UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the fiscal year ended December 31, ~~2009~~2010

¨	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from _________ to _________

GFR PHARMACEUTICALS, INC.

(Name of Small Business Issuer in Its Charter)

000-27959

(Commission file number)

77-0517964

(I.R.S. Employer Identification No.)

NEVADA

(State or Other Jurisdiction of Incorporation or Organization)

99 Yan Xiang Road, Biosep Building, Xi An, Shaan Xixi Province, P.R. China 710054

(Address of Principal Executive Office)

(86) 29- 8339-9676

(Issuer’s Telephone Number, Including Area Code)

Securities Registered Pursuant to Section 12(b) of the Exchange Act: NONE

Securities Registered Pursuant to Section 12(g) of the Exchange Act:

COMMON STOCK, $.001 PAR VALUE

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 406 of the Securities Act. Yes ¨ No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes___. No_____.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One)

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Small reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No þ

The aggregate market value of the common stock held by non-affiliates ( 26,079,940 shares) was approximately $ 1 25,~~303~~558,~~997~~341 , based an the average closing bid and ask price of $ 0.05 98 for the Common Stock on ~~June 30~~March 29, ~~2009~~ 2011.

As of ~~April~~ 14March 29, 2010, there were 42,079,940 shares of common stock outstanding.

Documents incorporated by reference: NONE

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

The discussion contained in this 10-K under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) contains forward-looking statements that involve risks and uncertainties. The issuer’s actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “the Company believes,” “management believes” and similar language, including those set forth in the discussion under “Description of Business,” including the “Risk Factors” described in that section, and “Management’s Discussion and Analysis or Plan of Operation” as well as those discussed elsewhere in this Form 10-k. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-k that are not historical facts are forward-looking statements that are subject to the “safe harbor” created by the Private Securities Litigation Reform Act of 1995.

TABLE OF CONTENTS

		PAGE
PART I
Item 1.	Business	3
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	8
Item 2.	Properties	8
Item 3.	Legal Proceedings	9
Item 4.	Reserved	9
PART II
Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	9
Item 6.	Selected Consolidated Financial Information	10
Item 7.	Management’s Discussion And Analysis Of Financial Condition And Results Of Operations	10
Item 7A.	Quantitative And Qualitative Disclosures About Market Risk	12
Item 8.	Financial Statements And Supplementary Data	12F-1
Item 9.	Changes In And Disagreements With Accountants Or Accounting And Financial Disclosure	13
Item 9A.	Controls And Procedures	13
Item 9B.	Other Information	14
PART III
Item 10.	Directors And Executive Officers Of The Registrant	15
Item 11.	Executive Compensation	18
Item 12.	Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters	19
Item 13.	Certain Relationships And Related Transactions, And Director Independence	20
Item 14.	Principal Accountant Fees And Services	21
PART IV.
Item 15.	Exhibits, Financial Statement Schedules	22

PART I

Item 1. Business

History

We were incorporated under the laws of the State of Nevada on December 18, 1996 under the name Laredo Investment Corp. (“Laredo”).

On January 21, 2000, Laredo entered into an acquisition agreement with GFR Pharma, Ltd. (“Pharma”) (formerly GFR Nutritionals, Ltd.), a British Columbia corporation. The transaction was recorded as a reverse acquisition. In June 1998 Pharma changed its name to GFR Nutritionals Ltd. Business operations began in October 1998 after acquiring manufacturing equipment and arranging to manufacture nutritional supplements under a private label contract.

On June 21, 2000, we entered into an acquisition agreement with Nutritionals (USA) Direct.Com, a Washington corporation, (“NDC”), to acquire 100% of the outstanding common stock of NDC in exchange for $1,000. The transaction has been recorded as a purchase. NDC’s operations were wound down in October 2002 and we became dormant.

On November 1, 2000, we entered into an acquisition agreement with GFR Health, Inc. (Formerly R & L Health, Inc.), a British Columbia corporation, to acquire 100% of the outstanding common stock of GFR Health, Inc. in exchange for $0.01. The transaction was recorded as a purchase.

On April 5, 2004, GFR Nutritionals Ltd. and R&L Health Inc changed their names to GFR Pharma Ltd. and GFR Health Inc., respectively. On August 9, 2004, Laredo Investment Corp. changed its name to GFR Pharmaceuticals, Inc. (“GFR”).

On June 26, 2006, we and our predecessor executed a Plan of Exchange with Shaan Xixi New Century Technology Investment Development Company, Ltd. (“New Century”), a corporation organized and existing under the laws of the Peoples’ Republic of China, with Richard Pierce, the former president and our former majority shareholder and Mr. Guo Li An, the majority shareholder of New Century.

On October 15, 2006, we executed an acquisition agreement (the “Hua Long Agreement”) with Xi'an Hua Long Yu Tian Ke Ji Shi Ye Co., Ltd., a corporation organized and existing under the laws of the Peoples’ Republic of China (“Hua Long”), Dong Jian Zhong and Guo Li Zheng, the shareholders of Hua Long (collectively "Hua Long Shareholders").

Pursuant to the Hua Long Agreement, we paid Hua Long Shareholders approximately $187,500 in cash to acquire 100% interest in the shares of registered capital of Hua Long. Hua Long acts as the holding company of New Century. The acquisition of Hua Long allowed us to complete the legal processing regarding the share exchange with New Century in China. Upon completion of the acquisition, we owned 100% interest of Hua Long and 95% interest of New Century through Hua Long. Consolidated financial statements are filed in this annual report for the year ended December 31, ~~2009~~2010.

On December 11, 2006, pursuant to the Plan of Exchange Agreement, Mr. Pierce delivered 200,000 shares of our common stock to New Century and/or its nominee in exchange for total payments of $325,000 in cash and we issued to the New Century shareholders an amount equal to 40,000,000 new investment shares of our common stock pursuant to Regulation S under the Securities Act of 1933, as amended, representing approximately 95% of our then outstanding shares of common stock, in exchange for a 95% interest in the shares of registered capital of New Century. Upon completion of the exchange, New Century became our 95% owned indirect subsidiary.

Recent Developments

On January 1, 2008, New Century entered into a stock purchase agreement with the holders of all 60,000,000 shares of the capital stock of Xi’an Jiaoda Bao Sai Bio-technology Co., Ltd (“Bao Sai”) to acquire 58,060,000 shares of their ~~its~~ capital ~~stock~~ stocks of Bao Sai, or 96.77% of its capital stock. The purchase price for Bao Sai ~~will~~equaled ~~equal~~ 96.77% of Bao Sai’s stockholders’ equity based on Bao Sai’s audited financial statements for the fiscal year ended December 31, 2009, prepared in accordance with the Generally Accepted Accounting ~~Principals~~ Principles.

On May 14, 2008, the Company completed the acquisition of Bao Sai for atotal consideration of $4,500,211 (approximately RMB33,000,000) for 96.77% of its equity interest in Bao Sai, based on the aggregate net book value of total assets and liabilities of Bao Sai as of December 31, 2007. The closing date was January 1, 2008. Upon the completion of the transaction, Bao Sai became a subsidiary of the Company. Prior to the closing of the transaction, the Company and Bao Sai were under common control and the principal owners of Bao Sai were affiliated with the Company. Payment of the purchase price, was made in two cash installments commencing in 2008, first to Xi’an Bio-sep Biological Filling Engineering Technology Company, Ltd., the owner of 28 million shares, or 46.67% of Bao Sai, and the balance in 2009 to the other three selling stockholders, in amounts equal to their respective percentage of share ownership pro rata of Bao Sai.

Bao Sai is engaged in research, development, ~~manufacture~~manufacturing and the sale of biological separation medium products, which isare technological know-how and devices engineered to separate and purify biological products and medicines. Separation medium products are used in the production of antibiotics, genetic recombinant medicine, bacterin production, the gene chip, diagnostic reagents and other biochemical products. Bao Sai’s principal office and manufacturing facility is located at 99 Yan Xiang Road, Biosep Building, Xi An, Shaan Xi Province, P. R. China.

Mr. Wang Li-An, one of the Company’s directors, is also a director of Bao Sai. ~~Xi’an Bio-sep Biological Filling Engineerings Technology Company, Ltd., which holds 46.67% of~~ Bao Sai’s ~~common stock,~~ is controlled by Mr. Guo Li An, who owns 38.03% of the Company. Mr. Guo Li Zheng, who is Guo Li An’s brother, owns 153.523% of the Bao Sai common stock and no shares of the Company. ~~Mr. Guo Li Zheng will be selling 12.27% of Bao Sai and retaining 3.23%.~~ Additionally, Mr. Zhao Yan Ding and Ms. Zhong Ya Li, the Company’s Chief Executive Officer and Chief Financial Officer, respectively, were officers of Bao Sai through the date of the acquisition agreement.

Overview of Business

GFR Pharmaceuticals, Inc. is a holding company with two business segments. The Company is involved in a Cancer Diagnosis and Treatment Center, which is a joint operation of PET Scanner and Rotary Gamma Ray Stereotactic Neurosurgery System imaging center in the PRC. The Company also operates a biological extraction business that extracts raw materials to medicine ingredients and distributes the extracted ingredients for medicine manufacturing uses.

The Company owns 100% of Hua Long’s outstanding common stock. Hua Long is approved in China to, among other things, engage in industrial chromatography to separate and purify chemical components for further use in agricultural and biotechnology products and in medicines, as well as for the research, development, manufacture and sale of biological separation medium products. However, Hua Long currently has no operating business and serves as a holding company for the operating subsidiary, New Century. Hua Long owns 95% of the outstanding stock of New Century.

Cancer Diagnosis and Treatment Center

New Century owns radiology and oncology equipment and provides it to Tangdu Hospital ~~in Shaan Xi province~~, which is affiliated with the Fourth Military Medical University. New Century currently owns three different devices used for radiological imaging for the brain and body and cancer treatment. The Company’s medical equipment is used in Tangdu Hospital’s Gamma Knife Therapeutic Center (the “Center”).

New Century entered into its relationship with Tangdu Hospital on February 2, 2006, when it accepted the rights and responsibilities previously held by Masep Medical Science & Technology Development (Shenzhen) Co., Ltd. (“Masep”) which Masep undertook pursuant to the “Cooperation Establishment of ‘Tangdu Gamma Knife Therapeutic Center’ Agreement” by and between Masep and Tandgu Hospital, dated May 18, 2001, as amended (the “Tangdu Agreement”). Pursuant to the terms of the Tangdu Agreement, New Century presently receives seventy percent (70%) of the profits generated by the Center. New Century’s profit sharing percentage decreases over the term of the Tangdu Agreement, which is sixteen years from the date that the Center opened in January 2002. The respective profit sharing ratios and time periods are as follows:

From January 2002 through December 2003, 90% to Masep;

From January 2004 through December 2008, 80% to Masep (or to New Century, giving effect to the assignment as of February 2006);

From January 2009 through December 2011, 70% to New Century;

From January 2012 through December 2014, 60% to New Century;

From January 2015 through December 2017, 50% to New Century.

Pursuant to the Tangdu Agreement, New Century has the power to appoint the Director of the Gamma Knife Center. Upon the termination of the Tangdu Agreement, the Tangdu Hospital has an option to purchase the equipment for fifty percent of its residual value.

As of December 31, ~~2009~~2010, New Century owned three different devices used in the medical centers, and the profit sharing percentage to New Century was 70 %. The cases processed in Tangdu Gamma Knife Therapeutithec Center (the “Center”), averaged ~~254cases~~ 292 cases per month in ~~2009~~2010, and ~~218~~254 cases per month in ~~2008~~2009. For the year ended December 31, ~~2009~~2010, the Center accounted for $3,~~336~~950,~~839~~033, or 8692%, of the Company’s revenues.

Tangdu Hospital is located in Xi’an, a city of over 89-million people and is the capital of Shaan Xi province. With our competitive facilities, services, and reputation of Tangdu Hospital in Northwest China including Shaan Xi province and four other adjacent provinces, our medical center business has a good potential to grow. To grasp this market opportunity, New Century intends to expand the operation by investing in an additional tumor therapy center or hospital and a modernized tumor institute。 However, such expansion will require additional capital.

Biological Separation Medium Product and Pharmaceutical Business

In 2008, New Century acquired 96.77% of the equity in Jiaoda Bao Sai Bio-technology Co Ltd. (“Bao Sai”). Bao Sai is engaged in research, development, manufacture and distribution of biological separation medium products which are used to recover and purify biosynthetic products, particularly pharmaceuticals, from natural sources such as animal or plant tissue or fermentation broth, including the recycling of salvageable components and the proper treatment and disposal of waste. Biological separation medium products are integral to the production of pharmaceuticals such as antibiotics, hormones (e.g. insulin and human growth hormone), antibodies, and vaccines; antibodies and enzymes used in diagnostics; industrial enzymes; and natural fragrance and flavor compounds.

The operations of Bao Sai are in the development stage and most of its efforts are focused on the research and development of new pharmaceutical and agricultural medium products, and the networking and advertisement to market these products in the future. In 2009, Bao Sai spent approximately $50,400 (2008: $690,991) in research and development of new biological separation medium products and new medicine. Most of the money was used to fund local medical institutions in the development of new products.

Pursuant to this effort, Bao Sai entered into a Research and Development Cooperation Contract with XiAn Jiao Tong University R&D Center for Natural Chinese Medicine and Engineering (“the University”) in 2005. According to the Cooperation Contract, Bao Sai provides funds in the research on the use of biological separation technology in the development of Xin Kang Ping medicine to treat heart diseases. The University performs all the laboratory work related to the general research project and toxic tests as the prerequisites of the clinical trial process for the application of a new medicine. The University presents the research ~~result~~results to Bao Sai, and Bao Sai has ~~all~~ the right to the project report and possible patent ~~right~~rights as a result of the project. This contract expired on August 25, 2008 and was not renewed. However, we have been able to continue the pharmacodynamics test and toxicology test as the prerequisite to the commencement of clinical trials for the development of Xin Kang Ping medicine. AtThese ~~present, these~~ two tests are close to successful completion. As the rules of the State Food and Drug Administration of China ( “SFDA”), now, Xin Kang Ping was changed its name to Fu Fang Dan Chuan Jiao Nang and we are in the process of applying for the clinical trial process with the State Food and Drug Administration of China ( “SFDA”). Upon the approval by of the SFDA, we will start clinical trials for Fu Fang Dan Chuan Jiao Nang . Less time is generally required in China than in the United States to complete the clinical trials for a new medicine, and the cost of clinical trials in China is also generally lower than those held in the USUnited States. We therefore expect that we can complete the clinical trials sooner and at lower cost than would be the case inif the ~~United~~ ~~States~~tests ~~and~~were atdone ~~lower~~in ~~cost~~the United States. Should the tests be successful and we obtain the approval of SFDA for the new medicine, we expect this new pharmaceutical product will be marketed in the PRC.

InUntil 2009, Bao Sai’s operations had consisted of ~~research~~bio-extraction and development of new products. ~~We have~~In ~~not~~2010, ~~yet~~based ~~developed~~on athe ~~distribution~~separation ~~system~~media, ~~for~~our ~~any~~new products ~~that~~developed ~~may~~from ~~be developed.~~traditional Webiochemical ~~plan~~products to ~~commercialize~~media ~~new~~derivatives—civil products. inWe ~~2010~~have ~~should~~made research progress in development ~~be completed,~~on ~~however,~~anti-virus wemask ~~are~~and ~~still~~have ~~currently~~submitted ininformation to Chinese government for a patent. We are applying for the ~~development stage~~patent of anti-virus mask.

Environmental Law Compliance

Our ~~operation~~operations currently ~~complies~~comply with all ~~the~~material environmental law and regulations in China. Moreover, since China does not have additional environmental regulations ~~dealing~~addressing ~~with~~ climate change that ~~apply~~ are applicable to our operations, we have ~~not~~no ~~planned~~plan to make material capital expenditures for environmental control facilities or make material changes in our business practices ~~specific~~ to climate change

Employees

We are divided into ~~five~~six departments, including administration, marketing, facility management, network, R&D center and finance. As of December 31, ~~2009~~2010, we had 6564 full-time employees, with 3230 in New Century and 3334 in Bao Sai. All our employees are employed on a staff is full-time basis. No one is involved in any labor disputes. We believe that our relations with our employees are good.

Item 1A. Risk Factors.

You should consider each of the following risk factors and any other information set forth in this Form 10-K and our other reports that we have filed with the Securities and Exchange Commission ("SEC"), including the Company's financial statements and related notes, in evaluating the Company's business and prospects. The risks and uncertainties described below are not the only ones that impact on the Company's operations and business. Additional risks and uncertainties not presently known to the Company, or that the Company currently considers immaterial, may also impair its business or operations. If any of the following risks actually occur, our business and financial condition, results or prospects could be harmed.

Risks Related to Our Business

Because there is no assurance that we will maintain the acceptance of our existing products and achieve success in our introduction of new business, any significant failure of our sales will adversely affect our business operations,.

Our ability to increase sales depends on numerous factors, including market acceptance of existing products, the successful introduction of new products, growth of consumer discretionary spending, and the ability to recruit new independent sales consultants. Business in all of our segments is driven by consumer preferences. Accordingly, there can be no assurances that our current or future products will maintain or achieve market acceptance. We can provide investors with no assurance that revenues will increase to a level which will reflect profitability. If we are unsuccessful in generating significant revenues, our business will most likely fail and our investors could lose their investment

Dependence on key corporate management personnel.

Our success depends in large part on the contributions of our key corporate management. We do not maintain any key person life insurance policies. The loss of our key corporate management personnel could have a material adverse effect on us.

Our Company and all of its assets are located in a jurisdiction that may not enforce the judgment of a US court.

Although we are incorporated in Nevada, the Company’s principal place of business and all of its assets are located in the People’s Republic of China. In the past, some U.S. plaintiffs and/or judgment creditors have found it difficult or impossible to enforce U.S. court orders and/or judgments in the People’s Republic of China. We can make no assurance that any shareholder or Company creditor who obtains a judgment or order against the Company, in Nevada or any other US jurisdiction, will be able to successfully enforce that judgment or order against the Company.

One customer accounts for a majority of our revenues and failure to maintain the business relationship with this customer will adversely affect our business operations.

Tangdu Hospital accounts for over 9085 % of our revenues and all our gross profit. In If ~~2009, our extraction business operated at a significant loss. In the event~~ we lose Tangdu Hospital as a customer or the business suffers adverse development, our financial condition will be materially and adversely affected.

Bao Sai’s efforts to develop and commercialize medical products may fail.

Bao Sai is attempting to develop new pharmaceutical and agricultural medium products, and to then market any products that are successfully developed. There can be no assurance that the clinical trials will be successful, that the necessary government approvals will be obtained or that the products, if any, can be successfully marketed or that Bao Sai will have sufficient resources to complete the development and commercialization of any products.

We may be exposed to potential risks relating to our internal controls over financial reporting and our ability to have those controls attested to by our independent auditors.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002 or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal controls over financial reporting in their annual reports, including Form 10-K. We have established disclosure controls and procedures effective for the purposes set forth in the definition thereof in Exchange Act Rule 13a-15(e) as of December 31, ~~2009~~2010. Commencing by the fiscal year ended December 31, 2010, the independent registered public accounting firm auditing a company’s financial statements must also attest to and report on management’s assessment of the effectiveness of the company’s internal controls over financial reporting as well as the operating effectiveness of the company’s internal controls. However, there can be no assurance that we will receive a positive attestation from our independent auditors. In the event we are unable to receive a positive attestation from our independent auditors with respect to our internal controls, investors and others may lose confidence in the reliability of our financial statements which will have a material adverse effect on our business. Also projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

We may be affected by global climate change or by legal, regulatory, or market responses to such change.

The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost of key raw materials that we use to produce our products. Additionally, the sale of our products can be impacted by weather conditions.

Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting greenhouse gas (GHG) emissions. For example, proposals that would impose mandatory requirements on GHG emissions continue to be considered by policy makers in the territories that we operate. Laws enacted that directly or indirectly affect our production, distribution, packaging, cost of raw materials, fuel, ingredients, and water could all impact our business and financial results.

Risks Related to Our Common Stock

Our Common Stock has been relatively thinly traded and we cannot predict the extent to which an active trading market will develop.

Our Common Stock is currently traded on the Over the Counter Bulletin Board. Our Common Stock is thinly traded compared to larger more widely known companies. Thinly traded Common Stock can be more volatile than Common Stock trading in an active public market. We cannot predict the extent to which an active public market for our Common Stock will develop or be sustained.

We may need to raise additional capital which may not be available on acceptable terms or at all.

In the future, we may be required to raise funds. There can be no assurance that financing will be available in amounts or on terms acceptable to us. The inability to obtain capital may reduce our ability to continue to conduct business operations. If we are unable to obtain additional financing, we will likely be required to curtail our development plans. Any equity financing may involve substantial dilution to our then existing stockholders.

We do not intend to pay dividends on any investment in the shares of our stock.

We have never paid any cash dividends in the past five years and currently do not intend to pay any dividends for the foreseeable future. ToWe ~~the~~intend ~~extent~~to ~~that~~maintain wethe ~~require~~normal ~~additional~~operation ~~funding currently~~of ~~not provided for in our financing plan, our funding sources may prohibit~~ the ~~payment of a dividend~~company. ~~Because~~Any ~~we do not intend to declare dividends, any~~ gain on an investment in us will need to come through an increase in the ~~stock’s~~working ~~price.~~capital ~~This~~and ~~may~~expansion ~~never happen~~ and ~~investors~~operation ~~may lose all~~ of ~~their investment~~the company in usfuture.

Because our securities are subject to penny stock rules, you may have difficulty reselling your shares.

Our shares as penny stocks are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell our securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. These rules apply to companies whose shares are not traded on a national stock exchange or on the NASDAQ system, trade at less than $5.00 per share, or who do not meet certain other financial requirements specified by the SEC. These rules require brokers who sell “penny stocks” to persons other than established customers and “accredited investors” to complete certain documentation, make suitability inquiries of investors, and provide investors with certain information concerning the risks of trading in such penny stocks. These rules may discourage or restrict the ability of brokers to sell our shares of Common Stock and may affect the secondary market for our shares of Common Stock. These rules could also hamper our ability to raise funds in the primary market for our shares of Common Stock.

Item 1B. Unresolved Staff Comments

Not Applicable.

Item 2. Properties

Our main office is located at 99 Yan Xiang Road, Biosep Building, Xi An, Shaan Xi Province, P.R. China 710054, which ~~and~~we ~~has~~were aunder ~~total~~land ~~area~~use right for purposes of ~~372~~using ~~square~~the ~~meters~~property as office space. There ~~The Company~~is ~~rents~~no ~~the~~private ~~office~~ownership of land in China. Land use rights are obtained from ~~Bao~~the ~~Sai~~government for aperiods ~~term~~ranging offrom ~~one~~50 ~~year,~~to ~~commencing~~70 ~~January 1~~years, ~~2009~~ and ~~ending~~are ~~December~~typically ~~31,~~renewable. ~~2009~~Land atuse anrights ~~annual~~can ~~rent~~be transferred upon approval by the land administrative authorities of ~~$3,779~~China (State Land Administration Bureau) upon payment of the required transfer fee. No other businesses operate from this office.

We also rent an operating office for New Century at Xi An Shi Gao Xin Qu Keji 2 Lu 68 Hao, Xi An Ruanjian Yuan C Zuo 2401 Shi, at an annual rent of $2,105. These two spaces are adequate for our present and planned future operations.

~~There~~Item ~~is no private ownership of land in China~~3. ~~Land~~Legal use rights are obtained from the government for periods ranging from 50 to 70 years, and are typically renewable. Land use rights can be transferred upon approval by the land administrative authorities of China (State Land Administration Bureau) upon payment of the required transfer fee.Proceedings

We own three different imaging and radiation oncology devices which we provide to Tangdu Hospital for use in their Gamma Knife Center.

Item 3. Legal Proceedings

None

Item 4. Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5. Market for Common Equity and Related and Stockholder

Market for Common Stock

Our Common Stock is quoted on the OTC Electronic Bulletin Board, a service maintained by The NASDAQ Stock Market, Inc., under the symbol “GFRP.OB”. ~~Trading in~~In ~~our~~February ~~Common~~of ~~Stock~~2011, indue ~~the~~to ~~over-~~the~~-counter~~ ~~market~~transformation ~~has been limited and sporadic and the quotations set forth below are not necessarily indicative~~ of ~~actual~~ its market ~~conditions.~~makers ~~Further,~~to ~~these~~use ~~quotations~~the ~~reflect~~platform ~~inter-dealer~~provided ~~prices, without~~by ~~retail~~OTC ~~mark-up,~~Markets ~~markdown,~~Group orto ~~commission,~~get ~~and do not necessarily reflect actual transactions. Set forth below is the range high and low bid information for~~ our ~~Common Stock for each quarter of the years ended December 31, 2009 and 2008~~securities.

	High		Low
2009
Quarter Ended March 31, 2009	$	0.49	$	0.02
Quarter Ended June 30, 2009	$	0.47	$	0.05
Quarter Ended September 30, 2009	$	0.15	$	0.05
Quarter Ended December 31, 2009	$	0.15	$	0.04
2008
Quarter Ended March 31, 2008	$	0.34	$	0.20
Quarter Ended June 30, 2008	$	0.25	$	0.09
Quarter Ended September 30, 2008	$	0.40	$	0.04
Quarter Ended December 31, 2008	$	0.05	$	0.03

The Company intends to closely monitor its status on the bulletin board as it evaluates its alternatives such as determining whether to remain listed for quotation on the OTCQB or explore a listing on a national securities exchange.

OnThe ~~April 14~~following table sets forth, ~~2010~~for the periods indicated, the high and low closing ~~price~~prices of our common stock as reported by OTCQB and OTC Bulletin Board. Trading in our Common Stock ~~was~~in $the over-the-counter market has been limited and sporadic and the quotations set forth below are not necessarily indicative of actual market conditions.0 Further, these quotations reflect inter-dealer prices, without retail mark-up, markdown, or commission, and do not necessarily reflect actual transactions.~~40 per share~~ Set forth below is the range high and low bid information for our Common Stock for each quarter of the years ended December 31, 2010 and 2009.

As of April 14, 2010 there were approximately 3,764 stockholders of record of our Common Stock. Our registrar and transfer agent is Securities Transfer Corporation located at 2591 Dallas Parkway Suite 102, Frisco Texas 75034. Their telephone number is (469) 633-0101.

	High		Low
2010
Quarter Ended March 31, 2010	$	0.30	$	0.05
Quarter Ended June 30, 2010	$	0.50	$	0.23
Quarter Ended September 30, 2010	$	0.51	$	0.25
Quarter Ended December 31, 2010	$	0.70	$	0.47

2009
Quarter Ended March 31, 2009	$	0.49	$	0.02
Quarter Ended June 30, 2009	$	0.47	$	0.05
Quarter Ended September 30, 2009	$	0.15	$	0.05
Quarter Ended December 31, 2009	$	0.15	$	0.04

As of March 29, 2011, the closing price of our Common Stock was $0.98 per share.

As of March 29, 2011 there were 3,740 stockholders of record of our Common Stock. Our registrar and transfer agent is Securities Transfer Corporation located at 2591 Dallas Parkway Suite 102, Frisco Texas 75034. Their telephone number is (469) 633-0101.

Limited Market for Common Stock

There is currently a limited trading market for our shares of Common Stock, and there can be no assurance that a more substantial market will ever develop or be maintained. Any market price for our shares of Common Stock is likely to be very volatile, and numerous factors beyond our control may have a significant adverse effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small capital companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may also adversely affect the market price of our Common Stock. Further, there is no correlation between the present limited market price of our Common Stock and our revenues, book value, assets or other established criteria of value. The present limited quotations of our Common Stock should not be considered indicative of the actual value of our Common Stock.

Dividends

We have not paid any cash dividends to date and does not anticipate or contemplate paying cash dividends in the foreseeable future ~~until earnings would generate funds in excess of those required to provide for our growth needs~~. We currently intend to retain any future earnings to fund the development and growth of its business.

Recent Sales of Unregistered Securities

~~On January 16, 2007, the Company issued 1,000,000 shares of common stock to Greentree Financial Group, Inc~~None. in consideration for business advisory services, pursuant to Section 4(2) of the Securities Act of 1933, as amended. The fair value of this stock issuance was determined using the fair value of the Company’s common stock on the date of issuance, at a price of $0.30 per share.

Securities Authorized for Issuance under Equity Compensation Plans.

The Board of Directors has authorized and GFRP has established the 2002 Incentive and Non-qualified Stock Option Plan (the “Plan”) under which GFRP may grant to employees, officers, directors, attorneys, consultants or other advisers of the Company or affiliated companies up to 10,000,000 shares of GFRP’s common stock with such exercise price and vesting periods as the Board of Directors deems to be in the best interest of the Company. As of December 31, ~~2009~~2010, no options or shares have been granted under the Plan. A copy of the Plan is filed as an exhibit to our Form S-8 filed with the Commission in June 19, 2002.

Item 6. Selected Financial Information

Not Applicable

Item 7. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

~~The following~~This ~~discussion~~Management’s ~~should~~Discussion beand ~~read~~Analysis inof ~~conjunction~~Financial ~~with,~~Condition and isResults ~~qualified~~of Operations (“MD&A”) should be read in ~~its entirety~~conjunction ~~by,~~with ~~the~~our annual consolidated financial statements and ~~related~~ notes thereto ~~and~~which ~~other financial~~appear ~~information~~elsewhere ~~included~~ in this Annual Report on Form 10-K. ~~Certain statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking.~~

~~Results of~~FORWARD ~~Operations~~LOOKING STATEMENTS

WeCertain ~~are~~statements ~~a high-tech~~in ~~company~~this inreport, ~~China~~including ~~chartered~~statements of our expectations, intentions, plans and ~~authorized~~beliefs, including those contained in or implied by "Management's Discussion and Analysis" and the ~~Chinese~~Notes ~~government for~~to ~~involvement~~Consolidated inFinancial ~~researching~~Statements, are "forward-looking statements", within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are subject to certain events, risks and ~~inventing~~uncertainties outside our control. The words “believe”, ~~manufacturing~~“expect”, “anticipate”, “optimistic”, “intend”, “will”, and ~~sales~~similar ~~of biological~~expressions ~~separation~~identify ~~medium~~forward-looking ~~products~~statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which ~~refers~~speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the ~~separation~~availability of funds and ~~purification~~ our ability to meet future capital needs, the realization of ~~biological~~our ~~products~~deferred tax assets, and ~~natural~~the ~~medicines~~assumptions described in this report underlying such forward-looking statements. ~~Such~~Actual ~~technology~~results ~~has been~~and ~~widely~~developments ~~used~~could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the ~~producing~~context of ~~antibiotic~~such ~~products~~forward-looking statements, ~~Genetic~~our ~~Recombinant Medicine~~expansion and acquisition strategy, our ability to achieve operating efficiencies, our dependence on network infrastructure, capacity, telecommunications carriers and other suppliers, industry pricing and technology trends, evolving industry standards, domestic and international regulatory matters, general economic and business conditions, the ~~Gene~~strength ~~Chip~~and financial resources of our competitors, ~~bacteria~~our ~~production~~ability to find and retain skilled personnel, ~~diagnoses~~the ~~reagent~~political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the Securities and Exchange Commission (the "Commission"). Additional factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: 1) our ability to successfully develop and ~~biochemical products~~deliver our services on a timely basis and in the prescribed condition; 2) our ability to compete effectively with other companies in the same industry; 3) our ability to raise sufficient capital in order to effectuate our business plan; and 4) our ability to retain our key executives.

New Century’s strategic purchase of Bao Sai will provides us with key technology in the biotech purification field and an experienced R&D team. We feel that the acquisition will put us in a strong position for increasing our market share and revenue in 2009.Overview

GFR Pharmaceuticals, Inc. was incorporated under the laws of the State of Nevada on December 18, 1996 under the name Laredo Investment Corp. (“Laredo”). Its subsidiary companies currently are involved in bio-extraction, researching and inventing, manufacturing and sales of biological separation medium products, radiology and oncology equipment and cancer treatment equipment. The Company’s principal place of business and all of its assets are located in the People’s Republic of China.

~~The Company~~On ~~believes~~October ~~that~~15, it2006, ~~has~~we ~~strong~~executed ~~prospects~~an ofacquisition ~~increasing~~agreement ~~our~~with ~~market~~Xi'an ~~share~~Hua ~~and revenues~~Long ~~because~~Yu ~~our~~Tian ~~diagnostic~~Ke ~~imaging~~Ji ~~and~~Shi ~~radiation~~Ye ~~oncology treatments and equipment are all covered by the Chinese national medical insurance system~~Co. ~~Additionally~~, ~~the~~Ltd. ~~acquisition of Bao Sai provides us with vital technology~~ and ~~experience~~ inowned ~~the~~100% ~~field~~interest of ~~chromatography.~~Hua ~~We experience little, if any, seasonality in our business~~Long.

~~The Company~~On isDecember ~~focused~~11, on2006, ~~strengthening~~pursuant ~~its~~to ~~market~~the ~~share~~Plan ~~and~~of ~~improving~~Exchange ~~its~~Agreement, ~~business performance.~~New WeCentury ~~have~~became noour ~~plans~~95% toowned ~~purchase~~indirect ~~or sell any plants or equipment~~subsidiary.

~~Year Ended~~On ~~December~~January 311, ~~2009~~2008, ~~Compared~~New toCentury ~~Year~~entered ~~Ended~~into ~~December~~a 31stock purchase agreement of the capital stock of Xi’an Jiaoda Bao Sai Bio-technology Co., ~~2008~~Ltd (“Bao Sai”) to acquire 96.77% of its capital stock.

~~Net revenue~~After ~~increased from$3~~consolidation,~~677,072~~ ~~for~~GFR ~~the year ended December 31~~Pharmaceuticals, ~~2008~~Inc. ~~to $3,884,097~~is ~~for~~a ~~the~~holding ~~year~~company ~~ended December 31, 2009,~~ with, antwo ~~increase~~business ~~of 5~~segments.~~6%.~~ ~~This increase~~The ~~was~~Company ~~principally~~is ~~the~~involved ~~result~~in ~~of decreased rate of profit sharing with Tangdu Center under the co~~bio-~~operation~~extraction, ~~agreement~~researching and ~~increased~~inventing, inmanufacturing ~~product~~and sales~~. There~~ ~~are 3 sets~~ of ~~medical~~biological ~~equipments~~separation ~~which~~medium ~~are~~products operated by ~~Tangdu~~Xi’an ~~Centre~~Jiaoda ~~but owned~~Bao bySai ~~New~~Bio-technology ~~Century~~Co. ~~Besides~~, ~~the~~Ltd ~~operations of~~ (“Bao Sai,”). ~~the~~The ~~newly~~Company ~~acquired business,~~also ~~are~~operates ~~still~~a inCancer ~~the~~Diagnosis ~~development~~and ~~stage~~Treatment ofCenter ~~development~~with professional team of ~~new pharmaceutical~~doctors ~~products.~~operated Weby ~~expect~~Shaan ~~that~~Xi asNew ~~soon~~Century asScientific weInvestment ~~complete~~Development ~~the~~Ltd. ~~government approval~~(“New ~~process~~Century”) ~~for~~in the ~~new products, we will be able to find another means to increase our revenues~~PRC.

~~Our operating~~New expenses incurred a substantial decrease from $5,795,407 in 2008 to $1,081,383 in 2009. The decrease is mainly attributable to the significant allowance for doubtful accounts made in 2008 from $3,826,074 to a recovery of doubtful accounts of $93,986 in 2009. General and administrative expenses decreased from $1,969,333 in 2008 to $1,175,369 in 2009. Such decrease was mainly attributable to reduction in R&D expenses of $690,991 from 2008 to $50,400 in 2009.century

~~Net income~~New ~~attributable~~Century tois ~~GFR~~a ~~Pharmaceuticals,~~medical ~~Inc.~~equipment ~~was~~investment ~~increased~~management ~~from~~company, ~~net~~which ~~loss~~mainly ~~of $3,041,287~~engages ~~for~~in ~~the~~investment ~~year~~and ~~ended~~management ~~December~~of ~~31,~~cancer ~~2008~~treatment toequipment ~~net~~and ~~income~~provides ofcomprehensive ~~$1,096,632~~services for ~~the~~ ~~year~~customers ~~ended~~with ~~December~~advanced ~~31,~~radiology ~~2009~~and oncology equipment..

New Century currently owns three different devices used for radiological imaging for the brain and body and cancer treatment. The Company’s medical equipment is used in Tangdu Hospital’s Gamma Knife Therapeutic Center (the “Center”).

From January 2002 through December 2003, 90% to Masep;

From January 2004 through December 2008, 80% to Masep (or to New Century, giving effect to the assignment as of February 2006);

From January 2009 through December 2011, 70% to New Century;

From January 2012 through December 2014, 60% to New Century;

From January 2015 through December 2017, 50% to New Century.

Pursuant to the Tangdu Agreement, New Century has the power to appoint the Director of the Center. Upon the termination of the Tangdu Agreement, the Tangdu Hospital has an option to purchase the equipment for fifty percent of its residual value.

With its advanced, professional and scientific management, New Century has established an outstanding marketing team and a well known cancer treatment center with a team of experts since it took over Gamma Knife Center on February 2, 2002. New Century has also successfully established a large integrated medical professional website - Medical Sina (www.120md.com), which provides extensive publicity and online integrated counseling services for patients. We extended our business to neighboring provinces of Shanxi Province and other provinces of the country. The Center is a well known cancer treatment center in the five northwestern provinces of China and even all over the country. The company’s operating revenue and profit have been increasing steadily.

The cases processed in the Center averaged 292 cases per month in 2010, 254 cases per month in 2009. For the year ended December 31, 2010, the Center accounted for $3,732,781, or 86%, of the Company’s revenues.

The Center currently runs at full capacity of business and shows an increasing latent capacity so that the existing equipment capacity cannot meet the requirements of patients. The Company intends to invest in the construction and management of cancer treatment equipment in the next few years. With its resources, technologies and services, the Company believes it will seize market opportunities, gradually expand the treatment capacity and improve profitability by the addition of cancer treatment centers or hospitals to build a leading integrated service center with prevention, screening, treatment and rehabilitation capabilities in the Northwest of China and even across the country.

The Company needs additional capital to finance its expansion plans. The Company presently does not have a commitment for such additional capital and there is no assurance such capital can be obtained on terms acceptable to the Company.

Bao Sai

Bao Sai is a high-tech company in China chartered and authorized by the Chinese government for involvement in researching and inventing, manufacturing and sales of biological separation medium products. It has the technology and facilities for the separation and purification of biological products and natural medicines and manufactures the agarose products of separation media.

Biological separation medium refers to the separation and purification of biological products and natural medicines, which is the core technology of biotechnology Industry. Such technology has been widely used in the producing of antibiotic products, Genetic Recombinant Medicine, the Gene Chip, bacteria production, diagnoses reagent and biochemical products. In addition to the biotechnology industry, the technology also has the wide applications and can be used for environmental protection industry, chemical and pharmaceutical industry and modernization of Chinese medicine.

The operations of Bao Sai are in the development stage and most of its efforts are focused on the research and development of new pharmaceutical and agricultural medium products, and the networking and advertisement to market these products in the future. In 2010, Bao Sai spent approximately $25,225 in research and development of new biological separation medium products and new medicine. Most of the money was used to fund local medical institutions in the development of new products.

Pursuant to this effort, Bao Sai entered into a Research and Development Cooperation Contract with XiAn Jiao Tong University R&D Center for Natural Chinese Medicine and Engineering (“the University”) in 2005. According to the Cooperation Contract, Bao Sai provides funds in the research on the use of biological separation technology in the development of Xin Kang Ping medicine to treat heart diseases. The University performs all the laboratory work related to the general research project and toxic tests as the prerequisites of the clinical trial process for the application of a new medicine. The University presents the research result to Bao Sai, and Bao Sai has all the right to the project report and possible patent right as a result of the project. This contract expired on August 25, 2008 and was not renewed. However, we have been able to continue the pharmacodynamics test and toxicology test as the prerequisite to the commencement of clinical trials for the development of Xin Kang Ping medicine. At present, these two tests are close to successful completion. As the rules of State Food and Drug Administration of China (“SFDA”), now, Xin Kang Ping was changed its name to Fu Fang Dan Chuan Jiao Nang and we are in the process of applying for the clinical trial process with the State Food and Drug Administration of China ( “SFDA”). Upon the approval by SFDA, we will start clinical trials for Fu Fang Dan Chuan Jiao Nang . Less time is generally required in China than in the United States to complete the clinical trials for a new medicine, and the cost of clinical trials in China is also generally lower than those held in the US. We therefore expect that we can complete the clinical trials sooner than would be the case in the United States and at lower cost. Should the tests be successful and we obtain the approval of SFDA for the new medicine, we expect this new pharmaceutical product will be marketed in the PRC.

Until 2009, Bao Sai’s operations had consisted of bio-extraction, biological separation medium production and development of new products.

In 2010, based on the separation media, our new products expanded from traditional biochemical products to media derivatives—civil products. With the adsorption media, civil products will be removed including the harmful substances such as bacteria, viruses, organic pesticides and tobacco tar. We have made research in project of anti-virus mask and submitted the required information to Chinese government. We are in the process of applying for the patent of anti-virus mask. Should we obtain the approval at an early date, we expect this new product will be marketed in the PRC. We also expect that our other researching project can make more progress and our civil products will open up the market and create more revenues and profits for the Company.

Results of Operations

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

Net revenue increased from $3,884,097 for the year ended December 31, 2009 to $4,361,556 for the year ended December 31, 2010, with an increase of 12.29%. This increase was principally the result of an increase of treatment cases sharing with Tangdu Center under the co-operation agreement and increased product sales. There are 3 sets of medical equipments which are operated by Tangdu Centre but owned by New Century. As well, the operations of Bao Sai increased about $590,000 from the provision of an extraction technology service. Our new pharmaceutical products are still in the development stage. We expect that as soon as we complete the government approval process for the new products, we have to be able to increase our revenues.

Our operating expenses incurred a substantial decrease from $1,081,383 in 2009 to $720,556 in 2010. The decrease is mainly attributable to a recovery of uncollectible accounts of $301,414 in 2010. As well, general and administrative expenses also decreased from $1,006,896 in 2009 to $801,819 in 2010.

Net income attributable to the Company increased from net income of $1,096,632 for the year ended December 31, 2009 to net income of $2,445,710 for the year ended December 31, 2010.

Our business operates entirely in Chinese Renminbi, but we report our results in our SEC filings in U.S. Dollars. The conversion of our accounts from RMB to Dollars results in translation adjustments. While our net income is added to the retained earnings on our balance sheet; the translation adjustments are added to a line item on our balance sheet labeled “other comprehensive income,” since it is more reflective of changes in the relative values of U.S. and Chinese currencies than of the success of our business.

Liquidity and Capital Resources

Stockholder’s equity ~~decreased~~increased from $34,~~145~~322,~~525~~122 as of December 31, ~~2008~~2009 to $46,~~322~~961,~~122~~268 as of December 31, ~~2009~~2010. In ~~connection~~addition, ~~with~~ our ~~acquisition~~principal ~~of Bao Sai on January 1~~shareholder, ~~2008,~~ we ~~incurred~~made a ~~payment obligation in the amount of~~ $41,~~500~~521,~~211~~607 ~~payable~~repayment to ~~the~~ ~~former owners~~Mr. As ofLian ~~December 31~~Guo, ~~2009, we had a note payable in the amount of $2,493,318 which was due on December 31, 2009 and was fully paid during 2009 fiscal year. In addition,~~ our principal ~~shareholder, Mr~~stockholder. ~~Lian Guo made a loan to fund our operations.~~ As of December 31, ~~2009~~2010, the balance of the loan was $1439,~~960,874~~267 which was unsecured, interest-free and repayable on demand. Also included in the current liability as of December 31, 2008 is a note payable to Shanxi Ze Hua Nuan Tong Zhileng Gongcheng Co., Ltd, secured by our building with the value of $ 1,753,706. Interest on this note accrued 10.46% per annum, payable monthly, with the total amount due on December 20, 2008. This note was re-paid in full in February 2009, and the property was released accordingly.

We also had a loan payable to Xi’an Bao Sai Medicine Co., Ltd (“Medicine”) in the principal amount of $980,575 as of December 31, 2009 which was unsecured and interest-free. The loan is repayable in four installments with the total amount due no later than 2012. We have a 75% equity interest in Medicine but Medicine is no longer consolidated and we recovered $255,947 from this unconsolidated affiliate.

1113

We have two business segments – the Cancer Diagnosis and Treatment Center at Tangdu Hospital and the biological extraction business that extracts raw materials to medicine ingredients and distributes the extracted ingredients for medicine manufacturing uses. We are dependent on the continued success of the operations at the cancer diagnostic and treatment business to continue our operations. In ~~2009~~2010, the cancer treatment business accounted for $3,~~336~~732,~~858~~ 781 (86%) of our revenue and generated $12,~~767~~017,~~050~~534 of net income. The extraction business generated $~~547~~628,~~258~~775 of revenue in ~~2009~~2010 as compared to $~~223~~547,~~063~~258 in ~~2008~~2009.

In addition, as of December 31, ~~2009~~2010 and ~~2008~~2009, allowance for doubtful accounts receivable was $~~552~~537,~~118~~812 and $~~515~~708,~~026~~741, respectively . The inability to collect more outstanding receivables can aversely affect our operations. Tangdu Hospital accounted for all of the revenues from the cancer diagnosis and treatment center and $~~502~~1,~~907~~169,993 of accounts receivable as of December 31, ~~2009~~2010.

Based on the financial resources available, management believes the Company’s ability to continue as a going concern depends upon its ability to maintain profitable operations in its medical business and to obtain additional financing or refinancing as may be required. The Company has generated positive cash inflows from operating activities during the years of 2008 and 2009. The Company will devote more resources on marketing in order to increase the market share and improve the operating performance. Management believes the Company will generate sufficient cash flow and either obtain additional financing or refinancing to meet its obligations on a timely basis for the foreseeable future.

Liquidity Analysis

	December 31, 2009			December 31, 2008
	December 31, 2010			December 31, 2009
Working Capital	$	(1674,~~760,129~~622	)	$	(31,~~672~~760,~~650~~129	)
Stockholders’ Equity	$	46,~~322~~961,~~122~~268		$	34,~~145~~322,~~525~~122
Total Liabilities	$	31,~~436~~861,~~619~~052		$	63,~~202~~436,~~281~~619

Critical Accounting Policies and Estimates

In preparing our financial statements we are required to formulate working policies regarding valuation of our assets and liabilities and to develop estimates of those values. In our preparation of the financial statements for ~~2009~~ 2010, there were no estimates made which were (a) subject to a high degree of uncertainty and (b) material to our results.

We made no material changes to our critical accounting policies in connection with the preparation of financial statements for ~~2009~~2010.

Impact of Accounting Pronouncements

~~There were~~The noCompany ~~recent~~has reviewed all recently issued, but not yet effective, accounting pronouncements ~~that~~and ~~have~~does ~~had~~not believe the future adoption of any such pronouncements may be expected to cause a material ~~effect~~impact on ~~the Company’s~~its financial ~~position~~condition or the results of its operations.

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-14 to amend ASC 605 “Revenue Recognition.” The amendments in this update change the accounting model for revenue arrangements that include both tangible products and software elements. The amendments in ASU 2009-14 will be effective for the fiscal years beginning January 1, 2011. The Company believes that ASU 2009-13 will not have a material impact on its consolidated financial statements.

In October 2009, the FASB issued ASU 2009-13 amending ASC 605 related to revenue arrangements with multiple deliverables. Among other things, ASU 2009-13 provides guidance for entities in determining the accounting for multiple deliverable arrangements and establishes a hierarchy for determining the amount of revenue to allocate to the various deliverables. The amendments in ASU 2009-13 will be effective for the fiscal years beginning January 1, 2011. The Company believes that ASU 2009-13 will not have a material impact on its consolidated financial statements

In January 2010, the FASB issued further guidance under ASC No. 820, “Fair Value Measurements and Disclosures” ("ASC 820"). ASC 820 requires disclosures about the transfers of investments between levels in the fair value hierarchy and disclosures relating to the reconciliation of fair value measurements using significant unobservable inputs (level 3 investments). ASC 820 is effective for the fiscal years and interim periods beginning after December 15, 2010. The Company will adopt the update on January 1, 2011 and expects that ASC 820 will not have a material impact on its consolidated financial statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

~~Not Applicable.~~Foreign Exchange Risk

12While our reporting currency is the US dollar, almost all of our consolidated revenues and consolidated costs and expenses are denominated in RMB. All of our assets are denominated in RMB except for some cash and cash equivalents and accounts receivables. As a result, we are exposed to foreign exchange risk as our revenues and results of operations may be affected by fluctuations in the exchange rate between US dollar and RMB. If the RMB depreciates against the US dollar, the value of our RMB revenues, earnings and assets as expressed in our US dollar financial statements will decline. We have not entered into any hedging transactions in an effort to reduce our exposure to foreign exchange risk.

Inflation

Inflationary factors such as increases in the costs of our products and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain current levels of gross margin and selling and distribution, general and administrative expenses as a percentage of net revenues if the selling prices of our products do not increase to cope with these increased costs.

Item 8. Financial Statements

GFR PHARMACEUTICALS, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm, ZYCPA Company Limited		F-2
Report of Independent Registered Public Accounting Firm		F-2
Report of Independent Registered Public Accounting Firm, AGCA, Inc. Certified Public Accountants		F-3
Consolidated Balance Sheets		F-3
Consolidated Balance Sheets		F-4
Consolidated Statements of Operations And Comprehensive Income		F-4
Consolidated Statements of Operations And Comprehensive Income (Loss)		F-5
Consolidated Statements of Cash Flows		F-5
Consolidated Statements of Cash Flows		F-6
Consolidated Statements of Stockholders’ Equity		F-6
Consolidated Statements of Stockholders’ Equity		F-7
Notes to Consolidated Financial Statements		F-7 to F-20
Notes to Consolidated Financial Statements		F-8 to F-26

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

GFR Pharmaceuticals, Inc.

We have audited the accompanying consolidated balance sheet of GFR Pharmaceuticals, Inc. and its subsidiaries (“the Company”) as of December 31, 2010 and 2009 and the related consolidated statements of operations and comprehensive income, cash flows and ~~stockholders’~~ changes in equity for the ~~year~~years ended December 31, 2010 and 2009. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our ~~audit~~audits.

We conducted our ~~audit~~audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the ~~audit~~audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our ~~audit~~audits ~~includes~~included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our ~~audit~~audits ~~provides~~provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and 2009, and the results of its operations and its cash flows for the ~~year~~years ended December 31, 2010 and 2009, in conformity with accounting principles generally accepted in the United States of America.

/s/ HKCMCPA Company Limited HKCMCPA Company Limited (Formerly ZYCPA Company Limited) Certified Public Accountants Hong Kong, China March 30, 2011

ZYCPA Company Limited

Certified Public Accountants

Hong Kong, China

April 14, 2010

F-2

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

GFR Pharmaceuticals, Inc.

Xi’an

China

We have audited the accompanying consolidated balance sheet of GFR Pharmaceuticals, Inc. and subsidiaries as of December 31, 2008 and the related consolidated statements of operations and comprehensive income, stockholders’ equity, and cash flows for the year then ended. GFR Pharmaceuticals, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits. The Consolidated financial statements of GFR Pharmaceuticals, Inc. and subsidiaries for the year ended December 31, 2007 were audited by other auditors whose report dated April 7, 2008 expressed an unqualified opinion on those statements.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of GFR Pharmaceuticals ,Inc. and subsidiaries as of December 31, 2008 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, as discussed in Note 2 to the consolidated financial statements. Management’s plans regarding those matters are also described in the said note. The consolidated financial statements do not include any adjustment that might result from the outcome of this uncertainty.

As disclosed in note 4, the Company acquired 96.77% of Xi’an Jiaoda Bao Sai Bio-Technology Co., Ltd. for $4,500,211 from mostly related parties. $3,884,029 of the consideration was paid or payable to the related parties.

/s/ AGCA, Inc.

Arcadia, California

April 3, 2009

Member: Registered: American Institute of Certified Public Accountants Public Company Accounting Oversight Board California Society of Certified Public Accountants

F-3

GFR PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	As of December 31,
	2009			2008
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	55300,~~486~~716		$	~~552~~55,~~398~~486
Trade accounts receivable, net		541,206			659,329
Accounts receivable, net		1,245,616			541,206
Inventories, net		1035,~~289~~062			~~282~~10,~~307~~289
Note receivable, net		-			-
Prepayments and other current assets		135,226			277,455
Other receivable, net		-			-
Operating lease prepaid, current portion		7,499			7,252
Amount due from unconsolidated affiliate, net		-			-
Total current assets		1,724,119			891,688
Prepayments and other current assets		277,455			243,242
Property, plant and equipment, net		6,957,273			6,723,519
Operating lease prepaid, current portion		7,252			7,255
Operating lease prepaid, non-current portion		140,928			143,534
Total current assets		891,688			1,744,531
TOTAL ASSETS	$	8,822,320		$	7,758,741
Property, plant and equipment, net		6,723,519			6,862,609
Intangible asset, net		-			-
Operating lease prepaid, non-current portion		143,534			150,844
Long term prepayment		-			589,822
TOTAL ASSETS	$	7,758,741		$	9,347,806
LIABILITIES AND EQUITY
Current liabilities:
Trade accounts payable	$	90,682		$	124,700
Accounts payable	$	27,903		$	90,682
Amount due to a related party		1439,~~960,874~~267			1,~~951~~960,~~203~~874
Note payable		-			219,472
Income tax payable		188,016			171,708
Note payable, related parties		-			2,493,318
Other payables and accrued liabilities		394,311			428,553
Income tax payable		171,708			171,847
Total current liabilities		1,049,497			2,651,817
Other payables and accrued liabilities		428,553			456,641
Total current liabilities		2,651,817			5,417,181
Long-term liabilities:
Loss in excess of investment in unconsolidated affiliate		784,802			785,100
Loss in excess of investment in an unconsolidated affiliate		811,555			784,802
TOTAL LIABILITIES		31,~~436~~861,~~619~~052			63,~~202~~436,~~281~~619
Commitments and contingencies
Equity:
GFR Pharmaceutical, Inc. stockholders’ equity:
GFR Pharmaceuticals, Inc. stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized; 42,079,940 and 42,079,940 shares issued and outstanding as of December 31, 2009 and 2008		42,080			42,080
Common stock, $0.001 par value; 100,000,000 shares authorized; 42,079,940 shares issued and outstanding, respectively		42,080			42,080
Additional paid-in capital		3,712,120			3,712,120
Accumulated other comprehensive income		~~210~~313,~~882~~694			210,~~695~~882
Statutory reserve		~~595~~800,~~253~~309			~~423~~595,~~760~~253
Accumulated deficits		(750,589	)		(1,675,728	)
Retained earnings (accumulated deficits)		1,490,065			(750,589	)
Total GFR Pharmaceutical, Inc. stockholders’ equity		3,809,746			2,712,927
Total GFR Pharmaceuticals, Inc. stockholders’ equity		6,358,268			3,809,746
Non-controlling interest		~~512~~603,~~376~~000			~~432~~512,~~598~~376
Total equity		46,~~322~~961,~~122~~268			34,~~145~~322,~~525~~122
TOTAL LIABILITIES AND EQUITY	$	78,~~758~~822,~~741~~320		$	97,~~347~~758,~~806~~741

See accompanying notes to consolidated financial statements.

F-43

GFR PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

~~AND COMPREHENSIVE~~FOR ~~INCOME~~THE ~~(LOSS)~~YEARS ENDED DECEMBER 31, 2010 AND 2009

~~FOR THE~~(Currency ~~YEARS~~expressed ~~ENDED~~in ~~DECEMBER~~United ~~31,~~States ~~2009~~Dollars ~~AND 2008~~(“US$”))

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Years ended December 31,
	2010			2009
Revenues, net:
Service revenue	$	4,290,407		$	3,336,839
Product sales		71,149			547,258
Total revenues, net		4,361,556			3,884,097

Cost of revenue (inclusive of depreciation):
Cost of service		639,473			596,988
Cost of products		34,709			474,724
Total cost of revenue		674,182			1,071,712

Gross profit		3,687,374			2,812,385

Operating expenses:
Depreciation and amortization		220,151			168,473
Recovery from uncollectible accounts		(301,414	)		(93,986	)
General and administrative		801,819			1,006,896
Total operating expenses		720,556			1,081,383

Income from operations		2,966,818			1,731,002

Other income:
Interest income		1,614			17,051
Recovery from an unconsolidated affiliate		255,947			-
Total other income		257,561			17,051

Income before income taxes		3,224,379			1,748,053

Income tax expense		(688,045	)		(571,643	)

NET INCOME		2,536,334			1,176,410

Less: net income attributable to non-controlling interest		(90,624	)		(79,778	)

Net income attributable to GFR Pharmaceuticals, Inc.	$	2,445,710		$	1,096,632

Net income per share – Basic and diluted	$	0.06		$	0.03
Net income per share attributable to GFRP Pharmaceuticals, Inc.	$	0.06		$	0.03

Weighted average common shares outstanding – Basic and diluted		42,079,940			42,079,940

	Years ended December 31,
	2009			2008
Revenue, net:
Service revenue	$	3,336,839		$	3,454,009
Product sales		547,258			223,063
Total revenues, net		3,884,097			3,677,072
Cost of revenue:
Depreciation		596,988			579,592
Cost of products		474,724			268,278
Total cost of revenue		1,071,712			847,870
GROSS PROFIT		2,812,385			2,829,202
Operating expenses:
(Recovery from) allowance for doubtful accounts		(93,986	)		3,826,074
General and administrative		1,175,369			1,969,333
Total operating expenses		1,081,383			5,795,407
Income (loss) from operations		1,731,002			(2,966,205	)
Other income (expense):
Rental income		-			556,098
Interest income		17,051			47,263
Interest expense		-			(121,433	)
Other expense		-			(212	)
Total other income		17,051			481,716
Income (loss) before income taxes		1,748,053			(2,484,489	)
Income tax expense		(571,643	)		(628,747	)
NET INCOME (LOSS)		1,176,410			(3,113,236	)
Net (income) loss attributable to non-controlling interest		(79,778	)		71,949
Net income attributable to GFR Pharmaceuticals, Inc.	$	1,096,632		$	(3,041,287	)
Net income (loss) per share – Basic and diluted
Net income (loss) attributable to GFR Pharmaceuticals, Inc	$	0.03		$	(0.07	)
Weighted average shares outstanding during the year – Basic and diluted		42,079,940			42,079,940

See accompanying notes to consolidated financial statements.

F-54

GFR PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”))

	Years ended December 31,
	2009			2008
	2010			2009
Cash flows from operating activities:
Net income (loss)	$	1,176,410		$	(3,113,236	)
Net income attributable to GFR Pharmaceuticals, Inc.	$	2,445,710		$	1,096,632
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Net income attributable to non-controlling interest		90,624			79,778
Depreciation and amortization		734,972			660,743
Consolidated net income		2,536,334			1,176,410
(Recovery from) allowance for doubtful accounts		(93,492	)		3,826,074
Adjustments to reconcile net income to net cash provided by operating activities
Inventory allowance		322,122			-
Depreciation and amortization		773,398			734,972
Recovery of allowance for doubtful accounts		(170,929	)		(93,492	)
(Recovery of) inventory allowance		(47,282	)		322,122
Change in operating assets and liabilities:
Trade accounts receivable		80,542			(248,866	)
Accounts receivable		(498,137	)		80,542
Inventories		~~(50~~23,~~359~~461	)		(550,~~628~~359	)
Other receivable		-			175,958
Prepayments and other current assets		(110,801	)		(30,968	)
Prepayments and other current assets		(30,968	)		173,997
Accounts payable		(64,248	)		(33,953	)
Operating lease prepaid		-			7,017
Income tax payable		13,003			(2,856	)
Trade accounts payable		(33,953	)		(795,258	)
Other payables and accrued liabilities		(12,257	)		(28,430	)
Income tax payable		(2,856	)		(34,459	)
Net cash provided by operating activities		2,442,542			2,073,988
Other payables and accrued liabilities		(28,430	)		(92,355	)
Net cash provided by operating activities		2,073,988			553,987
Cash flows from investing activities:
Acquisition of a subsidiary, net of cash acquired		-			(1,687,382	)
Repayment from an unconsolidated affiliate		255,947			130,759
Repayment from an unconsolidated affiliate		130,759			188,507
Purchase of property, plant and equipment		(770,519	)		(2,039	)
Proceeds from disposal of plant and equipment		-			1,400,857
Net cash (used in) provided by investing activities		(514,572	)		128,720
Purchase of property, plant and equipment		(2,039	)		(39,829	)
Net cash provided by (used in) investing activities		128,720			(137,847	)
Cash flows from financing activities:
Advances to related companies		-			(304,983	)
Repayment of notes payable		-			(219,269	)
Repayment of notes payable		(219,269	)		(212,251	)
Repayment of notes payable to related parties		-			(2,490,997	)
Repayment of notes payable to related parties		(2,490,997	)		-
(Repayment to) advances from a related party		(1,690,426	)		11,622
Advances from a stockholder		11,622			686,901
Net cash used in financing activities		(1,690,426	)		(2,698,644	)
Repayment to stockholders		-			(63,283	)
Effect on exchange rate change on cash and cash equivalents		7,686			(976	)
Net cash (used in) provided by financing activities		(2,698,644	)		106,384
NET CHANGE IN CASH AND CASH EQUIVALENTS		245,230			(496,912	)
Effect on exchange rate change on cash and cash equivalents		(976	)		19,923
CASH AND CASH EQUIVALENT, BEGINNING OF YEAR		55,486			552,398
NET CHANGE IN CASH AND CASH EQUIVALENTS		(496,912	)		542,447
CASH AND CASH EQUIVALENT, END OF YEAR	$	300,716		$	55,486
CASH AND CASH EQUIVALENT, BEGINNING OF YEAR		552,398			9,951
CASH AND CASH EQUIVALENT, END OF YEAR	$	55,486		$	552,398
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for income taxes	$	~~574~~675,~~499~~041		$	~~681~~574,~~927~~499
Cash paid for interest	$	-		$	~~44,538~~-

See accompanying notes to consolidated financial statements.

F-65

GFR PHARMACEUTICALS, INC.

CONSOLIDATED ~~STATEMENT~~ STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	GFR Pharmaceuticals, Inc. stockholders’ equity
	GFR Pharmaceuticals, Inc.
	Common stock				Additional paid-in capital		Accumulated other comprehensive income		Statutory reserve		Retained earnings (accumulated deficit)			Non-controlling interest		Total equity
	No. of shares		Amount		~~paid-in capital~~		~~income~~		~~reserve~~		~~deficit)~~			~~interest~~		~~equity~~
Balance as of January 1, 2008		42,079,940	$	42,080	$	3,712,120	$	134,797	$	236,818	$	1,552,501		$	328,605	$	6,006,921
Balance as of January 1, 2009		42,079,940	$	42,080	$	3,712,120	$	210,695	$	423,760	$	(1,675,728	)	$	432,598	$	3,145,525
Foreign currency translation adjustment		-		-		-		75,898		-		-			-		75,898
Net loss for the year		-		-		-		-		-		(3,041,287	)		-		(3,041,287	)
Appropriation to statutory reserve		-		-		-		-		186,942		(186,942	)		-		-
Non-controlling interest		-		-		-		-		-		-			103,993		103,993
Balance as of December 31, 2008		42,079,940		42,080		3,712,120		210,695		423,760		(1,675,728	)		432,598		3,145,525
Foreign currency translation adjustment		-		-		-		187		-		-			-		187
Net income for the year		-		-		-		-		-		1,096,632			79,778		1,176,410
Appropriation to statutory reserve		-		-		-		-		171,493		(171,493	)		-		-
Balance as of December 31, 2009		42,079,940	$	42,080	$	3,712,120	$	210,882	$	595,253	$	(750,589	)	$	512,376	$	4,322,122
Foreign currency translation adjustment		-		-		-		102,812		-		-			-		102,812
Net income for the year		-		-		-		-		-		2,445,710			90,624		2,536,334
Appropriation to statutory reserve		-		-		-		-		205,056		(205,056	)		-		-
Balance as of December 31, 2010		42,079,940	$	42,080	$	3,712,120	$	313,694	$	800,309	$	1,490,065		$	603,000	$	6,961,268

See accompanying notes to consolidated financial statements.

F-76

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

1.	ORGANIZATION AND BUSINESS BACKGROUND

GFR Pharmaceuticals, Inc. (the “Company” or “GFRP”) was incorporated in the State of Nevada on December 18, 1996 as Laredo Investment Corp. On August 9, 2004, Laredo Investment Corp. changed its name to GFR Pharmaceuticals, Inc.

The Company, through its subsidiaries, mainly engages in a joint operation of a Positive Emission Tomography (“PET”) Scanner and Rotary Gamma Ray Stereotactic Neurosurgery System imaging center, also the research and development of extraction process and trading of pharmaceutical products in Xian City, ~~Shaanxi~~Shanxi Province, in the People’s Republic of China (the “PRC”).

Xi'an Hua Long Yu Tian Scientific and Technological Industry Co., Ltd. (“Hua Long”) is a wholly-owned subsidiary of the Company, which was incorporated as a limited liability company in the PRC on December 23, 1999. Its principal activity is an investment holding of 95% equity interest in New Century Scientific Investment Ltd. (“New Century”).

New Century was incorporated as a limited liability company in the PRC on November 23, 2001 with a registered capital of RMB30, 000,000 (equivalent to $3,636,000). It jointly operates a PET scanner and Rotary Gamma Ray Stereotactic Neurosurgery System imaging center with Tang Du Hospital ("the Hospital") in Xian City, Shaanxi Province, the PRC. The duration of the operation was 11 years and it will expire in 2017.

On May 14, 2008, the Company completed the acquisition of Xi’an Jiaoda Bao Sai Bio-Technology Co., Ltd ("Bao Sai") pursuant to the terms of a Stock Purchase Agreement (“the Agreement”) dated January 1, 2008, between GFRP and Bao Sai for a consideration of $4,500,211 (approximately RMB33,000,000) for 96.77% of its equity interest in Bao Sai, based on the aggregate net book value of total assets and liabilities of Bao Sai as of December 31, 2007. The closing date was January 1, 2008. Upon the completion of the transaction, Bao Sai became a subsidiary of the Company.

Description of subsidiaries

Name

Place of incorporation and kind of legal entity

Principal activities and place of operation

Particulars of registered share capital

~~Effective interest held~~

Effective interest held

Xi'an Hua Long Yu Tian Scientific and Technological Industry Co., Ltd. (“Hua Long”)

The PRC, a limited liability company

~~Investing~~Investment holding

~~RMB1,500,000~~RMB

1,500,000

~~100%~~

100

New Century Scientific Investment Ltd. (“New Century”)

The PRC, a limited liability company

Operator of medical clinic in the PRC

~~RMB30,000,000~~RMB

30,000,000

~~95%~~

Xi’an Jiaoda Bao Sai Bio-Technology Co., Ltd (“Bao Sai”)

The PRC, a limited liability company

Research and development of extraction process and trading of pharmaceutical ~~materials~~products in the PRC

~~RMB60,000,000~~RMB

60,000,000

~~96.77%~~

96.77

GFRP, ~~Hua Long, New Century~~ and ~~Bao~~its ~~Sai~~subsidiaries are hereinafter referred to as (the “Company”).

F-8

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

·	Basis of presentation

These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”).

·	Use of estimates

In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance ~~sheet~~sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.

·	Basis of consolidation

The consolidated financial statements include the ~~financial~~accounts ~~statements~~ of GFRP and its subsidiaries~~, Hua Long, New Century and Bao Sai~~. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.

·	Equity method of accounting

Under Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 810, “Consolidation” (“ASC 810”), consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owner. From May 1, 2007, GFRP’s subsidiary Medicine ceased business and leased out its business license. Accordingly, GFRP deconsolidated Medicine and accounted Medicine for under the equity method of accounting.

~~Generally accepted accounting principles require that the investment in the investee be reported using the equity method under the provision of ASC Topic 323 “Investments~~ F- Equity Method and Joint Ventures” (“ASC 323”) when an investor corporation can exercise significant influence over the operations and financial policies of an investee corporation. When the equity method of accounting is used, the investor initially records the investment in the stock of an investee at cost. The investment account is then adjusted to recognize the investor’s share of the income or losses of the investee when it is earned by the investee. Such amounts are included when determining the net income of the investor in the period they are reported by the investee.7

As a result of deconsolidation under ASC 810 and the application of the equity method under ASC 323, GFRP had a negative basis in its investment in Medicine, the Equity Investee, because the subsidiary generated significant losses and intercompany liabilities in excess of its asset balances. This negative investment, “Loss in excess of investment in Equity Investee,” is reflected as a single amount on the Company’s consolidated balance sheet as approximately $784,802 and $785,100 liability as of December 31, 2009 and 2008.

Since Medicine’s results are no longer consolidated and GFRP believes that it is not obligated to fund future operating losses at Medicine, any adjustments reflected in Medicine’s financial statements subsequent to May 1, 2007 are not expected to affect the results of operations of GFRP.

· Cash and cash equivalents

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

F-9

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Generally accepted accounting principles require that the investment in the investee be reported using the equity method under the provision of ASC Topic 323, “Investments - Equity Method and Joint Ventures” (“ASC 323”) when an investor corporation can exercise significant influence over the operations and financial policies of an investee corporation. When the equity method of accounting is used, the investor initially records the investment in the stock of an investee at cost. The investment account is then adjusted to recognize the investor’s share of the income or losses of the investee when it is earned by the investee. Such amounts are included when determining the net income of the investor in the period they are reported by the investee.

As a result of deconsolidation under ASC 810 and the application of the equity method under ASC 323, GFRP had a negative basis in its investment in Medicine, the Equity Investee, because the subsidiary generated significant losses and inter-company liabilities in excess of its asset balances. This negative investment, “Loss in excess of investment in an unconsolidated affiliate” is reflected as a single amount on the Company’s consolidated balance sheet as approximately $811,555 and $784,802 as of December 31, 2010 and 2009, respectively.

·	Cash and cash equivalents

·	Accounts receivable and allowance for doubtful accounts

Accounts receivable are recorded at the invoiced amount and do not bear interest. Management reviews the adequacy of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of December 31, ~~2009~~2010 and ~~2008~~2009, the allowance for doubtful accounts was $~~552~~557,~~118~~657 and $~~515~~552,~~026~~118, respectively.

·	Inventories

Inventories are stated at the lower of cost or market value (net realizable value), cost being determined on a weighted average method. Costs include material, labor and manufacturing overhead costs. The Company quarterly reviews historical sales activity to determine excess, slow moving items and potentially obsolete items and also evaluates the impact of any anticipated changes in future demand. The Company provides inventory allowances based on excess and obsolete inventories determined principally by customer demand. As of December 31, ~~2009~~2010 and ~~2008~~2009, the inventory allowance was $~~688~~663,~~153~~136 and $~~367~~688,~~390~~153, respectively.

·	Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values:

	Depreciable life	Residual value
	Expected useful life	Residual value
Buildings	20 ~~– 40~~ years		5%	%
Plant and equipment	5 – 1613 years		5%	%
Motor vehicles	85 –12 8 years		5%	%
Furniture, fixture and equipment	5 – 8 years		5	%
Furniture, fixture and office equipment	5 years		5%
Leasehold improvement	5 years		-

Expenditure for repairs and maintenance is expensed as incurred. When assets have retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.F-8

· Intangible asset

Intangible asset includes technical know-how acquired from a business combination. Technical know-how is carried at cost less accumulated amortization and impairment charge and is amortized on a straight-line basis over its estimated useful lives of 10 years beginning at the time it is granted.

As of December 31, 2009 and 2008, the carrying value of the technical know-how was stated as zero. During the year ended December 31, 2008, the Company recognized a full impairment charge before the acquisition of Bao Sai for recoverability test.

· Operating lease prepaid

All lands in the PRC are owned by the PRC government. The government in the PRC, according to the relevant PRC law, may grant the right to use the land for a specified period of time. Thus, all of the Company’s lands in the PRC are considered operating lease prepaid. Operating lease prepaid is amortized on a straight-line basis over the lease term of 50 years.

F-10

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

·	Operating lease prepaid

The lease expense on prepaid operating lease for the years ended December 31, 2010 and 2009 was $7,315 and $7,248, respectively. As of December 31, 2010, the estimated annual amortization of the prepaid operating lease for the next five years and thereafter is as follows:

Years ending December 31:
2011	$	7,499
2012		7,499
2013		7,499
2014		7,499
2015		7,499
Thereafter		110,932

Total:	$	148,427

·	Impairment of long-lived assets

In accordance with the provisions of ~~the provision of~~ ASC Topic 360-10-5, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment ~~and intangible assets~~ held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of assets to estimated discounted net cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. There has been no impairment ascharge offor ~~December~~the ~~31,~~years ~~2009~~presented.

·	Revenue recognition

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectibility is reasonably assured.

(a) ~~Service~~Medical service revenue

Pursuant to the agreements entered into between the Company and Tang Du Hospital (“the Hospital”) dated February 2, 2006;, the Company and the Hospital would jointly operate the medical center in the provision of diagnostic imaging services to the patients. In return, the Company and the Hospital would share net revenues from services rendered, on a monthly basis, when earned, at their net realizable amounts from patients for services rendered at contractually established billing rates, after deducting the total operating cost of the centers. The Company recognizes net revenues based on the total amount received from the patients during the month, less the monthly operating costs incurred at the center.

The Company records the revenue, net of business tax, from the customers through the Hospital, on a net basis in compliance with ~~EITF~~ASC 99Topic 605-1945, “~~Reporting Revenues Gross as a~~ Principal ~~versus Net as an~~ Agent Considerations.”

~~(b) Sale of products~~F-9

~~The Company~~GFR ~~recognizes revenue from the sale and trading of pharmaceutical materials upon delivery to the customers~~PHARMACEUTICALS, ~~whereas the title and risk of loss are fully transferred to the customers~~INC. The Company records its revenues, net of value added taxes (“VAT”) under the PRC tax law which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and has recorded no reserve for sales returns for the years ended December 31, 2009 and 2008.

~~(c)~~NOTES ~~Interest~~TO ~~income~~CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(b)	Product sales

The Company recognizes revenue from the sale and trading of pharmaceutical products upon delivery to the customers, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”) under the PRC tax law which is levied on the majority of the products at the rate of 17% on the invoiced value of sales. The Company experienced no product returns and has recorded no reserve for sales returns for the years ended December 31, 2010 and 2009.

(c)	Technical service income

The Company provides technical service based upon the customer’s specifications in a term of three years on a monthly fixed-rate basis. The Company recognizes its monthly service fee over the service period.

(d)	Interest income

Interest income is recognized on a time apportionment basis, taking into account the principal amounts outstanding and the interest rates applicable.

·	Cost of service

Cost of service consists primarily of depreciation of operating equipment and direct labor which are directly attributable to the rendering of medical and technical service.

·	Cost of products

Cost of products consists primarily of purchase cost of extractions, direct labor and other overheads, which are directly attributable to the extraction and trading of pharmaceutical materials. Shipping and handling cost, associated with the distribution of finished products to the customers, are borne by the customers.

·	Advertising expense

Advertising costs are expensed as incurred under ASC Topic 720-35, “Advertising Costs”. ~~The Company~~No ~~incurred~~advertising noexpense ~~advertising~~was ~~cost~~incurred for the years ended December 31, ~~2009~~2010 and ~~2008~~ 2009.

~~F-11~~· Research and development

~~GFR PHARMACEUTICALS~~Research and development costs are expensed when incurred in the development of new processes including significant improvements and refinements of existing products. Such costs mainly relate to labor and material cost. The Company incurred $22,225 ~~INC~~and $50,400 of such costs for the years ended December 31, 2010 and 2009.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

· Research and development expense

Research and development costs are expensed when incurred in the development of new processes including significant improvements and refinements of existing products. Such costs mainly relate to labor and material cost. The Company incurred $50,400 and $690,991 of such costs for the years ended December 31, 2009 and 2008.

·	Income taxes

The ~~Company~~ ~~adopts~~provision for income taxes is determined in accordance with the provisions of ASC Topic 740, “Income Taxes” ~~regarding accounting~~(“ASC ~~for~~740”). ~~uncertainty~~Under inthis ~~income~~method, ~~taxes~~deferred ~~which~~tax ~~prescribes~~assets ~~the recognition threshold~~ and ~~measurement~~liabilities ~~attributes~~are recognized for ~~financial~~the ~~statement~~future ~~recognition and measurement of~~ tax ~~positions~~consequences ~~taken~~attributable ~~or expected~~ to bedifferences ~~taken~~between ~~on a tax return. In addition,~~ the ~~guidance~~financial ~~requires~~statement ~~the~~carrying ~~determination~~amounts of ~~whether~~existing ~~the~~assets ~~benefits~~and ofliabilities ~~tax positions~~and ~~will~~their berespective ~~more likely than not sustained upon audit based upon the technical merits of the~~ tax ~~position~~basis. ~~For~~Deferred tax ~~positions~~assets ~~that~~and liabilities are ~~determined~~measured ~~to be~~using ~~more~~enacted ~~likely~~income ~~than~~tax ~~not~~rates ~~sustained~~expected ~~upon~~to ~~audit,~~apply ato ~~company~~taxable ~~recognizes~~income ~~the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement~~ in the ~~financial~~years ~~statements.~~in ~~For~~which ~~tax~~those ~~positions~~temporary ~~that~~differences are ~~not determined~~expected to be ~~more~~recovered ~~likely~~or ~~than~~settled. ~~not~~Any ~~sustained~~effect ~~upon~~on ~~audit,~~deferred atax ~~company~~assets ~~does~~and ~~not recognize~~liabilities ~~any portion~~ of ~~the~~a ~~benefit~~change in ~~the~~tax ~~financial~~rates ~~statements.~~is ~~The~~recognized ~~guidance provides~~in ~~for~~income ~~de-recognition,~~in ~~classification,~~the ~~penalties~~period ~~and~~that ~~interest,~~includes ~~accounting in~~the ~~interim~~enactment ~~periods and disclosure~~date.

~~For~~ASC ~~the years~~740 ~~ended~~prescribes ~~December~~a 31comprehensive model for how companies should recognize, ~~2009~~measure, present, and ~~2008~~disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the ~~Company~~financial ~~did~~statements when it is more likely than not ~~have~~the ~~any~~position ~~interest and~~will ~~penalties~~be ~~associated~~sustained ~~with~~upon examination by the tax ~~positions~~authorities. AsSuch oftax ~~December~~positions ~~31,~~must ~~2009~~initially and ~~2008,~~ subsequently be measured as the ~~Company~~largest ~~did~~amount ~~not~~of ~~have~~tax ~~any~~benefit ~~significant~~that ~~unrecognized~~has ~~uncertain~~a greater than 50% likelihood of being realized upon ultimate settlement with the tax ~~positions~~ authority assuming full knowledge of the position and relevant facts.

~~The Company~~For ~~conducts~~the ~~major~~years ~~businesses~~ended inDecember ~~the~~31, ~~PRC~~2010 and ~~is subject to tax in this jurisdiction. As a result of its business activities~~2009, the Company ~~files~~did ~~tax returns~~not ~~that~~have ~~are~~any ~~subject~~interest toand ~~examination~~penalties byassociated ~~the~~with ~~foreign~~ tax ~~authority~~positions. ~~For~~As ~~the year~~of ~~ended~~ December 31, ~~2009~~2010, the Company ~~filed~~did ~~and~~not ~~cleared~~have ~~2008~~any ~~PRC~~significant ~~tax~~unrecognized ~~return by~~uncertain ~~the~~ tax ~~authority~~positions.

·The ~~Net~~Company ~~income~~conducts ~~(loss)~~major ~~per~~businesses ~~share~~in the PRC and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. For the year ended December 31, 2010, the Company filed and cleared 2009 tax return with its local tax authority in the PRC.

~~The Company calculates net income (loss) per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income (loss) per share is computed by dividing the net income by the weighted~~F-average number of common shares outstanding during the period. Diluted income (loss) per share is computed similar to basic income (loss) per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.10

· Comprehensive income

ASC Topic 220, “Reporting Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statement of changes in stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

	Years ended December 31,
	2009		2008
Net income (loss)	$	1,176,410	$	(3,113,236	)
Other comprehensive income (loss) income:
- Foreign currency translation (loss) gain		187		75,898
Comprehensive income (loss)	$	1,176,597	$	(3,037,338	)

F-12

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

·	Net income per share

The Company calculates net income per share in accordance with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

·	Comprehensive income

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

	Years ended December 31,
	2010		2009

Net income	$	2,536,334	$	1,176,410

Other comprehensive income:
- Foreign currency translation gain		102,812		187

Comprehensive income	$	2,639,146	$	1,176,597

·	Foreign currencies translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the consolidated statement of operations.

The reporting currency of the Company is United States ~~Dollar~~Dollars ("US$") and the accompanying financial statements have been expressed in US$. ~~The~~In addition, the Company's subsidiaries in the PRC maintain their books and records in their local currency, Renminbi Yuan ("RMB"), which is functional currency as being the primary currency of the economic environment in which these entities operate. In accordance with ASC Topic 830-30, “Translation of Financial Statement”, assets and liabilities of the Company whose functional currency is not US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$1 has been made at the following exchange rates for the respective year:

	2009		2008
	2010		2009
Year-end RMB:US$1 exchange rate		6.~~8372~~6118		6.~~8542~~8372
Annual average RMB:US$1 exchange rate		6.~~8409~~7788		6.~~9623~~8409

· Related parties

Parties, which can be a corporation or individual, are considered to be related if the Company 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. Companies are also considered to be related if they are subject to common control or common significant influence.

·	Retirement plan costs

Contributions to retirement ~~schemes~~plans (which are defined contribution plans) are charged to general and administrative expenses in the ~~accompanying~~ consolidated statements of ~~operation~~operations and comprehensive income as and when the related employee service is provided.

~~· Segment reporting~~F-11

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the years ended December 31, 2009 and 2008, the Company operates in two reportable segments: Medical Business and Extraction Business in PRC.

F-13

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

· ~~Fair~~Related ~~value measurement~~parties

~~ASC Topic 820-10~~Parties, ~~“Fair~~which ~~Value Measurements~~can ~~and~~be ~~Disclosures” ("ASC 820-10") establishes~~ a ~~new~~corporation ~~framework for~~or ~~measuring fair value and expands related disclosures. Broadly~~individual, ~~ASC~~are ~~820-10 framework~~considered ~~requires fair value~~ to be ~~determined~~related ~~based~~if on the ~~exchange~~Company ~~price~~has ~~that would~~the beability, ~~received~~directly ~~for an asset~~ or ~~paid~~indirectly, to ~~transfer~~control ~~a liability (an exit price) in~~ the ~~principal~~other party or ~~most~~exercise ~~advantageous~~significant ~~market~~influence ~~for~~over the ~~asset~~other orparty ~~liability~~ in ~~an orderly~~making ~~transaction~~financial ~~between~~and ~~market~~operational ~~participants~~decisions. ~~ASC~~Companies ~~820-10~~are ~~establishes~~also ~~a three-level~~considered ~~valuation~~to ~~hierarchy~~be ~~based~~related ~~upon~~if ~~observable~~they and non-observable inputs. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are ~~either~~subject ~~directly~~to orcommon ~~indirectly~~control ~~observable; and Level 3, defined as unobservable inputs in which little~~ or nocommon ~~market~~significant ~~data exists, therefore requiring an entity to develop its own assumptions~~influence.

~~For financial~~· ~~assets~~Segment and liabilities, fair value is the price the Company would receive to sell an asset or pay to transfer a liability in an orderly transaction with a market participant at the measurement date. In the absence of active markets for the identical assets or liabilities, such measurements involve developing assumptions based on market observable data and, in the absence of such data, internal information that is consistent with what market participants would use in a hypothetical transaction that occurs at the measurement date.reporting

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the years ended December 31, 2010 and 2009, the Company operates in two reportable segments: Medical Business and Extraction Business in PRC.

·	Fair value of financial instruments

The carrying value of the Company’s financial instruments include cash and cash equivalents, ~~trade~~ accounts receivable, prepayments and other ~~receivables~~current assets, ~~trade~~ accounts payable, ~~amounts~~amount due to a related ~~parties~~party, income tax payable, ~~accrued liabilities~~other payables and ~~other~~accrued ~~payable~~liabilities. Fair values were assumed to approximate carrying values for these financial instruments because they are short term in nature and their carrying amounts approximate fair values.

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

·	Level 1 : Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

·	Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and; and

Level 3 : Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

·	Reclassifications

Certain prior year amounts have been reclassified to confirm to the current period presentation. These reclassifications have no impact on previously reported financial position, results of operations or cash flows.

·	Recent accounting pronouncements

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

~~During~~ In October 2009, the Financial Accounting Standards ~~Codification~~Board (“~~ASC~~FASB”) ~~became~~issued ~~the~~Accounting ~~source~~Standards ~~of authoritative~~Update ~~U.S.~~(“ASU”) ~~GAAP~~2009-14 ~~recognized~~to byamend ~~the~~ASC ~~Financial~~605 ~~Accounting Standards Board (~~“~~FASB~~Revenue Recognition.”) ~~for~~The ~~nongovernmental~~amendments ~~entities,~~in ~~except~~this ~~for~~update ~~certain~~change ~~FASB~~the ~~Statements~~accounting ~~not yet~~model ~~incorporated~~for ~~into~~revenue ~~ASC.~~arrangements ~~Rules~~that include both tangible products and ~~interpretive~~software ~~releases~~elements. ofThe ~~the~~amendments ~~SEC~~in ~~under federal~~ASU ~~securities~~2009-14 ~~laws~~will ~~are~~be ~~also~~effective ~~sources~~for ofthe ~~authoritative~~fiscal ~~U.S.~~years ~~GAAP~~beginning ~~for registrants~~January 1, 2011. The ~~discussion~~Company ~~below~~believes ~~includes~~that ~~the~~ASU ~~applicable~~2009-13 ~~ASC reference~~will not have a material impact on its consolidated financial statements.

~~The Company~~In ~~adopted~~October ~~ASC Topic 810-10~~2009, ~~“Consolidation”~~the ~~(formerly~~FASB ~~SFAS No.~~issued ~~160,~~ASU ~~“Noncontrolling Interests~~2009-13 inamending ~~Consolidated~~ASC ~~Financial~~605 ~~Statements~~related –to anrevenue ~~amendment~~arrangements ofwith ~~ARB~~multiple Nodeliverables. ~~51”)~~ ~~effective~~Among ~~January~~other 2things, ASU 2009.-13 ~~Topic~~provides ~~810-10~~guidance ~~changes~~for entities in determining the ~~manner~~accounting ~~of presentation~~for multiple deliverable arrangements and ~~related~~establishes ~~disclosures~~a hierarchy for determining the ~~noncontrolling~~amount ~~interest~~of inrevenue ~~a subsidiary~~to ~~(formerly~~allocate ~~referred~~ to asthe avarious ~~minority~~deliverables. ~~interest)~~The ~~and~~amendments in ASU 2009-13 will be effective for the ~~deconsolidation~~ offiscal ayears ~~subsidiary~~beginning January 1, 2011. The ~~adoption~~Company ofbelieves ~~these~~that ~~sections~~ASU ~~did~~2009-13 will not have a material impact on ~~the~~its ~~Company’s~~ consolidated financial statements.

F-1412

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

~~ASC~~In ~~Topic 815-10~~January 2010, ~~“Derivatives~~the ~~and Hedging”~~FASB ~~(formerly~~issued ~~SFAS~~further guidance under ASC No. ~~161~~820, “Fair Value Measurements and Disclosures” ("ASC 820"). ASC 820 requires disclosures about ~~Derivative Instruments~~the transfers of investments between levels in the fair value hierarchy and ~~Hedging~~disclosures ~~Activities”~~relating to the reconciliation of fair value measurements using significant unobservable inputs (level 3 investments). ~~was~~ASC ~~adopted~~820 byis effective for the ~~Company~~fiscal ~~effective January~~years 2and interim periods beginning after December 15, ~~2009~~2010. The ~~guidance~~Company ~~under~~will ~~ASC~~adopt ~~Topic~~the ~~815-10~~update ~~changes~~on ~~the~~January ~~manner~~1, ~~of presentation~~2011 and ~~related~~expects ~~disclosures~~that ofASC ~~the~~820 ~~fair~~will ~~values~~not ofhave ~~derivative instruments~~a ~~and~~material ~~their~~impact ~~gains~~on ~~and~~its ~~losses~~consolidated financial statements.

In April 2009, the FASB issued an update to ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10) (formerly FASB Staff Position No. SFAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”). The standard provides additional guidance on estimating fair value in accordance with ASC 820-10 when the volume and level of transaction activity for an asset or liability have significantly decreased in relation to normal market activity for the asset or liability have significantly decreased and includes guidance on identifying circumstances that indicate if a transaction is not orderly. The Company adopted this pronouncement effective April 1, 2009 with no impact on its consolidated financial statements.

In April 2009, the FASB issued FSP SFAS No. 107-1, “Disclosures about Fair Value of Financial Instruments” (“ASC 825-10”). ASC 825-10 requires fair value of financial instruments disclosure for interim reporting periods of publicly traded companies as well as in annual financial statements. ASC 825-10 is effective for interim periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009. There was no material impact to the Company’s consolidated financial statements as a result of the adoption of ASC 825-10.

In April 2009, the FASB issued FSP APB No. 28-1, “Interim Financial Reporting” (“ASC 825-10”). ASC 825-10 requires the fair value of financial instruments disclosure in summarized financial information at interim reporting periods. ASC 825-10 is effective for interim periods ending after June 15, 2009 and was adopted by the Company in the second quarter of 2009. There was no material impact to the Company’s consolidated financial statements as a result of the adoption of ASC 825-10.

In June 2009, the FASB finalized SFAS No. 167, “Amending FASB interpretation No. 46(R)”, which was included in ASC Topic 810-10-05 “Variable Interest Entities”. The provisions of ASC Topic 810-10-05 amend the definition of the primary beneficiary of a variable interest entity and will require the Company to make an assessment each reporting period of its variable interests. The provisions of this pronouncement are effective January 1, 2010. The Company is evaluating the impact of the statement on its consolidated financial statements.

In July 2009, the FASB issued SFAS No. 168, “The Hierarchy of Generally Accepted Accounting Principles”. SFAS 168 codified all previously issued accounting pronouncements, eliminating the prior hierarchy of accounting literature, in a single source for authoritative U.S. GAAP recognized by the FASB to be applied by nongovernmental entities. SFAS 168, now ASC Topic 105-10 “Generally Accepted Accounting Principles”, is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of this pronouncement did not have an effect on the Company’s consolidated financial statements.

In August 2009, the FASB issued an update of ASC Topic 820, “Measuring Liabilities at Fair Value ”. The new guidance provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using prescribed techniques. The Company adopted the new guidance in the third quarter of 2009 and it did not materially affect the Company’s financial position and results of operations.

F-15

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

In October 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-13, “Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements (a consensus of the FASB Emerging Issues Task Force)” which amends ASC 605-25, “Revenue Recognition: Multiple-Element Arrangements.” ASU No. 2009-13 addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how to allocate consideration to each unit of accounting in the arrangement. This ASU replaces all references to fair value as the measurement criteria with the term selling price and establishes a hierarchy for determining the selling price of a deliverable. ASU No. 2009-13 also eliminates the use of the residual value method for determining the allocation of arrangement consideration. Additionally, ASU No. 2009-13 requires expanded disclosures. This ASU will become effective for us for revenue arrangements entered into or materially modified on or after April 1, 2011. Earlier application is permitted with required transition disclosures based on the period of adoption. The Company is currently evaluating the application date and the impact of this standard on its consolidated financial statements.

In September 2009, the FASB issued certain amendments as codified in ASC 605-25, “Revenue Recognition; Multiple-Element Arrangements.” These amendments provide clarification on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. An entity is required to allocate revenue in an arrangement using estimated selling prices of deliverables in the absence of vendor-specific objective evidence or third-party evidence of selling price. These amendments also eliminate the use of the residual method and require an entity to allocate revenue using the relative selling price method. The amendments significantly expand the disclosure requirements for multiple-deliverable revenue arrangements. These provisions are to be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with earlier application permitted. The Company is currently evaluating the impact of these amendments to its consolidated financial statements.

In November 2009, the FASB issued ASU 2009-16, “Transfers and Servicing (Topic 860) – Accounting for Transfers of Financial Assets,” which formally codifies FASB Statement No. 166, “Accounting for Transfers of Financial Assets.” ASU 2009-16 is a revision to SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,” and requires more information about transfers of financial assets, including securitization transactions, and where entities have continuing exposure to the risks related to transfer of financial assets. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. The provisions are effective January 1, 2010, for a calendar year-end entity, with early application not being permitted. Adoption of these provisions is not expected to have a material impact on the Company’s consolidated financial statements.

3.	ACCOUNTS RECEIVABLE

The majority of the Company’s sales are on open credit terms and in accordance with terms specified in the contracts governing the relevant transactions. The Company evaluates the need of an allowance for doubtful accounts based on specifically identified amounts that management believes to be uncollectible. If actual collections experience changes, revisions to the allowance may be required.

Accounts receivable consisted of the following:

	As of December 31,
	2009			2008
	2010			2009
Accounts receivable, gross	$	1,093,324		$	1,174,355
Accounts receivable, at original cost	$	1,803,273		$	1,249,947
Less: allowance for doubtful accounts		(~~552~~537,~~118~~812	)		(~~515~~708,~~026~~741	)
Accounts receivable, net	$	541,206		$	659,329
Less: foreign translation difference		(19,845	)		-
Accounts receivable, net	$	1,245,616		$	541,206

For the ~~year~~ years ended December 31, ~~2009~~2010 and ~~2008~~2009, the Company provided ~~for~~no ~~$37,267~~further ~~and $515,026 of the~~ allowance for doubtful accounts~~, respectively~~.

~~F-16~~For the years ended December 31, 2010 and 2009, the Company recovered $170,929 and $93,492 of allowance for doubtful accounts, respectively.

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

4.	INVENTORIES, NET

Inventories consisted of the following:

	As of December 31,
	2009			2008
	2010			2009
Raw materials	$	1713,~~876~~607		$	7417,~~270~~876
Work-in-process		-19,640			~~7,109~~-
Finished goods		~~680~~664,~~566~~951			~~568~~680,~~318~~566
		698,442			649,697
		698,198			698,442
Less: inventory allowance		(~~688~~640,~~153~~871	)		(~~367~~688,~~390~~153	)
Inventories, net	$	10,289		$	282,307
Less: foreign translation difference		(22,265	)		-
Inventories, net	$	35,062		$	10,289

For the ~~years~~ year ended December 31, ~~2009~~2010, ~~and~~the ~~2008~~Company recovered $47,282 from inventory allowance. For the year ended December 31, 2009, the Company recorded inventory allowance of $322,122 ~~and $367,390, respectively~~.

~~5. NOTE RECEIVABLE, NET~~F-13

	As of December 31,
	2009			2008
Note receivable, at cost	$	1,096,940		$	1,097,358
Less: allowance for doubtful accounts		(1,096,940	)		(1,097,358	)
Note receivable, net	$	-		$	-

On September 3, 2007, the Company’s subsidiary, Bao Sai, disposed of its investment in 75% of HuaYang for a cash consideration of $1,096,940 (equivalent to RMB7,500,000). The balance was unsecured and interest-free and repayable in 4 installments due in full, by December 31, 2008. Repayment was not made in full as of December 31, 2009, so an agreement was entered into by both parties to extend the maturity to December 31, 2011. Accordingly, allowance of doubtful accounts was fully made on the note receivable during the fiscal year 2008.

6. OTHER RECEIVABLE, NET

	As of December 31,
	2009			2008
Other receivable, gross	$	1,119,298		$	1,122,650
Less: allowance for doubtful accounts		(1,119,298	)		(1,122,650	)
Other receivable, net	$	-		$	-

As of December 31, 2009, the balance of $1,119,298 due from a former subsidiary of the Company, a represented temporary advance from the Company which was unsecured, interest-free, with a fixed repayment term of 4 installments and which is due in full no later than December 2013. As of December 31, 2009, the future installments to be received are as follows:

F-17

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

Years ending December 31,
2010	$	201,488
2011		219,472
2012		424,312
2013		274,026
Total	$	1,119,298

5.	PREPAYMENTS AND OTHER CURRENT ASSETS

For the year ended December 31, 2008, the Company fully provided for $1,122,650 of the allowance for doubtful accounts.

7. AMOUNT DUE FROM (TO) RELATED PARTIES

(a) Amount due from (to) a stockholder

As of December 31, 2009, a balance of $1,960,874 due from a stockholder, Mr. Lian Guo represented a temporary advance from the Company which was unsecured, interest-free and repayable on demand.

As of December 31, 2008, a balance of $1,951,203 due to a stockholder, Mr. Lian Guo represented a temporary advance to the Company which was unsecured, interest-free and repayable on demand.

(b) Note payable to related parties

As of December 31, 2008, note payable of $2,493,318 due to related parties represented payable to ex-shareholders of Xi'an Jiaoda Bao Sai Bio-Technology Co., Ltd for the transfer of their shares to New Century. The amount was fully paid to ex-shareholders during the 2009 fiscal year.

8. INVESTMENT IN AN UNCONSOLIDATED AFFILIATE

The Company has a 75% equity interest in Xi’an Bao Sai Medicine Co., Ltd (“Medicine”), through Bao Sai, which is registered as a limited liability company in the PRC. Medicine ceased business in 2007 and leased out its business license. Thus, the Company does not have control on the policy decisions in Medicine; and accordingly, investment in Medicine is accounted for under the equity method.

As of December 31, 2009 and 2008, the investment in an unconsolidated affiliate is presented as follows:-

	As of December 31,
	2009			2008
Investment in Medicine at the date of acquisition	$	106,804		$	106,804
Share of accumulated losses in Medicine		(870,823	)		(870,823	)
Foreign translation difference		(20,783	)		(21,081	)
Amount due from Medicine		980,575			1,111,828
Less: allowance for doubtful accounts		(980,575	)		(1,111,828	)
Loss in excess of investment in unconsolidated affiliate	$	(784,802	)	$	(785,100	)

F-18

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

During the year ended December 31, 2009, the Company recovered $130,759 from the amount due from Medicine and its allowance for doubtful account was reversed accordingly.

9. PREPAYMENTS AND OTHER CURRENT ASSETS

Prepayments and other current assets consisted of the following:

	As of December 31,
	2009		2008
	2010		2009
Deposits	$	-	$	77,617
VAT receivable	$	1,601	$	-
Advances to employees		~~151~~79,~~720~~843		25151,~~334~~720
Prepayments to equipment vendors		~~41,169~~-		-41,169
Prepaid operating expenses		8453,~~566~~782		~~140~~84,~~291~~566
	$	~~277~~135,~~455~~226	$	~~243~~277,~~242~~455

106. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following:

	As of December 31,
	2009			2008
	2010			2009
Buildings	$	21,~~293~~863,~~130~~446		$	2,293,130
Plant and equipment		68,~~323~~071,~~428~~246			6,~~322~~323,~~678~~428
Motor vehicles		~~246~~263,~~806~~070			246,806
Furniture, fixture and equipment		~~152~~162,~~645~~616			~~151~~152,~~356~~645
Foreign translation difference		619,423			33,264
Leasehold improvement		44,256			-
		9,635,432			9,047,234
Foreign translation difference		347,887			619,423
Less: accumulated depreciation		(2,795,337	)		(2,067,613	)
		10,752,521			9,635,432
Less: foreign translation difference		(116,576	)		(117,012	)
Less: accumulated depreciation		(3,676,681	)		(2,795,337	)
Property, plant and equipment, net	$	6,723,519		$	6,862,609
Less: foreign translation difference		(118,567	)		(116,576	)
Property, plant and equipment, net	$	6,957,273		$	6,723,519

~~The buildings~~Depreciation ~~were~~expense ~~pledged~~for asthe ~~security~~years ~~for~~ended ~~banking~~December ~~facilities~~31, of2010 ~~note~~and ~~payable~~2009 were $766,083 and ~~fully~~ ~~released~~$727,724 onrespectively, ~~March~~of 11which $553,247 ~~2009~~and $596,988 were include in cost of revenue.

~~Depreciation expenses~~7. ~~for~~AMOUNT ~~the~~DUE ~~years~~TO ~~ended~~A ~~December~~RELATED ~~31, 2009 and 2008 were $727,724 and $660,743 respectively, of which $596,988 and $579,592 were include in cost of revenue.~~PARTY

11As of December 31, 2010 and 2009, a balance of $439,267 and $1,960,874 due to a major shareholder, Mr. ~~PREPAID~~Lian ~~OPERATING~~Guo ~~LEASE~~represented temporary advances to the Company which was unsecured, interest-free and repayable on demand.

~~The Company has recorded as operating lease prepaid for the costs paid to acquire a long-term interest to utilize the land underlying the building and production facility for its business~~8. ~~This~~OTHER ~~type~~PAYABLES ofAND ~~arrangement~~ACCRUED ~~is common for the use of land in the PRC. The operating lease prepaid is amortized on the straight-line method over the term of the operating lease prepaid of 50 years.~~LIABILITIES

~~F-19~~Other payables and accrued liabilities consisted of the following:

	As of December 31,
	2010		2009

Business tax payable	$	102,054	$	81,174
Government levy payable		8,085		34,435
Salaries and welfare payable		91,890		97,724
Advances from employees		22,862		50,411
Accrued operating expenses		169,420		164,809

	$	394,311	$	428,553

F-14

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

~~The~~9. ~~lease expense~~INVESTMENT onIN ~~prepaid~~AN ~~operating~~UNCONSOLIDATED ~~lease for the years ended December 31, 2009 and 2008 was $7,248 and $7,255, respectively.~~AFFILIATE

AsThe ~~of December~~Company 31has a 75% equity interest in Xi’an Bao Sai Medicine Co., ~~2009~~Ltd (“Medicine”), through Bai Sai, which is registered as a limited liability company in the ~~estimated~~PRC. ~~amortization~~Medicine ofceased business in 2007 and leased out its business license. Thus, the ~~prepaid~~Company ~~operating~~does ~~lease~~not ~~for~~ have control on the ~~next~~policy ~~five~~decisions ~~years~~in Medicine; and ~~thereafter~~accordingly, investment in Medicine is asaccounted ~~follows:~~for under the equity method.

Years ending December 31:
2010	$	7,252
2011		7,252
2012		7,252
2013		7,252
2014		7,252
Thereafter		114,526
Total	$	150,786

As of December 31, 2010 and 2009, the investment in an unconsolidated affiliate is presented as follows:-

12. NOTE PAYABLE

	As of December 31,
	2010			2009

Investment in Medicine at the date of acquisition	$	106,804		$	106,804
Amount due from Medicine		751,593			980,575
Less: allowance for doubtful accounts		(751,593	)		(980,575	)
Share of accumulated losses in Medicine		(870,823	)		(870,823	)
Foreign translation difference		(47,536	)		(20,783	)

Loss in excess of investment in an unconsolidated affiliate	$	(811,555	)	$	(784,802	)

AsFor ~~of December~~the ~~31,~~year ~~2008,~~ended aDecember ~~balance of $219~~31,~~472~~ ~~represented a temporary advance from Shaanxi Ze Hua Nuan Tong Zhileng Gongcheng Co.~~2010, ~~Ltd to~~ the Company. ~~The~~received ~~note payable was secured by the Company’s building (Note 10) with the amount of~~ $1255,~~753,706~~947 ~~(equal~~from toMedicine ~~RMB11,~~as ~~985,882).~~recovery ~~Interest~~from onan ~~this~~unconsolidated ~~note~~affiliate ~~is charged at 10.46% per annum, payable monthly, with principal~~ and ~~accrued~~recorded ~~interest~~as ~~due~~“other onincome” ~~December 20, 2008. The note payable was repaid~~ in ~~February 2009 and~~ the ~~security~~statement ~~over~~of ~~the building property was released accordingly~~operations.

1310. ~~OTHER~~INCOME ~~PAYABLES AND ACCRUED LIABILITIES~~TAXES

~~Other payables~~For the years ended December 31, 2010 and ~~accrued~~2009, ~~liabilities~~the ~~consisted~~local (“United States of America”) and foreign components of income before income taxes were comprised of the following:

	As of December 31,
	Years ended December 31,
	2009		2008
	2010		2009
Business tax payable	$	81,174	$	82,554
Tax jurisdiction from:
Government levy payable		34,435		20,321
– Local	$	-	$	-
Salaries and welfare payable		97,724		100,405
– Foreign		3,224,378		1,748,053
Advances to employees		50,411		161,491
Income before income taxes	$	3,224,378	$	1,748,053
Customer deposits		-		8,457
Accrued operating expenses		164,809		83,413
	$	428,553	$	456,641

~~14.~~The ~~INCOME~~provision ~~TAXES~~for income taxes consisted of the following:

For the years ended December 31, 2009 and 2008, the local (“United States of America”) and foreign components of income before income taxes were comprised of the following:

	Years ended December 31,
	2010		2009
Current:
– Local	$	-	$	-
– Foreign		688,045		571,643

Deferred:
– Local		-		-
– Foreign		-		-

Income tax expense	$	688,045	$	571,643

F-2015

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

	Years ended December 31,
	2009		2008
Tax jurisdiction from:
– Local	$	-	$	-
– Foreign		1,748,053		(2,484,489	)
Income before income taxes	$	1,748,053	$	(2,484,489	)

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States and the PRC that are subject to tax in the jurisdictions in which they operate, as follows:

The provision for income taxes consisted of the following:

	Years ended December 31,
	2009		2008
Current:
– Local	$	-	$	-
– Foreign		571,643		628,747
Deferred:
– Local		-		-
– Foreign		-		-
Income tax expense	$	571,643	$	628,747

The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiary and VIE that operate in various countries: United States and the PRC that are subject to tax in the jurisdictions in which they operate, as follows:

United States of America

GFRP is registered in the State of Nevada and is subject to the tax laws of the United States of America. The Company has no operation in the United States of America.

The PRC

~~Effective as~~Under ~~of January 1, 2008,~~ the Corporate Income Tax Law of the People’s Republic of ~~China~~ ~~(the “New CIT Law”) is imposed. Under the New CIT Law~~China, the Company’s subsidiaries in the PRC are subject to the unified statutory income tax rate of 25%. The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2010 and 2009 is as follows:

The reconciliation of income tax rate to the effective income tax rate for the years ended December 31, 2009 and 2008 is as follows:

	Years ended December 31,
	2010			2009

Income before income taxes from PRC operation	$	3,224,378		$	1,748,053
Statutory income tax rate		25	%		25	%
Income tax expense at statutory rate		806,095			437,013

Net operating loss not recognized as deferred tax assets		1,559			171,533
Recovery from allowance of doubtful accounts not recognized as deferred taxes		(74,158	)		(36,903	)
Non-deductible items		(45,451	)		-

Income tax expense	$	688,045		$	571,643

	Years ended December 31,
	2009			2008
Income before income taxes from PRC operation	$	1,748,053		$	(2,484,489	)
Statutory income tax rate		25	%		25	%
Income tax expense at statutory rate		437,013			(621,122	)
Net operating loss not recognized as deferred tax assets		171,533			214,776
(Recovery from) allowance of doubtful accounts not recognized as deferred taxes		(36,903	)		956,519
Non-deductible expenses		-			78,574
Income tax expense	$	571,643		$	628,747

The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of December 31, 2010 and 2009:

F-21

	As of December 31,
	2010			2009
Deferred tax assets:
Net operating loss carryforwards	$	388,689		$	386,309
Allowance for doubtful accounts		779,103			919,616
Total deferred tax assets		1,167,792			1,305,925
Less: valuation allowance		(1,167,792	)		(1,305,925	)

Deferred tax assets	$	-		$	-

As of December 31, 2010, the Company incurred $1,554,758 of aggregate cumulative operating losses carryforwards available to offset its taxable income for PRC income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $1,167,792 on the expected future tax benefits from the net operating loss carryforwards and allowance for doubtful accounts as the management believes it is more likely than not that these assets will not be realized in the future. For the year ended December 31, 2010, the valuation allowance decreased by $138,133 primarily relating to the recovery from allowance for doubtful accounts.

11.	NET INCOME PER SHARE

Basic net income per share is computed using the weighted-average number of the common share outstanding during the year. The dilutive effect of potential common shares outstanding is included in diluted net income per share. The following table sets forth the computation of basic and diluted net income per share for the years ended December 31, 2010 and 2009:

F-16

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

The following table sets forth the significant components of the aggregate net deferred tax assets of the Company as of December 31, 2009 and 2008:

	Years ended December 31,
	2010		2009

Net income	$	2,536,334	$	1,176,410
Net income attributable to GFR Pharmaceuticals, Inc.	$	2,445,710	$	1,096,632

Weighted average common shares outstanding		42,079,940		42,079,940

Net income per share – Basic and diluted	$	0.06	$	0.03
Net income per share attributable to GFR Pharmaceuticals, Inc. – Basic and diluted	$	0.06	$	0.03

	As of December 31,
	2009			2008
Deferred tax assets:
Net operating loss carryforwards from:
– United States	$	-		$	-
– The PRC		386,309			214,776
Allowance for doubtful accounts		919,616			956,519
Total deferred tax assets		1,305,925			1,171,295
Less: valuation allowance		(1,305,925	)		(1,171,295	)
Deferred tax assets	$	-		$	-

12.	SEGMENT INFORMATION

As of December 31, 2009, the Company incurred $1,545,236 of aggregate net operating loss carryforwards available to offset its taxable income for income tax purposes. The Company has provided for a full valuation allowance against the deferred tax assets of $1,305,925 on the expected future tax benefits from the net operating loss carryforwards and allowance for doubtful accounts as the management believes it is more likely than not that these assets will not be realized in the future. For the year ended December 31, 2009, the valuation allowance increased by $134,630, primarily relating to net operating loss carryforward from the foreign tax regime.

15. NET INCOME PER SHARE

Basic net income (loss) per share is computed using the weighted average number of the ordinary shares outstanding during the year. Diluted net income (loss) per share is computed using the weighted average number of ordinary shares and ordinary share equivalents outstanding during the year. The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2009 and 2008:

	Years ended December 31,
	2009		2008
Basis and diluted net income (loss) per share calculation
Numerator:
Net income (loss) attributable to GFR Pharmaceuticals, Inc.	$	1,096,632	$	(3,041,287	)
Denominator:
- Weighted average ordinary shares outstanding		42,079,940		42,079,940
Net income (loss) per share attributable to GFR Pharmaceuticals, Inc. – Basic and diluted	$	0.03	$	(0.07	)

16. SEGMENT INFORMATION

The Company’s business units have been aggregated into two reportable segments, as defined by ASC Topic 280:

~~F-22~~· Medical Business – joint operation of PET Scanner and Rotary Gamma Ray Stereotactic Neurosurgery System imaging center in the PRC; and

~~GFR PHARMACEUTICALS,~~· ~~INC~~Extraction Business – provision of extraction service and distribution of extracted ingredients for medicine manufacturing uses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008

(Currency expressed in United States Dollars (“US$”), except for number of shares)

l Medical Business – joint operation of PET Scanner and Rotary Gamma Ray Stereotactic Neurosurgery System imaging center in the PRC; and

l Extraction Business – extraction of raw materials to medicine ingredients and distribution of extracted ingredients for medicine manufacturing uses.

The Company operates these segments in the PRC and all of the identifiable assets of the Company are located in the PRC during the years presented.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 2). The Company had no inter-segment sales for the years ended December 31, ~~2009~~2010 and ~~2008~~2009. The Company’s reportable segments are strategic business units that offer different products and services. They are managed separately based on the different technology and marketing strategies of each business unit for making internal operating decisions.

Summary of financial information concerning the Company’s reportable segments is shown in the following table for the years ended December 31, ~~2009~~2010 and ~~2008~~ 2009:

	Year ended December 31, 2009
	Year ended December 31, 2010
	Medical Business			Extraction Business			Total
Operating revenue, net	$	3,336,839		$	547,258		$	3,884,097
Operating revenue from external customers:
Cost of revenue		(555,397	)		(516,315	)		(1,071,712	)
Service revenue	$	3,732,781		$	557,626		$	4,290,407
Gross profit	$	2,781,442		$	30,943		$	2,812,385
Product sales		-			71,149			71,149
Depreciation and amortization	$	596,988		$	137,984		$	734,972
Total revenues, net		3,732,781			628,775			4,361,556
Net income (loss)		1,767,050			(590,640	)		1,176,410
Cost of revenue		(576,001	)		(98,181	)		(674,182	)
Total assets		5,520,607			2,238,134			7,758,741
Gross profit	$	3,156,780		$	530,594		$	3,687,374
Expenditure for long-lived assets	$	2,039		$	-		$	2,039
Depreciation and amortization	$	576,278		$	197,120		$	773,398
Net income		2,017,534			518,800			2,536,334
Expenditure for long-lived assets	$	59,008		$	711,511		$	770,519

	Year ended December 31, 2008
	Medical Business		Extraction Business			Total
Operating revenue, net:	$	3,454,009	$	223,063		$	3,677,072
Cost of revenue		-		(268,278	)		(268,278	)
Gross profit	$	3,454,009	$	(45,215	)	$	3,408,794
Depreciation and amortization	$	483,753	$	176,990		$	660,743
Net income (loss)		1,577,548		(4,690,784	)		(3,113,236	)
Total assets		6,487,743		2,860,063			9,347,806
Expenditure for long-lived assets	$	20,617	$	19,212		$	39,829

F-17

For the year ended December 31, 2009, 100% of the Company’s assets were located in the PRC and 100% of the Company’s revenues and purchases were derived from customers and vendors located in the PRC.

17. CHINA CONTRIBUTION PLAN

Under the PRC Law, full-time employees of its subsidiaries in the PRC, Hua Long, New Century and Bao Sai are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. Hua Long and New Century are required to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions made for such employee benefits were $12,148 and $9,685 for the years ended December 31, 2009 and 2008, respectively.

F-23

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

18. STATUTORY RESERVES

	Year ended December 31, 2009
	Medical Business			Extraction Business			Total
Operating revenue from external customers:
Service revenue	$	3,336,839		$	-		$	3,336,839
Product sales		-			547,258			547,258
Total revenues, net		3,336,839			547,258			3,884,097
Cost of revenue		(555,397	)		(516,315	)		(1,071,712	)

Gross profit	$	2,781,442		$	30,943		$	2,812,385

Depreciation and amortization	$	596,988		$	137,984		$	734,972
Net income (loss)		1,767,050			(590,640	)		1,176,410
Expenditure for long-lived assets	$	2,039		$	-		$	2,039

~~Under~~For the ~~PRC~~ ~~Law~~years ~~the~~ended ~~Company’s~~December ~~subsidiaries~~31, ~~Hua~~2010 ~~Long, New Century~~ and ~~Bao~~2009, ~~Sai~~100% ~~are required to make appropriation to the statutory reserve based on after-tax net earnings and determined in accordance with generally accepted accounting principles~~ of the ~~People~~Company’s ~~Republic~~assets ofwere ~~China~~located (in the “PRC ~~GAAP”).~~and ~~Appropriation to the statutory reserve should be at least 10~~100% of the ~~after-tax~~Company’s ~~net~~revenues ~~income~~and ~~until the~~purchases ~~reserve~~were isderived ~~equal~~from tocustomers ~~50% of the registered capital. The statutory reserve is established for the purpose of providing employee facilities~~ and ~~other collective~~vendors ~~benefits~~located toin the ~~employees and is non-distributable other than in liquidation~~PRC.

~~For~~13. ~~the years~~CHINA ~~ended~~CONTRIBUTION ~~December 31, 2009 and 2008, the Company’s PRC subsidiaries made appropriation of $171,493 and $186,942 to statutory reserve, respectively.~~PLAN

19Under the PRC Law, full-time employees of its subsidiaries in the PRC are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefits through a China government-mandated multi-employer defined contribution plan. ~~CONCENTRATIONS~~They OFare ~~RISK~~required to accrue for these benefits based on certain percentages of the employees’ salaries. The total contributions made for such employee benefits were $22,916 and $12,148 for the years ended December 31, 2010 and 2009, respectively.

14.	STATUTORY RESERVES

Under the PRC Law the Company’s subsidiaries, Hua Long, New Century and Bao Sai are required to make appropriations to the statutory reserve based on after-tax net earnings and determined in accordance with generally accepted accounting principles of the People’s Republic of China (the “PRC GAAP”). Appropriation to the statutory reserve should be at least 10% of the after-tax net income until the reserve is equal to 50% of the registered capital. The statutory reserve is established for the purpose of providing employee facilities and other collective benefits to the employees and is non-distributable other than in liquidation.

For the years ended December 31, 2010 and 2009, the Company made appropriations of $205,056 and $171,493 to statutory reserve, respectively.

15.	CONCENTRATIONS OF RISK

The Company is exposed to the following concentrations of risk:

(a)	Major customers

For the ~~year~~ years ended December 31, 2010 and 2009, the customer who accounted for 10% or more of the Company’s revenues ~~and its outstanding balances as at year-end dates~~, are presented as follows:

			Year ended December 31, 2009								December 31, 2009
		Year ended December 31, 2010							December 31, 2010
Customers			Revenues			Percentage of revenues					Accounts receivable, trade
					Percentage
Customer A			$	3,336,858			86	%			$	502,907
		Revenues			of revenues				Accounts receivable
Customer B				526,400			13	%				731
Customer A		$	3,732,783			86	%		$	1,169,993
	Total:		$	3,863,258			99	%	Total:		$	503,638
Customer B			557,626			12	%			75,622
Total:		$	4,290,409			98	%		$	1,245,615

~~(b) Major vendors~~F-18

For the year ended December 31, 2009, the vendor who accounted for 10% or more of the Company’s purchases and their outstanding balances as at year-end dates, are presented as follows:

		Year ended December 31, 2009						December 31, 2009
Vendors		Purchases		Percentage of purchase				Accounts payable, trade
Vendor A		$	468,580		82	%		$	-
Vendor B			72,067		13	%			35,541
	Total:	$	540,647		95	%	Total:	$	35,541

F-24

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

For the year ended December 31, 2008, two vendors represented more than 10% of the Company’s purchases and one of which represented more than 10% of the Company’s accounts payable.

	Year ended December 31, 2009					December 31, 2009
	Revenues		Percentage of revenues			Accounts receivable

Customer A	$	3,336,858		86	%	$	502,907
Customer B		526,400		13	%		731

Total:	$	3,863,258		99	%	$	503,638

(b)	Major vendors

For the years ended December 31, 2010 and 2009, the vendor who accounted for 10% or more of the Company’s purchases, are presented as follows:

	Year ended December 31, 2010					December 31, 2010
	Purchases		Percentage of purchase			Accounts payable

Vendor A	$	19,918		40	%	$	-
Vendor B		4,426		10	%		-

Total:	$	24,344		50	%	$	-

	Year ended December 31, 2009					December 31, 2009
	Purchases		Percentage of purchase			Accounts payable

Vendor A	$	468,580		82	%	$	-
Vendor B		72,067		13	%		35,541

Total:	$	540,647		95	%	$	35,541

(c)	Credit risk

Financial instruments that are potentially subject to credit risk consist principally of trade accounts receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.

(d)	Exchange rate risk

The reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in RMB and a significant portion of the assets and liabilities are denominated in RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$ and RMB. If RMB depreciates against US$, the value of RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.

(e)	Economic and political risks

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

The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, antiF-~~inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.~~19

20. COMMITMENTS AND CONTINGENCIES

The Company leased certain office space under a non-cancelable operating lease agreement with a term of 2 years with fixed monthly rentals. This lease agreement expires in June 2011. Total rent expenses for the years ended December 31, 2009 and 2008 was $2,105 and $2,038, respectively.

As of December, 31, 2009, future minimum rental payments due under the non-cancelable operating lease agreement are as follows:

Years ending December 31:
2010	$	2,106
2011		1,053
Total	$	3,159

F-25

GFR PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, ~~2009~~2010 AND ~~2008~~2009

(Currency expressed in United States Dollars (“US$”), except for number of shares)

21The Company's operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. ~~COMPARATIVE~~These ~~FIGURES~~include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company's results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.

~~Certain amounts~~16. inCOMMITMENTS ~~the~~AND ~~prior periods presented have been reclassified to conform to the current period financial statement presentation.~~CONTINGENCIES

FThe Company is committed to an office space under a non-26cancelable operating lease agreement with a term of 2 years with fixed monthly rentals, expiry in June 2011. Total rent expenses for the years ended December 31, 2010 and 2009 was $2,124 and $2,105, respectively. As of December 31, 2010, the Company has $1,208 of future minimum rental payments due under a non-cancelable operating lease agreement in the next twelve months.

17.	SUBSEQUENT EVENTS

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after December 31, 2010 up through the date was the Company issued the audited consolidated financial statements. During the period, the Company did not have any material recognizable subsequent events.

F-20

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

On January 25, 2010, the Company’s former independent accountants, AGCA, Inc. Certified Public Accountants (“AGCA”), advised the Company that it would not seek re-election as the Company’s independent accountants and resigned as independent accountants effective January 25, 2010. The choice of new independent accountants was approved by the Board of Directors of the Company.

The former independent accountant’s report on the Company’s financial statements for the fiscal year ended December 31, 2008 did not contain any adverse opinions or disclaimer opinions, nor were the reports qualified or modified as to uncertainty, audit scope or accounting principles. Furthermore, the accountant’s report did not include any disclosure of uncertainty regarding the Company’s ability to continue as a going concern. AGCA did not serve as the Company’s independent accountants for the fiscal year ended December 31, 2007.

During the Company’s last two fiscal years ended December 31, 2008 and December 31, 2009 and through January 25, 2010, the date of resignation and declination, there were no disagreements between the Company and AGCA, its former independent accountants, on any matters relating to accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of the former independent accountants, would have caused them to make reference to the subject matter of the disagreement in their report.

A letter addressed to the Securities and Exchange Commission stating whether or not AGCA agrees with the above statements was filed as an exhibit to the Company’s Current Report on Form 8-K that was filed with the Securities and Exchange Commission on January 29, 2010.

On January 27, 2010, the Company engaged HKCMCPA Company Limited (formerly ZYCPA Company Limited), Certified Public Accountants (“~~ZYCPA~~HKCMCPA”), as Company’s new independent accountants. During the two most recent years ended December 31, 2009 and 2008, and any subsequent interim period through January 27, 2009, the Company did not consult with ~~ZYCPA~~HKCMCPA, the newly engaged accountant, regarding any matter described in Item 304(a)(2) of Regulation SK, including any issue related to Company’s financial statements or the type of audit opinion that might be rendered for the Company. ~~ZYCPA~~HKCMCPA served as the Company’s independent accountants for the fiscal year ended December 31, 2007.

ITEM 9A~~(T)~~. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Based on their evaluation as of December 31, ~~2009~~2010, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) were effective to ensure that the information required to be disclosed by us in this Annual Report on Form 10-K was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and instructions for Form 10-K.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended). Our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2009~~2010.

Our internal control over financial reporting is a process designed by or under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on our financial statements.

In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in ‘Internal Control – Integrated Framework’. Our management has concluded that, as of December 31, ~~2009~~2010, our internal control over financial reporting is effective based on these criteria.

This annual report does not include an attestation report of the company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the company's registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management's report in this annual report.

There were no changes in our internal controls over financial reporting during the year ended December 31, ~~2009~~2010 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within GFR Pharmaceuticals Inc. have been detected.

Item 9B. Other Information

Not Applicable.

PART III

Item 10. Directors and Executive Officers of the Registrant and Corporate Governance

Identification of Directors and Executive Officers

The following table sets forth the names and ages of our directors and executive officers, the positions and offices held with us, and the period during which each served in such positions and offices. Each director and executive officer serves for a term of one (1) year and until his successor is duly elected and qualified. . Directors are elected annually by our stockholders at the annual meeting. Each director holds his office until his successor is elected and qualified or his earlier resignation or removal

DIRECTORS AND OFFICERS

Name	Age	Position	Period In Office
Zhao Yan Ding	3637	Chief Executive Officer &	January 2008 - Present
		Director
Zhong Ya Li	3031	Chief Financial Officer &	January 2008 - Present
		Director
Wang Li An	4647	Director	September 2006 - Present

The following is a summary of the business experience and other biographical information with respect to each of the Company’s officers and directors listed in the above-referenced table.

Zhao Yan Ding – Chief Executive Officer and Director

Mr. Zhao Yan Ding, our Chief Executive Officer and Director is 3637 year old. He holds a ~~university~~master’s degree as a senior engineer. He worked for Xi'an Herbal Medicine Company in the Administration and Marketing Department from 1997 to 2001, and gained the honor of advanced staff within two years. In 2001, he took a position with Xi'an Rising Bio-sep Bio-technique Co., Ltd. in the Researches & Production Department. He also worked for Zhejiang Haikang Bio-Products Co., Ltd, to set up their bio research department within company. From 2003 to the present, he has worked in Xi'an Bio-sep Bio-technique Co., Ltd. as their chief of research and the supervisor of the company. The Board believes that Mr. Zhao has the experience, qualifications, attributes and skills necessary to serve on the Board because of his extensive academic knowledge of the biotech industry and research accomplishments, the leadership and strategic direction he showed in Zhejiang Haikang Bio-Products Co., Ltd, and his unparalleled knowledge of the Company and its business by serving the Company ~~for~~for7 7 years. Mr. Zhao is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past ~~five~~six years.

Zhong Ya Li – Chief Financial Officer and Director

Ms. Zhong Ya Li, our ~~new~~ Chief Financial Officer and Director is 3031 years old. She holds a ~~university~~bachelor degree in accounting. Ms. Zhong Ya Li previously worked at Xi'an Rising Building Management Co., Ltd as a cashier and the chief accountant from 1999 to 2003. Then she worked for the Xi'an Bio-sep Bio-technique Co., Ltd as their Chief Accountant. In 2006, she was promoted to Vice Chief Financial Officer of Xi'an Bio-sep Bio-technique Co., Ltd. The Board believes that Ms. Zhong has the experience, qualifications, attributes and skills necessary to serve on the Board because of her relevant experience in finance and accounting. Ms. Zhong is not a member of the Board of any other public company or any investment company, neither has she been a member of the boards of directors of such companies for the past ~~five~~ six years.

Wang Li An - Director

Mr. Wang Li An has been a director of the Company since September 2006 and the Chairman of the Board of Director of New Century since March 2006. Mr. Wang is also the Vice General Manager and Director of Bao Sai since June 2005. From July 2002 to May 2005, Mr. Wang was the Secretary of the Board of Bao Sai and was responsible for corporate finance, taxation, capital restructure, operational management, and government relations. From October 1997 to June 2002, Mr. Wang was the dean of Security Investment Department of ~~Shaanxi~~Shanxi Rising Group Corp. and was responsible for the initial set up of the subsidiaries and capital investment. Mr. Wang graduated from Xia Men University in 1987 with a bachelor degree in Mathematics. The Board believes that Mr. Wang has the experience, qualifications, attributes and skills necessary to serve on the Board because of his 9 years of experience with the Company and his knowledge of our business. Mr. Wang is not a member of the Board of any other public company or any investment company, neither has he been a member of the boards of directors of such companies for the past ~~five~~six years.

Board Committees

Our board of directors is currently composed of three directors: Mr. Zhao Yan Ding, Ms. Zhong Ya Li, and Mr. Wang Li An. All board action requires the approval of a majority of directors in attendance at a meeting at which a quorum is present. We currently do not have standing audit, nominating or compensation committees. Our entire board of directors handles the functions that would otherwise be handled by each of the committees.

Audit Committee Financial Expert

We do not have a separately designated standing audit committee. The entire Board of Directors acts as an audit committee for the purpose of overseeing the accounting and financial reporting processes, and audits of our financial statements. The Commission recently adopted new regulations relating to audit committee composition and functions, including disclosure requirements relating to the presence of an “audit committee financial expert” serving on its audit committee. In connection with these new requirements, our Board of Directors examined the Commission’s definition of “audit committee financial expert” and concluded that Zhong Ya Li qualifies as such an expert. Presently, there are three directors serving on our Board, Each of our directors, by virtue of his past employment experience, has considerable knowledge of financial statements, finance, and accounting, and has significant employment experience involving financial oversight responsibilities. Accordingly, we believe that our current directors capably fulfill the duties and responsibilities of an audit committee in the absence of such an expert.

Involvement in Certain Legal Proceedings

None of our directors, executive officers, or control persons have been involved in any of the following events during the past ten years:

l· Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of bankruptcy or within two years prior to that time; or

l· Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or

l· Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

l· Being found by a court of competent jurisdiction (in a civil violation), the SEC or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; or

l· Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: any Federal or State securities or commodities law or regulation; or any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity. This violation does not apply to any settlement of a civil proceeding among private litigants; or

l· Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Code of Ethics

We have adopted a code of ethics that applies to our principal chief executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions (the “Code of Ethics”). The Code of Ethics is designed to deter wrongdoing, and to promote the following:

Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships.

Full, fair, accurate, timely and understandable disclosure in reports and documents that a small business issuer files with, or submits to, the Commission and in other public communications made by the small business issuer.

Compliance with applicable governmental laws, rules and regulations.

The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code.

Accountability for adherence to the code.

Additionally, the Chief Financial Officer, Zhong Ya Li, carries out her functions under the code of ethics and rules of professional conduct as outlined by the Peoples Republic of China.

Section 16(a) Beneficial Ownership Reporting Compliance

Under Section 16(a) of the Exchange Act, all executive officers, directors, and each person who is the beneficial owner of more than 10% of the common stock of a company that files reports pursuant to Section 12 of the Exchange Act, are required to report the ownership of such common stock, options, and stock appreciation rights (other than certain cash-only rights) and any changes in that ownership with the Commission. Specific due dates for these reports have been established, and we are required to report, in this Form 10-k, any failure to comply therewith during the fiscal year ended December 2008. We believe that all of the officers and directors satisfied the filing requirements of Section 16(a) in 2008.

Item 11. Executive Compensation

Compensation Philosophy

Our board of directors have historically determined the compensation to be paid to our executive officers based on our financial and operating performance and prospects, and contributions made by the officers’ to our success. Each of the named officers will be measured by a series of performance criteria by the board of directors, on a yearly basis. Such criteria will be based on certain objective parameters such as job characteristics, required professionalism, management skills, interpersonal skills, related experience, personal performance and overall corporate performance.

Our board of directors have not adopted or established a formal policy or procedure for determining the amount of compensation paid to our executive officers. As our executive leadership and board of directors grow, our board of directors may decide to form a compensation committee charged with the oversight of executive compensation plans, policies and programs.

Our compensation program for our executive officers and all other employees is designed such that it will not incentivize unnecessary risk-taking. We provide our executive officers solely with a base salary to compensate them for services rendered during the year. Our policy of compensating our executives with a cash salary has served us well. To date, we have not believed it necessary to provide our executives discretionary bonuses, equity incentives, or other benefits in order for us to continue to be successful. While we have established an incentive stock option plan, the Company has made no awards under the plan. Senior executives do not have the incentive to take unnecessary risks in order to receive a bonus. However, as the Company grows and the operations become more complex, the Board of Directors may deem it in the best interest of the Company to provide such additional compensation to existing executives and in order to attract new executives.

Summary Compensation Table

The following table sets forth compensation earned by the executive officers during the three years preceding December 31, ~~2009~~2010. -

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Nonqualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
Zhao Yan Ding	~~2009~~2010		48,~~811~~503		-		-		-		-		-		-		-8,503
Chief Executive	~~2008~~2009		4,~~753~~811		-		-		-		-		-		-		-4,811
Officer	~~2007~~2008		4,~~445~~753		-		-		-		-		-		-		-4.753
Zhong Ya Li,	~~2009~~2010		0-7,966		-		-		-		-		-		-		-7,966
Chief Financial	~~2008~~2009		~~3,734~~0		-		-		-		-		-		-		-0
Officer	~~2007~~2008		3,~~492~~734		-		-		-		-		-		-		-3,734
Jie Su, former	~~2009~~2010		0-		-		-		-		-		-		-		-
Director, former	~~2008~~2009		~~15,867~~-		-		-		-		-		-		-		-
CEO & former	~~2007~~2008		15,~~000~~867		-		-		-		-		-		-		15,867
President
Zhi Dong Wang,	~~2009~~2010		~~4,590~~-		-		-		-		-		-		-		-
former director,	~~2008~~2009		4,~~244~~590		-		-		-		-		-		-		4,590
former CFO &	~~2007~~2008		34,~~698~~244		-		-		-		-		-		-		4,244
former VP

Elements of Compensation

We provide our executive officers with a base salary to compensate them for services rendered during the year. Our policy of compensating our executives with a cash salary has served us well. Because of our history of attracting and retaining executive talent, we do not believe it is necessary at this time to provide our executives equity incentives, or other benefits in order for us to continue to be successful.

Stock Option Plan

The Company has established the 2002 Incentive and Non-qualified Stock Option Plan (“the Plan”) under which we may grant to employees, officers, directors, attorneys, consultants or other advisers of the Company or affiliated companies up to 10,000,000 shares of common stock with such exercise price and vesting periods as the Board of Directors deems to be in the best interest of the Company. As of December 31, ~~2009 and 2008~~2010, no options or shares have been granted under the Plan.

Compensation of Independent Directors

No compensation had been paid to any director solely in connection with their role as a director for the fiscal year ended December 31, 2010.

Employment Agreements

There are no written employment agreements with any of the Company's officers, as of December 31, 2010.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of ~~April~~March 1429, ~~2010~~2011 (i) each person known to us to be the beneficial owner of more than 5% of its Common Stock, (ii) each of our directors and executive officers, and (iii) all directors and executive officers as a group.

Name and Address of Beneficial Owner (1)	Amount and Nature of Beneficial Ownership (2)(3)		Percentage of Class (3)
Guo Li An		16,000,000		38.0	%
XinChengQuChangLeXiLu169Hao Xi’An ShaanXi Province, P.R. China 710054
XinChengQuChangLeXiLu169Hao Xi’An Shanxi Province, P.R. China 710054
Mr. Wang Li An c/o GFR Pharmaceuticals, Inc. 99 Yan Xiang Road, Biosep Building Xi An, Shaan Xi Province, P.R. China 710054		0		0
Ms. Zhong Ya Li c/o GFR Pharmaceuticals, Inc. 99 Yan Xiang Road, Biosep Building Xi An, Shaan Xi Province, P.R. China 710054		0		0
Mr. Zhao Ya Ding c/o GFR Pharmaceuticals, Inc. 99 Yan Xiang Road, Biosep Building Xi An, Shaan Xi Province, P.R. China 710054		0		0
Officers and directors as a group (3 persons)		0		0

(1)

As used herein, a person is deemed to be the “beneficial owner” of a security if he or she has or shares voting or investment power with respect to such security, or has the right to acquire such ownership within sixty (60) days. As used herein, “voting power” includes the power to vote or to direct the voting of shares, and “investment power” includes the power to dispose or to direct the disposition of shares, irrespective of any economic interest therein.

(2)	Except as otherwise indicated by footnote, the persons named in the table have sole voting and investment power with respect to all Common Stock beneficially owned by them.

(3) Percentage ownership for a given individual or group is calculated on the basis of (i) the amount of outstanding shares owned as of ~~April~~March 729, ~~2009~~2011 plus , (ii) the number of shares that such individual or group has the right to acquire within sixty (60) days pursuant to options, warrants, conversion privileges or other rights.

Item 13. Certain Relationships and Related Transactions and Director Independence

~~Certain Relationships~~Transactions with Related Persons

~~On January 1, 2008, New Century entered into a stock purchase agreement with the holders of all 60,000,000 shares of the capital stock of Xi’an Jiaoda Bao Sai Bio-technology Co~~Mr., ~~Ltd~~Guo ~~(“Bao~~Li ~~Sai”) to acquire 58~~An,~~060,000~~ ~~shares~~who ofowns ~~its capital stock of Bao Sai, or 96~~38.7703% of ~~its~~the ~~capital stock. In connection with our acquisition of Bao Sai operation on January 1~~Company, ~~2008,~~made ~~we incurred~~ a ~~payment obligation~~loan ~~in the amount of $4,500,211 payable~~ to ~~the~~fund ~~former~~our ~~owners, including Xi’an Bio-sep Biological Filling Engineering Technology Company, Ltd~~operations. ~~(“Xi’an Bio-sep”)~~As ~~the former owner~~ of ~~46.67%.~~December ~~Our chairman~~31, ~~Mr. Wang Li-An~~2010, ~~was~~ the ~~director~~ ofbalance ~~Xi’an Bio-sep; and our Chief Executive Officer and Chief Financial Officer, Mr. Zhao Yan Ding and Ms. Zhong Ya Li,were also officers~~ of ~~Bao Sai prior to~~ the ~~date~~loan ~~of acquisition. Payment of the purchase price~~ was ~~made in two cash installments commencing in 2008~~$439, ~~first to Xi’an Bio-sep~~267, ~~the~~which ~~owner~~was ~~of 28 million shares~~unsecured, orinterest-free ~~46.67% of Bao Sai,~~ and ~~the~~repayable ~~balance~~on ~~in 2009 to the other three selling stockholders, in amounts equal to their respective percentage of share ownership of Bao Sai~~demand.

~~The purchase~~We ~~price~~have isa ~~payable~~75% asequity ~~follows.~~interest ~~For~~in ~~the~~Medicine ~~year~~but ~~ended~~Medicine ~~December~~is ~~31,~~no ~~2008,~~longer ~~the Company~~consolidated ~~made~~in aour ~~payment~~financial ofstatement ~~purchase~~and ~~price~~recovered ~~consideration totaling $2~~255,~~322,436.~~947 ~~The balance~~from ~~due~~this ofunconsolidated ~~$2,493,318 was paid on December 31, 2009~~affiliate. ~~The portion of the purchase price payable to related parties is:~~

X’ian Bio-sep Biological Filler Engineering Technology Co., Ltd. (a)	$	2,170,350
Wang Zhidong (b)		1,143,073
Guo Lizheng (c)		570,606
	$	3,884,029

The Company rents an office from Bao Sai at an annual rent of $3,779 on a monthly basis. Mr. Guo Li An, who owns 38.03% of the Company, beneficially owns 46.67% of Bao Sai.

In addition, our shareholder, Mr. Lian Guo contributed a loan to fund our operations. As of December 31, 2009, the balance of the loan was $1,960,874 which was unsecured, interest-free and repayable on demand.

We also had a loan payable to our affiliate Medicine in the principal amount of $980,575 as of December 31, 2009 which was unsecured and interest-free. The loan is repayable in four installments with the total amount due no later than 2012. We have a 75% equity interest in Medicine but Medicine is no longer consolidated. We expect to collect this amount according to the schedule agreed.

Director Independence

None of the members of the Company’s Board of Directors is an independent director, pursuant to the definition of “independent director” under the Rules of ~~FINRA~~ NASDAQ Stock Market.

ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Our auditor is HKCMCPA Company Limited (formerly ZYCPA Company Limited).

Audit Fees

~~ZYCPA~~ HKCMCPA Company Limited billed $3560,~~500~~000 to the Company for professional ~~serices~~services rendered for the audit of our ~~2009~~2010 financial statements and billed $58,000 to the Company for professional services rendered for the audit of our ~~former~~2009 ~~independent accountants,~~financial statements.

AGCA, Inc billed $ 38,000 to the Company for professional services rendered for the audit of our 2008 financial statements. AGCA, Inc. billed $ 6,000 to the Company for the review of the financial statements included in fiscal 2009 10-QSB filings.

Audit-Related Fees

The former independent accountants, AGCA, Inc. billed $11,000 and current independent accountants ~~ZYCPA~~ HKCMCPA Company, Limited billed $0 to the Company during ~~2009~~2010 for assurance and related services that are reasonably related to the performance of the ~~2009~~2010 audit or review of the quarterly financial statements.

Tax Fees

The current independent accountants billed $0 to the Company during ~~2009~~2010 for professional services rendered for tax compliance, tax advice and tax planning. AGCA, Inc. billed $0 to the Company during ~~2009~~2010 for professional services rendered for tax compliance, tax advice and tax planning.

All Other Fees

The former independent accountants, AGCA Inc. and current accountants, ~~ZYCPA~~ HKCMCPA Company Limited billed $0 to the Company in ~~2009~~ 2010 and ~~2008~~2009 for services not described above.

It is the policy of the Company that all services other than audit, review or attest services must be pre-approved by the Board of Directors. No such services have been performed by either the former independent accountants or current independent accountants.

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Exhibits.

Exhibit Number		Description
2.1		Purchase Agreement for Bao Sai, dated January 1, 2008 (1)
3.1		Articles of Incorporation as Amended (2)
3.2		Bylaws(2)
4.1		See Exhibits 3.1 and 3.2 for the provisions of our Articles of Incorporation and Bylaws that define the rights of holders of our Common Stock
4.2		Specimen of Common Stock Certificate (3)
4.3		2002 Non-Qualified Stock Incentive Plan(4)
10.1		Cooperation Agreement with Tangdu Hospital, as last amended on February 2, 2006 (English & Chinese versions)
10.2		Bao Sai Purchase Agreement, dated January 1, 2008 (5)
10.2		Bao Sai Purchase Agreement, dated January 1, 2008
14.1		Code of Ethics (6)
16.1		Letter onfrom ~~Change~~AGCA indated ~~Certifying~~January ~~Accountant~~28, 2010 (57)
17.1		Plan of Exchange and Letter of Intent (6)
21.1		Subsidiaries of the Registration
14.1		Code of Ethics (7)
31.1		Rule 13a-14(a)/15d-14(a) Certifications of Zhao Yan Ding, Chief Executive Officer
31.2		Rule 13a-14(a)/15d-14(a) Certifications of Zhong Ya Li, Chief Financial Officer
32.1		Section 1350 Certifications of Zhao Yan Ding, Chief Executive Officer
32.2		Section 1350 Certifications of Zhong Ya Li, Chief Financial Officer

(1)	Filed as an Exhibit to our Form 8-K filed with the Commission on March 23, 2008
(2)	Filed as an Exhibit to our Form 10-SB12G, as filed with the Commission on November 5, 1999.
(3)	Filed as an Exhibit to the Company’s Annual Report on Form 10-k, as filed with the Commission on April 21, 2006.
(4)	Filed as Exhibit 4.1 to our Form S-8 filed June 19, 2002
(5)	Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Commission on February 2, 2007
(6)	Contained in Form 8-K, as filed with the Commission on July 3, 2006.
(7)	Filed as an Exhibit to our Form 10-k filed with the commission April 13, 2007

(1)	Filed as an Exhibit to our Form 8-K filed with the Commission on March 23, 2008

(2)	Filed as an Exhibit to our Form 10-SB12G, as filed with the Commission on November 5, 1999.

(3)	Filed as an Exhibit to the Company’s Annual Report on Form 10-k, as filed with the Commission on April 21, 2006.

(4)	Filed as Exhibit 4.1 to our Form S-8 filed June 19, 2002

(5)	Filed as an exhibit to the Company’s Form 8K filed on March 28, 2008.

(6)	Filed as an Exhibit to our Form 10-k filed with the commission April 13, 2007

(7)	Filed as an Exhibit to the Company’s Current Report on Form 8-K, as filed with the Commission on January 29, 2010.

SIGNATURES

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

Date: ~~April~~ 14March 30, ~~2010~~2011

		GFR PHARMACEUTICALS, INC.

	By:	/s/ Zhao Yan Ding
		Zhao Yan Ding, Chief Executive Officer

	By:	/s/ Zhong Ya Li
		Zhong Ya Li, Chief Financial Officer

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/Zhao Yan Ding	Director	April 15, 2010
/s/ Zhao Yan Ding	Director	March 30, 2011
Zhao Yan Ding
/s/ Zhong Ya Li	Director	~~April~~March 1530, ~~2010~~2011
Zhong Ya Li
/s/ Wang Li-An	Director	~~April~~March 1530, ~~2010~~2011
Wang Li-An

Filing Compare · GFR PHARMACEUTICALS INC