LOGIQ, INC. - Quarter Report: 2008 September (Form 10-Q)

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2008

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 333-128399

SINOBIOMED INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	20-1945139
(State or other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification Number)
Lane 4705, No. 58, North Yang Gao Rd. Pudong New Area Shanghai China	201206
(Address of Principal Executive Offices)	(Zip Code)
011-86-21-58546923 (Registrant's Telephone Number, Including Area Code)
N/A (Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

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.

Large accelerated filer o Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company) Smaller 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 o No x

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

Yes o No o

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class	Outstanding as of October 31, 2008
Common Stock, $0.0001 par value	131,422,086

TABLE OF CONTENTS

		Page
FORWARD-LOOKING STATEMENTS		1
USE OF NAMES		1
PART I – FINANCIAL INFORMATION		1
ITEM 1. FINANCIAL STATEMENTS		1
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS		17
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK		20
ITEM 4. CONTROLS AND PROCEDURES		21

PART II – OTHER INFORMATION		21
ITEM 1. LEGAL PROCEEDINGS		21
ITEM 1A. RISK FACTORS		22
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		37
ITEM 3. DEFAULTS UPON SENIOR SECUTIRIES		38
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		38
ITEM 5. OTHER INFORMATION		38
ITEM 6. EXHIBITS		39
SIGNATURES		40

iii

Forward Looking Statements

This quarterly report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements. Forward-looking statements give the Company’s current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this annual report, including statements regarding the Company’s future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plans,” “potential,” “projects,” “ongoing,” “expects,” “management believes,” “we believe,” “we intend,” and similar expressions. These statements are based on the Company’s current plans and are subject to risks and uncertainties, and as such the Company’s actual future activities and results of operations may be materially different from those set forth in the forward looking statements. Any or all of the forward-looking statements in this periodic report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including:

dependence on key personnel;

competitive factors;

degree of success of research and development programs

the operation of our business; and

general economic conditions in the United States and China

These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this annual report.

Use of Names

In this quarterly report, the terms “Sinobiomed”, “Company”, “we”, or “our”, unless the context otherwise requires, mean Sinobiomed Inc. and its subsidiaries.

PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited - Prepared by Management

	Page

Consolidated Balance Sheet	2

Consolidated Statements of Operations	3

Consolidated Statements of Cash Flows	4

Consolidated Statement of Stockholders' (Deficit)	5

Notes to Consolidated Financial Statements	6

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Consolidated Balance Sheet

(Expressed in US Dollars)

Unaudited- Prepared by Management

Note 1 - Basis of Presentation - going concern

	September 30			December 31
	2008			2007

ASSETS

CURRENT ASSETS
Cash - unrestricted	$	346,731		$	64,866
Cash - restricted (Note 3)		197			184
Accounts receivable (Note 4)		69,766			48,071
Inventory (Note 6)		1,211,039			893,402
Prepaid expenses and deposits		198,063			428,841
Total current assets		1,825,796			1,435,364

Fixed assets (Note 7)		6,529,246			6,658,831

Total assets	$	8,355,042		$	8,094,195

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
Short-term loans (Notes 8 and 9)	$	6,492,158		$	7,105,118
Accounts payable		991,679			824,706
Interest payable		2,424,208			1,918,408
Unearned revenue		317,071			170,471
Shareholder loans (Note 10)		3,883,528			2,176,526
Other current liabilities		2,047,781			1,986,284
Total current liabilities		16,156,425			14,181,513

Convertible debentures (Note 11)		350,000			-
Total liabilities		16,506,425			14,181,513

COMMITMENTS AND CONTINGENCIES (Notes 1, 2, 3, 4, 5, 8, 9, 10, 11, 12, 13, 15, 17 and 19)

STOCKHOLDERS' (DEFICIT)
Common stock (Note 14)
Authorized 250,000,000 shares at par value of $ 0.0001 each Issued and outstanding 131,422,086 shares (2007 - 131,312,086)		13,143			13,132
Additional paid-in capital		29,084,356			26,127,797
Accumulated (deficit)		(35,476,143	)		(30,761,870	)
Accumulated other comprehensive income (loss)		(1,772,739	)		(1,466,377	)
Total stockholders' (deficit)		(8,151,383	)		(6,087,318	)

Total liabilities and stockholders' (deficit)	$	8,355,042		$	8,094,195

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

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Operations

(Expressed in US Dollars)

Unaudited- Prepared by Management

	Three Months Ended September 30						Nine Months Ended September 30
	2008			2007			2008			2007

REVENUE
Sales	$	293,853		$	221,975		$	827,174		$	784,472
Cost of goods sold		239,166			111,043			473,029			499,829
Gross profit		54,687			110,932			354,145			284,643
Other income		99,124			33,142			582,079			190,188
		153,811			144,074			936,224			474,831

EXPENSES
Advertising and promotion		67			562			575			3,227
Depreciation		53,557			45,099			161,056			89,709
General and administration		344,990			616,453			1,195,055			2,226,892
Repairs and maintenance		11,029			13,980			37,147			31,879
Research and development		76,793			246,252			264,531			942,396
Salaries and benefits		156,194			177,209			521,992			448,469
Stock-based compensation (Note 15)		928,570			733,612			2,762,886			1,887,222
Travel		19,804			117,694			65,965			256,114
Total expenses		1,591,004			1,950,861			5,009,207			5,885,908

Net (loss) for the period from operations		(1,437,193	)		(1,806,787	)		(4,072,983	)		(5,411,077	)

OTHER INCOME AND EXPENSES
Interest and bank charges (Notes 8, 9 and 10)		(121,980	)		(151,632	)		(395,638	)		(833,292	)
Gain on forgiveness of interest on debt		-			2,284,194			-			2,284,194
(Losses) on loans and guarantees to other parties (Note 5)		(80,415	)		(36,758	)		(245,652	)		(183,869	)
Net income (loss) for the period before minority interests		(1,639,588	)		289,017			(4,714,273	)		(4,144,044	)

Minority interest in loss for the period		-			-			-			8,039

Net income (loss) for the period	$	(1,639,588	)	$	289,017		$	(4,714,273	)	$	(4,136,005	)

Other comprehensive income (loss)
Foreign currency translation	$	909			(78,658	)	$	(306,362	)		(524,696	)

Comprehensive income (loss)		(1,638,679	)	$	210,359			(5,020,635	)	$	(4,660,701	)

Net (loss) per common share - basic and fully diluted:
Net (loss) for the period	$	(0.01	)	$	0.00		$	(0.04	)	$	(0.03	)

Weighted average number of common stock outstanding		131,422,086			126,478,571			131,412,852			136,622,638

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

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statements of Cash Flows

(Expressed in US Dollars)

Unaudited- Prepared by Management

	Three Months Ended September 30						Nine Months Ended September 30
	2008			2007			2008			2007
Cash from (used in) operating activities:
Net (loss)	$	(1,639,588	)	$	289,017		$	(4,714,273	)	$	(4,136,005	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		205,647			194,086			619,016			569,887
Loss on disposition of fixed assets		-			145			-			6,844
Imputed interest expense on shareholders' loans		50,999			30,086			135,934			86,419
Minority interest in net income (loss)		-			-			-			(8,039	)
Shares issued for services		28,875			-			57,750			85,400
Stock-based compensation		928,570			733,612			2,762,886			1,887,222
Gain on foregiveness of interest on debt					(2,284,194	)					(2,284,194	)
Net change in operating assets and liabilities:
Accounts receivable		327,652			103,907			(21,695	)		54,935
Inventory		50,490			(349,306	)		(317,637	)		(249,186	)
Prepaid expenses and deposits		(75,680	)		(685,688	)		230,778			(759,193	)
Accounts payable		(31,763	)		74,881			166,973			306,550
Interest payable		156,688			(334,903	)		505,800			294,177
Unearned revenue		51,584			83,602			146,600			86,635
Other current liabilities		(198,677	)		673,603			61,497			624,645

Net cash (used in) from operating activities		(145,203	)		(1,471,152	)		(366,371	)		(3,433,903	)

Cash (used in) investing activities:
Purchases of fixed assets		(24,995	)		(27,206	)		(41,942	)		(120,633	)
Proceeds of disposition of fixed assets		-			-			-			3,911

Net cash (used in) investing activities		(24,995	)		(27,206	)		(41,942	)		(116,722	)

Cash from (used in) financing activities:
Loans made to unrelated parties		-			-			-			(499,683	)
Repayments of loans by unrelated parties					403						650,798
Share subscriptions received		-			6,407,500			-			16,577,501
Finders fees paid in cash		-			(488,500	)					(1,360,375	)
Short-term loans received		-			180,794						924,700
Repayments of short-term loans		-			(3,854,286	)		(1,057,601	)		(13,136,238	)
Proceeds of convertible debentures received		350,000						350,000
Loans received from shareholders		80,409						1,563,119			898,693
Repayments of loans from shareholders					(463,935	)		(20,800	)		(956,415	)

Net cash from (used in) financing activities		430,409			1,781,976			834,718			3,098,981

Effect of other comprehensive income (loss) on cash		(15,781	)		(677,864	)		(144,527	)		(797,639	)

Increase (decrease) in cash		244,430			(394,246	)		281,878			(1,249,283	)

Cash, beginning of period		102,498			1,291,243			65,050			2,146,280

Cash, end of period	$	346,928		$	896,997		$	346,928		$	896,997

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

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Consolidated Statement of Stockholders' (Deficit)

(Expressed in US Dollars)

Unaudited- Prepared by Management

	Common Stock		Amount		Additional paid-in capital		Cumulative Other Comprehensive Income (loss)			Accumulated (Deficit)			Stockholders' (Deficit)

Balance December 31, 2007		131,312,086	$	13,132	$	26,127,797	$	(1,466,377	)	$	(30,761,870	)	$	(6,087,318	)

Issue of shares for services		110,000		11		57,739		-			-			57,750
Stock-based compensation		-		-		917,158		-			-			917,158
Imputed interest on shareholders' loans		-		-		35,828		-			-			35,828
Net (loss) for the period		-		-		-		(194,382	)		(1,858,906	)		(2,053,288	)

Balance March 31, 2008		131,422,086	$	13,143	$	27,138,522	$	(1,660,759	)	$	(32,620,776	)	$	(7,129,870	)

Stock-based compensation		-		-		917,158		-			-			917,158
Imputed interest on shareholders' loans		-		-		49,107		-			-			49,107
Net (loss) for the period		-		-		-		(112,889	)		(1,215,779	)		(1,328,668	)

Balance June 30, 2008		131,422,086	$	13,143	$	28,104,787	$	(1,773,648	)	$	(33,836,555	)	$	(7,492,273	)

Stock-based compensation		-		-		928,570		-			-			928,570
Imputed interest on shareholders' loans		-		-		50,999		-			-			50,999
Net (loss) for the period		-		-		-		909			(1,639,588	)		(1,638,679	)

Balance September 30, 2008		131,422,086	$	13,143	$	29,084,356	$	(1,772,739	)	$	(35,476,143	)	$	(8,151,383	)

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

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

1. BASIS OF PRESENTATION

The unaudited financial statements as of September 30, 2008 included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with United States generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that these financial statements be read in conjunction with the December 31, 2007 audited financial statements and notes thereto.

2. BASIS OF PRESENTATION – GOING CONCERN

These consolidated financial statements of Sinobiomed Inc. (the “Company”) have been prepared on a going-concern basis which assumes that the Company will be able to realize assets and discharge liabilities in the normal course of business for the foreseeable future.

The Company has experienced losses since commencement of operations amounting to $35,476,143 and has negative working capital and a stockholders’ deficit as of September 30, 2008, which raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to meet its commitments as they become payable is dependent on the ability of the Company to obtain necessary financing or achieve a profitable level of operations. There are no assurances that the Company will be successful in achieving these goals.

The Company is in the process of researching, developing, testing and evaluating proposed new pharmaceutical products and has not yet determined whether these products are technically or economically feasible. The underlying value of the company is entirely dependent on the successful implementation of one or more of these products, the ability of the Company to obtain the necessary financing to complete development and upon future profitable production or sufficient proceeds from the disposition of manufacturing rights. Management’s plan is to actively search for new sources of capital, including government and non-government grants toward research projects and new equity investment.

These financial statements do not give effect to adjustments to the amounts and classifications to assets and liabilities that would be necessary should the Company be unable to continue as a going concern.

3. CASH - RESTRICTED

Restricted cash consists of $197 on deposit pursuant to agreement with a bank to maintain funds on deposit to ensure payment of interest on debt.

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

4. ACCOUNTS RECEIVABLE

Trade accounts receivable consists of receivable for sales of product on credit. Accounts receivable are net of allowance for doubtful accounts in the amount of $9,210.

5. LOANS TO UNRELATED PARTIES

The Company has loans receivable from other companies arising from guarantee arrangements under which the Company guaranteed the debt of other companies and has been called on its guarantees (Note 8). The company has $5,452,369 receivable from these companies including interest accrued on the original debts since call of the guarantees, but has provided for the full amount of the receivables due to uncertainty of collectibility. $245,652 has been charged to income in the nine months ended September 30, 2008 (2007 - $223,049) in respect of the provision. The increase in the amount of the loan receivable and the corresponding provision from year to year arises due to the interest accruing on the debt guaranteed. Under the terms of the guarantee agreements, the other companies had until December 31, 2007 to pay the Company, but nothing has been paid.

The Company has fully provided for $14,303 of additional loans receivable from sales agents and employees. $823 has been charged to expense in the nine months ended September 30, 2008 (2007 - $700 recovery) in respect of the provision.

The Company has fully provided for $136,446 of loans receivable from minority shareholders of Wanxing Cosmetic.

6. INVENTORY

Inventory consists of the following:

	September 30, 2008		December 31, 2007

Raw materials	$	163,560	$	74,007
Goods in process		809,556		550,198
Finished goods		237,923		269,197

	$	1,211,039	$	893,402

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

7. FIXED ASSETS

Fixed assets consist of the following:

	September 30, 2008		December 31, 2007

Buildings	$	6,646,817	$	6,220,810
Climate control equipment		1,350,997		1,265,923
Computer software		2,045		1,917
Land license		2,454,480		2,299,920
Manufacturing equipment		2,286,854		2,119,775
Office furniture and equipment		176,049		156,532
Other equipment		31,365		29,048
Road		36,776		34,460
Vehicles		748,679		701,535

		13,734,062		12,829,920
Less: Accumulated depreciation		7,204,816		6,171,089

	$	6,529,246	$	6,658,831

The land license is for the use of the land on which the Company’s buildings are situated, and is for a term of 30 years from September 18, 1996. At the end of the license, the Company expects to have an option to renew the license.

8. SHORT-TERM LOANS

The Company has obligations under the following loan agreements.

Name of Lender	Principal amount September 30, 2008		Principal amount December 31, 2007		Due date		Interest rate Not due/ overdue			Security (1)

China Construction Bank	$	1,928,520	$	1,957,670		October 16, 2004		5.31% / 7.56	%		Building mortgage	(2)
Shenzhen Development Bank		818,160		766,640		June 6, 2005		6.372%/9.56	%		Guarantee
Industrial Bank		2,693,558		3,395,128		December 19, 2005		6.138% / NA			Guarantee	(3)
Zheda Haina S&T Holding		613,620		574,980		-		-				(4)
Luoyang Zonghong		438,300		410,700		-		-
	$	6,492,158	$	7,105,118

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited - Prepared by Management)

(1)

Guarantees have been arranged with various companies under cross-guarantee arrangements where each guarantees a loan for the other, or a loan forward basis where Wanxing Bio-Pharmaceuticals borrows and then loans a specified amount to the guarantor in return for the guarantee. The Company has guaranteed debt of two other companies under such arrangements, up to an amount of $3,652,500 (25,000,000 Chinese yuan) plus interest. The Company’s debt to the Industrial Bank arose upon the Company being called on its two guarantees. The Company recorded a corresponding loan receivable from the other companies and has made a provision for uncollectibility in the full amount of the receivable (Note 5).

(2)

Buildings with carrying value of $3,849,637 have been mortgaged as security.

(3)

A payment on the Industrial Bank loan in the nine months ended September 30, 2008 was provided by the minority shareholder of Wanxing Bio-Pharmaceuticals pursuant to a guarantee provided by the minority shareholder. The corresponding debt to the minority shareholder is included in Shareholder Loans (Note 10).

(4)

The debt to Zheda Haina arose upon the payment by Zheda Haina of part of the Company’s loan from Shenzhen Development Bank pursuant to guarantees provided to the bank by Zheda Haina in 2004.

The bank loans are all delinquent at September 30, 2008. The Company has been involved in litigation over some of its bank loans. Two of the suits have been settled, and a further one is outstanding as at September 30, 2008 as more fully described in Note 9.

On April 3, 2008, Wanxin Bio-pharmaceuticals agreed to a revised payment schedule for the bank loan with the China Construction Bank. Under this agreement, Wanxin Bio-pharmaceuticals agreed to pay 4 Million yuan (approximately $584,000) by June 30, 2008 and the balance of principal and interest by September 30, 2008. Wanxin Bio-pharmaceuticals paid 1,200,000 yuan by June 30, 2008

On April 8, 2008, Wanxin Bio-pharmaceuticals agreed to a revised payment schedule for the bank loan with the Industrial Bank. Under this agreement, Wanxin Bio-pharmaceuticals agreed to pay 3 Million yuan (approximately $438,000) by April 30, 2008, 10 Million yuan (approximately $1,461,000) by June 30, 2008 and the balance of principal and interest by September 30, 2008. Wanxin Bio-pharmaceuticals paid 1 Million yuan by April 30, 2008 and another 600,000 yuan by June 30, 2008.

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

9. LITIGATION

The Company has been sued by the Shenzhen Development Bank to enforce payment under the loan agreement with that bank and judgment was granted in favor of the bank by the 1st Secondary People’s Court of Shanghai. On October 25, 2006 the Company and the bank entered into a settlement agreement to settle the litigation and the debt. The debt at that time had a principal balance of 17,800,000 yuan (approximately $US 2,600,000 at September 30, 2008 exchange rates). Under the terms of the settlement agreement, the Company was obligated to pay the bank 5 million yuan (approximately $US 730,000) before October 30, 2006, 3 million yuan (approximately $US 438,000) before March 20, 2007, 3 million yuan (approximately $US 438,000) before June 20, 2007, 3 million yuan (approximately $US 438,000) before September 20, 2007 and 3.8 million yuan (approximately $US 555,000) plus the balance of accrued interest before December 20, 2007. The Company made a payment of 5 million yuan in compliance with the settlement agreement in December 2006. The Company defaulted on the settlement agreement by not making the scheduled loan payment of 3 million yuan (approximately $US 438,000) on March 20, 2007. The bank granted a waiver of default in respect of this payment until May 30, 2007. The Company made the payment due May 30, defaulted on the two payments due by June 20, 2007 and September 20, 2007, made payments of 4,200,000 yuan after September 30, 2007, and has defaulted on the payment due December 20, 2007.

10. SHAREHOLDER LOANS

The loans from shareholders in the aggregate amount of $3,883,528 do not bear interest. $1,962,972 payable to a minority shareholder of a subsidiary was due December 31, 2007, $500,000 is payable on demand, and the remainder have no stated repayment terms. Imputed interest has been recorded on the shareholder loans at an interest rate of 5.31%. The net interest calculated is included in interest expense and has been recorded as additional paid-in capital since the imputed interest is not payable.

11. CONVERTIBLE DEBENTURES

On July 30, 2008 the Company closed an initial $100,000 portion of a $500,000 financing pursuant to a subscription agreement dated June 30, 2008 between the Company and an Asian-based investment fund. The Company issued the subscriber a $100,000 principal amount convertible debenture due July 1, 2011, convertible into shares of the Company’s common stock, par value $0.0001, at a price of $0.30 per share together with 300,000 common share purchase warrants (each a “Warrant”) and 600,000 common share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.33 per share for the period ending on December 1, 2008. Each Piggyback Warrant, which will only be available for exercise by the holder thereof if the Warrants have been exercised in full (unless subsequently waived in writing by the Company), entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.37 per share for the period ending on July 1, 2010.

Interest is payable on the principal amount of the convertible debenture outstanding from the closing date at 8% per annum, calculated and payable quarterly in arrears. Interest payable under the convertible debenture shall be paid on the last day of September, December, March and June of each year. The holder of the convertible debenture has the option to convert any accrued and unpaid interest due at the time of a conversion.

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

As at September 30, 2008 the Company has received $250,000 on a second $250,000 portion of the above financing. See also Note 19.

12. RELATED PARTY TRANSACTIONS

The Company is indebted to a company related to a shareholder in the amount of $300,000 and to the minority shareholder of a subsidiary in the amount of $2,886,093, and to four individual shareholders in the aggregate amount of $697,435 for shareholders’ loans.

The Company has paid or accrued finders’ fees to shareholders and a company related to a shareholder in the amounts of $1,295,875 and 20,000 shares.

The Company has incurred fees and associated expenses in the amount of $40,420 to a company related to a shareholder for services. The Company has committed to pay that company $2,000 per month plus expenses for services. The arrangement may be terminated by either party on one month notice.

The Company has committed to purchase consulting services from a shareholder at the rate of $10,000 per month for five years from March 31, 2007. The Company is indebted to the shareholder in the amount of $120,000 at September 30, 2008 in respect of these fees.

Two minority shareholders of a subsidiary are indebted to the Company in the amount of $136,165. The Company has provided an allowance for the full amount of this indebtedness (Note 5).

13. INCOME TAXES

The Company is subject to Chinese income taxes to the extent of its operations in China and in the United States should it have operations in the United States. The company had no income tax expense during the reported periods due to net operating losses.

A reconciliation of income tax expense to the amount computed at the statutory rates is as follows:

	Nine months ended September 30, 2008
Loss for the period	$	(4,714,273	)
Average statutory tax rate in China		33	%

Expected income tax provision	$	(1,555,710	)
Non-deductible stock-based compensation and imputed interest expenses		956,611
Tax basis of deferred expenses in excess of book cost		180,260
Unrecognized tax losses		418,840

Income tax expense	$	—

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

Significant components of deferred income tax assets are as follows:

	September 30, 2008
Operating losses carried forward		4,400,486
Excess of tax basis over book cost of deferred expenses in China	$	4,927,525
Valuation allowance		(9,328,011	)

Net deferred income tax assets	$	-

The Company has tax losses carried forward for Chinese tax purposes of approximately $13,335,000 which will expire in 2013 if not utilized.

14. COMMON STOCK

On January 23, 2008, the Company issued 110,000 shares of common stock in return for the services of the Company’s Chief Financial Officer for the 12 months commencing January 1, 2008. The Company recognized an issue price for the shares of $0.525 per share, reflecting a discount from market price on that date due to there being a hold period before the shares can be sold.

Warrants outstanding and exercisable as of September 30, 2008 are as follows:

Exercise Price	Number of Warrants		Expiry Date
$ 0.33		300,000		December 1, 2008
$ 1.25		1,012,334		May 14, 2009
$ 1.75		4,061,500		May 14 to May 30, 2009
$ 2.00		2,624,400		September 11, 2009
$ 2.00		274,169		December 5, 2009
		8,272,403

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

15. STOCK-BASED COMPENSATION

The Company’s 2006 Stock Option and Incentive Plan (the “Plan”) allows the Company to award stock options for up to 10,000,000 (post-forward stock split) shares to its directors, officers, employees, and consultants. The plan is administered by the Company’s Board of Directors, or its assigned committee, who has discretion as to the awards and terms of the options to be issued. Upon exercise of options, shares are issued from treasury.

On March 1, 2007, 6,000,000 stock options were granted under the Plan with the exercise price of $0.50 per share. 300,000 of 6,000,000 options vested on March 1, 2007 with the reminder to vest in equal monthly proportions on the first day of each of the next 19 months.

On May 30, 2007, 1,000,000 stock options were granted under the Plan with the exercise price of $1.90 per share. 500,000 of 1,000,000 options will vest on June 1, 2009 with the reminder to vest on June 1, 2011. On August 31, 2008 the Company re-priced these options to an exercise price of $0.50, with all other terms of the options remaining as they were.

On November 29, 2007, 1,000,000 stock options were granted under the Plan with the exercise price of $1.67 per share. 50,000 of 1,000,000 options vested on November 29, 2007 with the reminder to vest in equal monthly proportions on the first day of each of the next 19 months. On August 31, 2008 the Company re-priced these options to an exercise price of $0.50, with all other terms of the options remaining as they were.

A summary of the Company’s stock option activities is presented below:

	Number of options		Weighted Average Exercise Price		Weighted Average Grant-date Fair Value		Aggregate Intrinsic Value
Options Outstanding, January 1, 2008		8,000,000		0.50		0.825	$	-
Options granted:		-
Options Outstanding, September 30, 2008		8,000,000		0.50		0.68	$	-

Compensation cost related to options to vest in the future will be recognized as the related options vest. Outstanding options vest as follows:

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

Vested at	Range of Exercise Prices		Number of Shares		Weighted Average Exercise Price		Compensation Expense to be Recognized		Aggregate Intrinsic Value
September 30, 2008 and earlier		0.50		6,200,000		0.50			$	-
Remainder of 2008		0.50		450,000		0.50	$	278,080		-
2009		0.50		850,000		0.50		827,594		-
2010		0.50		-		0.50		258,141		-
2011		0.50		500,000		0.50		107,559		-
				8,000,000						-

Non-vested options are as follows:

	Number outstanding		Total fair value		Weighted average grant-date fair value
Non-vested options outstanding, January 1, 2008		4,650,000	$	4,037,450		-
Non-vested options outstanding, September 30, 2008		1,600,000	$	740,800		0.46
Options vested in nine months ended September 30, 2008		3,050,000	$	2,201,000	$	0.825

If not previously exercised or canceled, options outstanding at September 30, 2008 will expire as follows:

Range of

Exercise Prices

Number

Weighted average

Expiry Date

High

Low

of Shares

exercise price

Year Ending December 31,

2012

0.50

8,000,000

0.50

The fair values of the options repriced in August 2008 were estimated at values of $0.44 per share (May 30, 2007 grant), and $0.45 (November 29, 2007 grant) using the Black-Scholes Option Pricing Model with the following weighted average assumptions:

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

	May, 2007			November, 2007
Volatility:		104.3	%		104.3	%
Risk-free interest rate:		2.06	%		2.06	%
Dividend yield:		—			—
Expected lives (years):		3.75			4.25

Option-pricing models require the use of highly subjective estimates and assumptions including the expected stock price volatility. Changes in the underlying assumptions can materially affect the fair value estimates and therefore, in management’s opinion, existing models do not necessarily provide reliable measure of the fair value of the Company’s stock options.

16. OTHER INCOME

Other income includes $164,680 in government grant revenue to support clinical trials of the Company’s malaria vaccine and $400,000 contract revenue from hiring out part of the Company’s research and manufacturing facilities and staff to another company.

17. CONTINGENT PATENT RIGHTS COMMITMENTS

The Company has committed to payments for rights to use patented technology, contingent upon successful clinical trials and approval of products for production as follows:

11 Million yuan (approximately $1,607,000) will be payable upon completion of both Phase III clinical trials and approval of new drug certificate for Ethelphazine, an anti-tumor drug entering Phase III clinical trials.

20 Million yuan (approximately $2,922,000) will be payable upon completion of both Phase III clinical trials and approval of new drug certificate for the Company’s recombinant malaria vaccine. This drug is expected to enter Phase II clinical trials in 2008.

2.5 Million yuan (approximately $365,000) will be payable in respect of the Company’s recombinant Human Stem Cell factor bio-product in two stages. The first 1 Million yuan (approximately $146,000) will be due by the time of upon completion of Phase II trials and 1.5 Million yuan (approximately $219,000) will be payable upon completion of both Phase III clinical trials and approval of the product for production. This product is in Phase I trials.

18. SEGMENTED INFORMATION

The Company is operating in a single geographic market, the People’s Republic of China. The Company has two operating segments, the cosmetics business and the pharmaceuticals business. Segment revenues, net loss and assets are as follows:

SINOBIOMED INC.

AND CONSOLIDATED SUBSIDIARIES

Notes to Consolidated Financial Statements

September 30, 2008

(Expressed in US Dollars)

(Unaudited – Prepared by Management)

	Revenues		Net loss (income)			Total assets
Pharmaceuticals	$	856,296	$	1,527,292		$	7,764,700
Cosmetics		552,957		(155,924	)		476,483
Parent company administration				3,342,905			113,859
Total consolidated	$	1,409,253	$	4,714,273		$	8,355,042

19. SUBSEQUENT EVENTS

On October 2, 2008 the Company entered into a Corporate Consulting Services Agreement dated effective September 1, 2008 to appoint a new Chief Financial Officer. The term of the Agreement is for a period of three years and shall renew automatically for subsequent one-year periods unless notice not to renew is given by either party in writing at least 60 calendar days prior to the end of the term. As compensation for his services as the Company’s CFO, the Company shall pay to the CFO a monthly salary of US$5,000, which will become $15,000 per month should the Company succeed in completing a private placement of shares for $5,000,000 or greater. Also on October 2, 2008 the Company agreed to grant 500,000 stock options to the CFO at an exercise price of US$0.50 per share which options shall expire five years from the grant date. 5% of the options vested immediately and another 5% will vest at the start of each of the subsequent 19 months.

On November 11, 2008 the Company closed a second $250,000 portion of a $350,000 financing, which was reduced from the original amount of $500,000 pursuant to a subscription agreement between the Company and an Asian-based investment fund. The Company issued the fund a $250,000 principal amount convertible debenture due July 1, 2011, convertible into shares of the Company’s common stock, par value $0.0001, at a price of $0.30 per share together with 750,000 common share purchase warrants and 1,500,000 common share purchase piggyback warrants. Each warrant entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.33 per share for the period ending on December 1, 2008. Each piggyback warrant, which will only be available for exercise by the holder thereof if the warrants have been exercised in full (unless subsequently waived in writing by the Company), entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.37 per share for the period ending on July 1, 2010.

Interest is payable on the principal amount of the convertible debenture outstanding at 8% per annum, calculated and payable quarterly in arrears. Interest payable under the convertible debenture shall be paid on the last day of December, March, June and September of each year. The holder of the convertible debenture has the option to convert any accrued and unpaid interest due at the time of a conversion.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this quarterly report. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under “Risk Factors” in the Form 10-KSB filed with the SEC on EDGAR on April 14, 2008.

Overview

As from the inception of the Company and until the end of November 2006 we were in business of developing a Patent known as the "Car Door Safety Feature", however, we determined to change our business plan from the development of the Car Door Safety Feature Patent and began focusing around the Chinese biopharmaceutical industry. On January 12, 2007, the Company completed the reverse merger of Wanxin Bio-Technology Limited (“Wanxin”) and all the subsidiaries of Wanxin in accordance with the Share Purchase Agreement, whereby the Company acquired 100% of the issued and outstanding shares in the capital of Wanxin (the “Wanxin Capital”), through the issuance of 1,750,000 (pre forward stock split) shares of common stock of the Company in aggregate to the shareholders of Wanxin on a pro rata basis in accordance with each Wanxin shareholder’s percentage of ownership in Wanxin.

Wanxin is a company incorporated under the laws of the British Virgin Islands. Its only asset at the time of the reverse merger was 100% ownership of Manhing Enterprises Limited (“Manhing”), a company incorporated under the laws of Hong Kong. Manhing’s only asset was 82% ownership of Shanghai Wanxing Bio-pharmaceuticals Co., Ltd. (“Shanghai Wanxing”), a Sino-Foreign Joint Venture company incorporated with limited liability under the laws of the People’s Republic of China. Shanghai Wanxing’s business is research, development, manufacture and sale of pharmaceutical products, primarily for the Chinese market. There are currently 10 products approved or in development: three on the market, four in clinical trials and three in R&D. Shanghai Wanxing’s products respond to a wide range of diseases, including malaria and hepatitis. Currently manufactured product lines include Wanferon/Wanferin, formulations of recombinant human interferon for treating hepatitis and viral diseases, Leflunomide, a drug for the treatment of rheumatoid arthritis, and acidic Fibroblast Growth Factor (“aFGF”), a product that treats diabetic ulcers and burns and supports recovery from plastic surgery.

Shanghai Wanxing is also the owner of 50.33% of Shanghai Wanxing Bio-science Cosmetic Co., Ltd. (“Wanxing Cosmetic”). Wanxing Cosmetic manufactures skin-care products under the brand name KaiYing.

During the nine months ended September 30, 2008, Shanghai Wanxing was approved to receive grants from government funding of RMB 9 million (US$1.24 million) to continue the clinical trial of its recombinant malaria vaccine and advance its development with partner Second Military Medical University (“SMMU”). This government funding has been delayed until the end of the year.

The grant from China’s Ministry of Science and Technology, awarded jointly to Shanghai Wanxing and SMMU, is part of the key “863 Program” to support technology development as part of the government’s 11th five-year plan. Two-thirds of the fund will support Shanghai Wanxing’s planned Phase II Clinical Trial of the patented PfCP2.9 vaccine to be conducted in epidemic areas. The current research schedule calls for the application to the Chinese Food and Drug Administration (SFDA) for the Phase II Clinical trial in malaria endemic areas to be submitted by end of 2008.

The balance of the fund will support the joint development by Shanghai Wanxing and SMMU of a multistage, multivalent vaccine based on PfCP2.9. The multistage, multivalent vaccine, which seeks to improve immunogenicity and extend the immune period, is expected to enter into clinical trials in 2009.

Results of Operations

The Company has revenues from the Wanferon/Wanferin product line, aFGF, and the cosmetics products in the nine months ended September 30, 2008. Shanghai Wanxing is involved in a dispute with the company which manufactures the Leflunomide product under license. Should this dispute not be resolved, we may not realize further sales of the Leflunomide product. The Company also sells a relatively small amount of reagent, which is a product completed only to the stage where it can still be made into various different recombinant protein based pharmaceutical products.

Wanferon/Wanferin and interferon reagent sales accounted for $200,708 of sales revenue and $90,879 of cost of sales in the nine months ended September 30, 2008, as compared to $329,152 of sales revenue and $267,307 of cost of sales in the nine months ended September 30, 2007. The market for this product line is very competitive, and selling prices and volume have been decreasing through the 2006, 2007 years and to date in 2008 due to increased competition.

There has been no sales of the Leflunomide product and therefore no revenue or costs attributable to the product for the three months ended September 30, 2008.

aFGF sales accounted for $73,509 of sales revenue and $118,505 of cost of sales in the nine months ended September 30, 2008. There was no sales revenue or cost of sales of aFGF in the nine months ended September 30, 2007 as the product was awaiting regulatory approval at the time.

Cosmetics sales accounted for $552,957of sales revenue and $258,714 of cost of sales in the nine months ended September 30, 2008, as compared to $142,094 of sales revenue and $104,055 of cost of sales in the nine months ended September 30, 2007.

Operating Expenses

Operating expenses decreased from $5,885,908 for the nine months ended September 30, 2007 to $5,009,207 for the nine months ended September 30, 2008. This decrease was primarily due to (1) a decrease in General and Administrative expenses charged to operations due to the closure of the manufacturing facility for government inspection and recertification for most of the nine months ended September 30, 2007, which resulted in far less expense charged to cost of goods manufactured in 2007 than would otherwise have been charged, and (2) reduction in research and development activity so far in 2008, partly offset by (3) an increase in expenses relating to Stock-Based Compensation on options issued to employees and consultants .

Stock-based compensation

Stock-based compensation expense of $2,762,886 was recognized in the nine months ended September 30, 2008 compared to $1,887,222 in the comparable period in the previous year. The expense represents:

$2,045,415 as recognition of nine months amortization of 6,000,000 options with an aggregate value of $4,545,364 granted on March 1, 2007 in accordance with the Company’s stock option and incentive plan. Under the terms of the grant, 5% of the options vested immediately and another 5% vest on the first day of each subsequent month until October 1, 2008;

$156,834 as recognition of nine months amortization pertaining to 1 million options with an aggregate value at time of grant of $828,928, granted on May 30, 2007 in accordance with the terms of the Company's stock option and incentive plan. These options were re-priced and revalued on August 31, 2008. Under the terms of the grant, 50% of the options will vest on May 30, 2009 and the remaining 50% on May 30, 2011; and

$560,637 as recognition of nine months amortization pertaining to 1 million options with an aggregate value at time of grant of $1,223,630, granted on November 29, 2007 in accordance with the terms of the Company's stock option and incentive plan. These options were re-priced and revalued on August 31, 2008. Under the terms of the grant, 5% of the options vested immediately and another 5% vest on the first day of each subsequent month thereafter starting on January 1 2008.

Other Income and Expenses

During the nine month period ending September 30, 2008, the Company's interest expense (included in other income and expenses) was reduced from $833,292 in the comparable period to $395,638, attributable to a substantial reduction of its bank debt in 2007.

Net Loss

As a combined result of (1) the decrease in our operating expenses, (2) the reduction in other income and expenses, and (3) the increase in stock-based compensation expense our net loss for the nine months ended September 30, 2008, was $4,714,273, compared to a net loss of $4,136,005 for the nine months ended September 30, 2007 and the related cash used in operating activities in the nine months ended September 30, 2008, was $366,371, compared to cash used of $3,433,903 for the nine months ended September 30, 2007.

Liquidity and Capital Resources

At September 30, 2008, we had $346,928 of cash on hand and a working capital deficiency of $14,330,629. The Company is currently in the process of seeking to raise additional funds from equity and/or debt financing. The Company believes that its cash on hand as at September 30, 2008, and the funds it expects to raise from additional equity and/or debt financing, and its future revenues from its new products currently entering the market will enable the Company to meet its working capital needs and its debt service requirements for the following 12 months.

On July 30, 2008 the Company closed an initial $100,000 portion of a $500,000 financing pursuant to a Non-U.S. and Non-Canadian Private Placement Subscription Agreement, dated June 30, 2008, between the Company and Accelera Evolution Limited (“Accelera”), an Asian-based investment fund. The Company issued Accelera a $100,000 principal amount convertible debenture due July 1, 2011, convertible into shares of our common stock, par value $0.0001, at a price of $0.30 per share together with 300,000 common share purchase warrants (each a “Warrant”) and 600,000 common share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.33 per share (each a “Warrant Share”) for the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008 (the “Warrant Exercise Period”). Each Piggyback Warrant, which will only be available for exercise by the holder thereof if the Warrants have been exercised in full (unless subsequently waived in writing by the Company), entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.37 per share (each a “Piggyback Warrant Share”) for the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the “Piggyback Warrant Exercise Period”).

Interest is payable on the principal amount of the convertible debenture outstanding at 8% per annum, calculated and payable quarterly in arrears. Interest payable under the convertible debenture shall be paid on the last day of September, December, March and June of each year. The holder of the convertible debenture has the option to convert any accrued and unpaid interest due at the time of a conversion.

The proceeds from the transaction have been or will be used to fund the business of Sinobiomed Inc. and for general corporate purposes.

On November 11, 2008 the Company closed a second $250,000 portion of a $350,000 financing, which was reduced from the original amount of $500,000 pursuant to a Non-U.S. and Non-Canadian Private Placement Subscription Agreement, dated June 30, 2008, between the Company and Accelera Ventures Ltd. (“Accelera”), an Asian-based investment fund. The Company issued Accelera a $250,000 principal amount convertible debenture due July 1, 2011, convertible into shares of our common stock, par value $0.0001, at a price of $0.30 per share together with 750,000 common share purchase warrants (each a “Warrant”) and 1,500,000 common share purchase piggyback warrants (each a “Piggyback Warrant”). Each Warrant entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.33 per share (each a “Warrant Share”) for the period ending at 4:00 p.m. (Pacific Standard Time) on December 1, 2008 (the “Warrant Exercise Period”). Each Piggyback Warrant, which will only be available for exercise by the holder thereof if the Warrants have been exercised in full (unless subsequently waived in writing by the Company), entitles the holder thereof to acquire one additional share of common stock in the capital of the Company at a price of $0.37 per share (each a “Piggyback Warrant Share”) for the period ending at 4:00 p.m. (Pacific Standard Time) on July 1, 2010 (the “Piggyback Warrant Exercise Period”).

The proceeds from the transaction have been or will be used to fund the business of Sinobiomed Inc. and for general corporate purposes.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse change in foreign currency and interest rates.

Exchange Rate

Our reporting currency is United States Dollars (“USD”).

The Chinese Renminbi yuan (“RMB”) is the functional currency of Sinobiomed and its operating subsidiary, Shanghai Wanxing Bio-pharmaceuticals Co., Ltd.; and therefore, the fluctuation of exchange rates of RMB may have positive or negative impacts on the results of operations of the Company.

The value of the Renminbi yuan, against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of Renminbi yuan into foreign currencies, including U.S. dollars, has historically been set by the People’s Bank of China. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi yuan to the U.S. dollar. Under the new policy, the Renminbi yuan is permitted to fluctuate within a band against a basket of certain foreign currencies. This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi yuan against the U.S. dollar. Since the adoption of this new policy, the value of Renminbi yuan against the U.S. dollar has fluctuated on a daily basis within narrow ranges, but overall has continued to strengthen against the U.S. dollar. There remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation or depreciation in the value of the Renminbi yuan against the U.S. dollar.

Since all sales revenue and expenses of the operating subsidiary company are denominated in RMB, the net income effect of appreciation and devaluation of the currency against the US Dollar will be limited to the net operating results of the subsidiary company attributable to the Company.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

Internal Control over Financial Reporting. There have been no changes in the Company’s internal controls over the financial reporting that occurred during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

The Company has appointed Chris Metcalf who is a director of the company and a financial expert to serve as the head of the audit committee.

The Company intends to adopt a code of business conduct and ethics as an additional element to its financial controls and procedures in the near future.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company, through Shanghai Wanxing, has been sued by the Shenzhen Development Bank to enforce payment under the loan agreement with that bank and judgment was granted in favor of the bank by the 1st Secondary People’s Court of Shanghai. On October 25, 2006 the Company and the bank entered into a settlement agreement to settle the litigation and the debt. The debt at that time had a principal balance of 17,800,000 yuan (approximately $US 2,600,000 at September 30, 2008 exchange rates). Under the terms of the settlement agreement, the Company was obligated to pay the bank 5 million yuan (approximately $US 730,000) before October 30, 2006, 3 million yuan (approximately $US 438,000) before March 20, 2007, 3 million yuan (approximately $US 438,000) before June 20, 2007, 3 million yuan (approximately $US 438,000) before September 20, 2007 and 3.8 million yuan (approximately $US 555,000) plus the balance of accrued interest before December 20, 2007. The Company made a payment of 5 million yuan in compliance with the settlement agreement in December 2006. The Company defaulted on the settlement agreement by not making the scheduled loan payment of 3 million yuan (approximately $US 438,000) on March 20, 2007. The bank granted a waiver of default in respect of this payment until May 30, 2007. The Company made the payment due May 30, defaulted on the two payments due by June 20, 2007 and September 20, 2007, made payments of 4,200,000 yuan after September 30, 2007, and has defaulted on the payment due December 20, 2007.

Other than the above mentioned litigation and settlement agreements, there are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.

ITEM 1A. RISK FACTORS

An investment in the Company has a high degree of risk. Before you invest you should carefully consider the risks and uncertainties described below and the other information in this Quarterly Report. If any of the following risks actually occur, our business, operating results and financial condition could be harmed and the value of our stock could go down.

Risks Related to the Company

We have a history of operating losses and may never be profitable.

Biopharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. Shanghai Wanxing has incurred substantial losses since its inception, and it expects to continue to incur losses for the foreseeable future. The losses have resulted principally from research and development costs and selling, general and administrative expenses. Shanghai Wanxing expects to incur additional operating losses in the future if its sales do not increase or if its expenses grow. The losses have had, and are expected to continue to have, an adverse impact on working capital, total assets, stockholders’ equity and cash flow. Shanghai Wanxing and Sinobiomed cannot assure you that we will ever become profitable, or, even if we become profitable, that we would be able to sustain or increase our profitability.

We will need additional capital to expand the production capacity for our existing products, to continue development of our product pipeline and to market existing and future products on a large scale, and we cannot guarantee that we will find adequate sources of capital in the future.

We will need to raise further funds from the capital markets to finance expenditures for equipment, intellectual property asset acquisitions, to expand the production capacity for our existing products, to continue the development and commercialization of our product candidates and for other corporate purposes. We will need to undertake significant future financings for the following reasons:

	·	To proceed with the research and development of other vaccine products, including clinical testing relating to new products;
	·	To develop or acquire other product candidates, technologies or other lines of business;
	·	To establish and expand manufacturing capabilities;
	·	To commercialize our products, including the marketing and distribution of new and existing products;
	·	To protect our intellectual property;
	·	To seek and obtain regulatory approvals; and
	·	To finance general and administrative and research activities that are not related to specific products under development.

In the past, Shanghai Wanxing funded most of its research and development and other expenditures through grants and debt financing. We intend to raise additional funds in the near future because our current operating and capital resources are insufficient to meet future requirements.

If we raise additional funds by issuing equity securities, it will result in further dilution to our existing shareholders, because the shares may be sold at a time when the market price is low, and because shares issued in equity financing will normally be sold at a discount to the current market price. Unforeseen problems, including materially negative developments relating to, among other things, product sales, new product rollouts, clinical trials, research and development programs, our strategic relationships, our intellectual property, litigation, regulatory issues in our industry, the Chinese market generally or in general economic conditions, could interfere with our ability to raise additional equity capital or materially adversely affect the terms upon which such funding is available. If we raise additional funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders of our common shares, and the terms of the debt securities issued could impose significant restrictions on our operations. If we raise additional funds through collaborations and licensing arrangements, we might be required to relinquish significant rights to certain of our technologies, marketing territories, product candidates or products that we would otherwise seek to develop or commercialize ourselves, or be required to grant licenses on terms that are not favorable to us.

We do not know whether additional financing will be available to us on commercially acceptable terms when needed. If adequate funds are not available or are not available on commercially acceptable terms, we may need to downsize or suspend some or all of our operations and may be unable to continue developing our products. In any such event, our ability to bring a product to market and obtain revenues could be delayed, competitors could develop products sooner than us, and we could be forced to relinquish rights to technologies, products or potential products.

We currently have limited revenue sources and a reduction in revenues of our existing products would cause our revenues to decline and could materially harm our business.

Shanghai Wanxing generates a significant portion of its revenues from sales of its Wanferon/Wanferin products. We expect that sales of Wanferon/Wanferin will continue to comprise a substantial portion of our revenues in the near future. A decrease in Wanferon/Wanferin sales would most likely have an adverse affect on our financial results. Shanghai Wanxing also generates a significant portion of its revenues from its cosmetic sales of its skin care products produced by its majority-owned subsidiary Shanghai Wanxing Bio-science Cosmetic Co., Ltd.

If we are unable to successfully compete in the highly competitive biotechnology industry, our business could be harmed.

We operate in a highly competitive environment, and the competition is expected to increase. Competitors include large pharmaceutical and biotechnology companies and academic research institutions, in each case both within and outside China. Some of these competitors, particularly large pharmaceutical and biotechnology companies, have greater resources than us. New competitors may also enter into the markets where we currently compete. Accordingly, even if we are successful in launching a product, we may find that a competitive product dominates the market for any number of reasons, including:

	·	The possibility that the competitor may have launched its product first;
	·	The competitor may have greater access to certain raw materials;
	·	The competitor may have more efficient manufacturing processes;
	·	The competitor may have greater marketing capabilities; or
	·	The competitive product may have therapeutic or other advantages.

The technologies applied by our competitors and us are rapidly evolving, and new developments frequently result in price competition and product obsolescence. In addition, we may be impacted by competition from generic forms of our products, substitute products or imports of products from lower priced markets.

Competitors may develop and market biopharmaceutical products that are less expensive, more effective or safer, making our products obsolete or uncompetitive.

Some of our competitors and potential competitors have greater product development capabilities and financial, scientific, marketing and human resources than we do. Technological competition from biopharmaceutical companies and biotechnology companies is intense and is expected to increase. Other companies have developed technologies that could be the basis for competitive products. Some of these products have an entirely different approach or means of accomplishing the desired curative effect than products we are developing. Alternative products may be developed that are more effective, work faster and are less costly than our products. Competitors may succeed in developing products earlier than us, obtaining approvals and clearances for such products more rapidly than us, or developing products that are more effective than ours. In addition, other forms of treatment may be competitive with our products. Over time, our technology or products may become obsolete or uncompetitive.

We are controlled by a small number of shareholders and their affiliated entities and their interests may not be aligned with the interests of our other shareholders.

Our directors and executive officers and their affiliates collectively control approximately 34% of our outstanding common shares as of September 30, 2008. These stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. The concentration of ownership of these shareholders may discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and might reduce the price of our common shares. These actions may be taken even if they are opposed by our other shareholders. In cases where the interests of our significant shareholders are aligned and they vote together, these shareholders may also have the power to prevent or cause a change in control. In addition, these shareholders could divert business opportunities from us to themselves or others.

If we are unable to obtain the regulatory approvals or clearances that are necessary to commercialize our products, we will have less revenue than expected.

China and other countries impose significant statutory and regulatory obligations upon the manufacture and sale of bio-pharmaceutical products. Each regulatory authority typically has a lengthy approval process in which it examines pre-clinical and clinical data and the facilities in which the product is manufactured. Regulatory submissions must meet complex criteria to demonstrate the safety and efficacy of the ultimate products. Addressing these criteria requires considerable data collection, verification and analysis. We may spend time and money preparing regulatory submissions or applications without assurances as to whether they will be approved on a timely basis or at all.

Our product candidates, some of which are currently in the early stages of development, will require significant additional development and pre-clinical and clinical testing prior to their commercialization. These steps and the process of obtaining required approvals and clearances can be costly and time-consuming. If our potential products are not successfully developed, cannot be proven to be safe and effective through clinical trials, or do not receive applicable regulatory approvals and clearances, or if there are delays in the process:

	·	the commercialization of our products could be adversely affected;
	·	any competitive advantages of the products could be diminished; and
	·	revenues or collaborative milestones from the products could be reduced or delayed.

Governmental and regulatory authorities may approve a product candidate for fewer indications or narrower circumstances than requested or may condition approval on the performance of post-marketing studies for a product candidate. Even if a product receives regulatory approval and clearance, it may later exhibit adverse side effects that limit or prevent its widespread use or that force us to withdraw the product from the market. Any marketed product and its manufacturer, including us, will continue to be subject to strict regulation after approval. Results of post-marketing programs may limit or expand the further marketing of products. Unforeseen problems with an approved product or any violation of regulations could result in restrictions on the product, including its withdrawal from the market and possible civil actions.

We rely on vendors to supply ingredients for our products.

Regulatory authorities also periodically inspect manufacturing facilities, including third parties who provide ingredients to us, and may challenge their quality, qualifications or competence. Pharmaceutical manufacturing facilities must comply with applicable good manufacturing practice standards, and manufacturers usually must invest substantial funds, time and effort to ensure full compliance with these standards and make quality products. We do not have control over our vendors’ compliance with these requirements. Failure to comply with regulatory requirements can result in sanctions, fines, delays, suspension of approvals, seizures or recalls of products, operating restrictions, manufacturing interruptions, costly corrective actions, injunctions, adverse publicity against us and our products and criminal prosecutions.

If we are unable to obtain sufficient supplies of ingredients, if climatic or environmental conditions adversely affect them or if they increase significantly in price, our business would be seriously harmed. If any of our current or future third-party suppliers cease to supply products in the quantity and quality we need to produce our products, or if they are unable to comply with applicable regulations, the qualification of other suppliers could be a lengthy process, and there may not be adequate alternatives to meet our needs. As a result, we may not be able to obtain the necessary ingredients used in our products in the future on a timely basis, if at all. This would negatively affect our business.

We could be subject to costly and time-consuming product liability actions.

We manufacture recombinant protein drugs and vaccines that are injected into individuals to treat and protect against infectious illnesses. A failure of our products to function as anticipated, whether as a result of the design of these products, unanticipated health consequences or side effects, or misuse or mishandling by third parties of such products or because of faulty or contaminated supplies, could result in injury and as a result subject us to product liability lawsuits. Claims also could be based on failure to immunize as anticipated. Any product liability claim brought against us, with or without merit, could have a material adverse effect on us. Even a meritless or unsuccessful product liability claim could be time consuming, expensive to defend, and could result in the diversion of management’s attention from managing our core business or result in associated negative publicity.

Our business exposes us to potential product liability risks that are inherent in the testing, manufacturing and marketing of biopharmaceutical products. But we cannot be certain that we will be able to maintain adequate product liability insurance at a reasonable cost. In addition, we have no clinical trial insurance for our clinical trials except for our Malaria vaccine clinical trials because such coverage is not available in mainland China. Any insurance coverage we do have may not be sufficient to satisfy any liability resulting from product liability claims. A successful product liability claim or series of claims could have a material adverse impact on our business, financial condition and results of operations.

We depend on our key personnel, the loss of whom would adversely affect our operations. If we fail to attract and retain the talent required for our business, our business will be materially harmed.

We are a small company with approximately 93 full-time employees as of September 30, 2008, and we depend to a great extent on principal members of our management and scientific staff. If we lose the services of any key personnel it could significantly impede the achievement of our research and development objectives and delay our product development programs and the approval and commercialization of our product candidates. We do not currently have any key man life insurance policies. We have entered into employment agreements with our senior staff. The employment agreements do not ensure that we may be able to retain the services of our executive officers for an indefinite period of time in the future. In addition, recruiting and retaining qualified scientific, technical and managerial personnel and research partners will be critical to our success. Competition among biopharmaceutical and biotechnology companies for qualified employees in China is intense and turnover rates are high. There is currently a shortage of employees in China with expertise in our areas of research and clinical and regulatory affairs, and this shortage is likely to continue. We may not be able to retain existing personnel or attract and retain qualified staff in the future. If we fail to hire and retain personnel in key positions, we may be unable to develop or commercialize our product candidates in a timely manner.

We may encounter difficulties in managing our growth, which could adversely affect our results of operations.

We have experienced a period of rapid and substantial growth that has taken place and, if such growth continues, it will continue to place a strain on our administrative and operational infrastructure. If we are unable to manage this growth effectively, our business, results of operations or financial condition may be materially and adversely affected. Our ability to manage our operations and growth effectively requires us to continue to improve our operational, financial and management controls, reporting systems and procedures and hiring programs. We may not be able to successfully implement these required improvements.

We may face difficulties in achieving and maintaining widespread market acceptance for our biopharmaceutical products and any future biopharmaceutical product candidates.

If any of our products or product candidates for which we receive regulatory approval do not achieve broad market acceptance, the revenues that we generate from their sales will be limited.

The commercial success of any of our products or product candidates for which we obtain marketing approval from regulatory authorities will depend upon the acceptance of these products by the medical community, including physicians, patients and healthcare payors. The degree of market acceptance of any of our approved products will depend on a number of factors, including:

	·	demonstration of clinical safety and efficacy compared to other products;
	·	the relative convenience and ease of administration;
	·	the prevalence and severity of any adverse side effects;
	·	limitations or warnings contained in a product’s approved labeling;
	·	availability of alternative treatments, including, a number of competitive products already approved or expected to be commercially launched in the near future;
	·	pricing and cost effectiveness;
	·	the effectiveness of our or any future collaborators’ sales and marketing strategies;
	·	our ability to obtain sufficient third-party coverage or reimbursement; and
	·	the willingness of patients to pay out of pocket in the absence of third-party coverage.

If any of our products or approved product candidates do not achieve an adequate level of acceptance by physicians, healthcare payors and patients, we may not generate sufficient revenue from these products, and we may not become or remain profitable. In addition, our efforts to educate the medical community and third-party payors on the benefits of our product candidates may require significant resources and may never be successful.

Moreover, even if any of our products or product candidates receive marketing approval, we or others may later identify undesirable side effects caused by the product, and in that event a number of potentially significant negative consequences could result, including but not limited to:

	·	regulatory authorities may withdraw their approval of the product;
	·	regulatory authorities may require the addition of labeling statements, such as warnings or contraindications;
	·	we may be required to change the way the product is administered, conduct additional clinical trials or change the labeling of the product; and
	·	our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product or product candidate and could substantially increase the costs of commercializing our other products or product candidates.

We may have difficulties in developing future biopharmaceutical products.

Our product candidates are prone to the risks of failure inherent in drug development. Before obtaining regulatory approvals for the commercial sale of any product candidate for a target indication we must demonstrate with substantial evidence gathered in well-controlled clinical trials and to the satisfaction of regulatory authorities that the product candidate is safe and effective for use for that target indication.

Despite our efforts, our product candidates may not:

	·	offer therapeutic or other improvement over existing, comparable drugs;
	·	be proven safe and effective in clinical trials;
	·	meet applicable regulatory standards;
	·	be capable of being produced in commercial quantities at acceptable costs; or
	·	be successfully commercialized.

Positive results in preclinical studies of a product candidate may not be predictive of similar results in humans during clinical trials, and promising results from early clinical trials of a product candidate may not be replicated in later clinical trials. Interim results of a clinical trial do not necessarily predict final results. A number of companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in early-stage development. Accordingly, the results from completed preclinical studies and clinical trials may not be predictive of the results we may obtain in later stage trials. Our preclinical studies or clinical trials may produce negative or inclusive results, and we may decide, or regulators may require us, to conduct additional preclinical studies or clinical trials.

Undesirable side effects caused by our product candidates could cause us, regulatory authorities or institutional review boards to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval.

We have limited business insurance coverage.

The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. As a result, we do not have any property or casualty insurance coverage for our facilities or business liability insurance coverage for our operations. If we incur any losses, we will have to bear those losses without any assistance. As a result, we may not have sufficient capital to cover material damage to, or the loss of, our manufacturing facilities due to fire, severe weather, flood or other causes, and such damage or loss would have a material adverse effect on our financial condition, business and prospects.

Risk Related to our Stock

Our common stock is subject to the “penny stock” rules of the SEC and the trading market in our securities is limited, which makes transactions in our stock cumbersome and may reduce the value of an investment in our stock.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a “penny stock,” for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

	·	that a broker or dealer approve a person’s account for transactions in penny stocks; and
	·	the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person’s account for transactions in penny stocks, the broker or dealer must:

	·	obtain financial information and investment experience objectives of the person; and
	·	make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

	·	sets forth the basis on which the broker or dealer made the suitability determination; and
	·	that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

There are substantial risks of lack of liquidity and volatility risks.

Currently, the Company’s common stock is quoted in the OTC Bulletin Board (the “OTCBB”) market under the symbol “SOBM”. The liquidity of our common stock may be very limited and affected by its limited trading market. The OTCBB market is an inter-dealer market much less regulated than the major exchanges, and is subject to abuses and volatilities and shorting. There is currently no broadly followed and established trading market for our common stock. An established trading market may never develop or be maintained. Active trading markets generally result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces the liquidity of the shares traded there.

The trading volume of our common stock may be limited and sporadic. As a result of such trading activity, the quoted price for our common stock on the OTCBB may not necessarily be a reliable indicator of its fair market value. In addition, if our shares of common stock cease to be quoted, holders would find it more difficult to dispose of or to obtain accurate quotations as to the market value of, our common stock and as a result, the market value of our common stock likely would decline.

Because we do not intend to pay any cash dividends on our shares of common stock, our stockholders will not be able to receive a return on their shares unless they sell them.

We intend to retain any future earnings to finance the development and expansion of our business. We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. Unless we pay dividends, our stockholders will not be able to receive a return on their shares unless they sell them.

We are a holding company and rely on the receipt of dividends from our operating subsidiaries. We may encounter limitations on the ability of our subsidiaries to pay dividends to us.

As a holding company, we have no direct business operations other than the ownership of our operating subsidiaries. Our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions relating to doing business in China. If future dividends are paid in Renminbi, fluctuations in the exchange rate for the conversion of Renminbi into U.S. dollars may reduce the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars.

Risks Related To Government Regulation

We can only sell products that have received regulatory approval and many factors affect our ability to obtain such approvals.

Pre-clinical and clinical trials of our products, and the manufacturing and marketing of our technologies, are subject to extensive, costly and rigorous regulation by governmental authorities in the People’s Republic of China (“PRC”) and in other countries. Even if we complete preclinical and clinical trials successfully, we may not be able to obtain applicable regulatory approvals. We cannot market any product candidate until we have both completed our clinical trials and obtained the necessary regulatory approvals for that product candidate.

Conducting clinical trials and obtaining regulatory approvals are uncertain, time consuming and expensive processes. The process of obtaining required regulatory approvals from the China State Food and Drug Administration (the China “SFDA”), and other regulatory authorities often takes many years to complete and can vary significantly based on the type, complexity and novelty of the product candidates.

There can be no assurance that all of the clinical trials pertaining to our recombinant protein drugs and vaccines in development will be completed within the time frames anticipated by us. We could encounter difficulties in enrolling such recombinant protein drugs and vaccines for trials or encounter setbacks during the conduct of trials that result in delays or trial cancellation. Data obtained from preclinical and clinical studies are subject to varying interpretations that could delay, limit or prevent regulatory approval, and failure to observe regulatory requirements or inadequate manufacturing processes are examples of other problems that could prevent approval. In addition, we may encounter delays or rejections in the event of additional government regulations from future legislation, administrative action or changes in China SFDA policy or if unforeseen health risks become an issue with the participants of clinical trials. Clinical trials may also fail at any stage of testing. Results of early trials frequently do not predict results of later trials, and acceptable results in early trials may not be repeated. For these reasons, we do not know whether regulatory authorities will grant approval for any of our product candidates in the future.

Delays in obtaining China SFDA or foreign approvals of our products could result in substantial additional costs and adversely affect our ability to compete with other companies. Even if regulatory approval is ultimately granted, there can be no assurance that we can maintain the approval or that the approval will not be withdrawn. Any approval received may also restrict the intended use and marketing of the product we want to commercialize.

Outside the PRC, our ability to market any of our potential products is contingent upon receiving marketing authorizations from the appropriate regulatory authorities. These foreign regulatory approval processes include all of the risks associated with the China SFDA approval process described above and may include additional risks.

We may not be able to comply with applicable good manufacturing practice requirements and other regulatory requirements, which could have a material adverse affect on our business, financial condition and results of operations.

We are required to comply with applicable good manufacturing practice regulations, which include requirements relating to quality control and quality assurance as well as corresponding maintenance, record-keeping and documentation standards. Manufacturing facilities must be approved by governmental authorities before we can use them to commercially manufacture our products and are subject to inspection by regulatory agencies.

If we fail to comply with applicable regulatory requirements, including following any product approval, we may be subject to sanctions, including:

	·	Fines;
	·	Product recalls or seizure;
	·	Injunctions;
	·	Refusal of regulatory agencies to review pending market approval applications or supplements to approval applications;
	·	Total or partial suspension of production;
	·	Civil penalties;
	·	Withdrawals of previously approved marketing applications; or
	·	Criminal prosecution.

Failure to comply with the U.S. Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.

We are subject to the U.S. Foreign Corrupt Practices Act, which generally prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. In addition, we are required to maintain records that accurately and fairly represent our transactions and have an adequate system of internal accounting controls. Chinese companies and some other foreign companies, including some that may compete with us, are not subject to these prohibitions, and therefore may have a competitive advantage over us. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in the PRC, and our executive officers and employees have not been subject to the U.S. Foreign Corrupt Practices Act prior to the completion of the Share Purchase Agreement. We can make no assurance that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.

A recent campaign imposed by the Chinese government against the export of unsafe and substandard products, could hinder our ability to export our products internationally.

In August 2007, China’s Administration of Quality Supervision, Inspection and Quarantine (“AQSIQ”) announced an ongoing national campaign in China against unsafe food and substandard products. The special campaign against poor product quality was launched in response to a series of safety scares involving Chinese products worldwide. The campaign set 20 detailed goals, including twelve “100 percents”. The campaign, which was originally scheduled to finish at the end of 2007, is currently scheduled to continue throughout 2008.

As a result of this campaign by the AQSIQ, there has been a general slow-down and backlog of export clearances for certain Chinese consumer products. If we seek to export our products in the future, we may experience significant delays in obtaining export clearances.

Compliance with changing regulation of corporate governance and public disclosure will result in additional expenses and pose challenges for our management team.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act and SEC regulations, have created uncertainty for public companies and significantly increased the costs and risks associated with accessing the public markets and public reporting. Our management team will need to devote significant time and financial resources to comply with both existing and evolving standards for public companies, which will lead to increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

Standards for compliance with Section 404 of the Sarbanes-Oxley Act are uncertain, and if we fail to comply in a timely manner, our business could be harmed and our stock price could decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of a public company’s internal control over financial reporting, and attestation of this assessment by the public company’s independent registered public accountants. We believe that the annual assessment of our internal controls requirement will first apply to our annual report for the 2008 fiscal year and the attestation requirement of management’s assessment by our independent registered public accountants will first apply to our annual report for the 2009 fiscal year. The standards that must be met for management to assess the internal control over financial reporting are new and complex, and require significant documentation, testing and possible remediation to meet the detailed standards. We may encounter problems or delays in completing activities necessary to make an assessment of our internal control over financial reporting. In addition, the attestation process by our independent registered public accountants is new and we may encounter problems or delays in completing the implementation of any requested improvements and receiving an attestation of our assessment by our independent registered public accountants. If we cannot assess our internal control over financial reporting as effective, or our independent registered public accountants are unable to provide an unqualified attestation report on such assessment, investor confidence and share value may be negatively impacted.

Risks Related To Our Intellectual Property

If we are unable to protect our intellectual property, we may not be able to operate our business profitably.

Our success depends, in part, on our ability to protect our proprietary technologies. We try to protect the technology that we consider important to our business by filing PRC patent applications and relying on trade secret and pharmaceutical regulatory protection.

In addition to patents, we rely on trade secrets and proprietary know-how to protect our intellectual property. We have entered into confidentiality agreements (which include, in the case of employees, non-competition provisions) with the majority of our employees and all our advisors. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of our employees, the agreements provide that all of the technology which is conceived by the individual during the course of employment is our exclusive property. These agreements may not provide meaningful protection or adequate remedies in the event of unauthorized use or disclosure of our proprietary information. In addition, it is possible that third parties could independently develop proprietary information and techniques substantially similar to ours or otherwise gain access to our trade secrets.

We cannot assure you that our current or potential competitors, many of which have substantial resources and may have made substantive investments in competing technologies, do not have and will not develop, products that compete directly with our products despite our intellectual property rights.

Intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. For example, implementation and enforcement of PRC intellectual property-related laws have historically been deficient and ineffective and may be hampered by corruption and local protectionism. Policing unauthorized use of proprietary technology is difficult and expensive, and we might need to resort to litigation to enforce or defend patents issued to us or to determine the enforceability, scope and validity of our proprietary rights or those of others. The experience and capabilities of PRC courts in handling intellectual property litigation varies, and outcomes are unpredictable. Further, such litigation may require significant expenditure of cash and management efforts and could harm our business, financial condition and results of operations. An adverse determination in any such litigation could materially impair our intellectual property rights and may harm our business, prospects and reputation.

We may depend on market exclusivity for certain of our products, which will afford us less protection than patents.

Assuming regulatory approvals are obtained, our ability to successfully commercialize certain drugs may depend on the availability of market exclusivity under PRC law, which provides protection for certain new products. Under the PRC’s former Regulation on the Protection of New Pharmaceuticals and Technology Transfer, new drugs were afforded exclusivity protection of six, eight or twelve years, depending on the category of the drug in question. During the protection period, the China SFDA would not accept third parties’ applications for manufacturing the drug under protection.

After China joined the WTO in 2001, the government amended and implemented many laws and regulations in the area of pharmaceuticals. Currently, the Drug Administration Law, Implementing Regulations on Drug Administration and Drug Registration Regulation are the primary laws and regulations governing the exclusive protection regime for new drugs.

The Implementing Regulations on Drug Administration provide that the China SFDA may establish a monitoring period for up to five years for certain new drugs to monitor the safety of these products. During the monitoring period, the China SFDA will not accept third parties’ application for manufacturing or importing the same drug. The China SFDA’s regulations provide that the monitoring period shall be 3, 4 or 5 years. The China SFDA determines the availability and length of the monitoring period depending on the approval conditions of the same or similar drugs in China and in overseas markets. According to the Regulations on the Drug Registration promulgated by the China SFDA in 2005, in case there is more than one application for the same new drug pending, after the issuance of the first production license afforded with a monitoring period, the other co-pending applications should be rejected unless a clinical trial application has been approved.

If our products infringe the intellectual property rights of third parties, we may incur substantial liabilities, and we may be unable to sell these products.

Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties. Patent applications are maintained incognito until their publication 18 months from the filing date. The publication of discoveries in the scientific or patent literature frequently occurs substantially later than the date on which the underlying discoveries were made and patent applications are filed. China, similar to many other countries, adopts the first-to-file system under which whoever first files a patent application (instead of the one who makes first actual discoveries) will be awarded a patent. Even after reasonable investigation we may not know with certainty whether we have infringed upon a third-party’s patent because such third-party may have filed a patent application without our knowledge while we are still developing that product. If a third-party claims that we infringe upon its proprietary rights, any of the following may occur:

	·	We may become involved in time-consuming and expensive litigation, even if the claim is without merit;
	·	We may become liable for substantial damages for past infringement if a court decides that our technology infringes upon a competitor’s patent;
	·	A court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available on commercially acceptable terms, if at all, or which may require us to pay substantial royalties or grant cross licenses to our patents, and
	·	We may have to reformulate our product so that it does not infringe upon others’ patent rights, which may not be possible or could be very expensive and time-consuming.

If any of these events occurs, our business will suffer and the market price of our common shares could decline.

The success of our business may depend on licensing biologics from, and entering into collaboration arrangements with, third parties. We cannot be certain that our licensing or collaboration efforts will succeed or that we will realize any revenue from them.

The success of our business strategy may be, in part, dependent on our ability to enter into licensing and collaboration arrangements and to manage effectively the resulting relationships.

Our ability to enter into agreements with commercial partners depends in part on our ability to convince them of the value of our technology and know-how. This may require substantial time and effort on our part. While we anticipate expending substantial funds and management effort, we cannot assure you that strategic relationships will result or that we will be able to negotiate additional strategic agreements in the future on acceptable terms, if at all. Furthermore, we may incur significant financial commitments to collaborators in connection with potential licenses and sponsored research agreements. In addition, we may not be able to control the areas of responsibility undertaken by our strategic partners and may be adversely affected should these partners prove unable to carry a product candidate forward to full commercialization or should they lose interest in dedicating the necessary resources toward developing any such product quickly.

Third parties may terminate our licensing and other strategic arrangements if we do not perform as required under these arrangements. Generally, we expect that agreements for rights to develop technologies will require us to exercise diligence in bringing product candidates to market and may require us to make milestone and royalty payments that, in some instances, could be substantial. Our failure to exercise the required diligence or make any required milestone or royalty payments could result in the termination of the relevant license agreement, which could have a material adverse effect on us and our operations. In addition, these third parties may also breach or terminate their agreements with us or otherwise fail to conduct their activities in connection with our relationships in a timely manner. If we or our partners terminate or breach any of our licenses or relationships, we:

	·	May lose our rights to develop and market our product candidates;
	·	May lose trade secret protection for our product candidates;
	·	May experience significant delays in the development or commercialization of our product candidates;
	·	May not be able to obtain any other licenses on acceptable terms, if at all; and
	·	May incur liability for damages.

Licensing arrangements and strategic relationships in our industry can be very complex, particularly with respect to intellectual property rights. Disputes may arise in the future regarding ownership rights to technology developed by or with other parties. These and other possible disagreements between us and third parties with respect to our licenses or our strategic relationships could lead to delays in the research, development, manufacture and commercialization of our product candidates. These disputes could also result in litigation or arbitration, both of which are time-consuming and expensive. These third parties also may pursue alternative technologies or product candidates either on their own or in strategic relationships with others in direct competition with us.

Any cessation or suspension of our collaborations with scientific advisors and academic institutions may increase our costs in research and development and lengthen our new vaccines/drugs development process and lower our efficiency in new products development.

We work with scientific advisors and academic collaborators who assist us in our research and development efforts. We generally benefit considerably from the resources, technology and experience such academic collaboration may bring us. Any cessation or suspension of our collaborations with scientific advisors and academic institutions may increase our costs in research and development and lengthen our new vaccines development process and lower our efficiency in new products development.

Risks Related To Doing Business in China

Adverse changes in political, economic and other policies of the Chinese government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for our products and materially and adversely affect our competitive position.

All of our business operations are conducted in China, and all of our sales are currently made in China. Accordingly, our business, financial condition, results of operations and prospects are affected significantly by economic, political and legal developments in China. The Chinese economy differs from the economies of most developed countries in many respects, including:

	·	The extent of government involvement;
	·	The level of development;
	·	The growth rate;
	·	The control of foreign exchange;
	·	The allocation of resources;
	·	An evolving regulatory system; and
	·	Lack of sufficient transparency in the regulatory process.

While the Chinese economy has experienced significant growth in the past 20 years, growth has been uneven, both geographically and among various sectors of the economy. The Chinese government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures benefit the overall Chinese economy, but may also have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations that are applicable to us.

The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China is still owned by the Chinese government. The continued control of these assets and other aspects of the national economy by the Chinese government could materially and adversely affect our business. The Chinese government also exercises significant control over Chinese economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Efforts by the Chinese government to slow the pace of growth of the Chinese economy could result in decreased expenditures by hospitals and other users of our products, which in turn could reduce demand for our products.

Moreover, the political relationship between the United States, Europe, or other Asian nations and China is subject to sudden fluctuation and periodic tension. Changes in political conditions in China and changes in the state of foreign relations are difficult to predict and could adversely affect our operations or cause our products to become less attractive. This could lead to a decline in our profitability.

Any adverse change in the economic conditions or government policies in China could have a material adverse effect on overall economic growth and the level of healthcare investments and expenditures in China, which in turn could lead to a reduction in demand for our products and consequently have a material adverse effect on our businesses.

Future changes in laws, regulations or enforcement policies in China could adversely affect our business.

Laws, regulations and enforcement policies in China, including those regulating our business, are evolving and subject to future change. Future changes in laws, regulations or administrative interpretations, or stricter enforcement policies by the Chinese government, could impose more stringent requirements on us, including fines or other penalties. Changes in applicable laws and regulations may also increase our operating costs. Compliance with such requirements could impose substantial additional costs or otherwise have a material adverse effect on our business, financial condition and results of operations. These changes may relax some requirements, which could be beneficial to our competitors or could lower market entry barriers and increase competition. Further, regulatory agencies in China may periodically, and sometimes abruptly, change their enforcement practice. Therefore, prior enforcement activity, or lack of enforcement activity, is not necessarily predictive of future actions. Any enforcement actions against us could have a material and adverse effect on us and the market price of our common shares. In addition, any litigation or governmental investigation or enforcement proceedings in China may be protracted and may result in substantial cost and diversion of resources and management attention, negative publicity, damage to our reputation and decline in the price of our common shares.

We may have difficulty establishing adequate management, legal and financial controls in China.

PRC companies historically have not adopted a Western style of management and financial reporting concepts and practices, which includes strong corporate governance, internal controls and computer, financial and other control systems. As a result, we may experience difficulty in establishing management, legal and financial controls, collecting financial data and preparing financial statements, books of account and corporate records and instituting business practices that meet standards required of U.S. public companies. Therefore, we may, in turn, experience difficulties in implementing and maintaining adequate internal controls as required under Section 404 of the Sarbanes-Oxley Act. This may result in significant deficiencies or material weaknesses in our internal controls which could impact the reliability of our financial statements and prevent us from complying with SEC rules and regulations and the requirements of the Sarbanes-Oxley Act. Any such deficiencies, weaknesses or lack of compliance could have a material adverse effect on our business.

The Chinese government exerts substantial influence over the manner in which we must conduct our business activities.

In the last 20 years, despite a process of devolution of regulatory control to provincial and local levels and resulting economic autonomy and private economic activities, the Chinese central government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.

Accordingly, government actions in the future, including any decision to adjust economic policies or even to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures.

Fluctuation in the value of the Chinese currency may have a material adverse effect on your investment.

The value of the Chinese currency, the Renminbi yuan, against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. The conversion of Renminbi yuan into foreign currencies, including U.S. dollars, has historically been set by the People’s Bank of China. On July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi yuan to the U.S. dollar. Under the new policy, the Renminbi yuan is permitted to fluctuate within a band against a basket of certain foreign currencies. This change in policy resulted initially in an approximately 2.0% appreciation in the value of the Renminbi yuan against the U.S. dollar. Since the adoption of this new policy, the value of Renminbi yuan against the U.S. dollar has fluctuated on a daily basis within narrow ranges, but overall has continued to strengthen against the U.S. dollar. There remains significant international pressure on the PRC government to further liberalize its currency policy, which could result in a further and more significant appreciation or depreciation in the value of the Renminbi yuan against the U.S. dollar. Any significant revaluation of the Renminbi yuan may have a material adverse effect on our revenues and financial condition, and the value of, and any dividends payable on, our common shares in foreign currency terms. For example, to the extent that we need to convert U.S. dollars into Renminbi yuan for our operations, appreciation of the Renminbi yuan against the U.S. dollar would reduce the Renminbi yuan amount we receive from the conversion. Conversely, if we decide to convert our Renminbi yuan into U.S. dollars for the purpose of making dividend payments on our common shares or for other business purposes, appreciation of the U.S. dollar against the Renminbi yuan would reduce the U.S. dollar amount available to us.

Under the new EIT Law, we may be classified a “resident enterprise” for PRC tax purposes, which may subject us to PRC enterprise income tax for any dividends we receive from our Chinese subsidiaries and to PRC income tax withholding for any dividends we pay to our non-PRC shareholders.

On March 16, 2007, the National People’s Congress promulgated the Law of the People’s Republic of China on Enterprise Income Tax, or the new EIT Law, which became effective on January 1, 2008. In accordance with the new EIT Law, the corporate income tax rate is set at 25% for all enterprises. However, certain industries and projects, such as enterprises with foreign investors, may enjoy favorable tax treatment pursuant to the new EIT Law and its implementing rules.

Under the new EIT Law, an enterprise established outside of China whose “de facto management bodies” are located in China is considered a “resident enterprise” and is subject to the 25% enterprise income tax rate on its worldwide income. The new EIT Law and its implementing rules are relatively new, and currently, no official interpretation or application of this new “resident enterprise” classification is available. Therefore, it is unclear how tax authorities will determine the tax residency of enterprises established outside of China.

Most of our management is currently based in China. If the PRC tax authorities determine that our U.S. holding company is a “resident enterprise” for PRC enterprise income tax purposes, we may be subject to an enterprise income tax rate of 25% on our worldwide taxable income. The “resident enterprise” classification also could subject us to a 10% withholding tax on any dividends we pay to our non-PRC shareholders if the relevant PRC authorities determine that such income is PRC-sourced income. In addition to the uncertainties regarding the interpretation and application of the new “resident enterprise” classification, the new EIT Law may change in the future, possibly with retroactive effect. If we are classified as a “resident enterprise” and we incur these tax liabilities, our net income will decrease accordingly.

It may be difficult to effect service of process and enforcement of legal judgments upon our subsidiaries and some of our officers and directors because they reside outside the United States.

Our operating subsidiaries are presently based in China and some of our directors and officers reside in China, service of process on our operating subsidiaries and such directors and officers may be difficult to effect within the United States. Also, substantially all of our subsidiaries’ assets are located in China and any judgment obtained in the United States against our subsidiaries may not be enforceable outside the United States.

Since all of our subsidiaries’ assets are located in China, any dividends of proceeds from liquidation is subject to the approval of the relevant Chinese government agencies.

Our subsidiaries’ assets are located inside China. Under the laws governing foreign invested enterprises in China, dividend distribution and liquidation are allowed but subject to special procedures under the relevant laws and rules. Any dividend payment will be subject to the decision of the board of directors and subject to foreign exchange rules governing such repatriation. Any liquidation is subject to both the relevant government agency’s approval and supervision as well as the foreign exchange control. This may generate additional risk for investors in case of dividend payment and liquidation.

We are required to be in compliance with the registered capital requirements of the PRC.

Under the company law of China, the combined company will be required to contribute a certain amount of “registered capital” to its wholly owned subsidiary. By law, the Company’s subsidiaries are required to contribute at least 10% of after tax net income (as determined in accordance with Chinese GAAP) into a statutory surplus reserve until the reserve is equal to 50% of the subsidiaries’ registered capital, and between 5% and 10% of its after tax net income, as determined by the subsidiaries’ board of directors, into a public welfare fund. These reserve funds are recorded as part of shareholders' equity but are not available for distribution to shareholders other than in the case of liquidation. As a result of this requirement, the amount of net income available for distribution to shareholders will be limited.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Interest is payable on the principal amount of the convertible debenture outstanding at 8% per annum, calculated and payable quarterly in arrears. Interest payable under the convertible debenture shall be paid on the last day of September, December, March and June of each year. The holder of the convertible debenture has the option to convert any accrued and unpaid interest due at the time of a conversion.

The proceeds from the transaction have been or will be used to fund the business of Sinobiomed Inc. and for general corporate purposes.

The foregoing description of the Convertible Debenture of Sinobiomed Inc. in the principal sum of $100,000 issued to Accelera Evolution Limited does not purport to be complete and is qualified in its entirety by reference to the Convertible Debenture of Sinobiomed Inc. in the principal sum of $100,000 issued to Accelera Evolution Limited, which was attached as Exhibit 10.2 to the Form 8-K filed on August 8, 2008, which is incorporated herein by reference.

The proceeds from the transaction have been or will be used to fund the business of Sinobiomed Inc. and for general corporate purposes.

The foregoing description of the Convertible Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued to Accelera Ventures Ltd. does not purport to be complete and is qualified in its entirety by reference to the Convertible Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued to Accelera Ventures Ltd., which is attached hereto as Exhibit 10.1, which is incorporated herein by reference.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

N/A

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

N/A

ITEM 5. OTHER INFORMATION

On August 31, 2008, the Board of Directors of the Company unanimously approved to: (i) amend the exercise price of the 1,000,000 stock options granted to the Company’s employees on May 30, 2007 be reducing the exercise price of such stock options from $1.90 per share to $0.50 per share; and (ii) amend the exercise price of the 1,000,000 stock options granted to two of the Company’s directors on November 29, 2007 by reducing the exercise price of such stock options from $1.90 per share to $0.50 per share.

On October 2, 2008, the Board of Directors unanimously approved and granted in aggregate 500,000 stock options to the Company’s new CFO, Mr. Lionel Choong having an exercise price of $0.50 per share and an expiry date of five years from the date of grant. These stock options have vesting provisions of 5% on the date of grant and 5% on the first day of each month thereafter beginning on November 1, 2008.

ITEM 6. EXHIBITS

(b)	Exhibit List

	10.1	Convertible Debenture of Sinobiomed Inc. in the principal sum of $250,000 issued to Accelera Ventures Ltd.

	10.2	Share Purchase Warrant Certificate for up to 750,000 common shares of Sinobiomed Inc. issued to Accelera Ventures Ltd.

	10.3	Share Purchase Piggyback Warrant Certificate for up to 1,500,000 common shares of Sinobiomed Inc. issued to Accelera Ventures Ltd.

	31.1	Certificate pursuant to Rule 13a-14(a)

	31.2	Certificate pursuant to Rule 13a-14(a)

	32.1	Certificate pursuant to 18 U.S.C. §1350

	32.2	Certificate pursuant to 18 U.S.C. §1350

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on this 19^th day of November, 2008

	SINOBIOMED INC. (Registrant)
	By: /s/ Banjun Yang
	Banjun Yang
	President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, 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/ Banjun Yang	President, CEO, and Director	November 19, 2008
Banjun Yang

/s/ Ka Yu	Secretary, Treasurer and Director	November 19, 2008
Ka Yu

/s/ Lionel Choong	Chief Financial Officer	November 19, 2008
Lionel Choong