China Kangtai Cactus Bio-tech, Inc.

As now discussed in Note 20 to the condensed consolidated financial statements in the Amended Filing, the Company has restated its consolidated financial statements at September 30, 2011 and for the three and nine months ended September 30, 2011 and 2010 in order to correct the recording of the provisions for reserve for allowances, returns and doubtful accounts. In addition, the Company’s condensed consolidated financial statements at December 31, 2010 (which were previously included in the Company’s Form 10-K/A filed with the SEC on April 15, 2011) were amended on July 23, 2012 in order to correct the recording of provisions for reserve for allowances, returns and doubtful accounts at December 31, 2010 and 2009 and for the years then ended, resulting in the December 31, 2010 Condensed Consolidated Balance Sheet presented in the Amended Filing.

Accordingly, as previously reported, the Company deferred gross profit on sales of products estimated to be excess product in our distribution channel by expensing the provision for reserve for allowances, returns and doubtful accounts and increasing the balance sheet reserve for allowances, returns and doubtful accounts (which was reflected parenthetically on the condensed consolidated balance sheet as a reduction of accounts receivable). As restated, the Company has eliminated that part of the provisions for reserve for allowances, returns, and doubtful accounts relating to estimated excess product in our distribution channel and has adjusted the reserve to $0 at September 30, 2011 and December 31, 2010 based on the aging of the related accounts receivable and our historical experience of inconsequential returns and bad debts.

In accordance with Rule 12b-15 under the Exchange Act, each item of the Original Filing that is amended by this Amended Filing is also restated in its entirety, and this Amended Filing is accompanied by currently dated certifications on Exhibits 31.1, 31.2, 32.1 and 32.2 by the Company’s Chief Executive Officer and Chief Financial Officer. Except as described above, this Amended Filing does not amend, update, or change any items, financial statements, or other disclosures in the Original Filing, and does not reflect events occurring after the filing of the Original Filing, including as to any exhibits to the Original Filing affected by subsequent events. Information not affected by the changes described above is unchanged and reflects the disclosures made at the time of the Original Filing. Accordingly, this Amended Filing should be read in conjunction with the Original Filing and our other SEC filings subsequent to the filing of the Original Filing, including any amendments to those filings. Capitalized letters not defined in the Amended Filing are as defined by the Original Filing.

For additional detailed information regarding the restatements affecting this report, please see the attached amended and restated consolidated financial statement and Note 20 thereto.

The Company's current collections policies are formalized in writing and have been in place since May 2006. These policies presume that direct customers' payment should be settled on the day of delivery for cash on delivery, and that the normal agent (distributors) collection period is 3 months (90 days) from the day of sale. Procedures in place require that a sales assistant should reconcile with the salesman from time to time to confirm the situation of accounts receivable, and that financial department personnel should contact and reconcile with the customer at any time to confirm the authenticity of invoicing. In addition, the manager of the Sales Department should check the bill with a salesman at any time and press them in collection. If there are any special conditions why the collection was not received for over 3 months (90 days) from the date the goods were delivered it is required to be reported to the general manager, and after approval from the general manager the collection period can be appropriately extended. If collection is not received from the customer in over 90 days but less than 180 days, the salesman is required to make calls to communicate the need to cure the amount past due. If the collection is not received from the customer for over 180 days but less than 1 year, the sales department is required to communicate with them in writing. If the collection is not received from the customer for over 1 year, the financial department is required to communicate with them in writing, and at the same time to communicate with them to make a collection plan, or legal actions. The Company has made allowances for bad debt based on its experience and the age of its accounts receivable.

The Company enters into separate standardized calendar year annual renewable distribution agreements with distributors or customers. The distributor or customer is to arrange for pick-up of the goods from the Company’s premises. The distributor or customer pays the delivery costs and hires the delivery trucks. The distribution agreements provide for inspection by the buyer of the quality of the product upon pick-up by the buyer or their carrier agent and resolution of any defects in quality with the Company. The Company does not have a history of significant returns or credits due to quality. The cost of freight insurance, if any, is the responsibility of the distributor and the Company is not responsible for any damage to or loss of goods in transit from its facilities. The Company is not responsible for any loss of goods in transit from its facilities. For the foregoing reasons, title to the goods transfers to the buyer upon pick-up from the Company’s premises.