First China (PINK:FCPG)

We believe that our existing capital resources are sufficient to meet our current obligations and operating requirements, but will not be sufficient to meet our more aggressive growth and acquisition plans and that we will need to raise additional capital in the next 12 months. In order to meet our planned two to four strategic acquisitions, we estimate requiring US$6 million in capital.

XYT believes that its cash on hand and working capital will be sufficient to meet its anticipated cash requirements through December 31, 2010. If XYT does not meet its revenue objectives over that period, the Company may need to sell additional equity securities, which could result in dilution to current stockholders, or seek additional loans.

With appropriate funding, XYT anticipates its business model will change to leverage the efficiencies of internet ordering and fulfillment. We intend to expand our product line from approximately 5,000 products to approximately 30,000 products by the end of 2010. The broader product line will include significantly more Western drugs as well as additional traditional Chinese drugs and herbs. We estimate that the broader product line will ensure that our customers will be able to order 80% to 90% of the products they carry directly from XYT.