Florida
|
|
2834
|
65-1130026
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(Primary
Standard Industrial Classification Code Number)
|
(I.R.S.
Employer Identification
Number)
|
Title
of each class of securities to be registered
|
Amount
to be registered (1)
|
Proposed
maximum offering price per share (2)
|
Proposed
maximum aggregate offering price
|
Amount
of registration fee
|
|||||||||
Common
Stock, $.001
par value per share
|
25,000,000
|
(3)
|
$
|
0.215
|
$
|
5,375,000
|
$
|
211.24
|
|||||
Common
Stock, $.001
par value per share
|
16,000,000
|
(4)
|
$
|
0.215
|
$
|
3,440,000
|
$
|
135.20
|
|||||
Common
Stock, $.001
par value per share
|
150,000,000
|
(5)
|
$
|
0.215
|
$
|
32,250,000
|
$
|
1,268.00
|
|||||
Common
Stock, $.001
par value per share
|
75,000,000
|
(6)
|
$
|
0.215
|
$
|
16,125,000
|
$
|
633.71
|
|||||
TOTAL
|
266,000,000
|
—
|
$
|
57,190,000
|
$
|
2,248.15
|
(1) |
Pursuant
to Rule 416 of the Securities Act of 1933, as amended, the shares
of
common stock offered hereby also include such presently indeterminate
number of shares of our common stock as shall be issued by us to
the
selling shareholders as a result of stock splits, stock dividends
or
similar transactions.
|
(2) |
Estimated
solely for purposes of calculating the registration fee in accordance
with
Rule 457(c) under the Securities Act of 1933, as amended based on
the
average of the bid and asked prices, as reported on the Over the
Counter
Bulletin Board on July 8, 2008.
|
(3) |
The
25,000,000 shares of common stock are being registered for resale
by the
Selling Stockholders named in this registration statement, which
shares
are issuable by the registrant upon the conversion of the Company’s 6%
Convertible Subordinated Debentures due November 30,
2010.
|
(4) |
The
16,000,000 shares of common stock are being registered for resale
by the
Selling Stockholders named in this registration statement, which
shares
are issuable by the registrant upon the exercise of the Company’s warrants
issued in November 2007.
|
(5) |
The
150,000,000 shares of common stock are being registered for resale
by the
Selling Stockholders named in this registration statement, which
shares
are issuable by the registrant upon the conversion of the Company’s 6%
Convertible Notes due May 30, 2011.
|
(6) |
The
75,000,000 shares of common stock are being registered for resale
by the
Selling Stockholders named in this registration statement, which
shares
are issuable by the registrant upon the exercise of the Company’s Class A
Warrants issued in May 2008.
|
PROSPECTUS
SUMMARY
|
2
|
|||
THE
OFFERING
|
4
|
|||
CERTAIN
DISCLOSURE REGARDING CONVERSION OF THE DEBENTURES AND NOTES AND
EXERCISE
OF NOVEMBER WARRANTS AND CLASS A WARRANTS
|
4
|
|||
SUMMARY
CONSOLIDATED FINANCIAL DATA
|
5
|
|||
RISK
FACTORS
|
7
|
|||
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
|
24
|
|||
USE
OF PROCEEDS
|
24
|
|||
SELLING
STOCKHOLDERS
|
24
|
|||
PLAN
OF DISTRIBUTION
|
28
|
|||
BUSINESS
|
46
|
|||
DIRECTORS
AND EXECUTIVE OFFICERS
|
55
|
|||
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
59
|
|||
DESCRIPTION
OF CAPITAL STOCK
|
66
|
|||
TRANSFER
AGENT AND REGISTRAR
|
67
|
|||
LEGAL
MATTERS
|
67
|
|||
EXPERTS
|
67
|
|||
WHERE
YOU CAN FIND MORE INFORMATION
|
67
|
|||
INDEX
TO AUDITED FINANCIAL STATEMENTS
|
F-1
|
· |
25,000,000
shares issuable upon the conversion of the Debentures at a conversion
price of $.20 per share,
|
· |
16,000,000
shares issuable upon the exercise of the November Warrants at an
exercise
price of $.20 per share,
|
· |
150,000,000
shares issuable upon the conversion of the Notes at a conversion
price of
$.20 per share, and
|
· |
75,000,000
shares issuable upon the exercise of the Class A Warrants at an exercise
price of $.25 per share.
|
Common
Stock
being offered by Selling Stockholders
|
Up
to 266,000,000 shares
|
|
OTCBB
Symbol
|
GTEC
|
|
Risk
Factors
|
The
securities offered by this prospectus are speculative and involve
a high
degree of risk and investors purchasing securities should not purchase
the
securities unless they can afford the loss of their entire investment.
See
“Risk
Factors” beginning on page 7.
|
Gross
proceeds from issuance of the Debentures:
|
$
|
5,000,000.00
|
||
Payments
in connection with the transaction that the Company has made
or will
make:
|
||||
Finder's
fee (1)
|
$
|
250,000.00
|
||
Pope
Investments, LLC (legal fees reimbursement)(2)
|
$
|
20,000.00
|
||
Legal
fees (1)
|
$
|
69,000.00
|
||
Total
Payments made by the Company:
|
$
|
339,000.00
|
||
Net
proceeds to issuer:
|
$
|
4,661,000.00
|
Date
|
Interest
Payment Amount
|
|||
5/31/2008
|
$
|
150,000.00
|
||
11/30/2008
|
$
|
150,000.00
|
||
5/31/2009
|
$
|
150,000.00
|
||
11/30/2009
|
$
|
150,000.00
|
||
5/31/2010
|
$
|
150,000.00
|
||
Total
Interest Payments
|
$
|
750,000.00
|
Gross
proceeds from issuance of the Notes:
|
$
|
30,000,000.00
|
||
Payments
in connection with the transaction that the Company has made
or will
make:
|
||||
Placement
agent fees(1)
|
$
|
1,500,000.00
|
||
Legal
fees(1)
|
$
|
166,500.00
|
||
Pope
Investments, LLC (legal fees reimbursement)(2)
|
$
|
20,000.00
|
||
Bank
wire fees, printing and shipping fees (3)
|
$
|
3,510.00
|
||
Total
Payments made by the Company:
|
$
|
1,690,010.00
|
||
Net
proceeds to issuer:
|
$
|
28,309,990.00
|
Date
|
Interest
Payment Amount
|
|||
11/30/2008
|
$
|
900,000.00
|
||
5/30/2009
|
$
|
900,000.00
|
||
11/30/2009
|
$
|
900,000.00
|
||
5/30/2010
|
$
|
900,000.00
|
||
11/30/2010
|
$
|
900,000.00
|
||
5/30/2011
|
$
|
900,000.00
|
||
Total
Interest Payments
|
$
|
5,400,000.00
|
Market
price per share on November 7, 2007 of common stock underlying
the
Debentures and November Warrants:
|
$
|
0.40
|
||
Conversion
price per share on November 7, 2007 of securities underlying
the
Debentures:
|
$
|
0.25
|
||
Exercise
price per share on November 7, 2007 of securities underlying
the November
Warrants
|
$
|
0.32
|
||
Total
shares underlying Debentures (at a conversion price of
$0.25)
|
20,000,000
|
|||
Total
shares underlying November Warrants
|
10,000,000
|
|||
Combined
market price of the total number of shares (20,000,000) underlying
the
Debentures using $0.40 market price
|
$
|
8,000,000
|
||
Combined
conversion price of shares underlying the Debentures
|
$
|
5,000,000
|
||
Total
possible discount to market price of shares underlying the
Debentures
|
$
|
3,000,000
|
||
Combined
market price of the total number of shares (10,000,000) underlying
the
November Warrants using $0.40 market price
|
$
|
4,000,000
|
||
Combined
exercise price of shares underlying the November Warrants
|
$
|
3,200,000
|
||
Total
possible discount to market price of shares underlying the
November
Warrants
|
$
|
800,000
|
||
Total
possible discount to market price:
|
$
|
3,800,000
|
·
|
pursuant
to section 3(g)(ii) of the Debentures, the conversion price
was reduced
from $0.25 to $0.20 per share; and
|
·
|
pursuant
to sections 6(c) and 6(d) of the November Warrants, the exercise
price of
the November Warrants was reduced from $0.32 to $0.20 and the
total number
of shares of common stock underlying the November Warrants
was increased
to 16,000,000 from 10,000,000.
|
Market
price per share on May 30, 2008 of common stock underlying
the Notes and
Class A Warrants:
|
$
|
0.30
|
||
Conversion
price per share on May 30, 2008 of securities underlying the
Notes:
|
$
|
0.20
|
||
Exercise
price per share on May 30, 2008 of securities underlying the
Class A
Warrants
|
$
|
0.25
|
||
Total
shares underlying Notes (at a conversion price of $0.20)
|
150,000,000
|
|||
Total
shares underlying Class A Warrants
|
75,000,000
|
|||
Combined
market price of the total number of shares (150,000,000) underlying
the
Notes using $0.30 market price
|
$
|
45,000,000
|
||
Combined
conversion price of shares underlying the Notes
|
$
|
30,000,000
|
||
Total
possible discount to market price of shares underlying the
Notes
|
$
|
15,000,000
|
||
Combined
market price of the total number of shares (75,000,000) underlying
the
Class A Warrants using $0.30 market price
|
$
|
22,500,000
|
||
Combined
exercise price of shares underlying the Class A Warrants
|
$
|
18,750,000
|
||
Total
possible discount to market price of shares underlying the
November
Warrants
|
$
|
3,750,000
|
||
Total
possible discount to market price:
|
$
|
18,750,000
|
|
Amount
|
%
of Net Proceeds
|
|||||
Gross
proceeds paid to issuer:
|
$
|
5,000,000
|
|||||
All
payments that have been made by issuer:
|
$
|
339,000
|
7.27
|
%
|
|||
Net
proceeds to issuer:
|
$
|
4,661,000
|
100.00
|
%
|
|||
Combined
total possible profit as a result of discounted conversion
price of the
Debentures
|
$
|
3,000,000
|
64.36
|
%
|
|||
Combined
total possible profit as a result of discounted exercise price
of the
November Warrants
|
$
|
800,000
|
17.16
|
%
|
|
Amount
|
%
of Net Proceeds
|
|||||
Gross
proceeds paid to issuer:
|
$
|
30,000,000
|
-
|
||||
All
payments that have been made by issuer:
|
$
|
1,690,010
|
5.97
|
%
|
|||
Net
proceeds to issuer:
|
$
|
28,309,990
|
100.00
|
%
|
|||
Combined
total possible profit as a result of discounted conversion
price of the
Notes
|
$
|
15,000,000
|
52.98
|
%
|
|||
Combined
total possible profit as a result of discounted exercise price
of the
Class A Warrants
|
$
|
3,750,000
|
13.25
|
%
|
Number
of shares outstanding prior to November 2007 private placement
held by
persons other than the selling shareholders, affiliates of
the Company and
affiliates of the selling shareholders
|
195,715,380
|
Number
of shares outstanding prior to May 2008 private placement held
by persons
other than the selling shareholders, Affiliates
of the Company and affiliates of the selling shareholders
|
194,815,380
|
Number
of shares registered for resale by selling shareholders or
affiliates in
prior registration statements
|
0
|
Number
of shares registered for resale by selling shareholders or
affiliates of
selling shareholders continue to be held by selling shareholders
or
affiliates of selling shareholder
|
0
|
Number
of shares have been sold in registered resale by selling shareholders
or
affiliates of selling shareholders
|
0
|
Number
of shares registered for resale on behalf of selling shareholders
or
affiliates of selling shareholders in current transaction
(i)
|
266,000,000
|
Nine
Months Ended
March
31,
|
Year
Ended
June
30,
|
|||||||||||||||
2008
|
2007
|
2007
|
2006
|
2005
|
||||||||||||
(unaudited)
|
(unaudited)
|
|
||||||||||||||
Statement
of Operations Information:
|
||||||||||||||||
Sales
|
$
|
66,648
|
$
|
52,876
|
$
|
72,260
|
$
|
45,243
|
$
|
10,852
|
||||||
Sales-
related party
|
4,612
|
2,964
|
3,934
|
3,913
|
1,899
|
|||||||||||
Cost
of sales
|
17,744
|
15,724
|
21,162
|
15,686
|
8,772
|
|||||||||||
Gross
profit
|
53,516
|
40,116
|
55,032
|
33,470
|
3,979
|
|||||||||||
Research
and development
|
2,171
|
10,441
|
11,144
|
13,642
|
1,240
|
|||||||||||
General
and administrative
|
29,269
|
18,491
|
25,579
|
7,895
|
1,689
|
|||||||||||
Income
from operations
|
22,076
|
11,184
|
18,309
|
11,933
|
1,050
|
|||||||||||
Other
expenses (income), net
|
2,404
|
211
|
(6,375
|
)
|
387
|
253
|
||||||||||
Income
before provision for income taxes
|
19,672
|
10,973
|
24,684
|
11,546
|
797
|
|||||||||||
Provision
for income taxes
|
6,809
|
3,568
|
2,631
|
3,810
|
263
|
|||||||||||
Net
income
|
12,863
|
7,405
|
22,053
|
7,736
|
534
|
|||||||||||
Other
comprehensive income
|
4,777
|
673
|
1,018
|
128
|
-
|
|||||||||||
Comprehensive
income
|
17,640
|
8,078
|
23,071
|
7,864
|
534
|
1. |
Other
income for 2007 includes $6,189 representing the reversal of tax
accruals
previously made as the result of the grant by the local tax agency
to
Laiyang Jiangbo of a special tax exemption and release from any unpaid
corporate income tax and value added tax liabilities and any related
penalties from January 1, 2007 through June 30,
2007.
|
As
of March 31,
|
As
of June 30,
|
|||||||||
2008
(unaudited)
|
2007
|
2006
|
||||||||
Balance
Sheet Data:
|
||||||||||
Cash
and cash equivalents
|
$
|
21,574
|
$
|
17,737
|
$
|
3,372
|
||||
Accounts
receivable, net
|
20,589
|
11,825
|
9,759
|
|||||||
Accounts
receivable- related parties
|
2,019
|
499
|
414
|
|||||||
Other
current assets
|
12,412
|
14,038
|
16,882
|
|||||||
Property
and equipment, net
|
11,081
|
10,179
|
4,861
|
|||||||
Other
assets, net
|
12,911
|
1,119
|
1,185
|
|||||||
Total
assets
|
80,586
|
55,397
|
36,473
|
|||||||
Total
Current Liabilities
|
25,835
|
28,101
|
27,032
|
|||||||
Total
Liabilities
|
26,506
|
28,101
|
27,032
|
|||||||
Total
Stockholders’ Equity
|
54,080
|
27,296
|
9,441
|
· |
maintain
our market position in the pharmaceuticals business in
China;
|
· |
offer
new and innovative products to attract and retain a larger customer
base;
|
· |
attract
additional customers and increase spending per
customer;
|
· |
increase
awareness of our brand and continue to develop user and customer
loyalty;
|
· |
respond
to competitive market conditions;
|
· |
respond
to changes in our regulatory environment;
|
· |
manage
risks associated with intellectual property
rights;
|
· |
maintain
effective control of our costs and
expenses;
|
· |
raise
sufficient capital to sustain and expand our
business;
|
· |
attract,
retain and motivate qualified personnel;
and
|
· |
upgrade
our technology to support additional research and development of
new
products.
|
· |
terminates
or suspends its agreement with us;
|
· |
causes
delays;
|
· |
fails
to timely develop or manufacture in adequate quantities a substance
needed
in order to conduct clinical trials;
|
· |
fails
to adequately perform clinical trials;
|
· |
determines
not to develop, manufacture or commercialize a product to which it
has
rights; or
|
· |
otherwise
fails to meet its contractual
obligations.
|
· |
any
of our patent applications will result in the issuance of
patents;
|
· |
we
will develop additional patentable
products;
|
· |
the
patents we have been issued will provide us with any competitive
advantages;
|
· |
the
patents of others will not impede our ability to do business;
or
|
· |
third
parties will not be able to circumvent our
patents.
|
· |
the
commercialization of our products could be adversely
affected;
|
· |
any
competitive advantages of the products could be diminished;
and
|
· |
revenues
or collaborative milestones from the products could be reduced or
delayed.
|
· |
we
only have contractual control over Laiyang Jiangbo. We do not own
it due
to the restriction of foreign investment in Chinese businesses;
and
|
· |
uncertainties
relating to the regulation of the pharmaceutical business in China,
including evolving licensing practices, means that permits, licenses
or
operations at our company may be subject to challenge. This may disrupt
our business, or subject us to sanctions, requirements to increase
capital
or other conditions or enforcement, or compromise enforceability
of
related contractual arrangements, or have other harmful effects on
us.
|
· |
levying
fines;
|
· |
revoking
our business and other licenses;
and
|
· |
requiring
that we restructure our ownership or operations.
|
· |
the
amount of government involvement;
|
· |
level
of development;
|
· |
growth
rate;
|
· |
control
of foreign exchange; and
|
· |
allocation
of resources.
|
· |
the
level of state-owned enterprises in the PRC, as well as the level
of
governmental control over the allocation of resources is greater
than in
most of the countries belonging to the
OECD;
|
· |
the
level of capital reinvestment is lower in the PRC than in other countries
that are members of the OECD;
|
· |
the
government of the PRC has a greater involvement in general in the
economy
and the economic structure of industries within the PRC than other
countries belonging to the OECD;
|
· |
the
government of the PRC imposes price controls on certain products
and our
products may become subject to additional price controls;
and
|
· |
the
PRC has various impediments in place that make it difficult for foreign
firms to obtain local currency, as opposed to other countries belonging
to
the OECD where exchange of currencies is generally free from
restriction.
|
· |
actual
or anticipated fluctuations in our quarterly operating
results;
|
· |
changes
in financial estimates by securities research
analysts;
|
· |
conditions
in pharmaceutical and agricultural
markets;
|
· |
changes
in the economic performance or market valuations of other pharmaceutical
companies;
|
· |
announcements
by us or our competitors of new products, acquisitions, strategic
partnerships, joint ventures or capital
commitments;
|
· |
addition
or departure of key personnel;
|
· |
fluctuations
of exchange rates between RMB and the U.S.
dollar;
|
· |
intellectual
property litigation; and
|
· |
general
economic or political conditions in
China.
|
· |
the
name of the selling stockholders,
|
· |
the
number and percentage of shares of our common stock that the selling
stockholders beneficially owned prior to the offering for resale
of the
shares under this prospectus,
|
· |
the
number of shares of our common stock that may be offered for resale
for
the account of the selling stockholders under this prospectus,
and
|
· |
the
number and percentage of shares of our common stock to be beneficially
owned by the selling stockholders after the offering of the resale
shares
(assuming all of the offered resale shares are sold by the selling
stockholders).
|
Name
of Selling Stockholder
|
Shares
Beneficially Owned Prior to Offering(1)
|
Maximum
Number of Shares to be Sold
|
Number
of Shares Beneficially Owned After Offering
|
Percentage
Ownership After Offering
|
|||||||||
Pope
Investments LLC
|
45,850,000
|
(2)
|
168,500,000
|
(3)
|
-0-
|
-0-
|
|||||||
Ardsley
Partners Fund II, L.P.
|
11,812,500
|
(4)
|
11,812,500
|
-0-
|
-0-
|
||||||||
Ardsley
Partners Institutional Fund L.P.
|
7,725,000
|
(5)
|
7,725,000
|
-0-
|
-0-
|
||||||||
Ardsley
Partners Offshore Fund, Ltd.
|
7,912,500
|
(6)
|
7,912,500
|
-0-
|
-0-
|
||||||||
Marion
Lynton
|
300,000
|
(7)
|
300,000
|
-0-
|
-0-
|
||||||||
MidSouth
Investor Fund LP
|
2,250,000
|
(8)
|
2,250,000
|
-0-
|
-0-
|
||||||||
Sansar
Capital Special Opportunity Master Fund, LP
|
41,250,000
|
(9)
|
41,250,000
|
-0-
|
-0-
|
||||||||
Ephraim
Fields
|
375,000
|
(10)
|
375,000
|
-0-
|
-0-
|
||||||||
Hua-Mei
21st
Century Partners, LP
|
13,500,000
|
(11)
|
13,500,000
|
-0-
|
-0-
|
||||||||
Guerilla
Partners, LP
|
6,562,500
|
(12)
|
6,562,500
|
-0-
|
-0-
|
||||||||
Guerilla
IRA Partners, LP
|
187,500
|
(13)
|
187,500
|
-0-
|
-0-
|
||||||||
Excalibur
Special Opportunities, LP
|
3,750,000
|
(14)
|
3,750,000
|
-0-
|
-0-
|
||||||||
Whalehaven
Capital Fund Ltd.
|
1,875,000
|
(15)
|
1,875,000
|
-0-
|
-0-
|
(1)
|
Beneficial
ownership is determined in accordance with the rules and regulations
of
the SEC. In computing the number of shares beneficially owned by
a person
and the percentage ownership of that person, securities that are
currently
convertible or exercisable into shares of our common stock, or
convertible
or exercisable into shares of our common stock within 60 days of
the date
hereof are deemed outstanding. Such shares, however, are not deemed
outstanding for the purposes of computing the percentage ownership
of any
other person. Except as indicated in the footnotes to the following
table,
each stockholder named in the table has sole voting and investment
power
with respect to the shares set forth opposite such stockholder’s name. The
percentage of beneficial ownership is based on 412,986,078 shares
of common stock outstanding as of August 25,
2008.
|
(2)
|
Includes
(i) 25,000,000 shares of Common Stock issuable to Pope Investments
LLC, a
Delaware limited liability company (“Pope Investments”), upon conversion
of $5,000,000 aggregate principal amount of the Debentures and
16,000,000
shares of Common Stock issuable upon exercise of the November Warrants
and
(ii) up to an additional 4,850,000 shares of Common Stock of the
85,000,000 shares of Common Stock issuable to Pope Investments
upon
conversion of $17,000,000 aggregate principal amount of the Company’s
Notes and 42,500,000 shares of Common Stock issuable upon exercise
of the
Company’s Class A Warrants. Pursuant to the terms of the Notes and the
Class A Warrants, each of the Selling Stockholders has agreed that
it will
not convert any Notes or exercise any Class A Warrants to the extent
that
such conversion or exercise would result in it, together with its
affiliates, beneficially own more than 9.99% of the number of shares
of
our common stock outstanding at the time of conversion or exercise.
Any
Selling Stockholder may waive these beneficial ownership limitations
as to
itself upon no less than 61 days prior written notice to the Company.
Pope
Asset Management LLC, a Tennessee limited liability company (“Pope Asset”)
serves as an investment adviser and/or manager to Pope Investments.
Pope
Asset is the sole manager for Pope Investments and has sole voting
control
and investment and disposition power and discretion with respect
to all
securities held by Pope Investments. Pope Asset may be deemed to
beneficially own shares owned or held by, or held for the account
or
benefit of, Pope Investments. William P. Wells is the sole manager
of Pope
Asset. Mr. Wells may be deemed to own shares owned or held by,
or held for
the account or benefit of, Pope Investments. Pope Asset and Mr.
Wells do
not directly own any shares of Common Stock.
|
(3)
|
Includes
(i) 25,000,000 shares of Common Stock issuable to Pope Investments
upon
conversion of $5,000,000 aggregate principal amount of the Debentures;
(ii) 16,000,000 shares of Common Stock issuable upon exercise of
the
November Warrants; (iii) 85,000,000 shares of Common Stock issuable
to
Pope Investments upon conversion of $17,000,000 aggregate principal
amount
of the Notes; and (iv) 42,500,000 shares of Common Stock issuable
upon
exercise of Class A Warrants.
|
(4)
|
Includes
7,875,000 shares of common stock issuable to Ardsley Partners Fund
II,
L.P., a Delaware limited partnership, upon conversion of $1,575,000
aggregate principal amount of the Company’s Notes and 3,937,500 shares of
common stock issuable upon exercise of the Company’s Class A Warrants.
Ardsley Partners Fund II, L.P. has direct beneficial ownership
with
respect to the shares. Philip J. Hempelman has voting and dispositive
power over the shares.
|
(5)
|
Includes
5,150,000 shares of common stock issuable to Ardsley Partners
Institutional Fund L.P., a Delaware limited partnership, upon conversion
of $1,030,000 aggregate principal amount of the Company’s Notes and
2,575,000 shares of common stock issuable upon exercise of the
Company’s
Class A Warrants. Ardsley Partners Institutional Fund L.P. has
direct
beneficial ownership with respect to the shares. Philip J. Hempelman
has
voting and dispositive power over the
shares.
|
(6)
|
Includes
5,275,000 shares of common stock issuable to Ardsley Partners Offshore
Fund Ltd., a British Virgin Islands corporation, upon conversion
of
$1,055,000 aggregate principal amount of the Company’s Notes and 2,637,500
shares of common stock issuable upon exercise of the Company’s Class A
Warrants. Ardsley Partners Offshore Fund Ltd. has direct beneficial
ownership with respect to the shares. Philip J. Hempelman has voting
and
dispositive power over the
shares.
|
(7)
|
Includes
200,000 shares of common stock issuable to Marion Lynton upon conversion
of $40,000 aggregate principal amount of the Company’s Notes and 100,000
shares of common stock issuable upon exercise of the Company’s Class A
Warrants. Philip J. Hempelman has voting and dispositive power
over the
shares.
|
(8)
|
Includes
1,500,000 shares of common stock issuable to MidSouth
Investor Fund LP upon
conversion of $300,000 aggregate principal amount of the Company’s Notes
and 750,000 shares of common stock issuable upon exercise of the
Company’s
Class A Warrants. Lyman O. Heidtke has voting and dispositive power
over
the shares.
|
(9)
|
Includes
27,500,000 shares of common stock issuable to Sansar
Capital Special Opportunity Master Fund, LP upon
conversion of $5,500,000 aggregate principal amount of the Company’s Notes
and 13,750,000 shares of common stock issuable upon exercise of the
Company’s Class A Warrants. Sanjay Motwani has voting and
dispositive power over the
shares.
|
(10)
|
Includes
250,000 shares of common stock issuable to Ephraim
Fields upon
conversion of $50,000 aggregate principal amount of the Company’s Notes
and 125,000 shares of common stock issuable upon exercise of the
Company’s
Class A Warrants.
|
(11)
|
Includes
9,000,000 shares of common stock issuable to Hua-Mei
21st
Century Partners, LP upon
conversion of $1,800,000 aggregate principal amount of the Company’s Notes
and 4,500,000 shares of common stock issuable upon exercise of
the
Company’s Class A Warrants. Peter Siris and Leigh S. Curry have voting
and
dispositive power over the
shares.
|
(12)
|
Includes
4,375,000 shares of common stock issuable to Guerilla
Partners, LP upon
conversion of $875,000 aggregate principal amount of the Company’s Notes
and 2,187,500 shares of common stock issuable upon exercise of
the
Company’s Class A Warrants. Peter Siris and Leigh S. Curry have voting
and
dispositive power over the
shares.
|
(13)
|
Includes
125,000 shares of common stock issuable to Guerilla
IRA Partners, LP upon
conversion of $25,000 aggregate principal amount of the Company’s Notes
and 62,500 shares of common stock issuable upon exercise of the
Company’s
Class A Warrants. Peter Siris and Leigh S. Curry have voting and
dispositive power over the
shares.
|
(14)
|
Includes
2,500,000 shares of common stock issuable to Excalibur
Special Opportunities, LP upon
conversion of $500,000 aggregate principal amount of the Company’s Notes
and 1,250,000 shares of common stock issuable upon exercise of
the
Company’s Class A Warrants. William Hechter has voting and dispositive
power over the shares.
|
(15)
|
Includes
1,250,000 shares of common stock issuable to Whalehaven
Capital Fund Ltd. upon
conversion of $250,000 aggregate principal amount of the Company’s Notes
and 625,000 shares of common stock issuable upon exercise of the
Company’s
Class A Warrants. Arthur Jones, Trevor Williams and Brian Mazzella
have
voting and dispositive power over the
shares.
|
· |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Investors;
|
· |
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
· |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
· |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
· |
privately
negotiated transactions;
|
· |
to
cover short sales made after the date that this Registration Statement
is
declared effective by the Commission;
|
· |
broker-dealers
may agree with the Selling Stockholders to sell a specified number
of such
shares at a stipulated price per
share;
|
· |
a
combination of any such methods of sale;
and
|
· |
any
other method permitted pursuant to applicable
law.
|
· |
The
length of time and extent to which the market value has been less
than
cost;
|
· |
The
financial condition and near-term prospects of the issuer, including
any
specific events that may influence the operations of the issuer (e.g.,
changes in technology, or the planned discontinuance of a line of
business); and
|
· |
The
intent and ability of the holder to retain its investment in the
issuer
for a period of time sufficient to allow for any anticipated recovery
in
market value.
|
|
Three
Months Ended
|
Nine Months
Ended
|
|||||||||||||||||||||||
|
March
31,
|
March
31
|
|||||||||||||||||||||||
|
2008
|
2007
|
Change $
|
Change %
|
2008
|
2007
|
Change $
|
Change %
|
|||||||||||||||||
Change %
|
|
|
|
|
|
|
|
|
|||||||||||||||||
SALES
|
$
|
26,231,191
|
$
|
18,472,649
|
$
|
7,758,542
|
42
|
%
|
$
|
66,648,051
|
$
|
52,876,082
|
$
|
13,771,969
|
26.05
|
%
|
|||||||||
|
|||||||||||||||||||||||||
SALES-
RELATED PARTIES
|
1,869,092
|
455,580
|
1,413,512
|
310.27
|
%
|
4,611,849
|
2,963,871
|
1,647,978
|
55.6
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
|
|||||||||||||||||||||||||
COST
OF SALES
|
6,337,822
|
5,388,811
|
949,011
|
17.61
|
%
|
17,744,379
|
15,724,047
|
2,020,332
|
12.85
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
GROSS
PROFIT
|
21,762,461
|
13,539,418
|
8,223,043
|
60.73
|
%
|
53,515,521
|
40,115,906
|
13,399,615
|
33.4
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
RESEARCH
AND DEVELOPMENT
|
967,930
|
953,560
|
14,370
|
1.51
|
%
|
2,170,240
|
10,441,060
|
(8,270,820
|
)
|
(79.21
|
)%
|
||||||||||||||
|
|||||||||||||||||||||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
12,136,164
|
9,658,803
|
2,477,361
|
25.65
|
%
|
29,269,330
|
18,491,304
|
10,778,026
|
58.29
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
INCOME
FROM OPERATIONS
|
8,658,367
|
2,927,055
|
5,731,312
|
195.8
|
%
|
22,075,951
|
11,183,542
|
10,892,409
|
97.4
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
OTHER
EXPENSES
|
1,972,269
|
80,457
|
1,891,812
|
2351.33
|
%
|
2,404,038
|
210,313
|
2,193,725
|
1043.08
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
6,686,098
|
2,846,598
|
3,839,500
|
134.88
|
%
|
19,671,913
|
10,973,229
|
8,698,684
|
79.27
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
PROVISION
FOR INCOME TAXES
|
2,211,265
|
970,025
|
1,241,240
|
127.96
|
%
|
6,808,625
|
3,567,857
|
3,240,768
|
90.83
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
NET
INCOME
|
4,474,833
|
1,876,573
|
2,598,260
|
138.46
|
%
|
12,863,288
|
7,405,372
|
5,457,916
|
73.7
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
OTHER
COMPREHENSIVE INCOME
|
1,690,597
|
368,537
|
1,322,060
|
358.73
|
%
|
4,776,631
|
673,047
|
4,103,584
|
609.7
|
%
|
|||||||||||||||
|
|||||||||||||||||||||||||
COMPREHENSIVE
INCOME
|
6,165,430
|
2,245,110
|
3,920,320
|
174.62
|
%
|
17,639,919
|
8,078,419
|
9,561,500
|
118.36
|
%
|
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||
|
March 31,
2008
|
March 31,
2007
|
March 31,
2008
|
March 31,
2007
|
|||||||||
Advertisement,
marketing and promotion
|
$
|
6,969,491
|
$
|
7,295,921
|
$
|
19,483,894
|
$
|
13,884,825
|
|||||
Travel
and entertainment—
sales
related
|
96,519
|
9,265
|
404,321
|
306,501
|
|||||||||
Depreciation
and amortization
|
126,866
|
80,527
|
311,471
|
174,931
|
|||||||||
Shipping
and handling
|
106,116
|
69,833
|
253,366
|
209,667
|
|||||||||
Salaries,
wages, commissions and related benefits
|
4,577,685
|
2,160,925
|
7,255,133
|
2,916,535
|
|||||||||
Travel
and entertainment—
non
sales related
|
58,263
|
4,958
|
214,589
|
18,471
|
|||||||||
Other
|
201,224
|
37,374
|
1,346,556
|
980,374
|
|||||||||
Total
|
$
|
12,136,164
|
$
|
9,658,803
|
$
|
29,269,330
|
$
|
18,491,304
|
· |
An
increase of $5,599,069 or approximately 40.33% in advertisement,
marketing
and promotion spending for the nine months ended March 31, 2008 and
an
decrease of $326,430 or approximately 4.47% for the three months
ended
March 31, 2008 as compared to the corresponding period in fiscal
2007 were
primarily due to TV commercials and magazine advertisements expenses
to
establish our Baobaole Chewable tablets brand name. Additionally,
we also
increase our marketing and promotional activities to promote our
two other
best selling products.
|
· |
Travel
and entertainment -sales related expenses increased by $97,820 or
approximately 31.92% for the nine months ended March 31, 2008 and
$87,254
or approximately 941.76% for the three months ended March 31, 2008
as
compared to the corresponding period in fiscal 2007 was primarily
due to
our marketing and sales travel related activities related to promoting
our
Baobole Chewable tablets and establishing the distribution network
for the
product.
|
· |
Shipping
and handling expenses increased by $43,699 or approximately 20.84%
for the
nine months ended March 31, 2008 and $36,283 or 51.96% for the three
months ended March 31, 2008 as compared to the corresponding period
of
fiscal 2007, primarily because increase in sales volume in fiscal
year
2008.
|
· |
Depreciation
and amortization increased by $136,540 or 78.05% for the nine months
ended
March 31, 2008 and $46,339 for the three months ended March 31, 2008
as
compared to the corresponding period of fiscal 2007, primarily due
to
additional amortization expenses on the new patent obtained in late
fiscal
2007 and additional land use right obtained in the 3rd
quarter of fiscal 2008.
|
· |
Salaries,
wages, commissions and related benefits increased by $4,338,598 or
148.76%
for the nine months ended March 31, 2008 and $2,416,760 for the three
months ended March 31, 2008 as compared to the corresponding period
of
fiscal 2007. The increases were primarily due to increase in commission
payments to sales representatives as well as an increase in number
of
employees and sales representatives as a result of expanding our
distribution network from 26 provinces and regions to 30 provinces
and
regions in fiscal 2008.
|
· |
An
increase of $196,118 or approximately 1061.76% in travel and entertainment
-non sales related expenses for the nine months ended March 31, 2008
and
$53,305 or 1075.13% for the three months ended March 31, 2007 were
primarily due to increase in corporate executives’ and managers’ travel
related to public company related activities.
|
· |
Other
selling, general and administrative expenses, which includes professional
fees, utilities, office supplies and expenses increased by $366,182
or
37.35% for the nine months ended March 31, 2008 and increased by
$163,850
or 438.41% for the three months ended March 31, 2008 as compared
to the
corresponding period in fiscal 2008 primarily due to more professional
fees and other miscellaneous expense in fiscal 2008.
|
|
Year
Ended June 30,
|
%
of
|
Year
Ended June 30,
|
%
of
|
Year
Ended June 30,
|
%
of
|
|||||||||||||
|
2007
|
Revenue
|
2006
|
Revenue
|
2005
|
Revenue
|
|||||||||||||
SALES
|
$
|
72,259,812
|
94.84
|
%
|
$
|
45,242,987
|
92.04
|
%
|
$
|
10,852,106
|
85.11
|
%
|
|||||||
|
|||||||||||||||||||
SALES—RELATED
PARTIES
|
3,933,881
|
5.16
|
%
|
3,913,452
|
7.96
|
%
|
1,899,266
|
14.89
|
%
|
||||||||||
|
|||||||||||||||||||
COST
OF REVENUES
|
21,161,530
|
27.77
|
%
|
15,686,233
|
31.91
|
%
|
8,771,942
|
68.79
|
%
|
||||||||||
|
|||||||||||||||||||
GROSS
PROFIT
|
55,032,163
|
72.23
|
%
|
33,470,206
|
68.09
|
%
|
39,79,430
|
31.21
|
%
|
||||||||||
|
|||||||||||||||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
25,579,361
|
33.57
|
%
|
7,894,672
|
16.06
|
%
|
1,689,004
|
13.25
|
%
|
||||||||||
|
|||||||||||||||||||
RESEARCH
AND DEVELOPMENT
|
11,143,830
|
14.63
|
%
|
13,642,200
|
27.75
|
%
|
1,240,252
|
9.73
|
%
|
||||||||||
|
|||||||||||||||||||
INCOME
FROM OPERATIONS
|
18,308,972
|
24.03
|
%
|
11,933,334
|
24.28
|
%
|
1,050,174
|
8.24
|
%
|
||||||||||
|
|||||||||||||||||||
OTHER
(INCOME) EXPENSES
|
(6,375,340
|
)
|
(8.37
|
)%
|
386,816
|
0.79
|
%
|
253,319
|
1.99
|
%
|
|||||||||
|
|||||||||||||||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
24,684,312
|
32.40
|
%
|
11,546,518
|
23.49
|
%
|
796,855
|
6.25
|
%
|
||||||||||
|
|||||||||||||||||||
PROVISION
FOR INCOME TAXES
|
2,631,256
|
3.45
|
%
|
3,810,351
|
7.75
|
%
|
262,962
|
2.06
|
%
|
||||||||||
|
|||||||||||||||||||
NET
INCOME
|
22,053,056
|
28.94
|
%
|
7,736,167
|
15.74
|
%
|
533,893
|
4.19
|
%
|
||||||||||
|
|||||||||||||||||||
OTHER
COMPREHENSIVE INCOME
Foreign
currency translation adjustment
|
1,018,130
|
1.34
|
%
|
128,311
|
0.26
|
%
|
-
|
-
|
|||||||||||
|
|||||||||||||||||||
COMPREHENSIVE
INCOME
|
23,071,186
|
30.28
|
%
|
7,864,478
|
16.00
|
%
|
533,893
|
4.19
|
%
|
|
Payments
Due by
Period
|
|||||||||||||||
|
Total
|
Less
than 1 year
|
1-3
Years
|
3-5
Years
|
5
Years
+
|
|||||||||||
|
In
Thousands
|
|||||||||||||||
Contractual
Obligations:
|
||||||||||||||||
Bank
Indebtedness
|
$
|
6,201,804
|
$
|
6,201,804
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Research
and Development Obligations
|
$
|
11,936,320
|
$
|
4,069,200
|
$
|
6,510,720
|
$
|
1,356,400
|
$
|
-
|
||||||
Purchase
Obligations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Total
Contractual Obligations:
|
$
|
18,138,124
|
$
|
10,271,004
|
$
|
6,510,720
|
$
|
1,356,400
|
$
|
-
|
1. |
For
risks relating to our current corporate structure, see “Risk Factors—Risks
Associated with Doing Business in
China.”
|
2. |
Agreements
that provide us with effective control over Laiyang Jiangbo include
irrevocable powers of attorney, equity pledge agreements, purchase
options
and cooperation agreement. See “—Contractual Agreements with Laiyang
Jiangbo and Its Shareholders.”
|
3. |
The
economic benefits and losses of Laiyang Jiangbo accrue to Laiyang
Jiangbo
pursuant to a business cooperation agreement. See “—Contractual Agreements
with Laiyang Jiangbo and Its
Shareholders.”
|
1.
|
publishing
advertisements and articles in national as well as specialized and
provincial newspapers, magazines, and in other media, including the
Internet;
|
2.
|
participating
in national meetings, seminars, symposiums, exhibitions for pharmaceutical
and other related industries;
|
3.
|
organizing
cooperative promotional activities with distributors;
and
|
4.
|
sending
direct mail to major physician offices and
laboratories.
|
Name
|
Age
|
Position
|
||
Cao
Wubo
|
43
|
Chief
Executive Officer and Chairman of the Board
|
||
Elsa
Sung
|
34
|
Chief
Financial Officer
|
||
Xu
Hibo
|
37
|
Chief
Operating Officer and Director
|
||
Dong
Lining
|
49
|
Vice
President, Director of Technology
|
||
Yang
Weidong
|
37
|
Vice
President, Director of Sales
|
||
Xin
Jingsheng
|
53
|
Director
of Equipment
|
||
Xue
Hong
|
40
|
Controller
|
||
Feng
Xiaowei
|
40
|
Director
|
||
Huang
Lei
|
26
|
Director
|
||
Ge
Jian
|
37
|
Director
|
||
Robert
Cain
|
45
|
Director
|
||
Michael
Marks
|
36
|
Director
|
· |
compliance
with laws, rules and regulations,
|
· |
conflicts
of interest,
|
· |
insider
trading,
|
· |
corporate
opportunities
|
· |
competition
and fair dealing,
|
· |
discrimination
and harassment,
|
· |
health
and safety,
|
· |
record-keeping,
|
· |
confidentiality,
|
· |
protection
and proper use of company assets,
and
|
· |
payments
to government personnel.
|
Name
and Principal Position
|
Fiscal
Year Ended
|
Salary(1)
($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensa-tion
($)
|
Nonqualified
Deferred Compensa-tion Earnings
($)
|
All
Other Compensa-tion ($)
|
Total
($)
|
|||||||||||||||||||
Cao
Wubo,
Chief
Executive Officer, President
|
2007
2006
|
2,460
|
|
—
|
—
|
—
|
—
|
—
|
2,460
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Elsa
Sung,
Chief
Financial Officer (2)
|
2007
2006
|
—
—
|
—
—
|
—
—
|
—
—
|
—
—
|
—
—
|
—
—
|
—
—
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Xu
Haibo,
Vice
President, Chief Operating Officer
|
2007
2006
|
1,845
|
—
|
—
|
—
|
—
|
—
|
1,845
|
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
(1) |
Expressed
in U.S. Dollars based on the average interbank exchange rate of 7.8070
PRC
Dollars for each 1.00 U.S. Dollar for fiscal year ended June 30,
2007.
|
(2) |
Ms.
Sung was appointed as our Chief Financial Officer effective October
1,
2007, subsequent to the end of the most recent fiscal year ended
June 30,
2007. Accordingly, no compensation information is available for Ms.
Sung
for these periods.
|
Named
Executive Officers and Directors
|
Number
of Shares of Common Stock Beneficially
Owned
(1) (2)
|
Percentage
of Outstanding Common Stock
|
|||||
Cao
Wubo, Chief Executive Officer and Chairman of the Board†
|
194,263,661
|
(3)
|
47.04
|
%
|
|||
Elsa
Sung, Chief Financial Officer†
|
20,000
|
|
*
|
||||
Xu
Haibo, Vice President, Chief Operating Officer and Director†
|
0
|
||||||
Dong
Lining, Vice President, Director of Technology†
|
0
|
||||||
Yang
Weidong, Vice President, Director of Sales†
|
0
|
||||||
Xin
Jingsheng, Director of Equipment†
|
0
|
||||||
Xue
Hong, Controller†
|
0
|
||||||
Feng
Xiaowei, Director†
|
0
|
||||||
Huang
Lei, Director†
|
0
|
||||||
Ge
Jian, Director†
|
399,719
|
|
*
|
||||
Robert
Cain, Director†
|
550,000
|
|
*
|
||||
Michael
Marks, Director†
|
— | — | |||||
Total
Held by Directors and Executive Officers (thirteen
individuals)
|
195,233,380
|
47.27
|
%
|
5%
Shareholders
|
|||||||
Verda
International Limited
A-1
Building Dasi Street
Laiyan
City, Shandong Province, PRC
|
194,263,661
|
(4)
|
47.04
|
%
|
|||
Wang
Renhui
No.
57-2-14-1 Chaoyang Street
Dalin,
PRC
|
22,384,290
|
5.42
|
%
|
||||
Pope
Investments LLC(5)(6)
5100
Poplar Avenue, Suite 805
Memphis,
Tennessee 38137
|
41,257,309
|
9.99
|
%
|
||||
Ardsley
Advisory Partners(7)
262
Harbor Drive
Stamford,
Connecticut 06902
|
27,750,000
|
6.72
|
%
|
||||
Ardsley
Partners I(7)
262
Harbor Drive
Stamford,
Connecticut 06902
|
27,450,000
|
6.64
|
%
|
March
31, 2008
(Unaudited)
|
||||
Receivable
from product sales due from Jiangbo Chinese-Western
Pharmacy
|
$
|
615,934
|
||
Receivable
from product sales due from Laiyang Jiangbo Medicals, Co.,
Ltd.
|
616,966
|
|||
Receivable
from product sales due from Yantai Jiangbo Pharmaceuticals Co.,
Ltd.
|
786,378
|
|||
Total
accounts receivable-related parties
|
$
|
2,019,278
|
2008
|
High
|
Low
|
|||||
First
Quarter
|
0.16
|
0.19
|
|||||
Second
Quarter
|
0.49
|
0.10
|
|||||
Third Quarter | 0.37 | 0.17 | |||||
Fourth Quarter
|
0.36 | 0.20 |
2007
|
High
|
Low
|
|||||
First
Quarter
|
0.19
|
0.09
|
|||||
Second
Quarter
|
0.19
|
0.09
|
|||||
Third
Quarter
|
0.19
|
0.12
|
|||||
Fourth
Quarter
|
0.19
|
0.10
|
2006
|
High
|
Low
|
|||||
First
Quarter
|
0.09
|
0.04
|
|||||
Second
Quarter
|
0.07
|
0.03
|
|||||
Third
Quarter
|
0.51
|
0.01
|
|||||
Fourth
Quarter
|
0.37
|
0.16
|
Plan
category
|
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights (a)
|
Weighted-average
exercise price of outstanding options warrants and rights
(b)
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column (a))
(c)
|
|||||||
2002
Stock Option Plan and 2003 Stock Option Plan
|
3,150,000
|
$
|
0.079
|
0
|
||||||
2004
Stock Plan
|
0
|
$
|
0
|
0
|
||||||
Equity
Compensation Plans or Individual Compensation Arrangements Not Approved
by
Security Holders (1)
|
16,396,954
|
$
|
0.13
|
0
|
||||||
Total
|
19,546,954
|
$
|
0.122
|
0
|
(1)
|
Equity
compensation plan not approved by shareholders is comprised of options
granted and/or restricted stock to be issued to employees and
non-employees, including directors, consultants, advisers, suppliers,
vendors, customers and lenders for purposes including to provide
continued
incentives, as compensation for services and/or to satisfy outstanding
indebtedness to them.
|
Interim
Financial Statements (unaudited)
|
||
Consolidated
Balance Sheet as of March 31,
2008
|
F-2
|
|
Consolidated
Statements of Income
and Other Comprehensive Income for the nine months ended March 31,
2008 and 2007
|
F-3
|
|
Consolidated
Statements of Cash Flows for the three months ended March 31,
2008 and 2007
|
F-4
|
|
Notes
to Interim Financial Statements
|
F-5
|
|
Report
of Independent Registered Public Accounting Firm
|
F-30
|
|
Audited
Financial Statements:
|
||
Consolidated
Balance Sheets as of June
30, 2007 and 2006
|
F-31
|
|
Consolidated
Statements of Income
and Other Comprehensive Income for the years ended June 30, 2007,
2006 and 2005
|
F-32
|
|
Consolidated
Statement of Shareholders’
Equity for the years ended June 30, 2007, 2006 and
2005
|
F-33
|
|
Consolidated
Statement of Cash Flows for the years ended June 30,
2007, 2006 and 2005
|
F-34
|
|
Notes
to Audited Financial Statements
|
F-35
|
ASSETS
|
||||
|
(Unaudited)
|
|||
CURRENT
ASSETS:
|
|
|||
Cash
|
$
|
21,574,044
|
||
Restricted
cash
|
3,488,604
|
|||
Marketable
equity securities
|
2,112,500
|
|||
Accounts
receivable, net of allowance for doubtful accounts of
$62,625
|
20,589,289
|
|||
Accounts
receivable - related parties
|
2,019,278
|
|||
Inventories
|
5,542,846
|
|||
Other
receivables
|
284,908
|
|||
Other
receivables - related parties
|
85,680
|
|||
Advances
to suppliers
|
894,741
|
|||
Other
assets
|
2,271
|
|||
Total
current assets
|
56,594,161
|
|||
|
||||
PLANT
AND EQUIPMENT, net
|
11,081,056
|
|||
|
||||
OTHER
ASSETS:
|
||||
Restricted
marketable securities
|
2,826,413
|
|||
Debt
issuance cost, net
|
306,825
|
|||
Intangible
assets, net
|
9,777,832
|
|||
Total
other assets
|
12,911,070
|
|||
|
||||
|
||||
Total
assets
|
$
|
80,586,287
|
||
|
||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||
|
||||
CURRENT
LIABILITIES:
|
||||
Accounts
payable
|
$
|
3,448,086
|
||
Short
term bank loans
|
2,713,200
|
|||
Notes
payable
|
3,488,604
|
|||
Other
payables
|
3,736,397
|
|||
Other
payables - related parties
|
28,560
|
|||
Accrued
liabilities
|
545,885
|
|||
Liabilities
assumed from reorganization
|
1,352,997
|
|||
Taxes
payable
|
10,521,050
|
|||
Total
current liabilities
|
25,834,779
|
|||
|
||||
CONVERTIBLE
DEBT, net of discount $4,328,704 as of March 31, 2008
|
671,296
|
|||
|
||||
COMMITMENTS
AND CONTINGENCIES
|
-
|
|||
|
||||
SHAREHOLDERS'
EQUITY:
|
||||
Common
Stock ($0.001 par value, 600,000,000 shares authorized, 390,478,760
shares
issued and outstanding)
|
390,480
|
|||
Paid-in-capital
|
22,803,151
|
|||
Captial
contribution receivable
|
(7,711,000
|
)
|
||
Retained
earnings
|
28,934,053
|
|||
Statutory
reserves
|
3,740,456
|
|||
Accumulated
other comprehensive income
|
5,923,072
|
|||
Total
shareholders' equity
|
54,080,212
|
|||
Total
liabilities and shareholders' equity
|
$
|
80,586,287
|
|
Three
months ended
|
Nine
months ended
|
|||||||||||
|
March
31
|
March
31
|
|||||||||||
|
2008
|
2007
|
2008
|
2007
|
|||||||||
REVENUES:
|
|
|
|
|
|||||||||
Sales
|
$
|
26,231,191
|
$
|
18,472,649
|
$
|
66,648,051
|
$
|
52,876,082
|
|||||
Sales
- related party
|
1,869,092
|
455,580
|
4,611,849
|
2,963,871
|
|||||||||
TOTAL
REVENUE
|
28,100,283
|
18,928,229
|
71,259,900
|
55,839,953
|
|||||||||
|
|||||||||||||
COST
OF SALES
|
6,337,822
|
5,388,811
|
17,744,379
|
15,724,047
|
|||||||||
|
|||||||||||||
GROSS
PROFIT
|
21,762,461
|
13,539,418
|
53,515,521
|
40,115,906
|
|||||||||
|
|||||||||||||
RESEARCH
AND DEVELOPMENT EXPENSE
|
967,930
|
953,560
|
2,170,240
|
10,441,060
|
|||||||||
|
|||||||||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
12,136,164
|
9,658,803
|
29,269,330
|
18,491,304
|
|||||||||
|
|||||||||||||
INCOME
FROM OPERATIONS
|
8,658,367
|
2,927,055
|
22,075,951
|
11,183,542
|
|||||||||
|
|||||||||||||
|
|||||||||||||
OTHER
(INCOME) EXPENSE, NET
|
|||||||||||||
Other
expenese, net
|
1,217,477
|
-
|
1,136,534
|
-
|
|||||||||
Non-operating
(income) expense
|
(529
|
)
|
11,224
|
(232
|
)
|
5,642
|
|||||||
Interest
expense, net
|
526,509
|
69,233
|
925,993
|
204,671
|
|||||||||
Loss
from discontinued business
|
228,812
|
-
|
341,743
|
-
|
|||||||||
OTHER
EXPENSE, NET
|
1,972,269
|
80,457
|
2,404,038
|
210,313
|
|||||||||
|
|||||||||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
6,686,098
|
2,846,598
|
19,671,913
|
10,973,229
|
|||||||||
|
|||||||||||||
PROVISION
FOR INCOME TAXES
|
2,211,265
|
970,025
|
6,808,625
|
3,567,857
|
|||||||||
|
|||||||||||||
NET
INCOME
|
4,474,833
|
1,876,573
|
12,863,288
|
7,405,372
|
|||||||||
|
|||||||||||||
OTHER
COMPREHENSIVE INCOME:
|
|||||||||||||
Unrealized
(loss) gain on marketable securities
|
(270,351
|
)
|
-
|
1,347,852
|
|||||||||
Foreign
currency translation adjustment
|
1,960,948
|
368,537
|
3,428,779
|
673,047
|
|||||||||
|
|||||||||||||
COMPREHENSIVE
INCOME
|
$
|
6,165,430
|
$
|
2,245,110
|
$
|
17,639,919
|
$
|
8,078,419
|
|||||
|
|||||||||||||
WEIGITED
AVERAGE NUMBER OF SHARES:
|
|||||||||||||
Basic
|
389,605,134
|
84,545,655
|
260,297,377
|
84,131,121
|
|||||||||
Dilulted
|
393,292,698
|
90,950,796
|
263,271,624
|
89,658,922
|
|||||||||
|
|||||||||||||
EARNINGS
PER SHARE:
|
|||||||||||||
Basic
|
$
|
0.01
|
$
|
0.02
|
$
|
0.05
|
$
|
0.09
|
|||||
Diluted
|
$
|
0.01
|
$
|
0.02
|
$
|
0.05
|
$
|
0.08
|
|
2008
|
2007
|
|||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
12,863,288
|
$
|
7,405,372
|
|||
Loss
from discontinued operations
|
341,743
|
-
|
|||||
Income
from continued operations
|
13,205,031
|
7,405,372
|
|||||
Adjustments
to reconcile net income to cash provided by (used in) operating
activities:
|
|||||||
Depreciation
|
375,456
|
253,063
|
|||||
Amortization
of intangible assets
|
113,578
|
75,772
|
|||||
Amortization
of debt issuance costs
|
47,583
|
-
|
|||||
Amortization
of debt discount
|
671,296
|
-
|
|||||
Allowance
for bad debts
|
(112,459
|
)
|
|||||
Loss
on sale of marketable securities
|
19,819
|
-
|
|||||
Unrealized
loss on marketable securities
|
1,150,516
|
-
|
|||||
Deferred
compensation expense
|
28,750
|
-
|
|||||
Change
in operating assets and liabilities
|
|||||||
Accounts
receivable
|
(7,246,740
|
)
|
(3,308,650
|
)
|
|||
Accounts
receivable - related parties
|
(1,403,383
|
)
|
(245,420
|
)
|
|||
Notes
receivables
|
59,790
|
(29,473
|
)
|
||||
Inventories
|
27,542
|
1,065,113
|
|||||
Other
receivables
|
(254,886
|
)
|
(937
|
)
|
|||
Other
receivables - related parties
|
(81,384
|
)
|
|||||
Advances
to suppliers
|
(488,064
|
)
|
(10,316
|
)
|
|||
Other
assets
|
96,538
|
1,282,175
|
|||||
Accounts
payable
|
1,159,105
|
(2,324,940
|
)
|
||||
Accrued
liabilities
|
301,290
|
58,191
|
|||||
Other
payables
|
2,146,659
|
(1,355,440
|
)
|
||||
Other
payables - related parties
|
(962,509
|
)
|
(592,232
|
)
|
|||
Liabilities
from discontinued operations
|
(1,162,133
|
)
|
-
|
||||
Taxes
payable
|
10,006,057
|
2,011,128
|
|||||
Net
cash provided by operating activities
|
17,697,452
|
4,283,404
|
|||||
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Proceeds
from sale of marketable securities
|
605,882
|
-
|
|||||
Payment
for land use right
|
(8,246,830
|
)
|
-
|
||||
Purchase
of equipment
|
(401,302
|
)
|
(58,469
|
)
|
|||
Cash
receipt from reverse acquisition
|
534,950
|
-
|
|||||
Net
cash used in investing activities
|
(7,507,300
|
)
|
(58,469
|
)
|
|||
|
|||||||
CASH
FLOWS FINANCING ACTIVITIES:
|
|||||||
Proceeds
from sale of common stock
|
337,500
|
-
|
|||||
Proceeds
from sale of treasury stock
|
1,977
|
-
|
|||||
Payments
for dividend
|
(10,520,000
|
)
|
-
|
||||
Payments
for debt issuance cost
|
(354,408
|
)
|
-
|
||||
Proceeds
from convertible debt
|
5,000,000
|
-
|
|||||
Proceed
from officers
|
27,128
|
-
|
|||||
Payments
for bank loans
|
(5,425,600
|
)
|
(1,273,300
|
)
|
|||
Proceeds
from bank loans
|
3,255,360
|
-
|
|||||
Notes
payable
|
5,361,849
|
725,702
|
|||||
Restricted
cash
|
(5,361,849
|
)
|
(725,702
|
)
|
|||
Net
cash used in financing activities
|
(7,678,043
|
)
|
(1,273,300
|
)
|
|||
|
|||||||
EFFECTS
OF EXCHANGE RATE CHANGE IN CASH
|
1,324,727
|
166,101
|
|||||
|
|||||||
INCREASE
IN CASH
|
3,836,836
|
3,117,736
|
|||||
|
|||||||
CASH,
beginning of the period
|
17,737,208
|
3,371,598
|
|||||
|
|||||||
CASH,
end of the period
|
$
|
21,574,044
|
$
|
6,489,334
|
Cash
|
$
|
534,950
|
||
Prepaid
expenses
|
40,620
|
|||
Marketable
equity securities
|
370,330
|
|||
Other
assets
|
7,083
|
|||
Restricted
marketable securities
|
1,746,809
|
|||
Restricted
marketable securities held for short term loans
|
3,250,000
|
|||
Accounts
payable and accrued liabilities
|
(1,085,323
|
)
|
||
Loan
payable
|
(515,000
|
)
|
||
Other
liabilities assumed from acquisition
|
(452,001
|
)
|
||
Minority
interest
|
(121,063
|
)
|
||
Net
assets acquired
|
$
|
3,776,405
|
Consolidated
entity name:
|
Percentage
of ownership
|
|||
Karmoya
International Ltd
|
100
|
%
|
||
Union
Well International Limited
|
100
|
%
|
||
Genesis
Jiangbo (Laiyang) Biotech Technology Co., Ltd.
|
100
|
%
|
||
Laiyang
Jiangbo Pharmaceuticals Co., Ltd
|
Variable
Interest Entity
|
1.
|
Discussions
with each company's management to review the status of key internally
established development milestones. As a result of the Company's
strategic
alliance with partner companies, the Company regularly has information
regarding technology developments and business initiatives that
was
generally not available to the
community.
|
2.
|
The
Company's knowledge of partner company's activities relating to
new
agreements, new investor funding and
achievements.
|
3.
|
The
Company's review of financial position, primarily the cash resources
and
operating cash flow, to determine if it was sufficient to continue
to fund
projected operations and ongoing technology
development.
|
Beginning
allowance for doubtful accounts
|
$
|
166,696
|
||
Recovery
from bad debt expense
|
(112,459
|
)
|
||
Foreign
currency translation adjustments
|
8,388
|
|||
Ending
allowance for doubtful accounts
|
$
|
62,625
|
|
Useful
Life
|
||||||
Building
and building improvements
|
5-40
|
Years
|
|||||
Manufacturing
equipment
|
5-20
|
Years
|
|||||
Office
equipment and furniture
|
5-10
|
Years
|
|||||
Vehicle
|
5
|
Years
|
|
Useful
Life
|
||||||
Land
Use Right
|
50
|
Years
|
|||||
Patents
|
5
|
Years
|
|||||
Licenses
|
5
|
Years
|
|
2008
|
2007
|
|||||
For
the three months ended March 31, 2008 and 2007
|
|
|
|||||
Net
income for basic and diluted earnings per share
|
$
|
4,474,833
|
$
|
1,876,573
|
|||
|
|||||||
Weighted
average shares used in basic computation
|
389,605,134
|
84,545,655
|
|||||
Diluted
effect of stock options and warrants
|
3,687,564
|
6,405,141
|
|||||
Weighted
average shares used in diluted computation
|
393,292,698
|
90,950,796
|
|||||
|
|||||||
Earnings
per share:
|
|||||||
Basic
|
$
|
0.01
|
$
|
0.02
|
|||
Diluted
|
$
|
0.01
|
$
|
0.02
|
|
2008
|
2007
|
|||||
For
the nine months ended March 31, 2008 and 2007
|
|
|
|||||
Net
income for basic and diluted earnings per share
|
$
|
12,863,288
|
$
|
7,405,372
|
|||
|
|||||||
Weighted
average shares used in basic computation
|
260,297,377
|
84,131,121
|
|||||
Diluted
effect of stock options and warrants
|
2,974,247
|
5,527,801
|
|||||
Weighted
average shares used in diluted computation
|
263,271,624
|
89,658,922
|
|||||
|
|||||||
Earnings
per share:
|
|||||||
Basic
|
$
|
0.05
|
$
|
0.09
|
|||
Diluted
|
$
|
0.05
|
$
|
0.08
|
For
three months ended March 31, 2007
|
|
For
nine months ended March 31, 2007
|
||||
Outstanding
option / warrants
|
|
Exercise
price
|
|
Outstanding
option / warrants
|
|
Exercise
price
|
2,963,361
|
|
$
0.304
|
|
2,963,361
|
|
$
0.304
|
250,000
|
|
$
0.310
|
|
7,400,000
|
|
$
0.145
|
|
|
|
|
250,000
|
|
$
0.310
|
2008
|
2007
|
||||||
Revenues
|
$
|
-
|
$
|
||||
Cost
of sales
|
-
|
|
|||||
Gross
profit
|
-
|
||||||
Operating
and other non-operating expenses
|
228,812
|
|
|||||
Loss
from discontinued operations
|
$
|
228,812
|
$
|
|
2008
|
2007
|
||||||
Revenues
|
$
|
-
|
$
|
||||
Cost
of sales
|
-
|
|
|||||
Gross
profit
|
-
|
||||||
Operating
and other non-operating expenses
|
341,743
|
|
|||||
Loss
from discontinued operations
|
$
|
341,743
|
$
|
|
Raw
materials
|
$
|
3,083,214
|
||
Packaging
materials
|
240,839
|
|||
Finished
goods
|
2,218,793
|
|||
Total
|
$
|
5,542,846
|
Building
and building improvements
|
$
|
10,694,208
|
||
Manufacturing
equipment
|
1,083,159
|
|||
Office
equipment and furniture
|
325,624
|
|||
Vehicle
|
330,581
|
|||
Total
|
12,433,572
|
|||
Less:
accumulated depreciation
|
1,352,516
|
|||
Total
|
$
|
11,081,056
|
Land
use right
|
$
|
9,719,167
|
||
Patents
|
528,360
|
|||
License
|
22,777
|
|||
Total
|
10,270,304
|
|||
Less:
accumulated amortization
|
492,472
|
|||
Total
|
$
|
9,777,832
|
Loan
from Communication Bank, due September 2008. Interest Rate at 7.34%
per
annum, monthly interest payment. Guaranteed by related party, Jiangbo
Chinese-Western Pharmacy
|
$
|
2,713,200
|
||
Total
|
$
|
2,713,200
|
|
|
|||
Commercial
Bank, various amounts, due from April 2008 to August 2008.
|
$
|
3,488,604
|
||
Total
|
$
|
3,488,604
|
Receivable
from product sales due from Jiangbo Chinese-Western
Pharmacy
|
$
|
615,934
|
||
Receivable
from product sales due from Laiyang Jiangbo Medicals, Co.,
Ltd.
|
616,966
|
|||
Receivable
from product sales due from Yantai Jiangbo Pharmaceuticals Co.,
Ltd.
|
786,378
|
|||
Total
accounts receivable-related parties
|
$
|
2,019,278
|
Payable
to Cao Wubo, Chief Executive Officer and Chairman of the Board,
with
annual interest at 7.05% for March 31, 2008 and unsecured
|
$
|
28,560
|
||
Total
other payable-related parties
|
$
|
28,560
|
|
2008
|
|||
U.S.
Statutory rates
|
34.0
|
%
|
||
Foreign
income not recognized in the U.S
|
(34.0
|
%)
|
||
China
income taxes
|
30.2
|
%
|
||
Total
provision for income taxes
|
30.2
|
%
|
Value
added taxes
|
$
|
5,850,440
|
||
Income
taxes
|
3,425,169
|
|||
Other
taxes
|
1,245,441
|
|||
Total
|
$
|
10,521,050
|
Convertible
debenture note payable
|
$
|
5,000,000
|
||
Less:
unamortized discount on debentures
|
(4,328,704
|
)
|
||
Convertible
debentures, net
|
$
|
671,296
|
Number
of warrants outstanding
|
Number
of warrants exercisable
|
Weighted
average exercise price
|
Average
remaining life (years)
|
||||||||||
Balance,
October 1, 2007
|
2,963,361
|
2,963,361
|
$
|
0.25
|
1.01
|
||||||||
Granted
|
10,000,000
|
10,000,000
|
0.32
|
2.61
|
|||||||||
Exercised
|
-
|
-
|
-
|
-
|
|||||||||
Forfeited
|
-
|
-
|
-
|
-
|
|||||||||
Balance,
March 31, 2008
|
12,963,361
|
12,963,361
|
$
|
0.30
|
2.24
|
|
Expected
Life
|
Expected
Volatility
|
Dividend
Yield
|
Risk
Free Interest Rate
|
Grant
Date Fair Value
|
|||||||||||
Former
Executives
|
3.50
yrs
|
195
|
%
|
0
|
%
|
4.50
|
%
|
$
|
0.13
|
Number
of options outstanding
|
Weighted
average exercise price
|
Aggregate
intrinsic value
|
||||||||
Balance
at October 1, 2007
|
16,583,593
|
$
|
0.10
|
$
|
-
|
|||||
Granted
|
-
|
-
|
-
|
|||||||
Converted
|
(8,806,250
|
)
|
0.09
|
-
|
||||||
Cancelled
|
(941,406
|
)
|
0.11
|
-
|
||||||
Exercised
|
(1,500,000
|
)
|
0.11
|
-
|
||||||
Balance
at March 31, 2008
|
5,335,937
|
$
|
0.11
|
$
|
880,430
|
Outstanding
options
|
|
Exercisable
options
|
|||||||||
Exercise
price
|
|
Number
|
|
Average
remaining contractual life (years)
|
|
Average
exercise price
|
|
Number
|
|
Weighted
average exercise price
|
|
$0.105
|
|
5,335,937
|
|
2.75
|
|
$0.11
|
|
5,335,937
|
|
$0.11
|
Balance
at June 30, 2007
|
$
|
1,146,441
|
||
Foreign
currency translation gain
|
3,428,779
|
|||
Unrealized
gain on marketable securities
|
1,347,852
|
|||
Balance
at March 31, 2008
|
$
|
5,923,072
|
|
2007
|
2006
|
|||||
CURRENT
ASSETS:
|
|
|
|||||
Cash
|
$
|
17,737,208
|
$
|
3,371,598
|
|||
Restricted
cash
|
8,410,740
|
8,432,999
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of
$166,696
|
|||||||
and
$158,710 as of June 30, 2007 and 2006, respectively
|
11,825,442
|
9,758,715
|
|||||
Accounts
receivable - related parties
|
498,940
|
413,850
|
|||||
Notes
receivable
|
57,965
|
29,162
|
|||||
Inventories
|
5,130,934
|
6,573,362
|
|||||
Other
receivables
|
23,623
|
2,073
|
|||||
Advance
to suppliers
|
313,018
|
232,708
|
|||||
Deferred
expense
|
88,815
|
1,613,077
|
|||||
Tax
prepayment
|
12,153
|
-
|
|||||
Total
current assets
|
44,098,838
|
30,427,544
|
|||||
|
|||||||
PLANT
AND EQUIPMENT, net
|
10,179,134
|
4,860,561
|
|||||
|
|||||||
OTHER
ASSETS:
|
|||||||
Intangible
assets, net
|
1,119,087
|
1,184,843
|
|||||
|
|||||||
Total
assets
|
$
|
55,397,059
|
$
|
36,472,948
|
|||
|
|||||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|||||||
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable
|
$
|
2,051,506
|
$
|
3,935,433
|
|||
Short
term bank loans
|
4,602,500
|
5,634,000
|
|||||
Notes
payable
|
8,410,740
|
8,432,999
|
|||||
Other
payables
|
1,367,052
|
2,071,905
|
|||||
Other
payables - related parties
|
933,132
|
4,649,691
|
|||||
Accrued
liabilities
|
216,468
|
161,558
|
|||||
Taxes
payable
|
-
|
2,146,887
|
|||||
Dividend
payable
|
10,520,000
|
-
|
|||||
Total
current liabilities
|
28,101,398
|
27,032,473
|
|||||
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
-
|
-
|
|||||
|
|||||||
SHAREHOLDERS'
EQUITY:
|
|||||||
Common
Stock, $1 par value, 10,000 shares authorized,
|
|||||||
10,000
shares issued and outstanding
|
10,000
|
10,000
|
|||||
Paid-in-capital
|
18,339,000
|
13,211,000
|
|||||
Subscription
receivable
|
(11,000
|
)
|
(11,000
|
)
|
|||
Captial
contribution receivable
|
(12,000,000
|
)
|
(12,000,000
|
)
|
|||
Retained
earnings
|
17,653,583
|
7,453,497
|
|||||
Statutory
reserves
|
2,157,637
|
648,667
|
|||||
Accumulated
other comprehensive income
|
1,146,441
|
128,311
|
|||||
Total
shareholders' equity
|
27,295,661
|
9,440,475
|
|||||
Total
liabilities and shareholders' equity
|
$
|
55,397,059
|
$
|
36,472,948
|
|
2007
|
2006
|
2005
|
|||||||
Sales
|
$
|
72,259,812
|
$
|
45,242,987
|
$
|
10,852,106
|
||||
Sales
- related party
|
3,933,881
|
3,913,452
|
1,899,266
|
|||||||
TOTAL
REVENUE
|
76,193,693
|
49,156,439
|
12,751,372
|
|||||||
|
||||||||||
COST
OF SALES
|
21,161,530
|
15,686,233
|
8,771,942
|
|||||||
|
||||||||||
GROSS
PROFIT
|
55,032,163
|
33,470,206
|
3,979,430
|
|||||||
|
||||||||||
RESEARCH
AND DEVELOPMENT EXPENSE
|
11,143,830
|
13,642,200
|
1,240,252
|
|||||||
|
||||||||||
SELLING,
GENERAL AND ADMINISTRATIVE EXPENSES
|
25,579,361
|
7,894,672
|
1,689,004
|
|||||||
|
||||||||||
INCOME
FROM OPERATIONS
|
18,308,972
|
11,933,334
|
1,050,174
|
|||||||
|
||||||||||
Other
expense, net
|
-
|
7,176
|
-
|
|||||||
Non-operating
income
|
(6,593,145
|
)
|
-
|
-
|
||||||
Non-operating
expense
|
6,189
|
1,230
|
3,752
|
|||||||
Interest
(expense) income, net
|
211,616
|
378,410
|
249,567
|
|||||||
OTHER
EXPENSE (INCOME), NET
|
(6,375,340
|
)
|
386,816
|
253,319
|
||||||
|
||||||||||
INCOME
BEFORE PROVISION FOR INCOME TAXES
|
24,684,312
|
11,546,518
|
796,855
|
|||||||
|
||||||||||
PROVISION
FOR INCOME TAXES
|
2,631,256
|
3,810,351
|
262,962
|
|||||||
|
||||||||||
NET
INCOME
|
22,053,056
|
7,736,167
|
533,893
|
|||||||
|
||||||||||
OTHER
COMPREHENSIVE INCOME:
|
||||||||||
Foreign
currency translation adjustment
|
1,018,130
|
128,311
|
-
|
|||||||
|
||||||||||
COMPREHENSIVE
INCOME
|
$
|
23,071,186
|
$
|
7,864,478
|
$
|
533,893
|
Number
of
shares
|
Common
stock
|
Additional
Paid-in
capital
|
Subscription
receivable
|
Capital
contribution
receivable
|
Statutory
reserves
|
Retained
earnings
|
Accumulated
other
comprehensive
income
|
Totals
|
||||||||||||||||||||
BALANCE,
June 30, 2004
|
10,000
|
$
|
10,000
|
$
|
13,211,000
|
$
|
(11,000
|
)
|
$
|
(12,000,000
|
)
|
$
|
-
|
$
|
(167,896
|
)
|
$
|
-
|
$
|
1,042,104
|
||||||||
Recapitalization
of Company
|
-
|
|||||||||||||||||||||||||||
Adjustment
to statutory reserve
|
136,409
|
(136,409
|
)
|
-
|
||||||||||||||||||||||||
Net
income
|
533,893
|
533,893
|
||||||||||||||||||||||||||
Foreign
currency translation gain
|
|
|
|
|
|
|
|
-
|
-
|
|||||||||||||||||||
BALANCE,
June 30, 2005
|
10,000
|
$
|
10,000
|
$
|
13,211,000
|
$
|
(11,000
|
)
|
$
|
(12,000,000
|
)
|
$
|
136,409
|
$
|
229,588
|
$
|
-
|
$
|
1,575,997
|
|||||||||
Adjustment
to statutory reserve
|
512,258
|
(512,258
|
)
|
-
|
||||||||||||||||||||||||
Net
income
|
7,736,167
|
7,736,167
|
||||||||||||||||||||||||||
Foreign
currency translation gain
|
|
|
|
|
|
|
|
128,311
|
128,311
|
|||||||||||||||||||
BALANCE,
June 30, 2006
|
10,000
|
$
|
10,000
|
$
|
13,211,000
|
$
|
(11,000
|
)
|
$
|
(12,000,000
|
)
|
$
|
648,667
|
$
|
7,453,497
|
$
|
128,311
|
$
|
9,440,475
|
|||||||||
Capital
contribution
|
5,128,000
|
5,128,000
|
||||||||||||||||||||||||||
Dividend
distribution
|
(10,344,000
|
)
|
(10,344,000
|
)
|
||||||||||||||||||||||||
Adjustment
to statutory reserve
|
1,508,970
|
(1,508,970
|
)
|
-
|
||||||||||||||||||||||||
Net
income
|
22,053,056
|
22,053,056
|
||||||||||||||||||||||||||
Foreign
currency translation gain
|
|
|
|
|
|
|
|
1,018,130
|
1,018,130
|
|||||||||||||||||||
BALANCE,
June 30, 2007
|
10,000
|
$
|
10,000
|
$
|
18,339,000
|
$
|
(11,000
|
)
|
$
|
(12,000,000
|
)
|
$
|
2,157,637
|
$
|
17,653,583
|
$
|
1,146,441
|
$
|
27,295,661
|
|
2007
|
2006
|
2005
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|||||||
Net
income
|
$
|
22,053,056
|
$
|
7,736,167
|
$
|
533,893
|
||||
Adjustments
to reconcile net income to cash
|
||||||||||
provided
by (used in) operating activities:
|
||||||||||
Depreciation
|
364,417
|
255,602
|
198,936
|
|||||||
Amortization
of intangible assets
|
122,126
|
111,786
|
91,541
|
|||||||
Bad
debt expense
|
-
|
157,214
|
-
|
|||||||
(Increase)
decrease in assets:
|
||||||||||
Accounts
receivable
|
(1,534,814
|
)
|
(6,945,531
|
)
|
(2,763,440
|
)
|
||||
Accounts
receivable - related parties
|
(62,599
|
)
|
(12,538
|
)
|
(208,171
|
)
|
||||
Notes
receivables
|
(26,626
|
)
|
(28,888
|
)
|
-
|
|||||
Inventories
|
1,727,215
|
(3,680,020
|
)
|
(2,469,894
|
)
|
|||||
Other
receivables
|
(20,889
|
)
|
3,359
|
23,675
|
||||||
Advance
to suppliers
|
(66,821
|
)
|
264,641
|
36,231
|
||||||
Deferred
expense
|
1,563,800
|
(1,445,205
|
)
|
(148,951
|
)
|
|||||
Tax
prepayment
|
(11,837
|
)
|
-
|
-
|
||||||
Increase
(decrease) in liabilities:
|
||||||||||
Accounts
payable
|
(2,027,968
|
)
|
764,749
|
2,488,262
|
||||||
Other
payables
|
(827,498
|
)
|
(630,146
|
)
|
653,413
|
|||||
Other
payables - related parties
|
(3,848,086
|
)
|
(1,470,501
|
)
|
3,263,419
|
|||||
Accrued
liabilities
|
45,567
|
70,348
|
68,346
|
|||||||
Taxes
payable
|
(2,157,075
|
)
|
1,905,120
|
156,352
|
||||||
Net
cash provided by (used in) operating activities
|
15,291,968
|
(2,943,843
|
)
|
1,923,612
|
||||||
|
||||||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Purchase
of intangible assets
|
-
|
(34,106
|
)
|
(827,223
|
)
|
|||||
Purchase
of equipment
|
(183,237
|
)
|
(531,890
|
)
|
(356,135
|
)
|
||||
Net
cash used in investing activities
|
(183,237
|
)
|
(565,996
|
)
|
(1,183,358
|
)
|
||||
|
||||||||||
CASH
FLOWS FINANCING ACTIVITIES:
|
||||||||||
Proceeds
from bank loans
|
4,471,600
|
5,568,750
|
-
|
|||||||
Payments
for bank loans
|
(5,688,450
|
)
|
-
|
-
|
||||||
Notes
payable
|
(435,022
|
)
|
4,544,294
|
3,716,467
|
||||||
Restricted
cash
|
435,022
|
(4,544,212
|
)
|
(3,716,546
|
)
|
|||||
Net
cash (used in) provided by financing activities
|
(1,216,850
|
)
|
5,568,832
|
(79
|
)
|
|||||
|
||||||||||
EFFECTS
OF EXCHANGE RATE CHANGE IN CASH
|
473,729
|
74,821
|
-
|
|||||||
|
||||||||||
INCREASE
IN CASH
|
14,365,610
|
2,133,814
|
740,175
|
|||||||
|
||||||||||
CASH,
beginning of the year
|
3,371,598
|
1,237,784
|
497,609
|
|||||||
|
||||||||||
CASH,
end of the year
|
$
|
17,737,208
|
$
|
3,371,598
|
$
|
1,237,784
|
|
June
30,
|
June
30,
|
|||||
|
2007
|
2006
|
|||||
Beginning
allowance for doubtful accounts
|
$
|
158,710
|
-
|
||||
Additions
charged to bad debt expense
|
-
|
158,710
|
|||||
Write-off
charged against the allowance
|
-
|
-
|
|||||
Foreighn
currency translation adjustments
|
7,986
|
-
|
|||||
Ending
allowance for doubtful accounts
|
$
|
166,696
|
158,710
|
|
2007
|
2006
|
|||||
Raw
materials
|
$
|
2,955,915
|
$
|
4,905,832
|
|||
Packing
materials
|
609
|
39,093
|
|||||
Finished
goods
|
2,174,410
|
1,628,437
|
|||||
Total
|
$
|
5,130,934
|
$
|
6,573,362
|
|
Useful
Life
|
||||||
Building
and building improvements
|
20
- 40
|
Years
|
|||||
Manufacturing
equipment
|
10
- 15
|
Years
|
|||||
Office
equipment and furniture
|
5
- 8
|
Years
|
|||||
Vehicle
|
5
|
Years
|
|
2007
|
2006
|
|||||
Building
and building improvements
|
$
|
9,824,210
|
$
|
4,332,980
|
|||
Manufacturing
equipment
|
785,219
|
737,960
|
|||||
Office
equipment and furniture
|
217,813
|
195,752
|
|||||
Vehicle
|
233,385
|
76,936
|
|||||
Total
|
11,060,627
|
5,343,628
|
|||||
Less:
accumulated depreication
|
881,493
|
483,067
|
|||||
Total
|
$
|
10,179,134
|
$
|
4,860,561
|
|
Useful
Life
|
2007
|
2006
|
|||||||
Land
Use Right
|
40
Years
|
$
|
954,954
|
$
|
909,202
|
|||||
Patent
|
5
Years
|
486,550
|
463,240
|
|||||||
License
|
5
Years
|
20,974
|
19,969
|
|||||||
Total
|
1,462,478
|
1,392,411
|
||||||||
Less:
accumulated Amortization
|
343,391
|
207,568
|
||||||||
Total
|
$
|
1,119,087
|
$
|
1,184,843
|
|
June
30,
|
June
30,
|
|||||
|
2007
|
2006
|
|||||
Loan
from Communication Bank, due various dates from September 2006 to
September 2007. Interest rate at 5.022% to 7.344% per
annum, monthly interest payment. Guaranteed by related party,
Jiangbo Chinese-Western Pharmacy.
|
$
|
2,630,000
|
$
|
3,756,000
|
|||
|
|||||||
Loan
from Commercial Bank, due September 2006. Interest rate at 7.254% per
annum. Monthly interest payment. Guaranteed by the Company's
buildings and land use rights.
|
-
|
1,878,000
|
|||||
|
|||||||
Loan
from Hua Xia Bank, due April 2008. Interest rate at 6.39% per annum.
Guaranteed by the Company's buildings and land use
rights.
|
1,972,500
|
-
|
|||||
Total:
|
$
|
4,602,500
|
$
|
5,634,000
|
|
June
30,
|
June
30,
|
|||||
|
2007
|
2006
|
|||||
Buildings
|
$
|
4,143,723
|
$
|
4,085,154
|
|||
Land
use rights
|
885,918
|
866,205
|
|||||
Total
|
$
|
5,029,641
|
$
|
4,951,359
|
|
June
30,
|
June
30,
|
|||||
|
2007
|
2006
|
|||||
Commercial
Bank, various amounts, due from July 2007
|
$
|
8,279,240
|
8,215,777
|
||||
to
December 2007. 100% of restricted cash deposited
|
|||||||
|
|||||||
Communication
Bank, due from July 2007 to December
|
|||||||
2007.
100% of restricted cash deposited
|
131,500
|
217,222
|
|||||
Total
|
$
|
8,410,740
|
$
|
8,432,999
|
|
2007
|
2006
|
|||||
Payable
to Cao Wubo, Chief Executive Officer and
Chairman
of the Board, with annual interest at
5.84%
and 6.03%, for 2007 and 2006 respectively,
and
unsecured.
|
$
|
447,531
|
$
|
2,456,852
|
|||
|
|||||||
Payable
to Xun Guihong, shareholder and sister of
CEO’s
spouse, with annual interest at 5.84% and
6.03%,
for 2007 and 2006 respectively, and
unsecured.
|
280,334
|
1,369,358
|
|||||
|
|||||||
Payable
to Zhang Yihua, shareholder of the
Company
and Yantai Jiangbo Pharmaceuticals,
and
nephew of CEO, with annual interest at 5.84%
and
6.03%, for 2007 and 2006 respectively, and
unsecured.
|
29,665
|
28,244
|
|||||
|
|||||||
Payable
to Yantai Jiangbo Pharmaceuticals, an
affiliated
company, with annual interest at 5.84%
and
6.03%, for 2007 and 2006 respectively, and
unsecured.
|
106,910
|
727,788
|
|||||
|
|||||||
Payable
to Laiyang Jiangbo Medicals, an affiliated
company,
with annual interest at 5.84% and
6.03%,
for 2007 and 2006 respectively, and
unsecured.
|
68,249
|
67,029
|
|||||
|
|||||||
Payable
to Xun Guifang, who is the direct relative of
|
|||||||
one
of the Company's shareholder
|
443
|
420
|
|||||
Total
other payable-related parties
|
$
|
933,132
|
$
|
4,649,691
|
|
June
30, 2007
|
|||
VAT
tax exemption
|
$
|
6,126,464
|
||
Income
tax exemption
|
2,986,806
|
|||
City
construction tax exemption
|
510,362
|
|||
Others
|
308,287
|
|||
Total
|
$
|
9,931,919
|
|
2007
|
2006
|
2005
|
|||||||
|
|
|
|
|||||||
U.S.
Statutory rates
|
34.0
|
%
|
34.0
|
%
|
34.0
|
%
|
||||
Foreign
income not recognized in the U.S.
|
(34.0
|
%)
|
(34.0
|
%)
|
(34.0
|
%)
|
||||
China
income taxes
|
33.0
|
%
|
33.0
|
%
|
33.0
|
%
|
||||
China
income tax exemption
|
(18.6
|
%)
|
0.0
|
%
|
0.0
|
%
|
||||
Total
provision for income taxes
|
14.4
|
%
|
33.0
|
%
|
33.0
|
%
|
|
2007
|
2006
|
|||||
Value
added taxes
|
$
|
-
|
$
|
962,033
|
|||
Income
taxes
|
-
|
1,076,799
|
|||||
Other
taxes
|
(12,153
|
)
|
108,055
|
||||
Total
|
$
|
(12,153
|
)
|
$
|
2,146,887
|
SEC
Registration Fee
|
$
|
2,250
|
||
Printing
and Engraving Expenses
|
$
|
20,000
|
||
Legal
Fees and Expenses
|
$
|
100,000
|
||
Accounting
Fees and Expenses
|
$
|
40,000
|
||
Miscellaneous
|
-0-
|
|||
Total
|
$
|
162,250
|
Exhibit
Number
|
Description
|
|
2.1
|
Share
Acquisition and Exchange Agreement by and among Genesis, Karmoya
and
Karmoya Shareholders dated October 1, 2007 (1)
|
|
3.1
|
Articles
of Incorporation (2)
|
|
3.2
|
Bylaws
(2)
|
|
3.3
|
Articles
of Amendment to Articles of Incorporation (2)
|
|
3.4
|
Articles
of Amendment to Articles of Incorporation (2)
|
|
3.5
|
Articles
of Amendment to Articles of Incorporation (3)
|
|
4.1
|
Articles
of Amendment to Articles of Incorporation, Preferences and Rights
of
Series A Preferred Stock (4)
|
|
4.2
|
Articles
of Amendment to Articles of Incorporation, Preferences and Rights
of
Series B Voting Convertible Preferred Stock (5)
|
|
4.3
|
6%
Convertible Subordinated Debenture, dated November 7, 2007
(6)
|
|
4.4
|
Common
Stock Purchase Warrant, dated November 7, 2007 (6)
|
|
4.5
|
Form
of 6% Convertible Note (7)
|
|
4.6
|
Form
of Class A Common Stock Purchase Warrant (7)
|
|
5.1
|
Opinion
of Schneider
Weinberger & Beilly LLP,
regarding legality of securities.*
|
|
10.1
|
Securities
Purchase Agreement, dated as of November 6, 2007, between Genesis
Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
(6)
|
|
10.2
|
Registration
Rights Agreement, dated as of November 6, 2007, between Genesis
Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
(6)
|
|
10.3
|
Closing
Escrow Agreement, dated as of November 6, 2007, by and among
Genesis
Pharmaceuticals Enterprises, Inc., Pope Investments, LLC and
Sichenzia
Ross Friedman Ference LLP (6)
|
|
10.4
|
Securities
Purchase Agreement, dated May 30, 2008, by and among the Company,
Karmoya
International Ltd., Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., Wubo Cao and the investors party thereto (7)
|
|
10.5
|
Make
Good Escrow Agreement, dated May 30, 2008, by and among the Company,
the
investors party thereto, Pope Investments LLC, Wubo Cao and Loeb
&
Loeb LLP (7)
|
|
10.6
|
Holdback
Escrow Agreement, dated May 30, 2008, by and among the Company,
the
investors party thereto and Loeb & Loeb LLP (7)
|
|
10.7
|
Registration
Rights Agreement, dated May 30, 2008, by and among the Company
and the
investors party thereto (7)
|
|
10.8
|
Lock-up
Agreement, dated May 30, 2008, between the Company and Wubo Cao
(7)
|
|
10.9
|
Employment
Agreement between Elsa Sung and the Company, dated June 10, 2008
(8)
|
|
14.1 | Code of Business Conduct and Ethics (9) | |
23.1
|
Consent
of Moore Stephens Wurth Frazer and Torbet, LLP+
|
|
23.2
|
Consent
of Schneider
Weinberger & Beilly LLP
(included in the opinion filed as Exhibit 5.1)*
|
|
99.1
|
Consulting
Services Agreement between Genesis Jiangbo (Laiyang) Biotech
Technologies
Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated
September
21, 2007 (English Translation) (1)
|
|
99.2
|
Equity
Pledge Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated
September
21, 2007 (English Translation) (1)
|
|
99.3
|
Operating
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.4
|
Proxy
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.5
|
Option
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.6
|
Audit Committee Charter+ | |
99.7
|
Compensation Committee Charter+ |
(1)
|
Incorporated
by reference to the Company’s Form 8-K filed on October 1,
2007.
|
(2)
|
Incorporated
by reference to the Company’s Form 8-K filed on September 1,
1999.
|
(3)
|
Incorporated
by reference to the Company’s Form 8-K filed on August 21,
2008.
|
(4)
|
Incorporated
by reference to the Company’s Form 10-QSB filed on January 22,
2004.
|
(5)
|
Incorporated
by reference to the Company’s Form 8-K filed on October 9,
2007.
|
(6)
|
Incorporated
by reference to the Company’s Form 8-K filed on November 9,
2007.
|
(7)
|
Incorporated
by reference to the Company’s Form 8-K filed on June 3,
2008.
|
(8)
|
Incorporated
by reference to the Company’s Form 8-K filed on June 12,
2008.
|
(9)
|
Incorporated by reference to the Company's Form 10-KSB filed on January 13, 2006. |
|
|
|
By: | /s/ Cao Wubo | |
Name: Cao Wubo |
||
Title: Chief Executive Officer |
Signature
|
Title
|
Date
|
||
/s/
Cao Wubo
|
Chief
Executive Officer and Chairman of the Board
|
August
25, 2008
|
||
Cao
Wubo
|
||||
/s/
Elsa Sung
|
Chief
Financial Officer
|
August
25, 2008
|
||
Elsa
Sung
|
||||
/s/ Xue Hong
|
Controller |
August
25, 2008
|
||
Xue Hong | ||||
/s/
Xu Haibo
|
Vice
President, Chief Operating Officer and Director
|
August
25, 2008
|
||
Xu
Haibo
|
||||
/s/
Feng Xiaowei
|
Director
|
August
25, 2008
|
||
Feng
Xiaowei
|
||||
/s/
Huang Lei
|
Director
|
August
25, 2008
|
||
Huang
Lei
|
||||
/s/
Ge Jian
|
Director
|
August
25, 2008
|
||
Ge
Jian
|
||||
/s/
Michael Marks
|
Director
|
August
25, 2008
|
||
Michael
Marks
|
Exhibit
Number
|
Description
|
|
2.1
|
Share
Acquisition and Exchange Agreement by and among Genesis, Karmoya
and
Karmoya Shareholders dated October 1, 2007 (1)
|
|
3.1
|
Articles
of Incorporation (2)
|
|
3.2
|
Bylaws
(2)
|
|
3.3
|
Articles
of Amendment to Articles of Incorporation (2)
|
|
3.4
|
Articles
of Amendment to Articles of Incorporation (2)
|
|
3.5
|
Articles
of Amendment to Articles of Incorporation (3)
|
|
4.1
|
Articles
of Amendment to Articles of Incorporation, Preferences and Rights
of
Series A Preferred Stock (4)
|
|
4.2
|
Articles
of Amendment to Articles of Incorporation, Preferences and Rights
of
Series B Voting Convertible Preferred Stock (5)
|
|
4.3
|
6%
Convertible Subordinated Debenture, dated November 7, 2007
(6)
|
|
4.4
|
Common
Stock Purchase Warrant, dated November 7, 2007 (6)
|
|
4.5
|
Form
of 6% Convertible Note (7)
|
|
4.6
|
Form
of Class A Common Stock Purchase Warrant (7)
|
|
5.1
|
Opinion
of Schneider
Weinberger & Beilly LLP,
regarding legality of securities.*
|
|
10.1
|
Securities
Purchase Agreement, dated as of November 6, 2007, between Genesis
Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
(6)
|
|
10.2
|
Registration
Rights Agreement, dated as of November 6, 2007, between Genesis
Pharmaceuticals Enterprises, Inc. and Pope Investments, LLC
(6)
|
|
10.3
|
Closing
Escrow Agreement, dated as of November 6, 2007, by and among
Genesis
Pharmaceuticals Enterprises, Inc., Pope Investments, LLC and
Sichenzia
Ross Friedman Ference LLP (6)
|
|
10.4
|
Securities
Purchase Agreement, dated May 30, 2008, by and among the Company,
Karmoya
International Ltd., Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., Wubo Cao and the investors party thereto (7)
|
|
10.5
|
Make
Good Escrow Agreement, dated May 30, 2008, by and among the Company,
the
investors party thereto, Pope Investments LLC, Wubo Cao and Loeb
&
Loeb LLP (7)
|
|
10.6
|
Holdback
Escrow Agreement, dated May 30, 2008, by and among the Company,
the
investors party thereto and Loeb & Loeb LLP (7)
|
|
10.7
|
Registration
Rights Agreement, dated May 30, 2008, by and among the Company
and the
investors party thereto (7)
|
|
10.8
|
Lock-up
Agreement, dated May 30, 2008, between the Company and Wubo Cao
(7)
|
|
10.9
|
Employment
Agreement between Elsa Sung and the Company, dated June 10, 2008
(8)
|
|
14.1 | Code of Business Conduct and Ethics (9) | |
23.1
|
Consent
of Moore Stephens Wurth Frazer and Torbet, LLP+
|
|
23.2
|
Consent
of Schneider
Weinberger & Beilly LLP
(included in the opinion filed as Exhibit 5.1)*
|
|
99.1
|
Consulting
Services Agreement between Genesis Jiangbo (Laiyang) Biotech
Technologies
Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated
September
21, 2007 (English Translation) (1)
|
|
99.2
|
Equity
Pledge Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co., Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated
September
21, 2007 (English Translation) (1)
|
|
99.3
|
Operating
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.4
|
Proxy
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.5
|
Option
Agreement between Genesis Jiangbo (Laiyang) Biotech Technologies
Co.,
Ltd., and Laiyang Jiangbo Pharmaceutical Co., Ltd. dated September
21,
2007 (English Translation) (1)
|
|
99.6
|
Audit Committee Charter+ | |
99.7
|
Compensation Committee Charter+ |
(1)
|
Incorporated
by reference to the Company’s Form 8-K filed on October 1,
2007.
|
(2)
|
Incorporated
by reference to the Company’s Form 8-K filed on September 1,
1999.
|
(3)
|
Incorporated
by reference to the Company’s Form 8-K filed on August 21,
2008.
|
(4)
|
Incorporated
by reference to the Company’s Form 10-QSB filed on January 22,
2004.
|
(5)
|
Incorporated
by reference to the Company’s Form 8-K filed on October 9,
2007.
|
(6)
|
Incorporated
by reference to the Company’s Form 8-K filed on November 9,
2007.
|
(7)
|
Incorporated
by reference to the Company’s Form 8-K filed on June 3,
2008.
|
(8)
|
Incorporated
by reference to the Company’s Form 8-K filed on June 12,
2008.
|
(9)
|
Incorporated by reference to the Company's Form 10-KSB filed on January 13, 2006. |