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LATITUDE INDUSTRIES INCORPORATED (OTC: LTDI)
"Up 41.67% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/LTDI.php

Latitude Industries, Inc. was founded by the Hernandez family in December of 1995 under Stealth Marine Inc.; the company built more than 30 boats between 1995 and 1998. In 1998, a joint venture between Midnight Express and Navigator Powerboats, a subsidiary of Latitude Industries, Inc., was founded to build the 39' and the 37' Wide Body Midnight Express. Since 1998 to the present, we have built more than 200 boats. This venture led to a government contract to build more than 40 Midnight Express 39' Center Consoles for the U.S. Customs and Homeland Security to patrol the coast of the United States, the Caribbean, and the Gulf of Mexico.

LTDI News:

May 16 - Latitude Industries, Inc. Provides Shareholder Update

Latitude Industries, Inc. (OTC: LTDI), a manufacturer of high-performance, center console powerboats, would like to update current and prospective shareholders of the current share structure as recently updated on Pink Sheets.

Latitude Industries' share structure as of May 15th, 2008 is as follows:

1) 2,000,000,000 Authorized Shares
2) 847,408,357 Shares Free Trading
3) 500 million Control Block in certificate form issued 5/8/08 under an escrow agreement
4) 632,359,482 restricted shares
5) 619,088,215 shares currently in CEDE as of May15, 2008 — this number represents the float of LTDI.

Carolina Hernandez, the company's CEO, comments, "Management is very excited about the direction of the company and felt that it was important that all current and future investors receive accurate information. We are pleased to disclose that management has not sold any of its shareholdings.

"We are a fast growing company that is now moving into the national spotlight of the power boating industry. We affirm that we are on the right path to obtain the projected 6 million in yearly revenue figure given in a PR earlier this week."

CHINA PRECISION STEEL INCORPORATED (NASD: CPSL)
"Up 37.56% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/CPSL.php

China Precision Steel, Inc., a steel processing company, engages in the manufacture and sale of high precision cold-rolled steel products in China. The company produces and sells precision ultra-thin and high strength cold-rolled steel products with thicknesses ranging from 7.5 mm to 0.03 mm. It also provides heat treatment and cutting of medium and high carbon hot-rolled steel strips. The company's precision products are primarily used in the manufacture of automobile parts and components, plane friction discs, appliances, food packaging materials, saw blades, textile needles, microelectronics, packing, and containers. It sells its products in China, Nigeria, Thailand, Indonesia, and the Philippines. China Precision Steel was incorporated in 2002 and is headquartered in Sheung Wan, Hong Kong.

CPSL News:

May 16 - China Precision Steel Announces Third Quarter Fiscal 2008 Results

China Precision Steel (NASD: CPSL), a niche precision steel processing company principally engaged in producing and selling high precision cold-rolled steel products, announced today its results for the third quarter of fiscal 2008 ended March 31, 2008.

2008 Third Fiscal Quarter Highlights:

* Revenue grew 61.3% year-over-year to $18.7 million.
* Gross profit increased 58.0% to $5.3 million and gross margin was
   28.4%
* Income from operations increased 136.9% to $4.4 million
* Net income was $4.6 million, or $0.10 per fully diluted share, up
   231.1% year-over-year
* Exports accounted for 19.0% of revenue, up from 2.3% a year ago

''Our strong sales growth in exports of low-carbon, hard-rolled products and subcontracting work significantly increased our total revenue to a record level. We maintained our gross margin and saw a significant improvement in operating margin during the quarter, which flowed through to our bottom line,'' commented Dr. Wo Hing Li, China Precision Steel's Chairman and CEO. ''As our new 1400 cm cold rolled mill ramps up capacity, we are actively developing new products for new markets.''

Revenues for the third quarter of fiscal 2008 were $18.7 million, up 61.3% from $11.6 million in the third quarter last year. The increase in sales revenue is due to increased production and exports of low carbon hard-rolled steel coils and subcontracting income during the quarter. High carbon and low carbon products accounted for 29.1% and 47.7% of sales, respectively, compared to 51.0% and 47.3%, respectively, in the same period a year ago. Subcontracting income accounted for 21.6% of sales in the third quarter of 2008.

Gross profit for the quarter was $5.3 million, up 58.0% from $3.4 million for the same period a year ago. Gross margin was 28.4% down slightly from 29.0% in the third quarter of fiscal 2007. The minor decrease in gross profit margin was mainly attributed to changes in the mix of products sold during the quarter. Operating expenses were $930,000, down 38.6% from $1.5 million in the third quarter of fiscal 2007, primarily due to a decrease in administrative expenses from lower compliance costs and professional fees. Selling expenses were $203,447, up from $92,315 in the third quarter of fiscal 2007 due to an increase in delivery charges resulting from an increase in exported products associated with a broader, international customer base. As a percentage of revenue, operating expenses were 5.0% in the third quarter of fiscal 2008, compared to 13.0% in the same quarter a year ago.

Operating income was $4.4 million, up 136.9% from $1.9 million in the third quarter of fiscal 2007. Operating margin increased to 23.5% from 16.0% in the year ago period.

During the quarter, the Company recorded an income tax benefit of ($491,179), including $1.6 million in current income tax expense which was offset by a $2.1 million in deferred taxes.

Net income for the third quarter 2008 was $4.6 million, or $0.10 per diluted share, up 231.1% from $1.4 million, or $0.05 per diluted share, in the same period a year ago. Fully diluted weighted average shares outstanding increased to 46.4 million for the quarter from 29.4 million in the first quarter 2007 due to private placement financings in February and November 2007.

Nine Month Financial Results

Revenues for the first nine months of fiscal 2008 were $59.2 million, up 59.4% from revenues of $37.1 million in the first nine months of fiscal 2007. Gross profit was $17.0 million, up 62.2% from gross profit of $10.5 million for the nine months of fiscal 2007. Gross margin increased to 28.7%, from 28.2% for the same period a year ago. Operating income was $13.8 million, up 69.0% from $8.2 million in the first nine months of fiscal 2007. Net income was $12.7 million, or $0.30 per fully diluted share, compared to $7.4 million, or $0.29 per fully diluted share, in the same period a year ago. Fully diluted weighted average shares outstanding were 42.6 million compared to 26.0 million in the first nine months of fiscal 2007.

Financial Condition

As of March 31, 2008, China Precision Steel had $14.3 million in cash and cash equivalents, no long term debt, total liabilities of $46.1 million and working capital of $61.2 million. Shareholders' equity was $111.1 million compared to $51.1 million as of June 30, 2007.

During the third quarter, in view of the recent iron ore price surge and tighter supply of hot-rolled steel coils in the market, China Precision Steel has increased purchase quantities directly from its major and strategic supplier, Baosteel Group, with the aim of ensuring a stable raw material supply and mitigating the impact of expected increases in the cost of raw materials. As the contract terms with Baosteel are 100% payment in advance, this is the primary reason for the $26.8 million increase in advances to suppliers as of March 31, 2008.

Business Outlook

China Precision Steel's 1400 mm cold-roll mill with 150,000 metric tons of design capacity became operational at the beginning of October 2006 and is currently operating at 50% utilization. The cold-roll mill is expected to take another two years to realize its maximum production capacity. In the remainder of calendar 2008, the Company intends to invest in a new continuous annealing line for producing high quality stainless steel and a new 1700mm cold roll mill at its facilities in Shanghai. Capital expenditures related to these projects are expected to be $20 million.

''We continue our strive to find an appropriate sales mix that provides us with improved profitability and stability of cash flows, along with the higher margin provided by high precision and individually customized cold-rolled steel products,'' commented Dr. Li. ''With the addition of the continuous annealing line, we will be able to expand our product line to include higher margin, cold-rolled stainless steel. Our strong R&D capabilities and ability to develop precision products provide us with competitive advantages to continue to strengthen our position in the market and improve profitability in the long term.''

CHINA WIND SYSTEMS INCORPORATED (OTCBB: CWSI)
"Up 34.74% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/CWSI.php

China Wind Systems, through its affiliates, Huayang Dye Machine and Huayang Electrical Power Equipment, manufactures and sells industrial equipment for use in the textile and energy related industries in China. Since August 2007, the Company has shifted its strategy to focus on the growing wind energy industry in China, and has begun to supply high precision rolled rings to companies in the wind power energy industry.

CWSI News:

May 15 - China Wind Systems, Inc. Reports First Quarter 2008 Results

China Wind Systems, Inc. (OTCBB: CWSI) ("China Wind Systems" or the "Company"), which through its wholly owned subsidiaries and variable interest entities manufactures and sells industrial machines for use in the textile and energy related industries in the People's Republic of China, announced its financial results for the first quarter ended March 31, 2008.

First Quarter 2008 Highlights:

* Net revenues increased 104.6% year-over-year to $8.4 million
* Gross profit increased 103.8% year-over-year to $2.2 million
* Net loss allocable to common shareholders, after a $2.9 million non-
   cash deemed preferred dividend, totaled $(4.1) million, or $(0.11)
   per diluted share
* Adjusting for non-cash items such as interest expense of $2.3
   million and a deemed preferred dividend of $2.9 million, non-GAAP
   net income was $1.0 million, or $0.03 per diluted share.
* Revenue from the forging of rolled rings, for the wind power and
   other industries grew from $0 in the March Quarter of 2007 to $3.2
   million in the March Quarter of 2008.

"Last quarter we made progress in executing our long term strategy, which is to expand our products to offer products and services for the wind power industry. During 2007, we began to generate revenue from the forging of rolled rings, for the wind power and other industries. These activities accounted for $3,204,266, or 37.9% of total revenue for the three months ended March 31, 2008, of which approximately 30% are used for the wind industry. Wind industries revenues accounted for $1,902,916, or 7.8% of revenues for the year ended December 31, 2007. Management estimates that 25% of rings in 2007 and 30% of rings in the March Quarter of 2008 are for use in the wind industry. We presently only perform forging services relating to rolled rings, but intend to be in a position to manufacture these components internally in the fall of 2008," said Mr. Jianhua Wu, Chairman and CEO of China Wind Systems. Further, he said, "To increase oversight, we elected two new independent members to our board of directors who are serving on our audit and compensation committees."

First Quarter 2008 Results

Total revenue for the first quarter of 2008 totaled $8.4 million, up 104.6% from $4.1 million in the three month period ended March 31, 2007. The increase in total revenue was attributable to increases from both segments: dyeing and finishing equipment and electric power equipment. Revenues from the electric power equipment segment increased to $3.8 million from $0.3 million a year ago. Revenues from dyeing and finishing equipment increased 20% to $4.7 million from $3.9 million a year ago, due to marketing efforts focused on developing new customers and making follow-on sales to existing customers.

Gross profit for the first quarter of 2008 was $2.2 million, an increase of 103.8% from $1.1 million for the three months ended March 31, 2007. Gross margin was 25.7% for the first quarter of 2008, compared to 25.8% for the prior year period. Gross profit for dyeing was $1.2 million for the first quarter 2008 compared to $1.0 million for the same period prior year, representing gross margin of approximately 26.1% and 25.8%, respectively. Gross profit for the electrical power equipment segment was $1.0 million for the first quarter 2008 compared to $0.1 for the same period prior year.

Operating expenses were $0.7 million in the first quarter of 2008, compared to $0.2 million a year ago. Selling, general and administrative expenses for the first quarter of 2008 totaled $0.6 million, compared to $0.1 million a year ago, primarily due to increased professional fees associated with being a public company and higher payroll and related benefits.

Operating income for the first quarter of 2008 totaled $1.5 million, a 66.6% increase from $0.9 million for the same period prior year.

Net loss, including non-cash items such as interest expense related to amortization of debt discount of $2.3 million and a deemed preferred dividend of $2.9 million, for the first quarter of 2008 was ($4.1) million, or ($0.11) per fully diluted share, compared to net income of $0.6 million, or $0.02 per fully diluted share, for the three months ended March 31, 2007. Adjusting net loss for the non-cash items related to the amortization of debt discount to interest expense and the deemed preferred dividend, non-GAAP net income was $1.0 million, or $0.03 per fully diluted share. Earnings per share were calculated using a diluted weighted share count of 37.5 million shares for the first quarter of 2008 and 36.6 million shares for the first quarter of 2007. The increase in weighted average shares includes the impact of the reverse merger transaction and private placement in November 2007 as well as the issuance of common shares for services.

Financial Condition

As of March 31, 2008, the Company had cash and cash equivalents of $2.6 million and working capital of $7.4 million. Accounts receivable were $3.5 million. At March 31, 2008, the Company had $1.0 million in short-term loans payable and stockholders' equity of $26.8 million.

Business Outlook

"In 2008, we expect to significantly increase our revenues generated from our electric power equipment business and our wind power business. We have been evaluating working relationships with leading wind energy companies in China to supply wind components. We are on track to complete the first phase of our expansion plan and expect to manufacture larger forged rolled rings and shafts at our facilities by October 2008," concluded Mr. Jianhua Wu, CEO of China Wind Systems.

In 2008, the Company expects $40.0 million in revenues and $7.0 million in net income after a 25% tax rate, or $0.11 per share based on 62.9 million weighted average diluted share count.

Use of Non-GAAP Financial Measures

GAAP results for the quarter ended March 31, 2008 include a one-time, non- cash interest expense related to the amortization of debt discount in the amount of $2.3 million and a non cash deemed preferred stock dividend in the amount of $2.9 million. To supplement the Company's condensed consolidated financial statements presented on a GAAP basis, the Company has provided non- GAAP financial information excluding the impact of these items in this release, non-GAAP net income available to common shareholders and diluted earnings per share. The Company's management believes that these non-GAAP measures provide investors with a better understanding of how the results relate to the Company's historical performance. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered as a substitute for GAAP financials. The non-GAAP financial information that the Company provides also may differ from the non-GAAP information provided by other companies.

ENZYME ENVIRONMENTAL SOLUTIONS (OTC: EESO)
"Up 34.29% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/EESO.php

Enzyme Environmental Solutions is a U.S.-based manufacturer of industrial and agricultural enzyme products. All manufacturing, testing, and formulating are conducted in its manufacturing plant, located in Fort Wayne, Indiana. EESO strives to become a leader in ecological friendly or “green products” targeting the industrial and agricultural markets. It is the company's goal to have the best performing products on the market in each industry. Developing a growing and satisfied customer base is its number one marketing strategy.

EESO News:

May 16 - Enzyme Environmental Solutions Announces Midwest Distributor Agreement

Enzyme Environmental Solutions Inc. (OTC: EESO) CEO Jared Hochstedler announced that the company (in keeping with its contacts in the Convenience store industry) has finalized the agreement to be a distributor for all of the Midwest for Potencia Energy Drink.

Potencia Energy Drink is an up and coming rapidly growing supplier of the only energy drink directly targeting the Hispanic market. Potencia has distribution agreements and supplies all of the major retail chains in Mexico. The Hispanic energy drink market is exploding in the United States as well as in Mexico.

Brian Weber, Co-Owner Potencia Energy Drink (www.potenciaenergydrink.com), holds a Bachelor of Science and is a former NASCAR race car driver and team owner.

Weber stated, "We have created a very nice synergistic alliance with EESO. They have a great footprint in the Midwest Convenience Stores and we have a very strong footprint with the major retail chains in Mexico. As Jared and I discussed how we can assist each other, opening our distribution networks and sharing warehousing with each other allows for a very efficient way to open new markets for both companies."

"Brian Weber and I were in Mexico recently and as a result I am looking forward to releasing further contract information in the coming days. As mentioned earlier our fully automated bottling machine has been delivered and we expect it to be operational no later than weeks end. I hope these recent events will demonstrate my desire to build shareholder value. I trust all shareholders will be pleased with our results," stated Hochstedler.

Hochstedler further stated, "I understand that there is some misunderstanding why I am pursuing the C-Store Beverage business. For those that do not understand, obtaining shelf space in the retail market is the key to success. Once you have an in to the shelf space it becomes a matter of placing items that will sell the best. The C-Store industry, with the help of Bill and Owen, is becoming a huge opening for EESO product placement and in my view it does not matter whether it is enzyme based or otherwise. I said from the beginning I am focused on sales."

PHARMACOPEIA INCORPORATED (NASD: PCOP)
"Up 27.05% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/PCOP.php

Pharmacopeia, Inc., a biopharmaceutical company, engages in the discovery and development of therapeutics to address significant medical needs. Its internal program portfolio comprises PS433540, a dual-acting angiotensin and endothelin receptor antagonist, which is in phase II clinical development for the treatment of cardiovascular and renal diseases, including hypertension and diabetic nephropathy; and PS178990, a muscle selective SARM agonists that is in phase I clinical development. The company's products also include PS031291, a preclinical development product for the treatment of multiple myeloma and various inflammatory diseases, including rheumatoid arthritis; and JAK3 inhibitors for T-cell and cytokine mediated dermatologic and ocular diseases, such as psoriasis and dry eye. Pharmacopeia has strategic alliances with Bristol-Myers Squibb, Celgene, Cephalon, GlaxoSmithKline, Schering-Plough, and Wyeth Pharmaceuticals. The company was founded in 1993. It was formerly known as Pharmacopeia Drug Discovery, Inc. and changed its name to Pharmacopeia, Inc. in 2007. Pharmacopeia is based in Princeton, New Jersey.

PCOP News:

May 16 - Pharmacopeia's First-in-Class Investigational Therapy PS433540 Achieves Statistically Significant Reductions in Blood Pressure in Hypertensive Patients

Single Molecule with Dual Mechanism May Offer Novel Approach to Blood Pressure Management

Pharmacopeia (NASD: PCOP), an innovator in the discovery and development of novel small molecule therapeutics, announced today that PS433540, its first-in-class Dual Acting Receptor Antagonist (DARA), showed statistically significant blood pressure reductions in a Phase 2a study in patients with mild to moderate hypertension. PS433540 is being developed as a potential treatment for both hypertension and diabetic nephropathy and is a novel blood pressure product candidate that possesses two validated mechanisms of action in a single molecule. The data will be presented today at the Recent and Late Breaking Clinical Trials Session at the American Society of Hypertension (ASH) Twenty-Third Annual Scientific Meeting and Exposition in New Orleans.

The Phase 2a study met its primary endpoint by showing a statistically significant reduction in mean 24-hour systolic ambulatory blood pressure over placebo. The study also showed statistically significant improvements over placebo in mean 24-hour diastolic ambulatory blood pressure as well as seated blood pressure. In this double-blind, placebo-controlled study, patients treated with 200 mg of PS433540 once daily experienced a 12/9mmHg drop in mean 24-hour systolic and diastolic blood pressure and those treated with 500 mg experienced a 15/10mmHg drop in mean 24-hour systolic and diastolic blood pressure. These reductions were highly statistically significant vs. placebo (P<0.001). Mean seated office systolic and diastolic blood pressure, the typical blood pressure measure, was also evaluated, with observed blood pressure drops of 17/11mmHg with the 200 mg dose and 17/10mmHg with the 500 mg dose (P<0.001 vs. placebo).

Once-daily treatment with 200 or 500 mg of PS433540 was well tolerated. Most of the adverse events reported were mild or moderate in severity and included headaches and minor musculoskeletal and respiratory complaints. All of these events occurred with similar frequency in the three treatment groups. There was one case of peripheral edema in the placebo arm and one case of peripheral edema in one of the treated arms. There were no increases in liver enzymes above 2 times the upper limit of normal. On average, liver enzyme levels tended to decrease from baseline in the treated arms. There were no serious adverse events on PS433540 treatment. Three subjects discontinued therapy for adverse events, all of which were in the placebo group.

The leading, single-therapy antihypertensives across a broad range of classes, according to their labels, have the ability to lower seated office blood pressure up to 12/8mmHg.(1) Data show that a 2mmHg reduction in blood pressure decreases the average death rate from coronary heart disease by an estimated 4 percent and stroke by 6 percent.(2)

"These positive results indicate that PS433540 may be a unique new treatment option for physicians and patients," said Joel Neutel, M.D., Associate Professor of Medicine in the Department of Medicine at the University of California in Irvine, and Medical Director of Clinical Pharmacology at the Orange County Research Center in Tustin, CA, who was the lead investigator of the Phase 2a study. "The magnitude of the blood pressure reductions we saw in this study were very impressive, and we look forward to further evaluating the benefits of this novel compound."

An estimated 73 million Americans suffer from high blood pressure, a major risk factor for cardiovascular events and heart disease.(3) More than half of people diagnosed and treated with high blood pressure never reach suggested treatment goals and those who do often require two or more medications.(4) PS433540 is the first and only compound specifically designed to incorporate two proven mechanisms — endothelin (ETA) and angiotensin (AT1) receptor blockade — in one molecule to treat high blood pressure.

"We are very pleased with the results of this important Phase 2a trial and look forward to future studies which will further assess the potential of PS433540, perhaps even beyond blood pressure lowering," said Joseph A. Mollica, Ph.D., Chairman of the Board and Interim President and Chief Executive Officer of Pharmacopeia. "We believe PS433540's dual mechanism of action may have a positive effect on diabetic kidney disease."

Patients with diabetes are at an increased risk for many complications, including high blood pressure and diabetic kidney disease. Up to 73 percent of patients with diabetes have been or are being treated for high blood pressure,(5) and an estimated 20-30 percent of diabetic patients will progress to diabetic kidney disease,(6) a devastating disease that may require patients to undergo dialysis or a kidney transplant.(7)

Pharmacopeia recently initiated a 12-week, Phase 2b clinical trial with PS433540 to evaluate the compound's safety and efficacy at three different doses versus placebo in 375 subjects with Stage I and Stage II hypertension. The study will also compare blood pressure reductions for each dose with irbesartan. Pharmacopeia anticipates completion of the Phase 2b trial at the end of 2008.

ABOUT THE PHASE 2A STUDY

In this prospective study, 234 men and women with Stage I and Stage II hypertension entered into a single blind placebo run-in period for 3-4 weeks, after which 114 were randomized to receive double blind study medication for four weeks. At the time of the database lock, 108 subjects were available for evaluation, 93 of whom had both baseline and follow-up ambulatory blood pressure measurements (placebo: 25; PS433540 200mg: 35; PS433540 500mg: 33). The primary endpoint was the subjects' change from baseline in mean 24-hour systolic ambulatory blood pressure after 4 weeks of treatment. Additionally, investigators evaluated 24-hour diastolic ambulatory blood pressure and mean seated office systolic and diastolic blood pressure as well as a number of other endpoints.

ABOUT PS433540

PS433540 is the first and only blood pressure product candidate in a new class of antihypertensives known as Dual Acting Receptor Antagonists (DARAs). PS433540 is being developed as a potential treatment for hypertension and diabetic nephropathy. PS433540 possesses two clinically validated mechanisms of action in a single molecule. There is preclinical and initial clinical data suggesting that compared to either mechanism alone, simultaneously blocking angiotensin II and endothelin 1 at their respective receptors, AT1 and ETA, may provide an improved treatment option for several cardiovascular diseases. Because PS433540 is highly selective for the AT1 and ETA receptors it is able to block the blood pressure-raising actions of angiotensin and endothelin when they bind to these receptors.

CHINA BIOPHARMACEUTICALS HOLDINGS (OTCBB: CHBP)
"Up 25.00% on Friday"

Detailed Quote: http://www.otcpicks.com/quotes/CNEX.php

China Biopharmaceuticals Holdings, Inc (Symbol: CHBP) is a vertically integrated pharmaceutical company dedicated to the discovery, development, manufacturing and marketing of small and large molecule pharmaceutical products, including medicines, vaccines, and active pharmaceutical ingredients for various categories of diseases. CHBP is a U.S.-listed public company with operating subsidiaries and senior management based in China. For further information, visit the company's Web site at www.cbioinc.com.

CHBP News:

May 16 - China Biopharmaceuticals Holdings, Inc. Announces First Quarter 2008 Financial Results

Company Returns to Profitability with First Quarter Net Income of $492,076 on Record Revenues of $10.97 Million

China Biopharmaceuticals Holding, Inc. (OTCBB: CHBP), a vertically integrated bio-pharmaceutical company focused on developing, manufacturing and distributing innovative drugs in the People's Republic of China, today announced fiscal results for its first quarter ended March 31, 2008.

Revenue for the first quarter of 2008 increased 78.1% to approximately $10.97 million compared to approximately $6.16 million for the first quarter of 2007. The significant increase in revenues was due to three reasons. First is the rise in selling price and sales of Erye's raw material drugs. Second, the reform of medical insurance system in rural areas of China promotes the sales of Erye's drugs. Third, the selling price of the freeze-dried drugs has increased.

Cost of goods sold for the first quarter was approximately $7.7 million, yielding a gross profit of $3.3 million and gross margins of 29.7%, compared to $1.47 million in gross profit and a gross margin of 23.9% during the first quarter of 2007. Thus, gross profits grew by 124.5% on a year-over-year basis. The increase in gross margin is attributed primarily to the increase of the gross profit of the freeze-dried drugs and raw material drugs.

Operating expenses for the three months ended March 31, 2008 were $1.1 million, up 15.4% compared to the same period in 2007. Selling, general and administration expenses for the period increased to approximately $1.07 million from $0.9 million in the first quarter of 2007, which included increased investment in overall marketing including increased costs in advertisement expenses. Research and development expenses were $17,947 in the three months ended March 31, 2008, versus $43,163. This decrease was primarily attributed to the slowing down of drug approval of the China SFDA and new regulatory policies.

Operating income for the first quarter of 2008 totaled approximately $2.2 million, a 315% increase from the $523,795 reported for the first quarter of 2007. Operating margins were 19.8% and 8.5% for the first quarter of 2008 and 2007, respectively. The increase in the operating margin was due to the Company's Erye Subsidiary strong performance in sales and increased gross margin.

For the first quarter of 2008, net income was $492,076, an improvement of $669,869, compared to a loss of $177,793 for the first quarter of 2007. Fully diluted earnings per share were $0.013 compared to loss of $0.005 for the first quarter of 2007 respectively, based up on 36.5 million fully diluted shares outstanding. The Company had increased interest expense of $356,584 during the quarter versus $347,485 a year ago. The Company also increased its provision for income taxes from $1,108 to $299,409 during the current quarter, yielding an effective tax rate of 16.5%.

"We are extremely pleased to report a healthy quarterly profit and strong cashflow on record revenues. The success of our overall marketing strategy and focusing on high margin products enabled us to achieve a record revenue quarter. We have made huge strides in overcoming the Enshi problems and getting back to focusing on building a successful business. Going forward we intend to build upon the momentum established during the first quarter of 2008 to have a very strong performance for the rest of the year.'' commented Madame Zhang Jian, Chairwoman and CFO of China Biopharmaceuticals.

Balance Sheet and Cash Flow

The Company had $2.5 million in cash and cash equivalents on March 31, 2008, versus $1.77 million at December 31, 2007. The Company had total assets of $35.4 million, an increase of $4.16 million form yearend, versus total liabilities of $30.6 million, representing an increase of only $1.9 million from yearend. Shareholders equity improved $1.2 million in the first quarter of 2008. For the first quarter of 2008, the Company generated $2.3 million in cash from operations versus a loss of $332,580 million for the same period in 2007. Four major customers accounted for approximately 36% of the net revenue for the three months ended March 31, 2008 with each customer individually accounting for 13%, 11%, 6%, and 6%, respectively. At March 31, 2008, the total receivable balance due from these customers was $1,213,581, representing 21% of total accounts receivable. For the three months ended March 31, 2007, two major customers accounted for 10% of the net revenue with each customer individually accounting for 5% and 5%, respectively.

Business Plan

Our main manufacturing unit, Erye, recorded a significant growth of 80% in sales revenue for the three months ended March 31, 2008. The Company is still actively looking for growth and expansion opportunities and still believes in the overall strategy of internal growth and acquisitions. Whereas Erye's top management, Ms. ZHANG Jian and Mr. SHI Mingsheng joined our China Biopharmaceuticals board of directors and are now playing an active role in our management, the Company believes that they will continue to improve our overall operations, giving play to their industrial and manufacturing and marketing expertise. This was a main factor contributing to the Company's return to profitability during the 3 months period ended March 31, 2008.

Chris Mao, CEO of China Biopharmaceuticals added, ''We anticipate that our internally generated financial resources are sufficient to provide for our organic growth. These are the keys to creating a very valuable enterprise for our shareholders. We are looking forward to new opportunities of growth and opportunities in the pharmaceutical manufacturing and stemcell fields.''

Although China's strongest earthquake in 58 years hit Sichuan Province on May 12, the Company's production was not affected and no one from the Company was injured by the disaster.