Operations and Facilities.

Although TCM is thousands of years old, we believe that our product manufacturing and procedures are the most modern and up-to-date available. Bohai’s operations are conducted in the city of Yantai in Shandong Province in a state-of-the-art 18,000 square-meter facility that meets or exceeds the latest Good Manufacturing and Quality Management Practice standards, referred to as “GMP” in China.

In March 2009 we completed a GMP review which included examination of 225 items including development technology, production, quality assurance, quality control, material handling and engineering. As a result of that review, we were re-certified for a new five-year period. Our advanced and mechanized facilities utilize controlled, clean-room procedures with sophisticated water filtration and materials processing systems. In our annual operations, we process 800 tons of herbal plants to extract, isolate and purify the compounds used in its medicines and health supplements. The manufacturing staff consists of approximately 200 production employees and approximately 20 quality control inspectors as of June 2010.

As of June 2010, we had approximately 600 employees, including approximately 300 sales representatives, operating from 20 offices throughout China. These employees are trained in all details of each product and are encouraged to develop strong ties with physicians, hospitals and pharmacies in their local areas. More than 50% of our workforce is engaged in sales and distribution activities.