Edgar Filing: KIWA BIO-TECH PRODUCTS GROUP CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
for the fiscal year ended December 31, 2004

Commission File Number: [000-33167]

KIWA BIO-TECH PRODUCTS GROUP CORPORATION
(Exact name of small business issuer as specified in its charter)

Delaware 84-0448400
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

17700 Castleton Street, Suite 589, City of Industry, California 91748
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(Address of principal executive offices)

Registrant's telephone number, including area code: (626) 964-3232

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of each class Name of each exchange on which registered
Common Stock, $0.001 par value OTB Bulletin Board

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. Yes[ ] No[ X ]

Issuer's Revenues for its most recent year: $1,300,251.

As of March 22, 2005, the aggregate market value of voting and nonvoting equity
stock held by non-affiliates of the registrant, based upon the closing sales
price for the registrant's common stock, as reported on the OTB Bulletin Board
quotation service, was approximately $436,000.

Number of shares of registrant's common stock outstanding as of March 22, 2005
was 45,135,930 shares.

Portions of the registrant's definitive proxy statement to be delivered to
shareholders in connection with the 2005 annual meeting of shareholders to be
held on June 24, 2005 are incorporated by reference in response to Part III of
this Form 10-KSB.

Transitional Small Business Disclosure Format: Yes[ ] No[ X ]

KIWA BIO-TECH PRODUCTS GROUP CORPORATION AND SUBSIDIARIES

Table of Contents

PART I.........................................................................1
Item 1. Business..........................................................1
The Company..........................................................1
Intellectual Property And Product Lines..............................1
Strategies...........................................................3
Market Overview......................................................4
Competition..........................................................5
Raw Materials and Suppliers..........................................5
Customers............................................................5
Seasonality..........................................................5
Employees............................................................6
Regulatory Concerns..................................................6
Environmental Matters................................................6
Risk Factors.........................................................6
Item 2. Property.........................................................15
Item 3. Legal Proceedings................................................15
Item 4. Submission of Matters to a vote of Security Holders..............15
PART II.......................................................................15
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities..............15
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operation.......................................16
Overview............................................................16
Major Customers And Suppliers.......................................17
Going Concern.......................................................17
Trends And Uncertainties In Regulation And Government
Policy In China...................................................18
Critical Accounting Policies And Estimates..........................19
Results Of Operations...............................................20
Liquidity And Capital Resources.....................................22
Inflation And Currency Matters......................................23
Commitments And Contingencies.......................................24
Off-Balance Sheet Arrangements......................................24
Recent Accounting Pronouncements....................................24
Item 7. Financial Statements.............................................25
Independent Auditors' Report........................................25
Consolidated Balance Sheets.........................................26
Consolidated Statements of Operations...............................27
Consolidated Statement of Stockholders' Equity (Deficiency).........28
Consolidated Statements of Cash Flows...............................29
Notes to Consolidated Financial Statements..........................30
Item 8. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure............................42
Item 8A. Controls and Procedures.........................................42
Item 8B. Other Information...............................................42
PART III......................................................................42
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.............42
Item 10. Executive Compensation..........................................42
Item 11. Security Ownership of Certain Beneficial Owners and
Management And Related Stockholder Matters....................42
Item 12. Certain Relationships and Related Transactions..................42
Item 13. Exhibits........................................................43
Exhibits............................................................43
Item 14. Principal Accounting Fees and Services..........................45
SIGNATURES....................................................................45

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PART I

Item 1. Business

The Company

Kiwa Bio-Tech Products Group Corporation develops, manufactures, distributes and
markets innovative, cost-effective and environmentally safe bio-technological
products for agriculture, natural resources and environmental conservation. Our
products are designed to enhance the quality of human life by increasing the
value, quality and productivity of crops and decreasing the negative
environmental impact of chemicals and other wastes.

We are the result of a reverse merger between Tintic Gold Mining Company, a
corporation originally incorporated in the State of Utah on June 14, 1933 to
perform mining operations in Utah, and Kiwa Bio-Tech Products Group Ltd., a
company originally organized under the laws of the British Virgin Islands on
June 5, 2002. The merger was accomplished on March 12, 2004, pursuant to an
Agreement and Plan of Merger dated as of March 11, 2004 by and among Tintic Gold
Mining Company, TTGM Acquisition Corporation, a Utah corporation and
wholly-owned subsidiary of Tintic Gold Mining Company, and Kiwa Bio-Tech
Products Group Ltd. Pursuant to the Agreement and Plan of Merger TTGM
Acquisition Corporation merged with and into Kiwa Bio-Tech Products Group Ltd.
Each share of Kiwa Bio-Tech Products Group Ltd. common stock was converted into
1.5445839 shares of Tintic Gold Mining Company Common Stock, with Kiwa Bio-Tech
Products Group Ltd. surviving as Tintic Gold Mining Company's wholly-owned
subsidiary. The wholly-owned subsidiary thereafter merged with the parent. The
merger resulted in a change of control of Tintic Gold Mining Company, with
former Kiwa Bio-Tech Products Group Ltd. stockholders owning approximately 89%
of Tintic Gold Mining Company on a fully diluted basis. Subsequent to the
merger, Tintic Gold Mining Company changed its name to Kiwa Bio-Tech Products
Group Corporation. On July 22, 2004, we completed our reincorporation in the
State of Delaware.

In 2002, Kiwa Bio-Tech Products Group Ltd. chartered Kiwa Bio-Tech Products
(Shandong) Co. Ltd., a wholly-owned subsidiary organized under the laws of
China, as its offshore manufacturing base to capitalize on low cost, high
quality manufacturing advantages available in China. In October 2003, Kiwa
Bio-Tech Products Group Ltd. completed Phase I construction of its
state-of-the-art manufacturing facility in Shandong Province, China. In November
2003, Kiwa Bio-Tech Products Group Ltd. began shipping its first commercial
product, a bio-fertilizer, to the agricultural market in China. We are currently
working on existing product improvement and new product development while we
continue our three-phase facility build-up.

Intellectual Property And Product Lines

Our goal is to build a platform to commercialize bio-technological research and
development results for applications in agriculture and environmental
protection. In this respect, we are working on developing cooperative research
relationships with several universities in China and the United States. We are
also acquiring technologies to reduce research and development costs and shorten
commercialization cycles. Specifically, on April 12, 2004, we entered into an
agreement with China Agricultural University to acquire Chinese patent no. ZL
93101635.5 entitled "Highly Effective Composite Bacteria for Enhancing Yield and
the Related Methodology for Manufacturing" from China Agricultural University.
The aggregate purchase consideration under the agreement was $480,411, of which
$30,205 was paid in cash at signing of the agreement and an additional $30,206
was paid in December 2004. In addition, as part of the purchase price we issued
1,000,000 shares of common stock to China Agricultural University in September
2004, valued at $0.42 per share based on its fair market value on July 20, 2004
(aggregate value $420,000), which is the date when the transfer of the patent
was approved.

The patent acquired from China Agricultural University covers six different
species of bacillus which have been tested as bio-fertilizers to enhance yield
and plant health. The production methods of the six species are also patented.
The patent will expire on February 9, 2013. We plan to utilize the patent to
develop a new series of products that will complement our current products and
create a comprehensive product pipeline. There are no limitations under this
agreement on our exclusive use of the patent. Pursuant to our agreement with
China Agricultural University, the University agreed to provide research and
technology support services at no additional cost to us in the event we decide
to use the patent to produce commercial products. These research and technology
support services include (1) furnishing faculty or graduate-level researchers to
help bacteria culturing, sampling, testing, trial production and formula

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adjustment; (2) providing production technology and procedures to turn the
products into powder form while keeping live required bacteria in the products;
(3) establishing quality standards and quality control systems; (4) providing
testing and research support for us to obtain necessary sale permits from the
Chinese government; and (5) cooperation in developing derivative products. China
Agricultural University has been providing some of these services since August
2004. If the University fails to provide any of these support services, our
remedy against the University would be to bring a breach of contract suit for
damages.

In addition, we may file patent applications in China and or the United States
for technologies we are currently developing related to applications of
photosynthesis bacteria, biologic catalyst, and synergetic enzymes. These
technologies have applications in the agricultural, natural resources and
environmental conservation and drug manufacturing sectors. We also plan to
explore acquisition of similar technologies both in China and the United States.
In addition, our broad plan includes launching our products in the United States
and other markets, introducing new products, creating formal strategic alliances
with selected United States companies to co-develop and/or co-market products in
the United States and China, and forming an international biotechnology research
center in China for the research and development of agricultural, environmental
and medical applications.

We currently have two commercial products. Our first commercial product, based
on the photosynthesis bacteria technology, is a bio-fertilizer called
Photosynthesis Biological Catalyst. This product is distributed and sold in both
powdered and liquid forms. The powdered form of this bio-fertilizer is sold
under the ZHIGUANGYOU trademark. This product has fifteen different formulas for
different types of crops, mainly including grain crops, economic row crops,
leafy vegetables, fruits, and ornament plants. The products work as foliar
bio-fertilizer to help increase agricultural production yield and improve plant
quality by raising the photosynthetic capacity of plants and increasing the
capacity to absorb nutrition from the soil. We began shipping this product in
November 2003. We will target all major agricultural provinces in China over the
next 18 months. The liquid form of the Photosynthesis Biological Catalyst is
sold under the PUGUANGFU trademark. We started to offer this series of products
in April 2004 to target lower-end markets mainly in our local region in the
Shandong Province of China. The liquid form of the product is used as foliar and
as soil-applied bio-fertilizer. We currently have a temporary license from the
Chinese Agriculture Department to sell this product series and expect to receive
a permanent license shortly.

Field tests conducted by Chinese government and research institutions over the
past three years have confirmed that the Photosynthesis Biological Catalyst
product stimulates plant growth and increases crop yields, including vegetables,
fruits and other economic plants, by 10% to 25%.

Our second product is a water treatment liquid under the PUGUANGFU trademark.
This product is used in aquaculture as a water treatment and pathogen
suppression agent. We started to offer this product in the Shandong and Jiangshu
Provinces of China in April 2004. We currently have a temporary license from the
Chinese government to sell this product series and expect to receive a permanent
license within the next several months.

Our objective is to market additional products in the agriculture market in the
next six to twelve months. These products will be humus related products that
can help increase soil fertility and play a vital role in plant nutrition. These
products fall into the following categories:

1. Soil applied compound fertilizers with amino acids and humic acids.
These products work as a supplementary product to chemical fertilizers.
We have applied for a temporary license in the Shandong Province of
China to sell these products which we expect to receive in 2005 and
intend to start commercial sales when we receive the license.

2. Soil applied bio-organic fertilizer with Bacillus species. We are
applying for a sales license from the Chinese Agriculture Department
and expect to receive the license in the second quarter of 2005 to sell
these products. We will begin selling these products once we receive
the license and will target regional markets in China and possibly U.S.
markets in California, Florida and Texas in 2006.

In addition, we plan to expand the markets for our water-cleansing product based
on the photosynthesis bacteria technology in the natural resources conservation
market. We plan to actively pursue strategic alliances with bio-technology
companies in the United States to maximize use of our strong marketing network
in China's vast agricultural market.

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Strategies

With the world's largest population to feed, China's demand for agricultural
products is immense. Problems with pollution and soil contamination have
increased pressure on the Chinese government to conserve land and enhance
environmental protection. China thus faces an urgent need to improve unit land
yield and reduce pollution. We plan to address this need through the development
of our ag-biotechnology products which increase agricultural productivity in
environmentally friendly ways. To capture this opportunity, our core strategies
are as follows:

o Build a platform for world-class biotechnological research and development
results to be commercialized into products for applications in
agriculture, natural resources conservation and environmental protection;

o Invest in mature technologies that will not require large amounts of
research expense to develop into commercial products;

o Establish strategic alliances for research and development, sales and
distribution and customer acquisition with complimentary entities in the
biological-agriculture and natural resources conservation industry;

o Complete our manufacturing facility in Shandong Province, one of the
largest agricultural provinces in China;

o Enhance overall management systems, operational structure and corporate
governance; and

o Utilize proprietary technology to produce bacillus series products at
lower costs than our competitors.

Our sales strategy involves utilizing both a direct sales force and distribution
networks. Our distribution efforts are expected to include the following:

o Leveraging government support and existing rural area distribution
networks to more effectively reach end-users;

o Cooperating with special fertilizer distributors who also help farmers
resell their products;

o Focusing on large-to-medium size wholesalers of farm fertilizers at
provincial and municipal levels;

o Establishing a three-level distribution network consisting of a company
centralized sales office, prefectural representative office and direct
distributors in villages and towns; and

o Leveraging existing sales channel network of affiliates' products to save
costs of building the network from scratch.

We plan to target major agricultural companies and growers as customers that can
realize significant financial benefits from using our products including:

o High value crop (such as fruits and vegetables) growers in China that
supply major cities;

o Agricultural producers in China who export to Japanese, Korean and other
regional markets; and

o "Green" or organic growers of produce throughout the world.

Given the global trend of customers favoring environmentally safe organically
grown food and growers' needs for higher crop yields and better quality, we also
foresee strong market needs in the United States and other international markets
including East and Southeast Asia. We are currently exploring entering the
California and Florida markets in the United States, where farmers grow more
"green" or organic high value crops such as fruits and vegetables. We are also
in discussions with fertilizer manufacturers and distributors in Taiwan to
distribute our products in the Taiwanese market and to other distributors in the
Southeast Asian markets.

In addition, we also have on-going talks with universities in the United States,
such as the University of California at Riverside and at Davis as well as the
University of Wisconsin, and universities in China, such as China Agricultural
University, Nanjing Agricultural University and Shandong University, pursuant to
which we are exploring relationships for research and development projects.

-3-

Market Overview

Modern agricultural practices largely rely on heavy use of chemical fertilizers
and pesticides which cause tremendous harm to the environment and soils. Such
practices have been under increasing scrutiny across the world, leading to
consumer demand for agricultural practices that are more environmentally
friendly. China has only 9.1%(1) of the world's agricultural land but needs to
feed over 1.2(2) billion people, or approximately 21.1%(3) of the world's
population. To increase the overall crop yield, farmers in China use vast
amounts of chemical fertilizers. According to the China Statistics Bureau and
the Food & Agriculture Organization of the United Nations, the use of chemical
fertilizers in China increased 64.2%(4) in the past decade and accounted for
one-third of total world fertilizer consumption (5). Long-term excessive use of
chemical fertilizers in China has led to severe soil contamination and
pollution. If the situation continues unchanged, the largest population in the
world could potentially face severe food and water shortages and an increasingly
polluted living environment.

One solution to the environmental problem is bio-fertilizer, an environmental
friendly fertilizer. China's current consumption of bio-fertilizer consists of
only 2.3%(6) of the total fertilizer consumption in China. The Chinese
agricultural industry has started to recognize the importance of bio-fertilizers
to sustainable long-term agriculture in China. Our first commercialized product,
Photosynthesis Biological Catalyst, capitalizes on this market trend and we hope
to become one of the leaders in developing green technologies for productive,
more sustainable agriculture in China.

In the year 2004, we had exports to Cambodia of approximately US$600,000. Other
than that, our main markets were in China, primarily in the following geographic
provinces:

o Shandong Province - where our manufacturing facility is based and its
products are tested. This province is a significant agricultural market
and close to the Japanese and Korean markets; and

o Jiangsu and Zhejiang Provinces - two large provinces that are close to
Shanghai. Currently, we have entered into an exclusive distribution
arrangement with one of the largest fertilizer and related product
distributors in Jiangsu Province which is distributing our series of
products to the local farmers.

In 2005, with continuous expansion of the current market, our sales efforts are
focused on Jilin Province, Henan Province, and Guangdong Province, the three
largest agricultural provinces in terms of grain yield or aquatic product
export. At the same time, several new special fertilizers for special crops will
be put on the market in 2005. For example, we are optimistic that our special
fertilizer for tobacco will approved by and entered into the List of Special
Fertilizer for Tobacco published by the China Tobacco Bureau.

(1) Total area of cultivated land of China is 127,082,000 hectares - as cited
on page 385 in "China Statistical Yearbook" published by National Bureau of
Statistics of China (September 2002). Total area of world cultivated land
is 1,401,700,000 hectares - as cited on page 17 in "Summary of Food and
Agricultural Statistics 2003" published by Food and Agricultural
Organization of the United Nations (2003).
(2) Calculated based on data published in "China Statistical Yearbook"
published by National Bureau of Statistics of China (September 2002), page
927.
(3) Calculated based on data published in the "China Statistical Yearbook"
published by National Bureau of Statistics of China (September 2002), page
927.
(4) Calculated based on data published in the "China Statistical Yearbook"
published by National Bureau of Statistics of China (September 2002), page
389.
(5) Calculated based on data published in "Current Agriculture Situation and
Chemical Fertilizer Demand in China," by Gao Xiangzhao, Ma Shangbao and Du
Sen, published by Science Publication House (July 2004), page 73.
(6) Bio-fertilizer production and consumption of 1,000,000 metric tons, as
cited on page 1 of " Bio-Fertilizer Present and Future," by Linfeng Li,
published by Jiangxi Agricultural University. Aggregate fertilizer
consumption of 43,390,000 metric tons, as cited on page 73 of "Current
Agriculture Situation and Chemical Fertilizer Demand in China," by Gao
Xiangzhao, Ma Shangbao and Du Sen, published by Science Publication House
(July 2004).

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Competition

Due to the unique products that we offer and very early stage of the
bio-fertilizer market in China, we believe there is little direct competition
for our products in the Chinese marketplace. We may experience competition from
existing products that are similar to Photosynthesis Biological Catalyst.
Management believes that we have product differentiation and cost advantages
(cost to customer) as compared to these products that will enable us to
outperform our competitors, in terms of profitability, for the following
reasons, among others:

o High effectiveness in increasing crop yield and quality while being
environmentally friendly;

o Lower price point and higher return on investment to end users;

o Powder-based form making transportation and storage easier; and

o Complimentary to existing use of chemical fertilizer which will help to
minimize switching costs for end users.

We have conducted detailed research and analysis of the competitive landscape in
the marketplace. From a broader view, there are about 10 companies, in different
stages and of varied sizes of operations, which have or are producing similar
photosynthesis related, microbial bio-fertilizer products in China, according to
the categorization records from the Agriculture Fertilizer License Authority in
China. The products of these companies are all in liquid form.

In addition, we face competition from large chemical fertilizer manufacturers in
China, such as Sino-Arabic Chemical Fertilizer Company, in national markets as
well as Red Sun Group in Shandong and Jiangsu markets. These chemical fertilizer
manufacturers have provided chemical fertilizers to farmers in China for several
years and customers are more accustomed to using their established products as
compared to our products.

Raw Materials and Suppliers

The major raw materials for photosynthetic bacteria production are
photosynthetic bacteria, sodium acetate, glucose, diammonium phosphate, and
dipotassium hydrogen phosphate. Other chemicals are also used in the growth
media. These materials are either cultured by our technicians or purchased from
local markets. The key raw materials used in production of our products are
widely available from a wide variety of supply sources. Historically, we have
not experienced any difficulty in procuring adequate quantities of raw
materials.

Three suppliers accounted for 49.2%, 27.6%, and 4.1% of our net purchases for
the fiscal year ended December 31, 2004. These suppliers are Beijing Kailida
Technology Trading Co., Beijing Wenming-Xinke Science and Technology Ltd., and
Sichuan Fenghe Enterprise, respectively. Historically these suppliers have met
our needs. In addition, the raw materials used in our products are available
from a variety of alternative sources.

We do not have agreements with our suppliers due to the availability of numerous
suppliers who have the ability to supply our raw materials on fairly short
notice. We currently maintain a list of 160 qualified suppliers. We place
purchase orders when we need supplies.

Customers

Brix Resources Inc., Zhongzheng Agriculture-Technology Product Promotion Co. and
Beijing Kailida Technology Trading Co. accounted for 46.1%, 26.3% and 18.5% of
our net sales for the fiscal year ended December 31, 2004, respectively. No
other single customer accounted for more than 10% of our revenues.

Seasonality

We expect that our operating results will be subject to seasonal trends. This
trend is dependent on numerous factors, including the markets in which we
operate, growing seasons, climate, economic conditions and numerous other
factors beyond our control. Generally, we expect the second and third quarters
will be stronger than the first and fourth quarters, primarily because the
second and third quarters correspond with the growing seasons in our primary
markets in China. It is during those growing seasons when application of our
products by our customers would be most beneficial and we therefore expect
greater demand for our products during those periods. There can be no assurance
that these operating patterns will occur. But we will seek to develop markets
outside of China such as South-east Asia in order to reduce the impact of
seasonality.

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Employees

We currently employ 69 full-time employees in China and three in the United
States. We also have 43 seasonal employees in China. We believe our labor
relations are good and our turnover rate is relatively low.

Regulatory Concerns

Our production needs to follow bio-fertilizer and photosynthetic bacteria
standard production and testing procedures issued by the Chinese Ministry of
Agriculture. We comply with the applicable standard production and testing
procedures.

Environmental Matters

The bacteria used in our products are naturally occurring in many water bodies
and have been extensively tested for environmental safety. They have been
recognized as group beneficiary bacteria that can digest small inorganic and
organic molecules for water cleaning and other water treatment purposes. They
are environmentally friendly and are not known to cause any environmental
problems.

Risk Factors

We operate in a market environment that is difficult to predict and that
involves significant risks and uncertainties, many of which will be beyond our
control. The following risk factors and other information included in this
Annual Report should be carefully considered. The risks and uncertainties
described below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial
also may impair our business operations. If any of the following risks occur,
our business, financial condition, operating results, and cash flows could be
materially adversely affected.

(1) RISKS RELATED TO OUR BUSINESS

INVESTORS MAY NOT BE ABLE TO ADEQUATELY EVALUATE OUR BUSINESS DUE TO OUR SHORT
OPERATING HISTORY, LACK OF SIGNIFICANT REVENUE AND LIMITED PRODUCT OFFERINGS.
DUE TO THIS SHORT OPERATING HISTORY, WE HAVE NOT YET GENERATED ANY PROFITS AND
WILL REQUIRE ADDITIONAL FUNDING TO IMPLEMENT OUR BUSINESS PLAN. IN ADDITION, WE
HAVE BEEN THE SUBJECT OF A GOING CONCERN EXPLANATORY PARAGRAPH. FOR THE YEAR
ENDED DECEMBER 31, 2004 FROM OUR INDEPENDENT ACCOUNTANTS.

We have only been operating our current business (ag-biotechnology) since June
2002, providing a limited period for investors to evaluate our business model.
Because of this limited operating history and the uncertain nature of the
rapidly changing markets that we serve, we believe any prediction of future
results of operations is difficult. We have generated insignificant revenue,
have not been profitable, and incurred net operating losses during our recent
operating history. From the inception of our current business (ag-biotechnology)
on June 5, 2002 to December 31, 2004, we had accumulated losses of $4,154,796.
We expect to continue to have operating losses for the foreseeable future as we
further our research and continue to conduct product tests. We will require
additional capital to implement our business plan and continue operating. To the
extent that we are unable to successfully raise the capital necessary to fund
our future cash requirements on a timely basis and under acceptable terms and
conditions, we will not have sufficient cash resources to maintain operations,
and may have to curtail operations and consider a formal or informal
restructuring or reorganization.

We currently have two commercial product lines, a bio-fertilizer and a water
treatment and pathogen suppression agent, and plan to market additional products
in the agriculture market in the next six to twelve months. There can be no
assurances that any of the intellectual property or products intended to be
developed by us will be marketed successfully or that ultimately we can develop
a sufficiently large production capacity and sufficiently large customer demand
to operate on a profitable basis. In addition, we are generally required to
obtain a license from the China Agriculture Department, which can take three to
six months, prior to selling a new product in China. Until sufficient cash flow
is generated from operations, we will have to utilize our capital resources or
external sources of funding to satisfy our working capital needs. Furthermore,
our prospects must be evaluated in light of risks, uncertainties, expenses and
difficulties frequently encountered by companies in an early growth stage.

-6-

Our independent auditors have added an explanatory paragraph to their audit
opinion issued in connection with our financial statements for the year ended
December 31, 2004, which states that the financial statements raise substantial
doubt as to our ability to continue as a going concern. As of December 31, 2004,
we had accumulated net losses of $4,154,796 and had negative working capital of
$55,630. Our ability to make operations profitable or obtain additional funding
will determine our ability to continue as a going concern.

Notwithstanding this, the Company believes that the following facts diminish
going-concern doubts:

o In the fiscal year ended December 31, 2004, our only wholly-owned
subsidiary, Kiwa Bio-Tech Products (Shandong) Co. Ltd. generated net
income equal to $210,133, taking into account a non-recurring cost of
$1,417,434 related to the reverse merger.

o We generated $1.3 million in sales during fiscal 2004 from sales of our
two products in three China provinces and in Cambodia. We believe the
Company is well-positioned to increase sales of these products and to
generate revenue from the introduction of new products in 2005.

OUR BUSINESS IS SUBJECT TO SEASONAL FLUCTUATIONS.

See Seasonality in Item 1.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY, WHICH MAY RESULT IN
VOLATILITY OR HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR COMMON STOCK.

We have experienced, and expect to continue to experience, substantial variation
in our net sales and operating results from quarter to quarter. Our business is
subject to seasonal fluctuations due to growing seasons in different markets. We
believe the factors that influence this variability of quarterly results
include:

o the timing and size of orders from major customers;

o budgeting and purchasing cycles of customers;

o the timing of enhancements to products or new products introduced by us or
our competitors;

o changes in pricing policies made by us, our competitors or suppliers,
including possible decreases in average selling prices of products in
response to competitive pressures; and

o fluctuations in general economic conditions.

We may also choose to reduce prices or to increase spending in response to
competition or to pursue new market opportunities. Due to fluctuations in our
revenue and operating expenses, we believe that period-to-period comparisons of
our results of operations are not a good indication of our future performance.
It is possible that in some future quarter or quarters our operating results
will be below the expectations of securities analysts or investors. In that
case, our stock price could fluctuate significantly or decline.

From January 1, 2003 to December 31, 2004, the market price for our common stock
as quoted on the OTC Bulletin Board has ranged from $0.06 to $0.90 (adjusted for
stock splits). High volatility in the market price of our common stock may
result in lower prices for our common stock, making it more difficult for us to
obtain equity financing on terms and conditions which are favorable to us, if at
all. We expect to continue to incur losses in the near future as we develop and
market our initial products. As a result, we will be dependent on additional
debt or equity financing to fund our operations. If such financing is not
available on terms which are acceptable to us, we may have to delay development
of new products and/or reduce sales and marketing efforts for our existing
products. Such actions may have an adverse effect on our results of operations.
In addition, uncertainties with respect to our ability to raise additional
capital would make operational planning more difficult for management.

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REVOCATION OF OUR RIGHT TO USE PATENTS OR OTHER INTELLECTUAL PROPERTY RIGHTS
COULD ADVERSELY IMPACT THE GROWTH OF OUR BUSINESS.

We acquired a patent in April 2004 from China Agricultural University, titled
"Highly Effective Composite Bacteria for Enhancing Yield and the Related
Methodology for Manufacturing," issued by the China Intellectual Property
Bureau. While we do not yet have any commercial products utilizing the
technology covered by this patent, we plan to use the patent to develop a new
series of products that will compliment our current products. If our rights
under this patent are challenged or if we default on our obligations under
applicable Chinese regulatory requirements, our right to use that patent could
be revoked and we would no longer be permitted to use that patent in our
research, development and sales activities. Such a revocation or default could
have an adverse impact on the growth of our business by reducing the
introduction of new products, and consequently, sales.

OUR SUCCESS DEPENDS IN PART ON OUR SUCCESSFUL DEVELOPMENT AND SALE OF PRODUCTS
CURRENTLY IN THE RESEARCH AND DEVELOPMENT STAGE.

We currently have two commercial products based on photosynthesis bacteria
technology. The first is a bio-fertilizer called Photosynthesis Biological
Catalyst and the second is a water treatment and pathogen suppression agent. We
commenced sales of a powdered form of Photosynthesis Biological Catalyst in
November 2003 and a liquid form in April 2004. We commenced sales of our water
treatment and pathogen suppression agent in April 2004. Many of our product
candidates are still in the research and development stage. The successful
development of new products is uncertain and subject to a number of significant
risks. Potential products that appear to be promising at early states of
development may not reach the market for a number of reasons, including but not
limited to, the cost and time of development. Potential products may be found to
be ineffective or cause harmful side effects, fail to receive necessary
regulatory approvals, be difficult to manufacture on a large scale or be
uneconomical or fail to achieve market acceptance. Our failure to successfully
develop and sell new products may delay or eliminate future acquisition plans
and would most likely slow our development. Our plans to introduce additional
proprietary products may not be realized as expected, if at all.

There can be no assurance that any of our intended products will be successfully
developed or that we will achieve significant revenues from such products even
if they are successfully developed. Our success is dependent upon our ability to
develop and market our products on a timely basis. There can be no assurance
that we will be successful in developing or marketing such products or taking
advantage of the perceived demand for such products. In addition, there can be
no assurance that products or technologies developed by others will not render
our products or technologies non-competitive or obsolete. The China
bio-fertilizer market is still in a very early stage and is very fragmented with
many potential customers, but with no single producer or small group of
producers dominating the market. To some extent, however, we also face
competition from large chemical fertilizer manufacturers in China, such as
Sino-Arabic Chemical Fertilizer Company in national markets as well as Red Sun
Group in Shandong and Jiangsu markets. These chemical fertilizer manufacturers
have provided chemical fertilizers to farmers in China for several years and
customers are more accustomed to using their established products as compared to
new products.

FAILURE TO ADEQUATELY EXPAND TO ADDRESS EXPANDING MARKET OPPORTUNITIES COULD
HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND RESULTS OF OPERATIONS.

We anticipate that a significant expansion of operations will be required to
address potential market opportunities. There can be no assurances that we will
expand our operations in a timely or sufficiently large manner to capitalize on
these market opportunities. The anticipated substantial growth is expected to
place a significant strain on our managerial, operational and financial
resources and systems. While management believes it must implement, improve and
effectively use our operational, management, research and development,
marketing, financial and employee training systems to manage anticipated
substantial growth, there can be no assurances that these practices will be
successful.

OUR SUCCESS DEPENDS IN PART UPON OUR ABILITY TO RETAIN AND RECRUIT KEY
PERSONNEL.

Our success is highly dependent upon the continued services of our executive
officers, key product development personnel and key scientific personnel,
including without limitation, Wei Li, Da chang Ju, Lian jun Luo, James Nian
Zhan, Dr. Daniel Qu, Jing hong Zhang, Professor Qi Wang, Feng jun Ding,Yu hong
Pang, and Professor Gui sheng Chen. Given the intense competition for qualified
management and product development personnel in our industry, the loss of the
services of any key management or product development personnel may
significantly and detrimentally affect our business and prospects. We maintain
employment agreements with two of our key personnel in China: Lian jun Luo and
Qu Bin. The material terms of these employment agreements include three-year

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terms, provision for annual bonuses and stock option grants based on
performance, and severance of three month's base salary if these executives are
laid off without cause. We do not have employment agreements with any other
members of management or key personnel. While we have not experienced difficulty
in attracting and maintaining key personnel, there can be no assurance that we
will be able to retain these personnel, and it may be time consuming and costly
to recruit qualified replacement personnel.

WE CURRENTLY DO NOT HAVE SUFFICIENT REVENUES TO SUPPORT OUR BUSINESS ACTIVITIES
AND, IF OPERATING LOSSES CONTINUE, WE WILL REQUIRE ADDITIONAL FINANCING WHICH WE
MAY NOT BE ABLE TO SECURE.

We require substantial working capital to fund our business. In the short term,
we plan to continue building out our manufacturing facility, adjust our product
formula to improve product stability and optimize our product offerings, expand
our sales and marketing efforts in China, expand our distribution base in China,
introduce new products, and acquire 2 to 3 small or medium sized bio-technology
companies in the Chinese agricultural and/or environmental markets. Over the
next 24 months, we estimate that we will require approximately $2.5 million for
completion of construction of our manufacturing facility and equipment
investment, $1 million to consummate our planned acquisitions, $600,000 in
working capital and $500,000 in administrative and operations expenses. In the
long term, we plan to become a commercialization platform for world-class
biotechnological research and development results for applications in
agriculture, natural resources conservation and environmental protection, launch
our products in the United States and other markets, continue our introduction
of new products, create formal strategic alliances with selected United States
companies to co-develop and/or co-market products in the United States and
China, and form an international biotechnology research center in China for the
research and development of agricultural, environmental and medical
applications.

Because we currently do not have sufficient revenues to support our business
activities and we expect operating losses to continue, we will require
additional capital to fund our operations and finance our research and
development activities. Funding, whether from a public or private offering of
debt or equity, a bank loan or a collaborative agreement, may not be available
when needed or on favorable terms. If we are unable to obtain necessary
financing in the amounts and on terms deemed acceptable, we may have to limit,
delay, scale back or eliminate our research and development activities or future
operations. Any of the foregoing may adversely affect our business.

ENTERING INTO EQUITY OR DEBT FINANCINGS COULD RESULT IN DILUTION TO EXISTING
STOCKHOLDERS.

We will be required to raise additional capital to fund our operations and
finance our research and development activities through a public or private
offering of debt or equity. Any equity financing could result in dilution to the
existing stockholders as a direct result of our issuance of additional shares of
our capital stock. Debt financings will result in interest expense and likely
subject us to negative covenants that would limit our operational flexibility,
and if convertible into equity, could also dilute then-existing stockholders.

THE RISKS ASSOCIATED WITH RAISING CAPITAL THROUGH COLLABORATIONS AND LICENSING
AGREEMENTS COULD ADVERSELY AFFECT OUR BUSINESS.

We will be required to raise additional capital to fund our operations and
finance our research and development activities through collaborative and/or
licensing agreements. Under these agreements, we may be subject to various
restrictive covenants which could significantly limit our operating and
financial flexibility and may limit our ability to respond to changes in our
business or competitive environment. If we are unable to obtain necessary
financing in the amounts and on terms deemed acceptable, we may have to limit,
delay, scale back or eliminate our research and development activities or future
operations. Any of the foregoing may adversely affect our business.

RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO EFFECTIVELY RECEIVE
AND USE OUR REVENUE.

Because almost all of our future revenues may be in the form of Renminbi,
China's currency which is denominated RMB, any future restrictions on currency
exchanges may limit our ability to use revenue generated in Renminbi to fund our
business activities outside China or to make dividend or other payments in U.S.
Dollars. Although the Chinese government introduced regulations in 1996 to allow
greater convertibility of the Renminbi, for current account transactions
significant restrictions still remain, including primarily the restriction that
foreign invested enterprises may only buy, sell and/or remit foreign currencies

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at those banks authorized to conduct foreign exchange business after providing
valid commercial documents. In addition, conversion of Renminbi for capital
account items, including direct investment and loans, is subject to governmental
approval in China, and companies are required to open and maintain separate
foreign exchange accounts for capital account items. We cannot be certain that
the Chinese regulatory authorities will not impose more stringent restrictions
on the convertibility of the Renminbi, especially with respect to foreign
exchange transactions.

We may also be subject to foreign exchange risk and foreign ownership
restrictions. The Chinese government is loosening its control on foreign
exchange transactions. More liberal foreign exchange policies will reduce our
foreign exchange risk by increasing the liquidity of revenues generated in
Renminbi. We do anticipate conducting operations in any countries other than
China and the United States over the next twenty-four months. Fluctuations in
the exchange rate of the Renminbi relative to the U.S. Dollar could adversely
affect our results of operations by affecting our reported earnings for any
given period. In addition, foreign ownership restrictions could also impact our
ability to expand our business through investment and acquisition opportunities.
If we are unable to pursue such strategic opportunities due to foreign ownership
regulations, the growth of our business could be limited.

CHANGES IN CHINA'S POLITICAL, SOCIAL, ECONOMIC OR LEGAL SYSTEMS COULD MATERIALLY
HARM OUR BUSINESS.

All of our manufacturing and production and the majority of our sales occur in
China. Consequently, an investment in our common stock may be adversely affected
by the political, social and economic environment in China. Under its current
leadership, China has been pursuing economic reform policies, including the
encouragement of private economic activity and greater economic
decentralization. There can be no assurance, however, that the Chinese
government will continue to pursue such policies, that such policies will be
successful if pursued, or that such policies will not be significantly altered
from time to time.

Our business and prospects are dependent upon agreements and regulatory approval
with various entities controlled by Chinese governmental instrumentalities.
Historically, our operations in China have received relatively favorable
treatment from these instrumentalities as a result of the Chinese government's
policies of encouraging economic development and innovation, especially in
underdeveloped regions. However, our operations and prospects would be
materially and adversely affected by a change in China's economic policies,
which could make it more difficult for us to obtain necessary approvals from
governmental authorities and to obtain economic incentives from governmental
authorities. In addition, if the Chinese government elects not to honor certain
contracts as a result of political change, it might be difficult to enforce
these contracts against such governmental entities in China. In addition, the
legal system of China relating to foreign investments is both new and
continually evolving, and currently there can be no certainty as to the
application of its laws and regulations in particular instances.

A SLOW-DOWN IN THE CHINESE ECONOMY MAY ADVERSELY EFFECT OUR GROWTH AND
PROFITABILITY.

The growth of the Chinese economy has been uneven across geographic regions and
economic sectors. There can be no assurance that growth of the Chinese economy
will be steady or that any recessionary conditions will not have a negative
effect on our business. Several years ago, the Chinese economy experienced
deflation, which may reoccur in the foreseeable future. In addition, if an
outbreak of SARS recurs, it may cause a decrease in the level of economic
activity and may adversely affect economic growth in China, Asia and elsewhere
in the world. The performance of the Chinese economy overall affects our
profitability as expenditures for agricultural technological products may
decrease due to slowing domestic demand.

OUR ABILITY TO GENERATE REVENUES COULD SUFFER IF THE CHINESE AG-BIOTECHNOLOGY
MARKET DOES NOT DEVELOP AS ANTICIPATED.

The agriculture-biotechnology market in China, the primary market in which we do
business, is in the early stages of development. While we believe the market
opportunity looks promising, we expect that the market will take several years
to develop. While it is difficult to project exactly how long it will take to
develop the ag-biotechnology industry in China, we anticipate that it will take
at least ten years to reach a level of development which is similar to the
current state of the industry in the United States. Successful development of
the ag-biotechnology market in China depends on the following:

o continuation of governmental and consumer trends favoring the use of
products and technologies designed to create sustainable agriculture;

o educating the Chinese agricultural community and consumers about the uses
of ag-biotechnology products; and

o certain institutional developments such as governmental agricultural
subsidies designed to promote the use of environmentally friendly
ag-biotechnological products.

-10-

There are no assurances that these trends will continue, governmental subsidies
will be offered, or that the Chinese agricultural community and consumers will
be successfully educated about the uses of ag-biotechnology products. The
conduct of business in the ag-biotechnology market involves high risks. There
can be no assurances that the ag-biotechnology market in China will develop
sufficiently to facilitate our profitable operation. While we believe that we
will benefit from our first-mover advantage in a growing market, existing
competitors and new entrants in the ag-biotechnology market are expected to
create fierce competition in the future as the market evolves. Competitors and
new entrants may introduce new products into the market that may detrimentally
affect sales of our existing products, and consequently our revenues. We intend
to fund operations through sales, debt and equity financings until such time as
the ag-biotechnology market in China is sufficiently developed to support our
profitable operation.

WE MAY NOT BE ABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS, AND
MAY BE EXPOSED TO INFRINGEMENT CLAIMS FROM THIRD PARTIES.

Our success will depend in part on our ability to obtain patent protection for
our technology, to preserve our trade secrets and to operate without infringing
on the proprietary rights of third parties. We have several trademarks
registered in China, which will be protected by the trademark laws in China for
ten years and are renewable at the expiration of the initial ten year term. In
addition, we have recently acquired a China patent from the China Agricultural
University entitled "Highly Effective Composite Bacteria for Enhancing Yield and
the Related Methodology for Manufacturing," issued by China Intellectual
Property Bureau, which has a remaining term of eight years.

We may also file patents with China Intellectual Property Bureau and/or the U.S.
Patent and Trademark Office as we deem appropriate. There can be no assurance
that the patents applied for will be reviewed in a timely manner, that any
additional patents will be issued or that any patents issued will afford
meaningful protection against competitors with similar technology or that any
patents issued will not be challenged by third parties. There also can be no
assurance that others will not independently develop similar technologies,
duplicate our technologies or design around our technologies whether or not
patented. There also can be no assurance that we will have sufficient resources
to maintain a patent infringement lawsuit should anyone be found or believed to
be infringing our patents. There also can be no assurance that the technology
ultimately used by us will be covered in any additional patent applications that
we may file. We do not believe that our technology infringes on the patent
rights of third parties. However, there can be no assurance that certain aspects
of our technology will not be challenged by the holders of other patents or that
we will not be required to license or otherwise acquire from third parties the
right to use additional technology. The failure to overcome such challenges or
obtain such licenses or rights on acceptable terms could have a material adverse
affect on us, our business, results of operations and financial condition.

The processes and know-how of importance to our technology are dependent upon
the skills, knowledge and experience of our technical personnel, consultants and
advisors and such skills, knowledge and experience are not patentable. To help
protect our rights, we require employees, significant consultants and advisors
with access to confidential information to enter into confidentiality and
proprietary rights agreements. There can be no assurance, however, that these
agreements will provide adequate protection for our trade secrets, know-how or
proprietary information in the event of any unauthorized use or disclosure.
There can be no assurance that we will be able to obtain a license for any
technology that we may require to conduct our business or that, if obtainable,
such technology can be licensed at a reasonable cost. The cost of obtaining and
enforcing patent protection and of protecting proprietary technology may involve
a substantial commitment of our resources. Any such commitment may divert
resources from other areas of our operations. We may be required to license or
sublicense certain technology or patents in order to commence operations. There
can be no assurance that we will be able to obtain any necessary licenses or to
do so on satisfactory terms. In addition, we could incur substantial costs in
defending ourselves against suits brought by other parties for infringement of
intellectual property rights and there are no assurances that we will have the
resources to do so.

WE MAY BECOME INVOLVED IN INTELLECTUAL PROPERTY LITIGATION, THE DEFENSE OF WHICH
COULD ADVERSELY IMPACT OUR BUSINESS OPERATIONS.

Currently we have one patent in China (Patent Number ZL93 101635.5 and
International patent classification Number A01N 63/00), which covers six
different species of bacillus which have been tested as bio-fertilizers to
enhance yield and plant health as well as the production methods of the six
species. The patent will expire on February 19, 2013.

-11-

While we have not received any allegations, complaints or threats of litigation
relating to any intellectual property rights, we may, from time to time, become
involved in litigation regarding patent and other intellectual property rights.
From time to time, we may receive notices from third parties of potential
infringement and claims of potential infringement. Defending these claims could
be costly and time consuming and would divert the attention of management and
key personnel from other business issues. The complexity of the technology
involved and the uncertainty of intellectual property litigation increase these
risks. Claims of intellectual property infringement also might require us to
enter into costly royalty or license agreements. However, we may be unable to
obtain royalty or license agreements on terms acceptable to us, or at all. In
addition, third parties may attempt to appropriate the confidential information
and proprietary technologies and processes used in our business, which we may be
unable to prevent and which would harm the businesses and our prospects.

WE FACE TECHNICAL RISKS ASSOCIATED WITH COMMERCIALIZING OUR TECHNOLOGY WHICH
COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS RESULTS AND OPERATIONS.

A key to our future success is the ability to produce our bacillus series of
products at lower costs than our competitors. Although we are currently
utilizing our proprietary technology to produce such products at lower costs,
our method for producing such products on a commercial basis has only recently
begun. Further, although results from recent independent tests and our early
production results have been encouraging, the ability of our technology to
commercially produce such products at consistent levels is still being
evaluated. There can be no assurance that we will continue to be able to produce
such products at lower costs than our competitors, nor that our technology will
be able to commercially produce such products at consistent levels.

WE DEPEND ON A FEW CUSTOMERS FOR A SIGNIFICANT PORTION OF OUR REVENUE.

Three customers - Brix Resources Inc., Zhongzheng Agriculture-Technology Product
Promotion Co., Beijing Kailida Technology Trading Co. - together accounted for
approximately 90.9% of our net sales for the fiscal year ended December 31,
2004. The loss of any of our significant customers would result in a material
reduction in our sales and results of operations. We do not have long-term
contracts with any of our customers. Purchases generally occur on an
order-by-order basis, and relationships exist as long as there is a perceived
benefit to both parties. A decision by a major customer, whether motivated by
competitive considerations, financial difficulties, and economic conditions or
otherwise, to decrease its purchases from us or to change its manner of doing
business with us, could adversely affect our business and financial condition.
There can be no assurances that we will be able to retain these customers or
further expand our customer base to reduce our dependence on a small number of
customers. Our inability to generate new customers could negatively impact our
business and our ability to continue as a going concern.

WE HAVE LIMITED BUSINESS INSURANCE COVERAGE.

The insurance industry in China is still in its early stage of development.
Insurance companies in China offer limited business insurance. As a result, we
do not have any business liability insurance coverage for our operations.
Moreover, while business disruption insurance is available, we have determined
that the risks of disruption and cost of the insurance are such that we do not
require it at this time. Any business disruption, litigation or natural disaster
might result in substantial costs and diversion of resources.

(2) RISK RELATED TO OUR COMMON STOCK

IF AN ACTIVE TRADING MARKET FOR OUR SECURITIES DOES NOT REMAIN IN EXISTENCE, THE
MARKET PRICE OF OUR SECURITIES MAY DECLINE AND STOCKHOLDERS' LIQUIDITY MAY BE
REDUCED.

Although our common stock is quoted on the OTC Bulletin Board, a regular trading
market for the securities may not be sustained in the future. The OTC Bulletin
Board is an inter-dealer, over-the-counter market that provides significantly
less liquidity than the NASD's automated quotation system. Quotes for stocks
included on the OTC Bulletin Board are not listed in the financial sections of
newspapers as are those for the NASDAQ Stock Market. Therefore, prices for
securities quoted solely on the OTC Bulletin Board may be difficult to obtain
and holders of common stock may be unable to resell their securities at or near
their original purchase price or at any price. As of December 31, 2004, we had
379 stockholders of record. As of December 31, 2004, the closing price per share
of common stock was $0.06 and the average daily trading volume for the last
three months in 2004 was 80,479 shares. Market prices for our common stock will
be influenced by a number of factors, including:

-12-

o the issuance of new equity securities;

o changes in interest rates;

o competitive developments, including announcements by competitors of new
products or services or significant contracts, acquisitions, strategic
partnerships, joint ventures or capital commitments;

o variations in quarterly operating results;

o change in financial estimates by securities analysts;

o the depth and liquidity of the market for our common stock;

o investor perceptions of our company and the ag-biotechnology industry
generally; and

o general economic and other conditions.

WE ARE CONTROLLED BY TWO EXISTING STOCKHOLDERS WHO POSSESS SUFFICIENT VOTING
POWER TO PREVENT OR FRUSTRATE ATTEMPTS TO REPLACE OR REMOVE OUR CURRENT
MANAGEMENT OR TO ENGAGE IN CHANGE OF CONTROL TRANSACTIONS.

Our principal stockholders are All Star Technology Inc. and InvestLink (China)
Limited. Wei Li, our Chief Executive Officer and Chairman, is a principal
shareholder of All Star Technology Inc. Da chang Ju, one of our directors, is a
principal stockholder of InvestLink (China) Limited. All Star Technology Inc.,
together with InvestLink (China) Limited, currently beneficially own
approximately 54.8% of the outstanding shares of our common stock. Accordingly,
All Star Technology Inc., together with InvestLink (China) Limited, currently
have the ability to determine the outcome of any corporate transaction or other
matter submitted to the stockholders for approval, including election of
directors, mergers, consolidations and the sale of all or substantially all of
our assets. Our principal stockholders will also have the power to prevent or
cause a change in control. The interests of these stockholders may differ from
other stockholders' interests.

THE DESIGNATION OF OUR COMMON STOCK AS "PENNY STOCK" COULD IMPACT THE TRADING
MARKET FOR OUR COMMON STOCK DUE TO BROKER-DEALER REQUIREMENTS IMPOSED BY THE
DESIGNATION OF OUR COMMON STOCK AS "PENNY STOCK."

Our common stock is a "penny stock" as defined in Rules 15g-2 through 15g-6
promulgated under Section 15(g) of the Securities Exchange Act of 1934, as
amended, as it meets the following definitions: (i) the stock trades at a price
less than $5.00 per share; (ii) it is not traded on a "recognized" national
exchange; (iii) it is not quoted on the NASDAQ Stock Market, or even if so, has
a price less than $5.00 per share; and (iv) is issued by a company with net
tangible assets less than $2.0 million, if in business more than a continuous
three years, or with average revenues of less than $6.0 million for the past
three years. The principal result or effect of being designated a "penny stock"
is that securities broker-dealers cannot recommend the stock but must trade in
it on an unsolicited basis.

Section 15(g) of the Securities Exchange Act of 1934, as amended, and Rule 15g-2
promulgated thereunder by the Securities and Exchange Commission require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in a
penny stock for the investor's account.

Potential investors in our common stock are urged to obtain and read such
disclosure carefully before purchasing any shares that are deemed to be "penny
stock." Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve
the account of any investor for transactions in such stocks before selling any
penny stock to that investor. This procedure requires the broker-dealer to (i)
obtain from the investor information concerning his or her financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on that information, that transactions in penny stocks are suitable for
the investor and that the investor has sufficient knowledge and experience as to
be reasonably capable of evaluating the risks of penny stock transactions; (iii)
provide the investor with a written statement setting forth the basis on which
the broker-dealer made the determination in (ii) above; and (iv) receive a
signed and dated copy of such statement from the investor, confirming that it
accurately reflects the investor's financial situation, investment experience
and investment objectives. Compliance with these requirements may make it more
difficult for holders of our common stock to resell their shares to third
parties or to otherwise dispose of them in the market or otherwise.

-13-

PROVISIONS IN OUR CHARTER AND THE CORPORATE LAW OF OUR STATE OF INCORPORATION
COULD DETER OR PREVENT AN ACQUISITION OR CHANGE OF CONTROL.

Provisions of our certificate of incorporation may deter or prevent a change in
control of management. Specifically, our certificate of incorporation allows our
Board of Directors to issue 20,000,000 shares of preferred stock, in one or more
series and with such rights and preferences including voting rights, without
further stockholder approval. In the event that the Board of Directors
designates additional series of preferred stock with rights and preferences,
including super-majority voting rights, and issues such preferred stock, the
preferred stock could make our acquisition by means of a tender offer, a proxy
contest or otherwise, more difficult, and could also make the removal of
incumbent officers and directors more difficult. As a result, these provisions
may have an anti-takeover effect. The preferred stock authorized in our
certificate of incorporation may inhibit changes of control.

In addition, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law. That section provides, with some exceptions, that a
Delaware corporation may not engage in any of a broad range of business
combinations with a person or affiliate, or associate of the person, who is an
"interested stockholder" for a period of three years from the date that the
person became an interested stockholder unless: (i) the transaction resulting in
a person becoming an interested stockholder, or the business combination, is
approved by the Board of Directors of the corporation before the person becomes
an interested stockholder; (ii) the interested stockholder acquires 85% or more
of the outstanding voting stock of the corporation in the same transaction that
makes it an interested stockholder, excluding shares owned by persons who are
both officers and directors of the corporation, and shares held by some employee
stock ownership plans; or (iii) on or after the date the person becomes an
interested stockholder, the business combination is approved by the
corporation's Board of Directors and by the holders of at least 66 2/3% of the
corporation's outstanding voting stock at an annual or special meeting,
excluding shares owned by the interested stockholder. An "interested
stockholder" is defined as any person that is (a) the owner of 15% or more of
the outstanding voting stock of the corporation or (b) an affiliate or associate
of the corporation and was the owner of 15% or more of the outstanding voting
stock of the corporation at any time within the three-year period immediately
prior to the date on which it is sought to be determined whether the person is
an interested stockholder.

These provisions could also limit the price that future investors might be
willing to pay in the future for our common stock. This could have the effect of
delaying, deferring or preventing a change in control of our Company and/or a
change in the members our Board of Directors. The issuance of preferred stock
could also effectively limit or dilute the voting power of our stockholders.
Accordingly, such provisions of our certificate of incorporation, as amended,
may discourage or prevent an acquisition or disposition of our business that
could otherwise be in the best interest of our shareholders.

INVESTORS SHOULD NOT RELY ON AN INVESTMENT IN OUR COMMON STOCK FOR DIVIDEND
INCOME AS WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

We do not anticipate paying any cash dividends on our common stock in the
foreseeable future. We intend to retain any earnings to finance the growth of
our business. We cannot assure you that we will ever pay cash dividends.
Therefore, investors should not rely on an investment in our common stock if
they require dividend income. The only income in the foreseeable future such
investors will receive from an investment in our common stock will come from
increases in the market price of our common stock. There can be no assurances
that the market price of our common stock will increase or continue to increase,
and such increases will most likely be uncertain and unpredictable. Whether we
pay any cash dividends in the future will depend on the financial condition,
results of operations and other factors that the Board of Directors will
consider.

IT MAY BE DIFFICULT FOR INVESTORS TO ENFORCE A SERVICE OF PROCESS OR ENFORCE
LIABILITIES AGAINST US.

We are incorporated in the State of Delaware, and our principal executive
offices are located in the State of California. However, substantially all our
fixed assets and operations are located in the People's Republic of China. In
addition, some of our directors and officers are Chinese citizens and residents.
As a result, it may be more difficult for investors or other third parties to
attach our assets in enforcement of a judgment against us or to enforce
liabilities and obligations against us in certain circumstances. It may also be
difficult to enforce service of process against directors and officers in China.

-14-

Item 2. Property

In June 2002 the Company entered into an agreement with Zoucheng Municipal
Government granting the Company use of at least 15.7 acres in Shandong Province,
China at no cost for 10 years to construct a manufacturing facility. Under the
agreement, the Company has the option to pay a fee of $58,696 per acre for the
land use right at the expiration of the 10-year period. The Company may not
transfer or pledge the temporary land use right. In the same agreement, the
Company has also committed to invest approximately $18 million to $24 million
for developing the manufacturing and research facilities in Zoucheng, Shandong
Province. As of December 31, 2004, the Company had invested approximately $1.4
million for the project. Management believes that neither the Company nor
management will be liable for compensation or penalty if the investment
commitment is not fulfilled. As of December 31, 2004, the first phase of a
three-phase construction plan has been completed and production has begun in the
completed facility. The production capacity of the completed facility is 600
tons of bio-organic product. We will continue on to Phase II construction to
expand the capacity to 1,000 tons in 2005 when we are able to secure financing.

We lease our principal executive offices located at 17700 Castleton Street,
Suite 589, City of Industry, California 91748. The lease has a term of two years
and expires on June 11, 2005. We currently expect that we will renew this lease
prior to its expiration.

We also lease an office in Beijing under an operating lease expiring in April
2005 with an aggregate monthly lease payment of approximately $2,882. We do not
expect to renew this lease when it expires and are negotiating terms with
another landlord.

Item 3. Legal Proceedings

None.

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

None.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.

The Company's common stock is quoted on the OTC Bulletin Board of the NASD under
the symbol "KWBT.OB" from March 30, 2004, and was quoted under the symbol
"TTGM.OB" before the merger in March 2004 described previously under Item 1.,
"Business - The Company." During 2004, the market price for our common stock has
ranged from $0.06 to $0.75 (adjusted for stock splits).

The following table sets forth the high and low closing sale prices for our
common stock as reported on the OTC Bulletin Board for the periods indicated:

-------------------------------------------- -------------------- --------------
Fiscal 2003 High Low
-------------------------------------------- -------------------- --------------
First Quarter (commencing 01/01/03) 0.90 0.20
Second Quarter 0.50 0.50
Third Quarter 0.50 0.50
-------------------------------------------- -------------------- --------------
Fourth Quarter 0.50 0.50

-15-

-------------------------------------------- -------------------- --------------
Fiscal 2004 High Low
-------------------------------------------- -------------------- --------------
First Quarter (commencing 01/01/04) 0.50 0.12
Second Quarter 0.75 0.32
Third Quarter 0.45 0.09
-------------------------------------------- -------------------- --------------
Fourth Quarter 0.10 0.06

The foregoing prices take into account the 1-for-4 stock split of our shares
that occurred during the first quarter of 2004.

As of December 31, 2004, there were 379 shareholders of record of our common
shares. We have not paid any dividends on our common shares since our inception
and do not anticipate that dividends will be paid at any time in the immediate
future.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operation.

This report on Form 10-KSB for the fiscal year ended December 31, 2004 contains
"forward-looking" statements within the meaning of Section 21E of the Securities
and Exchange Act of 1934, as amended, including statements that include the
words "believes", "expects", "anticipates", or similar expressions. These
forward-looking statements include, among others, statements concerning our
expectations regarding our working capital requirements, financing requirements,
business, growth prospects, competition and results of operations, and other
statements of expectations, beliefs, future plans and strategies, anticipated
events or trends, and similar expressions concerning matters that are not
historical facts. The forward-looking statements in this report on Form 10-KSB
for the fiscal year ended December 31, 2004 involve known and unknown risks,
uncertainties and other factors that could cause our actual results, performance
or achievements to differ materially from those expressed in or implied by the
forward-looking statements contained herein.

Overview

Our business plan is to develop, manufacture, distribute and market innovative,
cost-effective and environmentally safe bio-technological products for the
agricultural, natural resources and environmental protection markets located
primarily in China. We intend to improve existing products and to develop new
products. Our activities to date have included conducting research and
development, acquiring and developing intellectual property, raising capital,
developing a manufacturing facility, identifying strategic acquisitions and
marketing our products. Our first product, a photosynthesis biological catalyst,
was introduced in China's agricultural market in November 2003. We generated
$1.3 million in revenue from planned principal operations in fiscal 2004.

The Company took its present form in March 2004 when Tintic Gold Mining Company,
a Utah public corporation, merged with Kiwa Bio-Tech Products Group Ltd., a
privately-held British Virgin Islands corporation. (See previous discussion
under "Item 1. Business - The Company."). For accounting purposes this
transaction was treated as an acquisition of the public company and a
recapitalization of Kiwa Bio-Tech Products Group Ltd. and its wholly owned
subsidiary, Kiwa Bio-Tech Products (Shandong) Co., Ltd (reverse merger). On July
22, 2004, we completed our reincorporation in the State of Delaware.

On April 12, 2004, we entered into an agreement with China Agricultural
University to acquire patent Number ZL 93101635.5 entitled "Highly Effective
Composite Bacteria for Enhancing Yield and the Related Methodology for
Manufacturing," which was originally granted by the People's Republic of China
Intellectual Property Bureau on July 12, 1996. There are no limitations under
this agreement on our exclusive use of the patent. The patent covers six
different species of bacillus which have been tested as bio-fertilizers to
enhance yield and plant health. The production methods of the six species are
also patented. The patent will expire on February 9, 2013. The Company plans to
utilize the patent to develop a new series of products that complement its
current products and create a comprehensive product pipeline. We expect to
invest $500,000 (included in manufacturing facility construction and working
capital spending plans) to complete the patent's commercialization and
anticipate generating between $1 million to $1.5 million in annual revenue from
commercial products under the patent in each of the next five to eight years.

-16-

Pursuant to our agreement with China Agricultural University, the University
agreed to provide research and technology support services at no additional cost
to us in the event we decide to use the patent to produce commercial products.
These research and technology support services include (1) furnishing faculty or
graduate-level researchers to help with bacteria culturing, sampling, testing,
trial production and formula adjustment; (2) providing production technology and
procedures to turn the products into powder form while keeping required live
bacteria in the products; (3) establishing quality standards and quality control
systems; (4) providing testing and research support for us to obtain necessary
sale permits from the Chinese government; and (5) cooperation in developing
derivative products. China Agricultural University has been providing some of
these services since August 2004. If the University fails to provide any of
these support services, our remedy against the University would be to bring a
breach of contract suit for damages.

Major Customers And Suppliers

Three customers accounted for 46.1%, 26.3% and 18.5% of our net sales for the
fiscal year ended December 31, 2004. No other single customer accounted for more
than 10% of our revenues. The revenue from Chinese and South-East Asian
customers accounted for 53.9% and 46.1% of sales, respectively. During the
fiscal year ended December 31, 2004, the total number of customers increased 10
fold, and our revenue was 31.5 times the revenue generated during the fiscal
year ended December 31, 2003. This increase is attributable to the fact that
2004 was our first full year of production. We generated revenue of $40,031 from
two customers in the fourth quarter of the fiscal year ended December 31, 2003.
These sales were made possible by completion of Phase I construction of our
production facility in 2003 and launch of our first product to market in
November 2003.

Three suppliers accounted for 49.2%, 27.6%, and 4.1% of our net purchases for
the fiscal year ended December 31, 2004. Our total purchases increased to
$526,897 during fiscal year 2004 compared with $143,393 in fiscal year 2003.

Going Concern

Our consolidated financial statements have been prepared assuming that we will
continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business. The carrying
amounts of assets and liabilities presented in the consolidated financial
statements do not purport to represent the realizable or settlement values. We
incurred a net loss of $2,728,673 and $1,355,239 during the fiscal years ended
December 31, 2004 and 2003, respectively, and our current liabilities exceeded
our current assets by $55,630 and $585,313 at December 31, 2004 and 2003,
respectively. In addition, we are still in an early growth stage and will
require additional capital to fund our business plan. Furthermore, we are
continuing to develop our manufacturing facility and have not generated
significant revenues from our operations. These factors create substantial doubt
about our ability to continue as a going concern.

As of December 31, 2004, we had obtained non-interest bearing loans from the
Chinese local government of approximately $1,510,264. Among these loans,
$120,821 was received from a local science bureau in Shandong Province, China.
The Company repaid $60,411 of such loan during 2004, and the local bureau agreed
to waive the remaining balance. Accordingly, the remaining balance of $60,411
was recorded as other income. Other loans require us to begin repayment of the
outstanding balance of the loans, approximately $1,389,443 in the first year
after our Chinese subsidiary reaches an accumulative profit position. The entire
balance is to be fully repaid within three years thereafter.

In the fiscal year ended December 31, 2004, our only wholly-owned subsidiary,
Kiwa Bio-Tech Products (Shandong) Co. Ltd. generated net income equal to
$210,133.

We generated $1.3 million in sales during fiscal 2004 from sales of our two
products in three China provinces and in Cambodia. We believe the Company is
well-positioned to increase sales of these products and to generate revenue from
the introduction of new products in 2005.

In 2005, we intend to raise additional capital through the issuance of debt or
equity securities to fund the development of our planned business operations,
although there can be no assurances that we will be successful in obtaining this
financing. To the extent that we are unable to successfully raise the capital
necessary to fund our future cash requirements on a timely basis and under
acceptable terms and conditions, we will not have sufficient cash resources to
maintain operations, and may have to curtail operations and consider a formal or
informal restructuring or reorganization.

-17-

Trends And Uncertainties In Regulation And Government Policy In China

AGRICULTURAL POLICY CHANGES IN CHINA

After over ten years of economic growth, China now faces an imbalance between
urban and rural environments as well as the manufacturing and agricultural
industries. On February 10, 2004, the Chinese central government issued a new
policy to correct the imbalance by offering favorable taxation of agricultural
products. Existing agricultural products will be taxed at a rate of 1%. At the
Central Working Conference on Agriculture on December 28, 2004, China's central
authorities pledged to continue agriculture-friendly policies, to stabilize
upward trends in grain production and to increase farmers' income in 2005,
including further reducing agricultural taxes, increasing financial subsidies to
farmers, investing more money in rural infrastructure and increasing financial
assistance to main grain-production counties. We should benefit from these
favorable policies as farmers will retain more of their income and will most
likely spend some of that income on our products resulting in greater sales. In
addition, we anticipate receiving additional governmental support in marketing
our products to farmers due to additional procedural changes included with the
new policy.

GENERAL FISCAL AND MONETARY POLICY CHANGES IN CHINA

In 2004, China adopted restricted fiscal and monetary policies to fight
potential inflation. However, "People's Daily", the most popular state-owned
newspaper in China, stated on August 10, 2004 that the agricultural area has
been one of a few industries which will continue to enjoy expansionary policy.
The article noted that the Chinese government will continue to increase
investment in agricultural development. We have previously benefited from these
policies, as evidenced by our receipt of non-interest bearing loans from the
government in the amount of approximately $1,510,264 from November 28, 2002 to
December 31, 2004. As the government further increases investment in the
agricultural area, we expect that similar loans or other favorable financing
programs will be available to us in the future, which we anticipate will assist
us with managing liquidity and capital resources during our growth period.
However, if these financing programs are not available in the future, we may
have to borrow on terms which are less favorable to us, or we may not be able to
borrow additional funds at all on terms which are acceptable.

FOREIGN INVESTMENT POLICY CHANGES

The Chinese government is considering changes to its currently policy that
provide favorable tax treatment to foreign invested enterprises as compared to
Chinese domestic business. The new policy under consideration will consolidate
enterprise income tax laws between foreign invested enterprises and Chinese
domestic enterprises. The new policy will also provide transitional arrangements
to facilitate the consolidation. No timetable has been announced yet for the
consolidation. If the new policy is implemented, newly established foreign
invested enterprises will not enjoy favorable tax treatment as in effect under
current tax laws. It is anticipated that the proposed policy will not have an
impact on companies like ours, which have already been granted favorable tax
treatment. We believe this beneficial tax status will make an investment in our
Company more attractive to both foreign and domestic investors in China, which
could improve our liquidity or provide additional capital resources. However, if
we were to be subject to such new policies, our tax rate and tax liability would
increase.

FOREIGN EXCHANGE POLICY CHANGES

China is considering allowing its currency to be freely exchangeable for other
major currencies. This change will result in greater liquidity for revenues
generated in Renminbi ("RMB"). We would benefit by having easier access to and
greater flexibility with capital generated in and held in the form of RMB. The
majority of our assets are located in China and most of our earnings are
currently generated in China, and are therefore denominated in RMB. Changes in
the RMB-U.S. Dollar exchange rate will impact our reported results of operations
and financial condition. In the event that RMB appreciates over the next year as
compared to the U.S. Dollar, our earnings will benefit from the appreciation of
the RMB. However, if we have to use U.S. Dollars to invest in our Chinese
operations, we will suffer from the depreciation of U.S. Dollars against the
RMB. On the other hand, if the value of the RMB were to depreciate compared to
the U.S. Dollar, then our reported earnings and financial condition would be
adversely affected when converted to U.S. Dollars.

-18-

Critical Accounting Policies And Estimates

We prepared our consolidated financial statements in accordance with accounting
principles generally accepted in the United States of America. The preparation
of these financial statements requires the use of 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
the reported amount of revenues and expenses during the reporting period.
Management periodically evaluates the estimates and judgments made. Management
bases its estimates and judgments on historical experience and on various
factors that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates as a result of different assumptions or
conditions.

The following critical accounting policies affect the more significant judgments
and estimates used in the preparation of our consolidated financial statements.

ACCOUNTS RECEIVABLE. We perform ongoing credit evaluations of our customers by
analyzing historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns,
and intend to establish an allowance for doubtful accounts when amounts are not
considered fully collectible or when they are more than 365 days past due.

We believe that the accounts receivable balance at December 31, 2004 is fully
collectible. Our belief is based on industry practices in the China region and
those of our competitors, our ongoing relationships and our payment experience
with our customers. As of December 31, 2004, all accounts receivable were less
than one year old and we have no indication of insolvency from any of our
customers.

Terms of the sales vary from cash on delivery through a credit term up to three
to twelve months. Ordinarily, we require our customers to pay between 20% and
60% of the purchase price of an order placed, depending on the results of our
credit investigations, prior to shipment. The remaining balance is due within
twelve months, unless other terms are approved by management. We maintain a
policy that all sales are final, we do not allow returns. However, in the event
of defective products, we may allow customers to exchange the defective products
for new products within 90 days of delivery and prior to the product's
expiration date. In the event of any exchange, the customers pay all
transportation expenses.

INVENTORIES. Inventories are stated at the lower of cost or net realizable
value. Cost is determined on the weighted average method. Inventories include
raw materials, work-in-progress, finished goods and low-value consumables. Net
realizable value is the estimated selling price in the ordinary course of
business, less estimated costs to complete and dispose. Management believes that
there is no obsolete inventory.

REVENUE RECOGNITION. We recognize revenue in accordance with Securities and
Exchange Commission Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements", as amended by SAB No. 104, "Revenue
Recognition"). Sales represent the invoiced value of goods, net of value added
tax, supplied to customers, and are recognized upon delivery of goods and
passage of title.

IMPAIRMENT OF ASSETS. Our long-lived assets consist of property and equipment
and intangible assets. At December 31, 2004, the net value of property and
equipment and intangible assets was $1,255,094 and $463,730, respectively, which
represented approximately 40.1% and 14.8% of our total assets respectively.

We periodically evaluate our investment in long-lived assets, including property
and equipment, for recoverability whenever events or changes in circumstances
indicate the net carrying amount may not be recoverable. Our judgments regarding
potential impairment are based on legal factors, market conditions and
operational performance indicators, among others. In assessing the impairment of
property and equipment, we make assumptions regarding the estimated future cash
flows and other factors to determine the fair value of the respective assets. If
these estimates or the related assumptions change in the future, we may be
required to record impairment charges for these assets.

-19-

INCOME TAXES. We record a valuation allowance to reduce our deferred tax assets
arising from net operating loss carryforwards to the amount that is more likely
than not to be realized. In the event we were to determine that we would be able
to realize our deferred tax assets in the future in excess of our recorded
amount, an adjustment to the deferred tax assets would be credited to operations
in the period such determination was made. Likewise, should we determine that we
would not be able to realize all or part of our deferred tax assets in the
future, an adjustment to the deferred tax assets would be charged to operations
in the period such determination was made.

Results Of Operations

TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003

NET SALES. Net sales were $1,300,251 and $40,031 for the twelve months ended
December 31, 2004 and 2003, respectively, representing an increase of 32 times
the revenue generated during the fiscal year ended December 31, 2003.
Introduction of new products and the development of a customer base from the end
of 2003 to 2004 is the basis for the increase in net sales during the period. A
$599,032 sale to a Cambodia customer in December 2004 accounted for 46.1% of the
total sales in 2004. We had only minimal sales in the fourth quarter of 2003.

COST OF SALES. Cost of sales were $641,236 and $30,294 for the twelve months
ended December 31, 2004 and 2003 including depreciation and amortization of
$56,326 and $16,578, respectively. The increase of $610,942 or 20 times in cost
of sales was primarily due to increased material costs, which resulted from
increased sales.

GROSS PROFIT. Gross profit was $659,015 and $9,737, representing a profit margin
of 50.7% and 24.3% for the twelve months ended December 31, 2004 and 2003,
respectively. This $649,278 (67-fold) increase was due to our increased sales in
2004.

CONSULTING AND PROFESSIONAL FEES. Consulting and professional fees were $448,442
and $545,787 for the twelve months ended December 31, 2004 and 2003,
respectively, representing a decrease of $97,345 or 17.8%. The decrease in
consulting and professional fees in 2004 is primarily attributable to consulting
and professional fees relating to the reverse merger in March 2004 separately
listed as reverse merger cost on the consolidated income statement. Most of
these fees are related to fund-raising, investor relations, public company
operations and marketing, including non-cash costs of $47,750 relating to the
issuance of common stock in September 2004.

DIRECTORS' COMPENSATION. Directors' compensation decreased by $269,712 or 348%
to $77,398 for the twelve months ended December 31, 2004, as compared to
$347,110 for the same period of 2003. In 2003, we issued an aggregate of
8,031,836 shares of common stock to compensate directors for their increased
time commitments to the Company. The decrease was due to a change in director
compensation policy following the completion of the reverse merger in 2004.

GENERAL AND ADMINISTRATIVE. General and administrative expense was $598,492 for
the twelve months ended December 31, 2004, as compared to $327,501 for the same
period of 2003, an increase of $270,991 or 82.8%, primarily as a result of
increased marketing expenses commensurate with enhanced sales volume and
increased personnel-related costs in China reflecting an increased level of
business activity and increased costs associated with being a public company.
General and administrative expenses include salaries, travel and entertainment,
rent, office expense, telephone expense and insurance costs, and other marketing
expenses.

RESEARCH AND DEVELOPMENT. Research and development expense decreased by $13,812,
or 21.8%, to $49,622 for the twelve months ended December 31, 2004, as compared
to $63,434 for the twelve months ended December 31, 2003. This decrease is due
to the reduced expenses to field test our products for sales licenses granted in
2004.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization, excluding
depreciation and amortization included in cost of production, increased $34,213,
or 184%, to $52,798 for the twelve months ended December 31, 2004, as compared
to $18,585 for the same period of 2003. Only six months of depreciation was
accrued in 2003 while a full year depreciation was accrued in 2004. Furthermore,
the addition of patent and ERP software has also contributed to increased
depreciation and amortization in 2004.

-20-

REVERSE MERGER COSTS. Reverse merger costs equal to $1,417,434 were incurred in
the first and second quarters of 2004, including non-cash costs relating to the
issuance of the warrants and options of $1,114,380 to consultants, as compared
to $50,336 for the twelve months ended December 31, 2003. The 2004 reverse
merger costs are non-recurring.

INTEREST INCOME (EXPENSE), NET. Interest expense increased $91,690, or 750%, to
$103,913 for the twelve months ended December 31, 2004, as compared to interest
expense of $12,223 for the same period of 2003. This increase is due to
increased borrowings in 2004 and the amortization of the intrinsic value of the
detachable warrants of $44,663 according to a convertible loan agreement for
$350,000 entered into on September 23, 2004.

AMORTIZATION OF BENEFICIAL CONVERSION FEATURE OF CONVERTIBLE NOTES PAYABLE. For
the twelve months ended December 31, 2004, we recorded a total charge of
$700,000 to reflect the beneficial conversion feature of two convertible loans.
On January 25, 2004, we entered into a convertible loan agreement for $500,000,
with annualized interest of 12%, payable at maturity. The loan was scheduled to
mature on September 25, 2004. As part of the loan terms, the lender had the
right to convert the loan into shares of our common stock at $0.25 per share at
any time prior to the maturity date, subject to our completion of a reverse
merger transaction in the United States, which was accomplished in March 2004.
On June 8, 2004, the lender converted the $500,000 loan into 2,000,000 shares of
our common stock at the agreed conversion price of $0.25 per share. The lender
is an unrelated party located outside the United States. The fair value of the
beneficial conversion feature of this convertible loan was determined to be
$500,000, consisting of the aggregate fair value of the difference between the
$0.25 conversion price and the fair market value of our common stock of $0.60
per share, and was recorded as a reduction to convertible notes payable and an
interest expense from January 25, 2004 through the conversion date (June 8,
2004), which resulted in a charge to operations of $281,250 before the
conversion date, and the unamortized deferred interest expense of $218,750 as of
the conversion date was charged to operations as interest expense.

On March 12, 2004, we entered into a convertible loan agreement for $200,000,
with annualized interest of 12%, payable at maturity. The loan was scheduled to
mature three months after funding. As part of the loan terms, the lender had the
right to convert the loan into shares of our common stock at $0.25 per share at
any time prior to the maturity date, subject to our completion of a reverse
merger transaction in the United States, which was accomplished in March 2004.
The loan was not funded until April 7, 2004. On June 8, 2004, the lender
converted the $200,000 loan into 800,000 shares of our common stock at the
agreed conversion price of $0.25 per share. The lender is an unrelated party
located outside the United States. The fair value of the beneficial conversion
feature of this convertible loan was determined to be $200,000, consisting of
the aggregate fair value of the difference between the $0.25 conversion price
and the fair market value of our common stock of $0.60 per share, and was
recorded as a reduction to convertible notes payable and an interest expense
from April 7, 2004 through the conversion date (June 8, 2004), which resulted in
a charge to operations of $133,333 before the conversion date, and the
unamortized deferred interest expense of $66,667 as of the conversion date was
charged to operations as interest expense.

OTHER INCOME. We had other income for the period ended December 31, 2004 of
$60,411 attributable to forgiveness by Zoucheng Science & Technology Bureau
(Shandong Province, China) of amounts due on money we borrowed from it in 2003.

NET LOSS. Net loss increased $1,373,434 to $ 2,728,673 for the twelve months
ended December 31, 2004, as compared to $1,355,239 for the same period of 2003.
The increased net loss in 2004 is primarily the result of the increase in
reverse merger costs and the amortization of beneficial conversion feature,
offset by additional gross profit in 2004.

Liquidity And Capital Resources

Since inception of the ag-biotech business in 2002, we have relied on the
proceeds from the sale of our equity securities and loans from both unrelated
and related parties to provide the resources necessary to fund the development
of our business plan and operations. During the fiscal year ended December 31,
2004, we raised $1,050,000 in the form of three convertible notes payable and
obtained a government preferential note of approximately $302,053.

We will require additional capital to fund our business plan, and to develop our
manufacturing facility and have not generated significant revenues from our
operations for such purposes. In 2005, we intend to raise additional capital
through the issuance of debt or equity securities to fund the development of our
planned business operations, although there can be no assurances that we will be
successful in this regard. There can be no assurances that we will be able to
obtain sufficient funds to allow us to continue operations in 2005.

-21-

In November 2002 and June 2003, we entered into two bank loans for two auto
purchases with a local bank in Beijing, China in the amounts of $38,663 and
$25,498, with interest rates of 5.32% and 5.02%, respectively. The maturity
dates are October 2007 and March 2008, respectively. As of December 31, 2004,
the outstanding balances of these loans were $15,379 and $11,474, respectively.
We had short-term borrowings of $283,930 as of December 31, 2003, which were
secured by restricted cash in the form of a bank certificate of deposit in U.S.
Dollars. These borrowings were repaid in full during the first six months of
2004.

In October 2003, we entered into a convertible loan agreement with China Star
Investment Group pursuant to which we borrowed $100,000 from the China Star
Investment Group. The loan bears interest at the rate of 12% per annum and was
originally due and payable in October 2004. In May 2004, China Star Investment
Group agreed to waive the conversion right in exchange for acceleration of the
maturity date to June 30, 2004. The maturity date has been subsequently extended
to August 31, 2005. In July 2004, we borrowed an additional $50,500 from China
Star Investment Group under the same loan agreement. This additional loan bears
interest at a rate of 12% per annum and was scheduled to mature on January 26,
2005. The maturity date has been subsequently extended to August 31, 2005. As of
December 31, 2004, the total outstanding balance to China Star Investment Group
was $112,105.

On January 4, 2005, we issued a promissory note in the original principal amount
of $400,000 to Cornell Capital which will be automatically repaid with cash
proceeds from the sale of our common stock under our Standby Equity Distribution
Agreement unless we elect to pay earlier from other sources. The note bears
interest at a rate of 10% per annum and has a term of 290 days. For further
detail see Note 19 to the Financial Statements in respect of the note and Note
14 in respect of our Standby Equity Distribution Agreement.

On September 23, 2004, we entered into a loan agreement with two U.S. citizens,
Young Sam Kim and Song N. Bang, for $350,000 with interest at 10% per annum, and
issued 1,050,000 detachable warrants. The warrants are exercisable for common
stock at $0.20 per share and have a three-year exercise period. The loan was
initially due on March 23, 2005, but the final maturity date was subsequently
extended by agreement to April 21, 2005. Our Chief Executive Officer personally
guaranteed the loan and pledged shares of our common stock that he owns as
security.

We qualified for non-interest bearing loans under a government sponsored program
to encourage economic development in certain industries and locations. To
qualify for the favorable loan terms, a company must meet the following
criteria: (1) be a technology company with innovative technology or product (as
determined by the Science Bureau of the central government); (2) operate in
specific industries, such as agriculture, environmental, education, and others,
which the government has determined important to encourage development; and (3)
be located in undeveloped areas such as Zoucheng, Shandong Province where our
facility is located.

As of December 31, 2004, we had obtained non-interest bearing loans from the
Chinese local government of approximately $1,510,264. Among these loans,
$120,821 was received from Zoucheng Science & Technology Bureau in Shandong
Province, China. The Company repaid $60,411 of the loan during 2004, and
Zoucheng Science & Technology Bureau forgave the payment of the remaining
balance of $60,411 at the end of 2004, which was recorded as other income. Other
loans require us to begin repayment of the outstanding balance of the loans -
approximately $1,389,443 - in the first year after our Chinese subsidiary
reaches an accumulative profit position. The entire balance is to be fully
repaid within three years thereafter.

At December 31, 2004 and December 31, 2003, we had cash of $17,049 and $48,730,
respectively. At December 31, 2004 and 2003, our net working capital deficiency
was $55,630 and $585,313, respectively, reflecting current ratios of 0.96:1 and
0.53:1, respectively, at such dates.

-22-

During the fiscal year ended December 31, 2004, our operations utilized cash of
$1,121,025 as compared to $710,001 utilized for the fiscal year ended December
31, 2003. This increase was attributable to an increased level of business
activity and costs associated with operating a public company.

During the fiscal year ended December 31, 2004 we utilized $219,645 in investing
activities for the purchase of property and equipment, as compared to $925,170
for the fiscal year ended December 31, 2003.

During the fiscal year ended December 31, 2004, we generated $1,308,989 from
financing activities, consisting of the proceeds from three convertible notes
payable of $1,050,000, decrease in restricted cash of $300,000 and increases in
short-term loan and long-term borrowings of $50,000 and $265,806, respectively,
offset in part by the repayment of short-term and long-term loans of $283,930
and $72,887 respectively. During the fiscal year ended December 31, 2003, we
generated $1,161,844 from financing activities through an increase in short-term
loans and long-term borrowings.

We continue to develop our manufacturing facility and have invested
approximately $1,397,536 in Phase I of our new manufacturing facility, including
$986,965 in buildings and $218,250 in equipment. We estimate that the total
investment for the completion of Phases II and III of the construction of our
manufacturing facility will be at least $2.5 million.

We do not anticipate generating sufficient positive internal operating cash flow
to fund our planned operations until such time as we generate substantial
revenues, which may take the next few years to fully realize. In 2005, we intend
to raise additional capital through the issuance of debt or equity securities to
fund the development of our planned business operations, although there can be
no assurances that we will be successful in obtaining this financing. To the
extent that we are unable to successfully raise the capital necessary to fund
our future cash requirements on a timely basis and under acceptable terms and
conditions, we will not have sufficient cash resources to maintain operations,
and may have to curtail operations and consider a formal or informal
restructuring or reorganization.

Inflation And Currency Matters

In the most recent decade, the Chinese economy has experienced periods of rapid
economic growth as well as relatively high rates of inflation, which in turn has
resulted in the periodic adoption by the Chinese government of various
corrective measures designed to regulate growth and contain inflation. Our
success depends in substantial part on the continued growth and development of
the Chinese economy.

Foreign operations are subject to certain risks inherent in conducting business
abroad, including price and currency exchange controls, and fluctuations in the
relative value of currencies. We conduct virtually all of our business in China
and, accordingly, the sale of our products is settled primarily in RMB. As a
result, devaluation or currency fluctuation of the RMB against the U.S. Dollar
would adversely affect our financial performance when measured in U.S. Dollars.
Although prior to 1994 the RMB experienced significant devaluation against the
U.S. Dollar, the RMB has remained fairly stable since then. In addition, the RMB
is not freely convertible into foreign currencies, and the ability to convert
the RMB is subject to the availability of foreign currencies. Effective December
1, 1998, all foreign exchange transactions involving the RMB must take place
through authorized banks or financial institutions in China at the prevailing
exchange rates quoted by the People's Bank of China. The exchange rate was
approximately $1.00 to RMB 8.28 at December 31, 2004 and December 31, 2003.

As China has recently been admitted as a member of the World Trade Organization,
the central government of China is expected to adopt a more rigorous approach to
partially deregulate currency conversion restrictions, which may in turn
increase the exchange rate fluctuation of the RMB. Should there be any major
change in the central government's currency policies, we do not believe that
such an action would have a detrimental effect on our operations, since we
conduct virtually all of our business in China, and the sale of our products is
settled in RMB.

Commitments And Contingencies

The Company has the following material contractual obligations:

-23-

Operating lease commitments - The Company leases an office in Beijing under an
operating lease expiring in April 2005 with an aggregate monthly lease payment
of approximately $2,882. Rent expense under the operating lease for the year
ended December 31, 2004 and 2003 was $31,703 and $27,570, respectively. At
December 31, 2004, the Company's future minimum lease payments required under
the operating lease total $11,528 for the four months ending April 30, 2005.

The Company leases an office in the United States under a commercial lease
agreement expiring in June 2005 with an aggregate monthly lease payment of
approximately $2,560. Pursuant to the lease agreement, the Company paid rent
expenses for the year ended December 31, 2004 of $21,904.

Off-Balance Sheet Arrangements

At December 31, 2004, we did not have any relationships with unconsolidated
entities or financial partnerships, such as entities often referred to as
structured finance or special purpose entities, which would have been
established for the purpose of facilitating off-balance sheet arrangements or
other contractually narrow or limited purposes. As such, we are not exposed to
any financing, liquidity, market or credit risk that could arise if we had
engaged in such relationships.

Recent Accounting Pronouncements

In September 2004, Emerging Issues Task Force ("EITF") reached a consensus on
EITF Issue No. 04-08 ("EITF 04-08"), "The Effect of Contingently Convertible
Debt on Diluted Earnings per Share". Under current interpretations of FASB No.
128, "Earnings per Share", issuers of contingently convertible debt instruments
("Co-Cos") generally exclude the potential common shares underlying the Co-Cos
from the calculation of diluted earnings per share until the underlying common
stock achieves a specified price target, or other contingency is met. EITF 04-08
requires that Co-Cos should be included in diluted earnings per share
computations, if dilutive, regardless of whether the market price trigger has
been met. We do not anticipate that the adoption of EITF04-08 will have a
significant effect on our earnings or financial position.

On October 13, 2004, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 123R, "Share-Based
Payment", which would require all companies to measure compensation cost for all
share-based payments (including employee stock options) at fair value, would be
effective for public companies for interim or annual periods beginning after
June 15, 2005. We could adopt the new standard in one of two ways -- the
modified prospective transition method or the modified retrospective transition
method. We will adopt SFAS No. 123R in our fourth quarter of fiscal 2005 and are
currently evaluating the effect that the adoption of SFAS No. 123R will have on
our financial position and results of operations.

In November 2004, the FASB issued SFAS No. 151, "Inventory Costs", an amendment
of ARB No. 43, Chapter 4, which would be effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. The amendments made by SFAS
No. 151 will improve financial reporting by clarifying that abnormal amounts of
idle facility expense, freight, handling costs, and wasted materials (spoilage)
should be recognized as current-period charges and by requiring the allocation
of fixed production overheads to inventory based on the normal capacity of the
production facilities. We do not anticipate that the adoption of the SFAS No.
151 will have a significant effect on our earnings or financial position.

In November 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- An Amendment to APB Opinion 29". The provisions of this statement are
effective for non monetary asset exchanges occurring in fiscal periods beginning
after June 1, 2005. This statement eliminates the exception to fair value for
exchanges of similar productive assets and replaces it with a general exception
for exchange transactions that do not have commercial substance - that is,
transactions that are not expected to result in significant changes in the cash
flows of the reporting entity. The Company does not believe that the adoption of
SFAS No. 153 will have a significant effect on our earnings or financial
position.

-24-

Item 7. Financial Statements

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Kiwa Bio-Tech Products Group Corporation

We have audited the accompanying consolidated balance sheets of Kiwa Bio-Tech
Products Group Corporation and Subsidiary (the "Company") as of December 31,
2004 and 2003, and the related consolidated statements of operations,
stockholders' equity (deficiency) and cash flows for the years ended December
31, 2004 and 2003. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
as established by the Auditing Standards Board (United States) and in accordance
with the auditing standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. The Company is not required to have, nor were
we engaged to perform, an audit of its internal controls over financial
reporting. Our audit included consideration of internal controls over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Kiwa Bio-Tech
Products Group Corporation and Subsidiary as of December 31, 2004 and 2003 and
the consolidated results of their operations and their cash flows for the years
ended December 31, 2004 and 2003, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations, has a working capital deficit and a net capital deficiency that
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ Grobstein, Horwath & Company, LLP

Sherman Oaks, California
February 25, 2005

-25-

Consolidated Balance Sheets

Kiwa Bio-Tech Products Group Corporation and Subsidiaries

Consolidated Balance Sheets

-------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31,
--------------------------------------------------------------------------
2004 2003
-------------------------------------------------------------------------------------------------------------------------------

ASSETS
Current assets
Cash and cash equivalents $ 17,049 $ 48,730
Restricted cash -- 300,000
Accounts receivable 963,403 45,235
Other receivable 157,495 --
Inventories 83,677 135,201
Due from related party -- 30,574
Prepaid consulting fees 131,600 --
Other current assets 26,340 109,811
-------------------------------------------------------------------------------------------------------------------------------
Total current assets 1,379,564 669,551
Property, Plant and Equipment:
Buildings 986,965 1,045,599
Machinery and equipment 218,250 312,784
Automobiles 101,321 97,485
Office equipment 49,688 11,640
Computer software 8,717 --
-------------------------------------------------------------------------------------------------------------------------------
1,364,941 1,467,508
Less: accumulated depreciation (109,847) (35,468)
-------------------------------------------------------------------------------------------------------------------------------
Property plant and equipment - net 1,255,094 1,432,040
Construction in progress 32,595 45,108
Intangible asset-net 463,730 --
-------------------------------------------------------------------------------------------------------------------------------
Total assets $ 3,130,983 $ 2,146,699
===============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Accounts payable and accrued expenses 577,653 214,138
Construction costs payable 370,453 523,498
Short-term loans 50,000 283,930
Due to related party 112,105 --
Convertible notes payable-unrelated party 312,104 --
Convertible notes payable-related party -- 100,000
Current portion of unsecured loans payables -- 120,821
Current portion of bank notes payables 12,879 12,477
-------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,435,194 1,254,864
Long-term liabilities, less current portion:
Unsecured loans payable 1,389,443 1,063,226
Bank notes payable 26,853 39,732
-------------------------------------------------------------------------------------------------------------------------------
Total long-term liabilities 1,416,296 1,102,958
Shareholders' equity (deficiency)
Common stock -$0.001 par value
Authorized 100,000,000 shares and 50,000,000
shares at December 31, 2004 and 2003, respectively
Issued and outstanding 40,873,711 shares and
30,891,676 shares at December 31, 2004 and
2003, respectively 40,874 30,892
Preferred stock -$0.001 par value
Authorized 20,000,000 shares and nil shares
at December 31, 2004 and 2003, respectively
Issued and outstanding nil shares at
December 31, 2004 and 2003 -- --
Additional paid-in capital 4,393,415 1,184,108
Accumulated deficit (4,154,796) (1,426,123)
-------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity (deficiency) 279,493 (211,123)
-------------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 3,130,983 $ 2,146,699
===============================================================================================================================

-26-

Consolidated Statements of Operations

Kiwa Bio-Tech Products Group Corporation and Subsidiaries

Consolidated Statements of Operations

------------------------------------------------------------------------------------------------------
Year Ended December 31,
2004 2003
------------------------------------------------------------------------------------------------------

Net sales $ 1,300,251 $ 40,031
Cost of sales 641,236 30,294
------------------------------------------------------------------------------------------------------
Gross profit 659,015 9,737
Operating expenses:
Consulting and professional fees 448,442 545,787
Directors' compensation 77,398 347,110
General and administrative 598,492 327,501
Research and development 49,622 63,434
Depreciation and amortization 52,798 18,585
Reverse merger costs 1,417,434 50,336
----------------------------------------------------
Total costs and expenses 2,644,186 1,352,753
------------------------------------------------------------------------------------------------------
Operating loss (1,985,171) (1,343,016)
------------------------------------------------------------------------------------------------------
Interest income (expense),net (803,913) (12,223)
Other income 60,411 --
------------------------------------------------------------------------------------------------------
Net loss $ (2,728,673) $ (1,355,239)
------------------------------------------------------------------------------------------------------
Net loss per common share
-basic and diluted $ (0.074) $ (0.044)

Weighted average number of common shares
outstanding-basic and diluted 36,887,339 30,891,676
------------------------------------------------------------------------------------------------------

-27-

Consolidated Statement of Stockholders' Equity (Deficiency)

Kiwa Bio-Tech Products Group Corporation and Subsidiaries

Consolidated Statement of Stockholders' Equity (Deficiency)

------------------------------------------------------------------------------------------------------------------------------------
Common Stock
Total
Additional Accumulated Stockholders' Equity
Shares Amount Paid-in Capital Deficits (Deficiency)
------------------------------------------------------------------------------------------------------------------------------------

Balance, January 1, 2003 12,356,670 $ 12,357 $ 452,643 $ (70,884) $ 394,116
------------------------------------------------------------------------------------------------------------------------------------
Share issued to consultants for services at $0.04
per share on December 31, 2003 10,503,170 10,503 414,497 -- 425,000
------------------------------------------------------------------------------------------------------------------------------------
Shares issued to directors as directors'
compensation at $0.04 per share on December 31,
2003 8,031,836 8,032 316,968 -- 325,000
------------------------------------------------------------------------------------------------------------------------------------
Net loss for the year ended December 31, 2003 -- -- -- (1,355,239) (1,355,239)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2003 30,891,676 30,892 1,184,108 (1,426,123) (211,123)
------------------------------------------------------------------------------------------------------------------------------------
Shares retained by public shareholders in
March 2004 reverse merger transaction 4,038,572 4,038 (4,038) -- --
------------------------------------------------------------------------------------------------------------------------------------
Issuance of warrants valued at $0.54 per share on
March 30, 2004 in conjunction with March 2004
reverse merger transaction -- -- 943,380 -- 943,380
------------------------------------------------------------------------------------------------------------------------------------
Issuance of stock options valued at $0.57 per
share on March 30, 2004 to consultant in
conjunction with March 2004 reverse merger
transaction -- -- 171,000 -- 171,000
------------------------------------------------------------------------------------------------------------------------------------
Beneficial conversion feature of convertible note
payable funded on January 25, 2004 -- -- 500,000 -- 500,000
------------------------------------------------------------------------------------------------------------------------------------
Beneficial conversion feature of convertible note
payable funded on April 7, 2004 -- -- 200,000 -- 200,000
------------------------------------------------------------------------------------------------------------------------------------
Restricted shares issued to a consultant for
services at $0.45 per share on May 24, 2004. 75,000 75 33,675 -- 33,750
------------------------------------------------------------------------------------------------------------------------------------
Shares issued upon conversion of convertible
notes payable at $0.25 per share on June 8, 2004 2,800,000 2,800 697,200 -- 700,000
------------------------------------------------------------------------------------------------------------------------------------
Shares issued to China Agricultural University in
conjunction with April 2004 Patent Transfer
Agreement at $0.42 per share on July 19, 2004 1,000,000 1,000 419,000 -- 420,000
------------------------------------------------------------------------------------------------------------------------------------
Shares issued to consultant in conjunction with
July 2004 Standby Equity Distribution transaction
at $0.001 per share on July 29, 2004 26,567 27 (27) -- --
------------------------------------------------------------------------------------------------------------------------------------
Shares issued for commitment fee in conjunction
with July 2004 Standby Equity Distribution
transaction at $0.001 per share on July 29, 2004 704,039 704 (704) -- --
------------------------------------------------------------------------------------------------------------------------------------
Shares issued to lawyer for legal services on
September, 19 at $0.014 per share on September
14, 2004 892,857 893 124,107 -- 125,000
------------------------------------------------------------------------------------------------------------------------------------
Issuance of warrants on September 23, 2004 in
conjunction with September 2004 convertible notes
payable -- -- 82,559 -- 82,559
------------------------------------------------------------------------------------------------------------------------------------
Shares issued to consultants for services at
$0.10 per share on October 1, 2004 415,000 415 41,085 -- 41,500
------------------------------------------------------------------------------------------------------------------------------------
Issuance of restricted common stock to a
consultant as final compensation at $0.07 per
share on November 19, 2004 30,000 30 2,070 -- 2,100
------------------------------------------------------------------------------------------------------------------------------------
Net loss for the year ended December 31, 2004 -- -- -- (2,728,673) (2,728,673)
------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 2004 40,873,711 $ 40,874 $ 4,393,415 $ (4,154,796) $ 279,493
------------------------------------------------------------------------------------------------------------------------------------

-28-

Consolidated Statements of Cash Flows

Kiwa Bio-Tech Products Group Corporation and Subsidiaries

Consolidated Statements of Cash Flows

--------------------------------------------------------------------------------------------------------------------
Year Ended
December 31,
------------------------------------------------------
2004 2003
--------------------------------------------------------------------------------------------------------------------

Cash flows from operating activities:
Net loss $ (2,728,673) $ (1,355,239)
Adjustments to reconcile net loss
to net cash used in operating activities:
Issuance of common stock for services 202,350 425,000
Issuance of common stock for director's compensation -- 325,000
Issuance of securities for reverse merger costs 1,114,380 --
Depreciation and amortization 91,061 35,163
Amortization of detachable warrants 44,663 --
Amortization of beneficial conversion feature
of convertible notes payable 700,000 --
(Gain)/Loss on disposal of fixed assets 121,268 --
Changes in operating assets and liabilities:
(Increase)decrease in :
Accounts receivable (918,168) (45,235)
Inventories 51,524 (128,906)
Other receivable (157,495) --
Prepaid consulting fees (131,600) --
Other current assets 83,471 (77,584)
Due from related party 30,574 (30,574)
Increase(decrease)in:
Accounts payable and accrued expenses 363,515 169,276
Due to related party 12,105 (26,902)
--------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (1,121,025) (710,001)
--------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of property and equipment (159,234) (925,170)
Acquisition of intangible asset (60,411) --
-------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (219,645) (925,170)
--------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Decrease (increase) in restricted cash 300,000 (300,000)
Proceeds from short-term loans 50,000 283,930
Repayment of short-term loans (283,930) --
Proceeds from convertible notes payable 1,050,000 100,000
Proceeds from long-term borrowings 265,806 --
Repayment of long-term borrowings (72,887) 1,077,914
--------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,308,989 1,161,844
--------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents:
Net increase(decrease) (31,681) (473,327)
Balance at beginning of year 48,730 522,057
--------------------------------------------------------------------------------------------------------------------
Balance at end of year $ 17,049 $ 48,730
====================================================================================================================

Supplemental Disclosures of Cash flow Information:
Cash paid for interest $ 57,966 $ 12,223
Cash paid for taxes -- --
Non-cash investing and financing activities:
Issuance of common stock for convertible notes payable 700,000 --
Beneficial conversion feature of convertible notes payable 700,000 --
Transfer from convertible notes due to related party 100,000 --
Issuance of common stock in exchange for patent 420,000 --
Issuance of detachable warrants in conjunction
with issuance of convertible notes payable 82,559 --
--------------------------------------------------------------------------------------------------------------------

-29-

Notes to Consolidated Financial Statements

1. Background and Basis of Presentation

Organization - On March 12, 2004, pursuant to an Agreement and Plan of Merger
dated as of March 11, 2004, by and among Tintic Gold Mining Company ("Tintic"),
TTGM Acquisition Corporation, a Utah corporation and wholly-owned subsidiary of
Tintic Gold Mining Company, and Kiwa Bio-Tech Products Group Ltd. ("Kiwa
Bio-Tech"), a British Virgin Islands international business company, TTGM
Acquisition Corporation merged with and into Kiwa Bio-Tech. Each share of Kiwa
Bio-Tech common stock was converted into 1.5445839 shares of Tintic Gold Mining
Company Common Stock, with Kiwa Bio-Tech surviving as Tintic Gold Mining
Company's wholly-owned subsidiary. The merger resulted in a change of control of
Tintic Gold Mining Company, with former Kiwa Bio-Tech stockholders owning
approximately 89% of Tintic Gold Mining Company on a fully diluted basis.
Subsequent to the merger, Tintic Gold Mining Company changed its name to Kiwa
Bio-Tech Products Group Corporation (the "Company"). On July 22, 2004, we
completed our reincorporation in the State of Delaware. The Company accounted
for this transaction as a reverse merger.

In 2002, Kiwa Bio-Tech chartered Kiwa Bio-Tech Products (Shandong) Co. Ltd.
("Kiwa-SD"), a wholly-owned subsidiary organized under the laws of China, as its
offshore manufacturing base to capitalize on low cost, high quality
manufacturing advantages available in China. In October 2003, Kiwa-SD completed
Phase I construction of its state-of-the-art manufacturing facility. In November
2003, Kiwa-SD began shipping its first commercial product, a bio-fertilizer, to
the agricultural market in China. We are currently working on existing product
improvement and new product development while we continue our three-phase
facility build-up.

Business - The Company intends to develop, manufacture, distribute and market
innovative, cost-effective and environmentally safe bio-technological products
for the agricultural, natural resources and environmental protection markets,
primarily in China. The Company intends to improve existing products and to
develop new products. Activities to date have included conducting research and
development, acquiring and developing intellectual property, raising capital,
development of a manufacturing facility, identification of strategic
acquisitions and execution of sales in selected major agricultural markets in
China. The Company's first product, a photosynthesis biological catalyst, was
introduced in the Chinese agricultural market in November 2003. The Company has
completed the development stage in fourth quarter of 2004 as the Company
generated substantial revenue from planned principal operations.

-30-

Basis of Presentation - The consolidated financial statements include the
operations of Kiwa Bio-Tech Products Group Corporation and its wholly-owned
subsidiaries, and are presented in accordance with generally accepted accounting
principles in the United States. All significant intercompany balances and
transactions have been eliminated in consolidation.

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

Country Risk - As the Company's principal operations are conducted in China, the
Company is subject to special considerations and significant risks not typically
associated with companies in North America and Western Europe. These risks
include, among others, risks associated with the political, economic and legal
environments and foreign currency exchange limitations encountered in China. The
Company's results of operations may be adversely affected by changes in the
political and social conditions in China, and by changes in governmental
policies with respect to laws and regulations, among other things.

In addition, all of the Company's transactions undertaken in China are
denominated in RMB, which must be converted into other currencies before
remittance out of China may be considered. Both the conversion of RMB into
foreign currencies and the remittance of foreign currencies abroad require the
approval of the Chinese government.

Credit Risk - The Company performs ongoing credit evaluations of its customers
and intends to establish an allowance for doubtful accounts when amounts are not
considered fully collectable. According to the Company's credit policy, the
Company provides 100% bad debt provision for the amounts outstanding over 365
days, which management believes is consistent with industry practice in the
China region. Based on industry practice and the credit history of the
customers, the management of the Company believes the accounts receivable
balance as of December 31, 2004 will be fully collected.

Going Concern - The consolidated financial statements have been prepared
assuming that the Company will continue as a going concern, which contemplates
the realization of assets and the satisfaction of liabilities in the normal
course of business. The carrying amounts of assets and liabilities presented in
the consolidated financial statements do not purport to represent the realizable
or settlement values. We incurred a net loss of $2,728,673 and $1,355,239 during
the fiscal year ended December 31, 2004 and 2003, respectively, and our current
liabilities exceeded our current assets by $55,630 and $585,313 at December 31,
2004 and 2003, respectively. These factors create substantial doubt about our
ability to continue as a going concern.

Company management continues to evaluate the Company's cash needs and the
availability of debt and equity financing to fund the Company's operations.

As a result of the aforementioned conditions, the Company's registered
independent public accountants, in their independent auditors' reports on the
consolidated financial statements as of and for the year ended December 31, 2004
and 2003, have included an explanatory paragraph in their opinion indicating
that there is substantial doubt about the Company's ability to continue as a
going concern. The financial statements do not contain any adjustments that
might result from the outcome of this uncertainty.

Revenue Recognition - The Company recognizes sales in accordance with Securities
and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements", as amended by SAB No. 104,
"Revenue Recognition". Sales represent the invoiced value of goods, net of value
added tax ("VAT"), supplied to customers, and are recognized upon delivery of
goods and passage of title.

All of the Company's sales made in China are subject to the Chinese value-added
tax at rates ranging from 13% to 17% ("output VAT"). Such output VAT is payable
after offsetting VAT paid by the Company on purchases ("input VAT").

Net Loss Per Common Share - Basic loss per common share is calculated by
dividing net loss by the weighted average number of common shares outstanding
during the period. Diluted loss per common share reflects the potential dilution
that would occur if dilutive securities (stock options, warrants and convertible
debt) were exercised. These potentially dilutive securities were not included in
the calculation of loss per share for the periods presented because the Company
incurred a loss during such periods and thus their effect would have been
anti-dilutive. Accordingly, basic and diluted loss per common share is the same
for all periods presented. As of December 31, 2004, potentially dilutive
securities aggregated 4,847,000 shares of common stock. The loss per common
share calculation for the year ended December 31, 2003 reflects the retroactive
restatement of the stockholders' equity (deficiency) section of the balance
sheet to reflect the March 2004 recapitalization of Kiwa Bio-Tech.

-31-

The Company effected a 4-for-1 split of its outstanding shares of common stock
effective March 29, 2004, in conjunction with the reverse merger transaction
with Kiwa Bio-Tech as described above. Unless otherwise indicated, all share and
per share amounts presented herein have been adjusted to reflect the stock
split.

Advertising - The Company charges all advertising costs to expense as incurred.
Advertising expenses for the years ended December 31, 2004 and 2003 were $17,416
and $4,788, respectively.

Research and development - Research and development costs are charged to expense
as incurred.

Cash and Cash Equivalents - Highly liquid investments with a maturity of three
months or less at the time of acquisition are considered to be cash equivalents.

Financial Instruments and Fair Value - The Company accounts for financial
instruments under the provisions of Statement of Financial Accounting Standards
("SFAS") No. 133: "Accounting for Derivative Instruments and Hedging
Activities", which requires that all derivative financial instruments be
recognized in the consolidated financial statements and maintained at fair value
regardless of the purpose or intent for holding them. Changes in fair value of
derivative financial instruments are either recognized periodically in income or
stockholders' equity (as a component of comprehensive income), depending on
whether the derivative is being used to hedge changes in fair value or cash
flows. The adoption of SFAS No. 133 did not have a material impact on the
Company's consolidated financial position or its results of operations because
the Company does not currently hold any derivative financial instruments and
does not engage in hedging activities. The carrying amounts for cash and cash
equivalents, restricted cash, accounts receivable, other receivables, deposits
and prepayments, short-term borrowings, accounts payable, other payables and
accruals approximate their fair values because of the short maturity of those
instruments. The Company estimates that the carrying value of its long-term debt
also approximates its fair value based on financing currently available from
government sponsored programs and other lenders.

Inventories - Inventories are stated at the lower of cost, determined on a
weighted average basis, and net realizable value. Work in progress and finished
goods are composed of direct material, direct labor and a portion of
manufacturing overhead. Net realizable value is the estimated selling price, in
the ordinary course of business, less estimated costs to complete and dispose.
Management believes that there is no obsolete inventory.

Property, Plant and Equipment - Property, Plant and Equipment are stated at
cost. Major expenditures for betterments and renewals are capitalized while
ordinary repairs and maintenance costs are expensed as incurred. Depreciation
and amortization is provided using the straight-line method over the estimated
useful lives of the assets after taking into account the estimated residual
value. The estimated useful lives are as follows:

Buildings 20-35 years
Machinery and equipments 4-12 years
Automobiles 8 years
Office equipment 5 years
Computer software 3 years

Construction in progress represents land costs as well as factory and office
buildings under construction. The Company capitalizes interest during the
construction phase of qualifying assets in accordance with SFAS No. 34,
"Capitalization of Interest Cost." No interest was capitalized during 2004 and
2003 as the construction in progress was minimal.

-32-

Income Taxes - The Company accounts for income taxes under the provisions of
SFAS No. 109, "Accounting for Income Taxes", which requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the consolidated financial statements or tax
returns. Deferred income taxes are provided using the liability method and is
recognized for all significant temporary differences between the income tax and
financial statement bases of assets and liabilities. There were no material
deferred tax assets or liabilities as of December 31, 2004 and 2003.

Operating Leases - Operating leases represent those leases under which
substantially all the risks and rewards of ownership of the leased assets remain
with the lessors. Rental payments under operating leases are charged to expense
on the straight-line basis over the period of the relevant leases.

Foreign Currency Translation - The functional currency of the Company is the
RMB. Transactions denominated in foreign currencies are translated into RMB at
the unified exchange rates quoted by the People's Bank of China, prevailing at
the transaction dates. Monetary assets and liabilities denominated in foreign
currencies are translated into RMB using the applicable unified exchange rates
prevailing at the balance sheet date.

Translations of amounts from RMB into United States Dollars ("US$") were at
approximately US $1.00 = RMB 8.28 for all periods presented. No representation
is made that the RMB amounts could have been, or could be, converted into US$ at
that rate or at any other rate. Due to the stability of the RMB during the
periods covered by the consolidated financial statements, no material exchange
differences exist.

Comprehensive Income (Loss) - The Company has adopted the provisions of SFAS No.
130, "Reporting Comprehensive Income". SFAS No. 130 establishes standards for
the reporting and display of comprehensive income, its components and
accumulated balances in a full set of general purpose financial statements. SFAS
No. 130 defines comprehensive income (loss) to include all changes in equity
except those resulting from investments by owners and distributions to owners,
including adjustments to minimum pension liabilities, accumulated foreign
currency translation, and unrealized gains or losses on marketable securities.
The Company did not have any minimum pension liabilities, foreign currency
translation income or loss or unrealized gains or losses on marketable
securities at December 31, 2004.

The Company's only component of comprehensive income (loss) is foreign currency
translation income (loss). Comprehensive income (loss) was not material for all
periods presented.

Stock-Based Compensation - The Company periodically issues shares of common
stock for services rendered or for financing costs. Such shares are valued based
on the market price on the transaction date.

The Company periodically issues stock options and warrants to employees and
non-employees in non-capital raising transactions for services and for financing
costs.

The Company has adopted SFAS No. 123, "Accounting for Stock-Based Compensation",
which establishes a fair value method of accounting for stock-based compensation
plans.

The provisions of SFAS No. 123 allow companies to either record an expense in
the financial statements to reflect the estimated fair value of stock options or
warrants to employees, or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", but to disclose on an annual basis the pro forma effect on
net income (loss) and net income (loss) per common share had the fair value of
the stock options and warrants been recorded in the financial statements. SFAS
No. 123 was amended by SFAS No. 148, which now requires companies to disclose in
financial statements the pro forma effect on net income (loss) and net income
(loss) per common share of the estimated fair market value of stock options or
warrants issued to employees. The Company has elected to continue to account for
stock-based compensation plans utilizing the intrinsic value method.
Accordingly, compensation cost for stock options and warrants is measured as the
excess, if any, of the fair market price of the Company's common stock at the
date of grant above the amount an employee must pay to acquire the common stock.

In accordance with SFAS No. 123, the cost of stock options and warrants issued
to non-employees is measured at the grant date based on the fair value of the
award. The fair value of the stock-based award is determined using the
Black-Scholes option-pricing model. The resulting amount is charged to expense
on the straight-line basis over the period in which the Company expects to
receive benefit, which is generally the vesting period.

-33-

The Company did not issue any stock options to its officers or management during
the fiscal years ended December 31, 2004 and 2003.

Reclassification from prior year audited financial statements - Certain prior
year comparative figures have been reclassified to conform with the current year
presentation.

2. Recent Accounting Pronouncements

In September 2004, Emerging Issues Task Force ("EITF") reached a consensus on
EITF Issue No. 04-08 ("EITF 04-08"), "The Effect of Contingently Convertible
Debt on Diluted Earnings per Share". Under current interpretations of FASB No.
128, "Earnings per Share", issuers of contingently convertible debt instruments
("Co-Cos") generally exclude the potential common shares underlying the Co-Cos
from the calculation of diluted earnings per share until the underlying common
stock achieves a specified price target, or other contingency is met. EITF 04-08
requires that Co-Cos should be included in diluted earnings per share
computations, if dilutive, regardless of whether the market price trigger has
been met. We do not anticipate that the adoption of EITF 04-08 will have a
significant effect on our earnings or financial position.

On October 13, 2004, the FASB issued the SFAS No. 123R, "Share-Based Payment",
which would require all companies to measure compensation cost for all
share-based payments (including employee stock options) at fair value, would be
effective for public companies for interim or annual periods beginning after
June 15, 2005. We could adopt the new standard in one of two ways -- the
modified prospective transition method or the modified retrospective transition
method. We will adopt SFAS No. 123R in our fourth quarter of fiscal 2005 and are
currently evaluating the effect that the adoption of SFAS No. 123R will have on
our financial position and results of operations.

3. Inventories

Inventories consisted of the following at December 31, 2004 and 2003:

------------------------------------ ---------------------------------- ---------------------------------
December 31, 2004 December 31, 2003
------------------------------------ ---------------------------------- ---------------------------------

Raw materials $ 36,248 $ 23,497
Work in progress 32,295 111,390
Finished goods 15,134 314
------------------------------------ ---------------------------------- ---------------------------------
Total $ 83,677 $135,201

4. Other receivable

The other receivable consists of an obligation to repay an advance of $157,495
made to an unrelated U.S. incorporated entity, Kiwa Bio-Tech Products, Inc.
("KBPI"), for payment of merger costs in March 2004. The Company has reached a
repayment schedule with KBPI, under which KBPI was to initially fully repay the
amount by March 2005. The repayment schedule was subsequently extended and KBPI
is to fully repay the amount by September 2005.

-34-

5. Prepaid consulting fees

As of December 31, 2004, the prepaid consulting fees mainly consisted of $63,750
prepaid to KBPI for one-year of marketing service. According to the marketing
service agreement, KBPI will be entitled to receive a royalty of 8% of the gross
profits derived from the products or services sold by the Company which are
referred by KBPI.

Other consulting fees included $45,000 prepaid to a consultant for public
relation services and sourcing of equity and debt financing for the Company over
one-year consulting period. The Company prepaid $6,850 to another consultant for
public relation services over six months. In addition, $16,000 in 2004 was
prepaid to a placement agent of the Company to raise bridge financing. No
consulting fees were paid in 2003.

6. Property Plant and Equipment

The total gross amount of property, plant and equipment was $1,364,941 and
$1,467,508, respectively, as of December 31, 2004 and 2003. The decrease is
mainly due to an adjustment to reflect the actual costs of property, plant and
equipment rather than the previously estimated cost provided by project
constructors. The adjustment of costs is based on the final project invoice and
certified by an independent accountant, the project constructor and the Company
in the fourth quarter of 2004. It resulted in a decrease of $130,523.

Depreciation expense was approximately $74,379 and $35,163 for the years ended
December 31, 2004 and 2003, respectively.

7. Intangible asset

The Company's intangible asset as of December 31, 2004 consisted of the
following:

---------- ---------------------- ---------------- --------------- -----------------
Expected Gross Accumulated Intangible
Amortization Period Carrying Value Amortization asset, Net
---------- ---------------------- ---------------- --------------- -----------------

Patent 8.5 years $480,411 $16,681 $463,730

The following table presents future expected amortization expense related to the
patent:

Amount
------
2005 $ 57,074
2006 57,074
2007 57,074
2008 57,074
2009 57,074
Thereafter 178,360
---------
$ 463,730
=========

8. Related Party Transactions with China Star Investment Group

China Star Investment Group ("China Star") is a company which is 10% owned by a
major stockholder of the Company. The balance due to China Star at December, 31,
2004 of $112,105 was primarily related to a loan from China Star and operating
expenses that China Star paid on behalf of the Company.

In October 2003, the Company obtained a $100,000 loan from China Star. The loan
was scheduled to mature on October 20, 2004, and bears interest at 12% per
annum, payable at maturity. As part of the loan terms, China Star had the right
to convert the loan into shares of the Company's common stock at $0.25 per share
at any time prior to the maturity date, subject to the Company completing a
reverse merger transaction in the United States, which was accomplished in March
2004. China Star has waived this conversion right. The final maturity date has
been subsequently extended to August 31, 2005.

The balance due from China Star at December 31, 2003 of $30,574 relate to
unsecured, non-interest bearing cash advances that are due on demand.

-35-

9. Construction Costs Payable

As of December 31, 2004, construction costs payable represents remaining amounts
to be paid for the Phase I construction project based on the independent
accountant's certification discussed in Note 6. Construction costs payable will
be fully repaid in 2005. As of December 31, 2003, construction costs payable
represents the estimated cost provided by the construction contractor. The
amount was adjusted upon completion of the project.

10. Short-term Loans

As of December 31, 2004, short term loans consisted of loans of $50,000 from
Greater China Securities Inc. The loans were unsecured, non-interest bearing and
were repaid in February 2005.

As of December 31, 2003, short-term loans consisted of RMB bank loans secured by
a US dollar deposit of $300,000, maturing on various dates through June 2004,
with interest rates ranging from 5.04% to 6.90% per annum.

11. Convertible notes payable

On January 25, 2004, the Company entered into a convertible loan agreement for
$500,000, with interest at 12%, payable at maturity. The loan was scheduled to
mature on September 25, 2004. As part of the loan terms, the lender has the
right to convert the loan into shares of the Company's common stock at $0.25 per
share at any time prior to the maturity date, subject to the Company completing
a reverse merger transaction in the United States, which was accomplished in
March 2004. On June 8, 2004, the lender converted the $500,000 loan into
2,000,000 shares of the Company's common stock at the agreed upon conversion
price of $0.25 per share. The lender is an unrelated party located outside the
United States.

The fair value of the beneficial conversion feature of this convertible loan was
determined to be $500,000, based on a formula that takes the lower of
outstanding loan principal and the difference between the $0.25 conversion price
and the fair market value of the Company's common stock of $0.60 per share. The
fair value of $500,000 was recorded as a reduction to convertible notes payable
and charged to operations as interest expense from January 25, 2004 through the
conversion date (June 8, 2004), which resulted in a charge to operations of
$281,250 before the conversion date. The unamortized deferred interest expense
of $218,750 as of the conversion date was charged to operations.

On March 12, 2004, the Company entered into a convertible loan agreement for
$200,000, with interest at 12%, payable at maturity. The loan was scheduled to
mature three months after funding. As part of the loan terms, the lender has the
right to convert the loan into shares of the Company's common stock at $0.25 per
share at any time prior to the maturity date, subject to the Company completing
a reverse merger transaction in the United States, which was accomplished in
March 2004. The loan was not funded until April 7, 2004. On June 8, 2004, the
lender converted the $200,000 loan into 800,000 shares of the Company's common
stock at the agreed upon conversion price of $0.25 per share. The lender is an
unrelated party located outside the United States.

The fair value of the beneficial conversion feature of this convertible loan was
determined to be $200,000, based on a formula that takes the lower of
outstanding loan principal and the difference between the $0.25 conversion price
and the fair market value of the Company's common stock of $0.60 per share. The
fair value of $200,000 was recorded as a reduction to convertible notes payable
and charged to operations as interest expense from April 7, 2004 through the
conversion date (June 8, 2004), which resulted in a charge to operations of
$133,333 before the conversion date. The unamortized deferred interest expense
of $66,667 as of the conversion date was charged to operations.

On September 23, 2004, the Company entered into a convertible loan agreement for
$350,000 with interest at 10% per annum, and issued 1,050,000 detachable
warrants. The loan was initially due on March 23, 2005, but the final maturity
date was subsequently extended by agreement to April 21, 2005. The lender is an
unrelated party located in the United States. Each warrant entitles the holder
to subscribe for one share of common stock of the Company at an exercise price
of $0.20 per share through September 23, 2007. None of the detachable warrants
were exercised in the fiscal year ended December 31, 2004. The intrinsic value
of the detachable warrants was determined to be $82,559, calculated pursuant to
the Black-Scholes option pricing model in accordance with EITF Issue No 00-27.
This intrinsic value has been recorded as a reduction to the convertible loan
and has been credited to additional paid-in capital, and is being amortized on
the straight-line basis over the term of the loan with the amounts amortized
being recognized as interest expense. Any unamortized discount remaining at the
date of conversion of the loan will be recognized as interest expense in the
period the conversion takes place. In addition, the Company's Chief Executive
Officer, Mr. Li Wei, also executed a guarantee of repayment of the loan which is
secured by shares of the Company's common stock that he owns.

-36-

In connection with the September 23, 2004 convertible loan agreement, the
Company recorded deferred debt issuance costs of $32,000, consisting of the
direct costs incurred for the issuance of the convertible loan. Debt issuance
costs are being amortized on the straight-line method over the term of the
convertible loan, with the amounts amortized being recognized as interest
expense. Any unamortized debt issuance costs remaining at the date of conversion
of the loan will be recognized as interest expense in the period the conversion
takes place.

12. Unsecured loans payable

Unsecured loans payable (including current portion) consisted of the following
at December 31:

---------------------------------------------------------------- ------------- ----------------------------- -----------------------
Notes 2004 2003
---------------------------------------------------------------- ------------- ----------------------------- -----------------------

Unsecured loan payable to Zoucheng Municipal (i)
Government, non-interest bearing, becoming due within
three years from Kiwa-SD's first profitable year on a
formula basis, interest has not been imputed due to
the undeterminable repayment date $1,087,390 $1,063,226
---------------------------------------------------------------- ------------- ----------------------------- -----------------------
Unsecured loan payable to Zoucheng Science & Technology (ii)
Bureau, non-interest bearing, 50% of the loan was repaid in
2004 and other 50% was written off as other income at the end
of 2004 -- 120,821
---------------------------------------------------------------- ------------- ----------------------------- -----------------------
Unsecured loan payable to Zoucheng Science & Technology (iii)
Bureau, non-interest bearing, it is due in Kiwa-SD's first
profitable year, interest has not been imputed due to the
undeterminable repayment date 302,053 --
---------------------------------------------------------------- ------------- ----------------------------- -----------------------
Total $1,389,443 $1,184,047
---------------------------------------------------------------- ------------- ----------------------------- -----------------------

Notes:

(i.) The unsecured loan payable consists of amounts borrowed under a project
agreement with Zoucheng Municipal Government, whereby the Company is
allowed to borrow up to $1.2 million. The loan is non-interest bearing,
becoming due within three years from Kiwa-SD's first profitable year on
a formula basis. Interest has not been imputed due to the undeterminable
repayment date.

According to the project agreement, Zoucheng Municipal Government
granted the Company use of at least 15.7 acres in Shandong Province,
China at no cost for 10 years to construct a manufacturing facility.
Under the agreement, the Company has the option to pay a fee of $58,696
per acre for the land use right after the 10-year period. The Company
may not transfer or pledge the temporary land use right. The Company
also committed to invest approximately $18 million to $24 million for
developing the manufacturing and research facilities in Zoucheng,
Shandong Province. As of December 31, 2004, the Company invested
approximately $1.4 million for the project. Management believes that
neither the Company nor management will be liable for compensation or
penalty if such commitment is not fulfilled.

(ii.) The amount represents an unsecured non-interest bearing loan payable to
Zoucheng Science & Technology Bureau. 50% of the loan was repaid in 2004
and other 50% was waived and recorded as other income at the end of
2004.

(iii.) The amount was borrowed from Zoucheng Science & Technology Bureau in
2004. It is non-interest bearing, unsecured and due in Kiwa-SD's first
profitable year. Interest has not been imputed due to the undeterminable
repayment date.

-37-

The Company qualifies for non-interest bearing loans under a government
sponsored program to encourage economic development in certain industries and
locations. To qualify for the favorable loan terms, a company must meet the
following criteria: (1) be a technology company with innovative technology or
product (as determined by the Science Bureau of the central government); (2)
operate in specific industries, such as agriculture, environmental, education,
and others, which the government has determined are important to encourage
development; and (3) be located in undeveloped areas such as Zoucheng, Shandong
Province where the manufacturing facility of the Company is located.

13. Bank notes payable

Bank notes payable (including current portion) consisted of the following at
December 31 of the years indicated:

----------------------------------------------------------------------- -------------------------- ----------------------
2004 2003
----------------------------------------------------------------------- -------------------------- ----------------------

Note payable to a bank, payable in monthly installments of
$735 secured by an automobile, bearing an interest rate of 5.32% per
annum, maturing in October 2007. $23,159 $30,536
----------------------------------------------------------------------- -------------------------- ----------------------
Note payable to a bank, payable in quarterly installments of
principle equal to $1,275, secured by an automobile, bearing an
interest rate of 5.02% per annum, maturing in March 2008. 16,573 21,673
------ ------
----------------------------------------------------------------------- -------------------------- ----------------------
Total $39,732 $52,209
======= =======
----------------------------------------------------------------------- -------------------------- ----------------------

Maturities of notes payable as of December 31, 2004 are as follows:

------------------------------ --------------------------------------------------------
Years Ending Amount
December 31
------------------------------ --------------------------------------------------------

2005 $12,879
2006 13,303
2007 12,276
2008 1,274
------------------------------ --------------------------------------------------------
Total $39,732
========================================================

14. Equity-Based Transactions

(a) Authorized share capital

On June 3, 2004, a majority of the Company's stockholders approved an amendment
to the Company's Second Restated and Amended Articles of Incorporation to (a)
increase from 50,000,000 to 100,000,000 the authorized number of shares of the
Company's common stock and (b) authorize 20,000,000 shares of preferred stock
(the rights, preferences, privileges and restrictions to be determined by the
Board of Directors). The amendment was effective on July 16, 2004.

(b) Issued and outstanding share capital

From January 1, 2003 to December 31, 2004, the Company has engaged in the
following equity-based transactions:

On December 31, 2003, the Company issued 18,535,006 shares of common stock in
exchange for consulting services provided by various consultants and directors
of the Company.

In conjunction with the March 2004 reverse merger transaction (see under
"Organization" in Note 1), the Company entered into the following equity-based
transactions:

-38-

a. In exchange for 100% of the issued and outstanding shares of Kiwa Bio-Tech,
the Kiwa Bio-Tech stockholders were issued 30,891,676 shares of Tintic's common
stock.

b. The stockholders of Tintic retained their 4,038,572 shares of common stock
which were issued and outstanding prior to the consummation of the Merger
Agreement.

c. Tintic assumed 1,852,501 stock options issuable by Kiwa Bio-Tech at March 12,
2004.

d. Effective March 11, 2004, the Company issued a warrant to its financial
advisor to purchase 1,747,000 shares of common stock exercisable at $0.20 per
share for six years. The fair value of this warrant was determined to be
approximately $0.54 per share pursuant to the Black-Scholes option-pricing
model. The aggregate fair value of such warrant of $943,380 was charged to
operations as reverse merger costs during the year ended December 31, 2004.

e. Effective March 30, 2004, the Company issued a stock option to a consultant
to purchase 300,000 shares of common stock exercisable at $0.20 per share for
ten years. The fair value of this option was determined to be approximately
$0.57 per share pursuant to the Black-Scholes option pricing model. The
aggregate fair value of such option of $171,000 was charged to operations as
reverse merger costs during the year ended December 31, 2004.

On April 12, 2004, the Company entered into an agreement with China Agricultural
University to acquire patent no. ZL 93101635.5 entitled "Highly Effective
Composite Bacteria for Enhancing Yield and the Related Methodology for
Manufacturing", which was originally granted by the PRC Patent Bureau on July
12, 1996. The purchase consideration was $480,411, of which $30,205 was paid at
signing of the agreement and an additional $30,205 was paid in December 2004. In
addition, the Company issued 1,000,000 shares of common stock valued at $0.42
per share based on its fair market value on July 19, 2004 (aggregate value
$420,000), the date when the application for the patent right holder alternation
registration was approved.

On May 24, 2004, the Company entered into a contract with Cinapsys Inc. to
provide investor relations services. The engagement is for a period of twelve
months and provides for a monthly retainer of $4,000 and the issuance of 75,000
shares of common stock. The Company recorded a prepaid expense of $33,750 based
on the closing price of its common stock on the effective date of the agreement
and is amortizing such amount to operations over the 12 month contract period.
On September 27, 2004, the Company terminated the engagement letter with
Cinapsys Inc. according to the termination clause and the Board of Directors
authorized the issuance of the above 75,000 common shares to Cinapsys Inc.
Accordingly, the prepaid expense was written off in 2004.

On July 6, 2004, the Company entered into a Standby Equity Distribution
Agreement with Cornell Capital Partners, LP ("Cornell Capital"). Under the
Standby Equity Distribution Agreement, the Company may, at its discretion,
periodically issue and sell to Cornell Capital common stock for a total purchase
price of up to $10,000,000, subject to further limitations noted in the next
paragraph. The purchase price for the shares is equal to 99% of the market
price, which is defined in the Standby Equity Distribution Agreement as the
lowest volume weighted average price of the common stock during the five trading
days following the notice date. Cornell Capital received a one-time commitment
fee of 704,039 shares of the Company's common stock following execution of the
Agreement on July 29, 2004, which was treated as a reduction of the proceeds.
Cornell Capital will be paid a fee equal to 4% of each advance, to be retained
from each advance. As a result, our proceeds from the sale of shares under the
Standby Equity Distribution Agreement will be equal to 95% of the market price,
calculated as described above. In connection with the Standby Equity
Distribution Agreement, the Company also entered into a Placement Agent
Agreement with Newbridge Securities Corporation, a registered broker-dealer. On
July 29, 2004, the Company paid Newbridge Securities Corporation a one-time
placement agent fee of 26,567 shares of common stock with a value of
approximately $10,000 based on the volume weighted average price of the
Company's common stock as quoted by Bloomberg, LP on the date of the Placement
Agent Agreement which was treated as a reduction of the proceeds. The Company
registered the shares of common stock issuable under the Standby Equity
Distribution Agreement for resale by Cornell Capital pursuant to Registration
Statement on Form SB-2 (No. 333-117868), which was declared effective by the
Securities and Exchange Commission in December 2004.

The amount of stock the Company may sell under the Standby Equity Distribution
Agreement at one time is subject to a maximum advance amount of $500,000, with
no cash advance occurring within seven trading days of a prior advance, and the
Company may not request cash advances if the shares to be issued in connection
with an advance would result in Cornell Capital owning more than 9.9% of the
Company's outstanding common stock. Based on the Company's current outstanding
shares of 40,873,711, it could not issue shares under the Standby Equity
Distribution Agreement if it would result in Cornell Capital owning more than
4,491,118 shares. Assuming a price of $0.02 per share, the closing price of the
Company's common stock on March 22, 2005, and the issuance of 4,491,118 shares
under the Standby Equity Distribution Agreement would result in proceeds to the
Company of approximately $85,331 after taking into account fees and discounts..

-39-

On September 14, 2004, the Company issued 892,857 shares of common stock to
Stubbs Alderton and Markiles, LLP, with an aggregate value of $125,000, as
payment for legal fees incurred during 2004.

On October 1, 2004, the Company entered a Consulting Agreement with Amy L.Yi to
provide investor relations services. The engagement is for a period of six
months and provides for the issuance of 200,000 shares of common stock. The
Company recorded a prepaid expense of $20,000 based on the closing price of its
common stock on the effective date of the agreement and is amortizing such
amount to operations over the six month contract period.

On October 1, 2004, the Company entered a Consulting Agreement with Robert
Sullivan to provide investor relations services. The engagement is for a period
of three months and provides for the issuance of 165,000 shares of common stock.
The Company recorded a prepaid expense of $16,500 based on the closing price of
its common stock on the effective date of the agreement and is amortizing such
amount to operations over the three month contract period.

On October 1, 2004, the Company entered a Consulting Agreement with Barry R.
Clark to provide investor relations services. The engagement is for a period of
four months and provides for the issuance of 200,000 shares of common stock. The
Company recorded a prepaid expense of $20,000 based on the closing price of its
common stock on the effective date of the agreement and is amortizing such
amount to operations over the four month contract period. After one month
service, the Company terminated the engagement with Barry R. Clark according to
the termination clause and the Board of Directors authorized the cancellation of
150,000 S-8 stock certificates issued to Barry R. Clark and the issuance of
30,000 shares of restricted stock to Barry R. Clark as final compensation, which
has been recognized as consulting expenses as of December 31, 2004.

On June 3, 2004, a majority of the Company's stockholders approved the adoption
of the Company's 2004 Stock Incentive Plan (the "Plan"). The plan reserved
1,047,907 shares of the Company's common stock for the issuance of stock options
and stock purchase rights under the Plan, of which not more than 350,000 shares
may be granted to any participant in any fiscal year.

The options of the Plan will expire ten years from the date of grant. The
options which are not issued to an officer, a director or a consultant, will
become exercisable at least as rapidly as 20% per year over the five-year period
commencing on the date of grant. As of December 31, 2004 and 2003, no stock
options or stock purchase rights had been granted under the Plan.

15. Major Customers and Suppliers

Three suppliers accounted for 49.2%, 27.6%, and 4.1% of our net purchases for
the fiscal year ended December 31, 2004. The raw materials used in our products
are available from a variety of alternative sources.

16. Taxation

In accordance with the relevant tax laws in China, Kiwa-SD would normally be
subject to a corporate income tax rate of 30% on its taxable income. However, in
accordance with the relevant tax laws in China, Kiwa-SD is exempt from corporate
income taxes for its first two profit making years and is entitled to a 50% tax
reduction for the succeeding three years. Kiwa-SD has not provided for any
corporate income taxes since it had no taxable income for the years ended
December 31, 2004 and 2003.

In accordance with the relevant tax laws in the British Virgin Islands, Kiwa
Bio-Tech Products Group Ltd., as an International Business Company, is exempt
from income taxes.

-40-

As of December 31, 2004 and 2003, the Company has no material deferred tax
assets or deferred tax liabilities.

A reconciliation of the provision for income taxes determined at the statutory
average state and local income taxes to the Company's effective income tax rate
is as follows:

------------------------------------ ---------------------------------- ---------------------------------
2004 2003
------------------------------------ ---------------------------------- ---------------------------------

Statutory income tax 33% 33%
Impact of effective tax exemption (33%) (33%)
---------------------------------- ---------------------------------
------------------------------------ ---------------------------------- ---------------------------------
Effective rate -- --

17. Lease Commitments

The Company has the following material contractual obligations:

The Company leases an office in the United States under a commercial lease
agreement with China Star expiring in June 2005 with an aggregate monthly lease
payment of approximately $2,560. Pursuant to agreement, rent expenses for the
year ended December 31, 2004 was $21,904. At December 31, 2004, the remaining
minimum lease payments amounted to $12,800.

18. Retirement Plan

As stipulated by the regulations of the Chinese government, Kiwa-SD has defined
contribution retirement plans for their employees. The Chinese government is
responsible for the pension liability to these retired employees. The Company
was required to make specified contributions to the state-sponsored retirement
plan at 20% of the basic salary cost of their staff. Each of the employees of
the PRC subsidiaries is required to contribute 8% of his/her basic salary. For
the year ended December 31, 2004 and 2003, contributions made by the Company
were approximately $26,146 and $19,005, respectively.

19. Subsequent Events

On January 4, 2005, as amended by letter agreements dated March 21, 2005 and
April 5, 2005, the Company completed a loan transaction pursuant to which the
Company received an advance of $400,000 (before deduction of expenses and fees)
from Cornell Capital in exchange for the issuance by the Company of a promissory
note in the original principal amount of $400,000 (the "Note"). The Note bears
interest at a rate of 10% per annum and has a term of 290 days. The Company's
obligations under the Note may be paid from, among other funds, the proceeds the
Company receives pursuant to the Standby Equity Distribution Agreement entered
into with Cornell Capital on July 6, 2004, described at Note 14. Pursuant to the
terms of the Note, the Company deposited in escrow 39 requests for advances
under the Standby Equity Distribution Agreement in the amount of $10,000 each
and one request in the amount of $29,589, as well as sufficient shares of the
Company's Common Stock registered pursuant to the Company's Registration
Statement No. 333-117868 to cover the advances. An attorney will serve as escrow
agent in connection with the advance notices and shares to be deposited in
escrow pursuant to the Note. Unless the Note is repaid by the Company, the
escrow agent will release such requests for advances to Cornell Capital every
seven days commencing on January 10, 2005 and Cornell Capital may then, at its
discretion, apply the proceeds from the advance to the outstanding balance on
the Note. In addition, the Note contains customary events of default and permits
Cornell Capital to accelerate the maturity of the full principal amount together
with interest and other amounts owing upon the occurrence of such events of
default.

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Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure

None.

Item 8A. Controls and Procedures

Under the supervision and with the participation of management, including the
Chief Executive Officer and Chief Financial Officer, we have evaluated the
effectiveness of our disclosure controls and procedures pursuant to Exchange Act
Rule 13a-15(b) as of the end of the period covered by this report. Based on that
evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that these disclosure controls and procedures are effective. There
were no changes in the Company's internal control over financial reporting
during the quarter ended December 31, 2004 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.

We plan to evaluate the level of our internal controls, identify certain
possible matters involving internal control deficiencies and adopt remedial
measures according to the COSO framework in 2005 with the assistance of a
professional internal control consultant. We believe we can meet the
requirements as defined in Section 404 of Sarbanes-Oxley Act of 2002 by the end
of 2006.

Item 8B. Other Information

Not applicable.

PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
With Section 16(a) of the Exchange Act

Information regarding our directors, executive officers, promoters and control
persons, and regarding our compliance with Section 16(a) of the Exchange Act is
incorporated herein by reference to the information included in our definitive
proxy statement for use in connection with our 2005 Annual Meeting of
Shareholders to be filed with the Securities and Exchange Commission within 120
days after the end of our 2004 fiscal year.

Item 10. Executive Compensation

Information regarding executive compensation is incorporated herein by reference
to the information included in our 2005 proxy statement.

Item 11. Security Ownership of Certain Beneficial Owners and Management And
Related Stockholder Matters

Information regarding security ownership of certain beneficial owners and
management and related stockholder matters is incorporated herein by reference
to the information included in our 2005 proxy statement.

Item 12. Certain Relationships and Related Transactions

Information regarding certain relationships and related transactions is
incorporated herein by reference to the information included in our 2005 proxy
statement.

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Item 13. Exhibits

Exhibits

These exhibits are numbered in accordance with the Exhibit Table of item 601 of
Regulation S-K.

Exhibit Description Incorporated by Reference in Exhibit No. in
No. Document Incorporated
Document

2.1 Agreement and Plan of Merger, dated March 11, 2004, by Form 8-K filed on March 29, 2004 2.1
and among Tintic Gold Mining Company, TTGM
Acquisition Corporation, and Kiwa
Bio-Tech Products Group Ltd.
2.2 Agreement and Plan of Merger, dated July 22, 2004, Form 8-K filed on July 23, 2004 2.1
between Kiwa Bio-Tech Products Group Corporation, a Utah
corporation, and Kiwa Bio-Tech Products Group
Corporation.
3.1 Certificate of Incorporation, effective as of July 21, Form 8-K filed on July 23 2004 3.1
2004.
3.2 Bylaws, effective as of July 22, 2004. Form 8-K filed on July 23, 2004 3.2
10.1 Standby Equity Distribution Agreement, dated July 6, Form SB-2 filed August 2, 2004 10.1
2004, between Cornell Capital Partners, LP and Kiwa
Bio-Tech Products Group Corporation.
10.2 Placement Agent Agreement, dated July 6, 2004, between Form SB-2 filed August 2, 2004 10.2
Newbridge Securities Corporation and Kiwa Bio-Tech
Products Group Corporation.
10.3 Registration Rights Agreement, dated July 6, 2004, Form SB-2 filed August 2, 2004 10.3
between Cornell Capital Partners, LP and Kiwa Bio-Tech
Products Group Corporation.
10.4 Warrant Purchase Agreement, dated March 12, 2004, Form 10-QSB filed May 20, 2004 10.1
issued to Westpark Capital, Inc.
10.5 Convertible Loan Agreement, dated January 25, 2004 Form 10-QSB filed May 20, 2004 10.2
between Kiwa Bio-tech Products Group Ltd. and Kao Ming
Investment Company
10.6 Convertible Loan Agreement dated March 12, 2004 for Form 10-QSB filed August 20, 2004 10.1
$200,000 between Kiwa Bio-Tech Products Group
Corporation and Jzu Hsiang Trading Co., Ltd.
10.7 Engagement agreement between Kiwa Bio-Tech Products Form 10-QSB filed August 20, 2004 10.3
Group Corporation and Cinapsys Inc. dated May 24, 2004
10.8 Patent Transfer Agreement dated April 12, 2004, between Form SB-2/A filed October 8, 2004 10.5
Kiwa Bio-Tech Products (Shandong) Co., Ltd. and China
Agricultural University.
10.9 Patent Transfer Contract, dated April 12, 2004, between Form SB-2/A filed November 23, 2004 10.5
Kiwa Bio-Tech Products Group Corporation and China
Agricultural University
10.10 Contract of Project of Venture Capital of Zoucheng Form SB-2/A filed October 8, 2004 10.6
Science & Technology Plan (Contract No.: 2004) among
KIWA Bio-Tech Products (Shandong) Company, Science &
Technology Bureau and Zoucheng Branch of China Commercial
Bank of ICBC dated April 2004.
10.11 Contract of Project of Venture Capital of Zoucheng Form SB-2/A filed October 8, 2004 10.7
Science & Technology Plan (Contract No. 2002) among
KIWA Bio-Tech Products (Shandong) Company, Zoucheng
Science & Technology Bureau and Zoucheng Branch of China
Commercial Bank of ICBC. dated November 2002.

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10.12 Contract of Project of Venture Capital of Zoucheng Form SB-2/A filed November 23, 2004 10.7
Science & Technology Plan (Contract No. 2002) among
KIWA Bio-Tech Products Group Limited, Zoucheng Municipal
People's Government
Bureau and Zoucheng Branch of China Commercial Bank of
ICBC dated May 26, 2002.
10.13 PBC Project Investment Agreement between KIWA Bio-Tech
Products Group Limited and Zoucheng Municipal Government
dated June 25, 2002
10.14 Employment Agreement dated March 18, 2003 Form SB-2/A filed November 23, 2004 10.13
between Kiwa Bio-Tech Products Group and Lian jun Luo
10.15 Employment Agreement dated March 18, 2003 Form SB-2/A filed November 23, 2004 10.14
between Kiwa Bio-Tech Products Group and Bin Qu
Convertible Loan Agreement dated October 20, 2003 Form SB-2/A filed October 8, 2004 10.8
10.16 between China Star Investment Group and Kiwa Bio-Tech
Products Group Ltd., as amended by letter agreement
dated August 1, 2004
10.17 Loan Agreement dated July 26, 2004 between China Star Form SB-2/A filed November 23, 2004 10.15
Investment Group and Kiwa Bio-Tech Products Group
Corporation
10.18 Commercial Lease Agreement dated April 1, 2004 between Form SB-2/A filed October 8, 2004 10.10
Kiwa Bio-Tech Products Group Corporation and China Star
Investment Company.
10.19 Convertible Note Agreement dated September 23, 2004 Form 10-QSB filed November 15, 2004 10.4
among Kiwa Bio-Tech Products Group Corporation and Young
San Kim and Song N. Bang
10.20 Amendment, dated April 7, 2005, to Convertible Note
Agreement dated September 23, 2004 among Kiwa Bio-Tech
Products Group Corporation and Young San Kim and Song N.
Bang
10.21 Common Stock Warrant dated September 23, 2004, issued Form 10-QSB filed November 15, 2004 10.5
by Kiwa Bio-Tech Products Group Corporation to Young San
Kim
10.22 Common Stock Warrant dated September 23, 2004, issued by 10-QSB filed November 15, 2004 10.6
Kiwa Bio-Tech Products Group Corporation to Song N. Bang
10.23 Promissory Note of Kiwa Bio-Tech Products Group
Corporation, principal amount $400,000, issued to
Cornell Capital Partners, LP on January 4, 2005, as
amended by letter agreements dated March 21, 2005 and
April 5, 2005.
31.2 Certification of Principal Financial Officer pursuant to
Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934
32.1 Certifications of Principal Executive Officer, pursuant
to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
32.2 Certifications of Principal Financial Officer, pursuant
to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002

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Item 14. Principal Accounting Fees and Services.

Information regarding principal accounting fees and services and is incorporated
herein by reference to the information included in our 2005 proxy statement.

SIGNATURES

KIWA BIO-TECH PRODUCTS GROUP CORPORATION
(Registrant)

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on April 13, 2005.

/S/ LI WEI

---------------------------
Wei Li
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities indicated on April 13, 2005.

/S/ LIAN JUN LUO April 13, 2005 Chief Financial Officer and
Director
-----------------------
Lian jun Luo

/S/ JAMES NIAN ZHAN April 13, 2005 Secretary and Director

-----------------------
James Nian Zhan

/S/ DA CHANG JU April 13, 2005 Director

-----------------------
Da chang Ju

/S/ YUN LONG ZHANG April 13, 2005 Director

-----------------------
Yun long Zhang

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