Summary of CHINA NORTHERN MEDICAL DEVICE INC

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The information contained in Item 2 contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this report. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

BUSINESS OVERVIEW

We formed as a Nevada corporation on March 26, 2007. Our activities have been limited to developing and writing our business plan. Management has primarily focused on preparation of this offering document along with contacting various entities and people in furtherance of our business plan.

We intend to sell medical devices with an emphasis on portable medical devices designed for home treatments. Our initial focus will be in the northern regions of China. We intend to seek strategic relationships with medical device manufacturers both in China and North America with the aim to be their sales and distribution agent in Northern China. We also intend to assist Chinese medical device manufacturers on the development of the North American market. Eventually, we may seek to acquire an existing medical device manufacturer to enhance our operations.

Our internal marketing research indicates that the population in Northern China is often subject to ordinary and ineradicable illness due to the geographic and climate factors of the region. We believe the local health care system is not postured to provide home medical devices to those in need in a timely manner. We believe that current enterprises employ poor marketing techniques and have not exploited the potential market for medical devices. We intend to implement a strong marketing program and establish our brand. We intend to conduct detailed research to understand the purchasing behavior in Northern China which will be followed by an advertising regime consisting of TV advertisement, outdoor advertisement, promotions in shopping malls and other methods of advertising.

In addition to implementing a strong marketing and branding campaign, we intend to establish multiple venues for the sale of our products including an e-commerce platform, establish a sales network in major cities and cooperate with local sops and business entities to sell our products.

We intend to seek and obtain marketing agreements and licenses from various sources so we can in turn sell home medical devices in the Northern China region. We will focus on both American and Chinese medical device manufacturers with the goal being a marketing or sales agreement that allows us to market their products. We expect any agreements we may enter will provide us a reasonable commission for product sales.

We have initiated questionnaires and market sampling to determine consumer demands for home medical devices in Northern China. Once our market analysis is complete, we intend to acquire sales licenses to the products our research indicates is most in demand.

Once we have obtained marketing and sales agreements, we intend to promote our products through a number of venues. We have commenced efforts to establish an electronic commerce platform for promotion and sales of products through the Internet. We have also begun to design advertisements for our products which will be posted on websites established by professionals in the medical communities as well as for use in television and outdoor media advertisements. We hope to establish relationships with such prominent Chinese advertisers such as Acorn International, Inc. and Focus Media Advertisement Col., Ltd. to promote the sales of various healthcare medical devices.

We further intend to offer our services as a consultant to current Chinese medical device manufacturers whereby we would assist companies on the development of markets in North America, application of relevant patent rights and approval documents. Additionally, we will offer consulting services for medical device market promotion and planning.

We intend to initially target three to five medical and healthcare manufacturers in Northern China with capacity and brand recognition and seek to enter consulting arrangements. We would provide such manufacturers with long-term consultation services for management and product promotion. We expect such services will include advertising and public relations for the targeted brand, construction of sales nets and tunnels and sales team training.

At some point in the future, once operations have commenced and the company is positioned favorably, we may consider acquiring a business or businesses that complement our business model.

RESULTS OF OPERATIONS

Results of Operations for the Three Months ended September 30, 2009 Compared to the Three Months ended September 30, 2008

We have experienced losses since inception. We generated $0 in revenues from operations for the three months ended September 30, 2009 and September 30, 2008. Expenses for the three months ended September 30, 2009 were $4,380 which consisted of office rent, office expenses and professional fees giving us a net loss of $4,380. For the same period in 2008, our expenses were $49,230 consisting of office rent and professional fees resulting in a net loss of $49,230. Our expenses were significantly lower for the Three Months ended September 30, 2009 due to the decrease in professional fees relating to the filing of a registration statement on Form S-1 in 2008.

Results of Operations for the Nine Months ended September 30, 2009 Compared to the Nine Months ended September 30, 2008

We generated $0 in revenues from operations for the Nine Months ended September 30, 2009 and September 30, 2008. Expenses for the Nine Months ended September 30, 2009 were $18,773 which consisted of office rent, office expenses and professional fees giving us a net loss of $18,771. For the same period in 2008, our expenses were $115,344 consisting of office rent and professional fees resulting in a net loss of $115,344. Our expenses were significantly lower for the Nine Months ended September 30, 2009 due to the decrease in professional fees relating to the filing of a registration statement on Form S-1 in 2008.

For the period of March 26, 2007 (inception) through the period ended September 30, 2009, our expenses were $265,558 and consisted on office rent of $11,200, office expenses of $5,445, consultancy fees of $25,000 and professional fees of $228,293 for a loss of $269,938.

Capital Resources and Liquidity

At September 30, 2009, we had $25,479 in available cash on hand which is our only asset at this time. We had liabilities of $145,200 consisting of $5,200 in accounts payable and accrued expenses and a loan form a shareholder in the amount of $140,000.

Our sole officer and director, Mr. Wu, has financed our operations to date by making loans to the Company. These loans are unsecured, non-interest bearing and have no fixed terms of repayment, therefore, deemed payable on demand. Cash flow from this activity is classified as cash flows from financing activity. The total borrowing from Mr. Wu was $140,000 for the period March 26, 2007 (inception) through December 31, 2008, and $0 for the Nine Months ended September 30, 2009.

The Company filed a registration statement on Form S-1 with the Securities and Exchange Commission to register up to 600,000 shares of common stock. The public offering price was $0.20 per share. The registration statement was declared effective on February 8, 2008. The Company completed its offering on March 14, 2008 and raised $110,000 from the sale of 550,000 shares of common stock.

During the next twelve months, we intend to use the balance of the proceeds from our offering to pay office rent for twelve months, purchase office equipment including computers and furniture, conduct market research and hire 3 or 4 employees. Working capital expenses which include accounting, legal, administrative, advertising, marketing and general office expense will be paid from the proceeds raised in our offering.

Going Concern

We incurred net losses of $4,380 for the three months ended September 30, 2009, $18,771 for the Nine Months ended September 30, 2009, and $269,721 for the period March 26, 2007 (inception) through September 30, 2009. In addition, we had a working capital deficiency of $119,721 and a stockholders' deficiency of $119,721 at September 30, 2009. These factors raise substantial doubt about our ability to continue as a going concern.

There can be no assurance that sufficient funds required during the next year or thereafter will be generated from operations or that funds will be available from external sources such as debt or equity financings or other potential sources. The lack of additional capital resulting from the inability to generate cash flow from operations or to raise capital from external sources would force us to substantially curtail or cease operations and would, therefore, have a material adverse effect on our business. Furthermore, there can be no assurance that any such required funds, if available, will be available on attractive terms or that they will not have a significant dilutive effect on our existing stockholders.

Need for Additional Financing

Costs associated with being a public company are much higher than those of a private company. China Northern, a new start-up in early development, has chosen public registration before the business has developed a predictable cash flow. There are present registration expenses and future legal and accounting expenses, future reporting requirements to the SEC, future exchange listing requirements, and future investor relation costs that must be borne by a public company but not by a private company. These costs can be a burdensome expense which could adversely affect our financial survival. The ongoing regulatory costs, reporting requirements, and management details, which must be met when registering and maintaining a public company, may make the economic viability of China Northern very doubtful.

We have no material commitments for the next twelve months. In the past we have relied on advances from our president to cover our operating costs. Management anticipates that they have sufficient capital to meet our needs through the next 12 months. However, there can be no assurances to that effect. Our need for capital may change dramatically if we acquire an interest in a business opportunity during that period. At present, we have no understandings, commitments or agreements with respect to the acquisition of any business venture, and there can be no assurance that we will identify a business venture suitable for acquisition in the future. Further, we cannot assure that we will be successful in consummating any acquisition on favorable terms or those we will be able to profitably manage any business venture we acquire. Should we require additional capital, we may seek additional advances from officers, sell common stock or find other forms of debt financing.

Critical Accounting Policies

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 5 of our financial statements for the quarter ended September 30, 2009. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause effect on our consolidated results of operations, financial position or liquidity for the periods presented in this report.

Recent Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board ("FASB") amended its guidance on accounting for variable interest entities ("VIE"). Among other things, the new guidance requires a qualitative rather than a quantitative analysis to determine the primary beneficiary of a VIE; requires continuous assessments of whether an enterprise is the primary beneficiary of a VIE; enhances disclosures about an enterprise's involvement with a VIE; and amends certain guidance for determining whether an entity is a VIE. Under the new guidance, a VIE must be consolidated if the enterprise has both (a) the power to direct the activities of the VIE that most significantly impact the entity's economic performance, and (b) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. This new guidance will be effective as of the beginning of each reporting entity's first annual reporting period that begins after November 15, 2009, and for interim periods within that first annual reporting period. Earlier application is prohibited. The Management does not expect that the adoption of this new guidance would have a material effect on the Company's financial position and results of operations.

In May 2009, the FASB issued new accounting and disclosure guidance for recognized and non-recognized subsequent events that occur after the balance sheet date but before financial statements are issued. The new guidance also requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. The new accounting guidance was effective for our Company beginning with our Quarterly Report on Form 10-Q for the three and six months ended June 30, 2009, and is being applied prospectively. This change in accounting policy had no impact on our financial statements.

In April 2009, the FASB issued new guidance regarding accounting for assets acquired and liabilities assumed in a business combination that arise from contingencies. This new guidance amends and clarifies the accounting, measurement and recognition provisions and the related disclosures arising from contingencies in a business combination. The Company adopted this new guidance on January 1, 2009. There was no significant impact upon adoption, and its effects on future periods will depend on the nature and significance of business combinations subject to this guidance.

In April 2009, the FASB issued new guidance regarding determining fair value when the volume and level of activity for the asset or liability have significantly decreased and identifying transactions that are not orderly. This new guidance provides additional guidance for estimating fair value when the volume and level of market activity for an asset or liability have significantly decreased when compared with normal market activity for the asset or liability. If there is a significant decrease in the volume and activity for the asset or liability, transactions or quoted prices may not be determinative of fair value in an orderly transaction and further analysis and adjustment of the transactions or quoted prices may be necessary. This new guidance was applied prospectively and was effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The adoption of this new guidance did not have a material effect on the Company's financial position and results of operations.

In April 2009, the FASB issued new guidance regarding recognition and presentation of other-than-temporary impairments. This new guidance amends the method for determining whether an other-than-temporary impairment exists and the classification of the impairment charge for debt securities and the related disclosures. This new guidance was applied prospectively and was effective for interim and annual periods ending after June 15, 2009 with early adoption permitted for periods ending after March 15, 2009. The adoption of this new guidance did not have a material effect on the Company's financial position and results of operations.

Off Balance Sheet Transactions

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as "special purpose entities" (SPEs).