
      Bulletin 104 for revenue recognition. In general, we record revenue when
      persuasive evidence of an arrangement exists, services have been rendered or
      product delivery has occurred, the sales price to the customer is fixed or
      determinable, and collectability is reasonably assured. We have identified
      the policy below as critical to our business operations and understanding of
      our
      financial results:
A.
      CASH AND CASH EQUIVALENTS
The
      Company considers cash and cash equivalents to include cash on hand and demand
      deposits with banks with an original maturity of three months or less.
B.
      INVENTORIES
Inventories
      are stated at the lower of cost and net realizable value. Cost is calculated
      on
      the weighted average basis and includes all costs to acquire and other costs
      incurred in bringing the inventories to their present location and condition.
      The Company evaluates the net realizable value of its inventories on a regular
      basis and records a provision for loss to reduce the computed weighted average
      cost if it exceeds the net realizable value.
C.
      LAND USE RIGHTS
According
      to the law of China, the government owns all the land in China. Companies or
      individuals are authorized to possess and use the land only through land use
      rights granted by the Chinese government. Land use rights are being amortized
      using the straight-line method over the lease term of 40 to 50
      years.
D.
      PROPERTY, PLANT AND EQUIPMENT
Property,
      plant and equipment are carried at cost. The cost of repairs and maintenance
      is
      expensed as incurred; major replacements and improvements are capitalized.
When
      assets are retired or disposed of, the cost and accumulated depreciation are
      removed from the accounts, and any resulting gains or losses are included in
      income in the year of disposition.
Depreciation
      is calculated on a straight-line basis over the estimated useful lives of the
      assets. The useful lives for property, plant and equipment are as follows:
Buildings
                and leasehold improvement
20
                years
Plant
                and machinery
10
                years
Office
                equipment and furnishings
5
                to10 years
Motor
                vehicles
5
                to10 years
E.
      CONSTRUCTION IN PROGRESS
Construction
      in progress represents direct costs of construction or acquisition and design
      fees incurred. Capitalization of these costs ceases and the construction in
      progress is transferred to plant and equipment when substantially all the
      activities necessary to prepare the assets for their intended use are completed.
      No depreciation is provided until it is completed and ready for intended
      use.
F.
      ACCOUNT RECEIVABLES
Trade
      receivables are recognized and carried at the original invoice amount less
      allowance for any uncollectible amounts. An estimate for doubtful accounts
      is
      made when collection of the full amount is no longer probable. Bad debts are
      written off as incurred.
An
      account is considered past due after sixty (60) days from the invoice date.
The
      allowance on the doubtful accounts was $656,685 and $765,078 as at April 30,
      2006 and October 31, 2005, respectively.
G.
      INCOME TAXES
Taxes
      are
      calculated in accordance with taxation principles currently effective in the
      PRC. The Company accounts for income taxes using the liability method. 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. The effect on deferred tax assets and liabilities
      of a
      change in tax rates is recognized as income in the period that includes the
      enactment date. A valuation allowance is provided for the amount of deferred
      tax
      assets that, based on available evidence, are not expected to be
      realized.
H.
      GOVERNMENT SUBSIDIES
Subsidies
      from the government are recognized at their fair values when received or there
      is reasonable assurance that they will be received, and all attached conditions
      are complied with. Subsides are for Company's research and development
      activities and they will continue in the following years. The amount of
      subsidies received for six months ended April 30, 2006 and the year ended
      October 31, 2005 were$155,316 and $326,092, respectively. The amounts granted
      and timing of receipts do vary every year, depending on the policies from the
      local authorities.
I.
      RELATED PARTIES
Parties
      are considered to be related if one party has the ability, directly or
      indirectly, to control the other party or exercise significant influence over
      the other party in making financial and operational decisions. Parties are
      also
      considered to be related if they are subject to common control or common
      significant influence. Related parties may be individuals or corporate
      entities.
J.
      FOREIGN CURRENCY TRANSLATION
The
      company maintains its books and accounting records in Renminbi ("RMB"), the
      PRC's currency, being the functional currency. Transactions denominated in
      foreign currencies are translated into the functional currency at the exchange
      rates prevailing on the transaction dates. Assets and liabilities denominated
      in
      foreign currencies are translated into the functional currency at the exchange
      rates prevailing at the balance sheet date. Income and expenditures are
      translated at the average exchange rate of the year.
On
      January 1, 1994, the PRC government introduced a single rate of exchange as
      quoted daily by the People's Bank of China (the "Unified Exchange Rate"). The
      quotation of the exchange rates does not imply free convertibility of RMB to
      other foreign currencies. All foreign exchange transactions continue to take
      place either through the Bank of China or other banks authorized to buy and
      sell
      foreign currencies at the exchange rates quoted by the People's Bank of China.
      Approval of foreign currency payments by the Bank of China or other institutions
      requires submitting a payment application form together with supplier's
      invoices, shipping documents and signed contracts.
April
                30, 2006
October
                31, 2005
Period/year
                end RMB : US$ exchange rate
8.0139
8.0680
Average
                RMB : US$ exchange rate
8.0481
8.2308
The
      RMB
      is not freely convertible into foreign currency and all foreign exchange
      transactions must take place through authorized institutions. No representation
      is made that the RMB amounts could have been, or could be, converted into US$
      at
      the rates used in translation.
K.
      USE OF ESTIMATES
The
      preparation of financial statements in conformity with generally accepted
      accounting principles in the United States of America requires management to
      make estimates and assumptions that affect the reported amounts of assets and
      liabilities and disclosure of contingent assets and liabilities at the date
      of
      the financial statements, and the reported amounts of revenue and expenses
      during the reporting period. Actual results when ultimately realized could
      differ from those estimates.
L.
      FAIR VALUE OF FINANCIAL INSTRUMENTS
The
      carrying value of financial instruments including cash, receivables, accounts
      payable and accrued expenses and debt, approximates their fair value at April
      30, 2006 and October 31, 2005 due to the relatively short-term nature of these
      instruments.
M.
      REVENUE RECOGNITION
In
      accordance with the provisions of Staff Accounting Bulletin No. 103, revenue
      is
      recognized when merchandise is shipped and title passes to the customer and
      collectibility is reasonably assured.
N.
      RESEARCH AND DEVELOPMENT
Research
      and development costs are expensed as incurred. Engineers and technical staff
      are involved in the production of our products as well as on-going research,
      with no segregation of the portion of their salaries relating to research and
      development from the portion of their salaries relating to production. The
      total
      salaries are included in cost of sales. Other research is performed on a future
      profit sharing basis conducted by universities and research
      institutions.
O.
      SHIPPING AND HANDLING
All
      shipping and handling are expensed as incurred and outbound freight is not
      billed to customers. Shipping and handling expenses included in selling and
      distribution expenses were $643,471 and $748,438 for the 6 months ended April
      30, 2006 and year ended October 31, 2005, respectively.
P.
      ADVERTISING
Advertising
      costs are expensed as incurred. They are separately disclosed in income
      statements.
Q.
      EMPLOYEES' BENEFITS
Mandatory
      contributions are made to the Government's health, retirement benefit and
      unemployment schemes at the statutory rates in force during the period, based
      on
      gross salary payments. The cost of these payments is charged to the statement
      of
      income in the same period as the related salary cost.
R.
      SEGMENTS
No
      business segment analysis is provided for the year end October 31, 2005 and
      for
      the six months ended April 30, 2006 and 2005, as less than 10% of revenue and
      less than 10% of income from operations is attributable to the segment other
      than sales of pharmaceutical products.
Further,
      no geographical segment analysis is provided for the year ended October 31,
      2005
      and for the six months ended April 30, 2006 and 2005, as less than 10% of
      revenue and less than 10% income from operations is attributable to the segment
      other than the Mainland China.
S.
      COMPREHENSIVE INCOME (LOSS)
The
      Company has adopted the provisions of Statement of Financial Accounting
      Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS
      No.
      130 establishes standards for the reporting and display of comprehensive income,
      its components and accumulated balances in a full set of general-purpose
      financial statements. SFAS No. 130 defines comprehensive income (loss) to
      include all changes in equity except those resulting from investments by owners
      and distributions to owners, including adjustments to minimum pension
      liabilities, accumulated foreign currency translation, and unrealized gains
      or
      losses on marketable securities.
T.
      CONCENTRATION OF CREDIT RISK
Financial
      instruments that potentially subject the Company to significant concentrations
      of credit risk consist primarily of trade accounts receivable. The Company
      performs ongoing credit evaluations with respect to the financial condition
      of
      its creditors, but does not require collateral. In order to determine the value
      of the Company's accounts receivable, the Company records a provision for
      doubtful accounts to cover probable credit losses. Management reviews and
      adjusts this allowance periodically based on historical experience and its
      evaluation of the collectibility of outstanding accounts
      receivable.
Management's
      Discussion and Analysis of Operations
Fiscal
      years ended October 31, 2005
Overview
The
      company achieved significant sales growth and higher gross margins in fiscal
      2005. As a result, it turned the loss of fiscal 2004 into a net profit of over
      $2 million. The company's operating results demonstrate the benefits of the
      management's continued focus on growing market shares while keeping costs under
      control.
Revenue
for
      the
      year ended October 31, 2005 increased by 84% to a record $18,915,064, compared
      with $10,296,230 for the previous year. The increase in sales was a direct
      result of new product launches starting in January 2005 (after a new factory
      began operations), as well as our ability to continue to attract customers
      with
      competitive pricing.
Net
      income attributable to shareholders
was
      $2,182,415 for the year ended October 31, 2005, compared with a
loss
of
      $526,195 for the previous year. The turn-around resulted from significantly
      higher sales volume and higher gross margins compared with the previous year.
Cost
      of sales
for
      the
      year ended October 31, 2005 increased by 43% to $8,868,845, compared with
      $6,190,503 for the previous year. Proportionately, the cost increase was just
      over half of the 84% increase in sales, reflecting better cost control from
      management along with new and more efficient production processes. For some
      products, cost of sales actually decreased by over 20% because of the above
      controls. Finally, cost of sales also included obsolescent inventories of
      $138,638 (compared with $508,858 for the previous year).
Gross
      profit margin
was
      53%
      for the year ended October 31, 2005, compared with 40% for the previous year.
      The improvement in gross margin reflects better cost control and more efficient
      production processes.
Selling
      and distribution expenses
increased
      by 127% to $3,347,094 for the year ended October 31, 2005, compared with
      $1,477,548 for the previous year. The increase was a result of increased
      transportation due to higher sales volume, as well as increased bonus payments
      to salespeople.
Advertising
      expenses
increased about 69 times to $1,518,686 for the year ended October 31, 2005,
      compared with only $2,189 for the previous year. The sharp increase was a direct
      result of major advertising campaigns and promotional initiatives started during
      the year. Major forms of advertising were TV commercials and advertisements
      in
      magazines and newspapers.
General
      and administrative expenses
decreased
      by 51% to $773,757 for the year ended October 31, 2005, compared with $1,578,423
      for the previous year. The decline was mostly due to lower office and travel
      expenses.
Provision
      for doubtful accounts
(for
      trade receivables) for the years ended October 31, 2005 and 2004 were $138,638
      and $592,736, respectively.
Depreciation
      and amortization
increased
      by 3 times to $800,305 for the year ended October 31, 2005, compared with
      $193,461 for the previous year. The increase was consistent with a
      more-than-6-times increase in property, plant and equipment (PPE) to $12,845,679
      from $1,960,242 the previous year. The bulk of the increase in PPE was due
      to
      the completion of $7 million of construction in progress during
      2005.
Research
      and development (R&D) expenses
increased
      by 37% to $1,233,504 for the year ended October 31, 2005, compared with $897,210
      for the previous year. The increase was largely due to the launch of several
      early-stage R&D initiatives to be carried out jointly with local
      universities to develop new products.
Government
      subsidies
for
      the
      year ended October 31, 2005 were $326,092, compared with $295,536 for the
      previous year. Government subsidies were given in support of our R&D
      efforts. They were unconditional and with no commitments from local authorities.
      We are not sure how long the subsidies can be expected to continue or if they
      will continue at the present levels.
Finance
      costs
increased
      by 2 times to $377,467 for the year ended October 31, 2005, compared with
      $124,643 for the previous year. The increase was due to interest payments on
      a
      new long-term bank loan of $3.7 million that was initiated in 2005.
Income
      taxes
were
      zero
      for 2005 and 2004, as the Company was exempted from corporate income taxes.
      It
      is currently entitled to full exemption from corporate income taxes through
      the
      end of December 2006. From 2007 onwards, the Company will enjoy a preferential
      income tax rate of 15%, based on its being in a high-tech development industry
      to be promoted by the local authorities.
Management's
      Discussion of Financial Resources and Liquidity
Fiscal
      years ended October 31, 2005
Overview
The
      company experienced significant expansion of its assets in fiscal 2005. Current
      assets increased to meet the increasing need for working capital as sales grew
      at a fast pace. Fixed assets also grew significantly after the completion of
      major production facilities. As a result of such asset expansion, both operating
      and investing activities experienced net cash outflow, while financing
      activities generated net cash inflow to finance the expansion.
Cash
      and cash equivalents
aggregated $3.44 million on October 31, 2005, down $1.33 million from the end
      of
      fiscal 2004. Operating and investing activities together used more cash than
      generated by the company's financing activities, causing the decline in cash
      balance.
Trade
      receivables
were
      $4.06 million on October 31, 2005, up $3.73 million from the end of fiscal
      2004,
      reflecting the company's significant growth in sales.
Inventories
stood at
      $3.51 million on October 31, 2005, up $1.39 million from the end of fiscal
      2004,
      as the company meets significant growth in sales by increasing its stock of
      raw
      materials and finished goods.
Prepayments
were
      $0.44 million on October 31, 2005, up $0.32 million from the end of fiscal
      2004,
      as the company increased its purchases of goods and supplies (and prepayments
      thereof) to meet increasing sales volume.
Other
      receivables
were
      $0.38 million on October 31, 2005, up $0.32 million from the end of fiscal
      2004,
      again reflecting increased sales volume and activities at the company.
Land
      use rights
were
      valued at $0.14 million, slightly higher than the previous year due to
      fluctuation in the USD/RMB exchange rate.
Property,
      plant and equipment
were
      $11.66 million on October 31, 2005, up $10.09 million from the end of fiscal
      2004, as the company completed a major facilities construction of about $7.6
      million and added other fixed assets.
Consolidated
      borrowings
aggregated
      $13.09 million, up from $8.44 million at the end of fiscal 2004. The increase
      was due to a $3.72 million bank loan to finance the completion of major
      production facilities, and increased current liabilities to meet working capital
      needs amid increasing sales volume.
Net
      cash flow
was
negative
$1.58
      million during fiscal 2005. The company used $1.17 million net in cash in
      operating activities, largely to meet increasing sales volume. It used $3.81
      million net in cash in investing activities, mainly to complete the construction
      of major new facilities and add fixed assets. The company generated $3.40
      million net in cash in its financing activities, mainly through bank
      loans.
Management's
      Discussion and Analysis of Operations
Six
      Months Ended April 30, 2006
Overview
The
      company achieved significant sales growth and higher gross margins during the
      six months ended April 30, 2006. As a result, net income increased by almost
      11%
      compared to the same period a year ago, despite significant increases in
      SG&A and advertising expenses during the period. The company's operating
      results demonstrate that the management's strategy to launch new products, grow
      market shares and keep costs under control continued to pay
      off.
Revenue
for
      the
      six months ended April 30, 2006 increased by 179% to $20,052,818, compared
      with
      $7,193,313 for the same period a year ago. The increase was due to continued
      success with new products launched since January 2005 (after a new factory
      began
      operations), as well as our ability to continue to attract customers with
      competitive pricing.
Net
      income attributable to shareholders
increased by almost 11% to $457,900, compared with $413,039 for the same period
      a year ago. The increase resulted from significantly higher sales volume and
      higher gross margins compared with the same period a year ago. Net income would
      have been higher had it not been for significant increases in SG&A and
      advertising expenses during the period.
Cost
      of sales
for
      the
      six months ended April 30, 2006 increased by 131% to $8,863,227, compared with
      $3,989,857 for the same period a year ago. Note that cost increased
      proportionately much less than sales, reflecting better cost control from
      management along with new and more efficient production processes.
Gross
      profit margin
was
      56%
      for the six months ended April 30, 2006, compared with 45% for the same period
      a
      year ago. The improvement in gross margin reflects better cost control and
      more
      efficient production processes.
Selling
      and distribution expenses
increased
      by 242% to $4,202,267 for the six months ended April 30, 2006, compared with
      $1,228,724 for the same period a year ago. The increase was a result of
      increased transportation due to significantly higher sales volume, as well
      as
      increased bonus payments to salespeople.
Advertising
      expenses
increased
      6.3 times to $2,917,988 for the six months ended April 30, 2006, compared with
      $398,714 for the same period a year ago. The sharp increase was a direct result
      of continued spending on major advertising campaigns and promotional initiatives
      started in fiscal 2005. Major forms of advertising were TV commercials and
      advertisements in magazines and newspapers.
General
      and administrative expenses
increased
      2.7 times to $1,632,290 for the six months ended April 30, 2006, compared with
      $446,791 for the same period a year ago. The increase was mainly due to
      significantly higher office and travel expenses as well as service payments.
Provision
      for doubtful accounts
(for
      trade receivables) for the six months ended April 30, 2006 and 2005 were
      $622,618 and zero, respectively.
Depreciation
      and amortization
decreased
      by 7% to $328,051 for the six months ended April 30, 2006, compared with
      $351,427 for the same period a year ago. The decrease reflected the transfer
      of
      approximately $2.7 million of property, plant and equipment to a newly set-up
      entity.
Research
      and development (R&D) expenses
increased
      by 39% to $817,547 for the six months ended April 30, 2006, compared with
      $586,113 for the same period a year ago. The increase was largely due to the
      launch of several early-stage R&D initiatives to be carried out jointly with
      local universities to develop new products.
Government
      subsidies
for
      the
      six months ended April 30, 2006 were $155,316, compared with $342,411 for the
      same period a year ago. Government subsidies were given in support of our
      R&D efforts. They were unconditional and with no commitments from local
      authorities. We are not sure how long the subsidies can be expected to continue
      or if they will continue at the present levels.
Finance
      costs
increased
      by 1.9 times to $359,465 for the six months ended April 30, 2006, compared
      with
      $125,047 for the same period a year ago. The increase was due to interest
      payments on a new long-term bank loan of $3.7 million that was initiated in
      November 2005.
Income
      taxes
were
      zero
      for the six months ended April 30, 2006 and 2005, as the Company was exempted
      from corporate income taxes. It is currently entitled to full exemption from
      corporate income taxes through the end of December 2006. From 2007 onwards,
      the
      Company will enjoy a preferential income tax rate of 15%, based on its being
      in
      a high-tech development industry to be promoted by the local
      authorities.
Management's
      Discussion of Financial Resources and Liquidity
Six
      Months Ended April 30, 2006
Overview
The
      company continued to expand its asset base during the six months ended April
      30,
      2006, largely due to current asset expansion (by $1.76 million) to meet the
      increasing need for working capital amid continued rapid growth in sales. Fixed
      assets declined as disposition exceeded acquisition. During the period, both
      operating and financing activities experienced net cash outflow, while investing
      activities generated net cash inflow. Net cash flow was
negative
$1.31
      million during the period.
Cash
      and cash equivalents
aggregated $2.23 million on April 30, 2006, down $1.21 million from the
      beginning of the period. Operating and financing activities together used more
      cash than generated by the company's investing activities, causing the decline
      in cash balance.
Trade
      receivables
were
      $5.38 million
on
      April
      30, 2006
,
      up
      $1.32 million from the
beginning
      of the period
,
      reflecting the company's continued growth in sales.
Inventories
stood at
      $2.40 million on April 30, 2006, down $1.11 million from the beginning of the
      period, as the company drew down its stock of finished goods to meet continued
      rapid growth in sales.
Prepayments
were
      $0.95 million on April 30, 2006, up $0.51 million from the beginning of the
      period, as the company increased its purchases of goods and supplies (and
      prepayments thereof) to meet increasing sales volume.
Other
      receivables
were
      $0.49 million on April 30, 2006, up $0.11 million from the beginning of the
      period, again reflecting increased sales volume and activities at the company.
Due
      from related parties
aggregated $0.28 million on April 30, 2006, up from zero at the beginning of
      the
      period.
The
      amounts are unsecured, interest-free and repayable within one year. They were
      mainly used for the operation of the company during the period.
Due
      from directors
aggregated $1.16 million on April 30, 2006, up from zero at the beginning of
      the
      period. The amounts are unsecured, interest-free and repayable within one year.
      They were mainly used for the operation of the Company during the
      period.
Deferred
      expenses
were
      $0.69 million on April 30, 2006, up from zero at the beginning of the period,
      due to expenses related to the pending reverse merger of the company.
Land
      use rights
were
      valued at $0.14 million, slightly up from the beginning of the period due to
      fluctuation in the USD/RMB exchange rate.
Property,
      plant and equipment
were
      $10.47 million on April 30, 2006, down $1.19 million from the beginning of
      the
      period, mainly due to the disposition of machinery and equipments.
Consolidated
      borrowings
aggregated
      $13.12 million, slightly up from $13.09 million at the beginning of the period,
      as fluctuation in the USD/RMB exchange rate led to slightly higher valuation
      of
      the company's long-term bank loan. Current liabilities also increased slightly
      to meet working capital needs amid increasing sales volume. Advance from
      customers and other payables went up, while the company reduced its account
      payables and repaid some of its short-term bank loans.
Net
      cash flow
was
negative
$1.31
      million during the period. The company used $0.50 million net in cash in
      operating activities, largely to meet increasing sales volume. It used $1.68
      million net in cash in its financing activities, paying back dues to directors
      and related parties and repaying some of its short-term bank loans. The company
      generated $0.86 million net in cash in investing activities, as disposition
      of
      fixed assets generated more cash than the amount of cash used in the acquisition
      of fixed assets.
Plan
      of Operation
Our
      plan
      of operation for the year ending April 30, 2007 is to continue implementing
      our
      business strategy, including the planned expansion and the fully implementation
      of our new production facility. We also intend to expand our product portfolio
      through research and development. We expect our revenue and net profit to grow
      significant.
As
      part
      of our planned expansion, we anticipate hiring additional full-time employees
      devoted to research and development activities and additional full-time
      employees for sales, general and administrative activities. In addition, we
      intend to use clinical research organizations and third parties to perform
      our
      clinical studies and manufacturing.
Overview
Historically,
      the Chinese population is interested in natural health care products, and it
      is
      estimated that with a growing middle class and an aging population, the demand
      for natural products will increase.
Acanthopanax
      is estimated to be Renhuang's leading product, which accounted for 45% of
      Renhuang's total revenue for the fiscal year of 2005, and 50% for the first half
      of fiscal year of 2006. Shark Power Healthcare products accounted for 25% of
      Renhuang's total revenue in 2005, and less in 2006. The remaining balance was
      dominated by traditional Western medicine products, led by Tornado Pills and
      Tianma Headache pills that reached top three in China.
The
      total
      market share of Renhuang's Acanthopanax products is approximately 10% and its
      Shark Power Healthcare products accounts for 20% in China. The Company estimates
      that, within 3-5 years, Renhuang's Acanthopanax products will account for 50%
      market share and that its market share of Shark Power Healthcare products can
      reach 60% with more investment in advertisement.
It
      is
      further estimated that, due to the high growth rate of the Chinese economy,
      including increased health consciousness, the demand of Acanthopanax products
      and Shark Power Healthy Care products will increase with a 30% annual growth
      rate, which is. This is a major opportunity for Renhuang.
Acanthopanax
      Products
Acanthopanax
      products are the most important product segment of Renhuang because Renhuang
      controls 70% of all wild Acanthopanax resources in China, and has developed
      new
      withdrawing technology to reduce 30% of its production cost.
In
      2004,
      the revenue from Acanthopanax products was 30% of the total revenue, which
      was
      close to $3.75 million. In the fiscal year of 2005, the revenue from
      Acanthopanax products rose 200%, to nearly $8.8 million. In the first half
      of
      fiscal year of 2006, the revenue was US $9.6 million, which is higher than
      that
      from the full previous year. Based on the foregoing, Renhuang conservatively
      estimates that sales of Acanthopanax products will grow with an average of
      50%
      annually in the next 5 years.
The
      Company estimates that revenue of Acanthopanax will reach US 18 million dollars
      in 2006, 27.7 million dollars in 2007, and 41.6 million dollars in 2008.
Shark
      Power Healthcare products
Revenue
      from Shark Power Healthcare products was close to US $5 million dollars in
      the
      fiscal year of 2005 compared to US $3.3 million for the first six months of
      fiscal year of 2006. Shark Power is popular among many students supported by
      their parents. This target market, which is substantial in China, is however
      neglected in many other countries. Additionally, seniors are another target
      segment for these products. Outdoor exercise is not as popular in China as
      in
      the United States. Therefore, senior aged people in China consume a larger
      amount of health care products in order to keep themselves healthy.
Because
      health care products usually provide a long-term effect and its immediate result
      is not visible, promotions become key factors to increase branding and market
      share. Commercials on TV and radio, and advertising in magazine etc are all
      trusted media that converts into increased sales.
Renhuang
      has a substantial market plan for its Shark Power products that will be
      implemented commencing 2007. Our conservative estimate accounts for a growth
      rate of 30% for the next 5 years.
It
      is
      estimated that revenue of Shark Power Healthcare products in 2006 will reach
      6
      million dollars, 8 million dollars in 2007, and 10 million dollars in
      2008.
Traditional
      Medicine
During
      the fiscal year of 2005, traditional medicine accounted for 30% of the total
      revenue in Renhuang, and during the first half of fiscal year of 2006, it
      accounted for 36% of the total revenue. In the future, after implementing more
      new products, Renhuang does not see traditional medicine as its main focus.
      Profit margins in this segment are lower compared with its other segments.
      However, most customers of its traditional medicine products are recurring,
      which generates cash flow with low risk. By utilizing stable sales channels,
      Renhuang will lower its cost for acquisition of new customers for its newer
      products.
Despite
      increased marketing activities as a whole, Renhuang will not focus on the growth
      of traditional medical products. As a result, the growth rate will be less
      than
      its other products and revenue will be estimated to peak during 2009 or
      2010.
It
      is
      estimated that revenue of traditional medicine in 2006 will reach 14 million
      dollars, 20 million dollars in 2007, and 22 million dollars in 2008.
Lysozyme
      Enzyme
This
      is a
      new product for Renhuang, with an estimated substantial growth potential. The
      product is highly demanded, especially in food preservation area, where Renhuang
      conservatively estimates that Lysozyme Enzyme products will be achieve the
      growth rate of 100% annually during the next five years starting
      2007.
The
      Company estimates that revenue of Lysozyme Enzyme in 2007 will reach $0.6
      million dollars, and 1.2 million dollars in 2008.
Reagent
      Box series
Reagent
      box is an emerging market segment with a huge potential. Renhuang recently
      employed a team of research scientists graduated from top schools in the United
      States that owns several patents related to this segment.
Renhuang
      estimates that of a total of 10 products, Renhuang plans to launch all of them
      during 2007 and 2008. Renhuang estimates that Reagent Box series will sustain
      a
      growth rate of 100% annually in the next five years.
It
      is
      estimated that revenue of Reagent Box series in 2007 will reach 1.2 million
      dollars, and 2.4 million dollars in 2008.
Critical
      Accounting Policies
In
      December 2001, the SEC request that all registrants discuss their most "critical
      accounting policies" in management's discussion and analysis of financial
      condition and results of operations. The SEC indicated that a "critical
      accounting policy" is one which is both important to the portrayal of the
      company's financial condition and results and requires management's most
      difficult, subjective or complex judgments, often as a result of the need to
      make estimates about the effect of matters that are inherently
      uncertain.
Use
      of estimates
The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America, US GAAP requires management
      to make estimates and assumptions that affect reported amounts of assets and
      liabilities as of the date of the balance sheet and reported amounts of expenses
      for the periods presented. Accordingly, actual results could differ from those
      estimates.
Net
      profit per share:
Basic
      net
      profit per share is computed by dividing net profit by the weighted-average
      number of common shares outstanding during the periods presented as required
      by
      SFAS No. 128, "Earnings Per Share".
For
      the
      six months ended April 30, 2006, the Company had a net income of $0.01 per
      share, despite significant increases in SG&A and advertising expenses. For
      the fiscal year 2005 the Company reported a net income of $0.06 per share.
      The
      company had a net loss of $0.02 per share for the year ended October 31, 2004.
Subsequently,
      the company launched new products to expand market share and increase sales
      volume. It also adopted cost control measures to improve gross margin.
Stock-based
      compensation
SFAS
      No.
      123, "Accounting for Stock-Based Compensation" ("SFAS 123"), provides for the
      use of a fair value-based method of accounting for stock-based compensation.
      However, SFAS 123 allows an entity to continue to measure compensation cost
      for
      stock options granted to employees using the intrinsic value method of
      accounting prescribed by Accounting Principles Board Opinion No. 25 "Accounting
      for Stock Issued to Employees" ("APB 25"). The Company accounts for its employee
      and director stock options using the intrinsic value method in accordance with
      APB 25 and related interpretations. The Company measures compensation expense
      for employee and director stock options as the aggregate excess of the market
      value of its common stock over the exercise prices of the options on the date
      that both the number of shares the grantee is entitled to receive and the
      exercise prices are known. Such excess is amortized over the vesting
      period.
In
      accordance with the provisions of SFAS 123 and Emerging Issues Task Force
      ("EITF") No. 96-18, "Accounting for Equity Instruments That are Issued to Other
      Than Employees for Acquiring or in Conjunction with Selling, Goods or Services,"
all other issuances of common stock, stock options or other equity instruments
      to non-employees (including consultants and all members of the Scientific
      Advisory Board) as the consideration for goods or services received by the
      Company are accounted for based on the fair value of the equity instruments
      issued (unless the fair value of the consideration received can be more reliably
      measured). Any options issued to non-employees are recorded in expense and
      additional paid-in capital in stockholders' equity (deficiency) over the
      applicable service periods using variable accounting through the vesting date
      based on the fair value of the options at the end of each period.
Description
      of Securities
Upon
      closing the acquisition of Renhuang Pharmaceuticals, Ltd., Inc. (BVI), the
      total
      number of shares that the Company will be
authorized
      to issue will be 100 million shares of common stock, par value $0.001 per share,
      and 10 million shares of preferred stock, no par value. The Company will have
      a
      total of 35,000,000 shares of common stock issued and outstanding and no shares
      of preferred shares issued.
Common
      stock
All
      shares of common stock have equal rights and privileges with respect to voting,
      liquidation and dividend rights. Each share of common stock entitled the hold
      thereof (a) to one non-cumulative vote for each share held of record on all
      matters submitted to a vote of the stockholders; (b) to participate equally
      and
      to receive any and all such dividends as may be declared by the board of
      directors; and (c) to participate pro rata in any distribution of assets
      available for distribution upon liquidation. Holders of our common stock have
      no
      preemptive rights to acquire additional shares of common stock or any other
      securities. Our common stock is not subject to redemption and carries no
      subscription or conversion rights.
The
      Company's amended certificate of incorporation also provides that the board of
      directors has the flexibility to set new classes, series, and other terms and
      conditions of the preferred shares. Preferred shares may be issued from time
      to
      time in one or more series in the discretion of the board of directors. The
      board has the authority to establish the number of shares to be included in
      each
      such series, and to fix the designation, powers, preferences and rights of
      the
      shares of each such series and the qualifications, limitations and restrictions
      thereof.
Preferred
      stock
Preferred
      shares may be issued in the future by the board without further stockholder
      approval and for such purposes as the board deems in the best interest of our
      company
including
      future stock
splits
      and split-ups, stock dividends, equity financings and issuances for acquisitions
      and business combinations. In addition, such authorized but unissued common
      and
      preferred shares could be used by the board of directors for defensive purposes
      against a hostile takeover attempt, including (by way of example) the private
      placement of shares or the granting of options to purchase shares to persons
      or
      entities sympathetic to, or contractually bound to support, management. We
      have
      no such present arrangement or understanding with any person. Further, the
      common and preferred shares may be reserved for issuance upon exercise of stock
      purchase rights designed to deter hostile takeovers, commonly known as a
''poison pill.''
Share
      structure and major shareholders
Notes
      to the above chart:
Note
      1.
On
      March
      3rd, 2006 Harbin Renhuang Pharmaceutical Stock Co. Ltd. ("Old Renhuang")
      transferred all of its operating assets (except buildings) independent valued
      by
      Hei Long Jiang Haohua Certified Public Accountants Co., LTD. at 25 million
      RMB
      ($3.3 million) to a newly organized company, Harbin Renhuang Pharmaceuticals
      Co.
      Ltd. ("Renhuang China"). On March 3, 2006 Renhuang Medicine for Animals, a
      corporation controlled by Mr. Li Shaoming, invested 25 million RMB ($3.3
      million) in cash in Renhuang China. Renhuang China has entered into a long-term
      lease agreement with option to buy the buildings from Old Renhuang on favorable
      conditions.
Note
      2.
On March
      16, 2006, the following five individuals and their designated nominee
      corporations: Mr. Li Shaoming with Celebrate Fortune Company Limited (BVI),
      Mr.
      Pi Dianjun with China Wealth Source Company Limited (BVI), Mr. Cheung Yiu Man
      with Total Prosperity Company Limited, Mr. Wulantuya with New BVI Co. and Ms.
      Ding Xiuhua with Benevolent Sovereign Intl Company Limited, as further described
      elsewhere in this Current Report acquired 100% of the shares in New Renhuang
      from Harbin Renhuang Pharmaceutical Stock Co. Ltd. and Harbin Renhuang Medicine
      for Animals Co. Ltd. The transaction has been settled via cash
      payment.
Note
      3.
On April
      11th, 2006 Harbin Renhuang Pharmaceutical Company Limited, a corporation
      incorporated in the British Virgin Island (Renhuang BVI) executed a share
      exchange with the five corporate entities as referred to above and consequently
      became the 100% shareholder of Renhuang BVI.
Note
      4.
On
      August 28, 2006, Renhuang BVI entered into a Share Exchange Agreement with
      the
      Company, whereby the Company issued 29,750,000 shares of Common Stock
      representing 85% of the total issued and outstanding shares of the Company
      as
      further described in our Current Report 8 K, dated and filed on August 29,
      2006
      and is hereby incorporated by reference. On September 7, the transaction closed
      and the Company became the 100% shareholder of Renhuang BVI.
Security
      Ownership of Certain Beneficial Owners and Management
The
      following table sets forth information regarding the number of shares of Common
      Stock beneficially owned on September 7, 2006, the Closing Date, by each person
      who is known by the Company to beneficially own 5% or more of the Company's
      Common Stock, each of the Company's directors and executive officers, and all of
      the Company's directors and executive officers, as a group:
Name
                of Beneficial Owner
No.
                of Shares
Percentage
                of Shares
Outstanding
Shaoming
                Li - Celebrate Fortune Company Limited
17,850,000
(1)
51.0000
%
Dianjun
                Pi - Total Prosperity Company Ltd.
3,159,450
(2)
9.0270
%
Yun
                Man Cheung - China Wealth Source Company Ltd.
4,278,050
(3)
12.2230
%
Tuya
                Wulan - New BVI Co.
2,975,000
(4)
8.5000
%
Xiuhua
                Ding - Benevolent Sovereign International Company Ltd
1,487,500
(5)
4.2500
%
Directors
                and officers as a group (5 persons):
29,750,000
85.000
%
(1)
Includes
                17,850,000 shares of Common Stock owned by Celebrate Fortune Company
                Limited, an entity controlled by Mr. Shaoming Li.
(2)
Includes
                3,159,450 shares of Common Stock owned by Total Prosperity Ltd.,
                an entity
                controlled by Mr. Dianjun Pi.
(3)
Includes
                4,278,050 shares of Common Stock owned by China Wealth Source Company
                Ltd., an entity controlled by Mr. Yun Man Cheung.
(4)
Includes
                2,975,000 shares of Common Stock owned by New BVI Co., an entity
                controlled by Mr. Tuya Wulan.
(4)
Includes
                1,487,500 shares of Common Stock owned by Benevolent Sovereign
                International Company Ltd. an entity controlled by Ms. Xiuhua Ding.
Directors
      and Executive Officers
The
      Company's Board of Directors is composed of four directors, all of whom are
      currently directors of Renhuang China:
Renhuang's
      Board of Directors is comprised of four people: Mr. Li Shaoming, Mr. Pi Dianjun,
      Mr. Meng Fanrong and Dr. Leo Wang. Renhuang have vacancies for two independent
      directors that will be filled shortly.
All
      directors hold office until the next annual meeting of stockholders and the
      election and qualification of their successors. The Company intends to appoint
      two additional directors that are considered ''independent'' under the SEC's
      independence standards. Officers are elected annually by the board of directors
      and serve at the discretion of the board. In addition, certain of the officers
      of Renhuang China were named to serve as officers of the Company in the same
      positions they served at Renhuang China upon the closing of the
      Merger.
The
      following table sets forth information regarding the members of the Company's
      Board of Directors and its executive officers following the Closing Date. The
      directors listed below will serve until the next annual meeting of the Company's
      stockholders.
Name
Age
Position
Li,
                Shaoming
44
Chairman
                and Chief Executive Officer
Pi,
                Dianjun
55
Director
                and Chief Operating Officer
Dr.
                Leo Wang
38
Chief
                Financial Officer
Meng,
                Fanrong
35
Director
The
      principal occupation for the past five years (and, in some instances, for prior
      years) of each of our directors and officers are as follows:
Mr.
      LI SHAOMING
has served as the Chairman of the Board of Directors since
      the inception of Harbin Renhuang Pharmaceutical Stock Co. Ltd in 1996, the
      Chairman of the Board of Director of Harbin Renhuang Pharmaceutical Co. Ltd.
      starting May 1
st
, 2006 and director, Chairman and Chief Executive
      Officer of the Company since April 2006. Mr. Li has more than 20 years
      experience from the pharmaceutical and finance industry. From 1984 to 1996,
      Mr.
      Li served as Vice Chairman of Shenzhen Health Pharmaceutical Co. Ltd, a company
      dedicated to drug research, production, and sales. Mr. Li is a professor at
      Harbin Business University and Northeastern Agriculture University. Mr. Li
      also
      served as Vice Chairman of Heilongjiang Provincial Chinese Traditional Medicine
      Association and Heilongjiang Provincial Medicine Association. Mr. Li Shaoming
      graduated from Central University of Finance and Economics in Beijing, China
      with a bachelor's degree in finance.
Mr.
      PI DIANJUN
has served as the Chief Operation Officer of Harbin Renhuang
      Pharmaceutical Stock Co. Ltd. since 2003, and the Chief Operation Officer of
      Harbin Renhuang Pharmaceutical Co. Ltd. commencing May 1
st
, 2006,
      including responsibilities for the human resource department, information
      management, the center of management, and the office of the president in
      Renhuang and director of the Company since April 2006. From 1992 to 2001, Mr.
      Pi
      served as the Chief Operation Officer of China Resource Breweries Limited,
      Harbin Office; from 2002 to 2004, Mr. Pi served as Vice Chairman of Kuihua
      Pharmaceutical Co. Ltd. Mr. Pi Dianjun graduated from Heilongjiang
      University.
Mr.
      MENG FANRONG
,
      the
      director of the board of Harbin Renhuang Pharmaceutical Stock Co. Ltd. and
      Harbin Renhuang Pharmaceutical Co. Ltd. starting May 1
st
,
      2006,
      and director of the Company since April 2006 has served as the Chief Executive
      Officer of Harbin Venture Capital Ltd since 2001. Mr. Meng has more than 15
      years investment experience in China. In 1997, he participated in the successful
      Initial Public Listing of Asiapower Investment in Singapore. Mr. Meng also
      has
      participated in various international investment banking transactions with
      private and publicly listed companies. Mr. Meng Fanrong graduated from Xiamen
      University with a master's degree in Finance.
Dr.
LEO
      WANG
has
      served as the director of and Chief Financial officer of Renhuang China. An
      expert on international business, finance and investment, Dr. Wang pioneered
      the
      study of foreign investments and multinational companies in China before the
      current wave of international business flows into China. Prior to Dr. Wang's
      current position, he worked in investment management at a New York hedge fund
      that invested for senior executives of Citigroup Morgan Stanley, UBS and the
      Federal Reserve. He also developed investment strategies at Fleet Boston
      Financial Corporation (Bank of America), and provided strategy consulting for
      Raytheon Company. Previously, he was an Assistant Professor of Economics at
      the
      University of Copenhagen in Denmark, and an Economic Advisor to the Ministry
      of
      Finance in Norway. Dr. Wang holds an M.B.A. in Finance and Management from
      MIT
      and a Ph.D. in Economics from the University of Oslo. He was also a National
      Science Foundation Scholar at Harvard University.
Director
      Compensation
The
      Company intends to compensate non-management directors through the issuance
      of
      stock awards including, without limitation, stock options, restricted stock
      awards, stock grants and/or stock appreciation rights.
Executive
      Officer Employment Agreements
The
      Company has entered into employment agreements with each of its senior executive
      officers. The Company expects that the employment agreements will be for an
      initial term of one year ending at the end of 2006 and provide for automatic
      successive one-year renewal terms thereafter unless terminated by either party
      upon 30 prior written notice. The agreements will provide customary provisions
      for earlier termination for reasons such as termination by the Company for
      cause, death or disability of executive, certain events of change in control
      or
      termination by the executive upon good reason. The definition of ''cause'' will
      include termination for conduct amounting to: fraud, embezzlement, willful
      or
      illegal misconduct; indictment or conviction of the executive by a court of
      proper jurisdiction (or his written, voluntary and freely confession of same)
      of
      a crime which constitutes a felony or results in material injury to the
      property, operation or reputation of the Company or its affiliates; and other
      forms of misconduct customarily amounting to a termination for cause. Each
      executive officer will provide venture deposit with different amounts depending
      on the different job responsibilities. The venture deposit will return to the
      executive officer(s) after the executive officer(s) leave.
Executive
      Compensation
The
      following executives, except Leo Wang, received compensation from Harbin
      Renhuang Pharmaceutical Stock Co., Ltd prior to April 30, 2006. No other item
      of
      compensation was paid to any officer or director of the Company other than
      reimbursement of expenses.
Name
Job
                Title
Date
                of Hiring
Revenue
Job
                description
Li,
                Shaoming
Chairman/CEO
1996
250,000
                RMB
US
                $31,250
Oversee
                the company operation
Han,
                Yulin
Chief
                Producing Officer
1996
36000
                RMB
US
                $4,500
Oversee
                the company producing
Gao,
                Zhimin
Chief
                Accounting Officer
1996
36000
                RMB
US
                $4,500
Oversee
                the company accounting system
Luo,
                Jingwang
Chief
                Marketing Officer
2003
100,000
                RMB
US
                $12,500
Oversee
                the marketing issue
Cui,
                Yuhai
Chief
                R&D Officer
2004
36,000
                RMB
US
                $4,500
R&D
                on new products
Liu,
                Guangming
Chief
                Strategic Planning Officer
2003
36,000
                RMB
US
                $4,500
Strategic
                Planning
He,
                Jiang
CEO
                assistant
2004
36,000
                RMB
US
                $4,500
Legal
                and Asset Management
Pi,
                Dianjun
Chief
                Operating Officer
2004
36,000
                RMB
US
                $4,500
General
                Operating
Leo
                Wang
Chief
                Financial Officer
2006
480,000
                RMB
US
                $60,000
Oversee
                the company financial system
Indemnification
      of Directors and Officers
As
      permitted by the provisions of the Nevada Corporation Law (the ''NCL''), the
      Company has the power to indemnify any person made a party to an action, suit
      or
      proceeding by reason of the fact that they are or were a director, officer,
      employee or agent of the Company, against expenses, judgments, fines and amounts
      paid in settlement actually and reasonably incurred by them in connection with
      any such action, suit or proceeding if they acted in good faith and in a manner
      which they reasonably believed to be in, or not opposed to, our best interest
      and, in any criminal action or proceeding, they had no reasonable cause to
      believe their conduct was unlawful. Termination of any action, suit or
      proceeding by judgment, order, settlement, conviction, or upon a plea of nolo
      contendere or its equivalent, does not, of itself, create a presumption that
      the
      person did not act in good faith and in a manner which they reasonably believed
      to be in or not opposed to our best interests, and, in any criminal action
      or
      proceeding, they had no reasonable cause to believe their conduct was
      unlawful.
The
      Company must indemnify a director, officer, employee or agent who is successful,
      on the merits or otherwise, in the defense of any action, suit or proceeding,
      or
      in defense of any claim, issue, or matter in the proceeding, to which they
      are a
      party because they are or were a director, officer, employee or agent, against
      expenses actually and reasonably incurred by them in connection with the
      defense.
The
      Company may provide to pay the expenses of officers and directors incurred
      in
      defending a civil or criminal action, suit or proceeding as the expenses are
      incurred and in advance of the final
disposition
      of the action, suit or proceeding, upon receipt of an undertaking by or on
      behalf of the director or officer to repay the amount if it is ultimately
      determined by a court of competent jurisdiction that they are not entitled
      to be
      indemnified by the Company.
The
      NCL
      also permits a corporation to purchase and maintain liability insurance or
      make
      other financial arrangements on behalf of any person who is or was
l
a
                director, officer, employee or agent of the
                corporation,
l
or
                is or was serving at the request of the corporation as a director,
                officer, employee or agent of another corporation, partnership, joint
                venture, trust or other
                enterprises.
Such
      coverage may be for any liability asserted against them and liability and
      expenses incurred by them in their capacity as a director, officer, employee
      or
      agent, or arising out of their status as such, whether or not the corporation
      has the authority to indemnify them against such liability and
      expenses.
Insofar
      as indemnification for liabilities arising under the Securities Act, as amended,
      may be permitted to officers, directors or persons controlling our company
      pursuant to the foregoing provisions, the Company has been informed that in
      the
      opinion of the SEC such indemnification is against public policy as expressed
      in
      such Act and is therefore unenforceable.
Senior
      Managers
The
      following individuals are senior managers reporting directly to the President
      and the Board of Directors.
Han,
                Yulin
37
Chief
                Producing Officer
Cui,
                Yuhai
35
Chief
                R&D Officer
Lou,
                Jingwang
48
Deputy
                General Manager in Sales Department
Liu,
                Guangming
38
Chief
                Strategy Officer
MS.
      HAN, YULIN
has
      served as the Chief Producing Officer of Harbin Renhuang Pharmaceutical Stock
      Co. Ltd since 1996, including responsibility for drug production. During the
      time working in Renhuang, Ms. Han has made following substantial achievements:
·
Ms.
      Han
      obtained the patent (with patent number 99116838.0) regarding producing
      technology improvement of cold capsule, effectively solving the problem of
      Aspirin Hydrolyzing problem of this product;
·
Ms.
      Han
      obtained the patent (with patent number
ZL00310682
ô
ZL00310035.9,
      ZL99321756.7) regarding designing the holding box of Squalene capsule, which
      was
      awarded golden patent award in China;
·
Published
      Paper in Chinese: "Discussion of best withdrawing technology of heart curing
      pills via Orthogonal Law";
·
Published
      Paper in Chinese: "Discussion of Best production technology of Spore Ammonia
      Pill via orthogonal Law";
Ms.
      Han
      has finished R&D, testing and application for approval of more than 30 new
      products in Renhuang.
Ms.
      Han
      graduated from Jiamusi Medical School in Heilongjiang Province with a bachelor
      degree in Chemical Medicine.
Mr.
      CUI, YUHAN
has
      served as the Chief R&D Officer of Harbin Renhuang Pharmaceutical Stock Co.
      Ltd since 2004. Before that, Mr. Cui has served as the Chief Project Manager
      in
      Harbin Renhuang Pharmaceutical Co. Ltd for 7 years. During the time working
      in
      Renhuang, Mr. Cui was awarded to top tier award of Science Technology Progress
      from Changchun Division of Chinese Academy of Sciences in 1997 and third tier
      award of Science Technology Progress from Heilongjiang Science Commission in
      1998. Mr. Cui graduated from Northeastern Agricultural University in Harbin
      with
      a bachelor degree in Biotechnology in 1994, and received his Master degree
      in
      Microorganism and biochemistry pharmacy from China Pharmaceutical University
      in
      China.
Mr.
      LOU, JINGWANG
has
      served as Deputy General Manager in Sales Department of Harbin Renhuang
      Pharmaceutical Stock Co. Ltd since 2003. From 1999 to 2003, Mr. Lou served
      as
      the Sales Manager of Beijing Tong Ren Tang, which is the biggest and most famous
      pharmaceutical company in China. Mr. Pi Dianjun graduated from Heilongjiang
      University.
Mr.
      LIU GUANGMING
has
      served as the Chief Strategy Officer of Harbin Renhuang Pharmaceutical Stock
      Co.
      Ltd since 2003, including responsibilities for the strategy planning, finance,
      and capital operation in Renhuang. From 2001 to 2003, Mr. Liu served as the
      Vice
      President of Investment Banking Division of Harbin Time Group. Mr. Liu Guangming
      graduated from Anshan University of Science and Technology with Bachelor degree
      in Industrial Engineering.
Item
      3.02 Unregistered Sales of Equity Securities
The
      disclosure as set forth in Item 2.01 are hereby incorporated by reference into
      this Item 3.02
Item
      4.01 Changes in Registrant's Certified Accountant.
The
      disclosure as set forth in our Current Report dated and filed on April 10,
2006
      is
      hereby incorporated by reference into this Item 4.01.
Item
      5.01 Changes in Control of Registrant
The
      disclosure as set forth in Item 2.01 are hereby incorporated by reference into
      this Item 5.01
Accounting
      Treatment; Change of Control
The
      merger is being accounted for as a "reverse merger,'' since the former
      stockholders of BVI own a majority of the outstanding shares of the Company's
      Common Stock immediately following the Merger. No arrangements or understandings
      exist among present or former controlling stockholders with respect to the
      election of members of the Company's board of directors and, to the Company's
      knowledge, no other arrangements exist that might result in a change of control
      in the future
.
As
      a
      result of the issuance of the 29,750,000 shares of Common Stock, a change in
      control occurred on the date of the consummation of the Merger
.
As
      of the
      time immediately following the closing, the Company continued to be a ''small
      business issuer,'' as defined under the Securities Exchange Act of 1934, as
      amended.
Item
      5.02 Departure of Directors or Principal Officers; Election of Directors;
      Appointment of Principal Officers
At
      the
      time of disposition of the Company's assets and discontinued operations on March
      3, 2006, the Company's then current sole director and officer, Mr. Vincent
      Rinehart elected Mr. Shaoming Li, Mr. Fanrong Meng and Dianjun Pi as the
      Company's new directors and thereafter resigned. On July 6, 2006 Dr. Leo Wang
      was elected as the Chief Financial Officer and to the Board of Directors. The
      Company has two vacancies to be filled by independent directors.
Item
      5.06 Change in Shell Company Status
As
      described in Item 2.01 above, which is incorporated by reference into this
      Item
      5.06, the Company ceased being a shell company (as defined in Rule 12b-2 under
      the Exchange Act of 1934, as amended) upon completion of the
      Merger.
Item
      9.01. Financial Statements and Exhibits.
(a)
As
                a result of its acquisition of Harbin Renhuang Pharmaceutical Company
                Limited ("BVI") and
its
                subsidiary Harbin Renhuang Pharmaceutical Co. Ltd., ("Renhuang
                China") (as described in Item 2.01), the registrant is filing Renhuang's
                audited and unaudited financial information as Exhibit 99.1 and Exhibit
                99.2 to this Current Report.
(b)
The
                registrant is filing p
ro
                forma financial information after giving effect to the acquisition
                of
                Renhuang BVI and its subsidiary Renhuang China (as described in Item
                2.01) in this
Current Report
.
EXHIBITS
Exhibit
Description
99.1
Audited
                financial statements of Harbin Renhuang Stock. Co Ltd.
October
                31, 2005 and 2004
99.2
Unaudited
                financial statements of Harbin Renhuang Stock. Co Ltd.
April
                30, 2006 and 2005
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.
Renhuang
                Pharmaceuticals, Inc.
Date: September
                8, 2006
By:
/
s/ Shaoming
                Li
Shaoming
                Li
Chief
                  Executive Officer and
                  President
EXHIBIT
      INDEX
Item
                No.
Description
(1)
Item
                1.02, Item 5.01 and Item 5.03 Completion of Acquisition or Disposition
                of
                Assets, incorporated by reference to our Current Report on Form 8-K
                dated
                and filed with the Commission on 2006-08-29.
(2)
Item
                4.01 and 9.01: Changes in Registrant's Certifying Accountant, incorporated
                by reference to our Current Report on Form 8-K/A filed and dated
                with the
                Commission on 2006-05-03.
(3)
Current
                Report 10-KSB dated and filed on August 15, 2006 and is hereby
                incorporated by reference.