<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>sinovacfinancials.txt
<DESCRIPTION>SINOVAC BIOTECH 6K, ACQUIRED BUSINESS FINANCIALS
<TEXT>


EXHIBIT 99.1
------------














                        TANGSHAN YIAN BIOLOGICAL
                        ------------------------
                        ENGINEERING CO., LTD.
                        ---------------------
                        (A company incorporated in China)


                        Financial Statements
                        (Expressed in U.S. Dollars)


                        June 30, 2003, December 31, 2002 and 2001







                        Index
                        -----

                        Report of Independent Accountants

                        Balance Sheets

                        Statements of Stockholders' Equity (Deficiency)

                        Statement of Operations

                        Statements of Cash Flows

                        Notes to Financial Statements












                                       F-1
<PAGE>



MOORE STEPHENS ELLIS FOSTER LTD.
--------------------------------
CHARTERED ACCOUNTANTS
---------------------

1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone:  (604) 734-1112 Facsimile: (604) 714-5916
Website:  www.ellisfoster.com

--------------------------------------------------------------------------------


REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------


To the Board of Directors and Stockholders of
---------------------------------------------

TANGSHAN YIAN BIOLOGICAL ENGINEERING CO., LTD.
----------------------------------------------

We have audited the balance sheets of Tangshan Yian Biological  Engineering Co.,
                                      ------------------------------------------
Ltd.  ("the  Company") as at June 30, 2003,  December 31, 2002 and 2001, and the
----
related  statements of stockholders'  equity  (deficiency),  operations and cash
flows for the six months ended June 30, 2003,  the years ended December 31, 2002
and 2001.  These financial  statements are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

Except as  explained in the  following  paragraph,  we  conducted  our audits in
accordance with auditing  standards  generally  accepted in the United States of
America.  Those  standards  require  that we plan and perform an audit to obtain
reasonable  assurance  whether  the  financial  statements  are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

Because we were not  appointed as auditors of the Company  until after  December
31, 2002, we were not able to observe the counting of physical inventories as at
January 1, 2001 and December 31, 2001, nor satisfy  ourselves  concerning  those
inventories  quantities by  alternative  means.  We were,  therefore,  unable to
determine whether  adjustments to inventories as at January 1, 2001 and December
31,  2001  might  be  necessary.  Since  beginning  inventories  enter  into the
determination  of the results of  operations  and cash flows,  we were unable to
determine whether  adjustments to cost of sales, net income (loss) for the year,
beginning  accumulated deficit and cash provided from operations for each of the
years in the two-year period ended December 31, 2002 might be necessary.

In our opinion,  except for the effect of  adjustments,  if any,  which we might
have determined to be necessary had we been able to examine beginning  inventory
quantities as described in the preceding  paragraph,  these financial statements
present fairly, in all material respects,  the financial position of the Company
as at December 31,  2001,  the result of its  operations  and its cash flows for
each of the years in the two-year  period ended December 31, 2002, in accordance
with generally accepted  accounting  principles in the United States of America.
Further,  in our opinion,  these financial  statements  present  fairly,  in all
material respects, the financial position of the Company as at June 30, 2003 and
December 31, 2002 and the results of its  operations  and its cash flows for the
six months ended June 30, 2003 in conformity with generally accepted  accounting
principles in the United States of America.



Vancouver, Canada                          "MOORE   STEPHENS  ELLIS FOSTER LTD."
August 13, 2003, except as to Note 13                      Chartered Accountants
which is as of September 24, 2003


--------------------------------------------------------------------------------
M S  An independently owned and operated member of Moore Stephens North America,
Inc. Members in principal cities throughout North America.  Moore Stephens North
America, Inc. is a member of Moore Stephens  International  Limited,  members in
principal cities throughout the world.

                                       F-2
<PAGE>



<TABLE>
<CAPTION>
TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Balance Sheets
(Expressed in U.S. Dollars)
=======================================================================================================================

                                                                        June 30         December 31         December 31
                                                                           2003                2002                2001
-----------------------------------------------------------------------------------------------------------------------

ASSETS

<S>                                                            <C>                 <C>                 <C>
Current assets
  Cash and cash equivalents                                    $        17,263     $        35,238     $       142,827

  Trade receivables, net of allowance of doubtful accounts              11,594              30,531              61,135
   of $26,109 in 2003, $19,949 in 2002 and $13,657 in 2001

  Other receivables, including related party receivables                17,191              14,770               8,614
    of $6,321 in 2003, $5,439 in 2002 and $3,675 in 2001

  Inventories                                                           81,475              68,848              83,604

  Deferred income taxes                                                      -              47,930                   -
-----------------------------------------------------------------------------------------------------------------------

Total current assets                                                   127,523             197,317             296,180

Deferred income taxes                                                        -                   -              47,930

Property, plant and equipment                                        1,894,958           1,950,772           2,051,294

Investment in Sinovac Biotech Co., Ltd.                                532,139             523,932             722,950
-----------------------------------------------------------------------------------------------------------------------

Total assets                                                   $     2,554,620     $     2,672,021     $     3,118,354
=======================================================================================================================


LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)

Current liabilities
  Loans payable                                                $     1,119,324     $     1,115,097     $       869,565
  Accounts payable and accrued liabilities                             705,990           1,454,493             815,427
  Due to related parties                                               677,487           1,225,913           1,437,645
-----------------------------------------------------------------------------------------------------------------------

Total current liabilities                                            2,502,801           3,795,503           3,122,637
-----------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY (DEFICIENCY)

Paid-in capital                                                      1,130,198             132,850             132,850

Contributed surplus                                                     85,176              79,098              66,912

Accumulated deficit                                                 (1,163,555)         (1,335,430)           (204,045)
-----------------------------------------------------------------------------------------------------------------------

Total stockholders' equity (deficiency)                                 51,819          (1,123,482)             (4,283)
-----------------------------------------------------------------------------------------------------------------------

Total liabilities and stockholders' equity                     $     2,554,620     $     2,672,021     $     3,118,354
=======================================================================================================================
</TABLE>

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




                                       F-3
<PAGE>



<TABLE>
<CAPTION>
TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Statements of Stockholders' Equity (Deficiency)
(Expressed in U.S. Dollars)
================================================================================================================
                                                                                                           Total
                                                                                                    stockholders
                                               Paid-in       Contributed             Deficit              equity
                                               capital           surplus         accumulated        (deficiency)
----------------------------------------------------------------------------------------------------------------

<S>                                     <C>               <C>               <C>                 <C>
Balance, December 31, 2000              $     132,850     $      57,144     $      (418,890)    $      (228,896)

Imputed interest                                    -             9,768                   -               9,768

Comprehensive income (loss)
- Net income for the year                           -                 -             214,845             214,845
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2001                    132,850            66,912            (204,045)             (4,283)
================================================================================================================

Imputed interest                                    -            12,186                   -              12,186

Comprehensive income (loss)
- Net (loss) for the year                           -                 -          (1,131,385)         (1,131,385)
----------------------------------------------------------------------------------------------------------------

Balance, December 31, 2002                    132,850            79,098          (1,335,430)         (1,123,482)
================================================================================================================

Imputed interest                                    -             6,078                   -               6,078

Debt exchange for shares (Note 10f)           997,348                 -                   -             997,348

Comprehensive income (loss)
- Net income for the period                         -                 -             171,875             171,875
----------------------------------------------------------------------------------------------------------------

Balance, June 30, 2003                  $   1,130,198     $      85,176          (1,163,555)    $        51,819
================================================================================================================
</TABLE>

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




















                                       F-4
<PAGE>



<TABLE>
<CAPTION>
TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Statements of Operations
(Expressed in U.S. Dollars)
======================================================================================================
                                                      Six months
                                                           ended          Year ended        Year ended
                                                         June 30         December 31       December 31
                                                            2003                2002              2001
------------------------------------------------------------------------------------------------------

<S>                                               <C>               <C>                 <C>
Sales                                             $      21,903     $       471,473     $     101,107

Cost of sales                                            31,798             288,014            33,456
------------------------------------------------------------------------------------------------------

Gross profit (loss)                                      (9,895)            183,459            67,651
------------------------------------------------------------------------------------------------------

Selling, general and administrative expenses             53,451             727,150           103,912

Research and development expenses                           365             910,417           329,642

Interest and financing expenses                          21,955              43,231            21,086

Depreciation of property, plant and equipment            10,812              21,770             9,356

Equity in net loss of Sinovac                            24,134             118,812            18,578
------------------------------------------------------------------------------------------------------

                                                        110,717           1,821,380           482,574
------------------------------------------------------------------------------------------------------

Operating (loss)                                       (120,612)         (1,637,921)         (414,923)

Gain on disposal of drug licenses                       240,618             502,078           741,528

Dilution gain                                            98,698                   -                 -

Other income                                              1,101               4,458             3,210
------------------------------------------------------------------------------------------------------

Income (loss) before income taxes                       219,805          (1,131,385)          329,815

Deferred Income taxes                                    47,930                   -           114,970
------------------------------------------------------------------------------------------------------

Net income (loss) for the period                  $     171,875     $    (1,131,385)    $     214,845
======================================================================================================
</TABLE>

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















                                       F-5
<PAGE>



<TABLE>
<CAPTION>
TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Statements of Cash Flows
(Expressed in U.S. Dollars)
==============================================================================================================
                                                              Six months
                                                                   ended          Year ended        Year ended
                                                                 June 30         December 31       December 31
                                                                    2003                2002              2001
--------------------------------------------------------------------------------------------------------------

<S>                                                       <C>               <C>                 <C>
Cash flows from (used in)
  operating activities
  Net income (loss) for the period                        $     171,875     $    (1,131,385)    $     214,845
  Adjustments for items not involving cash:
  - depreciation of property, plant and equipment                38,063             110,817            26,873
  - provision for doubtful account                                6,160               6,292            21,890
  - imputed interest                                              6,078              12,186             9,768
  - non-cash compensations                                            -             582,285                 -
  - loss on disposal of property, plant and equipment               210                 481                 -
  - gain on disposal of drug licenses                          (240,618)           (502,078)         (741,528)
  - dilution gain                                               (98,698)                  -                 -
  - equity in net loss of Sinovac                                24,134             118,812            18,578
  - deferred income taxes                                        47,930                   -           114,970
--------------------------------------------------------------------------------------------------------------

                                                                (44,866)           (802,590)         (334,604)
  Change in non-cash working capital items:
  - accounts receivable and others                               11,238              19,920           724,158
  - inventories                                                 (12,627)             14,756            45,821
  - accounts payable and accrued liabilities                      5,107             639,066           499,582
--------------------------------------------------------------------------------------------------------------

Net cash from (used in) operating activities                    (41,148)           (128,848)          934,957
--------------------------------------------------------------------------------------------------------------

Cash flows from (used in)
  financing activities
  Loans proceeds                                                  4,227             245,532           869,565
  Advances from (repayment to) related parties                   18,946            (213,496)         (518,316)
--------------------------------------------------------------------------------------------------------------

Net cash from financing activities                               23,173              32,036           351,249
--------------------------------------------------------------------------------------------------------------

Cash flows used in investing activities
  Acquisition of property, plant and equipment                        -             (10,777)       (1,310,247)
--------------------------------------------------------------------------------------------------------------

Decrease in cash and cash equivalents                           (17,975)           (107,589)          (24,041)

Cash and cash equivalents,
 beginning of period                                             35,238             142,827           166,868
--------------------------------------------------------------------------------------------------------------

Cash and cash equivalents,
 end of period                                            $      17,263     $        35,238     $     142,827
==============================================================================================================
</TABLE>

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









                                       F-6
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


1.   Nature of Business
-----------------------

     The Company was  incorporated  under the laws of China on February 9, 1993.
     Its business is in the research and  development,  production  and sales of
     pharmaceutical products in China.


2.   Currency of Presentation
-----------------------------

     These financial statements have been prepared in Renminbi ("RMB"), which is
     the currency of the Company's functional and reporting currency. US dollars
     equivalent  figures presented in these financial  statements are determined
     by  translating  the amounts at the exchange rate of US$1 = RMB8.28 for the
     convenience of the readers.


3.   Significant Accounting Policies
------------------------------------

     (a)  Principles of Accounting

          These  financial  statements  have been  prepared in  accordance  with
          accounting  principles  generally  accepted  in the  United  States of
          America.

     (b)  Accounting Estimates

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

     (c)  Cash and Cash Equivalents

          Cash equivalents usually consist of highly liquid investments that are
          readily  convertible  to cash with  maturities of three months or less
          when purchased.  As at June 30, 2003, December 31, 2002 and 2001, cash
          and cash equivalents consist of cash only.

     (d)  Inventories

          Inventories  are  stated  at the  lower of cost or  market  with  cost
          generally  determined on a first-in,  first-out  basis.  Cost includes
          direct material, direct labour and manufacturing overheads.






                                       F-7
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


3.   Significant Accounting Policies (continued)
------------------------------------

     (e)  Property, Plant and Equipment

          Property,   plant  and  equipment  are  recorded  at  cost,  including
          capitalized interest and internal  engineering costs.  Depreciation of
          property,   plant  and  equipment  generally  is  computed  using  the
          straight-line method based on the estimated useful lives of the assets
          as follows:

            Land-use rights                               28 years
            Plant and building                            30 years
            Machinery and equipment                       8 - 10 years
            Motor vehicles                                5 years
            Office equipment and furniture                5 years

          Property,  plant and  equipment are reviewed for  impairment  whenever
          events or changes in  circumstances  indicate that the carrying amount
          of an asset (asset group) may not be  recoverable.  An impairment loss
          would be recognized  when the carrying  amount of an asset exceeds the
          estimated  undiscounted  future cash flows expected to result from the
          use of the  asset  and its  eventual  disposition.  The  amount of the
          impairment  loss to be  recorded  is  calculated  by the excess of the
          asset's  carrying  value over its fair value.  Fair value is generally
          determined using a discounted cash flow analysis.

          The Company has adopted  Statement of Financial  Accounting  Standards
          ("SFAS") No. 144. This statement  retains the requirements of SFAS No.
          121  "Accounting  for the  Impairment  of  Long-Lived  Assets  and for
          Long-Lived  Assets to be Disposed  Of " to  recognize  impairments  on
          Property,  Plant and Equipment,  but removes  goodwill from its scope.
          The  adoption  of SFAS No. 144 does not have  impact on the  Company's
          financial statements.

     (f)  Income Taxes

          The Company has adopted  Statement of Financial  Accounting  Standards
          ("SFAS") No. 109,  "Accounting  for Income Taxes",  which requires the
          Company  to  recognize  deferred  tax  liabilities  and assets for the
          expected  future tax  consequences of events that have been recognized
          in the  Company's  financial  statements  or  tax  returns  using  the
          liability  method.  Under this method,  deferred tax  liabilities  and
          assets are determined based on the temporary  differences  between the
          financial  statements  and tax bases of assets and  liabilities  using
          enacted tax rates in effect in the years in which the  differences are
          expected to reverse.

     (g)  Revenue Recognition

          Sales revenue is recognized upon the delivery of goods to customers.




                                       F-8
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


3.   Significant Accounting Policies (continued)
------------------------------------

     (h)  Advertising Expenses

          Advertising  costs are  expensed as incurred  and  included in selling
          expenses.  There were no advertising costs incurred for the six months
          ended June 30, 2003, years ended December 31, 2002 and 2001.

     (i)  Research and Development

          Research and development  costs are charged to operations as incurred.
          Research and  development  costs are listed as a separate line item on
          the Company's statements of operations.

     (j)  Foreign Currency Transactions

          The Company's functional currency is Renminbi.  The Company translates
          foreign  currency  transactions  into its  functional  currency in the
          following manner:

          At the transaction date, each asset, liability, revenue and expense is
          translated  into the  functional  currency by the use of the  exchange
          rate in effect at that  date.  At the  period  end,  foreign  currency
          monetary assets,  and liabilities are re-evaluated into the functional
          currency by using the  exchange  rate in effect at the  balance  sheet
          date. The resulting  foreign exchange gains and losses are included in
          operations.

     (k)  Stock-based Compensation

          The Company  adopted the  disclosure-only  provisions  of Statement of
          Financial  Accounting  Standards No. 123 (SFAS 123),  "Accounting  for
          Stock-based Compensation".  SFAS 123 encourages, but does not require,
          companies to adopt a fair value based method for  determining  expense
          related  to  stock-based   compensation.   The  Company  accounts  for
          stock-based  compensation  issued to employees and directors using the
          intrinsic value method as prescribed under Accounting Principles Board
          Opinion (APB) No. 25,  "Accounting  for Stock Issued to Employees" and
          related  Interpretations.  The  Company  does not have  stock  options
          outstanding  as at June 30, 2003 and the years ended December 31, 2002
          and 2001.

     (l)  Comprehensive Income

          The  Company  has  adopted  SFAS  No.  130,  "Reporting  Comprehensive
          Income",  which  establishes  standards  for  reporting and display of
          comprehensive  income,  its components and accumulated  balances.  The
          Company  is   disclosing   this   information   on  its  Statement  of
          Stockholders'  Equity.  Comprehensive  income  comprises equity except
          those  resulting  from  investments  by owners  and  distributions  to
          owners.




                                       F-9
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


3.   Significant Accounting Policies (continued)
------------------------------------

     (m)  Earnings Per Share

          Earnings per share number is not presented as the Company is a private
          corporation.

     (n)  Financial Instruments and Concentration of Credit Risks

          Fair value of financial  instruments  are made at a specific  point in
          time,  based on  relevant  information  about  financial  markets  and
          specific financial  instruments.  As these estimates are subjective in
          nature,  involving uncertainties and matters of significant judgement,
          they cannot be determined with  precision.  Changes in assumptions can
          significantly affect estimated fair values.

          The carrying value of cash and cash equivalents, trade receivables and
          other  receivables,   loans  payable,  accounts  payable  and  accrued
          liabilities  approximate  their fair value  because of the  short-term
          nature of these instruments.

          The Company is operating in China,  which may give rise to significant
          foreign currency risks from  fluctuations and the degree of volatility
          of foreign  exchange rates between US dollars and the Chinese currency
          RMB.  Financial  instruments that  potentially  subject the Company to
          concentration  of credit risks consist  principally  of cash and trade
          receivables,  the  balances of which are stated on the balance  sheet.
          The  Company  places  its  cash  in  high  credit  quality   financial
          institutions. The Company's customers are primarily pharmaceutical and
          biotechnology  companies.  Ongoing  credit  evaluations  of customers'
          financial  condition are performed and the Company maintains provision
          for potential credit losses if necessary. The Company does not require
          collateral or other security to support financial  instruments subject
          to credit risks.  The Company is not subject to  significant  interest
          risks.

     (o)  Accounting for Derivative Instruments and Hedging Activities

          The  Company  has  adopted  the  Statement  of  Financial   Accounting
          Standards No. 133 (SFAS 133),  Accounting for  Derivative  Instruments
          and Hedging  Activities,  which  requires  companies to recognize  all
          derivatives  contracts as either assets or  liabilities in the balance
          sheet and to measure  them at fair value.  If certain  conditions  are
          met, a  derivative  may be  specifically  designated  as a hedge,  the
          objective of which is to match the timing of gain or loss  recognition
          on the hedging  derivative  with the recognition of (i) the changes in
          the fair value of the hedged asset or liability that are  attributable
          to the  hedged  risk  or  (ii)  the  earnings  effect  of  the  hedged
          forecasted  transaction.  For a derivative not designated as a hedging
          instrument,  the gain or loss is recognized in income in the period of
          change.

          The Company has not entered into derivative  contracts either to hedge
          existing  risks or for  speculative  purposes.  The  Company  does not
          anticipate  that the adoption of the statement will have a significant
          impact on its financial statements.


                                      F-10
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


3.   Significant Accounting Policies (continued)
------------------------------------

     (p)  New Accounting Pronouncements

          In December  2002,  the  Financial  Accounting  Standard  Board issued
          Statement  of  Financial  Accounting  Standard  No.  148  (SFAS  148),
          Accounting for  Stock-based  Compensation - Transition and Disclosure.
          SFAS 148 amends SFAS 123, Accounting for Stock-based Compensation,  to
          provide  alternative  methods for  voluntary  transition to SFAS 123's
          fair value method of accounting for stock-based employee compensation.
          SFAS  148 also  requires  disclosure  of the  effects  of an  entity's
          accounting policy with respect to stock-based employee compensation on
          reported net income (loss) and earnings (loss) per share in annual and
          interim financial  statements.  SFAS 148 is effective for fiscal years
          beginning  after  December 15, 2002. The adoption of SFAS 148 does not
          have an impact on the Company's financial statements.

          In November 2002, the Financial  Accounting Standard Board issued FASB
          Interpretation No. 45 (FIN 45), Guarantor's  Accounting and Disclosure
          Requirements  for  Guarantees,   Including   Indirect   Guarantees  of
          indebtedness of Others - An  Interpretation  of FASB Statements of No.
          5, 57 and 107 and  rescission  of FASB  Interpretation  No.  34.  This
          interpretation clarifies the requirements for a guarantor's accounting
          for and disclosures of certain guarantees issued and outstanding.  FIN
          45 also  clarifies the  requirements  related to the  recognition of a
          liability  by a guarantor at the  inception of a guarantee.  FIN 45 is
          effective for  guarantees  entered into or modified after December 31,
          2002.  The  adoption of FIN 45 does not have  impact on the  Company's
          financial statements.

          In January 2003, the Financial  Accounting  Standard Board issued FASB
          Interpretation  No. 46 (FIN 46),  Consolidation  of Variable  Interest
          Entities - An Interpretation of Accounting Research Bulletin (ARB) No.
          51.  This  interpretation  addressed  the  requirements  for  business
          enterprises  to  consolidate   related  entities  in  which  they  are
          determined to be the primary economic beneficiary as a result of their
          variable economic interest.  The interpretation is intended to provide
          guidance in judging  multiple  economic  interests in an entity and in
          determining  the  primary  beneficiary.  The  interpretation  outlines
          disclosure  requirements  for VIEs in  existence  prior to January 31,
          2003,  outlines  consolidation  requirements  for VIEs  created  after
          January  31,  2003.  The  company has  reviewed  its major  commercial
          relationship and its overall  economic  interests with other companies
          consisting of related parties, manufacture vendors, loan creditors and
          other  suppliers  to  determine  the extent of its  variable  economic
          interest  in  these  parties.   The  review  has  not  resulted  in  a
          determination  that the  Company  would be  judged  to be the  primary
          economic  beneficiary  in any  material  relationships,  or  that  any
          material  entities would be judged to be Variable Interest Entities of
          the Company.




                                      F-11
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


3.   Significant Accounting Policies (continued)
------------------------------------

     (p)  New Accounting Pronouncements (continued)

          In May 2003, the FASB issued SFAS No. 149,  Amendment of Statement 133
          on  Derivative  Instruments  and  Hedging  Activities.  SFAS  No.  149
          addresses  certain  accounting  issues related to hedging activity and
          derivative  instruments  embedded in other contracts.  In general, the
          amendments  require  contracts with comparable  characteristics  to be
          accounted for similarly.  In addition,  SFAS No. 149 provides guidance
          as to when a financing component of a derivative must be given special
          reporting  treatment in the  statement of cash flows.  SFAS No. 149 is
          effective for contracts  entered into or modified after June 30, 2003.
          The adoption of SFAS No. 149 does not have an impact on the  Company's
          financial statements.

          In May 2003, the Financial  Accounting Standards Board (FASB) approved
          SFAS No.  150,  Accounting  for  Certain  Financial  Instruments  with
          Characteristics   of  Both  Liabilities  and  Equity.   SFAS  No.  150
          establishes  standards  for  how to  classify  and  measure  financial
          instruments with  characteristics  of both liabilities and equity.  It
          requires  financial  instruments  that  fall  within  its  scope to be
          classified  as  liabilities.  SFAS No. 150 is effective  for financial
          instruments  entered  into or  modified  after May 31,  2003 and,  for
          pre-existing  financial  instruments,  as of July 1, 2003. The Company
          does not have any financial  instruments  that fall under the guidance
          of SFAS No. 150 and,  therefore,  the adoption does not have an effect
          on the Company's financial statements.


4.   Inventories
----------------

                                 June 30     December 31    December 31
                                    2003            2002           2001
     -------------------------------------------------------------------

     Raw materials             $  14,275       $  14,048      $  26,868
     Finished goods               67,200          54,800         56,736
     -------------------------------------------------------------------

                               $  81,475       $  68,848      $  83,604
     ===================================================================













                                      F-12
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


5.   Property, Plant and Equipment
----------------------------------

<TABLE>
<CAPTION>
                                                                    June 30, 2003
                                                    ----------------------------------------------
                                                             Cost      Accumulated       Net book
                                                                      Amortization          Value
     ---------------------------------------------------------------------------------------------

<S>                                                   <C>               <C>          <C>
     Land-use rights                                  $   226,577       $   17,533   $    209,044
     Plant and building                                 1,380,103           62,849      1,317,254
     Machinery and equipment                              497,373          146,235        351,138
     Motor vehicles                                        48,175           43,309          4,866
     Office equipment and furniture                        35,964           23,308         12,656
     ---------------------------------------------------------------------------------------------

                                                      $ 2,188,192       $  293,234   $  1,894,958
     =============================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                  December 31, 2002
                                                    ----------------------------------------------
                                                             Cost      Accumulated       Net book
                                                                      Amortization          Value
     ---------------------------------------------------------------------------------------------

<S>                                                   <C>               <C>          <C>
     Land-use rights                                  $   226,577       $   13,487   $    213,090
     Plant and building                                 1,380,103           41,899      1,338,204
     Machinery and equipment                              497,373          118,659        378,714
     Motor vehicles                                        48,175           43,268          4,907
     Office equipment and furniture                        38,422           22,565         15,857
     ---------------------------------------------------------------------------------------------
                                                      $ 2,190,650       $  239,878   $  1,950,772
     =============================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                  December 31, 2001
                                                    ----------------------------------------------
                                                             Cost      Accumulated       Net book
                                                                      Amortization          Value
     ---------------------------------------------------------------------------------------------

<S>                                                   <C>               <C>          <C>
     Land-use rights                                  $   226,577       $    5,395   $    221,182
     Plant and building, construction in progress       1,380,103                -      1,380,103
     Machinery and equipment                              491,202           63,840        427,362
     Motor vehicles                                        48,175           43,185          4,990
     Office equipment and furniture                        37,018           19,361         17,657
     ---------------------------------------------------------------------------------------------
                                                      $ 2,183,075       $  131,781   $  2,051,294
     =============================================================================================
</TABLE>

     Depreciation  for the six months ended June 30, 2003,  years ended December
     31, 2002 and 2001 are $55,568, $110,817 and $26,873 respectively.







                                      F-13
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


6.   Investment in Sinovac Biotech Co., Ltd. ("Sinovac")
--------------------------------------------------------

     In April 2001,  the Company  acquired a 24% interest in Sinovac,  a company
     incorporated  in China and operating in the business of  manufacturing  and
     marketing pharmaceutical products. Consideration for the purchase consisted
     of the  contribution  of  its  inactive  Hepatitis  A  drug  license.  This
     transaction was recorded as an investment and a gain on disposition of drug
     license in the amount of $741,528.

     In April 2002,  the Company  transferred  2.68% interest of Sinovac to Sino
     Pharmaceutics  Co., Ltd.  ("Sino Pharma") as a service  compensation.  This
     transaction  was recorded as a compensation  expense of $105,535 and a gain
     on the disposition of investment of $25,328.

     During the six-month period ended June 30, 2003, the Company's  interest of
     Sinovac was diluted to 15.72% due to further  share  issuances  by Sinovac.
     Asae result of this event, the Company recorded a dilution gain of $98,698.


7.   Accounts Payable and Accrued Liabilities
---------------------------------------------

<TABLE>
<CAPTION>
                                                     June 30     December 31     December 31
                                                        2003            2002            2001
     ----------------------------------------------------------------------------------------

<S>                                              <C>            <C>             <C>
     Trade payables                              $   579,401    $    587,923    $    653,267
     Payroll and employee benefits                   110,245          97,494          71,413
     Bonuses                                               -         753,610          88,517
     Sundry                                           16,344          15,466           2,230
     ----------------------------------------------------------------------------------------

                                                 $   705 990    $  1,454,493    $    815,427
     ========================================================================================
</TABLE>


8.   Loans Payable
------------------

<TABLE>
<CAPTION>
                                                     June 30     December 31     December 31
                                                        2003            2002            2001
     ----------------------------------------------------------------------------------------

<S>                                              <C>            <C>             <C>
     Loan payable to China High Technology
     Co., Ltd.: RMB 9,000,000 (2002 - RMB
     9,000,000, 2001 - RMB 7,200,000), no
     stated interest rate and due on demand      $ 1,086,957    $  1,086,957    $    869,565

     Employees loan: RMB 268,000 (2002 -
     RMB 233,000, 2001 - Nil) bearing interest
     at 12% per annum and due on demand               32,367          28,140               -
     ----------------------------------------------------------------------------------------

                                                 $ 1,119,324    $  1,115,097    $    869,565
     ========================================================================================
</TABLE>




                                      F-14
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


9.   Income Taxes
-----------------

     The Company is subject to income  taxes in China on its  taxable  income as
     reported in its  statutory  accounts at a tax rate in  accordance  with the
     relevant income tax laws applicable to sino-foreign investment enterprises.
     Pursuant to the same income tax laws, the Company is exempt from income tax
     for two years starting from its first  profit-making year followed by a 15%
     corporation income tax rate for the next three years.

     The tax effect of  temporary  differences  that give rise to the  Company's
     deferred tax assets (liabilities) are as follows:

                                         June 30    December 31    December 31
                                            2003           2002           2001
     ---------------------------------------------------------------------------

     Tax losses carried forward     $    416,500   $    456,500   $     83,200
     Less: valuation allowance          (416,500)      (408,070)       (35,270)
     ---------------------------------------------------------------------------

     Total deferred tax assets      $          -   $     47,930   $     47,930
     ===========================================================================

     The Company  evaluates its valuation  allowance  requirements  on an annual
     basis based on projected future operations.  When circumstances  change and
     this causes a change in management's  judgement about the  realizability of
     deferred tax assets, the impact of the change on the valuation allowance is
     generally reflected in current income.

     A  reconciliation  of the statutory  income tax to the Company's  effective
     income tax rate for the six  months  ended  June 30,  2003 and years  ended
     December 31, 2002 and 2001 are as follows:

                                          June 30    December 31    December 31
                                             2003           2002           2001
     ---------------------------------------------------------------------------

     Federal statutory income tax rate        33%            33%            33%
     Loss on equity accounted investment       4%             -              2%
     Non-taxable gain                        (15%)            -              -
     Benefit of loss carry forward             -            (33%)            -
     ---------------------------------------------------------------------------

     Effective income tax rate                22%             -             35%
     ===========================================================================











                                      F-15
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


10.  Related Party Transactions
-------------------------------

     Related party transactions that have not been disclosed  elsewhere in these
     financial statements are as follows:

     (a)  Amounts  due to  related  parties  are  unsecured  and  consist of the
          following:

<TABLE>
<CAPTION>
                                                       June 30    December 31    December 31
                                                          2003           2002           2001
          -----------------------------------------------------------------------------------

<S>                                                 <C>           <C>            <C>
          o    Advances from Sinovac, bearing
               interest at 5% per annum,
               unsecured, with no stated terms
               of repayment                         $  677,487    $   982,175    $ 1,193,918

          o    Advances from Sino Pharma, the
               majority shareholder, non-interest
               bearing                                       -        243,738        243,727
          -----------------------------------------------------------------------------------

                                                    $  677,487    $ 1,225,913    $ 1,437,645
          ===================================================================================
</TABLE>

     (b)  The Company  entered  into the  following  transactions  with  related
          parties:

<TABLE>
<CAPTION>
                                                 Six months          Year          Year
                                                      Ended         Ended         Ended
                                                    June 30   December 31   December 31
                                                       2003          2002          2001
          ------------------------------------------------------------------------------

<S>                                             <C>           <C>           <C>
          Sales to Sinovac                      $         -   $   403,698   $         -

          Rental income from Tangshan Yikang
          Biomedical Co., Ltd., a shareholder   $     1,063   $     2,127   $     2,127

          Interest expenses:
          - Sino Pharma                         $     6,078   $    12,186   $     9,768
          - Other shareholders of Sinovac       $    18,189   $    35,223   $    43,208
          ------------------------------------------------------------------------------
</TABLE>

     (c)  During the fiscal year 2002, the Company  transferred  its Recombinant
          Inactive  Hepatitis A&B drug license to Beijing Keding Investment Co.,
          Ltd.  ("Beijing  Keding"),  a corporation  controlled by the president
          (who is also a director) and two senior  officers of the Company.  The
          Company  recorded  compensation  expenses and a gain on disposition of
          drug license of  $476,750,  being the  estimated  fair market value of
          drug license.

     (d)  During  the six months  ended  June 30,  2003,  the  Company  sold its
          Influenza  Virus  HA  Vaccine  drug  license  to  Sinovac  for cash of
          $353,904,  its estimated fair market value.  The Company  recognized a
          gain of $240,618 as a result of this transaction.




                                      F-16
<PAGE>



TANGSHAN YIAN BIOLOGICAL
------------------------
ENGINEERING CO., LTD.
---------------------

Notes to Financial Statements
June 30, 2003, December 31, 2002 and 2001
(Expressed in U.S. Dollars)
--------------------------------------------------------------------------------


10.  Related Party Transactions (continued)
-------------------------------

     (e)  Pursuant to an  operating  lease  agreement,  the Company has leased a
          laboratory to Sinovac for an annual lease of $176,400 (RMB 1,460,400).
          The lease will commence on July 1, 2003 and has a term of five years.

     (f)  On June 30, 2003, the Company issued shares for settlement of the debt
          owed to a  shareholder  and  certain  officers  and  employees  of the
          Company totalling $997,348.


11.  Segmented Information
--------------------------

     The Company  operates  exclusively  in the biotech  sector.  The  Company's
     business is considered as operating in one segment based upon the Company's
     organizational  structure,  the way in which the  operation  is managed and
     evaluated,  the availability of separate  financial results and materiality
     considerations.  All the Company's  assets are located in China and all the
     revenues are generated in China.


12.  Non-Cash Transactions
--------------------------

     (a)  In 2001, the Company contributed  Inactive Hepatitis A drug license to
          Sinovac in exchange for ownership interest in Sinovac (see Note 6).

     (b)  In 2002, the Company transferred the ownership interest of Recombinant
          Hepatitis A&B drug license to Beijing Keding (see Note 10c).

     (c)  In 2003, the Company  issued shares for debt  settlement in the amount
          of $997,348 (see Note 10f)


13.  Subsequent Event
---------------------

     On September 24, 2003, the Company  disposed of all its interest in Sinovac
     to an  individual  related  to a  director  of  the  Company  for  cash  of
     approximately  $1.8  Million.  The  proceeds  are due  one  year  from  the
     completion date.













                                      F-17


</TEXT>
</DOCUMENT>
