Company Developments

On Tuesday, April 17, 2007, Lotus released its highly-anticipated 2006 Annual Report, as audited by Sherb & Company of New York. The report revealed gross revenues of $36 million, net profits of $4.1 million and net assets of $20.6 million. For detailed information, refer to SEC filings.

CFO Adam Wasserman summarized the Form 10-KSB: “Total revenues for the year ended December 31, 2006 were $36,207,689 as compared to total revenues of $18,345,841 for the year ended December 31, 2005, an increase of $17,861,848 or approximately 97 percent. For the year ended December 31, 2006, wholesale revenues increased by $9,331,033 or 58 percent. The significant increase in tangible product revenues is mainly attributed to continued strong sales of our best selling product, Valsartan Capsules, a medicine for primary hypertension or high blood pressure. For the year ended December 31, 2006, retail revenues increased by $1,903,238 or 116.7 percent. Eight of our 10 retail pharmacy stores are appointed pharmacy stores of medication insurance; thus, all of the customers who have medication insurance can get reimbursement from the social insurance agency, if they buy medicines in our stores. For the year ended December 31, 2006, other revenues increased by $6,627,577. Gross profit for the year ended December 31, 2006 was $9,684,650 or 26.7 per cent of total revenues, as compared to $3,761,159 or 20.5 percent of revenues for the year ended December 31, 2005. Our working capital position increased $2,694,840 to $8,646,076 at December 31, 2006 from $5,951,236 at December 31, 2005."

Dr. Liu Zhongyi, Chief Executive Officer, remarked: “The performance of Lotus is a tribute to our superior products and personnel. We are confident that this is only the beginning for our Company. Building on this success and with appropriate financing, our strategy is that Lotus will establish itself as one of the major pharmaceutical companies with much expanded marketing channels and a good range of products, plus a superb R&D capability. We firmly believe our existing operations can realize organic growth of 20 percent per year for the coming years. In addition, through complementary acquisitions, we expect to achieve aggregate yearly revenues in excess of $140 million. With expected profit margins of 12-15 percent, after planned acquisitions, Lotus would be on the fast track to leverage the synergy inherent in our enhanced operations. Achieving these objectives should place Lotus amongst the top 100 pharmaceutical companies in China."

Reviewing operations last year, Lotus opened its new facilities to produce freeze-dried powder injections, small-volume injections and eye drops with total investments of $245,000, which passed the National GMP Certification with the Certificate Number G3452. Exclusive new drug curing open-angle glaucoma, alpha-2 Receptor Excitant-brimonidine tartrate material and eye drops (Muxin) was approved by the State SFDA (registration number of approval: SDPD H20041215), and came to market in September; the sales in three months totaled RMB $244,000 with a profit of $100,000. Levofloxacin Lactate Freeze-Dried Powder Injection (Junxin), the broad spectrum antibiotic ranks first amongst users in the world was approved by the State SFDA (registration number of approval: SDPD H20050501), and also came into the market in September; the sales in three months was $400,000 with a profit of $134,000. In addition to well-established Valsartan Capsules for the treatment of hypertension, Lotus has submitted the following new drugs for SFDA approval and marketing in China: Broad spectrum antibiotic: Gatifloxacin Lactate Injection (Acceptance No.: CXHS0503239 Beijing and CXHS0503240 Beijing) Broad spectrum antibiotic: Gatifloxacin Lactate Freeze-Dried Powder Injection (Acceptance No.: CXHS0503288 Beijing and CXHS0503289 Beijing).

A new drug used to cure acute and chronic ambient circulatory disturbance, and ameliorate the low conation caused by cerebral infarction sequela and affective disturbance: Nicergoline Freeze-Dried Powder Injection (Acceptance No.: CYHS0506815 Beijing).

A new drug used to cure cerebral edema resulted from various courses of disease, swelling caused by wound or operation and venous return disturbance: Sodium Aescinate Freeze-Dried Powder Injection (Acceptance No.: CYHS0506816 Beijing and CYHS0506817 Beijing).

This website contains forward-looking statements that involve risks and uncertainties, including those relating to the Company's ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the company's limited operating history, the limited financial resources, domestic or global economic conditions -- especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, and conditions of equity markets. More information about the potential factors that could affect the company's business and financial results is included in the Company's filings, available via the United States Securities & Exchange Commission. Occasionally, the Company may select and post articles or opinions of third parties, with no known connection with the Company. These are considered expert or qualified writers about the Chinese economy and its various opportunities and pitfalls. The Company neither endorses nor rejects these views or content, and the articles are offered only for the readers' edification and personal analyses.