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EX-23.1 - CHINA MEDICINE CORP | v168688_ex23-1.htm |
EX-21.1 - CHINA MEDICINE CORP | v168688_ex21-1.htm |
As
filed with the Securities and Exchange Commission on December 14,
2009
Registration
No. 333-163443
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Amendment No.
1 to
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
CHINA
MEDICINE CORPORATION
(Name
of registrant in its charter)
Nevada
|
5122
|
51-0539830
|
||
(State
or other jurisdiction
of
incorporation or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
employer
identification
number)
|
Guangri
Tower, Suite 702
No.
8 Siyou South 1st Street
Yuexiu
District
Guangzhou,
China 510600
(8620)
8739-1718 and (8620) 8737-8212
(Address
and telephone number of principal executive offices)
Guangri
Tower, Suite 702
No.
8 Siyou South 1st Street
Yuexiu
District
Guangzhou,
China 510600
(Address
of principal place of business)
United
Corporate Services, Inc.
202
South Minnesota Street
Carson
City, Nevada 89703
(800)
899-8648
(Name,
address and telephone number of agent for service)
Copies
to:
Elizabeth
Fei Chen, Esq.
Pryor
Cashman LLP
7
Times Square
New
York, NY 10036-6569
(212)
421-4100
Approximate
date of proposed sale to the public: As soon as practicable after this
Registration Statement becomes effective.
If any of
the securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933
(“Securities Act”), check the following box. x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. ¨
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
i
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. ¨
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check the following box. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
(Check
one):
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
(Do not
check if a smaller reporting company)
The
registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
EXPLANATORY
NOTE
The
shares of our common stock being registered for resale under this registration
statement were previously registered pursuant to a registration statement on
Form SB-2 (No. 333-133283) which has been withdrawn pursuant to a Post-Effective
Amendment filed with the Commission on December 2, 2009.
ii
The information in this prospectus is
not complete and may be changed. The selling stockholders may not sell these
securities until the registration statement filed with the Securities and
Exchange Commission is effective. This prospectus is not an offer to sell these
securities, and the selling stockholders are not soliciting offers to buy these
securities, in any state where the offer or sale of these securities is not
permitted.
Subject
to completion dated December 14, 2009
PROSPECTUS
3,169,212
shares of common stock
CHINA
MEDICINE CORPORATION
This prospectus relates to the resale,
from time to time, of up to 3,169,212 shares of our common stock by the
stockholders referred to throughout this prospectus as “selling
stockholders.” Of the total number of shares of our common stock
offered in this prospectus, 199,474 shares are issuable upon the exercise of
Series A common stock purchase warrants issued on February 8, 2006 which have an
exercise price of $1.70 per share and 2,969,738 shares are issuable upon the
exercise of Series B common stock purchase warrants issued on February 8, 2006 which have
an exercise price of $2.43 per share. The Series A and Series B
common stock purchase warrants both expire on February 7,
2011.
The
selling stockholders may offer all or part of their shares for resale from time
to time through public or private transactions, either at prevailing market
prices or at privately negotiated prices. We will not receive any of the
proceeds from sales of the shares by the selling
stockholders. However, if the warrants are exercised for cash, we
will receive the aggregate exercise price for those warrants. The
terms of the warrants require the holder to exercise for cash so long as there
is an effective registration statement covering the shares issuable
thereunder.
We will
pay all of the registration expenses incurred in connection with this offering
(estimated to be $40,493.39), but the selling stockholders will pay all of the
selling commissions, brokerage fees and related expenses. We have agreed to
indemnify the selling stockholders against certain liabilities, including
liabilities under the Securities Act.
Our
common stock is currently quoted on the Financial Industry Regulatory
Authority’s OTC Bulletin Board under the symbol “CHME.OB”. As of November 30,
2009, the last reported bid price of our common stock was $2.77 per share and
the last reported ask price was $2.81 per share.
Investing
in our common stock involves a high degree of risk. See the “Risk Factors” beginning on
page 5
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this prospectus is December 14, 2009
iii
TABLE OF CONTENTS
Page
|
||
ABOUT
THIS PROSPECTUS
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1
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CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER INFORMATION CONTAINED
IN THIS PROSPECTUS
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1
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PROSPECTUS
SUMMARY
|
2
|
|
RISK FACTORS |
5
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USE
OF PROCEEDS
|
5
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SELLING
STOCKHOLDERS
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6
|
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PLAN
OF DISTRIBUTION
|
8
|
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DESCRIPTION
OF SECURITIES
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9
|
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INTERESTS
OF NAMED EXPERTS AND COUNSEL
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10
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LEGAL
MATTERS
|
10
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MATERIAL
CHANGES
|
10
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INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
|
10
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DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
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11
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WHERE
YOU CAN FIND MORE INFORMATION
|
11
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|
PART
II. INFORMATION NOT REQUIRED IN PROSPECTUS
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II-1
|
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II-4
|
iv
ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from that contained
in this prospectus. The selling stockholders are offering to sell and seeking
offers to buy shares of our common stock only in jurisdictions where offers and
sales are permitted. You should assume that the information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of our common
stock.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS AND OTHER
INFORMATION
CONTAINED IN THIS PROSPECTUS
This
prospectus contains some forward-looking statements. Forward-looking statements
give our current expectations or forecasts of future events. You can identify
these statements by the fact that they do not relate strictly to historical or
current facts. Forward-looking statements involve risks and uncertainties.
Forward-looking statements include statements regarding, among other things, (a)
our projected sales, profitability, and cash flows, and our projected expenses,
(b) our growth strategies, (c) anticipated trends in our industries, (d) our
future financing plans, (e) our anticipated needs for working capital, and (f)
potential future expansions and government approvals and other future actions.
They are generally identifiable by use of the words "may," "will," "should,"
"anticipate," "estimate," "plans," “potential," "projects," "continuing,"
"ongoing," "expects," "management believes," "we believe," "we intend" or the
negative of, or other variations on, these phrases or comparable terminology.
These statements may be found under "Management's Discussion and Analysis of
Financial Condition” and "Description of Business," which are incorporated
herein by reference to the Company’s Annual Report on Form 10-K, as well as in
this prospectus generally.
Any or
all of our forward-looking statements in this report may turn out to be
inaccurate. They can be affected by inaccurate assumptions we might make or by
known or unknown risks or uncertainties. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially as a
result of various factors, including, without limitation, the risks outlined
under "Risk Factors" and matters described in this prospectus generally. In
light of these risks and uncertainties, there can be no assurance that the
results anticipated in the forward-looking statements contained in this
prospectus will in fact occur. You should not place undue reliance on these
forward-looking statements.
Currency,
exchange rate, and “China” and other references
Unless
otherwise noted, all currency figures in this filing are in U.S. dollars.
References to "yuan" or "RMB" are to the Chinese yuan (also known as the
renminbi). According to the currency exchange website www.xe.com, on
November 30, 2009, $1.00 was equivalent to 6.8280 yuan.
References
to the “PRC” or “China” are to the People’s Republic of China.
References
to the “OTC Bulletin Board,” are to the Financial Industry Regulatory
Authority’s, or FINRA’s, over-the-counter Bulletin Board, a securities quotation
service, which is accessible at the website www.otcbb.com. FINRA is the
successor entity of the National Association of Securities Dealers.
References
to "Lounsberry" are to China Medicine Corporation prior to its name change on May 10, 2006, when its name
was “Lounsberry Holdings III, Inc.”
References
to “Capital Markets” are to Capital Markets Advisory Group, LLC, which was our
majority shareholder until February 8, 2006.
References
to the “SFDA” are to the PRC’s State Food and Drug Administration, a national
government body that oversees the safety of the country’s food and drugs and the
enforcement of food and drug laws.
1
The
following summary highlights certain material aspects of the offering for resale
of common stock by the selling stockholders covered by this prospectus but may
not contain all of the information that is important to you. You should read
this summary together with the more detailed information regarding our company,
our common stock and our financial statements and notes to those statements
appearing elsewhere in this prospectus, including the “Risk Factors”, before
making an investment decision. Except as otherwise specifically
stated or unless the context otherwise requires, the “Company,” “we,” “our” and
“us” refer collectively to China Medicine Corporation (“China Medicine”) and
Guangzhou Konzern Medicine Co., Ltd. (“Konzern”), a limited liability company
organized under the laws of the PRC and a wholly-owned subsidiary of China
Medicine.
Business
Overview
We are a
distributor and developer of pharmaceutical and medical products in the PRC,
including prescription and over-the-counter drugs, Chinese herbs, traditional
Chinese medicines made from Chinese herbs, nutritional supplements, dietary
supplements, and medical instruments. We are also engaged in proprietary
research and development with the aim of creating new pharmaceutical products.
We intend either (i) to control the medical formulas and other intellectual
property relating to these new products ourselves, in which case we may have the
products manufactured by third parties and delivered to us for distribution, or
(ii) to sell or license the intellectual property to third parties. In 2008, we
generated total revenues of $53,647,806, of which 97.5% came from product sales
and 2.5% came from sales of intellectual property.
In 2008,
we had exclusive rights to nationwide distribution of seven products made by our
suppliers, which accounted for approximately 29.4% of our sales in fiscal year
2008 and 20.6% of our sales in fiscal year 2007. The most significant of these
products are Iopamidol Injection 370 and 300, prescription medicines that are
used for angiography and CT scanning. For the years ended December 31, 2008 and
2007, our total revenue from these products amounted to $6.1 million and $4.9
million, respectively, which were 11.4% and 11.8% of our annual sales for the
years ended December 31, 2008 and 2007, respectively.
We are
frequently required to make a significant down payment when we place an order,
in order to secure the lowest possible purchase price and broadest possible
distribution area. These down payments are made pursuant to contracts with the
suppliers, and to the extent that we reduce the size of the order, we will
receive a credit from the supplier. For the nine months ended September 30, 2009
and the fiscal year ended December 31, 2008, we had a total balance of such
advances to suppliers of $8,392,320 and $6,121,974 respectively.
Our five
largest suppliers accounted for 56.8% of our total purchases for the nine months
ended September 30, 2009, compared to 47.2% for the comparable period of
2008.
Our
customers are typically medical product wholesalers, hospitals, and retail drug
stores. Our five largest customers accounted for 47.1% of our
revenues for the nine months ended September 30, 2009, compared to 50.2% for the
corresponding period in 2008. Our five largest customers accounted
for 37.9% and 39.5% of our revenues for the years ended December 31, 2008 and
2007, respectively. We have approximately 735 customers.
We dealt
in approximately 2,400 pharmaceutical and medical products, including: (i)
western and traditional Chinese medicine drugs and supplements (including
prescription and over the counter medicines), (ii) medical equipment and
substances including herbs, and (iii) dietary supplements. In 2008, Western and
traditional Chinese medicine drugs and supplements accounted for $50.9 million,
or 94.9%, of total revenues. In 2008, revenue from sales of medical
equipment and substances was $0.93 million or 1.8% of total revenues; revenue
from sales of dietary supplements was $0.45 million or 0.8% of total
revenues. Our sales of medical formula amounted to $1.34 million in
2008 or 2.5% of total revenues.
We
compete with large state-owned medicine distributors that are better capitalized
than we are and that are entitled under PRC law to sell anesthesia products,
which we may not sell. We believe that our competitive advantages include having
our own research and development facilities, after-sale customer service, and
sole distribution rights to seven medical products, as well as price, service
and the ability to provide timely delivery.
We have
received patents in the PRC for six of our medical products, and have patents
pending for three others.
Our
executive offices and Konzern’s executive offices are located at Guangri Tower,
Suite 702, No. 8 Siyou South 1st Street, Yuexiu District, Guangzhou, China
510600, and the telephone numbers are (8620) 8739-1718 and (8620) 8737-8212. Our
website can be found at www.chinamedicinecorp.com. Neither the information nor
any other content on our website or any other Internet website is a part of this
prospectus.
2
History
of the Company
We are a
Nevada corporation organized on February 10, 2005, under the name Lounsberry
Holdings III, Inc., for the purpose of acquiring an operating business. Until
February 2006, we were a shell company as that term is defined by SEC
rules.
On
February 8, 2006, we acquired an operating business and ceased to be a shell
company by entering into a reverse merger transaction. In the reverse merger, we
acquired all of the equity of Guangzhou Konzern Medicine Co., Ltd. (“Konzern”),
a PRC distributor of pharmaceutical products, in exchange for issuing 6,530,000
shares of common stock, representing approximately 88.5% of our outstanding
common stock, to the owners of Konzern. Beginning February 8, 2006, we have been
engaged, through our wholly-owned subsidiary Konzern, in pharmaceutical
distribution in the PRC. We serve as a holding company for Konzern and have no
operations other than the operations of Konzern.
In
connection with the acquisition of Konzern, we entered into:
·
|
A
preferred stock purchase agreement pursuant to which we issued 3,120,000
shares of Series A Preferred Stock and warrants to purchase an aggregate
of 7,389,476 shares of common stock to the owners of Konzern in exchange
for $3,900,000. Each share of Series A preferred stock is convertible into
one share of common stock.
|
·
|
A
stock redemption agreement with Capital Markets Advisory Group, LLC
("Capital Markets"), which was then our principal stockholder, pursuant to
which we purchased 928,000 shares of common stock from Capital Markets for
$167,602, and repaid $32,398 of debt to Capital Markets, using the
proceeds from the sale of the Series A preferred
stock.
|
On May
10, 2006, we changed our name to China Medicine Corporation. On June
10, 2009, the Company completed its reincorporation in Nevada. The
reincorporation effected a change in the Company’s legal domicile from Delaware
to Nevada. The Company’s business, assets, liabilities, and
headquarters were unchanged as a result of the reincorporation and the directors
and officers of the Company prior to the reincorporation continued to serve the
Company after the reincorporation.
After
the Reverse Acquisition
In late
2006, we created “Co-Win”, a PRC joint-venture company together with Guangzhou
Ji'nan Science & Technology Industrial Group ("JSIG") and Mr. Dongsheng Yao
for the purpose of discovering uses for aflatoxin-detoxifizyme, or ADTZ, an
enzyme that can eliminate the carcinogen aflatoxin from food and animal feed.
Konzern is to invest $2.2 million over the course of two years, and owns 70% of
the equity of the joint venture.
In
November 2006, we obtained approval from local government authorities for the
distribution of medical supplies and devices throughout Guangdong Province. We
began to sell and distribute medical supplies such as bandages and cotton swabs
in the first quarter of 2007.
Recent
Developments
Beginning
in 2007, the Guangdong government established an on-line bidding system for
medical distribution rights in Guangdong. Through the new system, we have
obtained the rights to sell and distribute a total of 774 new products, which we
began to distribute in 2008.
On May
20, 2009, Guangzhou Konzern Bio-Tech Co., Ltd. ("Konzern Bio-Tech") was
incorporated. Konzern Bio-Tech was established for the purpose of
engaging in research and development and utilizing the supports from the Chinese
Government for domestic hi-tech companies. Konzern has 100% ownership in Konzern
Bio-Tech. Bio-Tech is still in development and has not undertaken significant
operating activities.
On
October 26, 2009, Konzern entered into an Equity Transfer Agreement with
Sinoform Limited, a company registered under the laws of the British Virgin
Islands (“Sinoform”), to acquire 100% of Sinoform’s equity interests in
Guangzhou LifeTech Pharmaceuticals Co., Ltd, a wholly-owned subsidiary of
Sinoform. LifeTech is a developer and manufacturer of pharmaceutical
products. The acquisition of LifeTech was consumated on December 4, 2009.
LifeTech is now a wholly-owned subsidiary of Konzern.
Before
the Reverse Acquisition
Prior to
July 25, 2000, Konzern was a state-owned medicine distribution company located
in Guangzhou, China. On July 25, 2000, Konzern was privatized through a sale of
its capital stock.
Prior to
2004, Konzern did not engage in any research and development activities. In
October 2003, we entered into a research and development agreement with the with
the Pharmaceutical Research Institute of Nanhua University in Hunan Province to
establish a research and development center at that university. Under the
agreement, we contribute funds, including the salaries of the research
personnel, in return for the ownership of the new medicines so developed. The
center has developed four products, one of which is under review by the PRC
State Food and Drug Administration, or SFDA.
3
The
Offering
Common
stock outstanding as of November 30, 2009
|
15,320,139
(1)
|
Common
stock being offered by us
|
0
shares
|
|
Total
common stock that may be offered by selling stockholders in this
offering
|
3,169,212
|
|
Common
stock to be outstanding after the offering
|
18,489,351
(2)
|
Use
of Proceeds
|
We
will not receive any of the proceeds from the sale of shares by the
selling stockholders. However, if our outstanding warrants are exercised
for cash, we will receive the net proceeds of the issuance of the
underlying stock at the exercise price. The terms of the
warrants require the holder to pay the exercise price in cash (as opposed
to by “cashless exercise”) if the underlying shares of common stock are
covered by an effective registration statement. If the selling
stockholders exercise all of the outstanding warrants for cash at the
current exercise prices, we would issue 3,169,212 shares of common
stock and receive $7,555,569 in proceeds from the issuance. The
selling stockholders may choose not to exercise the remaining outstanding
warrants for cash or at all. We will use all proceeds from the exercise of
warrants for working capital and other general corporate
purposes.
|
|
Limitation
on Issuance of Common Stock:
|
No
holder of our common stock purchase warrants can convert or exercise our
securities into common stock if such holder and its affiliates would then
own more than 4.9% of our outstanding common stock.
|
|
Our
OTC Bulletin Board Trading Symbol
|
CHME.OB
|
|
Risk
Factors
|
See
"Risk Factors" beginning on page 5 and other information included in this
prospectus for a discussion of factors you should consider before deciding
to invest in shares of our common stock.
|
(1) Does
not include the 3,169,212 shares of common stock issuable upon exercise of our
outstanding Series A and Series B warrants held by the selling stockholders. If those shares of common stock, all of which are
unissued as of November 30, 2009, are added to the total number of shares of our
common stock outstanding, the resulting total number of shares
18,489,351.
(2)
Assumes prior exercise of all of our outstanding warrants to purchase common
stock.
Selling
Stockholders
The
selling stockholders acquired their shares in a private placement in February
2006 or, in some cases, in private purchases of stock from stockholders that
acquired their shares in the private placement.
Plan
of Distribution
This
offering is not being underwritten. The selling stockholders may sell their
shares from time to time in privately negotiated transactions or in transactions
on the OTC Bulletin Board or other stock exchange on which the shares may be
listed in the future. The shares may be sold at market prices prevailing at the
time of sale, at prices related to the prevailing market prices, or at
negotiated prices. To the extent required, specific information about a
particular sale (such as the purchase price and public offering prices, the
names of any broker or dealer, and any applicable commission or discounts) will
be described in an accompanying prospectus. We intend to keep this prospectus
current until all of the common stock being offered under this prospectus is
sold. The selling stockholders may offer the common stock pursuant to this
prospectus so long as this prospectus is then current under the rules of the SEC
and we have not withdrawn the registration statement of which this prospectus
forms a part.
4
We will
pay all expenses of registration incurred in connection with this offering, but
the selling stockholders will pay all of the selling commissions, brokerage fees
and related expenses. We have agreed to indemnify the selling stockholders
against certain liabilities, including liabilities under the Securities Act of
1933, as amended (the “Securities Act”).
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. You should
carefully consider the following information about these risks, together with
the other information contained in this prospectus and in the section entitled
“Risk Factors” contained in our Annual Report on Form 10-K for the fiscal year
ended December 31, 2008, as filed with the Securities and Exchange Commission on
March 31, 2009, which report is incorporated by reference into this prospectus,
before investing in our common stock. If any of the events anticipated by the
risks described therein or below occur, our results of operations and financial
condition could be adversely affected which could result in a decline in the
market price of our common stock, causing you to lose all or part of your
investment.
A
few of our stockholders control a significant percentage of our common
stock.
Over 40%
of our outstanding common stock is owned by the former owners of Konzern,
Senshan Yang, our chief executive officer and a director, Minhua Liu, our
executive vice president and a director, and Junhua Liu, the brother of Minhua
Liu. They presently have the voting power to influence the election of the
directors and with minimal voting support can approve any transaction requiring
stockholder approval and can take action by stockholder consent without a
stockholders' meeting. There is no guarantee that their judgment will be the
same as yours on important matters affecting the Company, including whether to
make acquisitions, be acquired by another company, authorize new shares of
stock, and maintain or dismiss members of management.
The
sale of our common stock in this offering may depress our stock
price.
Pursuant
to this offering, the selling stockholder may sell up to 3,169,212 shares
or our common stock, or approximately 20.7% of our outstanding common stock as
of November 30, 2009. These sales of a substantial number of shares of our
common stock in the public market, or the perception that such sales may occur,
could adversely affect the price of our common stock. We cannot predict the
effect, if any, that market sales of those shares of common stock or the
availability of those shares of common stock for sale will have on the market
price of our common stock.
USE
OF PROCEEDS
We will
not receive any of the proceeds from any sales by the selling stockholders of
their common stock. The terms of the warrants allow the holder to pay
the exercise price by cash or by “cashless exercise”, unless there is an
effective registration statement covering the resale of the underlying shares of
common stock. In that instance, the holder must exercise the warrants
for cash. If the selling stockholders exercise any of the outstanding
warrants to purchase a total of 3,169,212 shares of our common stock for
cash, we will receive the proceeds from the issuance of that stock at the
exercise price. In April 2007, the exercise price of our Series A
warrants was reduced from $1.75 to $1.70 per share and the exercise price of our
Series B warrants was reduced from $2.50 to $2.43 per share because we missed
certain performance targets set forth in the securities purchase agreement we
entered into with private investors on February 8, 2006.
The
maximum total exercise price of (i) our outstanding Series A warrants
approximately is $339,106, which we will receive only if all of the warrants are
exercised at their current exercise price which is $1.70 per share and (ii) our
outstanding Series B warrants is approximately $7.22 million, which we will
receive only if all of the warrants are exercised at their original exercise
price which is $2.43 per share. Any proceeds we receive from the
exercise of the warrants will be used for working capital and general corporate
purposes. We cannot assure you that any of the warrants will be
exercised.
The
holders of our warrants have cashless exercise rights, which provide them with
the ability to receive common stock with a value equal to the appreciation in
the stock price over the exercise price of the warrants being exercised. This
right was not exercisable during the first six months that the warrants were
outstanding and thereafter if the underlying shares are subject to an effective
registration statement. To the extent that the holders of the warrants exercise
this right, we will not receive proceeds from such exercise. As of the date of
this prospectus, 179,474 Series A warrants have been exercised cashlessly to
purchase 53,397 shares of our common stock.
5
SELLING
STOCKHOLDERS
The
following table sets forth the names of the selling stockholders, the number of
shares of common stock owned beneficially by the selling stockholders as of
November 30, 2009, the number of shares of our common stock that may be offered
by the selling stockholders as of November 30, 2009 pursuant to this
prospectus. No selling stockholder will own any shares of our
outstanding common stock upon completion of the offering. The table and the
other information contained under the captions "Selling Stockholders" and "Plan
of Distribution" have been prepared based upon information furnished to us by or
on behalf of the selling stockholders.
Name
|
No.
of shares
beneficially
owned
|
No.
of shares being offered
|
No.
of shares
beneficially
owned
after the
offering
(4) |
Percentage
of class
|
||||||||||||
Barron
Partners, LP(1)
|
67,671 | 2,401,316 | 0 | % | ||||||||||||
Ray
and Amy Rivers, JTWOS
|
62,353 | 305,948 | (2) | 0 | % | |||||||||||
Steve
Mazur
|
53,397 | 126,474 | (2) | 0 | % | |||||||||||
William
M. Denkin
|
--------- | 126,474 | (2) | 0 | % | |||||||||||
JMG
Capital Partners LP
|
--------- | 94,500 | 0 | % | ||||||||||||
JMG
Triton Offshore Fund, Ltd.
|
--------- | 94,500 | 0 | % | ||||||||||||
Warrant
Strategies Fund, LLC
|
--------- | 94,500 | 0 | % |
(1) Mr.
Andrew B. Worden, president of the general partner of Barron Partners LP, has
sole voting and dispositive power over the shares beneficially owned by Barron
Partners.
(2) Ray
and Amy Rivers, Steve Mazur, and William M. Denkin each sold warrants to
purchase 63,000 shares of common stock, 94,5000 of which were purchased by JMG
Capital Partners LP, and 74,500 of which were purchased by JMG Triton Offshore
Fund, Ltd.
(3) Ray and Amy Rivers and Steve Mazur each sold warrants to purchase
10,000 shares of Common Stock to Warrant Strategies Fund, LLC.
(4) We do
not know when or in what amounts a selling stockholder may offer shares for
sale. The selling stockholders might not sell any or all of the
shares offered by this prospectus. Because the selling stockholders
may offer all or some of the shares pursuant to this offering, and because there
are currently no agreements, arrangements or understandings with respect to the
sale of any of the shares, we cannot estimate the number of the shares that will
be held by the selling stockholders after completion of the
offering. However, for purposes of this table, we have assumed that,
after completion of the offering, none of the shares covered by this prospectus
will be held by the selling stockholders.
None of
the selling stockholders holds, or within the past three years has held, any
position, office or material relationship with us or any of our predecessors or
affiliates.
The
shares of common stock being offered by Barron Partners LP, Ray and Amy Rivers
(as joint tenants with right of survivorship) Steve Mazur and William M. Denkin
represent the shares of common stock issuable upon exercise of the warrants that
were issued to them in the February 2006 private placement. See "Selling
Stockholders - February 2006 Private Placement" for information relating to the
shares of common stock issuable to them.
None of
the selling stockholders are broker-dealers. Three selling stockholders, Steve
Mazur, Ray Rivers, and William M. Denkin, are employees but not affiliates of a
broker-dealer, CRT Capital LLC. Although they do not have an ownership or
control relationship with, and are not officers, directors, members or partners
of, the broker-dealer, Mr. Mazur, Mr. Rivers and Mr. Denkin may, nonetheless, be
deemed affiliates of the broker-dealer. The selling stockholders who are
affiliates and employees of broker-dealers purchased their shares in the
ordinary course and at the time of purchasing the securities they had no
agreements or understandings, directly or indirectly, with any person to
distribute the securities.
The
preferred stock purchase agreement provides that the warrants cannot be
exercised to the extent that the number of shares of common stock held by the
selling stockholder and his affiliates after such conversion or exercise would
exceed 4.9% of the outstanding common stock. Beneficial ownership is determined
in the manner provided in Section 13(d) of the Securities Exchange Act of 1934
and Regulation 13d-3 of the SEC thereunder. This provision, which cannot be
modified, limits the ability of the holders of the warrants to exercise their
warrants. Based on our 15,320,139 shares of common stock outstanding on November
30, 2009, Barron Partners, Ray and Amy Rivers, Steve Mazur and William M Denkin
may not exercise warrants if the conversion or exercise would result in their
owning more than 766,007 shares of common stock at any one time. This limitation
applies separately to each of these selling stockholders. As the number of
shares of common stock increases, whether upon conversion of Series A preferred
stock or exercise of warrants or for any other reason, the number of shares that
may be issued under this limitation will increase. In the event that any holder
of warrants issued in the February 2006 private placement transfers its or his
warrants, the transferee, if it is not an affiliate of the transferor, would be
subject to a separate 4.9% limitation.
In
February 2006, pursuant to a preferred stock purchase agreement, we issued to
Barron Partners LP, Ray and Amy Rivers (as joint tenants with right of
survivorship), Steve Mazur and William M. Denkin an aggregate of 3,120,000
shares of Series A Preferred Stock, and warrants to purchase an aggregate of
7,389,476 shares of common stock for an aggregate consideration of
$3,900,000. The following table sets forth, for each of the
purchasers in the February 2006 private placement, the number of shares of
common stock issuable upon conversion of the Series A Preferred Stock, and upon
exercise of the warrants, together with the total number of shares of common
stock issuable upon conversion of the Series A preferred stock and upon exercise
of the warrants, and the purchase price paid by the purchaser. There is no
additional consideration payable upon conversion of the Series A preferred
stock.
6
Name
|
Shares
of common stock issuable upon
conversion
of preferred stock
|
Shares
of common stock issuable upon exercise of Series A
warrants
|
Shares
of common stock issuable upon exercise of Series B
warrants
|
Total
number of shares of common stock
|
Amount
of investment
|
|||||||||||||||
Barron
Partners
|
2,640,000 | 3,126,316 | 3,126,316 | 8,892,632 | $ | 3,300,000 | ||||||||||||||
Ray
and Amy Rivers (jointly)
|
160,000 | 189,474 | 189,474 | 538,948 | $ | 200,000 | ||||||||||||||
Steve
Mazur
|
160,000 | 189,474 | 189,474 | 538,948 | $ | 200,000 | ||||||||||||||
William
M. Denkin
|
160,000 | 189,474 | 189,474 | 538,948 | $ | 200,000 |
Pursuant
to the preferred stock purchase agreement relating to the issuance of the Series
A preferred stock and warrants in the February 2006 private placement:
·
|
We
agreed that we will have appointed and maintain a board consisting of such
number of independent directors that would result in a majority of our
directors being independent directors, that our audit committee would be
composed solely of independent directors and our compensation committee
would have a majority of independent directors. Our failure to meet these
requirements would results in the payment of liquidated damages that are
to be paid either in cash or by the issuance of additional shares of
Series A preferred stock. Although we did not meet the required deadline
for having independent directors, because we have elected independent
directors who comprise both a majority of the board, all of the members of
the audit committee and the compensation committee, the investors waived
our failure to be in compliance when initially required. This waiver would
not apply to any subsequent failure to continue to meet this
requirement.
|
·
|
We
and the investors entered into a registration rights agreement pursuant to
which we agreed to file, within 60 days after the closing, the
registration statement of which this prospectus is a part. Since the
closing was on February 8, 2006, we were required to file the registration
statement by April 10, 2006 and have the registration statement declared
effective by August 8, 2006. We will be required to issue 1,025 shares of
Series A preferred stock for each day of the delay in filing and each date
after the required effective date. As a result we may be required to issue
3,225 shares of Series A preferred stock for the delay in filing the
initial registration statement and an additional 1,025 share of Series A
preferred stock for each day between August 8, 2006 and the effective date
of the registration statement of which this prospectus forms a part. We
will also be required to issue 1,025 shares of preferred stock for each
day that we fail to keep this registration statement current and
effective, with certain limited exceptions. At June 30, 2006, we had
accrued $44,003 in respect of this
obligation.
|
·
|
The
investors have the right to participate in any future
financing.
|
·
|
We
are required to elect a chief financial officer who is familiar with both
the conduct of business in China and the SEC's rules and regulations
relating to accounting, financial statements and accounting controls
within fifteen days after closing. We believe that we are in compliance
with this provision. The agreement does not include any liquidated damages
provision with respect to our failure to comply with this
requirement.
|
·
|
With
certain limited exceptions, if we issue stock at a purchase price or
warrants or convertible securities at an exercise or conversion price
which is less than the exercise price of the warrants, the conversion
price and exercise price will be reduced to such lower ratio. The initial
conversion price of the Series A preferred stock was $1.25 and the initial
conversion ratio was one share of common stock for each share of Series A
preferred stock. Any change in the conversion price
automatically resulted in an adjustment in the conversion ratio of the
Series A preferred stock.
|
|
·
|
If
our earnings before interest, taxes, depreciation and amortization
("EBITDA") for 2005 had been less than $5,650,000, there would have been a
reduction in the exercise price of the warrants. Since our EBITDA was
greater than that amount, no adjustment was
required.
|
7
PLAN
OF DISTRIBUTION
This
offering is not being underwritten. The selling stockholders and any of their
pledgees, donees, assignees and successors-in-interest may, from time to time,
sell any or all of their shares of common stock on any stock exchange, market or
trading facility on which our shares are traded or in private transactions.
These sales may be made at fixed or negotiated prices. To the extent required,
specific information about a particular sale (such as the purchase price and
public offering prices, the names of any broker or dealer, and any applicable
commission or discounts) will be described in an accompanying
prospectus.
There is
a limited public market for our common stock. Our common stock is
currently quoted on FINRA’s Over-the-Counter Bulletin Board.
We intend
to keep this prospectus current until all of the common stock being offered
under this prospectus is sold. The selling stockholders may offer the common
stock pursuant to this prospectus so long as this prospectus is current under
the rules of the SEC and we have not withdrawn the registration statement of
which this prospectus forms a part.
Subject
to the foregoing, the selling stockholders may use any one or more of the
following methods when selling or otherwise transferring shares:
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
·
|
block
trades in which a 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;
|
·
|
sales
to a broker-dealer as principal and the resale by the broker-dealer of the
shares for its account;
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
privately
negotiated transactions, including
gifts;
|
·
|
pursuant
to an arrangement or agreement with a broker-dealer 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 of sale permitted pursuant to applicable
law.
|
The
selling stockholders acquired their shares pursuant to the preferred stock
purchase agreement and may also sell shares pursuant to Rule 144 or Rule 144A
under the Securities Act, if available, rather than pursuant to this
prospectus.
The
holders of our Series A and Series B warrants may not exercise them for our
common stock if that would result in the holder and his or its affiliates
beneficially owning more than 4.9% of our common stock. Because of the
limitation whereby Barron Partners LP, Ray and Amy Rivers, Steve Mazur and
William M. Denkin cannot hold more than 4.9% of our stock at one time, there is
a limit on the number of shares that any of them may sell at any time. For
information on the selling shareholder limitation, see “Selling Stockholders” in
this prospectus.
Broker-dealers
engaged by the selling stockholders may arrange for other brokers dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated. The
selling stockholders do not expect these commissions and discounts to exceed
what is customary in the types of transactions involved.
8
A selling
stockholder may from time to time pledge or grant a security interest in some or
all of the shares or common stock or warrant owned by them and, if the selling
stockholder defaults in the performance of the secured obligations, the pledgees
or secured parties may offer and sell the shares of common stock from time to
time under this prospectus, or under an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgees, transferees or other
successors in interest as selling stockholders under this
prospectus.
In
connection with the sale of our common stock or interests therein, the selling
stockholders may enter into hedging transactions with broker-dealers or other
financial institutions which may in turn engage in short sales of our common
stock in the course of hedging the positions they assume. The selling
stockholders may, after the date of this prospectus, also sell shares of our
common stock short and deliver these securities to close out their short
positions, or loan or pledge their common stock to broker-dealers that in turn
may sell these securities. The selling stockholders may also enter into option
or other transactions with broker-dealers or other financial institutions or the
creation of one or more derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by this
prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such
transaction).
The
selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
In the event of a transfer by a selling stockholder of the warrants or the
common stock issuable upon conversion of the warrants other than a transfer
pursuant to this prospectus or Rule 144 of the SEC, we may be required to amend
or supplement this prospectus in order to name the transferee as a selling
stockholder.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The selling stockholders have informed us
that they do not have any agreement or understanding, directly or indirectly,
with any person to distribute the common stock.
Because
the selling stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. Federal securities laws, including
Regulation M, may restrict the timing of purchases and sales of our common stock
by the selling stockholders and any other persons who are involved in the
distribution of the shares of common stock pursuant to this
prospectus.
We are
required to pay all fees and expenses incident to the registration of the
shares. We have agreed to indemnify the selling stockholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.
DESCRIPTION
OF SECURITIES
We are
authorized to issue 90,000,000 shares of common stock, par value $.0001 per
share, and 10,000,000 shares of preferred stock, par value $.0001 per share. As
of the date of this prospectus, we have 15,320,139 shares of common stock and no
shares of Series A preferred stock outstanding.
Common
Stock
Holders
of common stock are entitled to one vote for each share held on all matters
submitted to a vote of stockholders and do not have cumulative voting rights.
Accordingly, holders of a majority of the shares of common stock entitled to
vote in any election of directors may elect all of the directors standing for
election. Holders of common stock are entitled to receive proportionately any
dividends as may be declared by our board of directors, subject to any
preferential dividend rights of outstanding preferred stock. Pursuant to the
certificate of designation relating to the Series A preferred stock, we are
prohibited from paying dividends on our common stock while preferred stock is
outstanding. Upon our liquidation, dissolution or winding up, the holders of
common stock are entitled to receive proportionately our net assets available
after the payment of all debts and other liabilities and subject to the prior
rights of any outstanding preferred stock. Holders of common stock have no
preemptive, subscription, redemption or conversion rights. Our outstanding
shares of common stock are fully paid and non-assessable. The rights,
preferences and privileges of holders of common stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
preferred stock that we may designate and issue in the future.
Common
Stock Purchase Warrants
In
connection with our February 2006 private placement, we issued Series A warrants
to purchase 3,694,738 shares of common stock at an exercise price of $1.75 per
share and Series B warrants to purchase 3,694,738 shares of common stock at an
exercise price of $2.50 per share. On April 23, 2007, the exercise price of the
Series A warrants was reduced to $1.70 per share and the exercise price of the
Series B warrants was reduced to $2.43 per share, representing reductions of 3%
in each case. These reductions in exercise price were made under a
Waiver and Amendment entered into between the Company and the initial investors
in the private placement. The Waiver and Amendment cancelled and replaced an
adjustment provision contained in the warrants, which provided that the exercise
price of our warrants would have been reduced by approximately 23% because the
Company did not meet a 2006 pre-tax income-per-share target of $0.40 per share.
The warrants are not subject to any further adjustment based on the Company’s
financial results.
9
The
warrants also provide that, with certain exceptions, if the Company issues
common stock at a price, or warrants or other convertible securities with an
exercise or conversion price, which is less than the exercise price of the
warrants, the exercise price of the warrants will be reduced to the sales price,
exercise price or conversion price, as the case may be, of such other
securities.
The
holders of the warrants have cashless exercise rights, which provide them with
the ability to receive common stock with a value equal to the appreciation in
the stock price over the exercise price of the warrants being exercised. This
right was not exercisable during the first six months that the warrants were
outstanding, and it is not exercisable thereafter if the underlying shares are
subject to an effective registration statement. To the extent that
the holders of the warrants exercise using a cashless exercise, we will not
receive proceeds from such exercise.
INTEREST
OF NAMED EXPERTS AND COUNSEL
Neither
our independent public accountant, Moore Stephens Wurth Frazer and Torbet, LLP,
nor our counsel passing upon the validity of the securities offered under this
prospectus, Pryor Cashman LLP, will receive a direct or indirect interest in us,
was hired on a contingent basis, or has been a promoter, underwriter, voting
trustee, director, officer, or employee of ours.
LEGAL
MATTERS
The
validity of the shares of common stock offered through this prospectus will be
passed on by Pryor Cashman LLP.
There
have been no material changes in our affairs which have occurred since the end
of the latest fiscal year for which audited financial statements were included
in the latest Form 10-K and that have not been described in a Form 10-Q or Form
8-K filed under the Exchange Act.
The SEC
allows us to “incorporate by reference” the information we file with them, which
means that we can disclose important information to you by referring you to
those documents instead of having to repeat the information in this prospectus.
The information incorporated by reference is considered to be part of this
prospectus. We incorporate by reference the documents listed below:
•
|
Our
Annual Report on Form 10-K for the year ended December 31, 2008, filed on
March 31, 2009;
|
|
•
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009,
filed on May 12, 2009;
|
|
•
|
Our
Definitive Proxy Statement on Form 14A, dated May 5, 2009, filed on May
19, 2009;
|
|
•
|
Our
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2009,
filed on August 12, 2009;
|
|
•
|
Our
Current Report on Form 8-K, dated June 19, 2009, filed on June 19,
2009;
|
|
•
|
Our
Current Report on Form 8-K, dated August 25, 2009, filed on August 31,
2009;
|
|
•
|
Our
Current Report on Form 8-K, dated October 26, 2009, filed on October 30,
2009
|
|
•
|
Our
Quarterly Report on Form 10-Q for the fiscal year ended September 30,
2009, filed on November 16, 2009 ; and
|
|
•
|
Our
Current Report on Form 8-K, dated December 4, 2009, filed on December
14, 2009.
|
We will
provide to each person, including any beneficial owner, to whom a prospectus is
delivered, a copy of any or all of the reports or documents that have been
incorporated by reference in the prospectus contained in the registration
statement but not delivered with the prospectus. We will provide these reports
or documents upon written or oral request and at no cost to the requester. You
can request copies of such document if you call or write us at the following
address or telephone number: Secretary, China Medicine Corporation, Guangri
Tower, Suite 702, No. 8 Siyou South 1st Street, Yuexiu District, Guangzhou,
China 510600, by telephone at (8620) 8739-1718. Our website can be found at
www.chinamedicinecorp.com.
10
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES
ACT LIABILITIES
Our
articles of incorporation provide for the indemnification and/or exculpation of
our directors, officers, employees, agents and other entities which deal with it
to the maximum extent provided, and under the terms provided, by the laws and
decisions of the courts of the state of Nevada, and by any additional applicable
federal or state law or court decisions. Besides the foregoing, we have not
entered into any agreements under which we have assumed such an indemnity
obligation.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by us of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by us is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
WHERE
YOU CAN FIND MORE INFORMATION
We file
annual, quarter and periodic reports, proxy statements and other information
with the Securities and Exchange Commission using the Commission's EDGAR system.
You may inspect these documents and copy information from them at the
Commission's offices at public reference room at 100 F Street, NE, Washington,
D.C. 20549. You may obtain information on the operation of the public reference
room by calling the SEC at 1-800-SEC-0330. The Commission maintains a web site
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The address of
that site is http//www.sec.gov.
We have
filed a registration statement with the Commission relating to the offering of
the shares. The registration statement contains information which is not
included in this prospectus. You may inspect or copy the registration statement
at the Commission's public reference facilities or its website.
You
should rely only on the information contained in this prospectus. We have not
authorized any person to provide you with any information that is
different.
11
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and Distribution
The
estimated expenses of the registration, all of which will be paid by the
Company, are as follows:
Item
|
Amount
|
|||
SEC
filing fee
|
$
|
493.39
|
||
Printing
and submission for filing
|
$
|
10,000.00
|
* | |
Legal
expenses
|
$
|
20,000.00
|
* | |
Accounting
Expenses
|
$
|
10,000.00
|
* | |
Total
|
$
|
40,493.39
|
*
Estimated
Item
14. Indemnification of Officers and Directors
Section
78.7502 of the Nevada Revised Statutes (the "Nevada Law") permits a corporation
to indemnify any of its directors, officers, employees and agents against costs
and expenses arising from claims, suits and proceedings if such persons acted in
good faith and in a manner reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Notwithstanding the foregoing, in an action by or in the right of the
corporation, no indemnification may be made in respect of any claim, issue or
matter, as to which such person is adjudged to be liable to the corporation
unless a court of competent jurisdiction determines that in view of all the
circumstances of the case, indemnification would be appropriate. The
indemnification provisions of the Nevada Law expressly do not exclude any other
rights a person may have to indemnification under any bylaw, among other
things.
Article
VIII of the Company's certificate of incorporation provides that the directors
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director, except for liability (i) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, or (ii) for the payment of distributions to
stockholders in violation of Nevada Law.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, offices or controlling persons of the Company, pursuant
to the foregoing provisions, or otherwise, the Company has been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered
hereunder, the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The
Company may purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, agent or fiduciary against any liability
asserted against such person and incurred by him or her in any such capacity, or
arising out of such persons' status as such.
Item
15. Recent Sales of Unregistered Securities
During
the last three years, the registrant has issued unregistered securities to the
persons, as described below. None of these transactions involved any
underwriters, underwriting discounts or commissions, except as specified below,
or any public offering, and the registrant believes that each transaction was
exempt from the registration requirements of the Securities Act of 1933 by
virtue of Section 4(2) thereof and/or Regulation D promulgated
thereunder.
During
2006, we issued shares of common stock and options to purchase common stock to
our officers and other key employees. Such shares were acquired for investment
and not with a view to the sale of distribution thereof. The shares issuable
upon exercise of the options will be registered pursuant to the Securities Act
on a Form S-8.
From
January to March 2007, we issued an aggregate of 1,621,750 shares of common
stock upon the exercise of Series A warrants at $1.75 per share to Barron
Partners, L.P. for gross proceeds of $2,838,062.
II-1
From
April to May 2007, we issued an aggregate of 1,694,040 shares of common stock
upon the exercise of Series A warrants at $1.70 per share to Barron Partners, LP
for gross proceeds of $2,879,868. From October to December 2007, we issued an
aggregate of 725,000 shares of common stock upon the exercise of Series B
warrants at $2.43 per share to Barron Partners, LP for gross proceeds of
$1,761,750. In September 2009, we issued 53,397 shares of common
stock to Steve Mazur upon the cashless exercise of 179,474 Class A
warrants.
On May
27, 2009, we granted 70,000 Series C warrants with an exercise price of $0.85 to
a third party in exchange for investor relations services.
Item
16. Exhibits
Exhibit
No. Description
Exhibit
No.
|
Description | ||
2.1
|
Exchange
Agreement dated as of February 8, 2006, among China Medicine Corporation
and the former stockholders of Konzern(1)
|
||
|
|||
2.2
|
Agreement
and Plan of Merger dated as of May , 2009 between
China Medicine Corporation (Delaware) and China Medicine Corporation
(Nevada) (2)
|
||
|
|||
3.1
|
Certificate
of incorporation (2)
|
||
|
|||
3.2
|
By-laws
(2)
|
||
|
|||
4.1
|
Certificate
of Designation for the Series A Convertible Preferred
Stock(1)
|
||
4.2
|
Form
of warrant issued to investors in the February 2006 private
placement(1)
|
||
|
|||
4.3
|
Form
of common stock certificate(3)
|
||
|
|||
4.4
|
Form
of preferred stock certificate (4)
|
||
|
|||
5.1*
|
Form
of opinion of Pryor Cashman LLP
|
||
|
|||
10.1
|
Preferred
stock purchase agreement dated February 8, 2006, between the Registrant
and the investors in the February 2006 private
placement(1)
|
||
|
|||
10.2
|
Registration
rights agreement dated February 8, 2006, between the Registrant and the
investors in the February 2006 private placement(1)
|
||
|
|||
10.3
|
Registration
rights provisions pursuant to the stock exchange
agreement(1)
|
||
|
|||
10.4
|
2006
Long-term incentive plan(1)
|
||
|
|||
10.5
|
BCG
Vaccine Transfer Agreement dated May 8, 2008, between Guangzhou Konzern
Pharmaceutical Co., LTD and Hongyuan Pharmaceutical Technology Consulting
Service Center of Yuexiu District of Guangzhou (5)
|
||
|
|||
10.6
|
Memorandum
dated June 2, 2008, between Guangzhou Konzern Pharmaceutical Co., LTD and
Hongyuan Pharmaceutical Technology Consulting Service Center of Yuexiu
District of Guangzhou (5)
|
||
|
|||
10.7
|
Equity
Ownership Transfer Agreement dated October 26, 2009, between Guangzhou
Konzern Pharmaceutical Co., LTD and Sinoform Limited
(6)
|
||
|
|||
21.1
|
List
of Subsidiaries
|
||
|
|||
23.1
|
Consent
of Moore Stephens Wurth Frazer and Torbet, LLP
|
||
|
|||
23.2*
|
Consent
of Pryor Cashman LLP (included in Exhibit 5.1)
|
||
|
|||
24.1*
|
Power
of Attorney (included in the signature page of the Registration
Statement)
|
* Previously filed with the Commission
(1) Filed
as an exhibit to the Company's Current Report on Form 8-K which was filed with
the Commission on February 14, 2006, and incorporated herein by
reference.
II-2
(2) Filed
as an exhibit to the Company's Definitive Proxy Statement on Form 14A, which was
filed with the Commission on May 5, 2009, and incorporated herein by
reference.
(3) Filed
as an exhibit to the Company’s Annual Report on Form 10-KSB, which was filed
with the Commission on April 3, 2007, and incorporated herein by
reference.
(4) Filed
as an exhibit to the Company's Annual Report on Form 10-KSB which was filed with
the Commission on March 31, 2006, and incorporated herein by
reference.
(5) Filed
as an exhibit to the Company's Quarterly Report on Form 10-Q which was filed
with the Commission on November 11, 2008, and incorporated herein by
reference.
(6) Filed
as an exhibit to the Company's Current Report on Form 8-K which was filed with
the Commission on October 30, 2009, and incorporated herein by
reference.
(a) The
undersigned registrant hereby undertakes:
1. To
file, during any period in which it offers or sells securities, a post-effective
amendment to this registration statement to:
i.
Include any prospectus required by section 10(a)(3) of the Securities
Act;
ii.
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration statement;
and Notwithstanding the forgoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation From the low or high end of
the estimated maximum offering range may be reflected in the form of prospects
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
iii.
include any additional or changed material information on the plan of
distribution.
2. For
determining liability under the Securities Act, to treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide
offering.
3. To
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(g) Each
prospectus filed pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying on Rule 430B
or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be
part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the registration statement
will, as to a purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such
document immediately prior to such date of first use.
II-3
SIGNATURES
Pursuant
to the requirement of the Securities Act of 1933, the registrant has duly caused
this Amendment No. 1 to Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized in the City of Guangzhou in the
People's Republic of China on this 14th day
of December, 2009.
CHINA
MEDICINE CORPORATION
By: /s/ Senshan
Yang
|
Dated: December
14, 2009
|
||
Senshan
Yang
Chief
Executive Officer
(Principal Executive
Officer)
|
By: /s/ Richard P.
Wu
|
Dated: December
14, 2009
|
||
Richard
P. Wu
Chief
Financial Officer
(Principal
Financial Officer and Principal Accounting
Officer)
|
Pursuant
to the requirements of the Securities Act of 1933, this Amendment No. 1
to Registration Statement was signed by the following persons in the
capacities and on the dates indicated.
Signature
|
Title
|
Date
|
||
/s/
Senshan Yang
Senshan
Yang
|
Chief
Executive Officer and Director
(Principal
Executive Officer)
|
December
14, 2009
|
||
*
Minhua Liu |
Director
|
December
14, 2009
|
||
*
Robert Adler |
Director
|
December
14, 2009
|
||
*
Rachel Gong |
Director
|
December
14, 2009
|
||
*
Yanfang Chen |
Director
|
December
14, 2009
|
||
*By: | /s/ Senshan Yang | ||||
Senshan
Yang
ATTORNEY-IN-FACT
|
II-4