Edgar Filing: AIDA PHARMACEUTICALS INC

March 2007, 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 March 31, 2006

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 May 8, 2007, there were 27,000,000 shares of $.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. Unaudited Financial Statements Condensed Consolidated Balance Sheets as of March 31, 2007 (Unaudited) and December 31, 2006 Condensed Consolidated Statements of Income (Loss) and Comprehensive Income for the Three Months Ended March 31, 2007 and 2006 (Unaudited) Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006 (Unaudited) Notes to Condensed Consolidated Financial Statements as of March 31, 2007 (Unaudited) Item 2. Management’s Discussion and Analysis of Financial Condition or Plan of Operation Item 3. Controls and Procedures	4 5 6 8 22 32
PART II.	Other Information Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K	32 32 32 32 32 33 33
	Signatures	34

(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
		March 31, 2007 (Unaudited)		December 31, 2006

CURRENT ASSETS
Cash and cash equivalents	$	4,930,714	$	6,116,816
Restricted cash		2,002,340		1,983,237
Accounts receivable, net of allowance for doubtful accounts of $670,011 and $639,208 as of March 31, 2007 and December 31, 2006, respectively		9,442,799		13,777,571
Notes receivable, net of discount of $53,267 and $70,717 as of March 31, 2007 and December 31, 2006, respectively		6,055,325		2,714,234
Inventories		3,218,672		2,806,945
Due from related parties		18,784		41,462
Deferred taxes		365,448		295,714
Other receivables, prepaid expenses, and other assets		191,124		146,694
Marketable securities		-		362,758
Due from employees		404,871		264,182
Prepayments for goods		140,712		118,327
Total current assets		26,770,789		28,627,940

Plant and equipment, net		13,938,539		13,977,611
Land use rights, net		3,764,031		3,747,225
Construction in progress		36,788		28,430
Patents, net		5,676,506		5,724,000
Long-term investments		295,749		295,749
Deposits		1,560,785		953,267
Deferred taxes		466,518		456,222
Total long-term assets		25,738,916		25,182,504

TOTAL ASSETS	$	52,509,705	$	53,810,444

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable	$	2,520,797	$	3,332,174
Other payables and accrued liabilities		1,895,835		2,150,079
Advance for research and development		241,454		251,050
Short-term debt		23,109,888		23,915,452
Current portion of long-term debt		3,717,380		3,717,380
Due to related parties		82,598		27,063
Taxes payable		148,558		352,998
Customer deposits		767,810		335,391
Due to employees		340,283		122,440
Deferred taxes		109,495		172,844
Total current liabilities		32,934,098		34,376,871

LONG-TERM LIABILITIES
Notes payable		1,920,934		1,920,934
Advance for research and development		1,075,742		1,065,478
Deferred taxes		940,733		917,530
Minority interests		5,277,303		5,177,413
Total long-term liabilities		9,214,712		9,081,355

TOTAL LIABILITIES		42,148,810		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 March 31, 2007 and December 31, 2006		27,000		27,000
Additional paid-in capital		5,204,352		5,204,352
Retained earnings (the restricted portion is $998,149 at March, 31, 2007 and at December 31, 2006)		4,429,876		4,590,079
Accumulated other comprehensive income		699,667		530,787

Total Shareholders’ Equity		10,360,895		10,352,218
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	52,509,705	$	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 (LOSS) AND COMPREHENSIVE INCOME

(UNAUDITED)


		Three Months Ended March. 31, 2007		Three Months Ended March. 31, 2006

REVENUES	$	5,296,176	$	5,331,827

COST OF GOODS SOLD		(2,972,516)		(2,983,114)

GROSS PROFIT		2,323,660		2,348,713

Research and development		132,198		1,600

Selling and distribution		988,101		1,680,669

General and administrative		1,176,049		647,210

INCOME FROM OPERATIONS		27,312		19,234

OTHER INCOME (EXPENSE)

Interest expense, net		(342,948)		(269,605)

Government grants		49,723		459,993

Gain on sale of marketable securities		118,626		-

Other expense, net		(29,968)		(31,145)

(LOSS) INCOME FROM OPERATIONS BEFORE INCOME TAXES		(177,255)		178,477

INCOME TAX BENEFIT (EXPENSE)		66,830		(97,143)

(LOSS) INCOME FROM OPERATIONS BEFORE MINORITY INTERESTS		(110,425)		81,334

MINORITY INTERESTS		(49,779)		(66,798)

NET (LOSS) INCOME		(160,204)		14,536

OTHER COMPREHENSIVE INCOME

Foreign currency translation gain		275,513		67,233

Income taxes related to other comprehensive income		(72,735)		(23,532)

OTHER COMPREHENSIVE INCOME, NET OF INCOME TAXES		202,778		43,701

COMPREHENSIVE INCOME	$	42,574	$	58,237

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

Net (loss) income per common share, basic and diluted	$	(0.01)	$	0.00

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 Three Months Ended March 31,
		2007		2006
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(160,204)	$	14,536
Adjustments to reconcile net (Loss)income to net cash provided by operating activities:
Depreciation and amortization		533,463		385,226
Provision for doubtful accounts		30,803		-
Amortization of discount on notes receivable		(21,109)		-
Deferred taxes		(120,177)		65,091
Gain on sale of marketable securities		(118,626)		-
Minority interests’ share of net income		49,779		66,798

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

(Increase) Decrease In:
Accounts receivable		4,303,968		440,175
Inventories		(411,727)		(1,006,797)
Other receivables, prepaid expenses, and other assets		(44,428)		46,757
Prepayments for goods		(22,385)		(230,718)

Increase (Decrease) In:
Accounts payable		(811,377)		1,678,111
Other payables and accrued liabilities		(257,024)		(502,025)
Advance for research and development		667		-
Due to employees		217,844		(375,564)
Taxes payable		(204,440)		33,291
Customer deposits		432,420		(209,723)
Net cash provided by operating activities		3,397,447		405,158

CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash		(19,104)		134,601
Purchases of plant and equipment		(274,144)		(201,395)
Purchases of construction in progress		(8,358)		(10,987)
Purchase of land use right		-		(393,117)
Deposit for long term investment		(583,356)		(124,211)
Deposit for plant and equipment		(160,420)		(56,531)
Repayment of notes receivable		566,218		104,014
Issuance of notes receivable		(3,886,201)		(13,240)
Due from employees		(140,689)		(179,320)
Proceeds from sale of marketable securities		374,751		-
Net cash used in investing activities		(4,131,303)		(740,186)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term debt		1,292,959		-
Repayments of short-term debt		(2,098,523)		(2,692,925)
Proceeds from notes payable		-		2,120,494
Advances from related parties		77,952		-
Repayment of advances to related parties		-		(36,486)
Net cash used in financing activities		(727,612)		(608,917)

DECREASE IN CASH AND CASH EQUIVALENTS		(1,461,468)		(943,945)

Effect of exchange rate changes on cash		275,366		91,901
Cash and cash equivalents at beginning of period		6,116,816		3,129,450

CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	4,930,714	$	2,277,406

SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid	$	76,913	$	6,296
Interest paid	$	360,536	$	261,327

See accompanying notes to condensed consolidated financial statements.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

SUPPLEMENTAL NON-CASH DISCLOSURES:

1. During the three months ended March 31, 2007 and 2006, $38,475 and $274,229 was transferred from deposits to patents.

2. During the three months ended March 31, 2007 and 2006, $97,783 and $0 was transferred from deposits to plant and equipment.

3. During the three months ended March 31, 2007, $3,659 of the notes receivable was discounted and $21,109 of the discount was amortized.

See accompanying notes to condensed consolidated financial statements.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 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 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 condensed consolidated 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 exercise 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 THREE MONTHS ENDED MARCH 31, 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
Major Customers	For the Three Months Ended March 31, 2007	For the Three Months Ended March 31, 2006	Accounts Receivable
Major Customers	For the Three Months Ended March 31, 2007	For the Three Months Ended March 31, 2006	March 31, 2007	December 31, 2006

Company A	-	2%	-	30%
Company B	-	10%	-	2%
Company C	-	10%	-	2%
Company D	-	21%	-	30%
Company E	26%	-	28%	-
Company F	4%	-	3%	-
Company G	2%	-	1%	-

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


	Purchase
Major Suppliers	For the Three Months Ended March 31, 2007	For the Three Months Ended March 31, 2006	Accounts Payable
Major Suppliers	For the Three Months Ended March 31, 2007	For the Three Months Ended March 31, 2006	March 31, 2007	December 31, 2006

Company H	11%	12%	6%	7%
Company I	9%	8%	3%	3%

The sole market of the Company is the PRC for the periods ended March 31, 2007 and 2006.

Of the total revenue for the three months ended March 31, 2007 and 2006, 69% and 47% was fully dependent on the patent for Etimicin Sulfate owned by the Company. The net book value of the patent is $84,967 at March 31, 2007.

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 THREE MONTHS ENDED MARCH 31, 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.


	March 31, 2007	December 31, 2006
Period end RMB: US$ exchange rate	7.7342	7.8087
Average period RMB: US$ exchange rate	7.7715	7.9395

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.

EARNINGS (LOSS) PER SHARE

Basic earning (loss) per share is computed by dividing income (loss) available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earning (loss) per share is computed similar to basic earning (loss) 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 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 March 31, 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 THREE MONTHS ENDED MARCH 31, 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 March 31, 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 March 31, 2007, the Company has no accrued interest or penalties related to uncertain tax positions.

10.

NEW ACCOUNTING PRONOUNCEMENTS

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 consolidated results of operations, financial position or cash flows.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

11.

NOTES RECEIVABLE

Notes receivable at March 31, 2007 and December 31, 2006 consist of the following:


Notes receivable from unrelated companies:
		March 31, 2007 (Unaudited)		December 31, 2006

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 April 30, 2007 (subsequently settled)		19,394		-
Due June 30, 2007		248,614		-
Due August 31, 2007		-		12,806
Due September 15, 2007		3,887,915		-
Due September 20, 2007		425,880		487,242
Due October 31, 2007		581,831		576,280
Due November 11, 2007		387,888		384,187
Due November 30, 2007		129,296		128,062
Due December 1, 2007		23,523		23,299
Due December 1, 2007		7,168		7,100
Due December 2, 2007		-		64,032
Due December 14, 2007		332,435		329,263
Due December 15, 2007		64,648		-
Subtotal		6,108,592		2,784,951
Less: Discount		53,267		70,717
Total notes receivable, net	$	6,055,325	$	2,714,234

Notes receivable are interest-free and unsecured.

In 2006, interest-free notes were provided to companies for their assistance in developing distribution channels and new markets for the Company. The Company recorded selling and distribution expense and a discount on the notes receivable of $80,095 based on the present value of the notes receivable using a 6% rate.

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 $3,659 based on the present value of the notes receivable using a 6% rate.

For the three months ended March 31, 2007, $21,109 of interest income was recognized in the accompanying consolidated statements of income (loss) from the amortization of the discount.

12.

INVENTORIES

Inventories at March 31, 2007 and December 31, 2006 consist of the following:


		March 31, 2007 (Unaudited)		December 31, 2006

Raw materials	$	1,379,107	$	1,712,850
Work-in-progress		864,557		500,997
Finished goods		975,008		593,098
Total	$	3,218,672	$	2,806,945

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

13.

PLANT AND EQUIPMENT

Plant and equipment consist of the following as of March 31, 2007 and December 31, 2006:


		March 31, 2007 (Unaudited)		December 31, 2006
At cost:
Buildings	$	9,030,469	$	8,944,313
Machinery		9,472,620		9,206,036
Motor vehicles		749,843		742,689
Office equipment		684,782		668,428
Leasehold improvements		450,213		455,356
		20,387,927		20,016,822
Less: Accumulated depreciation
Buildings		1,415,366		880,647
Machinery		3,772,031		3,504,714
Motor vehicles		476,509		445,523
Office equipment		440,739		412,530
Leasehold improvements		344,743		795,797
		6,449,388		6,039,211
Plant and equipment, net	$	13,938,539	$	13,977,611

The net book value of buildings and machinery pledged for certain bank loans at March 31, 2007 and December 31, 2006 is $4,901,979 and $4,892,624, respectively. Also see Note 17.

Depreciation expense for the three months ended March 31, 2007 and 2006 is $410,177 and $328,033, respectively.

14.

LAND USE RIGHTS


		March 31, 2007 (Unaudited)		December 31, 2006

Cost	$	3,983,389	$	3,945,385
Less: Accumulated amortization		219,358		198,160
Land use rights, net	$	3,764,031	$	3,747,225

Amortization expense for three months ended March 31, 2007 and 2006 is $19,797 and $9,620 respectively.

Amortization expense for the next five years and thereafter is as follows:


2007 within one year	$	59,388
2008		79,185
2009		79,185
2010		79,185
2011		79,185
Thereafter		3,387,903
Total	$	3,764,031

The net book value of the land use right pledged for certain bank loans at March 31, 2007 and December 31, 2006 is $1,617,379 and $1,572,139, respectively. Also see Note 17.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

15.

PATENTS


		March 31, 2007 (Unaudited)		December 31, 2006

Cost	$	6,502,563	$	6,446,568
Less: Accumulated amortization		826,057		722,568
Patents, net	$	5,676,506	$	5,724,000

Amortization expense for three months ended March 31, 2007 and 2006 is $103,489 and $47,573, respectively.

Amortization expense for the next five years and thereafter is as follows:


2007 within one year	$	247,671
2008		358,630
2009		297,904
2010		297,904
2011		295,720
Thereafter		4,178,676
Total	$	5,676,506

16.

DEPOSITS

Deposits at March 31, 2007 and December 31, 2006 consist of the following:


		March 31, 2007 (Unaudited)		December 31, 2006

Deposits for patent	$	665,227	$	703,702
Deposits for plant and equipment		160,420		97,783
Deposits for long-term investment		735,138		151,782
Total	$	1,560,785	$	953,267

During the three months ended March 31, 2007, the Company paid $160,420 as deposits to acquire certain equipment. Of the deposits, $97,783 was transferred to plant and equipment in the first quarter of 2007.

During the three months ended March 31, 2007, a deposit of $38,475 was transferred to patent.

During the three months ended March 31, 2007, the Company paid $66,173 and $517,183, as deposits to invest in Beijing Beimei Union Real Estate Development Co.,Ltd. and Jiangsu Microbial Research Institute.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT

Short-term debt as of March 31, 2007 and December 31, 2006 consists of the following:


		March 31, 2007 (Unaudited)		December 31, 2006
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. Also see Note 13.	$	646,479	$	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. Also see Note 13.		808,099		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. Also see Note 13.		905,070		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. Also see Note 13.	1,292,959	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. Also see Note 13.	775,775	768,374

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	1,292,959	1,290,623

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	1,292,959	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 5.3625% per annum, guaranteed by Xinchang Guobang Chemicals Co., Ltd.	1,292,959	-

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)	1,034,367	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.	646,479	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)

2,198,031

2,187,059

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT (CONTINUED)


	March 31, 2007 (Unaudited)	December 31, 2006

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.	1,292,959	1,290,623

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.

387,888

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. Also see Note 14.	1,829,535	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. Also see Note 14.	1,144,267	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.	258,592	270,614
Total short-term bank loans	17,099,377	17,829,100


		March 31, 2007 (Unaudited)		December 31, 2006
Notes payable to unrelated companies:
Due May 30, 2007	$	192,198	$	190,365
Due May 8, 2007 (subsequently repaid on its due date)		1,034,367		1,024,498
Due June 21, 2007		1,292,959		1,280,623
Due August 31, 2007		775,775		768,374
Due December 30, 2007, interest charged at 9.00% per annum		646,479		640,311
Due January 15, 2007 (subsequently repaid on its due date)		-		133,185
Due April 5, 2007, interest charged at 5.58% per annum (subsequently repaid on its due date)		323,240		320,156
Due April 20, 2007, interest charged at 5.58% per annum (subsequently repaid on its due date)		323,240		320,156
Due November 30, 2007, interest charged at 5.85% per annum		517,183		512,249
Due December 31, 2007, guaranteed by Donghong Taisheng Co., Ltd		258,592		256,125
Due August 28, 2007, interest charged at 6.40% per annum, guaranteed by Ge Xiaohu		646,478		640,310
Total notes payable		6,010,511		6,086,352

Total short-term debt	$	23,109,888	$	23,915,452

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

17.

SHORT –TERM DEBT (CONTINUED)

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 $3,005 and $420 for three months ended March 31, 2007 and 2006, respectively.

Restricted cash of $2,002,340 is held as collateral for the following notes payable at March, 31, 2007:


Due May 30, 2007	$	192,198
Due May 8, 2007		1,034,367
Due June 21, 2007		1,292,959
Total	$	2,519,524

18.

INCOME TAXES

(a) Corporation Income Tax (“CIT”)

In accordance with the relevant tax laws and regulations of PRC, the corporation income tax (“CIT”) rate is 33%. 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 benefit (expense) for the three months ended March 31, 2007 and 2006 are summarized as follows:


		For the Three Months Ended March 31, (Unauditetd)
		2007		2006
Current:
Provision for State Corporation Income Tax	$	(48,557)	$	(104,603)
Provision for Local Corporation Income Tax		(4,855)		(10,460)
		(53,412)		(115,063)
Deferred:
Provision for State Corporation Income Tax		109,311		16,291
Provision for Local Corporation Income Tax	$	10,931	$	1,629
		120,242		17,920

Income tax benefit (expense)	$	66,830	$	(97,143)

The Company’s income tax benefit (expense) differs from the “expected” tax benefit (expense) for the three months ended March 31, 2007 and 2006 (computed by applying the CIT rate of 26.4 percent to (loss) income before income taxes) as follows:

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

18.

INCOME TAXES (CONTINUED)


	For the Three Months Ended March 31, (Unauditetd)
		2007		2006

Computed “expected” benefit (expense)	$	46,795	$	(47,118)
Effect of tax rates difference among subsidiaries		(107,884)		(112,439)
Valuation allowance		(5,089)		(29,076)
Time difference		-		17,920
Tax exemptions		133,008		73,570

Income tax benefit (expense)	$	66,830	$	(97,143)

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


		March 31, 2007 (Unaudited)		December 31, 2006
Deferred tax assets:
Current portion:
Consulting and audit expenses	$	105,564	$	105,564
Selling and distribution expenses		167,040		102,404
Bad debt provision		49,677		41,949
Other		43,167		45,797
Subtotal		365,448		295,714

Non-current portion:
Depreciation		71,032		65,416
Impairment and amortization		51,271		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		42,307		42,307
Less: Valuation allowance		(16,390)		(11,301)
Subtotal		466,518		456,222

Total deferred tax assets		831,966		751,936

Deferred tax liabilities:
Current portion:
Sales cut-off		63,136		134,954
Unrealized gains from marketable securities		30,710		30,710
Other		15,649		7,180
Subtotal		109,495		172,844

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

18.

INCOME TAXES (CONTINUED)


Non-current portion:
Subsidy income		192,105		192,105
Depreciation		36,536		28,963
Research and development costs		35,315		35,315
Government grant		58,841		58,841
Other		37,131		35,274
Intangible assets of acquisition		580,805		567,032
Subtotal		940,733		917,530

Total deferred tax liabilities		1,050,228		1,090,374

Net deferred liabilities	$	(218,262)	$	(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 $111,217 and $301,103 at and March 31, 2007 and December 31, 2006, respectively, are included in other payables and accrued expenses in the accompanying condensed consolidated balance sheets.

19.

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 $374,751 resulting in a gain of $118,626 which was included in the condensed consolidated statement of income (loss) and comprehensive income for the three months ended March 31, 2007.

20.

COMMITMENTS AND CONTINGENCIES

(a) Lease Commitment

The Company occupies plant and office space leased from third parties. Accordingly, for the three months ended March 31, 2007 and 2006, the Company recognized rental expense for these spaces of $187,836 and $84,539 respectively.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

20.

COMMITMENTS AND CONTINGENCIES

(CONTINUED)

As of March 31, 2007, the Company has outstanding commitments with respect to non-cancelable operating leases for real estate, which fall due as follows:


Period Ending March 31,		Amount
2007	$	112,941
2008		145,158
2009		140,504
2010		140,504
2011		124,988
Thereafter		65,369
Total	$	729,464

(b) Capital Commitment

As of March 31, 2007, the Company has outstanding commitments with respect to non-cancelable long term investment, which fall due as follows:


Period Ending March 31		Amount
2007	$	8,376

As of March 31, 2007, the Company has outstanding commitments with respect to non-cancelable land use right transfer, which fall due as follows:


Period Ending March 31,		Amount
2007	$	39,238

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 compensation as of May 11, 2007. Considering the uncertainties of the legal proceeding, the Company did not record a contingent gain for this at March 31, 2007.

AIDA PHARMACEUTICALS, INC.

(FORMERLY BAS CONSULTING, INC.) AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(UNAUDITED)

20.

COMMITMENTS AND CONTINGENCIES

(CONTINUED)

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 compensation as of May 11, 2007. Considering the uncertainties of the legal proceeding, the Company did not record a contingent gain for this at March 31, 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. The Company believes the claim is without merit and plans to vigorously contend the claim. As such, there is no contingent accrual at March 31, 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, $.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.

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 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.

Products

The table below illustrates the major products produced and marketed by Aida:


Product	Produced By	Specification	Standard/Category
Etimicin Sulfate Injection Powder	Aida	50mg, 100mg, 150mg	National Category-A
Etimicin Sulfate Injection liquid	Fangyuan	1ml, 2ml, 4ml	National Category-A
Etimicin Sulfate for transfusion	Aike	100ml(with 100mg/200mg)	National Category-D

Etimicin Sulfate is the first antibiotic developed in China. It is a new generation of the amino glycoside family of antibiotics. Aida has the exclusive right to the production of this powder for injection and transfusion type and Aida’s subsidiary, Fangyuan, is one of the two producers who exclusively produce the liquid for injection. The patent is protected through 2013. It also has patent certificates from six foreign countries, including USA, Russia and United Kingdom. Etimicin sulfate is suitable for the treatment of various inflammations, such as:

(i)

Respiratory infection, such as acute bronchitis, acute onset of chronic bronchitis and pulmonary infections;

(ii)

Kidney and urinogenital infection, such as acute pyelonephritis or acute onset of chronic cystitis;

(iii)

Soft skin tissue infection; and

(iv)

Trauma and operations (before and after) preventive uses.

According to our market study, the Company believes that we have occupied more than 75% of the total market share of Etimicin in Mainland China. The Company is capable of producing a full series of Etimicin, namely, powder, transfusion and liquid. Emphasis will be placed on developing new products for the market.

Products Under Development

Major new products under developments by Aida include:

5-Deoxy-Fluorordine. Aida has developed a new liquid for injection type of drug generated from 5-fluroruacil that has displayed better anticancer results and fewer side effects. This new product has been under clinical testing since 1998. Test results showed that it has only nominal side effects, a broad spectrum and is highly effective. The Company will supplement clinical trials according to the instruction from State Food and Drug Administration in the PRC.

Apoptotic Factor (rh-Apo2l). Rh-Apo2l is being evaluated in a Phase I trial as a potential cancer therapeutic. The Phase I clinical trials were completed at the end of June, 2006. Shanghai Qiaer Bio-Technology, which is acquired by Hangzhou Aida, has applied for three patents from the Chinese government authority. One patent has been granted and the other two are currently in process. We plan to complete the second and third stage clinical trials in the second half of 2007 and get production approval in the first half of 2008.

Methylcanthatidinimide for Injection. It is another new drug being developed by Fangyuan used for cancer treatment. It is supposed to be a Category B new drug. The clinical tests are expected to be completed by the first half of 2008 and the production is expected to begin by the end of 2009.

SYO2. Hangzhou Aida has created one medicine extracted from herbal essence, called SYO2 that has exhibited bioactivity for brain anti-thrombosis. The drug, developed solely by an aligned research center of Hangzhou Aida, has shown to be safe, effective and without side effects. The Company believed that stroke patients treated by SYO2 would be significantly recovered after administration of the drug. Aida has completed SYO2’s pharmacological study and has applied for a patent. The Company plans to apply for clinical tests within the next 15 months. Hangzhou Aida intends to apply for production approval by the end of 2010.

Prodigiosin to Treat Pancreatic Cancer. Prodigiosin, a naturally occurring red pigment, is currently in pre-clinical trials for the treatment of pancreatic cancer. Aida Pharmaceuticals is developing a method to utilize the biochemical properties of Prodigiosin to create a non-invasive treatment for pancreatic cancer.

Anti-CD86 Monoclonal Antibody to Treat Immunity Diseases. Certain immunity diseases activate T-cells (a type of white blood cell), causing them to unnecessarily attack healthy tissue. Aida’s goal in developing the Anti-CD86 Monoclonal Antibody is to inhibit T-cells from harming healthy tissue.

Anti-CTLA-4 Monoclonal Antibody to Inhibit Tumor Growth. In the case of certain cancers, tumors over-express self-proteins, essentially hiding the tumor from the immune system. Aida Pharmaceuticals is in the development stages of Anti-CTLA-4 Monoclonal Antibody which may relieve the inhibition of T-cells allowing them to identify the over-expressed proteins and in turn naturally attack cancer cells without harming healthy tissues.

Aida is optimistic about the market potential of its products for the following reasons:

The demand for international quality drugs by the Chinese populace has historically increased as per capita income and the standard of living increase continually;

The sales of Hangzhou Aida’s Etimicin sulfate is estimated to grow continuously for the next three years after several years of market development;

Aida is now planning to build up international business relationship with global players gradually in future. The international markets should increase the sales growth;

Aida has achieved a monopoly status in this industry, with all types of Etimicin products and from the material chain to the final product chain. This is a significant and unique advantage of Aida and

The Company is preparing for the production of several new drugs especially the commercialization of Shanghai Qiaer Bio-Technology’s Rh-Apo2l within two years, which should boost the sales growth of Aida per annum.

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 months ended March 31, 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 March 31, 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 first quarter ended March 31, 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.

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 MARCH 31, 2007 AS COMPARED TO THREE MONTHS ENDED MARCH 31, 2006

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


	Three months Ended March 31,
	2007	2006

Revenues	100.00%	100.00%
Cost of goods sold	(56.13)%	(55.95)%
Gross margin	43.87%	44.05%
Research and development	(2.50)%	(0.03)%
Selling and distribution	(18.66)%	(31.52)%
General and administrative	(22.21)%	(12.14)%
Other income (expense)	(3.86)%	2.99%
Income taxes	1.26%	(1.82)%
Minority interests	(0.94)%	(1.25)%
Net income	(3.03)%	0.27%

Revenues, Cost of Goods Sold and Gross Profit

Revenues for the three months ended March 31, 2007 were $5,296,176 a decrease of $35,651 from $5,331,827 for the three months ended March 31, 2006. Compared to the first quarter of 2006, the decrease in sales revenues from our group of companies engaging in the production of different types of Etimicin for the first quarter of 2007 and 2006 were as follows:


		Three months ended March 31,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co., Ltd (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	1,222,032	$	1,332,506	$	(110,474)

Hainan Aike pharmaceutical Co., Ltd (“Aike”) specializes in the production of Etimicin transfusion		3,029,469		3,063,184		(33,715)

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”) specializes in the production of Etimicin injection		1,044,675		936,137		108,538

TOTAL	$	5,296,176	$	5,331,827	$	(35,651)

For the three months ended March 31, 2007, the sales of Hangzhou Aida decreased by $110,474 or 8.29% as compared to the same period of 2006. The decrease is mainly attributable to a decrease in sales of Etimicin powder product, “Aida” in Shanghai.

For the three months ended March 31, 2007, the sales of Hainan Aike decreased by $33,715 or 1.10% 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 three months ended March 31, 2007, the sales of Fangyuan increased by $108,538 or 11.59% as compared to the same period of 2006. The increase in sales is the result of the intense marketing and promotion programs of the Etimicin injection product, “Chuangcheng”.

The cost of goods sold for the first quarter ended March 31, 2007 was $2,972,516 a decrease of $10,598 from $2,983,114 for the year 2006. The increase in cost of goods sold can be analyzed as follows:


		Three months ended March 31,
Companies		2007		2006		Increase/ (Decrease)

Hangzhou Aida Pharmaceutical Co., Ltd. (“Hangzhou Aida”) specializes in the production of Etimicin powder	$	364,001	$	382,950	$	(18,949)

Hainan Aike pharmaceutical Co., Ltd. (“Aike”) specializes in the production of Etimicin transfusion		1,760,800		1,785,339		(24,539)

Changzhou Fangyuan Pharmaceutical Co., Ltd. (“Fangyuan”) specializes in the production of Etimicin injection		847,715		814,825		32,890

TOTAL	$	2,972,516	$	2,983,114	$	(10,598)

The cost of goods sold of Hangzhou Aida for the three months ended March 31, 2007 decreased by $18,949, or 4.95% compared to $382,950 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 8.29%.

The cost of goods sold of Aike for the three months ended March 31, 2007 decreased by $24,539, or 1.37% compared to 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 three months ended March 31, 2007 increased by $32,890, compared to $814,825 for the same period in 2006.The increase is mainly due to the increase in sales.

Compared to the three months ended March 31, 2006, the percentage gross profit margin for our Company decreased from 44.05% to 43.87% for the first quarter ended March 31, 2007.

Research and Developments

Compared with research and development cost of $1,600 for the first three months of 2006, research and development cost was $132,198 for the same period in 2007 representing cost incurred for the clinical trials for Rh-Apo2l by Qiaer.

Selling and Distribution

Selling and distribution expenses decreased from $1,680,669 for the three months ended March 31, 2006 to $988,101 for the same period this year, or a 41.21% decrease. Compared to the same period in 2006, our decrease in the expenses was because of the following:


		Three months ended March 31,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	386,021	$	487,849	$	(101,828)
Sale commissions		26,732		217,376		(190,644)
Office expenses		233,835		224,165		9,670
Payroll		67,940		94,424		(26,484)
Conference fees		38,386		69,188		(30,802)
Rent		9,007		68,136		(59,129)
Entertainment		79,802		53,087		26,715
Other expenses		143,268		220,208		(76,940)
Advertising expenses		3,110		246,236		(243,126)

TOTAL	$	988,101	$	1,680,669	$	(692,568)

For the three months ended March 31, 2007 traveling expenses decreased by $101,828, compared with the same period last year. The decrease was mainly explained that the Company controlled the traveling expenses by effective administration.

The sales commissions for the three months ended March 31, 2007 decreased by $190,644, compared to $217,376 for the same period last year. The decrease was due to the decrease in the sales with commissions for Fangyuan.

For the three months ended March 31, 2007 advertising expenses decreased by $243,126, compared with the same period last year. The decrease was mainly explained that the Company reduced the advertisement greatly in the first quarter this year.

General and Administrative

General and administrative expenses increased from $647,210 for the three months ended March 31, 2006 to $1,176,049 for the same period this year, representing a 81.71% increase. The details of general and administrative expenses for the three months ended March 31, 2007 and 2006 were as follows:


		Three months ended March 31,
Breakdown of Expenses		2007		2006		Increase/ (Decrease)

Traveling expenses	$	38,683	$	63,216	$	(24,533)
Office expenses		54,949		27,660		27,289
Payroll		216,356		117,810		98,546
Conference fees		6,172		0		6,172
Labor union & education & staff welfare		295,898		84,878		211,020
Amortization of intangible assets		159,449		124,089		35,360
Consultancy fees		115,163		77,407		37,756
Entertainment		73,415		36,287		37,128
Other expenses		124,537		24,752		99,785
Depreciation		86,755		56,241		30,514
Social compensation		4,672		34,870		(30,198)

TOTAL	$	1,176,049	$	647,210	$	528,839

The labor union expenses & education expenses & staff welfare of $295,898 for the three months ended March 31, 2007 increased by $211,020 from $84,878 for the same period last year. The increase was explained by the increase both in the payroll per staff and in the staff numbers. And the payroll expenses of $216,356 for the first quarter this year increased by $98,546 from $117,810 for the same period last year.

The consultancy which the Company pays consultants for their consultation service increased from $77,407 for the three months ended March 31, 2006 to $115,163 for the same period this year. The increase was mainly attributable to the increase in the consultancy fees of $40,143 from Hangzhou Aida.

Amortization of intangible assets of $159,449 for the three months ended March 31, 2007 increased by $35,360 from $124,089 for the same period last year. The increase was explained by that the increase in amortization of intangible assets of $59,399 occurred by Qiaer.

Other Income (Expenses)

Other income (expenses) decreased from $159,243 for the three months ended March 31, 2006 to $(204,567) for the same period this year. The other income (expenses) for the three months Ended March 31, 2007 and 2006 were as follows:


		Three months Ended March 31,
Breakdown of other income/(expenses)		2007		2006		Increase/ (Decrease)

Interest expense, net	$	(342,948)	$	(269,605)	$	(73,343)
Government grants		49,723		459,993		(410,270)
Gain on sale of marketable securities		118,626		-		118,626
Other (loss) income, net		(29,968)		(31,145)		1,177

TOTAL	$	(204,567)	$	159,243	$	(363,810)

Interest expense for the three months ended March 31, 2007 increased by $73,343 from $269,605 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 three months ended March 31, 2007 represented subsidies from the government was $49,723, as compared to $459,993 for the same period last year.

Gain on sale of marketable securities for the three months ended March 31, 2007 represented income from Chinese securities investment and no such income was incurred for the first quarter last year.

Income Tax

Income tax benefit (expense) was $66,830 for the three months ended March 31, 2007, as compared to income tax expense of $(97,143) 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. 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 Income (Loss)

In the first three months of 2007, our net income decreased by $174,740 to a net loss of $(160,204) from $14,536 in the same period in 2006.

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our cash balance decreased by $1,186,102 to $4,930,714 as of March 31, 2007, as compared to $6,116,816 as of December 31, 2006. The decrease was mainly attributable to cash out flow of investing and financing activities of $4,131,303 and $727,612, respectively, an increase in inventories of $411,727 and our decrease in accounts payable and other payables and accrued liabilities of $811,377 and $257,024 respectively. The decrease in cash flow was partially offset by a decrease in accounts receivable of $4,303,968. The net cash flow was a deficit $(1,186,102) for first quarter this year.

Our cash flow provided by operations amounted to $3,397,447 for the three months ended March 31, 2007, compared to $405,158 for the same period last year.

Our cash flow used in investing activities amounted to $4,131,303 of which $3,886,201 was used for the issuance of notes receivable. The Company invested $274,144 and $583,356 in the purchases of plant and equipment and deposit for long term investment respectively.

The net cash used in financing activities amounted to $727,612 of which $2,098,523 was used for the repayments of short-term debt.

At March 31, 2007, the Company had short-term debt of $23,109,888 of which $17,099,377 was short-term bank borrowings and the remaining $6,010,511 represented notes payable to unrelated parties. The interest for the short-term borrowings varied from 5.3625% to 8.37% 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 $414,378 to $(6,163,309) at March 31, 2007, as compared to $(5,748,931) at December 31, 2006. The increase in working capital deficiency at March 31, 2007 was mainly attributable to our decrease in accounts receivable of $4,334,772 and cash and cash equivalents of $1,186,102 and an increase in customer deposits of $432,420 offset by an increase in notes receivable of $3,341,091 and a decrease in accounts payable of $811,377.

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.

Code of Ethics

The company has adopted a code of ethics that applies to the company's principle executive officer, Principal financial officer, principal accounting officer or controller. The Company will provide, at no cost, a copy of the Code of Ethics to any shareholder of the Company upon receiving a written request sent to the Company’s address shown on Page 1 of this report.

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 March 31, 2007, 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 Chief Executive Officer 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.

There were no changes in our internal control over financial reporting during the quarter ended March 31, 2007 that has materially affected or is reasonably likely to affect our internal control over financial reporting.

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 compensation as of May 11, 2007.

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. The local judge has been held a court in April, 2007. The Company believes the claim is without merit and plans to vigorously contend the claim. As such, there is no contingent accrual at March 31, 2007.

Item 2. Changes in Securities

None.

Item 3. Defaults upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

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

No Reports on Form 8-K

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

Location

31.1

Certification of the Principal Executive Officer

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

Attached

31.2

Certification of the Principal Financial Officer

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

Attached

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*

Attached

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*

Attached

* 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: May 14, 2007

/s/ Biao Jin

Mr. Biao Jin

Chief Executive Officer

Date: May 14, 2007

/s/ Hui Lin

Ms. Hui Lin

Chief Financial Officer