As filed with the Securities and Exchange Commission on October 20, 2005
                              Registration No. ___

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM SB-2

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                              TS Electronics, Inc.
             (Exact name of registrant as specified in its charter)

          Delaware                                         73-1564807
(State or other jurisdiction                   (I.R.S. Employer Incorporation or
      of organization)                               Identification Number)
                                      4953
                          (Primary Standard Industrial
                           Classification Code Number)

Unit 8, D Area, Office Hall, Haikou Bonded Zone, Haikou, Hainan Province, China.
                                Zip Code: 570216
                          Telephone: +86 898 6681 8282
          (Address and telephone number of principal executive offices)


                               12890 Hilltop Road
                              Argyle, Texas, 76226
                                 (972) 233-0300
      (Former address and telephone number of principal executive offices)

                                   Copies to:

                                   Charles Law
                                King and Wood LLP
                               650 Page Mill Road
                               Palo Alto, CA 94304

Approximate  date of proposed sale to the public:  As soon as practicable  after
the effective date of this registration statement.

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, 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. [_]

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. [_]

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
for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [_]






                         CALCULATION OF REGISTRATION FEE

---------------------- ------------------- ----------------- ------------------- --------------
Title of each             Amount to be      Proposed          Proposed            Amount  of
class of securities       registered        maximum           maximum             registration
to be registered                            offering price    aggregate           fee
                                            per unit          offering price
---------------------- ------------------- ----------------- ------------------- --------------
                                                                              
Common  Stock, $.001    8,819,653 Shares     $2.25 (1)         $19,844,219.25(1)  $2,335.66(1)
par value
---------------------- ------------------- ----------------- ------------------- --------------
Total                   8,819,653 Shares     $2.25 (1)        $ 19,844,219.25(1)  $2,335.66 (1)
---------------------- ------------------- ----------------- ------------------- --------------


(1) Calculated in accordance with Rule 457(c).

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  thereafter  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 said 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 IT IS NOT  SOLICITING  AN  OFFER  TO BUY  THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                     SUBJECT TO COMPLETION, OCTOBER 20, 2005


                              TS Electronics, Inc.
                               8,819,653 of Shares
                                  Common Stock

This  prospectus  is an offering of 8,819,653  shares of our common stock by the
selling stockholders.

These  securities  are more fully  described  in the section of this  prospectus
titled "Description of Securities".

These securities are being registered to permit public secondary  trading of the
securities offered by the selling stockholders named in this prospectus. We will
not receive any of the proceeds  from the sale of the  securities by the selling
stockholders.

The selling  stockholders  may, but are not  obligated  to, offer all or part of
their  shares of common  stock for resale  from time to time  through  public or
private  transactions,  at  either  prevailing  market  prices  or at  privately
negotiated prices. See "Plan of Distribution."

Our common  stock is currently  quoted on the  Over-the-Counter  Bulletin  Board
("OTCBB")  under the symbol  "TSET.OB".  On October 11, 2005,  the last reported
sale price on our common stock was $2.25 per share.

INVESTING IN OUR SECURITIES  INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD PURCHASE
OUR SECURITIES  ONLY IF YOU CAN AFFORD A COMPLETE LOSS OF YOUR  INVESTMENT.  SEE
"RISK FACTORS" BEGINNING AT PAGE 7.

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION HAS APPROVED OR  DISAPPROVED  OF THESE  SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                The date of this prospectus is ______________, 2005.





                                       2


                              TS Electronics, Inc.

                                TABLE OF CONTENTS

                                                                            Page
--------------------------------------------------------------------------  ----
Prospectus Summary                                                          3
--------------------------------------------------------------------------  ----
Risk Factors                                                                7 
--------------------------------------------------------------------------  ----
Use of Proceeds                                                             23
--------------------------------------------------------------------------  ----
Market for Common Equity and Related Stockholder Matters                    23
--------------------------------------------------------------------------  ----
Selected Financial Data                                                     24
--------------------------------------------------------------------------  ----
Management's Discussion and Analysis or Plan of Operation                   24
--------------------------------------------------------------------------  ----
Business                                                                    31
--------------------------------------------------------------------------  ----
Management                                                                  37
--------------------------------------------------------------------------  ----
Director and Executive Compensation                                         38
--------------------------------------------------------------------------  ----
Security Ownership of Certain Beneficial Owners and Management              40
--------------------------------------------------------------------------  ----
Selling Security Holders                                                    41
--------------------------------------------------------------------------  ----
Description of Securities                                                   43
--------------------------------------------------------------------------  ----
Plan of Distribution                                                        45
--------------------------------------------------------------------------  ----
Legal Matters                                                               46
--------------------------------------------------------------------------  ----
Experts                                                                     46  
--------------------------------------------------------------------------  ----
Changes In and Disagreements With Accountants on Accounting and 
  Financial Disclosure                                                      46 
--------------------------------------------------------------------------  ----
Where You Can Find Additional Information                                   46 
--------------------------------------------------------------------------  ----
Financial Statements                                                        47
--------------------------------------------------------------------------  ----


Funalin,  Fukexing,  Helpson, HPS logo, Beisha, Shiduotai, Xinuo and other logos
are  trademarks  or  logos  of  Hainan  Helpson   Bio-pharmaceutical  Co.,  Ltd.
("Helpson"),  our  indirect  wholly owned  subsidiary.  All other brand names or
trademarks  appearing in this  prospectus  are the property of their  respective
holders.

You should rely only on the information contained in this prospectus in deciding
whether to purchase the  securities.  We have not  authorized  anyone to provide
information  different from that contained in this  prospectus.  The information
contained in the prospectus is accurate only as of the date of this  prospectus,
regardless  of the  time  of  delivery  of  this  prospectus  or of any  sale of
securities.  Our  business,  financial  condition,  results of  operations,  and
prospects may have changed since that date.

The  information  contained in this prospectus is not complete and is subject to
change. The selling  stockholders are not permitted to sell securities until the
registration  statement  filed with the  Securities  and Exchange  Commission is
effective. This prospectus is not an offer to sell these securities, nor is it a
solicitation of an offer to buy these securities in any state where the offer or
sale is not permitted.



                                       3



                               PROSPECTUS SUMMARY

This summary  highlights  selected  information about TS Electronics,  Inc., its
direct and indirect wholly owned subsidiaries and the offering that is contained
elsewhere  in this  prospectus.  You should  read the entire  prospectus  before
making an investment  decision,  especially the information  presented under the
heading "Risk Factors" on page 7 and the financial  statements and related notes
included  elsewhere in this prospectus,  as well as any other documents to which
we refer you.  Except as  otherwise  indicated  by context,  references  in this
prospectus to "we," "us," "our" or the "Company" are to the combined business of
TS Electronics,  Inc. and Onny Investment Limited ("Onny"), Helpson, and in each
case do not include the selling  stockholders.  References  to "China" or to the
"PRC" are references to the People's Republic of China. This prospectus contains
forward-looking  statements  and  information  about  us.  See  "Forward-Looking
Statements" on page 22.

                                   OUR COMPANY

Overview

TS Electronics, Inc. (formerly, Softstone, Inc.) was incorporated on January 28,
1999 pursuant to the provisions of the General  Corporation  Act of the State of
Delaware. On May 31, 1999, we merged with Soft Stone Building Products, Inc., an
Oklahoma  corporation  that was a  predecessor  to our company's  business.  Our
initial business operations were conducted at 620 Dallas Drive, Denton TX 76205.
On February 1, 2000, we moved our offices and facilities to Ardmore, OK. In June
2002, we moved our office  facilities to Pottsboro,  TX . On August 13, 2003, we
changed our name to TS Electronics, Inc.

Our focus initially was solely on realizing the commercial benefits of a process
developed and patented by our first president,  Frederick  Parker.  This process
converted waste tires into useful products.  We were not successful in promoting
this business, wrote off all assets associated with the business and shifted our
attention  to  the  commercial   possibilities   of  a  then,  newly  discovered
devulcanization  process to which we acquired a 5.5-year  exclusive  license for
the Western Hemisphere.  In addition,  we entered into the business of importing
hard-to-find  and specialty  crumb rubber.  We were also not successful in these
endeavors, and have abandoned all efforts regarding these pursuits.

Effective  August 11, 2004, the company entered into a Stock Exchange  Agreement
with Mr. Hou Xiao, the sole  stockholder of China ESCO Holdings  Limited ("China
ESCO"), a company  organized in the Hong Kong Special  Administration  Region in
the  People's  Republic  of China and its  wholly  owned  operating  subsidiary,
AsiaNet  PE Systems  Limited.  China ESCO was  engaged  in the  development  and
manufacturing of electrical energy saving systems and products in the PRC.

The  consummation of the transaction  with China ESCO was subject to a number of
conditions,  including  receipt by us of financial  statements  of China ESCO as
required  under  applicable  regulations,  and  satisfaction  of all  applicable
regulatory  requirements.  In  January  2005,  we  declared  China ESCO to be in
material breach of the agreement and rescinded the agreement.

Effective  February 8, 2005,  we  executed a Letter of Intent with Osage  Energy
Company,  LLC ("Osage")  whereby Osage would acquire 90% of the equity interests
of the company. This transaction was never consummated by the parties.

The company has had no operations or significant  assets since the quarter ended
December 31, 2004.



                                       4


On May  11,  2005,  we  sold to  Halter  Financial  Group,  Inc.,  in a  private
placement,  1,875,045  shares of restricted  common stock at a purchase price of
$0.1066641 per share,  pursuant to the terms of a Stock Purchase  Agreement (the
"Purchase  Agreement").  The private  placement was exempt from the registration
requirements of the Securities Act of 1933, as amended, in reliance upon Section
4(2)  thereunder.  As a result of the purchase,  Halter  Financial  Group,  Inc.
became our controlling  stockholder,  owning approximately 75% of our issued and
outstanding shares of common stock.

Immediately  subsequent  to and as a result of the  closing of the  transactions
contemplated by the Purchase Agreement, Gene F. Boyd, Keith P. Boyd, Fredrick W.
Parker and Leo G. Templer resigned as officers and directors, as applicable,  of
the  company.  Timothy P. Halter was  concurrently  appointed as a member of the
Board of Directors,  and Mr. Halter was elected as President,  Chief  Accounting
Officer, and Secretary of the company.

On October  19,  2005 we  entered  into a  Securities  Exchange  Agreement  (the
"Exchange  Agreement") with Onny and its original stockholders pursuant to which
we  acquired  all of the  issued  and  outstanding  shares  of  Onny  from  said
stockholders  in exchange for  27,499,940  shares of our common stock.  Upon the
effectiveness  of an amendment to the Company's  Certificate of Incorporation to
increase its common capital stock, as more  particularly  described  below,  the
Company  shall issue to Heung Mei Tsui,  the principal  stockholder  of Onny, an
additional 4,723,056 shares of common stock (the "Post Closing Shares") to which
she would  otherwise  have been  entitled if the  Company had enough  authorized
shares  as  of  the  closing  of  the  Exchange   Transaction   (the   "Exchange
Transaction").  Upon the issuance of the Post Closing Shares, Ms. Tsui will hold
25,278,385  shares or approximately  72.8% of the issued and outstanding  common
capital stock of the Company.

Prior to the  closing of the  Exchange  Transaction,  Onny  completed  a private
placement of its  convertible  preferred stock to 46 accredited  investors.  The
offering raised gross proceeds of $5,000,000. Prior to the Exchange Transaction,
participants in the offering  exchanged their preferred  shares for an aggregate
of 10,000 shares of Onny's common  capital stock.  Participants  in the offering
then  participated  in the  Exchange  Transaction,  and the shares of our common
stock that they received therein are included in the  registration  statement of
which this prospectus is a part.

The Company intends to file an Information  Statement in accordance with Section
14 of the  Securities  Exchange  Act of 1934,  as  amended,  for the  purpose of
increasing the Company's  authorized common capital stock to 100,000,000 shares,
to change the Company's name to ChinaPharma  Holdings,  Inc. and to grant to the
board of directors  the right to conduct up to a 2.89 for 1 reverse split of our
common stock at any time commencing 20 days after the  Information  Statement is
mailed to our stockholders and ending six months thereafter.



                                       5


Onny

Onny was  incorporated  on January 12, 2005 under the laws of the British Virgin
Islands. At the time of incorporation, Onny's authorized capital was $50,000 and
there were 50,000  shares of one class and one series,  $1.00 par value,  issued
and outstanding.  Ms. Heung Mei TSUI was at the time of  incorporation  the sole
stockholder  and  director  of  Onny.  On  July 6,  2005,  Onny  adopted  a sole
stockholder's  resolution  and a sole  director's  resolution  that  resolved to
change Onny's  authorized  capital to $50,000  divided into  4,000,000  ordinary
shares, $0.01 par value, and 100 preferred shares, $100 par value. On August 18,
2005,  Onny increased its authorized  capital to $5,000,000  divided into 40,000
ordinary shares,  $100.00 par value, and 10,000  preferred  shares,  $100.00 par
value.  As of Closing Date,  2005,  there are 39,700  ordinary shares issued and
outstanding,  all of which are held by the  company.  No  preferred  shares  are
currently issued and outstanding.

On May  25,  2005,  Onny  acquired  all  the  equity  interests  in  Helpson  in
consideration of RMB 28,000,000 (approximately $3,456,790). Effective as of June
21,  2005,  Onny became the sole  stockholder  of Helpson  and Helpson  became a
wholly foreign-owned enterprise as defined by Chinese laws.

On October 20,  2005,  Onny  completed a private  placement of  $5,000,000  (the
"Offering")  in  consideration  of the  issuance of 10,000  shares of  preferred
stock..  Participants  in this Offering  exchanged  their  preferred  shares for
ordinary shares in contemplation of participating the Exchange  Transaction with
the  Company.  As a result,  offering  participants  received  in the  aggregate
6,944,611 shares of our common stock..

Under  the  terms of the  Offering,  Ms.  Heung  Mei Tsui has  agreed  to escrow
6,944,611  shares of the Company's common stock that she received as a result of
the Exchange Transaction, which shares represent 20% of the Company's issued and
outstanding  common  capital  stock  immediately  following  the  closing of the
Exchange  Transaction  (the  "Make  Good  Pool"),  so  that  in  the  event  the
consolidated  financial  statements  of the Company do not reflect $8 million of
Net Income ("NI") for the fiscal year ending December 31, 2006 (the  "Guaranteed
NI")  the  Make  Good  Shares  can be  distributed  on a pro  rata  basis to the
participants of the Offering in accordance with the following formula:

Make Good Shares = (($8  million - Actual FY 06 US GAAP Net Income)  /$8m)X Make
Good Pool

If  required,  the Make Good Shares will be  delivered  to  participants  in the
Offering  within  ten (10)  business  days of the date the audit  report for the
period is filed with the SEC.

Ms. Heung Mei Tsui has also  escrowed  277,785  shares of the  Company's  common
stock that she  received as a result of the Exchange  Transaction,  which shares
represent  0.8% of the Company's  issued and  outstanding  common  capital stock
immediately  following the closing of the Exchange  Transaction  (the " HFG Make
Good Pool"), so that in the event the Company does not achieve the Guaranteed NI
the HFG Make Good Shares will be  distributed to HFG  International,  Limited in
accordance with the following formula:



                                       6


HFG Make Good Shares = (($8  million - Actual FY 06 US GAAP Net  Income)  /$8m)X
HFG Make Good Pool

If required, the HFG Make Good Shares will be delivered within ten (10) business
days of the date the audit report for the period is filed with the SEC.

Helpson

Helpson is a foreign-invested  enterprise established in Haikou, Hainan Province
on February 25, 1993. Initially,  its name was Hainan Fulin Biomedical Co., Ltd.
and it changed to "Helpson" in 1999. The company was originally an "equity joint
venture" as defined by China's  laws on foreign  invested  enterprises.  The two
joint  venturers  were  Haikou   Biomedical   Engineering  Co.,  Ltd.   ("Haikou
Biomedical"),  a Chinese  company,  and Hong Kong Fudao  Development  Co.,  Ltd.
("Fudao"),  a  Hong  Kong  company.   Haikou  Biomedical  invested  RMB2,100,000
(equivalent  to  US$367,197)  for a 70% share of  Helpson,  and  Fudao  invested
$150,000 for a 30% share of Helpson.

On June 16, 2001, Fudao entered into an equity interest transfer  agreement with
Hainan  Kaidi  Technology  Co., Ltd  ("Kaidi").  In  accordance  with the equity
interest transfer agreement,  Fudao transferred all its 30% capital contribution
in Helpson to Kaidi. As a result of the transfer, Haikou Biomedical continued to
hold a 70% equity interest in Helpson,  while Kaidi had a 30% equity interest in
Helpson.  Furthermore,  Helpson  became a PRC  domestic  company,  rather than a
foreign-invested company.

Effective  on December 26, 2003,  Helpson  issued new shares to Chengdu  Huineng
Biomedical Co., Ltd.  ("Chengdu Bio") and Chongqing  Chemical  Medicine  Holding
Group   ("Chongqing   Chemical").    Chengdu   Bio   contributed    RMB3,000,000
(approximately  US$370,370)  for  a  10.71%  equity  interest  in  Helpson,  and
Chongqing Chemical  contributed  RMB5,000,000  (approximately  US$617,284) for a
17.86%  equity  interest in Helpson.  After the issuance of shares,  Helpson had
four equity  holders:  Haikou  Biomedical,  which held a 50% equity  interest in
Helpson; Kaidi, which held a 21.43% interest in Helpson; Chengdu Bio, which held
a 10.71%  interest  in  Helpson;  and  Chongqing  Chemical,  which held a 17.86%
interest in Helpson.

On March 8, 2005,  Chongqing  Chemical entered into an equity interest  transfer
agreement with Haikou  Biomedical to transfer all its equity interest in Helpson
to Haikou Biomedical.  Upon completion of the transfer,  there remain only three
equity  holders  of  Helpson:  Haikou  Biomedical,  who  holds a  67.86%  equity
interest;  Kaidi, who holds a 21.43% equity interest, and Chengdu Bio, who holds
a 10.71% equity interest.

On May 25, 2005, Haikou Biomedical, Kaidi and Chengdu Bio entered into an equity
interest transfer agreement with Onny, a company organized in the British Virgin
Islands,  to  transfer  all  their  equity  interests  in  Helpson  to  Onny  in
consideration of RMB28,000,000 (approximately $3,456,790).  Effective as of June
21, 2005,  Onny became the sole  stockholder  of Helpson,  and Helpson  became a
wholly foreign-owned enterprise as defined by Chinese laws.



                                       7


Since  its  establishment,  Helpson  has  positioned  itself  in  the  research,
development,   manufacturing,  and  sales  of  a  series  of  bio-pharmaceutical
products.   Helpson's   products   focus   primarily  on  genetic   engineering,
bioengineering and peptidergic medicine, as well as chemical medicinal products.

Our principal executive office is located at Unit 8, D Area, Office Hall, Haikou
Bonded Zone, Haikou, Hainan Province, China, 570216.  

                                  THE OFFERING

Common stock to be outstanding after the offering       30,000,000

Common stock offered by the selling stockholders        8,819,653

OTCBB Trading Symbol                                    TSET.OB

Use of Proceeds                                         We   will   receive   no
                                                        proceeds  from  the sale
                                                        of   shares   of  common
                                                        stock in this offering.





AN  INVESTMENT  IN OUR COMMON  STOCK IS HIGHLY  SPECULATIVE  AND INVOLVES A HIGH
DEGREE OF RISK. SEE RISK FACTORS BEGINNING ON PAGE 7.

                                  RISK FACTORS

This offering involves a high degree of risk. You should carefully  consider the
risks  described  below before making a decision to buy our common stock. If any
of the following risks actually  occurs,  our business could be harmed.  In that
case, the trading price of our common stock could decline,  and you may lose all
or part of your  investment.  You should also refer to the other  information in
this  prospectus,  including our  financial  statements  and the related  notes.
Except for historical  information,  the information in this prospectus contains
"forward-looking" statements about our expected future business and performance.
Our actual  operating  results and  financial  performance  may prove to be very
different  from what we have  predicted as of the date of this  prospectus.  The
risks  described  below address all material risks to us and our  investors,  as
currently known to us.  Notwithstanding the above, Section 27A of the Securities
Act and Section 21E of the Securities Exchange Act expressly state that the safe
harbor for forward  looking  statements  does not apply to companies  that issue
securities  that meet the definition of a penny stock,  as such, the safe harbor
for forward looking statements does not apply to us.

Risks Related to Our Business and Industry

WE MAY NEED TO RAISE  ADDITIONAL  CAPITAL  WITHIN THE NEXT TWELVE MONTHS TO FUND
OUR  OPERATIONS  AND FAILER TO RAISE  ADDITIONAL  CAPITAL MAY FORCE US TO DELAY,
REDUE, OR ELMINATE OUR PRODUCT DEVELOPMENT PROGRAMS




                                       8


Due to the large funds required for research and  development and the subsequent
marketing of products,  the  pharmaceutical  industry is very capital intensive.
The industry is  characterized by large  receivable  turnovers,  which signifies
that we will  need  more  working  capital  as our  revenues  increase.  We have
traditionally   been  committed  to  biomedical  R&D,  and  are  now  developing
traditional  chemical medicines within specific market segments such as those of
anti-flu and anti-infection.  It is likely that we will need to raise additional
capital within the next twelve months.  Additional capital may be needed for the
development  of  new  products  or  product  lines,  financing  of  general  and
administrative  expenses,  licensing or acquisition of additional  technologies,
and marketing of new or existing products.  There are no assurances that we will
be able to raise  the  appropriate  amount  of  capital  needed  for our  future
operations. Failure to obtain funding when needed may force us to delay, reduce,
or eliminate our product development programs.

WE RELY ON FEW  SUPPLIERS  AND ANY  DISRUPTION  WITH OUR  SUPPLIERS  COULD DELAY
PRODUCT SHIPMENTS AND ADVERSELY AFFECT OUR BUSINESS OPERATIONS AND PROFITABILITY

We have developed relationships with a single or limited number of suppliers for
materials  that are otherwise  generally  available.  Purchases from our largest
supplier  in  2004,   Hainan  Xinxin   Biotechnology   Company,   accounted  for
approximately  74.35% of the total purchases of our company.  Purchases from our
second-to-largest  supplier in 2004, Chengdu Xingwangji  Pharmaceutical  Company
accounted  for  12.02%  of  our  total  purchases.   Although  we  believe  that
alternative  suppliers  are available to supply  materials,  should any of these
suppliers terminate their business arrangements with us or increase their prices
of materials supplied, it could delay product shipments and adversely affect our
business operations and profitability.

WE MAY UNDERTAKE ACQUISITIONS IN THE FUTURE, AND ANY DIFFICULTIES IN INTEGRATING
THESE ACQUISITIONS MAY DAMAGE OUR PROFITABILITY

In the future, we may acquire additional  businesses or products that complement
our existing  business and expand our business  scale.  The  integration  of new
businesses  and  products  may  prove  to be an  expensive  and  time  consuming
procedure.  We can  offer  no  assurance  that we  will be able to  successfully
integrate  the newly  acquired  businesses  and products or operate the acquired
business in a profitable manner.  Failure to locate an appropriate M&A target or
failure to successfully  integrate and operate acquired  businesses and products
may adversely impact our operations and profits.

THE FAILURE TO MANAGE  GROWTH  EFFECTIVELY  COULD HAVE AN ADVERSE  EFFECT ON OUR
BUSINESS, FINANCIAL CONDITION, AND RESULTS OF OUR OPERATIONS

The rapid market growth of our  pharmaceutical  products may require our company
to expand our employee base for managerial,  operational,  financial,  and other
purposes. As of September 23, 2005, we had 105 regular employees.  The continued
future growth will impose significant added responsibilities upon the members of
management  to  identify,   recruit,  maintain,   integrate,  and  motivate  new



                                       9


employees.  Aside  from  increased  difficulties  in  the  management  of  human
resources,  we may also encounter  working capital issues,  as we need increased
liquidity to finance the purchases of raw  materials and supplies,  research and
development of new products, acquisition of new businesses and technologies, and
the hiring of additional employees. For effective growth management,  we will be
required to continue improving our operations, management, and financial systems
and control.  Our failure to manage growth  effectively  may lead to operational
and financial  inefficiencies  that will have a negative effect on the Company's
profitability.

WE ARE DEPENDENT ON CERTAIN KEY PERSONNEL AND LOSS OF THESE KEY PERSONNEL  COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, FIANANCIAL CONDITION AND RESULTS
OF OPERATIONS

Our Company's  success is, to a certain extent,  attributable to the management,
sales and marketing,  and pharmaceutical  factory  operational  expertise of key
personnel.  Ms. Zhilin Li, Mr. Heqi Cai, and Ms. Yao Huang perform key functions
in the  operation  of our  Company.  Ms.  Zhilin Li entered  into an  Employment
Agreement  with Helpson,  which  provided that Ms. Li was employed by Helpson to
act as its CEO.  The term of her  employment  is from  July 1,  2005 to June 30,
2010.  Mr. Heqi Cai entered into an Employment  Agreement with Helpson to act as
its Director of Development Department for a term from from July 1, 2005 to June
30, 2010. Ms. Yao Huang entered into an Employment Agreement with Helpson to act
as its Head of  Pharmaceutical  Plant  for a term  from July 1, 2005 to June 30,
2010.  There can be no assurance  that we will be able to retain these  officers
after the term of their employment  contracts expire. The loss of these officers
could have a material adverse effect upon our business, financial condition, and
results of operations.  We must attract, recruit and retain a sizeable workforce
of technically  competent  employees.  Our ability to effectively  implement our
business  strategy  will  depend  upon,  among  other  factors,  the  successful
recruitment   and  retention  of  additional   highly  skilled  and  experienced
management  and other key  personnel.  We cannot  assure that we will be able to
hire or retain such employees.

IF ALL OR A SIGNIFICANT  PORTION OF OUR CUSTOMERS WITH TRADE RECEIVABLES FAIL TO
PAY ALL OF PART OF THE TRADE RECEIVABLES OR DELAY THE REPAYMENT,  OUR NET INCOME
WILL DECREASE AND OUR PROFITABILITY WILL BE ADVERSELY AFFECTED

Our Company had trade receivables,  net of allowance for doubtful  accounts,  of
approximately  Y10,425,289  ($1,259,595)  and   Y19,948,709($2,410,282)   as  of
December 31, 2003 and 2004,  respectively.  During the years ended  December 31,
2003 and 2004, the debtors'  turnover period were  approximately  [213] days and
[135] days, respectively.

Our Company had trade receivables,  net of allowance for doubtful  accounts,  of
approximately  Y39,705,780 [$4,797,412] as of 30th June 30, 2005. During the six
months ended June 30, 2005, the debtors'  turnover period was  approximately 297
days.



                                       10


It is usual  commercial  practice  that certain  customers may repay their debts
beyond  credit  periods  granted or may repay  slowly  when  transaction  volume
increases.  There is no assuance that our trade receivables will be fully repaid
on a timely basis.

If all or a significant  portion of our customers with trade receivables fail to
pay all or part of the  trade  receivables  or delay the  payment  due to us for
whatever  reason,  our net profit will  decrease and our  profitability  will be
adversely affected.

IF WE FAIL TO DEVELOP NEW PRODUCTS WITH HIGH PROFIT  MARGINS AND OUR HIGH PROFIT
MARGIN  PRODUCTS ARE  SUBSTITUTED BY  COMPETITOR'S  PRODUCTS,  OUR GROSS AND NET
PROFIT MARGINS WILL BE ADVERSELY AFFECTED

In the years ended  December 31, 2003 and 2004,  the gross profit margin for our
Company was 50.7% and 40.4% respectively. However, there is no assurance that we
will be able to sustain such profit  margins in the future.  The  pharmaceutical
industry is very competitive, and there may be pressure to reduce sale prices of
products without a corresponding decrease in the price of raw materials.  To the
extent that we fail to develop  new  products  with high profit  margins and our
high profit margin products are substituted by competitors'  products, the gross
profit margins will be adversely affected.

WE FACE COMPETITION IN THE  PHARMACEUTICAL  INDUSTRY AND SUCH COMPETITION  COULD
CAUSE OUR SALES REVENUE AND PROTITS TO DECLINE

According to the State Food and Drug Administration of China (the "SFDA"), there
were approximately 5,071 pharmaceutical manufacturing companies in the PRC as of
the end of June 2004, of which approximately  3,237  manufacturers  obtained GMP
certification. After GMP certification became a mandatory requirement on July 1,
2004,  approximately  1,834  pharmaceutical  manufacturers  were forced to cease
production  (Source:  http://www.jlda.gov.cn/hyzx/showhyzx.x?id=789).  Only  the
3,237  pharmaceutical  manufacturers  with GMP certifications may continue their
manufacturing operations.  The certificates,  permits, and licenses required for
pharmaceutical  operation  in  the  PRC  create  a  potential  barrier  for  new
competitors seeking entrance into the market.  Despite these obstacles,  we face
competitors  that will  attempt to create or are  marketing  products in the PRC
that are similar to ours.  There can be no assurance  that our products  will be
either more effective in their  therapeutic  abilities and/or be able to compete
in price with that of our competitors.  Failure to do either of these may result
in decreased profits for our Company.

OUR SUCCESS IS HIGHLY  DEPENDENT  ON  CONTINUALLY  DEVELOPING  NEW AND  ADVANCED
PRODUCTS,  TECHNOLOGIES, AND PROCESSES AND FAILURE TO DO SO MAY CAUSE US TO LOSE
OUR COMPETITIVENESS IN THE PHARMACEUTICAL  INDUSTRY AND MAY CAUSE OUR PROFITS TO
DECLINE




                                       11


To  remain  competitive  in the  pharmaceutical  industry,  it is  important  to
continually  develop new and advanced  products,  technologies,  and  processes.
There is no assurance  that the  competitors'  new products,  technologies,  and
processes  will  not  render  our  Company's   existing   products  obsolete  or
non-competitive.  Our Company's  competitiveness  in the  pharmaceutical  market
therefore relies upon our ability to enhance our current products, introduce new
products,  and  develop  and  implement  new  technologies  and  processes.  Our
Company's  failure to  technologically  evolve  and/or  develop  new or enhanced
products may cause us to lose our competitiveness in the pharmaceutical industry
and may cause our profits to decline.

THE  COMMERCIAL  SUCCESS  OF OUR  PRODUCTS  DEPENDS  UPON THE  DEGREE  OF MARKET
ACCEPTANCE AMONG THE MEDICAL  COMMUNITY AND FAILURE TO ATTAIN MARKET  ACCPETANCE
AMONG THE MEDICAL  COMMUNICTY  MAY HAVE AN ADVERSE  IMPACT ON OUR OPERATIONS AND
PROFITABILITY

The  commercial  success  of our  products  depends  upon the  degree  of market
acceptance among the medical community. Even if our products are approved by the
SFDA,  there is no assurance  that  physicians  will  prescribe or recommend our
products to patients.  Furthermore,  a product's prevalence and use at hospitals
may be  contingent  upon  our  relationship  with  the  medical  community.  The
acceptance of our products  among the medical  community may depend upon several
factors,  including but not limited to, the  product's  acceptance by physicians
and patients as a safe and effective  treatment,  cost effectiveness,  potential
advantages over alternative treatments,  and the prevalence and severity of side
effects.  Failure to attain market  acceptance  among the medical  community may
have an adverse impact on our operations and profitability.

WE ENJOY CERTAIN PREFERENTIAL TAX CONCESSIONS AND LOSS OF THESE PREFERENTIAL TAX
CONCESSIONS WILL CAUSE OUR TAX LIABILITIES TO INCREASE AND OUR  PROFITABILITY TO
DECLINE

Helpson enjoys preferential tax concessions as a high-tech enterprise.  Pursuant
to the State Council's Regulations on Encouraging  Investment in and Development
of Hainan Island,  Hainan  Provincial  State Tax Bureau  recognized and approved
Helpson's  status as a high and new  technology  enterprise and thus Helpson was
granted a 50% reduction in its income tax liability for the years 2003, 2004 and
2005. As the corporate  income tax in Hainan province is 15%,  Helpson's  income
tax liability for the period between 2003 and 2005 is 7.5%. After the expiration
of the  preferential  tax  treatment  to  Helpson  as a high and new  technology
enterprise,  Helpson  will be  subject  to 15%  corporate  income  tax unless it
receives other preferential tax treatments.

Pursuant to the  Examining  and  Administrative  Measures  Regarding  Income Tax
Deduction for Investment in PRC Made Equipment Used in Technical Reform,  40% of
the purchase  price in PRC-made  equipment can be used for income tax deduction.
In the case of Helpson,  RMB3,161,001.40  (approximately US$390,247) can be used
for  income tax  deduction  . For the two years  ending  December  31,  2003 and
December 31, 2004,  the amount of tax  deduction  approved  was  USD$27,916  and
USD$19,726 respectively.



                                       12


There is no assurance that the preferential  tax treatment  mentioned above will
remain unchanged and effective.  Helpson's tax liabilities will increase and its
profits may  accordingly  decline if the  reduced  income tax rate of 7.5% is no
longer applicable  and/or the tax relief on investment in PRC-made  equipment is
no longer available.

WE MAY BE  SUBJECT  TO THE  PRC'S  PRICE  CONTROL  OF DRUGS  WHICH MAY LIMIT OUR
PROFITABILITY AND EVEN CAUSE US TO STOP MANUFACTURING OF CERTAIN PRODUCTS

The State  Development and Reform  Commission  ("SDRC") of the PRC and the price
administration  bureaus  of the  relevant  provinces  of the  PRC in  which  the
pharmaceutical  products are  manufactured  are responsible for the retail price
control over our pharmaceutical  products.  The SDRC sets the price ceilings for
certain pharmaceutical  products in the PRC. Although our products have not been
subject to such price  control  as of the date of this  Prospectus,  there is no
assurance that our products will remain unaffected by it. Where our products are
subject to a price ceiling, we will need to adjust the product price to meet the
requirement and to accommodate for the pricing of competitors in the competition
for  market  shares.   The  price  ceilings  set  by  the  SDRC  may  limit  our
profitability,  and in some instances,  such as where the price ceiling is below
production costs, may cause us to stop manufacturing certain products.

OUR CERTIFICATES,  PERMITS, AND LICENSES ARE SUBJECT TO GOVERNMENTAL CONTROL AND
RENEWAL AND FAILURE TO OBTAIN  RENEWAL WILL CAUSE ALL OR PART OF OUR  OPERATIONS
TO BE TERMINATED

Our Company is subject to various  PRC laws and  regulations  pertaining  to the
pharmaceutical  industry.  Our Company has attained  certificates,  permits, and
licenses  required for the  operation  of a  pharmaceutical  enterprise  and the
manufacturing  of  pharmaceutical  products in the PRC. We obtained the Medicine
Production  Permit in December 2000,  which is valid through  December 31, 2005.
When the  permit  expires,  our  Company  will not be able to  operate  medicine
production  which will cause our operations to be  terminated.  We also obtained
three GMP certificates  which are effective  through July 17, 2008,  December 2,
2009 and February 2, 2010 respectively.  The  pharmaceutical  production permits
and GMP  certificates  are  valid for a term of five  years and must be  renewed
before their expiration.  During the renewal process, we will be re-evaluated by
the  appropriate   governmental  authorities  and  must  comply  with  the  then
prevailing  standards and regulations which may change from time to time. In the
event that we are not able to renew the certificates,  permits and licenses, all
or  part  of  our  operations  may be  terminated.  Furthermore,  if  escalating
compliance costs associated with governmental standards and regulations restrict
or prohibit any part of our  operations,  it may adversely  affect our operation
and profitability.

IF OUR PRODUCTS FAIL TO RECEIVE  REGULATORY  APPROVAL OR ARE SEVERELY LIMITED IN
THE PRODUCTS SCOPE OF USE, WE MAY BE UNABLE TO RECOUP CONSIDERABLE  RESEARCH AND
DEVELOPMENT EXPENDITURES

Our  products  that are approved to be  manufactured  include 15  medicines.  We
applied to the SFDA for  registration of manufacturing 21 medicines and SFDA has
accepted these  applications.  There are eight products in the stage of research
and development. The production of our pharmaceutical products is subject to the



                                       13


regulatory   approval  of  the  SFDA.  The  regulatory  approval  procedure  for
pharmaceuticals can be quite lengthy, costly, and uncertain.  Depending upon the
discretion of the SFDA,  the approval  process may be  significantly  delayed by
additional  clinical  testing and  require  the  expenditure  of  resources  not
currently available; in such an event, it may be necessary for us to abandon our
application.  Even where  approval  of the  product is  granted,  it may contain
significant   limitations   in  the  form  of  narrow   indications,   warnings,
precautions,  or  contra-indications  with  respect  to  conditions  of use.  If
approval of our product is denied,  abandoned,  or severely  limited in terms of
the scope of products use, it may result in the inability to recoup considerable
research and development expenditures.

OUR  RESEARCH AND  DEVELOPMENT  MAY BE COSTLY  AND/OR  UNTIMELY AND THERE ARE NO
ASSURANCES  THAT OUR  RESEARCH  AND  DEVELOPMENT  WILL EITHER BE  SUCCESSFUL  OR
COMPLETED WITHIN THE ANTICIPATED TIMEFRAME, IF EVER AT ALL

The  research  and  development  of our  new and  existing  products  and  their
subsequent  commercialization  plays an important role in our success. There are
eight  Products that are currently  under  research and  development,  including
rh-CNTF, rh-aFGF,  Thymopetidum for Injection,  Mycophenolate mofetil, Yimaikang
Capsule,  Compound  Ossotide for  Injection,  and  Deproteinised  Calf Blood for
Injection.  The  research  and  development  of new  products is costly and time
consuming,  and there are no assurances that our research and development of new
products  will  either  be  successful  or  completed   within  the  anticipated
timeframe,  if ever at all. There are also no assurances  that if the product is
developed, that it will lead to successful commercialization.

WE CANNOT  GAURANTEE THE PROTECTION OF OUR  INTELLECTUAL  PROPERTY RIGHTS AND IF
INFRINGEMENT OR COUNTERFEITING OF OUR INTELLECTUAL  PROPERTY RIGHTS OCCURS,  OUR
REPUTATION AND BUSINESS MAY BE ADVERSELY AFFECTED

To protect the  reputation of our products,  we have  registered and applied for
registration  of our  trademarks  in the PRC  where  we  have a  major  business
presence. Please refer to the paragraph headed "Intellectual property rights" in
the Business section of this Prospectus on page 35.

All of our  products  are sold under  these  trademarks.  As of the date of this
Prospectus,  we have not  experienced any  infringements  of such trademarks for
sales of  pharmaceutical  products  and as of the date of this  Prospectus,  the
Directors  were  not  aware of any  infringement  of our  intellectual  property
rights.  However,  there is no assurance that there will not be any infringement
of our  brand  name or other  registered  trademarks  or  counterfeiting  of our
products in the future.  Should any such infringement or  counterfeiting  occur,
our  reputation  and  business  may be  adversely  affected.  We may also  incur
significant  expenses and substantial  amounts of time and effort to enforce our
intellectual  property rights in the future. Such diversion of our resources may
adversely affect our existing business and future expansion plans.



                                       14


WE MAY SUFFER AS A RESULT OF PRODUCT LIABILITY OR DEFECTIVE PRODUCTS

We may  produce  products  which  inadvertently  have an adverse  pharmaceutical
effect on the health of individuals  despite proper  testing.  Existing PRC laws
and regulations do not require us to maintain third party liability insurance to
cover product liability claims. However, if a product liability claim is brought
against us, it may, regardless of merit or eventual outcome, result in damage to
our reputation, breach of contract with our customers,  decreased demand for our
products, costly litigation, product recalls, loss of revenue, and the inability
to  commercialize  some products.  We currently are not aware of any existing or
anticipated product liability claims with respect to our products.

WE  RELY  ON  THE  COOPERATION   WITH  RESEARCH   LABORATORIES,   PHARMACEUTICAL
INSITITUIONS, AND UNIVERSITIES AND IF THESE INSTITUTIONS CEASE TO COOPERATE WITH
US AND WE  CANNOT  FIND  OTHER  SUITABLE  SUBSTITUTE  RESEARCH  AND  DEVELOPMENT
PARTNERS,  OUR ABILITY TO DEVELOP NEW  PRODUCTS MAY BE HINDERED AND OUR BUSINESS
MAY BE ADVERSELY AFFECTED

Helpson cooperates with several research institutions  including Chinese Academy
of Sciences, China University of Pharmaceuticals, Military Medical Academy Basic
Medical  Science  Institute,  Chongqing  Medical  Industry  Institute  and China
Sichuan  University.  Helpson relies to a certain extent on the  above-mentioned
institutions  for its  development  of new products.  There is no assurance that
these  institutions  will  continue  cooperating  with  Helpson to  develop  new
products.  In the event that these  institutions cease to cooperate with Helpson
and Helpson  cannot find other  suitable  substitute  research  and  development
partners,  our ability to develop new  products may be hindered and our business
may be adversely affected.

Risks Related to Doing Business in China

Helpson  operates from  facilities that are located in China.  Accordingly,  its
operations must conform to governmental regulations and rules of China.

THE PRC LEGAL  SYSTEM HAS  INHERENT  UNCERTAINTIES  THAT  COULD  LIMIT THE LEGAL
PROTECTIONS AVAILABLE TO US

The Chinese legal system is a civil law system based on written statutes. Unlike
common law  systems,  it is a system in which  decided  legal  cases have little
precedent value. In the late 1970s, the Chinese government began to promulgate a
comprehensive  system of laws and regulations  governing commercial matters. The
overall effect of legislation  enacted over the past 20 years has  significantly
enhanced the  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.



                                       15


The  practical  effect of the PRC's legal system on our business  operations  in
China can be viewed from two separate but intertwined considerations.  First, as
a matter of  substantive  law,  the Foreign  Invested  Enterprise  laws  provide
significant  protection from government  interference.  In addition,  these laws
guarantee  the full  benefit of  corporate  articles  and  contracts  to Foreign
Invested  Enterprise  participants.  These laws,  however,  do impose  standards
concerning  corporate  formation  and  governance,  which are not  qualitatively
different from the corporation laws found in the United States.  Similarly,  PRC
accounting  laws mandate  accounting  practices which may not be consistent with
the US Generally Accepted Accounting  Principles.  China accounting laws require
that an annual  "statutory audit" be performed in accordance with PRC accounting
standards  and that the books of  account  of Foreign  Invested  Enterprises  be
maintained in accordance  with Chinese  accounting  laws.  Article 14 of the PRC
Wholly Foreign-Owned  Enterprise Law requires a Wholly Foreign-Owned  Enterprise
to submit certain periodic fiscal reports and statements to designated financial
and tax authorities, at the risk of business license revocation.

Second,  while the enforcement of substantive  rights may appear less clear than
United States procedures,  Foreign Invested Enterprises and Wholly Foreign-Owned
Enterprises are Chinese registered companies that enjoy the same status as other
Chinese registered companies in  business-to-business  dispute resolutions.  The
Chinese legal  infrastructure  is significantly  different in operation from its
United  States  counterpart,  and may present a  significant  impediment  to the
operation of Foreign Invested Enterprises.

PRC  ECONOMIC  REFORM  POLICIES  OR  NATIONALIZATION  COULD  RESULT  IN A  TOTAL
INVESTMENT LOSS IN OUR COMMON STOCK

Since 1979, the Chinese government has reformed its economic  policies.  Because
many reforms are unprecedented or experimental,  they are expected to be refined
and improved.  Other political,  economic and social factors,  such as political
changes, changes in the rates of economic growth,  unemployment or inflation, or
in the disparities in per capita wealth between regions within China, could lead
to further  readjustment of the reform measures.  This refining and readjustment
process may negatively affect our operations.


Although the Chinese government owns the majority of productive assets in China,
in the past  several  years  the  government  has  implemented  economic  reform
measures  that  emphasize   decentralization   and  encourage  private  economic
activity.  Because  these  economic  reform  measures  may  be  inconsistent  or
ineffectual, there are no assurances that:


      -     We will be able to capitalize on economic reforms;
      -     The Chinese  government will continue its pursuit of economic reform
            policies;
      -     The economic policies, even if pursued, will be successful;
      -     Economic  policies  will not be  significantly  altered from time to
            time; and
      -     Business  operations in China will not become subject to the risk of
            nationalization.



                                       16


Over the last few years,  China's  economy has  registered  high  growth  rates.
Recently, there have been indications that rates of inflation have increased. In
response,  the  Chinese  government  recently  has taken  measures  to curb this
excessively expansive economy.  These measures have included restrictions on the
availability of domestic credit,  reducing the purchasing  capability of some of
its  customers,  and  limited  recentralization  of  the  approval  process  for
purchases of certain  foreign  products.  These austere  measures  alone may not
succeed in slowing down the economy's  excessive expansion or control inflation,
and may  result in severe  dislocations  in the  Chinese  economy.  The  Chinese
government may adopt additional measures to further combat inflation,  including
the establishment of freezes or restraints on certain projects or markets. These
measures may adversely affect our operations.

There can be no  assurance  that the  reforms to China's  economic  system  will
continue  or that we will  not be  adversely  affected  by  changes  in  China's
political,  economic,  and social  conditions  and by changes in policies of the
Chinese government, such as changes in laws and regulations,  measures which may
be introduced to control  inflation,  changes in the rate or method of taxation,
imposition of additional  restrictions  on currency  conversion  and  remittance
abroad, and reduction in tariff protection and other import restrictions.


YOU MAY EXPERIENCE DIFFICULTIES IN EFFECTING SERVICE OF LEGAL PROCESS, ENFORCING
FOREIGN JUDGMENTS OR BRINGING ORIGINAL ACTIONS IN THE PRC BASED ON U.S. OR OTHER
FOREIGN LAWS AGAINST OUR MANAGEMENT AND US

Helpson,  our operating company,  is incorporated under the laws of the PRC, and
substantially all of our assets are located in the PRC. In addition, many of our
directors,   managers,  and  executive  officers  reside  within  the  PRC,  and
substantially  all of the assets of these persons are located within the PRC. As
a result,  it may not be possible to effect service of process within the United
States or  elsewhere  outside the PRC upon  certain  directors,  supervisors  or
executive officers, including with respect to matters arising under U.S. federal
securities laws or applicable state securities laws. Moreover,  the PRC does not
have treaties  providing  for the  reciprocal  recognition  and  enforcement  of
judgments of courts with the United States,  the United  Kingdom,  Japan or many
other  countries.  As a  result,  recognition  and  enforcement  in  the  PRC of
judgments  of a court in the United  States  and any of the other  jurisdictions
mentioned  above in  relation  to any matter  may be  difficult  or  impossible.
Furthermore,  an  original  action  may be brought  in the PRC  against  us, our
directors,  managers, or executive officers only if the actions are not required
to be arbitrated by PRC law and Helpson's  articles of association,  and only if
the facts alleged in the complaint give rise to a cause of action under PRC law.
In  connection  with any such  original  action,  a PRC court  may  award  civil
liability, including monetary damages.

BECAUSE WE RECEIVE SUBSTANTIALLY ALL OF OUR REVENUE IN RENMINBI, WHICH CURRENTLY
IS NOT A FREELY CONVERTIBLE  CURRENCY,  AND THE GOVERNMENT CONTROLS THE CURRENCY
CONVERSION AND THE FLUCTUATION OF THE RENMINBI, WE ARE SUBJECT TO CHANGES IN THE
PRCS' POLITICAL AND ECNOMONIC DECISIONS



                                       17


We receive substantially all of our revenues in Renminbi, which currently is not
a freely  convertible  currency.  The Chinese government may, at its discretion,
restrict  access  in the  future  to  foreign  currencies  for  current  account
transactions.

The  value  of the  Renminbi  against  the  U.S.  dollar  and  other  currencies
fluctuates  and is  affected  by,  among  other  things,  changes  in the  PRC's
political and economic  conditions.  Since 1994, the conversion of Renminbi into
foreign  currencies,  including  Hong Kong and U.S.  dollars,  has been based on
rates  set by the  People's  Bank of China,  which  are set  daily  based on the
previous day's  inter-bank  foreign  exchange market rates and current  exchange
rates on the world financial markets. Since 1994, the official exchange rate for
the  conversion  of Renminbi to U.S.  Dollars  generally  has been  stable.  Any
devaluation of the Renminbi,  however,  may materially and adversely  affect the
value of, and any dividends  payable on, our shares in foreign  currency  terms,
since  we will  receive  substantially  all of our  revenues,  and  express  our
profits, in Renminbi. Our financial condition and results of operations also may
be  affected  by  changes  in the value of  certain  currencies  other  than the
Renminbi.  Our results of operation may be adversely  affected by changes in the
political and social conditions in the PRC, and 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 GROWTH OF THE CHINESE ECONOMY HAS BEEN UNEVEN ACROSS GEOGRAPHIC  REGIONS AND
ECONOMIC  SECTORS,  AND A DOWNTURN IN CERTAIN REGIONS IN WHICH WE DO BUSINESS OR
IN OUR ECONMIC SECTOR WOULD SLOW DOWN OUR GROWTH AND PROFITABILITY

The growth of the Chinese economy has been uneven across geographic  regions and
economic sectors.  For example,  during the years between 1978 and 2000, the per
capital GDP growth rate of Fujian Province in  Southeastern  China was 12% while
that of Gansu  Province  in  Northwestern  China  was 5.3%  (Source:  New  China
Statistical   Materials   Compilation   for  50  Years  and  2001  China  Annual
Statistics).  There can be no assurance that growth of the Chinese  economy will
be steady or that any downturn will not have a negative  effect on our business.
Our  profitability  may decrease due to a downturn in the Chinese economy.  More
specifically, the expansion of our sales area in the less economically developed
central and western provinces of China will depend on those provinces  achieving
certain income levels.

ANY  OCCURRENCE  OF SERIOUS  INFECTIOUS  DISEASES,  SUCH AS RECURRENCE OF SEVERE
ACUTE  RESPIRATORY  SYNDROME (SARS) CAUSING  WIDESPREAD  PUBLIC HEALTH PROBLEMS,
COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS

A renewed outbreak of SARS or other widespread  public health problems in China,
where all of our revenue is derived,  and in Hainan,  where our  operations  are
headquartered,  could have a negative effect on our  operations.  Our operations
may be  impacted by a number of public  health-related  factors,  including  the
following:



                                       18


      o     quarantines or closures of our factories or subsidiaries which would
            severely disrupt its operations;

      o     the sickness or death of the key officers and employees; and

      o     general slowdown in the Chinese economy.

Any of the foregoing  events or other  unforeseen  consequences of public health
problems could adversely affect our business and results of operations.

WE ARE SUBJECT TO THE ENVIRONMENTAL PROTECTION LAWS OF THE PRC

Our manufacturing  process may produce  by-products such as effluent,  gases and
noise,  which are harmful to the  environment.  We are subject to multiple  laws
governing environmental protection, such as "The Law on Environmental Protection
in the PRC" and "The Law on  Prevention  of Effluent  Pollution in the PRC",  as
well as  standards  set by the  relevant  governmental  bodies  determining  the
classification  of  different  wastes  and  proper  disposal.  We have  properly
attained a waste disposal permit for our manufacturing  facility,  which details
the types and  concentration  of effluents and gases  allowed for disposal.  The
temporary  waste  disposal  permit will expire on  September  28,  2009.  We are
responsible for the renewal of the waste disposal permit.  There is no assurance
that we will  obtain the renewal of the waste  disposal  permit when the current
permit expires.

China  is  experiencing   substantial  problems  with  environmental  pollution.
Accordingly,  it is likely that the national,  provincial and local governmental
agencies will adopt stricter pollution controls.  There can be no assurance that
future  changes in  environmental  laws and  regulations  will not impose costly
compliance requirements on us or otherwise subject us to future liabilities. Our
business's  profitability  may be adversely  affected if  additional or modified
environmental control regulations are imposed upon us.

RECENT PRC  REGULATIONS  RELATING TO  ACQUISITIONS  OF PRC  COMPANIES BY FOREIGN
ENTITIES MAY LIMIT OUR ABILITY TO ACQUIRE PRC COMPANIES AND ADVERSELY AFFECT THE
IMPLEMENTATION OF OUR STRATEGY AS WELL AS OUR BUSINESS AND PROSPECTS

The PRC State  Administration  of  Foreign  Exchange,  or SAFE,  issued a public
notice in January 2005 concerning  foreign  exchange  regulations on mergers and
acquisitions  in China ("January  Notice").  The public notice states that if an
offshore company  controlled by PRC residents  intends to acquire a PRC company,
such acquisition  will be subject to strict  examination by the relevant foreign
exchange  authorities.  The public  notice also states that the  approval of the
relevant  foreign  exchange  authorities is required for any sale or transfer by
the PRC  residents  of a PRC  company's  assets or equity  interests  to foreign
entities, such as us, for equity interests or assets of the foreign entities.



                                       19


In April 2005, SAFE issued another public notice further  explaining the January
notice.  In accordance with the April notice, if an acquisition of a PRC company
by an offshore  company  controlled  by PRC  residents  has been  confirmed by a
Foreign  Investment  Enterprise  Certificate  prior to the  promulgation  of the
January  notice,  the PRC residents must each submit a registration  form to the
local SAFE branch with respect to their  respective  ownership  interests in the
offshore  company,  and must also file an amendment to such  registration if the
offshore  company  experiences  material  events,  such as  changes in the share
capital, share transfer, mergers and acquisitions,  spin-off transactions or use
of assets in China to  guarantee  offshore  obligations.  The April  notice also
provides  that  failure to comply  with the  registration  procedures  set forth
therein may result in a restriction  on the PRC company's  ability to distribute
profits to its offshore  parent  company.  Pending the  promulgation of detailed
implementation  rules,  the relevant  government  authorities  are  reluctant to
commence  processing any registration or application for approval required under
the SAFE notices.

As it is uncertain how the SAFE notices will be interpreted or  implemented,  we
cannot predict how they will affect our business  operations or future strategy.
For example,  we may be subject to more  stringent  review and approval  process
with respect to our foreign exchange activities, such as remittance of dividends
and  foreign-currency-denominated  borrowings,  which may  adversely  affect our
results of operation  and  financial  condition.  In  addition,  if we decide to
acquire a PRC  company  by  stocks,  we cannot  assure  that the  owners of such
company,  as the case may be, will be able to complete the  necessary  approval,
filings and registrations for the acquisition.  This may restrict our ability to
implement  our  acquisition  strategy  and  adversely  affect our  business  and
prospects.

OUR  BUISNESS MAY BE  ADVERSELY  AFFECTED AS A RESULT OF CHINA'S  ENTRY INTO THE
WORLD  TRADE  ORGANIZATION  ("WTO")  BECAUSE  THE  PREFERENTIAL  TAX  TREATMENTS
AVAILABLE TO US MAY BE DISCONTINUED AND FOREIGN PHARMACEUTICAL MANUFACTURERS MAY
COMPETE WITH US IN THE PRC PHARMACEUTIAL INDUSTRY

The PRC  became a member of the WTO on 11th  December,  2001.  The  current  tax
benefits  enjoyed by our Company may be  regarded as unfair  treatment  by other
members of the WTO. Accordingly, the preferential tax treatments available to us
may be discontinued.  In such circumstances,  our profitability may be adversely
affected.  In  addition,  we  may  face  additional   competition  from  foreign
pharmaceutical  manufacturers if they set up their production  facilities in the
PRC or form Sino-foreign  joint ventures with our competitors in the PRC. In the
event that we fail to maintain our  competitiveness  against these  competitors,
our profitability may be adversely affected.

Risks Related to Our Common Stock

THE MARKET  PRICE FOR OUR COMMON  STOCK MAY BE VOLATILE  WHICH COULD RESULT IN A
COMPLETE LOSS OF YOUR INVESTMENT

The  market  price for our  common  stock is likely  to be highly  volatile  and
subject to wide fluctuations in response to factors including the following:



                                       20


      o     actual  or  anticipated  fluctuations  in  our  quarterly  operating
            results,

      o     announcements of new products by us or our competitors,

      o     changes in financial estimates by securities analysts,

      o     conditions in the pharmaceutical market,

      o     changes in the economic  performance  or market  valuations of other
            companies involved in pharmaceutical production,

      o     announcements  by  our  competitors  of  significant   acquisitions,
            strategic partnerships, joint ventures or capital commitments,

      o     additions or departures of key personnel, or

      o     potential litigation,

In  addition,  the  securities  markets  have  from  time  to  time  experienced
significant price and volume  fluctuations that are not related to the operating
performance  of  particular  companies.   These  market  fluctuations  may  also
materially and adversely affect the market price of our common stock.

WE MAY ISSUE ADDITIONAL SHARES OF OUR CAPITAL STOCK TO RAISE ADDITIONAL CASH FOR
WORKING  CAPITAL.  IF WE ISSUE  ADDITIONAL  SHARES  OF OUR  CAPITAL  STOCK,  OUR
STOCKHOLDERS WILL EXPERIENCE DILUTION IN THEIR RESPECTIVE  PERCENTAGE  OWNERSHIP
IN US

We may issue additional shares of our capital stock to raise additional cash for
working  capital.  If we issue  additional  shares  of our  capital  stock,  our
stockholders will experience dilution in their respective  percentage  ownership
in us.

A  LARGE  PORTION  OF OUR  COMMON  STOCK  IS  CONTROLLED  BY A SMALL  NUMBER  OF
STOCKHOLDERS  AND AS A RESULT,  THESE  STOCKHOLDERS  ARE ABLE TO  INFLUENCE  THE
OUTCOME OF STOCKHOLDER VOTES ON VARIOUS MATTERS

A large  portion of our common stock is held by a small number of  stockholders.
For  instance,  Ms. Tsui holds  72.8% of the  Company's  common  stock after the
closing of the Exchange  Transaction.  As a result,  this stockholder is able to
influence the outcome of  stockholder  votes on various  matters,  including the
election  of  directors  and other  corporate  transactions  including  business
combinations.  In addition,  the occurrence of sales of a large number of shares
of our common stock, or the perception that these sales could occur,  may affect
our stock  price and could  impair  our  ability  to obtain  capital  through an
offering of equity securities.  Furthermore,  the current ratios of ownership of
our common stock reduce the public float and liquidity of our common stock which
can in turn affect the market price of our common stock.



                                       21


THERE IS CURRENTLY A LIMITED  TRADING MARKET FOR OUR COMMON STOCK WHICH MAY MAKE
IT DIFFICULT TO SELL SHARES OF OUR COMMON STOCK

Our  common  stock  is  traded  in  the  over-the-counter   market  through  the
Over-the-Counter  Electronic  Bulletin  Board.  While there is an active trading
market for our common  stock,  it is small.  Further,  there can be no assurance
that an active trading market will be maintained.  We cannot assure you that our
common stock will ever be included for trading on any stock  exchange or through
any other quotation  system  (including,  without  limitation,  the NASDAQ Stock
Market).

WE  ARE  LIKELY  TO  REMAIN  SUBJECT  TO  "PENNY  STOCK"  REGULATIONS  AND  AS A
CONSEQUENCE  THERE ARE ADITIONAL  SALES  PRACTICE  REQUIREMENTS  AND  ADDITIONAL
WARNINGS ISSUED BY THE SEC

As long as the trading  price of our common stock is below $5.00 per share,  the
open-market  trading  of our common  stock will be subject to the "penny  stock"
rules. The "penny stock" rules impose additional sales practice  requirements on
broker-dealers  who sell securities to persons other than established  customers
and accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding  $200,000 or $300,000  together with their spouse).  For
transactions  covered  by these  rules,  the  broker-dealer  must make a special
suitability  determination  for the purchase of securities and have received the
purchaser's   written   consent  to  the   transaction   before  the   purchase.
Additionally,  for any transaction  involving a penny stock,  unless exempt, the
broker-dealer  must  deliver,  before the  transaction,  a  disclosure  schedule
prescribed by the Securities and Exchange Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered  representative  and current quotations for the
securities.  Finally,  monthly  statements must be sent disclosing  recent price
information  on the limited  market in penny stocks.  These  additional  burdens
imposed on broker-dealers may restrict the ability of broker-dealers to sell the
common stock and may affect a stockholder's ability to resell the common stock.

Stockholders  should  be  aware  that,  according  to  Securities  and  Exchange
Commission  Release No.  34-29093,  the market for penny  stocks has suffered in
recent years from patterns of fraud and abuse. Such patterns include (i) control
of the market for the  security  by one or a few  broker-dealers  that are often
related  to  the  promoter  or  issuer;  (ii)  manipulation  of  prices  through
prearranged  matching  of  purchases  and sales and false and  misleading  press
releases;  (iii) boiler room practices involving high-pressure sales tactics and
unrealistic price projections by inexperienced sales persons; (iv) excessive and
undisclosed bid-ask differential and markups by selling broker-dealers;  and (v)
the wholesale  dumping of the same  securities  by promoters and  broker-dealers
after prices have been manipulated to a desired level,  along with the resulting
inevitable  collapse of those prices and with consequent  investor  losses.  Our
management is aware of the abuses that have occurred  historically  in the penny
stock market.




                                       22


WE ARE RESPONSIBLE FOR THE  INDEMNIFICATION  OF OUR OFFICERS AND DIRECTORS WHICH
COULD RESULT IN SUBSTANTIAL EXPENDITURES, WHICH WE MAY BE UNABLE TO RECOUP

Our  bylaws  provide  for  the  indemnification  of  our  directors,   officers,
employees, and agents, under certain circumstances,  against attorney's fees 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.  This
indemnification policy could result in substantial expenditures, which we may be
unable to recoup.

COMPLIANCE  WITH THE  SARBANES-OXLEY  ACT COULD COST  HUNDREDS OF  THOUSANDS  OF
DOLLARS,  REQUIRE  ADDITIONAL  PERSONNEL  AND  REQUIRE  HUNDREDS OF MAN HOURS OF
EFFORT, AND THERE CAN BE NO ASSURANCE THAT WE WILL HAVE THE PERSONNEL, FINANCIAL
RESOURCES OR EXPERTISE TO COMPLY WITH THESE REGULATIONS

The US Public  Company  Accounting  Reform and Investor  Protection Act of 2002,
better  known as  Sarbanes-Oxley,  is the most  sweeping  legislation  to affect
publicly traded companies in 70 years.  Sarbanes-Oxley  created a set of complex
and burdensome  regulations.  Compliance with such regulations requires hundreds
of  thousands  of dollars,  additional  personnel  and  hundreds of man hours of
effort.  There can be no assurance  that we will have the  personnel,  financial
resources or expertise to comply with these regulations.

                           FORWARD-LOOKING STATEMENTS

This  prospectus  contains  forward-looking  statements  within  the  meaning of
Section  27A of the  Securities  Act and Section  21E of the  Exchange  Act (the
"Exchange Act"). We have based these  forward-looking  statements largely on our
current  expectations  and projections  about future events and financial trends
affecting  the  financial  condition  of  our  business.  These  forward-looking
statements  are subject to a number of risks,  uncertainties,  and  assumptions,
including, among other things:

      -     general economic and business  conditions,  both internationally and
            in the PRC markets,
      -     our   expectations   and  estimates   concerning   future  financial
            performance, financing plans, and the impact of competition,
      -     our ability to implement our growth strategy,
      -     anticipated trends in our business,
      -     advances in technologies, and
      -     other  risk   factors  set  forth  under  "Risk   Factors"  in  this
            prospectus.

In addition, in this prospectus, we use words such as "anticipates," "believes,"
"plans,"  "expects,"  "future,"  "intends," and similar  expressions to identify
forward-looking statements.

We  undertake no  obligation  to update  publicly or revise any  forward-looking
statements,  whether as a result of new information,  future events or otherwise
after the date of this  prospectus.  In light of these risks and  uncertainties,
the  forward-looking  events and circumstances  discussed in this prospectus may
not occur and actual results could differ  materially from those  anticipated or
implied in the forward-looking statements.




                                       23


Notwithstanding the above, Section 27A of the Securities Act and Section 21E of
the Securities Exchange Act expressly state that the safe harbor for forward
looking statements doe not apply to companies that issue penny stock. Because we
issue penny stock, the safe harbor for forward looking statements does not apply
to us.

                                 USE OF PROCEEDS

This  prospectus  relates to shares of our common  stock that may be offered and
sold from time to time by the  selling  stockholders.  We will not  receive  any
proceeds from the sale of shares of common stock in this offering.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


We trade on the OTCBB  under the  symbol  "TSET.OB".  The  following  quotations
reflect the high and low bids for our common stock based on inter-dealer  prices
without retail  mark-up,  markdown,  or commission and may not represent  actual
transactions.  The high and low bid prices  for our  common  stock for each full
financial quarter for the two most recent full fiscal years were as follows:


                   Quarter Ended                   High               Low   
                                                                     
     2005 
     --------------------------------------        -------------     -----------
     3rd Quarter (through October 11, 2005)        $2.25             $1.05
     --------------------------------------        -------------     -----------
     2nd Quarter                                   $2.00             $0.50
     --------------------------------------        -------------     -----------
     1st Quarter                                   $2.25             $1.05
     --------------------------------------        -------------     -----------
                                                                     
     2004                                                            
     --------------------------------------        -------------     -----------
     4th Quarter                                   $1.15             $.40
     --------------------------------------        -------------     -----------
     3rd Quarter                                   $1.15             $1.01
     --------------------------------------        -------------     -----------
     2nd Quarter                                   $0.65             $.52
     --------------------------------------        -------------     -----------
     1st Quarter                                   $0.20             $.60

     2003
     --------------------------------------
     4th Quarter                                   $5.20             $2.00
     --------------------------------------        -------------     -----------
     3rd Quarter                                   $5.40             $0.08
     --------------------------------------        -------------     -----------
     2nd Quarter                                   $0.10             $0.05
     --------------------------------------        -------------     -----------
     1st Quarter                                   $0.10             $0.10
     --------------------------------------        -------------     -----------

On October 11,  2005,  the closing  price of our common  stock was $2.25.  As of
October  11,  2005,  the  stockholders'  list for our  common  stock  showed 169
registered  stockholders of record. This figure does not take into account those
stockholders  whose certificates are held in the name of broker-dealers or other
nominees.  As of October 20, 2005,  30,000,000 shares of common stock are issued
and outstanding.



                                       24

                                                                 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION

The following  discussion  should be read in conjunction  with our  consolidated
financial  statements and the notes thereto and the other financial  information
appearing elsewhere in this document. In addition to historical information, the
following   discussion  and  other  parts  of  this  document   contain  certain
forward-looking  information.  Our financial  statements are prepared in RMB and
are in accordance with accounting  principles  generally  accepted in the United
States.  When  used in this  discussion,  the words  "believes,"  "anticipates,"
"expects,"  and similar  expressions  are  intended to identify  forward-looking
statements.  Such  statements  are subject to certain  risks and  uncertainties,
which could cause actual results to differ  materially  from those projected due
to a number of factors beyond our control.

We do not  undertake  to  publicly  update or revise any of the  forward-looking
statements even if experience or future changes show that the indicated  results
or events will not be realized. You are cautioned not to place undue reliance on
these  forward-looking  statements,  which speak only as of the date hereof. You
are also urged to carefully  review and consider our  discussions  regarding the
various  factors,  which  affect our  business,  included  in this  section  and
elsewhere in this report.

Factors that might cause actual  results,  performance or achievements to differ
materially,  among  other  things:  from  those  projected  or  implied  in such
forward-looking statements include: (i) the impact of competitive products; (ii)
changes in laws and  regulations;  (iii) adequacy and  availability of insurance
coverage;  (iv)  limitations on future  financing;  (v) increases in the cost of
borrowings  and  availability  of debt or  equity  capital;  (vi) the  effect of
adverse publicity regarding our products; (vii) our inability to gain and/or













                                       25


hold market  share;  (viii)  exposure to and expense of resolving  and defending
product liability claims and other litigation;  (ix) consumer  acceptance of our
products;   (x)  managing  and  maintaining   growth;   (xi)  customer  demands;
(xii)market and industry  conditions  including pricing and demand for products,
(xiii)the success of product development and new product  introductions into the
marketplace;  (xiv)the departure of key members of management;  (xv) our ability
to  efficiently  market our products;  as well as other risks and  uncertainties
that are  described  from time to time in our filings  with the  Securities  and
Exchange Commission.

Notwithstanding the above,  Section 27A of the Securities Act and Section 21E of
the  Securities  Exchange Act expressly  states that the safe harbor for forward
looking  statements does not apply to companies that issue  securities that meet
the definition of a penny stock,  as such,  the safe harbor for forward  looking
statements does not apply to us.

Overview

On  June  16,  2005,  Onny  Investment  Limited  ("Onny")  acquired  all  of the
outstanding  common  shares of Hainan  Helpson  Medical  Biotechnology  Co., Ltd
("Hainan"),  a privately  held  Chinese  joint  venture,  in  exchange  for cash
payments to the Hainan  shareholders  in the form of common stock dividends from
Hainan  of  Y34,076,800  and  non-interest  bearing  promissory  notes  totaling
Y28,000,000  payable  on  September  16,  2005.  The  acquisition  of Hainan was
recognized as a business combination.

On August 16, 2005, the Onny  shareholder  made a capital  investment in Onny of
Y28,437,495  in cash in exchange  for the issuance of 29,600  additional  common
shares.  On August 18, 2005,  the memorandum and articles of association of Onny
were amended to increase the number of shares of preferred  stock  authorized to
10,000  shares with a Y827.65  (US$100)  par value.  On October 20,  2005,  Onny
issued  10,000  preferred  shares in exchange for  Y35,692,406  in cash,  net of
offering costs and estimated  registration  costs,  and on that same date, those
preferred  shares were  converted  into 10,000 Onny common  shares and principal
payments on the promissory  notes of Y28,000,000  were made to the former Hainan
shareholders.













                                       26


Also on October 20, 2005, Onny was  reorganized as a wholly-owned  subsidiary of
TS  Electronics,   Inc.  The   reorganization   was  accomplished  by  the  Onny
shareholders  exchanging  their 39,700 Onny common shares for 27,499,940  common
shares of TS Electronics, Inc. and for the commitment by TS Electronics, Inc. to
issue the  original  Onny  shareholder  4,723,056  common  shares  following  an
amendment of the TS Electronics,  Inc. articles of incorporation  increasing the
number of common shares authorized to 100,000,000 shares.

The  reorganization  was  recognized  as an 812-for-1  stock split of the common
stock of Onny and the  effective  issuance  by Onny of the  2,500,060  shares of
common stock of TS Electronics,  Inc. that remained  outstanding in exchange for
the assumption of Y37,021 of  liabilities.  The  acquisition of TS  Electronics,
Inc. was recognized as a nonmonetary exchange.

As a result of these transactions, we currently operate as a holding company for
Helpson, our China-based  indirect wholly owned subsidiary.  Through Helpson, we
research  and  produce a  variety  of  bio-pharmaceutical  products  that  focus
primarily on genetic engineering, bioengineering,  peptidergic medicine. We have
recently  expanded  into chemical  medicine.  Our main products can be separated
into  three  major  categories,  in terms of  product  purposes:  anti-infection
products,  and raw  materials for surface  wound-recovery  and the neural system
product..  We present  product  types  including  the covered  tablet,  capsule,
troche,  oral fluid,  injection,  frozen  powder  acicula,  and germfree  powder
acicula. By increasing  investment in research & development to develop products
with easier absorption,  stability and improved transportation safety, we strive
to fulfill a larger range of patient needs.

We  launched  an  anti-flu  product  named  PuSenOK,  which is the only anti flu
medicine  in the market  mixed with  pseudoephedrine  hydrochloride,  that has a
non-drowsy  formula  and a  runny  nose  suppressant.  We  plan  to  expand  our
biotechnology  product  series.  Based on the foundation  established by some of
Helpson's widely recognized medicine labels such as Neurotrophicpeptide, we will
launch  several  additional  biological  medicines,  including the brain peptide
injection,  injected hepatocyte growth-promoting factors, as well as new genetic
medicines,  rh-CNTF and rha-FGF,  which will give us a new growth following that
of Neurotrophicpeptide.

Our  products  have  been  sold in more than 20  provinces,  sovereignties,  and
autonomous  regions. We have 16 sales offices and approximately 250 proxy agents
in the whole  country.  The main channels we use to deliver our products were as
follows:  (1)  Distribution  system  (Proxy  Agency);  (2) Direct sale system to
hospitals;  (3)  Direct  representation  in  clinic  hospitals  through  medical
representatives;  and (4)  Distribution  of products to local medical  companies
through logistics companies.







                                       27




Our recent business activities include the following:
2005: Helpson launched a new anti-flu medicine: PusenOK.
2003: Helpson gained GMP authentication.
2003:  Helpson named "the best  enterprise  for storing SARS medicine" by Hainan
Food and Drug Administration.
2000:  Helpson  recognized as Hainan  Hi-tech  enterprise by Hainan  Science and
Technology Bureau.
2000: Helpson awarded as one of 50 best enterprises in Hainan by Hainan Economic
and Trade Bureau and Hainan Statistical Bureau.

Buflomedil Hydrochloride (Raw material; injection; & troche)

o     received the best technology  commercialization award in Hainan in 2004 by
      Hainan Scientific and Technological Result Examination Committee.
o     received the national  key new products  certificate  in 2003 by the State
      Science and  Technology  Department,  State Taxation  Bureau,  Ministry of
      Commerce, State Bureau of Quality Supervision,  Inspection and Quarantine,
      and State Enviromental Protection Bureau.
o     designated  as the key  technology  project  in  Hainan  in 2003 by Haikou
      Municpality.

The pro forma financial  information is only  illustrative of the effects of the
acquisition and the capital investment received and does not necessarily reflect
the financial position or results of operations that would have resulted had the
acquisition  actually  occurred  at those  dates.  In  addition,  the pro  forma
financial  information is not necessarily  indicative of the results that may be
expected for the year ending December 31, 2005, or any other period

The following  table  presents the  operations  of Hainan  Helpson for the years
ended December 31, 2003 and December 31,2004, the operations of Onny for the six
months ended June 30, 2005 and the Pro Forma  operations  of the company for the
year ended December 31, 2004 and for the six months ended June 30, 2005.


                                  Hainan Helpson               Onny                Pro Forma
                                                                          ---------------------------
                                For the years ended         For the six     For the      For the six       
                                     December 31,          months ended    year ended    months ended
                             ---------------------------     June 30,     December 31,     June 30,
                                 2003           2004           2005           2004           2005
                             ------------   ------------   ------------   ------------   ------------
                                                                                 
Revenue                      Y  31,149,004  Y  64,059,750  Y   4,076,425  Y  64,059,750  Y  48,143,470
                                                                                           
Cost of revenue                15,354,998     38,200,114      2,689,810     36,754,826     29,634,253
                                                                                           
Operating expenses              6,141,955      3,615,988        203,335      3,615,988      3,370,125
                                                                                           
Income from operations          9,652,051     22,243,648      1,183,280     23,688,936     15,139,092
                                                                                           
Interest expense                  634,336      1,340,709        239,147      2,040,709      1,532,680
Net income                      8,774,363     19,344,826        865,334     20,091,367     14,488,778
Basic and diluted earnings                                                                 
per common share                                                                  0.58           0.42

                                                                        
 


                                       28

                                                                         
Pro forma Operations

Pro forma  revenues were  Y64,059,750  for the year ended December 31, 2004, and
the cost of revenues was Y36,754,826, which is 57.37% of the revenues.

Pro forma  operating  expenses were  Y3,615,988,  which is 15.26% of income from
operations.

Pro forma interest expense for December 31, 2005 is Y2,040,709 and net income is
Y20,091,367.

Pro forma revenues were  Y48,143,470 for the six months ended June 30, 2005, and
the cost of revenues was Y29,634,253, which is 61.55% of the revenues.

Pro forma  operating  expenses were Y3,370,125 for the six months ended June 30,
2005, which is 22.26% of income from operations.

Pro forma interest  expensefor the six months ended June 30, 2005 is Y1,532,680,
and the net income is Y14,488,778.

Operations of Onny

Onny had revenues of Y4,076,425 for the six months ended June 30,2005,  and cost
of revenue of Y2,689,810, which is 65.98% of the revenues.

Onny had operating  expenses of Y203,335 for the six months ended June 30, 2005,
which is 17.18% of income from operations.

Onny had  interest  expense of Y239,147  for the six months ended June 30, 2005,
and the net income is 865,334.

Results  of  operations  of  Helpson  for the year ended  December  31,  2004 as
compared to the year ended December 31, 2003.

Revenues

Revenues  increased to approximately  Y64.06 million for the year ended December
31, 2004 as  compared to  approximately  Y31.15  million for the prior year,  an
increase of approximately Y32.91 million or 105.65%.

Our  revenues  increased  during  the  period as a result of the  completion  of
application  for GMP, which not only increased sale revenues,  but also expanded
the production capacity dramatically.

Cost of revenue

Cost of revenue for the year ended  December 31, 2004 was  approximately  Y38.20
million or 60% of revenues as compared to Y15.35  million or 49% of revenues for
the prior period.



                                       29


The  reduction  in gross profit as a percentage  of revenues  resulted  from the
fierce price competition in the  pharmaceutical  industry and the administrative
notification from the National  Development & Reform  Commission,  requiring all
pharmaceutical  companies to reduce the price of certain  anti-infective  drugs,
the  price  per unit has been cut down  drastically  in 2004.  As a  result,  an
overall decrease in gross profit by 11% of revenues.

Operating Expenses

Operating  expenses  grew to  approximately  Y3.62  million  for the year  ended
December 31, 2004 as compared to approximately Y6.14 million for the prior year,
a decrease of approximately Y2.53 million or 41%.

The reduction in operating  expenses resulted from the decrease in the provision
for bad debts in the amount of Y3.04 million.

Operating Income

Operating  income  totaled  approximately  (Y22.24  million  for the year  ended
December 31, 2004 as compared to operating income of approximately Y9.65 million
for the year ended  December  31,  2003,  an  increase of  approximately  Y12.59
million or 130.47%.

As a percentage of revenues,  operating  income was 34.7% in 2004 as compared to
31% for the prior year.  The  increase in operating  income as a  percentage  of
revenues was 3.7%.

Interest expenses

Finance  costs  increased  to  approximately  Y1.34  million  for the year ended
December 31, 2004 as compared to approximately Y0.63 million for the prior year,
an increase of about approximately Y0.71 million or 114.5%.

We had no  Short-term  notes  payable as of  December  31,  2004 as  compared to
approximately  Y3.80 million  Short-term  notes payable as of December 31, 2003.
However, we had Y15.00 million in current portion of Long-term notes payable and
Y8.00 million in Long-term  notes  payableat of December 31, 2004 as compared to
approximately  Y15.00 million in long-term  notes payable and no current portion
of long-term notes payable as of December 31, 2003.

The increase in interest  bearing debt caused the increase in finance costs. The
funds  obtained  were only used in research and  development.  This R&D fund was
appropriated  by the  ministry  of  finance  of  Hainan  Province  China and the
ministry of Science and technology of Hainan Province China.

Liquidity and capital  resource of Helpson for the year ended  December 31, 2003
and 2004, and Onny for the period from January 12, 2005 to June 30, 2005

The following  table  presents  selected items from the balance sheets of Hainan
Helpson for the years ended  December  31, 2003 and 2004,  the balance  sheet of
Onny at June 30, 2005 and the Pro Forma balance sheet at June 30, 2005. 



                                       30




                                    Hainan Helpson                                       
                                     December 31,             Onny        Pro Forma
                               ------------------------      June 30,      June 30,
                                  2003          2004          2005          2005
------------------------------------------------------------------------------------
                                                                    
Cash and cash equivalents      Y 2,768,395  Y  5,027,342  Y    329,945  Y 42,149,940
Trade accounts receivable       10,425,289    19,948,709    39,705,780    39,705,780
Inventory                       14,889,677    23,226,529    31,607,129    31,607,129
Current assets                  43,608,946    63,085,222    83,051,815   124,871,810
Property and equipment, net     43,510,867    41,050,518    20,776,981    20,776,981
Total assets                    89,130,678   106,010,352   104,404,205   146,224,200
Helpson purchase obligations          --            --      62,627,159    35,220,637
Other current liabilities       23,797,716    29,532,564    32,661,704    33,526,375
Long-term liabilities           25,250,000    18,250,000     8,250,000     8,250,000
Shareholders' equity            40,082,962    58,227,788       865,342    69,227,188



Liquidity and capital resources of Onny for the period January 12, 2005 to June
30, 2005.

As of June 30,2005 ,cash and cash equivalents of Onny is Y329,945.  Cash used in
operating activities was approximately  Y800,563 for the period January 12, 2005
to June 30, 2005,  which resulted from trade accounts  receivable  increasing by
Y3,916,269 and the other  receivables  increasing by Y,757,319 and the inventory
increasing  by  Y4,384,901  offset by  decreases  in advances to  suppliers  and
increases to accounts payable.

Cash flows from  investing  acitvities  for the period  January  12,2005 to June
30,2005  was mainly a result of the net cash  received  in the  purchase  Hainan
Helpson of Y1,068,275.

Liquidity and Capital  Resources of Helpson for the year ended December  31,2003
and 2004

As of  December  31,  2004 we had cash and cash  equivalents  in the  amount  of
approximately  Y5.01  million as compared to  approximately  Y2.75 million as of
December 31, 2003.  Cash used in operation  activities was  approximately  Y3.41
million  in  2004  as  compared  to  approximately  Y4.93  million  provided  by
operatiing activities in 2003.

The main reason for the decrease in cash provided by operating activities was an
increase of trade accounts  receivable in the amount of Y9.52 million in 2004 as
compared to the prior year.

We have historically financed our liquidity  requirements mainly from notes from
financial  institutions  due within a year. Cash provided by bank was Y8 million
in 2004 as  compared  to Y15  million  in 2003.  There was no cash  provided  by
shareholders in 2004 as compared to Y16 million in the prior year.

On October 20, 2005, Onny completed a private  offering of its  securities.  The
offering  resulted in the issuance of an aggregate of 10,000 shares of preferred
stock for gross  offering  proceeds of $5 million,  or an offering price of $500
per share.  Investors in the offering  participated in the exchange  transaction
with the Company and received an aggregate of 6,944,611 restricted shares of the



                                       31


Company's common stock, along with attendant  registration  rights. Net proceeds
from  the  financing  are  anticipated  to be  used  approximately  as  follows:
approximately US$0.6 million for expanding  production  capacity;  approximately
US$0.6 million for R & D;  approximately  US$1.4 million for products  promotion
and  advertisement;   and  approximately  US$1.2  million  for  working  capital
purposes.

                                    BUSINESS

Principal Products and Services
-------------------------------

Helpson's  primary business is drug  manufacturing  and drug sale and marketing.
Helpson  manufactures and markets products in three major categories in terms of
purpose:  cardiovascular and cerebrovascular medicine, raw materials for surface
wound, and anti-infection medicine.

The following drugs have attained new medicine certifications:

Buflomedil  Hydrocholoride  tablets,  Buflomedil   Hydrocholoridefor  injection,
Buflomedil  frozen powder aricula and raw materials.  This product is a chemical
medicine used for the nervous system.

PuSenOK  tablets.  PuSenOK is a new  anti-flu  medicine in the market mixed with
pseudoephederine  hydrochloride  with a  non-drowsy  formula  and a  runny  nose
suppressant.

In addition to the above new medicines,  Helpson is manufacturing  the following
products:

Neurotrophicpeptide  2ml,  5ml, and 10ml:  This  product is a  biopharmaceutical
medicine intended for the nervous system.  Its effect is to provide nutrition to
the neural system and fight nerve system  diseases.  The product is administered
by injection.

Haizhu oral liquid:  This product is a Chinese herbal medicine.  It is available
in fluid form to be taken orally.

Andrographolide  tablet:  This  product  is a Chinese  herbal  medicine  that is
intended for use as an anti-infectant.  The product has low bacteria  resistance
and is suitable for long-term use. It is available in tablet form.

Clarithromycin  capsules  and  granules:  This  product is a  chemical  medicine
intended  to be  used  as  an  anti-infectant.  The  product  is  an  antibiotic
specifically  used for the  effective  curing of  Helicobacter.  The  product is
available in capsule and granule forms.

Roxithromycin:  This  product  is  a  chemical  medicine  that  is  used  as  an
anti-infectant.  The product has germ- and virus-resistant characteristics,  but
is also a troche type of Roxithromycin  that makes it more attractive for use by
patients with deglutition problems. It is administered through tablets.

Thymopetidum  Injection:  This product is used to adjust the immune system.  Its
function is to adjust and  increase  the  immunity of human being  cells.  It is
administered by injection.



                                       32


At  present,  the  Helpson is  manufacturing  a total of 15 drugs  listed in the
following chart, including three that have received new drug certifications.  In
addition,  there are 21 drugs being reviewed by SFDA and eight drugs  undergoing
research and  development.  Among them,  two new drugs have gained the important
national new product certificate.

1.        Buflomedil Hydrocholoride tablets.
2.        Buflomedil Hydrocholoride for injection
3.        Buflomedil Hydrocholoride frozen powder aricula
4.        Buflomedil Hydrocholoride raw materials
5.        PuSenOK tablets
6.        Neurotrophicpeptide 2ml
7.        Neurotrophicpeptide 5ml
8.        Neurotrophicpeptide 10ml
9.        Haizhu Oral Liquid
10.       Andrographolide tablet
11.       Thymopetidum Injection
12.       Clarithromycin capsules
13.       Clarithromycin granules
14.       Cefaclor dispersible tablets
15.       Roxithromycin dispersible tablets
       
Due to the  nature  of the  biotechnology  and  pharmaceutical  industries,  the
product  structure of the Company strives to change with market demand.  Helpson
traditionally focused on R&D and marketing of cardiovascular and cerebrovascular
medicine medicines.  Recently, Helpson launched PuSenOK, an anti-flu medicine in
the  market  mixed with  pseudoephederine  hydrochloride  that has a  non-drowsy
formula and a runny nose  suppressant.  Helpson's  PuSenOK  has passed  clinical
experiments and entered the trial production stage, and awarded the new medicine
certificate.

Helpson also plans to expand its  biotechnology  product series.  Based upon the
foundation  established  by Helpson's  Neurotrophicpeptide,  Helpson will launch
several additional biological medicines, including Brain peptide injections, and
injected Hepatocyte Growth-promoting Factors.

Helpson adjusts the delivery system and marketing for each of its products based
on the product's target patient group. Maintaining a variety of delivery systems
(e.g.  tablet,  injection,  powder,  etc) targeted for different groups enhances
Helpson's  competitive  position  in the  market.  Helpson's  present  types  of
delivery include covered tablet, capsule, troche, oral fluid, injection,  frozen
powder, acicula, and germfree powder acicula.

Principal Markets
-----------------

The principal markets of Helpson lie within China. China has the world's largest
population of nearly 1.3 billion people.  The  pharmaceutical  industry accounts
for      approximately     3%     of     China's     annual     GDP     (Source:
http://www.chinability.com/2004%20economic%20performance.htm).  In  2004,  PRC's
pharmaceutical  industry  realized sales of RMB347.6 billion (US$42 billion) and
net profits of RMB30.64 billion (US$3.7 billion);  a 17.44% increase in realized
sales  and   11.74%   increase   in  net   profits   from  the   previous   year
(Source:http://www.chinapharm.com.cn). According to a Chinese government report,
China's  pharmaceutical sales in 2005 are expected to be approximately RMB 376.6
billion  (US$  45.5  billion),  growing  17% from  the  previous  year  (Source:
http://www.biotech.org.cn/news/news/show.php  ?id=21470).  It is estimated  that
China's  pharmaceutical  industry will  maintain at least a 12%-15%  growth rate
through the year 2010(Source: http://www.511511. com/A1/200501/A1000003917200501
04093750375.shtml).



                                       33


The predicted  growth is based upon the relaxation of trade  barriers  following
China's  accession  to the World  Trade  Organization,  advances  in the Chinese
economy, and China's large, aging population.

Detailed Market Sectors
-----------------------

Reepitheliazation/Wound  rehabilitation medications:  These products belong to a
new and advanced  classification of drugs used to speed the  rehabilitation of a
wide variety of wounds ranging from lacerations and burns to injuries  sustained
during  childbirth  and  surgery.   Cardiovascular  &  Cerebrovascular   Disease
medications:  Cardiovascular & cerebrovascular diseases have become increasingly
common and have a serious  impact on people's  health.  The SFDA  estimated  the
market  share in 2003 of these  two  medicines  in the PRC to be  14.36%  of the
US$5.1 billion (RMB42.2 billion) market. (Source: http://www.specc.com.cn/hydt/
ShowHydt.aspx?id=121 )
 
OTC Cold & Flu medicines:  In 2003, the OTC medicine  market capacity in the PRC
was  approximately   US$3.6  billion,   (Source:   http://www.cnm21.com/xinwen2/
041028_007.htm)  with cold & flu  medicines  having a market  of RMB2.5  billion
(Source: http://www.fx120.net/ypsj/ypsc/scfx/200406101631184449.htm ).

The sales of such medicines make up 8.3% of total OTC medicine retail sales.

Anti-infection  medicines: In the past few years,  Anti-infection medicines have
become the best  selling  drugs within the PRC while also  maintaining  a growth
rate of 20%. In 2001, the sales reached roughly RMB30 billion (US$3.6  billion);
in 2003, the sales reached more than RMB40 billion (US$4.8 billion), achieving a
30% market share.  (Source:  SFDA Prospectus of Zhejiang Jingxin  Pharmaceutical
Co., Ltd.).

 Distribution
 ------------

Helpson's products are currently sold in more than 20 provinces,  sovereignties,
and autonomous regions. Helpson has 16 sales offices and approximately 250 proxy
agents in China.

Helpson  uses  a  flat  distribution  channel  system  of  independent  regional
distributors. In a typical distribution contract, a distributor will be provided
with certain  sales  targets for a particular  period  according to a set retail
price. If the distributor completes the sales task within the prescribed period,
the agent  distributor  will be given  greater  economic  incentives  and future
distribution opportunities.  If the distributor fails to complete the sales task
within  the  prescribed  period,  Helpson  will  cancel  its  contract  with the
distributor  and sign with  other  competent  distributors.  Helpson  also signs
reselling  contracts with franchise drug companies for the  distribution  of its
products.  The  franchise  drug  company,  as a reseller,  resells the Company's
products to local hospitals,  drug stores,  and other channel  distributors.  In
addition,  Helpson  sells its  products  directly to  hospitals  and retail drug
stores.



                                       34


Industry Background and Competition

The  pharmaceutical  industry  accounts  for  approximately  3% of China's  GDP.
(Source: http://blog.fh21.com.cn/post/65/106). The industry's primary categories
include chemical medicine,  traditional Chinese medicinal material,  traditional
Chinese   medicinal  film,   prepared  Chinese  herbal  medicine,   antibiotics,
biological  products,   biological  medicine,   radioactive  medicine,   medical
appliances,  sanitation materials,  pharmaceutical machinery, medical packaging,
and trading.

There is a low degree of  consolidation  among  pharmaceutical  companies in the
PRC. According to the SFDA-reported statistics, in July of 2004, there were 5071
manufacturing   pharmaceutical  companies  (not  including  companies  producing
traditional  Chinese  medicinal  film,  medical  oxygen,   reagent  of  in-vitro
diagnosis  or  supplementary  materials).  The total  market share of the top 10
biggest companies was about 42%, compared to 66% in the US. (Source: SFDA(pound)
Prospectus of Zhejiang Jingxin Pharmaceutical Co., Ltd.)

Competition  in the  pharmaceutical  industry is reduced by barriers to entry. A
company  wishing  to enter the  industry  must  comply  with the  standards  and
regulations set forth by the government.  In the PRC, SFDA is the authority that
monitors  and  supervises  the  administration  of the  pharmaceutical  industry
including   pharmaceutical   products,   medical   appliances,   and  equipment.
Pharmaceutical   manufacturing   enterprises   must   obtain  a   Pharmaceutical
Manufacturing   Enterprise   Permit   issued  by  the  relevant   pharmaceutical
administrative  authorities  and relevant  health  departments at the provincial
level where the enterprise is located.  Furthermore, all pharmaceutical products
produced in the PRC, with the exception of Chinese  herbal  medicines in soluble
form,  must  bear a  registered  number  approved  by the  appropriate  medicine
administration  authorities  in the PRC.  Lastly,  in accordance  with the World
Health  Organization,  the PRC now  requires  compliance  with GMP  standards in
pharmaceutical  production  in order  to  minimize  the  risks  involved  in any
pharmaceutical  production  that  cannot be  eliminated  through  testing  final
products.  As the regulatory  approval  process becomes more stringent,  it also
increases the industry's capital entry barrier.

Due to the  variety  of  consumer  demands  within  the  pharmaceutical  market,
pharmaceutical  companies  have  relatively  dispersed  product  lines.  We have
identified,  however,  two  primary  strategies  we must  adopt in order to stay
competitive.  In expanding market share of common traditional  medicine, we must
take advantage of 1) our large  manufacturing  scale and reasonable cost control
mechanisms, and 2) our strong sales network.

Description of Property
-----------------------

Helpson owns a factory with a floor area of 663.94 square meters  located at the
East Wing, 6/F, 5 Jianshe Road, Jinpan Industrial Development Zone, Haikou.



                                       35


Helpson  also  owns the land use  right of the land  covering  an area of 31,050
square meters located at plot C09-2, Hainan Bonded Zone, Haikou. Helpson built a
factory  with a floor area of  approximately  7,300  square  meters on this land
plot.

In  addition,  Helpson  entered  into a  lease  agreement  with  Hainan  Zhongfu
Going-abroad  Personnel Service Center  ("Zhongfu"),  under which Helpson rented
the offices  located at 2/F,  Jiahai  Building owned by Zhongfu as its principal
executive  offices.  The lease term being 10 years,  from  November  21, 2000 to
November  20,  2010.  The rent from  November  21, 2000 to November  20, 2005 is
RMB3,600 per month.  The rent from November 21, 2005 to November 20, 2010 may be
adjusted within 5% of the original rent.

Intellectual Property
---------------------

Helpson owns 10 registered  trademarks and logos used in connection with western
medicine,   raw  material   medicine,   Chinese  herbal  medicine  and  medicine
injections,  which are: Funalin, Fukexing, Helspon, Beisha, Shiduotai, Xinuo and
HPS logo and  three  other  logos;  one logo  used in  connection  with  bathing
cosmetics,  shampoo, hair stimulating shampoo,  facials, nail polish, cosmetics,
perfume,  perfume essence oils, skin care toner, and cosmetics cleansers;  and 1
registered  trademark,  Helpson,  and one logo,  used in connection with medical
appliances and equipment, surgical implants, surgical implanted artificial eyes,
surgical  artificial  crystalline lens, surgical artificial skin, and artificial
eyes.  In  addition,  Helpson is applying for  registration  of nine other trade
marks used in connection with western medicine,  raw material medicine,  Chinese
herbal medicine and medicine injections.

Helpson  owns  the  intellectual  property  rights  of its  genetic  engineering
technology for rh-CNTF and rh-aFGA,  and fungi form  engineering  and production
techniques.

Employees
---------

The Company  currently has 105 regular  employees.  Helpson is also aided by the
efforts of a 250 member outside sales & marketing team.

Government Regulation
---------------------

The following is a summary of the principal  governmental  laws and  regulations
that are or may be applicable to  pharmaceutical  manufacturing  companies  like
Helpson in China.  The scope and enforcement of many of the laws and regulations
described  below  are  uncertain.  We  cannot  predict  the  effect  of  further
developments  in the Chinese legal system,  including  the  promulgation  of new
laws, changes to existing laws, or the interpretation or enforcement of laws.

The major pieces of legislation  regarding the  pharmaceutical  industry include
the Law of Drug Administration of the PRC, effective as of December 1, 2001, its
Implementing   Regulations   effective  as  of  September  15,  2002,   and  the
Administrative Measures of Drug Registration effective as of May 1, 2005.



                                       36


Production Licenses

In  the  PRC,  SFDA  is  the  authority   that  monitors  and   supervises   the
administration of the pharmaceutical industry including  pharmaceutical products
and  medical  appliances  and  equipment.   Any   pharmaceutical   manufacturing
enterprise must obtain a Pharmaceutical  Manufacturing  Enterprise Permit issued
by the relevant  pharmaceutical  administrative  authorities and relevant public
health departments at the provincial level where the enterprise is located.

Registration of Pharmaceutical Products

All pharmaceutical  products that are produced in the PRC must bear a registered
number  approved by the SFDA in the PRC, with the exception of Chinese herbs and
Chinese herbal medicines in soluble form. The medicine manufacturing enterprises
must obtain the medicine registration number before manufacturing any medicine.

GMP

The World  Health  Organization  encourages  the  adoption of GMP  standards  in
pharmaceutical  production  in order  to  minimize  the  risks  involved  in any
pharmaceutical  production  that  cannot be  eliminated  through  testing  final
products.  In 1998,  the  Ministry  of  Health of the PRC  started  to issue GMP
standards  for the  pharmaceutical  manufacturing  enterprises  in the PRC.  Any
pharmaceutical  manufacturing  enterprise  must comply with GMP standards by the
end of June 30th,  2004.  The  process  of GMP  authorization  requires  about 3
months.

Examination and Approval of New Medicines

New  medicines  generally  refer to those that have not yet been marketed in the
PRC. Marketed medicines  changing the type or application  method, or adding new
therapeutic functions shall also be treated as new medicines.

According to the Administrative  Measures of Drug Registration,  the approval of
new medicine shall undergo the following procedures:

The applicant shall first carry out clinical trials, which consists of 4 phases.

Upon completion of the clinical  trial,  the applicant shall submit the Medicine
Registration  Application Form, clinical trial materials and other supplementary
materials  to  the  provincial  medicine  administration   authority  where  the
applicant is located.  In the meantime,  the applicant  submits raw materials of
the medicine to the China Medicine and Biological Products Examination Institute
(the "Institute").

The  provincial  medicine  administration  authority  will conduct a preliminary
examination of the application. If it decides to accept the application, it will
conduct an on-site  examination  of the  application  and draw  sample  products



                                       37


within  5  days  of  accepting  the   application.   The   provincial   medicine
administration  authority will then send the samples to the medicine  inspection
institute for inspection,  which shall submit its inspection  report to the SFDA
with a copy to the provincial medicine administration authority.

The provincial  medicine  administration  authority will submit its  examination
opinion,  examination  report and application  materials to the SFDA, which will
perform a comprehensive  examination of the  application.  If the SFDA deems the
application complete,  it will issue the Medicine  Registration  Certificate and
New Medicine  Certificate  to the  applicant.  If the applicant  already holds a
Medicine  Manufacturing  Permit,  the SFDA will issue the Medicine  Registration
Number at the same time.

Legal Proceedings
-----------------

We have no pending legal  proceedings.  From time to time, we may be involved in
various claims,  lawsuits,  disputes with third parties,  and actions  involving
allegations of breach of contract or product liability actions incidental to the
normal business operations.

                                   MANAGEMENT

The  following  table sets forth the names of all of our current  directors  and
executive  officers to be  appointed.  The  directors  will serve until the next
annual  meeting of the  stockholders  or until their  successors  are elected or
appointed  and  qualified.   Executive   officers  will  serve  at  the  board's
discretion.


--------------------- -------------- -------------------------------------------
Name and Address         Age         Position                                   
--------------------- -------------- -------------------------------------------
Heung Mei TSUI           48          Director                                   
--------------------- -------------- -------------------------------------------
Zhilin LI                48          President and Chief Executive Officer      
--------------------- -------------- -------------------------------------------
Xinhua WU                38          Chief Financial Officer                    
--------------------- -------------- -------------------------------------------
Jian YANG                45          Secretary                                  
--------------------- -------------- -------------------------------------------
                                                                            
Ms. Heung Mei TSUI.  Ms. TSUI is director of the Company since October 20, 2005.
She  is a  self-employed  business  woman  engaged  in the  re-export  business,
including chemical products trade and  electromechanical  products trade. She is
also the Toyota automobile's agent in Hainan province.  She graduated from Huhan
Financial & Economic College in 1982.

Ms.  Zhilin LI: Ms. Li is President and Chief  Executive  Officer of the Company
since October 20, 2005. she is a founder of Helpson,  and has served as chairman
and CEO of Helpson  since 1993.  Ms. Li was  formerly  the  president  of Haikou
Bio-engineering  institute,  and the vice president of the Sichuan  Institute of
Biology . She graduated from Sichuan  University,  where she majored in biology,
and later became an instructor.

Mr.  Xinhua WU: Mr. Wu is Chief  Financial  Officer of the Company since October
20, 2005. He has acted as CFO of Helpson since his hiring in 1999. Mr. Wu served
as CFO and assistant to the CEO at Hainan Guobang Enterprises Inc., where he was
employed from 1992 to 1999.  Mr. Wu graduated  from the University of Wales with
an MBA degree and Jiangxi Financial college with a Bachelor of Science degree in
Finance.

Ms. Jian YANG:  Ms. Yang is Secretary of the Company since October 20, 2005. She
is a founder and director of Helpson.  Ms. Yang was a technician  at the Sichuan
Institute  of  Biology  in  1990  and  vice  president  of  Haikou   Biomedicine
Enginerring  Co.,  Ltd.  in 1991 Ms. Yang  earned her MBA at the  University  of
Wales, England.



                                       38


Board Composition and Committees


The board of directors is currently composed solely of Heung Mei Tsui. All board
actions  require the approval of a majority of the  directors in attendance at a
meeting at which a quorum is present.

We currently have no committees of Audit, Compensation, or any other committees;
therefore, the board will act in the capacity of the absent committees.

Disclosure  of  Commission   Position  of  Indemnification  for  Securities  and
Liabilities

Our Amended and Restated Certificate of Incorporation,  with certain exceptions,
eliminates  any  personal  liability  of  directors  or  officers  to us or  our
stockholders for monetary damages for the breach of such person's fiduciary duty
to the extent  permitted by law. We have also adopted  by-laws which provide for
indemnification  to the full extent  permitted  under the law which includes all
liability,  damages,  costs,  or expenses  arising  from or in  connection  with
service for,  employment by, or other  affiliation with us to the maximum extent
and under all circumstances permitted by law.

There are presently no material  pending  legal  proceeding to which a director,
officer, or employee of ours is a party. There is no pending litigation or legal
proceeding involving one of our directors,  officers,  employees or other agents
as to which indemnification is being sought, and we are not aware of any pending
or threatened  litigation that may result in claims for  indemnification  by any
director, officer, employee or other agent.

To  the  extent   provisions  of  our  Amended  and  Restated   Certificate   of
Incorporation  provide for  indemnification of directors for liabilities arising
under the  Securities  Act or the Exchange  Act,  those  provisions  are, in the
opinion of the  Securities  and Exchange  Commission,  against public policy and
therefore are unenforceable.

Code of Ethics

We do not  yet  have a Code  of  Ethics.  Due to the  recent  completion  of the
Reorganization  with Onny,  the board of  directors  has decided to postpone the
adoption of a code of ethics  until we are able to focus our  business  plan and
develop a greater infrastructure.  Once we have adopted a Code of Ethics, a copy
may be obtained by sending a written request to our corporate Secretary.

                       DIRECTOR AND EXECUTIVE COMPENSATION

No cash  compensation was paid to our director for services as a director during
the fiscal year ended June 30, 2005. We have no standard arrangement pursuant to
which our board of directors is compensated for their services in their capacity
as  directors.  The board of directors  may award  special  remuneration  to any



                                       39




director  undertaking  any special  services on behalf of our Company other than
those services ordinarily required of a director.  All authorized  out-of-pocket
expenses  incurred by a director on our behalf will be subject to  reimbursement
upon our receipt of required supporting  document of such expenses.  No director
received  and/or  accrued  any  compensation  for his  services  as a  director,
including committee participation and/or special assignments.

The following table provides  compensation  information for the period indicated
with respect to the person who served as our  President for the years ended June
30, 2005, 2004 and 2003, and all other of our executive officers receiving total
salary and bonus in excess of  $100,000  during the years  ended June 30,  2005,
2004and 2003 (collectively, the "Named Executive Officers"):


                           SUMMARY COMPENSATION TABLE

-----------------------------------------------------------------------------------------------------------------
                                                                         Long Term Compensation      
---------------------- ------ --------------------------------- -------------------------- --------- ------------
                                     Annual Compensation                  Awards            Payouts
---------------------- ------ --------------------------------- -------------------------- --------- ------------
        (a)              (b)       (c)       (d)       (e)           (f)         (g)           (h)       (i)

                                                      Other                    Securities                                  
                                                     Annual      Restricted   Under-lying    LTIP     All Other   
Name and Principal                          Bonus   Compensa-      Stock        Options/    Payouts    Compen-
     Position           Year   Salary ($)    ($)      tion       Awards ($)     SARs (#)      ($)     sation ($)
---------------------- ------ ------------ ------- ------------ ------------ ------------- --------- ------------
                                                                             
(1) Keith P. Boyd       2005           0       0             0           0              0       0             0  
CEO, CFO & President    2004           0       0             0           0              0       0             0  
                        2003      36,000       0             0           0              0       0             0  
---------------------- ------ ------------ ------- ------------ ------------ ------------- --------- ------------
(1) Tim Halter                         0       0             0           0              0       0             0  
President, CAO and      2005                                                                                     
Secretary                                                                                                        
---------------------- ------ ------------ ------- ------------ ------------ ------------- --------- ------------


(1) Our  management  did not spend any  material  time  working  since we had no
material  business.  Accordingly,  we did not compensate any officer or director
during this time period.

STOCK OPTION GRANTS AND EXERCISES

We currently have no option, retirement, pension, or profit sharing programs for
the  benefit of the  directors,  officers or other  employees,  but the board of
directors may recommend adoption of one or more such programs in the future.

EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS

Ms.  Zhilin Li, Mr.  Xinhua Wu and Ms.  Jian Yang  receive no  compensation  for
acting as officers of the  Company.  Ms.  Zhilin Li entered  into an  Employment
Agreement  with  Helpson,  which  provides that Ms. Li is employed by Helpson to
perform executive management. The term of her employment is from July 1, 2005 to


                                       40


June 30, 2010. Her annual salary is RMB800,000 or  approximately  $100,000.  Mr.
Xinhua Wu was employed by Helpson to act as its CFO. The term of his  employment
is from July 1, 2005 to June 30,  2010.  His  annual  salary  is  RMB500,000  or
approximately  $62,500.  Ms.  Jian Yang was  employed  by  Helpson to act as its
Deputy General Manager.  The term of her employment is from July 1, 2005 to June
30, 2010. Her annual salary is RMB500,000 or approximately $62,500.

DIVIDEND POLICY

Since  inception,  we have not paid,  nor declared,  any dividends and we do not
intend to declare any such dividends in the foreseeable  future.  Our ability to
pay dividends is subject to limitations  imposed by Delaware law and the laws of
the PRC.






         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth certain  information  known to us with respect to
the beneficial  ownership of our common stock as of October 20, 2005 and (i) all
persons who are known to us to be  beneficial  owners of five percent or more of
the common stock,  (ii) each of our Directors,  and (iii) all current  Directors
and executive officers as a group.

NAME AND ADDRESS OF             SHARES BENEFICIALLY OWNED       % OF CLASS OWNED
BENEFICIAL OWNER (1)         
                             
Heung Mei TSUI (2)                    20,555,329                      68.5

Halter Financial Investments,          1,828,170                       6.0
L.P.(3)                       

(1)      Unless otherwise stated, the address of all persons in the table is c/o
         Unit 8, D  Area,  Office  Hall,  Haikou  Bonded  Zone,  Haikou,  Hainan
         Province, China.

(2)      Upon the effectiveness of an amendment to the Company's  Certificate of
         Incorporation  to increase its common capital stock,  the Company shall
         issue to  Heung  Mei  Tsui,  the  principal  stockholder  of  Onny,  an
         additional  4,723,056 shares of Post Closing Shares.  Upon the issuance
         of the Post Closing  Shares,  Ms. Tsui will hold  25,278,385  shares or
         approximately  72.8% of the issued and outstanding common capital stock
         of the Company.  Ms. Heung Mei Tsui has also agreed to escrow 6,944,611
         shares of common stock for the participants in Onny's private placement
         and 277,785 shares for HFG International, Limited .

(3)      The address for Halter  Financial  Investments,  L.P. is 12890  Hilltop
         Road, Argyle, Texas 76226.




                                       41


Beneficial  ownership  is  determined  in  accordance  with  the  rules  of  the
Securities and Exchange  Commission and includes voting or investment power with
respect to the securities..  Unless otherwise indicated, the address for each of
the individuals listed in the table is care of Hainan Helpson Bio-Pharmaceutical
Co. Ltd,  Unit 8, D Area,  Office  Hall,  Haikou  Bonded  Zone,  Haikou,  Hainan
Province, China.

Unless otherwise indicated by footnote, the persons named in the table have sole
voting  and sole  investment  power with  respect to all shares of common  stock
shown as beneficially  owned by them,  subject to applicable  community property
laws.  Percentage of beneficial  ownership is based on 30,000,000  shares of our
common stock outstanding as of October 20, 2005.

                            SELLING SECURITY HOLDERS

We have prepared  this  prospectus  to allow the selling  stockholders  or their
pledgees,  donees,  transferees or other  successors in interest,  to sell up to
8,819,653  shares of our common  stock.  All of the common stock offered by this
prospectus is being offered by the selling stockholders for their own accounts.

2005 Private Placements

On May 11, 2005,  we sold to Halter  Financial  Group,  Inc.  ("HFG")  1,875,045
shares of restricted common stock at a purchase price of $0.1066641 per share in
a private  placement,  pursuant to the terms of a Stock Purchase  Agreement (the
"Purchase  Agreement")  executed by the parties on said date. As a result of the
purchase,  HFG became our controlling  shareholder,  owning approximately 75% of
our issued and  outstanding  shares of common stock..  This issuance was made in
reliance on Section 4(2) of the Act and was made without general solicitation or
advertising.  On October 4, 2005, Halter Financial Group  transferred  1,828,170
shares to Halter  Financial  Investments,  L.P.,  an affiliated  entity,  and an
aggregate of 46,875 shares to members of its advisory board. .

Prior to the  closing of the  Exchange  Transaction,  Onny  completed  a private
placement of its  convertible  preferred stock to 46 accredited  investors.  The
offering raised gross proceeds of $5,000,000. Prior to the Exchange Transaction,
participants in the offering  exchanged their preferred  shares for an aggregate
of 10,000 shares of Onny's common  capital stock.  Participants  in the offering
then  participated  in the  Exchange  Transaction,  and the shares of our common
stock that they received therein are included in the  registration  statement of
which this prospectus is a part..

The  following  table sets forth the names of the selling  stockholders  and for
each selling stockholder the number of shares of common stock beneficially owned
as of October 20,  2005,  and the number of shares being  registered.  Except as
otherwise   indicated  in  the  footnotes  to  the  below  table,  each  selling
stockholder  acquired its  securities  in the  Company's  private  placements of
securities  completed on October 20, 2005.  Furthermore,  except as set forth in
the footnotes below, none of the selling  stockholders has held a position as an
officer or  director  of the  company,  nor has any  selling  stockholder  had a
material relationship of any kind with the company. All information with respect
to share  ownership has been furnished by the selling  stockholders.  The shares



                                       42




being offered are being  registered to permit  public  secondary  trading of the
shares and each  selling  stockholder  may offer all or part of the shares owned
for resale  from time to time.  A selling  stockholder  is under no  obligation,
however,  to sell any shares immediately  pursuant to this prospectus,  nor is a
selling  stockholder  obligated  to sell all or any portion of the shares at any
time.  Therefore,  no estimate can be given as to the number of shares of common
stock that will be sold pursuant to this prospectus or the number of shares that
will be owned by the selling  stockholders upon termination of the offering made
hereby.  We will file a supplement to this  prospectus to name successors to any
named  selling  stockholders  who are able to use this  prospectus to resell the
securities registered hereby.


Selling Stockholder                Shares of     Percent of       Shares of         Percent of Common
                                 Common Stock      Class       Common Stock to      Stock owned after 
                                     Owned                      be Registered     Completion of Offering 
                                                                                            
Halter Financial Investments,     1,828,170         6.09         1,828,170                  0
L.P.                                                                                        
James R. Sasser*                      9,375         0.03             9,375                  0
Liu Hongru*                           9,375         0.03             9,375                  0
Pieter P. Bottelier*                  9,375         0.03             9,375                  0
James W. McDowell *                   9,375         0.03             9,375                  0
Gary C. Evans                       703,836         2.35             9,375                  0
Liu Hainan*                          41,668         0.14            41,668                  0
Nie Xinyong*                        208,338         0.69           208,338                  0
Jiao Xueqian*                        13,889         0.05            13,889                  0
Ma Fengdi*                           69,446         0.23            69,446                  0
Yang Wei*                            27,778         0.09            27,778                  0
Peng Yuguo*                          13,889         0.05            13,889                  0
He Shengping*                        69,446         0.23            69,446                  0
Baslow Technology Limited*           69,446         0.23            69,446                  0
Huang Xueming*                       34,723         0.12            34,723                  0
Wu Xiaowei*                          13,889         0.05            13,889                  0
Li Zhi*                              41,668         0.14            41,668                  0
Wang Guimin*                         41,668         0.14            41,668                  0
Yu Li*                               13,889         0.05            13,889                  0
Qiu Kun*                             13,889         0.05            13,889                  0
Wang Xinlu*                          69,446         0.23            69,446                  0
Dai Xianshu*                         41,668         0.14            41,668                  0
Long Yuqi*                           41,668         0.14            41,668                  0
Jin Shuzhi*                          27,778         0.09            27,778                  0
Clear View Investment                41,668         0.14            41,668                  0
Fund, LP*                                                                                   
Zhou Huaizu*                         13,889         0.05            13,889                  0
Liang Yinwen*                        20,835         0.07            20,835                  0
Guo Zhiying*                        125,003         0.42           125,003                  0
Zheng Min*                           41,668         0.14            41,668                  0
Cui Heming*                          55,558         0.19            55,558                  0
Yang Yonggang*                       55,558         0.19            55,558                  0
Zhang Jianye*                        27,778         0.09            27,778                  0
Shang Liying*                        13,889         0.05            13,889                  0
Chang Yundong*                       27,778         0.09            27,778                  0
Han Yi*                              13,889         0.05            13,889                  0
Qian Cheng*                          41,668         0.14            41,668                  0
Zhou Lin*                            69,446         0.23            69,446                  0
Zhao Kai*                            27,778         0.09            27,778                  0
Wang Tianan*                         13,889         0.05            13,889                  0
Lv Ping*                              6,945         0.02             6,945                  0
Mu Chuanquan*                         6,945         0.02             6,945                  0



                                       43


Tang Zhixiong*                       13,889         0.05            13,889                  0
Ma Yong                             416,677         1.39           416,677                  0
SICAV Placeuro-global               277,784         0.93           277,784                  0
China  Fund*                                                                                
Gu Liping*                          277,784         0.93           277,784                  0
Shao Jianmin                        569,458         1.90           569,458                  0
Zhao Jingzhen*                      138,892         0.46           138,892                  0
Dou Qilv*                           138,892         0.46           138,892                  0
Bob Wu*                              41,668         0.14            41,668                  0
Pinncale China Fund, LP           2,777,844         9.26         2,777,844                  0
Danny Conwill*                      138,892         0.46           138,892                  0
Total                             8,819,653         29.4         8,819,653                  0

                                                                     
                                                                          
*Denotes less than 1% of the outstanding shares of common stock.

                            DESCRIPTION OF SECURITIES

The descriptions in this section and in other sections of this prospectus of our
securities and various  provisions of our certificate of  incorporation  and our
bylaws  are  limited  solely  to  descriptions  of  the  material  terms  of our
securities,  articles  of  incorporation  and bylaws.  Our Amended and  Restated
Certificate of Incorporation and bylaws have been filed with the SEC as exhibits
to this registration statement of which this prospectus forms a part.

Our authorized  capital stock consists of 30,000,000 shares of common stock, par
value $0.001per share, all of which are issued and outstanding.

Common Stock

The  holders  of  our  common  stock  are  entitled  to  equal   dividends   and
distributions per share with respect to the common stock when and if declared by
the Board of Directors from funds legally available therefore.  No holder of any
shares of our common stock has a  pre-emptive  right to subscribe for any of our
securities.  Upon  liquidation,  dissolution,  or  winding  up of us,  and after
payment of  creditors  and  preferred  stockholders,  the assets will be divided
pro-rata  on a  share-for-share  basis among the holders of the shares of common
stock.  All  shares of common  stock now  outstanding  are fully  paid,  validly
issued, and non-assessable.

Each share of common  stock is entitled to one vote with respect to the election
of any  director or any other  matter upon which  stockholders  are  required or
permitted  to vote.  Holders of the common stock do not have  cumulative  voting
rights,  so the holders of more than 50% of the combined  shares  voting for the
election of  directors  may elect all of the  directors if they choose to do so,
and, in that  event,  the  holders of the  remaining  shares will not be able to
elect any members to the board of directors.

ANTI-TAKEOVER  EFFECTS OF VARIOUS PROVISIONS  OFDELAWARE LAW AND OUR ARTICLES OF
INCORPORATION AND BYLAWS

We are subject to Section 203 of the Delaware  General  Corporation Law. Subject
to certain exceptions,  this statute regulating  corporate takeovers prohibits a
Delaware  corporation  from  engaging  in  any  business  combination  with  any
interested  stockholder  for three years following the date that the stockholder
became an interested stockholder.



                                       44


Generally,  a business  combination  includes a merger,  asset or stock sale, or
other   transaction   resulting  in  a  financial   benefit  to  the  interested
stockholder. An interested stockholder is a person who, together with affiliates
and  associates,  owns or,  within  three  years prior to the  determination  of
interested   stockholder  status,  did  own  15%  or  more  of  a  corporation's
outstanding voting securities. We expect the existence of this provision to have
an anti-takeover effect with respect to transactions our board of directors does
not approve in  advance.  We also  anticipate  that  Section 203 may  discourage
takeover  attempts  that might result in a premium over the market price for the
shares of common stock held by stockholders.

Provisions of our certificate of incorporation and bylaws may have the effect of
making it more  difficult  for a third party to acquire,  or  discourage a third
party from  attempting  to acquire,  control of our Company by means of a tender
offer, a proxy contest or otherwise.  These provisions may also make the removal
of  incumbent  officers and  directors  more  difficult.  These  provisions  are
intended  to  discourage  certain  types  of  coercive  takeover  practices  and
inadequate  takeover bids and to encourage persons seeking to acquire control of
us to first negotiate with us. These  provisions could also limit the price that
investors  might be willing to pay in the future for shares of our common stock.
These  provisions may make it more difficult for  stockholders  to take specific
corporate  actions and could have the effect of delaying or  preventing a change
in control.

Shares Eligible for Future Sale 
-------------------------------

On October 20, 2005, 30,000,000 shares of our common stock were outstanding.  Of
the outstanding shares,  502,391shares of common stock are immediately  eligible
for sale in the public market without restriction or further  registration under
the  Securities  Act.  All  other  outstanding  shares of our  common  stock are
"restricted  securities"  as such term is defined  under Rule 144,  in that such
shares were issued in private  transactions  not involving a public offering and
may not be sold in the absence of  registration  other than in  accordance  with
Rules  144,  144(k),  or 701  promulgated  under the  Securities  Act or another
exemption from registration.

In  general,  under Rule 144 as  currently  in effect,  a person,  including  an
affiliate,  who has beneficially  owned shares for at least one year is entitled
to sell, within any three-month period commencing 90 days after the date of this
prospectus,  a number of shares  that does not exceed the greater of one percent
of the then outstanding shares of our common stock or the average weekly trading
volume in our common stock during the four calendar weeks  preceding the date on
which  notice  of such  sale is  filed,  subject  to  various  restrictions.  In
addition,  a person who is not deemed to have been an  affiliate  of ours at any
time  during the 90 days  preceding  a sale and who has  beneficially  owned the
shares  proposed  to be sold for at least two years  would be  entitled  to sell
those  shares under Rule 144(k)  without  regard to the  requirements  described
above. To the extent that shares were acquired from an affiliate,  such person's
holding  period for the purpose of affecting a sale under Rule 144  commences on
the date of transfer from the affiliate.  As of October 20, 2005,  approximately
97,624 of our  outstanding  restricted  shares were eligible for sale under Rule
144.



                                       45


There has been very limited trading volume in our common stock to date. Sales of
substantial  amounts of our common  stock under Rule 144,  this  prospectus,  or
otherwise,  could  adversely  affect the  prevailing  market price of our common
stock and could impair our ability to raise  capital  through the future sale of
our securities.

Transfer Agent and Registrar

The Transfer  Agent and Registrar  for our common stock is  Securities  Transfer
Corporation,  2591  Dallas  Parkway,  Suite  102,  Frisco,  Texas  75234 and its
telephone number is 469.633.0100.


                              PLAN OF DISTRIBUTION

We are  registering  a total of  8,819,653  shares of our common  stock that are
being offered by the selling stockholders. As used in this prospectus,  "selling
stockholders" includes the pledgees, donees, transferees or others who may later
hold the selling  stockholders'  interests in the common stock.  We will pay the
costs and fees of registering  the common shares,  but the selling  stockholders
will pay any brokerage commissions,  discounts or other expenses relating to the
sale of the common stock.  We will not receive the proceeds from the sale of the
shares by the selling stockholders.

The   selling   stockholders   and  any  of  their   pledgees,   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 purchasers;
     -    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;
     -    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



                                       46


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 of common stock or warrants  owned by them
and,  if they  default in the  performance  of their  secured  obligations,  the
pledges,  or secured  parties may offer and sell the 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,
amending the list of selling stockholders to include the pledgee, transferee, or
other successors in interest as selling stockholders under this prospectus.

                                  LEGAL MATTERS

The validity of the  registration  for the resale of common stock will be passed
upon for us by King & Wood LLP.

                                    EXPERTS

The  balance  sheet of Onny as of May 31,  2005,  and the related  statement  of
operations, stockholder's equity, and cash flows for the period from January 12,
2005 (date of inception)  through May 31, 2005,  balance sheets of Helpson as of
December  31,  2003  and  2004,  and  the  related   statements  of  operations,
stockholders'  equity,  and cash flows for the years then ended, and the balance
sheet of TS Electronics, Inc. as of June 30, 2005, and the related statements of
operations,  stockholders' deficit, and cash flows for the year then ended, have
been included in the registration on Form SB-2, of which this prospectus forms a
part,  in reliance on the report of Hansen,  Barnett & Maxwell,  an  independent
registered  public  accounting  firm,  given on the  authority  of that  firm as
experts in auditing and accounting.

The balance  sheet of TS  Electronics,  Inc. as of June 30, 2004 and the related
statements of operations, stockholders' deficit and cash flows for the year then
ended  included  in this  prospectus  have been so  included  in reliance on the
report of Evans,  Gaither & Associates  PLLC, an independent  registered  public
accounting  firm, given on the authority of said firm as experts in auditing and
accounting.




           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                            AND FINANCIAL DISCLOSURE


None.

                    WHERE YOU CAN FIND ADDITIONAL INFORMATION

We have  filed  with the SEC a  registration  statement  on Form SB-2  under the
Securities  Act in  connection  with the  offering  of the  common  stock by the
selling  stockholders.  This  prospectus,  which  is  part  of the  registration
statement,  does not contain all of the information included in the registration
statement.  Some information is omitted and you should refer to the registration
statement and its exhibits.  With respect to references  made in this prospectus
to any contract,  agreement or other document of ours,  such  references are not
necessarily  complete  and you  should  refer to the  exhibits  attached  to the
registration  statement  for copies of the actual  contract,  agreement or other
document.  You  may  review  a copy  of the  registration  statement,  including
exhibits,  at the  SEC's  public  reference  room  at 450  Fifth  Street,  N.W.,
Washington,  D.C. 20549.  The public may obtain  information on the operation of
the public reference room by calling the SEC at 1-800-SEC-0330.

We also file annual,  quarterly and current reports,  proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information on file at the public  reference  rooms. You can also request copies
of these documents, for a copying fee, by writing to the SEC.





                              TS ELECTRONICS, INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                            Page
PRO FORMA FINANCIAL INFORMATION
Pro Forma Financial Information..............................................F-2
Unaudited Pro Forma Condensed Consolidated Balance Sheet - June 30, 2005.....F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations for 
  the Six Months Ended June 30, 2005.........................................F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations for 
  the Year Ended December 31, 2004...........................................F-5
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information....F-6
ONNY INVESTMENT LIMITED AND SUBSIDIARY
Report of Independent Registered Public Accounting Firm......................F-7
Balance Sheets...............................................................F-8
Statements of Operations.....................................................F-9
Statements of Stockholder's Equity...........................................F-9
Statements of Cash Flows....................................................F-10
Notes to Financial Statements...............................................F-11
HAINAN HELPSON MEDICINE & BIOTECHNIQUE CO., LTD.
Report of Independent Registered Public Accounting Firm.....................F-20
Balance Sheets..............................................................F-21
Statements of Operations....................................................F-22
Statements of Stockholders' Equity..........................................F-23
Statements of Cash Flows....................................................F-24
Notes to Financial Statements...............................................F-25
TS ELECTRONICS, INC.
Report of Hansen, Barnett & Maxwell, Independent Registered Public 
  Accounting Firm...........................................................F-33
Report of Evans, Gaither & Associates PLLC, Independent Registered 
  Public Accounting Firm....................................................F-34
Balance Sheets..............................................................F-35
Statements of Operations....................................................F-36
Statements of Changes in Stockholder' Deficit...............................F-37
Statements of Cash Flows....................................................F-38
Notes to Financial Statements...............................................F-39








                                      F-1


                              TS ELECTRONICS, INC.
        UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On  June  16,  2005,  Onny  Investment  Limited  ("Onny")  acquired  all  of the
outstanding  common  shares of Hainan  Helpson  Medical  Biotechnology  Co., Ltd
("Hainan"),  a privately  held  Chinese  joint  venture,  in  exchange  for cash
payments to the Hainan  shareholders  in the form of common stock dividends from
Hainan  of  34,076,800  and  non-interest   bearing  promissory  notes  totaling
28,000,000  payable  on  September  16,  2005.  The  acquisition  of Hainan  was
recognized as a business combination.

On August 16, 2005, the Onny  shareholder  made a capital  investment in Onny of
Y28,437,495  in cash in exchange  for the issuance of 29,600  additional  common
shares.  On August 18, 2005, the articles of  incorporation of Onny were amended
to increase the  authorized  number of common shares to 40,000  shares,  Y827.65
(US$100) par value,  and the authorized  number of shares of preferred  stock to
10,000  shares,  Y827.65  (US$100) par value.  On October 19, 2005,  Onny issued
10,000  preferred  shares in exchange for  Y35,692,406  in cash, net of offering
costs and estimated  registration  costs, and on that same date, those preferred
shares were converted into 10,000 Onny common shares,  and principal payments of
Y28,000,000 were made on the promissory notes to the former Hainan shareholders.

Also on October 19, 2005, Onny was  reorganized as a wholly-owned  subsidiary of
TS  Electronics,   Inc.  The   reorganization   was  accomplished  by  the  Onny
shareholders  exchanging  their 39,700 Onny common shares for 27,499,940  common
shares of TS Electronics, Inc. and for the commitment by TS Electronics, Inc. to
issue the  original  Onny  shareholder  4,723,056  common  shares  following  an
amendment of the TS Electronics,  Inc. articles of incorporation  increasing the
number of common shares authorized to 100,000,000 shares.

The  reorganization  was  recognized  as an 812-for-1  stock split of the common
stock of Onny and the  effective  issuance  by Onny of the  2,500,060  shares of
common stock of TS Electronics,  Inc. that remained  outstanding in exchange for
the assumption of 37,021 of liabilities. The acquisition of TS Electronics, Inc.
was recognized as a nonmonetary exchange.

The following  unaudited pro forma  condensed  consolidated  balance sheet as of
June 30, 2005 has been prepared to present the effects of the capital investment
by the original  Onny  shareholder,  the issuance of and  conversion of the Onny
preferred stock into common stock,  the Onny stock split,  the assumption of the
TS Electronics,  Inc.  liabilities in exchange for common stock, the increase in
the  authorized  common shares and the issuance of the  remaining  shares to the
original Onny shareholder, as though these transactions had occurred on June 30,
2005. The unaudited pro forma  condensed  consolidated  statements of operations
for the six months ended June 30, 2005 and for the year ended  December 31, 2004
have been prepared to present the effects of the acquisition of Hainan and these
transactions  as  though  they  had  occurred  on  January  1,  2005  and  2004,
respectively.

The  unaudited  pro forma  financial  information  is only  illustrative  of the
effects of these  transactions  and does not  necessarily  reflect the financial
position or results of operations that would have resulted had the  transactions
actually  occurred  at  those  dates.  In  addition,  the  pro  forma  financial
information  is not  necessarily  indicative of the results that may be expected
for the year ending December 31, 2005, or any other period.



                                      F-2




                      TS ELECTRONICS, INC. AND SUBSIDIARIES
            UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2005


                                                                         TS           Pro Forma                                  
                                                         Onny        Electronics     Adjustments                 Pro Forma
                                                     ------------    ------------    ------------       ---------------------------
                                                                Chinese Yuan (Renminbi)                                U.S. Dollars
--------------------------------------------------------------------------------------------------------------------   ------------
                                                                                                               
ASSETS                                                                                                  
Current assets                                                                                          
Cash and cash equivalents                            Y    329,945    Y       --      Y  28,437,495  (B) Y 36,459,846   $  4,405,225
                                                                                        35,692,406  (C)                        --
                                                                                       (28,000,000) (F)
Trade accounts receivables                             39,705,780            --                           39,705,780      4,797,412
Other non-trade receivables                             7,525,344            --                            7,525,344        909,242
Advances to suppliers                                   3,002,951            --                            3,002,951        362,829
Inventory                                              31,607,129            --                           31,607,129      3,818,900
Accounts receivable - related parties                     557,549            --                              557,549         67,365
Deferred tax asset                                        323,117            --              --              323,117         39,040
-----------------------------------------------------------------    ------------    ------------       ---------------------------
 Total current assets                                  83,051,815            --        36,129,901        119,181,716     14,400,014
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Non-current assets                                                                                      
Property and equipment                                 20,776,981            --                           20,776,981      2,510,358
Intangible assets                                         575,409            --                              575,409         69,523
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Total non-current assets                               21,352,390            --              --           21,352,390      2,579,882
-----------------------------------------------------------------    ------------    ------------       ---------------------------
                                                                                                        
                       Total assets                  Y104,404,205    Y       --      Y 36,129,901       Y140,534,106   $ 16,979,896
=================================================================    ============    ============       =========================== 
LIABILITIES AND SHAREHOLDER'S EQUITY                                                                    
Current liabilities                                                                                     
Trade accounts payable                               Y  6,796,222    Y       --      Y       --            6,796,222   $    821,147
Accrued expenses                                          111,694            --                     (C)      111,694         13,495
Taxes payable                                           1,487,845            --                            1,487,845        179,767
Other accounts payable                                  5,007,371          37,021                          5,044,392        609,484
Advances from customers                                 3,048,780            --                            3,048,780        368,366
Purchase obligation to former Hainan Helpson                                                            
  shareholders                                         35,220,637            --                           35,220,637      4,255,499
Short-term notes payable to former Hainan                                                               
  Helpson shareholders                                 27,406,522            --           593,478   (E)         --             --
                                                                                      (28,000,000)  (F) 
Accounts payable - related party                        1,209,792            --                            1,209,792        146,172
Current portion of long-term note payable              15,000,000            --                           15,000,000      1,812,360
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Total current liabilities                              95,288,863          37,021     (27,406,522)        67,919,362      8,206,290
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Long-term liability                                                                                     
Note payable, net of current portion                    8,000,000                                          8,000,000        966,592
Research and development commitment                       250,000                                            250,000         30,206
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Total long-term liabilities                             8,250,000            --              --            8,250,000        996,798
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Shareholder's equity                                                                                    
Common shares, 0.008 par value; 100,000,000 shares              8          20,692             663   (A)      287,385         34,723
  authorized; 34,723,056 shares outstanding                                               198,845   (B) 
                                                                                           67,177   (C) 
Additional paid-in capital                                   --        46,925,163            (663)  (A)   63,805,503      7,709,237
                                                                                       28,238,650   (B) 
                                                                                       35,625,229   (C) 
                                                                                      (46,982,876)  (D) 
Retained earnings (accumulated deficit)                   865,334     (46,982,876)     46,982,876   (D)      271,856         32,847
                                                                                         (593,478)  (E) 
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Total shareholder's equity                                865,342         (37,021)     63,536,423         64,364,744      7,776,807
-----------------------------------------------------------------    ------------    ------------       ---------------------------
Total liabilities and shareholder's equity           Y104,404,205    Y       --      Y 36,129,901       Y140,534,106   $ 16,979,896 
=================================================================    ============    ============       ===========================
                                                                       






See the  accompanying  notes  to  unaudited  pro  forma  condensed  consolidated
financial information.


                                      F-3




                      TS ELECTRONICS, INC. AND SUBSIDIARIES
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                     FOR THE SIX MONTHS ENDED JUNE 30, 2005

                                                         Hainan          TS          Pro Forma      
                                           Onny         Helpson      Electronics    Adjustments                Pro Forma
                                       -----------    -----------    ------------   -----------       ---------------------------
                                                        Chinese Yuan (Renminbi)                                      U.S. Dollars
-----------------------------------    ---------------------------------------------------------       -----------    ------------
                                                                                                    
Revenues                               Y 4,076,425    Y44,067,045    Y       --      Y      --         Y48,143,470    $  5,816,888
                                                                                                                        
Cost of revenues                         2,689,810     27,667,087            --         (722,644) (G)   29,634,253       3,580,530
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Gross profit                             1,386,615     16,399,958            --          722,644        18,509,217       2,236,358
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Operating expenses                                                                                                      
Selling expenses                            37,159        318,065            --             --             355,224          42,920
Stock-based compensation                      --             --        14,018,140    (14,018,140) (D)         --              --
General and administrative                 166,176      2,848,725         997,898       (997,898) (D)    3,014,901         364,272
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
Total operating expenses                   203,335      3,166,790      15,016,038    (15,016,038)        3,370,125         407,192
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Income (loss) from operations            1,183,280     13,233,168     (15,016,038)    15,738,682        15,139,092       1,829,166
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Non-operating income (expense)                                                                                          
Interest income                               --            3,278            --             --               3,278             396
Interest expense                          (239,147)      (593,533)           --         (700,000) (E)   (1,532,680)       (185,185)
Other income                                  --        1,786,412            --             --           1,786,412         215,841
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
Non-operating income (expense)            (239,147)     1,196,157            --         (700,000)          257,010          31,052
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Income before taxes                        944,133     14,429,325     (15,016,038)    15,038,682        15,396,102       1,860,218
Income tax expense                         (78,799)      (774,327)           --          (54,198) (H)     (907,324)       (109,627)
-----------------------------------    -----------    -----------    ------------    -----------       -----------    ------------
                                                                                                                        
Net income (loss)                      Y   865,334    Y13,654,998    Y(15,016,038)   Y14,984,484       Y14,488,778    $  1,750,591
===================================    ===========    ===========    ============    ===========       ===========    ============
                                                                                                                        
Basic and diluted earnings per share                                                                   Y      0.42    $       0.05
==================================================================================================================    ============
                                                                                                                        
Weighted-average common shares                                                                                          
  outstanding                                                                                           34,723,056      34,723,056
------------------------------------------------------------------------------------------------------------------    ------------
                                                             
                                                                              















See the  accompanying  notes  to  unaudited  pro  forma  condensed  consolidated
financial information.

                                      F-4




                      TS ELECTRONICS, INC. AND SUBSIDIARIES
       UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2004


                                                       Hainan           TS          Pro Forma
                                          Onny         Helpson      Electronics    Adjustments               Pro Forma
                                       -----------   -----------    -----------    -----------       --------------------------
                                                                                                                    U.S. Dollars
----------------------------------------------------------------------------------------------------------------    ------------
                                                                                                       
Revenues                               Y      --     Y64,059,750    Y   132,076    Y  (132,076) (D)  Y64,059,750    $  7,739,957
Cost of revenues                                      38,200,114        148,778       (148,778) (D)                   
                                              --                                    (1,445,288) (G)   36,754,826       4,440,866
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
                                                                                                                      
Gross profit                                  --      25,859,636        (16,702)        16,702        27,304,924       3,299,091
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
                                                                                                                      
Operating expenses                                                                                                    
Selling expenses                              --         661,333           --             --             661,333          79,905
General and administrative                    --       2,954,655        484,523       (484,523)        2,954,655         356,993
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
Total operating expenses                      --       3,615,988        484,523       (484,523)        3,615,988         436,898
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
                                                                                                                      
Income from operations                        --      22,243,648       (501,225)       501,225        23,688,936       2,862,193
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
                                                                                                                      
Non-operating income (expense)                                                                                        
Interest income                               --          14,506           --             --              14,506           1,753
Interest expense                              --      (1,340,709)          --         (700,000) (E)   (2,040,709)       (246,567)
Other income (expense)                        --          57,262         20,691        (20,691) (D)       57,262           6,919
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
Non-operating expense                         --      (1,268,941)        20,691       (720,691)       (1,968,941)       (237,895)
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
Income before taxes                           --      20,974,707       (480,534)      (219,466)       21,719,995       2,624,298
Income tax expense                            --      (1,629,881)          --            1,253  (H)   (1,628,628)       (196,777)
-----------------------------------    -----------   -----------    -----------    -----------       -----------    ------------
                                                                                                                      
Net income                             Y      --     Y19,344,826    Y  (480,534)   Y  (218,213)      Y20,091,367    $  2,427,521
====================================   ===========   ===========    ===========    ===========       ===========    ============
                                                                                                                      
Basic and diluted earnings per share                                                                 Y      0.58    $       0.07
================================================================================================================    ============
                                                                                                                      
Weighted-average common shares                                                                                        
  outstanding                                                                                         34,723,056      34,723,056
----------------------------------------------------------------------------------------------------------------    ------------

                                                                               
















See the  accompanying  notes  to  unaudited  pro  forma  condensed  consolidated
financial information.

                                      F-5


                      TS ELECTRONICS, INC. AND SUBSIDIARIES
    NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION


A        To reflect the  effective  stock split of the Onny  Investment  Limited
         common shares on an 812-for-1  basis,  which resulted in the 100 common
         shares outstanding becoming 81,166 common shares.

B        Issuance of 24,025,206 shares (29,600 pre-split shares) of common stock
         to the Onny  shareholder in exchange for  Y28,437,495 in cash, or Y1.18
         per share.

C        Issuance of 8,116,624 shares (10,000  pre-split shares) of common stock
         upon  conversion  of  10,000  shares  of  preferred  stock  issued  for
         Y35,692,406  in cash,  net of Y5,690,094  offering  costs and estimated
         registration costs.

D        Acquisition  of TS  Electronics,  Inc.  in exchange  for the  2,500,060
         shares of common stock that  remained  outstanding.  The common  shares
         were valued at the fair value of the liabilities assumed, or Y(37,021).
         Elimination  of prior  operations  and the  accumulated  deficit  of TS
         Electronics, Inc. upon acquisition.

E        Amortization  of the  discount  on the notes  payable to former  Hainan
         Helpson shareholders.  The amortization of the discount is not expected
         to be a recurring expense to the Company.

F        Payment  to the  principal  amount of the notes  payable  to the former
         Hainan Helpson shareholders from the purchase of Hainan Helpson.

G        Decrease  in  depreciation  expense  from the  property  and  equipment
         acquired  and  decrease in  amortization  expense  from the  intangible
         assets acquired in the Hainan Helpson acquisition.

H        To adjust income taxes for the effects of the pro forma  adjustments to
         the  statements of  operations.  Also to increase in income tax expense
         related to the non-deductible amortization expense from the discount on
         the short-term notes payable. The expense is not deductible against the
         income earned in The People's Republic of China.




                                      F-6


                    [LETTERHEAD OF HANSEN, BARNETT & MAXWELL]


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and the Shareholder
Onny Investment Limited

We have audited the  accompanying  balance sheet of Onny Investment  Limited,  a
development stage  enterprise,  as of May 31, 2005, and the related statement of
operations, stockholder's equity, and cash flows for the period January 12, 2005
(date of inception)  through May 31, 2005.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

We conducted  our audit 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.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Onny Investment Limited as of
May 31,  2005,  and the  results  of its  operations  and its cash flows for the
period from  January  12, 2005 (Date of  Inception)  through  May 31,  2005,  in
conformity with accounting principles generally accepted in the United States of
America.


                                                       HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
August 1, 2005, except for Note 12,
  As to which the date is August 19, 2005






                                      F-7




                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                                 BALANCE SHEETS

                                                                  Chinese Yuan (Renminbi)      U.S. Dollars
                                                                 -------------------------     -----------
                                                                   May 31,       June 30,        June 30,
                                                                    2005          2005            2005
----------------------------------------------------------------------------   ----------------------------
                                                                              (Consolidated   (Consolidated
                                                                              and Unaudited)  and Unaudited)
                                                                                             
ASSETS                                                                                         
Current assets                                                                                 
Cash and cash equivalents                                        Y         8   Y    329,945     $    39,865
Trade accounts receivables, net of 10,213,471 allowance for                                    
doubtful accounts                                                       --       39,705,780       4,797,412
Other non-trade receivables, net of 910,800 allowance for                                      
doubtful accounts                                                       --        7,525,344         909,242
Advances to suppliers                                                   --        3,002,951         362,829
Inventory                                                               --       31,607,129       3,818,900
Accounts receivable - related parties                                   --          557,549          67,365
Deferred tax assets                                                     --          323,117          39,040
--------------------------------------------------------------   -----------   ------------     -----------
 Total current assets                                                      8     83,051,815      10,034,653
--------------------------------------------------------------   -----------   ------------     -----------
Non-current assets                                                                             
Property and equipment, net                                             --       20,776,981       2,510,358
Intangible assets, net                                                  --          575,409          69,523
Total non-current assets                                                --       21,352,390       2,579,881
--------------------------------------------------------------   -----------   ------------     -----------
Total assets                                                     Y         8   Y104,404,205     $12,614,534
==============================================================   ===========   ============     ===========
                                                                                               
LIABILITIES AND SHAREHOLDER'S EQUITY                                                           
Current liabilities                                                                            
Trade accounts payable                                            Y     --     Y  6,796,222     $   821,146
Accrued expenses                                                        --          111,694          13,495
Taxes payable                                                           --        1,487,845         179,767
Other accounts payable                                                  --        5,007,371         605,011
Advances from customers                                                 --        3,048,780         368,366
Purchase obligation to former Hainan Helpson shareholders               --       35,220,637       4,255,499
Short-term notes payable to former Hainan Helpson shareholders          --       27,406,522       3,311,366
Accounts payable - related party                                        --        1,209,792         146,172
Current portion of long-term note payable                               --       15,000,000       1,812,360
--------------------------------------------------------------   -----------   ------------     -----------
Total current liabilities                                               --       95,288,863      11,513,182
--------------------------------------------------------------   -----------   ------------     -----------
Long-term liabilities                                                                          
Note payable, net of current portion                                    --        8,000,000         966,592
Research and development commitment                                     --          250,000          30,206
--------------------------------------------------------------   -----------   ------------     -----------
Total long-term liabilities                                             --        8,250,000         996,798
--------------------------------------------------------------   -----------   ------------     -----------
Shareholder's equity                                                                           
Preferred shares, 825 par value; 100 shares authorized;                                        
no shares outstanding                                                   --             --              --
Common shares, 0.08 par value; 4,000,000 shares authorized;                                    
100 shares outstanding                                                     8              8               1
Additional paid-in capital                                              --             --              --
Retained earnings                                                       --          865,334         104,553
Total shareholder's equity                                                 8        865,342         104,554
--------------------------------------------------------------   -----------   ------------     -----------
Total liabilities and shareholder's equity                       Y         8   Y104,404,205     $12,614,534
==============================================================   ===========   ============     ===========
                                                                                              

                                                                          





               See accompanying notes to the financial statements.

                                      F-8




                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                            STATEMENTS OF OPERATIONS

                                                          Chinese Yuan (Renminbi)           U.S. Dollars
                                                  ------------------------------------    ----------------
                                                   From January 12,   From January 12,    From January 12,
                                                     2005 (Date of      2005 (Date of       2005 (Date of
                                                      Inception)         Inception)          Inception)
                                                       through            through             through
                                                     May 31, 2005       June 30, 2005       June 30, 2005
--------------------------------------------------------------------------------------    ----------------
                                                                       (Consolidated       (Consolidated
                                                                       and Unaudited)      and Unaudited)
                                                                                 
            
Revenues                                           Y           --     Y      4,076,425    $        492,530
Cost of revenues                                               --            2,689,810             324,994
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Gross profit                                                   --            1,386,615             167,536
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Operating expenses                                                                               
Selling expenses                                               --               37,159               4,490
General and administrative                                     --              166,176              20,078
--------------------------------------------------------------------------------------    ----------------
Total operating expenses                                       --              203,335              24,568
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Income from operations                                         --            1,183,280             142,968
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Non-operating income (expense)                                                                   
Interest expense                                               --             (239,147)            (28,895)
--------------------------------------------------------------------------------------    ----------------
Non-operating expense                                          --             (239,147)            (28,895)
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Income before taxes                                            --              944,133             114,073
Income tax expense                                             --              (78,799)             (9,521)
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Net income                                         Y           --     Y        865,334    $        104,552
======================================================================================    ================
                                                                                                 
Basic earnings per common share                    Y           --     Y          8,653    $          1,046
======================================================================================    ================
                                                                                                 
Basic weighted-average common shares outstanding                100                100                 100
======================================================================================    ================

           
                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                       STATEMENTS OF STOCKHOLDER'S EQUITY



                                                                               Chinese Yuan (Renminbi)
                                                           -------------------------------------------------------------
                                                                   Common Stock                                Total
                                                           -----------------------------      Retained     Stockholder's
                                                               Shares          Amount         Earnings        Equity
------------------------------------------------------------------------------------------------------------------------
                                                                                                         
Balance - January 12, 2005 (Date of Inception)                      --              --              --        Y     --
------------------------------------------------------------------------------------------------------------------------
Issuance of common stock                                             100       Y       8      Y     --                 8
------------------------------------------------------------------------------------------------------------------------
Balance - May 31, 2005                                               100               8            --                 8
------------------------------------------------------------------------------------------------------------------------
Net income (consolidated and unaudited)                             --              --           865,334         865,334
------------------------------------------------------------------------------------------------------------------------
Balance as of June 30, 2005 (consolidated and unaudited)             100       Y       8      Y  865,334      Y  865,342
========================================================================================================================

                                                                        




               See accompanying notes to the financial statements.

                                      F-9




                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                            STATEMENTS OF CASH FLOWS


                                                                        

                                                         Chinese Yuan (Renminbi)            U.S. Dollars
                                                   -----------------------------------    ----------------
                                                   From January 12,   From January 12     From January 12,
                                                     2005 (Date of      2005 (Date of       2005 (Date of
                                                       Inception)         Inception)          Inception)
                                                        through            through             through
                                                     May 31, 2005       June 30, 2005       June 30, 2005
--------------------------------------------------------------------------------------    ----------------
                                                                        (Consolidated       (Consolidated
                                                                        and Unaudited)      and Unaudited)
                                                                                           
Cash flows from operating activities:                                                            
Net income                                         Y           --     Y        865,334    $        104,552
Adjustments to reconcile net income to net cash                                                  
provided by (used in) operating activities:                                                      
Depreciation and amortization                                  --               60,330               7,289
Loss on disposal of property and equipment                     --              164,983              19,934
Accretion of discount on notes payable                         --              106,522              12,870
Change in assets and liabilities:                                                                
Trade accounts receivable                                      --           (3,912,269)           (472,696)
Other receivables                                              --           (3,757,319)           (453,974)
Advances to suppliers                                          --            6,685,631             807,785
Inventories                                                    --           (4,384,901)           (529,801)
Accounts payable                                               --            4,444,256             536,973
Accrued expenses                                               --               77,703               9,389
Taxes payable                                                  --             (178,334)            (21,547)
Other accounts payable                                         --           (1,766,233)           (213,403)
Advances from customers                                        --              793,734              95,902
--------------------------------------------------------------------------------------    ----------------
Net cash used in operating activities                          --             (800,563)            (96,727)
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Cash flows from investing activities:                                                            
Purchases of property and equipment                            --              (29,503)             (3,565)
Net cash received in purchase of Hainan                        --            1,068,275             129,073
Proceed from note receivable                                   --               91,728              11,083
--------------------------------------------------------------------------------------    ----------------
Net cash provided by investing activities                      --            1,130,500             136,591
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Cash flows from financing activities:                                                            
Proceeds from issuance of common stock                            8                  8                   1
--------------------------------------------------------------------------------------    ----------------
                                                                  8                  8                   1
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Net increase in cash                                           --              329,945              39,865
Cash and cash equivalents at beginning of period               --                 --                  --
--------------------------------------------------------------------------------------    ----------------
                                                                                                 
Cash and cash equivalents at end of period         Y              8   Y        329,945    $         39,865
======================================================================================    ================

                                                                    




               See accompanying notes to the financial statements.

                                      F-10


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)


                                                               
NOTE 1.  ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization - Onny Investment  Limited ("Onny") was incorporated in the British
Virgin  Islands  on  January  12,  2005.  Through  June  15,  2005,  Onny  was a
development stage enterprise with no development stage activities except for the
acquisition  of Hainan  Helpson,  as discussed  below.  Upon the  acquisition of
Hainan Helpson and its operations, Onny emerged from the development stage.

On April 12,  2005,  Onny  issued 100  shares of common  stock to Tusi Hueng Mei
("Ms.  Mei") in exchange for Y8 in cash. Ms. Mei also elected  herself as Onny's
sole director.

On June 16,  2005,  the Company  acquired all the  outstanding  shares of Hainan
Helpson Medical Biotechnology Co., Ltd (Hainan). See Note 2.

Hainan, formerly Hainan Fulin International Biomedical Industrial Co., Ltd., was
incorporated  as a  privately  foreign and Chinese  held joint  venture  between
Haikou  Biomedical  Engineering  Co., Ltd. and Fordisland  Development,  Ltd. in
Hainan  Province,  People's  Republic  of China  (PRC),  on February  25,  1993.
Fordisland  Development held a 30% interest in the Company and Haikou Biomedical
Engineering  held a 70%  interest  in the  Company.  In July 1999,  the  Company
changed its name to Hainan Helpson Medicine & Biotechnique Co., Ltd.

In October  2001,  Fordisland  Development  transferred  its 30% interest in the
Company  to  Hainan  Kaidi  Technique  Co.  Ltd.  and the  Company  changed  its
organization status to a wholly Chinese owned enterprise.

Nature of  Operations  - Hainan  manufactures  and markets  several  Western and
Chinese  medicines sold mainly to hospitals and private sellers in PRC,  through
its marketing  department in Hainan Province and from nine sales  representative
offices in other  provinces  and cities.  Hainan's  other  operating  activities
include biochemical products, health products, and cosmetics.

Basis of Presentation  and Translating  Financial  Statements - The accompanying
financial statements have been prepared in accordance with accounting principles
generally  accepted in the United States of America.  The  Company's  functional
currency  is  the  Chinese  Yuan  (Renminbi)  and  the  accompanying   financial
statements  have been expressed in Chinese Yuan. The financial  statements as of
and for the period ended June 30, 2005 have been  translated  into United States
dollars solely for the  convenience of the reader and are unaudited.  Solely for
this purpose, the financial statements have been translated into U.S. dollars at
the rate of Y8.2765 = US $1.00, the approximate exchange rate prevailing on June
30, 2005. The translated United States dollar amounts should not be construed as
representing Chinese Yuan amounts or that the Yuan amounts have been or could be
converted into United States dollars.

Accounting  Estimates - The  preparation  of financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and liabilities  and the disclosures of contingent  assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those estimates.

Consolidation - The accompanying  consolidated  financial statements include the
accounts of ONNY  Investment  Limited and its wholly  owned  subsidiary,  Hainan
Helpson Medical  Biotechnology Co., Ltd from the date of acquisition on June 16,
2005.  All  significant   inter-company  balances  and  transactions  have  been
eliminated in consolidation.



                                      F-11


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)


Fair Values of Financial  Instruments  --Based on the borrowing  rates currently
available  to the  Company  for  bank  loans  with  similar  terms  and  average
maturities, the carrying amounts of notes payable approximate fair value because
of either the immediate or short-term maturity of these financial instruments or
because  the  underlying  instruments  are at interest  rates which  approximate
current market rates.

Cash and cash equivalents - Cash and cash  equivalents  include interest bearing
and non-interest  bearing bank deposits,  money market accounts,  and short-term
certificates of deposit with original maturities of three months or less.

Trade  receivables and allowance for doubtful  accounts - Trade  receivables are
carried at original invoiced amounts less an allowance for doubtful accounts.

The Company presents trade receivables net of allowances for doubtful  accounts,
to ensure trade  receivables  are not  overstated due to  uncollectibility.  The
allowances  are  calculated  based on  detailed  review  of  certain  individual
customer accounts and an estimation of the overall economic conditions affecting
the Company's  customer  base. The Company  reviews a customer's  credit history
before  extending  credit.  If the financial  condition of its customers were to
deteriorate,  resulting  in an  impairment  of their  ability to make  payments,
additional allowances may be required.

Provision is made against accounts  receivable to the extent they are considered
unlikely to be  collected.  It is common  practice in China for  receivables  to
extend  beyond  one  year.   Included  in  trade  receivables  is  approximately
Y1,780,000 that occurred more than one year from June 30, 2005, but is estimated
to still be collectable.

Inventory - Inventories are stated at weighted  average  costing.  The method of
determining  inventory costs is used consistently  from year to year.  Allowance
for inventory  obsolescence  is provided in situation when its market values are
lower than its costs at the year end valuation.

Valuation of Long-lived Assets - The carrying values of the Company's long-lived
assets are reviewed for impairment  whenever events or changes in  circumstances
indicate  that  they may not be  recoverable.  When  such an event  occurs,  the
Company would project  undiscounted  cash flows to be generated  from the use of
the asset and its eventual  disposition over the remaining life of the asset. If
projections  were to indicate that the carrying  value of the  long-lived  asset
will not be recovered,  the carrying value is reduced by the estimated excess of
the carrying value over the projected discounted cash flows.

Property and Equipment - Property and equipment are stated at cost.  Maintenance
and  repairs  are  charged to expense as  incurred  and major  improvements  are
capitalized.  Gains or  losses  on  sales or  retirements  are  included  in the
statements of operations in the period of  disposition,  determined by reference
to their carrying amounts.

Intangible  Assets  -  Acquisition  costs  on  patents,  trademarks,   licenses,
techniques,  formulas and other  intangibles are capitalized and amortized using
the straight-line  method over their useful lives. For those intangible  assets,
such as patents,  with legal protection over a period,  their useful life is the
protected  period.  Others  that  do not  have  legal  protection  periods,  are
amortized  generally  over  5 to 10  years.  The  Company  does  not  capitalize
internally generated intangible assets.


                                      F-12


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)



Intangible  assets are  techniques  for  medicines.  Amortization  on intangible
assets was 8,750 for the period ended June 30, 2005.

Advances to suppliers/  advances from customers - The Company,  as is the common
practice in the PRC, will often pay advanced payments to suppliers for materials
and receive from customers advances for finished products.  As of June 30, 2005,
the advances to suppliers  were  Y3,002,951 and the advances from customers were
Y3,048,780, respectively.

Revenue  Recognition  - The Company  recognizes  revenue when it is realized and
earned. The Company considers revenue realized or realizable and earned when (1)
it has persuasive evidence of an arrangement, (2) delivery has occurred, (3) the
sales  price is fixed or  determinable,  and (4)  collectability  is  reasonably
assured. Delivery does not occur until products have been shipped to the client,
risk of loss has  transferred  to the  client  and  client  acceptance  has been
obtained, client acceptance provisions have lapsed, or the Company has objective
evidence that the criteria  specified in client acceptance  provisions have been
satisfied.  The sales price is not considered to be fixed or determinable  until
all contingencies related to the sale have been resolved.

Cost of Revenues - Cost of revenues include wages, materials,  handling charges,
and other expenses associated with the manufacture and delivery of product.

Research and Development - Research and development expenditures are recorded as
expenses in the period in which they occur.

Retirement  benefit  plans  -  The  Company   contributes  to  various  employee
retirement  benefit plans organized by provincial  governments under which it is
required to make monthly contributions to these plans at rates prescribed by the
related provincial  governments.  The provincial governments undertake to assume
the retirement benefit  obligations of all existing and future retired employees
of the Company. Contributions to these plans are charged to expense as incurred.

Advertising Costs - Advertising costs are expensed when incurred.

Basict  Earnings per Common Share - Basic  earnings per common share is computed
by  dividing  net  income  by  the  weighted-average  number  of  common  shares
outstanding.

Credit  risk - The  carrying  amounts of  accounts  receivable  included  in the
balance  sheets  represent the Company's  exposure to credit risk in relation to
its financial assets. No other financial assets carry a significant  exposure to
credit risk.

The Company  performs  ongoing credit  evaluations of each customer's  financial
condition.  It maintains allowances for doubtful accounts and such allowances in
the aggregate have not exceeded management's estimations.

Interest  rate risk - The Company is exposed to the risk arising  from  changing
interest rates,  which may affect the ability of repayment of existing debts and
viability of securing future debt instruments within the PRC.



                                      F-13


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)


Recently  Enacted  Accounting  Standards  -  In  November  2004,  the  Financial
Accounting  Standards  Board ("FASB") issued SFAS No. 151,  Inventory  Costs--An
Amendment of ARB No. 43, Chapter 4 ("SFAS 151"). SFAS 151 amends the guidance in
ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage).  Among other  provisions,  the new rule  requires that items such as
idle facility expense, excessive spoilage, double freight, and re-handling costs
be  recognized  as  current-period  charges  regardless of whether they meet the
criterion  of "so  abnormal"  as stated in ARB No.  43.  Additionally,  SFAS 151
requires  that the  allocation  of fixed  production  overhead  to the  costs of
conversion be based on the normal  capacity of the production  facilities.  SFAS
151 is effective for fiscal years  beginning after June 15, 2005 and is required
to be adopted by the Company beginning on January 1, 2006.

In  December  2004,  the FASB issued SFAS No. 123  (revised  2004),  Share-Based
Payment ("SFAS 123R"),  which revises SFAS No. 123,  Accounting for  Stock-Based
Compensation.  SFAS 123R also supersedes APB 25,  Accounting for Stock Issued to
Employees,  and amends SFAS No. 95,  Statement  of Cash Flows.  In general,  the
accounting  required by SFAS 123R is similar to that of SFAS No.  123.  However,
SFAS No. 123 gave companies a choice to either recognize the fair value of stock
options in their income  statements  or disclose the pro forma income  statement
effect  of the fair  value  of  stock  options  in the  notes  to the  financial
statements.  SFAS 123R eliminates that choice and requires the fair value of all
share-based  payments  to  employees,  including  the fair  value of  grants  of
employee stock options,  be recognized in the income  statement,  generally over
the option vesting period. SFAS 123R must be adopted no later than July 1, 2005.
Early adoption is permitted.

In  December  2004,  the FASB issued SFAS No.  153,  Exchanges  of  Non-monetary
Assets--An  Amendment  of  APB  Opinion  No.  29,  Accounting  for  Non-monetary
Transactions  ("SFAS 153").  SFAS 153  eliminates  the exception from fair value
measurement for non-monetary exchanges of similar productive assets in paragraph
21(b) of APB Opinion  No. 29,  Accounting  for  Non-monetary  Transactions,  and
replaces  it  with an  exception  for  exchanges  that  do not  have  commercial
substance.  SFAS 153 specifies  that a  non-monetary  exchange  have  commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.

The adoption of these  pronouncements  is not expected to have a material effect
on the Company's financial position or results of operations.

NOTE 2.  ACQUISITION

On May 25, 2005, the Company entered into an agreement with the  shareholders of
Hainan  Helpson  Medical  Biotechnology  Co., Ltd  ("Hainan"),  a privately held
Chinese  joint  venture,  in  which  the  Company  agreed  to  acquire  and  the
shareholders  of Hainan agreed to sell all of the  outstanding  common shares of
Hainan to the Company in exchange for the assumption of obligations to make cash
payments to the Hainan  shareholders  in the form of common stock dividends from
Hainan of  Y34,076,800,  the assumption of Y38,115,843 of other  liabilities and
the issuance of  non-interest  bearing  promissory  notes  totaling  Y28,000,000
payable  three months after  Hainan  obtains a business  license in the People's
Republic of China as a wholly foreign owned entity. Hainan obtained such license
on June 16,  2005 and the shares of Hainan  were  transferred  to the Company on
that date.  June 16, 2005 was  recognized  as the date of the  acquisition.  The
promissory notes are due September 16, 2005.

Hainan  manufactures  and markets  several  Western and Chinese  medicines  sold
mainly to  hospitals  and  private  sellers in the  Peoples  Republic  of China,



                                      F-14


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)



through  its  marketing  department  in  Hainan  Province  and from  nine  sales
representative  offices in other provinces and cities.  Hainan's other operating
activities include biochemical products, health products, and cosmetics.

Since  Hainan is an  operating  company and control of Hainan  changed  upon the
closing of the acquisition agreement, the Company is the accounting acquirer and
has recognized the acquisition of Hainan as a business combination in accordance
with   Statements  of  Financial   Accounting   Standards   No.  141,   Business
Combinations.  On April 25,  2005,  Hainan  declared a dividend  to the  selling
shareholders of Y34,076,800,  which equaled Hainan's  retained earnings at March
31, 2005 less  deferred  income tax assets of Y713,565  that are not  considered
part of  distributable  profits  under  Chinese  law.  The fair value of the net
assets of Hainan was  determined  by appraisal  and exceeded the cost of the net
assets  acquired.  That  excess was  allocated  as a pro rata  reduction  of the
amounts  that  otherwise  would have been  assigned  to the  non-current  assets
acquired.

At June 16, 2005, the purchase price was allocated to the assets acquired and
liabilities assumed as follows:

Current assets                                                    Y   78,513,015
Property and equipment                                                20,964,041
Intangible assets                                                        584,158
--------------------------------------------------------------------------------
Total assets acquired                                                100,061,214
--------------------------------------------------------------------------------
                                                                    
Current liabilities                                                   64,511,214
Long-term liabilities                                                  8,250,000
--------------------------------------------------------------------------------
Total liabilities assumed                                             72,761,214
--------------------------------------------------------------------------------
Net assets acquired                                               Y   27,300,000
================================================================================
                      

Intangible  assets  consist  of  registered   patents,   trademarks,   licenses,
techniques  and  formulas  related to several  Western  and  Chinese  medicines,
biochemical products,  health products,  and cosmetics.  These intangible assets
have a weighted-average useful life of approximately 5 years.

The  following  unaudited  pro forma  information  is  presented  to reflect the
operations of the Company and Hainan on a combined  basis as if the  acquisition
of Hainan had been completed as of January 1, 2004 and 2005,  respectively.  The
unaudited  pro forma  information  is only  illustrative  of the  effects of the
acquisition  and does not  necessarily  reflect the results of  operations  that
would have resulted had the acquisition actually occurred on those dates.
                                                        
                                                     For the Year    For the Six
                                                        Ended       Months Ended
                                                     December 31,     June 30,
                                                         2004           2005
--------------------------------------------------------------------------------
                                                      (unaudited)    (unaudited)
                                                                      
Revenue                                              Y 64,059,750   Y 48,143,470
Net income                                             20,677,805     14,620,077
Basic earnings per common share                           206,778        146,201
================================================================================

Pro forma net income for the year ended December 31, 2004 and for the six months
ended June 30, 2005 include nonrecurring interest expense of Y700,000 resulting



                                      F-15


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)


from the  amortization  of the  discount  on the  Y28,000,000  promissory  notes
payable to the former Hainan  shareholders,  which  discount was computed  based
upon an imputed interest rate of 10% per annum.

NOTE 3.  INVENTORY

Inventory consisted of the following at June 30, 2005:

-------------------------------------------------------------------------------
Raw materials                                                      Y 23,243,540
Work in progress                                                      3,804,086
Finished goods                                                        4,574,212
Provision for obsolescence                                              (14,709)
-------------------------------------------------------------------------------
Total Inventory                                                    Y 31,607,129
===============================================================================


NOTE 4.  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

-------------------------------------------------------------------------------
Permit of land use                                                 Y  2,816,679
Building                                                              8,813,969
Plant, machinery and equipment                                        8,990,916
Motor vehicle                                                           115,405
Office equipment                                                         91,592
-------------------------------------------------------------------------------
Total                                                                20,828,561
Less: Accumulated depreciation                                          (51,580)
-------------------------------------------------------------------------------
Property, pland and equipment, net                                 Y 20,776,981
===============================================================================
                                                    
Depreciation  is computed on a  straight-line  basis over the  estimated  useful
lives of the assets as follows:

Assets                                                                    Life
--------------------------------------------------------------------------------
Permit of land use                                                       40 - 70
Building                                                                 20 - 35
Plant, machinery and equipment                                              10
Motor vehicle                                                             5 - 10
Office equipment                                                            5
--------------------------------------------------------------------------------
                                                   
                                
Depreciation  expense was Y51,580  ($6,232) for the period from January 12, 2005
through June 30, 2005.


NOTE 5.  INTANGIBLE ASSETS

Intangible  assets  represent  the  costs  on  patents,  trademarks,   licenses,
techniques and formulas.  Intangible assets have a weighted-average  useful life
of  approximately  5 years.  One  intangible  asset,  valued at Y414,792  has an
indefinite life and is not being amortized. The estimated aggregate amortization
expense  for the  remainder  of the  period  ending  December  31,  2005 and the
succeeding four years is as follows:



                                      F-16


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)



--------------------------------------------------------------------------------
2005                                                                 Y    24,281
2006                                                                      41,936
2007                                                                      41,936
2008                                                                      27,826
2009                                                                      24,638
--------------------------------------------------------------------------------

NOTE 6. INCOME TAXES

The Company  accounts  for its income  taxes in  accordance  with  Statement  of
Financial  Accounting  Standards ("SFAS") No. 109, which requires recognition of
deferred tax assets and liabilities for future tax consequences  attributable to
differences  between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases and any tax credit carry forwards
available.  Deferred tax assets and  liabilities  are measured using enacted tax
rates expected to apply to taxable income in the years in which those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in income in the
period that includes the enactment date.

The  provision  for income  taxes  consisted  only of current  taxes  payable of
Y78,799.  The Company is not subject to any income  taxes in the United  States.
Income tax expense differed from the amounts computed by applying the enterprise
income tax rate of 7.5% to pretax income as a result of the following:



Tax at statutory rate (7.5%)                                         Y    70,810
Nondeductible expenses                                                     7,989
--------------------------------------------------------------------------------
Provision for income taxes                                           Y    78,799
================================================================================


At June 30, 2005, net deferred tax assets consisted of the following:


Allowances for doubtful accounts receivable                          Y   834,320
Property and equipment                                                 1,448,437
Intangible assets                                                         40,360
--------------------------------------------------------------------------------
Total deferred tax assets                                              2,323,117
Less: Valuation allowance                                              2,000,000
--------------------------------------------------------------------------------
Net deferred tax assets                                              Y   323,117
================================================================================
 
The Company has also  incurred  various  other  taxes,  primarily  comprised  of
business tax,  value-added tax, urban construction tax, education surcharges and
etc.  Any unpaid  amounts are  reflected  on the  balance  sheets as other taxes
payable.

NOTE 7.  NOTES PAYABLE

Notes payable consisted of the following at June 30, 2005:
                                                        


                                      F-17




                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)



-------------------------------------------------------------------------------------
                                                                        
Note payable to a bank, bearing interest at 6.6%, secured by equipment,
  building and land use rights, due in August 2005                       Y 15,000,000
Note payable to a bank, bearing interest at 6.6%, secured by equipment,
  building and land use rights, due in March 2006                           8,000,000
Note payable to former Hainan Helpson shareholders, noninterest
  bearing, secured by the capital stock of Hainan Helpson, due
  September 16, 2005, net of 593,478 unamortized discount,
  discount is based on imputed interest rate of 10%                        27,406,522
-------------------------------------------------------------------------------------
Total notes payable                                                        50,406,522
Less: Current portion                                                     (42,406,522)
-------------------------------------------------------------------------------------
Long-term notes payable                                                  Y  8,000,000
=====================================================================================



Annual  maturities  of notes  payable  for the  remainder  of the period  ending
December 31, 2005 and thereafter are as follows:

--------------------------------------------------------------------------------
2005                                                                Y 43,000,000
2006                                                                   8,000,000
================================================================================
                                                        
NOTE 8. STOCKHOLDERS' EQUITY

On July 6, 2005, the shareholder amended the Company's articles of incorporation
increasing the number of authorized common shares to 4,000,000, reducing the par
value of the  common  shares  to 0.08 per share and  authorizing  100  preferred
shares with a par value of Y825 each. The accompanying financial statements have
been restated to reflect the effects of this stock split.

In the event of declared dividends,  the preferred  shareholders,  if any, shall
receive dividends prior to common  shareholders at a rate of Y0.64 per annum for
each  preferred  share.  Following  the  payment  of  preferred  dividends,  the
preferred  shareholders  shall  participate  equally  with common  shareholders.
Preferred  dividends are  non-cumulative.  The preferred  shares are convertible
into common shares on a  one-for-one  basis any time after the date of issuance,
at the option of the holder.

NOTE 9.  RELATED-PARTY TRANSACTIONS

Significant  balances  receivable  from related parties at June 30, 2005 include
Y557,409  receivable from  Chongquing  Chencial  Medical Holding Group,  Ltd., a
shareholder,  and Y1,209,792 receivable from Haikou Biomedical  Engineering Co.,
Ltd., a shareholder.

NOTE 10.  COMMITMENTS AND CONTINGENCIES

The Company  incurred  rental  expense,  of Y1,818 for the period ended June 30,
2005.

Economic  environment  -  Significantly  all of  the  Company's  operations  are
conducted  in the PRC,  the  Company is subject  to special  considerations  and
significant  risks not  typically  associated  with  companies  operating in the
United States of America.  These risks  include,  among others,  the  political,
economic and legal  environments  and foreign currency  exchange.  The Company's
results  may be  adversely  affected  by  changes  in the  political  and social



                                      F-18


                     ONNY INVESTMENT LIMITED AND SUBSIDIARY
                          Notes to Financial Statements
                 (Information with Respect to June 30, 2005 and
                  for the Period from January 12, 2005 (Date of
                 Inception) through June 30, 2005 is Unaudited)
               (Information in United States Dollars is Unaudited)





conditions in the PRC, and 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.

In addition,  all of the Company's  revenue is denominated in the PRC's currency
of  Renminbi  ("RMB"),  which must be  converted  into other  currencies  before
remittance  out of the PRC. Both the  conversion of RMB into foreign  currencies
and the  remittance of foreign  currencies  abroad  require  approval of the PRC
government.

NOTE 11.  CONCENTRATIONS

For the period ended June 30, 2005, the company had sales to two major customers
that accounted for 45% of total sales.

NOTE 12 - SUBSEQUENT EVENTS

On August 16, 2005, the Onny  shareholder  made a capital  investment in Onny of
Y28,437,495  in cash in exchange  for the issuance of 29,600  additional  common
shares.  On August 18, 2005, the articles of  incorporation of Onny were amended
to increase the  authorized  number of common shares to 40,000  shares,  Y827.65
(US$100) par value,  and the authorized  number of shares of preferred  stock to
10,000  shares,  Y827.65  (US$100) par value.  On October 19, 2005,  Onny issued
10,000  preferred  shares in exchange for  Y35,692,406  in cash, net of offering
costs and estimated  registration  costs, and on that same date, those preferred
shares were converted into 10,000 Onny common shares,  and principal payments of
Y28,000,000 were made on the promissory notes to the former Hainan shareholders.

Also on October 19, 2005, Onny was  reorganized as a wholly-owned  subsidiary of
TS  Electronics,   Inc.  The   reorganization   was  accomplished  by  the  Onny
shareholders  exchanging  their 39,700 Onny common shares for 27,499,940  common
shares of TS Electronics, Inc. and for the commitment by TS Electronics, Inc. to
issue the  original  Onny  shareholder  4,723,056  common  shares  following  an
amendment of the TS Electronics,  Inc. articles of incorporation  increasing the
number of common shares authorized to 100,000,000 shares.






                                      F-19


                    [LETTERHEAD OF HANSEN, BARNETT & MAXWELL]


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and the Shareholders
Hainan Helpson Medicine & Biotechnique Co., Ltd.


We have audited the  accompanying  balance sheets of Hainan  Helpson  Medicine &
Biotechnique  Co.,  Ltd.  as of  December  31,  2003 and 2004,  and the  related
statements of  operations,  stockholders'  equity,  and cash flows for the years
then ended.  These financial  statements are the responsibility of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our 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  audits to  obtain  reasonable  assurance  about  whether  the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Hainan  Helpson  Medicine &
Biotechnique  Co., Ltd. as of December 31, 2003 and 2004, and the results of its
operations  and its cash  flows for the years then  ended,  in  conformity  with
accounting principles generally accepted in the United States of America.


                                                       HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
June 4, 2005






                                      F-20



                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                                 BALANCE SHEETS
                                                                   Chinese Yuan (Renminbi)                 U.S. Dollars
                                                          ---------------------------------------   --------------------------
                                                                 December 31,          March 31,    December 31,   March 31,
                                                          -------------------------   -----------   ------------   -----------
                                                              2003          2004           2005           2004           2005
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
ASSETS                                                                                  (unaudited)    (unaudited)   (unaudited)  
                                                                                                              
Current assets                                                                                          
Cash and cash equivalents                                 Y 2,768,395   Y  5,027,342   Y    238,450   $    607,424   $    28,810
Trade accounts receivables, less allowance for doubtful                                                 
  accounts of 8,115,881, 8,611,547,  8,611,547 (unaudited)                                              
  $1,040,482 (unaudited), and $1,040,482 (unaudited),                                                   
  respectively                                             10,425,289     19,948,709     25,047,836      2,410,282     3,026,380
Other non-trade receivables, less allowance for doubtful                                                
  accounts of 707,119 , 910,800 , 910,800 (unaudited),                                                  
  $110,047 (unaudited), and $110,047 (unaudited),                                                       
  respectively                                              5,216,693      7,563,904      7,309,331        913,901       883,143
Advances to suppliers                                       7,814,575      6,616,135     15,668,789        799,388     1,893,166
Notes receivable                                              619,317        170,000         30,000         20,540         3,625
Inventory, less provision for obsolescence                                                              
  of 14,709, 14,709, 14,709 (unaudited),                                                                
  $1,777 (unaudited), and $1,777 (unaudited),                                                           
  respectively                                             14,889,677     23,226,529     26,251,668      2,806,323     3,171,832
Accounts receivable - related parties                       1,875,000        532,603        532,603         64,351        64,351
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
 Total current assets                                      43,608,946     63,085,222     75,078,677      7,622,209     9,071,307
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Non-current assets                                                                                      
Property and equipment, net of accumulated depreciation                                                 
  of 5,247,911 and 5,607,021, 6,306,908 (unaudited),                                                    
  $677,463 (unaudited), and $762,026 (unaudited),                                                       
  respectively                                             43,510,867     41,050,518     40,534,431      4,959,889     4,897,533
Intangible assets, net of accumulated amortization                                                      
  of 1,493,952and 1,871,579 1,942,829 (unaudited),                                                      
  $226,132 (unaudited), and $234,740 (unaudited),                                                       
  respectively                                              1,356,048      1,161,047      1,089,797        140,282       131,674
Deferred tax asset                                            654,817        713,565        713,565         86,216        86,216
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total non-current assets                                   45,521,732     42,925,130     42,337,793      5,186,387     5,115,423
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total assets                                              Y89,130,678   Y106,010,352   Y117,416,470   $ 12,808,596   $14,186,730
=====================================================================   ============   ============   ============   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY                                                                    
Current liabilities                                                                                     
Trade accounts payable                                    Y 7,694,571   Y  2,237,476   Y  3,411,700   $    270,341   $   412,215
Accrued expenses                                               95,221         80,874          4,861          9,772           587
Taxes payable                                                 897,899      3,229,483      3,022,253        390,199       365,161
Other accounts payable                                      7,651,839      4,317,858      5,015,070        521,701       605,941
Advances from customers                                     2,357,672      2,140,307      3,087,397        258,600       373,032
Dividend payable                                              220,274      1,420,274      1,643,836        171,603       198,615
Accounts payable - related party                            1,080,240      1,106,292      1,209,792        133,667       146,172
Short-term notes payable                                    3,800,000           --             --             --            --
Current portion of long-term note payable                        --       15,000,000     15,000,000      1,812,360     1,812,360
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total current liabilities                                  23,797,716     29,532,564     32,394,909      3,568,243     3,914,083
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
                                                                                                        
Long-term liability                                                                                     
Long-term note payable                                     15,000,000      8,000,000      8,000,000        966,592       966,592
Research and development commitment                           250,000        250,000        250,000         30,206        30,206
Convertible mandatorily redeemable preferred stock,                                                     
  1.00 ($0.12)  par value; 5,000,000, 5,000,000 and 0                                                     
  shares authorized, issued and outstanding                10,000,000     10,000,000           --        1,208,240          --
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total long-term liabilities                                25,250,000     18,250,000      8,250,000      2,205,038       996,798
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total liabilities                                          49,047,716     47,782,564     40,644,909      5,773,281     4,910,881
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Shareholders' equity                                                                                    
Common shares, 1.00 ($0.12) par value; 23,000,000,                                                      
  23,000,000, 28,000,000 shares authorized, issued                                                      
  and  outstanding                                         23,000,000     23,000,000     28,000,000      2,778,952     3,383,073
Additional paid-in capital                                  3,164,000      3,164,000      8,164,000        382,287       986,407
Statutory reserves                                          2,924,284      5,817,196      5,817,196        702,857       702,857
Retained earnings                                          10,994,678     26,246,592     34,790,365      3,171,219     4,203,512
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total shareholders' equity                                 40,082,962     58,227,788     76,771,561      7,035,315     9,275,849
---------------------------------------------------------------------   ------------   ------------   ------------   -----------
Total liabilities and shareholders' equity                Y89,130,678   Y106,010,352   Y117,416,470   $ 12,808,596   $14,186,730
=====================================================================   ============   ============   ============   ===========
                                                                      

               See accompanying notes to the financial statements.
                                      F-21




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                            STATEMENTS OF OPERATIONS


                                                              Chinese Yuan (Renminbi)                       U.S. Dollars
                                    ------------------------------------------------------------    ------------------------------
                                        For the years ended       For the three    For the period   For the year     For the three  
                                            December 31,           months ended    from April 1         ended         months ended  
                                    -----------    -----------      March 31,       to June 15,     December 31,        March 31,
                                        2003           2004            2005             2004            2005              2005
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                   (unaudited)      (unaudited)      (unaudited)      (unaudited)   
                                                                                                             
Revenues                            Y31,149,004    Y64,059,750    Y  24,400,868    Y  19,666,177    $   7,739,957    $   2,948,211
                                                                                                                        
Cost of revenues                     15,354,998     38,200,114       14,221,864       13,445,223        4,615,491        1,718,343
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Gross profit                         15,794,006     25,859,636       10,179,004        6,220,954        3,124,466        1,229,868
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Operating expenses                                                                                                      
Selling expenses                        479,979        661,333          164,448          153,616           79,905           19,869
General and administrative            5,661,976      2,954,655          622,443        2,226,281          356,993           75,206
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
Total operating expenses              6,141,955      3,615,988          786,891        2,379,897          436,898           95,075
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Income from operations                9,652,051     22,243,648        9,392,113        3,841,057        2,687,568        1,134,793
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Non-operating income (expense)                                                                                          
Interest income                          18,879         14,506            2,139            1,139            1,753              258
Interest expense                       (634,336)    (1,340,709)        (332,577)        (260,956)        (161,990)         (40,183)
Other income (expense)                  304,688         57,262             (840)          (3,748)           6,919             (101)
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
Non-operating expense                  (310,769)    (1,268,941)        (331,278)        (263,565)        (153,318)         (40,026)
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Income before taxes                   9,341,282     20,974,707        9,060,835        3,577,492        2,534,250        1,094,767
Income tax expense                     (566,919)    (1,629,881)        (293,500)       1,388,972         (196,929)         (35,462)
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
                                                                                                                        
Net income                            8,774,363     19,344,826        8,767,335        4,966,464        2,337,321        1,059,305
                                                                                                                        
Perferred stock dividends              (220,274)    (1,200,000)        (223,562)            --           (144,989)         (27,012)
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------
Net income available                                                                                                    
to common shareholders              Y 8,554,089    Y18,144,826    Y   8,543,773        4,966,464    $   2,192,332    $   1,032,293
===============================================    ===========    =============    =============    =============    =============
                                                                                                                        
Earnings per common share                                                                                               
Basic                               Y      0.43    Y      0.84             0.36    $        0.18    $        0.10    $        0.04
Diluted                             Y      0.40    Y      0.65    Y        0.35    $        0.18    $        0.08    $        0.04
-----------------------------------------------    -----------    -------------    -------------    -------------    -------------

    


               See accompanying notes to the financial statements.      

                                      F-22




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                       STATEMENTS OF STOCKHOLDERS' EQUITY
                         

                                                                  Chinese Yuan (Renminbi)
                                  ----------------------------------------------------------------------------------------
                                       Common Stock              Additional                        
                                  ---------------------------     Paid-in       Statutory       Retained
                                     Shares         Amount        Capital        Reserves       Earnings         Total
--------------------------------------------------------------------------------------------------------------------------
                                                                                                   
Balance as of December 31, 2002     20,000,000   Y 20,000,000   Y    164,000   Y  1,650,116   Y  3,714,757    Y 25,528,873

Issuance of common stock             3,000,000      3,000,000      3,000,000           --             --         6,000,000
Net income for the year                   --             --             --        1,274,168      7,500,195       8,774,363
Perferred stock dividend                  --             --             --             --         (220,274)       (220,274)
--------------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 2003     23,000,000     23,000,000      3,164,000      2,924,284     10,994,678      40,082,962

Net income for the year                   --             --             --        2,892,912     16,451,914      19,344,826
Perferred stock dividend                  --             --             --             --       (1,200,000)     (1,200,000)
--------------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 2004     23,000,000     23,000,000      3,164,000      5,817,196     26,246,592      58,227,788

Net income for the period                 --             --             --             --        8,767,335       8,767,335
Perferred stock dividend                  --             --             --             --         (223,562)       (223,562)
Conversion of preferred stock        5,000,000      5,000,000      5,000,000           --             --        10,000,000
--------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2005        28,000,000   Y 28,000,000   Y  8,164,000   Y  5,817,196   Y 34,790,365    Y 76,771,561
==========================================================================================================================


                                                                       U.S. dollars
                                                                        (unaudited)
                                  ----------------------------------------------------------------------------------------
                                       Ordinary Stock            Additional                        
                                  ---------------------------     Paid-in        Statutory      Retained
                                     Shares         Amount        Capital        Reserves       Earnings          Total
                                  ------------   ------------   ------------   ------------   ------------    ------------

Balance as of December 31, 2003     23,000,000   $  2,778,952   $    382,287   $    353,324   $  1,328,421    $  4,842,984

Net profit for the year                   --             --             --          349,533      1,987,788       2,337,321
Dividends declared                        --             --             --             --         (144,990)       (144,990)
--------------------------------------------------------------------------------------------------------------------------
Balance as of December 31, 2004     23,000,000      2,778,952        382,287        702,857      3,171,219       7,035,315

Net profit for the period                 --             --             --             --        1,059,305       1,059,305
Dividends declared                        --             --             --             --          (27,012)        (27,012)
Conversion of preferred stock        5,000,000        604,121        604,120           --             --         1,208,241
--------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2005        28,000,000   $  3,383,073   $    986,407   $    702,857   $  4,203,512    $  9,275,849
==========================================================================================================================






               See accompanying notes to the financial statements.        

                                      F-23




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                            STATEMENTS OF CASH FLOWS

                                                                  Chinese Yuan (Renminbi)                    U.S. Dollars
                                                       -------------------------------------------    -----------------------------
                                                          For the years ended        For the three     For the year   For the three
                                                              December 31,            months ended        ended        months ended
                                                       --------------------------      March 31,      December 31,      March 31,
                                                          2003           2004             2005             2004            2005
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
                                                                                      (unaudited)      (unaudited)     (unaudited)
                                                                                                                 

Cash flows from operating activities:                                                                                    
Net income                                             Y 8,774,363    Y19,344,826     Y  8,767,335    $   2,337,321   $   1,059,305
Adjustments to reconcile net income to net cash                                                                          
  provided by (used in) operating activities:                                                                            
   Depreciation and amortization                         1,574,554      3,008,229          771,137          363,466          93,172
Change in assets and liabilities:                                                                                        
  Trade accounts receivable                              2,506,986     (9,523,420)      (5,099,127)      (1,150,658)       (616,098)
  Other receivables                                     (1,310,302)    (2,347,211)         254,573         (283,599)         30,759
  Advances to suppliers                                  5,820,109      1,198,440       (9,052,654)         144,800      (1,093,778)
  Inventories                                           (8,287,112)    (8,336,852)      (3,025,139)      (1,007,292)       (365,509)
  Deferred tax asset                                      (279,908)       (58,748)            --             (7,098)           --
  Accounts payable                                       5,093,294     (5,457,095)       1,174,224         (659,348)        141,874
  Accrued expenses                                          95,221        (14,347)         (76,013)          (1,733)         (9,184)
  Taxes payable                                            429,249      2,331,584         (207,230)         281,711         (25,038)
  Other accounts payable                                (8,800,608)    (3,333,981)         697,212         (402,825)         84,240
  Advances from customers                                 (679,110)      (217,365)         947,090          (26,264)        114,431
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
Net cash provided by (used in) operating activities      4,936,736     (3,405,940)      (4,848,592)        (411,519)       (585,826)
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
                                                                                                                         
Cash flows from investing activities:                                                                                    
Purchases of property and equipment                    (31,042,805)      (170,253)        (183,800)         (20,571)        (22,208)
Purchase of intangible assets                             (600,000)      (182,626)            --            (22,066)           --
Change in accounts receivable - related parties         (1,875,000)     1,342,397             --            162,194            --
Change in notes receivable                                (619,317)       449,317          140,000           54,288          16,915
Change in accounts payable - related parties            (3,881,068)        26,052          103,500            3,148          12,505
------------------------------------------------------------------    -----------    -------------    -------------   -------------
Net cash provided by (used) in investing activities    (38,018,190)     1,464,887           59,700          176,993           7,212
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
                                                                                                                         
Cash flows from financing activities:                                                                                    
Proceeds received from long-term notes payable          15,000,000      8,000,000             --            966,592            --
Proceeds from short-term loans                           5,000,000           --               --               --              --
Principal payment on short-term loans                   (1,200,000)    (3,800,000)            --           (459,131)           --
Proceeds from issuance of preferred stock               10,000,000           --               --               --              --
Proceeds from issuance of common stock                   6,000,000           --               --               --              --
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
Net cash provided by financing activities               34,800,000      4,200,000             --            507,461            --
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
                                                                                                                         
Net increase (decrease) in cash                          1,718,546      2,258,947       (4,788,892)         272,935        (578,614)
                                                                                                                         
Cash and cash equivalents at beginning of period         1,049,849      2,768,395        5,027,342          334,489         607,424
------------------------------------------------------------------    -----------    -------------    -------------   ------------- 
                                                                                                                         
Cash and cash equivalents at end of period              Y2,768,395    Y 5,027,342    Y     238,450    $     607,424   $      28,810
==================================================================    ===========    =============    =============   =============
                                                                                                                         
Supplemental Cash Flow In Formation                                                                                      
Taxes paid                                              Y  715,333    Y   712,015            8,979    $      86,028   $       1,085
Interest paid                                              627,554      1,317,287    Y     362,781          159,160          43,833
==================================================================    ===========    =============    =============   =============
                                                                                                                         
Schedule of Noncash Investing and Financing Activities                                                                   
Preferred dividends declared but not paid               Y  220,274    Y 1,200,000          223,562    $     144,989   $      27,012
Convert preferred stock and preferred stock dividends                                                                    
  to common stock                                       Y     --      Y      --      Y  11,643,836    $        --     $   1,406,856
==================================================================    ===========    =============    =============   =============

                                                                            


               See accompanying notes to the financial statements.        

                                      F-24


                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)

                                   
NOTE 1.  ORGANIZATION AND NATURE OF OPERATIONS

Organization - Hainan Helpson  Medicine & Biotechnique  Co., Ltd. (the Company),
formerly  Hainan  Fulin  International  Biomedical  Industrial  Co.,  Ltd.,  was
incorporated  as a  privately  foreign and Chinese  held joint  venture  between
Haikou  Biomedical  Engineering  Co., Ltd. and Fordisland  Development,  Ltd. in
Hainan  Province,  People's  Republic  of China  (PRC),  on February  25,  1993.
Fordisland  Development held a 30% interest in the Company and Haikou Biomedical
Engineering  held a 70%  interest  in the  Company.  In July 1999,  the  Company
changed its name to Hainan Helpson Medicine & Biotechnique Co., Ltd.

In October  2001,  Fordisland  Development  transferred  its 30% interest in the
Company  to  Hainan  Kaidi  Technique  Co.  Ltd.  and the  Company  changed  its
organization  status to a wholly  Chinese owned  enterprise.  In June 2005,  the
Company's  shareholders  sold their  interest in the Company to Onny  Investment
Limited,  a  British  Virgin  Islands  company,  and  the  Company  changed  its
organization status to a wholly foreign owned enterprise.

Nature of Operations -The Company  manufactures  and markets several Western and
Chinese  medicines sold mainly to hospitals and private sellers in PRC,  through
its marketing  department in Hainan Province and from nine sales  representative
offices in other provinces and cities. The Company's other operating  activities
include biochemical products, health products, and cosmetics.

NOTE 2.  SIGNIFICANT ACCONTING POLICIES

Basis of Presentation  and Translating  Financial  Statements - The accompanying
financial statements have been prepared in accordance with accounting principles
generally  accepted in the United States of America.  The  Company's  functional
currency  is  the  Chinese  Yuan  (Renminbi)  and  the  accompanying   financial
statements  have been expressed in Chinese Yuan. The financial  statements as of
and for the year  ended  December  31,  2004 and as of and for the three  months
ended March 31, 2005 have been  translated into United States dollars solely for
the  convenience of the reader and are unaudited.  Solely for this purpose,  the
financial  statements  have been  translated  into U.S.  dollars  at the rate of
Y8.2765 = US $1.00,  the  approximate  exchange rate  prevailing on December 31,
2004 which  remained  unchanged as of March 31, 2005.  These  translated  United
States  dollar  amounts  should not be  construed as  representing  Chinese Yuan
amounts or that the Yuan  amounts  have been or could be  converted  into United
States dollars.

Accounting  Estimates - The  preparation  of financial  statements in conformity
with accounting  principles  generally  accepted in the United States of America
requires  management to make estimates and assumptions  that affect the reported
amounts of assets and liabilities  and the disclosures of contingent  assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting periods.  Actual results could differ
from those estimates.

Fair Values of  Financial  Instruments  - The carrying  amounts  reported in the
balance sheets for cash and cash  equivalents,  trade  receivables,  advances to
supplier,  notes  receivable  , accounts  receivable-related  parties,  accounts
payable and accrued expenses,  taxes payable,  other accounts payable,  deferred
tax assets,  short-term debts approximate fair value because of the immediate or
short-term  maturity  of  these  financial  instruments.   The  Company  had  no
derivative financial instruments in any of the years presented.

Cash and cash equivalents - Cash and cash  equivalents  include interest bearing
and non-interest  bearing bank deposits,  money market accounts,  and short-term
certificates of deposit with original maturities of three months or less.

Trade  receivables and allowance for doubtful  accounts - Trade  receivables are
carried at original invoiced amounts less an allowance for doubtful accounts.



                                      F-25


                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)



The Company presents trade receivable,  net of allowances for doubtful accounts,
to ensure trade  receivable  are not  overstated  due to  uncollectibility.  The
allowances  are  calculated  based on  detailed  review  of  certain  individual
customer accounts and an estimation of the overall economic conditions affecting
the Company's  customer  base. The Company  reviews a customer's  credit history
before  extending  credit.  If the financial  condition of its customers were to
deteriorate,  resulting  in an  impairment  of their  ability to make  payments,
additional allowances may be required.

Provision is made against accounts  receivable to the extent they are considered
unlikely to be  collected.  It is common  practice in China for  receivables  to
extend beyond one year.  Included in trade  receivables is  approximately  5,000
that  occurred  more than one year from  December 31, 2004,  but is estimated to
still be collectable.

Inventory - Inventories are stated at weighted  average  costing.  The method of
determining  inventory costs is used consistently  from year to year.  Allowance
for inventory  obsolescence  is provided in situation when its market values are
lower than its costs at the year end valuation.

Valuation of Long-lived Assets - The carrying values of the Company's long-lived
assets are reviewed for impairment  whenever events or changes in  circumstances
indicate  that  they may not be  recoverable.  When  such an event  occurs,  the
Company would project  undiscounted  cash flows to be generated  from the use of
the asset and its eventual  disposition over the remaining life of the asset. If
projections  were to indicate that the carrying  value of the  long-lived  asset
will not be recovered,  the carrying value is reduced by the estimated excess of
the carrying value over the projected  discounted cash flows. The Company had an
appraisal  performed as of March 31, 2005 and determined  that no impairment had
occurred.

Property  and  Equipment - Gains and losses on disposal of  property,  plant and
equipment are determined by reference to their carrying amounts.

Property  and  equipment  are  stated at cost.  Depreciation  is  computed  on a
straight-line basis over the estimated useful lives of the assets as follows:

Asset                                                                     Life
--------------------------------------------------------------------------------
Permit of land use                                                       40 - 70
Building                                                                 20 - 35
Plant, machinery and equipment                                              10
Motor vehicle                                                             5 - 10
Office equipment                                                            5
--------------------------------------------------------------------------------

Maintenance   and  repairs  are  charged  to  expense  as  incurred   and  major
improvements  are  capitalized.  Gains or  losses  on sales or  retirements  are
included  in  the   statements  of  operations  in  the  year  of   disposition.
Depreciation  expense  was  Y1,439,553,   Y2,630,602  ($317,840),  and  Y699,887
($84,563)  for the  years  ended  December  31,  2003 and 2004 and for the three
months ended March 31, 2005, respectively.

Intangible  Assets  -  Acquisition  costs  on  patents,  trademarks,   licenses,
techniques,  formulas and other  intangibles are capitalized and amortized using
the straight-line  method over their useful lives. For those intangible  assets,
such as patents,  with legal protection over a period,  their useful life is the
protected  period.  Others  that  do not  have  legal  protection  periods,  are
amortized  generally  over  5 to 10  years.  The  Company  does  not  capitalize
internally generated intangible assets.

Intangible  assets are  techniques  for  medicines.  Amortization  on intangible
assets was Y135,001, Y377,627 ($45,626) and Y71,250 ($8,609) for the years ended
December  31,  2003 and 2004 and for the three  months  ended  March  31,  2005,
respectively.



                                      F-26




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)



Advances to suppliers/  advances from customers - The Company,  as is the common
practice in the PRC, will often pay advanced payments to suppliers for materials
and receive from customers advances for finished  products.  For the years ended
December 31, 2003 and 2004 and for the three  months  ended March 31, 2005,  the
advances to suppliers were:  Y7,814,575,  Y6,616,135  ($799,388) and Y15,668,789
($1,893,166),  respectively  and the advances from customers  were:  Y2,357,672,
Y2,140,307 ($258,600) and Y3,087,397 ($373,033), respectively.

Revenue  Recognition  - The Company  recognizes  revenue when it is realized and
earned. The Company considers revenue realized or realizable and earned when (1)
it has persuasive evidence of an arrangement, (2) delivery has occurred, (3) the
sales  price is fixed or  determinable,  and (4)  collectibility  is  reasonably
assured. Delivery does not occur until products have been shipped to the client,
risk of loss has  transferred  to the  client  and  client  acceptance  has been
obtained, client acceptance provisions have lapsed, or the Company has objective
evidence that the criteria  specified in client acceptance  provisions have been
satisfied.  The sales price is not considered to be fixed or determinable  until
all contingencies related to the sale have been resolved.

Cost of Revenues - Cost of revenues include wages, materials,  handling charges,
and other expenses associated with the manufacture and delivery of product.

Research and Development - Research and development expenditures are recorded as
expenses at the period they  occurred and were Y6,902,  Y306,984  ($37,091)  and
Y689  ($83) for the years  ended  December  31,  2003 and 2004 and for the three
months ended March 31, 2005, respectively.

Retirement  benefit  plans  -  The  Company   contributes  to  various  employee
retirement  benefit plans organized by provincial  governments under which it is
required to make monthly contributions to these plans at rates prescribed by the
related provincial  governments.  The provincial governments undertake to assume
the retirement benefit  obligations of all existing and future retired employees
of the Company. Contributions to these plans are charged to expense as incurred.

Advertising  Costs  -  Advertising  costs  are  expensed  when  incurred.  Total
advertising  expense was Y17,100,  Y14,500  ($1,751)  and Y3,000  ($362) for the
years ended  December 31, 2003 and 2004 and for the three months ended March 31,
2005, respectively.

Income  taxes - The Company  accounts for its income  taxes in  accordance  with
Statement of Financial  Accounting  Standards  ("SFAS") No. 109,  which requires
recognition of deferred tax assets and liabilities  for future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets  and  liabilities  and their  respective  tax bases and any tax
credit  carry  forwards  available.  Deferred  tax  assets and  liabilities  are
measured  using  enacted tax rates  expected  to apply to taxable  income in the
years in which those  temporary  differences  are  expected to be  recovered  or
settled.  The effect on deferred tax assets and  liabilities  of a change in tax
rates is recognized in income in the period that includes the enactment date.

The Company is not subject to any income taxes in the United States.  Income tax
expense differed from the amounts computed by applying the enterprise income tax
rate of 7.5% to pretax income as a result of the following:

                                                            Chinese Yuan (Renminbi)                 U.S. Dollars
                                                    --------------------------------------    --------------------------
                                                           December 31,         March 31,     December 31,    March 31,
                                                    ------------------------    ----------    --------------------------
                                                       2003          2004          2005           2004           2005
----------------------------------------------------------------------------    ----------    --------------------------
                                                                                                        
Tax calculated at a tax rate of 7.5%                Y  846,827    Y1,688,629    Y  679,563    $    204,027    $   82,108
Impairment loss on valuation (net of tax effects)     (279,908)      (58,748)     (386,063)         (7,098)      (46,646)
----------------------------------------------------------------------------    ----------    --------------------------
Income tax provision (benefit)                      Y  566,919    Y1,629,881    Y  293,500    $    196,929    $   35,462
==========================================================================================    ==========================



The Company also incurs  various  other taxes,  primarily  comprised of business
tax,  value-added tax, urban construction tax, education surcharges and etc. Any
unpaid amounts are reflected on the balance sheets as other taxes payable.



                                      F-27




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)


Net Earnings  per Common Share - Basic  earnings per common share is computed by
dividing net income by the weighted-average number of common shares outstanding.
Diluted  earnings per common share is computed by dividing net income,  adjusted
for dividends  associated with  mandatorily  redeemable  preferred stock, by the
weighted-average  number of common  shares and dilutive  potential  common share
equivalents  outstanding.  Potential common share equivalents  consist of shares
issuable upon the conversion of preferred stock.

The following table is a reconciliation  of the numerators and denominators used
in  the   calculation   of  basic  and  diluted   earnings  per  share  and  the
weighted-average common shares outstanding for the years ended December 31, 2003
and 2004 and for the three months ended March 31, 2005:

                                                     Chinese Yuan (Renminbi)                     U.S. Dollars
                                            ------------------------------------------   -------------------------------
                                               For the years ended      For the three     For the year     For the three
                                                   December 31,          months ended        ended          months ended
                                            -------------------------      March 31,      December 31,       March 31,  
                                               2003          2004             2005            2004             2005
                                                                          (unaudited)      (unaudited)      (unaudited)
                                                                                                              
Net income available to common shareholders   8,554,089    18,144,826        8,543,773   $    2,192,332   $    1,032,293
Preferred stock dividend                        220,274     1,200,000          223,562          144,989           27,012
--------------------------------------------------------------------------------------   --------------   --------------
                                                                                                 
Net income                                  Y 8,774,363  Y 19,344,826      Y 8,767,335        2,337,321        1,059,305
                                                                                                              
Basic weighted-average common shares                                                                          
outstanding                                  20,550,685    23,000,000       24,544,118       23,000,000       24,544,118
Effect of dilutive securities                                                                                 
Convertible Preferred Stock                     917,808     5,000,000             --          5,000,000             --
--------------------------------------------------------------------------------------   --------------   --------------
Diluted weighted-average common shares                                                                        
outstanding                                  21,468,493    28,000,000       24,544,118       28,000,000       24,544,118
--------------------------------------------------------------------------------------   --------------   --------------
Basic earnings per share                    Y      0.43  Y       0.84      Y      0.36   $         0.10   $         0.04
Diluted earnings per share                  Y      0.40  Y       0.65      Y      0.35   $         0.08   $         0.04
======================================================================================   ==============   ==============


From October 25, 2003 through March 10, 2005,  there were  mandatory  redeemable
preferred stock potential common share  equivalents  from convertible  preferred
stock of 5,000,000  common shares.  On March 10, 2005,  the Preferred  stock was
converted to common stock.

Credit  risk - The  carrying  amounts of  accounts  receivable  included  in the
balance  sheets  represent the Company's  exposure to credit risk in relation to
its financial assets. No other financial assets carry a significant  exposure to
credit risk.

The Company  performs  ongoing credit  evaluations of each customer's  financial
condition.  It maintains allowances for doubtful accounts and such allowances in
the aggregate have not exceeded management's estimations.

Interest  rate risk - The Company is exposed to the risk arising  from  changing
interest rates,  which may affect the ability of repayment of existing debts and
viability of securing future debt instruments within the PRC.

Recently  Enacted  Accounting  Standards  -  In  November  2004,  the  Financial
Accounting  Standards  Board ("FASB") issued SFAS No. 151,  Inventory  Costs--An
Amendment of ARB No. 43, Chapter 4 ("SFAS 151"). SFAS 151 amends the guidance in
ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal
amounts of idle facility expense,  freight,  handling costs, and wasted material
(spoilage).  Among other  provisions,  the new rule  requires that items such as
idle facility expense,  excessive spoilage, double freight, and rehandling costs
be  recognized  as  current-period  charges  regardless of whether they meet the
criterion  of "so  abnormal"  as stated in ARB No.  43.  Additionally,  SFAS 151
requires  that the  allocation  of fixed  production  overhead  to the  costs of
conversion be based on the normal  capacity of the production  facilities.  SFAS
151 is effective for fiscal years  beginning after June 15, 2005 and is required
to be adopted by the Company beginning on January 1, 2006.



                                      F-28





                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)


In  December  2004,  the FASB issued SFAS No. 123  (revised  2004),  Share-Based
Payment ("SFAS 123R"),  which revises SFAS No. 123,  Accounting for  Stock-Based
Compensation.  SFAS 123R also supersedes APB 25,  Accounting for Stock Issued to
Employees,  and amends SFAS No. 95,  Statement  of Cash Flows.  In general,  the
accounting  required by SFAS 123R is similar to that of SFAS No.  123.  However,
SFAS No. 123 gave companies a choice to either recognize the fair value of stock
options in their income  statements  or disclose the pro forma income  statement
effect  of the fair  value  of  stock  options  in the  notes  to the  financial
statements.  SFAS 123R eliminates that choice and requires the fair value of all
share-based  payments  to  employees,  including  the fair  value of  grants  of
employee stock options,  be recognized in the income  statement,  generally over
the option vesting period. SFAS 123R must be adopted no later than July 1, 2005.
Early adoption is permitted.

In  December  2004,  the FASB issued SFAS No.  153,  Exchanges  of  Non-monetary
Assets--An  Amendment  of  APB  Opinion  No.  29,  Accounting  for  Non-monetary
Transactions  ("SFAS 153").  SFAS 153  eliminates  the exception from fair value
measurement for non-monetary exchanges of similar productive assets in paragraph
21(b) of APB Opinion  No. 29,  Accounting  for  Non-monetary  Transactions,  and
replaces  it  with an  exception  for  exchanges  that  do not  have  commercial
substance.  SFAS 153 specifies  that a  non-monetary  exchange  have  commercial
substance  if the  future  cash  flows of the  entity  are  expected  to  change
significantly as a result of the exchange.

The adoption of these  pronouncements  is not expected to have a material effect
on the Company's financial position or results of operations.

NOTE 3.  INVENTORY

Inventory consisted of the following:


                                                  Chinese Yuan (Renminbi)                    U.S. Dollars
                                      -------------------------------------------    ------------------------------
                                          For the years ended       For the three    For the year     For the three 
                                             December 31,            months ended       ended          months ended
                                      --------------------------       March 31,      December 31,      March 31,
                                          2003           2004            2005             2004             2005
---------------------------------------------------------------------------------    -------------    -------------    
                                                                     (unaudited)      (unaudited)      (unaudited) 
                                                                                                 
Raw materials                         Y 4,817,221    Y13,566,628    Y  16,955,038    $   1,639,175    $   2,048,576
Work in progress                          147,088      2,714,904        4,097,491          328,026          495,075
Finished Goods                          9,940,077      6,959,706        5,213,848          840,900          629,958
Provision for impairment                  (14,709)       (14,709)         (14,709)          (1,777)          (1,777)
---------------------------------------------------------------------------------    -------------    -------------
Total inventory                       Y14,889,677    Y23,226,529    Y  26,251,668    $   2,806,323    $   3,171,832
=================================================================================    =============    =============


NOTE 4.  PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

                                
                                                 Chinese Yuan (Renminbi)                     U.S. Dollars
                                      -------------------------------------------    ------------------------------
                                         For the years ended        For the three    For the year     For the three 
                                             December 31,            months ended        ended         months ended    
                                      --------------------------      March 31,       December 31,     March 31,
                                          2003           2004            2005             2004             2005
----------------------------------------------------------------    -------------    -------------    -------------

                                                                     (unaudited)      (unaudited)      (unaudited)
Permit of land use                    Y 5,589,000    Y 5,589,000    Y   5,589,000    $     675,285    $     675,285
Building                               19,784,852     19,784,852       19,794,905        2,390,485        2,391,700
Plant, machinery and equipment         22,080,454     22,207,141       22,233,441        2,683,156        2,686,334
Motor vehicle                             844,685        844,685          992,132          102,058          119,873
Office equipment                          459,787        503,353          503,353           60,817           60,817
---------------------------------------------------------------------------------    -------------    -------------
Total                                  48,758,778     48,929,031       49,112,831        5,911,802        5,934,010
Less:  Accumulated depreciation        (5,247,911)    (7,878,513)      (8,578,400)        (951,914)      (1,036,477)
---------------------------------------------------------------------------------    -------------    -------------
Property, plant and equipment, net    Y43,510,867    Y41,050,518    Y  40,534,431    $   4,959,889    $   4,897,533
=================================================================================    =============    =============





                                      F-29




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)




NOTE 5.  INTANGIBLE ASSETS

Intangible  assets  represent  the  costs  on  patents,  trademarks,   licenses,
techniques, formulas, etc. Intangible assets have a weighted-average useful life
of approximately 2 years. One intangible asset,  valued at Y782,626 ($94,560) is
not being amortized by the company. Estimated aggregate amortization expense for
the succeeding five years ending December 31, is as follows:

                                                         Yuan       U.S. Dollars
--------------------------------------------------------------------------------
2005                                                    91,625         11,071
2006                                                    79,124          9,560
2007                                                    79,124          9,560
2008                                                    52,501          6,343
2009                                                    45,000          5,437
Thereafter                                              31,047          3,751
                                

NOTE 6.  NOTES PAYABLE

The Company received proceeds of Y15,000,000 and Y8,000,000 under the terms of a
note payable during 2003 and 2004  respectively.  Each note is due in 24 months,
and accrues interest at 6.59% per annum.

A summary of notes payable at December 31, 2003,  2004 and March 31, 2005 are as
follows:


                                                                              Chinese Yuan (Renminbi)                 U.S. Dollars
                                           ---------------------------------------   -----------------------------
                                             For the years ended     For the three   For the year    For the three 
                                                 December 31,         months ended       ended        months ended           
                                           -----------------------      March 31,    December 31,       March 31,
                                              2003         2004           2005            2004            2005
------------------------------------------------------------------   -------------   -------------   -------------
                                                                      (unaudited)     (unaudited)     (unaudited)
                                                                                                   
Note payable to bank bearing interest at                                                                 
6.6% secured by equipment, building and                                                                  
land use rights; payable in 24 months     Y15,000,000   Y15,000,000   Y  15,000,000      $1,812,360      $1,812,360
                                                                                                         
Note payable to bank bearing interest at                                                                 
6.6% secured by equipment, building and                                                                  
land use rights; payable in 24 months            --      8,000,000       8,000,000         966,592         966,592
------------------------------------------------------------------------------------------------------------------
Total                                     Y15,000,000  Y23,000,000    Y 23,000,000   $   2,778,952   $   2,778,952



Annual maturities of long-term debt as of December 31, 2004 for each of the next
five years are as follows:

                                                       Yuan         U.S. Dollars
--------------------------------------------------------------------------------
2005                                               Y15,000,000       $ 1,812,360
2006                                                 8,000,000           966,592
Thereafter                                                   -                 -
--------------------------------------------------------------------------------

Interest  accrued on the notes payable equaled  Y16,104,  Y32,204 ($3,891) and 0
($0) for the years ended  December  31,  2003 and 2004 and for the three  months
ended March 31, 2005, respectively.

NOTE 7. STOCKHOLDERS' EQUITY

Preferred  stock - On October 25, 2003, the Company issued  5,000,000  shares of
preferred  stock. The preferred stock carries a 24% cumulative  dividend.  After
three years from the date of issuance,  the  preferred  shareholder  can convert
their preferred shares to common shares or have the preferred shares redeemed by



                                      F-30




                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)



the Company at a price not less than the  original  value.  The Company  accrued
Y220,274,  Y1,200,000 ($144,989) and Y223,562 ($27,012) as dividends payable for
the years ended  December 31, 2003 and 2004 and for the three months ended March
31, 2005.  During March 2005,  the preferred  shareholder  sold their  preferred
shares to the  majority  common  shareholder  and  immediately  upon  sale,  the
preferred  shares,  valued at Y10,000,000  ($1,208,240)  was converted to common
shares by issuing 5,000,000 shares of common stock.

Common Stock - The Company is required to keep enough common shares available as
to allow for the conversion of the convertible, mandatorily redeemable Preferred
Stock. At December 31, 2004 this amounted to keeping at least  5,000,000  shares
of common stock available for issuance.

Statutory  Reserves - According to the Articles of  Association  of the Company,
the Company is required to transfer 10% of its net profits,  as determined under
PRC accounting regulations,  to the legal accumulated fund. When the accumulated
fund equals 50% of the registered capital of the Company,  transfers will cease.
In addition, 5% will be transferred into the commonwealth fund. The transfers to
these  reserve  funds  in  2003  or  2004  were   Y1,274,168   and   Y2,892,912,
respectively.  The amount  comprising  these capital reserve funds for the years
ended December 31, 2003,  and 2004 was  Y2,924,284  and  Y5,817,196  ($702,560),
respectively.  The Company  has not made the  statutory  reserves  for the three
months ended March 31, 2005.


NOTE 8.  RELATED-PARTY TRANSACTIONS

Significant  related party transactions  affecting the results of operations are
as follows:


                                                 Chinese Yuan (Renminbi)                 U.S. Dollars
                                          -------------------------------------   -----------------------------
                                          For the years ended     For the three    For the year   For the three
                                               December 31,        months ended       ended        months ended
                                          ---------------------     March 31,      December 31,     March 31,
                                             2003        2004          2005            2004            2005
---------------------------------------------------------------   -------------   -------------   -------------
                                                                   (unaudited)     (unaudited)     (unaudited)               
                                                                                         
Purchase of material from:                                                                             
Haikou Biomedical Engineering Co., Ltd.  Y2,867,657  Y     --     Y        --     $        --     $        --
(shareholder) Due from related parties:                                                                
Chongquing Chemcial Medicine              1,875,000     532,603            --            64,351            --
Holding Group, Ltd.                                                                                    
(shareholder) Due to related parties:                                                                  
Haikou Biomedical Engineering Co., Ltd.   1,080,240   1,106,292       1 209,792         133,667         146,172
(shareholder)                                                                                          
---------------------------------------------------------------------------------------------------------------

                                                                             


NOTE 9.  COMMITMENTS AND CONTINGENCIES

The Company  incurred rental expense,  of Y68,336,  Y75,707  ($9,147) and Y9,443
($1,140)  during 2003 and 2004 and for the three  months  ended March 31,  2005,
respectively.

Economic  environment  -  Significantly  all of  the  Company's  operations  are
conducted  in the PRC,  the  Company is subject  to special  considerations  and
significant  risks not  typically  associated  with  companies  operating in the
United States of America.  These risks  include,  among others,  the  political,
economic and legal  environments  and foreign currency  exchange.  The Company's
results  may be  adversely  affected  by  changes  in the  political  and social
conditions in the PRC, and by changes in  governmental  policies with respect to
laws  and  regulations,  anti-inflationary  measures,  currency  conversion  and
remittance abroad, and rates and methods of taxation, among other things.



                                      F-31



                HAINAN HELPSON MEDICINE & BIOTECHNIQUE Co., Ltd.
                          Notes to Financial Statements
                           December 31, 2003 and 2004
      (Information with Respect to March 31, 2005 and for the Three Months
                       Ended March 31, 2005 is Unaudited)
              (Information in United States Dollars is Unaudited.)



In addition,  all of the Company's  revenue is denominated in the PRC's currency
of  Renminbi  ("RMB"),  which must be  converted  into other  currencies  before
remittance  out of the PRC. Both the  conversion of RMB into foreign  currencies
and the  remittance of foreign  currencies  abroad  require  approval of the PRC
government.

NOTE 10.  CONCENTRATIONS

For the year  ended  December  31,  2004,  the  company  had sales to five major
customers that accounted for 52% of total sales.  In the year ended December 31,
2003,  the company had sales to one major  customer  that  accounted  for 62% of
total sales

NOTE 11.  SUBSEQUENT EVENTS (UNAUDITED)

On May 25, 2005,  Onny  Investment  Limited  ("Onny"),  a British  Virgin Island
company,  entered  into an agreement  with the  shareholders  of Hainan  Helpson
Medical  Biotechnology Co., Ltd ("Hainan"),  in which Onny agreed to acquire and
the  shareholders of Hainan agreed to sell all of the outstanding  common shares
of Hainan to Onny in exchange for cash  payments to the Hainan  shareholders  in
the form of common stock dividends from Hainan of Y34,076,800  and  non-interest
bearing  promissory  notes totaling RMB  Y28,000,000  payable three months after
Hainan obtains a business license in the People's  Republic of China as a wholly
foreign  owned  entity.  Hainan  obtained  such license on June 16, 2005 and the
shares  of Hainan  were  transferred  to Onny on that  date.  June 16,  2005 was
recognized as the date of the acquisition. Accordingly, the promissory notes are
due September 16, 2005.

As Hainan is an operating company and control of Hainan changed upon the closing
of the acquisition agreement;  accordingly,  Onny is the accounting acquirer and
has recognized the acquisition of Hainan as a business combination in accordance
with   Statements  of  Financial   Accounting   Standards   No.  141,   Business
Combinations.  On April 25,  2005,  Hainan  declared a dividend  to the  selling
shareholders of Y34,076,800,  which equaled Hainan's  retained earnings at March
31, 2005 less  deferred  income tax assets of Y713,565  that are not  considered
part of  distributable  profits  under Chinese law. The fair value of the assets
and  liabilities  of Hainan was determined by appraisal and exceeded the cost of
the assets  acquired by  Y15,394,761.  That excess was  allocated  as a pro rata
reduction of the amounts that otherwise would have been assigned to the acquired
non-current assets except deferred tax assets.



                                      F-32

                                                             
                    [LETTERHEAD OF HANSEN, BARNETT & MAXWELL]

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and the Stockholders
TS Electronics, Inc.

We have audited the balance sheet of TS  Electronics,  Inc. as of June 30, 2005,
and the related statements of operations,  stockholders' deficit, and cash flows
for the year then ended.  These financial  statements are the  responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted  our audit 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.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion the financial statements referred to above present fairly, in all
material respects, the financial position of TS Electronics, Inc. as of June 30,
2005,  and the  results of its  operations  and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
financial  statements,  the Company has incurred significant losses and negative
cash flows from operating  activities during the year ended June 30, 2005. As of
June 30, 2005, the Company had no assets, an accumulated  deficit of $5,676,660,
and negative working capital of $4,473.  These matters raise  substantial  doubt
about the Company's ability to continue as a going concern.  Management's  plans
with respect to these  matters are also  described  in Note C. The  accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


                                                       HANSEN, BARNETT & MAXWELL
Salt Lake City, Utah
September 8, 2005



                                      F-33


             Report of Independent Registered Public Accounting Firm


To the Stockholders and Board of Directors
TS Electronics, Inc. (formerly, Softstone, Inc.)  

We  have  audited  the  accompanying  balance  sheet  of  TS  Electronics,  Inc.
(formerly,  Softstone,  Inc.) as of June 30, 2004 and the related  statements of
operations,  stockholders' deficit and cash flows for the year then ended. These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted  our audit 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.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of TS Electronics, Inc. as of June
30, 2004 and the results of its  operations and its cash flows for the year then
ended, in conformity with accounting principles generally accepted in the United
States of America.

The Company's  financial  statements are prepared  using the generally  accepted
accounting  principles  applicable to a going concern,  which  contemplates  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.  The Company had an accumulated deficit of $3,834,281 through June 30,
2004 and negative working capital of $68,322 at June 30, 2004. These factors, as
discussed in Note C to the financial  statements,  raise substantial doubt about
the  Company's  ability to continue as a going  concern.  Management's  plans in
regard to these matters are also  described in Note C. The financial  statements
do not  include  any  adjustments  that might  result  from the  outcome of this
uncertainty.


Evans, Gaither & Associates PLLC
October 7, 2004
Oklahoma City, Oklahoma



                                      F-34



                                                               
                              TS Electronics, Inc.
                                 Balance Sheets

                                                                          June 30,
                                                                 --------------------------
                                                                     2005           2004
-------------------------------------------------------------------------------------------
                                                                                  
ASSETS

Current Assets
Cash                                                             $      --      $        84
-------------------------------------------------------------------------------------------

Total Current Assets                                                    --               84
-------------------------------------------------------------------------------------------

Total Assets                                                     $      --      $        84
===========================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable - trade and accrued liabilities                 $      --      $    68,406
Payable to major stockholder                                           4,473           --
-------------------------------------------------------------------------------------------

Total Current Liabilities                                              4,473         68,406
-------------------------------------------------------------------------------------------

Stockholders' Deficit
Common stock - $0.001 par value; 30,000,000 shares authorized;
2,500,060 shares and 600,015 shares outstanding, respectively          2,500            600
Additional paid-in capital                                         5,669,687      3,763,359
Shares to be issued                                                     --            2,000
Accumulated deficit                                               (5,676,660)    (3,834,281)
-------------------------------------------------------------------------------------------

Total Stockholders' Deficit                                           (4,473)       (68,322)
-------------------------------------------------------------------------------------------

Total Liabilities and Stockholders' Deficit                      $      --      $        84
===========================================================================================





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



                                      F-35


                              TS Electronics, Inc.
                            Statements of Operations    


                                                   For the Years Ended June 30,
                                                   ---------------------------- 
                                                       2005            2004
-------------------------------------------------------------------------------
                                                                     
Revenues                                           $       --      $     23,275
Cost of Sales                                              --            47,681
-------------------------------------------------------------------------------
                                                                     
Gross Loss                                                 --           (24,406)
-------------------------------------------------------------------------------
                                                                     
General and Administrative Expense                                   
Stock-based compensation                              1,693,728            --
Other                                                   148,651          92,963
-------------------------------------------------------------------------------
                                                                     
Total General and Administrative Expense              1,842,379          92,963
-------------------------------------------------------------------------------
                                                                     
Loss from Operations                                 (1,842,379)       (117,369)
                                                                     
Other Income (Expense)                                               
Other income                                               --             2,500
Interest expense                                           --            (5,595)
Loss on settlement of liabilities                          --          (504,190)
Gain on settlement of debt                                 --           120,362
-------------------------------------------------------------------------------
                                                                     
Net Loss                                           $ (1,842,379)   $   (504,292)
===============================================================================
                                                                     
Basic and Diluted Loss per Common Share            $      (2.20)   $      (0.89)
===============================================================================
                                                                     
Basic and Diluted Weighted-Average                                   
Common Shares Outstanding                               837,144         565,450
===============================================================================
                                                            


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

                                      F-36




                              TS Electronics, Inc.
                 Statements of Changes in Stockholders' Deficit
                   For the Years ended June 30, 2004 and 2005


                                                                 
                                                    Common Stock          Additional     Shares                          Total
                                             -------------------------     Paid-in        to be        Accumulated   Stockholders'
                                                Shares        Amount       Capital       Issued          Deficit        Deficit
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                              
Balances at July 1, 2003                         350,155   $       350   $ 2,294,088   $     6,515    $(3,329,989)   $  (1,029,036)
                                                                                                                        
Issuance for cash received in prior period           344             1         2,514        (2,515)          --               --
Settlement of related party accounts                --            --                                                    
payable                                            6,879             7        40,512          --             --             40,519
Issuance for services                              1,988             2        14,143          --             --             14,145
Issuance for payment of interest                     229          --           1,024          --             --              1,024
Issuance as payment of loan incentive                                                                                   
recognized in prior period                         1,147             1         1,999        (2,000)          --               --
Issuance in exchange for the assumption                                                                                 
of liabilities by major stockholders             239,273           239     1,409,079          --             --          1,409,318
Net loss for the year                               --            --            --            --         (504,292)        (504,292)
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        
Balances at June 30, 2004                        600,015           600     3,763,359         2,000     (3,834,281)         (68,322)
                                                                                                                        
Issuance for settlement of accounts                                                                                     
payable                                           25,000            25        12,475          --             --             12,500
Issuance for cash                              1,875,045         1,875       198,125          --             --            200,000
Stock-based compensation                            --            --       1,693,728          --             --          1,693,728
Cancellation of obligation to issue                                                                                     
shares paid for in prior period                     --            --           2,000        (2,000)          --               --
Net loss for the year                               --            --            --            --       (1,842,379)      (1,842,379)
----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        
Balances at June 30, 2005                      2,500,060   $     2,500   $ 5,669,687   $      --      $(5,676,660)   $      (4,473)
==================================================================================================================================

                                                                     









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

                                      F-37




                           TS Statements of Cash Flows

                                                               For the Years Ended June 30,
                                                               ----------------------------
                                                                   2005            2004
-------------------------------------------------------------------------------------------
                                                                                   
Cash Flows from Operating Activities                                             
Net loss                                                       $ (1,842,379)   $   (504,292)
Adjustments to reconcile net loss to net cash                                    
used in operating activities:                                                    
Loss on settlement of liabilities                                      --           504,190
Gain on settlement of debt                                             --          (120,362)
Expenses paid with common stock                                      12,500          14,145
Expenses paid by increase in payable due to major stockholder         4,473      
Stock-based compensation                                          1,693,728            --
Change in accounts payable and accrued expenses                     (68,406)         70,507
-------------------------------------------------------------------------------------------
Net Cash Used in Operating Activities                              (204,557)        (35,812)
-------------------------------------------------------------------------------------------
Cash Flows from Investing Activities                                             
Cash received from disposition of property and equipment               --             2,500
-------------------------------------------------------------------------------------------
Net Cash Used in Investing Activities                                  --             2,500
-------------------------------------------------------------------------------------------
Cash Flows from Financing Activities                                             
Principal payments on loans and debts                                  --            (3,804)
Proceeds from borrowing                                                --            35,411
Proceeds from issuance of common stock                              200,000            --
-------------------------------------------------------------------------------------------
Net Cash Provided by Financing Activities                           200,000          31,607
-------------------------------------------------------------------------------------------
Net Decrease in Cash                                                    (84)         (1,705)
Cash at beginning of year                                                84           1,789
-------------------------------------------------------------------------------------------
                                                                                 
Cash at End of Year                                            $       --      $         84
===========================================================================================
                                                                                 
Supplemental Disclosures of Cash Flow Information                                
Interest paid during the year                                  $       --      $      5,595
===========================================================================================
                                                                       


================================================================================
Supplemental  Schedule of Noncash Investing and Financing  Activities During the
year ended June 30, 2004, the major stockholders of the Company assumed $905,128
of  liabilities  from the Company in exchange  for the transfer of assets with a
fair value of zero and the  issuance  of 239,273  shares of common  stock with a
fair value of $1,409,318.  A $504,190 loss on settlement of the  liabilities was
recognized as a result of the transaction.

During the year ended June 30, 2005, the Company  obtained a  cancellation  of a
$2,000  obligation  to issue common stock that  resulted from cash received in a
prior  period.  The  cancellation  was  recognized  as an increase in additional
paid-in capital.
================================================================================


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

                                      F-38


                              TS Electronics, Inc.

                          Notes to Financial Statements

                                                               
Note A - Organization and Description of Business

TS Electronics, Inc. (Company) was incorporated as Softstone, Inc. in accordance
with the Laws of the State of Delaware on October 7, 1998. The Company's initial
business plan was to manufacture a patented  rubber product used in the road and
building construction industries.

On July 24, 2001, the Company  entered into a plan of  reorganization  involving
Kilkenny Acquisition Corp. (Kilkenny) whereby the Company is the survivor and in
control  of the  Board of  Directors.  The  merger  agreement  provided  for the
exchange of 1,158,387  shares of the  Company's  common stock for all the issued
and  outstanding  common  stock  of  Kilkenny.   For  accounting  purposes,  the
transaction  between the Company and Kilkenny was treated as a re!capitalization
of the Company, with the Company as the accounting acquirer.

On August 13, 2003, the Company changed its name to TS Electronics, Inc.

On or about August 11, 2004 the Company entered into a Stock Exchange  Agreement
(Agreement)  with the sole  shareholder  of China ESCO Holdings  Limited  (China
ESCO), a company organized in the Hong Kong Special Administration Region in The
People's Republic of China and its wholly owned operating subsidiary, AsiaNet PE
Systems   Limited.   The  agreement   provided  that  the  Company  would  issue
approximately  11,201,902  shares of its restricted common stock in exchange for
100% of the  issued and  outstanding  capital  stock of China  ESCO which  would
represent  approximately  94% of the then total  issued and  outstanding  common
stock of the Company  after the  exchange.  On January 14, 2005,  the August 17,
2003  Agreement  was  rescinded  on the  grounds  of  material  breaches  of the
agreement by the sole shareholder of China ESCO. Accordingly,  the Agreement was
not given accounting recognition in the accompanying financial statements.

On or about  February 8, 2005,  the Company signed a letter of intent with Osage
Energy Company, LLC with regard to a proposed business combination  transaction.
Subsequent  discussions  between  the Company  and Osage  Energy  resulted in an
abandonment of any further efforts with regard to such a business combination.

Note B - Preparation of Financial Statements

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
a year-end of June 30.

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Management  acknowledges  that  it is  solely  responsible  for  adopting  sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented.

For  segment  reporting  purposes,  the Company  operated  in only one  industry
segment during the periods represented in the accompanying  financial statements
and makes all  operating  decisions and  allocates  resources  based on the best
benefit to the Company as a whole.


                                      F-39


                              TS Electronics, Inc.

                    Notes to Financial Statements - Continued


Note C - Going Concern Contingency

The  accompanying  consolidated  financial  statements  have  been  prepared  in
conformity  with generally  accepted  accounting  principles  which  contemplate
continuation  of the  company as a going  concern.  However,  the Company has an
accumulated  deficit of $5,676,660 and negative  working  capital of $(4,473) at
June 30, 2005.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.

The Company anticipates offering equity securities in the future. However, there
is no  assurance  that the  Company  will be able to obtain  additional  funding
through the issuance of additional equity  securities or, that such funding,  if
available, will be obtained on terms favorable to or affordable by the Company.

If no additional  operating  capital is received  during the next twelve months,
the Company will be forced to rely upon additional loans from management  and/or
significant  stockholders  to preserve the integrity of the corporate  entity at
this  time.  In the  event,  the  Company  is unable to  acquire  advances  from
management and/or  significant  stockholders,  the Company's ongoing  operations
would be negatively impacted.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.

Note D - Summary of Significant Accounting Policies

Research  and  Development  Expenses - Research  and  development  expenses  are
charged to operations as incurred.

Advertising  Expenses  -  The  Company  does  not  utilize  direct  solicitation
advertising.  All other  advertising  and  marketing  expenses  are  charged  to
operations   as  incurred.   For  the  years  ended  June  30,  2005  and  2004,
respectively,  an aggregate of $-0- was charged to  operations  for  advertising
expenses.

Stock-Based  Compensation  - The  Company  utilizes  the  fair-value  method  of
accounting for the payment for goods and/or services with the issuance of equity
shares.

Basic and Diluted  Loss per Share - Basic loss per share is computed by dividing
net loss by the weighted-average  number of common shares outstanding during the
period.  Diluted  loss  per  share  is  computed  by  dividing  net  loss by the
weighted-average  number of common shares and dilutive  potential  common shares
outstanding.

New  accounting  pronouncements  - In December  2004,  the Financial  Accounting
Standards Board ("FASB") issued Statement of Financial  Accounting Standards No.
123 (revised 2004),  "Share-Based  Payment" which revised Statement of Financial
Accounting  Standards No. 123,  "Accounting for Stock-Based  Compensation." This
statement  supersedes  APB  Opinion  No.  25,  "Accounting  for Stock  Issued to
Employees."  The revised  statement  addresses the  accounting  for  share-based
payment  transactions  with  employees and other third  parties,  eliminates the
ability to account for share-based  compensation  transactions  using APB 25 and
requires that the compensation costs relating to such transactions be recognized
in the  statement  of  operations  using  the fair  value  method.  The  revised
statement  is  effective  for the  Company as of July 1, 2005.  Adoption  of the
revised statement is not expected to have any effect on the Company's  financial
statements  since the Company has not granted  share-based  compensation  to any
employees.

Note E - Advances from Major Shareholder

Through June 30, 2005, the Company's major shareholder has paid $4,473 to others
on behalf of the Company to support the Company's operations, settle outstanding
trade accounts payable and provide working capital. These advances are repayable
upon demand, are non-interest bearing and are unsecured.

Note F - Income Taxes

The Company had no  provision  for income  taxes during the years ended June 30,
2005 or 2004.

Concurrent  with a May 2005  change in control,  the  Company's  operating  loss
carryforward  for Federal  income tax purposes  will be limited.  The  Company's
income tax expense (benefit) for each of the years ended June 30, 2005 and 2004,
respectively, differed from the statutory federal rate of 34 percent as follows:


                                      F-40




                              TS Electronics, Inc.

                    Notes to Financial Statements - Continued


                                                              Year Ended       Year Ended
                                                            June 30, 2005    June 30, 2004
                                                            -------------    -------------                              
                                                                                  
Statutory rate applied to income before income taxes        $    (626,400)   $    (171,000)
Effect of non-deductible stock-based compensation expense         575,900         
Change in deferred tax valuation allowance                         50,500          171,000
                                                            -------------    -------------
                                                                                  
         Income tax expense                                 $        --      $        --
                                                            =============    =============

                                                                              
Deferred  tax assets  consisted  of the  following as of June 30, 2005 and 2004,
respectively, after taking the May 2005 change in control into consideration:

                                                  June 30, 2005    June 30, 2004
                                                  -------------    -------------
     Deferred tax assets                                              
       Net operating loss carryforwards           $       1,500    $        --
       Less valuation allowance                          (1,500)            --
                                                  -------------    -------------
                                                                      
       Net Deferred Tax Asset                     $        --      $        --
                                                  =============    =============
                                                            
Note G - Common Stock Transactions

During  the year  ended  June  30,  2004,  the  Company  issued  344  shares  of
restricted, unregistered common stock for cash received in the prior year.

During  the year  ended  June 30,  2004,  the  Company  issued  6,879  shares of
restricted,  unregistered common stock valued at $40,519 for settlement of notes
payable  amounting to $160,881  resulting in a gain of $120,362 on settlement of
debt.

During  the year  ended  June 30,  2004,  the  Company  issued  1,988  shares of
restricted, unregistered common stock for services valued at $14,145.

During  the year  ended  June  30,  2004,  the  Company  issued  229  shares  of
restricted, unregistered common stock for interest valued at $1,024.

During  the year  ended  June 30,  2004  the  Company  issued  1,147  shares  of
restricted,  unregistered common stock for loan incentives included in the prior
period valued at $2,000.

During  the year ended June 30,  2004,  the  Company  issued  239,273  shares of
restricted,  unregistered common stock valued at $1,409,318, based on the market
value of the common stock on the date of issuance, and transferred its operating
assets to the Company's major  stockholder in exchange for the major stockholder
assuming $905,128 of liabilities from the Company. As a result of the assumption
and  issuance  of the  common  stock,  the  Company  recognized  a  loss  on the
settlement of the liabilities of $504,190.

During  the year  ended June 30,  2005,  the  Company  issued  25,000  shares of
restricted,  unregistered common stock, valued at $12,500,  for payment of legal
fees.

During the year ended June 30,  2005,  the Company  issued  1,875,045  shares of
restricted, unregistered common stock for cash proceeds of $200,000. The Company
used  these  proceeds  to  retire   outstanding   accounts   payable  and  other
liabilities. This transaction was executed at less than the closing market price
for the Company's stock on the date of the transaction and therefore resulted in
recognition of stock-based  compensation for the services rendered by management
of the Company in the amount of $1,693,728.

Note H - Subsequent Events (Unaudited)

(Reverse acquisition with Onny Investments)

(Post acquisition issuance of shares to majority shareholder - Heung Mei Tsui)








                                      F-41


                 PART II: INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.    INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law authorizes a court to award,
or a  corporation's  board of  directors to grant,  indemnity  to directors  and
officers  in terms  sufficiently  broad to  permit  such  indemnification  under
certain  circumstances  for liabilities  (including  reimbursement  for expenses
incurred) arising under the Securities Act.

Our Amended and Restated Certificate of Incorporation and our Bylaws provide for
the   indemnification  of  a  present  or  former  director  or  officer.   Such
indemnification  shall include expenses,  including  attorney's fees actually or
reasonably incurred by him. We may indemnify such individuals against all costs,
expenses,  and  liabilities  incurred in a  threatened,  pending,  or  completed
action,  suit,  or  proceeding  brought  because such  individual  is one of our
directors or officers.


ITEM 25.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth an itemization of various expenses,  all of which
we will pay in connection with the sale and distribution of the securities being
registered. All of the amounts shown are estimates,  except the SEC registration
fee.

            SEC Registration Fee           $   2,335.66
            Accounting Fees and Expenses   $  30,000.00
            Legal Fees and Expenses        $  50,000.00
            Miscellaneous                  $   3,000.00
            Total                          $  85,335.66

ITEM 26.   RECENT SALES OF UNREGISTERED SECURITIES.

On May 11, 2005, we sold to Halter  Financial  Group,  Inc. ("HFG") in a private
placement  1,875,045  shares of restricted  common stock at a purchase  price of
$0.1066641 per share,  pursuant to the terms of a Stock Purchase  Agreement (the
"Purchase  Agreement")  executed by the parties on said date. As a result of the
purchase,  HFG became our controlling  shareholder,  owning approximately 75% of
our issued and  outstanding  shares of common  stock.  This issuance was made in
reliance on Section 4(2) of the Act and was made without general solicitation or
advertising.  The  purchaser  was a  sophisticated  investor  with access to all
relevant information  necessary to evaluate the investment,  and who represented
to us that the shares were being acquired for investment.

On October 20, 2005, we entered into a Securities  Exchange  Agreement with Onny
and its  original  stockholders  pursuant to which we acquired all of the issued
and outstanding shares of Onny from said stockholders in exchange for 27,499,940
shares of our common  stock.  This issuance was made in reliance on Section 4(2)
of the Act  and was  made  without  general  solicitation  or  advertising.  The
acquirers were sophisticated  investors with access to all relevant  information
necessary to evaluate the investment,  and who represented to us that the shares
were being acquired for investment.




ITEM 27.    EXHIBITS

The following Exhibits are attached hereto or incorporated herein by reference.

-------------- -----------------------------------------------------------------
Exhibit No.    Description
-------------- -----------------------------------------------------------------
2.1*           Securities Exchange Agreement, dated as of October 20, 2005.
-------------- -----------------------------------------------------------------
3.1*           Certificate of Incorporation for TS Electronics, Inc.
-------------- -----------------------------------------------------------------
3.2*           Bylaws of TS Electronics, Inc.
-------------- -----------------------------------------------------------------
3.3+           Memorandum and Articles of Association of Onny Investments Ltd.
-------------- -----------------------------------------------------------------
3.4*           Articles of Association of Helpson
-------------- -----------------------------------------------------------------
5.1            Opinion regarding legality
-------------- -----------------------------------------------------------------
10.1*          Stock Purchase Agreement dated May 11, 2005
-------------- -----------------------------------------------------------------
10.2           Subscription Agreement
-------------- -----------------------------------------------------------------
10.3+          Material Agreements
-------------- -----------------------------------------------------------------
21             Subsidiaries of the Registrant
-------------- -----------------------------------------------------------------
23.1           Consent of King and Wood (Included in Exhibit 5.1)
-------------- -----------------------------------------------------------------
23.2           Consent of Hansen, Barnett & Maxwell
-------------- -----------------------------------------------------------------
* Previously filed 
+ To be filed by amendment.

ITEM 28.    UNDERTAKINGS

(a) 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  provisions  described  under  Item  14  above,  or
otherwise, 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 Securities Act of 1933 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 of 1933 and will be governed by the final  adjudication  of such
issue.

(b) The undersigned registrant hereby undertakes:

(1) To file,  during  any  period in which  offers or sales  are being  made,  a
post-effective amendment to this Registration Statement;

(i) To include any prospectus required by section 10(a)(3) of the Securities Act
of 1933;

(ii) To  reflect  in the  prospectus  any  facts or  events  arising  after  the
effective date of the Registration  Statement (or the most recent post-effective
amendment  thereof)  which,  individually,  or in  the  aggregate,  represent  a
fundamental  change in the information set forth in the Registration  Statement;



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)  To  include  any  material  information  with  respect  to  the  plan  of
distribution  not  previously  disclosed  in the  Registration  Statement or any
material change to such information in the Registration Statement

(2) That, for the purpose of determining  any liability under the Securities Act
of 1933, each post-effective  amendment shall be deemed to be a new Registration
Statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof; and

(3) To remove from  registration by means of a  post-effective  amendment any of
the securities  being  registered  which remain unsold at the termination of the
Offering.

(c)  The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any  liability  under  the  Securities  Act,  each  filing  of  the
registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee  benefit  plan's  annual  report  pursuant  to  Section  15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
Registration  Statement  shall  be  deemed  to be a new  Registration  Statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.





                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Act of 1933,  the  Registrant
certifies  that it has duly caused this  Registration  Statement to be signed on
its behalf by the undersigned,  thereunto duly authorized, in Haikou, on October
20, 2005.


                                           TS Electronics, Inc.
                                           By: /s/ Zhilin Li                   
                                              ----------------------------------
                                              Zhilin Li, President and CEO

                                           By: /s/ Xinhua Wu            
                                              ----------------------------------
                                              Xinhua Wu, Chief Financial Officer

Pursuant to the  requirements of the Securities Act of 1933,  this  Registration
Statement has been signed by the following  persons in the capacities and on the
dates indicated.

SIGNATURE              TITLE                                    DATE
-------------------    --------------------------------------   ----------------
                       
/s/ Zhilin Li          President and Chief Executive Officer,   October 20, 2005
-------------------                                          
                                     
/s/ Xinhua Wu          Chief Financial Officer                  October 20, 2005
-------------------