China Biologic Products, Inc. (Form: SB-2, Received: 09/05/2007 06:01:50)

Seller or

Prospective Seller

Amount and

Nature of Securities

Price or Other Consideration

As filed with the Securities and Exchange Commission on September 4, 2007

Registration No. 333-_

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________________

FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

CHINA BIOLOGIC PRODUCTS, INC.
(Name of small business issuer in its charter)

Delaware	2836	75-2308816
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

No. 14 East Hushan Road, Taian City, Shandong
People’s Republic of China 271000
(86-538)-620-3897
(Address and telephone number of principal executive offices)
____________________________

Louis A. Bevilacqua, Esq.
Thomas M. Shoesmith, Esq.
Joseph R. Tiano, Jr., Esq.
Thelen Reid Brown Raysman & Steiner LLP
701 8th Street, N.W., Washington, D.C. 20001
(202) 508-4000
(Names, addresses and telephone numbers of agents for service)
____________________________

Approximate date of commencement of proposed sale to public: From time to time after the effective date of this Registration Statement, as determined by market conditions and other factors.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X]

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

			Proposed maximum
Title of each class of securities	Amount to be	Proposed maximum	aggregate offering	Amount of
to be registered	registered ^{(1) (3)}	offering price per share	price	registration fee
Common stock, $0.0001 par value	4,780,000	$2.70 ⁽²⁾	$12,906,000 ⁽²⁾	$396
Common stock, $0.0001 par value	1,284,000 ⁽⁴⁾	$2.8425 ⁽⁵⁾	$3,649,770 ⁽⁵⁾	$112
Total	6,064,000	-	$16,555,770	$508

(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, the shares of Common Stock offered hereby also include such presently indeterminable number of shares of common stock as shall be issued by us to the selling stockholders upon adjustment under anti-dilution provisions covering stock splits, stock dividends and similar transactions.

(2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c), based on the average of the bid and asked prices for the Common Stock reported in the Pink Sheets on August 29, 2007.

(3) Represents shares of the Registrant’s common stock being registered for resale that have been issued to the selling stockholders named in this registration statement.

(4) Represents shares of Common Stock issuable upon exercise of five-year warrants to purchase shares of Common Stock by the selling stockholders named in this registration statement.

(5) Calculated in accordance with Rule 457(g) based upon the price at which the warrants may be exercised.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

Subject to completion, dated September 4, 2007

6,064,000 Shares of Common Stock

This prospectus relates to the resale of up to 6,064,000 shares of our common stock being offered by the selling stockholders, which includes:

• 4,780,000 shares of common stock;

• 1,070,000 shares of common stock issuable upon the exercise of five-year warrants owned by the selling stockholders named in this prospectus; and

• 214,000 shares of common stock issuable upon exercise of five-year warrants owned by persons named in this prospectus who are associated with Lane Capital Markets, LLC.

We will not receive any proceeds from any sale of shares of common stock by the selling stockholders.

Our common stock is quoted on the over-the-counter market maintained by the Pink Sheets, LLC under the symbol “CBPO” The closing bid price for our common stock on August 29, 2007 was $2.70 per share, as reported by the Pink Sheets, LLC.

Any participating broker-dealers and any selling stockholders who are affiliates of broker-dealers are deemed to be “underwriters” within the meaning of the Securities Act of 1933, and any commissions or discounts given to any such broker-dealer or affiliate of a broker-dealer may be regarded as underwriting commissions or discounts under the Securities Act. The selling stockholders have informed us that they do not have any agreement or understanding, directly or indirectly, with any person to distribute their common stock.

Investing in our common stock involves a high degree of risk. See “Risk Factors” beginning on page 4 to read about factors you should consider before buying shares of our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

The date of this Prospectus is ___________, 2007.

TABLE OF CONTENTS

PROSPECTUS SUMMARY		4

SUMMARY CONSOLIDATED FINANCIAL INFORMATION		8

RISK FACTORS		10

RISKS RELATING TO OUR BUSINESS		10

RISKS RELATING TO OUR FINANCIAL CONDITION		15

RISKS RELATING TO OUR INDUSTRY		16

RISKS RELATING TO DOING BUSINESS IN CHINA		18

RISKS RELATING TO OUR COMMON STOCK		21

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		22

USE OF PROCEEDS		22

DILUTION		23

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS		23

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION		24

OUR CORPORATE STRUCTURE AND HISTORY		36

OUR BUSINESS		38

MANAGEMENT		49

EXECUTIVE COMPENSATION		52

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS		54

CHANGE IN ACCOUNTANTS		55

SELLING STOCKHOLDERS		56

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT		57

DESCRIPTION OF SECURITIES		58

SHARES ELIGIBLE FOR FUTURE SALE		59

PLAN OF DISTRIBUTION		60

INTEREST OF NAMED EXPERTS AND COUNSEL		61

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION		61

WHERE YOU CAN FIND MORE INFORMATION		62

PROSPECTUS SUMMARY

This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering, including “Risk Factors” and our consolidated financial statements and related notes, included elsewhere in, or incorporated by reference into, this prospectus.

China Biologic Products, Inc.

We are a biopharmaceutical company and through our indirect majority-owned Chinese subsidiary, Shandong Taibang, we are principally engaged in the research, development, production and manufacturing of plasma-based pharmaceutical products in China. Shandong Taibang, operates from our manufacturing facility located in Taian City, Shandong Province, and is currently the only plasma-based biopharmaceutical product manufacturer in Shandong Province approved by the State.

Our principal products include human albumin and various types of immunoglobulin. We currently produce 14 biopharmaceutical products in seven major categories as follows:

Human Albumin: - 20%/10ml, 20%/25ml and 20%/50ml
Human Hepatitis B Immunoglobulin – 100IU, 200IU, 400IU
Human Immunoglobulin – 10%/3ml and 10%/1.5ml
Human Immunoglobulin for Intravenous Injection – 5%/50ml
Thymopolypeptides Injection – 20mg/2ml
Human Rabies Immunoglobulin – 100IU, 200IU and 500IU
Human Tetanus Immunoglobulin – 250IU

Human Albumin is our top selling product. Sales of our human albumin products represented approximately 75.5% and 83.9% of our total revenues, respectively, for the each of the years ended December 31, 2006 and 2005, and 73.3% for the period ended June 30, 2007. Our remaining revenue came from our other product categories during those periods. Human albumin is principally used to increase blood volume while immunoglobulin is used for certain disease preventions and cures. Shandong Taibang’s human albumin and immunoglobulin products use human plasma as basic raw material. Albumin has been used for almost 50 years to treat critically ill patients by replacing lost fluid and maintaining adequate blood volume and pressure. All of our products are prescription medicines in the form of injections.

We sell our products to customers in the PRC. Our sales have historically been made on the basis of short-term arrangements and our largest customers have changed over the years. For the years ended December 31, 2006 and 2005, our top 5 customers accounted for approximately 10% and 12.3%, respectively, of our total revenue. For the years ended December 31, 2006 and 2005, our largest customer accounted for approximately 2.9% and 2.8%, of our revenue , respectively. As we continue to diversify our geographic presence, customer base and product mix, we expect that our largest customers will continue to change from year to year.

Our Industry

Our industry is competitive and subject to numerous government regulations. Retail prices of certain of our biopharmaceutical products in the PRC are subject to the control of the relevant State and provincial price administration authorities. The actual price for any given price-controlled product set by manufacturers, wholesalers and retailers cannot exceed the price ceiling imposed in accordance with the applicable government price control rules. Only those pharmaceutical products which are included in the Insurance Catalogue administered at the State or provincial level are subject to price control. Many competitive factors may affect our sales of products, including product efficacy, safety, price and cost effectiveness, marketing effectiveness, quality control and quality assurance of our manufacturing operations, and research and development of new products.

Competition

companies in the Chinese biological products industry, we are ranked the 20 ^th in 2006 and 25 ^th in 2005, and in the plasma products area, we were ranked 5 ^th . We believe that our past financial performance is attributable to our market position in the industry. Although entry to the industry is very restricted due to the regulatory requirements, over time, there may be new entrants into our industry. Our major competitors in the albumin and immunoglobulin market in China are Hualan Biological Engineering, Shanghai Institute of Biological Products, Shanghai RAAS Blood Products Co. Ltd., Chengdu Rongsheng Pharmaceuticals, and Sichuan Yuanda Shuyang Pharmaceutical Co.

We seek to continue to meet challenges and secure our market position by enhancing our existing products, introducing new products to meet customer demand, delivering quality products to our customers in a timely manner and maintaining our established industry reputation.

Our Strategy

Our mission is to become a first-class biopharmaceutical enterprise in China. To achieve this objective, we have implemented the following strategies:

Securing the supply of plasma – Due to the shortage of plasma and the reform of the ownership of plasma stations, our immediate strategy is to negotiate and acquire plasma stations so as to secure our plasma supply.
Acquisition of competitors and/or other biologic related companies – In addition to organic growth, acquisition is an important part of our expansion strategy. Although there are about 34 approved plasma- based biopharmaceutical manufacturers in the market, we are of the view that only about half of them will be competitive. In addition, due to recent Ministry of Health regulations, we believe that it is difficult for new manufacturers to enter into the industry.
Further strengthening of research and development capability – We believe that, unlike other more developed countries like the US, China’s plasma-based biopharmaceutical products are at the initial stage of development. We plan to increase our focus on research and development in order to give us a competitive advantage over our competitors.
Market development and network expansion – Leveraging on the high quality and safety record of our products, we intend to (i) enhance our product penetration with our existing customers by introducing new products and (ii) extend the reach of our products from our current market to include other provinces where we envision significant market potential.

Risk Factors

Our ability to successfully operate our business and achieve our goals and strategies is subject to numerous risks as discussed more fully in the section titled “Risk Factors,” including for example:

our ability to overcome competition from local and overseas pharmaceutical enterprises;
decrease in the availability, or increase in the cost, of plasma;
failure to obtain PRC governmental approval to increase retail prices of certain of our biopharmaceutical products;
loss of key members of our senior management; and
unexpected change in the PRC government’s regulation of the biopharmaceutical industry in China, or changes in China’s economic situation and legal environment.

Any of the above risks could materially and negatively affect our business, financial position and results of operations. An investment in our common stock involves risks. You should read and consider the information set forth in “Risk Factors” and all other information set forth in this prospectus before investing in our common stock.

Corporate Information

We were originally incorporated in 1992 under the laws of the State of Texas. We conduct our operations in China through our subsidiary, Shandong Taibang. The following chart reflects our organizational structure as of the date of this prospectus.

Our principal executive offices are located at No. 14 East Hushan Road, Taian City, Shandong, People’s Republic of China 271000. Our corporate telephone number is (86-538)-620-3897 and our fax number is (86-538)-6212407. We maintain a website at http://www.ctbb.com.cn that contains information about our operating company, but that information is not part of this prospectus.

Use of Defined Terms and Treatment of Stock Split

Except as otherwise indicated by the context, references in this prospectus to:

“China Biologic,” the “Company,” “we,” “us,” or “our,” are references to the combined business of China Biologic Products, Inc., a publicly-held, non-operating holding company with headquarters in China (formerly, GRC Holdings, Inc.), and its wholly-owned subsidiary, Logic Express Limited, or Logic Express, a British Virgin Islands company, and its 82.76% owned subsidiary Shandong Taibang Biological Products Co. Ltd., or Shandong Taibang, a sino-foreign joint venture incorporated in China, and Shandong Taibang’s wholly-owned subsidiaries, the Xia Jin Plasma Company, the Qi He Plasma Company, the He Ze Plasma Company, the Huan Jiang Plasma Company, the Yang Gu Plasma Company, the Zhang Qiu Plasma Company and the Shandong Medical Company, and Shandong Taibang’s 80% owned subsidiary, the Fang Cheng Plasma Company;
“China,” “State” and “PRC” are references to the People’s Republic of China;
“RMB” are to Renminbi, the legal currency of China;
“U.S. dollar,” and “$”are to the legal currency of the United States;
the “Securities Act” are to Securities Act of 1933, as amended;
the “Exchange Act” are to the Securities Exchange Act of 1934, as amended; and
“U.S. dollar,” “$” and “$” refer to the legal currency of the United States. For all U.S. dollar amounts reported, the dollar amount has been calculated on the basis that RMB7.60 = $1.00 for its June 30, 2007 unaudited balance sheet, with the exception of the equity accounts, and RMB7.80 = $1.00 for its December 31, 2006 audited balance sheets, with the exception of the equity accounts. The equity accounts were stated at their historical rate. The average translation rates applied to income statement and statements cash flows for the six months ended June 30, 2007 and 2006 were RMB7.96 and RMB8.02, respectively.

All share numbers contained in this prospectus are adjusted to reflect the 1-for -10 reverse split of our common stock that occurred on July 20, 2006.

The Offering

		6,064,000 shares, including 1,284,000 shares of common
Common stock offered by selling		stock that are issuable upon the exercise of outstanding
stockholders		warrants held by the selling stockholders named in this
		prospectus. This number represents 28.3% of our current
		outstanding common stock ⁽¹⁾

Common stock outstanding before the		22,718,942 shares.
offering (presuming the warrants are
exercised)

Common stock outstanding after the offering		22,718,942 shares.
(presuming the warrants are exercised)

Proceeds to us		We will not receive any proceeds from any sale of shares
		of common stock by the selling stockholders.

(1) Based on 22,718,942 shares of common stock outstanding at the filing of this Registration Statement, assuming that all the warrants are exercised. All share numbers contained in this prospectus are adjusted to reflect the 1-for -10 reverse split of our common stock that occurred on July 20, 2006.

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

The following tables set forth key components of our results of operations for the periods indicated in dollars. We were a “shell” company before our reverse acquisition of Logic Express. As we had no ongoing business operations prior to the share exchange transaction, we are not required to present financial statements for the year ended December 31, 2005 other than for Shandong Taibang, which is considered to be our “predecessor” for these purposes. We are providing our consolidated financial information, as of and for the fiscal years ended December 31, 2006 and 2005 which have been derived from the audited financial statements of Shandong Taibang. As the share exchange transaction involving our Company and Logic Express is considered to be a capital transaction (issuance of stock by Logic Express for the net monetary assets of our Company) in substance, rather than a business combination, Logic Express is treated as the continuing reporting entity that acquired us. Accordingly, the financial information prior to the reverse acquisition represents the consolidated financial information of Logic Express, which includes Shandong Taibang. This information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes appearing elsewhere in this prospectus.

	China Biologic and Subsidiaries		China Biologic and Subsidiaries
	Six Months Ended June 30		Fiscal Years Ended December 31
	( unaudited )		(audited)

	2007	2006	2006	2005

	(USD)	(USD)	(USD)	(USD)
Statement of Operations Data:
Revenues	16,503,911	9,067,701	22,230,570	11,558,708
Cost of revenues	6,012,348	4,185,625	9,601,605	6,205,685
Gross Profit	10,491,563	4,882,096	12,628,965	5,353,023
Operating Expenses	2,632,444	1,110,963	6,443,955	2,824,804
Operating income	7,859,119	3,771,133	6,185,010	2,528,219
Finance expense	46,224	95,502	185,578	103,505
Other expenses (income)	23,042	30,205	128,259	(72,886)
Income/(loss) before income taxes and			5,871,173	2,497,600
minority interests	7,789,853	3,645,426
Income tax expense	1,298,962	483,631	750,095	405,101
Net income/(loss) before minority interests	6,490,891	3,161,795	5,121,078	2,092,499
Minority Interests	1,148,548	472,476	1,304,241	782,813
Net income/(loss) after minority interests	5,342,343	2,689,319	3,816,837	1,309,686
Net income per share
Basic	0.25	0.14	0.18	0.07
Diluted	0.25	0.14	0.18	0.07
Total cash dividend declared	-	1,625,765	1,625,765	1,283,751

		China Biologic and
	China Biologic	Subsidiaries
	and Subsidiaries	Fiscal Years Ended December
		31
		(audited)
	June 30
	2007	2006	2005
	(unaudited)
	(USD)	(USD)	(USD)
Balance Sheet Data:
Cash and cash equivalents	6,548,316	4,268,220	607,376
Pledged bank deposit	65,750	-	1,860,000
Accounts receivable, net	3,407,481	3,775,387	2,200,138
Inventories	7,277,754	6,117,361	3,564,482
Other current assets	2,724,532	1,379,532	1,468,028
Total current assets	20,023,833	15,540,500	9,700,024
Property, plant and equipment, net	11,075,508	7,437,768	5,367,691
Intangible assets, net	759,331	718,011	438,237
Other non-current assets	804,150	778,364	175,577
Total assets	32,662,822	24,474,643	15,681,529
Short-term bank loans	1,315,000	2,564,000	3,720,000
Other current liabilities	8,820,362	6,235,316	8,388,787
Long term liabilities	460,250	641,000	1,302,001
Total liabilities	10,595,612	9,440,316	13,410,788
Minority Interests	3,535,935	2,308,487	1,693,597
Total shareholders’ equity	18,531,275	12,725,840	577,144

Cash Flow


	China Biologic and		China Biologic and Subsidiaries
	Subsidiaries		Fiscal Years Ended December 31
	Six Months Ended June 30		(audited)
	(unaudited)


USD	2007	2006	2006	2005


Net Cash provided by/(used in) Operating activities	7,309,632	475,524	3,094,871	(12,369)
Net Cash used in Investing activities	(3,872,728)	(156,928)	(3,516,965)	(1,495,767)
Net Cash (used in)/ provided by Financing
activities	(1,198,462)	203,101	4,051,475	1,476,307
Effects of Exchange Rate Change in Cash	41,654	13,617	31,463	96,083
Net Increase in Cash and Cash Equivalents	2,280,096	535,314	3,660,844	64,254
Cash and Cash Equivalent at beginning of
Period	4,268,220	607,376	607,376	543,122
Cash and Cash Equivalent at end of period	6,548,316	1,142,690	4,268,220	607,376

RISK FACTORS

The shares of our common stock being offered for resale by the selling stockholders are highly speculative in nature, involve a high degree of risk and should be purchased only by persons who can afford to lose the entire amount invested in the common stock. Before purchasing any of the shares of common stock, you should carefully consider the following factors relating to our business and prospects. If any of the following risks actually occurs, our business, financial condition or operating results will suffer, the trading price of our common stock could decline, and you may lose all or part of your investment.

RISKS RELATING TO OUR BUSINESS

If the State bans or limits plasma-based biopharmaceutical products, our operations, revenues and profitability would be adversely affected.

The principal raw materials of our existing and planned biopharmaceutical products is human source plasma, which, due to its unique nature, is subject to various quality and safety control issues which include, but are not limited to, contaminations and blood born diseases. In addition, limitations of current technology pose biological hazards inherent in plasma that have yet to be discovered which could result in a wide spread epidemic due to blood infusion. In the event that human plasma is discovered to contain pathogens or infectious agents or other bio-hazards or if the State bans or limits plasma-based biopharmaceutical products, our operations, revenues and profitability would be adversely affected.

If the plasma from Shandong Province are found to be contaminated, or the supply from these plasma stations becomes restricted, our operation, revenues and profitability would be adversely affected.

We currently source plasma mainly from our plasma stations in Shandong Province and Guangxi Province. The largest plasma station, Qihe, in Shandong Province, accounted for approximately 39.2% and 60% of our total plasma purchased for the years December 31, 2006 and 2005, respectively. If the plasma from these collection stations are found to be contaminated, the supply from these plasma stations becomes restricted, our operation, revenues and profitability would be adversely affected.

Our recent acquisition of five plasma stations in Shandong Province and three plasma stations in Guangxi Province expose us to potential risks and unforeseen liabilities which could have an adverse effect on our resources.

As part of the industry reform initiative by the Chinese government, in 2006 we acquired five of the six existing plasma stations in Shandong and we received the permit to operate them in January 2007. In April 2007 we acquired two additional plasma stations and signed letter of intent with another plasma station in the Guangxi Province. Two of our new plasma stations already have the necessary permit to operate and they commenced operations in July and August 2006, respectively. The acquisition of these stations exposes us to potential risks, including risks associated with the assimilation of new operations, technologies and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, and potential loss of, or harm to, relationships with employees, customers and suppliers as a result of the integration of these new businesses. Furthermore, we may not be able to complete the acquisition of the remaining plasma station in Guangxi Province or do so on the same terms that we have initially agreed to in the letters of intent.

Our revenues and profitability will be adversely affected if the market demands for human albumin cannot be sustained.

A large proportion of our revenue has been derived from human albumin products. The revenues derived from sales of our human albumin products represented approximately 75.5% and 83.9% of total revenues for the years ended December 31, 2006 and 2005, respectively. Although we have been developing new products and promoting various emerging products with the aim of gradually lowering our dependence on our principal products, these principal products have remained, and are expected to remain our key revenue contributors. Our revenues and profitability will be adversely affected if the market demands for human albumin cannot be sustained in the future or upon a decrease in prices of our biopharmaceutical products.

Our operations, sales, profit and cash flow will be adversely affected if our albumin products fail inspection or are delayed by regulators.

Each batch of our albumin products requires inspection by Chinese government regulators before we can ship it to our customers. Furthermore, new regulations may emerge to require our other products to be inspected by regulators before we can ship them to our customers. In the event that the regulators delay the approval of our products or change the requirements in such a way that we are unable to comply with those requirements, our operations, sales, profit and cash flow will be adversely affected.

We rely on contracts with the Shandong Province Institute of Biological Products for over 39% of our Shandong Taibang employees, which if breached, could have an adverse effect on our operations and on our financial results.

Shandong Province Institute of Biological Products, or the Shandong Institute, has provided us with approximately 130 of our employees out of a total of approximately 331 employees. We have entered into a secondment agreement with the Shandong Institute for these employees pursuant to which we are responsible for their salaries as well as for their social benefits such as State insurance. Our contract with the Shandong Institute expires in October 2032, however, the Shandong Institute is being privatized and this secondment arrangement will expire upon the completion of such privatization, which is expected to occur before the end of 2008. Upon expiration or termination of the secondment arrangement, we plan to hire the seconded employees directly, but we cannot be sure that all of the employees will accept our employment offers at that time. Some of these employees currently hold senior management positions with us. If the Shandong Institute stops seconding these employees to us and we are unable to hire replacement employees on time, our operations, as well as our financial results, will suffer.

If the distributors who we rely on do not purchase our products, our business and results of operations will be adversely affected.

We sell all of our products in China through our network of about 281 distributors located in about 22 provinces and municipal cities throughout China. While we have established working relationships with many of our distributors and strictly regulate their sales and marketing activities by annual distribution agreements, there are no restrictions in these distribution agreements preventing our distributors from also supplying products produced by our competitors. Our own marketing and sales staff work to develop and maintain relationships with our distributors, but there can be no assurance that we will be able to maintain such relationships. For the years ended December 31, 2006 and 2005, direct sales to distributors represented approximately 59.6% and 54%, respectively, of our total revenues. If a number of our distributors cease to purchase our products and we are unable to find suitable replacement, our business and results of operations will be adversely affected.

Our inability to successfully research and develop new biological pharmaceutical products could have an adverse effect on our future growth.

We believe that the successful development of biological pharmaceutical products can be affected by many factors. Products that appear to be promising in the early phases of research and development may fail to be commercialized for various reasons, including the failure to obtain the necessary regulatory approvals. In addition, the research and development cycles for new medicine for which we must obtain a Certificate of New Medicine from the PRC Ministry of Health, is a relatively lengthy process. In our experience, the process of conducting research and various tests on new products before obtaining a Certificate of New Medicine and subsequent procedures may take approximately three to five years. There is no assurance that our future research and development projects will be successful or that they will be completed within the anticipated time frame or budget. Also, there is no guarantee that we will receive the necessary approvals from relevant authorities for the production of our newly developed products. Even if such products could be successfully commercialized, there is no assurance that they will be accepted by the market as anticipated.

Our financial position and operations may be materially and adversely affected, if our product liability insurance does not sufficiently cover our liabilities.

Under current PRC laws, manufacturers and vendors of defective products in the PRC may incur liability for loss and injury caused by such products. Pursuant to the General Principles of the Civil Law of the PRC or the PRC Civil Law, which became effective in 1987, a defective product which causes property damage or physical injury to any person may subject the manufacturer or vendor of such product to civil liability.

In 1993, the PRC promulgated the Product Quality Law of the PRC or the Product Quality Law, which was revised in 2000. The Product Quality Law was enacted to protect the rights and interests of end-users and consumers and to strengthen the supervision and control of the quality of products. Under the Product Quality Law, manufacturers who produce defective products may be subject to fines and required to cease production, and in severe cases, be subject to criminal liability and may have their business licenses revoked.

1n 1993, the Law of the PRC on the Protection of the Rights and Interests of Consumers or the Consumers’ Rights Law was promulgated to further protect the legal rights and interests of consumers in connection with the purchase or use of goods and services. All businesses, including our business, must observe and comply with the Consumers’ Rights Law.

We maintain product liability insurance for sales in the PRC for all of our products. Although no one has filed any claims in relation to the use of our pharmaceutical products, our financial position and operations may be materially and adversely affected, if our insurance coverage is insufficient to cover a successful claim.

We depend heavily on key personnel, and turnover of key employees and senior management could harm our business.

Our success, to a certain extent, is attributable to the expertise and experience of our senior management and key research and technical personnel, including Stanley Wong, our Chief Financial Officer, Tung Lam, the Chief Executive Officer of Shandong Taibang, Diang Cong Liu, the Quality control Manager of Shandong Taibang and Ya Wen Liu, the Sales Manger of Shandong Taibang, who carry out key functions in our operation. If we lose the service of any of our senior management or key research or technical personnel or fail to attract additional personnel with suitable experience and qualification, our business operations and research capability may be adversely affected.

Our inability to successfully implement our business plans may adversely affect our profitability and prospects.

The successful implementation of our business plans and strategies, which include both organic and acquisition growth, depends on a number of factors including, among others, continued growth of the biopharmaceutical market in the PRC, the availability of funds, competition and government policies. There is no assurance that our plans can be implemented successfully as scheduled or at all. Any failure or delay in the implementation of any or all of our plans may have an adverse effect on our profitability and prospects.

Our senior management and employees have worked together for a short period of time, which may make it difficult for you to evaluate their effectiveness and ability to address challenges.

Due to our limited operating history and recent additions to our management team, certain of our senior management and employees have worked together at our company for only a relatively short period of time. As a result of these circumstances, it may be difficult for you to evaluate the effectiveness of our senior management and other key employees and their ability to address future challenges to our business.

Future acquisitions may have an adverse effect on our ability to manage our business.

Selective acquisitions form part of our strategy to further expand our business. If we are presented with appropriate opportunities, we may acquire additional companies, products or technologies. Future acquisitions and the subsequent integration of new companies into ours would require significant attention from our management. Our company has little experience with integrating newly acquired businesses. Potential problems encountered by each organization during mergers and acquisitions would be unique, posing additional risks to the company. The diversion of our management’s attention and

any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business. Future acquisitions would expose us to potential risks, including risks associated with the assimilation of new operations, technologies and personnel, unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, the inability to generate sufficient revenue to offset the costs and expenses of acquisitions, and potential loss of, or harm to, relationships with employees, customers and suppliers as a result of integration of new businesses.

We may lose our competitive advantage and our operations may suffer if we fail to prevent the loss or misappropriation of, or disputes over, our intellectual property.

We plan to apply for patents for our manufacturing processes. The patent application will be subject to approval from the relevant PRC authorities. We may not be able to successfully obtain the approval of the PRC authorities for our patent applications. Furthermore, third parties may assert claims to our proprietary procedures, technologies and systems. These proprietary procedures, technologies and systems are important to our business as they allow us to maintain our competitive edge over our competitors.

Our ability to compete successfully and to achieve future revenue growth will depend, in significant part, on our ability to protect our proprietary technology and operate without infringing upon the intellectual property rights of others. The legal regime in China for the protection of intellectual property rights is still at its early stage of development. Intellectual property protection became a national effort in China in 1979 when China adopted its first statute on the protection of trademarks. Since then, China has adopted its Patent Law, Trademark Law and Copyright Law and promulgated related regulations such as Regulation on Computer Software Protection, Regulation on the Protection of Layout Designs of Integrated Circuits and Regulation on Internet Domain Names. China has also acceded to various international treaties and conventions in this area, such as the Paris Convention for the Protection of Industrial Property, Patent Cooperation Treaty, Madrid Agreement and its Protocol Concerning the International Registration of Marks. In addition, when China became a party to the World Trade Organization in 2001, China amended many of its laws and regulations to comply with the Agreement on Trade-Related Aspects of Intellectual Property Rights. Despite many laws and regulations promulgated and other efforts made by China over the years with a view to tightening up its regulation and protection of intellectual property rights, private parties may not enjoy intellectual property rights in China to the same extent as they would in many Western countries, including the United States, and enforcement of such laws and regulations in China have not achieved the levels reached in those countries. Both the administrative agencies and the court system in China are not well-equipped to deal with violations or handle the nuances and complexities between compliant technological innovation and non-compliant infringement.

We rely on trade secrets and registered patents and trademarks to protect our intellectual property. We have also entered into confidentiality agreements with our management and employees relating to our confidential proprietary information. However, the protection of our intellectual properties may be compromised as a result of:

departure of any of our management members or employees in possession of our confidential proprietary information;
breach by such departing management member or employee of his or her confidentiality and non-disclosure undertaking to us;
expiration of the protection period of our registered patents or trademarks;
infringement by others of our proprietary technology and intellectual property rights; or
refusal by relevant regulatory authorities to approve our patent or trademark applications.

Any of these events or occurrences may have a material adverse effect on our operations. The measures that we have put into place to protect our intellectual property rights may not be sufficient. Litigation to enforce our intellectual property rights could result in substantial costs and may not be successful. If we are not able to successfully defend our intellectual property rights, we might lose rights to technology that we need to conduct and develop our business. This may seriously harm our business, operating results and financial condition, and enable our competitors to use our intellectual property to compete against us.

Furthermore, if third parties claim that our products infringe their patents or other intellectual property rights, we may be required to devote substantial resources to defend against such claims. If we are unsuccessful in defending against

such infringement claims, we may be required to pay damages, modify our products or suspend the production and sale of such products. We cannot guarantee that we will be able to modify our products on commercially reasonable terms.

A disruption in the supply of utilities, fire or other calamity at our manufacturing plant would disrupt production of our products and adversely affect our sales.

Our products are manufactured solely at our production facility located in Taian City, Shandong Province in the PRC. While we have not in the past experienced any calamities which disrupted production, any disruption in the supply of utilities, in particular, electricity or power supply, or any outbreak of fire, flood or other calamity resulting in significant damage at our facilities would severely affect our production and have a material adverse effect on our business, financial condition and results of operations.

We maintain insurance policies covering losses with respect to damages to our properties and products. We do not have insurance coverage for machinery and inventories of raw materials. There is no assurance that our insurance would be sufficient to cover all of our potential losses.

Investor confidence and market price of our shares may be adversely impacted if we or our independent registered public accountants are unable to attest to the adequacy of the internal controls over our financial reporting as of December 31, 2007, as required by Section 404 of the U.S. Sarbanes-Oxley Act of 2002.

We will be subject to the reporting requirements of the U.S. Securities and Exchange Commission, or SEC, following the completion of this offering. The SEC, as directed by Section 404 of the U.S. Sarbanes-Oxley Act of 2002, adopted rules requiring public companies, including us following the completion of this offering, to include a report of management of their internal control structure and procedures for financial reporting in their annual reports on Form 10-K that contains an assessment by management of the effectiveness of their internal controls over financial reporting. In addition, independent registered public accountants of these public companies must attest to and report on management’s assessment of the effectiveness of their internal controls over financial reporting. These requirements will first apply to our annual report on Form 10-KSB for the fiscal year ended on December 31, 2007, although the auditor attestation will not be required until our annual report on Form 10-KSB for the fiscal year ended on December 31, 2008. Our management may conclude that our internal controls over financial reporting are not effective. Moreover, even if our management concludes otherwise, if our independent registered public accountants are not satisfied with our internal control structure and procedures, the level at which our internal controls are documented, designed, operated or reviewed, or if the independent registered public accountants interpret the requirements, rules or regulations differently from us, they may decline to attest to our management’s assessment or may issue a report that is qualified. Any of these possible outcomes could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements, which could negatively impact the market price of our shares.

There is a dispute between the former shareholders of Shandong Taibang that calls into question our ownership of our primary operating subsidiary, which if not resolved in our favor will adversely affect our business.

In 2006, the Shandong Missile Biological Engineering Company, or Missile Engineering, which is controlled by Mr. Zu Ying Du, applied for arbitration before the China International Economic and Trade Arbitration Commission , or CIETAC, to challenge the effectiveness of the transfer to Up-Wing Investments Limited, or Up-Wing, of the equity interests in Shandong Taibang formerly owned by Missile Engineering. The equity transfer had been approved by the Shandong Provincial Department of Foreign Trade and Economic Cooperation, or the Shandong COFTEC. Missile Engineering later voluntarily withdrew this application and instead applied to the Shandong COFTEC for administrative reconsideration of the equity transfer, but this application was rejected. Thereafter, Missile commenced an administrative proceeding against the Shandong COFTEC alleging that it wrongfully approved the equity transfer. This administrative proceeding is still pending. We believe that all necessary approvals and documentation were obtained at the time of equity transfer and we have initiated legal action in China intending to restrain Missile Engineering from seeking to resolve the equity transfer issue, by means other than by arbitration, the agreed-upon method of conflict resolution at the time of the transfer. If we are unable to enjoin Missile Engineering from its current course of action, we may be tied up in litigation which could distract our management and our expenses may significantly increase. See “Legal Proceedings” for more details regarding this risk factor.

RISKS RELATING TO OUR FINANCIAL CONDITION

Our 2007 actual financial performance could vary from the performance thresholds provided by our controlling stockholders under the make good arrangement with the investors in our private placement.

Our 2007 actual financial performance could vary from the performance thresholds provided by our controlling stockholders under the make good arrangement with investors in our private placement. Under the make good arrangement with the investors, our controlling stockholders indicated that their expectation is that there will be at least $4,819,500 of after-tax net income or $5,823,465 of after-tax net income before minority interest for the fiscal year ending December 31, 2006 and $8,302,000 of after-tax net income or $10,031,416 of after-tax net income before minority interest for the fiscal year ending December 31, 2007 and we have not met the performance threshold for the fiscal year ending December 31, 2006. The performance thresholds generally represent a current estimate of our financial performance and are forward-looking. In addition, events beyond our control, including but not limited to the risk factors set out in this section of the Prospectus, changes in the bases or rates of taxation applicable to us in the respective jurisdictions in which we operate, and force majeure events or unforeseeable factors, could adversely affect the results. Actual results may be materially different from their estimate and thus the estimate by our controlling stockholders may not be reliable. Should our 2007 actual performance not meet the revenue estimates and the performance thresholds, (i) our share price will likely decrease and (ii) there will be a meaningful decrease in the percentage ownership by our controlling stockholders which may impact our board composition, our management structure, and/or the operation of our business going forward.

There is no assurance that we will be able to maintain or increase historical levels of profitability.

Competing or potential substitute products, produced locally in the PRC or imported by overseas manufacturers, may adversely affect the demand for, and pricing of, our products. Many of our biopharmaceutical products are also subject to pricing controls by the relevant State and provincial pricing authorities, which set the maximum retail sales prices for the relevant medicines in the PRC, and therefore we do not have absolute control to maximize our profits in relation to such products. These factors may at the same time restrict our ability to maintain profitability when faced with fluctuations in supply and prices of key raw materials used for the production of our products. Investors should be aware that there is no assurance that we will be able to increase or maintain our historical revenue or profit levels.

Our cash flow could be negatively affected as a result of our extension of relatively long payment terms to customers that we believe are credit worthy.

As is customary in our industry, we extend relatively long payment terms (up to six months) to customers that we believe are credit worthy. Although we attempt to establish appropriate reserves for our receivables, those reserves may not prove to be adequate in view of actual levels of bad debts. The failure of our customers to pay us timely would negatively affect our working capital, which could in turn adversely affect our cash flow.

Our limited operating history may not serve as an adequate basis to judge our future prospects and results of operations.

We have a limited operating history. Shandong Taibang as began its operation in October 2002. With the rapid growth of the industry, it has experienced a high growth rate since 2002. Furthermore, we did not acquire a controlling interest in Shandong Taibang until September 2005. As such, our historical operating results may not provide a meaningful basis for evaluating our business, financial performance and prospects. We may not be able to achieve a similar growth rate in future periods. Accordingly, you should not rely on our results of operations for any prior periods as an indication of our future performance.

We face risks associated with debt financing (including exposure to variation in interest rates).

Our total outstanding indebtedness, entirely comprising of short-term loans, as of June 30, 2007 and December 31, 2006 was $1.32 million and $2.56 million, respectively. The interest rates on these short-term loans are fixed and from 5.85% to 6.14% per annum. Our obligations under our existing loans have been mainly met through the cash flow from our operations and our financing activities. We are subject to risks normally associated with debt financing, including the risk of

significant increase in interest rates and the risk that our cash flow will be insufficient to meet required payment of principal and interest. In the past, cash flow from operations had been sufficient to meet payment obligations and/or we have been able to roll over our borrowings. There is however no assurance that we will be able to do so in the future. We may also underestimate our capital requirements and other expenditures or overestimate our future cash flows. In such event, additional capital, debt or other forms of financing may be required for our working capital. If any of the aforesaid events occur and we are unable for any reason to raise additional capital, debt or other financing to meet our working capital requirements, our business, operating results, liquidity and financial position will be adversely affected.

We will incur capital expenditures in the future in connection with our growth plans and therefore may require additional financing.

To grow our sales volume, we need to increase our production capacities and this will require substantial capital expenditures. Such expenditures are likely to be incurred in advance of any increase in sales. Our revenue may not increase after these capital expenditures are incurred. This will depend on, among other factors, on our ability to maintain or achieve high capacity utilization rates. Any failure to increase our revenue after incurring capital expenditure to expand production capacity will reduce our profitability.

In addition, we may need to obtain additional debt or equity financing to fund our capital expenditures. Additional equity financing may result in dilution to our shareholders. Additional debt financing may be required which, if obtained, may:

limit our ability to pay dividends or require us to seek consents for the payment of dividends;
increase our vulnerability to general adverse economic and industry conditions;
limit our ability to pursue our growth plan;
require us to dedicate a substantial portion of our cash flow from operations as payment for our debt, thereby reducing availability of our cash flow to fund capital expenditures, working capital and other general corporate purposes; and/or
limit our flexibility in planning for, or reacting to, changes in our business and our industry.

We cannot assure you that we will be able to obtain the additional financing on terms that are acceptable to us.

RISKS RELATING TO OUR INDUSTRY

If our supply of quality plasma is interrupted, our results of operations and profitability will be adversely affected.

The production of plasma-based biopharmaceutical products relies on the supply of plasma of suitable quality. For the year ended December 31, 2006 and 2005, the cost of plasma used by us for production accounted for approximately 74% and 68%, respectively, of total production cost. The supply and market prices of plasma may be adversely affected by factors such as regulatory restrictions, weather conditions or outbreak of diseases which would impact our costs of production. We may not be able to pass on any resulting increase in costs to our customers and therefore any substantial fluctuation in supply or market prices of plasma may adversely affect our results of operations and profitability.

The biopharmaceutical industry in the PRC is strictly regulated and changes in such regulations may have an adverse effect on our business.

The biopharmaceutical industry in the PRC is strictly regulated by the State. The regulatory regime, such as administrative approval of medicines and production approvals, comprises of series of regulations and administrative rules. The PRC regulatory authorities may amend such regulations and administrative rules and promulgate new regulations and administrative rules from time to time. Changes in these regulations and administrative rules could have a significant impact on our business. Such changes may have any adverse impact on our business.

We may not be able to carry on our business if we lose any of the permits and licenses required by the PRC Government in order to carry on our business.

All pharmaceutical manufacturing and distribution enterprises in the PRC are required to obtain from various PRC governmental authorities certain permits and licenses, including, in the case of manufacturing enterprises, a Pharmaceutical Manufacturing Permit and, in the case of distribution enterprises, a Pharmaceutical Distribution Permit.

We have obtained permits and licenses and certificates for Good Manufacturing Practice, or GMP, required for the manufacture of our pharmaceutical products. These permits and licenses held by us are subject to periodic renewal and/or reassessment by the relevant PRC Government authorities and the standards of compliance required in relation thereto may from time to time be subject to changes. We intend to apply for the renewal of such permits and licenses when required by applicable laws and regulations. Any changes in compliance standards, or any new laws or regulations that may prohibit or render it more restrictive for us to conduct our business or increase our compliance costs may adversely affect our operations or profitability. Any failure by us to obtain such renewals may have a material adverse effect on the operation of our business. In addition, we may not be able to carry on business without such permits and business licenses being renewed.

We may encounter increased competition from both local and overseas pharmaceutical enterprises which could adversely affect our revenues.

There are both local and overseas pharmaceutical enterprises that are engaged in the manufacture and sale of potential substitute or similar biopharmaceutical products as our products in the PRC. These competitors may have more capital, better research and development resources, manufacturing and marketing capability and experience than us. Our profitability may be adversely affected if (i) competition intensifies; (ii) competitors drastically reduce prices; or (iii) competitors develop new products or product substitutes having comparable medicinal applications or therapeutic effects which are more effective and /or less costly than those produced by us.

Other approved biopharmaceutical manufacturers in the PRC are entitled to produce many of the products produced by us. There are currently about 34 approved manufacturers of plasma-based pharmaceutical products in China. Many of these manufacturers are essentially producing the same type of products, human albumin and various types of immunoglobulin. Although we believe that it is difficult for new manufacturers to enter into the industry, if other manufacturers obtain approval from the regulators, we may face competition and our business and profitability may be adversely affected. We believe that our major competitors in the albumin and immunoglobulin market in China are Hualan Biological Engineering, Shanghai Institute of Biological Products, Shanghai RAAS Blood Products Co. Ltd., Chengdu Ronsheng Pharmaceuticals, and Sichuan Yuanda Shuyang Pharmaceutical Co.

Competition from imported products and China’s admission as a member of the WTO creates increased competition for us. The PRC became a member of the WTO in December 2001. Competition in the biopharmaceutical industry in the PRC will intensify generally in two respects. With lower import tariffs, we anticipate that imported biopharmaceutical products manufactured overseas may become increasingly competitive with domestically produced products in terms of pricing. We also believe that foreign biopharmaceutical manufacturers with more experience may set up production facilities in the PRC and compete with domestic manufacturers directly. Accordingly, with the expected increased supply of competitively priced biopharmaceutical products in the PRC we may be faced with increased competition by foreign biopharmaceutical products, including the types of products manufactured by US manufacturers and other manufacturers.

If we do not receive PRC governmental approval to increase the retail prices of certain of our biopharmaceutical products our revenues may be adversely affected.

Retail prices of certain of our biopharmaceutical products in the PRC are subject to the control of the relevant State and provincial price administration authorities. The actual price for any given price-controlled product set by manufacturers, wholesalers and retailers cannot exceed the price ceiling imposed in accordance with the applicable government price control rules. Only those pharmaceutical products which are included in the Insurance Catalogue administered at the State or provincial level are subject to price control.

Our three principal product categories, human albumin, human immunoglobulin for intravenous injections and human tetanus immunoglobulin, which accounted for a total of approximately 83% and 90% of our total revenues for the year

ended December 31, 2006 and 2005, respectively, were subject to national price control regulations in the PRC. Hence, the prices of those products could not be increased at our discretion above the relevant controlled retail price ceiling without prior governmental approval. This, in turn, may affect the ex-factory prices set by us for our products and we therefore do not have unfettered freedom to maximize our profits. It is uncertain whether we will be able to obtain necessary approvals to increase the price of any of our products.

RISKS RELATING TO DOING BUSINESS IN CHINA

Substantially all of our assets are located in, and substantially all of our revenue is sourced from the PRC. Accordingly, our results of operations, financial position and prospects are subject to a significant degree to the economic, political and legal developments of the PRC.

Changes in China’s political or economic situation could harm us and our operating results.

Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:

Level of government involvement in the economy;
Control of foreign exchange;
Methods of allocating resources;
Balance of payments position;
International trade restrictions; and
International conflict.

The Chinese economy differs from the economies of most countries belonging to the Organization for Economic Cooperation and Development, or OECD, in many ways. For example, state-owned enterprises still constitute a large portion of the Chinese economy and weak corporate governance and a lack of flexible currency exchange policy still prevail in China. As a result of these differences, we may not develop in the same way or at the same rate as might be expected if the Chinese economy was similar to those of the OECD member countries.

Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited.

The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. The overall effect of legislation enacted over the past 20 years has been to enhance the legal protections afforded to foreign invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses. In addition, all of our executive officers and our directors are residents of China and not of the U.S., and substantially all the assets of these persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against our Chinese operations and subsidiaries.

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

China only recently has permitted provincial and local economic autonomy and private economic activities. The Chinese 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 not to continue to support recent economic reforms and 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.

Future inflation in China may inhibit our ability to conduct business in China.

In recent years, the Chinese economy has experienced periods of rapid expansion and highly fluctuating rates of inflation. During the past ten years, the rate of inflation in China has been as high as 20.7% and as low as -2.2%. These factors have led to the adoption by the Chinese government, from time to time, of various corrective measures designed to restrict the availability of credit or regulate growth and contain inflation. High inflation may in the future cause the Chinese government to impose controls on credit and/or prices, or to take other action, which could inhibit economic activity in China, and thereby harm the market for our products and our company.

Restrictions on currency exchange may limit our ability to receive and use our revenues effectively.

The majority of our revenues will be settled in Renminbi and U.S. dollars, and any future restrictions on currency exchanges may limit our ability to use revenue generated in Renminbi to fund any future business activities outside China or to make dividend or other payments in U.S. dollars. Although the Chinese government introduced regulations in 1996 to allow greater convertibility of the Renminbi for current account transactions, significant restrictions still remain, including primarily the restriction that foreign-invested enterprises may only buy, sell or remit foreign currencies after providing valid commercial documents, at those banks in China authorized to conduct foreign exchange business. In addition, conversion of Renminbi for capital account items, including direct investment and loans, is subject to governmental approval in China, and companies are required to open and maintain separate foreign exchange accounts for capital account items. We cannot be certain that the Chinese regulatory authorities will not impose more stringent restrictions on the convertibility of the Renminbi.

Substantially all of our executive officers reside in the PRC, and substantially all of our assets are located within the PRC. It may not be possible for investors to affect service of process upon those persons in the PRC or to enforce any judgment obtained from non-PRC courts against them in the PRC or against our assets in the PRC.

China does not have treaties providing for the reciprocal recognition and enforcement of judgments of courts with Hong Kong, the United Kingdom, Japan or many other countries. Therefore recognition and enforcement in China of judgments of a court in any of these jurisdictions in respect of any matter not subject to a binding arbitration provision may be difficult or impossible.

Our primary source of funds of dividends and other distributions from our operating subsidiary in China is subject to various legal and contractual restrictions and uncertainties, and our ability to pay dividends or make other distributions to our shareholders are negatively affected by those restrictions and uncertainties.

We are a holding company established in Delaware and conduct our core business operations through our principal operating subsidiary, Shandong Taibang, in China. As a result, our profits available for distribution to our shareholders are dependent on the profits available for distribution from Shandong Taibang. If Shandong Taibang incurs debt on its own behalf, the debt instruments may restrict its ability to pay dividends or make other distributions, which in turn would limit our ability to pay dividends on our shares. Under the current PRC laws, because we are incorporated in the Delaware, our PRC subsidiary, Shandong Taibang, is regarded as a sino-foreign joint venture enterprise in China. Although dividends paid by foreign invested enterprises, such as wholly foreign-owned enterprises and sino-foreign joint ventures, are not subject to any PRC corporate withholding tax, the PRC laws permit payment of dividends only out of net income as determined in accordance with PRC accounting standards and regulations. Determination of net income under PRC accounting standards and regulations may differ from determination under U.S. GAAP in significant aspects, such as the use of different principles for recognition of revenues and expenses. In addition, if we make additional capital contributions to our PRC subsidiary, Shandong Taibang (which may occur through the capitalization of undistributed profits), then additional approval of the PRC government would be required due to an increase in our registered capital and total investment in Shandong Taibang. Under

the PRC laws, Shandong Taibang, a sino-foreign joint venture enterprise, is required to set aside a portion of its net income each year to fund designated statutory reserve funds. These reserves are not distributable as cash dividends. As a result, our primary internal source of funds of dividend payments from Shandong Taibang is subject to these and other legal and contractual restrictions and uncertainties, which in turn may limit or impair our ability to pay dividends to our shareholders. Moreover, any transfer of funds from us to Shandong Taibang, either as a shareholder loan or as an increase in registered capital, is subject to registration with or approval by PRC governmental authorities. These limitations on the flow of funds between us and Shandong Taibang could restrict our ability to act in response to changing market conditions. We currently do not intend on paying any dividends in the future and expect to retain all available funds to support our operations and to finance growth and development of our business.

Failure to comply with PRC regulations relating to the establishment of offshore special purpose companies by PRC residents may subject our PRC resident stockholders to personal liability, limit our ability to acquire PRC companies or to inject capital into our PRC subsidiaries, limit our PRC subsidiaries’ ability to distribute profits to us or otherwise materially adversely affect us.

In October 2005, the PRC State Administration of Foreign Exchange, or SAFE, issued the Notice on Relevant Issues in the Foreign Exchange Control over Financing and Return Investment Through Special Purpose Companies by Residents Inside China, generally referred to as Circular 75, which required PRC residents to register with the competent local SAFE branch before establishing or acquiring control over an offshore special purpose company, or SPV, for the purpose of engaging in an equity financing outside of China on the strength of domestic PRC assets originally held by those residents. Internal implementing guidelines issued by SAFE, which became public in June 2007 (known as Notice 106), expanded the reach of Circular 75 by (i) purporting to cover the establishment or acquisition of control by PRC residents of offshore entities which merely acquire “control” over domestic companies or assets, even in the absence of legal ownership; (ii) adding requirements relating to the source of the PRC resident’s funds used to establish or acquire the offshore entity; (iii) covering the use of existing offshore entities for offshore financings; (iv) purporting to cover situations in which an offshore SPV establishes a new subsidiary in China or acquires an unrelated company or unrelated assets in China; and (v) making the domestic affiliate of the SPV responsible for the accuracy of certain documents which must be filed in connection with any such registration, notably, the business plan which describes the overseas financing and the use of proceeds. Amendments to registrations made under Circular 75 are required in connection with any increase or decrease of capital, transfer of shares, mergers and acquisitions, equity investment or creation of any security interest in any assets located in China to guarantee offshore obligations, and Notice 106 makes the offshore SPV jointly responsible for these filings. In the case of an SPV which was established, and which acquired a related domestic company or assets, before the implementation date of Circular 75, a retroactive SAFE registration was required to have been completed before March 31, 2006; this date was subsequently extended indefinitely by Notice 106, which also required that the registrant establish that all foreign exchange transactions undertaken by the SPV and its affiliates were in compliance with applicable laws and regulations. Failure to comply with the requirements of Circular 75, as applied by SAFE in accordance with Notice 106, may result in fines and other penalties under PRC laws for evasion of applicable foreign exchange restrictions. Any such failure could also result in the SPV’s affiliates being impeded or prevented from distributing their profits and the proceeds from any reduction in capital, share transfer or liquidation to the SPV, or from engaging in other transfers of funds into or out of China.

We believe our stockholders who are PRC residents as defined in Circular 75 have registered with the relevant branch of SAFE, as currently required, in connection with their equity interests in us and our acquisitions of equity interests in our PRC subsidiaries. However, we cannot provide any assurances that their existing registrations have fully complied with, and they have made all necessary amendments to their registration to fully comply with, all applicable registrations or approvals required by Circular 75. Moreover, because of uncertainty over how Circular 75 will be interpreted and implemented, and how or whether SAFE will apply it to us, we cannot predict how it will affect our business operations or future strategies. For example, our present and prospective PRC subsidiaries’ ability to conduct foreign exchange activities, such as the remittance of dividends and foreign currency-denominated borrowings, may be subject to compliance with Circular 75 by our PRC resident beneficial holders. In addition, such PRC residents may not always be able to complete the necessary registration procedures required by Circular 75. We also have little control over either our present or prospective direct or indirect stockholders or the outcome of such registration procedures. A failure by our PRC resident beneficial holders or future PRC resident stockholders to comply with Circular 75, if SAFE requires it, could subject these PRC resident beneficial holders to fines or legal sanctions, restrict our overseas or cross-border investment activities, limit our subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

The value of our securities will be affected by the currency exchange rate between U.S. dollars and RMB. The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB, and between those currencies and other currencies in which our sales may be denominated. For example, if we need to convert U.S. dollars into RMB for our operational needs and the RMB appreciates against the U.S. dollar at that time, our financial position, our business, and the price of our common stock may be harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against the RMB, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.

Our procurement strategy is to diversify our suppliers both in the PRC and overseas. And some of our raw materials and major equipments are currently imported. These transactions are often settled in U.S. dollars or other foreign currency. In the event that the U.S. dollars or other foreign currency appreciate against RMB, our costs will increase. If we cannot pass the resulted cost increase to our customers, our profitability and operating results will suffer. In addition, because our sales to international customers are growing, we are subject to the risk of foreign currency depreciation.

If the China Securities Regulatory Commission, or CSRC, or another PRC regulatory agency, determines that CSRC approval is required in connection with this offering, this offering may be delayed or cancelled, or we may become subject to penalties.

On August 8, 2006, six PRC regulatory agencies, including the CSRC, promulgated the Regulation on Mergers and Acquisitions of Domestic Companies by Foreign Investors, which became effective on September 8, 2006. This new regulation, among other things, has certain provisions that require SPVs formed for the purpose of acquiring PRC domestic companies and controlled by PRC individuals, to obtain the approval of the CSRC prior to publicly listing their securities on an overseas stock market. However, the new regulation does not expressly provide that approval from the CSRC is required for the offshore listing of a SPV which acquires, directly or indirectly, equity interest or shares of domestic PRC entities held by domestic companies or individuals by cash payment, nor does it expressly provide that approval from CSRC is not required for the offshore listing of a SPV which has fully completed its acquisition of equity interest of domestic PRC equity prior to September 8, 2006. On September 21, 2006, the CSRC published on its official website a notice specifying the documents and materials that are required to be submitted for obtaining CSRC approval. It is not clear whether the provisions in the new regulation regarding the offshore listing and trading of the securities of a SPV applies to an offshore company such as us which has acquired the equity interest of PRC domestic entities in cash and has completed the acquisition of the equity interest of PRC domestic entities prior to the effective date of the new regulation. Since the new regulation has only recently been adopted, there remains some uncertainty as to how this regulation will be interpreted or implemented. If the CSRC or another PRC regulatory agency subsequently determines that the CSRC’s approval is required for this offering, we may face sanctions by the CSRC or another PRC regulatory agency. If this happens, these regulatory agencies may impose fines and penalties on our operations in the PRC, limit our operating privileges in the PRC, delay or restrict the repatriation of the proceeds from this offering into the PRC, restrict or prohibit payment or remittance of dividends to us or take other actions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects, as well as the trading price of our shares. The CSRC or other PRC regulatory agencies may also take actions requiring us, or making it advisable for us, to delay or cancel this offering before settlement and delivery of the shares being offered by us.

New corporate income tax law could adversely affect our business and our net income.

On March 16, 2007, National People’s Congress passed a new corporate income tax law, which will be effective on January 1, 2008. This new corporate income tax unifies the corporate income tax rate, cost deductions and tax incentive policies for both domestic and foreign-invested enterprises in China. According to the new corporate income tax law, the applicable corporate income tax rate of our Chinese subsidiaries will incrementally increase to 25% over a five-year period. We are expecting that the rules for implementation would be enacted by the Chinese government in the coming months. After the rules are enacted, we can better assess what the impact of the new unified tax law would be over this period. The discontinuation of any special or preferential tax treatment or other incentives could adversely affect our business and our net income.

RISKS RELATING TO OUR COMMON STOCK

There is not now, and there may not ever be, an active market for our common stock.

There currently is no market for our common stock. Further, although our common stock may be quoted in the over-the-counter market maintained by the Pink Sheets, LLC, trading of our common stock may be extremely sporadic. For example, several days may pass before any shares may be traded. A more active market for the common stock may never develop.

We cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange .

We plan to list our common stock as soon as practicable. However, we cannot assure you that we will be able to meet the initial listing standards of any stock exchange, or that we will be able to maintain any such listing. Until the common stock is listed on an exchange, we expect that it would be eligible to be quoted in the “pink sheets.” In this venue, however, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock. In addition, if we failed to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell our securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect its liquidity. This would also make it more difficult for us to raise additional capital.

We are subject to penny stock regulations and restrictions which may affect our ability to sell our securities on the secondary market.

The SEC has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock is less than $5.00 per share and therefore is a “penny stock.” Broker and dealers effecting transactions in “penny stock” must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect your ability to sell shares. In addition, so long as our common stock is quoted in the “pink sheets” (as is currently the case), investors will find it difficult to obtain accurate quotations of the stock, and may find few buyers to purchase such stock and few market makers to support its price.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. The forward-looking statements are contained principally in the sections entitled “Summary,” “Risk Factors,” “Use of Proceeds,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business.” These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” above. In some cases, you can identify forward-looking statements by terms such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “would” and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Forward-looking statements also represent our estimates and assumptions only as of the date of this prospectus. You should read this prospectus and the documents that we reference in this prospectus, or that we filed as exhibits to the registration statement of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect.

Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future.

USE OF PROCEEDS

We will not receive any proceeds from the sale of the shares of common stock by the selling stockholders. Any proceeds received by us upon the exercise of warrants held by the selling stockholders would be used for general working capital purposes.

DILUTION

Our net tangible book value per share of common stock as of June 30, 2007 was $1.62. Net tangible book value is determined by dividing our tangible book value (total assets less intangible assets including know-how, trademarks and copyrights and less total liabilities) by the number of outstanding shares of our capital stock. Since this offering is being made solely by the selling stockholders and none of the proceeds will be paid to us, our net tangible book value will be unaffected by this offering.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Market Information

Our Common Stock trades in the “pink sheets”, under the symbol “CBPO”. There is currently no established market for the shares of our Common Stock. There can be no assurance that a liquid market for our securities will ever develop. As of August 29, 2007, we had a total of 21,434,942 shares of our Common Stock outstanding.

The following table sets forth, for the periods indicated, the high and low bid prices of our common stock. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions. The high and low quotations have been adjusted for a 1-for-10 reverse stock split that became effective on July 20, 2006.

		Closing Bid Prices ⁽¹⁾

	High		Low

*Period Ended December 31, 2007*

1 ^st Quarter	N/A		N/A
2 ^nd Quarter	3.00		3.00
3 ^rd Quarter (until August 29, 2007)	2.70		2.70

*Year Ended December 31, 2006*

1 ^st Quarter	N/A		N/A
2 ^nd Quarter	N/A		N/A
3 ^rd Quarter	N/A		N/A
4 ^th Quarter	N/A		N/A

*Year Ended December 31, 2005*

1 ^st Quarter	N/A		N/A
2 ^nd Quarter	N/A		N/A
3 ^rd Quarter	N/A		N/A
4 ^th Quarter	N/A		N/A

⁽¹⁾ The above tables set forth the range of high and low closing bid prices per share of our common stock as reported by www.quotemedia.com for the periods indicated. The closing bid prices are only available from the quarter that began on April 3, 2007.

We plan to furnish our stockholders with an annual report for each fiscal year ending December 31 containing financial statements audited by our independent certified public accountants. Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our stockholders when we deem this appropriate. We intend to maintain compliance with the periodic reporting requirements of the Exchange Act.

Reports to Stockholders

We plan to furnish our stockholders with an annual report for each fiscal year ending December 31 containing financial statements audited by our independent registered public accounting firm. Additionally, we may, in our sole discretion, issue unaudited quarterly or other interim reports to our stockholders when we deem appropriate. We intend to maintain compliance with the periodic reporting requirements of the Securities Exchange Act of 1934.

Holders

As of August 29, 2007, there were approximately 456 shareholders of record.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

We are engaged in the research, development, manufacturing, marketing, distribution and sales of biologic products through our indirect majority-owned PRC subsidiary, Shandong Taibang, established under the laws of China. We are currently the only plasma based biopharmaceutical products manufacturer in Shandong province approved by the State. Since our establishment, all of our revenues have been derived primarily from the sales of human albumin and various types of immunoglobulin.

We operate and manage our business as a single segment. We do not account for the results of our operations on a geographic or other basis.

All our business has been conducted in Renminbi, the official currency of China. Renminbi is still not a free floating currency. The value of Renminbi is subject to changes in the Chinese government’s policies and depends to a large extent on China’s domestic and international economic and political developments, as well as supply and demand in the local market. Since 1994, the official exchange rate for the conversion of Renminbi to U.S. dollars has generally been stable, and Renminbi has appreciated against the U.S. dollar since July 2005.

Principal Factors Affecting Our Financial Condition

The following are key factors that affect our financial condition and results of operations and we believe them to be important to the understanding of our business:

Raw Material Prices

The primary raw material used in the production of our albumin and immunoglobulin products is human plasma. These products are still not affordable to many PRC patients. As China’s economy grows, we expect more Chinese people will become consumers of medical treatments and procedures, including procedures requiring the use of human plasma. As a result, we expect the enhanced economic conditions in China will result in increased demand for human plasma. Collection of human plasma in China is regulated and until recently, only licensed Plasmapheresis stations owned and operated by the government could collect human plasma. Each collection station can only supply plasma to the one manufacturer that has signed the “Quality Responsibility” statement with them. In Shandong Province, there are six plasma collection stations and we had annual plasma supply contracts with three of them indicating the estimated cost for each ton of plasma until December 2006. The price of human plasma is negotiated on an annual basis and is determined by a number of factors

including, but not limited to, the cost of operating the collection stations, the nutritional supplement fee awarded to the donors for each donation, and the anticipated volume of total plasma donated.

In March 2006, the Ministry of Health promulgated certain “Measures on Reforming Plasma Collection Stations,” or the Blood Collection Measures, whereby the ownership and management of PRC plasma stations are required to be transferred to plasma-based biopharmaceutical companies while the regulatory supervision and administrative control remain with the State. Plasma stations that did not complete their reform by December 31, 2006, risked revocation of their license to collect plasma. In December 2006, we signed agreements to acquire five of the six plasma stations in Shandong which we have since acquired. On January 1, 2007 we obtained the permit to operate these stations. These acquisitions will allow us to have direct influence on the operation of these collection stations in the future and secure a stable source of plasma supply for production.

In January 2007, we entered into letters of intent to acquire three plasma stations in Guangxi Province, two of which we acquired in February and April 2007 and obtained their permit to operate. However, there can be no assurance that the acquisition of the remaining plasma station can be completed or continue on the same terms that we have initially agreed to in the letter of intent as the permit for this station is in dispute. Please refer to “Legal Proceedings” for more information regarding this dispute.

Through Shandong Taibang, we formed separate subsidiaries that acquired the assets of the five plasma stations in Shandong and two of the plasma stations in Guangxi Province, and we will form a subsidiary to acquire the assets of the remaining plasma station in Guangxi Province. The wholly-owned subsidiaries of Shandong Taibang holding our new plasma stations are the Xia Jin Plasma Company, the Qi He Plasma Company, the He Ze Plasma Company, the Huan Jiang Plasma Company, the Yang Gu Plasma Company, the Zhang Qiu Plasma Company. The other plasma station is held in the Fang Cheng Plasma Company, which is 80% owned by Shandong Taibang and 20% owned by Lin Feng, an unrelated third party. Our acquisition of each plasma station was based conditioned on the State’s issuance to our acquiring subsidiaries all permits necessary to operate the acquired assets which we have now obtained. We have also make employment offers to all or substantially all of the employees of each plasma station that we have acquired.

We do not expect any material differences in our cost structure as a result of the acquisition of the plasma stations. However, we expect that our plasma supply will increase due to improved management. Although we have generally been able to pass substantially all cost increases in recent years on to our customers, there is no assurance that we can continue to do that in the future.

Prices of Our Products

In recent years, due to market demand, we were able to increase the selling price of most of our key products.

Demand for Our Products

Our products are mostly sold to hospitals either directly or through our distributors in China. The demand for our products is therefore, largely affected by the general economic conditions in China because they are still not affordable to many patients. As China’s economy grows, we expect more Chinese people will become consumers of medical treatments and procedures, including procedures requiring human plasma. As a result, we expect the enhanced economic conditions in China will result in increased demand for human plasma. A significant improvement in the economic environment in China will likely improve consumer income which in turn would make our products more affordable and consequently increase the demand for our products.

We have been able to expand our product range and markets by introducing new products required by customers. We believe that our technical expertise is important in introducing products that are in demand.

Production Capacity

Our sales volume is limited by our annual production capacity.

As we grow our business in the future, our ability to fulfill additional and larger orders will be dependent on our ability to increase our production capacity. Our plan to expand our production capacity will depend on, inter alia, the availability of capital to meet our needs of expansion or upgrading of production lines, and the availability of stable plasma supply.

Currently, our production capacity is 300 tons per annum. We estimate that the production capacity of our major competitors ranges from 300 tons to 1,000 tons per annum. We have already invested $1.5 million in the six-month period ending June 30, 2007, and we plan to invest an additional $2.5 million in 2007, in order to expand our production capacity to 500-800 tons per annum. We have committed capital expenditure of $4 million, as of June 30, 2007, of which $1.5 million has been paid. We expect the increase in our production capacity to be in place by early 2008.

Competition

We are subject to intense competition. There are both local and overseas pharmaceutical enterprises that are engaged in the manufacture and sale of potential substitute or similar biopharmaceutical products as our products in the PRC. These competitors may have more capital, better research and development resources, manufacturing and marketing capability and experience than us. In our industry, we compete based upon product quality, product cost, ability to produce a diverse range of products and logistical capabilities. Our profitability may be adversely affected if (i) competition intensifies; (ii) competitors drastically reduce prices; or (iii) competitors develop new products or product substitutes having comparable medicinal applications or therapeutic effects which are more effective and /or less costly than those produced by us.

Other approved biopharmaceutical manufacturers in the PRC are entitled to produce many of the products produced by us. There are currently about 34 approved manufacturers of plasma-based pharmaceutical products in China. Many of these manufacturers are essentially producing the same type of products, human albumin and various types of immunoglobulin. However, due to recent Ministry of Health regulations, we believe that it is difficult for new manufacturers to enter into the industry. We believe that our major competitors in the albumin and immunoglobulin market in China are Hualan Biological Engineering, Shanghai Institute of Biological Products, Shanghai RAAS Blood Products Co. Ltd., Chengdu Ronsheng Pharmaceuticals, and Sichuan Yuanda Shuyang Pharmaceutical Co.

In addition, competition from imported products and China’s admission as a member of the WTO creates increased competition for us. The PRC became a member of the WTO in December 2001. Competition in the biopharmaceutical industry in the PRC will intensify generally in two respects. With lower import tariffs, we anticipate that imported biopharmaceutical products manufactured overseas may become increasingly competitive with domestically produced products in terms of pricing. We also believe that foreign biopharmaceutical manufacturers with more experience may set up production facilities in the PRC and compete with domestic manufacturers directly. With the expected increased supply of competitively priced biopharmaceutical products in the PRC we may be faced with increased competition by foreign biopharmaceutical products, including the types of products manufactured by US manufacturers and other manufacturers.

We believe that we are currently one of the fastest growing producers of albumin and immunoglobulin biopharmaceutical products in China. According to a 2006 Hua Yuan Medicine Net survey of the profit ranking of companies in the Chinese biological products industry, we are ranked the 20 ^th in 2006 and 25 ^th in 2005, and in the plasma products area, we were ranked 5 ^th in 2006. Our past financial performance is attributable to our market position in the industry. Furthermore, while each of the plasma products related companies have their own product composition which include 3 main categories namely human albumin, human immunoglobulin and lyophilized human factor, we are currently developing lyophilized human factor products which we expect to launch new products in 2008. We will continue to meet challenges and secure our market position by enhancing our existing products, introducing new products to meet customer demand, delivering quality products to our customers in a timely manner and maintaining our established industry reputation.

Taxation

Prior to March 2007, PRC enterprise income tax is calculated based on taxable income determined under PRC accounting principles. In accordance with “Income Tax Law of China for Enterprises with Foreign Investment and Foreign Enterprises,” or the Income Tax Law, and the related implementing rules, foreign invested enterprises incorporated in the PRC are generally subject to an enterprise income tax rate of 33% (representing state income tax of 30% plus local income

tax of 3%). The Income Tax Law and the related implementing rules provide certain favorable tax treatments to foreign invested enterprises in the PRC. PRC domestic companies are governed by the Enterprise Income Tax Laws of the PRC and are generally subject to an enterprise income tax rate of 33%. On March 16, 2007, the Fifth Plenary Session of the Tenth National People’s Congress passed the Enterprise Income Tax Law of the PRC which will take effect on January 1, 2008. The Enterprise Income Tax rate will be lowered from 33% to 25%.

As a sino-foreign joint venture company, Shandong Taibang has been granted preferential tax holiday by the Tax Bureau of the PRC as of 2003. Accordingly, Shandong Taibang is entitled to tax concessions from 2003 whereby the profit for the first two financial years beginning with the first profit-making year is exempt from income tax in the PRC, and the profit for each of the subsequent three financial years is taxed at 50% of the prevailing state income tax rate. Local income tax of 3% is exempted for five years starting from the first profit-making year. Shandong Taibang will be allowed the benefits of tax holidays under the grandfather treatment over a five-year transition period, and the applicable income rate will be 25% after the tax holiday.

Results of Operations

The tables below sets forth certain key components of our results of operations for periods indicated, in dollars and as a percentage of revenues:

	China Biologic and		China Biologic and Subsidiaries
	Subsidiaries		Fiscal Years Ended
	Six Months Ended June 30		December 31
	(unaudited)		(audited)


	2007	2006		2006	2005


Revenue	16,503,911	9,067,701		22,230,570	11,558,708

Cost of Revenue	6,012,348	4,185,605		9,601,605	6,205,685

Gross profit	10,491,563	4,882,096		12,628,965	5,353,023

Operating expenses	2,632,444	1,110,963		6,443,955	2,824,804

Income before taxes and
minority interest	7,789,853	3,645,426		5,871,173	2,497,600

Income taxes	1,298,962	483,631		750,095	405,101

Net income before minority	6,490,891	3,161,795		5,121,078	2,092,499
interests

	China Biologic and		China Biologic and Subsidiaries
	Subsidiaries		Fiscal Years Ended
	Six Months Ended June 30		December 31
	(unaudited)		(audited)


	2007	2006	2006	2005



Revenue	100%	100%	100%	100%

Cost of Revenue	36.4%	46.2%	43.2%	53.7%

Gross profit	63.3%	53.8%	56.8%	46.3%

Operating expenses	16.0%	12.3%	29%	24.4%

Income before taxes and
minority interest	47.2%	40.2%	26.4%	21.6%

Income taxes	7.9%	5.3%	3.4%	3.5%

Net income before minority
interests	39.3%	34.9%	23.0%	18.1%

Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Revenues

Our sales revenue increased $7.4 million, or 82%, to $16.5 million for the six-month period ended June 30, 2007, from $9.1 million for the same period ended June 30, 2006. The increase in revenue was due to a decrease in the supply of plasma caused by the reorganization of all plasma collection stations at the end of 2006 and the implementation of higher collection standards. In addition, the SFDA tightened the manufacturing procedures for plasma-based products. We were able to meet the resulting demand by securing of our plasma supply from our newly acquired blood collection stations in Shandong Province. Our human albumin contributed an additional $4.8 million. These products recorded an increase in revenue of 273% and 66%, respectively, for the six months ended June 30, 2007 and 2006.

Cost of Revenues

Our cost of sales increased $1.8 million, or 43.6%, to $6 million from $4.2 million for the six months ended June 30, 2007, as compared to the same period in 2006. The increase was mainly due to an increase in our sales volume during the six-month period ended June 30, 2007. Cost of Revenues as a percentage of sales revenue was 36.4% for the six-month period ended June 30, 2007, as compared to 46.2% during the same period in 2006.

Gross Profit

Our gross profit increased $5.6 million, or 115%, to $10.5 million for the years ended June 30, 2007 from approximately $4.8 million for the same period in 2006. Gross profit as a percentage of sales revenue was 63.6% for the six months ended June 30, 2007, as compared to 53.8% during the same period in 2006. Such percentage increase was mainly due to increased demand in our products which increased our gross profit margin.

Operating Expenses

Our total operating expenses increased $1.5 million, or 125%, to $2.7 million for the six months ended June 30, 2007 from $1.2 million for the same period in 2006. As a percentage of sales revenue, our total expenses increased to 16.4% for the six months ended June 30, 2007 from 13.6% for the same period in 2006. The increase was primarily attributable to higher professional fees and staff costs incurred in 2007 in connection with our preparation of this prospectus and the registration statement of which this prospectus is a part.

Income Tax Expense

Our provision for income taxes increased $0.8million to $1.3 million for the six months ended June 30, 2007 from $0.5 million for the same period in 2006. Our effective tax rate for the years ended June 30, 2007 was 7.9%, and our 2006 effective tax rate for the same period was 5.3%.

Net Income Before Minority Interest

Our net income before minority interest increased $3.3 million, or 105%, to $6.5 million for the six months ended June 30, 2007 from $3.2 million for the same period in 2006. This increase is primarily attributable to the increase in our sales volume during the six-month period ended June 30, 2007.

Comparison of Fiscal Years Ended December 31, 2006 and 2005

Revenues

Our revenues are derived primarily from the sales of human albumin and various types of immunoglobulin. Our revenues increased 92.3%, or $10.7 million, to $22.2 million during the fiscal year ended December 31, 2006, compared to revenues of $11.6 million for the fiscal year ended December 31, 2005. The increase in revenues during fiscal year 2006 is primarily attributable to the continuously increasing demand for our albumin products. Sales of our human albumin have increased mainly due to an increase in sales volume, although we have also gradually increased our prices. In late 2005, we also launched two new products – Human Rabies Immunoglobulin and Human Tetanus Immunoglobulin.

Because of the recent rabies outbreak in China, human rabies immunoglobulin is currently our second largest products by sales. We were able to timely react to the sudden increase in market demand as a result of this outbreak. Our ability to react quickly has allowed us to acquire a larger portion of the market share than many of our competitors who were unable to produce as much human rabies immunoglobulin within the same time frame. Our successful experience confirmed the importance of broadening our product portfolio in preparation for new epidemic outbreaks.

Revenue from sales of our products is recognized when significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognized if there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods, or when the amount of revenue and costs incurred or to be incurred in respect of the transaction cannot be measured reliably. Our sales invoices are denominated in the Renminbi.

Our sales have historically been made on the basis of short-term arrangements and our largest customers have changed over the years. For the years ended December 31, 2006 and 2005, our top 5 customers accounted for approximately 10% and 12.3%, respectively, of our total revenue. For the years ended December 31, 2006 and 2005, our largest customer accounted for approximately 2.9% and 2.8%, of our revenue respectively. As we continue to diversify our geographic presence, customer base and product mix, we expect that our largest customers will continue to change from year to year.

Cost of Revenues

Our cost of sales increased $3.4 million, or 54.7 %, to $9.6 million for the years ended December 31, 2006, from $6.2 million during the same period in 2005. This increase was mainly due to an increase in sales volume especially human albumin and human rabies immunoglobulin. Cost of Revenues as a percentage of sales revenue was 43.2%for the years ended December 31, 2006, as compared to 53.7 % during the same period in 2005.

Gross Profit

Our gross profit increased $7.3 million, or 136%, to $12.6 million for the years ended December 31, 2006 from approximately $5.4 million for the same period in 2005. Gross profit as a percentage of sales revenue was 56.8 % for the years ended December 31, 2006, as compared to 46.3% during the same period in 2005. Such percentage increase was mainly due to an increase in our profit margin and in the volume of human albumin, human rabies immunoglobulin and Human Tetanus Immunoglobulin sold during 2006.

Operating Expenses

Our total operating expenses increased $3.6 million, or 128.1%, to $6.4 million for the years ended December 31, 2006, from $2.8 million for the same period in 2005. As a percentage of sales revenue, our total expenses increased to 29% for the years ended December 31, 2006 from 24.4% for the same period in 2005. The dollar increase was primarily attributable to our full accrual of the penalty owed to investors for late filing of the registration statement and to an increase in management expenses in connection with the reverse acquisition.

Income Tax Expense

Our provision for income taxes increased $0.35 million or 85.2%, to $0.75 million for the years ended December 31, 2006 from $0.4 million for the same period in 2005. Our effective tax rate for the years ended December 31, 2006 was 3.4%, and our 2005 effective tax rate was 3.5%.

Net Income Before Minority Interest

Our net income before minority interest increased $3 million, or 145%, to $5.1 million for the year ended December 31, 2006 from $2.1 million for the same period in 2005. This increase is primarily attributable to the increase of the volume of sales and the profit margin of our major products especially, human albumin, human rabies immunoglobulin and Human Tetanus Immunoglobulin. This increase occurred even though we had a $3.6 million, or 128%, increase in operating expenses due to more general and administrative related to the reverse acquisition transaction that we consummated in 2006.

Liquidity and Capital Resources

Cash flow and working capital

To date, we have financed our operations primarily through cash flows from operations, short-term bank borrowings, as well as equity contributions by our shareholders. We had aggregate short-term bank loans of RMB20 million (approximately $2.6 million) as at December 31, 2006, of which two loans amounting to RMB5 million (approximately $1.3 million) each became due in June and July 2007, respectively. These two loans had a floating interest rate of between 5.85% and 6.39% per annum. The remaining RMB10 million (approximately $1.3 million) loan, bears a fixed interest rate of 6.12% per annum, and is due in February 2008.

As of December 31, 2006, we had approximately $4.3 million in cash and cash equivalents, primarily consisting of cash on hand and demand deposits.

Cash Flow

					China Biologic and
	China Biologic and Subsidiaries				Subsidiaries
	Six Months Ended June 30				Fiscal Years Ended
	(unaudited)				December 31
					(audited)


USD	2007		2006		2006		2005


Net Cash provided /(used) in Operating
activities	7,309,632		475,524		3,094,871		(12,369	)

Net Cash used in Investing activities	(3,872,728	)	(156,928	)	(3,516,965	)	(1,495,767	)

Net Cash (used)/provided by Financing	(1,198,462	)	203,101		4,051,475		1,476,307
activities

Effects of Exchange Rate Change in Cash	41,654	13,617	31,463	96,083

Net Increase in Cash and Cash Equivalents	2,280,096	535,314	3,660,844	64,254

Cash and Cash Equivalent at beginning of			607,376	543,122
Period	4,268,220	607,376

Cash and Cash Equivalent at end of period	6,548,316	1,142,690	4,268,220	607,376

Operating activities

Net cash provided by operating activities was $3.1 million for the year ended December 31, 2006, as compared to $0.01 million net cash used for operating activities for the same period in 2005. Our main source of operating cash was receipts from customers, and cash payments to acquire raw materials was our main use for operating cash.

As disclosed above, we effectively acquired an 41% equity interest in Shandong Taibang on March 17, 2005 and an additional 40.76% equity interest on September 2, 2005. The increase of net cash flow during this period was generated from changes in operating assets and liabilities (net of effect of purchase of Shandong Taibang). Cash provided by operating activities is derived from increase in payables. The increase in usage is due mainly to the working capital usage (increase in accounts receivable, inventory level and prepayments) due to the increase business volume as our business continued to grow during the period.

Net cash provided by operating activities was $7.3 million for the six-month period ended June 30, 2007, as compared to $0.5 million net cash provided by operating activities for the same period in 2006. The increase in net cash provided by operating activities was mainly due to the great demand for our products during the interim 2007 period, which enabled us to shorten our accounts receivable period and we received more cash payments in advance from our customers.

Investing activities

Net cash used for investing activities for the years ended December 31, 2006 was $3.5 million, as compared to $1.5 million in the same period of 2005. The increase of net cash used for investing activities was mainly attributable to the purchase of plant and equipment for our production facility during the 2006 period.

Net cash used for investing activities in the six-month period ended June 30, 2007was $3.9 million, as compared to $0.2 million in the same period of 2006. The increase of the cash used for investing activities was mainly attributable to further commitment and payments for the expansion of our production facility.

Financing activities

Net cash provided by financing activities for the year ended December 31, 2006 totaled $4.1 million as compared to $1.5 million provided by financing activities in the same period of 2005. The increase of the cash provided by financing activities was mainly attributable to proceeds from stock insurance and release of a pledged deposit during 2006.

Net cash used for financing activities in the six-month period ended June 30, 2007 totaled $1.2 million as compared to $0.2 million provided by financing activities in the same period of 2006. The increase of the cash used for financing activities was mainly attributable to our repayment of a short term bank loan and a dividend paid to minority shareholders.

Commitments

Our outstanding capital commitments are primarily related to purchase of plant and equipment. Our total capital commitments outstanding as of June 30, 2007, not provided for in the financial statements, was approximately $2.5 million.

The following table illustrates our credit facilities, providing the name of the lender, the amount of the facility, the

date of issuance and the maturity date.


Banks	Amounts	Beginning	Ending	Duration	Remarks
		December 30, 2006	December 13, 2007	1 year	repaid
	RMB10,000,000
Bank of Communications	(approx. $1,300,000)
		August 1, 2006	June 26, 2007	11 months	repaid
	RMB5,000,000
Agricultural Bank of China	(approx. $600,000)
		August 1, 2006	July 26, 2007	1 year	repaid
	RMB5,000,000
Agricultural Bank of China	(approx. $600,000)

	RMB10,000,000
Bank of Communications	(approx.$1,300,000)	February 28,2007	February 25,2008	1 year

	RMB10,000,000
Total	(approx. $1,300,000)

As shown in the above table, we have a loan of approximately $1.3 million which matures in February, 2008. The loans we obtained in 2006 were all repaid in April 2007. We plan to either repay our remaining debt as it matures or refinance this debt with other debt.

On July 18, 2006, we completed a private placement of 2,200,000 shares of our common stock and 2,080,000 shares of our common stock held by our two controlling shareholders to a group of accredited investors who are among the selling stockholders listed in this prospectus. Gross proceeds received by us from the private placement amounted to approximately $4.2 million. We did not directly receive any of the proceeds from the sale by the controlling shareholders. However, the controlling shareholders used all of the proceeds received by them to repay outstanding amounts owed by them to us in the aggregate amount of $2.2 million and then made a loan to us of the remaining $0.91 million of net proceeds that they received in the offering. A portion of the proceeds of the private placement was injected into Shandong Taibang to meet a $3.3 million capital contribution requirement that Logic Express had in Shandong Taibang. Part of the proceeds was placed in escrow as described more fully elsewhere herein, until registration of the capital contribution with the PRC authorities was complete and, upon release, was used primarily to repay indebtedness owed to Shandong Taibang. All outstanding amounts owed to Shandong Taibang were settled in August 2006.

In connection with the private placement transaction, on July 19, 2007, we also entered into a registration rights agreement with the investors, pursuant to which we agreed to file within 45 days of the closing date, a registration statement registering for resale the shares issued to the investors in the private placement. We failed to file this registration statement within the time period prescribed by the registration rights agreement, which resulted in liquidated damages in the amount of $811,060 which we recognized in general and administrative expenses during fiscal year 2006. The shares being registered under this registration statement are the shares of our common stock issued and the shares of common stock underlying warrants issued in connection with the private placement.

We expect that cash on hand, funds generated from our operations and funds generated from companies that we may acquire in the future will be sufficient to satisfy our current and future commitments for at least the next twelve months. We do not believe that we have any significant short term liquidity problems. We plan to use surplus cash from our operations to repay outstanding indebtedness owed to financial institutions. In 2007, we are planning to increase our production capacity by establishing a new production line with total investment of approximately $4 million. We believe that we currently have sufficient cash on hand and other resources to satisfy the capital requirements for establishing this production line. In addition, we have approximately USD$10 million banking facility, of which approximately $8.7 million remains available, that we can draw down upon in the event that unforeseen liquidity requirements arise.

Off-Balance Sheet Arrangements and Contingent Liabilities

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of third parties. We have not entered into any derivative contracts that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development services with us.

Recently Issued Accounting Standards

FIN 48

In July 2006, the Financial Accounting Standards Board, or FASB, issued FASB Interpretations No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 or FIN 48, which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. FIN 48 did not have a material impact on the consolidated financial statements.

SFAS No.157

In September 2006, FASB issued SFAS No.157, Fair Value Measurements. SFAS No.157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No.157 applies under other accounting pronouncements that require or permit fair value measurements, FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS No.157 does not require any new fair value measurements. Under SFAS No.157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS No.157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. We do not expect the adoption of SFAS No.157 to have a material impact on the consolidated financial statements.

Staff Accounting Bulletin (“SAB”) No. 108

In September 2006, the Securities and Exchange Commission issued SAB 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements: SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for our fiscal year ended December 31, 2006, with early application encouraged. SAB 108 did not have a material impact on the consolidated financial statements.

FASB Staff Position (“FSP”) EITF 00-19-2

In December 2006, FASB issued FSB EITF 00-19-2, Accounting for Registration Payment Arrangements, which specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting for Contingencies. The FSB EITF 00-19-2 is effective immediately for new and modified registration payment arrangements. Arrangements that were entered into before the Staff Position was issued would become subject to its guidance for fiscal years beginning after December 15, 2006 by recognizing a cumulative-effect adjustment in retained earnings as of the beginning of the year of adoption.

Inflation

Inflation in the PRC has not had any material impact on our business in 2003, 2004, 2005 and 2006. According to the National Bureau of Statistics of China, the change in the consumer price index in China was 1.2%, 3.9%, 1.8% and 1.5% in 2003, 2004, 2005 and 2006, respectively.

Critical Accounting Policies

We prepare our financial statements in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities, to disclose contingent assets and liabilities on the date of the financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. We continue to evaluate these estimates and assumptions based on the most recently available information, our own historical experience and various other assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than other in their application.

Our financial statements have been prepared on the basis that we will continue as a going concern, which contemplates the realization and satisfaction of our existing liabilities and commitments in the normal course of business.

Revenue recognition

The Company recognizes revenue when products are delivered and the customer takes ownership and assumes risk of loss, collection of the relevant receivable is probable, persuasive evidence of an arrangement exists and the sales price is fixed or determinable, which are generally considered to be met upon delivery and acceptance of products at the customer site. Sales revenue represents the invoiced value of goods, net of a value-added tax (VAT). All of the Company’s products sold in the PRC are subject to a Chinese value-added tax at a rate of 6% of the gross sales price or at a rate approved by the Chinese local government.

Fair Value of Assets Acquired and Liabilities Assumed Upon Acquisition

There were fair value adjustments determined in connection with the acquisitions of Shandong Taibang’s equity interest as of March 17, 2005 and September 2, 2005. On the date of an acquisition, the assets acquired and liabilities assumed of Shandong Taibang were adjusted to their estimated fair values. The most significant estimates pertained to determining the fair values of the plant and equipment acquired. Fair values of these assets were determined based on replacement cost. Any change in such assumptions and judgment would affect the fair value of assets acquired and liabilities assumed.

Collectibility of Accounts Receivable

We offer different credit terms to our customers based on criteria such as working relationship, payment history, creditworthiness and their financial position. All credit terms are to be approved by our finance department, in consultation with our sales and marketing department. We generally grant credit period of no longer than 30 days to distributors with some exceptions. For hospitals and clinics, we generally grant credit period of no longer than 90 days.

We make specific allowance for doubtful accounts receivable after taking into account the aging of accounts receivable and in consultation with our sales and marketing department. We also provide allowance for doubtful accounts based on our best estimate of the amount of probable credit losses in the existing accounts receivable. We review our allowance for doubtful accounts monthly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. All other balances are reviewed on a pooled basis by aging of such balances. We have not experienced any significant bad debts and bad debt provisions. Bad debt expenses for 2006 and 2005 were $0.04 million and $0.4million, respectively.

Inventories

Due to its unique nature, our principal raw material, human blood plasma is subject to various quality and safety control issues which include, but are not limited to, contaminations and blood born diseases. In addition, limitations of current technology pose biological hazards inherent in plasma that have yet to be discovered, which could result in a widespread epidemic due to blood infusion. In the event that human plasma is discovered to contain pathogens or infectious agents or other bio-hazards, we would be required to write down our inventory to net realizable value. We determine the net realizable value of our inventories on the basis of anticipated sales proceeds less estimated selling expenses. At each balance sheet date, we evaluate inventories that may be worth less than current carrying amounts. No provision for inventory write down was required for 2006 and 2005, respectively.

Total inventories amounted to $6.1 million and $3.6 million as of December 31, 2006 and 2005, respectively. In order to ensure that the growing demand for our products are met, we have been gradually increasing our inventory level of raw materials. We strictly follow the production processes required by government regulations resulting in the relatively high level of work-in-progress customary to our industry.

Impairment of long-lived assets

We review periodically the carrying amounts of long-lived assets including property, plant and equipment, and intangible assets with finite useful lives, to assess whether they are impaired. We evaluate these assets for impairment whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable such as a change of business plan, technical obsolescence, or a period of continuous losses. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. In determining estimates of future cash flows, significant judgment in terms of projection of future cash flows and assumptions is required. There were no impairment charges recognized for the two years ended December 31, 2006 and 2005.

Use of Estimates

The preparation of consolidated financial statements in accordance with US GAAP requires us to make a number of estimates and assumptions relating to the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, we review our estimates and assumptions, including those related to the recoverability of the carrying amount and the estimated useful lives of long-lived assets, valuation allowances for accounts receivable and realizable values for inventories. Changes in facts and circumstances may result in revised estimates.

Contingencies

In the normal course of business, we are subject to contingencies, including, legal proceedings and claims arising out of the business that relate to a wide range of matters, including among others, product liability. We recognize a liability for such contingency if we determine that it is probable that a loss has occurred and a reasonable estimate of the loss can be made. We may consider many factors in making these assessments, including past history and the specifics of each matter. As we have not become aware of any product liability claim since operations commenced, we have not recognized a liability for any product liability claims.

Segment Reporting

We have one operating segment, as that term is defined by Statement of Financial Accounting Standards (“SFAS”) No. 131, “Disclosure about Segments on an Enterprise and Related Information.” Also, all of our revenue is derived in the PRC. Accordingly, no segment information is presented.

Accounting Basis

The U.S. GAAP accounting basis utilized by us and our PRC subsidiary, Shandong Taibang, is different in certain material respects from that used in the preparation of statutory financial statements of Shandong Taibang that are filed with the PRC government. The statutory financial statements of Shandong Taibang that are filed with the PRC government are in accordance with the accounting principles and the relevant financial regulations applicable in the PRC as established by the Ministry of Finance of the PRC (i.e., they are prepared in accordance with PRC GAAP).

Reporting Currencies

Our functional currency is Renminbi or RMB and our reporting currency is United States Dollars, or $. Amounts included in the accompanying financial statements are in $ and not RMB. Result of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate as quoted by

the People’s Bank of China at the end of the period. No representation is made that the RMB amounts could have been, or could be, converted into $ at that rate or at any particular rate at end of each period, or any other date.

OUR CORPORATE STRUCTURE AND HISTORY

Our Corporate Structure

The following chart reflects our organizational structure as of the date of this prospectus.

Our History

We were originally incorporated in 1992 under the laws of the State of Texas as Shepherd Food Equipment, Inc. On November 20, 2000, Shepherd Food Equipment, Inc. changed its corporate name to Shepherd Food Equipment, Inc. Acquisition Corp., or Shepherd. Shepherd is the survivor of a May 28, 2003, merger between Shepherd and GRC Holdings, Inc. or GRC. In the merger, the company adopted the Articles of Incorporation and By-Laws of GRC and changed its corporate name to GRC Holdings, Inc. On January 10, 2007, a Plan of Conversion became effective pursuant to which GRC was converted into a Delaware corporation.

Our Acquisition of Logic Express

On July 19, 2006, we completed a reverse acquisition transaction with Logic Express, whereby we issued to the stockholders of Logic Express, 18,484,715 shares of our common stock in exchange for 100% of the issued and outstanding shares of capital stock of Logic Express and its majority-owned Chinese operating subsidiary, Shandong Taibang. As a result of the reverse acquisition transaction with Logic Express, Logic Express became our 100% owned subsidiary and the former shareholders of Logic Express became our controlling shareholders with 96.1% of our common stock. Shandong Taibang became our 82.76% -owned indirect subsidiary and is the operating company for all of our commercial operations. Our operating company, Shandong Taibang, is a sino-foreign joint venture company established on October 23, 2002 with a registered capital of RMB80 million (approximately US$10.3 million).

Upon the closing of the reverse acquisition, Timothy P. Halter, our sole director prior to the reverse acquisition, submitted his resignation letter pursuant to which he resigned from all offices he held and from his position as our director, effective immediately. Siu Ling Chan and Lin Ling Li were appointed as our directors at the closing of the reverse acquisition of Logic Express. In addition, our executive officer was replaced by the Logic Express executive officers named herein at the closing of the reverse acquisition.

The reverse acquisition transaction involving Logic Express and us is considered to be a capital transaction (issuance of stock by Logic Express for our net monetary assets) in substance, rather than a business combination. Logic Express is treated as the continuing reporting entity that acquired us. The financial information prior to the reverse take-over represented the consolidated financial information of Logic Express.

Private Placement Transaction

On July 19, 2006, we completed a private placement transaction with a group of accredited investors. Pursuant to the securities purchase agreement as amended, we sold 2,200,000 shares of our common stock and five-year warrants to purchase 1,070,000 shares of common stock at an exercise price of $2.8425 per share, at a purchase price of $1.895 per unit. In addition, two of our controlling shareholders, Siu Ling Chan and Lin Ling Li, sold an aggregate of 2,080,000 shares of our common stock at a price of $1.895 per share to the same investors. Lane Capital Markets, LLC acted as exclusive placement agent and financial advisor in connection with the transaction, and received five-year warrants to purchase 214,000 shares of common stock at an exercise price of $2.8425 per share. The issuance of units and warrants was exempt from the registration requirements provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering and Regulation D promulgated thereunder and on Regulation S.

On July 19, 2007, our majority stockholders, Siu Ling Chan and Lin Ling Li also entered into a make good escrow agreement with the private placement investors, pursuant to which, Ms. Chan and Ms. Li agreed to deposit in an escrow account a total of 4,280,000 shares of our common stock owned by them, to be held for the benefit of the investors. Ms. Chan and Ms. Li agreed that if we do not attain a minimum after tax net income threshold of $4,819,500, or $5,823,465 of

after-tax net income before minority interest for the fiscal year ending December 31, 2006, and $8,302,000 of after-tax net income or $10,031,416 of after-tax net income before minority interest for the fiscal year ending December 31, 2007, the escrow agent may deliver their escrowed shares to the investors, based upon a pre-defined formula agreed to between the investors and Ms. Chan and Ms. Li. However, if the after tax net income threshold is met, the shares in escrow will be returned to Ms. Chan and Ms. Li. Pursuant to the escrow agreement, (i) liquidated damages accrued according to the registration rights agreement and; (ii) gain or loss on change in fair value of warrants, are not deemed to be an income or expense item in calculating the after-tax net income for the purpose of the escrow agreement. If such performance thresholds are met, the shares are to be returned to Ms Li Lin Ling and Ms Chan Siu Ling. We have met our performance threshold for the fiscal year ending December 31, 2006.

Acquisition of Plasma Stations

In December 2006, we acquired five plasma stations in Shandong Province and obtained the permit to operate them, and in February and April 2007, we acquired two plasma stations in Guangxi Province, respectively, and obtained their operating permits. We acquired these plasma stations through separate Shandong Taibang subsidiaries, specially formed for this purpose. The subsidiaries holding six of our new plasma stations are the Xia Jin Plasma Company, the Qi He Plasma Company, the He Ze Plasma Company, the Huan Jiang Plasma Company, the Yang Gu Plasma Company, the Zhang Qiu Plasma Company. The seventh plasma station is held in the Fang Cheng Plasma Company, which is 80% owned by Shandong Taibang and 20% owned by Lin Feng, an unrelated third party.

In January 2007 we also signed a letter of intent to acquire another plasma station in Guangxi Province. However, there can be no assurance that the acquisition of this plasma station can be completed or continue on the same terms that we have initially agreed to in the letter of intent as the permit for this station is in dispute. Please refer to “Legal Proceedings” for more information regarding this dispute.

Establishment of Shandong Medical

In September 2006, Shandong Taibang applied to establish a wholly owned subsidiary, Shandong Missile Medical Co., Ltd., or Shandong Medical, with registered capital of $384,600, which was fully paid on March 1, 2007. On February 7, 2007, Shandong Medical has obtained a distribution license for biological products, except for vaccine, from the Shandong Food and Drug Authority, or SFDA, for a license period of 5 years from the date of obtaining the license. The registration of Shandong Missile was ultimately approved by Shandong Provincial Department of Foreign Trade and Economic Cooperation on July 4, 2007 and Shandong Medical was formally registered on July 19, 2007. The scope of business is wholesale of biological products, except vaccine, with a license period of 25 years from the date of registration. As of June 30, 2007, Shandong Medical has not yet commenced operations.

OUR BUSINESS

Overview

We are a biopharmaceutical company and through our indirect majority-owned Chinese subsidiary, Shandong Taibang, we are principally engaged in the research, development, production and manufacturing of plasma-based pharmaceutical products in China. Shandong Taibang operates from our manufacturing facility located in Taian City, Shandong Province and is currently the only plasma-based biopharmaceutical product manufacturer in Shandong Province approved by the State.

Our principal products include human albumin and various types of immunoglobulin. We currently produce 14 biopharmaceutical products in seven major categories as follows:

Human Albumin: - 20%/10ml, 20%/25ml and 20%/50ml
Human Hepatitis B Immunoglobulin – 100IU, 200IU, 400IU
Human Immunoglobulin – 10%/3ml and 10%/1.5ml
Human Immunoglobulin for Intravenous Injection – 5%/50ml

Thymopolypeptides Injection – 20mg/2ml
Human Rabies Immunoglobulin – 100IU, 200IU and 500IU
Human Tetanus Immunoglobulin – 250IU

Human albumin is principally used to increase blood volume while immunoglobulin is used for certain disease preventions and cures. Shandong Taibang’s human albumin and immunoglobulin products use human plasma as basic raw material. Albumin also used for almost 50 years to treat critically ill patients by replacing lost fluid and maintaining adequate blood volume and pressure. All of our products are prescription medicines in the form of injections.

We have product liability insurance covering all of our products. However, since our establishment in 2002, there has not been any product liability claims nor legal action filed against us brought by patients due to the use of our products.

Our Industry

Human Albumin and Immunoglobulin Products

Our principal products are human albumin and immunoglobulin (and other derivatives), with human plasma as the main ingredient. About 55% of human blood is composed of a liquid known as plasma. The remaining 45% of human blood is made of three major types of cells: red blood cells, white blood cells, and platelets.

Plasma carries a large number of important proteins, including albumin, gamma globulin, and clotting factors. Albumin is the main protein in blood. It helps regulate the water content of tissues and blood. Gamma globulin is composed of tens of thousands of unique antibody molecules. Antibodies neutralize or help destroy infectious organisms. Each antibody is designed to target one specific invading organism.

The Plasma Product Industry in China

Plasma-based biopharmaceutical products are manufactured from healthy human plasma. The collection of plasma for the production of such products is influenced by factors such as government regulations, geographical locations of collection stations, sanitary conditions of collection stations, living standards of the donors, and cultural and religious beliefs. China currently has a severe shortage of plasma because (i) the State is no longer approving the establishment of new collection stations and (ii) the reform of the industry has led to the closure of many stations that did not meet new industry standards.

We estimate that the current annual supply of plasma amounts to approximately 4,000 tons in China. The supply of plasma has been on the decline since 2003 resulting from the State’s mandate to reform the country’s collection practices. Recent regulatory changes have improved the quality of blood and plasma by increasing cleanliness standards at blood collection stations and instituting measures which limit illegal selling of blood. As the operation of the plasma stations become more regulated and the donor population expands, we believe that the overall quality of raw materials, such as human albumin will continue to increase, leading to a safer, more reliable finished product.

According to data released by the State Food and Drug Administration, sales of plasma products in China amounted to $322 million and $396 million in 2002 and 2003 respectively, an increase of approximately 23.1% from year to year. In 2003, sales of albumin amounted to about $248 million, representing about 60% to 65% of the market.

In accordance with “Regulations on controlling blood products” promulgated in 1996, the retail price of certain plasma products including human albumin, IVIG and intramuscular IG are regulated by the State Pricing Bureau and the PRC Ministry of Health.

In addition to the low usage ratio between China and other more developed countries, there is also a significant difference in the make up and range of the plasma-based pharmaceutical products. Based on our analysis, in most developed countries like United States, clotting factor products accounts for the majority of the plasma-based biopharmaceutical products, while in China, it is human albumin that accounts for a vast majority.

Plasma Collection in China

Substantially all plasma donations for commercialized plasma-based biopharmaceutical products are done through plasmapheresis donation stations. Plasmapheresis donation means donors give only selected blood components — platelets, plasma, red cells, infection-fighting white cells called granulocytes, or a combination of these, depending on donors blood type and the needs of the community. Plasmapheresis stations in China are commonly used to collect plasma. In China, current regulations only allow an individual donor to donate blood in 14-day intervals, with a maximum quantity of 580ml (or about 600 gram) per donation.

The followings are the regulatory requirements for the establishment of a plasmapheresis station in China:

meet the overall plan in terms of the total number, distribution, and operational scale of plasmapheresis stations;
have the required professional health care technicians to operate a station;
have the facility and a hygienic environment to operate a station;
have an identification system to identify donors;
have the equipment to operate a station; and
have the equipment and quality control technicians to ensure the quality of the plasma collected.

As a result of the overhaul by the four ministries of the State Council in May 2004, we estimate that the number of collection stations (including plasma stations) that meet the standards imposed by the State has been reduced from approximately 156 to approximately 121. Currently the plasma stations are owned and managed by the PRC health authorities. In March 2006, the Ministry of Health promulgated the Blood Collection Measures whereby the ownership and management of the plasma stations must be transferred to plasma-based biopharmaceutical companies while the regulatory supervision and administrative control remain with the State. For those plasma stations which do not complete their reform by December 31, 2006, their license to collect plasma will be revoked.

Under normal circumstances, each station can only supply plasma to the one manufacturer that has signed the “Quality Responsibility” statement with them. In addition, the manufacturer is prohibited from sourcing plasma outside its approved list of plasma station suppliers. In the event of a supply shortage, the manufacturer can apply to the provincial health authorities to source plasma from other stations within the province. Moreover, if the manufacturer wishes to source plasma from stations outside of the province, it must first file for approval by the local provincial health authorities. The filing must be accompanied by a report on the status of the station. The station must also file with the local provincial health authorities on the transfer of excess plasma. The filing must be accompanied by a report on the status of the manufacturer. Upon approval of both provincial health authorities to the transfer, they must separately file for approval with the State Ministry of Health. The transfer is only legal after approval by the Ministry of Health. We believe that although there are such practices in the market, outside sourcing is not prevalent because (i) the manufacturer has to identify the station that has excess supply; (ii) the station must be willing to supply to such manufacturer, and (iii) the local provincial health authorities and the Ministry of Health have to approve such an arrangement.

Safety features at collection stations in China

Set out below are some of the safety features at China’s collection stations:

Collection station can only source plasma from donors within the assigned district approved by the provincial health authorities;
Collection station must perform a health check on the donor. Once the donor passes the health check, a “donor permit” is issued to the donor. The standards of the health check are established by the health authorities at the State Council level.
The design and printing of the “donor permit” is administrated by the provincial’s health authorities (or autonomous region or municipality government (as the case maybe)). The “donor permit” cannot be altered, copied or assigned.

Before donors can donate plasma, the station must verify their identities and the validity of their “donor permits.” The donors must pass the verification procedures before they are given a health check and blood test. For those donors who have passed the verification, health check and blood test and whose plasma were donated according to prescribed procedures, the station will setup a record.
All collection stations are subject to the regulations on transmittable diseases prevention. They must strictly adhere to the sanitary requirements and reporting procedures in the event of an epidemic situation.

Operation of stations are strictly regulated by the State.

Importation of blood products

According to current Chinese regulations, the following blood products are banned from importation to China:

†	Plasma

		Human Plasma – Frozen

		Human Plasma – Liquid

		Human Plasma – Freeze-dried

†	Immunoglobulin

		Human Normal Immunoglobulin

		Specific Immunoglobulin

		Human Anti-Tetanus Immunoglobulin

		Human Anti-hemophilia Globulin

		Human Anti-HBs Immunoglobulin

		Human Anti-D(Rho) Immunoglobulin

		Immunoglobulin For Intravenous Administration

†	Factor VIII

		Cryoprecipitated Factor VIII

		Factor VIII Concentrate

†	Factor IX Concentrate

†	Human Fibrinogen

†	Platelet Concentrate

†	Human Prothrombin Complex

†	Whole blood or blood components

Our Competition

Other approved biopharmaceutical manufacturers in the PRC are entitled to produce many of the products produced by us. There are currently about 34 approved manufacturers of plasma-based pharmaceutical products in China. Many of these manufacturers are essentially producing the same type of products, human albumin and various types of immunoglobulin. However, due to recent Ministry of Health regulations, we believe that it is difficult for new manufacturers to enter into the industry. We believe that our major competitors in the albumin and immunoglobulin market in China are Hualan Biological Engineering, Shanghai Institute of Biological Products, Shanghai RAAS Blood Products Co. Ltd., Chengdu Ronsheng Pharmaceuticals, and Sichuan Yuanda Shuyang Pharmaceutical Co.

Our Strategy

Our mission is to become a first-class biopharmaceutical enterprise in China. To achieve this objective, we have implemented the following strategies:

Securing the supply of plasma – Due to the shortage of plasma and the reform of the ownership of plasma stations, our immediate strategy is to negotiate and acquire plasma stations so as to secure our plasma supply. In June, 2006, we entered into letters of intent with five of the plasma stations in Shandong Province and we acquired those plasma stations in December 2006. Furthermore, in January 2007, we entered into three letters of intent to acquire three additional plasma stations in Guangxi Province, two of which we have acquired. See “Raw Materials” below.
Acquisition of competitors and/or other biologic related companies –In addition to organic growth, acquisition is an important part of our expansion strategy. Although there are about 34 approved plasma- based biopharmaceutical manufacturers in the market, we are of the view that only about half of them will be competitive. Furthermore, we believe that the regulatory authorities are in advanced discussion on reforming the industry and those smaller, less competitive manufacturers will face the possibility of having their manufacturing permits revoked by the regulators, making them potential targets for acquisition. Also, if we are presented with appropriate opportunities, we may acquire additional companies, products or technologies in the biologic related sectors (including but not limited to medical, pharmaceutical and biopharmaceutical).
Further strengthening of research and development capability – We believe that, unlike other more developed countries like the US, China’s plasma-based biopharmaceutical products are at the initial stage of development. There are many other plasma-based products that are being used in the US which are not currently being manufactured in China. We intend to strengthen our research and development capability so as to expand our product line to include higher-margin, technologically more advanced plasma-based biopharmaceutical products. We believe that our increased focus on research and development will give us a competitive advantage over our competitors

Market development and network expansion – Leveraging on the high quality and excellent safety record of our products, we intend (i) to enhance our product penetration with our existing customers by introducing new products and (ii) to extend the reach of our products from our current market to include other provinces where we envision significant market potential.

Our Intellectual Property

Pursuant to a Trademark License Agreement with the Shandong Institute, we hold the exclusive license to a Trademark Registration Certificate (No.3375484) issued by the State Industry and Commerce Administration Trademark Bureau. The class of goods on which the trademark has been approved to use include: drug for human beings, serum, microorganism products for medicine and veterinary medicine, plasma, medical blood, and medical biological product. The registration will expire in June 2014, the Shandong Institute has allowed us to use the trademark for free until May 2009. We expect to develop and register our own trademark before the termination of this license.

In addition, we have registered the following domain name: www.ctbb.com.cn , which is currently used by our Shandong subsidiary.

Our Research and Development Efforts

Shandong Taibang’s predecessor, the Shandong Institute, was established in 1971. the Shandong Institute is the research arm established by and directly administrated by the Shandong Provincial health department. It was the only entity approved for the research, development and production of biological and plasma-based biopharmaceutical products in Shandong Province, the second largest province in China. Since 1998, it promoted GMP management in the production process of blood products and became the first blood products manufacturing enterprise to obtain GMP Certification in China. In 2002, the Shandong Institute transferred all of its business and the licenses necessary to carry on its business to our subsidiary, Shandong Taibang. In 2005 and 2006, we were awarded the advanced high-tech enterprise certification by the Department of Science and Technology of Shandong Province and the Ministry of Science and Technology of China, respectively.

We employ a market driven approach to initiate research and development projects including both product and production technique development.

We believe that the key to the industry revolves around (i) safety of products and (ii) maximizing the yield per unit volume of plasma. Our research and development efforts are focused around the following areas:

Broaden the breadth and depth of our portfolio of plasma-based biopharmaceutical products;
Enhance the yield per unit volume of plasma through new collection techniques;
Maximize manufacturing efficiency and safety;
Promote product safety through implementation of new technologies; and
Refine production technology for existing products.

Our research center is located on the same premises the factory which is located in Taian City, Shandong Province. The research center is equipped with specialized equipment including advanced testing and analytical equipment, such as atomic absorptimeter, fully automated blood coagulation analyzer, high performance liquid chromatograph, gas chromatograph, radioimmunoassay analyzer, ultraviolet-visible pectrophotometer, and protein chromatograph, most of which have been imported from the US, Japan, Italy, Germany and Australia. Our research and development department is comprised of about 30 researchers. All of them hold degrees in areas such as medicine, pharmacy, biology, and biochemistry. Our research center carries out development and registration of our products.

All the products we currently manufacture have been developed in-house. Our research center has the following work in progress:

A clinical study of Human Hepatitis B Immunoglobulin (PH4) for Intravenous Injection has been approved by the

SFDA.

Our Human Albumin (12.5g/vial) has been accredited by the SFDA.
Our Human Immunoglobulin (5g/vial) for Intravenous Injection has been accredited by the SFDA.
Laboratory and pre-clinical research of Human Prothrombin Complex concentrate has been completed and large- scale production technology is ready. Our documentation and samples have been submitted to the National Institute for the Control of Pharmaceutical and Biological Products and we are applying for approval to carry out clinical trials.
Laboratory study of Human Coagulation Factor VIII has been completed. At present, documentation and samples have been collected for the validation of two different methods of virus inactivation.
We have commenced laboratory studies of a manufacturing procedure for Human Fibrinogen.
We have completed a technical feasibility study on 10% Human Immunoglobulin for Intravenous Injection and our laboratory study on the manufacturing procedure is about to begin.

For the years ended December 31, 2006 and for 2005, total research and development expenses amounted to approximately $0.6 million and $0.4 million, respectively, representing approximately 2.7% and 3.1%, respectively, of our revenues. For the six month period ended June 30, 2007 and 2006, total research and development expenses amounted to approximately $0.2 million and $0.2 million, respectively, representing approximately 1.3% and 2%, respectively, of our revenues during such periods.

Our Marketing Efforts

Because all of our products are prescription drugs, we can only sell to hospitals and inoculation centers directly or through approved distributors. For the years ended December 31, 2006 and 2005, direct sales to distributors represented approximately 60% and 54%, respectively, of our revenues.

Our five largest customers in the aggregate accounted for approximately 12.3% and 10% of our total revenues for the years ended December 31, 2006 and 2005, respectively. Our largest customer both accounted for approximately 2.9% and 2.8% of our total revenues for the years ended December 31, 2006 and 2005, respectively.

As part of our effort to ensure the quality of our distributors, we conduct due diligence to verify whether potential distributors have obtained necessary permits and licenses and facilities (such as cold storage) for the distribution of our biopharmaceutical products. We also assess the distributors’ financial condition before appointing them as distributors. We normally enter into annual supply contracts with our hospital customers and regional distributors. Certain of our regional distributors are appointed on an exclusive basis within a specified area. The supply contracts normally set out the quantity and price of products. For distributors, they also contain guidelines for the sale and distribution of our products, including restrictions on the geographical area to which the products could be sold. We provide our distributors with training in relation to our products and on sales techniques. We have implemented a coding system for our products for easy tracking. Depending on the relationship and the creditability of the distributors, we generally grant a credit period of no longer than 30 days to distributors with some exceptions. For hospitals and clinics, we generally grant a credit period of no longer than 90 days. Our bad debt expenses for 2006 and 2005 were $0.04 million and $0.4 million, respectively.

Our current key market is in Shandong province, representing approximately 44% and 54% of our total revenues for the years ended December 31, 2006 and 2005, respectively. Our strategy is to focus on our market efforts in Jiangsu, Zhejiang, Henan and the northeastern part of China.

Our marketing and after-sales services department currently employs approximately 48 employees.

We believe that due to the unique nature of our product, the key emphasis on the marketing efforts centers on product safety, brand recognition, timely availability and pricing. As all of our products are prescription medicines, we are not allowed to advertise our products in the mass media. For the years ended December 31, 2006 and 2005, total sales and marketing expenses amounted to approximately $1.8 million and $1.6 million, respectively, representing approximately 8%

and 14%, respectively, of our revenues. For the six month period ended June 30, 2007 and 2006, total sales and marketing expenses amounted to approximately $0.7 million and $0.3 million, respectively, representing approximately 4.3% and 3.2%, respectively of our revenues.

Raw Materials

Plasma

Plasma is the principal raw material for our biopharmaceutical products. The cost of raw materials included in our cost of sales for 2006 and 2005, were $9.6 million and $6.2 million, respectively and the cost of raw materials included in our cost of sales for the six-month periods ended June 30, 2007 and 2006 were $71.2% and $73.3%, respectively. There are currently six plasma stations in the Shandong Province, five of which we have recently acquired. In April 2007, we acquired two more plasma stations and signed letter of intent with one plasma station in the Guangxi Province, two of which already have the necessary permit to operate. When our production requirements exceed the plasma supply from the stations that we own or that we will acquire in the future, we will procure the supply deficiency from the blood centers operated by the regulators of Shandong and other Provinces.

We currently maintain sufficient plasma supply for approximately 60 days of production. In March 2007, the State Food and Drug Administration implemented new measures on biopharmaceutical industry effective as of January 2008, requiring plasma raw material to be kept for at least 3 months before being put into production. As such, in due course we will extend our plasma supply for approximately 4 months. We have not experienced any interruptions to our production due to shortage of plasma.

As discussed above under the caption “Our Industry,” up until the end of 2006, all the stations were owned by the State. In March 2006, the Ministry of Health promulgated the Blood Collection Measures, whereby the ownership and management of the plasma stations must be transferred to plasma-based biopharmaceutical companies while the regulatory supervision and administrative control remain with the State. In June 2006, we entered into letters of intent with five plasma stations in Shandong. We acquired these five plasma stations during December 2006 and received the permit to operate them in January 2007. The acquisition was for the assets and the associated liabilities with consideration determined based on the valuation by a qualified appraiser in China with reference to the attributable net asset value of the purchased interest. The aggregate considerations for these five plasma acquisitions amounted to RMB19.3 million (approximately $2.5 million). Consideration of RMB11.2 million was been paid before December 2006.

In January 2007, we entered into letters of intent with three plasma stations in Guangxi Province, two of which we have since acquired. However, at present, there is still a legal dispute between the owner and a third party and there can be no assurance that the acquisition of the remaining one plasma station can be completed or on terms that we have initially agreed to in the letters of intent.

We believe that the acquisitions and contemplated acquisitions of plasma stations will result in several benefits to us. We will have a controlled source of plasma and will be able to oversee the quality and quantity produced. We will also be able to have increased control over the cost of plasma. Finally, we believe that we will enjoy benefits of economies of scale with respect to the administration and management expenses of our several plasma stations.

Other Raw Materials and Packaging Materials

Other raw materials used in the production of our biopharmaceutical products include: reagents, consumables and packaging materials. The principal packaging materials we use include glass bottles for our injection products, external packaging and printed instructions for our biopharmaceutical products. We acquire our raw materials and packaging materials from our approved suppliers in China and overseas. We select our suppliers based on quality, consistency, price and delivery of the raw materials which they supply.

We have not experienced any shortage of supply on these raw materials and packaging materials and there has not been any significant problem with the quality of materials supplied by these suppliers.

Major Suppliers

The table below lists our major suppliers as of December 31, 2006, showing the cumulative dollar amount of raw materials purchased from them during the fiscal year ended December 31, 2006, and the percentage of raw materials purchased from each supplier as compared to procurement of all raw materials.

		Cumulative
		Amount	Percentage of
		Purchased During	Total Purchases
		Fiscal Year 2006	During Fiscal
Rank	Supplier’s name	*(RMB million)*	Year 2006
1	Qi He Plasma Collection Station	28.4	31.7%
	Shen County Plasma Collection
2	Station	15.34	17.2%
3	Xiajin Plasma Collection Station	10.8	12.%
	Shandong Yuncheng Plasma
4	Collection Station	8.5	9.6%
	Chongqing Sanda Weiye
5	Pharmaceutical Products	5.4	6%
6	Zhang Qiu Plasma Collection Station	5.3	6%
7	Yang Gu Plasma Collection Station	2.23	2.5%
	Taian City Dai Yue District Taixing
8	Enterprise Limited	1.3	1.5%
9	Taian City Coal Supply Company	1.2	1.4%
	Zibo Zhong Bao Kang Medical
10	Equipment Company	1.1	1.3%
	Total	79.5	89%

Our Major Customers

Due to the nature of our products and the current regulations, all of our customers are located in China. We have established relationships with most of our key customers since our establishment in 2002. For the fiscal year ended December 31, 2006, our top five customers, based on sales revenue and the percentage of their contribution to our revenues, were as follows:

		Percentage of Total
	Revenues During	Sales During
Customer	Fiscal Year 2006	Fiscal Year 2006
	*(RMB million)*
Hengshui Hua’an Medical Station	5.1	2.9%
Linyi Luoxin Medical Company	4.9	2.8%
Anhui Huayuan Medical Company	4.6	2.6%
Linyi Medical Station	4.1	2.3%
Nanjing Military District Fuzhou Medical	3.3	1.9%
Station
Total	22.0	12.3%

Regulation

Due to the nature of our products, we are supervised by various levels of the PRC Ministry of Health and/or State Food and Drug Administration. Such supervision includes the safety standards regulating our source supplies (mainly plasma), our manufacturing process through the issuance of our GMP Certification and the inspection of our finished products.

In addition, there are regulations regarding the retail price, rather than regulations of wholesale prices, of our products. According to the “Regulations on controlling blood products” promulgated by the State Council in 1996, the price (retail) setting standard and regulatory functions reside with regional offices of the State Pricing Bureau and the Ministry of Health. Presently, there are retail pricing guidelines for hospitals which sell our human albumin and immunoglobulin products to patients as prescribed by the relevant regulators in each region. The retail pricing guidelines are established based on, amongst other things, the regional living standards and the cost of production of the manufacturers.

The hospitals cannot sell the products to patients at prices exceeding the highest retail price prescribed by the relevant regulators. There is no pricing guideline on the ex-factory price to the hospital and the distributors. The highest retail price guideline is revised occasionally.

Our Employees

As of June 30, 2007, we employed approximately 331 full-time employees, of which approximately 130 were seconded to us by the Shandong Institute. An English translation of this Group Secondment Agreement is filed as an exhibit to this report.

We believe that we maintain a satisfactory working relationship with our employees and we have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.

As required by applicable Chinese law, we have entered into employment contracts with most of our officers, managers and employees. We are working towards entering into employment contracts with those employees who do not currently have employment contracts with us.

Our employees in China participate in a state pension scheme organized by Chinese municipal and provincial governments. We are required to contribute to the scheme at the rates ranging of the average monthly salary of 20%. The compensation expenses related to this scheme was about RMB1, 265,000 (approximately, $160,000) and RMB774, 000 (approximately, $97,000) for the fiscal years 2006 and 2005, respectively. Other major contributions include medical insurance (7%), unemployment insurance (2%) and housing provision fund (8%) for employees seconded from the Shandong Institute. In addition, we are required by Chinese law to cover employees in China with various types of social insurance. We have purchased social insurances for all of our employees.

Our Facilities

All land in China is owned by the State. Individuals and companies are permitted to acquire land use rights for specific purposes. Industrial land use rights are granted for a period of 50 years. This period may be renewed at the expiration of the initial and any subsequent terms. Granted land use rights are transferable and may be used as security for borrowings and other obligations.

In July 2003, Shandong Taibang obtained certain land use rights from the PRC municipal government to 43,663 square meters consisting of manufacturing facilities, warehouses and office buildings in Taian City, Shandong Province. Shandong Taibang is required to make payments totaling RMB138, 848 per year to the local state-owned entity, for the 50 year life of the rights or until the Shandong Institute completes its privatization process. We recorded “land use rights” equal to “other payable – land use rights” totaling $294,105 and $287,045 as of June 30, 2007 and December 31, 2006 determined using present value of annual payments over 50 years.

We believe that all of our properties have been adequately maintained, are generally in good condition, and are suitable and adequate for our business.

Some of our properties are leased from third parties. We have entered into formal lease agreements with two of them. The remaining leases are on a verbal basis. In all cases, the lessors have not been able to provide copies of documentation evidencing their rights to use the leased property. In most cases, the leased properties are small operating spaces we leased for our sales offices in different parts of China. In the event of any future dispute over the ownership of the leased properties, we believe we could easily and quickly find replacement premises so that the operations would not be affected.

Legal Proceedings

We may become involved in lawsuits and legal proceedings arising from the ordinary course of our business. This may adversely affect or harm our business. We are currently not aware of any such legal proceedings or claims that we believe will have a material adverse affect on our business, financial condition or operating results.

In July 2006, one of our sales employees misappropriated our goods and resold them to other parties using a counterfeited Company seal. The amount involved was approximately RMB1.16 million (approximately $0.15 million). The incident was revealed during a routine reconciliation of our account receivables. We reported the misappropriation to the police and the employee was arrested and criminal charges were brought against him. To date, we have recovered RMB350,000 in cash and goods of valued at approximately RMB30,000 (altogether, approximately $0.05 million). The balance will be recouped on or before the end of 2007, pursuant to a financial guarantee and repayment agreement between us and the employee witnessed by officials at the Tai An City Police Station.

Missile Engineering, which is controlled by Mr. Zu Ying Du, was one of the original equity holders in our operating subsidiary, Shandong Taibang. Pursuant to a joint venture agreement, among the original equity holders, Missile Engineering was obligated to make a capital contribution of RMB20 million (or approximately $2.6 million) for a 25% interest in Shandong Taibang. Missile Engineering made this contribution using funds borrowed from the Beijing Chen Da Technology Investment Company, or Beijing Chen Da. In addition, Missile Engineering was obligated to contribute technical know-how to Shandong Taibang, for which it was obligated to obtain a certificate and license from the State within a stipulated period. However, Missile Engineering failed to obtain the certificate and license and it also failed to repay Beijing Chen Da for its loan of the capital contribution amount. In 2004, Beijing Chen Da sued Mr. Du for repayment of the loan and obtained a judgment against him. As a result, Missile Engineering’s 25% equity interest in Shandong Taibang was transferred to Beijing Chen Da as consideration for the RMB20 million loan. On June 10, 2005, Beijing Chen Da sold its equity interests in Shandong Taibang to Up-Wing, pursuant to a share transfer agreement, which became effective on September 2, 2005, upon approval by the Shandong COFTEC. In March 2006, Up-Wing sold its equity interests in Shandong Taibang to Logic Express, our subsidiary. In 2006, Missile Engineering, applied for arbitration before CIETAC, in accordance with the terms of the joint venture agreement, to challenge the effectiveness of the transfer of the shares he formerly owned in Shandong Taibang. However, Missile Engineering later voluntarily withdrew this application and instead, applied to the Shandong COFTEC for administrative reconsideration of the equity transfer, but its application was rejected. Thereafter, Missile commenced an administrative proceeding against the Shandong COFTEC alleging that it wrongfully approved the equity transfer. This administrative proceeding is still pending. In April 2007, Logic Express initiated an arbitration proceeding before CIETAC, to recognize itself as the lawful shareholder of Shandong Taibang. This arbitration proceeding is still pending. We believe that all necessary approvals and documentation were obtained at the time of transfer and have initiated legal action in China intending to restrain Missile Engineering from seeking to resolve its differences with us by means other than arbitration.

In December 2006, we brought separate legal action in Tai Shan District Court in Shandong Province against Mr. Du for defamation in connection with his tortious comments regarding Shandong Taibang. We sought to enjoin Mr. Du from such conduct as well as damages of approximately $3,000. The outcome of this matter is not expected to have a material adverse effect on our business, financial condition or results of operations.

On February 5, 2007, our subsidiary Shandong Taibang received a summons from the District Court of Hong Qi District, Xin Xiang City, Henan Province, regarding an ongoing dispute with Hua Lan Biological Engineering Co Ltd., or Hua Lan, the plaintiff, pursuant to which Hua Lan alleges that Feng Lin, the principal of the Bobai Kangan Plasma Collection Co. Ltd., or Bobai, and Keliang Huang established the Bobai Plasma Collection Station in Bobai County, Guangxi, using a permit for collecting and supplying human plasma in Bobai County, that was granted to Hua Lan by the government of the Guangxi region, without Hua Lan’s permission. On January 18, 2007, we had signed a letter of intent to acquire the Bobai Plasma Collection Station from Bobai. However, on January 29, 2007, on Hua Lan’s motion, the District Court entered an order to freeze funds in the amount of RMB3,000,000 held by the defendants in the case, including RMB 500,000 in funds held in Shandong Taibang’s bank account in Taian City, and Shandong Taibang was joined as a third party defendant. The first hearing in the foregoing matter was scheduled to be held before the District Court in March 2007 but was suspended to allow the defendants to enter a plea to the Henan Provincial Court requesting clarification regarding whether the District Court has proper jurisdiction when the act of infringement and all defendants are not in Henan Province. A hearing was held on June 25, 2007 and judgment was entered against the defendants. There was no financial judgment on us and the RMB500,000

has been released, however, we have appealed the judgment to the high court. Other than the place of jurisdiction, we cannot make any comment on the validity of the franchise agreement between Bobai and Hua Lan. If Hua Lan prevails in this case then we may not be able to acquire Bobai. However, management does not expect our inability to acquire Bobai to have a material adverse effect on our business, financial condition or results of operations as Bobai is only a small station.

To our knowledge, no director, officer or affiliate of ours, and no owner of record or beneficial owner of more than five percent (5%) of our securities, or any associate of any such director, officer or security holder is our adverse party or has an material interest in our operation in reference to pending litigation.

MANAGEMENT

Directors and Executive Officers

The following sets forth the name and position of each of our current executive officers and directors.

Name	Age	Position
Siu Ling Chan,	44	Chairwoman of the Board
Stanley Wong	44	Chief Executive Officer
Lin Ling Li	44	Director
Chao Ming Zhao	34	Director and Chief Financial Officer

Siu Ling Chan has been our director since July 19, 2006. She has been our chairwoman since January 1, 2007 and served as our CEO from January 2007 to March 2007. Ms Chan is also currently a director of our subsidiary Logic Express. She was also appointed as the director of Shandong Taibang in April 2006. Ms. Chan has been involved in senior management positions with a number of companies and has made a number of investments in China. Prior to joining us, Ms. Chan worked from 1991 to 2005, as an administrator at the Fujian Academy of Social Sciences, and from 1989 to 1991 as a statistician at the Fujian Pingtan Economy Committee. She received her graduate degree in Statistics from Xiamen University in 1989.

Stanley Wong joined our Company as Chief Executive Officer in March 2007. Mr. Wong has over 20 years of working experience in the fields of auditing, hotel, investment, trust, settlement, fund administration, credit risk management, private banking, IPO, construction, manufacturing and IT industries in the Greater China Region, over 12 years of which has been spent in strategic and corporate management, internal controls and change management. Before joining our Company, Mr. Wong worked from December 2003 to November 2006 as the Chief Financial Officer of Futong Technology (HK) Co. Ltd. and Beijing Futong Dongfang Technology Co. Ltd., where he was responsible for Singapore listing work and corporate management. Prior to this Mr. Wong worked in Taipei from March 2003 to December 2003 as a General Manager for the Raido Group, a multinational investment enterprise. From May 2002 to February 2003, Mr. Wong worked as the Personal Assistant to the Managing Director of Hung Mau Realty & Construction Ltd., a general building contractor, and from January 2002 to April 2002 he worked as the Finance Manager for Noble Resources Ltd., a diversified commodities trading company listed in Singapore. Mr. Wong obtained his Bachelor degree in Accounting from the University of Kent in the UK. He is also a fellow member of the Association of Chartered Certified Accountants and the Hong Kong Institute of Certified Public Accountants.

Lin Ling Li has been a member of our board of directors since July 19, 2006. Since February 2006, Ms. Li has been the director of our subsidiary Logic Express, and since May 2004, she has been a director at Up-Wing Investment Limited, a predecessor to Logic Express. Ms. Li was a technician at Fuzhou Fuxing Pharmaceutical Company from 1980 to 2000. From October 1998 to April 2006, she was a senior manager at Fuzhou Chengxin Dian Dang Company Limited, where she was involved in financing, mortgage and loan industry. She holds degrees in finance and accounting from Fujian University (September 1986), and an accounting degree from Fujian Finance and Accounting Institute (October 1994).

Chao Ming Zhao has been our Director since August 2006 and our Chief Financial Officer since November 2006, and has been the Chief Financial Officer of our operating subsidiary, Shandong Taibang since September 2003. From February 2002 to June 2003, Mr. Zhao was the financial manager at EF English First (Fuzhou) School, where he was responsible for managing the school’s accounting and its internal control. He was a manager and auditor at Fujian (CFC) Group from July 1996 to January 2002, and was in charge of internal audit. Mr. Zhao is a certified accountant in the PRC and is an international registered internal auditor. Mr. Zhao graduated from Fuzhou University with a major in investment management and economics. He received his MBA in finance for Chinese University of Hong Kong in 2006. He also received his Bachelors degree in Investment Economy Management from Fuzhou University in 1996.

Significant Employees

The following sets forth the name and position of each of our current significant employees.

Tung Lam	46	Chief Executive Officer of Shandong Taibang
Guangli Pang	43	Director of China Biologic and Deputy CEO of
		Shandong Taibang
Yun Hua Gao	55	Technical Chief of Shandong Taibang
Dian Cong Liu	54	Quality Control Manager of Shandong Taibang
Ya Wen Liu	40	Sales Manager of Shandong Taibang

Tung, Lam has been the Chief Executive Officer of our operating subsidiary, Shandong Taibang, since October 2003, and is responsible for the entire operation. Mr. Lam served, from March 2001 to August 2003, as the vice president of the Fujian Province Fei Yue Group, where he was in charge of management investment. Mr. Lam graduated from Fuzhou University majoring in business administration in 1983. He also received a EMBA degree from People’s University of China in 2006.

Guang Li Pang has been our Director since August 2006 and has been the Deputy Chief Executive Officer of our operating subsidiary, Shandong Taibang since November 2002 where he is in charge of production. In 1985, Mr. Pang joined the Shandong Institute and was promoted head of its plasma division. Mr. Pang graduated from Shandong Medical University majoring in pharmacy in 1989. He received a degree in business management from Shandong Party Committee School in 2003, and started his EMBA at People’s University of China in January 2005.

Yun Hua Gao is the technical chief of our operating subsidiary, Shandong Taibang. In 1975, Mr. Gao was assigned to the Shandong Institute and has been involved in the research and development work of plasma products. From January 2000 to November 2000, he was head of the production department at Shandong Biological Products Institute, and from November 2002 to April 2004, he became the manager of the production department. He graduated from Shandong Medical University majoring in medicine in 1975. He received a degree in Biology in 1976 from the Shanghai Biological Research Institute.

Dian Cong Liu has been the quality control manager of our operating subsidiary, Shandong Taibang since September 2003. Mr. Liu has spent many years in the area of biopharmaceutical research. Mr. Liu joined the Shandong Institute in 1978, and served as manager of the institute’s placenta product department from 1986 to 1992 and as department head for the institute’s quality assurance department from 2000 to October 2002. Mr. Liu was one of our founding employees in 2002. He graduated from the Weifang Medical School in 1978, with a major in medicine.

Ya Wen Liu has been the sales manager of our operating subsidiary, Shandong Taibang since September 2003. Prior to joining us, Mr. Liu was employed by a number of pharmaceutical and biopharmaceutical companies. From March 2001 to September 2003, he was a marketing manager at Shenzhen Lanan Bioengineering Limited Company. He graduated from Yangchow Medical University in 1989 majoring in medicine.

The business address of our directors and executive officers is No. 14 East Hushan Road, Taian City, Shandong Province, People’s Republic of China, 271000. There are no agreements or understandings for any of our executive officers

or directors to resign at the request of another person and no officer or director is acting on behalf of nor will any of them act at the direction of any other person.

Board Composition and Committees

Our Board is currently composed of four members, none of whom are “independent” directors, as that term is defined under the Nasdaq listing standards. All actions of the board of directors require the approval of a majority of the directors in attendance at a meeting at which a quorum is present. Our directors have a duty of to act in good faith with a view to our interests. In fulfilling their duty of care to us, our directors must ensure compliance with our Certificate of Incorporation. Board action requires the approval of a majority of the directors in attendance at a meeting at which a quorum is present. During 2006, our board met two times and except for Ms. Lin Ling Li, who missed one meeting, no director missed more than 25% of the meetings of the board or any committee on which he or she sat.

We currently do not have standing audit, nominating or compensation committees. Currently, our entire board of directors is responsible for the functions that would otherwise be handled by these committees. We intend, however, to establish an audit committee, a nominating committee and a compensation committee of the board of directors as soon as practicable. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors, evaluating our accounting policies and our system of internal controls. The nominating committee would be primarily responsible for nominating directors and setting policies and procedures for the nomination of directors. The nominating committee would also be responsible for overseeing the creation and implementation of our corporate governance policies and procedures. The compensation committee will be primarily responsible for reviewing and approving our salary and benefit policies (including stock options), including compensation of executive officers.

Our board of directors has not made a determination as to whether any member of our board is an audit committee financial expert. Upon the establishment of an audit committee, the board will determine whether any of the directors qualify as an audit committee financial expert.

However, to enrich our technical expertise, we have enlisted the following individuals as our advisors, Mr. Wen Fang Liu and Mr. Xi Yun Chai.

Mr. Wen Fang Liu, 67, is a lecturer of post doctorate degree students and is our senior advisor. Mr. Liu is a pioneer in the plasma-based biopharmaceutical product industry in China. From 1963 to 1998, Mr. Liu was employed at the Transfusion Research Centre of China Medical Science Institute, where he focused on plasma fraction, purification, quality control and product development. Mr. Liu was one of the early adopter of then pioneering manufacturing techniques and product developments of plasma-based biopharmaceuticals. He has received numerous awards in this field and has published over 30 books and papers. Since the early 1990’s, Mr. Liu has been appointed as a member of the Chinese People’s Political Consultative Conference’s Sichuan Committee, a member of the Ministry of Health’s committee on biopharmaceuticals standards, council to the China Society of Blood Transfusion, council to the China Medicinal Biotech Association, an executive member of the council of Sichuan Red Cross. From 1993 to 1994, Mr. Liu was a visiting scholar to the Halland Research Centre of the U.S. Red Cross.

Mr. Xi Yun Chai, 46, graduated from the Shanghai Medical University with a doctorate degree in biochemistry. Mr. Chai is currently our senior advisor. After his graduation, Mr. Chai attended State University of New York at Buffalo for his post doctorate study. Mr. Chai has published over ten technical papers in internationally recognized magazines.

Family Relationships

Ms. Siu Ling Chan is the wife of Mr. Tung Lam. Other than the above, none of our directors or officers is related to each other or any of our principal shareholders; and to the best of our knowledge and belief, there are no arrangements or understandings with any of our principal shareholders, customers, suppliers, or any other person, pursuant to which any of our directors or executive officers were appointed.

Involvement in Certain Legal Proceedings

To the best of our knowledge, except as set forth in our discussion below in “Certain Relationships and Related Transactions”, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. None of the directors, director designees or executive officers to our knowledge has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, or has been a party to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws, except for matters that were dismissed without sanction or settlement.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the compensation paid by us for services rendered in all capacities to us by our chief executive officer. No other executive officers received total annual salary and bonus compensation in excess of $100,000.

Summary Compensation Table

						Non-	Non-
					Option	Equity Incentive	qualified	All Other
Name and Principal		Salary	Bonus	Stock	Awards	Plan	Deferred	Compensation	Total
Position	Year	($)	($)	Awards ($)	($)	Compensation	Compensation	($) ⁽³⁾	($)
						Earnings ($)	Earnings ($)


Michael Li, Former	2006	$61,720	$5,143	-0-	-0-	-0-	-0-	-0-	$66,863
CEO ⁽¹⁾

Siu Ling Chan,	2006	$48,848	$6,407	-0-	-0-	-0-	-0-	-0-	$55,255
Chairwoman and
Former CEO ⁽²⁾

Stanley Wong, CEO	2006	-0-	-0-	-0-	-0-	-0-	-0-	-0-	-0-

(1) Michael Li served as our CEO from July 2006, until his resignation in January 31, 2007, when the board of directors appointed Siu Ling Chan as our new CEO.

(2) Siu Ling Chan also served as our CEO from January 2007, until March 2007, when the board of directors appointed Stanley Wong as our new CEO.

Employment Agreements

Mr. Michael Li served as our Chief Executive Officer from July 2006 through January 2007. As consideration for his duties as our Chief Executive Officer, Mr. Li received a monthly salary of HK$80,000 (approximately $10,287), plus a guaranteed bonus equal to one month’s salary on December 31 of every year under the agreement.

As consideration for her duties on our board of directors, pursuant to a director’s employment agreement which became effective as of July 19, 2006, our Chairwoman, Ms. Siu Ling Chan, receives a monthly salary of HK$50,000 (approximately $6,400), plus a guaranteed bonus of HK$50,000 (approximately $6,400) on December 31 of every year under the agreement. Ms. Chan also receives compensation in the form of housing allowances and other allowances and benefit in kind.

Pursuant to an employment agreement which became effective March 8, 2007, as consideration for his services as our Chief Executive Officer, Mr. Stanley Wong receives a monthly salary of $12,800, a discretionary year-end bonus and monthly round trip ticket from Jinan to Hong Kong, valued at approximately $6,150 per year.

As consideration for his services as a director, and as our CFO as of November 2006, Chao Ming Zhao receives a monthly salary of HK$50,000 (approximately $6,400), plus a guaranteed bonus of HK$50,000 (approximately $6,400) on December 31 of every year under the agreement. In addition, for his services as the Chief Financial Officer of Shandong Taibang Mr. Zhao receives a monthly salary of RMB4,400 (approximately $564). He also receives housing allowances valued at RMB 3,100 per month (approximately $397) and a discretionary bonus which was RMB 25,000 (approximately $3,203) for fiscal year 2006.

Outstanding Equity Awards at Fiscal Year End

None of our executive officers received any equity awards, including, options, restricted stock or other equity incentives, during the fiscal year ended December 31, 2006.

Compensation of Directors

The following table sets forth certain information concerning the compensation paid by us for services rendered in all capacities to us during the fiscal year ended December 31, 2006 to our directors:

					Change
					in Pension
					Value and
					Nonqualified
				Non-Equity	Deferred
	Fees Earned or			Incentive Plan	Compensation	All Other
	Paid in Cash	Stock Awards	Option Awards	Compensation	Earnings	Compensation	Total
Nam	($)	($)	($)	($)	($)	($)	($)

Katherine Loh ⁽¹⁾	72,006	-	-	-	-	-	72,006
Lin Ling Li	56,024	-	-	-	-	1,153	57,177
Siu Ling Chan	48,848	-	-	-	-	6,407	55,255
Chao Ming Zhao ⁽²⁾	42,729	-	-	-	-	3,001	45,730
Guang Li Pang	7,168	-	-	-	-	1,754	8,921

(1) Katherine Loh served on our board of directors and chairwoman from July 1,2006 until her resignation in January 1, 2007.

(2) Chao Ming Zhao’s compensation includes compensation for his duties as our CFO from November 2006 to the present.

All directors receive reimbursements from us for expenses which are necessarily and reasonably incurred by them for providing services to us or in the performance of their duties. Our directors who are also our employees receive compensation in the form of salaries, housing allowances, other allowances and benefit in kind in their capacity as our employees. Our executive directors do not receive any compensation in their capacity as directors in addition to their salaries and other remunerations as members of our management team. We pay their expenses related to attending board meetings and participating in board functions

Out directors receive a monthly salary of approximately HK$50,000 (approximately $6,400), plus a guaranteed bonus of HK$50,000 (approximately $6,400) on December 31 ^st of every year under the agreement. Both Ms. Siu Ling Chan’s and Ms. Lin Ling Li’s directors’ employment agreement became effective in July 2006, Mr. Chao Mingh Zhao’s, became effective as of August 2006 and Mr. Guang Li Pang’s became effective as of August 2006. Our directors’ employment agreements continue until terminated.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Related Persons

The following includes a summary of transactions since the beginning of the last fiscal year, or any currently proposed transaction, in which we were or are to be a participant and the amount involved exceeded or exceeds $120,000, and in which any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

On July 19, 2006, we consummated the transactions contemplated by a share exchange agreement with the owners of all issued and outstanding capital stock of Logic Express, our directors, Ms. Siu Ling Chang and Ms. Lin Ling Li.. Pursuant to the share exchange agreement, we acquired 100% of the outstanding capital stock of Logic Express in exchange for 18,484,715 shares of our common stock. As a result of this transaction, Ms. Chang and Ms. Li became the beneficial owner of approximately 64% of our outstanding capital stock.

On July 19, 2007, our directors and majority stockholders, Siu Ling Chan and Lin Ling Li also entered into a make good escrow agreement with the private placement investors, pursuant to which, Ms. Chan and Ms. Li agreed to deposit in an escrow account a total of 4,280,000 shares of our common stock owned by them, to be held for the benefit of the investors. Ms. Chan and Ms. Li agreed that if we do not attain a minimum after tax net income threshold of $4,819,500, or $5,823,465 of after-tax net income before minority interest for the fiscal year ending December 31, 2006, and $8,302,000 of after-tax net income or $10,031,416 of after-tax net income before minority interest for the fiscal year ending December 31, 2007, the escrow agent may deliver their escrowed shares to the investors, based upon a pre-defined formula agreed to between the investors and Ms. Chan and Ms. Li. However, if the after tax net income threshold is met, the shares in escrow will be returned to Ms. Chan and Ms. Li. Pursuant to the escrow agreement, (i) liquidated damages accrued according to the registration rights agreement and; (ii) gain or loss on change in fair value of warrants, are not deemed to be an income or expense item in calculating the after-tax net income for the purpose of the escrow agreement. If such performance thresholds are met, the shares are to be returned to Ms Li Lin Ling and Ms Chan Siu Ling. We have met our performance threshold for the fiscal year ending December 31, 2006.

Amount Due to Related Parties

Amounts due from related parties as of December 31, 2006; and December 31, 2005 are as follows:

	For Fiscal Year	For Fiscal Year
	Ended	Ended
	December 31, 2006	December 31,2005
Amount due to:
Shareholders (1)		$1,872,087
Minority shareholder (2)	$675,761

(1) The Company’s investment in Shandong Taibang was financed by an advance from shareholders. The advance was unsecured, interest free and was paid for using dividends collected from Shandong Taibang. This amount was repaid in 2006.

(2) Represents a dividend of $675,761 borrowed for operational purposes from the minority shareholder of Shandong Taibang, at an annual interest rate of 6%. This amount is expected to be repaid in cash.

Staff Costs Related to Seconded Staff

These amounts represent staff costs for staff seconded from Shandong Institute of Biological Products to the Company.

	For Fiscal Year	For Fiscal Year
	Ended	Ended
	December 31, 2006	December 31, 2005

Personnel expenses to Shandong	676,000	727,000
Institute of Biological Products

Except as set forth in our discussion above, none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.

Policies and Procedures for Review, Approval or Ratification of Transactions with Related Persons

As we increase the size of our board of directors and gain independent directors, we expect to prepare and adopt a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration and approval or ratification of “related-persons transactions.” For purposes of our policy only, a “related-person transaction” will be a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related person” are participants involving an amount that exceeds $50,000. Transactions involving compensation for services provided to us as an employee, director, consultant or similar capacity by a related person will not be covered by this policy. A related person will be any executive officer, director or a holder of more than five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.

We anticipate that, where a transaction has been identified as a related-person transaction, the policy will require management to present information regarding the proposed related-person transaction to our audit committee (or, where approval by our audit committee would be inappropriate, to another independent body of our board of directors) for consideration and approval or ratification. Management’s presentation will be expected to include a description of, among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available.

To identify related-person transactions in advance, we are expected to rely on information supplied by our executive officers, directors and certain significant stockholders. In considering related-person transactions, our board of directors will take into account the relevant available facts and circumstances including, but not limited to:

the risks, costs and benefits to us;
the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
the terms of the transaction;
the availability of other sources for comparable services or products; and
the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.

We also expect that the policy will require any interested director to excuse himself or herself from deliberations and approval of the transaction in which the interested director is involved.

Promoters and Certain Control Persons

We did not have any promoters at any time during the past five fiscal years.

CHANGE IN ACCOUNTANTS

Prior to the effective date of this prospectus, we were not an SEC reporting Company and did not report our financial statements. However, in connection with our reverse merger transaction, our board of directors recommended and approved the appointment of Moore Stephens Wurth Frazer and Torbet, LLP, or Moore Stephens, as our independent auditor for the fiscal years ended December 31, 2006 and 2005 and during the subsequent interim period through the date of this report.

During the fiscal years ended December 31, 2006 and 2005 and through the date hereof, neither us nor anyone acting on our behalf consulted Moore Stephens with respect to (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and neither a written report was provided to us or oral advice was provided that Moore Stephens concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-B.

SELLING STOCKHOLDERS

The following table sets forth as of August 29, 2007, information regarding the current beneficial ownership of our common stock by the persons identified, based on information provided to us by them, which we have not independently verified. Although we have assumed for purposes of the table that the selling stockholders will sell all of the shares offered by this prospectus, because they may from time to time offer all or some of their shares under this prospectus or in another manner, no assurance can be given as to the actual number of shares that will be resold by the selling stockholders (or any of them), or that will be held after completion of the resales. In addition, a selling stockholder may have sold or otherwise disposed of shares in transactions exempt from the registration requirements of the Securities Act or otherwise since the date he or she provided information to us. The selling stockholders are not making any representation that the shares covered by this prospectus will be offered for sale.

Except as set forth below, no selling stockholder has held any position nor had any material relationship with us or our affiliates during the past three years.

	Shares	Maximum	Shares
	Beneficially	Number of	Beneficially	Percentage
	Owned Prior to	Shares to be	Owned After	Ownership
Name of Selling Stockholder	Offering	Sold	Offering	After Offering
Pinnacle China Fund, L.P.	3,225,323	3,138,523 (1)	86,800	*
Jayhawk China Fund (Cayman) Ltd.	1,978,893	1,978,893(2)	0	*
Hudson Bay Overseas Fund Ltd.	82,453	82,453 (3)	0	*
Hudson Bay Fund LP	247,361	247,361 (4)	0	*
Capital Ventures International	403,770	403,770 (5)	0	*
Ryan M. Lane	145,000	145,000	0	*
John D. Lane	53,000	53,000	0	*
Roderick L. McIlwain	7,500	7,500	0	*
Scott D. Edwards	7,500	7,500	0	*
Total	6,064,000	6,064,000	0	*

* means less than 1%.

(1) Consists of (i) 2,110,818 shares owned as of July 28, 2006, (ii) 527,705 shares of common stock issuable upon the exercise of five-year warrants to purchase common stock at an exercise price of $2.8425 per share, and (iii) 500,000 shares of common stock with registration rights purchased from PDS-HFI Partners, pursuant to a share purchase agreement, dated August 20, 2007. The General Partner of Pinnacle China Fund, L.P. is Pinnacle China Advisers, L.P., whose General Partner is Pinnacle China Management, LLC, the Manager of which is Kitt China Management, LLC, the Manager of

which is Barry M. Kitt. Mr. Kitt accordingly may be deemed to beneficially own but claims beneficial ownership of the shares owned by Pinnacle China Fund, L.P.

(2) Consists of (i) 1,583,114 shares owned as of July 28, 2006, and (ii) 395,779 shares of common stock issuable upon the exercise of five-year warrants to purchase common stock at an exercise price of $2.8425 per share. Jayhawk Capital Management, LLC is the Investment Manager for Jayhawk China Fund (Cayman), Ltd. Jayhawk Capital Management, LLC is controlled by Kent C. McCarthy.

(3) Consists of (i) 65,963 shares owned as of July 28, 2006, and (ii) 16,490 shares of common stock issuable upon the exercise of five-year warrants to purchase common stock at an exercise price of $2.8425 per share,. Yoav Roth and John Doscas share voting and investment power over the shares held by this selling stockholder. Both Yoav Roth and John Doscas disclaim beneficial ownership of such shares held by Hudson Bay Overseas Fund Ltd.

(4) Consists of (i) 197,889 shares of common stock owned as of July 28, 2006, and (ii) 49,472 shares of common stock issuable upon the exercise of five-year warrants to purchase common stock at an exercise price of $2.8425 per share. Yoav Roth and John Doscas share voting and investment power over the shares held by this selling stockholder. Both Yoav Roth and John Doscas disclaim beneficial ownership of such shares held by Hudson Bay Fund LP.

(5) Consists of (i) 323,216 shares owned as of July 28, 2006, and (iii) 80,554 shares of common stock issuable upon exercise of five-year warrants to purchase common stock at an exercise price of $2.8425 per share. Heights Capital Management is the Investment Manager for Capital Ventures International. Heights Capital Management, Inc., the authorized agent of Capital Ventures International, has discretionary authority to vote and dispose of the shares held by Capital Ventures International and may be deemed to be the beneficial owner of these shares. Martin Kobinger, in his capacity as Investment Manager of Heights Capital Management, Inc., may also be deemed to have investment discretion and voting power over the shares held by Capital Ventures International. Mr. Kobinger disclaims any such beneficial ownership of the shares.

(6) PDS-HFI Partners is a partnership comprised as Halter Financial Investments, L.P. and Patrick D. Souter. Halter Financial Investments, L.P. is a Texas limited partnership in which Timothy P. Halter, David Brigante, Marat Rosenberg and George Diamond (or their affiliated entities) are limited partners. All of them have voting power and investment power over the securities owned by PDS-HFI Partners and may be deemed to be the beneficial owner of the shares. Patrick D. Souter also has discretionary authority to vote and dispose of the shares held by PDS-HFI Partners and may be deemed to be the beneficial owner of these shares.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding beneficial ownership of our common stock as of August 29, 2007 (i) by each person who is known by us to beneficially own more than 5% of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group.

Security Ownership of Certain Beneficial Owners and Management

	Name & Address		Amount & Nature of	Percentage of
Title of Class	of Beneficial Owner	Office, If Any	Beneficial Ownership (1)	Class (2)

Common Stock	Katherine Loh	Chairwoman of	1,071,787	5.0%
$0.0001 par value	c/o Lane Capital Markets, LLC	China Biologic from
	120 Broadway, Suite 1019	July 2006 to
	New York	December 2006

Common Stock	Lin Ling Li	Director	6,862,624(3)	32.0%
$0.0001 par value	c/o Lane Capital Markets, LLC
	120 Broadway, Suite 1019
	New York

Common Stock	Siu Ling Chan (4)	Chairwoman of	6,862,624 (3)	32.0%
$0.0001 par value	c/o Lane Capital Markets, LLC	China Biologic since
	120 Broadway, Suite 1019	January 2007 and
	New York	former CEO from
		January 2007 to
		March 2007

Common Stock	Stanley Wong	CEO	0	0
$0.0001 par value

Common Stock	Chao Ming Zhao	CFO	1,071,787	5.0%
$0.0001 par value	c/o Lane Capital Markets, LLC
	120 Broadway, Suite 1019
	New York

Common Stock	Barry M. Kitt (5)	2,110,818	9.8%
$0.0001 par value	4965 Preston Park Blvd.,
	Suite 240
	Plano, TX 75093

Common Stock	Kent C. McCarthy (6)	1,583,114	7.4%
$0.0001 par value	c/o Jayhawk China Fund (Cayman)
	Ltd.
	8201 Mission Road, Suite 110
	Prairie Village, Kansas 66208

Common Stock	All officers and directors as a group (4	15,332,928	71.5%
$0.0001 par value	persons named above)

(1) Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock.

(2) Based on 21,434,942 shares of common stock issued and outstanding as of August 29, 2007.

(3) Includes 2,140,000 shares that have been placed in escrow that may be released to the Investors in the event we do not meet the performance thresholds for 2007.

(4) Ms. Chan is the wife of Mr. Lam, the Chief Executive Officer of Shandong Taibang.

(5) These shares of our common stock are owned by Pinnacle China which is controlled by Barry M. Kitt, the Sole Member of Kitt China Management, L.L.C., the Manager of Pinnacle China Management, L.L.C., the General Partner of Pinnacle China Advisors, L.P., the General Partner of Pinnacle China Fund, L.P.

(6) Consists of shares owned as of July 28, 2006 by Jayhawk China Fund (Cayman), Ltd. , which is managed by Jayhawk Capital Management, LLC, which is controlled by Kent C. McCarthy who is deemed the beneficial owner of the shares.

Changes in Control

We do not currently have any arrangements which if consummated may result in a change of control of our Company.

DESCRIPTION OF SECURITIES

Common or Preferred Stock

Our current authorized capital stock consists of 100,000,000 shares of common stock, par value $.0001 per share, of which 21,434,942 shares were issued and outstanding as of August 29, 2007, and 10,000,000 shares of preferred stock, par value $.0001 per share, of which no shares are issued or outstanding.

Each common share entitles the holder to one vote on all matters submitted to a vote of our stockholders. When a dividend is declared by the Board, all stockholders are entitled to receive a fixed dividend. All shares issued in the company are of the same class, and have equal liquidation, preference, and adjustment rights.

Warrants

On July 19, 2006, we issued to the Investors in the private placement warrants to purchase an aggregate of 1,070,000 shares of our Common Stock which are exercisable by the holder at $2.8425 per share for a period of five years following the closing of the private placement. In the event the market price of our Common Stock exceeds 160% of the exercise price of the warrants at any time after 45 days following the effective date of the registration statement of which this prospectus forms a part, then we may require the holder of such warrants to exercise any unexercised warrants so long as this registration statement remains effective and certain other conditions are met. Under no circumstances may the warrants be exercised – including pursuant to these forced exercise provisions -- if it would result in the holder beneficially owning more than (i) 4.9999% of our outstanding Common Stock (which provision may be waived by the holder thereof with upon notice to us 61 days prior to such exercise); or (ii) 9.9999% of our outstanding Common Stock (which provision may not be waived by any party). In the event we issue shares of our Common Stock or any type of securities convertible or exercisable into shares of our Common Stock at a price below $2.8425, the exercise price of the warrants shall be adjusted downwards on a “weighted average” basis.

In connection with the private placement, we also issued to Lane Capital Markets, LLC warrants to purchase 214,000 shares of our common stock on substantially identical terms as the warrants issued to the investors in the private placement (although the warrants issued to Lane Capital Markets LLC did not contain any forced exercise provisions).

Transfer Agent and Registrar

Our independent stock transfer agent and registrar for our common stock is Securities Transfer Corporation. Their mailing address is 2591 Dallas Parkway, Suite #102, Frisco, Texas, 75034, and their telephone number is (469) 633-0101.

SHARES ELIGIBLE FOR FUTURE SALE

As of August 29, 2007, we had outstanding 24,038,183 shares of common stock.

Shares Covered by this Prospectus

6,064,000 of the shares being registered in this offering may be sold without restriction under the Securities Act, so long as the registration statement of which this prospectus is a part is, and remains, effective.

In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated) who has beneficially owned shares of our common stock for at least one year, including any person who may be deemed to be an “affiliate” (as the term “affiliate” is defined under the Securities Act), would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

1% of the number of shares of common stock then outstanding, which as of August 29, 2007 would equal 214,349 shares; or
the average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

However, since our shares are quoted on the over-the-counter market maintained by Pink Sheets, LLC, which is not an “automated quotation system,” our stockholders cannot rely on the market-based volume limitation described in the second bullet above. If, in the future, our securities are listed on an exchange or quoted on NASDAQ, then our stockholders would be able to rely on the market-based volume limitation. Unless and until our stock is so listed or quoted, our stockholders can only rely on the percentage based volume limitation described in the first bullet above.

Sales under Rule 144 are also governed by other requirements regarding the manner of sale, notice filing and the availability of current public information about us. Under Rule 144, however, a person who is not, and for the three months prior to the sale of such shares has not been, an affiliate of the issuer is free to sell shares that are “restricted securities” which have been held for at least two years without regard to the limitations contained in Rule 144. The selling stockholders will not be governed by the foregoing restrictions when selling their shares pursuant to this prospectus.

A total of 250,227 of our outstanding shares may currently be sold in reliance on Rule 144.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, is entitled to sell such shares without complying with the manner of sale, notice filing, volume limitation or notice provisions of Rule 144.

We believe that none of our outstanding shares may currently be sold in reliance on Rule 144(k).

PLAN OF DISTRIBUTION

The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
an exchange distribution in accordance with the rules of the applicable exchange;
privately negotiated transactions to cover short sales made after the date that this Registration Statement is declared effective by the Commission;
broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;
a combination of any such methods of sale; and
any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

Upon our being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, and (v) other facts material to the transaction. In addition, upon our being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

Any broker-dealers or agents that are involved in selling the shares and any Selling Stockholders who are affiliates of broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling

Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to us that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company has advised each Selling Stockholder that it may not use shares registered on this Registration Statement to cover short sales of Common Stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement.

The Company is required to pay all fees and expenses incident to the registration of the shares, but we will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

INTEREST OF NAMED EXPERTS AND COUNSEL

The validity of the securities offered hereby has been passed upon for us by Thelen Reid Brown Raysman & Steiner LLP, Washington, D.C.

Our audited consolidated financial statements for the fiscal years ended December 31, 2006 and 2005 have been included in this prospectus in reliance upon the report of Moore Stephens Wurth Frazer & Torbet, LLP, independent auditors, appearing in this registration statement, and their authority as experts in accounting and auditing.

No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in China Biologic or any of its parents or subsidiaries. Nor was any such person connected with China Biologic or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Our Bylaws provide for the indemnification of our directors and officers, past, present and future, under certain circumstances, against attorney’s fees, judgments, fines and other expenses incurred by them in any litigation to which they become a party arising from their association with or activities on behalf of us. We will also bear expenses of such litigation for any of our directors, officers, employees or agents upon such persons promise to repay us therefore if it is ultimately determined that any such person shall not have been entitled to indemnification. This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.

Insofar as indemnification by us for liabilities arising under the Securities Exchange Act of 1934 may be permitted to our directors, officers and controlling persons pursuant to provisions of the Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

At the present time, there is no pending litigation or proceeding involving a director, officer, employee or other agent of ours in which indemnification would be required or permitted. We are not aware of any threatened litigation or proceeding which may result in a claim for such indemnification.

WHERE YOU CAN FIND MORE INFORMATION

We are a public company and file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. You can request copies of these documents by writing to the SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for more information about the operation of the public reference room. Our SEC filings are also available, at no charge, to the public at the SEC’s web site at http://www.sec.gov .

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

Index to Financial Statements

		Page
CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED)		F-2

Consolidated Balance Sheet as of June 30, 2007 and December 31, 2006		F-3

Consolidated Statements of Operations for the Six Months Ended June 30, 2007 and 2006		F-4

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2007 and 2006		F-5

Consolidated Statements of Stockholder’ Equity for the Six Months Ended June 30, 2007 and 2006		F-6

Notes to Consolidated Financial Statements		F-7

CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005		F-28

Report of Independent Registered Public Accounting Firm to China Biologic Products, Inc.		F-29

Consolidated Balance Sheet as of December 31, 2006 and 2005		F-30

Consolidated Statements of Operations for the Years Ended December 31, 2006 and 2005		F-31

Consolidated Statements of Stockholder’ Equity for the Years Ended December 31, 2006 and 2005		F-32

Consolidated Statements of Cash Flows for the Years Ended December 31, 2006 and 2005		F-33

Notes to Consolidated Financial Statements		F-34

F-1

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

F-2

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND DECEMBER 31, 2006

A S S E T S
		JUNE 30		DECEMBER 31
		2007		2006
		(Unaudited)
CURRENT ASSETS:
Cash	$	6,548,316	$	4,268,220
Restricted cash		65,750		-
Accounts receivable, net of allowance for doubtful accounts of $1,160,327
and $1,131,209 as of June 30, 2007 and December 31, 2006, respectively		3,407,481		3,775,387
Notes receivable		24,985		81,407
Other receivables		1,935,457		584,931
Other receivables - shareholders		223,059		-
Inventories		7,277,754		6,117,361
Advances on inventory purchases		541,031		713,194
Total current assets		20,023,833		15,540,500

PLANT AND EQUIPMENT, net		11,075,508		7,437,768

OTHER ASSETS:
Advances on equipment purchases		804,150		778,364
Intangible assets		759,331		718,011
Total other assets		1,563,481		1,496,375

Total assets	$	32,662,822	$	24,474,643

L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y

CURRENT LIABILITIES:
Accounts payable	$	2,511,779	$	2,412,440
Short term loans - bank		1,315,000		2,564,000
Short term loan - shareholder		693,156		675,761
Short term loan - employees		763,138		-
Other payables and accrued liabilities		2,225,571		1,874,973
Other payable - land use right		294,105		287,045
Dividend payable		-		476,597
Customer deposits		1,636,027		370,297
Taxes payable		696,586		138,203
Total current liabilities		10,135,362		8,799,316

Long term liabilities		460,250		641,000

Total liabilities		10,595,612		9,440,316

MINORITY INTEREST		3,535,935		2,308,487

SHAREHOLDERS' EQUITY:
Common stock, $0.0001 par value, 100,000,000 shares authorized, 21,434,942 shares
issued and outstanding at June 30, 2007 and December 31, 2006, respectively		2,143		2,143
Paid-in-capital		9,388,305		9,388,305
Retained earnings		4,035,544		2,199,580
Statutory reserves		3,523,806		17,427
Accumulated other comprehensive income		1,581,477		1,118,385
Total shareholders' equity		18,531,275		12,725,840

Total liabilities and shareholders' equity	$	32,662,822	$	24,474,643

The accompanying notes are an integral part of these statements.

F-3

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Unaudited)

		2007		2006
REVENUES	$	16,503,911	$	9,067,701

COST OF SALES		6,012,348		4,185,605

GROSS PROFIT		10,491,563		4,882,096

OPERATING EXPENSES
Selling expenses		702,468		292,669
General and administrative expenses		1,708,341		637,660
Research and development expenses		221,635		180,634
TOTAL OPERATING EXPENSES		2,632,444		1,110,963

INCOME FROM OPERATIONS		7,859,119		3,771,133

OTHER EXPENSES
Finance expense		46,224		95,502
Other expense		23,042		30,205
TOTAL OTHER EXPENSES		69,266		125,707

INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST		7,789,853		3,645,426

PROVISION FOR INCOME TAXES		1,298,962		483,631

NET INCOME BEFORE MINORITY INTEREST		6,490,891		3,161,795

LESS MINORITY INTEREST		1,148,548		472,476

NET INCOME		5,342,343		2,689,319
FOREIGN CURRENCY TRANSLATION GAIN		463,092		206,778

OTHER COMPREHENSIVE INCOME	$	5,805,435	$	2,896,097

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES		21,434,942		19,234,942

BASIC AND DILUTED EARNING PER SHARE	$	0.25	$	0.14

The accompanying notes are an integral part of these statements.

F-4

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006
(Unaudited)

		2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,342,343			2,689,319
Adjustments to reconcile net income to cash
provided by operating activities:
Minority Interest		1,148,548			472,476
Depreciation		417,406			196,245
Amortization		23,686			21,078
Loss on disposal of equipment		4,064			-
Change in assets:
Accounts receivable		458,758			(993,426	)
Notes receivable		57,721			(58,077	)
Other receivables		(1,317,291	)		(1,392,712	)
Other receivables - shareholder		(146,149	)		(4,026	)
Inventories		(989,274	)		(1,263,393	)
Advances on inventory purchase		187,928			23,977
Change in liabilities:
Accounts payable		36,733			(380,096	)
Other payables and accrued liabilities		298,787			705,131
Customer deposits		1,239,099			205,291
Taxes payable		547,273			253,737
Net cash provided by operating activities		7,309,632			475,524

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to plant and equipment		(3,830,236	)		(148,267	)
Proceed from disposal of fixed assets		9,393			-
Additions to intangible assets		(46,213	)		(8,661	)
Advances on equipment purchase		(5,672	)		-
Net cash used in investing activities		(3,872,728	)		(156,928	)

CASH FLOWS FINANCING ACTIVITIES:
Restriced cash		(65,750	)		1,915,646
Proceeds from note payable		-			(1,915,646	)
Proceeds from short term loan		1,297,100			(92,693	)
Payments on short term loan		(2,511,400	)		-
Prceeds from employee loan		752,750
Payments on long term debt		(194,565	)		295,794
Dividends paid to minority shareholders		(476,597	)		-
Net cash (used in) provided by financing activities		(1,198,462	)		203,101

EFFECTS OF EXCHANGE RATE CHANGE IN CASH		41,654			13,617

INCREASE IN CASH		2,280,096			535,314

CASH, beginning of period		4,268,220			607,376

CASH, end of period	$	6,548,316		$	1,142,690

The accompanying notes are an integral part of these statements.

F-5

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

	Common stock							Retained earnings					Accumulated other
					Additional Paid-in			Statutory					comprehensive
	Shares		Par value		capital			reserves		Unrestricted			income		Totals
BALANCE, December 31, 2005	19,234,942	$	1,923	$	(1,923	)	$	681,383	$	(655,448	)	$	551,209	$	577,144

Net income										2,689,319					2,689,319
Distribution to Up-Wing shareholder										(1,625,765	)				(1,625,765	)
Adjustment to statutory reserve								644,847		(644,847	)				-
Foreign currency translation adjustments													206,778		206,778

BALANCE, June 30, 2006 (unaudited)	19,234,942	$	1,923	$	(1,923	)	$	1,326,230	$	(236,741	)	$	757,987	$	1,847,476

Acquisition of Shandog Missile					5,638,128										5,638,128
Proceeds from issuance of common stock	2,200,000		220		3,752,100										3,752,320
Net income										1,127,518					1,127,518
Adjustment to statutory reserve								873,350		(873,350	)				-
Foreign currency translation adjustments													360,398		360,398

BALANCE, December 31, 2006	21,434,942	$	2,143	$	9,388,305		$	2,199,580	$	17,427		$	1,118,385	$	12,725,840

Net income										5,342,343					5,342,343
Adjustment to statutory reserve								1,324,226		(1,324,226	)				-
Foreign currency translation adjustments													463,092		463,092

BALANCE, June 30, 2007 (unaudited)	21,434,942	$	2,143	$	9,388,305		$	3,523,806	$	4,035,544		$	1,581,477	$	18,531,275

The accompanying notes are an integral part of these statements.

F-6

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Note 1 – Organization background and principal activities

Principal Activities and Reorganization

GRC Holdings, Inc. (“GRC”) and its subsidiaries (the “Group”) are principally engaged in research, development, commercialization, manufacture and sale of human blood products to customers in the People’s Republic of China (the “PRC”). GRC was originally incorporated in 1992 under the laws of the State of Texas, as Shepherd Food Equipment, Inc. On November 20, 2000, Shepherd Food Equipment, Inc. changed its corporate name to Shepherd Food Equipment, Inc. Acquisition Corp., or Shepherd. Shepherd is the survivor of a May 28, 2003, merger between Shepherd and GRC Holdings, Inc. In the merger, the company adopted the Articles of Incorporation and By-Laws of GRC and changed its corporate name to GRC Holdings, Inc. Pursuant to a Board resolution, dated October 27, 2006, GRC, a Texas Corporation, converted to a Delaware Corporation and changed its name to China Biologic Products, Inc. (the “Company”). This Plan of Conversion became effective on January 10, 2007.

On July 18, 2006, the Company entered into a Share Exchange Agreement with Logic Express Ltd (“Logic Express”) and its stockholders. Upon the closing of the Share Exchange Agreement on July 19, 2006, Logic Express became a wholly-owned subsidiary of the Company and the former stockholders of Logic Express owned approximately 96.1% of the Company immediately prior to the private placement described below (the “Reverse Take-Over”). Consequently, the share exchange between the stockholders of Logic Express and the Company has been accounted for as a reverse acquisition of Logic Express with no adjustment to the historical basis of the assets and liabilities of Logic Express. The operations were consolidated as though the transaction occurred as of the beginning of the first accounting period presented in the accompanying consolidated financial statements.

Logic Express was incorporated on January 6, 2006 in the British Virgin Islands. Logic Express was established on April 17, 2006 for the purpose of acquiring a majority equity interest in Shandong Missile Biological Products Co., Ltd. (“Shandong Missile”) from Up-Wing Investment Limited (“Up-Wing”) an entity with identical stockholders. in preparation of its reverse merger with GRC and anticipated offering of securities. Logic Express and Up-Wing had identical stockholders at the date of transfer. The transfer of equity interests in Shandong Missile from Up-Wing to Logic Express (the “Transfer”) was accounted for as a reorganization under common control.

Up-Wing was incorporated on November 30, 1993 in Hong Kong. Up-Wing acquired an 82.76% equity interest in Shandong Missile, the operating company of the Group in two equity transactions as described below. Shandong Missile was established in the PRC on October 23, 2002 with a registered capital of approximately $9.7 million (or RMB80 million).

In accordance with the equity transfer agreement dated September 26, 2004 Up-Wing agreed to acquire 41% of registered capital (including the unpaid capital contribution) of Shandong Missile from the minority shareholder (i) for cash consideration of RMB8,000,000 and (ii) agreed to fund the minority shareholder’s unpaid capital amount of RMB26,400,000 to Shandong Missile. Up-Wing paid the RMB 8,000,000 on March 17, 2005 (the “March 2005 Acquisition”) and the unpaid

F-7

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

capital contribution amount of RMB26,400,000 on July 19, 2006. After completing the March 2005 Acquisition, Up-Wing held 11.94% of the paid-in capital and 41% of the voting rights of Shandong Missile.

On June 10, 2005, Up-Wing entered into a share transfer agreement with another shareholder to acquire an additional 49% of the registered capital of Shandong Missile for a consideration of RMB35,500,000. The acquisition became effective on September 2, 2005 upon approval by the Shandong Provincial Department of Foreign Trade and Economic Cooperation (the “September 2005 Acquisition”). As of December 31, 2006, Up-Wing owned an 82.76% interest in Shandong Missile.

The Company has accounted for the acquisition of the additional equity interest in Shandong Missile under the purchase method. The fair value of underlying net assets representing Up-Wing’s additional 82.76% of paid-in capital acquired in Shandong Missile exceeded Up-Wing’s purchase price, giving rise to negative goodwill. Such negative goodwill was allocated to reduce the purchase price allocated to certain long-lived assets. As a result of this acquisition, the Company held 82.76% of the registered capital of Shandong Missile and Shandong Missile became a subsidiary of the Company. The results of operations of Shandong Missile are consolidated in the financial statements of the Group from January 1, 2005.

On July 20, 2006, the Company fulfilled its commitment to fund a portion of the shortfall in registered capital of Shandong Missile by injecting additional capital of RMB26,400,000 (approximately $3,383,000) into Shandong Missile in the form of cash. On February 27, 2007, Shandong Missile changed its name to Shandong Taibang Biological products Co., Ltd.

The purchase price for the September 2005 Acquisition and July 2006 Acquisition represented the results of negotiations with the then stockholders, who were disadvantaged by the following conditions:

(1) Because the share capital was not yet fully paid-up at that moment, Shandong Missile had insufficient working capital and liquidity to support its long term obligation; and

(2) According to the Articles of Association, the RMB26,400,000 unpaid capital was to be contributed within six months from the formation of the joint venture by April 23, 2003. However, the then stockholder failed to fulfill the obligation. Pursuant to the PRC rules and regulations applicable to foreign invested enterprises, if the then stockholder failed to contribute the RMB26,400,000 by the specific date, their entire interest would be forfeited. Details of the fair value of the net assets of Shandong Missile consolidated on September 2, 2005 are as follows:

F-8

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

		September 2, 2005

Currents assets	$	14,009,255
Property, plant and equipment		5,210,970
Intangible assets		426,155
Total assets acquired		19,646,380

Curret liabilities		8,660,625
Long term liabilities		1,426,000
Total liabilities assumed		10,086,625

Total net assets		9,559,755
% acquired		82.76%
Net assets acquired	$	7,911,653

Concurrent with the consummation of the Share Exchange Agreement with Logic Express, the Company completed a private placement of shares of common stock to a group of investors resulting in the issuance by the Company of 2,200,000 shares of its common stock and warrants to purchase 1,070,000 shares of common stock at $1.895 per share. Further, in connection with the private placement, two of the Company’s controlling stockholders sold 2,080,000 shares of common stock at $1.895 per share to the same group of investors. A portion of the proceeds of the new issuance was used to pay for the outstanding capital contribution of RMB26,400,000 of Shandong Missile.

In connection with the Share Exchange Agreement, the Company, pursuant to a registration rights agreement entered into with the investors, agreed to file within 45 days of the closing date of the Share Exchange Agreement a registration statement registering for resale the shares issued to the investors in the private placement. The Company failed to file this registration statement within the time period prescribed by the registration rights agreement and recognized in general and administrative expenses an amount of $811,060 (RMB6,353,114) at December 31, 2006 for the full amount of liquidated damages.

In conjunction with this private placement, Ms. Li Lin Ling and Ms. Chan Siu Ling, the controlling stockholders and directors of the Company, placed an aggregate 4,280,000 shares of common stock in escrow, pursuant to a share escrow agreement dated July 19, 2006, which was amended on February 16, 2007, March 27, 2007 and April 2, 2007 (the “Escrow Agreement”), pursuant to which one half of the escrowed shares are to be released to the investors in the private placement on a pro rata basis if the audited consolidated financial statements of the Company prepared in accordance with US generally accepted accounting principles (GAAP) do not reflect at least after-tax net income of at least $4,819,000 or after-tax net income before minority interest of $5,823,000 for the fiscal year ended December 31, 2006; and if the audited consolidated financial statements of the Company prepared in accordance with US GAAP do not reflect at least an after-tax net income of $8,302,000 or after-tax net income before minority interests of $10,031,000 for the fiscal year ending December 31, 2007, the second half of the escrow shares will be distributed on a pro rata basis to the investors. Pursuant to the Escrow Agreement, (i) liquidated damages accrued according to the registration rights agreement; (ii) gain or loss on change in fair value of warrants; and (iii) stock-based compensation charge

F-9

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

arising from transferring of shares from stockholders to senior management, are not deemed to be an income or expense item in calculating the after-tax net income for the purpose of the Escrow Agreement. If such performance thresholds are met, the shares are to be returned to Ms Li Lin Ling and Ms Chan Siu Ling.

Management determined that the threshold for the year ended December 31, 2006 has been met.

Acquisition of plasma stations in Shandong Province

In the second half of 2006, Shandong Missile entered into an asset transfer agreement with the Shandong Provincial government to acquire certain assets of five plasma stations in Shandong Province. The total consideration of $2,472,846 for the acquisition was determined based on independent valuations performed by qualified valuation experts registered in the PRC was paid in 2006. These acquisitions are not considered business combinations under Regulation S-X Article 11.

The operating licenses of the plasma stations started on January 1, 2007. The net assets of the plasma stations are included in the Company’s consolidated financial statements. All sales from the plasma companies are intercompany sales and are eliminated in the Company’s consolidated financial statement.

Acquisition of plasma stations in Guangxi Province

In January 2007, Shandong Missile entered into letters of intent to acquire two plasma stations in Guangxi Province for 100% and 80% interest respectively. The total consideration of $741,104 for the acquisition was determined based on independent valuation performed by qualified valuation experts recognized in the PRC. The net assets of the plasma stations are included in the Company’s consolidated financial statement. No operation has occurred as of June 30, 2007. These acquisitions are not considered business combinations under Regulation S-X Article 11.

Establishment of own distribution company

In September 2006, Shandong Missile applied to establish a wholly owned subsidiary “Shandong Missile Medical Co., Ltd.” (“Shandong Medical”) with registered capital of $384,600 and the capital was fully paid on March 1, 2007. A distribution license of biological products, except for vaccine, was obtained from the Shandong Food and Drug Authority on February 7, 2007 for a license period of 5 years from the date of obtaining the license. The registration of Shandong Missile was ultimately approved by Shandong Provincial Department of Foreign Trade and Economic Cooperation on July 4, 2007 and Shandong Medical was formally registered on July 19, 2007. The scope of business is wholesale of biological products, except vaccine, with a license period of 25 years from the date of registration. As of June 30, 2007, Shandong Medical has not yet commenced operations.

Note 2 – Summary of significant accounting policies

The reporting entity

The consolidated financial statements of the Company reflect the activities of the parent and the following subsidiaries.

F-10

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Subsidiaries		Percentage of
		Ownership
Logic Express Ltd.	British Virgin Islands	100%
Shandong Missile Biologic Products., Ltd	The People's Republic of China	82.76%
Xia Jin Plasma Company	The People's Republic of China	82.76%
He Ze Plasma Company	The People's Republic of China	82.76%
Yang Gu Plasma Company	The People's Republic of China	82.76%
Zhang Qiu Plasma Company	The People's Republic of China	82.76%
Qi He Plasma Company	The People's Republic of China	82.76%
Huan Jiang Plasma Company	The People's Republic of China	82.76%
Fang Cheng Plasma Company	The People's Republic of China	66.21%
Shandong Medical Company	The People's Republic of China	82.76%

Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All material intercompany transactions and balances have been eliminated in the consolidation.

The Reverse Take-Over has been accounted for as a reverse acquisition of Logic Express with no adjustment to the historical basis of the assets and liabilities of Logic Express. The operations were consolidated as though the transaction occurred as of the beginning of the first accounting period presented in the accompanying consolidated financial statements.

Because Logic Express and Up-Wing were under common control, the Transfer has been accounted for as a business combination similar to a pooling-of-interests. Consequently, the consolidated financial statements of the Company include the accounts of Logic Express and Up-Wing at their historical amounts and the financial statements and results of Shandong Missile as though it had been acquired at the beginning of 2005.

Foreign currency translation

The reporting currency of the Company is the US dollar. The Company’s principal operating subsidiaries established in the PRC uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statements of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders’ equity and amounted to $1,581,477 and $1,118,385 as of June 30, 2007 and December 31, 2006, respectively. The consolidated balance sheet amounts with the exception of equity at June 30, 2007 and December 31, 2006 were translated at 7.60 RMB to $1.00 USD and 7.80 RMB, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to

F-11

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

consolidated statements of income and cash flows for the six months ended June 30, 2007 and 2006 were 7.71 RMB, 8.02 RMB, respectively.

Revenue recognition

Shipping and handling

Shipping and handling costs related to costs of goods sold are included in selling, general and administrative costs and totaled $52,812 and $11,145 for the six months ended June 30, 2006 and 2005, respectively.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. For example, management estimates potential losses on outstanding receivables. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates.

Financial instruments

Statement of Financial Accounting Standards No. 107 (SFAS 107), “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value of financial instruments held by the Company. SFAS 107 defines the fair value of financial instruments as the amount at which the instrument could be exchanged in a current transaction between willing parties. The Company considers the carrying amount of cash, accounts receivable, other receivables, accounts payable, accrued liabilities and loans to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with state-owned banks within PRC, Hong Kong and the United States. Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the United States. Balances at financial institutions or state owned banks within the PRC are not covered by insurance. Total cash (excluding restricted cash balances) in state-owned banks at June 30, 2007 and December 31, 2006 amounted to $6,614,066 and $4,268,220, respectively, of which no

F-12

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

The Company has restricted cash amounts to $65,750 and $0 as of June 30, 2007 and December 31, 2006, respectively.

Accounts receivable

The Company’s business operations are conducted in PRC. During the normal course of business, the Company extends unsecured credit to its customers. Accounts receivable, outstanding at June 30, 2007 and December 31, 2006 amounted to $3,407,481 and $3,775,387, respectively. Management reviews its accounts receivable on a regular basis to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable.

Trade accounts receivable at June 30, 2007 and December 31, 2006 consist of the following:

		2007		2006
Trade accounts receivable	$	4,567,808	$	4,906,596
Less: Allowance for doubtful accounts		(1,160,327)		(1,131,209)
Totals	$	3,407,481	$	3,775,387

The activity in the allowance for doubtful accounts for trade accounts receivable for the six months ended June 30, 2007 and year ended December 31, 2006 is as follows:

		June 30,		December 31,
		2007		2006
Beginning allowance for doubtful accounts	$	1,131,209	$	1,107,552
Additions charged to bad debt expense		29,118		37,514
Write-off charged against the allowance				(13,857)
Ending allowance for doubtful accounts	$	1,160,327	$	1,131,209

Inventories

Inventories are stated at the lower of cost or market using the weighted average basis and consist of the following at June 30, 2007 and December 31, 2006:

		2007		2006
Raw materials	$	1,673,883	$	1,740,333
Work-in-progress		4,803,318		3,261,175
Finished goods		800,553		1,115,853
Total	$	7,277,754	$	6,117,361

F-13

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

The Company reviews its inventory periodically for possible obsolete goods or to determine if any reserves are necessary for potential obsolescence. As of June 30, 2007 and December 31, 2006, the Company has determined that no reserves are necessary.

Property and equipment

Plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. Depreciation expense for the six months ended June 30, 2007 and 2006 amounted to $417,406 and $196,245 respectively.

Estimated useful lives of the assets are as follows:
	Estimated	Useful Life
Buildings	30	years
Machinery and equipment	10	years
Furniture, fixtures and office equipment	5-10	years

Construction in progress represents the costs incurred in connection with the construction of buildings or new additions to the Company’s plant facilities. No depreciation is provided for construction in progress until such time as the assets are completed and placed into service. Maintenance, repairs and minor renewals are charged directly to expenses as incurred. Major additions and betterment to property and equipment are capitalized.

The Company periodically evaluates the carrying value of long-lived assets in accordance with SFAS 144. When estimated cash flows generated by those assets are less than the carrying amounts of the asset, the Company recognizes an impairment loss. Based on its review, the Company believes that, as of July 30, 2007, there were no significant impairments of its long-lived assets.

Plant and equipment consist of the following at June 30, 2007 and December 31, 2006:

		2007		2006
Building and improvements	$	3,854,905	$	3,459,449
Production equipment		5,976,437		4,919,590
Furniture, fixtures and office equipment		947,772		120,228
		10,779,114		8,499,267
Accumulated depreciation		(1,690,874)		(1,172,878)
		9,088,240		7,326,389
Construction in progress		1,987,268		111,379
Totals	$	11,075,508	$	7,437,768

Interest expense of $22,936 and $52,930 was capitalized into construction in progress for the years ended June 30, 2007 and December 31, 2006, respectively.

F-14

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Intangible assets

Intangible assets are stated at cost (estimated fair value upon contribution or acquisition), less accumulated amortization and impairment. Amortization expense is recognized on the straight-line basis over the estimated useful lives of the assets as follows:

Intangible assets		Estimated useful lives
Land use right		50 years
Permits and licenses		5-10 years
Blood donor network		10 years

Given the environment in which the Group currently operates, it is reasonably possible that the estimated economic useful lives of these assets or the Group’s estimate that it will recover their carrying amounts from future operations could change in the future.

All land in the PRC is owned by the government and cannot be sold to any individual or company. However, the government grants the user a “land use right” (the Right) to use the land. The Company has the right to use various parcels of land that range from 50 years in length. The Company amortizes the cost of the land use rights over their useful life using the straight-line method.

Other intangible assets represent permits, licenses and Good Manufacturing Practice Certificates contributed in return for equity upon the establishment of Shandong Missile in 2002. Contributed rights include those necessary to manufacture and distribute human blood products in the PRC market as authorized by the relevant PRC authorities. The estimated useful life of the contributed rights is 5-10 years

Intangible assets of the Company are reviewed annually or more often if circumstances dictate, to determine whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of June 30, 2007, the Company expects these assets to be fully recoverable.

Total amortization expense for the years ended June 30, 2007 and 2006 amounted to $23,686 and $21,078 respectively.

Intangible assets consisted of the following:

F-15

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

		June 30, 2007		December 31, 2006

Land use rights	$	473,434	$	461,554
Permits and licenses		216,220		205,120
Blood donor network		145,102		137,793
Others		103,817		71,708
Totals		938,573		876,175
Accumulated amortization		(179,242)		(158,164)
Intangible assets, net	$	759,331	$	718,011

Revenues

The Group’s revenue is primarily derived from the manufacture and sale of human blood products. The Group’s revenue by significant types of product for the six months ended June 30, 2007 and 2006 is as follows:

		2007		2006
Human Albumin	$	12,097,301	$	7,298,022
Human Hepatitis B Immunoglobulin		721,703		446,209
Human Immunoglobulin for Intravenous
Injection		763,936		387,633
Human Rabies Immunoglobulin		2,417,397		729,704
Human Tetanus Immunoglobulin		437,517		188,792
Others		66,057		17,341
Totals	$	16,503,911	$	9,067,701

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs amounted to $221,635 and $180,634 for the six months ended June 30, 2007 and 2006, respectively.

Retirement and Other Post retirement Benefits

Contributions to retirement schemes (which are defined contribution plans) are charged to the statement of operations as and when the related employee service is provided.

Warranty Costs

The Group records a liability required for specific product quality assurance under warranty when sales are made. Based on the history of actual warranty claims, the Company has not recognized a liability for warranty claims for the years ended June 30, 2007 and December 31, 2006.

F-16

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Income taxes

The Company has adopted Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (SFAS 109). SFAS 109 requires the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consist of taxes currently due plus deferred taxes. Since the Company had no operations within the United States there is no provision for US taxes and there are no deferred tax amounts at June 30, 2007 and December 31, 2006.

The charge for taxation is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probably that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when they related to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

Recently issued accounting pronouncements

In July, 2006, the Financial Accounting Standard Board (“FASB”) issued FASB Interpretations No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. The adoption of FIN 48 did not have a material impact on the consolidation financial statements.

In September 2006, FASB issued SFAS No. 157, Fair Value Measurements . SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. Under SFAS No. 157, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of SFAS No. 157 to have a material impact on the consolidated financial statements.

F-17

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

In September 2006 the Securities and Exchange Commission (“SEC”) issued SAB 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements SAB 108 provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement. The SEC staff believes that registrants should quantify errors using both a balance sheet and an income statement approach and evaluate whether either approach results in quantifying a misstatement that, when all relevant quantitative and qualitative factors are considered, is material. SAB 108 is effective for the Company’s fiscal year ended December 31, 2006, with early application encouraged. The adoption of SAB 108 did not have a material impact on the consolidated financial statements.

In December 2006, FASB issued FSB EITF 00-19-2, Accounting for Registration Payment Arrangements , which specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognised and measured in accordance with FASB Statement No. 5, Accounting for Contingencies . The FSB EITF 00-19-2 is effective immediately for new and modified registration payment arrangements entered into after December 21, 2006, and beginning in the fiscal year ended December 31, 2007 for any such instruments entered into before that date. As the Company failed to file the registration statement within the time period prescribed by the registration rights agreement, the full amount of liquidated damages of US$811 (RMB6,330) was recognized in general and administrative expenses in the year ended December 31, 2006.

In February 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities—Including an amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective of SFAS 159 is to provide opportunities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply hedge accounting provisions. SFAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. SFAS 159 will be effective in the first quarter of fiscal 2009. The Company is evaluating the impact that this statement will have on its consolidated financial statements.

In June 2007, FASB issued FASB Staff Position No. EITF 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services Received for use in Future Research and Development Activities” (“FSP EITF 07-3”), which addresses whether nonrefundable advance payments for goods or services that used or rendered for research and development activities should be expensed when the advance payment is made or when the research and development activity has been performed. Management is currently evaluating the effect of this pronouncement on financial statements.

Note 3 - Supplemental disclosure of cash flow information

Income taxes paid for the periods ended June 30, 2007 and 2006, amounted to $743,113 and $509,209, respectively.

Interest paid (net of capitalized interest) the periods ended June 30, 2007 and 2006, amounted to $55,714 and $117,111 respectively.

F-18

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

Non cash financing activities including warrants granted to placement agent in 2006 which is valued at $728,456 at grant date.

Note 4 – Related party transactions

Related Party Transactions

The material related party transactions undertaken by the Company with related parties during the periods presented are as follows:

Amount Due from:	Purpose		June 30, 2007		Decmeber 31,2006
Shareholders (1)	Advances	$	223,059	$	-

Amount Due to:	Purpose		June 30, 2007		Decmeber 31,2006
Minority shareholder	Loan	$	693,156	$	675,761
of subsidiary (2)

(1) The Company’s shareholders advanced totaled of $223,059 as of June 30, 2007 as short term advance. The advance was unsecured, non-interest bearing and is expected to be repaid either in form of cash or services.

(2) Dividend of $675,761 was borrowed from its minority shareholder for operation purpose, the loan is borrowed at annual interest rate of 6%. This amount is expected to be repaid by the Company in form of cash.

Note 5 – Prepayments

Prepayments represent partial payments for deposits on raw material purchases and amounted to $541,031 and $713,194 as of June 30, 2007 and December 31, 2006, respectively.

Prepayments – non-current represent partial payments for deposits on plant and equipment purchases and amounted to $804,150 and $778,364 as of June 30, 2007 and December 31, 2006, respectively.

Note 6 – Debt

Other payables and accruals

Other payables and accruals at June 30, 2007 and December 31, 2006 consist of the following:

F-19

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

		2007		2006
		USD		USD

Other payables	$	892,991	$	426,517
Accruals for salaries and welfare		105,417		217,526
Accruals for RTO expenses		237,526		387,897
Accruals for late filling		811,060		811,060
Accruals for selling expenses		152,953		-
Others		25,624		31,973
Totals	$	2,225,571	$	1,874,973

Short term loans

Short term loans represent amounts due to various banks which are normally due within one year, and these loans can be renewed with the banks.

The Company’s short term bank loans as of June 30, 2007 and December 31, 2006 consisted of the following:

		June 30, 2007		December 31, 2006
Bank loans, secured by buildings and land use
rights (note (a))	$	1,315,000	$	1,282,000
Bank loans, unsecured		-		1,282,000
Total	$	1,315,000	$	2,564,000

(a) The short-term bank loans bear interest of 6.14% to 5.85% as of June 30, 2007 and December 31, 2006, respectively.

The loans are secured by buildings and land use rights with carrying values as follows:

		June 30, 2007		December 31, 2006
Buildings	$	1,311,254	$	1,250,174
Land use rights		294,105		287,045
Total	$	1,605,359	$	1,537,219

Employee loan

One of the Company’s subsidiaries, “Zhang Qiu Plasma Company” has employee loan of $763,138 as of June 30, 2007. The loan was borrowed in late May of 2007 at annual interest rate of 6%.

Other payable - land use rights

In July 2003, Shandong Missile obtained certain land use rights from the PRC municipal government. Shandong Missile is required to make payments totaling RMB138,848 per year to the local state-owned entity, for the 50 year life of the rights or until Shandong Biologic Institute

F-20

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

completes its privatization process. The Company recorded “land use rights” equal to “other payable – land use rights” totaling $294,105 and $287,045 as of June 30, 2007 and December 31, 2006 determined using present value of annual payments over 50 years.

Other Long term loans

Long term loans represent amounts due to the Department of Health. The loan was unsecured, interest free and had no fixed terms of repayment.

Note 7 - Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding and dilutive potential common shares outstanding during the period.

In accordance with SFAS No. 128 “Earnings Per Share”, basic net income per share available is computed by dividing net income by the number of shares outstanding as if the shares issued in the reverse merger as described in Note 1 had occurred at the beginning of the earliest period presented and such shares had been outstanding for all periods. There are no potentially dilutive shares as at June 30, 2007 and 2006.

		June 30, 2007		June 30, 2006
Net income for earnings per share	$	5,342,343	$	2,689,319

Weighted average shares used in basic
computation		21,434,942		19,234,942
Diluted effect of warrants		-		-
Weighted average shares used in diluted
computation		21,434,942		19,234,942

Basic and diluted earnings per share	$	0.25	$	0.14

Note 8 – Income taxes

The Company is governed by the Income Tax Law of PRC concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (the Income Tax Laws). Under the Income Tax Laws, foreign investment enterprises (FIE) generally are subject to an income tax at an effective rate of 33% (30% state income taxes plus 3% local income taxes) on income as reported in their statutory financial statements after appropriate tax adjustments unless the enterprise is located in specially designated regions of cities for which more favorable effective tax rates apply. Upon approval by the PRC tax authorities, FIE’s scheduled to operate for a period of 10 years or more and engaged in manufacturing and production may be exempt from income taxes for two years, commencing with their first profitable year of operations, after taking into account any losses brought forward from prior years, and thereafter with a 50% exemption for the next three years.

F-21

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

In 2002, the Company became a Sino-foreign joint venture. In 2003, the Company was granted by the state government for benefit of income tax exemption in first 2 years from January 2003 to December 2004 and 50% exemption for the third to fifth years from January 2005 to December 2007.

Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law will replace the existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”).

The key changes are:

a.	The new standard EIT rate of 25% will replace the 33% rate currently applicable to both DES and FIEs, except for High Tech companies who pays a reduced rate of 15%; and

b.	Companies established before March 16, 2007 will continue to enjoy tax holiday treatment approved by local government for a grace period of the next 5 years or until the tax holiday term is completed, whichever is sooner. These companies will pay the standard tax rate as defined in point “a” above during the grace period.

The Company’s subsidiary, Shandong Missile, was established before March 16, 2007 and therefore is qualified to continue enjoying the reduced tax rate as described above. Since the detailed guidelines of the new tax law is not publicized yet, the Company cannot determined what the new tax rate will be applicable to the Company after the end of their respective tax holiday terms.

The Company was granted by the local government for benefit of income tax exemption for the fiscal year ended December 31, 2003 through 2006 for making purchases on local equipment.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the period ended June 30, 2007 and 2006:

	2006		2005
U.S. Statutory rates	35.0	%	35.0	%
Foreign income	(35.0	)	(35.0	)
China taxe rates	33.0		33.0
China income tax exemption	(18.0	)	(18.0	)
Effective income tax rates	15.0	%	15.0	%

The estimated tax savings due to the tax exemption for the years ending June 30, 2007 and 2006 amounted to $1,271,689 and $719,360, respectively.

Value Added Tax

Enterprises or individuals who sell products, engage in repair and maintenance or import and export goods in the PRC are subject to a value added tax in accordance with Chinese laws. The value added tax rate applicable to the Company is 6% of the gross sales price. No credit is available for VAT paid on the purchases.

F-22

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

VAT on sales amounted to $1,057,596 and $540,352 for the six months ended June 30, 2007 and 2006 respectively. Sales are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not impacted by the income tax holiday.

Taxes payable consisted of the followings:
		June 30, 2007		December 31, 2006
VAT tax payable	$	184,506	$	212,688
Income tax payable		500,339		(83,872	)
Others misc tax payable		11,741		9,387
	$	696,586	$	138,203

Note 9 – Dividends

Before April 2006, prior to Logic Express acquiring a majority equity interest in Shandong Missile from Up-Wing. Up-Wing made a distribution amounted to $ 2,909,516.

Note 10 – Commitments and Contingent liabilities

Capital commitments

Capital commitments outstanding as of June 30, 2007 and December 31, 2006 not provided for in the financial statements were as follows:

		2007		2006
Property and equipment , net yet received		$ 2,474,655		$ 158,000

Contingencies

In the normal course of business, the Group is exposed to claims related to the manufacture and use of the Group’s products, but currently the Group is not aware of any such claim.

Legal proceedings

In 2006, Missile Engineering, which is controlled by Mr. Du Zu Ying, applied for arbitration in China International Economic and Trade Arbitration Commission (“CIETAC”) to challenge the

F-23

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

effectiveness of the transfer of the shares he formerly owned in Shandong Missile. The arbitration was dismissed in April 2006. We believe that all necessary approvals and documentation were obtained at the time of transfer and have initiated legal action in China intending to restrain Mr. Du from seeking to resolve his differences with us by means other than arbitration, the agreed-upon method of conflict resolution at the time of the transfer.

Note 11 – Stockholders’ equity

GRC implemented a reverse stock split at 1 for 20 reverse split to reduce the number of issued and outstanding shares of common stock to 750,227 immediately before issuing 18,484,715 shares of common stock to the stockholders of Logic Express. The reverse stock split did not change the par value ($0.0001) of the common stock.

On July 19, 2006, the Company entered into a securities purchase agreement with accredited investors and completed the sale of 2,200,000 of the Company’s common stock and common stock purchase warrants.

In connection with the offering, the Company paid a placement fee of 10% of the proceeds in cash, together with other expenses in the amount of 3% of the proceeds, in cash. In addition,

F-24

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

the placement agent was issued warrants to purchase 66,154 shares of common stock on the same terms and conditions as the investors.

Warrant

Concurrent with the private placement, GRC issued 1,070,000 units of warrant with exercise price at $2.8425 per share (“Investor Warrant”) to investors. The warrants issued to the new investors have a 5-year term and shall be callable by the Company if the shares trade at 160% of the exercise price for 15 consecutive trading days after the registration statement has been effective for 45 days.

On July 28, 2006, GRC also issued 214,000 warrants with exercise price at $2.8425 (“Placement Agent Warrant”) to Lane Capital Markets, LLC, the exclusive placement agent and financial advisor, for no purchase price. These warrants have a 5-year term and are non-callable.

The warrants are accounted for as equity under SFAS 133 and EITF 00-19

				Weighted	Average
	Warrants	Warrants		Average Exercise	Remaining
	Outsanding	Exercisable		Price	Contractual Life
Outstanding, December
31, 2006	1,284,000	1,284,000	$	2.84	4.46
Granted
Forfeited	-	-		-	-
Exercised	-	-		-	-

Outstanding, June 30,
2007	1,284,000	1,284,000	$	2.84	4.03

Note 12 – Statutory reserves

In accordance with the “Law of the PRC on Joint Ventures Using Chinese and Foreign Investment” and the Company’s Articles of Association, appropriations from net profit should be made to the Reserve Fund, the Staff and Workers’ Bonus and Welfare Fund and the Enterprise Expansion Fund, after offsetting accumulated losses from prior years, and before profit distributions to the investors. The percentages to be appropriated to the Reserve Fund, the Staff and Workers’ Bonus and Welfare Fund and the Enterprise Expansion Fund are determined by the Board of Directors of the Company.

Reserve fund

For the six months ended June 30, 2007 and 2006, the Company transferred US$662,113 and US$322,424 respectively. Amounts represent 10% of the net income determined in accordance with PRC accounting rules and regulations. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing stockholders in proportion to their shareholding or by increasing the par value of the shares

F-25

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

Enterprise expansion fund

The enterprise fund may be used to acquire fixed assets or to increase the working capital to expend on production and operation of the business. For the six months ended June 30, 2007 and 2006, the Company transferred US$662,113 and US$322,424, respectively. Amounts represent 10% of the net income determined in accordance with PRC accounting rules and regulations.

Note 13 – Retirement benefit plans

Regulations in PRC require the Company to contribute to a defined contribution retirement plan for the benefit of all permanent employees. All permanent employees are entitled to an annual pension equal to their basic salaries at retirement. The PRC government is responsible for the benefit liability to these retired employees. The Company is required to make contributions to the state retirement plan at 20% of the monthly basic salaries of the current employees. For the six months ended June 30, 2007 and 2006, the Company made pension contributions in the amount of $ 56,530 and $54,677 respectively.

Note 14 – Current vulnerability due to certain concentrations

The Company’s operations are carried out in the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC economy.

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

The Company’s major product, human albumin, accounted for 71% and 76% of total revenues for six months ended June 30, 2007 and 2006, respectively. If the market demands for human albumin cannot be sustained in the future or upon decrease in price of human albumin, it would adversely affect the Group’s operating results.

All of the Group’s customers are located in the PRC. As of December 31, 2006 and 2005, the Group had no significant concentration of credit risk, except for the amounts due from related parties. There were no customers that individually comprised 10% or more of revenue in the periods presented.

There were no customers that individually comprised 10% or more of the gross trade accounts receivable at June 30, 2007 and December 31, 2006 or 10% or more of revenue in the periods presented. The Group performs ongoing credit evaluations of its customers’ financial condition

F-26

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2007 AND 2006

and, generally, requires no collateral from its customers.

F-27

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

F-28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of
China Biologic Products, Inc. and subsidiaries

We have audited the accompanying consolidated balance sheets of China Biologic Products, Inc. and subsidiaries as of December 31, 2006 and 2005, and the related consolidated statements of income and other comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2006. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of China Biologic Products, Inc. and subsidiaries as of December 31, 2006 and 2005, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2006, in conformity with accounting principles generally accepted in the United States of America.

/s/ Moore Stephens Wurth Frazer and Torbet, LLP

Walnut, California
September 4, 2007

F-29

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2005

A S S E T S
		2006		2005

CURRENT ASSETS:
Cash	$	4,268,220	$	607,376
Restricted cash		-		1,860,000
Accounts receivable, net of allowance for doubtful accounts of $1,131,209
and $1,107,552 as of December 31, 2006 and December 31, 2005, respectively		3,775,387		2,200,138
Notes receivable		81,407		19,840
Other receivables		584,931		1,067,116
Inventories		6,117,361		3,564,482
Advances on inventory purchases		713,194		381,072
Total current assets		15,540,500		9,700,024

PLANT AND EQUIPMENT, net		7,437,768		5,367,691

OTHER ASSETS:
Advances on equipment purchases		778,364		175,577
Intangible assets		718,011		438,237
Total other assets		1,496,375		613,814

Total assets	$	24,474,643	$	15,681,529

L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y

CURRENT LIABILITIES:
Accounts payable	$	2,412,440	$	849,436
Short term loans - bank		2,564,000		3,720,000
Short term loan - shareholder		675,761		1,872,087
Note payable		-		1,860,000
Other payables and accrued liabilities		1,874,973		1,314,726
Other payable - land use right		287,045		278,839
Dividend payable		476,597		1,495,605
Customer deposits		370,297		353,831
Taxes payable		138,203		364,263
Total current liabilities		8,799,316		12,108,787

Long term liabilities		641,000		1,302,001

Total liabilities		9,440,316		13,410,788

MINORITY INTEREST		2,308,487		1,693,597

SHAREHOLDERS' EQUITY:
Common stock, $0.0001 par value, 100,000,000 shares authorized, 21,434,942 and
19,234,942 shares issued and outstanding at December 31, 2006 and 2005, respectively		2,143		1,923
Paid-in-capital		9,388,305		(1,923	)
Retained earnings		17,427		(655,448	)
Statutory reserves		2,199,580		681,383
Accumulated other comprehensive income		1,118,385		551,209
Total shareholders' equity		12,725,840		577,144

Total liabilities and shareholders' equity	$	24,474,643	$	15,681,529

See report of independent registered public accounting firm.
The accompanying notes are an integral part of these statements.

F-30

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

		2006		2005

REVENUES	$	22,230,570	$	11,558,708
COST OF SALES		9,601,605		6,205,685
GROSS PROFIT		12,628,965		5,353,023
OPERATING EXPENSES
Selling expenses		1,783,302		824,153
General and administrative expenses		4,065,903		1,638,227
Research and development expenses		594,750		362,424
TOTAL OPERATING EXPENSES		6,443,955		2,824,804
INCOME FROM OPERATIONS		6,185,010		2,528,219
OTHER EXPENSES
Finance expense		185,578		103,505
Other expense (income)		128,259		(72,886	)
TOTAL OTHER EXPENSES		313,837		30,619
INCOME BEFORE PROVISION FOR INCOME TAXES
AND MINORITY INTEREST		5,871,173		2,497,600

PROVISION FOR INCOME TAXES		750,095		405,101

NET INCOME BEFORE MINORITY INTEREST		5,121,078		2,092,499

LESS MINORITY INTEREST		1,304,241		782,813

NET INCOME		3,816,837		1,309,686

FOREIGN CURRENCY TRANSLATION GAIN		567,176		551,209

OTHER COMPREHENSIVE INCOME	$	4,384,013	$	1,860,895

BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF SHARES		21,434,942		19,234,942

BASIC AND DILUTED EARNINGS PER SHARE	$	0.18	$	0.07

See report of independent registered public accounting firm.
The accompanying notes are an integral part of these statements.

F-31

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

	Common stock							Retained earnings					Accumulated other
					Additional Paid-in			Statutory					comprehensive
	Shares		Par value		capital			reserves		Unrestricted			income		Totals

BALANCE, December 31, 2004	19,234,942	$	1,923	$	(1,923	)	$	169,899	$	(169,899	)	$	-	$	-

Foreign currency translation adjustments													551,209		551,209
Net income										1,309,686					1,309,686
Distribution to Up-Wing Shareholder										(1,283,751	)				(1,283,751	)
Adjustment to statutory reserve								511,484		(511,484	)				-

BALANCE, December 31, 2005	19,234,942	$	1,923		(1,923	)	$	681,383	$	(655,448	)	$	551,209	$	577,144

Acquisition of Shandang Missile					5,638,128										5,638,128
Proceeds from issuance of common stock	2,200,000		220		3,752,100										3,752,320
Net income										3,816,837					3,816,837
Distribution to Up-Wing Shareholder										(1,625,765	)				(1,625,765	)
Adjustment to statutory reserve								1,518,197		(1,518,197	)				-
Foreign currency translation adjustments													567,176		567,176

BALANCE, December 31, 2006	21,434,942	$	2,143	$	9,388,305		$	2,199,580	$	17,427		$	1,118,385	$	12,725,840

See report of independent registered public accounting firm.
The accompanying notes are an integral part of these statements.

F-32

CHINA BIOLOGIC PRODUCTS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005

		2006			2005

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	3,816,837		$	1,309,686
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Minority Interest		1,304,241			782,813
Depreciation		404,003			351,584
Amortization		42,479			21,978
Loss on disposal of equipment		-			18,082
Allowance for doubtful accounts		23,172			430,489
Change in assets:
Accounts receivable		(1,483,514	)		(53,748	)
Notes receivable		(59,646	)		258,643
Other receivables		(75,750	)		(336,530	)
Other receivables - shareholder		-			297,473
Inventories		(2,382,252	)		(1,088,322	)
Advances on inventory purchase		(283,586	)		(316,784	)
Change in liabilities:
Accounts payable		1,502,760			122,336
Other payable - related party		-			(2,974,228	)
Other payables and accrued liabilities		515,245			705,131
Customer deposits		4,389			205,291
Taxes payable		(233,507	)		253,737
Net cash provided by (used in) operating activities		3,094,871			(12,369	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Payment to original shareholders		-			(782,208	)
Additions to plant and equipment		(2,648,482	)		(387,929	)
Additions to intangible assets		(262,629	)		(215,620	)
Advances on equuipment purchase		(605,854	)		(110,010	)
Net cash used in investing activities		(3,516,965	)		(1,495,767	)

CASH FLOWS FINANCING ACTIVITIES:
Restriced cash		1,860,000			(1,833,000	)
Proceeds from stock issuance		3,752,100			-
Proceeds from note payable		-			1,833,000
Payments on notes payable		(1,883,550	)		-
Proceeds from short term loan		2,511,400			3,666,600
Payments on short term loan		(1,541,034	)		(1,761,600	)
Payments on long term debt		(647,441	)		(89,499	)
Dividends paid to minority shareholders		-			(339,194	)
Net cash provided by financing activities		4,051,475			1,476,307

EFFECTS OF EXCHANGE RATE CHANGE IN CASH		31,463			96,083

INCREASE IN CASH		3,660,844			64,254

CASH, beginning of year		607,376			543,122

CASH, end of year	$	4,268,220		$	607,376

See report of independent registered public accounting firm.
The accompanying notes are an integral part of these statements.

F-33

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Note 1 – Organization background and principal activities Principal Activities and Reorganization

Logic Express was incorporated on January 6, 2006 in the British Virgin Islands. Logic Express was established on April 17, 2006 for the purpose of acquiring a majority equity interest in Shandong Missile Biological Products Co., Ltd. (“Shandong Missile”) from Up-Wing Investment Limited (“Up-wing”), an entity with identical stockholders in preparation of its reverse merger with GRC and anticipated offering of securities. Logic Express and Up-Wing had identical stockholders at the date of transfer. The transfer of equity interests in Shandong Missile from Up-Wing to Logic Express (the “Transfer”) was accounted for as reorganization under common control.

Up-Wing Investment Limited was incorporated on November 30, 1993 in Hong Kong. Up-Wing acquired an 82.76% equity interest in Shandong Missile, the operating company of the Group in two equity transactions as described below. Shandong Missile was established in the PRC on October 23, 2002 with a registered capital of approximately $9.7 million (or RMB80 million). In accordance with the equity transfer agreement dated September 26, 2004 Up-Wing agreed to acquire 41% of registered capital (including the unpaid capital contribution) of Shandong Missile from the minority shareholder (i) for cash consideration of RMB8,000,000 and (ii) agreed to fund the minority shareholder’s unpaid capital amount of RMB26,400,000 to Shandong Missile. Up-Wing paid the RMB 8,000,000 on March 17, 2005 (the “March 2005 Acquisition”) and the unpaid capital contribution amount of RMB26,400,000 on July 19, 2006. After completing the March 2005 Acquisition, Up-Wing held 11.94% of the paid-in capital and 41% of the voting rights of Shandong Missile.

F-34

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

On June 10, 2005, Up-Wing entered into a share transfer agreement with another shareholder to acquire an additional 49% of the registered capital of Shandong Missile for a consideration of RMB35,500,000. The acquisition became effective on September 2, 2005 upon the approval by the Shandong Provincial Department of Foreign Trade and Economic Cooperation (the “September 2005 Acquisition”). As of December 31, 2006, Up-Wing owned an 82.76% interest in Shandong Missile.

In connection with the private placement, the Company, pursuant to a registration rights agreement entered into with the investors, agreed to file within 45 days of the closing date of the Share Exchange Agreement a registration statement registering for resale the shares issued to the investors in the private placement. The Company failed to file this registration statement within the time period prescribed by the registration rights agreement and recognized in general and administrative expenses an amount of $811,060 (RMB6,353,114) at December 31, 2006 for the full amount of liquidated damages.

In conjunction with this private placement, Ms. Li Lin Ling and Ms. Chan Siu Ling, the controlling stockholders and directors of the Company, placed an aggregate 4,280,000 shares of common stock in escrow, pursuant to a share escrow agreement dated July 19, 2006, (the “Escrow Agreement”) as amended, pursuant to which one half of the escrowed shares are to be released to the investors in the private placement on a pro rata basis if the audited consolidated financial statements of the Company prepared in accordance with US generally accepted accounting principles (GAAP) do not reflect at least after-tax net income of at least $4,819,000 or after-tax net income before minority interest of $5,823,000 for the fiscal year ended December 31, 2006; and if the audited consolidated financial statements of the Company prepared in accordance with US GAAP do not reflect at least an after-tax net income of $8,302,000 or after-tax net income before minority interests of $10,031,000 for the fiscal year ending December 31, 2007,

F-35

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

the second half of the escrow shares will be distributed on a pro rata basis to the investors. Pursuant to the Escrow Agreement, (i) liquidated damages accrued according to the registration rights agreement; (ii) gain or loss on change in fair value of warrants; and (iii) stock-based compensation charge arising from transferring of shares from stockholders to senior management, are not deemed to be an income or expense item in calculating the after-tax net income for the purpose of the Escrow Agreement. If such performance thresholds are met, the shares are to be returned to Ms Li Lin Ling and Ms Chan Siu Ling.

Management determined that the threshold for the year ended December 31, 2006 has been met.

Acquisition of plasma stations in Shandong Province

In the second half of 2006, Shandong Missile entered into an asset transfer agreement with Shandong Provincial government to acquire certain assets of five plasma stations in Shandong Province. The purchase was accounted for under SFAS. 141. The total consideration of $2,472,846 for the acquisition was paid in 2006 and was on based on independent valuations performed by qualified valuation experts registered in the PRC. (These acquisitions are not considered business combinations under Regulation S-X Article 11.)

The operating licenses of the plasma stations started on January 1, 2007, no operations occurred in 2006. The net assets of the plasma stations are included in the Company’s consolidated financial statement.

Note 2 – Summary of significant accounting policies

The reporting entity

The Company’s consolidated financial statements of reflect the activities of the parent and the following subsidiaries.

Subsidiaries		Percentage of
		Ownership
Logic Express Ltd.	British Virgin Islands	100%
Shandong Missile Biologic Products., Ltd	The People's Republic of China	82.76%
Xia Jin Plasma Company	The People's Republic of China	82.76%
He Ze Plasma Company	The People's Republic of China	82.76%
Yang Gu Plasma Company	The People's Republic of China	82.76%
Zhang Qiu Plasma Company	The People's Republic of China	82.76%
Qi He Plasma Company	The People's Republic of China	82.76%

Basis of presentation

F-36

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Because Logic Express and Up-Wing were under common control, the Transfer has been accounted for as a business combination similar to a pooling-of-interests. Consequently, the consolidated financial statements of the Company include the accounts of Logic Express and Up-Wing at their historical amounts. and the financial statements and results of Shandong Missile as though it had been acquired at the beginning of 2005.

Foreign currency translation

The reporting currency of the Company is the US dollar. The Company’s principal operating subsidiaries established in the PRC uses their local currency, Renminbi (RMB), as their functional currency. Results of operations and cash flows are translated at average exchange rates during the period, and assets and liabilities are translated at the unified exchange rate as quoted by the People’s Bank of China at the end of the period. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statement of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statement of shareholders’ equity and amounted to $1,118,384 and $551,209 as of December 31, 2006 and 2005, respectively. The balance sheet amounts with the exception of equity at December 31, 2006 and 2005 were translated at 7.80 RMB to $1.00 USD and 8.06 RMB, respectively. The equity accounts were stated at their historical rate. The average translation rates applied to the consolidated statements of income and cash flows for the years ended December 31, 2006 and 2005 were 7.96 RMB and 8.18 RMB, respectively.

Revenue recognition

Shipping and handling costs related to costs of goods sold are included in selling, general and administrative costs and totaled $91,831 and $9,734 for the year ended December 31, 2006 and 2005, respectively.

Use of estimates

The preparation of financial statements in conformity with generally accepted accounting

F-37

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

principles of the United States of America requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. For example, management estimates potential losses on outstanding receivables. Management believes that the estimates utilized in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates.

Financial instruments

Cash and concentration of risk

Cash includes cash on hand and demand deposits in accounts maintained with state-owned banks within PRC, Hong Kong and the United States of America. Certain financial instruments, which subject the Company to concentration of credit risk, consist of cash. The Company maintains cash balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for the banks located in the Unites States. Balances at financial institutions or state owned banks within the PRC are not covered by insurance. Total cash (excluding restricted cash balances) in state-owned banks at December 31, 2006 and 2005 amounted to $4,268,220 and $607,376, respectively, of which no deposits are covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Restricted cash

The Company through its bank agreements was required to keep certain amounts on deposit that are subject to withdrawal restrictions; these amounts are $0 and $1,860,000 as of December 31, 2006 and 2005, respectively.

Accounts receivable

The Company’s business operations are conducted in PRC. During the normal course of business, the Company extends unsecured credit to its customers. Accounts receivable, outstanding at December 31, 2006 and 2005 amounted to $4,906,596 and $3,307,689, respectively. Management reviews its accounts receivable on a regular basis to determine if the allowance for doubtful accounts is adequate. An estimate for doubtful accounts is made when collection of the full amount is no longer probable.

F-38

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Trade accounts receivable at December 31, 2006 and 2005 consist of the following:

		December 31,			December 31,
		2006			2005
Trade accounts receivable	$	4,906,596		$	3,307,690
Less: Allowance for doubtful accounts		(1,131,209	)		(1,107,552	)
Totals	$	3,775,387		$	2,200,138

The activity in the allowance for doubtful accounts for trade accounts receivable for the periods ended December 31, 2006 and 2005 is as follows:

		December 31,			December 31,
		2006			2005
Beginning allowance for doubtful accounts	$	1,107,552		$	691,382
Additions charged to bad debt expense		37,514			416,170
Write-off charged against the allowance		(13,857	)		-
Ending allowance for doubtful accounts	$	1,131,209		$	1,107,552

Inventories

Inventories are stated at the lower of cost or market using the weighted average basis and consist of the following at December 31, 2006 and 2005:

		December 31,		December 31,
		2006		2005
Raw materials	$	1,740,333	$	1,181,126
Work in progress		3,261,175		1,951,484
Finished goods		1,115,853		431,872
Totals	$	6,117,361	$	3,564,482

The Company reviews its inventory periodically for possible obsolete goods or to determine if any reserves are necessary for potential obsolescence. As of December 31, 2006 and 2005, the Company has determined that no reserves are necessary.

Property and equipment

Plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets with 5% residual value. Depreciation expense for the years ended December 31, 2006 and 2005 amounted to $404,003 and $351,584 respectively.

F-39

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Estimated useful lives of the assets are as follows:

	Estimated	Useful Life
Buildings	30	years
Machinery and equipment	10	years
Furniture, fixtures and office equipment	5-10	years

The Company periodically evaluates the carrying value of long-lived assets in accordance with SFAS 144. When estimated cash flows generated by those assets are less than the carrying amounts of the asset, the Company recognizes an impairment loss. Based on its review, the Company believes that, as of December 31, 2006, there were no significant impairments of its long-lived assets.

Plant and equipment consist of the following at December 31, 2006 and 2005:

		December 31,			December 31,
		2006			2005
Building and improvements	$	3,459,449		$	2,319,806
Production equipment		4,919,590			2,794,262
Furniture, fixtures and office equipment		120,228			98,153
		8,499,267			5,212,221
Accumulated depreciation		(1,172,878	)		(760,413	)
		7,326,389			4,451,808
Construction in progress		111,379			915,883
Totals	$	7,437,768		$	5,367,691

Interest expense of $52,930 and $42,951 was capitalized into construction in progress for the years ended December 31, 2006 and 2005, respectively.

Intangible assets

F-40

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Intangible assets		Estimated useful lives
Land use right		50 years
Patent		10 years
Permits and licenses		5-10 years
Blood donor network		10 years

All land in PRC is owned by the government and cannot be sold to any individual or company. However, the government grants the user a “land use right” to use the land. The Company has the right to use various parcels of land that range from 50 years in length. The Company amortizes the cost of the land use rights over their useful life using the straight-line method.

Intangible assets of the Company are reviewed annually or more often if circumstances dictate, to determine whether their carrying value has become impaired. The Company considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations. The Company also re-evaluates the periods of amortization to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of December 31, 2006, the Company expects these assets to be fully recoverable.

Total amortization expense for the years ended December 31, 2006 and 2005 amounted to $42,479 and $21,978 respectively.

Intangible assets consisted of the following at December 31:

		2006			2005

Land use rights	$	461,554		$	280,703
Patents		-			12,791
Permits and licenses		205,120			198,400
Blood donor network		137,793			-
Others		71,708			57,378
Totals		876,175			549,272
Accumulated amortization		(158,164	)		(111,035	)
Intangible assets, net	$	718,011		$	438,237

F-41

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Revenues

The Group’s revenue is primarily derived from the manufacture and sale of human blood products. The Group’s revenue by significant types of product for the periods ended December 31, 2006 and 2005 is as follows:

	2006	2005
	$	$

Human Albumin	16,831,948	9,778,607
Human Hepatitis B Immunoglobulin	939,456	846,505
Human Immunoglobulin for Intravenous Injection	966,028	646,746
Human Rabies Immunoglobulin	2,720,207	194,219
Human Tetanus Immunoglobulin	734,356	20,841
Others	38,575	71,790
Totals	22,230,570	11,558,708

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs amounted to $594,750 and $362,424 for the years ended December 31, 2006 and 2005, respectively.

Sales and Marketing Costs

Sales and marketing costs consist primarily of commission fees, advertising and promotion expenses. Advertising costs are expensed as incurred and amounted to $156,561 and $0 for the years ended December 31, 2006 and 2005, respectively.

Retirement and Other Post retirement Benefits

Contributions to retirement schemes (which are defined contribution plans) are charged to the statement of operations as and when the related employee service is provided.

Warranty Costs

The Group records a liability required for specific product quality assurance under warranty when sales are made. Based on the history of actual warranty claims, the Group has not recognized a liability for warranty claims for the years ended December 31, 2006 and 2005.

Government Grants

For the years ended December 31, 2006 and 2005, Shandong Missile received non-refundable grants of $62,086 and $82,685, respectively, from the PRC municipal government as the operating company is operating in the high and new technology business sector. The grant can be used for enterprise development and technology innovation purposes. This government grant is recognized in the statement of operations of the Group as other income when the grant is received.

F-42

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Income taxes

Recently issued accounting pronouncements

In July, 2006, the Financial Accounting Standard Board (“FASB”) issued FASB Interpretations No. 48, Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions taken or expected to be taken in a return. FIN 48 provides guidance on the measurement, recognition, classification and disclosure of tax positions, along with accounting for the related interest and penalties. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness.The adoption of FIN 48 did not have a material impact on the consolidation financial statements.

F-43

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

early adoption permitted. The Company does not expect the adoption of SFAS No. 157 to have a material impact on the consolidated financial statements.

In December 2006, FASB issued FSB EITF 00-19-2, Accounting for Registration Payment Arrangements , which specifies that the contingent obligation to make future payments or otherwise transfer consideration under a registration payment arrangement should be separately recognised and measured in accordance with FASB Statement No. 5, Accounting for Contingencies . The FSB EITF 00-19-2 is effective immediately for new and modified registration payment arrangements entered into after December 21, 2006, and beginning in the fiscal year ended December 31, 2007 for any such instruments entered into before that date. As the Company failed to file the registration statement within the time period prescribed by the registration rights agreement, the full amount of liquidated damages of $811,000 (RMB6,330,000) was recognized in general and administrative expenses in the year ended December 31, 2006.

F-44

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Note 3 - Supplemental disclosure of cash flow information

Income taxes paid for the years ended December 31, 2006 and 2005, amounted to $1,068,466 and $175,184, respectively.

Interest paid (net of capitalized interest) for the years ended December 31, 2006 and 2005 amounted to $223,763 and $131,194 respectively.

Non cash financing activities including warrants granted to placement agent in 2006 which is valued at $728,456 at grant date.

Note 4 – Related party transactions

Related Party Transactions

The material related party transactions undertaken by the Company with related parties during the periods presented are as follows:

Amount Due to:	Purpose		2006		2005
Shareholders (1)	Acqusition of subsidiary	$	-	$	1,872,087
Minority shareholder
of subsidiary (2)	Loan	$	675,761	$	-

(1) The Company’s investment in Shandong Missile was financed by an advance from shareholders. The advance was unsecured, interest free and is paid for using dividend collected from subsidiary. This amount is repaid in 2006.

(2) Dividend of $675,761 was borrowed from its minority shareholder at an annual interest rate of 6% for operational purposes. This amount is expected to be repaid in form of cash.

Note 5 – Prepayments

Prepayments represent partial payments for deposits on raw material purchases and amounted to $713,194 and $381,072 as of December 31, 2006 and 2005, respectively.

Prepayments – non-current represent partial payments for deposits on plant and equipment purchases and amounted to $778,364 and $175,577 as of December 31, 2006 and 2005, respectively.

Note 6 – Debt

Other payables and accruals

Other payables and accruals at December 31, 2006 and 2005 consist of the following:

F-45

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

		2006		2005
Other payables	$	426,517	$	1,198,942
Accruals for salaries and welfare		217,526		63,732
Accruals for RTO expenses		387,897		-
Accruals for late filling		811,060		-
Others		31,973		52,052
	$	1,874,973	$	1,314,726

Short term loans

Short term loans represent amounts due to various banks which are normally due within one year, and these loans can be renewed with the banks.

The Company’s short term bank loans as of December 31 consisted of the following:

	2006		2005

Bank loans, secured by buildings and land use rights
(note (a))	$	1,282,000	$	1,860,000
Bank loans, secured by a guarantee from an
unrelated financial institution (note (b))		-		1,860,000
Bank loans, unsecured		1,282,000		-
Totals	$	2,564,000	$	3,720,000

(a)	The short-term bank loans bear interest of 6.14% to 5.85% as of December 31, 2006 and 2005, respectively.

(b)	The Company paid a fee of RMB180,000 for the guarantee granted by an unrelated financial institution for the year ended December 31, 2005.

The loans are secured by buildings and land use rights with carrying values as follows:

	2006		2005

Buildings	$	1,311,254	$	1,250,174
Land use rights		287,045		277,641
	$	1,598,299	$	1,527,815

Other payable - land use rights

F-46

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

payable – land use rights” totaling $273,912 determined using present value of annual payments over 50 years.

Other Long term liability

Long term loan represent amounts due to the Department of Health. The loan was unsecured, interest free and had no fixed terms of repayment.

Note 7 – Acquisition

Initial acquisition of Shandong Missile

On March 17, 2005, the Company completed the acquisition of 41% of the registered capital of Shandong Missile for a consideration of RMB34,400,000, of which RMB8,000,000 was paid by cash and the remaining consideration of RMB26,400,000 was paid on July 19, 2006. Up-Wing has accounted for the acquisition of 41% of the registered capital in Shandong Missile under the purchase method.

Acquisition of additional equity interest in Shandong Missile

On September 2, 2005, the Company completed the acquisition of an additional 41.76% of registered capital in Shandong Missile from the then equity owner, for net consideration of RMB35,500,000 (Note 1). The then equity owner also assigned its portion of dividend from Shandong Missile to the Company totaled $793,865, this amount is treated as reduction in total consideration.

Additional capital injection into Shandong Missile

The purchase price for the September 2005 Acquisition and July 2006 Acquisition represented the results of negotiations with the then stockholders, who were disadvantaged by the following conditions:

(1)	Because the share capital was not yet fully paid-up at that moment, Shandong Missile had insufficient working capital and liquidity to support its long term obligation; and

F-47

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

(2)	According to the Articles of Association, the RMB26,400,000 unpaid capital was to be contributed within six months from the formation of the joint venture by April 23, 2003.

	However, the then stockholder failed to fulfill the obligation. Pursuant to the PRC rules and regulations applicable to foreign invested enterprises, if the then stockholder failed to contribute the RMB 26,400,000 by the specific date, their entire interest would be forfeited. Details of the fair value of the net assets of Shandong Missile consolidated on September 2, 2005 are as follows:

		September 2, 2005

Currents assets	$	14,009,255
Plant and equipment		5,210,970
Intangible assets		426,155
Total assets acquired		19,646,380

Curret liabilities		8,660,625
Long term liabilities		1,426,000
Total liabilities assumed		10,086,625

Total net assets		9,559,755
% acquired		82.76%
Net assets acquired	$	7,911,653

Note 8 - Earnings Per Share

F-48

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

		December 31, 2006		December 31, 2005
Net income for earnings per share	$	3,816,837	$	1,309,686

Weighted average shares used in basic
computation		21,434,942		19,234,942
Diluted effect of warrants				-
Weighted average shares used in diluted
computation		21,434,942		19,234,942

Earnings per share
Basic	$	0.18	$	0.07
Diluted	$	0.18	$	0.07

Note 9 – Income taxes

The Company is governed by the Income Tax Law of the People’s Republic of China (PRC) concerning Foreign Investment Enterprises and Foreign Enterprises and various local income tax laws (the Income Tax Laws). Under the Income Tax Laws, foreign investment enterprises (FIE) generally are subject to an income tax at an effective rate of 33% (30% state income taxes plus 3% local income taxes) on income as reported in their statutory financial statements after appropriate tax adjustments unless the enterprise is located in specially designated regions of cities for which more favorable effective tax rates apply. Upon approval by the PRC tax authorities, FIE’s scheduled to operate for a period of 10 years or more and engaged in manufacturing and production may be exempt from income taxes for two years, commencing with their first profitable year of operations, after taking into account any losses brought forward from prior years, and thereafter with a 50% exemption for the next three years.

Beginning January 1, 2008, the new Enterprise Income Tax (“EIT”) law will replace the existing laws for Domestic Enterprises (“DES”) and Foreign Invested Enterprises (“FIEs”).

The key changes are:

a.	The new standard EIT rate of 25% will replace the 33% rate currently applicable to both DES and FIEs, except for High Tech companies who pays at a reduced rate of 15%; and

b.	Companies established before March 16, 2007 will continue to enjoy tax holiday treatment approved by local government for a grace period of the next 5 years or until the tax holiday term is completed, whichever is sooner. These companies will pay the standard tax rate as defined in point “a” above during the grace period.

The Company’s subsidiary, Shandong Missile, was established before March 16, 2007 and therefore is qualified to continue enjoying the reduced tax rate as described above. Since the

F-49

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

detailed guidelines of the new tax law is not publicized yet, the Company cannot determined what the new tax rate will be applicable to the Company after the end of their respective tax holiday terms.

The Company was granted by the local government for benefit of income tax exemption for the fiscal year ended December 31, 2003 through 2006 for making purchases on local equipment.

The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the years ended December 31, 2006 and 2005:

	2006			2005
U.S. Statutory rates	34.0		%	34.0		%
Foreign income	(34.0	)		(34.0	)
China taxe rates	33.0			33.0
China income tax exemption	(18.0	)		(18.0	)
Effective income tax rates	15.0		%	15.0		%

The estimated tax savings due to the tax exemption for the years ending December 31, 2006, and 2005 amounted to $1,045,589 and $682,205 respectively.

Value Added Tax

VAT on sales amounted to $1,333,438 and $693,641 for the year ended December 31, 2006 and 2005 respectively. Sales are recorded net of VAT collected and paid as the Company acts as an agent for the government. VAT taxes are not impacted by the income tax holiday.

Taxes payable consisted of the followings:
		2006			2005
VAT tax payable	$	212,688		$	125,914
Income tax (credit) payable		(83,872	)		233,266
Others misc tax payable		9,387			5,083
	$	138,203		$	364,263

Note 10 – Commitments and Contingent liabilities

Capital commitments

Capital commitments outstanding as of December 31, 2006 and 2005 not provided for in the financial statements were as follows:

F-50

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

		2006		2005
Property and equipment, not yet received	$	432,000	$	158,000

Capital injection to Shandong Missile	$	-	$	3,273,600

Contingencies

In the normal course of business, the Company is exposed to claims related to the manufacture and use of the Company’s products, but currently the Company is not aware of any such claim.

Legal Proceedings

In 2006, Missile Engineering, which is controlled by Mr. Zu Ying Du, applied for arbitration in China International Economic and Trade Arbitration Commission (“CIETAC”) to challenge the effectiveness of the transfer of the shares he formerly owned in Shandong Missile. The arbitration was dismissed in April 2006. We believe that all necessary approvals and documentation were obtained at the time of transfer and have initiated legal action in China intending to restrain Mr. Du from seeking to resolve his differences with us by means other than arbitration, the agreed-upon method of conflict resolution at the time of the transfer.

F-51

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Taibang was joined as a third party defendant. The first hearing in the foregoing matter was scheduled to be held before the District Court in March 2007 but was suspended to allow the defendants to enter a plea to the Henan Provincial Court requesting clarification regarding whether the District Court has proper jurisdiction when the act of infringement and all defendants are not in Henan Province. A hearing was held on June 25, 2007 and judgment was entered against the defendants. There was no financial judgment on us and the RMB500, 000 has been released, however, we have appealed the judgment to the high court. Other than the place of jurisdiction, we cannot make any comment on the validity of the franchise agreement between Bobai and Hua Lan. If Hua Lan prevails in this case then we may not be able to acquire Bobai. However, management does not expect our inability to acquire Bobai to have a material adverse effect on our business, financial condition or results of operations as Bobai is only a small station.

Note 11 – Stockholders’ equity

The Company implemented a reverse stock split at two for one to reduce the number of issued and outstanding shares of common stock to 750,227 immediately before issuing 18,484,715 shares of common stock to the stockholders of Logic Express. The reverse stock split did not change the par value ($0.0001) of the common stock.

In connection with the offering, the Company paid a placement fee of 10% of the proceeds in cash, together with other expenses in the amount of 3% of the proceeds, in cash. In addition, the placement agent was issued warrants to purchase 66,154 shares of common stock on the same terms and conditions as the investors.

Dividends

During April 2006, prior to Logic Express acquiring a majority equity interest in Shandong Missile from Up-Wing. Up-Wing made a distribution amounted to $ 2,909,516.

Warrant

The warrants are accounted for as equity under SFAS 133 and EITF 00-19.

F-52

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

				Weighted	Average
	Warrants	Warrants		Average Exercise	Remaining
	Outsanding	Exercisable		Price	Contractual Life
Outstanding, December
31, 2005	-	-		-	-
Granted	1,284,000	1,284,000	$	2.84	4.46
Forfeited	-	-		-	-
Exercised	-	-		-	-
Outstanding, December
31, 2006	1,284,000	1,284,000	$	2.84	4.46

Note 12 – Statutory reserves

Reserve fund

For the year ended December 31, 2006 and 2005, the Company transferred US$759,099 and US$204,594 respectively. Amounts represent 10% of the net income determined in accordance with PRC accounting rules and regulations. The surplus reserve fund is non-distributable other than during liquidation and can be used to fund previous years’ losses, if any, and may be utilized for business expansion or converted into share capital by issuing new shares to existing stockholders in proportion to their shareholding or by increasing the par value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of the registered capital.

Enterprise expansion fund

The enterprise fund may be used to acquire fixed assets or to increase the working capital to expend on production and operation of the business. For the year ended December 31, 2006 and 2005, the Company transferred US$759,099 and US$204,594 respectively. Amounts represent 10% of the net income determined in accordance with PRC accounting rules and regulations.

Staff and workers’ bonus and welfare fund

Through 2005, the Company was required to transfer 5% to 10% of its net income, as determined in accordance with the PRC accounting rules and regulations, to the statutory common welfare fund. For the years ended December 31, 2006 and 2005, the Company transferred $0 and $102,297 respectively, representing 5% of the year’s net income determined in accordance with PRC accounting rules and regulations, to this reserve. Starting on January 1,

F-53

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

2006, the PRC accounting rules and regulations no longer required the company to transfer 5% to 10% of its net income to the staff and workers’ bonus and welfare fund. The balance in this fund at December 31, 2005 was transferred to the reserve fund.

Note 13 – Retirement benefit plans

Regulations in PRC require the Company to contribute to a defined contribution retirement plan for the benefit of all permanent employees. All permanent employees are entitled to an annual pension equal to their basic salaries at retirement. The PRC government is responsible for the benefit liability to these retired employees. The Company is required to make contributions to the state retirement plan at 20% of the monthly basic salaries of the current employees. For the years ended December 31, 2006 and 2005, the Company made pension contributions in the amount of $103,380 and $94,572 respectively.

Note 14 – Current vulnerability due to certain concentrations

The Company’s major product, human albumin, accounted for 84.6% and 75.7% of total revenues for year ended December 31, 2006 and December 31, 2005 respectively. If the market demands for human albumin cannot be sustained in the future or upon decrease in price of human albumin, it would adversely affect the Group’s operating results.

There were no customers that individually comprised 10% or more of the gross trade accounts receivable at December 31, 2005 and 2006 or 10% or more of revenue in the periods presented. The Group performs ongoing credit evaluations of its customers’ financial condition and, generally, requires no collateral from its customers.

Three vendors comprised 61% and 80% of the Company’s purchases for the years ended December 31, 2006 and 2006. Accounts payable to these vendors amounted $820,250 and $56,386 as of December 31, 2006 and 2005, respectively.

F-54

CHINA BIOLOGIC PRODUCTS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006 AND 2005

Note 15 – Subsequent Event

Acquisition of plasma stations in Guangxi Province

In January 2007, Shandong Missile entered into letters of intent to acquire three plasma stations in Guangxi Province. The total consideration for the acquisition would be determined based on independent valuation performed by qualified valuation experts recognized in the PRC. The acquisition will be financed by RMB10,000,000 bank loans drawn down in January 2007.

Establishment of own distribution company

In September 2006, Shandong Missile applied to establish a wholly owned subsidiary “Shandong Missile Medical Co., Ltd.” (“Shandong Medical”) with registered capital of RMB3,000,000 and the capital was fully paid on March 1, 2007. A distribution license of biological products, except for vaccine, was obtained from the Shandong Food and Drug Authority on February 7, 2007 for a license period of 5 years from the date of obtaining the license. The registration of Shandong Missile was ultimately approved by Shandong Provincial Department of Foreign Trade and Economic Cooperation on July 4, 2007 and Shandong Medical was formally registered on July 19, 2007. The scope of business is wholesale of biological products, except vaccine, with a license period of 25 years from the date of registration. As of July 31, 2007, Shandong Medical has not yet commenced operations.

F-55

6,064,000 shares of common stock

PROSPECTUS

_____________ , 2007

II-1

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our bylaws provide for the indemnification of our present and prior directors and officers or any person who may have served at our request as a director or officer of another corporation in which we own shares of capital stock or of which we are a creditor, against expenses actually and necessarily incurred by them in connection with the defense of any actions, suits or proceedings in which they, or any of them, are made parties, or a party, by reason of being or having been director(s) or officer(s) of us or of such other corporation, in the absence of negligence or misconduct in the performance of their duties. This indemnification policy could result in substantial expenditure by us, which we may be unable to recoup.

Insofar as indemnification by us for liabilities arising under the Exchange Act may be permitted to our directors, officers and controlling persons pursuant to provisions of the Articles of Incorporation and Bylaws, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy and is, therefore, unenforceable. In the event that a claim for indemnification by such director, officer or controlling person of us in the successful defense of any action, suit or proceeding is asserted by such director, officer or controlling person in connection with the securities being offered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Exchange Act and will be governed by the final adjudication of such issue.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses payable by China Biologic in connection with the issuance and distribution of the securities being registered are as follows:

SEC Registration Fee	$	530

Printing Expenses	$	12,500

Legal Fees and Expenses	$	300,000

Accounting Fees and Expenses	$	400,000

Total	$	713,030

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

On July 18, 2006, we entered into a share and warrant exchange agreement with Logic Express Limited, the owners of all of Logic Express’ shares and the other parties thereto, pursuant to which on July 19, 2006, we acquired all of the issued and outstanding shares of stock of Logic Express in exchange for the issuance in the aggregate of 18,484,715 shares of our common stock to the Shareholders. The issuance of Shares was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”), pursuant to Section 4(2) of, and Regulation S promulgated under, such Act.

Concurrently with entering into the share and warrant exchange agreement, we completed a private placement transaction with a group of accredited investors, pursuant to a securities purchase agreement, dated July 18, 2006. Pursuant to the securities purchase agreement as amended, we sold units consisting of an aggregate of 2,200,000 shares of its common stock and five-year warrants to purchase 1,070,000 shares of common stock at an

II-2

exercise price of $2.8425 per share at a purchase price of $1.895 per unit and two of the controlling shareholders of China Biologic, Siu Ling Chan and Lin Ling Li, sold an aggregate of 2,080,000 shares of our common stock at a price of $1.895 per share to the same investors. Lane Capital Markets, LLC acted as exclusive placement agent and financial advisor and received five-year warrants to purchase 214,000 shares of common stock at an exercise price of $2.8425 per share. We are under a contractual obligation to register shares of our common stock as well as shares of common stock issuable upon exercise of the warrants issued to the investors and the placement agent in connection with this private placement within a pre-defined period. The shares being registered under this registration statement are the shares of our common stock issued and the shares of common stock underlying warrants issued in connection with the private placement. The issuance of units and warrants was exempt from the registration requirements provided by Section 4(2) of the Securities Act for the offer and sale of securities not involving a public offering and Regulation D promulgated thereunder and on Regulation S.

In instances described above where we issued securities in reliance upon Regulation D, we relied upon Rule 506 of Regulation D of the Securities Act. These stockholders who received the securities in such instances made representations that (a) the stockholder is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the stockholder agrees not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the stockholder has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, (d) the stockholder had access to all of our documents, records, and books pertaining to the investment and was provided the opportunity ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or were able to acquire without unreasonable effort and expense, and (e) the stockholder has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Our Management made the determination that the investors are accredited investors as defined in Regulation D, based upon Management’s inquiry into their sophistication and net worth. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.

In instances described above where we issued securities in reliance upon Regulation S our reliance was based upon the fact that: (a) each such investor was not U.S. person and was not acquiring its shares for the account or benefit of any U.S. person, (b) each such investor agreed not to offer or sell its shares (including any prearrangement for a purchase by a U.S. person or other person in the United States) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) each such investor made its subscription from its offices at an address outside of the United States and (d) each such investor or its advisors have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of, and protecting its interests in connection with an investment in our Company.

ITEM 27. EXHIBITS

	Exhibit No.	Description

	2	Share Exchange Agreement between China Biologic, Logic Express and the selling stockholders signatory thereto, dated as of July 18, 2006

	3.1	Certificate of Incorporation of China Biologic

	3.2	Bylaws of China Biologic

	4.1	Securities Purchase Agreement between China Biologic, Logic Express, Shandong Taibang, and the selling stockholders and investors signatory thereto, dated as of July 18, 2006

II-3

	4.2	Registration Rights Agreement, between China Biologic and certain investors signatory thereto, dated as of July 18, 2006

	4.3	Form of Stockholder Warrant to purchase Common Stock, dated as of July 19, 2006

	4.4	Lane Warrant, dated as of July 19, 2006

	4.5	Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of July 19, 2006

	4.6	Escrow Agreement, between China Biologic, the Escrow Agent, and the selling stockholders signatory thereto, dated as of July 19, 2006

	4.7	Amendment No. 1 to the Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of February 16, 2007

	4.8	Amendment No. 2 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of March 27, 2007

	4.9	Amendment No. 3 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of April 2, 2007

	4.10	Amendment No. 4 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of May 9, 2007

	4.11	Amendment No. 1 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of February 16, 2007

	4.12	Amendment No. 2 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of March 27, 2007

	4.13	Amendment No. 3 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of April 2, 2007

	4.14	Amendment No. 4 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of May 9, 2007

	4.15	Amendment No. 5 to Securities Purchase Agreement, between China Biologic and investors signatory thereto, dated as of August 20, 2007

	5	Opinion of Thelen Reid Brown Raysman & Steiner LLP

	10.1	Group Secondment Agreement, between the Shandong Taibang and the Shandong Institute (Summary Translation)

	10.2	Amended and Restated Joint Venture Agreement, between Logic Express and the Shandong

II-4

		Institute, dated as of March 12, 2006 (Summary Translation)

	10.3	Letter of Intent for Equity Transfer, between Logic Express Limited and the Shandong Institute, dated as of June 10, 2006 (Summary Translation)

	10.4	Raw Plasma Supply Agreement, between Shandong Taibang and Qihei Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.5	Raw Plasma Supply Agreement, between Shandong Taibang and the Xiajin Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.6	Raw Plasma Supply Agreement, between Shandong Taibang and the Zhangqiu Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.7	Employment Agreement, between China Biologic and Stanley Wong, dated as of March 8, 2007 (Summary Translation)

	10.8	Form of Director’s Employment Agreement of China Biologic

	21	Subsidiaries of China Biologic

	23.1	Consent of Moore Stephens Wurth Frazer and Torbet, LLP, certified public accountants

	23.2	Consent of Thelen Reid Brown Raysman & Steiner LLP (included in Exhibit 5)

	24	Power of Attorney (appear on the signature pages hereof)

ITEM 28. UNDERTAKINGS.

Undertaking Required by Item 512 of Regulation S-B.

(a) The undersigned registrant will:

(1) File, during any period in which it offers or sells securities, a post-effective amendment to this registration statement to:

(i) include any prospectus required by Section 10(a)(3) of the Securities Act;

(ii) reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) include any additional or changed material information on the plan of distribution.

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(2) For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

(4) For determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities, the registrant undertakes that in a primary offering of securities of the registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the registrant or used or referred to by the registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the registrant or its securities provided by or on behalf of the registrant; and

(iv) Any other communication that is an offer in the offering made by the registrant to the purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

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SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form SB-2 and has authorized this registration statement to be signed on its behalf by the undersigned in Shandong, China, on the 4th day of September, 2007.

CHINA BIOLOGIC PRODUCTS, INC.

By: /s/ Stanley Wong

Stanley Wong

Chief Executive Officer

By: /s/ Chao Ming Zhao

Chao Ming Zhao

Chief Financial Officer

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint, jointly and severally, Siu Ling Chan and Zhao, Chao Ming, or either of them, as his or her true and lawful attorney-in-fact and agents, with full power of substitution and re-substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Registration Statement filed herewith and any and all amendments to said Registration Statement (including Post-effective amendments and registration statements filed pursuant to Rule 462 and otherwise), and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has executed this Power of Attorney as of the date indicated.

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the dates stated:

Name	Title	Date

/s/ Siu Ling Chan	Chairwoman	September 4, 2007
Siu Ling Chan

/s/Stanley Wong	Chief Executive Officer	September 4, 2007
Stanley Wong

/s/Chao Ming Zhao	Chief Financial Officer and Director	September 4, 2007
Chao Ming Zhao

/s/ Tung Lam	Chairman and Chief Executive Officer of	September 4, 2007
Tung Lam	Shandong Taibang

/s/ Lin Ling Li	Director	September 4, 2007
Lin Ling Li

/s/ Pang Guang Li	Director	September 4, 2007
Pang Guang Li

EXHIBIT INDEX

	Exhibit No.	Description

	2	Share Exchange Agreement between China Biologic, Logic Express and the selling stockholders signatory thereto, dated as of July 18, 2006

	3.1	Certificate of Incorporation of China Biologic

	3.2	Bylaws of China Biologic

	4.1	Securities Purchase Agreement between China Biologic, Logic Express, Shandong Taibang, and the selling stockholders and investors signatory thereto, dated as of July 18, 2006

	4.2	Registration Rights Agreement, between China Biologic and certain investors signatory thereto, dated as of July 18, 2006

	4.3	Form of Stockholder Warrant to purchase Common Stock, dated as of July 19, 2006

	4.4	Lane Warrant, dated as of July 19, 2006

	4.5	Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of July 19, 2006

	4.6	Escrow Agreement, between China Biologic, the Escrow Agent, and the selling stockholders signatory thereto, dated as of July 19, 2006

	4.7	Amendment No. 1 to the Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of February 16, 2007

	4.8	Amendment No. 2 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of March 27, 2007

	4.9	Amendment No. 3 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of April 2, 2007

	4.10	Amendment No. 4 to Share Escrow Agreement, between China Biologic, Lane, as investor representative, the Escrow Agent, and the selling stockholders signatory thereto, dated as of May 9, 2007

	4.11	Amendment No. 1 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of February 16, 2007

	4.12	Amendment No. 2 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of March 27, 2007

	4.13	Amendment No. 3 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of April 2, 2007

	4.14	Amendment No. 4 to Securities Purchase Agreement, between China Biologic, Logic Express, Shandong Taibang and the selling stockholders and investors signatory thereto, dated as of May 9, 2007

	4.15	Amendment No. 5 to Securities Purchase Agreement, between China Biologic and investors signatory thereto, dated as of August 20, 2007

	5	Opinion of Thelen Reid Brown Raysman & Steiner LLP

	10.1	Group Secondment Agreement, between the Shandong Taibang and the Shandong Institute (Summary Translation)

	10.2	Amended and Restated Joint Venture Agreement, between Logic Express and the Shandong Institute, dated as of March 12, 2006 (Summary Translation)

	10.3	Letter of Intent for Equity Transfer, between Logic Express Limited and the Shandong Institute, dated as of June 10, 2006 (Summary Translation)

	10.4	Raw Plasma Supply Agreement, between Shandong Taibang and Qihei Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.5	Raw Plasma Supply Agreement, between Shandong Taibang and the Xiajin Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.6	Raw Plasma Supply Agreement, between Shandong Taibang and the Zhangqiu Plasma Collection Station, dated as of December 30, 2005 (Summary Translation)

	10.7	Employment Agreement, between China Biologic and Stanley Wong, dated as of March 8, 2007 (Summary Translation)

	10.8	Form of Director’s Employment Agreement of China Biologic

	21	Subsidiaries of China Biologic

	23.1	Consent of Moore Stephens Wurth Frazer and Torbet, LLP, certified public accountants

	23.2	Consent of Thelen Reid Brown Raysman & Steiner LLP (included in Exhibit 5)

	24	Power of Attorney (appear on the signature pages hereof)

EXHIBIT 2.1

Share Exchange Agreement

This Share Exchange Agreement, dated as of July 18, 2006, is made by and among GRC Holdings, Inc., a Texas corporation (the “Acquiror Company”), Lin Ling LI, Siu Ling CHAN, Michael LI, Katherine LOH and Chao Ming ZHAO (collectively, the “Shareholders”), and Logic Express Limited, a corporation organized under the laws of the British Virgin Islands (the “Company”).

BACKGROUND

WHEREAS, the Shareholders together own 100% of the Shares of the Company in the respective amounts set forth in Exhibit A hereto;

WHEREAS, the Shareholders have agreed to transfer to the Acquiror Company, and the Acquiror Company has agreed to acquire from the Shareholders, all of the Shares, which Shares constitute 100% of the issued and outstanding shares of the Company, in exchange for 18,484,715 shares of the Acquiror Company’s Common Stock to be issued on the Closing Date (the “Acquiror Company Shares”), which Acquiror Company Shares shall constitute 96.1% of the issued and outstanding shares of Acquiror Company’s Common Stock immediately after the closing of the transactions contemplated herein, in each case, on the terms and conditions as set forth herein.

WHEREAS, the investors named in the Securities Purchase Agreement of even date herewith entered into by Acquiror Company (the “Investors”) have agreed to purchase an aggregate of 4,280,000 shares of the Acquiror Company (2,200,000 newly issued shares and 1,040,000 existing shares from Ms. Li and 1,040,000 existing shares from Ms. Chan), which Acquiror Company Shares shall constitute approximately 20% of the issued and outstanding shares of Acquiror Company Common Stock immediately after the closing of the transactions contemplated herein, in each case, on the terms and conditions as set forth herein.

SECTION I

DEFINITIONS

Unless the context otherwise requires, the terms defined in this Section 1 will have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms herein defined.

1.1 “Accredited Investor” has the meaning set forth in Regulation D under the Securities Act and set forth on Exhibit B .

1.2 “Acquired Companies” means, collectively, the Company and the Company Subsidiary.

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1.3 “Acquiror Company Balance Sheet” means the Acquiror Company’s audited balance sheet at December 31, 2005.

1.4 “Acquiror Company Board” means the Board of Directors of the Acquiror Company.

1.5 “Acquiror Company Common Stock” means the Acquiror Company’s common stock, par value US $.0001 per share.

1.6 “Acquiror Company Shares” means the Acquiror Company Common Stock being issued to the Shareholders pursuant hereto.

1.7 “Affiliate” means any Person that directly or indirectly controls, is controlled by or is under common control with the indicated Person.

1.8 “Agreement” means this Share Exchange Agreement, including all Schedules and Exhibits hereto, as this Share Exchange Agreement may be from time to time amended, modified or supplemented.

1.9 “Approved Plans” means a stock option or similar plan for the benefit of employees or others which has been approved by the stockholders of the Acquiror Company.

1.10 “Closing Acquiror Company Shares” means the aggregate number of Acquiror Company Shares issuable to the Shareholders at the Closing Date.

1.11 “Closing Date” has the meaning set forth in Section 3.

1.12 “Code” means the Internal Revenue Code of 1986, as amended.

1.13 “Common Stock” means the Company’s common shares, $1.00 par value per share.

1.14 “Commission” means the Securities and Exchange Commission or any other federal agency then administering the Securities Act.

1.15 “Company Board” means the Board of Directors of the Company.

1.16 “Company Indemnified Party” has the meaning set forth in Section 9.1.

1.17 “Company Subsidiary” means Shandong Missile Biologic Products Co., Ltd. a Sino-foreign joint venture organized under the laws of the People’s Republic of China.

1.18 “Covered Persons” means all Persons, other than Acquiror Company, who are parties to indemnification and employment agreements with Acquiror Company existing on or before the Closing Date.

1.19 “Damages” means any costs or expenses (including attorneys’ fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any Proceeding.

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1.20 “Distributor” means any underwriter, dealer or other Person who participates, pursuant to a contractual arrangement, in the distribution of the securities offered or sold in reliance on Regulation S.

1.21 “Environmental Laws” means any Law or other requirement relating to the environment, natural resources, or public or employee health and safety.

1.22 “Environmental Permit” means all licenses, permits, authorizations, approvals, franchises and rights required under any applicable Environmental Law or Order.

1.23 “Equity Security” means any stock or similar security, including, without limitation, securities containing equity features and securities containing profit participation features, or any security convertible into or exchangeable for, with or without consideration, any stock or similar security, or any security carrying any warrant, right or option to subscribe to or purchase any shares of capital stock, or any such warrant or right.

1.24 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.25 “Exchange” has the meaning set forth in Section 2.1.

1.26 “Exchange Act” means the Securities Exchange Act of 1934 or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will then be in effect.

1.27 “Exhibits” means the several exhibits referred to and identified in this Agreement.

1.28 “GAAP” means, with respect to any Person, United States generally accepted accounting principles applied on a consistent basis with such Person’s past practices.

1.29 “Governmental Authority” means any federal or national, state or provincial, municipal or local government, governmental authority, regulatory or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, political subdivision, commission, court, tribunal, official, arbitrator or arbitral body, in each case whether U.S. or non-U.S.

1.30 “Indebtedness” means any obligation, contingent or otherwise. Any obligation secured by a Lien on, or payable out of the proceeds of, or production from, property of the relevant party will be deemed to be Indebtedness.

1.31 “Indemnified Persons” has the meaning set forth in Section 7.1.1.

1.32 “Intellectual Property” means all industrial and intellectual property, including, without limitation, all U.S. and non-U.S. patents, patent applications, patent rights, trademarks, trademark applications, common law trademarks, Internet domain names, trade names, service marks, service mark applications, common law service marks, and the goodwill associated therewith, copyrights, in both published and unpublished works, whether registered or unregistered, copyright applications, franchises, licenses, know-how, trade secrets, technical data, designs, customer lists, confidential and proprietary information, processes and formulae, all computer software programs or applications, layouts, inventions, development tools and all documentation and media constituting, describing or relating to the above, including manuals, memoranda, and records, whether such intellectual property has been created, applied for or obtained anywhere throughout the world.

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1.33 “Laws” means, with respect to any Person, any U.S. or non-U.S. federal, national, state, provincial, local, municipal, international, multinational or other law (including common law), constitution, statute, code, ordinance, rule, regulation or treaty applicable to such Person.

1.34 “Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by Law.

1.35 “Material Acquiror Company Contract” means any and all agreements, contracts, arrangements, leases, commitments or otherwise, of the Acquiror Company, of the type and nature that the Acquiror Company is required to file with the Commission.

1.36 “Material Adverse Effect” means, when used with respect to the Acquiror Company or the Acquired Companies, as the case may be, any change, effect or circumstance which, individually or in the aggregate, would reasonably be expected to (a) have a material adverse effect on the business, assets, financial condition or results of operations of the Acquiror Company or the Acquired Companies, as the case may be, in each case taken as a whole or (b) materially impair the ability of the Acquiror Company or the Acquired Companies, as the case may be, to perform their obligations under this Agreement, excluding any change, effect or circumstance resulting from (i) the announcement, pendency or consummation of the transactions contemplated by this Agreement, (ii) changes in the United States securities markets generally, or (iii) changes in general economic, currency exchange rate, political or regulatory conditions in industries in which the Acquiror Company or the Acquired Companies, as the case may be, operate.

1.37 “Order” means any award, decision, injunction, judgment, order, ruling, subpoena, or verdict entered, issued, made, or rendered by any Governmental Authority.

1.38 “Organizational Documents” means (a) the articles or certificate of incorporation and the by-laws or code of regulations of a corporation; (b) the partnership agreement and any statement of partnership of a general partnership; (c) the limited partnership agreement and the certificate of limited partnership of a limited partnership; (d) the articles or certificate of formation and operating agreement of a limited liability company; (e) any other document performing a similar function to the documents specified in clauses (a), (b), (c) and (d) adopted or filed in connection with the creation, formation or organization of a Person; and (f) any and all amendments to any of the foregoing.

1.39 “Permitted Liens” means (a) Liens for Taxes not yet payable or in respect of which the validity thereof is being contested in good faith by appropriate proceedings and for the payment of which the relevant party has made adequate reserves; (b) Liens in respect of pledges or deposits under workmen’s compensation laws or similar legislation, carriers, warehousemen, mechanics, laborers and materialmen and similar Liens, if the obligations secured by such Liens are not then delinquent or are being contested in good faith by appropriate proceedings conducted and for the payment of which the relevant party has made adequate reserves; (c) statutory Liens incidental to the conduct of the business of the relevant party which were not incurred in connection with the borrowing of money or the obtaining of advances or credits and that do not in the aggregate materially detract from the value of its property or materially impair the use thereof in the operation of its business; and (d) Liens that would not have a Material Adverse Effect.

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1.40 “Person” means all natural persons, corporations, business trusts, associations, companies, partnerships, limited liability companies, joint ventures and other entities, governments, agencies and political subdivisions.

1.41 “Proceeding” means any action, arbitration, audit, hearing, investigation, litigation, or suit (whether civil, criminal, administrative or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Authority.

1.42 “Regulation S” means Regulation S under the Securities Act, as the same may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission.

1.43 “Rule 144” means Rule 144 under the Securities Act, as the same may be amended from time to time, or any successor statute.

1.44 “Schedules” means the several schedules referred to and identified herein, setting forth certain disclosures, exceptions and other information, data and documents referred to at various places throughout this Agreement.

1.45 “Section 4(2)” means Section 4(2) under the Securities Act, as the same may be amended from time to time, or any successor statute.

1.46 “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same will be in effect at the time.

1.47 “Shares” means the issued and outstanding common shares of the Company.

1.48 “Subsidiary” means, with respect to any Person, any corporation, limited liability company, joint venture or partnership of which such Person (a) beneficially owns, either directly or indirectly, more than 50% of (i) the total combined voting power of all classes of voting securities of such entity, (ii) the total combined equity interests, or (iii) the capital or profit interests, in the case of a partnership; or (b) otherwise has the power to vote or to direct the voting of sufficient securities to elect a majority of the board of directors or similar governing body.

1.49 “Survival Period” has the meaning set forth in Section 11.1.

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1.50 “Taxes” means all foreign, federal, state or local taxes, charges, fees, levies, imposts, duties and other assessments, as applicable, including, but not limited to, any income, alternative minimum or add-on, estimated, gross income, gross receipts, sales, use, transfer, transactions, intangibles, ad valorem, value-added, franchise, registration, title, license, capital, paid-up capital, profits, withholding, payroll, employment, unemployment, excise, severance, stamp, occupation, premium, real property, recording, personal property, federal highway use, commercial rent, environmental (including, but not limited to, taxes under Section 59A of the Code) or windfall profit tax, custom, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties or additions to tax with respect to any of the foregoing; and “Tax” means any of the foregoing Taxes.

1.51 “Tax Group” means any federal, state, local or foreign consolidated, affiliated, combined, unitary or other similar group.

1.52 “Tax Return” means any return, declaration, report, claim for refund or credit, information return, statement or other similar document filed with any Governmental Authority with respect to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

1.53 “Transaction Documents” means, collectively, all agreements, instruments and other documents to be executed and delivered in connection with the transactions contemplated by this Agreement.

1.54 “U.S.” means the United States of America.

1.55 “U.S. Dollars” or “US $” means the currency of the United States of America.

1.56 “U.S. Person” has the meaning set forth in Regulation S under the Securities Act and set forth on Exhibit C hereto.

SECTION II

EXCHANGE OF SHARES AND WARRANTS AND CONSIDERATION

2.1 Share Exchange . At the Closing, the Shareholders shall transfer a total of 3,025,264 Shares, representing all of the issued and outstanding shares of the Company, and, in consideration therefore, Acquiror Company shall issue to the Shareholders an aggregate of 18,484,715 fully paid and nonassessable shares of Acquiror Company Common Stock (the “Exchange”) in the names and denominations set forth in Exhibit A hereto. Each Shareholder shall provide the Acquiror Company with such information concerning his or her U.S. federal income tax basis in the Shares as shall be reasonably requested by the Acquiror Company.

2.2 Withholding . The Acquiror Company shall be entitled to deduct and withhold from the Acquiror Company Shares otherwise payable pursuant to this Agreement to the Shareholders such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local, provincial or foreign tax Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to any Shareholder in respect of which such deduction and withholding was made. Each Shareholder shall provide to the Acquiror Company such tax forms as may be necessary to claim an applicable exemption from any such withholding.

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2.3 Section 368 Reorganization . For U.S. federal income tax purposes, the Exchange is intended to constitute a “reorganization” within the meaning of Section 368(a)(1)(B) of the Code. The parties to this Agreement hereby adopt this Agreement as a “plan of reorganization” within the meaning of Sections 1.368-2(g) of the United States Treasury Regulations, and agree to file and retain such information as shall be required under 1.368-3T of the United States Treasury Regulations. Notwithstanding the foregoing or anything else to the contrary contained in this Agreement, the parties acknowledge and agree that no party is making any representation or warranty as to the qualification of the Exchange as a reorganization under Section 368 of the Code or as to the effect, if any, that any transaction consummated prior to the Closing Date has or may have on any such reorganization status. The parties acknowledge and agree that each (i) has had the opportunity to obtain independent legal and tax advice with respect to the transaction contemplated by this Agreement, and (ii) is responsible for paying its own Taxes, including without limitation, any adverse Tax consequences that may result if the transaction contemplated by this Agreement is determined not to qualify as a reorganization under Section 368 of the Code.

SECTION III

CLOSING DATE

3.1 Closing Date . The closing of the Exchange will occur upon execution of this Agreement on July 18, 2006 or at such later date as all of the closing conditions set forth in Sections 8 and 9 have been satisfied or waived (the “Closing Date”).

SECTION IV

REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS

4.1 Generally . The Shareholders, severally and not jointly, hereby each represent and warrant to the Acquiror Company on behalf of himself, herself or itself:

4.1.1 Authority . The Shareholder has the right, power, authority and capacity to execute and deliver this Agreement and each of the Transaction Documents to which the Shareholder is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which the Shareholder is a party, and to perform the Shareholder’s obligations under this Agreement and each of the Transaction Documents to which the Shareholder is a party. This Agreement has been, and each of the Transaction Documents to which the Shareholder is a party will be, duly and validly executed and delivered by the Shareholder. Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than the Shareholder, this Agreement is, and each of the Transaction Documents to which the Shareholder is a party have been, duly executed and delivered by the Shareholder and constitutes the legal, valid and binding obligation of the Shareholder, enforceable against the Shareholder in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

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4.1.2 No Conflict . Neither the execution or delivery by the Shareholder of this Agreement or any Transaction Document to which the Shareholder is a party, nor the consummation or performance by the Shareholder of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, any agreement or instrument to which such Shareholder is a party or by which the properties or assets of the Shareholder are bound; or (b) contravene, conflict with, or result in a violation of, any Law or Order to which the Shareholder, or any of his, hers or its (as the case may be) properties or assets, may be subject.

4.1.3 Litigation . There is no pending Proceeding against the Shareholder that challenges, or may have the effect of preventing, delaying or making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement and, to the knowledge of the Shareholder, no such Proceeding has been threatened, and no event or circumstance exists that is reasonably likely to give rise to or serve as a basis for the commencement of any such Proceeding.

4.1.4 No Brokers or Finders . Except as disclosed in Schedule 4.1.4, no Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Shareholder for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Shareholder will indemnify and hold the Acquiror Company harmless against any liability or expense arising out of, or in connection with, any such claim.

4.2 Investment Representations . Such Shareholder, severally and not jointly, hereby represents and warrants to the Acquiror Company:

4.2.1 Ownership of Shares . The Shareholder owns, of record and beneficially, and has good, valid and indefeasible title to and the right to transfer to the Acquiror Company pursuant to this Agreement, the Shares owned by it, free and clear of any and all Liens. There are no options, rights, voting trusts, stockholder agreements or any other contracts or understandings to which the Shareholder is a party or by which such party or the Shares owned by it, are bound with respect to the issuance, sale, transfer, voting or registration thereof. At the Closing Date, the Acquiror Company will acquire good, valid and marketable title to such Shares being sold by it, free and clear of any and all Liens.

4.2.2 Acknowledgment . The Shareholder understands and agrees that the Acquiror Company Shares to be issued pursuant to this Agreement have not been registered under the Securities Act or the securities laws of any state of the U.S. and that the issuance of the Acquiror Company Shares are being effected in reliance upon an exemption from registration afforded either under Section 4(2) of the Securities Act for transactions by an issuer not involving a public offering or Regulation S for offers and sales of securities outside the U.S.

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4.2.3 Status . By its execution of this Agreement, the Shareholders each severally and not jointly, represent and warrant to the Acquiror Company as indicated on its signature page to this Agreement, either that:

(a) the Shareholder is an Accredited Investor; or

(b) the Shareholder is not a U.S. Person.

The Shareholders severally understand that the Acquiror Company Shares are being offered and sold to the Shareholder in reliance upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of the Shareholder set forth in this Agreement, in order that the Acquiror Company may determine the applicability and availability of the exemptions from registration of the Acquiror Company Shares on which the Acquiror Company is relying.

4.2.4 Additional Representations and Warranties of Accredited Investors . In the event the Shareholder indicates that it is an Accredited Investor on its signature page to this Agreement, it further makes the representations and warranties to the Acquiror Company set forth on Exhibit D .

4.2.5 Additional Representations and Warranties of Non-U.S. Persons . In the event the Shareholder indicates that it is not a U.S. person on its signature page to this Agreement, it further makes the representations and warranties to the Acquiror Company set forth on Exhibit E .

4.2.6 Legends . The Shareholder hereby severally agree with the Acquiror Company as follows:

(a) Securities Act Legend - Accredited Investors . The certificates evidencing the Acquiror Company Shares issued to those who are Accredited Investors, and each certificate issued in transfer thereof, will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS.

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(b) Securities Act Legend - Non-U.S. Persons . The certificates evidencing the Acquiror Company Shares issued to those who are not U.S. Persons, and each certificate issued in transfer or upon exercise thereof, will bear the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

(c) Other Legends . The certificates representing such Acquiror Company Shares, and each certificate issued in transfer thereof, will also bear any other legend required under any applicable Law, including, without limitation, any U.S. state corporate and state securities law, or contract.

(d) Opinion . The Shareholders may not transfer any or all of the Acquiror Company Shares pursuant to Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of the Acquiror Company Shares without first providing the Acquiror Company with an opinion of counsel (which counsel and opinion are reasonably satisfactory to the Acquiror Company) to the effect that such transfer will be made in compliance with Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws.

(e) Consent . The Shareholders severally understand and acknowledge that the Acquiror Company may refuse to transfer the Acquiror Company Shares unless it complies with this Section 4.2.6 and any other restrictions on transferability set forth in Exhibit D and E. Each such party consents to the Acquiror Company making a notation on its records or giving instructions to any transfer agent of the Acquiror Company’s Common Stock in order to implement the restrictions on transfer of the Acquiror Company Shares.

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SECTION V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Acquiror Company as follows:

5.1 Organization and Qualification . The Company is duly incorporated and validly existing under the laws of the British Virgin Islands, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and as contemplated to be conducted, to own, hold and operate its properties and assets as now owned, held and operated by it, to enter into this Agreement, to carry out the provisions hereof except where the failure to be so organized, existing and in good standing or to have such authority or power will not, in the aggregate, either (i) have a material adverse effect on the business, assets, financial condition, or prospects of the Company, or (ii) materially impair the ability of the Company and the Shareholders each to perform their respective material obligations under this Agreement (any of such effects or impairments, a “Material Adverse Effect”). The Company is treated as a foreign corporation for U.S. federal income tax purposes and is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned or leased makes such qualification, licensing or domestication necessary, except where the failure to be so qualified, licensed or domesticated will not have a Material Adverse Effect. Set forth on Schedule 5.1 [Do we have this yet?] is a list of those jurisdictions in which the Company presently conducts its business, owns, holds and operates its properties and assets.

5.2 Subsidiaries . Except as set forth on Schedule 5.2, the Company does not own directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise.

5.3 Constitution . The Company is governed by Memorandum and Articles of Association in accordance with the BVI Business Companies Act, 2004. The Company is not in violation or breach of any of the provisions of the replaceable rules, except for such violations or breaches as, in the aggregate, will not have a Material Adverse Effect.

5.4 Authorization and Validity of this Agreement . The recording of the transfer of the Shares and the registration of such Shares in the name of Acquiror Company are within the Company’s corporate powers, have been duly authorized by all necessary corporate action, do not require from the Board or the Shareholder of the Company any consent or approval that has not been validly and lawfully obtained, require no authorization, consent, approval, license, exemption of or filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality of government that has not been validly and lawfully obtained, filed or registered, as the case may be, except for those that, if not obtained or made would not have a Material Adverse Effect.

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5.5 No Violation . None of the execution, delivery or performance by the Company of this Agreement or any Transaction Document to which the Company is a party, nor the consummation by the Company of the transactions contemplated hereby violates any provision of its Organizational Documents, or violates or conflicts with, or constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the creation of imposition of any Lien under, any agreement or instrument to which the Company is a party or by which the Company is or will be bound or subject, or violate any laws.

5.6 Binding Obligations . Assuming this Agreement has been duly and validly authorized, executed and delivered by the Acquiror Company, the Acquiror Company Shareholders, and the Shareholders, this Agreement is and all agreements or instruments contemplated hereby to which the Company is a party, have been duly authorized, executed and delivered by the Company and are the legal, valid and binding Agreement of the Company and is enforceable against the Company in accordance with its terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors rights generally.

5.7 Capitalization and Related Matters .

5.7.1 Capitalization . The issued capital stock of the Company consists of 3,025,264 ordinary fully paid shares held in the name of the Shareholders. Except as otherwise as set forth in Schedule 5.7.1, there are no outstanding or authorized options, warrants, calls, subscriptions, rights (including any preemptive rights or rights of first refusal), agreements or commitments of any character obligating the Company to issue any ordinary shares or any other capital stock of the Company. All issued and outstanding shares of the Company’s capital stock are duly authorized, validly issued, fully paid and nonassessable and have not been issued in violation of any preemptive or similar rights.

5.7.2 No Redemption Requirements . Except as set forth in Schedule 5.7.2, there are no outstanding contractual obligations (contingent or otherwise) of the Company to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, the Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other entity.

5.7.3 Duly Authorized . The Exchange of the Shares has been duly authorized, and the Shares have been validly issued and are fully paid and nonassessable.

5.8 Shareholders . The Shareholders are the only persons holding Shares. Except as expressly provided in this Agreement, no holder of Shares or any other security of the Company or any other Person is entitled to any preemptive right, right of first refusal or similar right as a result of the issuance of the shares or otherwise. There is no voting trust, agreement or arrangement among any of the shareholders of any capital stock of the Company affecting the exercise of the voting rights of any such capital stock.

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5.9 Compliance with Laws and Other Instruments . Except as would not have a Material Adverse Effect, the business and operations of the Company have been and are being conducted in accordance with all applicable foreign, federal, state and local laws, rules and regulations and all applicable orders, injunctions, decrees, writs, judgments, determinations and awards of all courts and governmental agencies and instrumentalities. Except as would not have a Material Adverse Effect, the Company is not, and is not alleged to be, in violation of, or (with or without notice or lapse of time or both) in default under, or in breach of, any term or provision of its Organizational Documents or of any indenture, loan or credit agreement, note, deed of trust, mortgage, security agreement or other material agreement, lease, license or other instrument, commitment, obligation or arrangement to which the Company is a party or by which any of the Company’s properties, assets or rights are bound or affected. To the knowledge of the Company, no other party to any material contract, agreement, lease, license, commitment, instrument or other obligation to which the Company is a party is (with or without notice or lapse of time or both) in default thereunder or in breach of any term thereof. The Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Company, any event or circumstance relating to the Company that materially and adversely affects in any way its business, properties, assets or prospects or that would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby or thereby.

5.10 Certain Proceedings . There is no pending Proceeding that has been commenced against the Company and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated in this Agreement. To the Company’s knowledge, no such Proceeding has been threatened.

5.11 No Brokers or Finders . Except as disclosed in Schedule 5.11, no person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Company will indemnify and hold the Acquiror Company harmless against any liability or expense arising out of, or in connection with, any such claim.

5.12 Title to and Condition of Properties . Except as disclosed in Schedule 5.12, as of the Closing Date, the Company owns or holds under valid leases or other rights to use all real property, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted, except where the failure to own or hold such property, plants, machinery and equipment would not have a Material Adverse Effect on the Company. The material buildings, plants, machinery and equipment necessary for the conduct of the business of the Company as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, in each case, taken as a whole, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

5.13 Board Recommendation . The Board has, by unanimous written consent, determined that this Agreement and the transactions contemplated by this Agreement, are advisable and in the best interests of the Shareholders.

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SECTION VI

REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR COMPANY

The Acquiror Company represents and warrants to the Shareholders, the Investors and the Company as follows:

6.1 Organization and Qualification . The Acquiror Company is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to carry on its business as presently conducted and to own, hold and operate its properties and assets as now owned, held and operated by it, except where the failure to be so organized, existing and in good standing, or to have such authority and power, governmental licenses, authorizations, consents or approvals would not have a Material Adverse Effect. The Acquiror Company is duly qualified, licensed or domesticated as a foreign corporation in good standing in each jurisdiction wherein the nature of its activities or its properties owned, held or operated makes such qualification, licensing or domestication necessary, except where the failure to be so duly qualified, licensed or domesticated and in good standing would not have a Material Adverse Effect. Schedule 6.1 sets forth a true, correct and complete list of the Acquiror Company’s jurisdiction of organization and each other jurisdiction in which the Acquiror Company presently conducts its business or owns, holds and operates its properties and assets.

6.2 Subsidiaries . The Acquiror Company does not own, directly or indirectly, any equity or other ownership interest in any corporation, partnership, joint venture or other entity or enterprise.

6.3 Organizational Documents . True, correct and complete copies of the Organizational Documents of the Acquiror Company have been delivered to the Company prior to the execution of this Agreement, and no action has been taken to amend or repeal such Organizational Documents. The Acquiror Company is not in violation or breach of any of the provisions of its Organizational Documents, except for such violations or breaches as would not have a Material Adverse Effect.

6.4 Authorization . The Acquiror Company has all requisite authority and power (corporate and other), governmental licenses, authorizations, consents and approvals to enter into this Agreement and each of the Transaction Documents to which the Acquiror Company is a party, to consummate the transactions contemplated by this Agreement and each of the Transaction Documents to which the Acquiror Company is a party and to perform its obligations under this Agreement and each of the Transaction Documents to which the Acquiror Company is a party. The execution, delivery and performance by the Acquiror Company of this Agreement and each of the Transaction Documents to which the Acquiror Company is a party have been duly authorized by all necessary corporate action and do not require from the Acquiror Company Board or the stockholders of the Acquiror Company any consent or approval that has not been validly and lawfully obtained. The execution, delivery and performance by the Acquiror Company of this Agreement and each of the Transaction Documents to which the Acquiror Company is a party requires no authorization, consent, approval, license, exemption of or filing or registration with any Governmental Authority or other Person other than (a) the Schedule 14(f) Filing, and (b) such other customary filings with the Commission for transactions of the type contemplated by this Agreement.

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6.5 No Violation . Neither the execution nor the delivery by the Acquiror Company of this Agreement or any Transaction Document to which the Acquiror Company is a party, nor the consummation or performance by the Acquiror Company of the transactions contemplated hereby or thereby will, directly or indirectly, (a) contravene, conflict with, or result in a violation of any provision of the Organizational Documents of the Acquiror Company; (b) contravene, conflict with, constitute a default (or an event or condition which, with notice or lapse of time or both, would constitute a default) under, or result in the termination or acceleration of, or result in the imposition or creation of any Lien under, any agreement or instrument to which the Acquiror Company is a party or by which the properties or assets of the Acquiror Company are bound; (c) contravene, conflict with, or result in a violation of, any Law or Order to which the Acquiror Company, or any of the properties or assets owned or used by the Acquiror Company, may be subject; or (d) contravene, conflict with, or result in a violation of, the terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any licenses, permits, authorizations, approvals, franchises or other rights held by the Acquiror Company or that otherwise relate to the business of, or any of the properties or assets owned or used by, the Acquiror Company, except, in the case of clause (b), (c), or (d), for any such contraventions, conflicts, violations, or other occurrences as would not have a Material Adverse Effect.

6.6 Binding Obligations . Assuming this Agreement and the Transaction Documents have been duly and validly authorized, executed and delivered by the parties thereto other than the Acquiror Company, this Agreement and each of the Transaction Documents to which the Acquiror Company is a party are duly authorized, executed and delivered by the Acquiror Company and constitutes the legal, valid and binding obligations of the Acquiror Company, enforceable against the Acquiror Company in accordance with their respective terms, except as such enforcement is limited by general equitable principles, or by bankruptcy, insolvency and other similar Laws affecting the enforcement of creditors rights generally.

6.7 Securities Laws . Assuming the accuracy of the representations and warranties of the Shareholders, and the Investors as applicable, contained in Section 4 and Exhibits D and E, the issuance of the Acquiror Company Shares pursuant to this Agreement are (a) exempt from the registration and prospectus delivery requirements of the Securities Act, (b) have been registered or qualified (or are exempt from registration and qualification) under the registration permit or qualification requirements of all applicable state securities laws, and (c) accomplished in conformity with all other applicable federal and state securities laws.

6.8 Capitalization and Related Matters .

6.8.1 Capitalization . The authorized capital stock of the Acquiror Company consists of 100,000,000 shares of the Acquiror Company’s Common Stock, of which 750,227 shares are issued and outstanding. All issued and outstanding shares of the Acquiror Company’s Common Stock are duly authorized, validly issued, fully paid and nonassessable, and have not been issued in violation of any preemptive or similar rights. At the Closing Date, the Acquiror Company will have sufficient authorized and unissued Acquiror Company’s Common Stock to consummate the transactions contemplated hereby. There are no outstanding options, warrants, purchase agreements, participation agreements, subscription rights, conversion rights, exchange rights or other securities or contracts that could require the Acquiror Company to issue, sell or otherwise cause to become outstanding any of its authorized but unissued shares of capital stock or any securities convertible into, exchangeable for or carrying a right or option to purchase shares of capital stock or to create, authorize, issue, sell or otherwise cause to become outstanding any new class of capital stock. There are no outstanding stockholders’ agreements, voting trusts or arrangements, registration rights agreements, rights of first refusal or other contracts pertaining to the capital stock of the Acquiror Company. The issuance of all of the shares of Acquiror Company’s Common Stock described in this Section 6.8.1 have been in compliance with U.S. federal and state securities laws.

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6.8.2 No Redemption Requirements . Except as set forth in Schedule 6.8.2, there are no outstanding contractual obligations (contingent or otherwise) of the Acquiror Company to retire, repurchase, redeem or otherwise acquire any outstanding shares of capital stock of, or other ownership interests in, the Acquiror Company or to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any other Person.

6.8.3 Duly Authorized . The issuance of the Acquiror Company Shares has been duly authorized and, upon delivery to the Shareholders of certificates therefor or agreements with respect thereto, as the case may be, in accordance with the terms of this Agreement, the Acquiror Company Shares will have been validly issued and fully paid, and will be non-assessable and will have the rights, preferences and privileges specified, will be free of preemptive rights and will be free and clear of all Liens and restrictions, other than restrictions on transfer imposed by this Agreement and the Securities Act.

6.9 Compliance with Laws . Except as would not have a Material Adverse Effect, the business and operations of the Acquiror Company have been and are being conducted in accordance with all applicable Laws and Orders. Except as would not have a Material Adverse Effect, the Acquiror Company has not received notice of any violation (or any Proceeding involving an allegation of any violation) of any applicable Law or Order by or affecting the Acquiror Company and, to the knowledge of the Acquiror Company, no Proceeding involving an allegation of violation of any applicable Law or Order is threatened or contemplated. Except as would not have a Material Adverse Effect, the Acquiror Company is not subject to any obligation or restriction of any kind or character, nor is there, to the knowledge of the Acquiror Company, any event or circumstance relating to the Acquiror Company that materially and adversely affects in any way its business, properties, assets or prospects or that prohibits the Acquiror Company from entering into this Agreement or would prevent or make burdensome its performance of or compliance with all or any part of this Agreement or the consummation of the transactions contemplated hereby.

6.10 Certain Proceedings . There is no pending Proceeding that has been commenced against the Acquiror Company and that challenges, or may have the effect of preventing, delaying, making illegal, or otherwise interfering with, any of the transactions contemplated by this Agreement. To the knowledge of the Acquiror Company, no such Proceeding has been threatened.

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6.11 No Brokers or Finders . Except as disclosed on Schedule 6.11, no Person has, or as a result of the transactions contemplated herein will have, any right or valid claim against the Acquiror Company for any commission, fee or other compensation as a finder or broker, or in any similar capacity, and the Acquiror Company will indemnify and hold the Company harmless against any liability or expense arising out of, or in connection with, any such claim.

6.12 Absence of Undisclosed Liabilities . Except as set forth on Schedule 6.12, the Acquiror Company has no debt, obligation or liability (whether accrued, absolute, contingent, liquidated or otherwise, whether due or to become due, whether or not known to the Acquiror Company) arising out of any transaction entered into at or prior to the Closing Date or any act or omission at or prior to the Closing Date, except to the extent set forth on or reserved against on the Acquiror Company Balance Sheet. All debts, obligations or liabilities with respect to directors and officers of the Acquiror Company will be cancelled prior to the Closing. The Acquiror Company has not incurred any liabilities, commitments or obligations under agreements entered into since January 1, 2006.

6.13 Changes . Except as set forth in Schedule 6.13, the Acquiror Company has not, since January 1, 2006:

6.13.1 Ordinary Course of Business . Conducted any business or entered into any transaction other than in the usual and ordinary course of business of a non-operating company, except for this Agreement.

6.13.2 Adverse Changes . Suffered or experienced any change in, or affecting, its condition (financial or otherwise), properties, assets, liabilities, business, operations, results of operations or prospects other than changes, events or conditions in the usual and ordinary course of its business, none of which would have a Material Adverse Effect;

6.13.3 Loans . Made any loans or advances to any Person other than travel advances and reimbursement of expenses made to employees, officers and directors in the ordinary course of business;

6.13.4 Liens . Created or permitted to exist any Lien on any material property or asset of the Acquiror Company, other than Permitted Liens;

6.13.5 Capital Stock . Issued, sold, disposed of or encumbered, or authorized the issuance, sale, disposition or encumbrance of, or granted or issued any option to acquire any shares of its capital stock or any other of its securities or any Equity Security, or altered the term of any of its outstanding securities or made any change in its outstanding shares of capital stock or its capitalization, whether by reason of reclassification, recapitalization, stock split, combination, exchange or readjustment of shares, stock dividend or otherwise;

6.13.6 Dividends . Declared, set aside, made or paid any dividend or other distribution to any of its stockholders;

6.13.7 Material Acquiror Company Contracts . Terminated or modified any Material Acquiror Company Contract, except for termination upon expiration in accordance with the terms thereof;

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6.13.8 Claims . Released, waived or cancelled any claims or rights relating to or affecting the Acquiror Company in excess of US $1,000 in the aggregate or instituted or settled any Proceeding involving in excess of US $1,000 in the aggregate;

6.13.9 Discharged Liabilities . Paid, discharged or satisfied any claim, obligation or liability in excess of US $1,000 in the aggregate, except for liabilities incurred prior to the date of this Agreement in the ordinary course of business;

6.13.10 Indebtedness . Created, incurred, assumed or otherwise become liable for any Indebtedness in excess of US $1,000 in the aggregate, other than professional fees;

6.13.11 Guarantees . Guaranteed or endorsed in a material amount any obligation or net worth of any Person;

6.13.12 Acquisitions . Acquired the capital stock or other securities or any ownership interest in, or substantially all of the assets of, any other Person;

6.13.13 Accounting . Changed its method of accounting or the accounting principles or practices utilized in the preparation of its financial statements, other than as required by GAAP;

6.13.14 Agreements . Entered into any agreement, or otherwise obligated itself, to do any of the foregoing.

6.14 Material Acquiror Company Contracts . The Acquiror Company has made available to the Company, prior to the date of this Agreement, true, correct and complete copies of each written Material Acquiror Company Contract, including each amendment, supplement and modification thereto.

6.14.1 No Defaults . Each Material Acquiror Company Contract is a valid and binding agreement of the Acquiror Company that is party thereto, and is in full force and effect. Except as would not have a Material Adverse Effect, the Acquiror Company is not in breach or default of any Material Acquiror Company Contract to which it is a party and, to the knowledge of the Acquiror Company, no other party to any Material Acquiror Company Contract is in breach or default thereof. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that (with or without notice or lapse of time) would (a) contravene, conflict with or result in a violation or breach of, or become a default or event of default under, any provision of any Material Acquiror Company Contract or (b) permit the Acquiror Company or any other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate or modify any Material Acquiror Company Contract. The Acquiror Company has not received notice of the pending or threatened cancellation, revocation or termination of any Material Acquiror Company Contract to which it is a party. There are no renegotiations of, or attempts to renegotiate, or outstanding rights to renegotiate any material terms of any Material Acquiror Company Contract.

6.15 Employees .

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6.15.1 The Acquiror Company has no employees, independent contractors or other Persons providing research or other services to it. Except as would not have a Material Adverse Effect, the Acquiror Company is in full compliance with all Laws regarding employment, wages, hours, benefits, equal opportunity, collective bargaining, the payment of Social Security and other taxes, occupational safety and health and plant closing. The Acquiror Company is not liable for the payment of any compensation, damages, taxes, fines, penalties or other amounts, however designated, for failure to comply with any of the foregoing Laws.

6.15.2 No director, officer or employee of the Acquiror Company is a party to, or is otherwise bound by, any contract (including any confidentiality, non-competition or proprietary rights agreement) with any other Person that in any way adversely affects or will materially affect (a) the performance of his or her duties as a director, officer or employee of the Acquiror Company or (b) the ability of the Acquiror Company to conduct its business.

6.16 Tax Returns and Audits .

6.16.1 Tax Returns . The Acquiror Company has filed all Tax Returns required to be filed by or on behalf of the Acquiror Company and has paid all Taxes of the Acquiror Company required to have been paid (whether or not reflected on any Tax Return). The Acquiror Company has timely withheld and paid over to the appropriate Governmental Authority all Taxes required to have been withheld and paid by the Acquiror Company. Except as set forth in Schedule 6.16, (a) no Governmental Authority in any jurisdiction has made a claim, assertion or threat to the Acquiror Company that the Acquiror Company is or may be subject to taxation by such jurisdiction; (b) there are no Liens with respect to Taxes on the Acquiror Company’s property or assets other than Permitted Liens; and (c) there are no Tax rulings, requests for rulings, or closing agreements relating to the Acquiror Company for any period (or portion of a period) that would affect any period after the date hereof.

6.16.2 No Adjustments, Changes . Neither the Acquiror Company nor any other Person on behalf of the Acquiror Company (a) has executed or entered into a closing agreement pursuant to Section 7121 of the Code or any predecessor provision thereof or any similar provision of state, local or foreign law; or (b) has agreed to or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of state, local or foreign law.

6.16.3 No Disputes . There is no pending audit, examination, investigation, dispute, proceeding or claim with respect to any Taxes of the Acquiror Company, nor is any such claim or dispute pending or contemplated. The Acquiror Company has delivered to the Company true, correct and complete copies of all Tax Returns, and any examination reports and statements of deficiencies assessed or asserted against or agreed to by the Acquiror Company since its inception and any and all correspondence with respect to the foregoing.

6.16.4 Not a U.S. Real Property Holding Corporation . The Acquiror Company is not and has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code.

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6.16.5 No Tax Allocation, Sharing . The Acquiror Company is not a party to any Tax allocation or sharing agreement. The Acquiror Company (a) has never been a member of a Tax Group filing a consolidated income Tax Return under Section 1501 of the Code (or any similar provision of state, local or foreign law), and (b) does not have any liability for Taxes for any Person under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law) or as a transferee or successor, by contract or otherwise.

6.16.6 No Other Arrangements . The Acquiror Company is not a party to any agreement, contract or arrangement for services that would result, individually or in the aggregate, in the payment of any amount that would not be deductible by reason of Section 162(m), 280G or 404 of the Code. The Acquiror Company is not a “consenting corporation” within the meaning of former Section 341(f) of the Code. The Acquiror Company does not have any “tax-exempt bond financed property” or “tax-exempt use property” within the meaning of Section 168(g) or (h), respectively, of the Code. The Acquiror Company does not have any outstanding closing agreement, ruling request, request for consent to change a method of accounting, subpoena or request for information to or from a Governmental Authority in connection with any Tax matter. During the last two years, the Acquiror Company has not engaged in any exchange with a related party (within the meaning of Section 1031(f) of the Code) under which gain realized was not recognized by reason of Section 1031 of the Code. The Acquiror Company is not a party to any reportable transaction within the meaning of Treasury Regulation Section 1.6011-4.

6.17 Material Assets . The financial statements of the Acquiror Company referred to in Section 6.26 below reflect the material properties and assets (real and personal) owned or leased by the Acquiror Company.

6.18 Insurance Coverage . The Acquiror Company has made available to the Company, prior to the date of this Agreement, true, correct and complete copies of any insurance policies maintained by the Acquiror Company on its properties and assets. Except as would not have a Material Adverse Effect, all of such policies (a) taken together, provide adequate insurance coverage for the properties, assets and operations of each Acquiror Company for all risks normally insured against by a Person carrying on the same business as such Acquiror Company, and (b) are sufficient for compliance with all applicable Laws and Material Acquiror Company Contracts. Except as would not have a Material Adverse Effect, all of such policies are valid, outstanding and in full force and effect and, by their express terms, will continue in full force and effect following the consummation of the transactions contemplated by this Agreement. Except as set forth in Schedule 6.18, the Acquiror Company has not received (a) any refusal of coverage or any notice that a defense will be afforded with reservation of rights, or (b) any notice of cancellation or any other indication that any insurance policy is no longer in full force or effect or will not be renewed or that the issuer of any policy is not willing or able to perform its obligations thereunder. All premiums due on such insurance policies on or prior to the date hereof have been paid. There are no pending claims with respect to the Acquiror Company or its properties or assets under any such insurance policies, and there are no claims as to which the insurers have notified the Acquiror Company that they intend to deny liability. There is no existing default under any such insurance policies.

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6.19 Litigation; Orders . Except as set forth on Schedule 6.19, there is no Proceeding (whether federal, state, local or foreign) pending or, to the knowledge of the Acquiror Company, threatened against or affecting the Acquiror Company or the Acquiror Company’s properties, assets, business or employees. To the knowledge of the Acquiror Company, there is no fact that might result in or form the basis for any such Proceeding. The Acquiror Company is not subject to any Orders.

6.20 Licenses . Except as would not have a Material Adverse Effect, the Acquiror Company possesses from the appropriate Governmental Authority all licenses, permits, authorizations, approvals, franchises and rights that are necessary for the Acquiror Company to engage in its business as currently conducted and to permit the Acquiror Company to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets (collectively, “Acquiror Company Permits”). The Acquiror Company has not received notice from any Governmental Authority or other Person that there is lacking any license, permit, authorization, approval, franchise or right necessary for the Acquiror Company to engage in its business as currently conducted and to permit the Acquiror Company to own and use its properties and assets in the manner in which it currently owns and uses such properties and assets. Except as would not have a Material Adverse Effect, the Acquiror Company Permits are valid and in full force and effect. Except as would not have a Material Adverse Effect, no event has occurred or circumstance exists that may (with or without notice or lapse of time): (a) constitute or result, directly or indirectly, in a violation of or a failure to comply with any Acquiror Company Permit; or (b) result, directly or indirectly, in the revocation, withdrawal, suspension, cancellation or termination of, or any modification to, any Acquiror Company Permit. The Acquiror Company has not received notice from any Governmental Authority or any other Person regarding: (a) any actual, alleged, possible or potential contravention of any Acquiror Company Permit; or (b) any actual, proposed, possible or potential revocation, withdrawal, suspension, cancellation, termination of, or modification to, any Acquiror Company Permit. All applications required to have been filed for the renewal of such Company Permits have been duly filed on a timely basis with the appropriate Persons, and all other filings required to have been made with respect to such Acquiror Company Permits have been duly made on a timely basis with the appropriate Persons. All Acquiror Company Permits are renewable by their terms or in the ordinary course of business without the need to comply with any special qualification procedures or to pay any amounts other than routine fees or similar charges, all of which have, to the extent due, been duly paid.

6.21 Interested Party Transactions . Except as disclosed on Schedule 6.21, no officer, director or stockholder of the Acquiror Company or any Affiliate or “associate” (as such term is defined in Rule 405 of the Commission under the Securities Act) of any such Person, has or has had, either directly or indirectly, (1) an interest in any Person which (a) furnishes or sells services or products which are furnished or sold or are proposed to be furnished or sold by the Acquiror Company, or (b) purchases from or sells or furnishes to, or proposes to purchase from, sell to or furnish any Acquiror Company any goods or services; or (2) a beneficial interest in any contract or agreement to which the Acquiror Company is a party or by which it may be bound or affected.

6.22 Governmental Inquiries . The Acquiror Company has provided to the Company a copy of each material written inspection report, questionnaire, inquiry, demand or request for information received by the Acquiror Company from any Governmental Authority, and the Acquiror Company’s response thereto, and each material written statement, report or other document filed by the Acquiror Company with any Governmental Authority.

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6.23 Bank Accounts and Safe Deposit Boxes . Schedule 6.23 discloses the title and number of each bank or other deposit or financial account, and each lock box and safety deposit box used by the Acquiror Company, the financial institution at which that account or box is maintained and the names of the persons authorized to draw against the account or otherwise have access to the account or box, as the case may be.

6.24 Intellectual Property . The Acquiror Company does not own, use or license any Intellectual Property in its business as presently conducted.

6.25 Title to and Condition of Properties . Except as would not have a Material Adverse Effect, the Acquiror Company owns (with good and marketable title in the case of real property) or holds under valid leases or other rights to use all real property, plants, machinery, equipment and other personal property necessary for the conduct of its business as presently conducted, free and clear of all Liens, except Permitted Liens. The material buildings, plants, machinery and equipment necessary for the conduct of the business of the Acquiror Company as presently conducted are structurally sound, are in good operating condition and repair and are adequate for the uses to which they are being put, and none of such buildings, plants, machinery or equipment is in need of maintenance or repairs, except for ordinary, routine maintenance and repairs that are not material in nature or cost.

6.26 Financial Statements . The financial statements of the Acquiror Company provided to the Company and the Shareholders and attached as Schedule 6.26 hereto comply in all material respects with applicable accounting requirement and the rules and regulations of the Commission with respect to financial statements that would be included in a filing with the Commission, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto, or, in the case of unaudited statements), and fairly present in all material respects (subject in the case of unaudited statements, to normal, recurring audit adjustments) the financial position of the Acquiror Company as at the dates thereof and the results of its operations and cash flows for the periods then ended.

6.27 Stock Option Plans; Employee Benefits .

6.27.1 The Acquiror Company has no stock option plans providing for the grant by the Acquiror Company of stock options to directors, officers or employees.

6.27.2 The Acquiror Company has no employee benefit plans or arrangements covering their present and former employees or providing benefits to such persons in respect of services provided to the Acquiror Company.

6.27.3 Neither the consummation of the transactions contemplated hereby alone, nor in combination with another event, with respect to each director, officer, employee and consultant of the Acquiror Company, will result in (a) any payment (including, without limitation, severance, unemployment compensation or bonus payments) becoming due from the Acquiror Company, (b) any increase in the amount of compensation or benefits payable to any such individual or (c) any acceleration of the vesting or timing of payment of compensation payable to any such individual. No agreement, arrangement or other contract of the Acquiror Company provides benefits or payments contingent upon, triggered by, or increased as a result of a change in the ownership or effective control of the Acquiror Company.

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6.28 Environmental and Safety Matters . Except as set forth on Schedule 6.28 or except as would not have a Material Adverse Effect:

6.28.1 The Acquiror Company has at all time been and is in compliance with all Environmental Laws applicable to the Acquiror Company.

6.28.2 There are no Proceedings pending or threatened against the Acquiror Company alleging the violation of any Environmental Law or Environmental Permit applicable to the Acquiror Company or alleging that the Acquiror Company is a potentially responsible party for any environmental site contamination.

6.28.3 Neither this Agreement nor the consummation of the transactions contemplated by this Agreement shall impose any obligations to notify or obtain the consent of any Governmental Authority or third Persons under any Environmental Laws applicable to the Acquiror Company.

6.29 Money Laundering Laws . The operations of the Acquiror Company is and has been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all U.S. and non-U.S. jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority (collectively, the “Money Laundering Laws”) and no Proceeding involving the Acquiror Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Acquiror Company, threatened.

6.30 Board Recommendation . The Acquiror Company Board, at a meeting duly called and held, has determined that this Agreement and the transactions contemplated by this Agreement are advisable and in the best interests of the Acquiror Company’s stockholders and has duly authorized this Agreement and the transactions contemplated by this Agreement.

6.31 Disclosure. The Acquiror Company confirms that neither it nor any other person acting on its behalf has provided any of the Shareholders or Company or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information other than as set forth in the following sentence. All disclosure provided to the Shareholder and Company regarding the Acquiror Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Acquiror Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

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SECTION VII

COVENANTS OF THE ACQUIROR COMPANY

7.1 Indemnification and Insurance.

7.1.1 The Acquiror Company shall to the fullest extent permitted under applicable Law or its Organizational Documents, indemnify and hold harmless, each present and former director, officer or employee of the Acquiror Company (collectively, the “Indemnified Parties”) against any Damages (x) arising out of or pertaining to the transactions contemplated by this Agreement or (y) otherwise with respect to any acts or omissions occurring at or prior to the Closing Date, to the same extent as provided in the Acquiror Company’s Organizational Documents or any applicable contract or agreement as in effect on the date hereof, in each case for a period of one year after the Closing Date. In the event of any such Proceeding (whether arising before or after the Closing Date), (i) any counsel retained by the Indemnified Parties for any period after the Closing Date shall be reasonably satisfactory to the Acquiror Company, (ii) after the Closing Date, the Acquiror Company shall pay the reasonable fees and expenses of such counsel, promptly after statements therefor are received, provided that the Indemnified Parties shall be required to reimburse the Acquiror Company for such payments in the circumstances and to the extent required by the Acquiror Company’s Organizational Documents, any applicable contract or agreement or applicable Law, and (iii) the Acquiror Company will cooperate in the defense of any such matter; provided , however , that the Acquiror Company shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); and provided, further, that, in the event that any claim or claims for indemnification are asserted or made within such one (1) year period, all rights to indemnification in respect of any such claim or claims shall continue until the disposition of any and all such claims. The Indemnified Parties as a group may retain only one law firm to represent them in each applicable jurisdiction with respect to any single action unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Indemnified Parties, in which case each Indemnified Person with respect to whom such a conflict exists (or group of such Indemnified Persons who among them have no such conflict) may retain one separate law firm in each applicable jurisdiction.

7.1.2 This Section 7.1 shall survive the consummation of the transactions contemplated by this Agreement upon execution, is intended to benefit the Indemnified Parties and the Covered Persons, shall be binding on all successors and assigns of the Acquiror Company and shall be enforceable by the Indemnified Parties and the Covered Persons.

7.2 Registration Rights . The Acquiror Company hereby agrees to register the 500,000 Acquiror Company Shares registered in the name of PDS-HFI Partners at the Closing Date on the same terms and conditions as set forth in the registration rights agreement between the Acquiror Company and the Investors of even date herewith.

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SECTION VIII

CONDITIONS PRECEDENT OF THE ACQUIROR COMPANY

The Acquiror Company’s obligation to acquire the Shares and to take the other actions required to be taken by the Acquiror Company at the Closing Date is subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by the Acquiror Company, in whole or in part):

8.1 Accuracy of Representations . The representations and warranties of the Company and the Shareholders set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects as of the date of this Agreement except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule. The representations and warranties of the Company and the Shareholders set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects as of the date of this Agreement, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule.

8.2 Performance by the Company and the Shareholders .

8.2.1 All of the covenants and obligations that the Company and the Shareholders are required to perform or to comply with pursuant to this Agreement (considered collectively), and each of these covenants and obligations (considered individually), must have been duly performed and complied with in all material respects.

8.2.2 Each document required to be delivered by the Company and the Shareholders pursuant to this Agreement must have been delivered.

8.3 No Force Majeure Event . There shall not have been any delay, error, failure or interruption in the conduct of the business of any Acquired Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.

8.4 Certificate of Officer . The Company will have delivered to the Acquiror Company a certificate executed by an officer of the Company, certifying the satisfaction of the conditions specified in Sections 8.1, 8.2, and 8.3.

8.5 Consents .

8.5.1 All material consents, waivers, approvals, authorizations or orders required to be obtained and all filings required to be made, by the Company and/or the Shareholders for the authorization, execution and delivery of this Agreement and the consummation by them of the transactions contemplated by this Agreement, shall have been obtained and made by the Company or the Shareholders, as the case may be, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror Company.

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8.6 Documents . The Shareholders must deliver to the Acquiror Company at the Closing (i) an effective assignment under British Virgin Island Law of the number of Shares held by the Shareholder (as set forth in Exhibit A ), together with a certified copy of a board resolution of the Company approving the registration of the transfer of such shares to Acquiror Company (subject to Closing), (ii) each of the Transaction Documents to which the Company and/or the Shareholder are a party, duly executed, and (iii) such other documents as the Acquiror Company may reasonably request for the purpose of (A) evidencing the accuracy of any of the representations and warranties of the Company and the Shareholders pursuant to Section 8.1, (B) evidencing the performance of, or compliance by the Company and the Shareholders with, any covenant or obligation required to be performed or complied with by the Company or the Shareholders, as the case may be, (C) evidencing the satisfaction of any condition referred to in this Section, or (D) otherwise facilitating the consummation or performance of any of the transactions contemplated by this Agreement.

8.7 No Proceedings . There must not have been commenced or threatened against the Acquiror Company, the Company or any the Shareholder, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the Closing Date) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated by this Agreement.

8.8 No Claim Regarding Stock Ownership or Consideration . There must not have been made or threatened by any Person any claim asserting that such Person (a) is the holder of, or has the right to acquire or to obtain beneficial ownership of the Shares or any other stock, voting, equity, or ownership interest in, the Company, or (b) is entitled to all or any portion of the Acquiror Company Shares.

SECTION IX

COVENANTS OF THE COMPANY

9.1 Indemnification and Insurance.

9.1.1 The Company shall to the fullest extent permitted under applicable Law or its Organizational Documents, indemnify and hold harmless, each present and former director, officer or employee of the Company (collectively, the “Company Indemnified Parties”) against any Damages (x) arising out of or pertaining to the transactions contemplated by this Agreement or (y) otherwise with respect to any acts or omissions occurring at or prior to the Closing Date (“Company Damages”), to the same extent as provided in the Company’s Organizational Documents or any applicable contract or agreement as in effect on the date hereof, in each case for a period of two years after the Closing Date. In the event of any such Proceeding (whether arising before or after the Closing Date), (i) any counsel retained by the Company Indemnified Parties for any period after the Closing Date shall be reasonably satisfactory to the Company, (ii) after the Closing Date, the Company shall pay the reasonable fees and expenses of such counsel, promptly after statements therefor are received, provided that the Company Indemnified Parties shall be required to reimburse the Company for such payments in the circumstances and to the extent required by the Company’s Organizational Documents, any applicable contract or agreement or applicable Law, and (iii) the Company will cooperate in the defense of any such matter; provided , however , that the Company shall not be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); and provided, further, that, in the event that any claim or claims for indemnification are asserted or made within such two (2) year period, all rights to indemnification in respect of any such claim or claims shall continue until the disposition of any and all such claims. The Company Indemnified Parties as a group may retain only one law firm to represent them in each applicable jurisdiction with respect to any single action unless there is, under applicable standards of professional conduct, a conflict on any significant issue between the positions of any two or more Company Indemnified Parties, in which case each Company Indemnified Person with respect to whom such a conflict exists (or group of such Company Indemnified Persons who among them have no such conflict) may retain one separate law firm in each applicable jurisdiction.

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9.1.2 This Section 9.1 shall survive the consummation of the transactions contemplated by this Agreement upon execution, is intended to benefit the Company Indemnified Parties and the Covered Persons, shall be binding on all successors and assigns of the Company and shall be enforceable by the Company Indemnified Parties and the Covered Persons.

SECTION X

CONDITIONS PRECEDENT OF THE COMPANY AND THE SHAREHOLDERS

The Shareholders’ obligation to transfer the Shares and the obligations of the Company to take the other actions required to be taken by the Company in advance of or at the Closing Date are subject to the satisfaction, at or prior to the Closing Date, of each of the following conditions (any of which may be waived by the Company and the Shareholders jointly, in whole or in part):

10.1 Accuracy of Representations . The representations and warranties of the Acquiror Company set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are not qualified as to materiality shall be true and correct in all material respects as of the date of this Agreement except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule. The representations and warranties of the Acquiror Company and set forth in this Agreement or in any Schedule or certificate delivered pursuant hereto that are qualified as to materiality shall be true and correct in all respects as of the date of this Agreement, except to the extent a representation or warranty is expressly limited by its terms to another date and without giving effect to any supplemental Schedule.

10.2 Performance by the Acquiror Company .

10.2.1 All of the covenants and obligations that the Acquiror Company is required to perform or to comply with pursuant to this Agreement, must have been performed and complied with in all respects.

10.2.2 Each document required to be delivered by the Acquiror Company pursuant to this Agreement must have been delivered.

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10.3 No Force Majeure Event . There shall not have been any delay, error, failure or interruption in the conduct of the business of the Acquiror Company, or any loss, injury, delay, damage, distress, or other casualty, due to force majeure including but not limited to (a) acts of God; (b) fire or explosion; (c) war, acts of terrorism or other civil unrest; or (d) national emergency.

10.4 Certificate of Officer . The Acquiror Company will have delivered to the Company a certificate, dated the Closing Date, executed by an officer of the Acquiror Company, certifying the satisfaction of the conditions specified in Sections 10.1, 10.2, and 10.3.

10.5 Consents .

10.5.1 All material consents, waivers, approvals, authorizations or orders required to be obtained, and all filings required to be made, by the Acquiror Company for the authorization, execution and delivery of this Agreement and the consummation by it of the transactions contemplated by this Agreement, shall have been obtained and made by the Acquiror Company, except where the failure to receive such consents, waivers, approvals, authorizations or orders or to make such filings would not have a Material Adverse Effect on the Company or the Acquiror Company.

10.6 Documents . The Acquiror Company must have caused the following documents to be delivered:

10.6.1 share certificates to the Shareholder evidencing the Shareholder’s ownership of the Closing Acquiror Company Shares;

10.6.2 to the Company and each Shareholder;

10.6.2.1 a Secretary’s Certificate, dated the Closing Date certifying attached copies of (A) the Organizational Documents of the Acquiror Company, (B) the resolutions of the Acquiror Company Board approving this Agreement and the transactions contemplated hereby; and (C) the incumbency of each authorized officer of the Acquiror Company signing this Agreement and any other agreement or instrument contemplated hereby to which the Acquiror Company is a party;

10.6.2.2 a Certificate of Good Standing of the Acquiror Company;

10.6.2.3 each of the Transaction Documents to which the Acquiror Company is a party, duly executed;

10.6.2.4 the resignation of Timothy P. Halter, as sole director and officer of the Acquiror Company in favor of the appointment of Ms. Katherine LOH as Chairwoman, Ms. Lin Ling LI as directors, and Ms. Siu Ling CHAN as director of the Acquiror Company Board and Mr. Michael LI as CEO and Mr. Peter YEUNG as Chief Financial Officer; and

10.6.2.5 such other documents as the Company may reasonably request for the purpose of (i) evidencing the accuracy of any representation or warranty of the Acquiror Company pursuant to Section 10.1, (ii) evidencing the performance by the Acquiror Company of, or the compliance by the Acquiror Company with, any covenant or obligation required to be performed or complied with by the Acquiror Company, (iii) evidencing the satisfaction of any condition referred to in this Section 10, or (iv) otherwise facilitating the consummation of any of the transactions contemplated by this Agreement.

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10.7 No Proceedings . Since the date of this Agreement, there must not have been commenced or threatened against the Acquiror Company, the Company or the Shareholders, or against any Affiliate thereof, any Proceeding (which Proceeding remains unresolved as of the date of this Agreement) (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated hereby, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated hereby.

10.8 No Claim Regarding Stock Ownership or Consideration . There must not have been made or threatened by any Person any claim asserting that such Person is the holder of, or has the right to acquire or to obtain beneficial ownership of the Acquiror Company Common Stock or any other stock, voting, equity, or ownership interest in, the Acquiror Company.

SECTION XI

INDEMNIFICATION; REMEDIES

11.1 Survival . All representations, warranties, covenants, and obligations in this Agreement shall expire on the second (2nd) anniversary of the date this Agreement is executed, provided however, that any representation, warranties, covenants or obligations relating to Taxes shall survive until the expiration of the applicable statute of limitations period (“Survival Period”). The right to indemnification, payment of Damages or other remedy based on such representations, warranties, covenants, and obligations will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant, or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification, payment of Damages, or other remedy based on such representations, warranties, covenants, and obligations.

11.2 Indemnification by the Acquiror Company . From and after the execution of this Agreement until the expiration of the Survival Period, the Acquiror Company shall indemnify and hold harmless the Company, the Shareholders, and the Investors (collectively, the “Company Indemnified Parties”), from and against any Damages arising, directly or indirectly, from or in connection with:

(a) any breach of any representation or warranty made by the Acquiror Company in this Agreement or in any certificate delivered by the Acquiror Company pursuant to this Agreement;

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(b) any breach by the Acquiror Company of any covenant or obligation of the Acquiror Company in this Agreement required to be performed by the Acquiror Company on or prior to the Closing Date; or

(c) any and all Taxes, losses, claims, damages, or liabilities with respect to the Acquiror Company, arising or occurring on or prior to the Closing Date.

11.3 Limitations on Amount - the Acquiror Company . No Company Indemnified Party shall be entitled to indemnification (except in respect of Taxes), unless and until the aggregate amount of Damages to all Company Indemnified Parties with respect to such matters under Section 11.2 exceeds US$25,000, at which time, the Company Indemnified Parties shall be entitled to indemnification for the total amount of such Damages in excess of US$25,000.

11.4 Determining Damages . Materiality qualifications to the representations and warranties of the Acquiror Company shall not be taken into account in determining the amount of Damages occasioned by a breach of any such representation and warranty for purposes of determining whether the basket set forth in Section 11.3 has been met.

11.5 Breach by the Shareholders . Nothing in this Section 11 shall limit the Acquiror Company’s right to pursue any appropriate legal or equitable remedy against the Shareholders with respect to any Damages arising, directly or indirectly, from or in connection with: (a) any breach by the Shareholders of any representation or warranty made by such Shareholder in this Agreement or in any certificate delivered by such Shareholder pursuant to this Agreement or (b) any breach by such Shareholder of its covenants or obligations in this Agreement. All claims of the Acquiror Company pursuant to this Section 11.5 shall be brought on behalf of the Acquiror Company by those Persons who were stockholders of the Acquiror Company immediately prior to the Closing Date.

SECTION XII

GENERAL PROVISIONS

12.1 Expenses . Except as otherwise expressly provided in this Agreement, each party to this Agreement will bear its respective expenses incurred in connection with the preparation, execution, and performance of this Agreement and the transactions contemplated by this Agreement, including all fees and expenses of agents, representatives, counsel, and accountants. In the event of termination of this Agreement, the obligation of each party to pay its own expenses will be subject to any rights of such party arising from a breach of this Agreement by another party.

12.2 Public Announcements . The Acquiror Company shall promptly, but no later than three (3) days following the effective date of this Agreement, issue a press release disclosing the transactions contemplated hereby. Prior to the Closing Date, the Company and the Acquiror Company shall consult with each other in issuing any other press releases or otherwise making public statements or filings and other communications with the Commission or any regulatory agency or stock market or trading facility with respect to the transactions contemplated hereby and neither party shall issue any such press release or otherwise make any such public statement, filings or other communications without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, except that no prior consent shall be required if such disclosure is required by law, in which case the disclosing party shall provide the other party with prior notice of such public statement, filing or other communication and shall incorporate into such public statement, filing or other communication the reasonable comments of the other party.

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12.3 Confidentiality .

12.3.1 Subsequent to the date of this Agreement, the Shareholders and the Company will maintain in confidence, and will cause their respective directors, officers, employees, agents, and advisors to maintain in confidence, any written, oral, or other information obtained in confidence from another party in connection with this Agreement or the transactions contemplated by this Agreement, unless (a) such information is already known to such party or to others not bound by a duty of confidentiality or such information becomes publicly available through no fault of such party, (b) the use of such information is necessary or appropriate in making any required filing with the Commission, or obtaining any consent or approval required for the consummation of the transactions contemplated by this Agreement, or (c) the furnishing or use of such information is required by or necessary or appropriate in connection with legal proceedings.

12.3.2 In the event that any party is required to disclose any information of another party pursuant to clause (b) or (c) of Section 12.3.1, the party requested or required to make the disclosure (the “disclosing party”) shall provide the party that provided such information (the “providing party”) with prompt notice of any such requirement so that the providing party may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this Section 12.3. If, in the absence of a protective order or other remedy or the receipt of a waiver by the providing party, the disclosing party is nonetheless, in the opinion of counsel, legally compelled to disclose the information of the providing party, the disclosing party may, without liability hereunder, disclose only that portion of the providing party’s information which such counsel advises is legally required to be disclosed, provided that the disclosing party exercises its reasonable efforts to preserve the confidentiality of the providing party’s information, including, without limitation, by cooperating with the providing party to obtain an appropriate protective order or other relief assurance that confidential treatment will be accorded the providing party’s information.

12.3.3 If the transactions contemplated by this Agreement are not consummated, each party will return or destroy as much of such written information as the other party may reasonably request.

12.4 Notices . All notices, consents, waivers, and other communications under this Agreement must be in writing and will be deemed to have been duly given when (a) delivered by hand (with written confirmation of receipt), (b) sent by telecopier (with written confirmation of receipt), or (c) when received by the addressee, if sent by a nationally recognized overnight delivery service (receipt requested), in each case to the appropriate addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers as a party may designate by written notice to the other parties):

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If to Acquiror Company: [address] Attention: [ ]	with a copy to [ ] [address]

If to the Company: Michael Li No.14 East Hushan Road Tai’an City, Shandong P.R. China Telephone No.: (86-538)-620-3897 Facsimile No.: (86-538)-620-3895	with a copy to Loeb & Loeb LLP 345 Park Avenue New York, New York 10154 Attention: Mitchell S. Nussbaum, Esq. Telephone No.: 212-407-4159 Facsimile No.: 212-407-4990

12.5 Arbitration . Any dispute or controversy under this Agreement shall be settled exclusively by arbitration in the City of New York, County of New York in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitration award in any court having jurisdiction.

12.6 Further Assurances . The parties agree (a) to furnish upon request to each other such further information, (b) to execute and deliver to each other such other documents, and (c) to do such other acts and things, all as the other party may reasonably request for the purpose of carrying out the intent of this Agreement and the documents referred to in this Agreement.

12.7 Waiver . The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power, or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power, or privilege, and no single or partial exercise of any such right, power, or privilege will preclude any other or further exercise of such right, power, or privilege or the exercise of any other right, power, or privilege. To the maximum extent permitted by applicable law, (a) no claim or right arising out of this Agreement or the documents referred to in this Agreement can be discharged by one party, in whole or in part, by a waiver or renunciation of the claim or right unless in writing signed by the other party; (b) no waiver that may be given by a party will be applicable except in the specific instance for which it is given; and (c) no notice to or demand on one party will be deemed to be a waiver of any obligation of such party or of the right of the party giving such notice or demand to take further action without notice or demand as provided in this Agreement or the documents referred to in this Agreement.

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12.8 Entire Agreement and Modification . This Agreement supersedes all prior agreements between the parties with respect to its subject matter and constitutes (along with the documents referred to in this Agreement) a complete and exclusive statement of the terms of the agreement between the parties with respect to its subject matter. This Agreement may not be amended except by a written agreement executed by the party against whom the enforcement of such amendment is sought.

12.9 Assignments, Successors, and No Third-Party Rights . No party may assign any of its rights under this Agreement without the prior consent of the other parties. Subject to the preceding sentence, this Agreement will apply to, be binding in all respects upon, and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the parties. Except as set forth in Sections 7.1 and 9.1 and in Section 6 and 11 with respect to the ability of the Investors to rely on the representations and warranties contained therein, nothing expressed or referred to in this Agreement will be construed to give any Person other than the parties to this Agreement any legal or equitable right, remedy, or claim under or with respect to this Agreement or any provision of this Agreement. This Agreement and all of its provisions and conditions are for the sole and exclusive benefit of the parties to this Agreement and their successors and assigns.

12.10 Severability . If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement will remain in full force and effect. Any provision of this Agreement held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

12.11 Section Headings, Construction . The headings of Sections in this Agreement are provided for convenience only and will not affect its construction or interpretation. All references to “Section” or “Sections” refer to the corresponding Section or Sections of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Unless otherwise expressly provided, the word “including” does not limit the preceding words or terms.

12.12 Governing Law . This Agreement will be governed by the laws of the State of New York without regard to conflicts of laws principles.

12.13 Counterparts . This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement.

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COUNTERPART SIGNATURE PAGE

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.

Acquiror Company: GRC HOLDINGS, INC. Signed: /s/ Timothy P. Halter Printed name: Timothy P. Halter Title: President
Company: LOGIC EXPRESS LTD. Signed: /s/ Lin Ling Li Printed name: Lin Ling Li Title: Legal Representative
Shareholders: Signed: /s/ Lin Ling Li Printed name: Lin Ling Li
Signed: /s/ Siu Ling Chan Printed name: Siu Ling Chan
Signed: /s/ Katherine Loh Printed name: Katherine Loh
Signed: /s/ Michael Li Printed name: Michael Li
Signed: /s/ Chao Ming Zhao Printed name: Chao Ming Zhao

-34-

COUNTERPART SIGNATURE PAGE

(FOR ISSUANCES PURSUANT TO REGULATION S)

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.

ENTITY NAME:

By:________________________________

Name:

Title:

OFFSHORE DELIVERY INSTRUCTIONS :

____________________________________

PRINT EXACT NAME IN WHICH YOU WANT

THE SECURITIES TO BE REGISTERED

Attn:___________________________________

Address:________________________________

________________________________

Phone No._______________________________

Facsimile No._____________________________

-35-

COUNTERPART SIGNATURE PAGE

(FOR ISSUANCES PURSUANT TO SECTION 4(2))

IN WITNESS WHEREOF, the parties have executed and delivered this Share Exchange Agreement as of the date first written above.

ENTITY NAME:

By:________________________________

Name:

Title:

Circle the category under which you, or the Investor for whom you are acting as Attorney for, are an “accredited investor” pursuant to Exhibit B :

1 2 3 4 5 6 7 8

____________________________________

PRINT EXACT NAME IN
WHICH YOU WANT

THE SECURITIES TO BE
REGISTERED

Attn:___________________________________

Address:________________________________

________________________________

Phone No._______________________________

Facsimile No._____________________________

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SCHEDULES

Schedule 4.1.4	Shareholder Brokers or Finders
	None
Schedule 5.1	Company Jurisdiction
Schedule 5.2	Company Subsidiaries
	Shandong Missile Biologic Products Co., Ltd.
Schedule 5.7.1	Capitalization of the Company
	None
Schedule 5.7.2	Company Redemption Requirements
Schedule 5.11	Company Brokers or Finders
	Lane Capital Markets LLC is entitled to a fee of 10% of the gross proceeds received from the Investors
Schedule 5.12	Company Title to Property
	State owned land use right issued by Municipal Government of Tai’an City which has been mortgaged to Industrial and Commercial Bank of China
Schedule 6.1	Acquiror Company Jurisdiction
Schedule 6.2	Acquiror Company Subsidiaries
Schedule 6.8.2	Acquiror Company Redemption Requirements
Schedule 6.11	Acquiror Company Brokers or Finders
Schedule 6.12	Undisclosed Liabilities
Schedule 6.13	Changes
Schedule 6.19	Litigation
Schedule 6.21	Interested Party Transactions
Schedule 6.23	Bank Accounts
Schedule 6.28	Environmental and Safety Matters

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EXHIBIT A

COMPANY SHAREHOLDERS

Name and Address of Company Shareholder	Number of Shares held by Company Shareholder	Number of Acquiror Company Shares to be Received
Lin Ling LI	1,293,367	7,902,624
Siu Ling CHAN	1,293,367	7,902,624
Michael LI 12B, 103 Leighton Road, Lippo Leighton Center Causeway Bay, Hong Kong	87,706	535,893
Katherine LOH	175,412	1,071,787
Chao Ming ZHAO	175,412	1,071,787

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EXHIBIT B

Definition of “Accredited Investor”

The term “accredited investor” means:

(1)

A bank as defined in Section 3(a)(2) of the Securities Act, or a savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Securities Act, whether acting in its individual or fiduciary capacity; a broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; an insurance company as defined in Section 2(13) of the Securities Act; an investment company registered under the Investment Company Act of 1940 (the “Investment Company Act”) or a business development company as defined in Section 2(a)(48) of the Investment Company Act; a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; a plan established and maintained by a state, its political subdivisions or any agency or instrumentality of a state or its political subdivisions for the benefit of its employees, if such plan has total assets in excess of US $5,000,000; an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), if the investment decision is made by a plan fiduciary, as defined in Section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment advisor, or if the employee benefit plan has total assets in excess of US $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors.

(2)	A private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940.

(3)	An organization described in Section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of US $5,000,000.

(4)	A director or executive officer of the Acquiror Company.

(5)	A natural person whose individual net worth, or joint net worth with that person’s spouse, at the time of his or her purchase exceeds US $1,000,000.

(6)	A natural person who had an individual income in excess of US $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of US $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year.

(7)

A trust, with total assets in excess of US $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) (i.e., a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of the prospective investment).

(8)	An entity in which all of the equity owners are accredited investors. (If this alternative is checked, the Trustee or the Shareholder must identify each equity owner and provide statements signed by each demonstrating how each is qualified as an accredited investor.)

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EXHIBIT C

Definition of “U.S. Person”

(1)	“U.S. person” (as defined in Regulation S) means:

(i)	Any natural person resident in the United States;

(ii)	Any partnership or corporation organized or incorporated under the laws of the United States;

(iii)

Any estate of which any executor or administrator is a U.S. person;

(iv)	Any trust of which any trustee is a U.S. person;

(v)	Any agency or branch of a foreign entity located in the United States;

(vi)	Any non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person;

(vii)

Any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; and

(viii)

Any partnership or corporation if: (A) organized or incorporated under the laws of any foreign jurisdiction; and (B) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a)) who are not natural persons, estates or trusts.

(2)

Notwithstanding paragraph (1) above, any discretionary account or similar account (other than an estate or trust) held for the benefit or account of a non-U.S. person by a dealer or other professional fiduciary organized, incorporated, or (if an individual) resident in the United States shall not be deemed a “U.S. person.”

(3)	Notwithstanding paragraph (1), any estate of which any professional fiduciary acting as executor or administrator is a U.S. person shall not be deemed a U.S. person if:

(i)	An executor or administrator of the estate who is not a U.S. person has sole or shared investment discretion with respect to the assets of the estate; and

(ii)	The estate is governed by foreign law.

(4)

Notwithstanding paragraph (1), any trust of which any professional fiduciary acting as trustee is a U.S. person shall not be deemed a U.S. person if a trustee who is not a U.S. person has sole or shared investment discretion with respect to the trust assets, and no beneficiary of the trust (and no settlor if the trust is revocable) is a U.S. person.

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(5)	Notwithstanding paragraph (1), an employee benefit plan established and administered in accordance with the law of a country other than the United States and customary practices and documentation of such country shall not be deemed a U.S. person.

(6)	Notwithstanding paragraph (1), any agency or branch of a U.S. person located outside the United States shall not be deemed a “U.S. person” if:

(i)	The agency or branch operates for valid business reasons; and

(ii)	The age ncy or branch is engaged in the business of insurance or banking and is subject to substantive ins urance or banking regulation, respectively, in the jurisdiction where located.

(7)

The International Monetary Fund, the International Bank for Reconstruction and Development, the Inter-American Development Bank, the Asian Development Bank, the African Development Bank, the United Nations, and their agencies, affiliates and pension plans, and any other similar international organizations, their agencies, affiliates and pension plans shall not be deemed “U.S. persons.”

-41-

EXHIBIT D

ACCREDITED INVESTOR REPRESENTATIONS

Each Shareholder indicating that it is an Accredited Investor, severally and not jointly, further represents and warrants to the Acquiror Company as follows:

1.	Such person or entity qualifies as an Accredited Investor on the basis set forth on its signature page to this Agreement.

2.	Such person or entity has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such Shareholder’s interests in connection with the transactions contemplated by this Agreement.

3.	Such person or entity has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Acquiror Company Shares.

4.	Such person or entity understands the various risks of an investment in the Acquiror Company Shares and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Acquiror Company Shares.

5.	Such person or entity has had access to the Acquiror Company’s financial statements.

Such person or entity has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Acquiror Company that such person or entity has requested and all such public information is sufficient for such person or entity to evaluate the risks of investing in the Acquiror Company Shares.

7.	Such person or entity has been afforded the opportunity to ask questions of and receive answers concerning the Acquiror Company and the terms and conditions of the issuance of the Acquiror Company Shares.

8.	Such person or entity is not relying on any representations and warranties concerning the Acquiror Company made by the Acquiror Company or any officer, employee or agent of the Acquiror Company, other than those contained in this Agreement.

9.	Such person or entity is acquiring the Acquiror Company Shares for such person’s or entity’s, as the case may be, own account, for investment and not for distribution or resale to others.

10.	Such person or entity will not sell or otherwise transfer the Acquiror Company Shares, unless either (a) the transfer of such securities is registered under the Securities Act or (b) an exemption from registration of such securities is available.

-42-

11.	Such person or entity understands and acknowledges that the Acquiror Company is under no obligation to register the Acquiror Company Shares for sale under the Securities Act.

12.	Such person or entity consents to the placement of a legend on any certificate or other document evidencing the Acquiror Company Shares substantially in the form set forth in Section 4.2.5(a).

13.	Such person or entity represents that the address furnished on its signature page to this Agreement is the principal residence if he is an individual or its principal business address if it is a corporation or other entity.

14.

Such person or entity understands and acknowledges that the Acquiror Company Shares have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Acquiror Company that has been supplied to such person or entity and that any representation to the contrary is a criminal offense.

15.	Such person or entity acknowledges that the representations, warranties and agreements made by such person or entity herein shall survive the execution and delivery of this Agreement and the purchase of the Acquiror Company Shares.

-43-

EXHIBIT E

NON U.S. PERSON REPRESENTATIONS

Each Shareholder indicating that it is not a U.S. person, severally and not jointly, further represents and warrants to the Acquiror Company as follows:

1.	At the time of (a) the offer by the Acquiror Company and (b) the acceptance of the offer by such person or entity, of the Acquiror Company Shares, such person or entity was outside the United States.

2.	No offer to acquire the Acquiror Company Shares or otherwise to participate in the transactions contemplated by this Agreement was made to such person or entity or its representatives inside the United States.

3.	Such person or entity is not purchasing the Acquiror Company Shares for the account or benefit of any U.S. person, or with a view towards distribution to any U.S. person, in violation of the registration requirements of the Securities Act.

Such person or entity will make all subsequent offers and sales of the Acquiror Company Shares either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such person or entity will not resell the Acquiror Company Shares to any U.S. person or within the United States prior to the expiration of a period commencing on the Closing Date and ending on the date that is one year thereafter (the “Distribution Compliance Period”), except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act.

5.	Such person or entity is acquiring the Acquiror Company Shares for such Shareholder’s own account, for investment and not for distribution or resale to others.

6.	Such person or entity has no present plan or intention to sell the Acquiror Company Shares in the United States or to a U.S. person at any predetermined time, has made no predetermined arrangements to sell the Acquiror Company Shares and is not acting as a Distributor of such securities.

Neither such person or entity, its Affiliates nor any Person acting on behalf of such person or entity, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Acquiror Company Shares at any time after the Closing Date through the Distribution Compliance Period except in compliance with the Securities Act.

8.	Such person or entity consents to the placement of a legend on any certificate or other document evidencing the Acquiror Company Shares substantially in the form set forth in Section 4.2.5(b).

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9.	Such person or entity is not acquiring the Acquiror Company Shares in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.

10.	Such person or entity has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person’s or entity’s interests in connection with the transactions contemplated by this Agreement.

11.	Such person or entity has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Acquiror Company Shares.

12.	Such person or entity understands the various risks of an investment in the Acquiror Company Shares and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Acquiror Company Shares.

13.	Such person or entity has had access to the Acquiror Company’s financial statements.

14.

15.	Such person or entity has been afforded the opportunity to ask questions of and receive answers concerning the Acquiror Company and the terms and conditions of the issuance of the Acquiror Company Shares.

16.	Such person or entity is not relying on any representations and warranties concerning the Acquiror Company made by the Acquiror Company or any officer, employee or agent of the Acquiror Company, other than those contained in this Agreement.

17.	Such person or entity will not sell or otherwise transfer the Acquiror Company Shares, unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available.

18.	Such person or entity understands and acknowledges that the Acquiror Company is under no obligation to register the Acquiror Company Shares for sale under the Securities Act.

19.	Such person or entity represents that the address furnished on its signature page to this Agreement is the principal residence if he is an individual or its principal business address if it is a corporation or other entity.

20.

21.	Such person or entity acknowledges that the representations, warranties and agreements made by such person or entity herein shall survive the execution and delivery of this Agreement and the purchase of the Acquiror Company Shares.

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EXHIBIT 3.1

	Delaware	PAGE 1
	The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY CERTIFY THAT THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF CONVERSION OF A TEXAS CORPORATION UNDER THE NAME OF “GRC HOLDINGS, INC.” TO A DELAWARE CORPORATION, CHANGING ITS NAME FROM “GRC HOLDINGS, INC.” TO “CHINA BIOLOGIC PRODUCTS, INC.” FILED IN THIS OFFICE ON THE TENTH DAY OF JANUARY, A.D. 2007, AT 4:56 O'CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS.

Harriet Smith Windsor, Secretary of State

4283489 8100V

070031736

AUTHENTICATION: 5348489

DATE: 01-11-07

State of Delaware
Secretary of State
Division of Corporations
Delivered 04:55 PM 01/10/2007
FILED 04:56 PM 01/10/2007
SRV 070031736 - 4283489 FILE

STATE OF DELAWARE
CERTIFICATE OF CONVERSION
FROM A NON-DELAWARE CORPORATION
TO A DELAWARE CORPORATION
PURSUANT TO SECTION 265 OF THE
DELAWARE GENERAL CORPORATION LAW

1). The jurisdiction where the Non-Delaware Corporation first formed is TEXAS

2.) The jurisdiction immediately prior to filing this Certificate is TEXAS

3.) The date the Non-Delaware Corporation first formed is May 28, 2003

4.) The name of the Non-Delaware Corporation immediately prior to filing this Certificate is GRC HOLDINGS, INC.

5.) The name of the Corporation as set forth in the Certificate of Incorporation is CHINA BIOLOGIC PRODUCTS, INC.

IN WITNESS WHEREOF, the undersigned being duly authorized to sign on behalf of the converting Non-Delaware Corporation have executed this Certificate on the 5th day of JANUARY , A.D. 2007 .

	By:	/s/ Sarah-Nicole Pinheiro

	Name:	/s/ Sarah-Nicole Pinheiro
		Print or Type

	Title:	Incorporator
		Print or Type

	Delaware	PAGE 2
	The First State

I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE DO HEREBY CERTIFY THAT THE ATTACHED IS A TRUE AND CORRECT COPY OF CERTIFICATE OF INCORPORATION OF “CHINA BIOLOGIC PRODUCTS, INC.” FILED IN THIS OFFICE ON THE TENTH DAY OF JANUARY, A.D. 2007, AT 4:56 O'CLOCK P.M.

A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE KENT COUNTY RECORDER OF DEEDS.

Harriet Smith Windsor, Secretary of State

4283489 8100V

070031736

AUTHENTICATION: 5348489

DATE: 01-11-07

State of Delaware
Secretary of State
Division of Corporations
Delivered 04:55 PM 01/10/2007
FILED 04:56 PM 01/10/2007
SRV 070031736 - 4283489 FILE

STATE OF DELAWARE

CERTIFICATE OF INCORPORATION

OF

CHINA BIOLOGIC PRODUCTS, INC.

FIRST: The name of this corporation shall be: CHINA BIOLOGIC PRODUCTS, INC.

SECOND: Its registered office in the State of Delaware is to be located at 615 South DuPont Highway, city of Dover County of Kent, Delaware 19901 and its registered agent at such address is National corporte Research, Ltd.

THIRD: The purposes of the corporation shall be:

To engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH: The total number of shares of stock which this corporation is authorized to issue is: 110,000,000 shares, with a par value of $0.0001, of which 100,000,000 shall be Common Stock and 10,000,000 shall be Preferred Stock.

FIFTH: The mane and address of the incorporator is as follows:

Sarah-Nicole Pinheiro

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

SIXTH: The Board of Directors shall have the power to adopt, amend or repeal the by-laws.

SEVENTH: No director shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law, (i) for breach of the director’s dity of loyalty to the Corporation or its stockholders, (ii) for acts of omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the Delaware General Corporation Law of (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal of this Article Seventh shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment.

IN WITNESS WHEREOF, the undersigned, being the incorporator herein before named, has executed signed and acknowledged this certificate of incorporation this 5th day of January, A.D. 2007.


	Incorporator: Sarah-Nicole Pinheiro

EXHIBIT 3.2

CORPORATE BYLAWS OF

GRC HOLDINGS, INC.

(a Texas corporation)

BYLAWS

GRC HOLDINGS, INC.
(a Texas Corporation)

ARTICLE I.

NAME AND OFFICES

I.1 Name . The name of the Corporation is GRC HOLDINGS, INC., hereinafter referred to as the “Corporation.”

I.2 Registered Office and Agent . The Corporation shall establish, designate and continuously maintain a registered office and agent in the State of Texas, subject to the following provisions:


	(a) Registered Office . The Corporation shall establish and continuously maintain in the State of Texas a registered office which may be, but need not be, the same as its place of business.

	(b) Registered Agent . The Corporation shall designate and continuously maintain in the State of Texas a registered agent, which agent may be either an individual resident of the State of Texas whose business office is identical with such registered office, or a domestic corporation or a foreign corporation authorized to transact business in the State of Texas, having a business office identical with such registered office.

	(c) Change of Registered Office or Agent . The Corporation may change its registered office or change its registered agent, or both, upon the filing in the Office of the Secretary of State of Texas of a statement setting forth the facts required by law, and executed for the Corporation by its President or a Vice President.

I.3 Other Offices . The Corporation may also have offices at such other places within and without the State of Texas as the Board of Directors may, from time to time, determine the business of the Corporation may require.

ARTICLE II.

SHAREHOLDERS

II.1 Place of Meetings . Each meeting of the shareholders of the Corporation is to be held at the principal offices of the Corporation or at such other place, either within or without the State of Texas, as may be specified in the notice of the meeting or in a duly executed waiver of notice thereof.

II.2 Annual Meetings . The annual meeting of the shareholders for the election of Directors and for the transaction of such other business as may properly come before the meeting shall be held within one hundred twenty (120) days after the close of the fiscal year of the Corporation on a day during such period to be selected by the Board of Directors; provided, however, that the failure to hold the annual meeting within the designated period of time or on the designated date shall not work a forfeiture or dissolution of the Corporation.

II.3 Special Meetings . Special meetings of the shareholders, for any purpose or purposes, may be called by the Chairman of the Board or the President. Special meetings of the shareholders shall be called by the President or Secretary at the request in writing of a majority of the Board of Directors, or at the request in writing of shareholders owning at least fifty percent (50%) of the capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting and the business to be transacted at any such special meeting of shareholders, and shall be limited to the purposes stated in the notice therefor.

II.4 Notice . Written or printed notice of the meeting stating the place, day and hour of the meeting, and in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by mail, by or at the direction of the Chairman of the Board or the President, the Secretary or a majority of the members of the Board of Directors calling the meeting, to each shareholder entitled to vote at such meeting as determined in accordance with the provisions of Section 2.10 hereof. If mailed, such notice shall be deemed to be delivered when deposited in the United States Mail, with postage thereon prepaid, addressed to the shareholder entitled thereto at his address as it appears on the share transfer records of the Corporation.

II.5 Voting List . The officer or agent having charge and custody of the share transfer records of the Corporation, shall prepare, at least ten (10) days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting, arranged in alphabetical order and containing the address and number of voting shares held by each, which list shall be kept on file at the registered office or principal place of business of the Corporation for a period of not less than ten (10) days prior to such meeting and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to

the inspection of any shareholder during the entire time of the meeting. The original share ledger or transfer book, or a duplicate thereof, shall be prima facie evidence as to identity of the shareholders entitled to examine such list or share ledger or transfer book and to vote at any such meeting of the shareholders.

II.6 Quorum . The holders of one-third of the shares of the capital stock issued and outstanding and entitled to vote thereat, represented in person or by proxy, shall be requisite and shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation or by these Bylaws. The shareholders represented in person or by proxy at a meeting of the shareholders at which a quorum is not present may adjourn the meeting until such time and to such place as may be determined by a vote of the holders of a majority of the shares represented in person or by proxy at that meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

II.7 Requisite Vote . If a quorum is present at any meeting, the vote of the holders of a majority of the shares of capital stock having voting power, present in person or represented by proxy, shall determine any question brought before such meeting, unless the question is one upon which, by express provision of the Articles of Incorporation or of these Bylaws, a different vote shall be required or permitted, in which case such express provision shall govern and control the determination of such question.

II.8 Withdrawal of Quorum . If a quorum is present at the time of commencement of any meeting, the shareholders present at such duly convened meeting may continue to transact any business which may properly come before said meeting until adjournment thereof, notwithstanding the withdrawal from such meeting of sufficient holders of the shares of capital stock entitled to vote thereat to leave less than a quorum remaining.

II.9 Voting at Meeting . Voting at meetings of shareholders shall be conducted and exercised subject to the following procedures and regulations:


	(a) Voting Power . In the exercise of voting power with respect to each matter properly submitted to a vote at any meeting of shareholders, each shareholder of the capital stock of the Corporation having voting power shall be entitled to one (1) vote for each such share held in his name on the records of the Corporation, except to the extent otherwise specified by the Articles of Incorporation.


	(b) Exercise of Voting Power; Proxies . At any meeting of the shareholders, every holder of the shares of capital stock of the Corporation entitled to vote at such meeting may vote either in person, or by proxy executed in writing by such shareholder. A telegram, telex, cablegram, or similar transmission by a shareholder, or a photographic, photostatic, facsimile, or similar reproduction of a writing executed by a shareholder, shall be treated as an execution in writing. No proxy shall be valid after the expiration of eleven (11) months from the date of its execution, unless otherwise stated therein. A proxy shall be revocable unless expressly designated therein as irrevocable and coupled with an interest. Proxies coupled with an interest include the appointment as proxy of: (a) a pledgee; (b) a person who purchased or agreed to purchase or owns or holds an option to purchase the shares voted; (c) a creditor of the Corporation who extended its credit under terms requiring the appointment; (d) an employee of the Corporation whose employment contract requires the appointment; or (e) a party to a voting agreement created under Section B of Article 2.30 of the Texas Business Corporation Act, as amended. Each proxy shall be filed with the Secretary of the Corporation prior to or at the time of the meeting. Voting for directors shall be in accordance with the provisions of paragraph (c) below of this Section 2.9. Any vote may be taken by voice vote or by show of hands unless someone entitled to vote at the meeting objects, in which case written ballots shall be used.

	(c) Election of Directors . In all elections of Directors cumulative voting shall be prohibited.

II.10 Record Date for Meetings; Closing Transfer Records . As more specifically provided in Article 7, Section 7.7 hereof, the Board of Directors may fix in advance a record date for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such record date to be not less than ten (10) nor more than sixty (60) days prior to such meeting, or the Board of Directors may close the share transfer records for such purpose for a period of not less than ten (10) nor more than sixty (60) days prior to such meeting. In the absence of any action by the Board of Directors, the date upon which the notice of the meeting is mailed shall be deemed the record date.

II.11 Action Without Meetings . Any action required by the Act, the Articles of Incorporation or these Bylaws to be taken at any annual or special meeting of the shareholders, or any action which may be taken at any annual or special meeting of the shareholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing setting forth the action so taken, shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all of the shares entitled to vote on the action were present and voted, provided that such action is done in compliance with Section 9.10 of the Act. Any such executed written consent, or an executed counterpart thereof, shall be placed in the minute book of the Corporation. Every written consent shall bear the date of signature of each shareholder who signs the consent. No written consent shall be effective to take the action that is the subject of the consent

unless, within sixty (60) days after the date of the earliest dated consent delivered to the Corporation in the manner required under Section 2.12 hereof, a consent or consents signed by the holders of a majority of the shares of the capital stock issued and outstanding and entitled to vote on the action that is the subject of the consent are delivered to the Corporation.

II.12 Record Date for Action Without Meetings . Unless a record date shall have previously been fixed or determined by the Board of Directors as provided in Section 2.10 hereof, whenever action by shareholders is proposed to be taken by consent in writing without a meeting of shareholders, the Board of Directors may fix a record date for the purpose of determining shareholders entitled to consent to that action, which record date shall not precede, and shall not be more than ten (10) days after, the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors and the prior action of the Board of Directors is not required by statute or the Articles of Incorporation, the record date for determining shareholders entitled to consent to action in writing without a meeting shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office, its principal place of business, or an officer or agent of the Corporation having custody of the books in which proceedings of meetings of shareholders are recorded. Delivery shall be by hand or by certified or registered mail, return receipt requested. Delivery to the Corporation’s principal place of business shall be addressed to the President or principal executive officer of the Corporation. If no record date shall have been fixed by the Board of Directors and prior action of the Board of Directors is required by statute, the record date for determining shareholders entitled to consent to action in writing without a meeting shall be at the close of business on the date in which the Board of Directors adopts a resolution taking such prior action.

II.13 Preemptive Rights . Unless otherwise determined by the Board of Directors in the manner provided under the Texas Business Corporation Act, as amended, no holder of shares of capital stock of the Corporation shall, as such holder, have any right to purchase or subscribe for any capital stock of any class Which the Corporation may issue or sell, whether or not exchangeable for any capital stock of the Corporation of any class or classes, whether issued out of unissued shares authorized by the Articles of Incorporation, as amended, or out of shares of capital stock of the Corporation acquired by it after the issue thereof; nor, unless otherwise determined by the Board of Directors in the manner provided under the

Texas Business Corporation Act, as amended, shall any holder of shares of capital stock of the Corporation, as such holder, have any right to purchase, acquire or subscribe for any securities which the Corporation may issue or sell whether or not convertible into or exchangeable for shares of capital stock of the Corporation of any class or classes, and whether or not any such securities have attached or appurtenant thereto warrants, options or other instruments which entitle the holders thereof to purchase, acquire or subscribe for shares of capital stock of any class or classes.

ARTICLE III.

DIRECTORS

III.1 Management Powers . The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, its Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

III.2 Number and Qualification . The Board of Directors shall consist of not less than one (1) member nor more than fifteen (15) members; provided, however, the initial Board of Directors shall consist of one member(s). Directors need not be residents of the State of Texas or shareholders of the Corporation. Each Director shall qualify as a Director following election as such by agreeing to act or acting in such capacity. The number of Directors may be increased or decreased from time to time by resolution of the Board of Directors or shareholders without the necessity of a written amendment to the Bylaws of the Corporation; provided, however, no decrease shall have the effect of shortening the term of any incumbent Director.

III.3 Election and Term . Members of the Board of Directors shall hold office until the annual meeting of shareholders and until their successors shall have been elected and qualified. At the annual meeting of the shareholders, the shareholders entitled to vote in an election of Directors shall elect Directors to hold office until the next succeeding annual meeting. Each Director shall hold office for the term for which he is elected, and until his successor shall be elected and qualified or until his death, resignation or removal, if earlier.

III.4 Voting on Directors . Directors shall be elected by the vote of the holders of a plurality of the shares entitled to vote in the election of Directors and represented in person or by proxy at a meeting of

shareholders at which a quorum is present. Cumulative voting in the election of Directors is expressly prohibited.

III.5 Vacancies . Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining Directors then in office, though less than a quorum of the Board of Directors. For purposes of these Bylaws, a “vacancy” shall be defined as an unfilled directorship arising by virtue of the death, resignation or removal of a Director theretofore duly elected to serve in such capacity in accordance with the relevant provisions of these Bylaws. A Director elected to fill a vacancy shall be elected for the unexpired portion of the term of his predecessor in office.

III.6 New Directorships . Any directorship to be filled by reason of an increase in the number of Directors actually serving as such shall be filled by election at an annual meeting of the shareholders or at a special meeting of shareholders called for that purpose, or by the Board of Directors for a term of office continuing only until the next election of one or more Directors by the shareholders, provided that the Board of Directors may not fill more than two (2) such directorships during the period between any two (2) successive annual meetings of shareholders.

III.7 Removal . Any Director may be removed either for or without cause at any duly convened special or annual meeting of shareholders, by the affirmative vote of a majority in number of shares of the shareholders present in person or by proxy at any meeting and entitled to vote for the election of such Director, provided notice of intention to act upon such matter shall have been given in the notice calling such meeting.

III.8 Meetings . The meetings of the Board of Directors shall be held and conducted subject to the following regulations:

(a) Place . Meetings of the Board of Directors of the Corporation, annual, regular or special, are to be held at the principal office or place of business of the Corporation, or such other place, either within or without the State of Texas, as may be specified in the respective notices, or waivers of notice, thereof.

(b) Annual Meeting . The Board of Directors shall meet each year immediately after the annual meeting of the shareholders, at the place where such meeting of the shareholders has been held (either within or without the State of Texas), for the purpose of organization, election of officers, and consideration of any other business that may properly be brought before the meeting. No notice of any kind to either old or new members of the Board of Directors for such annual meeting shall be required.

(c) Regular Meetings . Regular meetings of the Board of Directors may be held without notice at such time and at such place or places as shall from time to time be determined and designated by the Board.

(d) Special Meetings . Special meetings of the Board of Directors may be called by the Chairman of the Board or the President of the Corporation on notice of two (2) days to each Director either personally or by mail or by telegram; special meetings shall be called by the Chairman of the Board or the President or Secretary in like manner and on like notice on the written request of two (2) Directors.

(e) Notice and Waiver of Notice . Attendance of a Director at any meeting shall constitute a waiver of notice of such meeting, except where a Director attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

(f) Quorum . At all meetings of the Board of Directors, a majority of the number of Directors fixed by these Bylaws shall constitute a quorum for the transaction of business, unless a greater number is required by law or by the Articles of Incorporation. If a quorum shall not be present at any meeting of Directors, the Directors present thereat may adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

(g) Requisite Vote . In the exercise of voting power with respect to each matter properly submitted to a vote at any meeting of the Board of Directors, each Director present at such meeting shall have one (1) vote. The act of a majority of the Directors present at any meeting at which a quorum is present shall be the act of the Board of Directors.

III.9 Action Without Meetings . Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted by law to be taken at any meetings of the Board of Directors, or any committee thereof, may be taken without a meeting, if prior to such action a written consent thereto is signed by all members of the Board or of such committee, as the case may be, and such written consent is filed in the minutes or proceedings of the Board of Directors or committee.

III.10 Committees . Committees designated and appointed by the Board of Directors shall function subject to and in accordance with the following regulations and procedures:

(a) Designation and Appointment . The Board of Directors may, by resolution adopted by a majority of the entire Board, designate and appoint one or more committees under such name or names and for such purpose or function as may be deemed appropriate.

(b) Members; Alternate Members; Terms . Each Committee thus designated and appointed shall consist of two or more of the Directors of the Corporation, one of whom, in the case of the Executive Committee, shall be the President. The Board of Directors may designate one or more of its members as alternate members of any committee, who may, subject to any limitations imposed by the entire Board, replace absent or disqualified members at any meeting of

that committee. The members or alternate members of any such committee shall serve at the pleasure of and subject to the discretion of the Board of Directors.

(c) Authority . Each Committee, to the extent provided in the resolution of the Board creating same, shall have and may exercise such of the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation as the Board of Directors may direct and delegate, except, however, those matters which are required by statute to be reserved unto or acted upon by the entire Board of Directors.

(d) Records . Each such Committee shall keep and maintain regular records or minutes of its meetings and report the same to the Board of Directors when required.

(e) Change in Number . The number of members or alternate members of any Committee appointed by the Board of Directors, as herein provided, may be increased or decreased (but not below two) from time to time by appropriate resolution adopted by a majority of the entire Board of Directors.

(f) Vacancies . Vacancies in the membership of any committee designated and appointed hereunder shall be filled by the Board of Directors, at a regular or special meeting of the Board of Directors, in a manner consistent with the provisions of this Section 3.10.

(g) Removal . Any member or alternate member of any committee appointed hereunder may be removed by the Board of Directors by the affirmative vote of a majority of the entire Board, whenever in its judgment the best interests of the Corporation will be served thereby.

(h) Meetings . The time, place and notice (if any) of committee meetings shall be determined by the members of such committee.

(i) Quorum; Requisite Vote . At meetings of any committee appointed hereunder, a majority of the number of members designated by the Board of Directors shall constitute a quorum for the transaction of business. The act of a majority of the members and alternate members of the committee present at any meeting at which a quorum is present shall be the act of such committee, except as otherwise specifically provided by statute or by the Articles of Incorporation or by these Bylaws. If a quorum is not present at a meeting of such committee, the members of such committee present may adjourn the meeting from time to time, without notice other than an announcement at the meeting, until a quorum is present.

(j) Compensation . Appropriate compensation for members and alternate members of any committee appointed pursuant to the authority hereof may be authorized by the action of a majority of the entire Board of Directors pursuant to the provisions of Section 3.11 hereof.

(k) Action Without Meetings . Any action required or permitted to be taken at a meeting of any committee may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all members of such committee. Such consent shall have the same force and effect as a unanimous vote at a meeting. The signed consent, or a signed copy, shall become a part of the record of such committee.

(1) Responsibility . Notwithstanding any provision to the contrary herein, the designation and appointment of a committee and the delegation of authority to it shall not operate to

relieve the Board of Directors, or any member or alternate member thereof, of any responsibility imposed upon it or him by law.

III.11 Compensation . By appropriate resolution of the Board of Directors, the Directors may be reimbursed their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum (as determined from time to time by the vote of a majority of the Directors then in office) for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in another capacity and receiving compensation therefor. Members of special or standing committees may, by appropriate resolution of the Board of Directors, be allowed similar reimbursement of expenses and compensation for attending committee meetings.

III.12 Maintenance of Records . The Directors may keep the books and records of the Corporation, except such as are required by law to be kept within the State, outside the State of Texas or at such place or places as they may, from time to time, determine.

III.13 Interested Directors and Officers . An otherwise valid contract or other transaction between the Corporation and one or more of its Directors or officers, or between the Corporation and any firm of which one or more of its Directors or officers are members or employees, or in which they are interested, or between the Corporation and any corporation or association of which one or more of its Directors or officers are shareholders, members, directors, officers, or employees, or in which they are interested, shall be valid notwithstanding the presence of such Director or Directors or officer or officers at the meeting of the Board of Directors of the Corporation, which acts upon, or in reference to, such contract, or transaction, or solely because his or their votes are counted for such purpose, if any one of the following is satisfied: (a) the material facts of such relationship or interest shall be disclosed or known to the Board of Directors and the Board of Directors shall, nevertheless in good faith, authorize, approve and ratify such contract or transaction by a vote of a majority of the Directors present, such interested Director or Directors to be counted in determining whether a quorum is present, but not to be counted in calculating the majority of such quorum necessary to carry such vote; (b) the material facts of such relationship or interest as to the contract or transaction are disclosed or are known to the shareholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by the vote of the shareholders; or (c) the contract or transaction is fair to the Corporation as of the time it is authorized,

approved or ratified by the Board of Directors, a committee thereof or the shareholders. The provisions of this Section shall not be construed to invalidate any contract or other transaction which would otherwise be valid under the common and statutory law applicable thereto.

ARTICLE IV.

NOTICES

IV.1 Method of Notice . Whenever under the provisions of the Texas Business Corporation Act or of the Articles of Incorporation or of these Bylaws, notice is required to be given to any Director or shareholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such Director or shareholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States Mail. Notice to Directors or shareholders may also be given by telegram.

IV.2 Waiver . Whenever any notice whatever is required to be given under the provisions of the Texas Business Corporation Act or under the provisions of the Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Attendance by such person or persons, whether in person or by proxy, at any meeting requiring notice shall constitute a waiver of notice of such meeting, except as provided in Section 3.8(5) hereof.

ARTICLE V.

OFFICERS AND AGENTS

V.1 Designation . The officers of the Corporation shall be chosen by the Board of Directors and shall consist of the offices of:


	(a) President and Secretary; and

	(b) Such other offices and officers (including a Chairman of the Board, one or more Vice Presidents and a Treasurer) and assistant officers and agents as the Board of Directors shall deem necessary.

V.2 Election of Officers . Each officer designated in Section 5.1(a) hereof shall be elected by the Board of Directors on the expiration of the term of office of such officer, as herein provided, or

whenever a vacancy exists in such office. Each officer or agent designated in Section 5.1(b) above may be elected by the Board at any meeting.

V.3 Qualifications . No officer or agent need be a shareholder of the Corporation or a resident of Texas. No officer or agent is required to be a Director, except the Chairman of the Board. Any two or more offices may be held by the same person.

V.4 Term of Office . Unless otherwise specified by the Board of Directors at the time of election or appointment, or by the express provisions of an employment contract approved by the Board, the term of office of each officer and each agent shall expire on the date of the first meeting of Directors next following the annual meeting of shareholders each year. Each such officer or agent shall serve until the expiration of the term of his office or, if earlier, his death, resignation or removal.

V.5 Authority . Officers and agents shall have such authority and perform such duties in the management of the Corporation as are provided in these Bylaws or as may be determined by resolution of the Board of Directors not inconsistent with these Bylaws.

V.6 Removal . Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby. Such removal shall be without prejudice to the contract rights, if any, of the person so removed. Election or appointment of an officer or agent shall not of itself create contract rights.

V.7 Vacancies . Any vacancy occurring in any office of the Corporation (by death, resignation, removal or otherwise) shall be filled by the Board of Directors.

V.8 Compensation . The compensation of all officers and agents of the Corporation shall be fixed from time to time by the Board of Directors.

V.9 Chairman of the Board . If a Chairman of the Board is elected, he shall be chosen from among the Directors and shall be the chief executive and principal officer of the Corporation. He shall have the power to call special meetings of the shareholders and of the Directors for any purpose or purposes, and he shall preside at all meetings of the shareholders and of the Board of Directors, unless he shall be absent or unless he shall, at his election, designate the President to preside in his stead. The Chairman of the Board shall be responsible for the operations and business affairs of the Corporation and shall possess all of the powers granted by the Bylaws to the President, including the power to make and sign contracts and agreements in the name and on behalf of the Corporation. He shall, in general, have

supervisory power over the President and all other officers and the business activities of the Corporation, subject to the discretion of the Board of Directors.

V.10 President . Subject to the supervision of the Chairman of the Board, or in the absence of the election of a Chairman of the Board, the President shall be the chief executive officer of the Corporation; shall preside at all meetings of the shareholders and the Board of Directors; shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. The President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the Corporation, except where required or permitted by law to be otherwise executed and except where the execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation. The President shall perform such other duties and possess such other authority and powers as the Board of Directors may from time to time prescribe.

V.11 Vice Presidents . The Vice President, or if there shall be more than one, the Vice Presidents in the order determined by a majority vote of the Board of Directors, shall, in the prolonged absence or disability of the President (and Chairman of the Board, if one is elected), perform the duties and exercise the powers of the President and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe or the chief executive officer may from time to time delegate.

V.12 Secretary . The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders of the Corporation and record all proceedings of the meetings of the Corporation and of the Board of Directors in a book to be maintained for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors, the Chairman of the Board, or President. He shall have custody of the corporate seal of the Corporation, and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature.

V.13 Assistant Secretaries . The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors, shall in the absence or disability of the

Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe or the chief executive officer may from time to time delegate.

V.14 Treasurer . The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President (and Chairman of the Board, if one is elected) and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money, and other property of whatever kind in his possession or under his control owned by the Corporation. The Treasurer shall perform such other duties and have such other authority and powers as the Board of Directors may from time to time prescribe or as the chief executive officer may from time to time delegate.

V.I5 Assistant Treasurers . The Assistant Treasurer, or, if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe or as the chief executive officer may from time to time delegate.

ARTICLE VI.

INDEMNIFICATION

VI.1 Mandatory Indemnification . Each person who was or is made a party or is threatened to be made a party, or who was or is a witness without being named a party, to any threatened, pending or completed action, claim, suit or proceeding, whether civil, criminal, administrative or investigative, any appeal in such an action, suit or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding (a “Proceeding”), by reason of the fact that such individual is or was a Director or officer of the Corporation, or while a Director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, partnership, trust, employee benefit plan or other enterprise, shall be indemnified and held harmless by the Corporation from and against any judgments, penalties (including excise taxes), fines, amounts paid in settlement and reasonable expenses (including court costs and attorneys’ fees) actually incurred by such person in connection with such Proceeding if it is determined that he acted in good faith and reasonably believed (i) in the case of conduct in his official capacity on behalf of the Corporation that his conduct was in the Corporation’s best interests, (ii) in all other cases, that his conduct was not opposed to the best interests of the Corporation, and (iii) with respect to any Proceeding which is a criminal action, that he had no reasonable cause to believe his conduct was unlawful; provided, however, that in the event a determination is made that such person is liable to the Corporation or is found liable on the basis that personal benefit was improperly received by such person, the indemnification is limited to reasonable expenses actually incurred by such person in connection with the Proceeding and shall not be made in respect of any Proceeding in which such person shall have been found liable for willful or intentional misconduct in the performance of his duty to the Corporation. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself be determinative of whether the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any Proceeding which is a criminal action, had no reasonable cause to believe that his conduct was unlawful. A person shall be deemed to have been found liable in respect of any claim, issue or matter only after the person shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom.

VI.2 Determination of Indemnification . Any indemnification under the foregoing Section 6.1 (unless ordered by a court of competent jurisdiction) shall be made by the Corporation only upon a determination that indemnification of such person is proper in the circumstances by virtue of the fact that it shall have been determined that such person has met the applicable standard of conduct. Such determination shall be made (1) by a majority vote of a quorum consisting of Directors who at the time of the vote are not named defendants or respondents in the Proceeding; (2) if such quorum cannot be obtained, by a majority vote of a committee of the Board of Directors, designated to act in the matter by a majority of all Directors, consisting solely of two or more Directors who at the time of the vote are not named defendants or respondents in the Proceeding; (3) by special legal counsel (in a written opinion) selected by the Board of Directors or a committee of the Board by a vote as set forth in Subsection (1) or (2) of this Section, or, if such quorum cannot be obtained and such committee cannot be established, by a majority vote of all Directors (in which Directors who are named defendants or respondents in the Proceeding may participate); or (4) by the shareholders of the Corporation in a vote that excludes the shares held by Directors who are named defendants or respondents in the Proceeding.

VI.3 Advance of Expenses . Reasonable expenses, including court costs and attorneys’ fees, incurred by a person who was or is a witness or who was or is named as a defendant or respondent in a Proceeding, by reason of the fact that such individual is or was a Director or officer of the Corporation, or while a Director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another corporation, partnership, trust, employee benefit plan or other enterprise, shall be paid by the Corporation at reasonable intervals in advance of the final disposition of such Proceeding, and without the determination specified in the foregoing Section 6.2, upon receipt by the Corporation of a written affirmation by such person of his good faith belief that he has met the standard of conduct necessary for indemnification under this Article 6, and a written undertaking by or on behalf of such person to repay the amount paid or reimbursed by the Corporation if it is ultimately determined that he is not entitled to be indemnified by the Corporation as authorized in this Article 6. Such written undertaking shall be an unlimited obligation of such person and it may be accepted without reference to financial ability to make repayment.

VI.4 Permissive Indemnification . The Board of Directors of the Corporation may authorize the Corporation to indemnify employees or agents of the Corporation, and to advance the reasonable expenses

of such persons, to the same extent, following the same determinations and upon the same conditions as are required for the indemnification of and advancement of expenses to Directors and officers of the Corporation.

VI.5 Nature of Indemnification . The indemnification and advancement of expenses provided hereunder shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the Articles of Incorporation, these Bylaws, any agreement, vote of shareholders or disinterested Directors or otherwise, both as to actions taken in an official capacity and as to actions taken in any other capacity while holding such office, shall continue as to a person who has ceased to be a Director, officer, employee or agent of the Corporation and shall inure to the benefit of the heirs, executors and administrators of such person.

VI.6 Insurance . The Corporation shall have the power and authority to purchase and maintain insurance or another arrangement on behalf of any person who is or was a Director, officer, employee or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent, or similar functionary of another foreign or domestic corporation, partnership, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise against any liability, claim, damage, loss or risk asserted against such person and incurred by such person in any such capacity or arising out of the status of such person as such, irrespective of whether the Corporation would have the power to indemnify and hold such person harmless against such liability under the provisions hereof. If the insurance or other arrangement is with a person or entity that is not regularly engaged in the business of providing insurance coverage, the insurance or arrangement may provide for payment of a liability with respect to which the Corporation would not have the power to indemnify the person only if including coverage for the additional liability has been approved by the shareholders of the Corporation. Without limiting the power of the Corporation to procure or maintain any kind of insurance or other arrangement, the Corporation may, for the benefit of persons indemnified by the Corporation, (1) create a trust fund; (2) establish any form of self-insurance; (3) secure its indemnity obligation by grant of a security interest or other lien on the assets of the Corporation; or (4) establish a letter of credit, guaranty, or surety arrangement. The insurance or other arrangement may be procured, maintained, or established within the Corporation or with any insurer or other person deemed appropriate by the Board of Directors regardless of whether all or part of the stock or other securities of the insurer or

other person are owned in whole or part by the Corporation. In the absence of fraud, the judgment of the Board of Directors as to the terms and conditions of the insurance or other arrangement and the identity of the insurer or other person participating in the arrangement shall be conclusive and the insurance or arrangement shall not be voidable and shall not subject the Directors approving the insurance or arrangement to liability, on any ground, regardless of whether Directors participating in the approval are beneficiaries of the insurance or arrangement.

VI.7 Notice . Any indemnification or advance of expenses to a present or former director of the Corporation in accordance with this Article 6 shall be reported in writing to the shareholders of the Corporation with or before the notice or waiver of notice of the next shareholders’ meeting or with or before the next submission of a consent to action without a meeting and, in any case, within the next twelve month period immediately following the indemnification or advance.

ARTICLE VII.

STOCK CERTIFICATES AND TRANSFER REGULATIONS

VII.1 Description of Certificates . The shares of the capital stock of the Corporation shall be represented by certificates in the form approved by the Board of Directors and signed in the name of the Corporation by the President or a Vice President and the Secretary or an Assistant Secretary of the Corporation, and sealed with the seal of the Corporation or a facsimile thereof. Each certificate shall state on the face thereof the name of the holder, the number and class of shares and the designation of the series, if any, which such certificate represents, the par value of shares covered thereby or a statement that such shares are without par value, and such other matters as are required by law. At such time as the Corporation may be authorized to issue shares of more than one class or any class in series, every certificate shall set forth upon the face or back of such certificate a statement of the designations, preferences, limitations and relative rights of the shares of each class or series authorized to be issued, as required by the laws of the State of Texas.

VII.2 Delivery . Every holder of the capital stock in the Corporation shall be entitled to have a certificate signed in the name of the Corporation by the President or a Vice President and the Secretary or an Assistant Secretary of the Corporation, certifying the class of capital stock and the number of shares represented thereby as owned or held by such shareholder in the Corporation.

VII.3 Signatures . The signatures of the President, Vice President, Secretary or Assistant Secretary upon a certificate may be facsimiles. In case any officer or officers who have signed, or whose facsimile signature or signatures have been placed upon any such certificate or certificates, shall cease to serve as such officer or officers of the Corporation, whether because of death, resignation, removal or otherwise, before such certificate or certificates are issued and delivered by the Corporation, such certificate or certificates may nevertheless be adopted by the Corporation and be issued and delivered with the same effect as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to serve as such officer or officers of the Corporation.

VII.4 Issuance of Certificates . Certificates evidencing shares of its capital stock (both treasury and authorized but unissued) may be issued for such consideration (not less than par value, except for treasury shares which may be issued for such consideration) and to such persons as the Board of Directors may determine from time to time. Shares shall not be issued until the full amount of the consideration, fixed as provided by law, has been paid.

VII.5 Payment for Shares . Consideration for the issuance of shares shall be paid, valued and allocated as follows:


	(a) Consideration . The consideration for the issuance of shares shall consist of money paid, labor done (including services actually performed for the Corporation), or property (tangible or intangible) actually received. Neither promissory notes nor the promise of future services shall constitute payment of consideration for shares.

	(b) Valuation . In the absence of fraud in the transaction, the determination of the Board of Directors as to the value of consideration received shall be conclusive.

	(c) Effect . When consideration, fixed as provided by law, has been paid, the shares shall be deemed to have been issued and shall be considered fully paid and nonassessable.

	(d) Allocation of Consideration . The consideration received for shares shall be allocated by the Board of Directors, in accordance with law, between the stated capital and capital surplus accounts.

VII.6 Subscriptions . Unless otherwise provided in the subscription agreement, subscriptions of shares, whether made before or after organization of the Corporation, shall be paid in full in such installments and at such times as shall be determined by the Board of Directors. Any call made by the Board of Directors for payment on subscriptions shall be uniform as to all shares of the same class and

series. In case of default in the payment of any installment or call when payment is due, the Corporation may proceed to collect the amount due in the same manner as any debt due to the Corporation.

VII.7 Closing of Transfer Records; Record Date for Action With Meetings . For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, or in order to make a determination of shareholders for any other proper purpose (other than determining shareholders entitled to consent to action by shareholders proposed to be taken without a meeting of shareholders), the Board of Directors may provide that share transfer records shall be closed for a stated period of time not to exceed, in any case, sixty (60) days. If the share transfer records shall be closed for the purpose of determining shareholders, such records shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the share transfer records, as aforesaid, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than sixty (60) days, and in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action requiring such determination of shareholders is to be taken. If the share transfer records are not closed and no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive a distribution (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section, such determination shall be applied to any adjournment thereof except where the determination has been made through the closing of the stock transfer books and the stated period of closing has expired.

VII.8 Registered Owners . Prior to due presentment for registration of transfer of a certificate evidencing shares of the capital stock of the Corporation in the manner set forth in Section 7.10 hereof, the Corporation shall be entitled to recognize the person registered as the owner of such shares on its records (or the records of its duly appointed transfer agent, as the case may be) as the person exclusively entitled to vote, to receive notices and dividends with respect to, and otherwise exercise all rights and powers relative

to such shares; and the Corporation shall not be bound or otherwise obligated to recognize any claim, direct or indirect, legal or equitable, to such shares by any other person, whether or not it shall have actual, express or other notice thereof, except as otherwise provided by the laws of Texas.

VII.9 Lost, Stolen or Destroyed Certificates . The Corporation shall issue a new certificate in place of any certificate for shares previously issued if the registered owner of the certificate satisfies the following conditions:


	(a) Proof of Loss . Submits proof in affidavit form satisfactory to the Corporation that such certificate has been lost, destroyed or wrongfully taken; and

	(b) Timely Request . Requests the issuance of a new certificate before the Corporation has notice that the certificate has been acquired by a purchaser for value in good faith and without notice of an adverse claim; and

	(c) Bond . Gives a bond in such form, and with such surety or sureties, with fixed or open penalty, as the Corporation may direct, to indemnify the Corporation (and its transfer agent and registrar, if any) against any claim that may be made or otherwise asserted by virtue of the alleged loss, destruction, or theft of such certificate or certificates; and

	(d) Other Requirements . Satisfies any other reasonable requirements imposed by the Corporation.

In the event a certificate has been lost, apparently destroyed or wrongfully taken, and the registered owner of record fails to notify the Corporation within a reasonable time after he has notice of such loss, destruction, or wrongful taking, and the Corporation registers a transfer (in the manner hereinbelow set forth) of the shares represented by the certificate before receiving such notification, such prior registered owner of record shall be precluded from making any claim against the Corporation for the transfer required hereunder or for a new certificate.

VII.10 Registration of Transfers . Subject to the provisions hereof, the Corporation shall register the transfer of a certificate evidencing shares of its capital stock presented to it for transfer if:


	(a) Endorsement . Upon surrender of the certificate to the Corporation (or its transfer agent, as the case may be) for transfer, the certificate (or an appended stock power) is properly endorsed by the registered owner, or by his duly authorized legal representative or attorney-in-fact, with proper written evidence of the authority and appointment of such representative, if any, accompanying the certificate; and

	(b) Guaranty and Effectiveness of Signature . The signature of such registered owner or his legal representative or attorney-in-fact, as the case may be, has been guaranteed by a national banking association or member of the New York Stock Exchange, and reasonable


	assurance in a form satisfactory to the Corporation is given that such endorsements are genuine and effective; and

	(c) Adverse Claims . The Corporation has no notice of an adverse claim or has otherwise discharged any duty to inquire into such a claim; and

	(d) Collection of Taxes . Any applicable law (local, state or federal) relating to the collection of taxes relative to the transaction has been complied with; and

	(e) Additional Requirements Satisfied . Such additional conditions and documentation as the Corporation (or its transfer agent, as the case may be) shall reasonably require, including without limitation thereto, the delivery with the surrender of such stock certificate or certificates of proper evidence of succession, assignment or other authority to obtain transfer thereof, as the circumstances may require, and such legal opinions with reference to the requested transfer as shall be required by the Corporation (or its transfer agent) pursuant to the provisions of these Bylaws and applicable law, shall have been satisfied.

VII.11 Restrictions on Transfer and Legends on Certificates .


	(a) Shares in Classes or Series . If the Corporation is authorized to issue shares of more than one class, the certificate shall set forth, either on the face or back of the certificate, a full or summary statement of all of the designations, preferences, limitations, and relative rights of the shares of each such class and, if the Corporation is authorized to issue any preferred or special class in series, the variations in the relative rights and preferences of the shares of each such series so far as the same have been fixed and determined, and the authority of the Board of Directors to fix and determine the relative rights and preferences of subsequent series. In lieu of providing such a statement in full on the certificate, a statement on the face or back of the certificate may provide that the Corporation will furnish such information to any shareholder without charge upon written request to the Corporation at its principal place of business or registered office and that copies of the information are on file in the office of the Secretary of State.

	(b) Restriction on Transfer . Any restrictions imposed or agreed to by the Corporation on the sale or other disposition of its shares and on the transfer thereof must be copied at length or in summary form on the face, or so copied on the back and referred to on the face, of each certificate representing shares to which the restriction applies. The certificate may however state on the face or back that such a restriction exists pursuant to a specified document and that the Corporation will furnish a copy of the document to the holder of the certificate without charge upon written request to the Corporation at its principal place of business.

	(c) Preemptive Rights . Any preemptive rights of a shareholder to acquire unissued or treasury shares of the Corporation which are limited or denied by the Articles of Incorporation must be set forth at length on the face or back of the certificate representing shares subject thereto. In lieu of providing such a statement in full on the certificate, a statement on the face or back of the certificate may provide that the Corporation will furnish such information to any shareholder without charge upon written request to the Corporation at its principal place of business and that a copy of such information is on file in the office of the Secretary of State.

	(d) Unregistered Securities . Any security of the Corporation, including, among others, any certificate evidencing shares of the Common Stock or warrants to purchase Common Stock of the Corporation, which is issued to any person without registration under the Securities

Act of 1933, as amended, or the Blue Sky laws of any state, shall not be transferable until the Corporation has been furnished with a legal opinion of counsel with reference thereto, satisfactory in form and content to the Corporation and its counsel, to the effect that such sale, transfer or pledge does not involve a violation of the Securities Act of 1933, as amended, or the Blue Sky laws of any state having jurisdiction. The certificate representing the security shall bear substantially the following legend:

THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE CORPORATION SHALL HAVE RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE CORPORATION AND ITS COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.

ARTICLE VIII.

GENERAL PROVISIONS

VIII.1 Distributions . Subject to the provisions of the Texas Business Corporation Act, as amended, and the Articles of Incorporation, distributions of the Corporation shall be declared and paid pursuant to the following regulations:


	(a) Declaration and Payment . Distributions on the issued and outstanding shares of capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting and may be paid in cash, in property, or in shares of capital stock. Such declaration and payment shall be at the discretion of the Board of Directors.

	(b) Record Date . The Board of Directors may fix in advance a record date for the purpose of determining shareholders entitled to receive payment of any distribution, such record date to be not more than sixty (60) days prior to the payment date of such distribution, or the Board of Directors may close the stock transfer books for such purpose for a period of not more than sixty (60) days prior to the payment date of such distribution. In the absence of action by the Board of Directors, the date upon which the Board of Directors adopts the resolution declaring such distribution shall be the record date.

VIII.2 Reserves . There may be created by resolution of the Board of Directors out of the surplus of the Corporation such reserve or reserves as the Directors from time to time, in their discretion, think proper to provide for contingencies, or to equalize distributions, or to repair or maintain any property of

the Corporation, or for such other purposes as the Directors shall think beneficial to the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.

VIII.3 Books and Records . The Corporation shall maintain books and records of account and shall prepare and maintain minutes of the proceedings of its shareholders, its Board of Directors and each committee of its Board of Directors. The Corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of the original issuance of shares issued by the Corporation and a record of each transfer of those shares that have been presented to the Corporation for registration of transfer. Such records shall contain the names and addresses of all past and present shareholders of the Corporation and the number and class of shares issued by the Corporation held by each of them.

VIII.4 Annual Statement . The Board of Directors shall present at or before each annual meeting of shareholders a full and clear statement of the business and financial condition of the Corporation, including a reasonably detailed balance sheet and income statement under current date.

VIII.5 Contracts and Negotiable Instruments . Except as otherwise provided by law or these Bylaws, any contract or other instrument relative to the business of the Corporation may be executed and delivered in the name of the Corporation and on its behalf by the Chairman of the Board, the Chief Executive Officer, or the Chief Operating Officer, if any, or the President of the Corporation. The Board of Directors may authorize any other officer or agent of the Corporation to enter into any contract or execute and deliver any contract in the name and on behalf of the Corporation, and such authority may be general or confined to specific instances as the Board of Directors may determine by resolution. All bills, notes, checks or other instruments for the payment of money shall be signed or countersigned by such officer, officers, agent or agents and in such manner as are permitted by these Bylaws and/or as, from time to time, may be prescribed by resolution of the Board of Directors. Unless authorized to do so by these Bylaws or by the Board of Directors, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement, or to pledge its credit, or to render it liable pecuniarily for any purpose or to any amount.

VIII.6 Fiscal Year . The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

VIII.7 Corporate Seal . The Corporation seal shall be in such form as may be determined by the Board of Directors. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

VIII.8 Resignations . Any director, officer or agent may resign his office or position with the Corporation by delivering written notice thereof to the President or the Secretary. Such resignation shall be effective at the time specified therein, or immediately upon delivery if no time is specified. Unless otherwise specified therein, an acceptance of such resignation shall not be a necessary prerequisite of its effectiveness.

VIII.9 Amendment of Bylaws . These Bylaws may be altered, amended, or repealed and new Bylaws adopted at any meeting of the Board of Directors at which a quorum is present, by the affirmative vote of a majority of the Directors present at such meeting, provided notice of the proposed alteration, amendment, or repeal be contained in the notice of such meeting.

VIII.10 Construction . Whenever the context so requires herein, the masculine shall include the feminine and neuter, and the singular shall include the plural, and conversely. If any portion or provision of these Bylaws shall be held invalid or inoperative, then, so far as is reasonable and possible: (1) the remainder of these Bylaws shall be considered valid and operative, and (2) effect shall be given to the intent manifested by the portion or provision held invalid or inoperative.

VIII.11 Telephone Meetings . Shareholders, Directors, or members of any committee may hold any meeting of such shareholders, Directors or committee by means of conference telephone or similar communications equipment which permits all persons participating in the meeting to hear each other and actions taken at such meetings shall have the same force and effect as if taken at a meeting at which persons were present and voting in person. The Secretary of the Corporation shall prepare a memorandum of the action taken.

VIII.12 Table of Contents; Captions . The table of contents and captions used in these Bylaws have been inserted for administrative convenience only and do not constitute matter to be construed in interpretation.

IN DUE CERTIFICATION WHEREOF, the undersigned, being the Secretary of GRC HOLDINGS, INC. confirms the adoption and approval of the foregoing Bylaws, effective as of the ___ day of May 2003.




	Patrick D. Souter, Secretary

EXHIBIT 4.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement” ) is dated as of July 18, 2006, among GRC Holdings, Inc., a Texas corporation (“ GRC ”) and its wholly-owned subsidiary, Logic Express Limited (“ Logic Express ”), and its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd. ( “Shandong Missile” or the “Company” ), the selling stockholders identified on the signature pages hereto (each, a “Selling Stockholder,” and collectively, the “Selling Stockholders” ) and the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors” ).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, GRC and the Selling Stockholders desire to sell to each Investor, and each Investor, severally and not jointly, desires to purchase from GRC and the Selling Stockholders, certain securities of GRC, as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, GRC, the Company, the Selling Stockholders and the Investors agree as follows:

ARTICLE 1.

DEFINITIONS

1.1. Definitions . In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

“Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting any Person or any of its respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144.

“Business Day” means any day except Saturday, Sunday and any day which is a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“ Buy-In ” has the meaning set forth in Section 4.1(c).

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“Closing” means the closing of the purchase and sale of the Securities pursuant to Article II.

“Closing Date” means the Business Day on which all of the conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree.

“Closing 8-K” means the Form 8-K to be filed by the Company on the second Business Day following the Closing Date in accordance with Section 4.5.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock of GRC, par value $.0001 per share, and any securities into which such common stock may hereafter be reclassified.

“Common Stock Equivalents” has the meaning set forth in Section 4.13.

“Effective Date” means the date that the initial Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchange Transaction” shall mean the transaction contemplated by the Share Exchange Agreement by and among GRC, Logic Express and the shareholders of Logic Express of even date herewith.

“GAAP” means U.S. generally accepted accounting principles.

“Intellectual Property Rights” has the meaning set forth in Section 3.1(p).

“Investment Amount” means, with respect to each Investor, the Investment Amount indicated on such Investor’s signature page to this Agreement.

“Investor Deliverables” has the meaning set forth in Section 2.2(b).

“Investor Party” has the meaning set forth in Section 4.7.

“Lien” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind.

“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Document.

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

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“Outside Date” means July 21, 2006.

“Per Unit Purchase Price” equals $1.8950.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and the Investors, in the form of Exhibit B hereto.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Investors of the Shares and the Warrant Shares.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Securities” means the Shares, the Selling Stockholder Shares, the Warrants and the Warrant Shares.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller Deliverables” has the meaning set forth in Section 2.2(a).

“Selling Stockholder Shares” means the shares of Common Stock being offered and sold by the Selling Stockholder to the Investors hereunder in such number as is set forth below the Selling Stockholder’s signature to this Agreement.

“ Share Delivery Date ” has the meaning set forth in Section 4.1(c).

"Share Escrow Agreement" means the Share Escrow Agreement, dated as of the date hereof, among the Selling Stockholders, GRC, the Investor Representative and the Escrow Agent, in the form of Exhibit E hereto.

“Shares” means the shares of Common Stock offered and sold to the Investors by GRC pursuant to this Agreement.

“Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, swaps and similar arrangements (including on a total return basis), and sales and other transactions through non-US broker dealers or foreign regulated brokers.

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“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ Capital Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question.

“Transaction Documents” means this Agreement, the Warrants, the Registration Rights Agreement, the Share Escrow Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“Warrants” means the Common Stock purchase warrants in the form of Exhibit A , which are issuable to the Investors at the Closing.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE 2.

PURCHASE AND SALE

2.1. Closing .

(a) Subject to the terms and conditions set forth in this Agreement, at the Closing GRC and the Selling Stockholders shall sell to each Investor, and each Investor shall, severally and not jointly, purchase from the Company and the Selling Stockholders, the Shares, Selling Stockholder Shares and the Warrants representing such Investor’s Investment Amount. The Closing shall take place at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, New York, NY 10104 on the Closing Date or at such other location or time as the parties may agree.

(b) GRC and the Selling Stockholders will cooperate with one another, and will cause the Selling Stockholder Shares to be transferred to the Investors at Closing as part of a single stock certificate registered in the name of the relevant Investor that will include all Shares and Selling Stockholder Shares being acquired by such Investor under this Agreement. In furtherance thereof, each Selling Stockholder will (i) deliver to GRC any certificates representing the Selling Stockholder Shares it will be selling at the Closing, together with such other documents (including legal opinions) as GRC may require to effect the transfer of such shares to the name of the Investors at the Closing, including executed stock powers and directions for GRC to effect the transfer of such shares on its books as of the Closing and (ii) instruct GRC to hold any certificates representing the Selling Stockholder Shares it has received and deliver the Selling Stockholder Shares at Closing in accordance with Section 2.2.

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2.2. Closing Deliveries . i) At the Closing, GRC and the Selling Shareholders shall deliver or cause to be delivered to each Investor the following (the “Seller Deliverables” ):

(i) a single certificate evidencing the aggregate number of Shares and Selling Stockholder Shares equal to such Investor’s Investment Amount divided by the Per Unit Purchase Price, registered in the name of such Investor;

(ii) a Warrant, registered in the name of such Investor, pursuant to which such Investor shall have the right to acquire the number of shares of Common Stock equal to 25% of the number of Shares purchased by such Investor pursuant to Section 2.2(a)(i);

(iii) the legal opinions of Loeb & Loeb LLP and Snell, Wylie & Tibbals, P.C., in the forms attached as Exhibit C and Exhibit D , respectively, addressed to the Investors;

(iv) the Registration Rights Agreement, duly executed by GRC; and

(v) the Share Escrow Agreement, duly executed by GRC, the Selling Stockholders, the Escrow Agent and the Investor Repres entative.

(b) At the Closing, each Investor shall deliver or cause to be delivered to or upon the instruction of GRC and the Selling Stockholders the following (the “Investor Deliverables” ):

(i) its Investment Amount, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by GRC and the Selling Stockholders for such purpose; and

(ii) the Registration Rights Agreement, duly executed by such Investor.

ARTICLE 3.

REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of the Company . The Company hereby makes the following representations and warranties to each Investor:

(a) Subsidiaries . Logic Express has no subsidiaries other than the Company, which is its 82.76% owned subsidiary. The Company has no direct or indirect subsidiaries. Except as disclosed in Schedule 3.1(a) , Logic Express owns, directly or indirectly, all of the subsidiary and joint venture interests of the Company free and clear of any and all Liens, and all the issued and outstanding subsidiary and joint venture interests of the Company are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

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(b) Organization and Qualification . Logic Express and the Company are duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Other than as disclosed in the Closing 8-K, neither Logic Express nor the Company is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct its business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary.

(c) Authorization; Enforcement . The Company and GRC each have the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which they are a party, and otherwise to carry out their obligations thereunder. The execution and delivery of each of the Transaction Documents to which they are a party by the Company and GRC and the consummation by them of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and GRC and no further action is required by the Company and GRC in connection therewith. Each Transaction Document to which they are a party has been (or upon delivery will have been) duly executed by the Company and GRC and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company and GRC enforceable against the Company and GRC in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(d) No Conflicts . The execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby and the sale of the Selling Stockholder Shares hereunder do not and will not (i) conflict with or violate any provision of Logic Express’ or the Company certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company is bound or affected.

(e) Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents or by reason of the sale of the Selling Stockholder Shares hereunder, other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation D of the Securities Act, (iv) the filings required in accordance with Section 4.5 and (v) those that have been made or obtained prior to the date of this Agreement. To the knowledge of the Company, no Selling Stockholder is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or any other Person in connection with the execution, delivery and performance by them of the Transaction Documents or by reason of the sale of the Selling Stockholder Shares hereunder.

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(f) Issuance of the Securities . The Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. GRC has reserved from its duly authorized capital stock the shares of Common Stock issuable pursuant to this Agreement and the Warrants in order to issue the Shares and the Warrant Shares. When issued, the Selling Stockholder Shares were duly authorized and were validly issued, fully paid and nonassessable. The Selling Stockholders are the sole record owner of the Selling Stockholder Shares to be sold hereunder.

(g) Capitalization . The number of shares and type of all authorized, issued and outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance under the Company’s various option and incentive plans, is specified in Schedule 3.1(g) . Except as specified in Schedule 3.1(g) , no securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as specified in Schedule 3.1(g) , there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which Logic Express or the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. The issue and sale of the Securities will not, immediately or with the passage of time, obligate Logic Express or the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in a right of any holder of Logic Express or Company securities to adjust the exercise, conversion, exchange or reset price under such securities.

(h) Financial Statements . The financial statements of the Company included in the Closing 8-K comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, year-end audit adjustments.

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(i) Press Releases . The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading.

(j) Material Changes . Since the date of the audited financial statements for the year ended December 31, 2005, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP, (iii) the Company has not altered its method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information.

(k) Litigation . There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company, nor any director or officer thereof (in his or her capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such).

(l) Labor Relations . No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company.

(m) Compliance . Neither the Company (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters. The Company is in compliance with all applicable effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder that are applicable to it.

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(n) Regulatory Permits . The Company possesses all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct its business as currently conducted, and the Company has not received any notice of proceedings relating to the revocation or modification of any such permits.

(o) Title to Assets . The Company has good and marketable title in fee simple to all real property owned by it that is material to its business and good and marketable title in all personal property owned by it that is material to its business, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company. Any real property and facilities held under lease by the Company are held by it under valid, subsisting and enforceable leases of which the Company is in compliance.

(p) Patents and Trademarks . The Company has, or has rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the Closing 8-K and which the failure to so have could, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (collectively, the “Intellectual Property Rights” ). The Company has not received a written notice that the Intellectual Property Rights used by the Company violates or infringes upon the rights of any Person. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.

(q) Insurance . The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company is engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business on terms consistent with market for the Company’s respective lines of business.

(r) Transactions With Affiliates and Employees . None of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

(s) Internal Accounting Controls . The Company maintains a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company is made known to the certifying officers by others within those entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is being prepared.

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(t) Solvency . Based on the financial condition of the Company as of the Closing Date (and assuming that the Closing shall have occurred), (i) the Company’s fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).

(u) Certain Fees . Except as described in Schedule 3.1(u) , no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

(v) Certain Registration Matters . Assuming the accuracy of the Investors’ representations and warranties set forth in Section 3.2(b)-(e), no registration under the Securities Act is required for the offer and sale of the Shares and Selling Stockholder Shares and Warrant Shares by GRC and the Selling Stockholders (as applicable) to the Investors under the Transaction Documents. Neither the Company nor GRC nor any their respective Affiliates has directly or through any agent (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any “security” (as defined in the Securities Act) that is or could be integrated with the sale of the Shares or the Selling Stockholder Shares in a manner that would require registration under the Securities Act or (ii) engaged in any form of general solicitation or general advertising (as those terms are used in Regulation D under the Securities Act) in connection with the offering of the Shares and the Selling Stockholder Shares or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act. GRC is eligible to register its Common Stock for resale by the Investors under Form S-1 promulgated under the Securities Act. Except as specified in Schedule 3.1(v) , the Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied.

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(w) Investment Company . The Company is not, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(x) Application of Takeover Protections . The Company has taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the Company’s issuance of the Securities and the Investors’ ownership of the Securities.

(y) No Additional Agreements . The Company does not have any agreement or understanding with any Investor with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

(z) No Undisclosed Events, Liabilities, Developments or Circumstances . No event, liability, development or circumstance has occurred or exists, or is contemplated to occur with respect to the Company, or its business, properties, prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws on a registration statement on Form S-1 filed with the Commission relating to an issuance and sale by the Company of its Common Stock and which has not been described in the Closing 8-K.

(aa) Foreign Corrupt Practices . Neither the Company, nor any director, officer, agent, employee or other Person acting on behalf of the Company has, in the course of its actions for, or on behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

(bb) Tax Status . The Company (i) has made or filed all foreign, federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

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(cc) Off Balance Sheet Arrangements . There is no transaction, arrangement, or other relationship between the Company and an unconsolidated or other off balance sheet entity that would be required to be disclosed by the Company in Exchange Act filings.

(dd) Environmental Laws . The Company (i) is in compliance with any and all Environmental Laws (as hereinafter defined), (ii) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business and (iii) is in compliance with all terms and conditions of any such permit, license or approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect. The term " Environmental Laws " means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes (collectively, " Hazardous Materials ") into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

(ee) Indebtedness and Other Contracts . Except as disclosed in the Closing 8-K, the Company (i) has no outstanding Indebtedness (as defined below), (ii) is not a party to any contract, agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or instrument would result in a Material Adverse Effect, (iii) is not in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, and (iv) is not a party to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of the Company's officers, has or is expected to have a Material Adverse Effect. The Closing 8-K provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x) " Indebtedness " of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than trade payables entered into in the ordinary course of business), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any property or assets (including accounts and contract rights) owned by any Person, even though the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G) above; (y) " Contingent Obligation " means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss with respect thereto.

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(ff) Disclosure . The Company confirms that neither it nor any other Person acting on its behalf has provided any of the Investors or their agents or counsel with any information that constitutes or could reasonably be expected to constitute material, nonpublic information other than as set forth in the following sentence. The Company understands and confirms that each of the Investors will rely on the foregoing representations in effecting transactions in securities of the Company. To the knowledge of the Company, the representations and warranties of the Selling Stockholders are true and correct in all material respects. All disclosure provided to the Investors regarding the Company, its business and the transactions contemplated hereby, including the Schedules to this Agreement, furnished by or on behalf of the Company is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

3.2. Representations and Warranties of the Investors . Each Investor hereby, for itself and for no other Investor, represents and warrants to the Company as follows:

(a) Organization; Authority . Such Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Investor of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or, if such Investor is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Investor. Each of this Agreement and the Registration Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(b) Investment Intent . Such Investor is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof, without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. Such Investor is acquiring the Securities hereunder in the ordinary course of its business. Such Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.

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(c) Investor Status . At the time such Investor was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises Warrants it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Investor is not a registered broker-dealer under Section 15 of the Exchange Act.

(d) General Solicitation . Such Investor is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(e) Access to Information . Such Investor acknowledges that it has reviewed the Closing 8-K and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Closing 8-K and the Company’s representations and warranties contained in the Transaction Documents.

(f) Certain Trading Activities . Such Investor has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Investor, engaged in any transactions in the securities of GRC (including, without limitations, any Short Sales involving GRC’s securities) since the time that such Investor was first contacted by or on behalf of GRC or the Company regarding an investment in the Company. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it will engage in any transactions in the securities of GRC (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed.

(g) Independent Investment Decision . Such Investor has independently evaluated the merits of its decision to purchase Securities pursuant to the Transaction Documents, and such Investor confirms that it has not relied on the advice of any other Investor’s business and/or legal counsel in making such decision.

The Company acknowledges and agrees that no Investor has made or makes any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2.

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3.3. Representations and Warranties of the Selling Stockholders. Each Selling Stockholder for itself and no other Selling Stockholder hereby makes the following representations and warranties to each Investor:

(a) Enforcement . This Agreement has been duly executed and delivered by each Selling Stockholder and constitutes the valid and binding obligation of each Selling Stockholder, enforceable against him in accordance with its terms except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.

(b) No Consents . No consent, approval, authorization or order of, or any filing or declaration with, any court or governmental agency or body or other Person is required in connection with the consummation by each Selling Stockholder of the transactions on its part contemplated by the Transaction Documents, except (i) filings as may be required under Sections 13(d) and 16(a) of the Exchange Act, and (ii) those that have been made or obtained prior to the date of this Agreement.

(c) No Conflicts . The execution, delivery and performance by each Selling Stockholder of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby do not and will not result in a breach or violation of, or constitute a default under (with or without notice or lapse of time), any stockholders agreement, voting trust agreement, pledge registration rights agreement or other agreement or instrument to which such Selling Stockholder or any of its properties are bound or affected, and will not violate or conflict with any judgment, decree or order of any court or other governmental agency or any law, rule or regulation applicable to such Selling Stockholder, in each case such as could not have or result in a Material Adverse Effect.

(d) Certain Registration Matters . Assuming the accuracy of the Investors’ representations and warranties set forth in Sections 3.2(b)-(d), no registration under the Securities Act is required for the purchase and sale of the Selling Stockholder Shares to the Investors hereunder.

(e) Good and Marketable Title . Each Selling Stockholder is the sole lawful record and sole beneficial owner of all of the Selling Stockholder Shares to be sold by it hereunder. Such Selling Stockholder has good and marketable title to the Selling Stockholder Shares to be sold by it hereunder, free and clear of any Liens, except for restrictions on subsequent transfer imposed by the securities laws. Upon consummation of the Closing, the Investors will have good and marketable title to the Selling Stockholder Shares purchased by them, free and clear of all Liens created by or through such Selling Stockholder.

(f) Certain Fees . Except as described in Schedule 3.3(f) , no brokerage or finder's fees or commissions are or will be payable by the Selling Stockholders to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement.

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(g) No Additional Agreements . The Selling Stockholders do not have any agreement or understanding with any Investor or with the Company or GRC with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.

ARTICLE 4.

OTHER AGREEMENTS OF THE PARTIES

4.1. (a) Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to GRC, to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to GRC an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.

(b) Certificates evidencing the Securities will contain the following legend, until such time as they are not required under Section 4.1(c):

[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

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GRC acknowledges and agrees that an Investor may from time to time pledge, and/or grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, such Investor may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of GRC and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor and the transferee of the pledge. No notice shall be required of such pledge. At the appropriate Investor’s expense, GRC will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.

(c) Certificates evidencing Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b)): (i) if such Shares or Warrant Shares are registered for resale under the Securities Act , or (ii) following a sale or transfer of such Shares or Warrant Shares pursuant to Rule 144 (assuming the transferee is not an Affiliate of GRC), or (iii) such Shares or Warrant Shares are eligible for sale under Rule 144(k) or (iv) in connection with a sale, assignment or other transfer, such Investor provides GRC with an opinion of counsel, in a form reasonably acceptable to GRC, to the effect that such sale or transfer of the Shares or Warrant Shares may be made without registration under the applicable requirements of the Securities Act . If an Investor shall make a sale or transfer of Shares or Warrant Shares either (x) pursuant to Rule 144 or (y) pursuant to a registration statement and in each case shall have delivered to GRC or GRC’s transfer agent the certificate representing Shares or Warrant Shares containing a restrictive legend which are the subject of such sale or transfer and a representation letter in customary form (the date of such sale or transfer and Share or Warrant Share, as the case may be, delivery being the “Share Delivery Date” ) and (1) GRC shall fail to deliver or cause to be delivered to such Investor a certificate representing such Shares or Warrant Shares that is free from all restrictive or other legends by the third Trading Day following the Share Delivery Date and (2) following such third Trading Day after the Share Delivery Date and prior to the time such Shares or Warrant Shares are received free from restrictive legends, the Investor, or any third party on behalf of such Investor, purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Investor of such Shares or Warrant Shares (a "Buy-In" ), then GRC shall pay in cash to the Investor (for costs incurred either directly by such Investor or on behalf of a third party) the amount by which the total purchase price paid for Common Stock as a result of the Buy-In (including brokerage commissions, if any) exceed the proceeds received by such Investor as a result of the sale to which such Buy-In relates. The Investor shall provide GRC written notice indicating the amounts payable to the Investor in respect of the Buy-In.

4.2. Furnishing of Information . As long as any Investor owns the Securities, GRC covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by GRC after the date hereof pursuant to the Exchange Act. As long as any Investor owns Securities, if GRC is not required to file reports pursuant to such laws, it will prepare and furnish to the Investors and make publicly available in accordance with Rule 144(c) such information as is required for the Investors to sell the Shares and Warrant Shares under Rule 144. GRC further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell the Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144.

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4.3. Integration . GRC shall not, and shall use its best efforts to ensure that no Affiliate of GRC shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market in a manner that would require stockholder approval of the sale of the securities to the Investors.

4.4. Subsequent Registrations . Other than pursuant to the Registration Statement, prior to the Effective Date, GRC may not file any registration statement (other than on Form S-8) with the Commission with respect to any securities of GRC.

4.5. Securities Laws Disclosure; Publicity . By 9:00 a.m. (New York time) on the Trading Day following the Closing Date, the Company shall issue a press release disclosing the transactions contemplated hereby and the Closing. On the second Business Day following the Closing Date GRC will file a Current Report on Form 8-K disclosing the material terms of the Transaction Documents (and attach as exhibits thereto the Transaction Documents) and the Closing. In addition, GRC will make such other filings and notices in the manner and time required by the Commission and the Trading Market on which the Common Stock is listed. Notwithstanding the foregoing, GRC shall not publicly disclose the name of any Investor, or include the name of any Investor in any filing with the Commission (other than the Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange Act) or any regulatory agency or Trading Market, without the prior written consent of such Investor, except to the extent such disclosure is required by law or Trading Market regulations.

4.6. Limitation on Issuance of Future Priced Securities . During the six months following the Closing Date, GRC shall not issue any “Future Priced Securities” as such term is described by NASD IM-4350-1.

4.7. Indemnification of Investors. In addition to the indemnity provided in the Registration Rights Agreement, the Company and each Selling Stockholder hereby agree to the following indemnification of the Investors:

(a) The Company will indemnify and hold the Investors and their respective directors, officers, shareholders, partners, employees and agents (each, an "Investor Party" ) harmless from any and all losses that any such Investor Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by the Company in any Transaction Document. In addition to the indemnity contained herein, the Company will reimburse each Investor Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred.

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(b) Each Selling Stockholder will severally and not jointly indemnify and hold each of the Company and each Investor Party harmless from any and all losses that the Company or any such Investor Party may suffer or incur as a result of or relating to any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by such Selling Stockholder in any Transaction Document. In addition, such Selling Stockholder will reimburse each of the Company and each Investor Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred.

Except as otherwise set forth herein, the mechanics and procedures with respect to the rights and obligations under this Section 4.7 shall be the same as those set forth in Section 5 of the Registration Rights Agreement.

4.8. Non-Public Information . GRC, the Company and the Selling Stockholders covenant and agree that neither they nor any other Person acting on their behalf will provide any Investor or its agents or counsel with any information that GRC or the Company believes constitutes material non-public information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. GRC, the Company and the Selling Stockholders understand and confirm that each Investor shall be relying on the foregoing representations in effecting transactions in securities of GRC.

4.9. Listing of Securities . GRC agrees, (i) if GRC applies to have the Common Stock traded on any other Trading Market, it will include in such application the Shares and Warrant Shares, and will take such other action as is necessary or desirable to cause the Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible, and (ii) it will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

4.10. Use of Proceeds . GRC will use the net proceeds from the sale of the Shares hereunder for working capital purposes and in accordance with Section 4.14 herein, and not for the satisfaction of any portion of its debt (other than payment of trade payables and accrued expenses in the ordinary course of its business and consistent with prior practices), or to redeem any Common Stock or Common Stock Equivalents.

4.11. Make Good Escrow Arrangement. Ms. LI Lin Ling and Ms. CHAN Siu Ling shall escrow 4,280,000 shares (the “ Make Good Shares ”) of GRC's common stock so that (a) if the audited consolidated financial statements of GRC, prepared in accordance with GAAP, do not reflect at least $4,819,500 of after-tax net income or $5,823,465 of after-tax net income before the minority interest for the fiscal year ending December 31, 2006, one-half of the Escrow Shares will be distributed on a pro rata basis to the Investors and (b) if the audited consolidated financial statements of GRC, prepared in accordance with GAAP, do not reflect at least $8,302,000 of after-tax net income or $10,031,416 of after-tax net income before the minority interest for the fiscal year ending December 31, 2007, the second-half of the Escrow Shares will be distributed on a pro rata basis to the Investors . If required, the appropriate number of Escrow Shares will be delivered to the Investors within ten (10) Business Days of the date the audit report for the applicable period is delivered to the Investor Representative (such delivery of the financial statements referenced in (a) and (b) above to the Investor Representative shall be no later than March 31, 2007 and March 31, 2008, respectively), otherwise, if GRC has met the applicable threshold, the appropriate number of Escrow Shares shall be returned to Ms. LI Lin Ling and Ms. CHAN Siu Ling within such ten (10) Business Day period. The Investors hereby appoint Lane Capital Markets, LLC to act as the Investors Representative in connection with the Share Escrow Agreement entered into for the purpose of effectuating this provision. The Investors Representative’s sole responsibility shall be to review the audited financial statements of GRC to determine whether any Escrow Shares should be distributed.

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4.12. Investor Relations. GRC covenants that prior to October 31, 2006 it will hire an investor relations firm acceptable to Pinnacle China Fund, L.P.

4.13. Additional Issuances of Securities.

For purposes of this Section 4.13, the following definitions shall apply.

" Convertible Securities " means any stock or securities (other than Options) convertible into or exercisable or exchangeable for shares of Common Stock.

" Options " means any rights, warrants or options to subscribe for or purchase shares of Common Stock or Convertible Securities.

" Common Stock Equivalents " means, collectively, Options and Convertible Securities.

(a) From the date hereof until the date that is 30 Trading Days following the Effective Date (plus one additional day for each Trading Day following the Effective Date during which either (1) the Registration Statement is not effective or (2) the prospectus forming a portion of the Registration Statement is not available for the resale of all Registrable Securities (as defined in the Registration Rights Agreement) required to be covered thereby) (the " Trigger Date "), GRC will not, directly or indirectly, offer, sell, grant any option to purchase, or otherwise dispose of (or announce any offer, sale, grant or any option to purchase or other disposition of) any of its or its subsidiaries' equity or equity equivalent securities, including without limitation any debt, preferred stock or other instrument or security that is, at any time during its life and under any circumstances, convertible into or exchangeable or exercisable for shares of Common Stock or Common Stock Equivalents (any such offer, sale, grant, disposition or announcement being referred to as a " Subsequent Placement ").

(b) From the Trigger Date until the second anniversary of the Effective Date (plus one additional day for each Trading Day following the Effective Date during which either (1) the Registration Statement is not effective or (2) the prospectus forming a portion of the Registration Statement is not available for the resale of all Registrable Securities (as defined in the Registration Rights Agreement) required to be covered thereby) , GRC will not, directly or indirectly, effect any Subsequent Placement unless GRC shall have first complied with this Section 4.13.

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(c) GRC shall deliver to each Investor who purchased at least $1,000,000 of Securities hereunder (each, an " Eligible Buyer ") with a written notice (the " Offer Notice ") of any proposed or intended issuance or sale or exchange (the " Offer ") of the securities being offered (the " Offered Securities ") in a Subsequent Placement, which Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price and other terms upon which they are to be issued, sold or exchanged, and the number or amount of the Offered Securities to be issued, sold or exchanged, (y) identify the persons or entities (if known) to which or with which the Offered Securities are to be offered, issued, sold or exchanged and (z) offer to issue and sell to or exchange with such Eligible Buyers at least 50% of the Offered Securities, allocated among such Eligible Buyers (a) based on such Eligible Buyer's pro rata portion of the total Investment Amount hereunder by Eligible Buyers (the " Basic Amount "), and (b) with respect to each Eligible Buyer that elects to purchase its Basic Amount, any additional portion of the Offered Securities attributable to the Basic Amounts of other Eligible Buyers as such Eligible Buyer shall indicate it will purchase or acquire should the other Eligible Buyers subscribe for less than their Basic Amounts (the " Undersubscription Amount "), which process shall be repeated until the Investors shall have an opportunity to subscribe for any remaining Undersubscription Amount.

(d) To accept an Offer, in whole or in part, such Eligible Buyer must deliver a written notice to GRC prior to the end of the fifth (5 ^th ) Business Day after such Eligible Buyer's receipt of the Offer Notice (the " Offer Period "), setting forth the portion of such Eligible Buyer's Basic Amount that such Eligible Buyer elects to purchase and, if such Eligible Buyer shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Eligible Buyer elects to purchase (in either case, the " Notice of Acceptance "). If the Basic Amounts subscribed for by all Eligible Buyers are less than the total of all of the Basic Amounts, then each Eligible Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed for; provided , however , that if the Undersubscription Amounts subscribed for exceed the difference between the total of all the Basic Amounts and the Basic Amounts subscribed for (the " Available Undersubscription Amount "), each Eligible Buyer who has subscribed for any Undersubscription Amount shall be entitled to purchase only that portion of the Available Undersubscription Amount as the Basic Amount of such Eligible Buyer bears to the total Basic Amounts of all Eligible Buyers that have subscribed for Undersubscription Amounts, subject to rounding by GRC to the extent its deems reasonably necessary.

(e) GRC shall have ten (10) Business Days from the expiration of the Offer Period above to (i) offer, issue, sell or exchange all or any part of such Offered Securities as to which a Notice of Acceptance has not been given by the Eligible Buyers (the " Refused Securities "), but only to the offerees described in the Offer Notice (if so described therein) and only upon terms and conditions (including, without limitation, unit prices and interest rates) that are not more favorable to the acquiring person or persons or less favorable to GRC than those set forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent Placement Agreement (as defined below), and (b) either (x) the consummation of the transactions contemplated by such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement Agreement, which shall be filed with the Commission on a Current Report on Form 8-K with such Subsequent Placement Agreement and any documents contemplated therein filed as exhibits thereto.

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(f) In the event GRC shall propose to sell less than all the Refused Securities (any such sale to be in the manner and on the terms specified in this Section 4.13), then each Eligible Buyer may, at its sole option and in its sole discretion, reduce the number or amount of the Offered Securities specified in its Notice of Acceptance to an amount that shall be not less than the number or amount of the Offered Securities that such Eligible Buyer elected to purchase pursuant to Section 4.13(d) above multiplied by a fraction, (i) the numerator of which shall be the number or amount of Offered Securities GRC actually proposes to issue, sell or exchange (including Offered Securities to be issued or sold to Eligible Buyers pursuant to Section 4.13(d) above prior to such reduction) and (ii) the denominator of which shall be the original amount of the Offered Securities. In the event that any Eligible Buyer so elects to reduce the number or amount of Offered Securities specified in its Notice of Acceptance, GRC may not issue, sell or exchange more than the reduced number or amount of the Offered Securities unless and until such securities have again been offered to the Eligible Buyers in accordance with Section 4.13(c) above.

(g) Upon the closing of the issuance, sale or exchange of all or less than all of the Refused Securities, the Eligible Buyers shall acquire from GRC, and GRC shall issue to the Eligible Buyers, the number or amount of Offered Securities specified in the Notices of Acceptance, as reduced pursuant to Section 4.13(f) above if the Eligible Buyers have so elected, upon the terms and conditions specified in the Offer. The purchase by the Eligible Buyers of any Offered Securities is subject in all cases to the preparation, execution and delivery by GRC and the Eligible Buyers of a purchase agreement relating to such Offered Securities reasonably satisfactory in form and substance to the Eligible Buyers and their respective counsel.

(h) Any Offered Securities not acquired by the Eligible Buyers or other persons in accordance with Section 4.13(g) above may not be issued, sold or exchanged until they are again offered to the Eligible Buyers under the procedures specified in this Agreement.

(i) In exchange for GRC’s willingness to agree to these procedures, each Eligible Buyer hereby irrevocably agrees that it will hold in strict confidence any and all Offer Notices, the information contained therein, and the fact that GRC is contemplating a Subsequent Placement, unless it notifies GRC in writing that it no longer desires to receive Offer Notices.

4.14. Capital Deficit. Within 3 Trading Days of the Closing Date, the Company shall have been paid the remaining registered capital deficit of RMB 26,400,000. Logic Express shall provide the Investors with evidence that such registered deficit has been paid by providing a Capital Verification Report and a new Business License on or before July 31, 2006.

4.15. Obligations of the Company. GRC shall cause the Company to satisfy its obligations under the Transaction Documents.

4.16. No Non-US Reincorporation. For so long as the Investors own at least 10% of the Securities purchased by them hereunder, GRC shall not change its jurisdiction of incorporation to any jurisdiction other than one of the fifty United States without the approval of Investors representing at least 75% of the aggregate Investment Amount.

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ARTICLE 5.

CONDITIONS PRECEDENT TO CLOSING

5.1. Conditions Precedent to the Obligations of the Investors to Purchase Securities . The obligation of each Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties . The representations and warranties of GRC, Logic Express and the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date;

(b) Performance . Each of GRC, the Company and the Selling Stockholders shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing;

(d) No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;

(e) Adverse Changes . Since the date of execution of this Agreement, no event or series of events shall have occurred that reasonably could have or result in a Material Adverse Effect;

(f) No Suspensions of Trading in Common Stock; Listing . Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market; and

(g) Deliverables . GRC and the Selling Stockholders shall have delivered the Seller Deliverables in accordance with Section 2.2(a).

5.2. Conditions Precedent to the Obligations of GRC and the Selling Stockholders to sell Securities . The obligation of GRC and the Selling Stockholders to sell Securities at the Closing is subject to the satisfaction or waiver by GRC and the Selling Stockholders, at or before the Closing, of each of the following conditions:

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(a) Representations and Warranties . The representations and warranties of each Investor contained herein shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date;

(b) Performance . Each Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing;

(c) No Injunction . No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; and

(d) Investors Deliverables . Each Investor shall have delivered its Investors Deliverables in accordance with Section 2.2(b).

ARTICLE 6.

MISCELLANEOUS

6.1. Fees and Expenses . Each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. GRC shall pay all stamp and other taxes and duties levied in connection with the sale of the Shares.

6.2. Entire Agreement . The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

6.3. Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

If to GRC, the Company,

or Logic Express:

China Biologic Products, Inc.

No. 14 East Hushan Road

Ta’ian City, Shandong Province

P.C. 271000, China

Attention: Michael Li

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With a copy to:

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Facsimile: (212) 504-3013

Attention: Mitchell S. Nussbaum, Esq.

If to a Selling

Stockholder:

To the address set forth under such Selling Stockholder’s name on the signature pages hereof;

If to an Investor: To the address set forth under such Investor’s name on the signature pages hereof;

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

6.4. Amendments; Waivers; No Additional Consideration . No provision of this Agreement may be waived or amended except in a written instrument signed by GRC and the Investors holding a majority of the Shares. In addition, Sections 3.3, 4.7(b) and Article VI may not be waived or amended except in a written instrument signed by the Investors holding a majority of the Shares, the Company and the Selling Stockholder. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to any Investor to amend or consent to a waiver or modification of any provision of any Transaction Document unless the same consideration is also offered to all Investors who then hold Shares.

6.5. Termination . This Agreement may be terminated prior to Closing:

(a) by written agreement of the Investors and GRC ; and

(b) by GRC, the Selling Stockholder (as to itself but no other Selling Stockholder), or an Investor (as to itself but no other Investor) upon written notice to the other, if the Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside Date; provided , that the right to terminate this Agreement under this Section 6.5(b) shall not be available to any Person whose failure to comply with its obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time.

In the event of a termination pursuant to this Section, GRC shall promptly notify all non-terminating Investors. Upon a termination in accordance with this Section 6.5, GRC, terminating Selling Stockholder(s) or terminating Investor(s), as applicable, shall not have any further obligation or liability (including as arising from such termination) to any other party and no Investor will have any liability to any other Investor under the Transaction Documents as a result therefrom.

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6.6. Construction . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.

6.7. Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. Neither GRC nor the Selling Stockholders may assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign any or all of its rights under this Agreement to any Person to whom such Investor assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investors.”

6.8. No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7 (as to each Investor Party).

6.9. Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each of GRC, the Investors and the Selling Stockholders agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each of GRC, the Investors and the Selling Stockholders hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each of GRC, the Investors and the Selling Stockholders hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each of GRC, the Investors and the Selling Stockholders hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If any party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be jointly and severally reimbursed by the adverse party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

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6.10. Survival . The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the Securities.

6.11. Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

6.12. Severability . If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

6.13. Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right, election, demand or option under a Transaction Document and GRC does not timely perform its related obligations within the periods therein provided, then such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to GRC, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.

6.14. Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, GRC shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to GRC of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, GRC may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement.

6.15. Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors, GRC and the Selling Stockholders will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

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6.16. Payment Set Aside . To the extent that GRC or any Selling Stockholder makes a payment or payments to any Investor pursuant to any Transaction Document or an Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to GRC or such Selling Stockholder, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

6.17. Independent Nature of Investors’ Obligations and Rights . The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. Each of the Company and each Selling Stockholder acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

6.18. Limitation of Liability . Notwithstanding anything herein to the contrary, each of GRC and each Selling Stockholder acknowledges and agrees that the liability of an Investor arising directly or indirectly, under any Transaction Document of any and every nature whatsoever shall be satisfied solely out of the assets of such Investor, and that no trustee, officer, other investment vehicle or any other Affiliate of such Investor or any investor, shareholder or holder of shares of beneficial interest of such a Investor shall be personally liable for any liabilities of such Investor.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

GRC HOLDINGS, INC.

By: /s/ Michael Li

Name: Michael Li

Title: CEO

LOGIC EXPRESS LIMITED

By: /s/ Lin Ling Li

Name: Lin Ling Li

Title: Legal Representative

SHANDONG MISSILE BIOLOGIC PRODUCTS CO., LTD.

By:_____________________________________

Name:

Title:

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR SELLING STOCKHOLDERS FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

SELLING STOCKHOLDER

/s/ Chan, Siu Ling

Name: Chan, Siu Ling

Tax ID No.: N/A

NUMBER OF SELLING STOCKHOLDER SHARES

_________1,040,000_______________________

ADDRESS FOR NOTICE

Street: Flat 22C, Tower 15, Pacific Palisades

City/State/Zip: North Point, Hong Kong

Tel:_____________________________________

Fax:_____________________________________

SELLING STOCKHOLDER

/s/ Lin Ling Li

Nam e: Li, Lin Ling

Tax ID No.: N/A

NUMBER OF SELLING STOCKHOLDER SHARES

_______ 1,040,000 _________________________

ADDRESS FOR NOTICE

Street: Flat 22D, Oceanic Building, 38 Finnie Street

City/State/Zip: Quarry Bay, Hong Kong

Tel:_____________________________________

Fax:_____________________________________

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES FOR INVESTORS FOLLOW]

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Pinnacle China Fund LP

By: /s/ Barry Kitt

Name: Barry Kitt

Title: Principle

Investment Amount: $ 4,000,000

Tax ID No.:

ADDRESS FOR NOTICE

Street: 4965 Preston Park Blvd., Suite 240

City/State/Zip: Plano, Texas 75093-5770

Attention: Barry Kitt

Tel: 972-985-2121

Fax: 972-985-2122

DELIVERY INSTRUCTIONS

(if different from above)

c/o: Banc of America Securities

Street: 901 Main St., Ste 6616

City/State/Zip: Dallas ,TX 75202

Attention: Brett Speer

Tel: 214-209-9973

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

JayHawk China Fund “Cayman LTD”

By: /s/ Michael Schmitz

Name: Michael Schmitz

Title: Chief Financial Officer

Investment Amount: $ 3,000,000

Tax ID No.: 98-0170144

ADDRESS FOR NOTICE

Street: 8201 Mission Road, Suite 110

City/State/Zip: Prairie Village, KS 66208

Attention: Michael Schmitz

Tel:_____________________________________

Fax:_____________________________________

DELIVERY INSTRUCTIONS

(if different from above)

c/o:_____________________________________

Street:___________________________________

City/State/Zip:_____________________________

Attention:________________________________

Tel:_____________________________________

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Hudson Bay Fund LP

By: /s/ Yoav Roth

Name: Yoav Roth

Title: Principle & Portfolio Manager

Investment Amount: $500,000

Tax ID No.:

ADDRESS FOR NOTICE

Street: 120 Broadway, 40 ^th floor

City/State/Zip: New York, NY 10019

Attention: Yoav Roth

Tel: 212-571-1244

Fax: 212-571-1279

DELIVERY INSTRUCTIONS

(if different from above)

c/o:_____________________________________

Street:___________________________________

City/State/Zip:_____________________________

Attention:________________________________

Tel:_____________________________________

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Capital Ventures International, by

Heights Capital Management, Inc.

By: /s/ Martin Kobinger

Name: Martin Kobinger

Title: Investment Manager

Investment Amount: $ 610,600

Tax ID No.:

ADDRESS FOR NOTICE

Street: 101 California Street, Suite 3250

City/State/Zip: San Francisco, CA 94111

Attention: Martin Hoe

Tel: 415-403-6500

Fax: 415-403-6525

DELIVERY INSTRUCTIONS

(if different from above)

c/o:_____________________________________

Street:___________________________________

City/State/Zip:_____________________________

Attention:________________________________

Tel:_____________________________________

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Schedule 3.1(a) - Subsidiaries of the Company

None

Schedule 3.1(g) - Capitalization of the Company

Registered capital: RMB 87,000,000, the contributed capital is RMB 60,600,000.

Shareholders: Logic Express Ltd.(“LOGIC”), holding 82.76% equity interest; Shandong Province Biological Product Research Institute (“Research Institute”), holding 17.24% equity interest.

Schedule 3.1(u) - Fees

Lane Capital Markets, LLC: US$416,900

Schedule 3.1(v) - Registration Rights

None

Schedule 3.3(f) - Fees

Lane Capital Markets, LLC: US$394,160

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EXHIBIT 4.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement" ) is made and entered into as of July 18, 2006, by and among GRC Holdings, Inc. , a Texas corporation (the "Company" ), and the investors signatory hereto (each a "Investor" and collectively, the "Investors" ).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Investors (the "Purchase Agreement" ).

The Company and the Investors hereby agree as follows:

1. Definitions . Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement will have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms have the respective meanings set forth in this Section 1:

“Advice” has the meaning set forth in Section 6(d).

"Effective Date" means, as to a Registration Statement, the date on which such Registration Statement is first declared effective by the Commission.

“Effectiveness Date” means (a) with respect to the Registration Statement required to be filed under Section 2(a), the earlier of: (a)(i) the 180 ^th day following the Closing Date, and (ii) the fifth Trading Day following the date on which the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments.

"Effectiveness Period" has the meaning set forth in Section 2(a).

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Filing Date" means (a) with respect to the Registration Statement required to be filed under Section 2(a), the 45 ^th day following the Closing Date.

"Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities.

“Indemnified Party” has the meaning set forth in Section 5(c).

“Indemnifying Party” has the meaning set forth in Section 5(c).

“Losses” has the meaning set forth in Section 5(a).

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

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"Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened in writing.

“Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means: (i) the Shares, (ii) the Warrant Shares, (iii) the Escrow Shares, (iv) any shares of Common Stock issuable upon exercise of warrants issued to any placement agent as compensation in connection with the financing that is the subject of the Purchase Agreement, and (v) any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event, or any exercise price adjustment with respect to any of the securities referenced in (i), (ii), (iii), or (iv) above; provided however, that once any such securities referred to in foregoing clauses (i), (ii), (iii), (iv) or (v) have been sold pursuant to the Registration Statement or are eligible for resale under Rule 144 of the Securities Act, they shall no longer constitute Registrable Securities..

"Registration Statement" means the registration statement required to be filed in accordance with Section 2(a) including the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference therein.

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

"Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

"Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

"Securities Act" means the Securities Act of 1933, as amended.

"Shares" means the shares of Common Stock sold to the Investors pursuant to the Purchase Agreement.

“Warrants” means the Common Stock purchase warrants issued or issuable to the Investors pursuant to the Purchase Agreement and to any placement agent identified in

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Schedule 3.1(u) to the Purchase Agreement in accordance with the terms of the engagement or similar agreements between the Company and any such agents.

"Warrant Shares" means the shares of Common Stock issued or issuable upon exercise of the Warrants.

2. Registration .

(a) On or prior to the Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415, on Form S-1 (or on such other form appropriate for such purpose). Such Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the "Plan of Distribution" attached hereto as Annex A. The Company shall cause such Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than the Effectiveness Date, and shall use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earliest of (i) three years after its Effective Date, and (ii) such time as all of the Registrable Securities covered by such Registration Statement have either been publicly sold by the Holders or may be sold by the Holders pursuant to Rule 144(k) under the Securities Act (the "Effectiveness Period" ). By 5:00 p.m. (New York City time) on the Effective Date, the Company shall file with the Commission in accordance with Rule 424 under the Securities Act the final prospectus to be used in connection with sales pursuant to such Registration Statement (whether or not such filing is technically required under such Rule).

(b) If: (i) a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) hereof, the Company shall not be deemed to have satisfied this clause (i)), or (ii) a Registration Statement is not declared effective by the Commission on or prior to its required Effectiveness Date, or if by the second Business Day immediately following the Effective Date the Company shall not have filed a “final” prospectus for the Registration Statement with the Commission under Rule 424(b) in accordance with Section 2(a), 2(b) or 2(c) herein, as the case may be (whether or not such a prospectus is technically required by such Rule), or (iii) after its Effective Date, without regard for the reason thereunder or efforts therefor, such Registration Statement ceases for any reason to be effective and available to the Holders as to all Registrable Securities to which it is required to cover at any time prior to the expiration of its Effectiveness Period for more than an aggregate of 30 Trading Days (which need not be consecutive) (any such failure or breach being referred to as an “Event,” and for purposes of clauses (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such 30 Trading Day-period is exceeded, being referred to as “Event Date” ), then in addition to any other rights the Holders may have hereunder or under applicable law: on such Event Date and in the case of an Event arising under either clause (i) or (ii) above, on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured the Company shall pay to each Holder an amount in cash or shares of Common Stock of the Company that have been registered under the Securities Act, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate Investment Amount paid by such Holder for Shares pursuant to the

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Purchase Agreement ; provided , however, that if any damages are payable pursuant to this Section 2(b) as a result of the Registration Statement not being declared effective by the Commission prior to the required Effectiveness Date, such liquidated damages shall equal 0.75% (instead of 1.0%) of the aggregate Investment Amount paid by such Holder for Shares pursuant to the Purchase Agreement. The parties agree that the Company will not be liable for liquidated damages under this Section with respect to the Warrants or Warrant Shares. In no event will the Company be liable for damages in excess of 1.0% of the aggregate Investment Amount of the Holders in any 30-day period and the maximum aggregate liquidated damages payable to a Holder under this Section 2(b) shall not exceed ten percent (10%) of the aggregate Investment Amount paid by such Holder pursuant to the Purchase Agreement. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date.

(c) Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this Agreement as Annex B (a “Selling Holder Questionnaire” ). The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement and shall not be required to pay any liquidated or other damages under Section 2(b) to any Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least two Trading Days prior to the Filing Date (subject to the requirements set forth in Section 3(a)).

3. Registration Procedures .

In connection with the Company's registration obligations hereunder, the Company shall:

(a) Not less than four Trading Days prior to the filing of a Registration Statement, the Company shall furnish to each Holder copies of such document which will be subject to the review of such Holder. The Company shall not file a Registration Statement to which a Holder reasonably objects in writing (including via e-mail).

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible provide , upon request, the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that would not result in the disclosure to the Holders of material and non-public information concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement.

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(c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below, not less than three Trading Days prior to such filing and, in the case of (v) below, not less than three Trading Days prior to the financial statements in any Registration Statement becoming ineligible for inclusion therein) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto, upon request, to each of the Holders that pertain to the Holders as a Selling Stockholder or to the Plan of Distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(e) Promptly deliver to each Holder, without charge, one electronic copy of each Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto.

(f) Prior to any resale of Registrable Securities by a Holder, use its reasonable best efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing (including via

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e-mail), to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided , that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction. In connection with the Company’s obligations under this Section 3(f), the Company shall promptly following the Effectiveness Date, qualify for a “Manual’s Exemption” allowing for secondary trading in the Company’s Common Stock once the Company has a listing in Standard & Poor’s Rating Services, Moody’s Investor Service, or other similar nationally recognized securities manual.

(g) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

(h) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

4. Registration Expenses . All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder.

5. Indemnification .

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(a) Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, investment advisors, partners, members and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and reasonable attorneys' fees) and expenses (collectively, " Losses "), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b) Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising solely out of or based solely upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any

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amendment or supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an " Indemnified Party "), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the " Indemnifying Party ") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to

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indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d) Contribution . If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6. Miscellaneous .

(a) Remedies . In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

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(b) No Piggyback on Registrations . Except as and to the extent specified in Schedule 3.1(v) to the Purchase Agreement, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities, and the Company shall not during the Effectiveness Period enter into any agreement providing any such right to any of its security holders.

(c) Compliance . Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(d) Discontinued Disposition . Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "Advice" ) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

(e) Piggy-Back Registrations . If at any time during the Effectiveness Period there is not an effective Registration Statement covering all or any portion of the Registrable Securities and the Company shall file with the Commission a resale registration statement relating to an offering for the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Investor holding such Registrable Securities which are then not covered by an effective Registration Statement, written notice of such determination and, if within fifteen days after receipt of such notice, any such Investor shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities, subject to customary underwriter cutbacks applicable to all holders of registration rights.

(f) Amendments and Waivers . The provisions of this Agreement, including the provisions of this Section 6(f), may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of no less than a majority in interest of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates.

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(g) Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows:

If to the Company:

China Biologic Products, Inc.

No. 14 East Hushan Road

Ta’ian City, Shandong Province

P.C. 271000, China

Attention: Michael Li

With a copy to:

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Facsimile: (212) 504-3013

Attention: Mitchell S. Nussbaum, Esq.

If to a Investor:

To the address set forth under such Investor's name on the signature pages hereto.

If to any other Person who is then the registered Holder:

To the address of such Holder as it appears in the stock transfer books of the Company

or such other address as may be designated in writing hereafter, in the same manner, by such Person.

(h) Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

(i) Execution and Counterparts . This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

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(j) Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) will be commenced in the New York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

(k) Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(l) Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(m) Headings . The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

(n) Independent Nature of Investors' Obligations and Rights . The obligations of each Investor under this Agreement are several and not joint with the obligations of each other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to

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such obligations or the transactions contemplated by this Agreement or any other Transaction Document. Each Investor acknowledges that no other Investor will be acting as agent of such Investor in enforcing its rights under this Agreement. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Registration Rights Agreement for the purpose of closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES TO FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

GRC HOLDINGS, INC.

By: /s/ Michael Li

Name: Michael Li

Title: CEO

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGES OF INVESTORS TO FOLLOW]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NAME OF INVESTING ENTITY

Pinnacle China Fund; LP

By: /s/ Barry M. Kitt

Name: Barry M. Kitt

Title: General Partner

ADDRESS FOR NOTICE

c/o: Pinnacle China Fund, LP

Street: 4965 Preston Park Blvd, Ste 240

City/State/Zip: Plano, TX 75093

Attention: Barry M. Kitt

Tel: 972-985-2121

Fax: 972-985-2122

Email: barry@pinnaclechinafund.com

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NAME OF INVESTING ENTITY

Jayhawk China Fund (Cayman) Ltd.

By: /s/ Michael Schmitz

Name: Michael Schmitz

Title: CFO of Investment Manager

ADDRESS FOR NOTICE

c/o: Jayhawk Capital Management, LLC

Street: 8201 Mission Rd., Ste. 110

City/State/Zip: Prairie Village, KS 66208

Attention:

Tel:

Fax:

Email:

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NAME OF INVESTING ENTITY

Hudson Bay Overseas Fund, Ltd.

By: /s/ Yoav Roth

Name: Yoav Roth

Title: Principle and Portfolio Manager

ADDRESS FOR NOTICE

c/o: Hudson Bay Capital Management LP

Street: 120 Broadway, 40th Floor

City/State/Zip: New York, NY 10271

Attention: Yoav Roth

Tel: 212-571-1244

Fax: 212-571-1279

Email: yroth@hudsonbaycapital.com

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NAME OF INVESTING ENTITY

Hudson Bay Fund

By: /s/ Yoav Roth

Name: Yoav Roth

Title: Principle and Portfolio Manager

ADDRESS FOR NOTICE

c/o: Hudson Bay Capital Management, LP

Street: 120 Broadway, 40th Floor

City/State/Zip: New York, NY 10271

Attention: Yoav Roth

Tel: 212-571-1244

Fax: 212-571-1279

Email:

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

NAME OF INVESTING ENTITY

Capital Ventures International

By: /s/ Martin Kobinger

Name: Martin Kobinger

Title: Investment Manager

ADDRESS FOR NOTICE

c/o: Heights Capital Management

Street: 101 California Street, Suite 3250

City/State/Zip: San Francisco, CA 94111

Attention: Martin Kobinger or Martin Hoe

Tel: 415-403-6500

Fax: 415-403-6525

Email: martin.kobinger@sig.com or martin.hoe@sig.com

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Annex A

Plan of Distribution

·	ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors;

·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

·	an exchange distribution in accordance with the rules of the applicable exchange;

·	privately negotiated transactions;

·	to cover short sales made after the date that this Registration Statement is declared effective by the Commission;

·	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

·	a combination of any such methods of sale; and

·	any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

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Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, and (v) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.

The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed to the sale of Securities will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

The Company is required to pay all fees and expenses incident to the registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

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Annex B

China Biologic Products, Inc. (the “Company”)

SELLING SHAREHOLDER QUESTIONNAIRE

The following information is requested for use in connection with the preparation of a registration statement registering shares of our common stock, including shares of our common stock underlying warrants, options and convertible notes that we have sold or issued, for resale by you as a selling shareholder (the “Shares”). The Shares, which you acquired in connection with the Company’s reverse merger (the “Acquisition”) and in other financing transactions, will be included in a Registration Statement on Form SB-2 (the “Registration Statement”) filed under the Securities Act of 1933 (the “Act”).

Please complete and sign one copy of this questionnaire, and return it to Norwood Beveridge, Esq., Loeb & Loeb LLP, 345 Park Avenue, New York, New York 10154 at your earliest opportunity.

Kindly note that while some of the information requested herein may be deemed not material and therefore not required to be disclosed in the Registration Statement relating to the proposed public offering, you should provide all the information requested.

ITEM 1. DEFINITIONS

Before you complete this Questionnaire, please give consideration to the following definitions of various terms used in this Questionnaire.

“Associate”, as used throughout this questionnaire, means (a) any corporation or organization (other than the Company or any of its subsidiaries) of which you are an officer, director or partner or of which you are, directly or indirectly, the beneficial owner of 5% or more of any class of equity securities, (b) any trust or other estate in which you have a substantial beneficial interest or as to which you serve as trustee or in a similar capacity, (c) your spouse, (d) any relative of your spouse or any relative of yours who has the same home as you or who is a director or officer of key executive of the Company or any of its subsidiaries, (e) any partner, syndicate member or person with whom you have agreed to act in concert with respect to the acquisition, holding, voting or disposition of shares of the Company's securities.

“Beneficially”, when used in connection with the ownership of securities, means (a) any interest in a security which entitled you to any of the rights or benefits of ownership even though you may not be the owner of record or (b) securities owned by you directly or indirectly, including those held by you for your own benefit (regardless of how registered), and securities held by others for your benefit (regardless of how registered), such as by custodians, brokers, nominees, pledgees, etc., and including securities held by an estate or trust in which you have an interest as legatee or beneficiary, securities owned by a partnership of which you are a partner, securities held by a personal holding company of which you are a shareholder, etc., and securities held in the name of your spouse, minor children and any relative (sharing the same

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home). A “beneficial owner” of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares:

(1)

voting power which includes the power to vote, or to direct the voting of, such security; and/or

(2)

investment power which includes the power to dispose, or to direct the disposition, of such security.

In addition to being beneficial owner of securities over which you have, or share, voting or investment power, you are deemed to be the beneficial owner of a security if you have a right, within 60 days, to acquire beneficial ownership of (i.e., the right to obtain or share voting or investment power over) such security. Examples of such rights would include the right to acquire: (i) through the exercise of any option, warrant or similar right; (ii) through conversion of any security; or (iii) pursuant to the power to revoke, or the provision for automatic termination of, a trust, discretionary account or options, convertible securities or power to revoke such a trust with the “purpose or effect” or changing or influencing control underlying securities upon such acquisition, without regard to the sixty day rule state above.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise.

A “Control Person” of a specified person is a person that directly, or indirectly through one or more intermediaries, controls the person specified.

“Material”, when used in this Questionnaire to qualify a requirement for the furnishing of information as to any subject, limits the information required to those matters as to which an average prudent investor ought reasonable to be informed before purchasing the common stock of the Company.

“Material Relationship” has not been defined by the Securities and Exchange Commission. However, the Commission has indicated that it will probably construe as a “material relationship” any relationship which tends to prevent arms-length bargaining in dealings with a company, whether arising from a close business connection or family relationship, a relationship of control or otherwise. It seems prudent, therefore, to consider that you would have such a relationship, for example, with any organization of which you are an officer, director, trustee or partner or in which you own, directly or indirectly, 10% or more of the outstanding voting stock, or in which you have some other substantial interest, and with any person or organization with whom you have, or with whom any relative or spouse (or any other person or organization as to which you have any of the foregoing other relationships) has, a contractual relationship.

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The National Association of Securities Dealers, Inc. (“NASD”) defines a “Member” as being either any broker or dealer admitted to a membership in the NASD or any officer or partner of such a member, or the executive representative of such a member or the substitute for such a representative.

The NASD defines a “Person Associated with a Member” as being every sole proprietor, partner, officer, director or branch manager of any member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by such member (for example, any employee), whether or not any such person is registered or exempt from registration with the NASD.

The NASD defines an “Underwriter or a Related Person” with respect to a proposed offering as being underwriters, underwriters' counsel, financial consultants and advisors, finders, members of the selling or distribution group, and any and all other persons associated with or related to any of such persons.

ITEM 2. Please complete the following:

If you need more space to respond to or clarify your response to a question, use the “Additional Information” page at the end of this Questionnaire.

1.	Print name of shareholder _____________________________________________

2.	Print address _____________________________________________________________

_______________________________________________________________

3.	If you plan to sell any shares in a state other than the state included in your address, please identify below:

4.	List all positions or offices that you or any of your directors, officers, partners, shareholders or members have had since January 1, 2001 with the Company or any of its affiliates:

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5.	Describe below any material relationship you or any of your directors, officers, partners, shareholders or members have had with the Company or any of its officers or directors:

State below whether you or any of your Associates is or after January 1, 2001 was a member of the NASD, a controlling shareholder of a member, a person Associated or affiliated with a member or an Underwriter or a Related Person with respect to the proposed offering. If you respond “yes”, describe such relationship:

Yes _____ No _____

(IF THE RESPONSE TO 6 WAS “NO”, DO NOT RESPOND TO PARTS 7-9)

7.	Describe below information as to all purchases and acquisitions (including contracts to purchase or to acquire) of securities of the Company by you since January 1, 2001, and all proposed purchases and acquisitions which are to be consummated in whole or in part within the next twelve months:

Describe below all information as to all sales and dispositions (including contracts to sell or to dispose) of securities of the Company since January 1, 2001 by you to any “member” of the NASD or any Person Associated with a Member with respect to the proposed public offering, as well as to all proposed sales and dispositions by you which are to be consummated in whole or in part within the next twelve months.

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If you have had since January 1, 2001, or are to have within the next twelve months, any transaction of the character referred to in either Point 7 or 8 above, describe briefly below the relationship, affiliation or association of both you and, if known, the other party or parties to any such transaction with an underwriter or other “in the stream of distribution” with respect to the proposed offering. In any case, where the purchaser (whether you or any such party) is known by you to be a member of a “private investment group”, such as a hedge fund or other group of purchasers, list, if known, the names of all persons comprising the “group” and their “association with” or “relationship to” any broker-dealer.

10.	Describe any arrangement known to you made or to be made by any person, or any transaction already effected and if no such arrangement or transaction is known to you, state “none”:

(i)

to limited or restrict the sale of the common stock of the Company during the period of the offering of such common stock registered under the Registration Statement;

(ii)

to stabilize the market for the common stock; or

(iii)

to withhold commissions or otherwise to hold each underwriter or dealer responsible for the distribution of his participation in the offering.

11.	Specify below the information required as to Shares and all other securities beneficially owned by you (including any options or warrants) as of the date of this Questionnaire. [Please refer to the attached definition of “Beneficially” or the first page of this Questionnaire.]

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12.	Specify below the number of Shares acquired by you in the Acquisition or other financing transaction which you wish to include in the Registration Statement pursuant to your registration rights (if left blank, all such Shares will be included):

13.	State below whether you or any of your Associates is a market-maker in, or in any other way involved in the trading of, any security of the Company. If you respond “yes”, describe such relationship:

Yes _____ No _____

14.	State below whether shareholder is selling the Shares to be sold pursuant to the registration statement for the purposes of raising funds or diversifying your investment portfolio. If you respond “no”, describe the purpose of your sale:

Yes _____ No _____

15.	State whether you may sell shares in any method of distribution other than from time to time in transactions on the OTC Bulletin Board, in negotiated transactions, through the writing of options or a combination of such methods of sale. If you respond “yes”, describe such method:

Yes _____ No _____

16.	State whether you may sell the shares to or through broker-dealers.

Yes _____ No _____

Please note that the selling shareholders and any broker-dealers or agents who participate in the distribution of shares pursuant to the Registration Statement may be deemed to be “underwriters” as that term is defined in the Act, and any commissions received by them and profit on any resale of the shares as principal might be deemed to be underwriting discounts and commissions under the Act.

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ITEM 3. SIGNATURE

I understand that the information that I am furnishing China Biologic Products, Inc. herein will be used by the Company in the preparation of the Registration Statement under the Securities Act of 1933, as amended. The responses supplied in this questionnaire are accurate and complete to the best of my knowledge. If, at any time after the date of my signing this Questionnaire and prior to the date of registration of the Company’s securities, any change occurs which would render any of my statements in this Questionnaire inaccurate, misleading or incomplete in any respect, I will immediately advise Loeb & Loeb LLP of such changes and the details thereof.

Signature:________________________________________

Name (please print) :

Title:____________________________________________

Telephone No:____________________________________

Fax No:_________________________________________

Business Address:________________________________

_________________________________________

Date:___________________________________________

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EXHIBIT 4.3

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES.

GRC HOLDINGS, INC.

WARRANT

Warrant No. _____

Original Issue Date: July 19, 2006

GRC Holdings, Inc., a Texas corporation (the "Company" ), hereby certifies that, for value received, ______ or its registered assigns (the "Holder" ), is entitled to purchase from the Company up to a total of _______ shares of Common Stock (each such share, a "Warrant Share" and all such shares, the "Warrant Shares" ), at any time and from time to time from and after the Original Issue Date and through and including July 19, 2011 (the "Expiration Date" ), and subject to the following terms and conditions:

1. Definitions . As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1. Capitalized terms that are used and not defined in this Warrant that are defined in the Purchase Agreement (as defined below) shall have the respective definitions set forth in the Purchase Agreement.

"Business Day" means any day except Saturday, Sunday and any day that is a federal legal holiday in the United States or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

"Common Stock" means the common stock of the Company, par value $.0001 per share, and any securities into which such common stock may hereafter be reclassified.

"Exercise Price" means $2.8425, subject to adjustment in accordance with Section 9.

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"Fundamental Transaction" means any of the following: (1) the Company effects any merger or consolidation of the Company with or into another Person, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.

“Original Issue Date” means the Original Issue Date first set forth on the first page of this Warrant.

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

"Purchase Agreement" means the Securities Purchase Agreement, dated July 18, 2006, to which the Company and the original Holder are parties.

"Trading Day" means (i) a day on which the Common Stock is traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day.

"VWAP" means on any particular Trading Day or for any particular period, the volume weighted average trading price per share of Common Stock on such date or for such period as reported by Bloomberg L.P., or by any successor performing similar functions.

2. Registration of Warrant . The Company shall register this Warrant upon records to be maintained by the Company for that purpose (the "Warrant Register" ), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

3. Registration of Transfers . The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a "New Warrant" ), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant.

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4. Exercise and Duration of Warrants .

(a) This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the Original Issue Date through and including the Expiration Date. At 6:30 p.m., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value. Except as provided in Section 4(b) below, the Company may not call or redeem any portion of this Warrant without the prior written consent of the affected Holder.

(b) Subject to the provisions of this Section 4(b), if at any time following the forty-fifth Trading Day following the Effective Date: (i) the VWAP of the Common Stock on each Trading Day during any 15 consecutive Trading Day period, each following such forty five Trading Day period, is equal to or greater than 160% of the Exercise Price (subject to adjustment pursuant to Section 9), (ii) the Warrant Shares are either registered for resale pursuant to an effective registration statement naming the Holder as a selling stockholder thereunder (and the prospectus thereunder is available for use by the Holder as to all Warrant Shares) or freely transferable without volume restrictions pursuant to Rule 144(k) promulgated under the Securities Act, as determined by counsel to the Company pursuant to a written opinion letter addressed and in form and substance reasonably acceptable to the Holder and the transfer agent for the Common Stock, during the entire 15 Trading Day period referenced in (i) above through the expiration of the Call Date as set forth in the Company’s notice pursuant to this Section (the “Call Condition Period” ), (iii) the Common Stock shall at all times be listed or quoted on a Trading Market, then, subject to the conditions set forth in this Section, the Company may, in its sole discretion, elect to require the exercise of up to all of the then unexercised portion of this Warrant, on the date that is the third Trading Day after written notice thereof (a “Call Notice” ) is received by the Holder (such third Trading Day shall be known as the “Call Date” ) at the address last shown on the records of the Company for the Holder or given by the Holder to the Company for the purpose of notice; provided , that the conditions to giving such notice must be in effect at all times during the Call Condition Period (other than as to clause (i) above which only needs to be satisfied up to the time of the delivery of the Call Notice) or any such Call Notice shall be null and void. The Company and the Holder agree that, if and to the extent Section 11 of this Warrant would restrict the ability of the Holder to exercise this Warrant in the event of a delivery of a Call Notice, then notwithstanding anything to the contrary set forth in the Call Notice, the Call Notice shall be deemed automatically amended to apply only to such portion of this Warrant as may be exercised by the Holder by the Call Date in accordance with such Section. The Holder will promptly (and, in any event, prior to the Call Date) notify the Company in writing following receipt of a Call Notice if Section 11 would restrict its exercise of the Warrant, specifying therein the number of Warrant Shares so restricted. The Company covenants and agrees that it will honor all Exercise Notices tendered through 6:30 p.m. (New York City time) on the Call Date.

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5. Delivery of Warrant Shares .

(a) To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant Shares represented by this Warrant is being exercised. Upon delivery of the Exercise Notice (in the form attached hereto) to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein, together with payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise, which, unless otherwise required by the Purchase Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the Warrant Shares has been declared effective by the Securities and Exchange Commission, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available, provided , that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A " Date of Exercise " means the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased.

(b) If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise.

(c) If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a " Buy-In "), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock on the Date of Exercise and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In.

(d) The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing Warrant Shares upon exercise of the Warrant as required pursuant to the terms hereof.

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6. Charges, Taxes and Expenses . Issuance and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares or Alternate Consideration upon exercise hereof.

7. Replacement of Warrant . If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company’s obligation to issue the New Warrant.

8. Reservation of Warrant Shares . The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable.

9. Certain Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

(a) Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination.

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(b) Fundamental Transactions . If, at any time while this Warrant is outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the "Alternate Consideration" ). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder's option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder's right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. The terms of any agreement pursuant to which a Fundamental Transaction is effected shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction.

(i) If the Company, at any time while this Warrant is outstanding, shall issue shares of Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock, at a price per share less than the then current Exercise Price (if the holder of the Common Stock or Common Stock Equivalent so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights issued in connection with such issuance, be entitled to receive shares of Common Stock at a price less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then, the Exercise Price shall be multiplied by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such shares of Common Stock or such Common Stock Equivalents plus the number of shares of Common Stock which the offering price for such shares of Common Stock or Common Stock Equivalents would purchase at the Exercise Price, and the denominator of which shall be the sum of the number of shares of Common Stock outstanding immediately prior to such issuance plus the number of shares of Common Stock so issued or issuable. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. The Company shall notify the Holder in writing, no later than the third Trading Day following the issuance of any Common Stock or Common Stock Equivalent subject to this section, indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms.

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(ii) For purposes of this subsection 9(c), the following subsections (c)(ii)(l) to (c)(ii)(6) shall also be applicable:

(1) Issuance of Rights or Options . In case at any time the Company shall in any manner grant (directly and not by assumption in a merger or otherwise) any warrants or other rights to subscribe for or to purchase, or any options for the purchase of, Common Stock or any stock or security convertible into or exchangeable for Common Stock (such warrants, rights or options being called “Options” and such convertible or exchangeable stock or securities being called “Convertible Securities” ) whether or not such Options or the right to convert or exchange any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such Options or upon the conversion or exchange of such Convertible Securities (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount, if any, received or receivable by the Company as consideration for the granting of such Options, plus (y) the aggregate amount of additional consideration payable to the Company upon the exercise of all such Options, plus (z), in the case of such Options which relate to Convertible Securities, the aggregate amount of additional consideration, if any, payable upon the issue or sale of such Convertible Securities and upon the conversion or exchange thereof, by (ii) the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options) shall be less than the Exercise Price in effect immediately prior to the time of the granting of such Options, then the total number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to have been issued for such price per share as of the date of granting of such Options or the issuance of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price. Except as otherwise provided in subsection 9(c)(ii)(3), no adjustment of the Exercise Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such Options or upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities.

(2) Issuance of Convertible Securities . In case the Company shall in any manner issue (directly and not by assumption in a merger or otherwise) or sell any Convertible Securities, whether or not the rights to exchange or convert any such Convertible Securities are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange (determined by dividing (i) the sum (which sum shall constitute the applicable consideration) of (x) the total amount received or receivable by the Company as consideration for the issue or sale of such Convertible Securities, plus (y) the aggregate amount of additional consideration, if any, payable to the Company upon the conversion or exchange thereof, by (ii) the total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities) shall be less than the Exercise Price in effect immediately prior to the time of such issue or sale, then the total maximum number of shares of Common Stock issuable upon conversion or exchange of all such Convertible Securities shall be deemed to have been issued for such price per share as of the date of the issue or sale of such Convertible Securities and thereafter shall be deemed to be outstanding for purposes of adjusting the Exercise Price, provided that (a) except as otherwise provided in subsection 9(c)(ii)(3), no adjustment of the Exercise Price shall be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities and (b) no further adjustment of the Exercise Price shall be made by reason of the issue or sale of Convertible Securities upon exercise of any Options to purchase any such Convertible Securities for which adjustments of the Exercise Price have been made pursuant to the other provisions of subsection 9(c).

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(3) Change in Option Price or Conversion Rate . Upon the happening of any of the following events, namely, if the purchase price provided for in any Option referred to in subsection 9(c)(ii)(l) hereof, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities referred to in subsections 9(c)(ii)(l) or 9(c)(ii)(2), or the rate at which Convertible Securities referred to in subsections 9(c)(ii)(l) or 9(c)(ii)(2) are convertible into or exchangeable for Common Stock shall change at any time (including, but not limited to, changes under or by reason of provisions designed to protect against dilution), the Exercise Price in effect at the time of such event shall forthwith be readjusted to the Exercise Price which would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold. On the termination of any Option for which any adjustment was made pursuant to this subsection 9(c) or any right to convert or exchange Convertible Securities for which any adjustment was made pursuant to this subsection 9(c) (including without limitation upon the redemption or purchase for consideration of such Convertible Securities by the Company), the Exercise Price then in effect hereunder shall forthwith be changed to the Exercise Price which would have been in effect at the time of such termination had such Option or Convertible Securities, to the extent outstanding immediately prior to such termination, never been issued.

(4) Stock Dividends . Subject to the provisions of this subsection 9(c), in case the Company shall declare a dividend or make any other distribution upon any stock of the Company (other than the Common Stock) payable in Common Stock, Options or Convertible Securities, then any Common Stock, Options or Convertible Securities, as the case may be, issuable in payment of such dividend or distribution shall be deemed to have been issued or sold without consideration.

(5) Consideration for Stock . In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for cash, the consideration received therefor shall be deemed to be the net amount received by the Company therefor, after deduction therefrom of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any shares of Common Stock, Options or Convertible Securities shall be issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Company shall be deemed to be the fair value of such consideration as determined in good faith by the Board of Directors of the Company, after deduction of any expenses incurred or any underwriting commissions or concessions paid or allowed by the Company in connection therewith. In case any Options shall be issued in connection with the issue and sale of other securities of the Company, together comprising one integral transaction in which no specific consideration is allocated to such Options by the parties thereto, such Options shall be deemed to have been issued for such consideration as determined in good faith by the Board of Directors of the Company. If Common Stock, Options or Convertible Securities shall be issued or sold by the Company and, in connection therewith, other Options or Convertible Securities (the “Additional Rights” ) are issued, then the consideration received or deemed to be received by the Company shall be reduced by the fair market value of the Additional Rights (as determined using a method mutually agreed to by the Company and the Holder). The Board of Directors of the Company shall respond promptly, in writing, to an inquiry by the Holders as to the fair market value of the Additional Rights. In the event that the Board of Directors of the Company and the Holders are unable to agree upon the fair market value of the Additional Rights, the Company and the Holders shall jointly select an appraiser, who is experienced in such matters. The decision of such appraiser shall be final and conclusive, and the cost of such appraiser shall be borne evenly by the Company and the Holder.

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(6) Record Date . In case the Company shall take a record of the holders of its Common Stock for the purpose of entitling them (i) to receive a dividend or other distribution payable in Common Stock, Options or Convertible Securities or (ii) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be.

(iii) Notwithstanding the foregoing, no adjustment will be made under this paragraph (c) in respect of: (1) the issuance of securities upon the exercise or conversion of any Common Stock Equivalents issued by the Company prior to the Original Issue Date of this Warrant (but will apply to any amendments, modifications, and reissuances thereof and as a result of any changes, resets or adjustments to a conversion or exercise price thereunder whether or not as a result of any amendment, modification or reissuance), or (2) the grant of options or warrants, or the issuance of additional securities, under any duly authorized Company stock option, stock incentive plan, restricted stock plan or stock purchase or similar plan in existence on the Closing Date.

(d) Number of Warrant Shares . Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

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(e) Calculations . All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100 ^th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock.

(f) Notice of Adjustments . Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company's Transfer Agent.

(g) Notice of Corporate Events . If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction (but only to the extent such disclosure would not result in the dissemination of material, non-public information to the Holder) at least 10 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice.

10. Payment of Exercise Price . The Holder shall pay the Exercise Price b y delivery of immediately available funds in the form of cash or certified or official bank check drawn to the order of the Company.

11. Limitations on Exercise .

(a) Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed 4.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant. By written notice to the Company, an Investor may waive the provisions of this Section 11(a) as to itself but any such waiver will not be effective until the 61 ^st day after delivery thereof and such waiver shall have no effect on any other Investor.

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(b) Notwithstanding anything to the contrary contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant. This restriction may not be waived, and notwithstanding anything to the contrary in any Transaction Document, may not be amended by agreement of the parties.

12. No Fractional Shares . No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by the applicable Trading Market on the date of exercise.

13. Notices . Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to GRC Holdings, Inc., Attn: President, or to Facsimile No.: [ ] (or such other address as the Company shall indicate in writing in accordance with this Section), or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section.

14. Warrant Agent . The Company shall serve as warrant agent under this Warrant. Upon 10 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register.

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15. Miscellaneous .

(a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns.

(b) All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York (except for matters governed by corporate law in the State of Texas), without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein contemplated ( “Proceedings” ) (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Warrant, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding.

(c) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(d) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant.

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(e) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

GRC HOLDINGS, INC.

By:_________________________

Name:

Title:

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EXERCISE NOTICE

GRC HOLDINGS, INC.

WARRANT DATED JULY 19, 2006

The undersigned Holder hereby irrevocably elects to purchase _____________ shares of Common Stock pursuant to the above referenced Warrant. Capitalized terms used herein and not otherwise defined have the respective meanings set forth in the Warrant.

(1) The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

(2) The holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

(3) Pursuant to this Exercise Notice, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.

(4) By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section 11 of this Warrant to which this notice relates.



Dated: ______________________ , ____		Name of Holder:

		(Print)________________________________________

		By:__________________________________________
		Name:________________________________________
		Title:_________________________________________

		(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

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Warrant Shares Exercise Log

Date	Number of Warrant Shares Available to be Exercised	Number of Warrant Shares Exercised	Number of Warrant Shares Remaining to be Exercised

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GRC HOLDINGS, INC.

WARRANT ORIGINALLY ISSUED July 19, 2006

WARRANT NO. [ ]

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the above-captioned Warrant to purchase ____________ shares of Common Stock to which such Warrant relates and appoints ________________ attorney to transfer said right on the books of the Company with full power of substitution in the premises.

Dated: _______________, ____

_______________________________________

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

_______________________________________

Address of Transferee

_______________________________________

In the presence of:

__________________________

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EXHIBIT 4.4

GRC HOLDINGS, INC.

WARRANT

Warrant No. 006

Original Issue Date: July 19, 2006

GRC Holdings, Inc., a Texas corporation (the "Company" ), hereby certifies that, for value received, Lane Capital Markets, LLC or its registered assigns (the "Holder" ), is entitled to purchase from the Company up to a total of 214,000 shares of Common Stock (each such share, a "Warrant Share" and all such shares, the "Warrant Shares" ), at any time and from time to time from and after the Original Issue Date and through and including July 19, 2011 (the "Expiration Date" ), and subject to the following terms and conditions:

"Common Stock" means the common stock of the Company, par value $.0001 per share, and any securities into which such common stock may hereafter be reclassified.

"Exercise Price" means $2.8425, subject to adjustment in accordance with Section 9.

“Original Issue Date” means the Original Issue Date first set forth on the first page of this Warrant.

“New York Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan.

"Purchase Agreement" means the Securities Purchase Agreement, dated July 19, 2006, to which the Company and the original Holder are parties.

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4. Exercise and Duration of Warrants .

5. Delivery of Warrant Shares .

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9. Certain Adjustments . The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9.

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(ii) For purposes of this subsection 9(c), the following subsections (c)(ii)(l) to (c)(ii)(6) shall also be applicable:

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11. Limitations on Exercise .

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13. Notices . Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to GRC Holdings, Inc., Attn: President, or to Facsimile No .: 852-2232-6101 (or such other address as the Company shall indicate in writing in accordance with this Section), or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section.

15. Miscellaneous .

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(c) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof.

(e) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above.

GRC HOLDINGS, INC.

By: /s/ Michael Li

Name: Michael Li

Title: Chief Executive Officer

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EXERCISE NOTICE

GRC HOLDINGS, INC.

WARRANT DATED JULY 19, 2006

(1) The undersigned Holder hereby exercises its right to purchase _________________ Warrant Shares pursuant to the Warrant.

(2) The holder shall pay the sum of $____________ to the Company in accordance with the terms of the Warrant.

(3) Pursuant to this Exercise Notice, the Company shall deliver to the holder _______________ Warrant Shares in accordance with the terms of the Warrant.



Dated: ___________________ , ____		Name of Holder:

		(Print) __________________________________

		By:_____________________________________
		Name:___________________________________
		Title:____________________________________

		(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

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Warrant Shares Exercise Log

Date	Number of Warrant Shares Available to be Exercised	Number of Warrant Shares Exercised	Number of Warrant Shares Remaining to be Exercised

GRC HOLDINGS, INC.

WARRANT ORIGINALLY ISSUED July 19, 2006

WARRANT NO. 006

FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant]

Dated: _______________, ____

_______________________________________

(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

_______________________________________

Address of Transferee

_______________________________________

In the presence of:

__________________________

EXHIBIT 4.5

SHARE ESCROW AGREEMENT

This Escrow Agreement (the “ Agreement ”), dated July 19, 2006, is entered into by and among GRC Holdings, Inc., a Texas corporation (the “ Company ”), Lane Capital Markets, LLC, as representative of the Investors (the “ Investor Representative” ), Ms. LI Lin Ling and Ms. CHAN Siu Ling (collectively, the “ Stockholders ”), and Securities Transfer Corporation (hereinafter referred to as “ Escrow Agent ”). All capitalized terms used but not defined herein shall have the meanings assigned them in that certain Securities Purchase Agreement, dated July 18, 2006 (“ Purchase Agreement ”), between the Company, the Stockholders and each Investor in the offering the subject of the Purchase Agreement (each an “ Investor ” and collectively, the “ Investors ”).

BACKGROUND

As an inducement to the Investors to enter into the Purchase Agreement, the Stockholders agreed that the Stockholders would place the “Escrow Shares” (as hereinafter defined) into escrow for the benefit of the Investors in the event the Company failed to satisfy the “Performance Thresholds” (as hereinafter defined). Pursuant to the requirements of the Purchase Agreement, the Company, the Stockholders and the Investor Representative have agreed to establish an escrow on the terms and conditions set forth in this Agreement and the Escrow Agent has agreed to act as escrow agent pursuant to the terms and conditions of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises of the parties and the terms and conditions hereof, the parties hereby agree as follows:

1. Appointment of Escrow Agent. The Investor Representative (on behalf of the Investors), the Stockholders and the Company hereby appoint Securities Transfer Corporation as Escrow Agent to act in accordance with the terms and conditions set forth in this Agreement, and Escrow Agent hereby accepts such appointment and agrees to act in accordance with such terms and conditions.

2. Establishment of Escrow. Upon the execution of this Agreement, the Stockholders shall deliver to the Escrow Agent two sets of stock certificates evidencing in the aggregate 4,280,000 shares of the Company’s common stock, par value $0.0001 per share (collectively, the “ Escrow Share s”), along with stock powers executed in blank. The first set of certificates (from each Stockholder in the amounts set forth on Exhibit A hereto) shall represent 2,140,000 Escrow Shares (the “ 2006 Escrow Shares ”) and the second set of certificates (from each Stockholder in the amounts set forth on Exhibit A hereto) shall evidence 2,140,000 Escrow Shares (the “ 2007 Escrow Shares ”).

3. Representations of the Stockholders. The Stockholders hereby represent and warrant to the Investors and the Investor Representative as follows:

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(i) The Escrow Shares are validly issued, fully paid and nonassessable shares of the Company, and free and clear of all pledges, liens and encumbrances.

(ii) Performance of this Agreement and compliance with the provisions hereof will not violate any provision of any applicable law and will not conflict with or result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon, any of the properties or assets of the Stockholders pursuant to the terms of any indenture, mortgage, deed of trust or other agreement or instrument binding upon the Stockholders, other than such breaches, defaults or liens which would not have a material adverse effect taken as a whole.

4. Disbursement of Escrow Shares. The Stockholders covenanted to the Investors that the Company would attain the following financial performance thresholds (the “ Performance Thresholds ”): $4,819,500 of after-tax net income or $5,823,465 of after-tax net income before the minority interest for the fiscal year ending December 31, 2006 (the “ 2006 Threshold ”) and $8,302,000 of after-tax net income or $10,031,416 of after-tax net income before the minority interest for the fiscal year ending December 31, 2007 (the “ 2007 Threshold ” ). The Company will provide the Investor Representative with (a) its audited financial statements, prepared in accordance with United States generally accepted accounting principles, on or before March 31, 2007 so as to allow the Investor Representative the opportunity to evaluate whether the 2006 Threshold was attained and (b) its audited financial statements, prepared in accordance with United States generally accepted accounting principles, on or before March 31, 2008 so as to allow the Investor Representative the opportunity to evaluate whether the 2007 Threshold was attained. If such audited financial statements do not evidence that the 2006 Threshold has been achieved, the Investor Representative shall request that the Company cause its counsel, Loeb & Loeb LLP, to provide written instruction to the Escrow Agent instructing the Escrow Agent to issue and deliver within ten business days following delivery of such request of the Investor Representative certificates registered in the name of each Investor evidencing the Investor’s pro rata portion of the 2006 Escrow Shares based on such Investor’s original Investment Amount. If such audited financial statements do not evidence that the 2007 Threshold has been achieved, the Investor Representative shall request that the Company shall cause its counsel, Loeb & Loeb LLP, to provide written instruction to the Escrow Agent to issue and deliver within ten business days following delivery of the fiscal year 2007 financial statements to the Investor Representative certificates registered in the name of each Investor evidencing the Investor’s pro rata portion of the 2007 Escrow Shares based on such Investor’s original Investment Amount. The Investor Representative shall thereafter promptly deliver to the Investors such certificates. The Escrow Agent need only rely on the letter of instruction from Loeb & Loeb LLP in this regard. If the Investor Representative has not requested that the Company cause its counsel Loeb & Loeb LLP to so instruct the Escrow Agent to release such Escrow Shares to the Investor Representative by the 10 ^th business day following the delivery of the relevant audited financial statements of the Company referred to above to the Investor Representative, then the Company shall cause Loeb & Loeb LLP to provide written instruction to the Escrow Agent, for the release of the 2006 Escrow Shares or 2007 Escrow Shares, respectively, as applicable, to the Stockholders.

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5. Duration. This Agreement shall terminate on the distribution of all the Escrow Shares in accordance with Section 4 above.

6. Interpleader. Should any controversy arise among the parties hereto with respect to this Agreement or with respect to the right to receive the Escrow Shares, Escrow Agent shall have the right to consult counsel and/or to institute an appropriate interpleader action to determine the rights of the parties. Escrow Agent is also hereby authorized to institute an appropriate interpleader action upon receipt of a written letter of direction executed by the parties so directing Escrow Agent. If Escrow Agent is directed to institute an appropriate interpleader action, it shall institute such action not prior to thirty (30) days after receipt of such letter of direction and not later than sixty (60) days after such date. Any interpleader action instituted in accordance with this Section 6 shall be filed in any court of competent jurisdiction in Dallas County, Texas, and the Escrow Shares in dispute shall be deposited with the court and in such event Escrow Agent shall be relieved of and discharged from any and all obligations and liabilities under and pursuant to this Agreement with respect to the Escrow Shares.

7. Exculpation and Indemnification of Escrow Agent.

(a) Escrow Agent is not a party to, and is not bound by or charged with notice of any agreement out of which this escrow may arise. Escrow Agent acts under this Agreement as a depositary only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of the escrow, or any part thereof, or for the form or execution of any notice given by any other party hereunder, or for the identity or authority of any person executing any such notice. Escrow Agent will have no duties or responsibilities other than those expressly set forth herein. Escrow Agent will be under no liability to anyone by reason of any failure on the part of any party hereto (other than Escrow Agent) or any maker, endorser or other signatory of any document to perform such person’s or entity’s obligations hereunder or under any such document. Except for this Agreement and instructions to Escrow Agent pursuant to the terms of this Agreement, Escrow Agent will not be obligated to recognize any agreement between or among any or all of the persons or entities referred to herein, notwithstanding its knowledge thereof.

(b) Escrow Agent will not be liable for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, and may rely conclusively on, and will be protected in acting upon, any order, notice, demand, certificate, or opinion or advice of counsel (including counsel chosen by Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is reasonably believed by Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The duties and responsibilities of the Escrow Agent hereunder shall be determined solely by the express provisions of this Agreement and no other or further duties or responsibilities shall be implied, including, but not limited to, any obligation under or imposed by any laws of the State of Texas upon fiduciaries.

(c) Escrow Agent will be indemnified and held harmless, jointly and severally, by the Company and the Stockholders from and against any expenses, including reasonable attorneys’ fees and disbursements, damages or losses suffered by Escrow Agent in

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connection with any claim or demand, which, in any way, directly or indirectly, arises out of or relates to this Agreement or the services of Escrow Agent hereunder; except, that if Escrow Agent is guilty of willful misconduct, fraud or gross negligence under this Agreement, then Escrow Agent will bear all losses, damages and expenses arising as a result of such willful misconduct, fraud or gross negligence. Promptly after the receipt by Escrow Agent of notice of any such demand or claim or the commencement of any action, suit or proceeding relating to such demand or claim, Escrow Agent will notify the other parties hereto in writing. For the purposes hereof, the terms “ expense ” and “ loss ” will include all amounts paid or payable to satisfy any such claim or demand, or in settlement of any such claim, demand, action, suit or proceeding settled with the express written consent of the parties hereto, and all costs and expenses, including, but not limited to, reasonable attorneys’ fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding. The provisions of this Section 7 shall survive the termination of this Agreement.

8. Compensation of Escrow Agent. The Company will pay Escrow Agent $1,000 for all services rendered by Escrow Agent hereunder.

9. Resignation of Escrow Agent. At any time, upon ten (10) days’ written notice to the Company, Escrow Agent may resign and be discharged from its duties as Escrow Agent hereunder. As soon as practicable after its resignation, Escrow Agent will promptly turn over to a successor escrow agent appointed by the Company the Escrow Shares held hereunder upon presentation of a document appointing the new escrow agent and evidencing its acceptance thereof. If, by the end of the 10-day period following the giving of notice of resignation by Escrow Agent, the Company shall have failed to appoint a successor escrow agent, Escrow Agent may interplead the Escrow Shares into the registry of any court having jurisdiction.

10. Records. Escrow Agent shall maintain accurate records of all transactions hereunder. Promptly after the termination of this Agreement or as may reasonably be requested by the parties hereto from time to time before such termination, Escrow Agent shall provide the parties hereto, as the case may be, with a complete copy of such records, certified by Escrow Agent to be a complete and accurate account of all such transactions. The authorized representatives of each of the parties hereto shall have access to such books and records at all reasonable times during normal business hours upon reasonable notice to Escrow Agent.

11. Notice. All notices, communications and instructions required or desired to be given under this Agreement must be in writing and shall be deemed to be duly given if sent by registered or certified mail, return receipt requested, or overnight courier to the following addresses:

If to Escrow Agent:

Securities Transfer Corporation

2591 Dallas Parkway, Suite 102

Frisco, Texas 75034

Attention: Kevin Halter

If to the Company:

China Biologic Products, Inc.

No. 14 East Hushan Road

Ta’ian City, Shandong Province

P.C. 271000, China

Attention: Michael Li

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With a copy to:

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Facsimile: (212) 504-3013

Attention: Mitchell S. Nussbaum, Esq.

If to the Investor Representative:

Lane Capital Markets, LLC

120 Broadway, Suite 1019

New York, NY 10271

Facsimile: (212) 608-3307

Attention: Ryan M. Lane

If to an Investor:

To the address set forth on such Investor’s signature page to the Purchase Agreement

If to a Stockholder:

To the address set forth on such Stockholder’s signature page to the Purchase Agreement

or to such other address and to the attention of such other person as any of the above may have furnished to the other parties in writing and delivered in accordance with the provisions set forth above.

12. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

13. Assignment and Modification. This Agreement and the rights and obligations hereunder of any of the parties hereto may not be assigned without the prior written consent of the other parties hereto. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns. No other person will acquire or have any rights under, or by virtue of, this Agreement. No portion of the Escrow Shares shall be subject to interference or control by any creditor of any party hereto, or be subject to being taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such party hereto prior to the disbursement thereof to such party hereto in accordance with the provisions of this Agreement. This Agreement may be changed or modified only in writing signed by all of the parties hereto.

14. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN, EXCEPT THAT THE PORTIONS OF THE TEXAS TRUST CODE, SECTION 111.001, ET SEQ. OF THE TEXAS PROPERTY CODE, CONCERNING FIDUCIARY DUTIES AND LIABILITIES

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OF TRUSTEES SHALL NOT APPLY TO THIS AGREEMENT. THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT BEING THEIR INTENT TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW AGENT LIABLE ONLY IN THE EVENT OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS NEGLIGENCE. ANY LITIGATION CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED IN THE COURTS OF DALLAS COUNTY, TEXAS, AND ALL PARTIES CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THOSE COURTS.

15. Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.

16. Attorneys’ Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party (unless such other party is the Escrow Agent), which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.

17. Registration Rights. If any Escrow Shares are distributed to the Investors hereunder, then the Company shall use commercially reasonable efforts to file a registration statement relating to the resale by the Investors of the Escrow Shares so distributed within 30 days following the date that the Company is obligated hereunder to deliver any such Escrow Shares to the Investors and the Company shall thereafter use commercially reasonable efforts to cause such registration statement to become effective. The Investors shall provide such information to the Company as the Company may reasonably request in order to prepare such registration statement, including, without limitation, delivery to the Company of selling stockholder questionnaires. The Company shall cause such registration statement to remain effective until each Investor has sold all Escrow Shares received by it thereunder or until each Investor is permitted to resell all of the Escrow Shares received hereunder at one time pursuant to Rule 144(k) of the Securities Act of 1933, as amended.

[ Signature Page Follows ]

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first indicated above.

GRC HOLDINGS, INC.

By: /s/ Michael Li

Its: CEO

Dated: 7-12-06

Ms. LI Lin Ling

By: /s/ Li Lin Ling

Ms. CHAN Siu Ling

By: /s/ Chan Siu Ling

SECURITIES TRANSFER CORPORATION

By: /s/ Kevin Halter

Kevin Halter

President

LANE CAPITAL MARKETS, LLC

As representative of the Investors

By: /s/ Ryan M. Lane

Ryan M. Lane

Partner

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EXHIBIT 4.6

ESCROW AGREEMENT

This Escrow Agreement (the “Agreement”), entered into as of this 19th day of July, 2006, is by and among GRC Holdings, Inc., a Texas corporation (the “Company”), each of the purchasers of shares of the Company’s common stock (the “Shares”) identified below (collectively, the “Purchasers”), the selling stockholders identified on the signature pages hereto (each, a “Selling Stockholder,” and collectively, the “Selling Stockholders”) and Securities Transfer Corporation (hereinafter referred to as “Escrow Agent”).

WHEREAS, the Company, the Selling Stockholders and the Purchasers have entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which each Purchaser has agreed to purchase from the Company and the Selling Stockholders, and the Company and each Selling Stockholder has agreed to sell to each Purchaser, the number of Shares identified therein;

WHEREAS, pursuant to the Purchase Agreement, the Company, the Selling Stockholders and the Purchasers have agreed to establish an escrow on the terms and conditions set forth in this Agreement;

WHEREAS, the Escrow Agent has agreed to act as escrow agent pursuant to the terms and conditions of this Agreement; and

WHEREAS, all capitalized terms used but not defined herein shall have the meanings assigned them in the Purchase Agreement.

NOW, THEREFORE, in consideration of the promises of the parties and the terms and conditions hereof, the parties hereby agree as follows:

1. Appointment of Escrow Agent. Each Purchaser, Selling Stockholder and the Company hereby appoints Securities Transfer Corporation as Escrow Agent to act in accordance with the Purchase Agreement and the terms and conditions set forth in this Agreement, and Escrow Agent hereby accepts such appointment and agrees to act in accordance with such terms and conditions.

2. Establishment of Escrow. $4 million of the aggregate Investment Amount provided by the Purchasers in connection with their acquisitions of the Securities as set forth in the Purchase Agreement shall be deposited in an account maintained by the Escrow Agent with Wells Fargo Bank, N.A. in immediately available funds by federal wire transfer, such funds being referred to herein as the “Escrow Funds”. The wire transfer details relating to such account are:

Wells Fargo Bank, N.A. 420 Montgomery Street

City/State San Francisco, CA 94104

ABA NO: 121000248

Credit to : Securities Transfer Corporation Trust account

Account Number: 3101032101

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3. Segregation of Escrow Funds. The Escrow Funds shall be segregated from the assets of Escrow Agent and held in trust for the benefit of the Company, the Selling Stockholders and the Purchasers in accordance herewith. It is hereby acknowledged and understood by all parties hereto (including, without limitation, the Purchasers who shall have provided funds in respect of their Investment Amount) that the Escrow Funds represent funds deposited into the account referred to in Section 2 above by only one of the Purchasers, but that the deposit shall have been made by such Purchaser by and on behalf of the other Purchasers to the extent of their percentage interest in the total Investment Amount, as more fully described in Exhibit B hereto

4. Receipt and Investment of Funds.

(a) Escrow Agent agrees that the Escrow Funds shall at all times be maintained in a non-interest bearing and federally insured depository account. Subject to Section 7(c) hereof, Escrow Agent shall have no liability for any loss resulting from the deposit of the Escrow Funds.

(b) The Escrow Agent shall cause to be prepared all income and other tax returns and reports the Escrow Agent, in its sole discretion, deems necessary or advisable in order to comply with all tax and other laws, rules and regulations applicable to the Escrow Funds.

5. Disbursement of the Escrow Funds.

Upon receipt by the Escrow Agent of a certificate in the form of Exhibit A, duly signed by both the Company and Pinnacle China Fund, L.P., the Escrow Funds shall be disbursed in accordance with Exhibit A.

This Agreement shall terminate upon the earlier of (a) disbursement of all Escrow Funds in accordance with Exhibit A, or (b) July 31, 2006 (each such event being referred to herein as the “Termination Date”). The Termination Date may be extended by joint written instructions to Escrow Agent by the Company and Pinnacle China Fund, L.P., on behalf of the Purchasers.

Upon the Termination Date, Escrow Agent shall release the Escrow Funds in the Escrow Account to the Purchasers in accordance with Exhibit B if the certificate referred to in the first paragraph of this Section 5 shall not have been delivered to it by such date. Immediately following any such disbursement to the Purchasers in accordance with Exhibit B, each such Purchaser shall return to the Company that amount of Securities purchased by it under the Purchase Agreement equal to the amount of such disbursement received by it, divided by the Per Unit Purchase Price.

6. Interpleader. Should any controversy arise among the parties hereto with respect to this Agreement or with respect to the right to receive the Escrow Funds, Escrow Agent shall have the right to consult counsel and/or to institute an appropriate interpleader action to determine the rights of the parties. Escrow Agent is also hereby authorized to institute an appropriate interpleader action upon receipt of a written letter of direction executed by the parties so directing Escrow Agent. If Escrow Agent is directed to institute an appropriate interpleader

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action, it shall institute such action not prior to thirty (30) days after receipt of such letter of direction and not later than sixty (60) days after such date. Any interpleader action instituted in accordance with this Section 6 shall be filed in any court of competent jurisdiction in Dallas, Texas, and the portion of the Escrow Funds in dispute shall be deposited with the court and in such event Escrow Agent shall be relieved of and discharged from any and all obligations and liabilities under and pursuant to this Agreement with respect to that portion of the Escrow Funds.

7. Exculpation and Indemnification of Escrow Agent.

(a) Escrow Agent is not a party to, and is not bound by or charged with notice of any agreement (other than the Purchase Agreement) out of which this escrow may arise. Escrow Agent acts under this Agreement as a depositary only and is not responsible or liable in any manner whatsoever for the sufficiency, correctness, genuineness or validity of the subject matter of the escrow, or any part thereof, or for the form or execution of any notice given by any other party hereunder, or for the identity or authority of any person executing any such notice or depositing the Escrow Funds. Escrow Agent will have no duties or responsibilities other than those expressly set forth herein. Escrow Agent will be under no liability to anyone by reason of any failure on the part of any party hereto (other than Escrow Agent) or any maker, endorser or other signatory of any document to perform such person’s or entity’s obligations hereunder or under any such document. Except for this Agreement and instructions to Escrow Agent pursuant to the terms of this Agreement, Escrow Agent will not be obligated to recognize any agreement between or among any or all of the persons or entities referred to herein, notwithstanding its knowledge thereof.

(c) Escrow Agent will be indemnified and held harmless, jointly and severally, by the Company and the Selling Stockholders from and against any expenses, including reasonable attorneys’ fees and disbursements, damages or losses suffered by Escrow Agent in connection with any claim or demand, which, in any way, directly or indirectly, arises out of or relates to this Agreement or the services of Escrow Agent hereunder; except, that if Escrow Agent is guilty of willful misconduct, fraud or gross negligence under this Agreement, then Escrow Agent will bear all losses, damages and expenses arising as a result of such willful misconduct, fraud or gross negligence. Promptly after the receipt by Escrow Agent of notice of any such demand or claim or the commencement of any action, suit or proceeding relating to such demand or claim, Escrow Agent will notify the other parties hereto in writing. For the purposes hereof, the terms “expense” and “loss” will include all amounts paid or payable to

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satisfy any such claim or demand, or in settlement of any such claim, demand, action, suit or proceeding settled with the express written consent of the parties hereto, and all costs and expenses, including, but not limited to, reasonable attorneys’ fees and disbursements, paid or incurred in investigating or defending against any such claim, demand, action, suit or proceeding. The provisions of this Section 7 shall survive the termination of this Agreement.

8. Compensation of Escrow Agent. The Selling Stockholders will pay Escrow Agent $1,500 for all services rendered by Escrow Agent hereunder.

9. Resignation of Escrow Agent. At any time, upon ten (10) days’ written notice to the Company, Escrow Agent may resign and be discharged from its duties as Escrow Agent hereunder. As soon as practicable after its resignation, Escrow Agent will promptly turn over to a successor escrow agent appointed by the Company all monies and property held hereunder upon presentation of a document appointing the new escrow agent and evidencing its acceptance thereof. If, by the end of the 10-day period following the giving of notice of resignation by Escrow Agent, the Company shall have failed to appoint a successor escrow agent, Escrow Agent may interplead the Escrow Funds into the registry of any court having jurisdiction.

10. Method of Distribution by Escrow Agent. All disbursements by Escrow Agent to a party to this Agreement will be made by wire transfer of immediately available funds to an account designated in writing by the party (it being understood that the Exhibits hereto constitute such writings) to receive any such payment.

11. Records. Escrow Agent shall maintain accurate records of all transactions hereunder. Promptly after the termination of this Agreement or as may reasonably be requested by the parties hereto from time to time before such termination, Escrow Agent shall provide the parties hereto, as the case may be, with a complete copy of such records, certified by Escrow Agent to be a complete and accurate account of all such transactions. The authorized representatives of each of the parties hereto shall have access to such books and records at all reasonable times during normal business hours upon reasonable notice to Escrow Agent.

12. Notice. All notices, communications and instructions required or desired to be given under this Agreement must be in writing and shall be deemed to be duly given if sent by registered or certified mail, return receipt requested, or overnight courier to the following addresses:

If to Escrow Agent:

Securities Transfer Corporation

2591 Dallas Parkway, Suite 102

Frisco, Texas 75034

Attention: Kevin Halter

If to the Company:

China Biologic Products, Inc.

No. 14 East Hushan Road

Ta’ian City, Shandong Province

P.C. 271000, China

Attention: Michael Li

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With a copy to:

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

Facsimile: (212) 504-3013

Attention: Mitchell S. Nussbaum, Esq.

If to a Purchaser:

To the address set forth on such Purchaser’s signature page to the Purchase Agreement

If to a Selling Stockholder:

To the address set forth on such Selling Stockholder’s signature page to the Purchase Agreement

13. Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

14. Assignment and Modification. This Agreement and the rights and obligations hereunder of any of the parties hereto may not be assigned without the prior written consent of the other parties hereto. Subject to the foregoing, this Agreement will be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns. No other person will acquire or have any rights under, or by virtue of, this Agreement. No portion of the Escrow Funds shall be subject to interference or control by any creditor of any party hereto, or be subject to being taken or reached by any legal or equitable process in satisfaction of any debt or other liability of any such party hereto prior to the disbursement thereof to such party hereto in accordance with the provisions of this Agreement. This Agreement may be changed or modified only in writing signed by all of the parties hereto.

15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, USA APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN. THE PARTIES EXPRESSLY WAIVE SUCH DUTIES AND LIABILITIES, IT BEING THEIR INTENT TO CREATE SOLELY AN AGENCY RELATIONSHIP AND HOLD THE ESCROW AGENT LIABLE ONLY IN THE EVENT OF ITS WILLFUL MISCONDUCT, FRAUD, OR GROSS NEGLIGENCE. ANY LITIGATION CONCERNING THE SUBJECT MATTER OF THIS AGREEMENT SHALL BE EXCLUSIVELY PROSECUTED IN THE COURTS OF DALLAS, TEXAS, USA, AND ALL PARTIES CONSENT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THOSE COURTS.

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16. Headings. The headings contained in this Agreement are for convenience of reference only and shall not affect the construction of this Agreement.

17. Attorneys’ Fees. If any action at law or in equity, including an action for declaratory relief, is brought to enforce or interpret the provisions of this Agreement, the prevailing party shall be entitled to recover reasonable attorneys’ fees from the other party (unless such other party is the Escrow Agent), which fees may be set by the court in the trial of such action or may be enforced in a separate action brought for that purpose, and which fees shall be in addition to any other relief that may be awarded.

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date set forth opposite their respective names.

GRC HOLDINGS, INC.

By: /s/ Michael Li

CEO

SECURITIES TRANSFER CORPORATION

By: /s/ Kevin Halter

Kevin Halter

President

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date set forth opposite their respective names.

PURCHASER:

Pinnacle China Fund, LP

By: /s/ Barry M. Kitt

Name: Barry M. Kitt

Title: General Partner

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date set forth opposite their respective names.

SELLING STOCKHOLDER:

/s/ Chan Siu Ling

Name: Chan, Siu Ling

SELLING STOCKHOLDER:

/s/ Li Lin Ling

Name: Li, Lin Ling

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EXHIBIT A

July __, 2006

Securities Transfer Corporation

2591 Dallas Parkway, suite 102

Frisco, Texas 75034

Attn: Kevin Halter

Ladies and Gentlemen:

Reference is hereby made to the Escrow Agreement dated July 18, 2006 between and among GRC Holdings, Inc., a Texas corporation (the “Company”), each of the purchasers of shares of the Company’s common stock (collectively, the “Purchasers”) and the selling stockholders (each, a “Selling Stockholder,” and collectively, the “Selling Stockholders”), in each case identified on the signature pages thereto and Securities Transfer Corporation (hereinafter referred to as “Escrow Agent”). Each term used, but not defined, herein has the meaning assigned to it in the Escrow Agreement.

We hereby confirm that the covenant contained in Section 4.14 of the Securities Purchase Agreement has been complied with and you are hereby instructed to release the Escrow Funds as follows:

1. LANE CAPITAL MARKETS US$ 817,046
Financial Institution:	PEOPLES BANK
	1800 Post Farm Rd. & Buckley Ave.
	Green Farms, CT 06838
Phone #:	(203) 338-7171
ABA#:	221-1-72186
For the Benefit of:	Lane Capital Markets LLC
Account #:	010 7009533

2. LOGIC EXPRESS US$ 3,100,000
For Crediting:	BANK of CHINA (Hong Kong) Limited
Phone #:	Fax #:
SWIFT Code:	BKCH HK HH XXX
The Payee:	Logic Express Limited
US$ Account:	012-875-92325463

3. $82,954 to the account of GRC Holdings, Inc. as follows:

HSBC

NY, NY

ABA# 021-0-01088

Account Name: GRC Holding Inc.

Account # 619 760354

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GRC HOLDINGS, INC.

By:_____________________

Name:

Title:

PINNACLE CHINA FUND, L.P.

By:______________________

Name:

Title:

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EXHIBIT B

PINNACLE CHINA FUND, L.P.

Beneficiary Bank:

Bank of America NA

100 West 33 ^rd Street, NY, NY 10001

ABA Number:

0260 0959 3

CHIPS Address:

0959

SWIFT Address:

BOFA US 3N

Beneficiary:

Banc of America Securities LLC

600 Montgomery Street, SF, CA 94111

Account Number:

00 12339 32118

For Further Credit:

Client Account Number & Name

118-01855

The Pinnacle China Fund, L.P.

$4,000,000 Investment Amount out of aggregate Investment Amount of $8,110,600 = 49.32% of Escrow Funds .

JAYHAWK CHINA FUND (CAYMAN) LTD.

Bank of New York

ABA No.:

021 000 018

BIC Code:

IRVTUS3N

First Beneficiary:

CSFB (Europe) Ltd.

Account Number:

890-0361-158

BIC Code:

CSFBG2L

Second Beneficiary:

Jayhawk China Fund

Account Number:

0ZD4

$3,000,000 Investment Amount out of aggregate Investment Amount of $8,110,600 = 36.99% of Escrow Funds.

CAPITAL VENTURES INTERNATIONAL, BY HEIGHTS CAPITAL MANAGEMENT, INC., IT’S AUTHORIZED AGENT

Chase Manhattan Bank, NY

Swift: CHASUS33

ABA: 021 000 021

A/C Merrill Lynch International EFG

A/C number: 066612489

$610,600 Investment Amount out of aggregate Investment Amount of $8,110,600 = 7.53% of Escrow Funds.

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HUDSON BAY FUND LP

JPMorgan Chase Bank, NY

ABA # 021000021

F/B/O ML PRO

A/C # 066 024 390

Further Credit - Hudson Bay Fund LP

A/C # 510-53703-D4

$375,000 Investment Amount out of aggregate Investment Amount of $8,110,600 = 4.62% of Escrow Funds.

HUDSON BAY OVERSEAS FUND LTD.

JPMorgan Chase Bank, NY

ABA # 021000021

F/B/O ML PRO

A/C # 066 024 390

Further Credit - Hudson Bay Overseas Fund LTD

A/C # 507-52316-D1

$125,000 Investment Amount out of aggregate Investment Amount of $8,110,600 = 1.54% of Escrow Funds

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Exhibit 4.7

AMENDMENT NO. 1

TO SHARE ESCROW AGREEMENT

This AMENDMENT NO. 1 to the SHARE ESCROW AGREEMENT is entered into as of February 16, 2007 (this “ Amendment ”) by and among China Biologic Products, Inc., a Delaware corporation (formerly, GRC Holdings, Inc.) (the “ Company ”), Lane Capital Markets, LLC, as representative of the Investors (the “ Investor Representative ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Stockholders ”), and Security Transfer Corporation, as escrow agent (the “ Escrow Agent ”). Each of the Company, the Investor Representative, the Stockholders and the Escrow Agent are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

As a condition to the closing of a Purchase Agreement, dated July 18, 2006, among the Company, the Stockholders and the Investors, the Parties entered into a Share Escrow Agreement, dated as of July 19, 2006 (the “ Original Agreement ”) pursuant to which the Stockholders placed the Escrow Shares into escrow for the benefit of the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. The Parties now desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Amendment to Section 4 : Section 4 of the Original Agreement is amended to insert the following at the end of the final sentence:

“Notwithstanding the foregoing or anything else to the contrary herein, the parties hereto agree that for purposes of determining whether or not the 2006 Threshold or the 2007 Threshold have been achieved, the release of the 2006 Escrow Shares or the 2007 Escrow Shares, as applicable, to the Stockholders as a result of the operation of this Section 4 shall not be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.”

2. Agreement . In all other respects, the Agreement shall remain in full force and effect.

3. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

COMPANY:

China Biologic Products, Inc.


By:	/s/ Siu Ling Chan
	Siu Ling Chan
	Chief Executive Officer


STOCKHOLDERS:


/s/ Lin Ling Li
Ms. Lin Ling Li


/s/ Siu Ling Chan
Ms. Siu Ling Chan



INVESTOR REPRESENTATIVE:

Lane Capital Markets, LLC


By:	/s/ Ryan M. Lane
	Ryan M. Lane
	Partner



ESCROW AGENT:

Securities Transfer Corporation


By:	/s/ Kevin Halter
	Kevin Halter, Jr.
	President

Amendment No. 1 to Share Escrow Agreement

Exhibit 4.8

AMENDMENT NO. 2

TO SHARE ESCROW AGREEMENT

This AMENDMENT NO. 2 to the SHARE ESCROW AGREEMENT is entered into as of March 27, 2007 (this “ Amendment ”), by and among China Biologic Products, Inc., a Delaware corporation (formerly, GRC Holdings, Inc.) (the “ Company ”), Lane Capital Markets, LLC, as representative of the Investors (the “ Investor Representative ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Stockholders ”), and Security Transfer Corporation, as escrow agent (the “ Escrow Agent ”). Each of the Company, the Investor Representative, the Stockholders and the Escrow Agent are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

As a condition to the closing of the Securities Purchase Agreement, dated July 18, 2006, among the Company, the Stockholders and the Investors, the Parties entered into a Share Escrow Agreement, dated as of July 19, 2006 (as amended, the “ Original Agreement ”), pursuant to which the Stockholders placed the Escrow Shares into escrow for the benefit of the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. Since the execution and delivery of the Original Agreement, the Company has changed its name from GRC Holdings, Inc. to China Biologic Products, Inc., and has reincorporated from the State of Texas to the State of Delaware. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

I. References to GRC Holdings, Inc. All references in the Original Agreement to GRC Holdings, Inc., a Texas corporation, are deleted in their entirety and in lieu thereof, references to China Biologic Products, Inc., a Delaware corporation is inserted.

II. Amendment to Section 4 : Section 4 of the Original Agreement is amended to remove the second sentence in its entirety and to replace it with the following:

“The Company will provide the Investor Representative with (a) its audited financial statements, prepared in accordance with United States generally accepted accounting principles, on or before April 30, 2007 so as to allow the Investor Representative the opportunity to evaluate whether the 2006 Threshold was attained and (b) its audited financial statements, prepared in accordance with United States generally accepted accounting principles, on or before March 31, 2008 so as to allow the Investor Representative the opportunity to evaluate whether the 2007 Threshold was attained.”

III. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

IV. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

COMPANY:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer


STOCKHOLDERS:


/s/ Lin Ling Li
Ms. Lin Ling Li


/s/ Siu Ling Chan
Ms. Siu Ling Chan



INVESTOR REPRESENTATIVE:

Lane Capital Markets, LLC


By:	/s/ Ryan M. Lane
	Ryan M. Lane
	Partner



ESCROW AGENT:

Securities Transfer Corporation


By:	/s/ Kevin Halter
	Kevin Halter, Jr.
	President

Amendment No. 2 to Share Escrow Agreement

Exhibit 4.9

AMENDMENT NO. 3

TO SHARE ESCROW AGREEMENT

This AMENDMENT NO. 3 to the SHARE ESCROW AGREEMENT is entered into as of April 2, 2007 (this “ Amendment ”), by and among China Biologic Products, Inc., a Delaware corporation (the “ Company ”), Lane Capital Markets, LLC, as representative of the Investors (the “ Investor Representative ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Stockholders ”), and Security Transfer Corporation, as escrow agent (the “ Escrow Agent ”). Each of the Company, the Investor Representative, the Stockholders and the Escrow Agent are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

As a condition to the closing of the Securities Purchase Agreement, dated July 18, 2006, among the Company, the Stockholders and the Investors, the Parties entered into a Share Escrow Agreement, dated as of July 19, 2006 (as amended, the “ Original Agreement ”), pursuant to which the Stockholders placed the Escrow Shares into escrow for the benefit of the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

I. Amendment to Disbursement of Escrow Shares : The last sentence of Section 4 of the Original Agreement is deleted in its entirety and the following is inserted in its place:

“Notwithstanding the foregoing or anything else to the contrary herein, for purposes of determining whether or not the Performance Thresholds set forth in this Section 4 have been met, the release of any of the Escrow Shares to Ms. LI Lin Ling and Ms. CHAN Siu Ling as a result of the operation of this Section 4 and the payment of or obligation to pay any liquidated damages accrued by operation of the Registration Rights Agreement, shall not be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.”

II. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

III. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

COMPANY:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer



STOCKHOLDERS:


/s/ Lin Ling Li
Ms. Lin Ling Li


/s/ Siu Ling Chan
Ms. Siu Ling Chan



INVESTOR REPRESENTATIVE:

Lane Capital Markets, LLC


By:	/s/Ryan M. Lane
	Ryan M. Lane
	Partner



ESCROW AGENT:

Securities Transfer Corporation


By:	/s/ Kevin Halter
	Kevin Halter, Jr.
	President

Amendment No. 3 to Share Escrow Agreement

Exhibit 4.10

AMENDMENT NO. 4

TO SHARE ESCROW AGREEMENT

This AMENDMENT NO. 4 to the SHARE ESCROW AGREEMENT is entered into as of May 9, 2007 (this “ Amendment ”), by and among China Biologic Products, Inc., a Delaware corporation (the “ Company ”), Lane Capital Markets, LLC, as representative of the Investors (the “ Investor Representative ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Stockholders ”), and Security Transfer Corporation, as escrow agent (the “ Escrow Agent ”). Each of the Company, the Investor Representative, the Stockholders and the Escrow Agent are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

As a condition to the closing of the Securities Purchase Agreement, dated July 18, 2006, among the Company, the Stockholders and the Investors, the Parties entered into a Share Escrow Agreement, dated as of July 19, 2006 (as amended, the “ Original Agreement ”), pursuant to which the Stockholders placed the Escrow Shares into escrow for the benefit of the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

I. Amendment to Disbursement of Escrow Shares : The last sentence of Section 4 of the Original Agreement is deleted in its entirety and the following is inserted in its place:

“Notwithstanding the foregoing or anything else to the contrary herein, for purposes of determining whether or not the Performance Thresholds set forth in this Section 4 have been met, neither (a) the release of any of the Escrow Shares to Ms. LI Lin Ling and Ms. CHAN Siu Ling as a result of the operation of this Section 4, (b) the payment of or obligation to pay any liquidated damages accrued by operation of the Registration Rights Agreement nor (c) the valuation of the Warrant Shares shall be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.”

II. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

III. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

COMPANY:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer


STOCKHOLDERS:


/s/ Lin Ling Li
Ms. Lin Ling Li


/s/ Siu Ling Chan
Ms. Siu Ling Chan



INVESTOR REPRESENTATIVE:

Lane Capital Markets, LLC


By:	/s/ Ryan M. Lane
	Ryan M. Lane
	Partner



ESCROW AGENT:

Securities Transfer Corporation


By:	/s/ Kevin Halter
	Kevin Halter, Jr.
	President

Amendment No. 4 to Share Escrow Agreement

Exhibit 4.11

AMENDMENT NO. 1

TO SECURITIES PURCHASE AGREEMENT

This AMENDMENT NO. 1 to the SECURITIES PURCHASE AGREEMENT is entered into as of February 16, 2007 (this “ Amendment ”) by and among China Biologic Products, Inc., a Delaware corporation (formerly, GRC Holdings, Inc.) (“CBP”) , its wholly-owned subsidiary Logic Express Limited (“ Logic Express ”) and its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd. (“ Shandong Missile ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Selling Stockholders ”), and the investors signatory thereto (each an “ Investor ” and collectively, the “ Investors ”). Each of GRC, Logic Express, the Company, the Selling Stockholders and the Investors are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

WHEREAS , the Parties entered into a Securities Purchase Agreement, dated as of July 18, 2006 (as amended, the “ Original Agreement ”), pursuant to which each of the Investors purchased from the Company and the Selling Stockholders, the Shares, Selling Stockholder Shares and the Warrants representing each Investors Investment Amount; and

WHEREAS , as a condition to the closing of the Original Agreement, the Parties agreed to place the Make Good Shares into escrow for the benefit of the Investors, pursuant to a Share Escrow Agreement, dated as of July 19, 2006, to be distributed to the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein; and

WHEREAS, the Parties now desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

1. Amendment to Make Good Escrow Arrangement : Section 4.11 of the Original Agreement is amended to insert the following before the penultimate sentence:

“Notwithstanding the foregoing or anything else to the contrary herein, for purposes of determining whether or not the applicable thresholds set forth in (a) and (b) above have been met, the release of any of the Escrow Shares to Ms. LI Lin Ling and Ms. CHAN Siu Ling as a result of the operation of this Section 4.11 shall not be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.”

2. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

3. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

CBP:

China Biologic Products, Inc.


By:	/s/ Siu Ling Chan
	Siu Ling Chan
	Chief Executive Officer


LOGIC EXPRESS:

Logic Express Limited


By:	/s/ Lin Ling Li
	Lin Ling Li
	Director


SHANDONG MISSILE:

Shandong Missile Biologic Products Co., Ltd.


By:	/s/ Tung Lam
	Tung Lam
	Chief Executive Officer

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Amendment No. 1 to Securities Purchase Agreement

SELLING STOCKHOLDERS:

/s/ Lin Ling Li

MS. LIN LING LI

/s/ Siu Ling Chan

MS. SIU LING CHAN

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Amendment No. 1 to Securities Purchase Agreement

INVESTORS:

Pinnacle China Fund, L.P.


By:	/s/ Barry M. Kitt
	Barry M. Kitt,
	Manager, Kitt China Management, L.L.C.,
	the Manager of Pinnacle China Management, L.L.C.,
	the General Partner of Pinnacle China Advisors, L.P.,
	the General Partner of Pinnacle China Fund, L.P.

Total number of Shares owned:		2,110,818

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Amendment No. 1 to Securities Purchase Agreement

Capital Ventures International


By:	/s/ Martin Kobinger
	Martin Koebinger
	Investment Manager


Total number of Shares owned:		322,216

Amendment No. 1 to Securities Purchase Agreement

Exhibit 4.12

AMENDMENT NO. 2

TO SECURITIES PURCHASE AGREEMENT

This AMENDMENT NO. 2 to the SECURITIES PURCHASE AGREEMENT is entered into as of March 27, 2007 (this “ Amendment ”) by and among China Biologic Products, Inc., a Delaware corporation (formerly, GRC Holdings, Inc.) (“ CBP ”), its wholly-owned subsidiary Logic Express Limited (“ Logic Express ”) and its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd. (“ Shandong Missile ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Selling Stockholders ”), and the investors signatory thereto (each an “ Investor ” and collectively, the “ Investors ”). Each of CBP, Logic Express, the Company, the Selling Stockholders and the Investors are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

The Parties entered into a Securities Purchase Agreement, dated as of July 18, 2006 (as amended, the “ Original Agreement ”), pursuant to which each of the Investors purchased from the Company and the Selling Stockholders, the Shares, Selling Stockholder Shares and the Warrants representing each Investors Investment Amount. As a condition to the closing of the Original Agreement, the Parties agreed to place the Make Good Shares into escrow for the benefit of the Investors, pursuant to a Share Escrow Agreement, dated as of July 19, 2006, to be distributed to the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. Since the execution and delivery of the Original Agreement, GRC Holdings, Inc. has changed its name to China Biologic Products, Inc. and has reincorporated from the State of Texas to the State of Delaware. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

I. References to GRC Holdings, Inc . All references to GRC Holdings, Inc., a Texas corporation (or “ GRC ”) in the Original Agreement are deleted in their entirety and in lieu thereof references to China Biologic Products, Inc., a Delaware corporation (or “ CBP ”) is inserted.

II. Amendment to Make Good Escrow Arrangement : Section 4.11 of the Original Agreement is amended to replace the second sentence in its entirety with the following:

“If required, the appropriate number of Make Good Shares will be delivered to the Investors within ten (10) Business Days of the date the audit report for the applicable period is delivered to the Investor Representative (such delivery of the financial statements referenced in (a)

and (b) above to the Investor Representative shall be no later than April 30, 2007 and March 31, 2008, respectively), otherwise if CBP has met the applicable threshold, the appropriate number of Escrow Shares shall be returned to Ms. Lin Ling Li and Ms. Siu Lin Chang within such ten (10) Business Day period.”

III. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

IV. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

CBP:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer



LOGIC EXPRESS:

Logic Express Limited


By:	/s/ Lin Ling Li
	Lin Ling Li
	Director



SHANDONG MISSILE:

Shandong Missile Biologic Products Co., Ltd.


By:	/s/ Tung Lam
	Tung Lam
	Chief Executive Officer

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Amendment No. 2 to Securities Purchase Agreement

SELLING STOCKHOLDERS:

/s/ Lin Ling Li

MS. LIN LING LI

/s/ Siu Ling Chang

MS. SIU LING CHAN

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Amendment No. 2 to Securities Purchase Agreement

	INVESTORS:

	Pinnacle China Fund, L.P.


By:	/s/ Barry M. Kitt
	Barry M. Kitt,
	Manager, Kitt China Management, L.L.C.,
	the Manager of Pinnacle China Management, L.L.C.,
	the General Partner of Pinnacle China Advisors, L.P.,
	the General Partner of Pinnacle China Fund, L.P.

Total number of Shares owned:		2,110,818

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Amendment No. 2 to Securities Purchase Agreement

Capital Ventures International


By:	Heights Capital Management, Inc.,
	its authorized agent

	/s/ Martin Kobinger
	Name: Martin Kobinger
	Title: Investment Manager


Total number of Shares owned:		322,216

Amendment No. 2 to Securities Purchase Agreement

Exhibit 4.13

AMENDMENT NO. 3

TO SECURITIES PURCHASE AGREEMENT

This AMENDMENT NO. 3 to the SECURITIES PURCHASE AGREEMENT is entered into as of April 2, 2007 (this “ Amendment ”) by and among China Biologic Products, Inc., a Delaware corporation (“ CBP ”), its wholly-owned subsidiary Logic Express Limited (“ Logic Express ”) and its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd. (“ Shandong Missile ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Selling Stockholders ”), and the investors signatory thereto (each an “ Investor ” and collectively, the “ Investors ”). Each of CBP, Logic Express, the Company, the Selling Stockholders and the Investors are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

The Parties entered into a Securities Purchase Agreement, dated as of July 18, 2006 (as amended, the “ Original Agreement ”), pursuant to which each of the Investors purchased from the Company and the Selling Stockholders, the Shares, Selling Stockholder Shares and the Warrants representing each Investors Investment Amount. As a condition to the closing of the Original Agreement, the Parties agreed to place the Make Good Shares into escrow for the benefit of the Investors, pursuant to a Share Escrow Agreement, dated as of July 19, 2006, to be distributed to the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

I. Amendment to Make Good Escrow Arrangement : Delete sentence before the penultimate sentence of Section 4.11 of the Original Agreement in its entirety and insert the following sentence in its place:

“Notwithstanding the foregoing or anything else to the contrary herein, for purposes of determining whether or not the applicable thresholds set forth in (a) and (b) above have been met, the release of any of the Escrow Shares to Ms. LI Lin Ling and Ms. CHAN Siu Ling as a result of the operation of this Section 4.11 and the payment of or obligation to pay any liquidated damages accrued by operation of the Registration Rights Agreement, shall not be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.

II. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

III. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

CBP:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer



LOGIC EXPRESS:

Logic Express Limited


By:	/s/ Lin Ling Li
	Lin Ling Li
	Director



SHANDONG MISSILE:

Shandong Missile Biologic Products Co., Ltd.


By:	/s/ Tung Lam
	Tung Lam
	Chief Executive Officer

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Amendment No. 3 to Securities Purchase Agreement

SELLING STOCKHOLDERS:

/s/ Lin Ling Li

MS. LIN LING LI

/s/Siu Sing Chan

MS. SIU LING CHAN

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Amendment No. 3 to Securities Purchase Agreement

INVESTORS:

Pinnacle China Fund, L.P.


By:	/s/Barry M. Kitt
	Barry M. Kitt,
	Manager, Kitt China Management, L.L.C.,
	the Manager of Pinnacle China Management, L.L.C.,
	the General Partner of Pinnacle China Advisors, L.P.,
	the General Partner of Pinnacle China Fund, L.P.

Total number of Shares owned:		2,110,818

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Amendment No. 3 to Securities Purchase Agreement

	Capital Ventures International


By:	Heights Capital Management, Inc.,
	its authorized agent


	/s/ Martin Kobinger
	Name: Martin Kobinger
	Title: Investment Manager


Total number of Shares owned:		322,216

Amendment No. 3 to Securities Purchase Agreement

Exhibit 4.14

AMENDMENT NO. 4

TO SECURITIES PURCHASE AGREEMENT

This AMENDMENT NO. 4 to the SECURITIES PURCHASE AGREEMENT is entered into as of May 9, 2007 (this “ Amendment ”) by and among China Biologic Products, Inc., a Delaware corporation (“ CBP ”), its wholly-owned subsidiary Logic Express Limited (“ Logic Express ”) and its 82.76% owned subsidiary Shandong Missile Biologic Products Co., Ltd. (“ Shandong Missile ”), Ms. Lin Ling Li and Ms. Siu Ling Chan (together, the “ Selling Stockholders ”), and the investors signatory thereto (each an “ Investor ” and collectively, the “ Investors ”). Each of CBP, Logic Express, the Company, the Selling Stockholders and the Investors are referred to herein as a “ Party ” and collectively, as the “ Parties ”. Capitalized terms used, but not otherwise defined, herein have the meanings ascribed to such terms in the Original Agreement (as defined below).

BACKGROUND

The Parties entered into a Securities Purchase Agreement, dated as of July 18, 2006 (as amended, the “ Original Agreement ”), pursuant to which each of the Investors purchased from the Company and the Selling Stockholders, the Shares, Selling Stockholder Shares and the Warrants representing each Investors Investment Amount. As a condition to the closing of the Original Agreement, the Parties agreed to place the Make Good Shares into escrow for the benefit of the Investors, pursuant to a Share Escrow Agreement, dated as of July 19, 2006, to be distributed to the Investors in the event that the Company fails to meet certain Performance Thresholds as set forth therein. The Parties desire to enter into this Amendment to modify the terms of the Original Agreement as more specifically set forth herein.

AGREEMENT

“Notwithstanding the foregoing or anything else to the contrary herein, for purposes of determining whether or not the applicable thresholds set forth in (a) and (b) above have been met, neither (i) the release of any of the Escrow Shares to Ms. LI Lin Ling and Ms. CHAN Siu Ling as a result of the operation of this Section 4.11, (ii) the payment of or obligation to pay any liquidated damages accrued by operation of the Registration Rights Agreement nor (iii) the valuation of the Warrant Shares shall be deemed to be an expense, charge, or other deduction from revenues even though GAAP may require contrary treatment.

II. Agreement . In all other respects, the Original Agreement shall remain in full force and effect.

III. Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

[ Signature Page Follows ]

IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the date first above written.

CBP:

China Biologic Products, Inc.


By:	/s/ Stanley Wong
	Stanley Wong
	Chief Executive Officer



LOGIC EXPRESS:

Logic Express Limited


By:	/s/ Lin Ling Li
	Lin Ling Li
	Director



SHANDONG MISSILE:

Shandong Missile Biologic Products Co., Ltd.


By:	/s/ Tung Lam
	Tung Lam
	Chief Executive Officer

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Amendment No. 4 to Securities Purchase Agreement

SELLING STOCKHOLDERS:

/s/ Lin Ling Li

MS. LIN LING LI

/s/ Siu Ling Chan

MS. SIU LING CHAN

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Amendment No. 4 to Securities Purchase Agreement

INVESTORS:

Pinnacle China Fund, L.P.


By:	/s/ Barry M. Kitt
	Barry M. Kitt,
	Manager, Kitt China Management, L.L.C.,
	the Manager of Pinnacle China Management, L.L.C.,
	the General Partner of Pinnacle China Advisors, L.P.,
	the General Partner of Pinnacle China Fund, L.P.

Total number of Shares owned:		2,110,818

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Amendment No. 4 to Securities Purchase Agreement

Capital Ventures International


By:	Heights Capital Management, Inc.,
	its authorized agent

	/s/Martin Kobinger
	Name: Martin Kobinger
	Title: Investment Manager


Total number of Shares owned:		322,216

Amendment No. 4 to Securities Purchase Agreement

AMENDMENT TO SECURITIES PURCHASE AGREEMENT

This AMENDMENT NO. 5 TO THE SECURITIES PURCHASE AGREEMENT (this “Amendment” ) is made and entered into as of August 20, 2007 by and among China Biologic Products, Inc. (the “Company” ), and the investors identified on the signature pages hereto (each an “Investor” and, collectively, the “Investors” ).

WHEREAS, the Company and the Investors are parties to that certain Securities Purchase Agreement, dated as of July 18, 2006 (the “Purchase Agreement” ), pursuant to which, among other things, the Company issued and delivered to the Investors certain securities of the Company. All capitalized terms used and not otherwise defined herein shall have the respective meanings set forth in the Purchase Agreement.

WHEREAS, pursuant to Section 6.4 of the Purchase Agreement, no provision of the Purchase Agreement may be amended other than by an instrument in writing signed by the Company and Investors holding a majority of the Shares, and any amendment to the Purchase Agreement made in conformity with the provisions of Section 6.4 shall be binding on all Investors and holders of Shares, as applicable.

WHEREAS, each of the Investors holds in the aggregate the number of Shares set forth on their respective signature pages hereto, and collectively, the Investors hold an aggregate of 3,600,160 Shares, representing in excess of a majority of the Shares.

NOW, THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration the receipt and sufficiency are hereby acknowledged, the parties hereby agree as follows:

1. Schedule 3.1(v) to the Purchase Agreement shall be deleted and replaced in its entirety by Exhibit A to this Amendment. For purposes of clarification, the parties set forth on Exhibit A shall be provided piggyback registration rights as to the number of shares of Common Stock opposite their name on Exhibit A on the first Registration Statement filed by the Company, pursuant to the Registration Rights Agreement.

2. This Amendment contains the entire understanding of the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into this Amendment.

3. This Amendment may be executed in two or more counterparts, all of which when taken together shall be considered one and the same Amendment and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

4. Except as specifically amended by this Amendment, the Purchase Agreement shall remain in full force and effect, unaffected by this Amendment, except that the Purchase Agreement shall incorporate this Amendment as if originally a part thereof. The Purchase Agreement shall refer to the Purchase Agreement, as amended by this Amendment.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized signatories as of the date first indicated above.

	CHINA BIOLOGIC PRODUCTS, INC.



	By:	/s/ Stanley Wong
		Stanley Wong
		Chief Executive Officer

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	INVESTORS:

	Pinnacle China Fund, L.P.


	By:	/s/ Barry M. Kitt
		Barry M. Kitt,
		Manager, Kitt China Management, L.L.C.,
		the Manager of Pinnacle China Management, L.L.C.,
		the General Partner of Pinnacle China Advisors, L.P.,
		the General Partner of Pinnacle China Fund, L.P.

	Total number of Shares owned: 2,110,818

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	Jayhawk China Fund (Cayman) Ltd.


	By:	/s/ Michael D. Schmitz
		Michael D. Schmitz
		CFO of General Partner


	Total number of Shares owned: 1,489,342

Exhibit A

Schedule 3.1(v)

PDS-HFI Partners

500,000 shares of the Company’s Common Stock

September 4, 2007

China Biologic Products, Inc.
No. 14 East Hushan Road,
Taian City, Shandong
People’s Republic of China 271000

*RE:*		*Registration Statement on Form SB-2 (the “Registration Statement”) of China*
		*Biologic Products, Inc. (the “Corporation”)*

Gentlemen:

We have acted as special securities counsel to the Corporation in connection with the preparation of the Registration Statement filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended (the “Securities Act”), relating to the sale by the selling shareholders named therein of an aggregate of 6,064,000 shares of the Company’s common stock, par value $.0001 per share (the “Shares”), including 1,284,000 shares of Common Stock issuable upon the exercise of outstanding warrants (the “Warrant Shares”).

We are furnishing this opinion to you in accordance with Item 601(b)(5) of Regulation S-B promulgated under the Securities Act for filing an Exhibit 5 to the Registration Statement.

We are familiar with the Registration Statement, and we have examined the Corporation’s Certificate of Incorporation, as amended to date, the Corporation’s Bylaws, as amended to date, copies of the stock purchase and subscription agreements and other documents pursuant to which the selling shareholders acquired the Shares and the Warrant Shares, certificates evidencing the Shares, warrants evidencing the Warrant Shares, and minutes and resolutions of the Corporation’s Board of Directors. We have also examined such other documents, certificates, instruments and corporate records, and such statutes, decisions and questions of law, as we have deemed necessary or appropriate for the purpose of this opinion. In our examination we have assumed the conformity to original documents of documents submitted to us as copies, the genuineness of all signatures and that the documents submitted to us are within the capacity and powers of, and have been validly authorized, executed and delivered by, each party thereto, other than the Corporation.

Based upon the foregoing, we are of the opinion that (i) the Shares are validly issued, fully paid and non-assessable and (ii) the Warrant Shares, when issued in accordance with the terms of the warrants, will be validly issued, fully paid and non-assessable.

September 4, 2007
Page 2

Our opinions expressed above are limited to the General Corporation Law of the State of Delaware and the federal laws of the United States of America.

We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the use of our name, as counsel, therein. In giving the foregoing consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Securities and Exchange Commission thereunder.

	Very truly yours,


	/s/ THELEN REID BROWN RAYSMAN &
	STEINER LLP


	THELEN REID BROWN RAYSMAN &
	STEINER LLP

EXHIBIT 10.1

Shandong Missile Biologic Products Co., Ltd

Shandong Institute of Biologic Products

Group Secondment Agreement

(Summary Translation)

In order to protect the legal interests of Shandong Missile Biologic Products Co., Ltd. (Party A: Employing Unit), Shandong Institute of Biological Products (Party B: Entrusting Unit) and their employees and ascertain the rights and obligations of Party A and B, in reference to the Joint Venture agreement (“Agreement”) and Bylaws of Party A (“Bylaws”), laws and regulations promulgated by the State and Shandong Province Labour contract regulations, Party A&B reached a consensus voluntarily and agreed to enter into this agreement and committed to observe all the clauses in this agreement.

This agreement is to supplement and perfect the Agreement. It’s a supplemental document. It’s an agreement about group secondment which becomes effective after signing. From the day this agreement becomes effective, Party B entrust Party A to carry out human resources management. Party B’s employees work for Party A. But their status in the system remains unchanged. They are still considered employees of Party B in the system.

II.

Except for those approved by Provincial Health Bureau to stay or those retired voluntarily, all other employees will join Party A (except those choose not to). Party A should arrange suitable positions for these employees. Through negotiation, the people in the attached list are seconded from Party B.

III.

The agreement starts from _______, 2002 and ends on _________

IV.

Production, duties and terms

Party B agrees Party A can assign work according to the needs in research, production, operation and other work requirements. The workers should finish the duties assigned in consistency with their roles.

Party A must provide protection gears, required equipment to ensure work safety and hygiene working environment.

Party A’s rights and obligations

Party A’s obligations:

Comply with PRC laws, regulations and policy, respect the employees and provide conducive working environment, protect the legal rights of Party B’s employees

Responsible for training and educating the employees in the areas of law compliance, work ethics, techincal skills, production safety and company policy, protecting the rights of the employees and ensuring their fulfillment of duties

Establish a structured labour union, protect the legal rights of employees

In accordance with the regulations promulgated by the State, province and Tai An city and the Agreement, Party A pays the seconded employees in cash on a monthly basis. Party A pays Party B in full the old age pension, medical insurance, unemployment insurance, housing provident fund, education fund etc every month. Party B will submit to the relevant government departments every month.

Total of the salaries paid by Party A must not be lower than the total amount on payroll as at December, 2001.

Provided that the employee does not violate company regulations during the secondment term and works in the same or similar capacity, his personal income should not be reduced in principle. If the position has been changed, his salary should not be lower than 80% of the original. Retired people should be taken care off as well.

Party A pays Party B various society security fees monthly according to base amount and standard per regulations of the state, province and city

When the enterprise unit adjusts the salary and benefits due to a policy change, Party A adjusts the seconded employees’ salary individually and in total

Party A should comply with the state’s regulations on working hours. If working hours are required to be prolonged to meet production needs, overtime pay should be made and state regulations should not be violated.

Under the following conditions, Party A pay the employees a higher rate:

Overtime working is paid at 150% of the normal rate

Working on a rest day without compensated leave is paid at 200% of the normal rate

Working on a statutory holiday is paid at 300% of the normal rate

Party A bears the relevant costs resulting from work injuries or job related disease

Party A cannot send the employees back to Party B under the following circumstances:

During the secondment period, an employee suffers from job related disease or work injuries. He is diagnosed of losing all or part of working abilities

The employee is in his permitted medical leave after suffering from job related disease or work injuries

Female employees in her maternity leave or breasting period

b. Party A’s rights

Rewards and punishes the employees according to company regulations provided that these regulations don’t violate regulations promulgated by state, provincial and city governments

Reassign positions or assign temporary or special duties (allowed by laws) in consideration of production needs, reasonableness

Party A can send back the employee to Party B under any of the conditions

Seriously violate disciplines or company regulations

Fail to perform or embezzle resulting in major damages to the benefits of Party A

Being sued for compensation or educated in a labor camp because of damages inflicted on Party B

Due to illness or injuries unrelated to job, the employee loses the ability to perform duties assigned by Party A after medical leave

The employee fails to perform satisfactorily even after retraining and reassignment of duties

Under conditions d) or e) above, Party A should notify Party B and the employee in writing.

VI.

Party B’s rights and obligations

Party B’s obligations

Educate the employees to observe laws and protect the interests of Party A

When there is dispute between the employee and Party, work with Party A’s labour union to resolve the dispute

As the employer, participate in the legal process started by the employee against Party A

Party B’s seconded employees’ obligations

Actively participate in various training arranged by Party A including work ethics, technical skills, observe work safety procedures, disciplines and work ethics

Accept and finish production duties assigned by Party A, reach the required standard and improve on technical skills

Observe Party A’s various regulations, obey to Party A’s management

Never leak technical and commercial secrets

Observe rules and regulations as specified in the laws or agreed

Under any of the following conditions, the employee cannot leave his position without approval

Party A paid for a specific training and the employee has not completed his term of employment as agreed

The employee has not completed a project on hand while holding an important position in research or operation

A compensation agreement has not been reached when the employee caused economic damages

Party B (the employees)’s rights

Protect Party B and its employees as allowed by laws

Receive remuneration for work performed under laws

Enjoy resting time and holiday

Enjoy salary adjustment, fringe benefits, social security, safety protection, clean working environment, receipt of technical training

Raise dispute on labour issues

In case the relevant departments confirm that the working environment is unsafe and unclean to the extent that health is jeopardized, the employees can refuse to report duties until the conditions are corrected

Rights granted by laws and regulations

Under one of the following conditions, the employee has the right to ask Party B to arrange his return to Party B with Party A:

Party A uses force or other threatening or freedom restricting measures to keep the employees working

Party A did not pay salary according to what was agreed

The working environment provided by Party A was determined to be health hazardous

Party A infringes on the Party B’s legal rights

Except under the conditions specified in this clause, Party B’s employees need to give 30 days’ notice in writing before leaving Party A

VII.

Both parties agreed that upon the regulations pertaining to the reform of enterprise unit be promulgated by Shandong provincial government, this Agreement will terminate automatically on the day approved by the direct reporting department. Party A and Labor Union or individual will then refer to Section 5, Clause 4 and item 2 for making the arrangement.

VIII.

When Party B undergoes reform, Party A should assist Party B in resolving the issues including reassignment, social security, status changing and compensation and other matters related to the welfare of the employees

IX.

Once signed, this Agreement is legally binding, both parties must observe strictly. The party that breaches the contract must bear the obligations as defined in the contract and compensate the other party for economic losses incurred.

When dispute arises during the execution of the Agreement, Party A and B should negotiate to resolve. When it fails, Shandong provincial health bureau will facilitate the negotiation. When negotiation fails, either party can apply for arbitration within the allowed time limit. The party which disagrees with the arbitration results can file the case with the local court within the allowed time limit.

XI.

Any details not specified in this Agreement should be referred to state, provincial or municipal regulations if applicable. Otherwise, Party A & B should negotiate for supplementary clauses to address them.

XII.

This Agreement has 3 originals and 3 carbon copies

XIII.

Any of the above clause in violation of state laws would be overridden by the relevant laws.

XIV.

This Agreement becomes effective upon signing or chopping by both sides.

Party A

Shandong Missile Biologic Products Co., Ltd.

Legal representative: Du Zu ing

Party B

Shandong Institute of Biologic Products

Legal representative: Pang Guang Li

EXHIBIT 10.2

AMENDED AND RESTATED JOINT VENTURE AGREEMENT
BETWEEN LOGIC EXPRESS LIMITED AND SHANDONG
BIOLOGIC PRODUCTS RESEARCH INSTITUTE
DATED AS OF MARCH 12, 2006

(Summary Translation)

This Joint Venture Contract (hereinafter referred to as “ Contract ”) is made as of the [ ] day of [ ] 2006 by and between the following Party A and Party B:

Preamble

WHEREAS

The shareholding of Shandong Missile Biologic Products Co., Ltd. (hereinafter referred to as “ Joint Venture ”) has been changed and the original shareholder Zhi Yang Investment Co., Ltd. ( 志扬投犼有榰公司 ) has assigned all his equity interest in the Joint Venture to LOGICEXPRESS LTD (hereinafter referred to as “ Party A ”). Pursuant to the Law of the People's Republic of China on Sino-Foreign Equity Joint Ventures, the Company Law of the People’s Republic of China and other applicable laws and regulations of the People’s Republic of China, both Party A and Shandong Province Biologic Products Research Institute ( 山东省生物制品研究所 ) (hereinafter referred to as “ Party B ”), based on the principles of equality and mutual benefit and through friendly consultation, have agreed to establish a Sino-foreign equity joint venture in the Shandong Province of the People’s Republic of China and to amend the original joint venture contract correspondingly.

NOW THEREFORE THE PARTIES agree as follows:

Chapter 1. The Parties

1.	The contracting Parties of this Contract are:

Party A: LOGIC EXPRESS LTD

Legal Address: Vanterpool Plaza ô Wickhams Cay 1 ô 2nd Floor, Road Town,Tortola,British Virgin Islands.

Office Address: Room 1606, Nan Fung Centre, 264 Castle Peak Road, Tsuen Wan, Hong Kong.

Representative: Li Linling ( 李林玲 )

Nationality: China

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Party B: Shandong Province Biologic Products Research Institute

( 山东省生物制品研究所 )

Legal Address: 14 Hushan East Road, Taian City, Shandong Province, China.

Legal Representative: Pang Guangli ( 庞广礼 )

Position: President of the Institute

Nationality: China

2.	Each of the Parties represents that his identity and information are true and up-to-date, and each of the Parties has full power and capacity to execute this Contract and to perform all the obligations under this Contract.

Chapter 2. Incorporation

3.	Both Parties of this Contract agrees to incorporate a biologic products company limited (hereinafter referred to as “ Joint Venture ”), which is an equity joint venture, in Taian City, Shandong Province of China in accordance with the applicable laws and regulations of China.

4.	The Chinese name of the Joint Venture is: 山东米歇尔生物制品有榰公司。

The English name of the Joint Venture is: SHANDONG MISSILE BIOLOGIC PRODUCTS CO. LTD.

Legal Address is: 14 Hushan East Road, Taian City, Shandong Province, China. ( 中国山东省泰安市禲山东爑 14 号 )

5.	The Joint Venture is a Chinese legal person, and is governed and protected by the laws, regulations, and related rules of China (hereinafter referred to as “Laws of China”). The Joint Venture can operate all the legal businesses under the Laws of China.

The Joint Venture shall be incorporated as a limited liability company and its liability is limited to all of its assets. The liability of each Party shall be limited to his capital contribution to the registered capital of the Joint Venture. The Parties shall share the profits the Joint Venture in proportion to their capital contributions to the registered capital.

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Chapter 3. Mission, Scope and Scale of Business

The mission of the Joint Venture is: In accordance with the principles of equality and mutual benefit, and the intent to have a long-term partnership, both Parties fully utilize their comparative advantages, and apply advance technologies and scientific management methods to establish Joint Venture, and to make it a modern biological and pharmaceutical enterprise, which produces competitive products in terms of scope, quality and price in the Chinese and overseas markets, and as a result, both Parties can achieve their economic efficiency.

The scope of production and business of Joint Venture is: Research, production and marketing of biologic products, blood products, biochemical products, small volume parenteral solution, and genetic engineering product in compliance with the Pharmaceutical Administration Law of the People’s Republic of China, Regulations for Implementation of the Pharmaceutical Administration Law of the People’s Republic of China, and Good Management Practice for the Quality and Production of Pharmaceutical Products (GMP) issued by the State Food and Drug Administration.

The scale of production of Joint Venture is: In the first year of the establishment of Joint Venture, revenue income for the production of existing products reaches 40 million Yuan; within three (3) years, three (3) new product types will be added and the revenue income will reach 80 million Yuan; after five (5) years, revenue income will reach 100 million Yuan.

Chapter 4. Total Investment and Registered Capital

10.	Total investment:

The total amount of investment of Joint Venture is 160 million RMB Yuan.

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11.	Registered Capital:

The registered capital of Joint Venture is 87 million RMB Yuan, in which:

Party A: 72 million RMB Yuan, equivalent to 82.76% of total equity interest;

Party B: 15 million RMB Yuan, equivalent to 17.24% of total equity interest.

12.	The following items shall be used in capital contribution by the Parties:

Party A: Cash: Hong Kong Dollar cash equivalent to 68.8754 million RMB Yuan; Equipment and Machinery equivalent to 3.1246 million RMB Yuan. The aforesaid capital contribution is in the total sum of 72.00 million RMB Yuan which is equivalent to 82.76% of registered capital.

Party B: Factory, machinery, inventory, liquid asset, etc in kind equivalent to 6.40 million RMB Yuan; non-patented technology equivalent to 8.60 million RMB Yuan. The aforesaid capital contribution is in the total sum of 15.00 million RMB Yuan which is equivalent to 17.24% of registered capital.

13.	Party B has already paid up all his subscribed capital contribution to Joint Venture.

Party A was assigned from Up wing Investment Limited. its subscribed capital contribution amounting to RMB 72.00 million Yuan which is equivalent to 82.76% of the company registered capital, in which Party A has already paid up capital contribution 45.60 million Yuan and the rest 26.40 million Yuan shall be deposited in cash into the designated bank account of Joint Venture on 30 ^th day of June 2006.

14.

The capital contribution paid by the Parties in accordance with this Contract shall be in cash which shall be owned by the corresponding Party, in kind or in the form of land use right, industrial intellectual property, non-patented technology or other kinds of legal rights which shall be owned by the respective Party and shall not be restricted by guarantee or any kind of encumbrance.

In the case that the capital contribution is in kind or in the form of industrial intellectual property, non-patented technology or any other legal rights, the contributing Party shall provide relevant documents to proof his possession of the ownership of and the right to dispose the same.

15.

Each and either Party of Joint Venture shall not use the loans, rental machinery and equipment, or any other properties owned or obtained under the name of Joint Venture, or any other people’s property as his own capital contribution, and also shall not use the property or rights of the Joint Venture or the other Party’s property or rights to guarantee his capital contribution.

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16.

Either Party fails to contribute his committed capital totally or partially in accordance with this Contract shall constitute a breach of contract. In addition to the relevant treatment stipulated by the State, non-breaching Party should also remind the breaching Party to pay or to pay up his capital contribution within one (1) month. If the breaching party fails to do so within the said time limit, the breaching Party shall pay the late payment interest (refer to interest penalty on late payment of loan) and compensate the non-breaching Party for the loss and damages. The breaching Party shall also be liable for the breach of the Contract in accordance with the applicable laws and regulations of the State.

17.

A Chinese chartered public accountant firm shall verify the capital contributed by each Party and issue a capital verification certificate. Joint Venture shall issue a capital contribution certificate to each contributing Party pursuant to the capital verification certificate. The capital contribution certificate shall include the following items: name of the Joint Venture, incorporation date of the Joint Venture, Name of the investors and the amount, proportion, form and date of his capital contribution, and the issue date of the capital contribution certificate.

The capital contribution certificate is the material evidence for the proportion of the capital contribution and the rights of each Party, and has the highest evidential weight for the Parties.

18.	Equity interest assignment and change:

The assignment of the equity interest in Joint Venture shall be conducted in compliance with the laws and regulations of China.

In the case that any Party intend to assign his subscribed equity interest totally or partially to any other third parties, the other Party has the right of first refusal to purchase such equity interest in the terms and conditions not worse than those given to the aforesaid third party. In the case that the said other Party does not wish to exercise his right of first refusal, the aforesaid assignment shall be deemed agreed by the said other Party.

Any increase of Joint Venture’s registered capital shall be processed by the board of directors in compliance with Change of Equity Interest Agreement, and shall be submitted to the original government authority for approval.

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Chapter 5. Obligations of both Parties

19.	Both Parties shall complete the following items respectively:

Party A’s obligations:

To pay up capital contribution in accordance with Chapter 4 and to assist in capital arrangement, and to be responsible for the listing of the company;

To assist Joint Venture to obtain preferential policy and conditions;

To assist foreign employees to apply for the visa, work permit and traveling documents, etc.

Party B’s obligations:

To pay up capital contribution in accordance with Chapter 4 and to assist in capital arrangement;

To assist Joint Venture to the Land Administration Authorities for land use right;

To assist Joint Venture to organize the design and building of the factory and other engineering facilities of the Joint Venture;

To assist Joint Venture to apply for and install water, electricity, transportation and other infrastructure setup;

To assist Joint Venture to employ management in China, technical personnel, workers and any other necessary personnel;

To provide the necessary machinery installation and customization, personnel to conduct test run, and personnel for production and control;

To be responsible for other business entrusted by Joint Venture.

Chapter 6. Use of Premises

20.	Joint Venture has the right to obtain the right to use a premise by rental or purchase in accordance with the Laws of China.

21.

Before the Joint Venture obtains the right to use a premise, Party B shall guarantee Joint Venture has the right to use Party B’s premise (refer to Annex 3: Blueprint). Save for the portion reserved for Party B, the right to use the land set forth in Annex 3 shall be owned by Joint Venture. Joint Venture shall pay, no matter how or what nature of the aforesaid land is changed, the related fee to Party B regularly and sufficiently according to the principles set forth in the meeting minutes of Shandong Province Government dated 28 ^th of June 2002 and the summary of Taian City Government Special Topic Conference (ref.: [2002] No. 31) before the restructuring of Party B. During the restructuring of Party B, both Joint Venture and Party B shall comply with the Land Use Compensation Agreement entered between Joint Venture and Party B on 14 ^th day of July 2003, and Joint Venture shall not use the aforesaid land in any other way without the consent of Party B (except for the loan guarantee).

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Chapter 7. Board of Directors and Supervisors

22.	The board of directors is founded on the registration date of the Joint Venture.

23.

The board of directors shall consist of five (5) directors, in which Party A shall appoint four (4) directors and Party B shall appoint one (1) director. The board has one chairman and one vice-chairman, who shall be elected by the board of directors. If a director appointed by a Party becomes the chairman, a director appointed by other Party shall assume the office of vice-chairman. Both Parties has right to change the directors appointed by him from time to time. The term of the chairman and vice-chairman of the board, and the directors are four (4) years provided that the respective appointing Party has not changed his directors. The directors may stay for another term if appointed by the Party.

24.	The board of directors is the highest authority of the Joint Venture and decides all the major issues in relation to Joint Venture. The power of the board of directors includes the following:

Amendment of the Articles of Association of the Joint Venture;

Termination and dissolution of Joint Venture;

Merger and spin-off of Joint Venture;

Change of registered capital of Joint Venture;

Discussion and Decision on the remuneration system of the employees;

Decision on the profit distribution and deficit make up scheme;

Approval of annual budget and financial report;

Decision on major acquisition and investment;

Decision on taking out mortgage and guarantee on the Joint Venture’s asset;

10.

Adoption, amendment and termination of group labor contract and staff benefit scheme;

11.

Appointment or dismissal of the general manager, deputy general manager of Joint Venture; appointment or dismissal of financial controller, marketing and sales director and assistant to general manager according to the nominations of the general manager, and decision on their remuneration and appraisal scheme;

12.

Decision on the establishment of the business management structure of Joint Venture;

13.

Other major issues which shall be decided by the board of directors.

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25.

For item 1 to item 5 set forth in Article 24, a unanimous approval of the directors who has right to vote and has attended the corresponding board of directors meeting shall be required; for item 6 to item 10, the approval of two third (2/3) of the directors who has attended the corresponding board of directors meeting shall be required; and for the rest of the items, the approval of half (1/2) of the directors who has attended the corresponding board of directors meeting shall be required.

26.	The chairman shall chair the board of directors meeting. If the chairman cannot exercise his authority, he shall entrust the vice-chairman in writing. If the vice-chairman cannot exercise his authority, he can entrust a director in writing.

The board of directors shall convene at least one meeting every year. An interim board of directors meeting can be convened on the request of one third (1/3) of the directors. The resolution and minutes of the meeting shall be filed by Joint Venture.

The board of directors meeting requires a quorum of over two third (2/3) of the total number of directors. Each director shall assign a proxy to attend and vote in the board of directors meeting in writing if he cannot attend the meeting. If a director does not attend the meeting and does not assign a proxy to attend the meeting, he shall be deemed to abstain from voting.

The rules of procedure for the board of directors meeting shall be set up separately by the board of directors in compliance with the Articles of Association of Joint Venture.

27.

The company shall establish the board of supervisors which shall consist of 3 members. Each of the investing Parties shall appoint one member and one member shall represent the employees. The chairman of the board of supervisor shall be elected by the members from the members appointed by the Party who does not appoint a director who subsequently becomes the chairman of the board of directors. The board of supervisors exercise the following powers:

Check the financial conditions of the company;

Supervise the duty-related acts of the directors and managers and to check if they have violated any laws and regulations, or the articles of association; and to request the director and the manager to correct if their acts cause damages to the company;

Inform the related shareholder and individual to handle before certain time limit if the directors, managers and supervisors are not in compliance with the Article 57 of Company Law. In the case that individual has an outstanding debt amounting to over one (1) million RMB Yuan, the related shareholder and individual shall be replaced or resigned;

Perform other duties agreed by the board of directors;

Attend the board of directors meeting as a non-voting member.

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Chapter 8. Business Management Structure

28.

The Joint Venture shall establish a management office which shall be responsible for its daily management. The management office shall have one general manager, one deputy general manager. The general manager and the deputy general manger shall be employed by the board of directors and their term of office shall be three (3) years.

29.

The general manager is the legal representative of Joint Venture, and has the responsibility to execute the decisions of the board of directors, to organize and to lead the daily operation of the Joint Venture. The deputy general manger shall assist the general manager to perform his duty. The detail job description of the general manager shall be specified in the Articles of Association of Joint Venture.

30.	The financial controller, marketing and sales director and assistant to general manager shall be nominated by the general manager and appointed by the board of directors.

31.	Directors, supervisors and the employees appointed by the board of directors are senior personnel. The remuneration and bonus of senior personnel are decided by the board of directors.

32.	If any of the senior personnel has committed embezzlement or has serious dereliction of duty, they may be dismissed at any time upon the decision of the board of directors.

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Chapter 9. Staff Management

33.

The recruitment, penalty, dismissal, term of contract, salary, reward and punishment, labor insurance, society security, welfare and other matters of the employees of the Joint Venture shall be decided by the board of directors in compliance with the Labor Law of the People’s Republic of China, the Regulations of the People’s Republic of China on Labor Management in Sino-foreign Equity Joint Ventures and its implementation rules, and relevant rules and regulations issued by the Taian City of Shandong Province Government. Joint Venture and the labor union of Joint Venture or individual can enter into group or individual labor contract. The labor contracts shall be submitted to the local Labor Administration Authority for verification and filing.

The employees of Shandong Province Biologic Products Research Institute under the custody of the company shall be managed in compliance with the Labor Custody Agreement.

34.	The board of directors shall set up separate schemes for the employment and management of special personnel whenever necessary.

Chapter 10. Labor Union

35.	Labor union can be established pursuant to the Laws of China. The labor union’s major duties are:

Protect the rights and benefits of employees stipulated by the laws;

Assist Joint Venture to arrange and use the welfare fund properly;

Participate in resolving any disputes between employees and Joint Venture;

Execute the group labor contract on behalf of the employees and monitor its implementation;

Protect the rights of employees under the laws.

36.	The representatives of the labor union has right to negotiate the issues in relation to bonus, penalty, discharge, salary, welfare, job safety and labor insurance of employees, etc. with management.

37.	Pursuant to the Laws of China and related rules and regulations, Joint Venture shall monthly allot an amount of money amounting to 2% of the sum of the actual salaries of all the employees of Joint Venture to the labor union fund.

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Chapter 11. Tax, Finance, Audit and Company Seal

38.	Joint Venture shall conduct financial audit in compliance with the Accounting Law of the People’s Republic of China and shall pay all the taxes in compliance with the Laws of China.

39.	The employees of Joint Venture shall pay income tax in compliance with the Tax Law of China.

40.

Joint Venture shall allocate to the reserve fund, company development fund and staff welfare fund in compliance with the Sino-foreign Equity Joint Venture Law of the People’s Republic of China. The annual allocation percentage to the funds shall be discussed and decided by the board of directors according to the business conditions of the company.

41.

The financial year of Joint Venture is the same as the calendar year and starts from 1 ^st day of January to 31 ^st day of December in every year. Chinese language shall be used in all accounting vouchers, receipts, reports and accounting statements. The bank accounts and the company seal of the Joint Venture shall be controlled and managed by both Sino and foreign Parties together and the respective detail methods shall be set up by the board of directors.

42.	The financial statements of Joint Venture shall be audited once a year by a Chinese chartered public accountant firm and Joint Venture shall be liable for the related fee. Either Party has right to appoint a separate accountant firm to audit the aforesaid financial statements at his own costs.

43.

The balance sheet, profit and loss statement and profit distribution scheme for the last financial year shall be complied within the first three (3) months of every financial year and shall be submitted to the board of directors for verification. The profit distribution ratio shall be calculated based on the actual paid up capital of each shareholder.

Chapter 12. Insurance

44.

Joint Venture shall purchase insurance from the insurance company in the territory of China to avoid the risk of loss and damages caused by accidents and natural disasters to the Joint Venture. The board of director shall decide the type, amount and the term of the insurance purchased. Joint Venture shall be liable for the related insurance premium.

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Chapter 13. Term and Termination of Joint Venture

45.	The term for operation of Joint Venture is thirty (30) years. The date of incorporation of Joint Venture is the issue date of the business license of Joint Venture.

The term of operation of Joint Venture can be extended by applying to the original Government Authority six (6) months before the expiry date upon the unanimous approval by the board of directors on a motion by either Party.

46.	If Joint Venture is terminated upon expiry or before the expiry date, it shall be liquidated in compliance with the applicable laws and the Articles of Association of Joint Venture.

Chapter 14. Amendment, Alternation and Termination of Contract

47.	Any amendment to this Contract or its Annex shall be agreed by the Parties by entering into a written agreement and approved by the original government authority before the said amendment becomes effective.

48.

In the case that this Contract is not able to be executed due to force majeure, or the Joint Venture cannot sustain the operation due to many years of continuous deficit, this Contract can be terminated upon the unanimous approval from the board of directors and approval by the original Government Authority.

49.

In the case that Joint Venture cannot operate its business or cannot achieve the objectives of its business operation due to the non-performance or substantial violation of this Contract or the Articles of Association by either Party, the breaching Party shall be deemed to terminate the Contract unilaterally and the non-breaching Party has right to claim compensation from the breaching Party and to submit the application to the original Government Authority in accordance with this Contract for the approval to terminate this Contract.

Chapter 15. Force Majeure

50.

In the case of earthquake, typhoon, flooding, fire, war and other unforeseeable and unavoidable force majeure, which has direct influence on the execution of the Contract or cause the inability for the Contract to be executed in the agreed conditions, the Party hindered by the event of force majeure shall telex the other Party immediately and shall provide documents within fifteen (15) days to explain the details of the event of force majeure and to proof the reasons why the Contract cannot be performed completely or partially, or has to be performed in a later time. The said document of proof shall be issued by the local notary office in the location where the said event occurred. Both Parties shall negotiate and decide together if the Contract shall be terminated or part of the obligations under the Contract shall be exempted or be performed in a later time, according to the influence of the said event of force majeure.

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Chapter 16. Applicable Laws

51.	The execution, validity, interpretation and performance of this Contract shall be governed by the Laws of China.

Chapter 17. Dispute Resolution

52.

Any dispute arising from or in connection with this Agreement, both Parties should have friendly negotiation to resolve. In the case that the disputes cannot be resolved, either Party can submit the disputes to China International Economic and Trade Arbitration Commission Beijing Commission for arbitration which shall be conducted in accordance with the Commission’s arbitration rules. The arbitral award is final and binding upon both Parties.

Chapter 18. Language of the Contract

53.	This Chinese version of this Contract is the only valid and legally binding version.

Chapter 19. Miscellaneous

54.	This Contract and its annex shall come into effect on the approval date given by the approval authority of the People’s Republic of China.

55.	Telex and fax notifications sent by one Party to another Party shall be followed by letters in writing if the notice is in relation to the rights and obligations of either Party. The legal address of the Parties set forth herein shall be the correspondence address.

56.	Any matters not stipulated in this Contract shall be handled in compliance with the Company Law, Sino-foreign Equity Joint Venture Law of the People’s Republic of China, Labor Law of the People’s Republic of China and its Shandong Province Labor Law Ordinance.

57.	This Contract is executed by both Parties on 12 ^th day of March 2006 in Taian City, Shandong Province of China.

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IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the day and year first set forth above.

Party A: LOGIC EXPRESS LTD

Legal Representative (signature):

Party B: Shandong Province Biologic Products Research Institute

山东省生物制品研究所

Legal Representative (signature):

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EXHIBIT 10.3

Letter of Intent - Equity Transfer

(Summary Translation)

Party A: Logic Express Limited

Party B: Shandong Institute of Biological Products

In reference to Shandong provincial government’s published regulation, “Regarding the opinion on pushing ahead the reform of enterprise unit”, Party A & B, after undergoing friendly negotiation, reached the following consensus on the purchase by Party A from Party B of 17.24% of the equity interest in Shandong Missile Biological Products Co., Ltd.

Party B agrees to sell and Party A agrees to purchase 17.24% of the equity interest in Shandong Missile Biological Products Co., Ltd.

According to the regulations pertaining to management of State Resources, both parties agree that the transfer price of this transaction should be based on the net asset value determined by a registered valuator and approved by the relevant State Resources Management department.

After the signing of this letter of intent, Party B will apply, according to the policy published by Shandong provincial government regarding the reform of enterprise unit, to Provincial Health Bureau and State Resources Management Bureau for the transfer of equity interest. Once approved, both parties will draft up the equity transfer agreement, engage a valuator to assess the net asset value of Missile Biological Products Co., Ltd, and confirm the transfer price based on the valuation result.

In order to facilitate the reform of Party B, Party A commits to pay the transfer price to Party B as soon as possible once the transfer agreement is signed.

This letter of intent is effective once signed by representatives from both Parties.

This letter of intent has 2 copies. Each party keeps one copy. For details not covered, both parties will hold further discussion.

Party A: Logic Express Limited

Party B: Shandong Institute of Biological Products

This letter of intent is signed on June 10, 2006

EXHIBIT 10.4

Raw Plasma Supply Agreement

(Summary Translation)

December 30, 2005

Raw Plasma Supply Agreement

Party A: Shandong Missile Biologic Products Co. Ltd.

Party B: Shandong Province Qihe Plasma Collection Station

According to item 13 of the Regulation “Controlling of Blood Products”, a plasma collection station may only supply raw plasma to one blood products manufacturer under quality credential agreement, raw plasma supply to other manufacturers is forbidden. According to MOH standards, the plasma collection station and blood products manufacturer must sign an agreement for the supply of raw plasma.

According to plasma regulations promulgated by the Bureau of Health, Shandong Province, Party B shall supply Party A with source plasma (hereafter referred to as “plasma”). Both parties agree to the following terms and conditions:

1. Quantity and Quality Standards of Plasma Supply

I. Party B shall provide Party A with plasma collected from donors within the collection area who have passed all physical and biochemical tests.

II. Major quality standards are as follows:

(1)	HBsAg negative;

(2)	Anti-HCV negative;

(3)	Anti-HIV negative;

(4)	ALT ≤ 25 units (Reit’s method);

(5)	Syphilis serological test negative;

(6)	Total plasma protein ≥ 55g/L (Biuret method);

(7)	No germ contamination;

(8)	Compliance with all other standards promulgated by the MOH over raw plasma;

(9)	Appearance: plasma should be rice-yellow, clear, transparent liquid, without dissolved blood, milky feculence, fibrinogen clots, visible red blood cells or other impurities.

III. The testing reagents used for HBsAg, Anti-HCV, Anti-HIV and syphilis testing must have passed “every-batch” inspection, and labeled with counterfeit-proof labels.

IV. If the plasma sample fails to pass the double test performed by Party A, Party A shall immediately notify Party B to send technical personnel for further testing. If the sample fails to pass further testing, then the unit (bag of plasma) is disqualified, and Party A shall not make any payment. Party A should notify Party B of any testing failure in writing on a timely basis. The disqualified plasma should be sterilized on the spot and disposed of immediately, and Party A shall not dispose of disqualified plasma privately or send the plasma back to Party B.

2. Labeling Plasma Samples

I. Every bag of plasma should be labeled with the name, collection code, blood type, physical and biochemical test results of the donor, as well as the collection date.

II. Every shipment of plasma should include a bill of lading, providing information on: the number of donors, the number of bags of plasma, as well as the biochemical test results. All these information should be internally consistent.

III. Each bag of plasma must be appended with enough sample (about 13cm of conducting tube), labeled with the corresponding plasma collection code. The sample plasma must be consistent with the plasma contained in the bag. Plasma with sample label absent, unclarity or lacking of code or inconsistency with records is treated as disqualified, plasma would be disposed of in the way described in 1(IV).

IV. Collection coding: continual coding within the same year from January 1 to December 31, without repeating or skipping. Codes take the form of “03000001-03015551”, with “03” representing the year 2003, and 000001-015551 specifying plasma man collection unit. Thus the number of collections taken in the year 2003 was 15551.

3. Pricing and Transportation

I. The pricing of plasma complies with regulations promulgated by the provincial Bureau of Health and the provincial Pricing Bureau. The current unit price of qualified plasma is RMB $235,000 per ton, balance settled at the end of every month. If national plasma pricing standards should shift, both parties shall negotiate on new prices.

II. If the protein level of the plasma is lower than 55g/L, the price is reduced by 2% for every 1g/L lower than the standard. The protein level here referred to is the average protein level of the annual supply, calculated at the end of each year.

III. Party A is responsible for the transportation of plasma. Party B shall pack the plasma and load the transporting vehicles as Party A requires. After all relevant personnel have confirmed the information in the bill of lading, delegates of both parties shall sign to certify delivery.

IV. Party A visits Party B to collect plasma and make payment on a regular basis. Payment for each batch of plasma are made at the delivery of the next batch.

4. Other Specifications

I. The plasma collected must be stored in freezing temperature by each donar. No cross mixing of plasma should occur.

II. After collection, the plasma should be immediately stored in a fridge or cold storage room at -30℃, to ensure freezing within 6 hours.

III. Each bag contains 580ml of plasma, or equivalent to 600 g in weight. The net weight of each bag of plasma is calculated in the following way: gross weight - bag weight - sample tube weight ≈ net weight.

IV. Party B may only supply plasma to Party A. No supplying to any third party should take place.

V. Party A is obliged to offer complete technical guidance to Party B and ensure quality control.

5. Any details not specified in this Agreement shall be negotiated between both parties.

6. There are five copies of this Agreement: one held by either party, and one submitted to the provincial, municipal and county Bureau of Health, respectively.

7. This Agreement becomes valid after legal delegates of both parties have signed and stamped. The agreement will end on December 31, 2006.

Party A

Legal Delegate: (signature and stamp)

January 1, 2006

Party B

Legal Delegate: (signature and stamp)

January 1, 2006

EXHIBIT 10.5

Raw Plasma Supply Agreement

(Summary Translation)

December 30, 2005

Raw Plasma Supply Agreement

Party A: Shandong Missile Biologic Products Co. Ltd.

Party B: Shandong Province Xiajin Plasma Collection Station

1. Quantity and Quality Standards of Plasma Supply

I. Party B shall provide Party A with plasma collected from donors within the collection area who have passed all physical and biochemical tests.

II. Major quality standards are as follows:

(1)	HBsAg negative;

(2)	Anti-HCV negative;

(3)	Anti-HIV negative;

(4)	ALT ≤ 25 units (Reit’s method);

(5)	Syphilis serological test negative;

(6)	Total plasma protein ≥ 55g/L (Biuret method);

(7)	No germ contamination;

(8)	Compliance with all other standards promulgated by the MOH over raw plasma;

(9)	Appearance: plasma should be rice-yellow, clear, transparent liquid, without dissolved blood, milky feculence, fibrinogen clots, visible red blood cells or other impurities.

III. The testing reagents used for HBsAg, Anti-HCV, Anti-HIV and syphilis testing must have passed “every-batch” inspection, and labeled with counterfeit-proof labels.

2. Labeling Plasma Samples

I. Every bag of plasma should be labeled with the name, collection code, blood type, physical and biochemical test results of the donor, as well as the collection date.

3. Pricing and Transportation

IV. Party A visits Party B to collect plasma and make payment on a regular basis. Payment for each batch of plasma are made at the delivery of the next batch.

4. Other Specifications

I. The plasma collected must be stored in freezing temperature by each donar. No cross mixing of plasma should occur.

II. After collection, the plasma should be immediately stored in a fridge or cold storage room at -30℃, to ensure freezing within 6 hours.

IV. Party B may only supply plasma to Party A. No supplying to any third party should take place.

V. Party A is obliged to offer complete technical guidance to Party B and ensure quality control.

5. Any details not specified in this Agreement shall be negotiated between both parties.

6. There are five copies of this Agreement: one held by either party, and one submitted to the provincial, municipal and county Bureau of Health, respectively.

7. This Agreement becomes valid after legal delegates of both parties have signed and stamped. The agreement will end on December 31, 2006.

Party A

Legal Delegate: (signature and stamp)

January 1, 2006

Party B

Legal Delegate: (signature and stamp)

January 1, 2006

EXHIBIT 10.6

Raw Plasma Supply Agreement

(Summary Translation)

December 30, 2005

Raw Plasma Supply Agreement

Party A: Shandong Missile Biologic Products Co. Ltd.

Party B: Shandong Province Zhangqiu Plasma Collection Station

1. Quantity and Quality Standards of Plasma Supply

I. Party B shall provide Party A with plasma collected from donors within the collection area who have passed all physical and biochemical tests.

II. Major quality standards are as follows:

(1)	HBsAg negative;

(2)	Anti-HCV negative;

(3)	Anti-HIV negative;

(4)	ALT ≤ 25 units (Reit’s method);

(5)	Syphilis serological test negative;

(6)	Total plasma protein ≥ 55g/L (Biuret method);

(7)	No germ contamination;

(8)	Compliance with all other standards promulgated by the MOH over raw plasma;

(9)	Appearance: plasma should be rice-yellow, clear, transparent liquid, without dissolved blood, milky feculence, fibrinogen clots, visible red blood cells or other impurities.

III. The testing reagents used for HBsAg, Anti-HCV, Anti-HIV and syphilis testing must have passed “every-batch” inspection, and labeled with counterfeit-proof labels.

2. Labeling Plasma Samples

I. Every bag of plasma should be labeled with the name, collection code, blood type, physical and biochemical test results of the donor, as well as the collection date.

3. Pricing and Transportation

IV. Party A visits Party B to collect plasma and make payment on a regular basis. Payment for each batch of plasma are made at the delivery of the next batch.

4. Other Specifications

I. The plasma collected must be stored in freezing temperature by each donar. No cross mixing of plasma should occur.

II. After collection, the plasma should be immediately stored in a fridge or cold storage room at -30℃, to ensure freezing within 6 hours.

IV. Party B may only supply plasma to Party A. No supplying to any third party should take place.

V. Party A is obliged to offer complete technical guidance to Party B and ensure quality control.

5. Any details not specified in this Agreement shall be negotiated between both parties.

6. There are five copies of this Agreement: one held by either party, and one submitted to the provincial, municipal and county Bureau of Health, respectively.

7. This Agreement becomes valid after legal delegates of both parties have signed and stamped. The agreement will end on December 31, 2006.

Party A

Legal Delegate: (signature and stamp)

January 1, 2006

Party B

Legal Delegate: (signature and stamp)

January 1, 2006

Exhibit 10.7

(English Translation)
Employment Agreement

n	Contract effective date: March 8, 2007

n	Signed between China Biologic Products, Inc and Stanley Wong

n	Title of employment: Chief Executive Officer

n	Place of employment: Taian City, Shandong Province, PRC

n	Duties: Lead the Company day-to-day operations, handle matters relating to regulators, intermediaries and institutional investors, ensure compliance of Sox requirement in 2007, responsible for capital sourcing and investment, lead and coordinate the decision on funding, operations and management in the company and its subsidiaries, co-ordinate listing work. Assist and ensure subsidiary’s CEO to implement financial and internal controls matter.

n	Probation period: one months

n	Salary: HK$80,000 and RMB20,000 per month on a 13 months basis.

n	Working hours: 0830 to 1700 Monday to Friday

n	Bonus: at Board of Directors’ discretion.

n	Paid leave: 18 days

n	Tax: HK and PRC tax are borne by employee

n	Other benefit: round trip ticket to HK each month

n	Shares/options: Eligible as declared by BOD

n	Contract signed by

/s/ Zhao Chao Min		/s/ Stanley Wong
Zhao Chao Min		Stanley Wong
director of China Biologic Products, Inc.

Exhibit 10.8

STRICTLY PRIVATE AND CONFIDENTIAL

CHINA BIOLOGIC PRODUCTS, INC.

FORM OF EMPLOYMENT AGREEMENT

THIS AGREEMENT is made on the date of _______________

BETWEEN

(1) China Biologic Products, Inc. whose registered office is situated at No. 14 East Hushan Road, Taian City, Shandong, People’s Republic of China 271000 (the “Company”), and

(2) ____________ (hereunder called the “Employee”).

WHEREAS the Company is desirous of employing the Employee as a ___________ of the Company and the Employee is desirous of being so employed subject to and on the following terms and conditions.

NOW IT IS HEREBY AGREED as follows:

(1)	APPOINTMENT

	The Company shall employ the Employee and the Employee shall serve the Company as a ___________ of the Company.

(2)	DURATION

	(a)	The employment of the Employee hereunder shall commence on _____________ (the “Commencement Date”) and shall continue thereafter until being terminated in accordance with the provisions of this Agreement.

(3)	DUTIES

	(a)	The Employee shall,

		(i)	serve as a ___________ of the Company and shall discharge and perform all his/her duties as such and discharge and perform such other duties as the Company may from time to time assign to him/her;

		(ii)	devote himself/herself and his/her attention to the business of the Company as shall reasonably required for the due discharge and performance of his/her duties hereunder;

		(iii)	in all respects observe and comply with all relevant laws, regulations, rules, code of conducts, guidelines, procedures, restrictions, directions for the time being in force applicable to and governing the regulated activities

			of the Company and all such regulations, rules, code of conducts, guidelines, procedures, restrictions, directions from time to time imposed by the Company relating to or in respect of the Company’s business and/or the Employee’s duties hereunder; and

		(iv)	use all reasonable endeavors to promote the best interests of the Company and its business.

	(b)	The Employee shall attend at the office of the Company or at such other places as his/her duties or as the Company may require and shall not absent himself/herself during the normal working hours except in the case of illness or incapacity.

(4)	REMUNERATION AND TAX

	(a)	During the continuance in force of his/her employment hereunder, the Company will pay the Employee a monthly remuneration of ______ in arrears normally at the end of each month, subject to such necessary adjustment if the Employee has not worked for a complete month for any particular month.

	(b)	The Company will pay the Employee a [guaranteed/discretionary] bonus of ______________ on 31 ^st December each year.

	(c)	The Employee shall be responsible for his/her own salary and/or income tax liabilities wherever and whenever imposed upon or resulting from his/her employment and in respect of all his/her income hereunder.

(5)	EMPLOYEE BENEFITS

	(a)	Mandatory Provident Fund Scheme

		The Employee will participate in the Company’s Mandatory Provident Funds Scheme subject to the terms and conditions governing such scheme.

	(b)	Medical Benefits

		The Employee will be covered under the Company’s Medical Insurance Scheme subject to the terms and conditions governing such scheme.

	(c)	Bonus and others

		The Employee may be granted bonus in such amount and/or such other benefits as the Company may at its absolute discretion from time to time provide.

(6)	ANNUAL LEAVE

	(a)	The Employee shall be entitled to __________ working days of paid leave per annum in addition to the normal statutory holidays. Leave is to be taken at such

		times and intervals as may be agreed by the Company having regard to the workload of the Employee and needs of the Company.

	(b)	Accumulation of leave is permitted and leave not taken in any year shall be carry- forward to the next year.

(7)	BUSINESS EXPENSES

	The Company will reimburse the Employee all out-of-pocket expenses necessarily incurred by the Employee in the discharge and performance of his/her duties hereunder upon production of such appropriate receipts or vouchers as the Company may reasonably require from time to time.

(8)	NON-DISCLOSURE

	(a)	The Employee shall not either during the continuance of his/her employment hereunder or thereafter except in the proper course in discharge and performance of his/her duties hereunder divulge to any person whosoever or company whatsoever and shall use his/her best endeavours to prevent the unauthorised publication or disclosure of any information concerning the business or finances of the Company or any of its clients or customers or any of the organizations, dealings, transactions, operations, practice or affairs of the Company or any of its clients or customers which may come to his/her knowledge during or in the course of his/her employment hereunder.

	(b)	The Employee hereby acknowledged that, the computer systems and any other assets of the Company or any other member of the Company is the exclusive property of the Company (including without limit, the software and all information stored therein). All the Employee’s work products as well as datas, information and documentation in such computer systems, including but without limit, intellectual property rights, shall remain the sole and exclusive property of the Company and disclosure, retention or destruction of such any of such products, datas, information or documentation is hereby prohibited.

(9)	RESTRICTION AFTER TERMINATION

	(a)	Upon the termination of his/her employment hereunder for any cause or by any means whatsoever, the Employee shall not for a period of 45 days next thereafter, directly or indirectly,

		(i)	canvass or solicit by any means whatsoever for himself/herself or any other person, firm or company, any person or company who shall at any time during the continuance of his/her employment hereunder have been a client or customer of the Company or any other member of the Company or endeavour to take away such client or customer from the Company or any other member of the Group, or

	(ii)	solicit or encourage any employee of the Company or any other member of the Group to leave the employ of the Company or such other member of the Group.

(b)	After the termination of his/her employment hereunder for any cause or by any means whatsoever, the Employee shall not at any time or for any purpose use the name of the Company or any other member of the Company in connection with his/her own or any other name in any way calculated to suggest that he/she is or has been connected with the business of the Company or any other member of the Group nor in any way hold himself/herself out as having or having had any such connection and shall not use any information concerning the Company or any other member of the Group which he/she may have acquired in the course of or as incident to his/her employment hereunder for his/her own benefit or to the detriment or intended or probable detriment to the Company or any other member of the Group.

(10)	NON-COMPETITION

	During the course of the Employee’s employment hereunder. the Employee shall not without the prior approval of the Company engage or be concerned or interested directly or indirectly as principal, agent, employee or otherwise (except in his/her capacity employed hereunder) in the similar business or activities being carry on by the Company or be personally employed or engaged with or without any consideration in any capacity whatsoever in or in connection with any business whatsoever other than the business of the Company.

(11)	TERMINATION

	The employment of the Employee hereunder may be terminated at any time.

	(a)	by either party hereto giving to the other not less than _________ month(s)’s prior notice in writing to that effect or paying to the other a sum equal to not less than ______ month(s)’s salary in lieu of such notice; or

	(b)	by the Employee without any prior notice or payment in lieu thereof.

	If the Employee is also appointed as a director of the Company, upon the termination of his/her employment hereunder, he/she shall at the time of such termination automatically cease to be the director of the Company without any claim, compensation or payment of any nature whatsoever by reason thereof.

(12)	SEVERABILITY

	If at any time any provision of this Agreement or any part of such provision becomes invalid, illegal, unenforceable or incapable of performance in any respect, the validity, legality, enforceability or performance of the remaining provisions hereof or such

	remaining part of such provision (as the case may be) shall not thereby in any way be affected or impaired.

(13)	ENTIRE AGREEMENT

	This Agreement constitutes the entire agreement and understanding between the parties hereto in connection with the subject matter of this Agreement and supersedes all previous (if any) proposals, representations, warranties, undertakings or agreements relating thereto whether oral, written or otherwise and neither party hereto has relied on (if any) such proposals, representations, warranties, undertakings or agreements in entering into this Agreement.

(14)	GOVERNING LAW

	This Agreement shall be governed and construed according to the laws of Hong Kong Special Administrative Region (“Hong Kong”) and the parties hereto hereby submit to the non-exclusive jurisdiction of the Hong Kong courts.

SIGNED BY		SIGNED BY
For and on behalf of
China Biologic Products, Inc.




Authorised Signatory		[EMPLOYEE]

Exhibit 21

LIST OF SUBSIDIARIES

Name of Subsidiary	Jurisdiction of Organization	% Owned
Logic Express Ltd.	British Virgin Islands	100%
Shandong Missile Biologic Products., Ltd	The People’s Republic of China	82.76%
Xia Jin Plasma Company	The People’s Republic of China	82.76%
He Ze Plasma Company	The People’s Republic of China	82.76%
Yang Gu Plasma Company	The People’s Republic of China	82.76%
Zhang Qiu Plasma Company	The People’s Republic of China	82.76%
Qi He Plasma Company	The People’s Republic of China	82.76%
Huan Jiang Plasma Company	The People’s Republic of China	82.76%
Fang Cheng Plasma Company	The People’s Republic of China	66.21%
Shangdong Medical Company	The People’s Republic of China	82.76%

Consent of Independent Registered Public Accounting Firm
China Biologic Products, Inc. and Subsidiaries
Audited Financial Statements
December 31, 2006 and 2005

To The Board of Directors
China Biologic Products, Inc.

We consent to the incorporation in the Report of China Biologic Products, Inc. on Form SB-2 of our report dated September 4, 2007 on our audits of the consolidated financial statements of China Biologic Products, Inc. and Subsidiaries as of December 31, 2006 and 2005 and for the two-year period ended December 31, 2006, which our reports are incorporated in the Form
SB-2.

/s/ Moore Stephens Wurth Frazer and Torbet, LLP
Walnut, California
September 4, 2007