Edgar Filing: AIDA PHARMACEUTICALS INC

10-QSB

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-QSB

(Mark One)

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2007

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______________ to _____________

Commission file number 000-50212

AIDA PHARMACEUTICALS, INC.

(Exact name of small business issuer as specified in its charter)

Nevada

81-0592184

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)


31 Dingjiang Road, Jianggan District, Hangzhou, China		310016
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number 86-0571-85802712

__________________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issues (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 13b-2 of the Exchange Act).

Yes £ No S

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes £ No £

APPLICABLE ONLY TO CORPORATE ISSUES

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

As of November 10, 2007, there were 27,000,000 shares of $0.001 par value common stock issued and outstanding.

Transitional Small Business Disclosure Format (Check one): Yes £ No S

SEC2334(9-05)

Persons who are to respond to the collection of information contained in this form are

not required to respond unless the form displays a currently valid OMB control number.

FORM 10-QSB

AIDA PHARMACEUTICALS, INC.

INDEX


		Page
PART I.	Financial Information	3

	Item 1. Financial Statements ( Unaudited)	3

	Condensed Consolidated Balance Sheets as of September 30, 2007 (Unaudited) and December 31, 2006	4

	Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) for the Three and Six Months Ended September 30, 2007 and 2006 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006 (Unaudited)	6

	Notes to Condensed Consolidated Financial Statements as of September 30, 2007 (Unaudited)	8

	Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation	24

	Item 3. Controls and Procedures	38

PART II.	Other Information	38

	Item 1. Legal Proceedings	38

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38

	Item 3. Defaults Upon Senior Securities	38

	Item 4. Submission of Matters to a Vote of Security Holders.	39

	Item 5. Other Information	39

	Item 6. Exhibits and Reports on Form 8-K	39

	Signatures	40

(Inapplicable items have been omitted)

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

In the opinion of management, the accompanying unaudited condensed consolidated financial statements included in this Form 10-QSB reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of operations for the periods presented. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year.

AIDA PHARMACEUTICAL, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


ASSETS
		September 30, 2007 (Unaudited)		December 31, 2006

CURRENT ASSETS
Cash and cash equivalents	$	7,693,300	$	6,116,816
Restricted cash		2,416,233		1,983,237
Accounts receivable, net of allowance for doubtful accounts of $655,663 and $639,208 as of September 30, 2007 and December 31, 2006, respectively		8,194,940		13,777,571
Notes receivable, net of discount of $10,255 and $70,717 as of September 30, 2007 and December 31, 2006, respectively		4,117,882		2,714,234
Inventories		4,126,420		2,806,945
Due from related parties		86,784		41,462
Deferred taxes		440,500		295,714
Other receivables, prepaid expenses, and other assets		211,023		146,694
Marketable securities		-		362,758
Due from employees		1,544,097		264,182
Prepayments for goods		122,917		118,327
Total current assets		28,954,096		28,627,940

Plant and equipment, net		15,353,794		13,977,611
Land use rights, net		3,836,263		3,747,225
Construction in progress		241,477		28,430
Patents, net		5,540,779		5,724,000
Long-term investments		199,713		295,749
Deposits		4,089,464		953,267
Deferred taxes		421,628		456,222
Total long-term assets		29,683,118		25,182,504

TOTAL ASSETS	$	58,637,214	$	53,810,444

LIABILITIES AND SHAREHOLDERS’ EQUITY


CURRENT LIABILITIES
Accounts payable	$	2,446,547	$	3,332,174
Other payables and accrued liabilities		2,609,185		2,150,079
Advance for research and development		340,026		251,050
Short-term debt		29,405,234		23,915,452
Current portion of long-term debt		1,331,416		3,717,380
Due to related parties		27,063		27,063
Taxes payable		62,278		352,998
Customer deposits		1,063,060		335,391
Due to employees		412,420		122,440
Deferred taxes		105,004		172,844
Total current liabilities		37,802,233		34,376,871

LONG-TERM LIABILITIES
Notes payable		1,920,934		1,920,934
Advance for research and development		871,404		1,065,478
Deferred taxes		1,014,008		917,530
Minority interests		5,956,998		5,177,413
Total long-term liabilities		9,763,344		9,081,355

TOTAL LIABILITIES		47,565,577		43,458,226

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS’ EQUITY
Common stock, $0.001 par value; 75,000,000 shares authorized; 27,000,000 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively		27,000		27,000
Additional paid-in capital		5,204,352		5,204,352
Retained earnings (the restricted portion is $998,149 at September 30, 2007 and December 31, 2006, respectively)		4,923,467		4,590,079
Accumulated other comprehensive income		916,818		530,787

Total shareholders’ equity		11,071,637		10,352,218
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	58,637,214	$	53,810,444

See accompanying notes to condensed consolidated financial statements.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS

OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)


		FOR THE THREE MONTHS ENDED SEPTEMBER 30,				FOR THE NINE MONTHS ENDED SEPTEMBER 30,
		2007		2006		2007		2006

REVENUES, (NET)	$	7,373,770	$	7,023,891	$	18,687,283	$	19,659,235

COST OF GOODS SOLD		(3,557,685)		(3,103,516)		(9,740,952)		(9,679,567)

GROSS PROFIT		3,816,085		3,920,375		8,946,331		9,979,668

Selling and distribution		1,387,818		1,175,000		3,515,776		4,728,989

General and administrative		991,216		1,306,226		3,006,799		2,896,205

Research and development		74,514		45,323		238,159		45,111

INCOME FROM OPERATIONS		1,362,537		1,393,826		2,185,597		2,309,363

OTHER INCOME (EXPENSES)

Interest expense, net		(465,282)		(459,511)		(1,180,813)		(1,114,105)

Government grants		46,131		551,420		95,998		1,097,724

(Loss) gain on sales of investment		(10,457)		-		(10,457)		12,490

Gain on sale of marketable securities		-		-		120,356		-

Other income (loss), net		(3,478)		(77,358)		(122,876)		(120,734)

INCOME BEFORE INCOME TAXES		929,451		1,408,377		1,087,805		2,184,738

INCOME TAXES		(153,182)		(217,720)		(191,349)		(445,047)

INCOME BEFORE MINORITY INTERESTS		776,269		1,190,657		896,456		1,739,691

MINORITY INTERESTS		(257,208)		(271,372)		(563,068)		(413,018)

NET INCOME		519,061		919,285		333,388		1,326,673

OTHER COMPREHENSIVE INCOME
Foreign currency translation gain		30,098		73,643		492,663		160,785

OTHER COMPREHENSIVE INCOME BEFORE INCOME TAXES		30,098		73,643		492,663		160,785

INCOME TAXES RELATED TO OTHER COMPREHENSIVE INCOME		(7,946)		(24,302)		(130,063)		(54,012)

OTHER COMPREHENSIVE INCOME , NET OF INCOME TAXES		22,152		49,341		362,600		106,773

COMPREHENSIVE INCOME	$	541,213	$	968,626	$	695,988	$	1,433,446

WEIGHTED AVERAGE SHARES OUTSTANDING BASIC AND DILUTED		27,000,000		25,000,000		27,000,000		25,000,000

NET INCOME PER COMMON SHARE, BASIC AND DILUTED	$	0.02	$	0.04	$	0.01	$	0.05

See accompanying notes to condensed consolidated financial statements.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		For the Nine Months Ended September 30,
		2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	333,388	$	1,326,673
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,476,339		1,281,280
Provision for doubtful accounts		16,455		-
Amortization of discount on notes receivable		(64,228)		-
Loss of disposal of fixed assets		28,146		230
Amortization of deferred compensation		-		356,878
Deferred taxes		(81,554)		142,717
Gain on sale of marketable securities		(120,356)		-
Gain on disposal of discontinued operation		-		(12,490)
Minority interests’ share of net income		563,068		413,018

Changes in operating assets and liabilities, net of effects of acquisition:

(Increase) Decrease In:
Accounts receivable		5,566,175		(3,471,378)
Inventories		(1,319,475)		(435,080)
Other receivables, prepaid expenses, and other assets		(64,328)		97,309
Prepayments for goods		(4,590)		(146,414)

Increase (Decrease) In:
Accounts payable		(885,626)		2,145,059
Other payables and accrued liabilities		441,287		(273,451)
Advance for research and development		(105,099)		-
Due to employees		289,981		(365,431)
Taxes payable		(290,719)		129,085
Customer deposits		727,669		(608,739)
Net cash provided by operating activities		6,506,533		579,266

CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		(432,996)		(416,959)
Purchases of plant and equipment		(1,924,724)		(1,178,141)
Purchases of construction in progress		(206,699)		(43,612)
Cash received from sale of plant and equipment		-		820
Purchase of land use right		-		(442,573)
Deposit for land use right		-		(1,005,737)
Deposit for long term investment		(2,578,149)		-
Deposit for plant and equipment		(751,871)		-
Deposit for patent		-		(125,069)
Repayment of notes receivable		973,320		-
Issuance of notes receivable		(2,312,740)		(860,728)
Due from related parties		-		(14,163)
Due from employees		(1,279,916)		797,710
Proceeds from sale of marketable securities		376,481		-
Proceeds from disposal of patent		101,188		-
Proceeds from disposal of investment		96,035		137,559
Purchase of investment		-		(79,933)
Purchase of subsidiaries, net of cash acquired		-		(1,977,393)
Net cash used in investing activities		(7,940,071)		(5,208,219)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt		23,290,420		3,877,511
Proceeds from capital contribution		-		187,500
Repayments of short-term debt		(20,186,602)		-
Proceeds from long-term debt		-		75,911
Proceeds from notes payable		-		2,149,532
Repayment of advances to related parties		(45,322)		(20,072)
Net cash provided by financing activities		3,058,496		6,270,382

INCREASE IN CASH AND CASH EQUIVALENTS		1,624,958		1,641,429

Effect of exchange rate changes on cash		(48,474)		163,674
Cash and cash equivalents at beginning of period		6,116,816		3,129,450

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	7,693,300	$	4,934,553

See accompanying notes to condensed consolidated financial statements.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


		For the Nine Months Ended September 30,
		2007		2006
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	$	610,430	$	172,644
Interest paid	$	1,050,689	$	1,139,094

SUPPLEMENTAL NON-CASH INVESTING DISCLOSURES:

1. During the nine months ended September 30, 2007 and 2006, $46,600 and $274,229 was transferred from deposits to patents.

2. During the nine months ended September 30, 2007 and 2006, $33,790 and $781,948 was transferred from construction in progress to

plant and equipment.

3. During the nine months ended September 30, 2007 and 2006, $97,783 and $268,596 was transferred from deposits to plant

and equipment.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

ORGANIZATION AND PRINCIPAL ACTIVITIES

The primary operations of Aida Pharmaceuticals, Inc. and subsidiaries (the “Company”) are the development, production and distribution of cardiovascular and anti cancer drugs, in the form of powder for injection, liquid for intravenous injection, capsule, tablet, ointment, etc., within the People’s Republic of China (“PRC”).

BASIS OF PRENTATION

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the requirements for reporting on Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. However, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. Results shown for interim periods are not necessarily indicative of the results to be obtained for a full year. The condensed consolidated balance sheet information as of December 31, 2006 was derived from the audited consolidated financial statements included in the Company’s Annual Report Form 10-KSB. These interim financial statements should be read in conjunction with that report.

PRINCIPLES OF CONSOLIDATION

The unaudited condensed consolidated financial statements include the accounts of Aida Pharmaceuticals, Inc. (Formerly BAS Consulting, Inc.) and the following subsidiaries:

(i)

Earjoy Group Limited (“Earjoy”) (100% subsidiary of Aida);

(ii)

Hangzhou Aida Pharmaceutical Co., Ltd. (“HAPC”) (100% Subsidiary of Earjoy);

(iii)

Hangzhou Boda Medical Research and Development Co., (“Boda”) (100% Subsidiary of HAPC);

(iv)

Hainan Aike Pharmaceutical Co., Ltd. (“Hainan”) (60.61%% subsidiary of HAPC) and Yang Pu Aike Pharmaceutical Co., Ltd. (“Yangpu”) (95% subsidiary of Hainan). HAPC exercises significant influence over Hainan by controlling over 50% of the voting rights;

(v)

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”) (66% subsidiary of HAPC).

(vi)

Shanghai Qiaer Bio-Technology Co., Ltd. (“Qiaer”) (77.5% subsidiary of HAPC)

All significant inter-company accounts and transactions have been eliminated in consolidation.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

CONCENTRATIONS

The Company has major customers who accounted for the following percentages of total sales and total accounts receivable in 2007 and 2006:


	Sales
			Accounts Receivable
Major Customers	For the Nine Months Ended September 30, 2007	For the Nine Months Ended September 30, 2006	September 30, 2007	December 31, 2006

Company A	-	24%	-	30%
Company B	-	7%	-	2%
Company C	-	4%	-	2%
Company D	-	3%	-	30%
Company E	32%	-	30%	-
Company F	6%	-	5%	-
Company G	5%	-	5%	-

The Company has major suppliers who accounted for the following percentages of total purchases and total accounts payable in 2007 and 2006:


	Purchases
			Accounts Payable
Major Suppliers	For the Nine Months Ended September 30, 2007	For the Nine Months Ended September 30, 2006	September 30, 2007	December 31, 2006

Company H	19%	9%	16%	7%
Company I	14%	6%	13%	3%

The sole market of the Company is the PRC for the periods ended September 30, 2007 and 2006.

Of the total revenue for the nine months ended September 30, 2007 and 2006, 69% and 66% was fully dependent on the patent for Etimicin Sulfate owned by the Company.

USE OF ESTIMATES

The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles 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 condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods.

Management makes these estimates using the best information available at the time the estimates are made. Actual results could differ materially from those estimates.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

FOREIGN CURRENCY TRANSLATION

The accompanying condensed consolidated financial statements are presented in United States dollars. The functional currency of the Company is the Renminbi (RMB). The condensed consolidated financial statements are translated into United States dollars from RMB at year-end exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.


	September 30, 2007	December 31, 2006	September 30, 2006
Period end RMB: US$ exchange rate	7.5108	7.8087	7.9087
Average period RMB: US$ exchange rate	7.6598	7.9395	7.9895

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments include cash and cash equivalents, restricted cash, accounts receivable, notes receivable, due to/from related parties, other receivables and prepaid expenses, due to employees, prepayments for goods, accounts payable, other payable and accrued liabilities, accrued expenses, short-term debt, taxes payable and customer deposits. Management has estimated that the carrying amount approximates fair value due to their short-term nature. The fair value of the Company’s long-term notes payable are estimated based on the current rates offered to the Company for debt of similar terms and maturities. Under this method, the Company’s fair value of long-term notes payable was not significantly different from the carrying value at September 30, 2007.

EARNINGS PER SHARE

Basic earning per share is computed by dividing net income by the weighted-average number of common shares outstanding during the periods. Diluted earning per share is computed similar to basic earning per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive securities outstanding for the periods presented.

ADOPTION OF NEW ACCOUNTING POLICY

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an interpretation of FASB statement No. 109, Accounting for Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of September 30, 2007, the Company does not have a liability for unrecognized tax benefits.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

ADOPTION OF NEW ACCOUNTING POLICY (CONTINUED)

The Company files income tax returns in the U.S. federal jurisdiction and various states. The Company is subject to U.S. federal or state income tax examinations by tax authorities for years after 2005. During the periods open to examination, the Company has net operating loss and tax credit carry forwards for U.S. federal and state tax purposes that have attributes from closed periods. Since these NOLs and tax credit carry forwards may be utilized in future periods, they remain subject to examination. The Company also files certain tax returns in China. As of September 30, 2007 the Company was not aware of any pending income tax examinations by China tax authorities. The Company's policy is to record interest and penalties on uncertain tax provisions as income tax expense. As of September 30, 2007, the Company has no accrued interest or penalties related to uncertain tax positions.

10.

NEW ACCOUNTING PRONOUNCEMENTS

In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, "Fair Value Measurements," which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS No. 157 also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and to interim periods within those fiscal years. The Company is currently in the process of evaluating the effect, if any, the adoption of SFAS No. 157 will have on its consolidated results of operations, financial position, or cash flows.

In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities −− Including an amendment of FASB Statement No. 115 (“FAS 159”). FAS 159, which becomes effective for the Company on January 1, 2008. This standard permits companies to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses in earnings. Such accounting is optional and is generally to be applied instrument by instrument. The Company does not anticipate that election, if any, of this fair value option will have a material effect on the results or operations or consolidated financial position.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

11.

NOTES RECEIVALBE

Notes receivable consist of the following:


Notes receivable from unrelated companies:
		September 30,		December 31,
		2007		2006
		(Unaudited)
Due January 30, 2007 (subsequently settled)	$	-	$	256,125
Due January 31, 2007 (subsequently settled)		-		502,366
Due January 31, 2007 (subsequently settled)		-		14,189
Due August 31, 2007 (subsequently settled)		-		12,806
Due September 20, 2007 (subsequently settled)		-		487,242
Due October 31, 2007 (subsequently settled)		599,137		576,280
Due November 11, 2007 (subsequently settled)		399,425		384,187
Due November 30, 2007		133,142		128,062
Due December 1, 2007		24,223		23,299
Due December 1, 2007		7,381		7,100
Due December 1, 2007		399,425		64,032
Due December 14, 2007		340,648		329,263
Due December 1, 2007		7,988		-
Due December 15, 2007, interest at 5.58% per annum		1,893,847		-
Due December 15, 2007, interest at 6% per annum		66,571		-
Due December 20, 2007		123,208		-
Due December 31, 2007		133,142		-
Subtotal		4,128,137		2,784,951
Less: Discount		10,255		70,717
Total notes receivable, net	$	4,117,882	$	2,714,234

Notes receivable are unsecured.

In 2007, an interest-free note was provided to a company for its assistance in research and development activities. The Company recorded research and development expense and a discount on the notes receivable of $3,766 based on the present value of the notes receivable using a 6% discount rate.

For the nine months ended September 30, 2007 and 2006, $64,228 and $0 of interest income was recognized in the accompanying condensed consolidated statements of income from the amortization of the discount.

12.

INVENTORIES

Inventories consist of the following:


		September 30,		December 31,
		2007		2006
		(Unaudited)
Raw materials	$	1,223,273	$	1,712,850
Work-in-progress		1,127,615		500,997
Finished goods		1,775,532		593,098
Total	$	4,126,420	$	2,806,945

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

13.

PLANT AND EQUIPMENT

Plant and equipment consist of the following:


		September 30,		December 31,
		2007		2006
		(Unaudited)
At cost:
Buildings	$	9,422,313	$	8,944,313
Machinery		10,747,211		9,206,036
Motor vehicles		752,710		742,689
Office equipment		1,334,677		668,428
Leasehold improvements		463,604		455,356
		22,720,515		20,016,822
Less: Accumulated depreciation
Buildings		1,580,855		880,647
Machinery		4,381,683		3,504,714
Motor vehicles		465,240		445,523
Office equipment		577,085		412,530
Leasehold improvements		361,858		795,797
		7,366,721		6,039,211
Plant and equipment, net	$	15,353,794	$	13,977,611

The net book value of buildings and machinery pledged for certain bank loans at September 30, 2007 and December 31, 2006 is $4,969,991 and $4,892,624, respectively. Also see Note 17.

Depreciation expense for the nine months ended September 30, 2007 and 2006 is $1,147,349 and $1,002,776, respectively.

14.

LAND USE RIGHTS


		September 30,		December 31,
		2007		2006
		(Unaudited)

Cost	$	4,101,870	$	3,945,385
Less: Accumulated amortization		265,607		198,160
Land use rights, net	$	3,836,263	$	3,747,225

Amortization expense for nine months ended September 30, 2007 and 2006 is $58,429 and $35,019 respectively.

Amortization expense for the remaining part of 2007, for the next four years and thereafter is as follows:


2007	$	19,861
2008		79,450
2009		79,450
2010		79,450
2011		79,450
Thereafter		3,498,602
Total	$	3,836,263

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

14.

LAND USE RIGHTS (CONTINUED)

The net book value of the land use right pledged for certain bank loans at September 30, 2007 and December 31, 2006 is $1,176,268 and $1,572,139, respectively. Also see Note 17.

15.

PATENTS


		September 30,		December 31,
		2007		2006
		(Unaudited)

Cost	$	6,379,864	$	6,446,568
Less: Accumulated amortization		839,085		722,568
Patents, net	$	5,540,779	$	5,724,000

Amortization expense for nine months ended September 30, 2007 and 2006 is $270,561 and $243,484 respectively.

Amortization expense for the remaining part of 2007, for the next four years and thereafter is as follows:


2007	$	85,479
2008		316,950
2009		305,068
2010		303,319
2011		302,077
Thereafter		4,227,886
Total	$	5,540,779

16.

DEPOSITS

Deposits consist of the following:


		September 30, 2007		December 31, 2006
		(Unaudited)

Patent	$	583,826	$	703,702
Plant and equipment		769,688		97,783
Long-term investment		2,735,950		151,782
Total	$	4,089,464	$	953,267

During the nine months ended September 30, 2007, the Company paid $769,688 as deposits to acquire certain equipment.

Deposits of $97,783 were transferred to plant and equipment during the nine months ended September 30, 2007.

During the nine months ended September 30, 2007, a deposit of $46,600 was transferred to a patent.

During the nine months ended September 30, 2007, the Company paid $66,571 as a refundable deposit to acquire 10% of outstanding shares of Beijing Beimei Union Real Estate Development Co., Ltd.

During the nine months ended September 30, 2007, the Company paid $2,517,597, as a refundable deposit to acquire 60% of the outstanding shares of Jiangsu Microbial Research Institute.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT

Short-term debt consists of the following:


		September 30, 2007		December 31, 2006
Bank Loans:		(Unaudited)
Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 20, 2007, monthly interest only payments at 6.732% per annum, secured by assets owned by the Company (subsequently repaid on its due date).	$	-	$	640,311

Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 15, 2007, monthly interest only payments at 6.732% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		800,389

Loans from Industrial and Commercial Bank of China Qingchun Branch, due July 26, 2007, monthly interest only payments at 6.435% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		896,436

Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 6, 2007, monthly interest only payments at 6.435% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		1,280,623

Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 27, 2007, monthly interest only payments at 6.435% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		768,374

Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 15, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Note 13.		665,708		-

Loans from Industrial and Commercial Bank of China Qingchun Branch, due July 18, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Note 13.		931,991		-

Loans from Industrial and Commercial Bank of China Qingchun Branch, due August 8, 2008, monthly interest only payments at 7.524% per annum, secured by assets owned by the Company. Also see Note 13.		832,135		-

Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 6, 2008, monthly interest only payments at 7.227% per annum, secured by assets owned by the Company. Also see Note 13.		1,331,416		-

Loans from Industrial and Commercial Bank of China Qingchun Branch, due June 18, 2008, monthly interest only payments at 7.227% per annum, secured by assets owned by the Company. Also see Note 13.		798,850		-

Loan from Bank of Communication Qingchun Branch, due June 5, 2007 monthly interest only payments at 6.435% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd (subsequently repaid on its due date).		-		1,290,623

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT (CONTINUED)


	September 30, 2007	December 31, 2006
	(Unaudited)
Loan from Bank of Communication Qingchun Branch, due June 19, 2007 monthly interest only payments at 6.435% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd (subsequently repaid on its due date).	-	1,290,623

Loan from Hangzhou Commercial Bank Gaoxin Branch due February 27, 2007, monthly interest only payments at 5.3625% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd (subsequently repaid on its due date).	-	1,290,623

Loan from Hangzhou Commercial Bank Gaoxin Branch due February 1, 2008, monthly interest only payments at 5.6100% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.	1,331,416	-

Loan from Bank of China Kaiyuan Branch due May 8, 2007, monthly interest only payments at 6.7275% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd (subsequently repaid on its due date).	-	1,034,498

Loan from Bank of China Kaiyuan Branch due May 16, 2007, monthly interest only payments at 6.7275% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd (subsequently repaid on its due date).	-	650,311

Loan from Bank of China Kaiyuan Branch due April 17, 2007, monthly interest only payments at 6.417% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd (subsequently repaid on its due date).	-	2,187,059

Loan from Huaxia Bank Wenhui Branch due April 3, 2007, monthly interest only payments at 6.417% per annum, guaranteed by Ningbo Tianheng Co., Ltd (subsequently repaid on its due date).	-	778,374

Loans from Industrial and Commercial Bank of China Qingtai Branch, due August 4, 2007, monthly interest only payments at 6.138% per annum, guaranteed by Hangzhou Jinou Group (subsequently repaid on its due date).	-	1,290,623

Loan from Bank of Communication Qingchun Branch, due March 29, 2008 monthly interest only payments at 6.7095% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd.	3,328,540	-

Loan from Bank of Communication Qingchun Branch, due June 5, 2008 monthly interest only payments at 6.8985% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd.	1,331,416	-

Loan from Bank of Communication Qingchun Branch, due June 18, 2008 monthly interest only payments at 6.8985% per annum, guaranteed by Nanwang Information Industry Group Co., Ltd.	1,331,416	-

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT (CONTINUED)


		September 30, 2007		December 31, 2006
		(Unaudited)
Loan from Bank of China Kaiyuan Branch due April 27, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.		1,331,416		-

Loan from Bank of China Kaiyuan Branch due May 16, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.		665,708		-

Loan from Bank of China Kaiyuan Branch due May 9, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.		1,997,124		-

Loan from Evergrowing Bank Hangzhou Branch due June 4, 2008, monthly interest only payments at 7.3485% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.		1,997,124		-

Loan from China Development Bank Haikou Branch, due December 21, 2007 and monthly interest only payments at 6.138% per annum, guaranteed by Haikou Assure Investment Ltd.		239,655		394,187

Loans from Changzhou Commercial Bank, due June 20, 2007, monthly interest only payments at 8.37% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		1,822,081

Loans from Changzhou Commercial Bank, due June 20, 2007, monthly interest only payments at 8.37% per annum, secured by assets owned by the Company (subsequently repaid on its due date).		-		1,143,351

Loans from Changzhou Commercial Bank, due May 18, 2007, monthly interest only payments at 8.37% per annum, guaranteed by Jiangyin Huilun Co. Ltd (subsequently repaid on its due date).		-		270,614

Loans from Changzhou Commercial Bank, due May 28, 2008, monthly interest only payments at 8.541% per annum, secured by assets owned by the Company. Also see Note 14.		1,883,954		-

Loans from Changzhou Commercial Bank, due May 28, 2008, monthly interest only payments at 8.541% per annum, secured by assets owned by the Company. Also see Note 14.		1,178,304		-

Loans from Changzhou Commercial Bank, due November 28, 2008, monthly interest only payments at 8.541% per annum, guaranteed by Jiangyin Huilun Weave Co., Ltd.		1,331,416		-
Total short-term bank loans	$	22,507,589	$	17,829,100

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT (CONTINUED)


Notes payable:

Due May 30, 2007 (subsequently repaid on its due date)	$	-	$	190,365
Due May 8, 2007 (subsequently repaid on its due date)		-		1,024,498
Due June 21, 2007 (subsequently repaid on its due date)		-		1,280,623
Due August 31, 2007 (subsequently repaid on its due date)		-		768,374
Due December 30, 2007, interest at 9.00% per annum		665,708		640,311
Due January 15, 2007 (subsequently repaid on its due date)		-		133,185
Due April 5, 2007, interest at 5.58% per annum (subsequently repaid on its due date)		-		320,156

Due April 20, 2007, interest at 5.58% per annum (subsequently repaid on its due date)		-		320,156
Due November 6, 2007 (subsequently repaid on its due date)		122,336		-
Due November 30, 2007, interest at 5.85% per annum		532,566		512,249
Due December 31, 2007, guaranteed by Donghong Taisheng Co., Ltd		266,283		256,125
Due October 15, 2007, interest at 6.40% per annum, guaranteed by Ge Xiaohu (subsequently repaid on its due date)		665,708		640,310
Due December 12, 2007		1,331,416		-
Due December 19, 2007		196,916		-
Due February 23, 2008		665,708		-
Due April 20, 2008, interest at 5.58% per annum		332,854		-
Due March 14, 2008		99,857		-
Due May 1, 2008, interest at 6.00% per annum		886,590		-
Due September 30, 2008		798,850		-
Due October 30, 2008, interest at 5.85% per annum		332,853		-

Total notes payable		6,897,645		6,086,352

Total short-term debt	$	29,405,234	$	23,915,452

All the notes payable are subject to bank charges of 0.05% of the principal as a commission on each loan transaction. Bank charges for notes payable were $7,850 and $1,908 for nine months ended September 30, 2007 and 2006, respectively.

Restricted cash of $2,416,233 is held as collateral for the following notes payable at September, 30, 2007:


Due November 6, 2007	$	122,336
Due December 12, 2007		1,331,416
Due December 19, 2007		196,916
Due March 14, 2008		99,857
Due February 23, 2008		665,708
Total	$	2,416,233

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

18.

LONG –TERM DEBT

Long-term debt consists of the following:


		September 30, 2007		December31, 2006
		(Unaudited)
Loans from Communication Bank of China Changzhou Branch, due September 9, 2007, monthly interest only payments at 5.58% per annum, guaranteed by Changzhou High-Tech Development District Co., Ltd.	$	-	$	3,717,380

Loans from Communication Bank of China Changzhou Branch, due September 9, 2008, monthly interest only payments at 5.58% per annum, guaranteed by Changzhou High-Tech Development District Co., Ltd.		1,331,416		-
Total long-term bank loan		1,331,416		3,717,380
Less: current portion		(1,331,416)		(3,717,380)
Long-term portion	$	-	$	-



Notes payable to unrelated companies:

Due December 31, 2008, interest charged at 1% per annum and guaranteed by Donghong Taisheng Co., Ltd	$	256,124	$	256,124
Due December 31, 2009, interest charged at 1% per annum and guaranteed by Donghong Taisheng Co., Ltd		384,187		384,187
Due February 20, 2009, interest charged at 1% per annum and unsecured		1,280,623		1,280,623
Total notes payable	$	1,920,934	$	1,920,934

Total long-term debt	$	1,920,934	$	1,920,934

19.

LONG-TERM INVESTMENTS

Long-term investments consist of the following:


	Ownership Interest		September 30, 2007	Ownership Interest		December 31, 2006
			(Unaudited)
At cost:
Hangzhou Longde Medical Machinery Co., Ltd.	-	$	-	10.6%	$	103,656
Hangzhou Jin'ou Medicine Co., Ltd	15%		199,173	15%		192,093
		$	199,713		$	295,749

On July 28, 2007, the Company entered into agreement with Hangzhou Handcrafts Cooperate Association to transfer its 10.6% interest in Hangzhou Longde Medical Machinery Co., Ltd. for $93,199 resulting in a loss of $10,457.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

20.

INCOME TAXES

Effect of Changes in Chinese Corporate Tax Law

On March 16, 2007, the National People’s Congress of China approved the Corporate Income Tax Law of the People’s Republic of China (the “new CIT Law”), which is effective from January 1, 2008. Under the new CIT Law, the corporate income tax rate applicable to the Company starting from January 1, 2008 will be 25%, replacing the currently applicable tax rate of 33%. The new CIT Law has an impact on the deferred tax assets and liabilities of the Company. As there is still no detailed implementation rulings released, the Company adjusted deferred tax balances as of September 30, 2007 based on their best estimates and will continue to assess the impact of such new law in the future. Effects arising from the enforcement of new CIT law have been reflected in the accompanying condensed consolidated financial statements.

In 2006, HAPC applied to the local tax authority for a favorable corporate income tax rate of 26.4% for companies registered in coastal economic zone of PRC, which was approved in October 2006. As a result, the corporate income tax rate applicable to HAPC was changed to 26.4% from 33%. Hainan and Yangpu are subsidiaries registered in Hainan, PRC, and their corporate income tax rate of 15% is the tax rate for companies registered in Hainan, PRC in accordance with the relevant tax laws in PRC. Fangyuan is a subsidiary of HAPC and its applicable corporate income tax rate is 15%, since the company was recognized as high-tech companies by the PRC government. However, in accordance with the relevant taxation laws in the PRC, from the time that a company has its first profitable tax year, a foreign investment company is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. For Hangzhou and Hainan, the first profitable year for income tax purposes as a foreign investment company was 2004.

Income tax expense for the nine months ended September 30, 2007 and 2006 is summarized as follows:


		For the Nine Months Ended September 30, (Unaudited)
		2007		2006
Current:
Provision for State Corporation Income Tax	$	248,094	$	274,845
Provision for Local Corporation Income Tax		24,809		27,485
		272,903		302,330
Deferred:
Provision for State Corporation Income Tax		(74,140)		129,743
Provision for Local Corporation Income Tax		(7,414)		12,974
		(81,554)		142,717

Income tax	$	191,349	$	445,047

The Company’s income tax expense differs from the “expected” tax expense for the nine months ended September 30, 2007 and 2006 (computed by applying the CIT rate of 26.4 percent to income before income taxes) as follows:

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

20.

INCOME TAXES (CONTINUED)


		For the Nine Months Ended September 30, (Unaudited)
		2007		2006

Computed “expected” expense	$	287,181	$	764,658
Tax rate adjustment		(4,391)		-
Valuation allowance		21,435		(12,167)
Time difference		(81,554)		99,022
Tax exemptions		(31,322)		(406,466)

Income tax expense	$	191,349	$	445,047

The tax effects of temporary differences that give rise to the Company’s net deferred tax assets and liabilities as of September 30, 2007 and December 31, 2006 are as follows:


		September 30, 2007		December 31, 2006
		(Unaudited)
Deferred tax assets:
Current portion:
Consulting and audit expenses	$	105,564	$	105,564
Selling and distribution expenses		224,322		102,404
Bad debt provision		66,329		41,949
Other		44,285		45,797
Subtotal		440,500		295,714

Non-current portion:
Depreciation		82,800		65,416
Impairment and amortization		12,462		41,502
Bad debt provision		24,299		24,299
Pre-operating expenses		12,546		12,546
Research and development costs		281,453		281,453
Other		40,804		42,307
Less: Valuation allowance		(32,736)		(11,301)
Subtotal		421,628		456,222

Total deferred tax assets		862,128		751,936

Deferred tax liabilities:
Current portion:
Sales cut-off		27,170		134,954
Unrealized gains from marketable securities		30,710		30,710
Other		47,124		7,180
Subtotal		105,004		172,844

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

20.

INCOME TAXES (CONTINUED)


Non-current portion:
Subsidy income		192,105		192,105
Depreciation		59,520		28,963
Research and development costs		35,315		35,315
Government grant		58,841		58,841
Other		75,746		35,274
Intangible assets of acquisition		592,481		567,032
Subtotal		1,014,008		917,530

Total deferred tax liabilities		1,119,012		1,090,374

Net deferred tax liabilities	$	(256,884)	$	(338,438)

(b)

Value Added Tax (“VAT”)

Enterprises or individuals who sell commodities, engage in repair and maintenance or import or export goods in the PRC are subject to a value added tax in accordance with Chinese Laws. The value added tax standard rate is 17% of the gross sale price. A credit is available whereby VAT paid on the purchases of semi-finished products or raw materials used in the production of the Company’s finished products can be used to offset the VAT due on the sales of the finished products.

The VAT payable of $230,636 and $301,103 at and September 30, 2007 and December 31, 2006, respectively, are included in other payables and accrued expenses in the accompanying condensed consolidated balance sheets.

21.

MARKETABLE SECURITIES

The Company purchased an investment fund at a cost of $256,125 on September 6, 2006. The fair market value of the fund as of December 31, 2006 was $362,758. The difference between the market value and the cost of $106,633 was recognized as other comprehensive income at December 31, 2006, and was included as a separate component of shareholders’ equity for year then ended. The securities were classified as available-for-sale.

On January 28, 2007, the Company sold the marketable securities for $376,481 resulting in a gain of $120,356 which was included in the condensed consolidated statement of income and comprehensive income for the nine months ended September 30, 2007.

22.

COMMITMENTS AND CONTINGENCIES

(a) Lease Commitments

The Company occupies plant and office space leased from third parties. Accordingly, for the nine months ended September 30, 2007 and 2006, the Company recognized rental expense for these spaces of $312,696 and $138,603 respectively.

As of September 30, 2007, the Company has outstanding commitments with respect to non-cancelable operating leases for real estate, which fall due as follows:

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(UNAUDITED)

22.

COMMITMENTS AND CONTINGENCIES

(CONTINUED)


Period Ending September 30,		Amount
2007	$	63,055
2008		153,415
2009		144,683
2010		144,683
2011		128,706
Thereafter		67,312
Total	$	701,854

(b) Capital Commitment

As of September 30, 2007, the Company has outstanding commitments with respect to non-cancelable contract, which fall due as follows:


Period Ending September 30		Amount
2007	$	420,585

In 2006, the Company brought a legal action against Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. for their infringement upon the patent of Etimicin transfusion. As the plaintiff, the Company has claimed compensation of approximately $38,590 for the infringement. According to the judge’s report from the local court in Haikou, PRC, on December 30, 2006, the Company won the lawsuit and Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. will be required to pay $38,590 as compensation to the Company. However, Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. appealed the ruling to a higher level court and the Company has not received the payment. Considering the uncertainties of the legal proceeding, the Company did not record a contingent gain for this at September 30, 2007.

In December of 2005, the Company sued Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. for their infringement upon the patent of Etimicin transfusion. As the plaintiff, the Company has claimed compensation of approximately $38,590 for the infringement. According to the judge’s report from the local court in Haikou, PRC, on January 18, 2007, the Company won the lawsuit and Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. will pay $38,590 as compensation for the infringement. However, Hainan Haomai Pharmaceutical Co., Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. appealed the ruling to a higher level court and the Company has not received the payment. Considering the uncertainties of the legal proceeding, the Company did not record a contingent gain for this at September 30, 2007.

In January 2007, the Company was sued by Jiangying Xinqiao Construction Co., Ltd for an overdue construction payment of $243,318. The local judge held a court in April, 2007 which was still in progress. The Company believes the claim is without merit and plans to vigorously contend the claim. As such, there is no contingent accrual at September 30, 2007.

Item 2. Management’s Discussion and Analysis or Plan of Operation.

FORWARD-LOOKING STATEMENTS

We have included forward-looking statements in this report. For this purpose, any statements contained in this report that are not statements of historical fact may be deemed to be forward looking statements. Without limiting the foregoing, words such as "may", "will", "expect", "believe", "anticipate", "estimate", "plan" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors. Factors that might cause forward-looking statements to differ materially from actual results include, among other things, overall economic and business conditions, demand for the Company's products, competitive factors in the industries in which we compete or intend to compete, natural gas availability and cost and timing, impact and other uncertainties of our future acquisition plans.

GENERAL

Aida Pharmaceuticals Inc. (formerly known as BAS Consulting, Inc.) (the “Company”) was incorporated in the State of Nevada on December 18, 2002 (inception). The Company attempted to operate as a consulting firm and was not successful. The Company then began to seek an acquisition candidate and on December 8, 2005, we completed and closed the Share Exchange Agreement (the “Agreement”) dated as of June 1, 2005 by and among BAS Consulting, Inc., Earjoy Group Limited, a British Virgin Islands international business company (“Earjoy”), and the shareholders of Earjoy (the “Earjoy Shareholders”). A copy of the Agreement was previously filed as an Exhibit to our Current Report on Form 8-K dated June 1, 2005 as filed with the Securities and Exchange Commission (the “SEC”) on June 15, 2005.

On March 6, 2006, the Company amended its Articles of Incorporation to change the name of the Company to Aida Pharmaceuticals, Inc. As a result of the acquisition, we now operate the business of AIDA Pharmaceuticals, Inc.

On July 5, 2006, the Company registered 2,500,000 shares of its common stock, $0.001 par value on Form S-8 with the Securities and Exchange Commission. Pursuant to the registration statement, the Company issued 2,000,000 shares to employees and consultants.

The Chinese pharmaceutical industry suffers from a relatively rigorous industrial environment since last year mainly due to the frequent strict regulation policies and personnel change from State Food and Drug Administration of the People’s Republic of China (“SFDA”). This negatively affected the sales of the Company in a short term. The new medicine tender system for hospitals in some regions such as some east-south areas of China, in the beginning of 2007 requires the hospitals to purchase medicines and drugs only from the manufacturer of Pharmaceutical rather than distributors, which resulted in sales returns from some distributors.

OUR BUSINESS

AIDA Pharmaceuticals, Inc. has the following subsidiaries:

Earjoy Group Limited, (“Earjoy”)

Hangzhou Aida Pharmaceutical Co., Ltd (“Hangzhou Aida”);

Hangzhou Boda Medical Research and Development Co., Ltd. (“Boda”);

Hainan Aike Pharmaceutical Co., Ltd. (“Aike”) and;

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”)

Shanghai Qiaer Bio-technology Co., Ltd (“Qiaer”)

Earjoy is an investment holding company.

Hangzhou Aida has been in operation since March 1999 and was established as a limited liability company under the laws of the People’s Republic of China (“PRC”) on March 26, 1999. On December 23, 2004, Earjoy entered into a Share Purchase Agreement with Best Nation Investment Co., Ltd. for the acquisition by Earjoy of 100% of all interests in Hangzhou Aida.

Hangzhou Aida is a fully integrated pharmaceutical company engaged in the development, manufacture, marketing, licensing, and distribution of pharmaceutical products primarily in Mainland China. Aida (including its subsidiaries) has a total of nine production lines for the manufacturing of antibiotics, cardiovascular and anti-tumor drugs in various forms, including injectable powder, injectable liquid, capsules, tablets and ointments. All of them have been certified according to the Good Manufacturing Practices (“GMP”) guidelines issued by the State Food and Drug Administration of the People’s Republic of China (“SFDA”). Hangzhou Aida sells its Category-A antibiotic（Etimicin）under the trademark “Aida” and “PanNuo” etc. All these products are prescription drugs that are sold mainly to the hospitals in Mainland China.

Hangzhou Aida’s strategy is to control all facets of its research and development efforts, including formulation development, clinical studies, regulatory submissions and manufacturing. In addition, the company markets its own branded products directly to health care professionals through its Mainland China sales operations. A key element of Hangzhou Aida’s business is the development, manufacture and sale of branded pharmaceutical products that incorporate Hangzhou Aida’s expertise in research and development and exclusive relationships with raw material suppliers, which provide significant therapeutic advantages over existing competing formulations.

Hangzhou Aida will also work to develop synergistic marketing partnerships in China and around the world in areas such as technology licensing, clinical research, product development, in-licensing and out-licensing of products, co-development and co-marketing agreements.

The headquarters of Hangzhou Aida is located in Hangzhou and Hangzhou Aida specializes in the production of Etimicin powder.

Boda is a wholly owned subsidiary of Hangzhou Aida and engages itself in the research and development of new drugs.

Aike was once a 50% owned subsidiary of Hangzhou Aida. In August 2006, Hangzhou Aida increased its position through an additional direct investment of $568,994 into Hainan Aike and making a $63,222 purchase of the interests held by a third-party institutional shareholder Merlin Green Canada Inc. Thereafter, Hainan Aike became a 60.61% owned subsidiary of the Company. Hangzhou Aida exercises significant influence over Aike by controlling over 60.61% of the voting rights and Aike owns 95% of Yangpu Aike Pharmaceutical Co., Ltd. (“Yangpu”). Aike specializes in the production of transfusion type of Etimicin “AiYi”.

Fangyuan is a 66% owned subsidiary of Hangzhou Aida. Fangyuan is sole supplier of the raw material of Etimicin and is also a major producer of the liquid type of Etimicin “ChuangCheng”.

The Company is capable of producing all types of Etimicin namely, powder, liquid and transfusion and thus has achieved a significant influence in the industry. This is a significant and unique advantage of the Company.

On August 8, 2006, the Company completed and closed the Share Purchase Agreements with Zhejiang Pharmaceutical Co., Ltd., Shanghai Handsome Biotech Co., Ltd and Zhongtuo Times Investment Co., Ltd. respectively. With these agreements, the Company acquired 77.5% of the outstanding shares of Shanghai Qiaer Bio-Technology Co., Ltd collectively.

Qiaer Bio-Tech was founded in 2001 and is located in the Zhangjiang Hi-tech development zone in Shanghai, China. The key product of Qiaer Bio-Tech is rh-Apo21, a pioneering potential biopharmaceutical therapy with genetic engineering techniques used for cancers. Qiaer Bio-Tech has applied for three patents from the Chinese government authority, one of which has been granted with the other two in process. The Phase I clinical trial of rh-Apo2l has been successfully completed and the Phase II clinical trial has been initiated.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management's Discussion and Analysis of Financial Condition and Results of Operations.

We recognize revenue in accordance with Staff Accounting Bulletin ("SAB") No. 104. All of the following criteria must exist in order for us to recognize revenue:

1. Persuasive evidence of an arrangement exists;

2. Delivery has occurred or services have been rendered;

3. The seller's price to the buyer is fixed or determinable; and

4. Collectibility is reasonably assured.

For fixed-priced refundable contracts, the Company recognizes revenue on a completion basis. Progress payments received/receivables are recognized as revenue only if the specified criteria is achieved, accepted by the customer, confirmed not refundable and continued performance of future research and development services related to the criteria are not required.

We have identified one policy area as critical to the understanding of our consolidated financial statements. The preparation of our consolidated financial statements 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 consolidated financial statements and the reported amounts of sales and expenses during the reporting periods. With respect to net realizable value of the Company's accounts receivable, Long-lived assets and inventories, significant estimation judgments are made and actual results could differ materially from these estimates.

For the three and nine months ended September 30, 2007, management of the Company provided a reserve on its accounts receivable to reflect management’s expectation on the collectibility of aged accounts receivable. Management’s estimation of the reserve on accounts receivable at September 30, 2007 was based on the current facts that there are aged accounts receivable. Management has assessed the customers’ ability to continue to pay the outstanding invoices timely, and whether their financial position will deteriorate significantly in the future which would result in their inability to pay their debts to the Company.

For the three and nine months ended September 30, 2007, the Company had made no impairments for Long-lived assets. Long-lived assets of the Company are reviewed annually as to whether their carrying value has become impaired, pursuant to the guidelines established in SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". The Company also periodically evaluates the amortization periods of its depreciable assets to determine whether subsequent events and circumstances warrant revised estimates of the useful lives.

Management's estimation whether a provision is needed is based on management’s analysis of the current facts of whether potential impairments on the current carrying value of the inventories due to potential obsolescence exist as a result of aged inventories. In making their judgments, management made their estimations of the potential impairments based on the demand for their products in the future and the trends of turnover of the inventories.

While the Company's management currently believes that there is little likelihood that the actual results of their current estimates will differ materially from such current estimates, if the financial position of its customers deteriorates, if there is a significant reduction in the carrying value of its Long-lived assets, or if, customer demand for its products decreases significantly in the near future, the Company could realize significant write downs for uncollectible accounts receivable, impairment of Long-lived assets or slow moving inventories.

Effective January 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, Accounting for Uncertainty in Income Taxes ("FIN 48"), an interpretation of FASB statement No. 109, Accounting for Income Taxes. The interpretation addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN 48, we may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN 48 also provides guidance on derecognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased disclosures. As of June 30, 2007, the Company does not have a liability for unrecognized tax benefits.

In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements," which provides enhanced guidance for using fair value to measure assets and liabilities. SFAS No. 157 provides a common definition of fair value and establishes a framework to make the measurement of fair value in generally accepted accounting principles more consistent and comparable. SFAS No. 157 also requires expanded disclosures to provide information about the extent to which fair value is used to measure assets and liabilities, the methods and assumptions used to measure fair value, and the effect of fair value measures on earnings. SFAS No. 157 is effective for financial statements issued in fiscal years beginning after November 15, 2007 and to interim periods within those fiscal years. The Company is currently in the process of evaluating the effect, if any, the adoption of SFAS No. 157 will have on its consolidated results of operations, financial position, or cash flows.

In February 2007, the FASB issued FASB Statement No. 159, The Fair Value Option for Financial Assets and Financial Liabilities −− Including an amendment of FASB Statement No. 115 (“FAS 159”). FAS 159, which becomes effective for the Company on January 1, 2008. This standard permits companies to choose to measure many financial instruments and certain other items at fair value and report unrealized gains and losses in earnings. Such accounting is optional and is generally to be applied instrument by instrument. The Company does not anticipate that election, if any, of this fair-value option will have a material effect on the results or operations or consolidated financial position

RESULTS OF OPERATIONS – THREE MONTHS ENDED SEPTEMBER 30, 2007 AS COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2006

The following table sets forth selected statements of income data as a percentage of revenues for the three months indicated.


	Three Months Ended September 30,
	2007	2006

Revenues, net	100.00%	100.00%
Cost of goods sold	(48.25)%	(44.19)%
Gross margin	51.75%	55.81%
Selling and distribution	(18.82)%	(16.73)%
General and administrative	(13.44)%	(18.60)%
Research and development	(1.01)%	(0.65)%
Other expense	(5.87)%	0.21%
Income taxes	(2.08)%	(3.10)%
Minority interests	(3.49)%	(3.86)%
Net (loss) income	7.04%	13.09%

Revenues, Cost of Goods Sold and Gross Profit

Revenues for the three months ended September 30, 2007 were $7,373,770 an increase of $349,879 from $7,023,891 for the three months ended September 30, 2006. Compared to the third quarter of 2006, the increase in sales revenues from our group of companies engaging in the production of different types of Etimicin for the third quarter of 2007 and 2006 were as follows:


		Three Months Ended September 30,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co., Ltd (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	2,524,765	$	2,759,390	$	(234,625)

Hainan Aike pharmaceutical Co., Ltd (“Aike”) specializes in the production of Etimicin transfusion		3,069,379		2,838,064		231,315

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”) specializes in the production of Etimicin injection		1,779,626		1,426,437		353,189

TOTAL	$	7,373,770	$	7,023,891	$	349,879

For the three months ended September 30, 2007, the sales of Hangzhou Aida decreased by $234,625 or 8.50% as compared to the same period of 2006. The decrease in sales is mainly attributable to the decrease in sales of the Etimicin powder, “Aida”.

For the three months ended September 30, 2007, the sales of Hainan Aike increased by $231,315 or 8.15% as compared to the same period of 2006. The increase in sales can mainly be accounted for the increase in sales of the Etimicin transfusion product, “Aiyi”.

For the three months ended September 30, 2007, the sales of Fangyuan increased by $353,189 or 24.76% as compared to the same period of 2006. The increase in sales is mainly attributable to an increase in sales of Etimicin material product.

The cost of goods sold for the third quarter ended June 30, 2007 was $3,557,685 an increase of $454,169 from $3,103,516 for the same period of 2006. The increase in cost of goods sold can be analyzed as follows:


		Three Months Ended September 30,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co. Ltd (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	846,239	$	940,872	$	(94,633)

Hainan Aike pharmaceuticalCo. Ltd (“Aike”) specializesin the production of Etimicin transfusion		1,941,099		1,724,307		216,792

Changzhou Fangyuan Pharmaceutical Ltd. (“Fangyuan”) specializesin the production of Etimicininjection		770,347		438,337		332,010

TOTAL	$	3,557,685	$	3,103,516	$	454,169

The cost of goods sold of Hangzhou Aida for the three months ended September 30, 2007 decreased by $94,633, or 10.06% compared to $940,872 for the same period in 2006. The decrease in the cost of goods sold can mainly be accounted for by a decrease in sales.

The cost of goods sold of Aike for the three months ended September 30, 2007 increased by $216,792, or 12.57% compared to $1,724,307for the same period in 2006. The increase can mainly be explained by the decrease in sales.

The cost of goods sold of Fangyuan for the three months ended September 30, 2007 increased by $332,010, or 75.74% compared to $438,337 for the same period in 2006.The increase is mainly due to the increase in sales.

Compared to the three months ended September 30, 2006, the percentage gross profit margin for our Company decreased from 55.81% to 51.75% for the third quarter ended June 30, 2007.

Research and Developments

The cost of the research and development for the third quarter of 2007 was 74,514 representing the cost incurred for the clinical trials for Rh-Apo2l by Qiaer, as compared to $45,323 for the third quarter of 2006.

Selling and Distribution

Selling and distribution expenses increased from $1,175,000 for the three months ended September 30, 2006 to $1,387,818 for the same period this year, or a 18.11% increase. Compared to the same period in 2006, our increase in the expenses was because of the following:


		Three Months Ended September 30,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	422,580	$	523,221	$	(100,641)
Office expenses		202,815		210,595		(7,780)
Payroll		131,087		52,418		78,669
Conference fees		76,869		17,275		59,594
Rent		83,906		12,774		71,132
Entertainment		157,452		42,368		115,084
Advertising expenses		17,190		162,653		(145,463)
Other expenses		295,919		153,696		142,223

TOTAL	$	1,387,818	$	1,175,000	$	212,818

For the three months ended September 30, 2007 traveling expenses and office expenses decreased by $100,641 and 7,780, respectively, compared with the same period last year. The decrease was mainly explained that the Company controlled the traveling and office expenses by effective administration.

For the three months ended September 30, 2007 advertising expenses decreased by $145,463, compared with the same period last year. The decrease was mainly explained that the Company carried out several great advertisements for sales promotion in the third quarter last year and no such great advertisements for the same period this year.

For the three months ended September 30, 2007, the rent expenses of $83,906 incurred for Aike, increased by $71,132, compared to $12,774 for the same period last year.

General and Administrative

General and administrative expenses decreased from $1,306,226 for the three months ended September 30, 2006 to $991,216 for the same period this year, representing a 24.12% decrease. The details of general and administrative expenses for the three months ended September 30, 2007 and 2006 were as follows:


		Three Months Ended September 30,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	27,679	$	49,643	$	(21,964)
Office expenses		58,945		46,021		12,924
Payroll		97,654		140,111		(42,457)
Conference fees		19,322		17,800		1,522
Labor union & education & staff welfare		132,601		140,097		(7,496)
Consultancy fees		70,782		138,357		(67,575)
Entertainment		37,810		24,716		13,094
Depreciation		119,681		82,092		37,589
Amortization of intangible assets		163,064		452,463		(289,399)
Other expenses		263,678		214,926		48,752

TOTAL	$	991,216	$	1,306,226	$	(315,010)

The consultancy fees which the company pays consultants for their consultation service decreased from $138,357 for the three months ended September 30, 2006 to $70,782 for the same period this year. The decrease was mainly attributable to a decrease of $79,360 in consultation service of Aida in the third quarter this year.

Amortization of intangible assets of $163,064 for the three months ended September 30, 2007 decreased by $289,399 from $452,463 for the same period last year. The decrease was explained by that amortization of deferred expense of $311,044 for the third quarter of 2006. On July 5, 2006, the Company issued 800,000 and 1,200,000 shares of common stock on Form S-8 with the Securities and Exchange Commission to employees and consultants, respectively. The deferred compensation is amortized over the service period.

Depreciation expenses of $119,681 for the three months ended September 30, 2007 increased by $37,589 from $82,092 fot the same period last year. The increase was mainly attributable to an increase of $28,431 in the depreciation expenses for Aida.

Other Income (Expenses)

Other income (expenses) decreased from $14,551 for the three months ended September 30, 2006 to $(433,086) for the same period this year. The other income (expenses) for the three months Ended September 30, 2007 and 2006 were as follows:


		Three Months Ended September 30,
Breakdown of Other Income (Expenses)		2007		2006		Increase/ (Decrease)

Interest expense, net	$	(465,282)	$	(459,511)	$	(5,771)
Government grants		46,131		551,420		(505,289)
Investment income (loss)		(10,457)		-		(10,457)
Other (loss) income, net		(3,478)		(77,358)		73,880

TOTAL	$	(433,086)	$	14,551	$	(447,637)

Net Interest expense for the three months ended September 30, 2007 increased slightly by $5,771 from $459,511 for the same period last year.

Government grants of $551,420 for the three months ended September 30, 2006 represented subsidies from the government. such income of $46,131 occurred for the same period this year.

Investment income (loss) of $(10,457) for the three months ended September 30, 2007 was mainly explained that he Company entered into agreement with Hangzhou Handcrafts Cooperate Association to transfer its 10.6% interest in Hangzhou Longde Medicine Machinery Co., Ltd. for $93,199 resulting in a loss of $14,285.And no such income occurred for the same period of 2006.

Income Taxes

Income tax expense was $153,182 for the three months ended September 30, 2007, as compared to $217,720 for the same period last year.

In accordance with the relevant tax laws and regulations of PRC, the corporation income tax rate is 33%. As a Company registered in Hainan, PRC, Aike is entitled a beneficial corporate income tax rate of 15% in accordance with the relevant tax laws in the PRC. Fangyuan enjoys a beneficial tax rate of 15% as it is registered in a national high-tech development zone. According to the relevant laws and regulations of PRC, the preferential tax rate of 15% is applied to companies established in the national high-tech development zone.

In accordance with the relevant taxation laws in the PRC, from the time that a company has its first profitable tax year, a foreign investment company is exempt from corporate income tax for its first two years and is then entitled to a 50% tax reduction for the succeeding three years. And the foreign investment company income tax rate is 27% in Hangzhou, PRC. Since Hangzhou Aida Pharmaceutical Co., Ltd has been a foreign investment company since 2004, so we are entitled to a 50% tax reduction in 2007.

Net (Loss) Income

In the third quarter of 2007, our net income decreased by $400,224 to a net income of $519,061 from $919,285 in the same period in 2006.

RESULTS OF OPERATIONS – NINE MONTHS ENDED SEPTEMBER 30, 2007 AS COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 2006

The following table sets forth selected statements of income data as a percentage of revenues for the nine months indicated.


	Nine Months Ended September 30,
	2007	2006

Revenues, net	100.00%	100.00%
Cost of goods sold	(52.13)%	(49.24)%
Gross margin	47.87%	50.76%
Selling and distribution	(18.81)%	(24.05)%
General and administrative	(16.09)%	(14.73)%
Research and development	(1.27)%	(0.23)%
Other income (expense)	(5.87)%	(0.64)%
Income taxes	(1.02)%	(2.26)%
Minority interests	(3.01)%	(2.10)%
Net (loss) income	1.78%	6.75%

Revenues, Cost of Goods Sold and Gross Profit

Revenues for the nine months ended September 30, 2007 were $18,687,283 a decrease of $971,952 from $19,659,235 for the same time last year. Compared to the nine months of 2006, the decrease in sales revenues from our group of companies engaging in the production of different types of Etimicin for the nine months of 2007 and 2006 were as follows:


		Nine Months Ended September 30,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co., Ltd (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	5,347,266	$	6,830,259	$	(1,482,993)

Hainan Aike pharmaceutical Co., Ltd (“Aike”) specializes in the production of Etimicin transfusion		9,087,966		9,609,484		(521,518)

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”) specializes in the production of Etimicin injection		4,252,051		3,219,492		1,032,559

TOTAL	$	18,687,283	$	19,659,235	$	(971,952)

For the nine months ended September 30, 2007, the sales of Hangzhou Aida decreased by $1,482,993 or 21.71% as compared to the same period of 2006. The Chinese pharmaceutical industry suffers from a relatively rigorous industrial environment since last year mainly due to the frequent strict regulation policies and personnel change from SFDA. This negatively affected the sales of the Company in the short term. The new medicine tender system for hospitals in some regions such as some east-south areas of China, in the beginning of 2007 requires the hospitals to purchase medicines and drugs only from the manufacturer of Pharmaceutical rather than distributors, which resulted in sales returns from some distributors. The Company believes after renewal of distribution channel and rapid adaptation to the new system, we can overcome the short period disadvantage. In a view of the long run, the Company will benefit a lot from the restructuring of the industry and government regulation as a well-disciplined and innovative company. Meanwhile, some other Etimicin manufacturers who infringed the patent of Etimicin also created disorder of the market, thus bringing negative impact against the business performance of the company. But with the successful ongoing of the legal action, we believe that those manufacturers will stop producing and selling shortly. We see the recovery of our sales from the second quarter compared with that in the first quarter of this year. We believe that our operation and growth will continue to recover in the coming quarters. We also expect that the commercialization of our new drugs will improve the heavy reliance on Etimicin and lessen the fluctuation of our performance.

For the nine months ended September 30, 2007, the sales of Hainan Aike decreased by $521,518 or 5.43% as compared to the same period of 2006. The decrease in sales can mainly be accounted for the slight decrease in sales of the Etimicin transfusion product, “Aiyi”.

For the nine months ended September 30, 2007, the sales of Fangyuan increased by $1,032,559 or 32.07% as compared to the same period of 2006. The increase in sales is the result of the intense marketing and promotion programs of a new Etimicin injection product, “Chuangcheng”. Another reason is the increase in sales of the Etimicin material product.

The cost of goods sold for the nine months ended September 30, 2007 was $9,740,952 an increase of $61,385 from $9,679,567, for the year 2006. The increase in cost of goods sold can be analyzed as follows:


		Nine Months Ended September 30,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co. Ltd (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	1,677,909	$	1,959,058	$	(281,149)

Hainan Aike pharmaceuticalCo. Ltd (“Aike”) specializesin the production of Etimicin transfusion		5,591,975		5,955,803		(363,828)

Changzhou Fangyuan Pharmaceutical Ltd. (“Fangyuan”) specializesin the production of Etimicininjection		2,471,068		1,764,706		706,362

TOTAL	$	9,740,952	$	9,679,567	$	61,385

The cost of goods sold of Hangzhou Aida for the nine months ended September 30, 2007 decreased by $281,149, or 14.35% compared to $1,959,058 for the same period in 2006. The decrease in the cost of goods sold can mainly be accounted for by a decrease in sales by 21.71%.

The cost of goods sold of Aike for the nine months ended September 30, 2007 decreased by $363,828, or 6.11% compared to $5,5955,803 for the same period in 2006. The increase can mainly be explained by the decrease in sales.

The cost of goods sold of Fangyuan for the nine months ended September 30, 2007 increased by $706,362, compared to $1,764,706 for the same period in 2006.The increase is mainly due to the increase in sales.

Compared to the nine months ended September 30, 2006, the percentage gross profit margin for our Company decreased from 50.76% to 47.87% for the same period in 2007.

Research and Developments

The cost of the research and development for the nine months ended September 30, 2007 was 238,159 representing the cost incurred for the clinical trials for Rh-Apo2l by Qiaer, as compared to $45,111 for the same period of 2006.

Selling and Distribution

Selling and distribution expenses decreased from $4,728,989 for the nine months ended September 30, 2006 to $3,515,776 for the same period this year, or a 25.65% decrease. Compared to the same period in 2006, our decrease in the expenses was because of the following:


		Nine Months Ended September 30,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	1,081,545		1,713,380	$	(631,835)
Sale commissions		81,084		431,207		(350,123)
Office expenses		632,859		799,684		(166,825)
Payroll		343,879		249,098		94,781
Conference fees		136,786		141,647		(4,861)
Rent		283,638		105,807		177,831
Entertainment		351,711		117,031		234,680
Advertising expenses		21,873		566,413		(544,540)
Other expenses		582,401		604,722		(22,321)

TOTAL	$	3,515,776	$	4,728,989	$	(1,213,213)

For the nine months ended September 30, 2007 sale commissions of $81,084 decreased by $350,123, compared with the same period last year. The decrease was due to the decrease in the sales with commissions for Fangyuan.

For the nine months ended September 30, 2007 traveling expenses, office expenses and advertising expenses decreased by $631,835, $166,825 and $544,540 respectively, compared with the same period last year. The decrease was mainly explained that the Company controlled the selling expenses by effective administration.

For the nine months ended September 30, 2007, the rent expenses of $283,638 incurred for the Beijing office , the biggest sales office for Aike, increased by $177,831, compared to $105,807 for the same period last year.

General and Administrative

General and administrative expenses increased from $2,896,205 for the nine months ended September 30, 2006 to $3,006,799 for the same period this year, representing a 3.82% increase. The details of general and administrative expenses For the nine months ended September 30, 2007 and 2006 were as follows:


		Nine Months Ended September 30,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	203,104	$	188,765	$	14,339
Office expenses		157,273		133,073		24,200
Payroll		526,580		422,687		103,893
Conference fees		42,253		27,564		14,689
Labor union & education & staff welfare		590,563		417,895		172,668
Consultancy fees		160,150		245,646		(85,496)
Entertainment		173,158		75,770		97,388
Depreciation		328,248		230,212		98,036
Amortization of intangible assets		537,449		680,617		(143,168)
Other expenses		288,021		473,976		(185,955)

TOTAL	$	3,006,799	$	2,896,205	$	110,594

The labor union expenses & education expenses & staff welfare of $590,563 for the nine months ended September 30, 2007 increased by $172,668 from $417,895 for the same period last year. The increase was explained by the increase in the payroll per staff. And the payroll expenses of $526,580 for the nine months ended September 30, 2007 increased by $103,893 from $422,687 for the same period last year.

Amortization of intangible assets of $537,449 for the nine months ended September 30, 2007 decreased by $143,168 from $680,617 for the same period last year. The decrease was explained by that amortization of deferred expense of $311,044 for the third quarter of 2006. On July 5, 2006, the Company issued 800,000 and 1,200,000 shares of common stock on Form S-8 with the Securities and Exchange Commission to employees and consultants, respectively. The deferred compensation is amortized over the service period.

Depreciation expenses of $328,248 for the nine months ended September 30, 2007 increased by $98,036 from $230,212 for the same period last year. The increase was mainly attributable to an increase of $42,302 in the depreciation expenses for Fangyuan.

Other Income (Expenses)

Other income (expenses) decreased from $(124,625) for the nine months ended September 30, 2006 to $(1,097,792) for the same period this year. The other income (expenses) for the nine months ended September 30, 2007 and 2006 were as follows:


		Nine Months Ended September 30,
Breakdown of other income/(expenses)		2007		2006		Increase/ (Decrease)

Interest expense, net	$	(1,180,813)	$	(1,114,105)	$	(66,708)
Government grants		95,998		1,097,724		(1,001,726)
Investment income		(10,457)		12,490		(22,947)
Gain on sale of marketable securities		120,356		-		120,356
Other (loss) income, net		(122,876)		(120,734)		(2,142)

TOTAL	$	(1,097,792)	$	(124,625)	$	(973,167)

Net Interest expense for the nine months ended September 30, 2007 increased by $66,708 from $1,114,105 for the same period last year. The increase is mainly due to an increase in the interest for the short-term borrowings.

Government grants for the nine months ended September 30, 2007 decreased by $1,001,726 from $1,097,724 for the same period last year. The decrease is due to the decrease in subsidies from the government.

Investment income of $12,490 for the nine months ended September 30, 2006 represented the sold income of 8.33% outstanding shares of Zhejiang Anglikang Pharmaceutical Co., Ltd at a price of $12,490 and the investment income (loss) of $(10,457) for the same period this year was mainly explained that he Company entered into agreement with Hangzhou Handcrafts Cooperate Association to transfer its 10.6% interest in Hangzhou Longde Medicine Machinery Co., Ltd. for $93,199 resulting in a loss of $14,285

Gain on sale of marketable securities of $120,356 for the nine months ended September 30, 2007 represented income from Chinese securities investment and no such income was incurred for the same period last year.

Income Taxes

Income tax expense was $191,349 for the nine months ended September 30, 2007, as compared to $445,047for the same period last year.

Net (loss) Income

For the nine months ended September 30, 2007, our net income decreased by $993,285 to a net income of $333,388 from $1,326,673 in the same period in 2006.

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our cash balance increased by $1,576,484 to $7,693,300 as of September 30, 2007, as compared to $6,116,816 as of December 31, 2006. The increase was mainly attributable to cash in flow of financing activities and depreciation and amortization of $3,058,496 and $1,476,339, respectively, a decrease in accounts receivable of $5,566,175. The increase in cash flow was partially offset by cash out flow of investment activities of $7,940,071, an increase in inventories of $1,319,475, and a decrease in accounts payable of $885,626. The net cash flow was $1,576,484 for the nine months ended September 30, 2007.

Our cash flow from operations amounted to $6,506,533 for the nine months ended September 30, 2007, compared to $579,266 for the same period last year.

Our cash flow used in investing activities amounted to $7,940,071 of which $2,312,740 was issuance of notes receivable. The Company invested $2,578,149 in the deposit for long term investment, invested $1,924,724 in the purchases of plant and equipment and lent to employees $1,279,916.

The net cash used in financing activities amounted to $3,058,496 of which $23,290,420 was the proceeds from short-term debt.

At September 30, 2007, the Company had short-term debt of $29,405,234 of which $22,507,589 was short-term bank borrowings and the remaining $6,897,645 represented notes payable to unrelated parties. The interest for the short-term borrowings varied from 5.3625% to 8.541% per annum whereas the notes payable to unrelated parties is interest free. The Company believes that the cash generated from normal operation will be sufficient to pay off its liabilities as the short-term borrowings and commitments fall due.

Working Capital

Our working capital deficiency increased by $3,099,206 to $8,848,137 at September 30, 2007, as compared to $5,748,931 at December 31, 2006. The increase in working capital deficiency at September 30, 2007 was mainly attributable to our increase in short term debt of $5,489,782 and customer deposits of $727,669 and a decrease in accounts receivable of $5,582,631 offset by the decrease in accounts payable and current portion of long-term debt of $885,627 and $2,385,964 and an increase in cash of $1,576,484, notes receivable of $1,403,648, due from employees of $1,279,915 and inventories of $1,319,475.

The Company currently generates its cash flow through operations and the Company believes that its cash flow generated from operations will be sufficient to sustain operations for the next twelve months. Also, from time to time, the Company may require extra funding through financing activities and investments for expansion. Also, from time to time, the Company may come up with new expansion opportunities for which our management may consider seeking external funding and financing. However, as of September 30, 2007, the Company had no solid plan for additional capital through external funding and financing.

Item 3. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures.

Within the 90 days prior to the date of this Quarterly Report for the period ended September 30, 2006, we carried out an evaluation, under the supervision and with the participation of our management, including the Company's Chairman and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-14 of the Securities Exchange Act of 1934 (the "Exchange Act"), which disclosure controls and procedures are designed to insure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods specified by the SEC's rules and forms. Based upon that evaluation, the Chairman and the Chief Financial Officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company's period SEC filings.

(b)

Changes in Internal Controls.

Subsequent to the date of such evaluation as described in subparagraph (a) above, there were no significant changes in our internal controls or other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

In 2006, the Company brought a legal action against Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. for their infringement upon the patent of Etimicin transfusion. As the plaintiff, the Company has claimed compensation of approximately $38,590 for the infringement. According to the judge’s report from the local court in Haikou, PRC, on December 30, 2006, the Company won the lawsuit and Hainan Haomai Pharmaceutical Co. Ltd. and Fuzhou Likang Pharmaceuticals Co., Ltd. will be required to pay $38,590 as compensation to the Company. However, Jiangxi Pharmaceutical Co., Ltd. and Hainan Licheng Pharmaceuticals Co., Ltd. appealed the ruling to a higher level court and the Company has not received the payment.

In January 2007, the Company was sued by Jiangying Xinqiao Construction Co., Ltd for an overdue construction payment of $243,318. The Company believes the claim is without merit and plans to vigorously contend the claim. As such, there is no contingent accrual at September 30, 2007.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibits

Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-B.

Exhibit No.

SEC Ref. No.

Title of Document

31.1

Certification of the Principal Executive Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Principal Financial Officer

pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

Certification of the Principal Executive Officer

pursuant to U.S.C. Section 1350 as adopted pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002*

32.2

Certification of the Principal Financial Officer

pursuant to U.S.C. Section 1350 as adopted pursuant

to Section 906 of the Sarbanes-Oxley Act of 2002*

* The Exhibit attached to this Form 10-QSB shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

SIGNATURES

In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AIDA PHARMACEUTICALS, INC.

Date: November 14, 2007

/s/ Biao Jin

Mr. Biao Jin

Chief Executive Officer

Date: November 14, 2007

/s/ Hui Lin

Ms. Hui Lin

Chief Financial Officer