Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
x ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2009
o TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the transition period from ___________ to ___________.
Commission
file number 01-06914
Worldwide
Biotech & Pharmaceutical Company
(Exact
name of small business issuer as specified in its charter)
Delaware
(State
or other jurisdiction of
incorporation
or organization)
|
59-0950777
(IRS
Employer Identification No.)
|
4
Fenghui South Road, 15th Floor, A10-11501
Jie
Zuo Mansion, Xi’an, Shaanxi,
P.R. China
710075
(Address
of principal executive offices)
(86)
29-88193339
(Issuer's
telephone number)
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, par value $.001 per share
Indicate
by check mark whether the registrant is a well-known seasoned issuer, as defined
in Rule 405 of the Securities Act. Yes No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for shorter period that the registrant as required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes x
No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. Yes No x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting
company x
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act) Yes No x
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant as of March 24, 2010 was $632,461, based on the
closing price of the Common Stock of $0.015 on such date.
The
number of shares outstanding of the registrant's common stock as of March 24,
2010: 53,915,653 shares, $.001 Par Value.
TABLE
OF CONTENTS
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Page
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Part
I
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Item
1.
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3
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Item
2.
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11
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Item
3.
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11
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Item
4.
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12
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Part
II
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Item
5.
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12
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Item
6
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13
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Item
7.
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13
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Item
7A.
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17
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Item
8.
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18
- 38
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Item
9.
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39
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Item
9A.
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39
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Item
9B.
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40
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Part III
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Item
10.
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40
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Item
11.
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42
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Item
12.
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44
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Item
13.
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45
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Item
14.
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45
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Part
IV
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Item
15.
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46
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47
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PART
I
Item
1. Business
CAUTIONARY
STATEMENT REGARDING FORWARD LOOKING INFORMATION
This
annual report on Form 10-K and other statements issued or made from time to time
by Worldwide Biotech & Pharmaceutical Company, a Delaware corporation (the
“Company” and/or “Worldwide”), contain statements which may constitute
“Forward-Looking Statements” within the meaning of the Securities Act of 1933,
as amended (the “Act”) and the Securities Exchange Act of 1934 (the “Exchange
Act”), including the Private Securities Litigation Reform Act of 1995, 15
U.S.C.A. Sections 77Z-2 and 78U-5 (SUPP. 1996). Those statements
include statements regarding the intent, belief or current expectations of
Worldwide and its officers/directors as well as the assumptions on which such
statements are based. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those contemplated by such forward-looking statements.
General
Background
Worldwide,
a Delaware corporation, is sometimes referred to herein as “we”, “us”, “our” and
the “Company.” The Company was incorporated in Delaware in 1961 as
Sun City Dairy Products, Inc. and changed its name to Sun City Industries, Inc.
in 1969. The Company originally registered its shares of common stock
under the Exchange Act in 1994.
Change
in Control
Michael
F. Manion in June 2003 became the sole officer and director of the Company as
the result of the sale of the Company that took place in U.S. Bankruptcy Court
on June 27, 2003 and was issued 1,000,000 post-reverse split shares of common
stock par value $.001 bearing restrictive legend. He resigned as sole
officer and director of the Company on June 28, 2004. On June 30,
2004, Coast to Coast Equity Group, Inc. (“Coast to Coast”), a Florida
corporation located in Sarasota, Florida, whose sole officer and director is
Charles Scimeca purchased from Mr. Manion his 1,000,000 shares of the Company in
a private stock transaction for payment to Mr. Manion of $375,000, which funds
had been loaned to Coast to Coast by George Frudakis. As a result of
the transaction, Coast to Coast owned approximately 94.6% of the voting
securities of registrant. Dr. Tony Frudakis, who is the son of George
Frudakis, was appointed director effective June 30, 2004.
On
December 16, 2004, the Company closed on a Reorganization Agreement that had
previously been entered into on April 20, 2004 with Yangling Daiying Biological
Engineering Co. Ltd. (“Daiying” or “Yangling Daiying”), a corporation organized
under the Peoples Republic of China. The Company, as a result of the
closing of this transaction, acquired all of the issued and outstanding stock of
Daiying which became a 100% owned subsidiary of the Company. At
closing, the shareholders of Daiying were issued 30,880,000 shares which equaled
89.10% of the issued and outstanding shares not including 1,400,000 shares to be
held in escrow for additional compensation to Coast to Coast pursuant to a
Consulting Agreement. The total number of shares issued to consummate
the transaction including shares issued to consultants were 33,600,000, and the
total issued at closing were 35,000,000 shares including the shares issued to
Coast to Coast held in escrow. On this date four new directors were
elected, which included Wenxia Guo, Peiyi Tian, JianJun Liu, and Humin
Zhang.
New
Business of the Company and Acquisitions
Daiying,
was established in 2000 in the People’s Republic of China. Wenxia Guo
was the founder of Daiying and funded the Company with approximately
US$1,000,000. In November 2001 six investment firms invested an
additional US$4,000,000 in the Company to participate in the HCV research
project and the Company was reorganized at this time as a stock based
company.
On July
26, 2005, Glory Dragon Investments Ltd. (“Glory Dragon”), an international
business company, was formed in the British Virgin Islands and a Certificate of
Incumbency was signed on December 6, 2005. The sole shareholder, officer and
director was Peiyi Tian. He was also a director and CFO of the
Company. On the same date, Peiyi Tian, in a Declaration of Trust,
declared that 100% of the stock (50,000 shares) of Glory Dragon is owned by the
Company.
Glory
Dragon then established a wholly-owned foreign investment company in the
People’s Republic of China known as Shaanxi Allied Shine International
Investment Management Consulting Ltd. (“Shaanxi Allied”) on December 27, 2005.
Shareholders of Daiying then transferred their shares of Daiying to Shaanxi
Allied on December 27, 2005
On July
12, 2005, Daiying formed a medical product distribution company, Shaanxi Daiying
Medicine Distribution Co., Ltd. Daiying owns 90% of the shares of
this company. The company’s purpose is the wholesale distribution of traditional
Chinese medicine, including Chinese medicine drink tablets, synthetic medicine,
antibiotics, biotech medicine and biotech reagents; wholesale of Class II
medical devices, Class III medical devices, including but not limited to,
medical sewing materials and bond, medical high molecular materials and
products, and disposable sterile medical devices.
On
January 19, 2006, Daiying entered into a Reorganization Agreement with Hunan Hua
Yang Pharmaceutical Co. Ltd. formerly Hunan Changde Huaan Pharmaceutical Co.
Ltd. (“Hua Yang”) and its shareholders Aibin Chen and Zhuobin Li, pursuant to
which Daiying acquired 51% of Hua Yang..
Pursuant
to this agreement, Daiying caused Worldwide to issue 482,800 shares of its
common stock to the above mentioned shareholders in connection with the
acquisition Daiying was given, among other rights, the right to appoint board
members of Hua Yang. The transaction closed on January 19, 2006, with
the said shares being issued to Mr. Chen and Mr. Li on February 28,
2006.
On
January 19, 2006, Daiying also entered into a Reorganization Agreement with
Hunan Ze An Pharmaceutical Co. Ltd. (“Ze An”) formerly Hunan Jinjin
Pharmaceutical Co. Ltd. and its shareholders Zhongyu Lu, Aibin Chen, and
Weiliang Wu, pursuant to which Daiying acquired 65% of Ze An. Daiying
paid RMB3,400,000, which equates to US$411,124.53, using the agreed upon
exchange rate of RMB8.27 to US$1.00, as follows: (a) 1,960,000 RMB to
Zhongyu Lu for 37% of his share capital of Ze An; (b) 1,440,000 RMB to Weiliang
Wu for 18% of his share capital of Ze An. In addition, Daiying caused
Worldwide to issue 219,670 shares of common stock to Aibin Chen for 10% of his
share capital of Ze An. Daiying financed the 3.4 million RMB cash
portion of the purchase price with a loan at an annual interest rate of 12% from
Xian Jin Jou Sci-tech Investment Management Co., Ltd., payable monthly with
principle due on a demand note.
On May
23, 2006, the Company filed a Form 8-K/A with the Commission pursuant to which
it provided audited financial statements of the two acquired subsidiaries as
well as unaudited pro forma combined financial statements for the companies as a
whole.
On
December 18, 2006, Daiying, Mr. Chen and Mr. Li entered into a Consolidation and
Reorganization Agreement with respect to the two newly acquired subsidiaries,
pursuant to which Hua Yang acquired Ze An as part of a plan to optimize capital
resources and to diminish operational costs and management costs at the two
subsidiaries. As a result of the reorganization, Daiying acquired
67.3% of the share capital of Hua Yang, Mr. Chen acquired 18.7% of the share
capital of Hua Yang and Mr. Li acquired 14.0% of the share capital of Hua
Yang. In addition, as part of the reorganization, a 15% interest in
the share capital of Ze An owned by Mr. Chen was transferred to Daiying in
exchange for Daiying agreeing to assume Mr. Chen’s payment obligation of 1.2
million RMB plus interest due in two years, which was owing to a former
shareholder. All existing assets and liabilities of Ze An were
assumed by Hua Yang as part of the plan of reorganization. The full name of the
entity that survives is Hunan Hua Yang Pharmaceutical Co., Ltd.
Description
of Current Business
Daiying
is a high-tech biopharmaceutical company that specializes in the development and
potential marketing of viruses/viral vectors, bio-medicines, external diagnostic
reagents, prophylactic vaccines for humans, and oral dosage forms of traditional
Chinese medicine. The Company is currently developing a hepatitis C
vaccine primarily in China. The Company employs 57 full time
employees, with corporate headquarters, manufacturing facilities and main
laboratory in the Yangling Agricultural Hi-Tech Industrial Demonstration Zone,
Shaanxi Province, China.
ABOUT
HCV: G14
Hepatitis
C virus (“HCV”) is a blood-borne RNA virus, a major cause of liver disease in
the United States and the world. It’s also one of the four most dangerous
blood-borne viruses, with infection rate four times higher than HIV. About
1.3-3% of the worldwide population is infected with the virus and 200 million
people have been infected by HCV by the end of 2005. In the United States, about
2.4% of the population is infected by HCV and it’s even as high as 10% in some
Asian and European Countries.
About 70%
of HCV infected cases become chronic hepatitis. Ninety percent (90%) of HCV
infected people are asymptotic. HCV accounts for about 15 percent of acute
hepatitis cases, 60 to 70 percent of chronic hepatitis cases, and up to 50
percent of cases of cirrhosis, end-stage liver disease, and liver
cancer.
There is
no medication available that can cure HCV infection and no vaccine for
prevention, and existing diagnostics suffer from poor sensitivity and
specificity. Statistics show that the rate of misdiagnosis of HCV is
relatively high. The development of reliable diagnostic methods and treatment
for HCV is delayed due to lack of the resource of HCV particles, despite the
fact that numerous famous research institutions and big pharmaceutical companies
put so much effort into HCV research. Scientists need viral material to learn
about the virus’ biology, identify therapeutic targets, screen compounds to
discover new drugs, and identify the best diagnostic target proteins and
antigens for vaccines. The titer of HCV in patients is so low that
scientist could not directly extract HCV particles out of patient blood. Other
than human beings, HCV can only infect chimpanzees. That means, except
chimpanzees, there is no other small animal model nor robust in vitro model for
HCV experimental study like scientists usually do with most other viruses or
bacteria. Until recently, the inability to produce and propagate HCV in vitro
has been the biggest bottleneck in HCV research.
INTACT
HCV FROM HCV IN VITRO CELL CULTURE SYSTEM
Yangling
Daiying has committed a large amount of cash and resources to the development of
its cornerstone technology: a laboratory method for culturing (growing,
propagating) intact Hepatitis C virus. After three years of intensive research,
the scientists at Yangling Daiying achieved a technological breakthrough for
culturing HCV in vitro, making it the first to overcome the main hurdle to HCV
research and product development. HCV virus produced in Yangling Daiying has
viral genome replication, viral gene expression and protein
production/processing demonstrated using molecular biological approaches. The
titer of virus in the culture medium is over 106 which are much higher than that
in patient serum. The purified virus is stable for 2 years in -20°C~-80°C. The viruses
produced possess well-defined biological HCV characteristics that are
inheritable and the virus have propagated in the Yangling Daiying over 30
generations.
The first
batch of HCV ever produced in a laboratory was cultured by Yangling Daiying and
given the historical significance, this batch was deposited China General
Microbiological Culture Collection Center (CGMCC), directed by State
Intellectual Property Office of the People’s Republic of China on March 28th,
2001. Given the fact that no other company or research institution had ever been
able to produce intact HCV virions in vitro, China General Microbiological
Culture Collection Center named this strain of HCV the ”DY” strain. Yangling
Daiying obtained a Chinese patent for this invention on October 23rd, 2002,
securing a strong independent IP position. A pending PCT (Patent Co-operation
Treaty) international application was filed on August 2nd, 2002 to cover
countries and areas including the United States, Japan, Korea, Russia and the
European Union. In December 2003, our patent “The Intact Hepatitis C
Virus (HCV) and Method for Culturing HCV in Vitro by Cell Culture” was awarded
the prestigious China Patent Golden Metal in the 8th China Patent
Assessment. Over the past 10 years in China, this medal was the only
golden metal issued for achievement in the biomedical sciences. The
Assessment is administrated by the General World Intellectual Property
Organization (WIPO) and recognized by 46 countries all over the
world.
The
breakthrough in establishing a cell culture system for HCV production and
infection by Yangling Daiying scientists provides a potentially unlimited source
for HCV and a comprehensive technology platform upon which Yangling Daiying can
be built. From this Rosetta stone, Yangling Daiying hopes to develop
new generation HCV diagnostics, new classes of HCV drugs, HCV vaccines and to be
part of the development of next-generation anti-HCV targeted (gene)
therapies.
Principal
Products and Services and Their Market
PRODUCT
LINE 1: HEPATITIS C VIRUS PRODUCED IN VITRO
Whole
virus HCV material that we have been able to produce can be sold and/or
partnered in non-core, non-competitive market areas to generate sales revenues
for the Company during its growth stage. We have already achieved a
production scale level of 10,000 ml of concentrated material per month. HCV
antigen production is 10 grams per month.
According
to the decision of the Board of Directors, intact HCV viral material will be
sold and/or partnered only in non-core, non-competitive market areas in order to
get more patent protections on HCV related products under development in our
company at the current stage.
PRODUCT
LINE 2: ELISA KITS FOR HCV ANTIBODY DETECTION
Yangling
Daiying scientists recently completed the development of a new generation ELISA
test for HCV antibodies. The simple mechanism of this kit is that the specific
HCV antigens in the kit can be recognized by the corresponding HCV antibodies in
patient blood. Different than other HCV antibody detection kit, the antigen for
producing our kit is purified directly from the intact HCV virus particles
instead of using recombinant HCV proteins or synthesized polypeptides. The
antigens from intact HCV virus have better epitopes which could be more
specifically recognized by HCV antibody for the following reasons. 1. Antigens
from intact HCV virus are assumed to natural 3D structures which is required for
antibody-antigen interaction. 2. Antigens in mammalian cells are sugar modified
while the recombinant antigens from yeast are not. 3. Natural HCV proteins
offers multiple epitopes for antibody interaction while the synthesized
polypeptides only have one or two epitopes, therefore, natural antigens is more
sensitive to capture the antibodies than polypeptides.
Compared
with HCV diagnostic products on the current market, our HCV antibody detection
kit has following advantages:
High sensitivity: Our product
is one only one developed based on intact HCV virus, it could catch HCV
antibodies in the samples with much higher sensitivity than HCV diagnostics
developed based on recombinant HCV antigen. Therefore, our kit could
dramatically lower down the false negative rate.
High specificity: Our HCV
diagnostic kit developed from intact HCV virus could more specifically recognize
HCV antibodies.
Stable Raw Material Supply:
Unlike the other companies which have to depend on the third parties for supply,
the major raw material for our HCV kit, HCV antigen, produced by our own HCV in
vitro cell culturing system which could guarantee stable supply for our
production.
Low Price: Large-scale
culturing of HCV virus can provide to our company high quality HCV antigens with
very low cost. This low cost raw material gives competing advantage to our
product on the market.
Intellectual Property Protection:
The HCV virus we use for our HCV diagnostics is protected by Chinese
patent. We also filed patent applications in both United States and European
Countries.
A
large-scale State Food and Drug Administration (“SFDA”) (Chinese FDA) sanctioned
clinical trial of this test involving 10,000 samples has already been
examined by the National Institute for the Control of Pharmaceutical and
Biological Products and demonstrated ultra high sensitivity and high specificity
relative to the other HCV diagnostics technology currently on the
market.
The
Company obtained SFDA approval for its HCV antibody detection kit on May 10,
2006, the certificate number is S20063051. The production line for the
diagnostic kit got a good manufacturing practice (“GMP”) certificate in November
of 2006. Production and sales of this diagnostic product started in
2007.
PRODUCT
LINE 3: ANTI-HCV MEDICINES
About 200
million people have been infected by HCV virus worldwide. The most recent reach
carried by Dr. Brian Edlin from Cornell University shows there are 5 million
people infected by HCV virus in the United Stated by the end of year 2005.
Majority HCV infected people become chronic cases and carry the virus for the
whole life. There’s no cure for this disease. The only medicine available for
HCV patients, such as interferon, can only slow down the process of this
disease. In addition, only 40% to 50% patients can actually response to
interferon treatment. The effective rate is even lower in China and some other
Asian countries with majority people infected by type I HCV virus. There’s no
any medicine available for these patients.
A lot of
pharmaceutical companies and HCV research institute have invested a lot of money
on the battle for anti-HCV research. However, they are moving forward extremely
slow due to lack of intact HCV virus.
We have
already established an anti HCV drug-screening assay based on our in vitro cell
culture system and we have started the primary screening stage. The mechanism of
this system is shown the figure. In the human hepatocytes culturing plates,
intact HCV virus is used to infect hepatocytes. Anti-HCV drug candidate is added
to the cell culture plate. If the drug can kill HCV virus or inhibit invasion of
HCV virus into hepatocytes, the morphology of hepatocytes would be as normal as
healthy hepatocytes and HCV virus can not kill these cells.
This is
only in vitro anti-HCV drug screen system in the world with the low-cost and
high-speed characters. With the careful optimization, this system can screen
thousands of chemical and drugs in very short period of time which increase the
chances of getting anti-HCV target medicine dramatically.
This in
vitro anti-HCV medicine screening system has the following
advantages:
Uniqueness: This system so far
is the only one available for in vitro anti-HCV medicine screening; It will
dramatically speed up new drug development for HCV;
Suitable for High-through Put
Screening: The speed can be extremely fast and hundreds drugs could be
tested by this system every three days;
Intuitive: This system can
help scientist to clearly know what’s the anti-HCV mechanism of drug candidates,
e.g. to figure out whether drugs can directly kill HCV virus, or prohibit the
enter of HCV virus into human hepatocytes, or inhibit replication of
virus;
Safe: This system allows
anti-HCV medicine to be tested before they are used directly to clinical trial
due to lacking of in vitro system.
Our first
batch of candidates to screen will be the known anti-viral drugs. Except
interferon (which performance is also not satisfying for anti-HCV), there’s no
effective anti-HCV medications clinically used. Some of Traditional Chinese
Medicine has been proved to be helpful for treating HCV infection. The anti-HCV
drug screen system set up by our company will use these precious resources.
These medicines are low-cost and suitable for more HCV infected patients. If
capital funding is adequate enough, the Company will start to screen chemical
library as well.
The
Company also would like to collaborate with other research institutes and allow
them to test their drug candidates by using our in vitro system.
PRODUCT
LINE 4: HCV HUMAN VACCINE
Ninety
percent of HCV infected people are asymptomatic and 70% among them become
chronic cases. This asymptomatic population is the major source for spreading
HCV virus. Effective preventive method is the most efficient way to eradicate
HCV virus. The development of HCV vaccine meets the major obstacles because the
bio-characters of HCV are not clear yet.
Vaccines
contain antigenic components which can stimulate an immune response (but not the
disease), and leads to immunity for certain pathogen. There are two types of
vaccine, activated (live virus which cannot replicate or be pathogenic) and
inactivated (components of actual virus). Many research results show that
inactivated HCV vaccine is not effective. However, activated HCV vaccine cannot
be made without live HCV virus. Yangling Daiying is developing an attenuated
live HCV vaccine using replication-deficient HCV virus and making fast progress
with the support of 863 grants from Chinese government. It can hold the whole
market share if it can be released soon. The markets of activated HCV vaccine
are including both domestic and international market.
Prophylactics
such as vaccines enabled with our “Rosetta stone” also promise to be highly
profitable and our HCV vaccine research program has also already been initiated;
this research has been awarded prestigious Chinese government high-Tech 863
project statuses. Chinese 863 projects are special industrial projects the
Chinese government deems to be of profound significance to their nation in
important research areas, and they receive substantial financial support from
the Chinese government. As the main institution for the execution of
the HCV human vaccine project, Yangling Daiying has obtained three years of
government funding grants through the prestigious 863 mechanism – grants that
come to Yangling Daiying with no strings attached whatsoever.
At
current stage, the Company has successfully created replication-deficient HCV
virus. Results from immunolized animal show: Replication-deficient HCV can
induce high production of anti-HCV virus. The Company can purify large-scale
these special virus for human vaccine production.
Further
studies include using animal models to evaluate the effectiveness and safety of
HCV vaccine, Phase I, II and III clinical trials, application for registration
approvals and so on.
PRODUCT
LINE 5: OVER-THE-COUNTER MEDICINES
In
addition to research and development of innovative, high-tech biological
products, the Company is also actively involved in the development and
manufacturing of over-the-counter (OTC) Traditional Chinese Medicines (TCM),
synthetic medicines and functional foods. As the consequences of acquisitions,
the Company owns 36 medicines with National Drug Production Licenses and 6
functional foods with National Food Production Licenses approved by SFDA. These
various medicines include liver-care medicines, anti-inflammation medicines,
anti-cold medicines, cough suppressant, vitamins, and other nutrient
supplements. Most of medicines have been on the market for year and well
accepted by Chinese customers.
PRODUCT
LINE 6: MEDICAL DEVICES AND OTHER MEDICAL PRODUCTS DISTRIBUTED FOR THE OTHER
COMPANIES
Daiying,
through its subsidiary, Shaanxi Daiying Medicine Distribution Co., Ltd. a GSP
(Good Sales Practice) – compliant medical products distribution company,
distributes medical products from international biological and pharmaceutical
companies on China’s market. On May 12, 2005, Yangling Daiying signed
the Sole Distribution Agreement and the Sole Co-production Agreement with
Taramedic Corporation Sdn. BHD, a Malaysian company for distribution of its
product, Tara KLampÒ Disposable
Circumcision Device. The product owns patent protection in both
Malaysia and China (China Patent Number 93104792.7). The Company has
obtained the Registration Approval for this imported product from SFDA on
January 26, 2006. Marketing and sales has presently commenced.
Services
SERVICE
1: ANTI-HCV MEDICINE SCREEN
We have
already established an anti HCV drug-screening assay based on our in vitro cell
culture system and we have started the primary screening of anti-HCV
medicines.
This is
only in vitro anti-HCV drug screen system in the world with the low-cost and
high-speed characters. With the careful optimization, this system can screen
thousands of chemical and drugs in very short period of time which increase the
chances of getting anti-HCV target medicine dramatically.
In order
to speed up the development of new anti-HCV drugs, Yangling Daiying is willing
to offer the services for some companies and research institutes to use its in
vitro virus culture system to test their anti-HCV drug candidates.
SERVICE
2: GMP-COMPLIANT MEDICAL PRODUCTS PRODUCTION
Our
high-output GMP manufacturing facility provides an opportunity to commercialize
products licensed from third-parties and developed through collaborations.
Yangling Daiying plans to manufacture several dozen other diagnostic product
pharmaceutical chemicals and oral dosage forms for various foreign companies
through Original Equipment Manufacturer (OEM) relationships.
Distribution
Methods of Products
MARKETING
MODELS
The
Company’s products will be distributed through hundreds of sub distributors in
Chinese, taking advantages of existing sales networks of these distributors,
quickly spread the Company’s products all over in China.
TECHNICAL
SEMINARS AND TRAINING:
It’s very
important for the Company to build up good image among its customers and let
them know the Company’s products are developed from advanced technology.
Marketing strategies will be different among different customers. Main efforts
will be focused on biggest 20 to 30 customers. For example, we would pick out a
couple of biggest hospitals from some big cities; for marketing to those blood
stands, we will be focusing on the blood stands at Beijing, Shanghai and Xi’an,
et al.
The
Company will spend a lot of efforts to help customers understand the value of
intact HCV virus. Seminars will be held for various customers to help them
understand our technology.
Based on
the quantities and dependence on our products, we will select VIP customers each
year. Our expert team will provide training on recent trends of HCV reach and
hepatology. People attended will be award training certificate. VIP customers
will enjoy more advantage on prices of our products and after-sales services so
that those customers will be bond more tightly to our products.
Based on
unique and advanced technology, the new diagnostic products from the Company
will bring new mileage for HCV diagnostic. The Company will break-up traditional
low-price, more-sales model, and bring more profits for its distributors and
stabilize our sales network.
MEDIA
ADVERTISEMENT:
To make
customers understand advantages of the Companies products and technologies
based, advertisement through media plays important roles. The media channels
include newspaper, internet and international scientific journals, et al. The
contents include recognition of HCV, self-protection for HCV infection and
self-detection for HCV infection, et al. Through this program, the Company will
help the general populations to recognize the dangerous of HCV infection, as the
same time, let them understand the break-through the Company brings to HCV
treatment and prevention.
Status
of any publicly announced new products or services
On April
3, 2009, the Company was contracted by Yangling
Daiying Biotechnology Research Institute to produce and sell its
SFDA-approved Emergency Haemostatic Patch product. We are currently producing
and selling this product in China.
Competitive
business conditions, and the Company’s competitive position in the industry, and
methods of competition
MARKET
POSITIONING VS. COMPETITORS
HCV Virus
and Antigen
There is
no real competition at this time since Daiying has the only system available to
produce HCV virus and antigen, and we have obtained domestic patents to protect
the replication of the technology by others and products derived from
it.
Anti-HCV
Drug-screen System
Due to
the limitation of treatment for chronic HCV infection, intensive research and
development activities are being done in pharmaceutical companies and HCV
research institutes. However, we have no real competition currently because
Yangling Daiying has the only system available that is using an intact HCV
culturing system for screening anti-HCV drugs in vitro. Instead of the extensive
drug screening from the synthetic compounds that most pharmaceutical companies
are doing, Yangling Daiying has sources of traditional medicines that are known
to be effective to control HCV infection. Screening anti-HCV drugs
out of these traditional Chinese medicines would be much faster and less
expensive than screening tens of thousands of synthetic medicines.
HCV
Antibody Detection ELISA Kits
Our main
competitors are domestic companies, of which there are over 200 currently. All
these companies rely on a third party to supply antigen for their kits. Yangling
Daiying is different in this respect because it is self-sufficient for its
antigen supply.
Over-the-counter
Medicines
China is
a huge market for OTC medicine. Because of historical reasons and relaxed
government regulation, development of OTC products has its own unique cultural
and market background. The large base of users, as well as extensive media
coverage, make the Chinese OTC market very attractive.
COMPETITIVE
ADVANTAGES
The
competitive advantages of the Company mainly lie in:
HCV
research abilities
Daiying
has a distinctive technology for culturing (growing, propagating) intact
Hepatitis C virus in vitro, which provides an excellent foundation for
developing other HCV products.
Government
supports
Daiying’s
HCV vaccine research program has been awarded the prestigious High-Tech 863
project status by the Chinese government. Daiying also enjoys special tax
considerations and support for acquiring land to expand its
business.
Advanced
manufacturing facilities
Daiying
has the most comprehensive 10,000-grade GMP-compliant manufacturing facilities
in China, which include fully equipped GMP standard production lines for oral
dosage forms of Chinese medicines, synthetic medicines, functional foods, virus
and in vitro diagnostics.
Patent
protection in China
Daiying
obtained a Chinese patent for this invention on October 23, 2002, securing a
strong independent IP position. In December 2003, the patent was awarded the
prestigious China Patent Golden Medal by the General World Intellectual Property
Organization (WIPO).
COMPETITIVE
WEAKNESSES
The
competitive weaknesses of the Company mainly lie in:
Although
Daiying has filed an application of PCT, US patent and European patent
protection, patents haven’t been issued in other countries/districts but only in
China currently.
Daiying’s
HCV research needs substantial long term funding, therefore, Daiying needs to
spent tremendous efforts on marketing and sales for current products to generate
sufficient revenues and profits to support its research. Meanwhile, Yangling
Daiying needs to raise funds to support its growth and long-term research
lines.
Daiying
has its sales network mainly in China for its existing products and it expects
to rapidly broaden its network to international market.
Sources
and Availability of Raw Materials and Names of Suppliers
The
following is a list of raw materials that we utilize and the name of our
suppliers:
1. Sigma:
all chemical reagents, American company, branch office in Xi’an, China: #1 Wenyi
South Rd, Xi’an.
2. Gibco:
medium and fetal bovine serum, American company, branch office in Xi’an, China:
#17 Changle West Rd, Xi’an.
3. Shenzhen
Jincanhua Enterprise Co., Ltd: 96-well plat and glassware, Hi-tech Demonstration
Zone, Bldg. 3, Shenzhen, China.
4. Shaanxi
Ruibo Pharmaceutical Co., Ltd.: chemical compound #113 Xi’an Changle Rd, Xi’an
China.
5. Shaanxi
Daxin Suye Co., Ltd.: tablets for medicine #1 Huoju Rd, Xi’an
China.
6. Xi’an Raw
Chinese Traditional Medicine Supply Company: Raw Traditional Medicine, #93
Dongguan South Rd, Xi’an China.
7. Wuningxian
Linquan Capicule Co., Ltd.: Capicule shell Dongdu Development Zone, Wuning
County, Jiangxi, China.
8. Xi’an
Ruikang Rubber Manufacturing Co., Ltd: plastics, Sanqiao Xinjie Xibaozi, Weiyang
District, Xi’an China.
9. Shaanxi Guoyi
New Special Medicine Co., Ltd.: Chinese Traditional Medicine Industry Trading
Zone, Huxian County, Xi’an China.
Dependence
on one or a few major customers
Daiying
believes that it will not be dependent on a few major customers for the sales
and distribution of its products and services. Its potential
customers will include hospitals, pharmacies and research institutes of which
there are many.
Patents,
Trademarks, Licenses, Franchises, Concessions, Royalty Agreements, or Labor
Contracts
Daiying
obtained a Chinese patent for “The Intact Hepatitis C Virus (HCV) and Method for
Culturing HCV in vitro by Cell Culture” on October 23, 2002. The
patent number is 01124001.6. A pending Patent Co-operation Treaty
(PCT) international application was filed on August 2, 2002 to cover countries
and areas including the United States, Japan, Korea, Russia and the European
Union, and obtained the priority protection from these countries.
On
February 5, 2004, Daiying filed a patent application to the United States Patent
and Trademark Office, the processing number is 10/486,024. The
publication number is US-2004-0166488-A1. The patent has been reviewed and a
comment letter was sent to Yangling Daiying on January 9, 2006. An
amendment needs to be filed to continue the patent application.
On March
11, 2004, Daiying filed patent application to the European Patent Office. The
processing number is 02754159.8. The Company registered “Daiying
Biotech” as its trademark at the National Institute of Trademark in China
effective May 21, 2002 to May 20, 2012. The Company has no licenses, franchises,
concessions, royalty agreements, or labor contracts.
Need
for Governmental Approval of Products
The
Company has acquired all of regulation approvals for its existing products from
SFDA by the end of year 2006.
Effect
of Existing Governmental Regulations
The
manufacturing facilities for both biological and medical products have to be
GMP-compliant. We have received the GMP certificate from the
government. In order to sell or distribute the pharmaceutical
products in China, the Company has to have a Good Sales Practice for
Pharmaceutical Products (GSP) certificate. Daiying’s subsidiary,
Shaanxi Daiying Medicine Distribution Co., Ltd., has obtained the GSP
certificate which allows the company to wholesale medical products to
pharmacies, hospitals, clinics and sub-distributors. For commercialization of
new drugs in China, companies have to get New Drug Approval from
SFDA. We have obtained a New Drug License for three of our TCM
Products.
The
amount spent during last two fiscal years on research and development
costs
Research
and product development costs are charged to expense as incurred. The
Company incurred $31,303 and $21,868 in product development costs for the years
ended December 31, 2009 and December 31, 2008, respectively.
Costs
and Effects of Compliance with Environmental Laws
At the
present time, Daiying is in compliance with applicable environmental laws in
China, both nationally and locally. Its current cost of compliance is
approximately $50,000 per year, assuming no change in the current
laws.
Number
of Full Time and Part Time Employees:
The
Company and its subsidiaries had 57 full-time employees as of December 31,
2009.
COMPLIANCE
WITH RELATED LAWS AND REGULATIONS
In China,
the Company relies on the advice of Chinese legal counsel to maintain compliance
with all laws, rules, regulations and government policies in China. The biotech
and pharmaceutical industries in China are subject to extensive government
regulation, which regulations have been changing rapidly, and there is no
assurance that the Company will not be adversely impacted by such regulations in
the future.
(a) Local
Regulations
The
Company cannot determine to what extent its future operations and earnings may
be affected by new legislation, new regulations or changes in existing
regulations on a local level in China.
(b) National
Regulations
The
Company cannot determine to what extent its future operations and earnings may
be affected by new legislation, new regulations or changes in existing
regulations on a national level in China.
(c) Other
Factors
Since the
operations of the Company are conducted in the People's Republic of China
("PRC"), they are subject to special considerations and significant risks not
typically associated with investments in equity securities of United States and
Western European companies. These include risks associated with, among others,
the political, economic and legal environments and foreign currency exchange.
These are described further in the following:
POLITICAL
ENVIRONMENT
The value
of the Company's businesses in China may be adversely affected by significant
political, economic and social uncertainties in the PRC. A change in
policies by the Chinese government could adversely affect the Company's
interests in its subsidiaries by, among other factors: changes in
laws, regulations or the interpretation thereof; confiscatory taxation;
restrictions on foreign currency conversion, imports or sources of suppliers; or
the expropriation or nationalization of private enterprises.
ECONOMIC
ENVIRONMENT
The
economy of the PRC differs significantly from the economies of the United States
and Western Europe in such respects as structure, level of development, gross
national product, growth rate, capital reinvestment, resource allocation,
self-sufficiency, rate of inflation and balance of payments position, among
others. Only recently has the Chinese government encouraged substantial private
economic activities.
The
Chinese economy has experienced significant growth in the past ten years, but
such growth has been uneven among various sectors of the economy and geographic
regions. Actions by the Chinese central government to control inflation have
significantly restrained economic expansion recently. Similar actions by the
central government of the PRC in the future could have a significant adverse
effect on economic conditions in the PRC and the economic prospects for our
Company.
FOREIGN
CURRENCY EXCHANGE
The
Chinese central government imposes control over its foreign currency reserves
through control over imports and through direct regulation of the conversion of
its national currency into foreign currencies. As a result, the Renminbi is not
freely convertible into foreign currencies.
The
Company conducts, or plans to conduct, substantially all of its business in the
PRC, and its financial performance and condition is measured in terms of
Renminbi. The revenues and profits of the Company’s subsidiaries are
predominantly denominated in Renminbi, and will have to be converted to pay
dividends to the Company’s shareholders in United States
Dollars. Should the Renminbi devalue against these currencies,
such devaluation would have a material adverse effect on the Company's profits
and the foreign currency equivalent of such profits repatriated by the
subsidiaries to the Company. The Company currently is not able to hedge its
exchange rate exposure in the PRC because neither the banks in the PRC nor any
other financial institution authorized to engage in foreign exchange
transactions offer forward exchange contracts.
LEGAL
ENVIRONMENT
Since
1979, many laws and regulations dealing with economic matters in general and
foreign investment in particular have been enacted in the
PRC. However, the PRC still does not have a comprehensive system of
laws and enforcement of existing laws may be uncertain and
sporadic.
Item
2. Properties
PLANTS
The
Company owns three manufacturing facilities. The Company’s headquarters is
located in Yangling, which is only 82 km away from Xi’an, one of the biggest
cities in China. Daiying has a GMP-compliant manufacturing facility
which is one of the few GMP-compliant facilities for both biological and
pharmaceutical products in China. The Company’s research center and
manufacturing plant is in Shaanxi province. The Company acquired
35,940 m2 of land in the Yangling Agricultural Hi-tech Industrial Demonstration
Zone in China. Yangling Daiying has already constructed a 5,359 m2
GMP standard facility. The overall production facility meets the
cleanness standard of 10,000-grade GMP compliance, and it includes a production
facility for HCV particles and antigens, a biological kits facility, and a
fully-equipped factory for producing Traditional Chinese Medicine (TCM) and
Western solid medicines. The other two manufacturing facilities are
Hua Yang and Ze An, which are located Hunan province. The two facilities have
over 58,640 m2 of land with GMP certified production area 13,000
m2.
EQUIPMENT
The
manufacturing plants are designed based on Chinese GMP
requirements. High class facilities are selected for the
establishment of the manufacturing workshop.
Item
3. Legal Proceedings
The
Company was previously a defendant in a legal proceedings brought against it by
Coast to Coast Equities, Inc. in the United States District Court for the
Southern District of Florida under Case No. 0:06-cv-60414-JIC. This
action commenced in March 2006 and as of September 11, 2006, an Order was
entered by the court granting a Joint Motion for Stipulated Order of Dismissal
with Prejudice wherein the action was dismissed with prejudice with each party
to bear their own costs and attorneys’ fees. Pursuant to Order
effective the same date, the case was closed.
In
accordance with a Release & Satisfaction executed by the respective parties
to this litigation on September 7, 2006, the Company agreed to issue and has
issued to Coast to Coast the 2,158,151 shares of common stock, and Coast to
Coast agreed to forfeit any claim that it had to 3,000,000 warrants to acquire
common stock pursuant to a previously executed Warrant Agreement. The
parties further agreed to terminate any and all duties and responsibilities owed
to each other pursuant to previously executed Reorganization Agreement,
Consulting Agreement, and Warrant Agreement.
Item
4. (Removed and Reserved).
PART
II
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
Market
Information
The
Company’s common stock is traded on the OTCBB under the symbol “WWBP.OB”. The
Company’s common stock consists of 90,000,000 shares authorized, par value $.001
per share, of which, as of December 31, 2009, there are 53,915,653 shares issued
and outstanding. According to the Company’s Restated Certificate of
Incorporation, shareholders are not entitled to preemptive rights nor are they
entitled to cumulative rights. The common stock started trading under the symbol
SCII on August 20, 2003, the effective date of the 1-100 reverse stock
split. The following is the high and low prices of our stock for the
last eight quarters.
The
following table sets forth the range of bid prices of our common stock as quoted
on the OTCBB during the periods indicated. The prices reported represent prices
between dealers, do not include markups, markdowns or commissions and do not
necessarily represent actual transactions.
Quarter
|
|
2009
|
|
|
2008
|
|
||||||||||
|
|
High
|
|
|
Low
|
|
|
High
|
|
|
Low
|
|
||||
First
|
|
$
|
0.04
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
Second
|
|
$
|
0.02
|
|
|
$
|
0.01
|
|
|
$
|
0.05
|
|
|
$
|
0.03
|
|
Third
|
|
$
|
0.09
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
|
$
|
0.03
|
|
Fourth
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
|
$
|
0.03
|
|
|
$
|
0.01
|
|
Our
common shares are issued in registered form. American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, NY 10038, is the registrar and transfer agent
for our common stock.
From
January 1 to March 24, 2010, the highest and lowest prices of our common shares
on the OTC Bulletin Board were $0.05 per share and $0.007 per
share. On March 24, 2010, the closing price of our common stock on
the OTC Bulletin Board on the last day it traded before the filing of this
Annual Report was $0.015 per share.
As of
March 24, 2009, there were approximately 126 shareholders of record of the
Company’s common stock, which does not include shareholders who own our shares
in so-called “street name.”
Dividends
We have
not paid dividends on our shares of common stock, and do not intend to pay
dividends in the foreseeable future. We intend to retain earnings, if
any, to finance development and expansion of our business. Payment of
dividends in the future will depend among other things, upon our ability to
generate earnings, our need for capital, and our overall financial
condition.
Equity Compensation
Plans
The
Company filed a Form S-8 with the Commission on May 20, 2005 wherein it
registered 5,000,000 shares to be issued under a Non-Qualified Employee Stock
Compensation Plan. (“Plan”) Employees, directors, officers,
consultants, advisors and other persons associated with the issuer are entitled
to be issued shares for bona fide services rendered to the Company pursuant to
the Plan. As of the year ended December 31, 2009, 2,000,000 shares have been
issued to employees and 3,000,000 shares have been issued to
consultants.
Securities Issued in
Connection with Acquisitions
On
January 19, 2006, the Company, by and through its wholly owned subsidiary
Yangling Daiying Biotech & Pharmaceutical Group Co. Ltd., entered into a
reorganization agreement with Hunan Hua Yang Pharmaceutical Co. Ltd. and its
shareholders Aibin Chen and Zhuobin Lin. Pursuant to this agreement,
the Company issued 482,800 shares of its common stock to acquire 51% of Hua Yang
in a transaction exempt from registration pursuant to Regulation S under the
Securities Act of 1933, as amended.
On
January 19, 2006, the Company also entered into a reorganization agreement with
Hunan Ze An Pharmaceutical Co. Ltd. and its shareholders Zhongyu Lu, Aibin Chen
and Weiliang Wu. Pursuant to the agreement, the Company issued
217,600 shares of common stock and paid certain cash consideration to acquire
control of Hunan Ze An Pharmaceutical in a transaction exempt from registration
pursuant to Regulation S under the Securities Act of 1933, as
amended.
Securities Issued in
Connection with Settlement of Litigation
On
September 7, 2006, the Company and Coast to Coast Equity Group, Inc., settled a
litigation pursuant to which the Company issued 2,158,151 shares of common stock
to Coast to Coast in a transaction that was exempt from registration pursuant to
Section 4(2) under the Securities of Act of 1933, as amended.
Securities Issued in
Connection with Conversion of Debt
On March
31, 2007, Xi'An Jin Hao Sci-Tech Investment Management Co., Ltd. (formerly Xi'An
Jin You Sci-Tech Investment Management Co., Ltd.) (“Jin Hao”), a stockholder of
the Company converted RMB7.73 million debt (equivalent to $1 million at the date
of conversion) to 10,000,000 shares of the Company’s common stock at $0.10 per
share, the closing price of the Company's common stock on the date of
conversion.
On
September 30, 2007, the Company and Jin Hao, a stockholder of the Company
reached an agreement whereby the Company transferred certain property to Jin
Hao, a stockholder of the Company with the original cost of RMB3,030,707 and Jin
Hao assumed the remaining mortgage of RMB1,087,250 and relieved debt of
RMB1,943,457. Upon transfer of certain property, the related cost of
RMB3,030,707 (equivalent to $404,483 at September 30,2007), accumulated
depreciation of RMB447,032 ($59,662), remaining mortgage of RMB1,087,250
($145,106) and due to Jin Hao of RMB1,943,457 ($259,377) were removed from the
accounts and the excess of agreed upon transfer price (original cost less
assumed mortgage remainder) over the net book value (original cost less
accumulated depreciation) of RMB447,032 ($59,662) was recorded as additional
paid-in capital.
Recent Sales of Unregistered
Securities
We have
not made any previously unreported sales of unregistered securities from January
1, 2009 to December 31, 2009.
Purchases of Equity
Securities by Issuer and Affiliated Purchasers
We have
not repurchased any of our common stock and have no publicly announced
repurchase plans or programs as of December 31, 2009.
Item
6. Selected Financial Data
Not
applicable.
Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations
PRELIMINARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
following discussion of our financial condition and results of our operations
should be read in conjunction with the Financial Statements and Notes
thereto. Our fiscal year ends December 31. This document
contains certain forward-looking statements including, among others, anticipated
trends in our financial condition and results of operations and our business
strategy. These forward-looking statements are based largely on our
current expectations and are subject to a number of risks and
uncertainties. Actual results could differ materially from these
forward-looking statements. Important factors to consider in
evaluating such forward-looking statements include (i) changes in external
factors or in our internal budgeting process which might impact trends in our
results of operations; (ii) unanticipated working capital or other cash
requirements; (iii) changes in our business strategy or an inability to execute
our strategy due to unanticipated changes in the industries in which we operate;
and (iv) various competitive market factors that may prevent us from competing
successfully in the marketplace.
OVERVIEW OF OUR
BUSINESS
The
Company was incorporated in Delaware and was founded in 1961. On Dec. 16, 2004,
through a Reorganization Agreement, the Company reorganized with Yangling
Daiying Biotech & Pharmaceutical Group Co., Ltd. (“Daiying”), located at
Yangling High-tech Agricultural Demonstration Zone, P.R. China. The Company
operates its business mainly through its wholly subsidiary, Daiying and its
subsidiaries in P.R. China. The Company focuses on research & develop,
manufacture and distribution of in vitro diagnostics, human vaccine,
biomedicines, traditional Chinese medicines, synthetic medicines and medical
devices with frontier technologies and great potentials.
Summary
of research
As a
biotech-focused company, we have made significant progress on our HCV research
pipelines. We were able to successfully set up the in vitro intact HCV virus
culturing system which could continuously replicate the HCV virus in vitro and
we are the first entity in the world to break this bottle neck in the HCV
research field. We made some progress on the improving of sensitivity and
specificity on HCV diagnostic reagents in 2007. We screened four
Chinese traditional medicines using high-throughput anti-HCV medicine
screening system and got some primary data. The data will be verified by further
test. We expect to get one or two new anti- HCV leads in next years
if we could raise enough capital funding for our research. We optimized
large–quantity purification methods for replication-deficient HCV virus and
setting up ideal animal models for efficacy and safety studies of HCV human
vaccine in 2007. We will actively seek new collaboration
opportunities and promising research projects. The progress on our research
projects depend on our ability to raise enough funding in the following
year.
RESULTS OF
OPERATIONS
The
following table shows the financial data of the consolidated statements of
operations of the Company and its subsidiaries for the years ended December 2009
and 2008. The data should be read in conjunction with the audited
consolidated financial statements of the Company and related notes
thereto.
2009
|
2008
|
|||||||
Net
revenue
|
$
|
60,480
|
$
|
136,043
|
||||
|
|
|
|
|
|
|
|
|
Cost
of revenue
|
|
|
(202,913
|
)
|
|
|
(117,491
|
)
|
Gross
profit
|
|
|
(142,433
|
)
|
|
|
18,552
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Research
and development
|
|
|
31,303
|
|
|
|
21,868
|
|
Professional
fees
|
|
|
112,562
|
|
|
|
93,801
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
Selling
expense
|
|
|
101,189
|
|
|
|
44,564
|
|
General
and administrative
|
|
|
419,124
|
|
|
|
965,140
|
|
Total
operating expenses
|
|
|
664,178
|
|
|
|
1,125,373
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(806,611
|
)
|
|
|
(1,106,821
|
)
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
(734
|
)
|
|
|
(3,111
|
)
|
Interest
expense
|
|
|
476,575
|
|
|
|
467,141
|
|
Government
grants
|
|
|
-
|
|
|
|
-
|
|
Other
(income) expense
|
|
|
(19,635
|
)
|
|
|
(5,255
|
)
|
Other
(income) expense–related parties
|
|
|
(45,169
|
)
|
|
|
-
|
|
Depreciation
and production costs of idle capacity
|
|
|
243,284
|
|
|
|
77,888
|
|
Total
Other (Income) Expenses
|
|
|
654,321
|
|
|
|
536,663
|
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
|
(1,460,932
|
)
|
|
|
(1,643,484
|
)
|
Less:
Net loss attributable to the noncontrolling interest
|
|
|
243,269
|
|
|
|
25,080
|
|
Net
Loss Attributable to WWBP common stockholders
|
|
|
(1,217,663
|
)
|
|
|
(1,618,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share – Basic and diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares outstanding – Basic and
diluted
|
|
|
53,915,653
|
|
|
|
53,915,653
|
|
Fiscal Year Ended December 31, 2009 compared to year ended December 31, 2008
REVENUES
For the
year ended December 31, 2009, our revenues were $60,480, as compared to $136,043
for the year ended December 31, 2008, a decrease of $75,563 in
revenue. We attribute this decrease in net revenues to a decline in
sales due to the Company’s limited investment in marketing its products as a
result of not having sufficient financing in place.
OPERATING
EXPENSES
For the
year ended December 31, 2009, the selling, general and administrative expenses
amounted to $520,313 as compared to the selling, general and administrative
expenses of $1,009,704 for the year ended December 31, 2008. Gross
profit for the year ended December 31, 2009 was $(142,433), as compared to
$18,552 for the year ended December 31, 2008.
The
changes in operating expenses include:
|
·
|
For
the year ended December 31, 2009, we incurred selling expense of $101,189
compared to $44,564 for the year ended December 31, 2008. The
increase was due to the set up of a sales center in Beijing and increased
cost of sales.
|
|
·
|
For
the year ended December 31, 2009, we incurred research and development
expense of $31,303 compared to $21,868 for the year ended December 31,
2008, an increase of $9,435 or 43.1%. The increase was
attributable to increased testing and experiments in new product
development, specifically drug
screening.
|
|
·
|
For
the year ended December 31, 2009, we incurred professional fees of
$112,562 as compared to $93,801 for the year ended December 31, 2008, an
increase of $18,761, or 20%. The increase was due to the
engagement of a new independent registered public accounting firm and the
costs associated with making the
change.
|
|
·
|
For
the year ended December 31, 2009, general and administrative expenses were
$419,124 as compared to $965,140 for the year ended December 31, 2008, a
decrease of $546,016, or approximately 56.6%. The decrease in
administrative expenses in 2009 was attributable to the Company’s
improvement in its systems to control expenditures on resources and
operational activities.
|
For the
year ended December 31, 2009, interest expense was $476,575 as compared to
$467,141 for the year ended December 31, 2008 and was related to an increase in
interest payments from loans overdue to Xi'An Jin Hao Sci-Tech Investment
Management Co., Ltd. For the year ended December 31, 2009, other
expense was $(19,635) as compared to other income of $(5,255) for the year ended
December 31, 2008.
As a
result of these factors, the Company reported a net loss of $1,460,932 or $0.02
per share for the year ended December 31, 2009, as compared to a net loss of
$1,618,404 or $0.03 per share for the same period in 2008.
INCOME
TAXES
Worldwide
is registered in the State of Delaware and is subject to United States of
America tax law. Worldwide did not have any assessable income for the years
ended December 31, 2009 and 2008 and made no provision for income taxes in the
United States.
The
Company conducts all of its business through its PRC subsidiaries namely Shaanxi
Allied, Daiying, Shaanxi and Hua Yang. All of the Company’s PRC subsidiaries are
subjected to PRC’s Enterprise Income Tax governed by the Income Tax Law of the
People’s Republic of China (the “PRC Income Tax Law”). Under the PRC Income Tax
Law, Shaanxi Allied, as a foreign investment enterprises is exempted from income
tax for two years from the first profit making calendar year of operations after
offset of accumulated taxable losses, followed by a 50% exemption of income tax
for the immediate next three 3 calendar years (“tax holiday”). Shaanxi Allied
did not have any taxable income for the years ended December 31, 2009 and 2008
and no provision for income taxes has been made. Daiying is located in Yangling
High Tech Zone approved by the relevant PRC tax bureau whereas Daiying is
entitled to a preferential tax rate of 15%. The statutory income tax rate for
Daiying for relevant periods is 15% prior to December 31, 2007 and 25% as of
January 1, 2008 and forward. Shaanxi Daiying Medicine Distribution Company and
Hua Yang, which are local PRC companies are generally subjected to a statutory
income tax rate of 33%. The statutory income tax rate for Shaanxi and Hua Yang
for relevant periods is 33% prior to December 31, 2007 and 25% as of January 1,
2008 and forward.
The
Company accounts for income taxes pursuant to the standard, “Accounting for
Income Taxes,” codified with ASC 740 which requires recognition of deferred
income tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company’s financial statements or tax
returns.
LIQUIDITY
AND CAPITAL RESOURCES
At
December 31, 2009, we had cash and cash equivalent of $595,478.
Net cash
used in operating activities for the year ended December 31, 2009 was $241,714
as compared to net cash used in operating activities of $321,868 for the year
ended December 31, 2007. For the year ended December 31, 2009, we
used cash to fund our loss of $1,460,932 and to fund such as accounts receivable
of $24,375, accounts payable of $1,559, other current liabilities of 627,938 and
offset by non-cash items such as depreciation and amortization of $433,469, and
imputed interest for due to related parties of $169,969. For the year ended
December 31, 2008, we used cash to fund our loss of $1,618,404 and to fund such
as accounts receivable of $45,491, inventories of $52,268, prepayments and other
receivables, of $59,359, other current liabilities of 616,746, and offset by
non-cash items such as depreciation and amortization of $449,685 and imputed
interest for due to related parties of $117,730
Net cash
used in investing activities for the year ended December 31, 2009 was $37,050 as
compared to net cash used in investing activities for the year ended December
31, 2008 of $297,919. We attribute this decrease to the fact that the company’s
investment in fixed assets for new products has been substantially completed,
and no further significant expansion of investment is needed.
Net cash
generated from financing activities for the year ended December 31, 2009 was
$629,009 as compared to net cash used in financing activities of
$75,187 for the year ended December 31, 2008. For the year ended
December 31, 2009, the Company received $665,606 from
stockholders/officers, offset by repayment of note payable to stockholder,
$36,597. For the year ended December 31, 2008, the Company made the
repayment of $75,187 to related parties.
The
Company currently has no material commitments for capital
expenditures.
Efforts
to improve the Company’s financial results
The
Company has incurred losses over the past years. Management is making every
effort and continues to implement changes designed to significantly improve the
Company’s financial results and operating cash flows. The actions
involve certain cost-saving initiatives and growth strategies,
including:
(a)
|
Improve
capital conditions
|
Taking steps to improve the capital conditions, including increasing our bank
loan and attracting new investment.
(b) Expand
the market for our products by increasing marketing activities and
sales
Manufacturing some drugs that we did not make before, increasing marketing
activities and instituting polices to motivate salespersons to increase
sales.
(c)
Strengthen internal controls
Taking steps to strengthen internal controls aimed at bringing down production
costs and various expenses.
(d)
Continue our cooperation with Yangling Daiying Biotech Institute
Continue cooperation with Yangling Daiying Biotech Institute on the
manufacturing and sale of its SFDA-approved product Emergency Haemostatic Patch,
as well as increasing other incomes.
Management believes that these actions will enable the Company to improve future
profitability and cash flow in its continuing operations through December 31,
2010.
Critical
Accounting Policies
In
presenting our financial statements in conformity with generally accepted
accounting principles, we are required to make estimates and assumptions that
affect the amounts reported therein. Several of the estimates and assumptions we
are required to make relate to matters that are inherently uncertain as they
pertain to future events. However, events that are outside of our control cannot
be predicted and, as such, they cannot be contemplated in evaluating such
estimates and assumptions. If there is a significant unfavorable change to
current conditions, it could result in a material adverse impact to our
consolidated results of operations, financial position and liquidity. We believe
that the estimates and assumptions we used when preparing our financial
statements were the most appropriate at that time. Presented below are those
accounting policies that we believe require subjective and complex judgments
that could potentially affect reported results. However, the majority of our
businesses operate in environments where we pay a fee for a service performed,
and therefore the results of the majority of our recurring operations are
recorded in our financial statements using accounting policies that are not
particularly subjective, nor complex.
VALUATION
OF LONG-LIVED ASSETS
We review
our long-lived assets for impairment, including property, plant and equipment,
and identifiable intangibles with definite lives, whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable. To determine recoverability of our long-lived assets, we evaluate
the probability that future undiscounted net cash flows will be greater than the
carrying amount of our assets. Impairment is measured based on the difference
between the carrying amount of our assets and their estimated fair
value.
ALLOWANCE
FOR DOUBTFUL ACCOUNTS
We
perform ongoing credit evaluations of our customers and adjust credit limits
based upon customer payment history and current creditworthiness. We
continuously monitor collections and payments from our customers and maintain a
provision for estimated credit losses based upon our historical experience and
any specific customer collection issues that have been identified. While such
credit losses have historically been within our expectations and the provisions
established, we cannot guarantee that we will continue to experience credit loss
rates similar to those we have experienced in the past. Measurement of such
losses requires consideration of historical loss experience, including the need
to adjust for current conditions, and judgments about the probable effects of
relevant observable data, including present economic conditions such as
delinquency rates and financial health of specific
customers.
Item
7A. Quantitative and Qualitative Disclosures about Market
Risk
Credit
Risk
Financial
instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash and cash equivalents. As of
December 31, 2009, substantially all of the Company's cash and cash equivalents
were held by major financial institutions located in the PRC, none of which are
insured. However, the Company has not experienced losses on these accounts and
management believes that the Company is not exposed to significant risks on such
accounts.
Item
8. Financial Statements and Supplementary Data
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Consolidated
Financial Statements
For
The Year Ended December 31, 2009 and December 31, 2008
(With
Reports of Independent Registered Public Accounting Firm Thereon)
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
December
31, 2009 and 2008
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
Page
|
|
|
Report
of Independent Registered Public Accounting Firm
|
20
|
|
|
Report
of Independent Registered Public Accounting Firm
|
21
|
|
|
Consolidated
Balance Sheets
|
22
|
|
|
Consolidated
Statements of Operations
|
23
|
|
|
Consolidated
Statements of Stockholders’ Equity (Deficit) and Comprehensive Income
(Loss)
|
24
|
Consolidated
Statements of Comprehensive Income (Loss)
|
25
|
|
|
Consolidated
Statements of Cash Flows
|
26
|
|
|
Notes
to Consolidated Financial Statements
|
27
- 38
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Worldwide
Biotech & Pharmaceutical Company
Yangling,
Shaanxi, China
We have
audited the accompanying consolidated balance sheet of Worldwide Biotech &
Pharmaceutical Company as of December 31, 2009 and the related consolidated
statements of operations, stockholders’ equity (deficit), comprehensive income
(loss) and cash flows for the year ended December 31, 2009. The financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated financial statements, assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Worldwide Biotech &
Pharmaceutical Company as of December 31, 2009, and the results of operations
and cash flows for the year ended December 31, 2009 in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to consolidated
financial statements, the Company has generated limited revenue and has incurred
accumulated deficit of $14,645,196 as of December 31, 2009 that include losses
of $1,460,932 for the year ended December 31, 2009. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also discussed in Note 3. The
accompanying consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
Yichien
Yeh, CPA
Rego
Park
March 24,
2010
KEMPISTY
& COMPANY
CERTIFIED
PUBLIC ACCOUNTANTS, P.C.
15
MAIDEN LANE – SUITE 1003 – NEW YORK, NY 10038 – TEL (212) 406-7272 – FAX (212)
513-1930
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders
of
Worldwide
Biotech & Pharmaceutical Company and Subsidiaries
We have
audited the accompanying consolidated balance sheet of Worldwide Biotech &
Pharmaceutical Company as of December 31, 2008 and the related consolidated
statements of operations, stockholders’ equity (deficit) and comprehensive
income (loss), and cash flows for the year then ended. The financial
statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We have
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above, present fairly, in all
material respects, the consolidated financial position of Worldwide Biotech
& Pharmaceutical Company as of December 31, 2008, and the consolidated
results of operations and cash flows for the year ended December 31, 2008 in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming the
Company will continue as a going concern. As discussed in Note 3 to
the financial statements, the Company has generated limited revenue and has
incurred accumulated losses of $13,427,533 on December 31, 2008 since
inception. These factors raise substantial doubt about the Company’s
ability to continue as a going concern. Management’s plans in regard
to these matters are also discussed in Note 3. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Kempisty & Company
CPAs PC
Kempisty
& Company,
Certified
Public Accountants, P.C.
New York,
New York
March 23,
2009
WORLDWIDE BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
|
$ | 595,478 | $ | 190,039 | ||||
Accounts
receivable, net (Note 4)
|
1,863 | 26,238 | ||||||
Inventories
(Note 5)
|
139,507 | 126,585 | ||||||
Prepayments
and other current assets
|
87,231 | 62,061 | ||||||
Total
Current Assets
|
824,079 | 404,923 | ||||||
Property,
plant and Equipment, net
|
4,316,918 | 4,858,303 | ||||||
Land
use rights, net
|
768,590 | 781,815 | ||||||
Total
Assets
|
$ | 5,909,587 | $ | 6,045,041 | ||||
LIABILITIES
|
||||||||
Current
liabilities:
|
||||||||
Loan
payable (Note 7)
|
$ | 703,089 | $ | 703,554 | ||||
Note
payable- stockholder (Note 6)
|
161,300 | 198,051 | ||||||
Current
maturities of note payable - bank (Note 8)
|
1,464,768 | 1,465,738 | ||||||
Accounts
payable
|
354,617 | 353,058 | ||||||
Due
to related parties (Note 6)
|
3,090,339 | 2,140,537 | ||||||
Other
current liabilities
|
2,124,049 | 1,935,279 | ||||||
|
||||||||
Total
Current Liabilities
|
7,898,162 | 6,796,217 | ||||||
Total
Liabilities
|
7,898,162 | 6,796,217 | ||||||
EQUITY(DEFICIT)
|
||||||||
WWBP
stockholders' equity(deficit):
|
||||||||
Common
stock $.001 par value; 90,000,000 shares authorized;
|
||||||||
53,915,653
shares issued and outstanding,
|
53,916 | 53,916 | ||||||
Additional
paid-in capital
|
12,669,140 | 12,499,171 | ||||||
Accumulated
deficit
|
(14,645,196 | ) | (13,427,533 | ) | ||||
Accumulated
other comprehensive income (loss):
|
||||||||
Foreign
currency translation gain
|
162,167 | 123,270 | ||||||
Total
WWBP stockholders' equity(deficit)
|
(1,759,973 | ) | (751,176 | ) | ||||
Noncontrolling
interest
|
(228,602 | ) | - | |||||
Total
Equity(Deficit)
|
(1,988,575 | ) | (751,176 | ) | ||||
Total
Liabilities and Equity(Deficit)
|
$ | 5,909,587 | $ | 6,045,041 | ||||
See
accompanying notes to consolidated financial
statements
|
WORLDWIDE BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
For
the Years Ended
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
Net
Revenues
|
$ | 60,480 | $ | 136,043 | ||||
Cost
of Goods Sold
|
202,913 | 117,491 | ||||||
Gross
Profit
|
(142,433 | ) | 18,552 | |||||
Operating
Expenses:
|
||||||||
Selling
expenses
|
101,189 | 44,564 | ||||||
Research
and development
|
31,303 | 21,868 | ||||||
Professional
fees
|
112,562 | 93,801 | ||||||
General
and administrative
|
419,124 | 965,140 | ||||||
Total
Operating Expenses
|
664,178 | 1,125,373 | ||||||
Loss
from Operations
|
(806,611 | ) | (1,106,821 | ) | ||||
Other
Expenses(Income):
|
||||||||
Interest
income
|
(734 | ) | (3,111 | ) | ||||
Interest
expense
|
476,575 | 467,141 | ||||||
Other
(income) expense
|
(19,635 | ) | (5,255 | ) | ||||
Other
(income) expense-related parties
|
(45,169 | ) | - | |||||
Depreciation
and production cost of idle capacity
|
243,284 | 77,888 | ||||||
Total
Other (Income) Expenses
|
654,321 | 536,663 | ||||||
Net
Loss
|
(1,460,932 | ) | (1,643,484 | ) | ||||
Less:
Net loss attributable to the noncontrolling interest
|
243,269 | 25,080 | ||||||
Net
Loss Attributable to WWBP common stockholders
|
$ | (1,217,663 | ) | $ | (1,618,404 | ) | ||
Net
Loss Per Common Share
|
||||||||
Net
loss per common share - Basic and diluted
|
$ | (0.02 | ) | $ | (0.03 | ) | ||
Weighted
average number of common shares outstanding
|
||||||||
-
Basic and diluted
|
53,915,653 | 53,915,653 | ||||||
See
accompanying notes to consolidated financial
statements.
|
WORLDWIDE BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
|
||||||||
For
the Years Ended
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
Net
loss
|
$ | (1,460,932 | ) | $ | (1,643,484 | ) | ||
Other
comprehensive income(loss), net of tax:
|
||||||||
Foreign
currency translation gain(loss)
|
53,564 | 90,054 | ||||||
Comprehensive
loss
|
(1,407,368 | ) | (1,553,430 | ) | ||||
Comprehensive
loss attributable to the noncontrolling interest
|
228,602 | - | ||||||
Comprehensive
loss attributable to WWBP
|
$ | (1,178,766 | ) | $ | (1,553,430 | ) | ||
See
accompanying notes to consolidated financial
statements.
|
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
|
|||||||||||||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY (DEFICIT)
|
|||||||||||||||||||||||||||||||||
FOR
THE YEARS ENDED DECEMBER 31, 2009 and 2008
|
|||||||||||||||||||||||||||||||||
WWBP
Shareholders
|
|||||||||||||||||||||||||||||||||
Accumulated
|
|||||||||||||||||||||||||||||||||
Common
Stock, $.001 Par Value
|
Additional
|
Other
|
|||||||||||||||||||||||||||||||
Comprehnsive
|
Number
of
|
Paid-in
|
Accumulated
|
Comprehensive
|
Noncontrolling
|
||||||||||||||||||||||||||||
Total
|
Income(Loss)
|
Shares
|
Amount
|
Capital
|
Deficit
|
Income
|
Interest
|
||||||||||||||||||||||||||
Balance,
December 31, 2007
|
$ | 684,524 | 53,915,653 | $ | 53,916 | $ | 12,381,441 | $ | (11,809,129 | ) | $ | 58,296 | $ | - | |||||||||||||||||||
Interest
for due to related parties
|
117,730 | $ | 117,730 | ||||||||||||||||||||||||||||||
Comprehensive
income(loss):
|
|||||||||||||||||||||||||||||||||
Net
loss
|
(1,643,484 | ) | (1,643,484 | ) | (1,618,404 | ) | (25,080 | ) | |||||||||||||||||||||||||
Other comprehensive income, net of tax:
|
|||||||||||||||||||||||||||||||||
Foreign
currency translation gain
|
90,054 | 90,054 | 64,974 | 25,080 | |||||||||||||||||||||||||||||
Comprehensive
income(loss)
|
(1,553,430 | ) | $ | (1,553,430 | ) | ||||||||||||||||||||||||||||
Balance,
December 31, 2008
|
$ | (751,176 | ) | $ | - | 53,915,653 | $ | 53,916 | $ | 12,499,171 | $ | (13,427,533 | ) | $ | 123,270 | $ | - | ||||||||||||||||
Interest
for due to related parties
|
169,969 | 169,969 | |||||||||||||||||||||||||||||||
Comprehensive
income(loss):
|
|||||||||||||||||||||||||||||||||
Net
loss
|
(1,460,932 | ) | (1,460,932 | ) | (1,217,663 | ) | (243,269 | ) | |||||||||||||||||||||||||
Other comprehensive income, net of tax:
|
|||||||||||||||||||||||||||||||||
Foreign
currency translation loss
|
53,564 | 53,564 | 38,897 | 14,667 | |||||||||||||||||||||||||||||
Comprehensive
income(loss)
|
(1,407,368 | ) | $ | (1,407,368 | ) | ||||||||||||||||||||||||||||
Balance,
December 31, 2009
|
$ | (1,988,575 | ) | 53,915,653 | $ | 53,916 | $ | 12,669,140 | $ | (14,645,196 | ) | $ | 162,167 | $ | (228,602 | ) | |||||||||||||||||
See
accompanying notes to consolidated financial
statements
|
WORLDWIDE BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES | ||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
For
The Years Ended
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
loss
|
$ | (1,460,932 | ) | $ | (1,643,484 | ) | ||
Adjustments
to reconcile net loss to net cash provided by
|
||||||||
(used
in) operating activities:
|
||||||||
Depreciation
and amortization
|
433,469 | 449,685 | ||||||
Imputed
interest for due to related parties
|
169,969 | 117,730 | ||||||
Changes
in assets and liabilities:
|
||||||||
Accounts
receivable
|
24,375 | 45,491 | ||||||
Inventories
|
(12,922 | ) | 52,268 | |||||
Prepayments
and other current assets
|
(25,170 | ) | 59,359 | |||||
Accounts
payable
|
1,559 | (19,663 | ) | |||||
Other
current liabilities
|
627,938 | 616,746 | ||||||
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
|
(241,714 | ) | (321,868 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase
of property and equipment
|
(31,319 | ) | (297,919 | ) | ||||
Addition
of Land user right
|
(5,731 | ) | - | |||||
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
(37,050 | ) | (297,919 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment
of note payable - stockholder
|
(36,597 | ) | - | |||||
Repayment
for due to related parties
|
- | (75,187 | ) | |||||
Proceeds
from stockholders/officers
|
665,606 | - | ||||||
NET
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
629,009 | (75,187 | ) | |||||
EFFECT
OF EXCHANGE RATE CHANGES ON CASH
|
55,194 | 69,572 | ||||||
NET
CHANGE IN CASH
|
405,439 | (625,402 | ) | |||||
CASH
at beginning of period
|
190,039 | 815,441 | ||||||
CASH
at end of period
|
$ | 595,478 | $ | 190,039 | ||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Interest
paid
|
$ | - | $ | 25,456 | ||||
See
accompanying notes to consolidated financial
statements.
|
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 1 - ORGANIZATION AND
OPERATIONS
Worldwide
Biotech & Pharmaceutical Company, (“Worldwide” or the “Company”) was
incorporated in Delaware in 1961. In the fourth quarter of 2005, the Company
commenced revenue producing operations.
On April
20, 2004, as amended on August 3, 2004 and effective December 16, 2004, under an
Agreement and Plan of Reorganization, the Company issued 33,600,000 shares of
its common stock for the acquisition of all of the outstanding capital stock of
Yangling Daiying Biological Engineering Co., Ltd. (“Daiying”) with the former
shareholders of the Company retaining 1,057,102 or approximately 5% of the
outstanding stock. As a result of the ownership interests of the former
shareholders of Daiying, for financial accounting purposes, the exchange of
stock has been treated as a recapitalization of Worldwide with Daiying deemed
the accounting acquirer and Worldwide deemed the accounting acquiree under the
purchase method of accounting in accordance with Statement of Financial
Accounting Standards No. 141 “Business Combinations” (“SFAS
No. 141”). Additionally, as part of the Merger, the Company, whose former name
was Sun City Industries, Inc., amended its Articles of Incorporation, and
changed its name to Worldwide Biotech & Pharmaceutical Company.
Daiying
was incorporated on November 26, 2001 in Shaanxi Province, the People's Republic
of China (the “PRC”). Its principal business activities are to develop and
market viruses/viral vectors, external diagnostic reagents, prophylactic
vaccines for humans, and oral solid dosage forms of traditional Chinese medicine
products.
On March
7, 2005, Daiying formed Shaanxi Daiying Medicine Distribution Co., Ltd.
(“Shaanxi”) with a stockholder of the Company, in which Daiying holds a 90%
interest. The stockholder's contribution for its 10% interest was Renminbi
(“RMB”) 500,000 (equivalent to $61,956 at December 31, 2005), which has been
reduced by its proportional share of Shaanxi's loss from inception-to-date.
Shaanxi's principal business activities are trading of medicine
products.
On July
26, 2005, Glory Dragon Investments Ltd. (“Glory Dragon”), an international
business company, was formed in the British Virgin Islands by the Company. Glory
Dragon then established a wholly-owned foreign investment company in the
People's Republic of China known as Shaanxi Allied Shine International
Investment Management Consulting Ltd. (“Shaanxi Allied”) on December 27, 2005.
Worldwide transferred all of its shares in Daiying to Shaanxi Allied on December
27, 2005.
On
January 19, 2006, Worldwide by and through its wholly owned subsidiary, Daiying,
entered into a Reorganization Agreement with Hunan Hua Yang Pharmaceutical Co.
Ltd. (“Hua Yang”) and its shareholders. Pursuant to this agreement, the Company
issued 482,800 shares of its common stock to the shareholders of Hua Yang to
acquire 51%. Hua Yang, incorporated on June 22, 1999 in Hunan Province, China,
engages in developing, manufacturing and marketing synthetic chemical medicine,
antibiotics, immune vaccine and nutrient supplements.
Also on
January 19, 2006, Daiying entered into a Reorganization Agreement with Hunan Ze
An Pharmaceutical Co. Ltd. (“Ze An”) and its shareholders. Daiying
paid RMB3,400,000 (equivalent to US$424,115 at March 31, 2006) and 217,600
shares of common stock of Worldwide for 65% of Ze An. Ze An was incorporated in
February 2000 in Hunan Province, China, and engages in developing, manufacturing
and marketing essential traditional Chinese medicine, organic herbal medicine,
and neutraceutical products.
On
December 18, 2006, Daiying, Mr. Aibin Chen and Mr. Zuobin Li, minority
shareholders of Ze An and Hua Yang, entered into a Consolidation and
Reorganization Agreement (“Consolidation”). Pursuant to the
Consolidation, Ze An merged into Hua Yang with Hua Yang assuming all assets and
liabilities of Ze An and Hua Yang continuing as the surviving entity. In
addition, as part of the Consolidation, Daiying acquired an additional 15%
equity interest in Ze An for a note payable to Mr. Zhongyu Lu, a former
shareholder of Ze An, of RMB 1,351,200 (equivalent to $172,954 at December 31,
2006). The note included the principal of RMB1.2 million (equivalent to $153,600
at December 31, 2006) and accrued interest of RMB151,200 (equivalent to $19,354
at December 31, 2006) based on an interest rate of 6.3% per annum with both
principal and interest due December 4, 2007; the note is currently passed due.
The Company owns a 67.3486% equity interest of Hua Yang subsequent to the
consolidation.
Basis of
presentation
The
accompanying audited consolidated financial statements and related notes have
been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”).
The
consolidated financial statements include all the accounts of the Company and
its wholly-owned and majority-owned subsidiaries. All significant inter-company
balances and transactions have been eliminated. The results of operations for
Hua Yang have been included in the Consolidated Statements of Operations and
Comprehensive Loss since the date of acquisition.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Reclassification
Certain
amounts in the prior period financial statements have been reclassified to
conform to the current period presentation. These reclassifications had no
effect on reported losses.
Use of
estimates
In
preparing these consolidated financial statements, management makes estimates
and assumptions that affect the reported amounts of assets and liabilities in
the balance sheets and revenues and expenses during the year reported. Actual
results may differ from these estimates. The Company regularly evaluates
estimates and assumptions related to obsolete inventory, useful life and
recoverability of long lived assets, and goodwill. The Company bases its
estimates and assumptions on current facts, historical experience and various
other factors that it believes to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities and the accrual of costs and expenses that are not
readily apparent from other sources. The actual results experienced by the
Company may differ materially and adversely from the Company’s estimates. To the
extent there are material differences between the estimates and the actual
results, future results of operations will be affected.
Subsequent
Events
The
Company has evaluated subsequent events through the date that these consolidated
financial statements were issued, which was March 31, 2010, the date of the
Company’s Annual Report on Form 10-K for the year ended December 31,
2009
Cash
equivalents
Cash and
cash equivalents include cash on hand, demand deposits with banks and liquid
investments with an original maturity of three months or less. Cash deposits
with banks are held in financial institutions in China, which has no federally
insured deposit protection. Accordingly, the Company has a concentration of
credit risk related to these uninsured deposits.
Marketable
securities
Marketable
securities, available-for-sale, securities consisted of investments in the
equity of publicly traded companies in China and are stated at market value
based on the most recently traded price of these securities. Unrealized gains
and losses, determined by the difference between historical purchase price and
the market value at each balance sheet date, are recorded as a component of
Accumulated other comprehensive income in stockholders’ equity. Realized gains
and losses are determined by the difference between historical purchase price
and gross proceeds received when the marketable securities are
sold.
Trade
accounts receivable
Trade
accounts receivable are recorded at the invoiced amount, net of an allowance for
doubtful accounts. The allowance for doubtful accounts is the Company's best
estimate of the amount of probable credit losses in the Company's existing
accounts receivable. The Company determines the allowance based on historical
write-off experience, customer specific facts and economic conditions. Bad debt
expense is included in general and administrative expenses, if any.
Outstanding
account balances are reviewed individually for collectibility. Account balances
are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. The Company does
not have any off-balance-sheet credit exposure to its customers.
Inventories
Inventories
are stated at the lower of cost or market value. Cost is determined using the
weighted average cost method. Costs include direct material, direct labor and
applicable manufacturing overhead. Market value is determined by reference to
selling prices after the balance sheet date or to management’s estimates based
on prevailing market conditions. Management writes down the inventories to
market value if market value is below cost. Management also regularly evaluates
the composition of the Company’s inventories to identify slow-moving and
obsolete inventories to determine if a valuation allowance is
required.
Property,
plant and equipment
Property,
plant and equipment are recorded at cost. Expenditures for major
additions and betterments are capitalized. Maintenance and repairs
are charged to operations as incurred. Depreciation of property, plant and
equipment is computed by the straight-line method (after taking into account
their respective estimated residual values) over the assets estimated useful
lives ranging from five (5) years to 20 years. Upon sale or retirement of
property, plant and equipment, the related cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in operations.
Leasehold improvements, if any, are amortized on a straight-line basis over the
lease period or the estimated useful life, whichever is shorter. Upon becoming
fully amortized, the related cost and accumulated amortization are removed from
the accounts. Construction in progress includes direct costs of
construction of factory building. Interest incurred during the period of
construction has not been capitalized as such amounts are considered to be
immaterial at this time. Construction in progress is not depreciated until such
time as the assets are completed and put into operational use.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Land use
rights
Land use
rights represent the cost to obtain the right to use land in the PRC. Land use
rights are carried at cost and amortized on a straight-line basis over the lives
of the right ranging from 40 to 50 years. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the
accounts.
Licenses
The
Company has adopted the guidelines as set out in the standard, “Goodwill and Other Intangible
Assets”, codified with ASC 350, for the licenses. Under the requirements
as set out in SFAS No. 142, the Company amortizes the costs of acquired licenses
over their remaining legal lives or the term of the contract, whichever is
shorter. Licenses are stated at cost less accumulated amortization and
accumulated impairment losses, if any. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the
accounts.
Impairment
of long-lived assets
The
Company follows the standard, “Accounting for the Impairment or
Disposal of Long-Lived Assets”, codified with ASC 360, for its long-lived
assets. The Company's long-lived assets, which include property, plant and
equipment, land use rights and licenses are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
The
Company assesses the recoverability of its long-lived assets by comparing the
projected undiscounted net cash flows associated with the related long-lived
asset or group of long-lived assets over their remaining estimated useful lives
against their respective carrying amounts. Impairment, if any, is based on the
excess of the carrying amount over the fair value of those assets. Fair value is
generally determined using the asset's expected future discounted cash flows or
market value, if readily determinable. If long-lived assets are determined to be
recoverable, but the newly determined remaining estimated useful lives are
shorter than originally estimated, the net book values of the long-lived assets
are depreciated over the newly determined remaining estimated useful lives. The
Company determined that there were no impairments of long-lived assets for the
years ended December 31, 2009 and 2008.
Segment
information
The
standard, “Disclosures about
Segments of an Enterprise and Related Information”, codified with ASC
280, requires certain financial and supplementary information to be disclosed on
an annual and interim basis for each reportable segment of an enterprise. The
Company believes that it operates in one business segment (research,
development, production, marketing and sales of auto electronic products) and in
one geographical segment (China), as all of the Company’s current operations are
carried out in China.
Revenue
recognition
The
Company follows the guidance of the standard, “Revenue Recognition”,
codified with ASC 605, for revenue recognition. The Company revenue when
persuasive evidence of an arrangement exists, services have been rendered or
product delivery has occurred and the title and risk of loss transfer to the
buyer, the sales price to the customer is fixed or determinable, and
collectability is reasonably assured. Persuasive evidence of an
arrangement is demonstrated via invoice to the customer; product delivery is
evidenced by the warehouse shipping log as well as a signed bill of lading from
the trucking company and no product return is allowed except for defective or
damaged products; the sales price to the customer is fixed upon acceptance of
the purchase order; and there are no separate sales rebates, discounts, or
volume incentives. The Company manufactures and distributes traditional Chinese
medicine, including drink tablets, synthetic medicine, antibiotics, biotech
medicine and biotech reagents; wholesale Class II medical devices, Class III
medical devices, including but not limited to, medical sewing materials and
bond, medical high molecular materials and products, and disposable sterile
medical devices. The majority of the Company's revenue derives from sales
contracts with distributors. The Company sells certain products to certain
customers on a consignment basis. The Company records revenue for consignment
transactions when the consignee sells the product to the end users.
Stock
based compensation
Effective
January 1, 2006, the Company adopted the fair value recognition provisions of
the standard, “Share-Based
Payment”, codified with ASC 718, using the modified prospective method.
On January 12, 2007, the Company issued 1,400,000 shares of its common stock to
three employees pursuant to the 2005 Non-Qualified Stock Compensation Plan (see
Note 15(i)). The Company valued the shares at $0.15 per share, the closing price
of the Company's common stock on the date of issuance and charged $210,000 to
stock based compensation. The Company did not issue any stock options
or warrants to any employees, directors, officers or third parties since January
1, 2006.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Research
and development
Research
and development costs are charged to expense as incurred. Research and
development costs consist primarily of remuneration for research and development
staff, depreciation and maintenance expenses of research and development
equipment and material costs for research and development.
Government
grants
Receipts
of government grants to encourage research and development activities which are
non-refundable are credited to deferred income upon receipt. The Company
recognizes government grants income when the government completes inspection on
regulated use of the subsidy. There was no government grants income recognized
for the years ended December 31, 2009 or 2008. As of December 31 2009 and 2008,
government grants of $366,192 and $439,722, respectively, which were recorded as
deferred income.
Shipping
and handling costs
The
Company accounts for shipping and handling fees in accordance with the standard,
“Accounting for Shipping and
Handling Fees and Costs”, codified with ASC 605. While amounts charged to
customers for shipping product are included in revenues, the related costs are
classified in cost of goods sold as incurred.
Income
taxes
The
Company follows the standard, “Accounting for Income
Taxes”, codified with ASC 740, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the
Consolidated Statements of Operations and Comprehensive Income in the period
that includes the enactment date.
Fair
value of financial instruments
The
Company adopted the standard “Fair Value Measurements”, codified with ASC 820
and effective January 1, 2008. The provisions of ASC 820 are to be
applied prospectively.
ASC 820
clarifies that fair value is an estimate of the exit price, representing the
amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants (i.e., the exit price at
the measurement date). Under ASC 820, fair value measurements are not
adjusted for transaction cost. ASC 820 provides for use of a fair
value hierarchy that prioritizes inputs to valuation techniques used to measure
fair value into three levels:
Level
1:
|
Unadjusted
quoted prices in active markets for identical assets or
liabilities
|
Level
2:
|
Input
other than quoted market prices that are observable, either directly or
indirectly, and reasonably available. Observable inputs reflect
the assumptions market participants would use in pricing the asset or
liability and are developed based on market data obtained from sources
independent of the Company.
|
Level
3:
|
Unobservable
inputs. Unobservable inputs reflect the assumptions that the
Company develops based on available information about what market
participants would use in valuing the asset or
liability.
|
An asset
or liability’s level within the fair value hierarchy is based on the lowest
level of any input that is significant to the fair value
measurement. Availability of observable inputs can vary and is
affected by a variety of factors. The Company uses judgment in
determining fair value of assets and liabilities and Level 3 assets and
liabilities involve greater judgment than Level 1 and Level 2 assets or
liabilities.
Foreign
currency translation
Transactions
and balances originally denominated in U.S. dollars are presented at their
original amounts. Transactions and balances in other currencies are converted
into U.S. dollars in accordance with the standard, “Foreign Currency
Translation,”
codified with ASC 830.
The
financial records of the Company are maintained in their local currency, the
Renminbi (“RMB”), which is the functional currency. Assets and liabilities are
translated from the local currency into the reporting currency, U.S. dollars, at
the exchange rate prevailing at the balance sheet date. Revenues and expenses
are translated at weighted average exchange rates for the period to approximate
translation at the exchange rates prevailing at the dates those elements are
recognized in the combined and consolidated financial statements. Foreign
currency translation gain (loss)
resulting from the process of translating the local currency financial
statements into U.S. dollars are included in determining accumulated other
comprehensive income in the consolidated statement of stockholders'
equity.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RMB is
not a fully convertible currency. All foreign exchange transactions involving
RMB must take place either through the People's Bank of China (the “PBOC”) or
other institutions authorized to buy and sell foreign exchange. The exchange
rate adopted for the foreign exchange transactions are the rates of exchange
quoted by the PBOC, which are determined largely by supply and demand.
Translation of amounts from RMB into United States dollars (“US$”) has been made
at the following exchange rates for the respective years:
December 31,
2009
Balance
sheet RMB 6.8270 to US$1.00
Statement
of operations and comprehensive income (loss) RMB 6.8311to US$1.00
December 31,
2008
Balance
sheet RMB 6.8225 to US$1.00
Statement
of operations and comprehensive income (loss) RMB 6.9493 to US$1.00
Commencing
July 21, 2005, China adopted a managed floating exchange rate regime based on
market demand and supply with reference to a basket of currencies. The exchange
rate of the US dollar against the RMB was adjusted from approximately RMB 8.2765
per US dollar to approximately RMB 8.11 per US dollar on July 21, 2005. Since
then, the PBOC administers and regulates the exchange rate of the US dollar
against the RMB taking into account demand and supply of RMB, as well as
domestic and foreign economic and financial conditions.
Net gains
and losses resulting from foreign exchange transactions, if any, are included in
the Consolidated Statements of Operations and Comprehensive loss. The foreign
currency translation gain for the years ended December 31, 2009 and 2008 were
$38,897 and $64,974, respectively and effect of exchange rate changes on cash
flows for the years ended were $55,194 and $69,572, respectively.
Related
parties
A party
is considered to be related to the Company if the party directly or indirectly
or through one or more intermediaries, controls, is controlled by, or is under
common control with the Company. Related parties also include principal owners
of the Company, its management, members of the immediate families of principal
owners of the Company and its management and other parties with which the
Company may deal if one party controls or can significantly influence the
management or operating policies of the other to an extent that one of the
transacting parties might be prevented from fully pursuing its own separate
interests. A party which can significantly influence the management or operating
policies of the transacting parties or if it has an ownership interest in one of
the transacting parties and can significantly influence the other to an extent
that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests is also a related party.
Comprehensive
income (loss)
The
Company has adopted the standard, “Reporting Comprehensive
Income” codified with ASC 220. This statement establishes rules for the
reporting of comprehensive income (loss) and its components. Comprehensive
income (loss), for the Company, consists of net loss and foreign currency
translation adjustments and is presented in the Consolidated Statements of
Operations and Comprehensive Income (loss) and Stockholders'
Equity.
Net loss
per common share is computed pursuant to the standard, “Earnings Per Share”,
codified with ASC 260. Basic net loss per common share is computed by dividing
net loss by the weighted average number of shares of common stock outstanding
during each period. Diluted net loss per common share is computed by dividing
net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during each
period. There were no potentially dilutive shares outstanding as of
December 31, 2009 or 2008.
Commitments
and contingencies
Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and
penalties and other sources are recorded when it is probable that a liability
has been incurred and the amount of the assessment can be reasonably
estimated.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In June
2009, the Financial Accounting Standards Board (the “FASB”) issued a standard
that established the FASB Accounting Standards Codification (“ASC”) and amended
the hierarchy of generally accepted accounting principles (“GAAP”) such that the
ASC became the single source of authoritative nongovernmental U.S. GAAP. The ASC
did not change current U.S. GAAP, but it was intended to simplify user access to
all authoritative U.S. GAAP by providing all the authoritative literature
related to a particular topic in one place. All previously existing accounting
standard documents were superseded and all other accounting literature not
included in the ASC is considered non-authoritative. New accounting standards
issued subsequent to June 30, 2009 are communicated by the FASB through
Accounting Standards Updates (“ASUs”). For the Company, the ASC was effective
July 1, 2009. This standard did not have an impact on the Company’s consolidated
results of operations or financial condition. However, throughout the notes to
the consolidated financial statements references that were previously made to
various former authoritative U.S. GAAP pronouncements have been changed to
coincide with the appropriate section of the ASC.
In April
2009, the FASB issued an accounting standard which modifies the requirements for
recognizing other-than-temporarily impaired debt securities and changes the
existing impairment model for such securities. The standard also requires
additional disclosures for annual and interim periods with respect to both debt
and equity securities. Under the standard, impairment of debt securities will be
considered other-than-temporary if an entity (1) intends to sell the security,
(2) more likely than not will be required to sell the security before recovering
its cost, or (3) does not expect to recover the security’s entire amortized cost
basis (even if the entity does not intend to sell). The standard further
indicates that, depending on which of the above factor(s) causes the impairment
to be considered other-than-temporary, (1) the entire shortfall of the
security’s fair value versus its amortized cost basis or (2) only the credit
loss portion would be recognized in earnings while the remaining shortfall (if
any) would be recorded in other comprehensive income. The standard requires
entities to initially apply its provisions to previously other-than-temporarily
impaired debt securities existing as of the date of initial adoption by making a
cumulative-effect adjustment to the opening balance of retained earnings in the
period of adoption. The cumulative-effect adjustment potentially reclassifies
the noncredit portion of a previously other-than-temporarily impaired debt
security held as of the date of initial adoption from retained earnings to
accumulated other comprehensive income. For the Company, this standard was
effective beginning April 1, 2009. The adoption of this standard did not have a
material impact on the Company’s consolidated results of operations or financial
condition.
In May
2009, the FASB issued a new accounting standard regarding subsequent events.
This standard incorporates into authoritative accounting literature certain
guidance that already existed within generally accepted auditing standards, with
the requirements concerning recognition and disclosure of subsequent events
remaining essentially unchanged. This guidance addresses events which occur
after the balance sheet date but before the issuance of financial statements.
Under the new standard, as under previous practice, an entity must record the
effects of subsequent events that provide evidence about conditions that existed
at the balance sheet date and must disclose but not record the effects of
subsequent events which provide evidence about conditions that did not exist at
the balance sheet date. This standard added additional required
disclosure relative to the date through
which subsequent events have been evaluated and whether that is the date on
which the financial statements were issued. For the Company, this standard was
effective beginning April 1, 2009. The additional disclosures required by this
standard are included in Note 2.
In June
2009, the FASB issued a new standard regarding the accounting for transfers of
financial assets amending the existing guidance on transfers of financial assets
to, among other things, eliminate the qualifying special-purpose entity concept,
include a new unit of account definition that must be met for transfers of
portions of financial assets to be eligible for sale accounting, clarify and
change the derecognition criteria for a transfer to be accounted for as a sale,
and require significant additional disclosure. For the Company, this standard is
effective for new transfers of financial assets beginning January 1, 2010.
Because the Company historically does not have significant transfers of
financial assets, the adoption of this standard is not expected to have a
material impact on the Company’s consolidated results of operations or financial
condition.
In August
2009, the FASB issued ASU No. 2009-05, “Measuring Liabilities at Fair Value”,
which provides additional guidance on how companies should measure liabilities
at fair value under ASC 820. The ASU clarifies that the quoted price for an
identical liability should be used. However, if such information is not
available, a entity may use the quoted price of an identical liability when
traded as an asset, quoted prices for similar liabilities or similar liabilities
traded as assets, or another valuation technique (such as the market or income
approach). The ASU also indicates that the fair value of a liability is not
adjusted to reflect the impact of contractual restrictions that prevent its
transfer and indicates circumstances in which quoted prices for an identical
liability or quoted prices for an identical liability traded as an asset may be
considered Level 1 fair value measurements. For the Company, this ASU is
effective October 1, 2009. The adoption of this ASU did not have a material
impact on the Company’s consolidated results of operations or financial
condition.
In
September 2009, the FASB issued ASU No. 2009-12, “Investments in Certain
Entities That Calculate Net Asset Value per Share (or Its Equivalent)”, that
amends ASC 820 to provide guidance on measuring the fair value of certain
alternative investments such as hedge funds, private equity funds and venture
capital funds. The ASU indicates that, under certain circumstances, the fair
value of such investments may be determined using net asset value (“NAV”) as a
practical expedient, unless it is probable the investment will be sold at
something other than NAV. In those situations, the practical expedient cannot be
used and disclosure of the remaining actions necessary to complete the sale is
required. The ASU also requires additional disclosures of the attributes of all
investments within the scope of the new guidance, regardless of whether an
entity used the practical expedient to measure the fair value of any of its
investments. The disclosure provisions of this ASU are not applicable to an
employer’s disclosures about pension and other postretirement benefit plan
assets. For the Company, this ASU was effective October 1, 2009. The adoption of
this ASU did not have a material impact on the Company’s consolidated results of
operations or financial condition.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 2 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In
October 2009, the FASB issued ASU No. 2009-13, “Multiple-Deliverable Revenue
Arrangements—a consensus of the FASB Emerging Issues Task Force”, that provides
amendments to the criteria for separating consideration in multiple-deliverable
arrangements. As a result of these amendments, multiple-deliverable revenue
arrangements will be separated in more circumstances than under existing U.S.
GAAP. The ASU does this by establishing a selling price hierarchy for
determining the selling price of a deliverable. The selling price used for each
deliverable will be based on vendor-specific objective evidence if available,
third-party evidence if vendor-specific objective evidence is not available, or
estimated selling price if neither vendor-specific objective evidence nor
third-party evidence is available. A vendor will be required to determine its
best estimate of selling price in a manner that is consistent with that used to
determine the price to sell the deliverable on a standalone basis. This ASU also
eliminates the residual method of allocation and will require that arrangement
consideration be allocated at the inception of the arrangement to all
deliverables using the relative selling price method, which allocates any
discount in the overall arrangement proportionally to each deliverable based on
its relative selling price. Expanded disclosures of qualitative and quantitative
information regarding the application of the multiple-deliverable revenue
arrangement guidance are also required under the ASU. The ASU does not apply to
arrangements for which industry specific allocation and measurement guidance
exists, such as long-term construction contracts and software transactions. For
the Company, ASU No. 2009-13 is effective beginning January 1, 2011. The Company
may elect to adopt the provisions prospectively to new or materially modified
arrangements beginning on the effective date or retrospectively for all periods
presented. The Company is currently evaluating the impact of this standard on
its Company’s consolidated results of operations and financial
condition.
In
October 2009, the FASB issued ASU No. 2009-14, “Certain Revenue Arrangements
That Include Software Elements—a consensus of the FASB Emerging Issues Task
Force”, that reduces the types of transactions that fall within the current
scope of software revenue recognition guidance. Existing software revenue
recognition guidance requires that its provisions be applied to an entire
arrangement when the sale of any products or services containing or utilizing
software is considered more than incidental to the product or service. As a
result of the amendments included in ASU No. 2009-14, many tangible products and
services that rely on software will be accounted for under the multiple-element
arrangements revenue recognition guidance rather than under the software revenue
recognition guidance. Under the ASU, the following components would be excluded
from the scope of software revenue recognition guidance: the tangible
element of the product, software products bundled with tangible products where
the software components and non-software components function together to deliver
the product’s essential functionality, and undelivered components that relate to
software that is essential to the tangible product’s functionality. The ASU also
provides guidance on how to allocate transaction consideration when an
arrangement contains both deliverables within the scope of software revenue
guidance (software deliverables) and deliverables not within the scope of that
guidance (non-software deliverables). For the Company, ASU No. 2009-14 is
effective beginning January 1, 2011. The Company is currently evaluating the
impact of this standard on the its consolidated results of operations and
financial condition.
In
January 2010, the FASB issued ASU No. 2010-6, “Improving Disclosures About Fair
Value Measurements”, that amends existing disclosure requirements under ASC 820
by adding required disclosures about items transferring into and out of Levels 1
and 2 in the fair value hierarchy; adding separate disclosures about purchases,
sales, issuances, and settlements relative to Level 3 measurements; and
clarifying, among other things, the existing fair value disclosures about the
level of disaggregation. For the Company, this ASU is effective for the first
quarter of 2010, except for the requirement to provide Level 3 activity of
purchases, sales, issuances, and settlements on a gross basis, which is
effective beginning the first quarter of 2011. Since this standard impacts
disclosure requirements only, its adoption will not have a material impact on
the Company’s consolidated results of operations or financial
condition.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 3 - GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As reflected in the
accompanying consolidated financial statements, the Company has an accumulated
deficit of $14,645,196 and $13,427,533 at December 31, 2009 and 2008,
respectively that include losses of $1,460,932 and $1,643,484 for the year ended
December 31, 2009 and 2008, respectively. The Company also had a working capital
deficiency of $7,074,083 and $6,391,294 at December 31, 2009 and 2008,
respectively.
While the
Company is attempting to produce sufficient revenues, the Company's cash
position may not be enough to support the Company's daily operations. Management
intends to raise additional funds by way of a public or private
offering. Management believes that the actions presently being taken
to further implement its business plan and generate sufficient revenues provide
the opportunity for the Company to continue as a going concern. While
the Company believes in the viability of its strategy to increase revenues and
in its ability to raise additional funds, there can be no assurances to that
effect. The ability of the Company to continue as a going concern is dependent
upon the Company's ability to further implement its business plan and generate
sufficient revenues. The financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going
concern.
NOTE 4 - ACCOUNTS
RECEIVABLE
Accounts
receivable at December 31, 2009 and 2008 consisted of the
following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Accounts
Receivable
|
$ | 533,446 | $ | 512,611 | ||||
Less:
Allowance for doubtful accounts
|
(531,583 | ) | (486,373 | ) | ||||
$ | 1,863 | $ | 26,238 |
For the
years ended December 30, 2009 and 2008, the Company recorded bad debt expense of
$45,504 and $106,753, respectively.
NOTE 5 -
INVENTORIES
Inventories
at December 31, 2009 and 2008 consisted of the following:
Prepayment
and other current assets at December 31, 2009 and 2008 consisted of the
following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Advances
on purchases
|
$ | 30,959 | $ | 36,698 | ||||
Other
receivables
|
56,272 | 25,363 | ||||||
$ | 87,231 | $ | 62,061 |
NOTE
7 – PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment stated at cost, less accumulated depreciation at December
31, 2009 and 2008 consisted of the following:
December
31
|
December
31
|
|||||||||||
Estimated
Useful
|
2009
|
2008
|
||||||||||
Life
(Years)
|
||||||||||||
Buildings
and improvement
|
20 | $ | 4,777,194 | $ | 4,780,359 | |||||||
Machinery
and equipment
|
5-8 | 190,678 | 190,804 | |||||||||
Vechicles
|
8 | 1,494,790 | 1,464,580 | |||||||||
Construction
in progress (b)
|
22,880 | 177,058 | ||||||||||
6,485,542 | 6,612,801 | |||||||||||
Less:
Accumulated depreciation
|
(2,168,624 | ) | (1,754,498 | ) | ||||||||
$ | 4,316,918 | $ | 4,858,303 |
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 7 – PROPERTY, PLANT
AND EQUIPMENT (CONTINUED)
(a)
|
Depreciation
expense
|
Depreciation
expense for the years ended December 31, 2009 and 2008 was $415,039 and
$417,323, respectively.
(b)
|
Construction
in progress
|
Construction
in progress comprised capital expenditures for construction of the Company’s new
production line, including machinery and equipment and facility set up charges.
Upon completion of the construction, the construction in progress was
reclassified as machinery and equipment. The Company did not capitalize any
interest expense to construction in progress for the years ended December 31,
2009 or 2008.
NOTE
8 – LAND USE RIGHTS
Land use
rights at cost, less accumulated amortization at December 31, 2009 and 2008
consisted of the following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Land
use rights
|
$ | 891,335 | $ | 886,188 | ||||
Less:
accumulated amortization
|
(122,745 | ) | (104,373 | ) | ||||
$ | 768,590 | $ | 781,815 |
(a)
|
Amortization
expense
|
Amortization
expense for the years ended December 31, 2009 and 2008 was $18,430 and $18,089,
respectively.
NOTE
9 – LICENSES
Licenses
at cost, less accumulated amortization at December 31, 2009 and 2008 consisted
of the following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Licenses
|
$ | 42,066 | $ | 42,094 | ||||
Less:
accumulated amortization
|
(42,066 | ) | (42,094 | ) | ||||
$ | - | $ | - |
(a)
|
Amortization
expense
|
Amortization
expense for the years ended December 31, 2009 and 2008 was $0 and $14,273,
respectively.
NOTE 10 - RELATED PARTY
TRANSACTIONS
Due to
and notes payable - related parties at December 31, 2009 and 2008 consisted of
the following:
December
31
|
December 31 | ||||||||
2009
|
2008
|
||||||||
Due to related parties (a)
|
|||||||||
Guo,
Wenxia
|
CEO;
Stockholder; Stockholder of Daiying
|
$ | 291,407 | $ | 251,330 | ||||
Xian
Jin Hao Tech
|
Stockholder; Stockholder
of Daiying
|
1,308,568 | 486,731 | ||||||
Daiying
Bio-Tech Research Institute
|
The entity controlled by Guo,Wenxia
|
1,363,528 | 1,275,557 | ||||||
Li,
Zhuobin
|
Stockholder; Stockholder
of Hua Yang
|
2,773 | 2,774 | ||||||
Chen,
Aibin
|
Stockholder; Stockholder
of Hua Yang
|
124,063 | 124,145 | ||||||
$ | 3,090,339 | $ | 2,140,537 | ||||||
Note payable- stockholder
(b)
|
|||||||||
Lu,
Zhongyu
|
Prior
Stockholder of Ze An
|
$ | 161,300 | $ | 198,051 |
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 10 -
RELATED PARTY TRANSACTIONS (CONTINUED)
The chief
executive officer and a stockholder advanced funds to the Company for its
working capital. These advances are unsecured, due on demand and non-interest
bearing.
Note
payable to a stockholder is unsecured, payable to a stockholder with interest at
6.3% per annum and due December 4, 2007. The note is currently past
due.
On March
31, 2007, Xian Jin Hao Sci-Tech Investment Management Co., Ltd. (Xian Jin Hao),
a stockholder of the Company converted RMB7.73 million (equivalent to $1 million
at the date of conversion) to 10,000,000 shares of the Company’s common stock at
$0.10 per share, the closing price of the Company’s common stock on the date of
conversion
On
September 30, 2007, the Company and Xian Jin Hao, a stockholder of the Company
reached an agreement whereby the Company transferred certain property to Xian
Jin Hao, with the original cost of RMB3,030,707 and Xian Jin Hao assumed the
remaining mortgage of RMB1,087,250 and relieved debt of RMB1,943,457. Upon
transfer of the property, the related cost of RMB3,030,707 (equivalent to
$41,547 at December 31, 2007), accumulated depreciation of RMB447,032 ($61,283)
remaining mortgage of RMB1,087,250 ($149,049) and the payable to Jin Hao of
RMB1,943,457 ($266,424) were removed from the accounts with the excess value of
the payable and assumed mortgage over the net book value of the transferred
property being recorded as a contribution to capital.
Due to
related parties do not bear interest and have no definite terms of repayment.
For the year ended December 31, 2009 and 2008, the Company imputed interest of
$169,969 and $117,730, respectively based on a 5.5% interest rate which
approximates the bank lending rate.
In 2009,
Daiying Bio-Tech Research Institute entrusted the Company to process “Emergency
Haemostatic Patch” of which the patent belongs to Daiying Bio-Tech Research
Institute. In the agreement, the Company will receive $0.3 (RMB 2) by processing
each patch. The Company will be reimbursed for cost input for the process.
However, the Company has to be responsible for the abnormal spoilage. For the
year ended December 31, 2009, due to abnormal spoilage, there is loss of $25,097
for processing Emergency Haemostatic Patch.
For
raising funds of processing Emergency Haemostatic Patch, Daiying Bio-Tech
Research Institute entrusts the Company to apply government grants. The Company
is able to get 8% of government grants applied for Emergency Haemostatic Patch
as commission. For the year ended December 31, 2009, the company recognized
$35,133 other income for providing this service. This income is for government’s
grant of $439,168 received in 2007 and government completed inspection on this
grant in 2009.
Daiying
Bio-Tech Research Institute rents Company’s building for processing Emergency
Haemostatic Patch. The lease agreement is valid from 2009 to 2016. The net value
of leased building is $1,602,739 as of December 31, 2009. For the year ended
December 31, 2009, other income-rental was 35,133.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE
11 – LOAN PAYABLE
Loans
payable at December 31, 2009 and 2008 consisted of the
following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Loan
Payable
|
$ | 703,089 | $ | 703,554 |
Loan
payable is collateralized by all of Hua Yang’s equipment, building and land use
right, payable to a financial institution, with interest at 6.696% per annum
payable monthly, with principal due May 27, 2007. The loan is currently past
due. The Company paid interest through May 20, 2007 and interest accrued through
September 30, 2009 was included in accrued interest. The net value of equipment,
building and land use right collateralized for this loan is $2,873,915 and
$3,124,339 as of December 31, 2009 and 2008, respectively.
NOTE
12 – CURRENT MATURITIES OF NOTE PAYABLE- BANK
Loans
payable at December 31, 2009 and 2008 consisted of the
following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Note
Payable-Bank-Current Portion
|
$ | 1,464,768 | $ | 1,465,738 |
Note
payable - bank is collateralized by all of Hua Yang’s equipment, building and
land use right, and is payable to a financial institution, with interest at
6.696% per annum payable monthly, with RMB5 million (equivalent $667,307) due
April 29, 2007 and RMB5 million ($667,308) due April 27, 2008. The note is
currently past due for the first principal payment due on April 29, 2007. The
Company paid interest through May 20, 2007 and interest accrued through December
31, 2009 was included in accrued interest
The
accrued interest for above Loan Payable and Current Maturities of Note Payable
was $452,234 and $304,998 as of December 31, 2009 and December 31, 2008,
respectively. Interest expense accrued for above Loan Payable and
Current Maturities of Note Payable was $147,350 and $102,642 for the years end
December 31, 2009 and 2008, respectively.
NOTE
13 - ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued
expenses and other current liabilities at December 31, 2009 and 2008, consisted
of the following:
December
31
|
December
31
|
|||||||
2009
|
2008
|
|||||||
Accrued
expenses
|
$ | 33,000 | $ | 12,583 | ||||
Other
tax payable
|
23,121 | 18,242 | ||||||
Customer
deposits
|
259,605 | 198,522 | ||||||
Salaries
and benefits payable
|
72,071 | 82,683 | ||||||
Other
payables
|
852,158 | 853,574 | ||||||
Deferred
income
|
366,192 | 439,722 | ||||||
Accrued
interest
|
517,902 | 329,953 | ||||||
$ | 2,124,049 | $ | 1,935,279 |
NOTE 14 – INCOME TAXES
The
Company accounts for income taxes pursuant to the standard, “Accounting for
Income Taxes”, codified with ASC 740 which requires recognition of deferred
income tax liabilities and assets for the expected future tax consequences of
events that have been recognized in the Company’s financial statements or tax
returns.
Prior to
January 1, 2008, the Company was governed by the Income Tax Law of the People’s
Republic of China concerning Foreign Investment Enterprises and Foreign
Enterprises and local income tax laws (the previous income tax laws and rules).
Pursuant to the previous income tax laws and rules, wholly-owned foreign
enterprises were subject to tax at a statutory rate of 33% (30% state income tax
plus 3% local income tax).
In March
2007, the Chinese government enacted the Corporate Income Tax Law, and
promulgated related regulations, which were effective January 1, 2008. The
Corporate Income Tax Law, among other things, imposes a unified income tax rate
of 25% for both domestic and foreign invested enterprises. The previous income
tax laws and rules, which stipulated income tax rates for domestic and foreign
invested enterprises at different rates, expired upon the effectiveness of the
Corporate Income Tax Law.
WORLDWIDE
BIOTECH & PHARMACEUTICAL COMPANY AND SUBSIDIARIES
Notes
to Consolidated Financial Statements
December
31, 2009 and 2008
NOTE 14 – INCOME TAXES
(CONTINUED)
Due to
the Company’s net loss, there was no provision for income taxes. The Company’s
effective tax rate for the years ended December 31, 2009 and 2008 was 0% and 0%
due to the net loss position in both years.
The
Company’s taxes were subject to a full valuation allowance as
follows:
For the Years Ended | ||||||||
December 31, 2009
|
December 31, 2008
|
|||||||
Computed
tax benefit at statutory rate
|
$ | 365,233 | $ | 410,871 | ||||
Change
in valuation allowance
|
(365,233 | ) | (410,871 | ) | ||||
Income
expense(benefit)
|
$ | - | $ | - |
The net deferred tax asset generated by the loss carry-forward has been fully reserved.
The tax
authority of the PRC Government conducts periodic and ad hoc tax filing reviews
on business enterprises operating in the PRC after those enterprises had
completed their relevant tax filings, hence the Company’s tax filings may not be
finalized. It is therefore uncertain as to whether the PRC tax
authority may take different views about the Company’s tax filings which may
lead to additional tax liabilities.
The
Company has no United States corporate income tax liability as of December 31,
2009 and 2008.
NOTE
15 – STATUTORY RESEARVES
Under the
Corporation Law of the PRC, net income after taxation can only be distributed as
dividends after appropriation has been made for the following: (i) cumulative
prior years' losses, if any; (ii) allocations to the “Statutory Surplus Reserve”
of at least 10% of net income after tax, as determined under PRC accounting
rules and regulations, until the fund amounts to 50% of the Company's registered
capital; (iii) allocations of 5-10% of income after tax, as determined under PRC
accounting rules and regulations, to the Company's “Statutory Common Welfare
Fund”, which is established for the purpose of providing employee facilities and
other collective benefits to employees in PRC; and (iv) allocations to any
discretionary surplus reserve, if approved by stockholders.
As of
December 31, 2009 and 2008, the Company had no Statutory Surplus
Reserve and the Statutory Common Welfare Fund established and segregated in
retained earnings.
NOTE 16 – CONTINGENCIES, RISKS AND
UNCERTAINTIES
Operating
Lease Commitment
Future
minimum lease rentals to be received on noncancelable leases in the aggregate
and for each of the next five fiscal years are as follows
Year
Ending December 31,
|
||||
2010
|
$ | 35,133 | ||
2011
|
35,133 | |||
2012
|
52,700 | |||
2013
|
52,700 | |||
2014
|
52,700 | |||
$ | 228,366 |
Credit risk
Financial
instruments that potentially subject the Company to significant concentration of
credit risk consist primarily of cash and cash equivalents. As of
December 31, 2009 and 2008, substantially all of the Company's cash and cash
equivalents were held by major financial institutions located in the PRC, none
of which are insured. However, the Company has not experienced losses on these
accounts and management believes that the Company is not exposed to significant
risks on such accounts.
Country
risk
Substantially
all of the Company's operations are carried out and all of its assets are
located in the PRC. Accordingly, the Company's business, financial condition and
results of operations may be influenced by the political, economic and legal
environments in the PRC. The Company's business may be influenced by changes in
governmental policies with respect to laws and regulations, anti-inflationary
measures, currency fluctuation and remittances and methods of taxation, among
other things.
Item
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
On
February 4, 2010, we engaged Yichien Yeh, CPA (“Yeh”) as our new independent
registered public accounting firm. Our Board of Directors recommended,
authorized, and approved the decision to dismiss Kempisty & Company as our
independent registered public accounting firm and to engage Yeh to serve as our
independent registered public accounting firm. We had not consulted
with Yeh regarding the application of accounting principles to any
contemplated or completed transactions nor the type of audit opinion that might
be rendered on our financial statements, and neither written nor oral advice was
provided that would be an important factor considered by us in reaching a
decision as to an accounting, auditing or financial reporting
issue.
On
February 4, 2010, we dismissed Kempisty & Company, Certified Public
Accountants, P.C. (“Kempisty & Company”) as our independent registered
public accounting firm.
For the
year ended December 31, 2008, Kempisty & Company issued an audit report on
the our consolidated balance sheet as of December 31, 2008, and the related
consolidated statements of operations, stockholders’ equity (deficit) and
comprehensive income (loss), and cash flows for the year then ended. The report
of Kempsity & Company on the foregoing financial statements did not contain
any adverse opinion or disclaimer of opinion, nor were they qualified or
modified as to any uncertainty, audit scope or accounting principles, except for
an explanatory paragraph related to our ability to continue as a going
concern.
In
addition, Kempisty & Company reviewed management’s prepared consolidated
financial statements for the quarters ended March 31, 2009, June 30, 2009 and
September 30, 2009.
During
the year ended December 31, 2008 and all subsequent interim periods and through
February 4, 2010, (i) there were no disagreements between us and Kempisty &
Company on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreement(s), if not
resolved to the satisfaction of Kempisty & Company would have caused
Kempisty & Company to make reference to the subject matter of disagreement
in connection with its reports on our financial statements, and (ii) there were
no reportable events as that term is described in Item 304(a)(1)(iv) of
Regulation S-K.
Item
9A. Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer, Wenxia Guo (“CEO”)
and Chief Financial Officer, Peng Wang (“CFO”), of the effectiveness of the
Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) or
15d-15(e) under the Exchange Act) as of the end of the period covered by this
report. Based upon that evaluation, the Company’s CEO and CFO concluded that the
Company’s disclosure controls and procedures were effective to provide
reasonable assurance that information required to be disclosed by the Company in
the reports that the Company files or submits under the Exchange Act, is
recorded, processed, summarized and reported, within the time periods specified
in the SEC’s rules, regulations and forms, and that such information is
accumulated and communicated to the Company’s management, including the
Company’s CEO and CFO, as appropriate, to allow timely decisions regarding
required disclosure.
Management Report on
Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting for the company in accordance with Rules
13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over
financial reporting is designed to provide reasonable assurance regarding the
(i) effectiveness and efficiency of operations, (ii) reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles, and (iii) compliance
with applicable laws and regulations.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Management
conducted an evaluation of the effectiveness of the Company’s internal control
over financial reporting based on the criteria set forth in Internal Control -
Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this evaluation, management has concluded
that the Company’s internal control over financial reporting is effective as of
December 31, 2009.
This
annual report does not include an attestation report of the Company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the SEC that permit the
Company to provide only management's report in this annual report.
Changes in Internal
Controls
During
the year ended December 31, 2009 there were no changes in our internal control
over financial reporting that materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Item
9B. Other Information
(i) Loan
payable
Loan
payable is collateralized by all of the Hua Yang’s equipment, buildings and land
use rights, payable to a financial institution, with interest at 6.696% per
annum payable monthly, with principal due May 27, 2007. The loan is currently
past due. Total amount of the default was RMB5,801,322 (equivalent to $850,479
at December 31, 2009) including RMB1,001,322 ($146,670) in accrued interest as
of December 31, 2009.
(ii) Note payable –
bank
Note
payable - bank is collateralized by all of the Hua Yang’s equipment, buildings
and land use rights, and is a long-term note payable to the same financial
institution, with interest at 6.696% per annum payable monthly, with RMB5
million (equivalent to $732,384 at December 31, 2009) due April 29, 2007 and
RMB5 million ($732,384) due April 27, 2008. The note is currently past due
for the first principal payment due on April 29, 2007. Total amount of the
default was RMB12,086,088 ($1,770,332) including RMB10 million ($1,464,768) in
principal and RMB2,086,088 ($305,564) in accrued interest as of December 31,
2009.
PART
III
Item 10. Directors, Executive Officers and
Corporate Governance
Directors
and Executive Officers
The
following table sets forth the names, ages and positions of our executive
officers and directors as of the date of this filing:
Name
|
Age
|
Position
|
Wenxia
Guo
|
42
|
President,
CEO and Director
|
Peng
Wang
|
51
|
CFO,
Treasurer and Director
|
Yuan
Cheng
|
38
|
Vice
President of Operations
|
Qiang
Li
|
34
|
Director
|
The
officers and directors shall serve until replaced by a vote of the majority of
the shareholders. Officers shall serve until removed by the
directors.
Background
of Directors and Officers
Ms. Wenxia Guo, President, CEO
and Director. Winner of “National Labor Medal.” Ms. Guo is a law major graduate
from the Education Institute of Xi’an Jiao-Tong University. Since 1990, she has
set up five pharmaceutical companies successfully and made great achievement on
medicine production, distribution, management and development. She has almost 20
years of business experience. She has connections with the Singapore
Pharmaceutical Commerce Committee, Hong Kong Commerce Committee and similar
committees in other south-east Asian countries. All of this background provides
a solid basis for international business development. She currently holds many
important organization positions, such as Director of Project Review Department
of Chinese Primary Healthcare Foundation, member of the Financial and Economic
Committee of Chinese Peasants and Workers Democratic Party, member of Shaaxi
Provincial Committee of the Chinese People’s Political Consultative Conference,
Standing Member of Industrial and Commercial Union of Shaanxi Province, Vice
Chairman of Committee of Yangling Demonstration Zone of the Chinese People’s
Political Consultative Conference, Vice Chairman of Medical & Pharmaceutical
Union of Shaaxi Province, Vice Chairman, Woman’s Union of Yangling Demonstration
Zone. In 1999, she successfully founded Yangling Daiying Biotech &
Pharmaceutical Group Co., Ltd. The successful development of new HCV
products helped the Company transition from a development-stage company to a
comprehensive pharmaceutical company with research, production and distributions
of biomedical products. In August 2003, Ms. Guo was awarded with
“National Best Professional Woman” and Hu Jintao, the President of China, gave
her the medal in person.
Mr. Peng Wang, CFO, Treasurer
and Director. Mr. Wang, a graduate from Xi’an University of Finance
and Economics, has worked for over 23 years in finance as a Certified Public
Accountant. Prior to Mr. Wang’s appointment as the Registrant’s Chief
Financial Officer and Treasurer, he served as a financial officer in
governmental organizations from 1977 to 1995 and as the Chief Financial Officer
of Shaanxi Yuqi Functional Product Factory from 1995 to 2000.
Mr. Yuan Cheng, VP of
Operations. Mr. Cheng graduated in 1993 from Xi’An Medical College with a
Bachelors Degree in pharmacy. Following his graduation through 1996,
Mr. Cheng worked in the quality control department of Xi’An Medical
Company. From 1996 to 2002, Mr. Cheng was the head of the production
and research and development departments of Nanjing Meirui Pharmaceutical Co.,
Ltd. Mr. Cheng attended Tianjin University from 2002 to 2006, where
he was awarded a Masters Degree in pharmaceutical engineering. After
receiving his Masters Degree, Mr. Cheng worked Shaanxi Haoqijun Pharmaecutical
Co., Ltd. until his appointment on February 24, 2010 as Vice President of
Operations of Yangling Daiying Biotech & Pharmaceutial Group Co., Ltd., one
of our subsidiaries.
Mr. Qiang Li,
Director. Mr. Qiang Li has 14 years of experience working extensively
in medicine and publishing. For the two years immediately following
Mr. Li’s graduation from Ruicang Health School of Jiangxi Province in 1994, he
worked in Medicare services in the Nancang Taohua Hospital in Jiangxi
Province. From 1996 to 2004, Mr. Li was the chief editor at the
Guangdong Branch of the Xinhua News Agency. Since 2004, Mr. Li has
been working for Shaanxi Daiying Medicine Distribution Co., Ltd., one of our
subsidiaries.
Family
Relationships
There are
no familial relationships between our officers and
directors.
Meetings
of Our Board of Directors
The
Registrant’s Board of Directors held four meetings during the fiscal year ended
December 31, 2009.
The
Registrant’s Board of Directors held four meetings during the fiscal year ended
December 31, 2008.
Board
Committees
Audit Committee. The Company intends to
establish an audit committee of the board of directors, which will consist of
soon-to-be-nominated independent directors. The audit committee’s duties would
be to recommend to the Company’s Board of Directors the engagement of
independent auditors to audit the Company’s financial statements and to review
the Company’s accounting and auditing principles. The audit committee would
review the scope, timing and fees for the annual audit and the results of audit
examinations performed by the internal auditors and independent public
accountants, including their recommendations to improve the system of accounting
and internal controls. The audit committee would at all times be composed
exclusively of directors who are, in the opinion of the Company’s Board of
Directors, free from any relationship which would interfere with the exercise of
independent judgment as a committee member and who possess an understanding of
financial statements and generally accepted accounting principles.
Compensation Committee. The Company intends to
establish a compensation committee of the Board of Directors. The compensation
committee would review and approve the Company’s salary and benefits policies,
including compensation of executive officers.
Director
Compensation
We have
no standard arrangement pursuant to which our directors are compensated for
their services in their capacity as directors. The Board of Directors may award
special remuneration to any director undertaking any special services on behalf
of our company other than services ordinarily required of a
director.
Limitation
of Liability of Directors
The laws
of the State of Delaware and the Company's By-laws provide for indemnification
of the Company's directors for liabilities and expenses that they may incur in
such capacities. In general, directors and officers are indemnified with respect
to actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action or proceeding, actions that the indemnitee had no reasonable cause to
believe were unlawful.
The
Company has been advised that in the opinion of the Securities and Exchange
Commission, indemnification for liabilities arising under the Securities Act is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
Significant
Employees
Other
than the directors and officer described above, we do not expect any other
individuals to make a significant contribution to our business.
Involvement
in Legal Proceedings
None of
our directors, executive officers, promoters or control persons has been
involved in any of the following events during the past five years:
Ÿ
|
any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
Ÿ
|
any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
Ÿ
|
being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
Ÿ
|
being
found by a court of competent jurisdiction (in a civil action), the SEC or
the Commodity Futures Trading Commission to have violated a federal or
state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
|
Code
of Ethics
The
Company has adopted a code of ethics for all of the employees, directors and
officers, a copy of which is included as Exhibit 14.1 to our Form 8-K filed on
July 7, 2004.
Section
16(a) Beneficial Ownership Reporting Compliance
Under
Section 16(a) of the Exchange Act, all executive officers, directors, and each
person who is the beneficial owner of more than 10% of the common stock of a
company that files reports pursuant to Section 12 of the Exchange Act, are
required to report the ownership of such common stock, options, and stock
appreciation rights (other than certain cash-only rights) and any changes in
that ownership with the Commission. Specific due dates for these reports have
been established, and the Company is required to report, in this Form 10-K, any
failure to comply therewith during the fiscal year ended December 31, 2009. The
Company believes that all of these filing requirements were satisfied by its
executive officers, directors and by the beneficial owners of more than 10% of
the Company’s common stock. In making this statement, the Company has relied
solely on copies of any reporting forms received by it, and upon any written
representations received from reporting persons that no Form 5 (Annual Statement
of Changes in Beneficial Ownership) was required to be filed under applicable
rules of the Commission.
Item
11. Executive Compensation
Compensation
Discussion and Analysis
We
maintain a peer-based executive compensation program comprised of fixed and
performance variable elements. The design and operation of the program reflect
the following objectives:
-
|
Recruiting
and retaining talented leadership.
|
-
|
Implementing
measurable performance targets.
|
-
|
Correlating
compensation directly with shareowner value.
|
-
|
Emphasizing
performance based compensation, progressively weighted with seniority
level.
|
-
|
Adherence
to high ethical, safety and leadership
standards.
|
Designing
a Competitive Compensation Package
Recruitment
and retention of leadership to manage our Company requires a competitive
compensation package. Our Board of Directors emphasizes (i) fixed compensation
elements of base salary that compare with our compensation peer group of
companies, and (ii) variable compensation contingent on above-target
performance. The compensation peer group consists of those companies in the
Guangdong region that we deem to compete with our Company for executive talent.
Individual compensation will vary depending on factors such as performance, job
scope, abilities, tenure, and retention risk.
Fixed
Compensation
The
principal element of fixed compensation not directly linked to performance
targets is based salary. We target the value of fixed compensation generally at
the median of our compensation peer group to facilitate a competitive
recruitment and retention strategy.
Incentive
Compensation
Our
incentive compensation programs are linked directly to earnings growth, cash
flow, and total shareowner return. Annual bonuses are tied to the current year’s
performance of our company. Restrictive stock awards are tied to an individual’s
success in exceeding targeted results set by management.
The
following table sets forth all compensation awarded to, earned by, or paid for
all services rendered to the Company during the fiscal years 2009, 2008 and 2007
by those persons who served as Chief Executive Officer and Chief Financial
Officer, and any Named Executive Officer who received compensation in excess of
US$100,000 during such years.
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Stock
Awards
|
|
Option
Awards
|
|
Non-Equity
Incentive Plan Compensation
|
|
Nonqualified
Deferred
Compensation
|
|
All
Other Compensation
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wenxia
Guo
|
|
2009
|
|
2,365
|
|
--
|
--
|
--
|
--
|
--
|
--
|
2,365
|
||||||
President,
CEO,
|
2008
|
9,314
|
--
|
--
|
--
|
--
|
--
|
--
|
9,314
|
|||||||||
Director
|
2007
|
6,789
|
--
|
--
|
--
|
--
|
--
|
--
|
6,789
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peiyi
Tian
|
|
2009
|
|
3,967
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
--
|
|
3,967
|
Former
CFO, Director
|
2008
|
7,762
|
--
|
--
|
--
|
--
|
--
|
--
|
7,762
|
|||||||||
2007
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
The above
amounts are reflected in U.S. Dollars.
Option
Grants in Last Fiscal Year
During
the fiscal year ending December 31, 2009, no executive officer or director was
granted options to purchase shares of common stock.
During
the fiscal year ending December 31, 2009, no executive officer or director
exercised any options to purchase shares of common stock, and as of December 31,
2008, no executive, officer or director possessed any options to purchase shares
of common stock.
Pension, Retirement or
Similar Benefit Plans
There are
no arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers. We have no material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that stock options may be
granted at the discretion of the Board of Directors or a committee
thereof.
Employment
Agreements
Our
executives do not have the typical employment agreements that specify
compensation or length of employment. These matters are left to the discretion
of the Board of Directors and the employee. At present, there are no employment
contracts with any of our executives.
Equity Compensation
Plan
The
Company currently does not have any equity compensation plans.
Compensation
Committee
We
currently do not have a compensation committee of the Board of Directors. The
Board of Directors as a whole determines executive compensation.
Compensation of
Directors
We have
no standard arrangement pursuant to which our directors are compensated for
their services in their capacity as directors. The Board of Directors may award
special remuneration to any director undertaking any special services on behalf
of our company other than services ordinarily required of a
director.
Change of
Control
As of
December 31, 2009, we had no pension plans or compensatory plans or other
arrangements which provide compensation on the event of termination of
employment or change in control of us.
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
The
following table sets forth certain information concerning the number of shares
of our common stock beneficially owned as of March 24, 2010 by: (i) each of our
directors, (ii) each of our named executive officers and (iii) owners of 5% or
more of our common shares. There was no other person or group known by us to
beneficially own more than 5% of our outstanding shares of common stock. The
Company believes that unless otherwise indicated, each of the shareholders has
sole voting and investment power with respect to the shares beneficially
owned.
Title of Class
|
Name and Address of Beneficial
Owner
|
|
Number of Shares Owned(1)
|
|
|
Percent of Voting Power(2)
|
|
||
|
|
|
|
|
|
|
|||
|
Other
Principal Stockholders (5%)
|
|
|
|
|
|
|
||
Common
|
Xi’an
Ji You Sci-Tech
Investment
Management Co., Ltd.
2455 E Sunrise Blvd
#905,
Ft.
Lauderdale, FL 33304-3112
|
|
|
5,376,000
|
|
|
|
9.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
|
Jianjun
Liu
4
Fenghui South Rd, 15th
Floor A10-11501
Jie
Zuo Mansion, Xi’an, Shaanxi, China
|
|
|
4,800,000
|
|
|
|
8.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
|
Gailing
Liu
Nanchang
Rd. Bld. 17, Unit 1, 4th
Floor, Room 7
Xi’An,
Shaanxi, China
|
|
|
2,800,000
|
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Directors
and Executive Officers
|
|
|
|
|
|
|
|
|
Common
|
Wenxia
Guo
President,
CEO and Director
16
Weiyi Rd., Yangling Demonstration Zone,
Shaanxi,
China
|
|
|
8,601,600
|
|
|
|
15.9
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
|
Peng
Wang
CFO,
Treasurer and Director
4
Fenghui South Rd, 15th
Floor A10-11501
Jie
Zuo Mansion, Xi’An, Shaanxi, China
|
|
|
500,000
|
|
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Common
|
Yuan
Cheng
VP
Operations
4
Fenghui South Rd, 15th
Floor A10-11501
Jie
Zuo Mansion, Xi’An, Shaanxi, China
|
|
|
0
|
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
||
Common
|
Qiang
Li
Director
4
Fenghui South Rd, 15th
Floor A10-11501
Jie
Zuo Mansion, Xi’An, Shaanxi, China
|
|
|
2,650,000
|
|
|
|
4.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors as a Group (4 person)
|
|
|
11,751,600
|
|
|
|
21.8
|
%
|
(1) Except
as otherwise indicated, the shares are owned of record and beneficially by the
persons named in the table.
(2) Based
on 53,915,653 shares of common stock issued and outstanding.
44
Item
13. Certain Relationships, Related Transactions and Director Independence
None.
Director
Independence
Our
securities are quoted on the OTC Bulletin Board, which does not have any
director independence requirements. Once we engage further directors
and officers, we will develop a definition of independence and scrutinize our
Board of Directors with regard to this definition.
Item
14. Principal Accounting Fees and Services
Fees
Billed For Audit and Non-Audit Services
The
following table represents the aggregate fees billed for professional audit
services rendered by the accounting firms of Kempisty & Company, Certified
Public Accountants, P.C., and Yichien Yeh, CPA, our current independent auditor,
and all fees billed for other services rendered by the said firms during those
periods.
Year
Ended December 31
|
|
2009
|
|
|
2008
|
|
||
|
|
|
|
|
|
|
||
Audit
Fees (1)
|
|
$
|
47,000
|
|
|
$
|
50,000
|
|
Audit-Related
Fees (2)
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees (3)
|
|
|
-
|
|
|
|
-
|
|
All
Other Fees (4)
|
|
|
-
|
|
|
|
-
|
|
Total
Accounting Fees and Services
|
|
$
|
47,000
|
|
|
$
|
50,000
|
|
(1)
|
Audit Fee. These are
fees for professional services for the audit of the Company's annual
financial statements, and for the review of the financial statements
included in the Company's filings on Form 10-Q, and for services that are
normally provided in connection with statutory and regulatory filings or
engagements.
|
|
|
(2)
|
Audit-Related Fee.
These are fees for the assurance and related services reasonably related
to the performance of the audit or the review of the Company's financial
statements.
|
|
|
(3)
|
Tax Fees. These are
fees for professional services with respect to tax compliance, tax advice,
and tax planning.
|
|
|
(4)
|
All Other Fees. These
are fees for permissible work that does not fall within any of the other
fee categories, i.e., Audit Fees, Audit-Related Fees, or Tax
Fees.
|
Pre-Approval
Policy for Audit and Non-Audit Services
The
Company implemented pre-approval policies and procedures related to the
provision of audit and non-audit services. Under these procedures, our Board of
Directors, performing the duties of the Audit Committee, reviews all audit and
non-audit related fees at least annually. The Board of Directors as the Audit
Committee pre-approved all audit related services in the year ended December 31,
2009.
Item
15. Exhibits, Financial Statement Schedules
(a)
(1) Financial Statements
See
“Index to Consolidated Financial Statements” set forth on page 19.
(a)
(2) Financial Statement Schedules
None. The
financial statement schedules are omitted because they are inapplicable or the
requested information is shown in our financial statements or related notes
thereto.
(a)
(3) Exhibits
Exhibit
Number
|
Exhibit
Description
|
3.1
|
Restated
Certificate of Incorporation (1)
|
3.2
|
Certificate
of Renewal, Restoration and Revival of Certificate of Incorporation
(1)
|
3.3
|
By-laws
of the Company (1)
|
10.1
|
Assets
Repay Debt Agreement (2)
|
14.1
|
Code
of Ethics (3)
|
16.1
|
Letter
on change of certified accountant (4)
|
21
|
|
31.1
|
|
31.2
|
|
32
|
*
|
Filed
herewith.
|
(1)
|
Included
as an exhibit to our Form 8-K filed with the Commission on August 8,
2003.
|
(2)
|
Incorporated
by reference to Exhibit 10.1 to our Annual Report on Form 10-KSB for the
fiscal year ended December 31,
2007.
|
(3)
|
Incorporated
by reference to Exhibit 14.1 of our Form 8-K filed on July 7,
2004.
|
(4)
|
Incorporated
by reference to Exhibit 16.1 of our Form 8-K filed on June 27,
2008.
|
SIGNATURES
In
accordance with the Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
Worldwide
Biotech & Pharmaceutical Company
|
|
|
|
|
|
|
Date:
March 31, 2010
|
By:
|
/s/ Wenxia
Guo
|
|
|
|
Wenxia
Guo
|
|
|
|
Chief
Executive Officer, Director
|
|
|
|
|
|
Pursuant
to the requirements of the Exchange Act, this report has been signed by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
Signature
|
Title
|
Date
|
|
/s/ Wenxia Guo
|
Chief
Executive Officer, Director
(Principal
Executive Officer)
|
March
31, 2010
|
|
Wenxia
Guo
|
|
|
|
/s/ Peng Wang
|
Chief
Financial Officer, Treasurer, Director
(Principal
Financial and
Accounting
Officer)
|
March
31, 2010
|
|
Peng
Wang
|
|
|
|
/s/ Qiang Li
|
Director
|
March
31, 2010
|
|
Qiang
Li
|
|
|
|
47