The following discussion relates to a discussion of the financial condition and results of operations of China Yongxin Pharmaceuticals Inc. (formerly Digital Learning Management Corporation and Nutradyne Group, Inc.) (the "Company") and its subsidiaries. This management's discussion and analysis of financial condition and results of operations for the three month and nine month periods ending September 30, 2009 and September 30, 2008 should be read in conjunction with its financial statements and the related notes, and the other financial information included in this report.

Forward-Looking Statements

The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report. This report contains forward-looking statements. The words "anticipated," "believe," "expect, "plan," "intend," "seek," "estimate," "project," "could," "may" and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect our management's current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetration and additional customers, and various other matters, many of which are beyond our control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements made in this report are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Overview

The Company was incorporated in Delaware on February 18, 1999 under the name of FreePCSQuote. The Company through its Chinese subsidiaries is engaged in the wholesale distribution of pharmaceuticals and medical-related products, and the sale and distribution of pharmaceuticals, health and beauty products, ginseng and herbal supplements, and other healthcare products through retail operations in the PRC.

On December 21, 2006, Changchun Yongxin Dirui Medical Co., Ltd. ("Yongxin"), a company organized in the People's Republic of China ("China") and all of the shareholders of Yongxin entered into a share exchange agreement ("Share Exchange Agreement") with the Company. The Share Exchange Agreement was amended on June 15, 2007 (the "Amended Exchange Agreement"). On November 16, 2007, Yongxin and the Company closed on the share exchange under the Amended Exchange Agreement. However, it was improperly documented in the Share Exchange Agreement, that the Yongxin shareholders and the Company agreed that the Yongxin shareholders sold and the Company acquired 100% of the equity interests of Yongxin. On April 12, 2008, we entered into a second amendment to the Share Exchange Agreement ("Second Amended Exchange Agreement") with Yongxin, effective November 16, 2007, to reflect that the Company in fact desired to acquire from the Yongxin shareholders, and Yongxin shareholders desired to sell to the Company, only 80% of the equity interest of Yongxin in exchange for the issuance by the Company of an aggregate of 21,000,000 shares of the Company's common stock and 5,000,000 shares of the Company's Series A Preferred Stock to the Yongxin shareholders and/or their designees.

The Series A Convertible Preferred Stock is convertible over a 3-year period, into up to 30 million shares of common stock. In particular, the holder of any shares of Series A Convertible Preferred Stock shall have the right, at its option, (i) at any time hereafter (except that upon any liquidation of the Company, the right of conversion shall terminate at the close of business on the business day fixed for payment of the amount distributable on the Series A Convertible Preferred Stock) to convert, any such shares of Series A Convertible Preferred Stock into such number of fully paid and nonassessable shares of Common Stock on a six (6) for one (1) basis. No more than 1,666,666 shares of the Series A Convertible Preferred Stock may be converted in each of the three periods following issuance as detailed below. The conversion formula is conditioned on the Company earning no less than $3 million of net income in for the fiscal year ending December 31, 2007, $4 million of net income in the fiscal year ending December 31, 2008, and $5 million of net income in the fiscal year ending December 31, 2009. In the event that in any of the three fiscal years, the Company earns less than required net income amounts for conversion, then the conversion right shall be proportionately reduced by the amount of the shortfall below the required net income amount, with the "catch-up" right to convert additional shares to the extent that the net income exceeds $3 million, $4 million and $5 million, respectively, in each of the three consecutive years. In no event shall this conversion right allow for the conversion of the Series A Preferred Stock into more than 6 common shares for each share of Series A Preferred Stock over the course of the aforementioned three fiscal years. The net income requirements shall be based upon an audit of the revenues for each fiscal year. All conversions shall be made within 30 days of the completion of such audit.

For accounting purposes, the share exchange transaction has been accounted for as a reverse merger, since the stockholders of Yongxin own a majority of the issued and outstanding shares of common stock of the Company, and the directors and executive officers of Yongxin became the directors and executive officers of the Company. This acquisition was accounted for at historical cost in a manner similar to that in pooling of interests method since after the acquisition, the former shareholders of Yongxin acquired majority of the outstanding shares of the Company. The financial statements of the legal acquirer are not significant; therefore, no pro forma financial information is submitted. The historical financial statements are those of "Changchun Yongxin Dirui Medical Co, Inc. & Subsidiaries."

Yongxin was established in 1993. The Company's operations are based in Changchun City, Jilin Province, China.

In 2004, Yongxin established Jilin Province Yongxin Chain Durgstore Ltd. ("Yongxin Drugstore") with an investment of RMB 2,500,000 (equivalent to $303,000) to develop customer-terminal network market. In July 2005, the Company obtained the franchise rights in Jilin Province from American Medicine Shoppe (Meixin International Medical Chains) and by now has developed 4 chains of "Meixin Yongxin." As of September 30, 2009, Yongxin Drugstore has developed a chain of 20 retail drug stores under the "Yongxin Drugstore" name which collectively cover 4,376 M2 of retail space throughout Changchun, the capital of Jilin Province in northeastern China. These drugstores sell over-the counter western and traditional Chinese medicines and other medical-related products.

On March 16, 2007, Yongxin Drugstore entered into various agreements with retail drug stores in Tianjin, China, and established Tianjin Jingyongxin Chain Drugstore Ltd. ("Jingyongxin Drugstore") with an investment of $116,868, in which the Company has 90% ownership. As of September 30, 2009, Jinyongxin Drugstore has developed a 22-store retail chain with total retail space of 2,500 M2.

On May 15, 2007, Yongxin established Jilin Dingjian Natural & Health Products Co., Ltd. ("Dingjian") with an investment of $116,868 whereby the shareholders of the company have 90% ownership of Dingjian. Dingjian was formed under laws of the People's Republic of China and is located in Changchun City, Jilin Province.

On June 15 2007, Yongxin Drugstore established Baishan Caoantang Chain Drugstore Ltd. ("Caoantang Drugstore") with an investment of $328,430, including $144,509 in cash and $183,921in property and equipment, with an additional $80,076 payment for goodwill to be evenly paid by Yongxin over 30 months. Caoantang Drugstore is a wholly-owned subsidiary of Yongxin Drugstore. As of September 30, 2009, Caoantang Drugstore operates a chain of 31 retail drugstores that collectively cover 2,435 M2 of retail space and selling over-the counter western and traditional Chinese medicines and other medical-related products.

On May 5, 2008 the Company changed its name from Nutradyne Group, Inc to China Yongxin Pharmaceuticals Inc.

2009 Overview

The current general economic recession may affect our operations since many of our products are discretionary and we depend to a significant extent upon a number of factors relating to discretionary consumer spending in China. During times of economic downturn, consumers tend to spend less on many of our products, including cosmetics, organic products and health and nutritional supplements.

Previously, management believed that the government will pass certain favorable medical policies ("National Medical Policy") in the second half of 2009 which will extend medical insurance coverage to people who live in the rural area or countryside of China, which covers approximately 40% of the Chinese population. Management believes the passage of the National Medical Policy will highly benefit our sales and operations. However, the National Medical Policy has not been passed so far and its direction is unclear. Due to the uncertainty of the direction of the National Medical Policy, the Company decided to make certain changes to the operation of its business in the second half of 2009 which included shifting its focus from the wholesale sector to the retail sector of its business. The Company will readjust its operations and sales strategy accordingly once the direction of the National Medical Policy becomes clear.

Since last year, the Company has added products with higher profit margins to our operations to increase our gross profit, such products including cosmetics and certain health and organic products. Management believes that the addition of such products will increase our overall gross profit in 2009 and the next few years. Management believes that our sales and gross profit margins will improve with better economic conditions in 2010.

Critical Accounting Policies and Estimates

Our management's discussion and analysis of our financial condition and results of operations are based on our financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make 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 as well as the reported net sales and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in note 2 to our financial statements under the section above titled "Summary of Significant Accounting Policies," we believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis:

Basis of Presentation

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. The functional currency of our operating subsidiary, Changchun Yongxin Dirui Medical Co., Ltd is Chinese Yuan Renminbi.

Translation Adjustment

As of September 30, 2009, the accounts of Yongxin were maintained, and its financial statements were expressed, in Chinese Yuan Renminbi ("CNY"). Such financial statements were translated into U.S. Dollars ("USD") in accordance with Statement of Financial Accounts Standards ("SFAS") No. 52 (ASC 830), "Foreign Currency Translation," with the CNY as the functional currency. According to the Statement, all assets and liabilities were translated at the current exchange rate, stockholders' equity are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130 (ASC 220), "Reporting Comprehensive Income" as a component of shareholders' equity.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make certain 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 period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

Principles of Consolidation

The consolidated financial statements include the accounts of China Yongxin Pharmaceuticals Inc. and its subsidiaries collectively referred to within as the "Company". All material inter-company accounts, transactions and profits have been eliminated in consolidation.

Non-controlling interest

The Company owns 90% ownership interest in Jingyongxin Drugstore and Dingjian. The remaining 10% interest in each of the entities is owned by third parties. As at September 30, 2009, minority interest in Jingyongxin Drugstore and Dingjian amounted to $32,249 compared to $20,286 as at December 31, 2008. The Company acquired 80% of Yongxin. The remaining 20% represents minority interest amounting to $4,737,931 as at September 30, 2009 compared to $4,078,654 as at December 31, 2008.

Inventories

Inventories are valued on a lower of weighted average cost or market basis. Inventory includes product cost, inbound freight, warehousing costs and vendor allowances not included as a reduction of advertising expense. The management compares the cost of inventories with the market value and allowance is made for writing down their inventories to market value, if lower. Work in process inventories include the cost of raw materials and outsource processing fees.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over useful lives ranging from 5 to 10 years. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Assets held under capital leases are recorded at the lesser of the present value of the future minimum lease payments or the fair value of the leased property. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Buildings                                                                20 years
Infrastructures and leasehold improvements                               10 years
Equipment (including electronic facilities, sports, education and        10 years
recreation facilities)
Automobiles                                                              10 years
Furniture and fixtures                                                    5 years
Computer hardware and software                                            5 years

Impairment of Long-Lived Assets

Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144") (ASC 360), which addresses financial accounting and reporting for the impairment or disposal of long-lived assets and supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30, "Reporting the Results of Operations for a Disposal of a Segment of a Business." The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS
144 (ASC 360). SFAS 144 (ASC 360) requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Revenue Recognition

The Company's revenue recognition policies are in compliance with Staff Accounting Bulletin ("SAB") 104 (ASC 605). Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. The Company recognizes revenue net of an allowance for estimated returns, at the time the merchandise is sold or services performed. The allowance for sales returns is estimated based on the Company's historical experience. Sales taxes are presented on a net basis (excluded from revenues and costs). Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue.

Fair Value of Financial Instruments

Statement of Financial Accounting Standard No. 107 (ASC 825), "Disclosures about Fair Value of Financial Instruments", requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Stock Based Compensation

Effective January 1, 2006, the Company adopted Statement No. 123R, Share-Based Payment ("SFAS 123R") (ASC 718), which requires companies to measure and recognize compensation expense for all stock-based payments at fair value. SFAS 123R is being applied on the modified prospective basis. Prior to the adoption of SFAS 123R, the Company accounted for its stock-based compensation plan s under the recognition and measurement principles of Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees", and related interpretations, and accordingly, recognized no compensation expense related to the stock-based plans. Under the modified prospective approach, SFAS 123R applies to new awards and to awards that were outstanding on January 1, 2006 that are subsequently modified, repurchased or cancelled.

Recent Accounting Pronouncements

In June 2009, the FASB issued ASC 105 (previously SFAS No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles ("GAAP") - a replacement of FASB Statement No. 162), which will become the source of authoritative accounting principles generally accepted in the United States recognized by the FASB to be applied to nongovernmental entities. The Codification is effective in the third quarter of 2009, and accordingly, the Quarterly Report on Form 10-Q for the quarter ending September 30, 2009 and all subsequent public filings will reference the Codification as the sole source of authoritative literature. The Company does not believe that this will have a material effect on its consolidated financial statements.

In June 2009, the FASB issued ASC 855 (previously SFAS No. 165, Subsequent Events), which establishes general standards of accounting for and disclosures of events that occur after the balance sheet date but before the financial statements are issued or available to be issued. It is effective for interim and annual periods ending after June 15, 2009. There was no material impact upon the adoption of this standard on the Company's consolidated financial statements.

In June 2009, the FASB issued ASC 860 (previously SFAS No. 166, "Accounting for Transfers of Financial Assets") , which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a "qualifying special-purpose entity," changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009. The Company does not believe this pronouncement will impact its financial statements.

In June 2009, the FASB issued ASC 810 (previously SFAS No. 167) for determining whether to consolidate a variable interest entity. These amended standards eliminate a mandatory quantitative approach to determine whether a variable interest gives the entity a controlling financial interest in a variable interest entity in favor of a qualitatively focused analysis, and require an ongoing reassessment of whether an entity is the primary beneficiary. These amended standards are effective for us beginning in the first quarter of fiscal year 2010 and we are currently evaluating the impact that adoption will have on our consolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update ("ASU") 2009-05, which amends ASC Topic 820, Measuring Liabilities at Fair Value, which provides additional guidance on the measurement of liabilities at fair value. These amended standards clarify that in circumstances in which a quoted price in an active market for the identical liability is not available, we are required to use the quoted price of the identical liability when traded as an asset, quoted prices for similar liabilities, or quoted prices for similar liabilities when traded as assets. If these quoted prices are not available, we are required to use another valuation technique, such as an income approach or a market approach. These amended standards are effective for us beginning in the fourth quarter of fiscal year 2009 and are not expected to have a significant impact on our consolidated financial statements.

 Results of Operations

Comparison of Three and Nine Month Periods Ended September 30, 2009 and 2008.

The following table sets forth the results of our operations for the periods
indicated:

                                                 Three Months Ended                  Nine Months Ended
                                                   September 30,                       September 30,
                                               2009             2008              2009              2008
                                           (unaudited)       (unaudited)       (unaudited)       (unaudited)
Net Revenues                               $ 10,844,786     $  15,451,100     $  29,199,325     $  45,025,197
Cost of Goods Sold                           (7,685,369 )     (12,412,576 )     (21,090,595 )     (36,602,807 )
Gross profit                                  3,159,417         3,038,524         8,108,730         8,422,390

Operating Expenses:
Selling expenses                                912,094           858,038         2,495,546         2,582,411
General and administrative                    2,386,349           369,471         3,908,223         1,482,786
Total operating expenses                      3,298,443         1,227,509         6,403,769         4,065,197

Income (loss) from operations                  (139,026 )       1,811,015         1,704,961         4,357,193

Other Income (Expense):
Other income                                  1,112,309           683,618         1,906,864         1,517,758
Other expense                                   (19,981 )         (42,745 )         (40,763 )         (77,651 )
Interest income (expense)                        (6,919 )         (55,845 )           1,066          (282,957 )
Total other income                            1,085,409           585,028         1,867,166         1,157,150

Operating income before income tax &
non-controlling interest                        946,383         2,396,043         3,572,127         5,514,343

Provision for income tax                       (233,908 )        (547,088 )        (964,474 )      (1,487,230 )

Net income before non-controlling
interest                                        712,475         1,848,955         2,607,653         4,027,113

Non-controlling interest                       (240,362 )        (191,894 )        (670,747 )        (883,775 )

Net income                                      472,113         1,657,061         1,936,906         3,143,338

Other Comprehensive Item
Foreign exchange translation gain                18,938            26,258               598           862,970

Net Comprehensive Income                        491,051         1,683,319         1,937,504         4,006,308

Earning per share
Basic                                              0.01              0.05              0.06              0.10
Diluted                                            0.01              0.05              0.06              0.10

Weighted average number of shares
outstanding
Basic                                        31,667,062        31,291,845        31,288,904        31,150,819
Diluted                                      32,125,923        31,291,845        31,747,765        31,150,819

Comparison of Three Months Ended September 30, 2009 and 2008.

Net Revenues. For the three month period ended September 30, 2009, our net revenues decreased approximately 29.8% from $15,451,100 for the three month period ended September 30, 2008 compared to $10,844,786 for the same period ended September 30, 2009. Our revenues for the three months ended September 30, 2009 are lower due to the transition of the Company's sales strategy. Due to the uncertainty of the direction of the National Medical Policy, as described in the 2009 overview of our business, we have reduced input into the wholesale sector of our business and we are shifting our focus to increase the retail sector of our business. The overall policy for our drug retail business has not . . .