Summary of BIO BRIDGE SCIENCE INC

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

Some of the statements made by us in this Quarterly Report on Form 10-Q are forward-looking in nature, including but not limited to, statements relating to our future revenue and expenses, product development, future market acceptance, levels of research and development, our management's plans and objectives for our current and future operations, and other statements that are not historical facts. Forward-looking statements include, but are not limited to, statements that are not historical facts, and statements including forms of the words "intend", "believe", "will", "may", "could", "expect", "anticipate", "plan", "possible", and similar terms. Actual results could differ materially from the results implied by the forward looking statements due to a variety of factors, many of which are discussed throughout this Quarterly Report and in our SEC filings. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly release any revisions to these forward-looking statements that may reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, unless required by law. Factors that could cause actual results to differ materially from those expressed in any forward-looking statement made by us include, but are not limited to:

· our ability to finance our activities and maintain our financial liquidity;

· our ability to attract and retain qualified, knowledgeable employees;

· our ability to complete product development;

· our ability to obtain regulatory approvals to conduct clinical trials;

· our ability to design and market new products successfully;

· our ability to acquire new customers in the future;

· deterioration of business and economic conditions in our markets; and

· intensely competitive industry conditions.

As used in this Quarter Report on Form 10-Q, unless the context requires otherwise, we refer to Bio-Bridge Science, Inc. and subsidiaries, including Bio-Bridge Science Corporation, a Cayman Islands corporation; Bio-Bridge Science
(Beijing) Co. Ltd. ("Bio-Bridge Beijing"), a People's Republic of China ("PRC")
company; Bio-Bridge Science Holding Co. Ltd. ("Bio-Bridge Holding"), a Cayman Islands corporation; Bio-Bridge Science (HK) Co. Ltd. ("Bio-Bridge HK"), a Hong Kong company; and Bio-Bridge JRS Biosciences (Beijing) Co. Ltd. ("Bio-Bridge JRS"), a 51% owned PRC company, as "we," "us," "our," "Bio-Bridge" and the "Company".

OVERVIEW

Bio-Bridge Science, Inc. is a biotechnology company whose subsidiaries are focused on the commercial development of HIV-PV Vaccine I, HPV vaccine, colon cancer vaccine, mucosal adjuvant and the manufacture and sale of vaccine production-related materials. Bio-Bridge Beijing is conducting our vaccine development and Bio-Bridge JRS is producing cell culture medium for sales in the near future.

Our primary corporate focus is on the commercial development of our potential vaccine products through our subsidiaries. Our capital requirements, particularly as they relate to product research and development, have been and will continue to be significant. Our future cash requirements and the adequacy of available funds will depend on many factors, including the pace at which we are able to obtain regulatory approvals of vaccine candidates, whether or not a market develops for our products and, if a market develops, the pace at which it develops, and the pace at which the technology involved in making our products changes.

Plans of Operation

Vaccine Development

The vaccine development is being undertaken by our 100% owned subsidiary, Bio-Bridge Beijing. We intend to develop and obtain regulatory approval for commercial sale of the following vaccines and products: (i) an HIV vaccine (HIV-PV Vaccine I) designed to prevent and treat infection by the human immunodeficiency virus, or HIV, (ii) an HPV vaccine, (iii) a colon cancer therapeutic vaccine, and (iv) other related potential products. The HIV and colon cancer vaccines in development are based on the technology platform co-developed by Dr. Liang Qiao, our Chief Executive Officer and a professor at Loyola University Chicago. The technology platform is owned by Loyola University Chicago. In June 2002, Loyola University Chicago exclusively licensed this technology to our subsidiary Bio-Bridge Science Corporation with respect to development and sales in the territories of the People's Republic of China, Japan and the United States.

We also plan to conduct the pre-clinical trials for colon cancer vaccine and HPV vaccine. We estimate that we will begin the pre-clinical trial of colon cancer vaccine and that of HPV vaccine when funding is available. We expect to enter clinical trials of colon cancer vaccine and HPV vaccine pending satisfactory results of the pre-clinical trials and the availability of funds. The clinical trial for therapeutic vaccine is expected to last three years. Since we use the same technology platform, we expect to use the same GMP facility in Beijing, China, to produce the HIV vaccine and colon cancer vaccine for pre-clinical and clinical trials. To date, we have not commenced clinical testing of the colon cancer or HPV vaccines, nor have they been approved by China's State Food and Drug Administration ("SFDA") or any other regulatory agency.

After we produce sufficient HIV-PV Vaccine I samples in our facility we plan to submit an application with the Beijing branch of the SFDA for approval to conduct clinical trails. Upon receipt of approval from the Beijing branch of the SFDA we plan to enter and conduct Phase I, II and III human clinical trials.

To date we have funded our operations from funds we raised in private offerings. We will need to raise capital through an offering of our securities or from loans to continue research and development of our various vaccine product candidates in China, as well as conducting joint venture activities in China. We estimate that our capital requirements for the next two years will be as follows:

· approximately $1.2 million for preparatory work and Phase I clinical study of HIV-PV Vaccine I;

· approximately $0.8 million for working capital and general corporate needs; and

· approximately $1.0 million for pre-clinical trials on colon cancer vaccine and HPV vaccine.

After SFDA approval to conduct clinical trials, we expect that the therapeutic vaccine may be brought to market in three to five years and the preventive vaccine may be brought to market in five to seven years, if we are successful in raising funds to complete development of the vaccines. As of March 31, 2011, our cash and cash equivalents was $123,552. Although we have raised capital in private placements, we will still need to raise additional funds through the public or private sales of our securities, loans, or a combination of the foregoing to meet our planned operations. We cannot guarantee that financing will be available to us, on acceptable terms or at all. We also may borrow from local banks in China given that our land use right and laboratory facility could be used as collateral for borrowing. If we fail to obtain other financing, either through an offering of our securities or by obtaining additional loans, we may be unable to develop our planned projects as scheduled and may be forced to scale back.

Acquisitions of and Joint Venture in Companies Complementary to The Company

Another major corporate focus for the Company is to acquire other profitable vaccine companies or vaccine production related companies, such as those producing materials for vaccine production, in China. Such an acquisition may help support our development of our in-house vaccine candidates by providing us with operating cash flows, lower cost for material used in our vaccine production, skillful work force in vaccine production, and a distribution channel. We believe these companies will be complementary to us and make us more competitive.

Joint Venture Bio-Bridge JRS

On June 9, 2009, Bio-Bridge Science (HK) Co., Ltd., entered into an equity joint venture contract with JR Scientific Inc. ("JRS"), a California based manufacturer of classical and custom cell culture medium and sera products, and several other investors to form a new cell culture medium joint venture in Beijing, China. The registered capital of the joint venture is RMB 10,000,000 (approximately US $1,464,000). The Company invested RMB 5,100,000 (approximately US $732,000) in cash in the joint venture for 51% of the equity. JRS contributed certain technology for 15% of the equity. The balance of the equity was purchased by other investors, including 11% that was purchased by China Diamond, a company controlled by Trevor Roy, one of our directors. On October 16, 2009, the business license was issued by the Beijing Administration for Industry and Commerce of the PRC, indicating approval of the formation of the joint venture, Bio-Bridge JRS Biosciences (Beijing) Co., Ltd. ("Bio-Bridge JRS"), which was officially established at the end of October 2009.

Bio-Bridge JRS subsequently leased a facility in Beijing, China for operations. The plant was fitted-out and major equipment has been purchased and installed. The fit-out has been completed and the facility is rated for all-year production, including conditions of extreme cold, heat, and humidity. The major production technology has been transferred from JRS to the Bio-Bridge JRS technicians, and cell culture medium samples have been produced. The produced samples have been tested against those produced by our major competitors, and have performed very well. We expect that Bio-Bridge JRS will begin to formally produce and sell cell culture medium and related products during 2011.

The Bio-Bridge JRS plant continues to produce sample quantities of cell culture medium, and introduce same to targeted clients. Ramp up to full-scale production has been delayed by the installation of a large homogenizing blender, which will increase single-batch fulfillment capability to 150,000 liters. Full-scale production is scheduled to begin during the second quarter of 2011. The board has used the delay to commission fresh market studies, the result of which indicates a whole-market movement towards low/no-serum medium. With the addition of Bio-Bridge JRS's planned custom media capabilities slated for commission in the third quarter of 2011, Bio-Bridge JRS will be well-positioned to benefit from this fundamental market change.

Distribution of Xinhua Surgical Instruments

We signed an exclusive agency agreement with Xinhua Surgical Instruments Co. Ltd. ("Xinhua") to distribute its products in the United States at the end of 2005. The agreement was superseded by a new agreement signed with Xinhua on March 17, 2008. The March 17, 2008 agreement has been amended on several occasions, with the most recent amendment on December 9, 2009. Under the most recent terms of the agreement, we have been granted exclusive distribution rights for all Xinhua surgical instruments in the United States, Australia, New Zealand and Costa Rica. Our minimum order placement requirement for these four areas in the first year calculated from the signing date will be $55,000 and increases by 10% over the previous year's minimum order placement annually thereafter. We are responsible for advertising and marketing expenses in connection with distribution of Xinhua surgical instruments in these areas. Our exclusivity rights in these four areas will be extended unless we fail to fulfill the minimum order placement requirements. We are currently seeking collaboration with distributors and developing markets for Xinhua instruments. Inventory has been purchased, imported, and is stocked at our corporate headquarters. A website was developed for business to consumer and business to business sales of Xinhua products. We have been pursuing marketing initiatives such as, advertising online through Google AdWords and other sites, as well as, through traditional methods like direct mail and sales calls. Additionally, we have been participating and responding to bid requests and requests for quotations from government, educational, and business organizations.

Surgical instruments are regulated by the Food and Drug Administration (FDA) in the United States. On December 6, 2005, we received confirmation from the FDA of our registration as a medical device establishment, which enables us to perform initial distributor and repackager operations. This confirmation does not represent an FDA approval of any product or any of our activities. It is neither a license, nor a certification. We began selling Xinhua surgical instruments that meet the criteria for class I medical devices under FDA rules, which do not require pre-market notification to the FDA.

Results of Operation

Three Months Ended March 31, 2011

For the three months ended March 31, 2011 and 2010, total sales, consisting solely of the sales of Xinhua surgical instruments, were $15,133 and $24,828, and the cost of goods sold were $7,687 and $12,131, respectively.

For the three months ended March 31, 2011 and 2010, research and development expenses were $51,113 and $88,336, respectively. The decrease of $37,223 is due to the reduction in our research activities.

For the three months ended March 31, 2011 and 2010, general and administrative expenses were $302,011 and $1,826,445, respectively. The difference primarily resulted from the compensation cost of $1,521,805 for issuing common stock warrants during the three months ended March 31, 2010.

For the three months ended March 31, 2011 and 2010, selling and distribution expenses, related solely to the sales of Xinhua surgical instruments, were $16,200 and $22,146, respectively.

For the three months ended March 31, 2011 and 2010, interest expenses, related solely to the fluctuations in the exchange rate of US Dollar to Chinese RMB for our subsidiaries in China, were $803 and $860, respectively.

Net loss for the three months ended March 31, 2011 and 2010 were $417,072 and $1,914,789, respectively. The difference of $1,497,717 primarily resulted from the compensation cost of $1,521,805 for issuing common stock warrants during the three months ended March 31, 2010.

Liquidity and Capital Resources

Our principal sources of liquidity are cash and cash equivalent balances, which was $123,552 at March 31, 2011.

Net cash used in operating activities for the three months ended March 31, 2011 and 2010 were was $114,769 and $603,378 respectively. The difference resulted primarily from the change in operating assets and liabilities.

Net cash provided by investing activities for the three months ended March 31, 2011 was $39,231 and net cash used in investment activities for the three months ended March 31, 2010 was $33,684.

Net cash provided by financing activities for the three months ended March 31, 2011 and 2010 were was $1,454 and $4,176 respectively.

To date, our operations have been funded through issuances of our common stock and preferred stock whereby we raised an aggregate $8,665,888 from inception through March 31, 2011.

Based on our current operating plan, we believe that we have sufficient cash and cash equivalents to last approximately through July 2011. We will need to obtain additional financing in addition to the funds already raised through the sale of equity securities to fund our cash needs and continue our operations beyond July 2011. Additional financing, whether through public or private equity or debt financing, arrangements with stockholders or other sources to fund operations, may not be available, or if available, may be on terms unacceptable to us. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. If we issue additional equity securities to raise funds, the ownership percentage of our existing stockholders would be reduced. New investors may demand rights, preferences or privileges senior to those of existing holders of our common stock. Debt incurred by us would be senior to equity in the ability of debt holders to make claims on our assets. The terms of any debt issued could impose restrictions on our operations. If adequate funds are not available to satisfy either medium or long-term capital requirements, our operations and liquidity could be materially adversely affected and we could be forced to cut back our operations.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses for each period. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available and the best judgment at the time the estimates are made, however actual results could differ materially from those estimates.

Revenue Recognition

The Company recognizes revenue from the sales of products in accordance with Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104, when persuasive evidence of an order arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectibility is reasonably assured. Generally, these criteria are met at the time the product is shipped to customers when title and risk of loss have transferred.

Accounts Receivable

Accounts receivables are recognized and carried at original invoiced amount less an allowance for any uncollectible accounts. The Company uses the aging method to estimate the valuation allowance for anticipated uncollectible receivable balances. Under the aging method, bad debts determined by management are based on historical experience as well as the current economic climate and are applied to customers' balances categorized by the number of months the underlying invoices have remained outstanding. The valuation allowance balance is adjusted to the amount computed as a result of the aging method. When facts subsequently become available to indicate that an adjustment to the allowance should be made, this is recorded as a change in estimate in the current year.

Stock-Based Compensation

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 accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the Financial Accounting Standards Board ("FASB"). The Company accounts for stock option and warrant grants issued and vesting to non-employees in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary performance to earn the equity instruments is complete. Non-employee share-based compensation charges generally are amortized over the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the non-employee, option grants are immediately vested and the total share-based compensation charge is recorded in the period of the measurement date.

The fair value of Bio-Bridge's common stock option grants are estimated using the Black-Scholes-Merton option pricing model, which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the Black-Scholes-Merton option pricing model could materially affect compensation expense recorded in future periods.

Impairment of Long-Lived Assets

We review long-lived assets whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable in accordance with the authoritative guidance provided by the FASB. Our long-lived assets, such as property and equipment, are reviewed for impairment when events and circumstances indicate that depreciable or amortizable long lived assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amount of those assets. When specific assets are determined to be unrecoverable, the cost basis of the asset is reduced to reflect the current value.

We use various assumptions in determining the current fair value of these assets, including future expected cash flows and discount rates, as well as other fair value measurements. Our impairment loss calculations require us to apply judgment in estimating future cash flows, including forecasting useful lives of the assets and selecting the discount rate that reflects the risk inherent in future cash flows. If actual results are not consistent with our assumptions and judgments used in estimating future cash flows and asset fair values, we may be exposed to future impairment losses that could be material to our results.

Inventory Valuation

Inventories are stated at the lower of cost or market. Market is defined as current replacement cost, except that market should not exceed the net realizable value and should not be less than net realizable value reduced by an allowance for an approximately normal profit margin. The cost of inventories is determined by using the first-in, first-out method. We perform a monthly analysis of our inventory balances to determine if the carrying amount of inventories exceeds their net realizable value. Our determination of estimated net realizable value is based on customer orders, market trends and historical pricing. If the carrying amount exceeds the estimated net realizable value, the carrying amount is reduced to the estimated net realizable value.

Derivative Financial Instruments

The Company evaluates all of its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the condensed consolidated statements of operations. For stock-based derivative financial instruments, the Company uses both the Black-Scholes-Merton option pricing models to value the derivative instruments at inception and on subsequent valuation dates. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks.

Recent Accounting Pronouncements

Recently issued accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") have either been implemented or are not significant to the Company.

Commitments

Royalty and License Arrangements

Liang Qiao, M.D., our co-founder and chief executive officer, is one of the two co-inventors of our core technology that was assigned to Loyola University Chicago in April 2001. Under an agreement with Loyola University Chicago, we have obtained exclusive rights to this technology for use in its future products within the United States, Japan and the People's Republic of China, including mainland China, Hong Kong, Taiwan and Macau. The license continues perpetually or for the maximum period of time permitted by law, unless terminated earlier under the terms of the agreement. Pursuant to this agreement, Loyola receives a royalty of 4% from the net profit for all uses of the licensed technology, including uses under sublicenses. As of March 31, 2011, we had not generated any revenues from the sale of any products under development, nor had we received any revenues from sublicenses.