Daphne Board of Directors Office                 34h Issue                November 11, 2011

   On the November 11, 2011 morning, a task force from Daphne Panax Notoginseng Industrial Co., Ltd, organized by Feng Guangquan, Daphne VP, was formed to check the internal management work at the panax notoginseng GAP bases since review by Daphne HQ in 2009. The task force carried out thorough overhaul of the base construction management work against “the TCM Drug Material GAP Certification Appraisal Standard” (interim).

   Since review in 2009, the Daphne Panax Notoginseng Industrial Co., Ltd fell behind in data management related with construction of the panax notoginseng GAP bases. It is not until the second half of 2011 that, under call of the HQ officials, the company designated special persons to take charge of panax notoginseng GAP base construction management work.

   Currently, through joint effort of all the staff over more than 3 months, the relevant records have been established, including records generated in the environmental quality testing, product quality testing, plantation, processing and storage process.

   Through the activity, all the relevant records are put on file. It marks compliance of the panax notoginseng GAP base construction management work with all the requirements in 78 clauses in the “the TCM Drug Material GAP Certification Appraisal Standard” on plantation of TCM drug materials. It lays a firm basis for the Company to further normalize the base construction management practice, establish a material traceability system, guarantee quality of the panax notoginseng material, supply quality stable raw panax notoginseng for the in-house pharmaceutical enterprises and increase sales of raw panax notoginseng.