UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2009

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

For the transition period from ____________ to __________

Commission file number: 000-32253

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

Nevada	87-0650264
(State or Other Jurisdiction of	(I.R.S. Employer of
Incorporation or Organization)	Identification No.)

16B/F Ruixin Bldg., No. 25 Gaoxin Road

Xi’an 710075 Shaanxi Province, China  

(Address of Principal Executive Offices Including Zip Code)

86-29-8822 4682

(Registrant 's telephone number, including area code)

N/A

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

Indicate by check mark whether the registrant (1) has 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  x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o  No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  o
Non-accelerated filer  o	Smaller reporting company  x

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o No  x

Number of shares of Common Stock outstanding as of September 30, 2009, was 22,341,169 shares of common stock, par value $0.018.

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC.

INDEX

PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008 (audited)	2
	Unaudited Condensed Consolidated Statements of Operations and Other Comprehensive Income for the Three and Nine Months Ended September 30, 2009 and 2008	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2009 and 2008	4
	Notes to Unaudited Condensed Consolidated Financial Statements as of September 30, 2009	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4T.	Controls and Procedures	15
PART II.	OTHER INFORMATION	16
Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Submission of Matters to a Vote of Security Holders	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
SIGNATURES		17

SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS

On one or more occasions, we may make forward-looking statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions identify forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified below, under “   Part II — Other Information, Item 1A. Risk Factors  ” and elsewhere herein. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent annual and periodic reports filed with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K and Proxy Statements on Schedule 14A.

Unless the context requires otherwise, references to “we,” “us,” “our,” the “Company” and “the Company” refer specifically to Huifeng Bio-Pharmaceutical Technology, Inc. and our subsidiaries.

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC

AND SUBSIDIARIES (“HFGB”)

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2009 (Unaudited)		December 31, 2008 (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	284,886	$	44,898
Accounts receivable, net		3,818,236		2,877,868
Inventories, net		6,224,705		4,740,230
Other assets		436,379		328,996
Assets related to discontinued operations, held for sale		-		114,577
Total Current Assets		10,764,206		8,106,569
PROPERTY AND EQUIPMENT, NET		6,015,017		5,833,557
LAND USE RIGHTS, NET		146,429		148,564
TOTAL ASSETS	$	16,925,652	$	14,088,690
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	377,868	$	520,280
Other payables and accrued expenses		767,869		390,598
Income tax and other taxes payable		508,315		538,483
Notes payable		545,513		281,579
Convertible notes payable (net of unamortized discount of $80,773 and due on December 31, 2009)		1,919,227		1,676,907
Liabilities related to discontinued operations, held for sale		-		17,128
Total Current Liabilities		4,118,792		3,424,975
COMMITMENTS AND CONTINGENCIES		-		-
EQUITY
HFGB Stockholders’ Equity
Preferred stock ($0.001 par value, 5,000,000 shares authorized, none issued and outstanding as of September 30, 2009 and December 31, 2008)		-		-
Common stock ($0.018 par value, 100,000,000 shares authorized, 22,341,169 shares issued and outstanding as of September 30, 2009 and 18,466,169 shares issued and outstanding as of December 31, 2008)		402,138		332,388
Additional paid-in capital		8,962,111		8,355,863
Retained earnings (deficit)
Unappropriated		1,008,767		(403,795	)
Appropriated		504,780		504,780
Accumulated other comprehensive income		1,396,877		1,366,800
Total HFGB Stockholders' Equity		12,274,673		10,156,036
Non-controlling Interests		532,187		507,679
TOTAL EQUITY		12,806,860		10,663,715
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	16,925,652	$	14,088,690

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

2

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC

AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

	For the Three			For the Three			For the Nine			For the Nine
	Months Ended			Months Ended			Months Ended			Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008
NET SALES	$	4,465,770		$	3,534,623		$	8,883,190		$	8,886,065
COST OF SALES		(2,994,605	)		(2,203,839	)		(5,960,465	)		(5,716,154	)
GROSS PROFIT		1,471,165			1,330,784			2,922,725			3,169,911
OPERATING EXPENSES
Selling expenses and distribution expenses		87,072			56,705			174,001			148,603
General and administrative expenses		67,967			261,727			509,373			891,488
Depreciation and amortization		6,334			5,971			19,178			15,652
Total Operating Expenses		161,373			324,403			702,552			1,055,743
INCOME FROM CONTINUING OPERATIONS		1,309,792			1,006,381			2,220,173			2,114,168
OTHER INCOME (EXPENSE)
Interest income		1,080			12,026			2,440			16,397
Interest expenses		(146,750	)		(152,508	)		(436,555	)		(438,483	)
Other income		88,383			98,058			139,860			262,623
Total Expenses, net		(57,287	)		(42,424	)		(294,255	)		(159,463	)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		1,252,505			963,957			1,925,918			1,954,705
INCOME TAX EXPENSE		(229,988	)		(187,730	)		(414,559	)		(450,498	)
NET INCOME FROM CONTINUING OPERATIONS		1,022,517			776,227			1,511,359			1,504,207
DISCONTINUED OPERATIONS
Loss from discontinued operations, net of income taxes		-			(8,361	)		(16,961	)		(24,623	)
Loss from disposal of discontinued operations		-			-			(34,446	)		-
NET LOSS FROM DISCONTINUED OPERATIONS		-			(8,361	)		(51,407	)		(24,623	)
NET INCOME		1,022,517			767,866			1,459,952			1,479,584
Less: net income (loss) attributable to non-controlling interests		(20,512	)		340			(47,390	)		(13,305	)
NET INCOME ATTRIBUTABLE TO HFGB COMMON STOCKHOLDERS		1,002,005			768,206			1,412,562			1,466,279
OTHER COMPREHENSIVE INCOME
Total other comprehensive income		13,826			155,136			30,077			729,968
Less: foreign currency translation gain attributable to non-controlling interests		(847	)		(1,957	)		(1,918	)		(53,994	)
Foreign currency translation gain attributable to HFGB common stockholders		12,979			153,179			28,159			675,974
COMPREHENSIVE INCOME ATTRIBUTABLE TO HFGB COMMON STOCKHOLDERS	$	1,014,984		$	921,385		$	1,440,721		$	2,142,253
Income per share – basic
Continuing operations	$	0.05		$	0.04		$	0.08		$	0.08
Discontinued operations		-			-			-			-
Net income per share - basic	$	0.05		$	0.04		$	0.08		$	0.08
Income per share - diluted
Continuing operations	$	0.05		$	0.04		$	0.07		$	0.07
Discontinued operations		-			-			-			-
Net income per share - diluted	$	0.05		$	0.04		$	0.07		$	0.07
Weighted average number of shares outstanding during the period - basic		20,354,212			18,466,169			19,102,432			18,466,169
Weighted average number of shares outstanding during the period - diluted		22,354,212			20,466,169			21,102,432			20,466,169

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

3

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

	For the Nine Months Ended September 30,  2009			For the Nine Months Ended September 30,  2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net income continuing operations	$	1,429,523		$	1,490,902
Net loss from discontinued operations		(16,961	)		(24,623	)
Net income		1,412,562			1,466,279
Adjusted to reconcile net income to cash provided by (used in)
operating activities, including discontinued operations:
Allowance for doubtful accounts - accounts receivable		120,466			(5,713)
Depreciation and amortization - cost of sales		447,031			319,552
Depreciation and amortization		19,178			15,652
Amortization of discount on convertible notes		115,007			115,007
Amortization of deferred financing costs		127,313			127,313
Stock option issued to a legal counsel		32,748			18,195
Stock issued to a legal counsel		37,500			-
Non-controlling interests		47,390			13,305
Loss from disposal of discontinued operations		34,446			-
Changes in operating assets and liabilities
(Increase) decrease in:
Accounts receivable		(1,592,376	)		(1,012,893	)
Inventories		(932,711	)		(1,963,774	)
Other assets		(106,508	)		774,957
Increase (decrease) in:
Accounts payable		40,571			166,021
Other payables and accrued expenses		381,868			264,368
Income tax and other taxes payable		(31,453	)		(69,883)
Due to stockholders		-			(293,137	)
Net cash provided by (used in) operating activities – continuing operations		153,032			(64.751	)
Net cash provided by operating activities – discontinued operations		16,753			24,570
Net cash provided by (used in) operating activities		169,785			(40,181	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(209,850	)		(1,438,289	)
Net cash inflow from acquisition of subsidiary		-			127,691
Net cash inflow on disposal of discontinued operations		15,612			-
Net cash used in investing activities – continuing operations		(194,238	)		(1,310,598	)
Net cash provided by investing activities – discontinued operations		-			-
Net cash used in investing activities		(194,238	)		(1,310,598	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable		263,062			252,898
Net cash provided by financing activities – continuing operations		263,062			252,898
Net cash provided by financing activities – discontinued operations		-			-
Net cash provided by financing activities		263,062			252,898
EFFECT OF EXCHANGE RATES ON CASH		703			70,335
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		239,312			(1,027,546	)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		45,574			2,219,694
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	284,886		$	1,192,148
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Income taxes	$	546,287		$	397,931
Interest expenses	$	42,013		$	179,497

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

On August 17, 2009, the Company issued 1,200,000 shares of restricted common stock having a fair value of $184,359 to a third party for the settlement of outstanding accounts payable.

On August 17, 2009, the Company issued 2,600,000 shares of restricted common stock having a fair value of $421,391 to a third party for the payment of construction costs for an office building located at Changwu County, PRC.

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

4

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION

Huifeng Bio-Pharmaceutical Technology Inc. and all of its subsidiaries (collectively “Huifeng Bio-Pharmaceutical”) or (the “Company”) are principally engaged in the manufacture of plant extracts and bio-chemical products in the People’s Republic of China (“PRC”), for sale in the PRC market, Japan and some European countries.

Huifeng Bio-Pharmaceutical was incorporated in Nevada on March 16, 2000 under the name Enternet, Inc. with headquarters in Xi’an City, PRC.

Details of the Company’s principal subsidiaries as of September 30, 2009 are described in Note 4 – Subsidiaries.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

It the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments consisting only of normal recurring accruals considered necessary to present fairly the Company's consolidated financial position at September 30, 2009 and December 31, 2008, the consolidated results of operations for the three and nine months ended September 30, 2009 and 2008, and consolidated cash flows for the nine months ended September 30, 2009 and 2008. The consolidated results for the nine months ended September 30, 2009 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2009. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2008 appearing in the Company's annual report on Form 10-K as filed with the Securities and Exchange Commission on March 31, 2009.

5

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 2 USE OF ESTIMATES

In preparing financial statements to conform with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates.

NOTE 3 PRINCIPLES OF CONSOLIDATION

The accompanying unaudited condensed consolidated financial statements as of September 30, 2009 include the financial statements of Huifeng Bio-Pharmaceutical and its 100% owned subsidiary Northwest, 100% owned subsidiary Huifeng Bio-Technic and 80.2% owned subsidiary Huifeng Pharmaceutical.

The accompanying unaudited condensed consolidated financial statements as of September 30, 2008 include the financial statements of Huifeng Bio-Pharmaceutical and its 100% owned subsidiary Northwest, 100% owned subsidiary Huifeng Bio-Technic, 70% subsidiary Huifeng Engineering and 80.2% owned subsidiary Huifeng Pharmaceutical.

The results of discontinued operations have been reported separately in the unaudited condensed consolidated financial statements and the previously reported financial statements have been reclassified.

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

NOTE 4 SUBSIDIARIES

Details of the Company’s principal consolidated subsidiaries as of September 30, 2009 were as follows:

Name	Place of Incorporation	Ownershipinterest attributable to the Company	Principal activities
Northwest Bio-Technic Inc.	British Virgin Islands	100%	Investment holding
Xi’an Huifeng Bio-Technic Inc.	The PRC	100%	Manufacturing and sale of pharmaceutical raw materials
Xi’an Huifeng Pharmaceutical Company Limited	The PRC	80.2%	Manufacturing and sale of pharmaceutical raw materials

The Company disposed its 70% owned subsidiary – Xi’an Huifeng Biochemistry Engineering Company Limited (“Huifeng Engineering”) in June 2009. See Note 16 – Discontinued Operations for further details.

NOTE 5 CASH AND CASH EQUIVALENTS

For purposes of the cash flow statements, the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents.

NOTE 6 STOCK-BASED COMPENSATION

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, “Share-Based Payment”, a revision to SFAS No. 123, “Accounting for Stock-Based Compensation”, and superseding APB Opinion No. 25, “Accounting for Stock Issued to Employees” and its related implementation guidance. In April 2008, the Company adopted SFAS 123R, using a modified prospective application transition method, which establishes accounting for stock-based awards in exchange for consultancy services. Under this application, the Company is required to record stock-based compensation expense for all awards granted after the date of adoption and unvested awards that were outstanding as of the date of adoption. SFAS 123R requires that stock-based compensation cost is measured at grant date, based on the fair value of the award, and recognized in expense over the vesting period.

Common stock, a stock option and warrants issued to other than employees or directors in exchange for services are recorded on the basis of their fair value, as required by SFAS No. 123R, which is measured as of the date required by EITF Issue 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services”. In accordance with EITF 96-18, the non-employee stock options or warrants are measured at their fair value by using the Black-Scholes option pricing model as of the earlier of the date at which a commitment for performance to earn the equity instruments is reached (“performance commitment date”) or the date at which performance is complete (“performance completion date”). Accounting for non-employee stock options or warrants which involve only performance conditions when no performance commitment date or performance completion date has occurred as of reporting date requires measurement a the equity instruments then-current fair value. Any subsequent changes in the market value of the underlying common stock are reflected in the expense recorded in the subsequent period in which that change occurs.

6

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 7 INCOME TAXES

The Company accounts for income taxes under the Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes” (“Statement 109”). Under Statement 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under Statement 109, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

On January 1, 2008, the Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 prescribes a more-likely-than-not threshold for financial statements recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This Interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. The adoption of FIN 48 has not resulted in any material impact on the Company’s financial position or results.

Huifeng Bio-Pharmaceutical was incorporated in the United States.

Northwest, a wholly owned subsidiary of the Company, was incorporated in the British Virgin Islands and, under current laws of the British Virgin Islands, is not subject to tax on income or on capital gains.

Huifeng Bio-Technic, a wholly-owned subsidiary of Northwest, was incorporated in the PRC being registered as a new and high technology enterprise is entitled to an income tax reduction. According to the document of reductions approved by the local tax bureau, the income tax rate was reduced from 33% to 15% on a permanent basis. Provision for income tax expenses for the three and nine months ended September 30, 2009 and 2008 were $187,578, $173,679, $311,603 and $393,497 respectively.

Huifeng Engineering 70% owned subsidiary of Huifeng Bio-Technic, was incorporated in the PRC and subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. No provision for income tax expenses for the three and nine months ended September 30, 2009 and 2008 as Huifeng Engineering has incurred net operating loss and was disposed on June 28, 2009.

Huifeng Pharmaceutical, 80.2% owned subsidiary of Huifeng Bio-Technic, was also incorporated in the PRC and subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. The applicable tax rate for the nine months ended September 30, 2009 and 2008 was 25%. The provision for income tax expenses for the three and nine months ended September 30, 2009 and 2008 was $42,410, $14,051, $102,956 and $57,001 respectively.

NOTE 8 INCOME PER SHARE

Basic income per share is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per share is computed similar to basic income 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. Included in diluted weighted average number of shares for the three and nine months ended September 30, 2009 and 2008 is the Company’s 10% secured convertible notes (the “Notes”) in a face amount of $2,000,000 which are due in 2 years from their issuance and convertible into 2,000,000 shares of common stock of the Company at a conversion price of $1 per share.

Warrants to purchase 500,000 shares of common stock at prices $1.50 per share was outstanding as of September 30, 2009 and 2008 and a stock option to purchase 100,000 shares of common stock at price $1.50 per share was outstanding as of September 30, 2009 and 2008, but were excluded from the calculation of diluted earnings per share because the effect of these warrants and stock option was anti-dilutive.

NOTE 9 BUSINESS SEGMENTS

The Company operates in only one segment, thereafter segment disclosure is not presented.

7

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 10 RECENT ACCOUNTING PRONOUNCEMENTS

Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC or Codification), “Generally Accepted Accounting Principles - Overall” (ASC Topic 105-10). The Codification established one source for all U.S. GAAP. The Codification supersedes, but does not change, all then-existing non-SEC accounting and reporting standards. Throughout this report, references provided to applicable portions of the Codification also include reference to the original FASB standard (SFAS), staff position (FSP) or consensus of the Emerging Issues Task Force (EITF).

In December 2008, the FASB issued Staff Position No. FAS 132(R)-1 “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP FAS 132(R)-1 requires more detailed disclosures about employers’ plan assets in a defined benefit pension or other postretirement plan, including employers’ investment strategies, major categories of plan assets, concentrations of risk within plan assets, and inputs and valuation techniques used to measure the fair value of plan assets. FSP FAS 132(R)-1 also requires, for fair value measurements using significant unobservable inputs (Level 3), disclosure of the effect of the measurements on changes in plan assets for the period. The disclosures about plan assets required by FSP FAS 132(R)-1 must be provided for fiscal years ending after December 15, 2009. As this pronouncement is only disclosure-related, it will not have an impact on the financial position and results of operations.

In June 2009, the FASB issued SFAS No. 166 “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” (“SFAS 166”). SFAS 166 amends various provisions of SFAS No. 140 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities—a replacement of FASB Statement No. 125” by removing the concept of a qualifying special-purpose entity and removes the exception from applying FIN 46(R) to variable interest entities that are qualifying special-purpose entities; limits the circumstances in which a transferor derecognizes a portion or component of a financial asset; defines a participating interest; requires a transferor to recognize and initially measure at fair value all assets obtained and liabilities incurred as a result of a transfer accounted for as a sale; and requires enhanced disclosure; among others. SFAS 166 will be effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. The Company does not expect the standard to have any impact on the Company’s financial position.

In June 2009, the FASB issued SFAS No. 167 “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”). SFAS 167 amends FASB Interpretation No. 46 (Revised December 2003) “Consolidation of Variable Interest Entities—an interpretation of ARB No. 51” (FIN 46(R)) to require an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity; to eliminate the quantitative approach previously required for determining the primary beneficiary of a variable interest entity; to add an additional reconsideration event for determining whether an entity is a variable interest entity when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most significantly impact the entity’s economic performance; and to require enhanced disclosures that will provide users of financial statements with more transparent information about an enterprise’s involvement in a variable interest entity. SFAS 167 will be effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. The Company does not expect the standard to have any impact on the Company’s financial position.

In August 2009, the FASB issued ASU No. 2009-05 “Measuring Liabilities at Fair Value” (amendments to  ASC Topic 820, Fair Value Measurements and Disclosures)” (“ASU 2009-05”)which amends Fair Value Measurements and Disclosures – Overall (ASC Topic 820-10) to provide guidance on the fair value measurement of liabilities. This update requires clarification for circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the following techniques: 1) a valuation technique that uses either the quoted price of the identical liability when traded as an asset or quoted prices for similar liabilities or similar liabilities when traded as an asset; or 2) another valuation technique that is consistent with the principles in ASC Topic 820 such as the income and market approach to valuation. The amendments in this update also clarify that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability. This update further clarifies that if the fair value of a liability is determined by reference to a quoted price in an active market for an identical liability, that price would be considered a Level 1 measurement in the fair value hierarchy. Similarly, if the identical liability has a quoted price when traded as an asset in an active market, it is also a Level 1 fair value measurement if no adjustments to the quoted price of the asset are required. This update is effective for this quarter. The Company does not expect the standard to have material impact on the Company's financial position.

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements, (amendments to ASC Topic 605, Revenue Recognition)” (“ASU 2009-13”). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. Management is currently evaluating the potential impact of ASU2009-13 on our financial statements.

In October 2009, the FASB issued ASU 2009-14, “Certain Arrangements That Include Software Elements, (amendments to ASC Topic 985, Software)” (“ASU 2009-14”). ASU 2009-14 removes tangible products from the scope of software revenue guidance and provides guidance on determining whether software deliverables in an arrangement that includes a tangible product are covered by the scope of the software revenue guidance. ASU 2009-14 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. Management is currently evaluating the potential impact of ASU 2009-14 on our financial statements.

In October, 2009, the FASB issued ASU 2009-15, “Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing”( amendments to ASC Topic 470, Debt)” (“ASU 2009-15”), and provides guidance for accounting and reporting for own-share lending arrangements issued in contemplation of a convertible debt issuance.  At the date of issuance, a share-lending arrangement entered into on an entity’s own shares should be measured at fair value in accordance with Topic 820 and recognized as an issuance cost, with an offset to additional paid-in capital.  Loaned shares are excluded from basic and diluted earnings per share unless default of the share-lending arrangement occurs.  The amendments also require several disclosures including a description and the terms of the arrangement and the reason for entering into the arrangement.  The effective dates of the amendments are dependent upon the date the share-lending arrangement was entered into and include retrospective application for arrangements outstanding as of the beginning of fiscal years beginning on or after December 15, 2009.   Management is currently evaluating the potential impact of ASU 2009-15 on our financial statements.

8

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 11 NOTES PAYABLE

Notes payable as of September 30, 2009 (unaudited) and December 31, 2008 (audited) consisted of the following:

	September 30, 2009		December 31, 2008
Notes payable to a financial institution, interest rate of
10.188% per annum, secured by directors’ properties and
the company's fixed assets, guaranteed by a third party,
due July 2009, was extended to June 2010	$	253,013	$	281,579
Note payable to a bank, interest rate of 6.372% per annum,
guaranteed by a director and a third party, due May 2010		292,500		-
Current maturities	$	545,513	$	281,579

The interest expenses for the three and nine months ended September 30, 2009 and 2008 were $12,023, $16,961, $34,662 and $38,485 respectively.

NOTE 12 CONVERTIBLE NOTES PAYABLE

On December 31, 2007, the Company consummated a private placement of $2,000,000 principal amount of 10% secured convertible notes (the “Notes”) with a two-year common stock warrants to seven accredited investors. Financing cost of $339,500 was paid out of the gross proceeds. Financing cost is amortized over the life of the Notes to interest expense using the effective interest method. For the three and nine months ended September 30, 2009 and 2008, the Company amortized $42,437, $42,437, $127,313 and $127,313 of financing costs in interest expenses respectively. The Notes are due December 31, 2009 and are convertible into 2,000,000 shares of common stock of the Company at a conversion price of $1.00 per share.

The holders of the Notes may convert the unpaid principal amount of the Notes into common stock of the Company at any time prior to maturity, at the applicable conversion price. After the occurrence of an Event of Default, 150% of the principal amount then outstanding plus all interest occurred to the date of the prepayment is payable within three days.

In accordance with EITF 98-5, no beneficial conversion feature has been recorded on the issuance of the Notes as the conversion price of the Notes of $1 is higher than the fair market value per share of $0.75 at December 31, 2007.

9

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 12 CONVERTIBLE NOTES PAYABLE (CONTINUED)

The Company issued warrants to the note holders in the note financing, for the purchase of up to a total 500,000 shares of common stock at an exercise price of $1.50. The warrants are exercisable for a period that extends three years beginning from the date that a registration statement covering the underlying warrant shares is declared effective.

The Notes are secured by 300,000 shares of Northwest’s share capital pursuant to a pledge agreement, the Company’s performance of the Notes and other obligations in connection with the financing is also secured by a pledge of 5,272,860 shares of common stock personally held by the current Chief Executive Officer and two other stockholders pursuant to another pledge agreement. Upon any event of default (as defined in the Notes and pledge agreements), the investors will be entitled to exercise their respective rights under the pledge agreements.

As of September 30, 2009, the Note holders have not converted the principal amount of their notes into shares of common stock of the Company.

The Company recorded a discount on the Notes in accordance with EITF 98-5 of $306,686 for the fair value of the warrants issued. The fair value of warrants was calculated using the Black-Scholes model with the following assumptions: (i) risk-free interest rate of 3.07%; (ii) expected life (in years) of 3; (iii) expected volatility of 172%; (iv) expected dividend yield of 0.00%; and (v) stock market price of $0.75. The discount on Notes is amortized using effective interest method over 2 years. For the three and nine months ended September 30, 2009 and 2008, the Company recorded amortization of $38,337, $38,337, $115,007 and $115,007 respectively as interest expenses in the statement of operations.

The Notes bear a 10% annual interest rate payable in arrears with a first payment due March 1, 2008, and thereafter on each June 1, September 1 and December 1 while the Notes are outstanding, with a final payment of interest due on the maturity date. For the three and nine months ended September 30, 2009 and 2008, $51,111, $51,111, $152,222 and $152,778 respectively were recorded as interest expenses.

NOTE 13 COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Company occupies an office and warehouses from third parties under operating leases which expires on September 30, 2010 and on July 23, 2011 at a quarterly rental of $2,850 and at an annually rental of $4,969 respectively. Accordingly, for the three and nine months ended September 30, 2009 and 2008, the Company recognized rental expenses for this space in the amount of $4,093, $2,214, $12,276 and $8,010 respectively.

As of September 30, 2009, the Company has outstanding commitments with respect to the non-cancelable operating leases which are due as follows:

2009	$	4,092
2010		13,518
2011		2,898
	$	20,508

NOTE 14 STOCKHOLDERS’ EQUITY

(A) Stock issuances

On August 17, 2009, the Board of Directors approved the issuance of 1,200,000 shares of restricted common stock having a fair value of $184,359 to a third party for the settlement of outstanding accounts payable of $184,359. The value of the common stock issued was determined based on the outstanding balance of payable, which below the aggregated amount of $420,000 calculated by the closing market price of $0.35 per share on August 17, 2009.

On August 17, 2009, the Company also issued 2,600,000 shares of restricted common stock having a fair value of $421,391 to a third party for the payment of construction costs for an office building located at Changwu County, PRC of $421,391. The value of the common stock issued was determined based on the outstanding balance of payable, which below the aggregated amount of $910,000 calculated by the closing market price of $0.35 per share on August 17, 2009.

On August 26, 2009, the Company issued 75,000 shares of restricted common stock having a fair value of $37,500 to a legal counsel for legal advisory services provided during the year. The value of the common stock issued was determined based on the closing market price of $0.5 per share on August 26, 2009.

Stock options

On April 28, 2008, the Company issued options to its legal counsel to purchase up to 100,000 shares of common stock at an exercise price of $1.50 per share. The options shall be exercisable in whole or in part, according to the vesting schedule, shall be fully vested upon execution of the agreement and shall be exercisable at any time pursuant to the terms of the Agreement until April 28, 2010. The fair value of the options was estimated on the grant date using the Black-Scholes option pricing model as required by SFAS 123R with the following assumptions and estimates: expected dividend 0%, volatility 189%, a risk-free rate of 2.36% and an expected like of two years. The value of options recognized during the three and nine months ended September 30, 2009 and 2008 was $10,916, $10,916, $32,748 and $18,194 respectively.

10

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2009 (UNAUDITED)

NOTE 15 RELATED PARTY TRANSACTIONS

The current Chief Executive Officer and two other stockholders pledged a total of 5,272,860 shares of common stock held by them to secure the Company’s performance of the $2,000,000 Convertible Notes issued on December 31, 2007.

NOTE 16 DISCONTINUED OPERATIONS

On June 28, 2009, Huifeng Bio-Technic entered into an agreement with a third party to sell its 70% interest in Huifeng Engineering for a consideration of $21,919 in cash. The operations of Huifeng Engineering have been reclassified as discontinued operations in the accompanying consolidated statements of operations for the three and nine months ended September 30, 2009 and 2008 and are summarized as follows:

	For the Three		For the Three			For the Nine			For the Nine
	Months Ended		Months Ended			Months Ended			Months Ended
	September 30, 2009		September 30, 2008			September 30, 2009			September 30, 2008
General and administrative expenses	$	-	$	(1	)	$	(208	)	$	(56	)
Depreciation		-		(8,361	)		(16,753	)		(24,570	)
Operating expenses	$	-	$	(8,362	)	$	(16,961	)	$	(24,626	)
Interest income		-		1			-			3
Loss from discontinued operations	$	-	$	(8,361	)	$	(16,961	)	$	(24,623	)

The assets and liabilities of discontinued operations as of September 30, 2009 and December 31, 2008 are summarized as follows:

	September 30, 2009		December 31, 2008
	(Unaudited)		(Audited)
ASSETS
Cash and cash equivalents	$	-	$	676
Equipment, net		-		113,901
Total assets related to discontinued operations	$	-	$	114,577
LIABILITIES
Other payables	$	-	$	17,128
Total liabilities related to discontinued operations	$	-	$	17,128

The detailed information on the loss on disposal of Huifeng Engineering is as follows:

Cash and cash equivalents	$	6,307
Fixed assets, net		97,188
Other payables		(22,973	)
Non-controlling interests		(24,157	)
Book value of net assets disposed		56,365
Less: Consideration for disposition		(21,919	)
Loss on disposal of discontinued operations	$	34,446

The detailed information on net cash inflow on disposal of discontinued operations is as follows:

Proceeds from disposal	$	21,919
Less: cash and cash equivalent disposed		(6,307	)
Net cash inflow	$	15,612

NOTE 17 CONCENTRATIONS AND RISKS

During the nine months ended September 30, 2009 and 2008, 100% of the Company’s assets were located in China and Hong Kong.

During the nine months ended September 30, 2009 and 2008, 57% and 47% of the Company's revenues were derived from companies located in China respectively.

The Company relied on two customers for approximately $609,092 and $410,076 representing in aggregate 11% of sales for the nine months ended September 30, 2009. At September 30, 2009, accounts receivable from those two customers totaled $652,796.

NOTE 18 SUBSEQUENT EVENTS

The Company evaluated subsequent events through the time of filing this Quarterly Report on Form 10-Q on November 13 2009. No significant events occurred subsequent to the balance sheet date but prior to the filing of this report that would have a material impact on our Condensed Consolidated Financial Statements.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 

The following discussion should be read in conjunction with the Huifend Bio-Pharmaceutical Techonology, Inc. consolidated financial statements and accompanying notes included elsewhere in this report. The following discussion contains forward-looking statements that reflect the plans, estimates and beliefs of Huifeng Bio-Pharmaceutical Technology, Inc. The actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Report and the Annual Report 10-K, particularly in “Risk Factors” section in the Annual Report on 10-K.   All references to years relate to the calendar year ended December 31 of the particular year.

OVERVIEW

History

On December 20, 2004, pursuant to the Malone Agreement, Art Malone, Jr. sold 7,229,601 shares of the common stock of the Company, or 56% of the Company’s outstanding common stock, for $300,000 (the "Sale") to Zhi Lan Wang and Jun Lin on December 20, 2004.  Immediately thereafter, on December 20, 2004 the Company completed a Northwest Agreement, pursuant to which the Company initially purchased 30% of the common shares of Northwest BioTechnic, Inc. (“NBTI”) in exchange for 80,735,590 shares of the Company's common stock ("Acquisition"). The purchase price for the remaining 70% of NBTI's common shares was $1,900,000 payable by the Company's issuance of a promissory note ("Promissory Note") on December 20, 2004. The Promissory Note was subsequently converted into 10,465,725 (post a one for eighteen reverse split) shares of the Company's common stock. At the closing of the transaction,   80,735,590 shares of the common stock of the Company sold represented approximately 86.3% of the total outstanding stock of the Company.

NBTI was incorporated in the British Virgin Islands on June 25, 2004. NBTI operates through its wholly owned subsidiary, Huifeng Biochemistry Joint Stock Company, which is a joint venture company established under the laws of China and is engaged in the production and sales of plant extracts, biochemical products and pharmaceutical raw products in the PRC. On February 22, 2006, Huifeng Biochemistry Joint Stock Company changed its name to Xi’an Huifeng Biotechnic, Inc. ("Huifeng").

The exchange was treated as a reverse acquisition for accounting purposes. As such, the financial information reflects activity subsequent to the acquisition for the Company and its subsidiaries and financial activity of NBTI prior to the acquisition.

Business

The Company, through its wholly owned subsidiary NBTI, owns 100% of Huifeng which produces and sells plant extracts, biochemical products and pharmaceutical raw products in the PRC. Huifeng was founded on January 18, 2000. With its proprietary technology of “Producing Rutin by Eliminating Enzyme and Mucus” together with abundant resources of high quality pagoda rice in the Northwest region of China as raw material, Huifeng developed and specialized itself as one of the major technology based Rutin company in Xian city within two years after establishment. Huifeng possesses one of the most advanced and patented Rutin-refining technologies in China and is a major Rutin supplier for the world market.

12

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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 and inventories, significant estimation judgments are made and actual results could differ materially from these estimates.

The Company does not have any reserves against its accounts receivable or inventories at September 30, 2009 and 2008. Management's estimation that there are no reserves is based on the current facts that there are no significant aged accounts receivable and the current inventory turnover is sufficient to realize the current carrying value of the inventories. In making their judgment, management has assumed that there will be continued demand for their products in the future, thereby maintaining adequate turnover of the inventories. Additionally, management has assumed that customers will continue to pay their outstanding invoices timely, and that their customers' financial positions will not deteriorate significantly in the future, which would result in their inability to pay their debts to the Company. While the Company's management currently believes that there is little likelihood that the actual results of their current estimates will differ materially from its current estimates, if customer demand for its products decreases significantly in the near future, or if the financial position of its customers deteriorates in the near future, the Company could realize significant write downs for slow moving inventories or uncollectible accounts receivable.

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. Collectability is reasonably assured.

The majority of the Company's revenue results from sales contracts with distributors and revenue is generated upon the shipment of goods. The Company's pricing structure is fixed and there are no rebate or discount programs. Management conducts credit background checks for new customers as a means to reduce the subjectivity of assuring collectability. Based on these factors, the Company believes that it can apply the provisions of SAB 104 with minimal subjectivity.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO THREE MONTHS ENDED SEPTEMBER 30, 2008

Revenues, Cost of Revenues and Gross Margin

Revenues for the quarter ended September 30, 2009 were $4,465,770, an increase of $931,147, or 26%, from $3,534,623 for the same quarter in 2008. Our increase in revenues for the third quarter of 2009 was mainly due to the increase in our sales of pharmaceutical raw-material and Plant Extractive and others products, which include our products of Rutin, Quercetin, Troxerutin (injection) and Diosmin as set forth in the table below. Our increase in revenue is mainly as a result of a gain in new customers and an increase in the number of orders from the Company’s existing customers:

	For the quarter ended September 30,				Increase /
Product	2009		2008		(Decrease)
Pharmaceutical intermediates	$	1,104,279	$	1,327,502	$	(223,223	)
Pharmaceutical raw-material		2,696,843		1,839,977		856,866
Plant Extractive and others		664,648		367,144		297,504
TOTAL	$	4,465,770	$	3,534,623	$	931,147

Cost of revenues for the quarter ended September 30, 2009 were $2,994,605, an increase of $790,766, or 36%, from $2,203,839 for the quarter ended September 30, 2008. Compared to the quarter ended September 30, 2008, the increase in the cost of revenues for the third quarter of 2009 was caused by the significant increase in sales of our pharmaceutical raw-material and Plant Extractive and others as follows: 

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	For the quarter ended September 30,				Increase /
Product	2009		2008		(Decrease)
Pharmaceutical intermediates	$	697,933	$	680,202	$	17,731
Pharmaceutical raw-material		1,863,999		1,229,747		634,252
Plant Extractive and others		432,673		293,890		138,783
TOTAL	$	2,994,605	$	2,203,839	$	790,766

Gross margin for the quarter ended September 30, 2009 was $1,471,165, an increase of $140,381, or 10.5%, from $1,330,784 for the same period ended September 30, 2008 as a result of the increase in product sales.

Our gross profit margin for 2009 was decreased from 38% of the third quarter of 2008 to 33% of the third quarter ended September 30, 2009. The decrease was a result of the higher unit cost of our products over the three-month period despite increase in cost of raw material during the third quarter of 2009

General and Administrative Expenses

General and Administrative expenses totaled $67,967 for the three months ended September 30, 2009, a decrease of $193,760, or 74%, from $261,727 for the three months ended September 30, 2008. The decrease in general and administrative expenses was mainly due to a decrease in legal and professional fees of $6,710, decrease in allowance for doubtful accounts of $69,819 and decrease in exchange losses from foreign currency fluctuations of $106,366.

Selling and Distribution Expenses

Selling and distribution expenses totaled $87,072 for the three months ended September 30, 2009, an increase of $30,367, or 53%, from $56,705 for the three months ended September 30, 2008. The increase in selling and distribution expenses was mainly due to the increase of freight charge of $50,932.

NINE MONTHS ENDED SEPTEMBER 30, 2009 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2008

Revenues, Cost of Revenues and Gross Margin

Revenues for the nine months ended September 30, 2009 were $8,883,190, a slightly decrease of $2,875, or under 1%, from $8,886,065 for the same period in 2008.  An analysis of our results in sales of our products is as follows:

	Nine months ended September 30,						Increase /
Product	2009			2008			(Decrease)
Pharmaceutical intermediates		$	2,002,165		$	3,516,232		$	(1,514,067)
Pharmaceutical raw-material			5,445,430			4,431,680			1,013,750
Plant Extractive and others			1,435,595			938,153			497,442
TOTAL		$	8,883,190		$	8,886,065		$	(2,875)

Cost of revenues for the nine months ended September 30, 2009 were $5,960,465, an increase of $244,311, or 4%, from $5,716,154 for the nine months ended September 30, 2008, compared to the nine months ended September 30, 2008. An analysis of our results in cost of revenues of our products is as follows:

	Nine months ended September 30,						Increase /
Product	2009			2008			(Decrease)
Pharmaceutical intermediates		$	1,247,493		$	1,915,740		$	(668,247)
Pharmaceutical raw-material			3,864,665			3,105,808			758,857
Plant Extractive and others			848,307			694,606			153,701
TOTAL		$	5,960,465		$	5,716,154		$	244,311

The gross margin for the nine months ended September 30, 2009 was $2,922,725, a decrease of $247,186, or 8%, from $3,169,911 for the period ended September 30, 2008 as a result of the increase in cost of revenues.

Our gross profit margin for the nine months ended September 30, 2009 had a slightly decrease from 36% to 33% compare to the same period in 2008. The decrease was a result of the higher unit cost of our products over the nine-month period despite increase in cost of raw material during the third quarter of 2009.

General and Administrative Expenses

General and Administrative expenses totaled $509,373 for the nine months ended September 30, 2009, a decrease of $382,115 or 43% from $891,488 for the nine months ended September 30, 2008. The decrease in general and administrative expenses was mainly due to a decrease in legal and professional fees of $242,381 and decrease in exchange losses from foreign currency fluctuations of $247,735.

Selling and Distribution Expenses

Selling and distribution expenses totaled $174,001 for the nine months ended September 30, 2009, an increase of $25,398 or 17% from $148,603 for the nine months ended September 30, 2008. The increase in selling and distribution expenses was mainly due to the increase of freight expenses of $33,166.

14

LIQUIDITY AND CAPITAL RESOURCES

Cash

Our cash balance amounted to $284,886 at September 30, 2009.

In the nine months ended September 30, 2009, our cash provided by operating activities totaled $169,785, mainly due to our net income for the period of $1,429,523 and increase in accounts receivable of $1,592,376. In the nine months ended September 30, 2009, our cash used in investing activities totaled $194,238 mainly for our purchase of property and equipment. Our cash provided by financing activities in the nine months ended September 30, 2009 of $263,062 was a bank loan from a PRC bank.

Working Capital

Our working capital amounted to $6,645,414 at September 30, 2009.

INFLATION

Inflation has had a small impact on our business. It increased the purchase cost of our raw materials resulting in an increase in our production cost.

CURRENCY EXCHANGE FLUCTUATIONS

All of our revenues and majority of the expenses for the nine months ended September 30, 2009 were denominated primarily in Renminbi ("RMB"), the currency of China, and were converted into US Dollars at the exchange rate of 6.83760 to 1. Since July 22, 2005, the Renminbi has strengthened against the US dollars. As a result of the appreciation of RMB we recognized a foreign currency translation gain of $30,077 during the nine months ended September 30, 2009. There could be no assurance that RMB-to-U.S. dollar exchange rates will remain stable. A devaluation of RMB relative to the U.S. dollar would adversely affect our business, financial condition and results of operations. We do not engage in currency hedging.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required

Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). The purpose of this evaluation is to determine if, as of the Evaluation Date, our disclosure controls and procedures were operating effectively such that the information, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) was recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) was accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were operating effectively.

Changes in Internal Control over Financial Reporting.  

There have been no significant changes in our internal controls over financial reporting that occurred during the nine months ended September 30, 2009 that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

Limitations on the Effectiveness of Disclosure Controls and Procedures.

Disclosure controls and procedures and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time period specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings:

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of our Company's or our Company's subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

Item 1 A. Risk Factors

Not required.

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

None

Item 3. Defaults Upon Senior Securities

None.

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

Not applicable

Item 5. Other Information

None.

Item 6. Exhibits

(a) Exhibits

31.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Certification of the Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.
32.2	Certification of the Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. Section 1350.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized this 13th day of November 2009.

HUIFENG BIO-PHARMACEUTICAL TECHNOLOGY, INC
By:	/s/ Jing’an Wang
	Jing’an Wang Chief Executive Officer
	/s/ Sanding Tao
	Sanding Tao
	Chief Financial Officer

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