Our operating subsidiaries, BMP China and Wanwei, are organized and located in China. China currently is transitioning to a market-developed socialist economy. There are significant political and economic tensions resulting from this transition that could affect the business environment in China. Our efforts to expand into China pose special risks that could adversely affect our business. Doing business in China also will subject us to the customary risks of doing business in foreign countries. These risks include, among others, the effects of:
Any of these risks could cause significant interruptions in our distribution and other operations, which would adversely affect our ability to conduct business in China and our financial condition, results of operations and business.
Substantially all of our revenues, profits, cash flows and assets have been, and we expect will continue to be, derived in China and be denominated in Chinese currency, or RMB. The value of the RMB, which is controlled and adjusted periodically by the Chinese government, fluctuates and is subject to changes in the political and economic conditions in China. On July 21, 2005, China increased the value of the RMB by 2.1% to RMB 8.11 to the dollar and announced that the RMB would no longer be pegged to the United States dollar, but would be allowed to float in a band (and, to a limited extent, increase in value) against a basket of foreign currencies. On December 31, 2006, the exchange rate of United States dollar to RMB is approximately 1 to 7.82. Any devaluation of the RMB could adversely affect the value of our common stock in foreign currency terms because we will receive substantially all of our revenues in RMB. Fluctuations in exchange rates also could adversely affect the value, translated or converted into United States dollars, of our net assets, earnings and any declared dividends. In addition, a devaluation of the RMB is likely to increase the portion of our cash flow required to satisfy any foreign currency denominated obligations.
Substantially all of our revenues are in RMB, which currently is not a freely convertible currency. Any restrictions on currency exchange may limit our ability to use revenue generated in RMB to fund our business activities outside of China or to make dividend payments in United States dollars. Under China’s existing foreign exchange regulations, the RMB is freely convertible for trade and service-related foreign exchange transactions, but not for direct investment, loan or investment in securities outside of China without the prior approval of China’s State Administration of Foreign Exchange. Foreign exchange transactions under our capital account, including foreign currency-denominated borrowings from Chinese or foreign banks and principal payments with respect to foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the State Administration of Foreign Exchange. These limitations could affect our ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures. In the future, the Chinese government may take measures at its discretion to restrict access to foreign currencies for current account transactions if foreign currencies become scarce in China. We may be unable to pay dividends in United States dollars or other foreign currencies to our stockholders if the Chinese government restricts access to foreign currencies for current account transactions.
Substantially all of our operations are conducted in China and substantially all of our revenues are generated in China. As wholly foreign-owned enterprises, BMP China and Wanwei are required to establish reserve funds and staff and workers’ bonus and welfare funds, each of which is appropriated from net profit after taxation but before dividend distributions in accordance with Chinese law. BMP China is required to allocate at least 10% of their net profits to the reserve fund until the balance of this fund has reached 50% of BMP China’s or Wanwei’s registered capital, which, as of December 31, 2006, was approximately $2.5 million and $2.4 million, respectively.
In addition, the profit available for distribution from our Chinese subsidiaries is determined in accordance with generally accepted accounting principles in China. This calculation may differ from the one performed under generally accepted accounting principles in the United States, or GAAP. As a result, we may not receive sufficient distributions from our Chinese subsidiaries to enable us to make dividend distributions to our stockholders in the future and limitations on distributions of the profits of BMP China and Wanwei could negatively affect our financial condition and assets, even if our GAAP financial statements indicate that our operations have been profitable.
Any transfer by us of funds to our Chinese subsidiaries through a stockholder loan and the capacity for our Chinese subsidiaries to obtain an RMB loan secured by us or other foreign institutions are subject to registration with China’s State Administration of Foreign Exchange. If the sum of the aggregated medium-term and long-term external debts, the outstanding short-term external debts and RMB loans secured by foreign institution(s) of a Chinese subsidiary is less than the difference between its total investment amount and its registered capital, the Chinese subsidiary is required to apply to the appropriate examination and approval authority to increase its total investment amount. Accordingly, any transfer of funds from us, directly or indirectly, to any of our Chinese subsidiaries by means of increasing its registered capital is subject to approval by the appropriate examination and approval authorities in China. This limitation on the free flow of funds between us and our Chinese subsidiaries may restrict our ability to react to changing market conditions.
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China’s economic, political and social conditions, and its government policies, could adversely affect our business.
Substantially all of our operations are conducted in China and substantially all of our revenues are derived in China. Accordingly, our results of operations, financial condition and prospects are subject, to a significant degree, to economic, political and legal developments in China. The economy of China differs from the economies of most developed countries in many respects, including:
| • | level of government involvement; |
| • | allocation of resources; |
| • | control of foreign exchange. |
The economy of China has been transitioning from a planned economy to a more market-oriented economy. Although in recent years the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government. In addition, the Chinese government continues to play a significant role in regulating industrial development. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies.
A slow-down of the Chinese economy could adversely affect our growth and profitability.
Our financial results have been, and are expected to continue to be, affected by conditions in the Chinese economy and pharmaceutical industry. Although the Chinese economy has grown significantly in the past decade, there can be no assurance that this growth will continue or that any slow-down will not have a negative impact on our business.
The legal system in China has inherent uncertainties that could limit the legal protections available to us.
We currently conduct our business primarily through our wholly-owned operating subsidiaries, BMP China and Wanwei, and expect in the future to conduct our business through BMP China, Wanwei and other subsidiaries organized in China that we acquire, which are and will be organized in China. These subsidiaries generally are subject to laws and regulations applicable to foreign investment in China and, in particular, laws applicable to wholly foreign-owned enterprises. In addition, we depend on several affiliated entities in China to honor their service agreements with us. Chinese law governs almost all of these agreements, and disputes arising out of these agreements are expected to be decided by arbitration in China. The Chinese legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, Chinese legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since these laws and regulations are relatively new and the Chinese legal system continues to evolve, the interpretations of many laws, regulations and rules are not always uniform, and enforcement of these laws, regulations, and rules involves uncertainties that may limit remedies available to us. Any litigation in China may be protracted and may result in substantial costs and diversion of resources and management attention. In addition, China may enact new laws or amend current laws that may be detrimental to us, which may have a material adverse effect on our business operations.
We have limited business insurance coverage in China.
The insurance industry in China is still in an early stage of development. Insurance companies in China offer limited business insurance options. As a result, we have not maintained, and currently do not maintain, any liability, hazard or other insurance covering our services, business, operations, errors, acts or omissions, personnel or properties. To the extent that we are unable to recover from others for any uninsured losses, such losses could result in a loss of capital and significant harm to our business. If any action, suit and/or proceeding is brought against us and we are unable to pay a judgment rendered against us and/or defend ourselves against such action, suit and/or proceeding, our business, financial condition and operations could be negatively affected.
Any future outbreak of health epidemics, such as Severe Acute Respiratory Syndrome, or SARS, Asian Influenza, or Asian Bird Flu, or any other epidemic in China could have a material adverse effect on our business operations, financial condition and results of operations.
From December 2002 to June 2003, China and certain other Asian countries experienced an outbreak of a new and highly contagious form of atypical pneumonia now known as SARS. In addition, recent outbreaks of the Asian Bird Flu have occurred throughout Asia. Outbreaks of SARS, Asian Bird Flu or any other epidemic in the future may disrupt our business operations and have a material adverse effect on our financial condition and results of operations. For example, a new outbreak of SARS, Asian Bird Flu or any other epidemic likely would reduce the level of economic activity in affected areas, which may lead to a reduction in our revenue if our clients cancel existing contracts or defer future expenditures. In addition, health or other government regulations may require temporary closing of our offices, or the offices of our customers or partners, which would severely disrupt our business operations and have a material adverse effect on our financial condition and results of operations.
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Risks Relating to Pharmaceutical Distribution in China and Wanwei
The absence of express laws and regulations in China regarding foreign investment in China’s pharmaceutical distribution sector may cause uncertainty.
Pursuant to China’s Administrative Measures on the Foreign Investment in Commercial Sector, as of December 11, 2004, foreign enterprises are permitted to establish or invest in wholly foreign-owned enterprises or joint ventures that engage in wholesale or retail sales of pharmaceuticals in China subject to the implementation of relevant regulations. However, no specific regulation in this regard has been promulgated to date. If specific regulations are not promulgated, or if any promulgated regulations contain clauses that will cause an adverse impact to our current and future acquisitions in China, our operations and business strategy will be adversely affected.
Wanwei may be unable to obtain renewals of necessary pharmaceutical distribution permits.
Under Chinese law, all pharmaceutical wholesale and retail enterprises engaging in the pharmaceutical distribution business must obtain a pharmaceutical distribution permit, and must comply with China’s GSP standards and obtain a GSP certificate. Both the permit and certificate are valid for five years and are subject to renewal and reassessment by the relevant Chinese authorities, and the standards of compliance required in relation thereto may from time to time be subject to change. Any changes in compliance standards, or any new laws or regulations that prohibit or render it more restrictive for Wanwei or other pharmaceutical distribution enterprises we may acquire in the future to conduct their business or that increase their compliance costs may adversely affect their or our operations and profitability.
Wanwei has previously obtained a GSP certificate and pharmaceutical distribution permit. Wanwei’s GSP certificate will expire on April 3, 2008 and its pharmaceutical distribution permit will expire on February 2, 2010. Although we do not believe that Wanwei will be unable to obtain renewals of its GSP certificate and pharmaceutical distribution permit in the future, its ability to do so is primarily outside of its or our control. Any failure by Wanwei to obtain renewals of its GSP certificate or pharmaceutical distribution permit may have a material adverse effect on its operations by restricting its ability to carry out its pharmaceutical distribution business, among other things.
Price control regulations may decrease our profitability.
The prices of certain medicines Wanwei distributes, including those listed in the Chinese government’s catalogue of medications that are reimbursable under China’s social insurance program, or the Insurance Catalogue, are subject to control by the relevant state or provincial price administration authorities. In practice, price control with respect to these medicines sets a ceiling on their retail price. The actual price of such medicines set by manufacturers, wholesalers and retailers cannot historically exceed the price ceiling imposed by applicable government price control regulations. Although, as a general matter, government price control regulations have resulted in drug prices tending to decline over time, there has been no predictable pattern for such decreases.
Revenues from products distributed by Wanwei that are subject to price controls accounted for a total of approximately 66% and 70% of Wanwei’s total revenues in the years ended December 31, 2004 and 2005. Hence, the prices of these medicines could not be increased at Wanwei’s discretion above the price ceiling without prior government approval. It is uncertain whether Wanwei would be able to obtain the necessary approvals to increase the prices of these medicines. This could affect Wanwei’s ability to maximize its profits or to profitably sell these products.
The bidding process with respect to the purchase of pharmaceutical products may lead to reduced revenue.
Chinese regulations require non-profit medical organizations established in China to implement bidding procedures for the purchase of drugs. It is intended that the implementation of a bidding purchase system will be extended gradually and will cover, among other drugs, those drugs consumed in large volume and commonly used for clinical uses. Pharmaceutical wholesalers must have the due authorization of the pharmaceutical manufacturers in order to participate in the bidding process. If, for the purpose of reducing the bidding price, pharmaceutical manufacturers participate in the bidding process on their own and enter into purchase and sales contracts with medical organizations directly without authorizing a pharmaceutical distributor, the revenue of Wanwei or any other subsidiaries that we may acquire in the future, whose main business is pharmaceutical distribution, may be adversely affected.
Even though Wanwei has established long-term business relationships with many medical organizations, if a pharmaceutical manufacturer whose products we do not distribute is awarded a contract under the bidding process, the medical organization that initiated the bidding process will be restricted under its agreement with the winning bidder from purchasing similar products from Wanwei.
If the medicines Wanwei distributes are replaced by other medicines or are removed from China’s Insurance Catalogue in the future, Wanwei’s revenue may suffer.
Under Chinese regulations, patients purchasing medicines listed by China’s state and/or provincial governments in the Insurance Catalogue may be reimbursed, in part or in whole, by a social medicine fund. Accordingly, pharmaceutical distributors prefer to engage in the distribution of medicines listed in the Insurance Catalogue. Currently, the main products that Wanwei distributes are listed in the Insurance Catalogue. The content of the Insurance Catalogue is subject to change by the Ministry of Labor and Social Security of China, and new medicines may be added to the Insurance Catalogue by provincial level authorities as part of their limited ability to change certain medicines listed in the Insurance Catalogue. If the medicines Wanwei distributes are replaced by other medicines or removed from the Insurance Catalogue in the future, Wanwei’s revenue may suffer.
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Risks Relating to Our Common Stock
Sales of substantial amounts of our common stock in the public market could depress the market price of our common stock.
Since August 10, 2006, our common stock has been traded on the NASDAQ Capital Market. If our stockholders sell substantial amounts of common stock in the public market, including common stock issuable upon the exercise of outstanding warrants and options, or the market perceives that such sales may occur, the market price of our common stock could fall and we may be unable to sell our common stock in the future. We had 26,531,027 shares of common stock outstanding as of January 2, 2007. Approximately 8,640,834 of these outstanding shares are held by Abacus, who may be deemed to be our “affiliate“ as that term is defined under Rule 144 under the Securities Act of 1933, as amended, or the Securities Act, and would be subject to Rule 144. After this offering, we will have outstanding 26,522,868 shares of common stock based on the number of shares outstanding as of January 2, 2007. This includes 3,333,306 shares that are being registered under this registration statement, all of which, unless purchased by our “affiliates,” as that term is defined in Rule 144 under the Securities Act, may be resold in the public market immediately. We also are registering under this registration statement for resale by the selling stockholders 1,116,611 shares issuable upon the exercise of warrants. Sales of substantial amounts of our common stock over limited time periods would likely materially decrease the market price of our common stock.
If the ownership of our common stock continues to be highly concentrated, it may prevent you and other stockholders from influencing corporate decisions, such as significant corporate transactions and the election and replacement or removal of directors and management, and may also result in conflicts of interest that could cause our stock price to decline.
As of January 16, 2007, Abacus beneficially owned or controlled approximately 32.6% of our outstanding shares of common stock. If Abacus were to act on its own, it likely could control the outcome of corporate actions requiring stockholder approval, including the election, replacement or removal of directors, any merger, consolidation or sale of all or substantially all of our assets, or any other significant corporate transactions, and by virtue of its ability to control the board of directors could control and influence management composition. Abacus may have different interests than other stockholders. For example, Abacus could act to delay or prevent a change of control of us, even if such a change of control would benefit our other stockholders, could prevent or frustrate attempts to replace or remove current management, or Abacus could pursue strategies that are different from the wishes of other investors. This significant concentration of stock ownership may adversely affect the trading price of our common stock due to investors’ perception that conflicts of interest may exist or arise.
Our common stock may experience extreme price and volume fluctuations, which could lead to costly litigation for us and make an investment in us less appealing.
The market price of our common stock may fluctuate substantially due to a variety of factors, including:
| • | announcements concerning our competitors or the pharmaceutical distribution industry in general; |
| • | rate of sales and customer acceptance; |
| • | changing factors related to doing business in China; |
| • | interruption of supply or changes in our agreements with manufacturers or distributors; |
| • | new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals; |
| • | general and industry-specific economic conditions; |
| • | additions to or departures of our key personnel; |
| • | variations in our quarterly financial and operating results; |
| • | changes in market valuations of other companies that operate in our business segments or in our industry; |
| • | lack of adequate trading liquidity; |
| • | announcements about our business partners; |
| • | changes in accounting principles; and |
| • | general market conditions. |
The market prices of the securities of early-stage companies, particularly companies like ours without consistent product revenues and earnings, could be highly volatile. In the past, companies that experience volatility in the market price of their securities have often faced securities class action litigation. Whether or not meritorious, litigation brought against us could result in substantial costs, divert our management’s attention and resources and harm our financial condition and results of operations.
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the sections titled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Our Business,” contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements herein include, among others, statements relating to:
| • | our potential acquisition of a majority interest in Rongheng; |
| • | competition in the Chinese pharmaceutical distribution industry and our ability to compete; |
| • | our belief regarding the significance of our acquisition of Wanwei; |
| • | our belief that a significant opportunity exists to obtain an increased market share in the Chinese pharmaceutical marketing and distribution markets by offering a distribution chain solution that combines our market development services with market fulfilment services; |
| • | our expectation to continue to incur significant and increasing operating expenses and capital expenditures; |
| • | our expectation that substantially all of our revenues, profits, cash flows and assets will continue to be derived in China and be dominated in Chinese currency; |
| • | our belief regarding the significance of brand recognition; |
| • | our ability to renew any GSP certificate or any pharmaceutical distributor permit to conduct business as a pharmaceutical distributor or to maintain this certificate or permit; |
| • | our expectation that we may incur operating losses for the foreseeable future; |
| • | our future financial and operating results; |
| • | the dependence of our future success on obtaining additional promotional and market research agreements and licensing rights for China and on acquiring additional distribution companies; |
| • | our ability to fund our current level of operations for the next twelve months through our cash and cash equivalents; |
| • | our expectation regarding our Exchange Act reporting obligations; and |
| • | Any other statements regarding matters not of historical fact. |
The words “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue,” and similar expressions may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Forward-looking statements involve known and unknown risks, uncertainties and achievements, and other factors that may cause our or our industry’s actual results, levels of activity, performance, or achievements to be materially different from the information expressed or implied by these forward-looking statements. While we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we caution you that these statements are based on a combination of facts and factors currently known by us and projections of the future about which we cannot be certain. Many factors affect our ability to achieve our objectives, including:
| • | delays in entering into, or our inability to enter into definitive documents to acquire a majority interest in Rongheng; |
| • | difficulties in acquiring complementary businesses or in integrating acquired businesses; |
| • | our inability to obtain additional capital when necessary; |
| • | delays in product introduction and marketing or interruptions in supply; |
| • | a decrease in business from our major clients; |
| • | our inability to compete successfully against new and existing competitors or to leverage our marketing capabilities with our distribution capabilities; |
| • | adverse economic, political or social conditions in China; |
| • | our inability to renew our GSP certificate or our pharmaceutical distributor permit to conduct business as a pharmaceutical distributor or to maintain this certificate and permit; |
| • | our inability to manage our growth effectively; |
| • | our inability to attract and retain key personnel; |
| • | our inability to effectively market our services or obtain and maintain arrangements with manufacturers; and |
| • | a slowdown in the Chinese economy. |
In addition, you should refer to the “Risk Factors” section of this prospectus for a discussion of other factors that may cause our actual results to differ materially from those implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this prospectus will prove to be accurate. In addition, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, if at all. We may not update these forward-looking statements, even though our situation may change in the future.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders. We will bear all costs, expenses and fees in connection with the registration of shares of our common stock to be sold by the selling stockholders. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares.
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THE SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial ownership by the selling stockholders listed below of shares of our common stock as of January 2, 2007. The shares of our common stock offered hereby includes, unless otherwise indicated, the shares of our common stock, including the shares of our common stock issuable upon exercise of warrants, that were purchased by the selling stockholders in our private placement of securities in December 2006 (the “December 2006 Private Placement”).
The following table assumes that the selling stockholders will sell all of the shares of our common stock offered by them in this offering. However, the selling stockholders may offer all or some portion of our shares of common stock or any shares of common stock issuable upon exercise of outstanding options or warrants held by them. Accordingly, no estimate can be given as to the amount or percentage of our common stock that will be held by the selling stockholders upon termination of sales pursuant to this prospectus. In addition, the selling stockholders identified below may have sold, transferred or disposed of all or a portion of their shares since the date on which they provided the information regarding their holdings in transactions exempt from the registration requirements of the Securities Act.
We will bear all costs, expenses and fees in connection with the registration of shares of our common stock to be sold by the selling stockholders. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares.
As of January 2, 2007, there were 26,522,868 shares of our common stock outstanding. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of Common Stock subject to options and warrants, currently exercisable or exercisable within 60 days of January 2, 2007, are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated, the selling stockholders have the sole power to direct the voting and investment over shares owned by them. Unless otherwise indicated, warrants were acquired in the December 2006 Private Placement.
| | Shares of Common Stock Beneficially Owned Prior to the Offering | | Shares of Common Stock Beneficially Owned After the Offering | |
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Selling Stockholder | | Number of Shares Beneficially Owned | | Percent of Class | | Number of Shares Being Offered | | Number of Shares Beneficially Owned | | Percent of Class | |
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Abacus Investment Ltd | | 8,807,484 | (1) | 32.99 | % | 999,975 | | 7,807,509 | | 29.24 | % |
Les Baledge | | 1,192,684 | (2) | 4.49 | % | 319,992 | | 872,692 | | 3.28 | % |
Strata Fund LP | | 486,245 | (3) | 1.83 | % | 279,725 | | 206,520 | | | * |
Artis Microcap Fund LP | | 469,430 | (4) | 1.77 | % | 266,662 | | 202,768 | | | * |
Artis Microcap Master Fund LP | | 470,540 | (5) | 1.77 | % | 266,662 | | 203,878 | | | * |
TVI Corporation | | 996,162 | (6) | 3.75 | % | 266,662 | | 729,500 | | 2.75 | % |
Strata-Karsh Capital Ltd | | 135,197 | (7) | | * | 135,197 | | 0 | | | * |
JMG Capital Partners LP | | 133,330 | (8) | | * | 133,330 | | 0 | | | * |
JMG Triton Offshore Fund Ltd | | 133,330 | (9) | | * | 133,330 | | 0 | | | * |
Millenium Partners, LP | | 119,998 | (10) | | * | 119,998 | | 0 | | | * |
Booth & Co. | | 106,766 | (11) | | * | 106,766 | | 0 | | | * |
Cardinal Bear LLC | | 106,664 | (12) | | * | 106,664 | | 0 | | | * |
Fred C. Applegate Trustee Fred C Applegate U/A 10/8/92 | | 299,997 | (13) | 1.13 | % | 99,997 | | 200,000 | | | * |
Bost & Co | | 93,000 | (14) | | * | 93,000 | | 0 | | | * |
Strata-Karsch Capital II LP | | 69,331 | (15) | | * | 69,331 | | 0 | | | * |
Linerbrook & Co | | 68,400 | (16) | | * | 68,400 | | 0 | | | * |
Asgard Partner LP | | 93,391 | (17) | | * | 53,332 | | 40,059 | | | * |
Gus Blass II | | 376,662 | (18) | 1.42 | % | 53,333 | | 323,330 | | 1.22 | % |
Honorable Anthony Trevor Samuel Montagu | | 83,332 | (19) | | * | 53,332 | | 30,000 | | | * |
William Scott and Karen Kaplan Living Trust dated 3/17/04 William Scott and Karen Kaplan Trustees | | 459,993 | (20) | 1.73 | % | 53,332 | | 406,661 | | 1.53 | % |
Hyon Ja Hwang | | 39,999 | (21) | | * | 39,999 | | 0 | | | * |
Linerbrook & Co | | 37,200 | (22) | | * | 37,200 | | 0 | | | * |
Edward L. Fenimore | | 26,666 | (23) | | * | 26,666 | | 0 | | | * |
Elkhorn Partners LP | | 119,666 | (24) | | * | 26,666 | | 93,000 | | | * |
Endla K. Anday, Jennifer A Creed and James P Creed II JT WROS | | 55,122 | (25) | | * | 26,666 | | 28,456 | | | * |
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| | Shares of Common Stock Beneficially Owned Prior to the Offering | | Shares of Common Stock Beneficially Owned After the Offering | |
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Selling Stockholder | | Number of Shares Beneficially Owned | | Percent of Class | | Number of Shares Being Offered | | Number of Shares Beneficially Owned | | Percent of Class | |
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NFS/FMTC Cust FBO Annemie Deruytter IRA | | 61,666 | (26) | | * | 26,666 | | 35,000 | | | * |
Nite Capital LP | | 26,666 | (27) | | * | 26,666 | | 0 | | | * |
Patricia McDermott | | 46,666 | (28) | | * | 26,666 | | 20,000 | | | * |
Vincent Piazza | | 76,664 | (29) | | * | 26,666 | | 49,998 | | | * |
Kathleen A. Tornetta | | 35,333 | (30) | | * | 13,333 | | 22,000 | | | * |
Paul J. Goldberg, Penny J. Goldberg JT WROS | | 56,943 | (31) | | * | 13,333 | | 45,832 | | | * |
Booth & Co | | 7,800 | (32) | | * | 7,800 | | 0 | | | * |
Linerbrook & Co | | 6,840 | (33) | | * | 6,840 | | 0 | | | * |
Strata – Karsch Capital I LP | | 6,133 | (34) | | * | 6,133 | | 0 | | | * |
Strata – Serena Ltd | | 4,799 | (35) | | * | 4,799 | | 0 | | | * |
Strata Offshore Fund | | 7,894 | (36) | | * | 4,799 | | 3,095 | | | * |
Robert Fisk | | 368,944 | (37) | 1.37 | % | 209,781 | | 159,163 | | | * |
James Allsopp | | 131,146 | (38) | | * | 73,063 | | 58,083 | | | * |
Kevin Hamilton | | 128,400 | (39) | | * | 54,062 | | 74,338 | | | * |
Sean McDermott | | 123,345 | (40) | | * | 49,592 | | 73,753 | | | * |
Peter Jacobs | | 54,156 | (41) | | * | 22,688 | | 31,468 | | | * |
Robert Jacobs | | 102,834 | (42) | | * | 15,125 | | 87,709 | | | * |
Bernadette Pucillo | | 33,000 | (43) | | * | 10,000 | | 23,000 | | | * |
Paul Smith | | 23,648 | (44) | | * | 6,188 | | 17,460 | | | * |
Brinton Frith | | 3,300 | (45) | | * | 2,750 | | 550 | | | * |
Frank Campbell III | | 241,738 | (46) | | * | 2,063 | | 239,675 | | | * |
Meghan Hamilton | | 4,920 | (47) | | * | 2,000 | | 2,920 | | | * |
Karen Spataccino | | 6,000 | (48) | | * | 2,000 | | 4,000 | | | * |
Robert Schmauk | | 6,409 | (49) | | * | 688 | | 5,721 | | | * |
* | Represents beneficial ownership of less than one percent of our outstanding common stock. |
(1) | Includes 166,650 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Philip Embiricos, Ning Ning Chang, Robert Mulderig, Deanna Didyk, Sir John Craven and John F. Turben are the natural persons with voting and investment control over these shares. |
(2) | Includes 53,328 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(3) | Includes 46,417 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(4) | Includes 44,440 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Stuart Peterson is the natural person with voting and investment control over these shares. |
(5) | Includes 44,440 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Stuart Peterson is the natural person with voting and investment control over these shares. |
(6) | Includes 44,440 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Daniel Harrington and Tinkham Veale are the natural persons with voting and investment control over these shares. |
(7) | Includes 22,531 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(8) | Includes 22,220 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Jonathan M. Glaser is the natural person with voting and investment control over these shares. |
(9) | Includes 22,220 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Jonathan M. Glaser and Daniel A. David are the natural persons with voting and investment control over these shares. |
(10) | Includes 19,998 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Israel A. Englander is the natural person with voting and investment control over these shares. |
(11) | Includes 17,800 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Ashford is the natural person with voting and investment control over these shares. |
(12) | Includes 17,776 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Michael F. Baxter is the natural person with voting and investment control over these shares. |
(13) | Includes 16,665 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Fred Applegate is the natural person with voting and investment control over these shares. |
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(14) | Includes 15,500 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Ashford is the natural person with voting and investment control over these shares. |
(15) | Includes 11,554 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(16) | Includes 11,400 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Ashford is the natural person with voting and investment control over these shares. |
(17) | Includes 8,888 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Ron Silverton and Todd M. Binder are the natural persons with voting and investment control over these shares. |
(18) | Includes 8,888 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(19) | Includes 8,888 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(20) | Includes 8,888 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. William Scott and Karen Kaplan are the natural persons with voting and investment control over these shares. |
(21) | Includes 6,666 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(22) | Includes 6,200 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Ashford is the natural person with voting and investment control over these shares. |
(23) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(24) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Alan S. Parsow the natural person with voting and investment control over these shares. |
(25) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(26) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(27) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(28) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(29) | Includes 4,444 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(30) | Includes 2,222 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(31) | Includes 2,222 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. |
(32) | Includes 1,300 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Asford is the natural person with voting and investment control over these shares. |
(33) | Includes 1,140 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Theodore H. Asford is the natural person with voting and investment control over these shares. |
(34) | Includes 1,022 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(35) | Includes 800 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(36) | Includes 800 shares of common stock issuable upon the exercise of warrants, all of which are offered hereby. Steve Bardack is the natural person with voting and investment control over these shares. |
(37) | Includes 350,162 shares of common stock issuable upon the exercise of warrants, of which 209,781 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(38) | Includes 95,969 shares of common stock issuable upon the exercise of warrants, of which 73,063 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(39) | Includes 111,900 shares of common stock issuable upon the exercise of warrants, of which 54,062 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(40) | Includes 113,345 shares of common stock issuable upon the exercise of warrants, of which 49,592 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(41) | Includes 22,688 shares of common stock issuable upon the exercise of warrants, all of which were acquired in the December 2006 Private Placement and are offered hereby. |
(42) | Includes 49,284 shares of common stock issuable upon the exercise of warrants, of which 15,125 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(43) | Includes 19,000 shares of common stock issuable upon the exercise of warrants, of which 10,000 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(44) | Includes 6,188 shares of common stock issuable upon the exercise of warrants, all of which were acquired in the December 2006 Private Placement and are offered hereby. |
(45) | Represents 3,300 shares of common stock issuable upon the exercise of warrants, of which 2,750 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(46) | Includes 3,328 shares of common stock issuable upon the exercise of warrants, of which 2,063 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(47) | Includes 2,000 shares of common stock issuable upon the exercise of warrants, all of which were acquired in the December 2006 Private Placement and are offered hereby. |
(48) | Includes 5,000 shares of common stock issuable upon the exercise of warrants, of which 2,000 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
(49) | Includes 1,321 shares of common stock issuable upon the exercise of warrants, of which 688 shares underlying warrants were acquired in the December 2006 Private Placement and are offered hereby. |
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PLAN OF DISTRIBUTION
The shares of common stock covered by this prospectus may be offered and sold from time to time by the selling stockholders. As used in this prospectus, “selling stockholders” includes transferees, donees, pledgees, or other successors-in-interest to the named selling stockholders. The selling stockholders may sell all or a portion of the shares of our common stock beneficially owned by them and offered by this prospectus from time to time:
| • | through underwriters, broker-dealers, or agents, who may receive compensation in the form of discounts, commissions or concessions from the selling stockholder or from the purchasers of the shares for whom such underwriters, broker-dealers, or agents may act as agent. |
The shares may be sold from time to time in one or more transactions at:
| • | fixed prices, which may be changed; |
| • | prevailing market prices at the time of sale; |
| • | varying prices determined at the time of sale; or |
The sales described in the preceding paragraph may be effected in transactions:
| • | on any national securities exchange or quotation service on which the shares of our common stock may be listed or quoted at the time of sale, including the NASDAQ Stock Market; |
| • | in the over-the-counter market; |
| • | otherwise than on such exchanges or services or in the over-the-counter market; or |
| • | through the writing of options. |
These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade.
In connection with sales of the shares of our common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers. These broker-dealers may in turn engage in short sales of the shares of our common stock in the course of hedging their positions. The selling stockholders may also sell the shares of our common stock short and deliver shares of our common stock to close out short positions, or loan or pledge shares to broker-dealers that in turn may sell the shares. The selling stockholders may pledge or grant a security interest in some or all of the shares of our common stock owned by it, and, upon a default in performance of the secured obligation, the pledgees or secured parties may offer and sell the shares from time to time pursuant to this prospectus.
To our knowledge, there currently are no plans, arrangements or understandings between any selling stockholders and any underwriter, broker-dealer or agent regarding the sale of the shares by the selling stockholders. The selling stockholders may determine not to sell any or all of the shares offered by it pursuant to this prospectus. In addition, we cannot assure you that the selling stockholders will not transfer the shares by other means not described in this prospectus. In this regard, any shares covered by this prospectus that qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, upon being notified by the selling stockholders that any material arrangement has been entered into with any agent, underwriter or broker-dealer for the sale of common stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by any agent, underwriter or broker-dealer, the name of the selling stockholders and of the participating agent, underwriter or broker-dealer, specific shares to be sold, the respective purchase prices and public offering prices, any applicable commissions or discounts, and other facts material to the transaction will be set forth in a supplement to this prospectus or a post-effective amendment to the registration statement of which this prospectus is a part, as appropriate.
The outstanding shares of our common stock are quoted on the NASDAQ Capital Market under the symbol “BJGP.”
In order to comply with the securities laws of some states, if applicable, the shares of our common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.
The selling stockholders and any broker and any broker-dealers, agents or underwriters that participate with the selling stockholders in the distribution of the shares of our common stock may be deemed to be “underwriters” within the meaning of the Securities Act. In this case, any commissions received by these broker-dealers, agents or underwriters and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. In addition, any profits realized by the selling stockholders may be deemed to be underwriting commissions. If a selling stockholder is deemed to be an underwriter, the selling stockholder may be subject to certain statutory liabilities including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act. Any selling stockholder who is deemed an underwriter within the meaning of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.
The selling stockholders and any other person participating in such distribution will be subject to the Exchange Act. The Exchange Act rules include Regulation M, which may limit the timing of purchases and sales of any of the shares of our common stock by the selling stockholders and any such other person. In addition, Regulation M may restrict the ability of any person engaged in the distribution of the shares to engage in market-making activities with respect to the particular shares of our common stock being distributed for a period of up to five business days prior to the commencement of the distribution. This may affect the marketability of the shares of our common stock and the ability of any person or entity to engage in market-making activities with respect to the shares of our common stock.
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We will bear all costs, expenses and fees in connection with the registration of shares of our common stock, including shares issuable upon the exercise of warrants, to be sold by the selling stockholders. The selling stockholders will bear all commissions and discounts, if any, attributable to their respective sales of shares of our common stock. In addition, the selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving the sales of shares of our common stock against some liabilities, including liabilities arising under the Securities Act.
Subject to our compliance with the Securities Act and the rules of any trading market on which shares of our common stock trade, we will maintain the effectiveness of the registration statement of which this prospectus forms a part until October 2007, at which time, unless purchased by one of our “affiliates” as that term is defined in Rule 144 under the Securities Act, the substantial majority of the shares covered by this prospectus will be freely tradable pursuant to Rule 144(k) under the Securities Act. However, we may determine in our sole discretion to suspend the use of this prospectus or to cause the registration statement to no longer be effective at any time and from time to time, including whenever we are required to update the prospectus in accordance with the Securities Act. We also may not be able to maintain effectiveness of the registration statement of which this prospectus forms a part. If use of the prospectus is suspended or the registration statement of which this prospectus forms a part, once effective, ceases at any time to continue to be effective, the selling stockholders would not be able to offer and resell or otherwise transfer the shares covered by this prospectus pursuant to the registration statement.
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DESCRIPTION OF CAPITAL STOCK
General
Our authorized capital stock consists of 50,000,000 shares of common stock, par value $0.001 per share, and 20,000,000 shares of preferred stock, par value $0.001 per share. As of January 2, 2007, there were 26,522,868 shares of our common stock outstanding, outstanding options to purchase 1,668,000 shares of our common stock, and outstanding warrants to purchase 1,640,844 shares of our common stock.
Common Stock
Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available thereof at such time and in such amounts as the board of directors may from time to time determine. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our certificate of incorporation, which means that the holders of a majority of the shares voted can elect all of the directors then standing for election. The common stock is not entitled to preemptive rights and is not to subject to conversion or redemption. Upon the occurrence of a liquidation, dissolution or winding-up, the holders of shares of our common stock would be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all of our liabilities and the payment of any liquidation preference of any outstanding preferred stock. Each outstanding share of our common stock is, and all shares of our common stock to be outstanding upon completion of this offering will be, fully paid and nonassessable.
Options
As of January 2, 2007, options to purchase a total of 1,668,000 shares of our common stock were outstanding and options to purchase 812,000 additional shares of our common stock were available for future grant under our 2004 Stock Incentive Plan.
Warrants
As of January 2, 2007, there were outstanding warrants to purchase up to 1,640,844 shares of our common stock at exercise prices between $1.15 and $5.625 per share that expire between April 2009 and December 2011.
Antitakeover Effects of Provisions of our Certificate of Incorporation and Bylaws and under Delaware Law
Our bylaws provide that only the Chairman of our board of directors or a majority of the members of our board of directors may call a special meeting of stockholders. Our bylaws also establish procedures, including advance notice, with regard to the nomination of directors and stockholder proposals. These provisions of the bylaws could discourage potential acquisition proposals and could delay or prevent a change in control. Such provisions also may have the effect of preventing changes in our management.
In addition, we are subject to Section 203 of the Delaware General Corporation Law, which, subject to certain exceptions, generally prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the time that such stockholder became an interested stockholder, unless:
| • | prior to the business combination, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; or |
| • | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding, for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder), those shares owned: |
| • | by persons who are directors and also officers; |
| • | by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
| • | at or after the time the stockholder became an interested stockholder, the business combination is approved by our board of directors and authorized at an annual or special meeting of our stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of our outstanding voting stock that is not owned by the interested stockholder. |
In general, the Delaware General Corporation Law defines an interested stockholder as an entity or person (other than the corporation and any direct or indirect majority-owned subsidiaries of the corporation) that beneficially owns 15% or more of the outstanding voting stock of the corporation or any entity or person that is an affiliate or associate of such entity or person.
The Delaware General Corporation Law generally defines a business combination to include the following:
| • | any merger or consolidation involving the corporation and the interested stockholder; |
| • | any sale, lease, exchange, mortgage, pledge, transfer or other disposition of 10% or more of the aggregate market value of all the assets of the corporation or its majority-owned subsidiary that involves the interested stockholder; |
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| • | subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; |
| • | subject to certain exceptions, any transaction involving the corporation that has the effect of increasing the interested stockholder’s proportionate share of the stock of any class or series of the corporation; and |
| • | the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. |
Transfer Agent and Registrar
The Transfer Agent and Registrar for our common stock is Florida Atlantic Stock Transfer, Inc., whose address is 7130 Nob Hill Road, Tamarac, Florida 33321, and whose phone number is (954) 726-4954.
Listing
Since August 10, 2006, our common stock has been traded on the NASDAQ Capital Market under the trading symbol “BJGP.” From February 22, 2006 to August 9, 2006, our common stock was quoted on the Over-the-Counter Bulletin Board under the trading symbol “BJGP.OB.” Prior to that, our common stock was quoted on the Pink Sheets under the symbol “BJGP.PK.” On January 17, 2007, the last reported sale price of our common stock on NASDAQ was $7.59 per share. Since July 2005, we have been subject to the reporting requirements of the Exchange Act.
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EXPERTS
The financial statements of Beijing Med-Pharm Corporation and Subsidiary, Beijing Med-Pharm Market Calculating Co. Ltd., as of December 31, 2004 and 2005, and for each of the three years in the period ended December 31, 2005, included in this prospectus have been audited by Grant Thornton, Hong Kong, an independent registered public accounting firm, as stated in its reports appearing herein. These financial statements have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
Beijing Wanwei Pharmaceutical Co. Ltd.’s financial statements as of December 31, 2004 and 2005, and for each of the three years in the period ended December 31, 2005, included in this prospectus have been audited by Grant Thornton, Hong Kong, an independent registered public accounting firm, as stated in its reports appearing herein. These financial statements have been so included in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters with respect to the validity of shares of the common stock being offered hereby will be passed on for us by Morgan, Lewis & Bockius LLP, Philadelphia, Pennsylvania. One of our selling stockholders named in this prospectus, Charles G. Lubar, who beneficially owns 21,739 shares of our common stock, is a partner at Morgan, Lewis & Bockius LLP.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3, including exhibits, schedules and amendments filed with this registration statement, under the Securities Act with respect to offers and resales of shares of our common stock by the selling stockholders identified in this prospectus. This prospectus, which constitutes part of the registration statement, does not include all of the information contained in the registration statement and its exhibits and schedules. You should refer to the registration statement and its exhibits and schedules for additional information. Whenever we make reference in this prospectus to any of our contracts, agreements or other documents, the references are not necessarily complete and you should refer to the exhibits filed with the registration statement for copies of the actual contract, agreement or other document. Statements contained in this prospectus as to the contents of any contract or other document referred to in this prospectus are not necessarily complete and, where that contract is an exhibit to the registration statement, each statement is qualified in all respects by reference to the exhibit to which the reference relates.
We are required to comply with the information requirements of the Exchange Act. Accordingly, we file annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statement and other information with the SEC.
You can read the registration statement and our other filings with the SEC over the Internet at the SEC’s website at http://www.sec.gov. You also may read and copy any document that we file with the SEC at its public reference room at Headquarters Office, 100 F Street, N.E., Room 1580, Washington, D.C. 20549.
You also may obtain copies of the documents at prescribed rates by contacting the Public Reference Room of the SEC at (202) 551-8090. Please call the SEC at (202) 551-8090 for further information on the operation of the public reference room.
INFORMATION INCORPORATED BY REFERENCE
The SEC requires us to “incorporate by reference” into this prospectus information that we file with the SEC in other documents. This means that we can disclose important information to you by referring to other documents that contain that information. The information incorporated by reference is considered to be part of this prospectus. Information contained in this prospectus and information that we file with the SEC in the future and incorporate by reference in this prospectus automatically updates and supersedes previously filed information. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the sale of all the shares covered by this prospectus.
| (1) | Our Annual Report on Form 10 K for the year ended December 31, 2005; |
| (2) | Our Quarterly Report on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006; |
| (3) | Our Current Reports on Form 8-K filed with the SEC on December 9, 2005 (as amended by Form 8-K/A filed with the SEC on January 27, 2006), January 26, 2006, August 24, 2006 and December 21, 2006; and |
| (4) | The description of our common stock contained in our registration statement on Form 8-A filed with the SEC on August 9, 2006 to register our common stock under the Exchange Act, including any amendments or reports filed for the purpose of updating such description. |
You may request a copy of these documents, which will be provided to you at no cost, by writing or telephoning us using the following contact information:
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Beijing Med-Pharm Corporation
600 W. Germantown Pike, Suite 400
Plymouth Meeting, Pennsylvania 19462
Attn: Fred M. Powell, Chief Financial Officer
Telephone: (610) 940-1675
You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone to provide you with information different from that contained or incorporated by reference in this prospectus. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.
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4,449,917 Shares
BEIJING MED-PHARM CORPORATION
Common Stock
![](https://capedge.com/proxy/S-3/0001125282-07-000320/img1.jpg)
PROSPECTUS
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. | Other Expenses of Issuance and Distribution. |
The following table sets forth the costs and expenses payable by the registrant in connection with the issuance and distribution of the common stock being registered. All amounts are estimates, except the SEC registration fee.
SEC registration fee | | $ | 3,123.49 |
Legal fees and expenses | | | 25,000.00 |
Accounting fees and expenses | | | 6,000.00 |
Printing and engraving expenses | | | 10,000.00 |
Miscellaneous | | | 1,000.00 |
| |
|
|
Total | | $ | 45,123.49 |
| |
|
|
No portion of these costs and expenses will be borne by the selling stockholders.
Item 15. | Indemnification of Directors and Officers. |
As permitted by Section 102(b)(7) of the Delaware General Corporation Law, the registrant’s certificate of incorporation contains a provision that eliminates the personal liability of the registrant’s directors for monetary damages for any breach of fiduciary duty as a director. This provision, however, does not eliminate a director’s liability:
| • | for any breach of the director’s duty of loyalty to the registrant or its stockholders; |
| • | for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law; |
| • | under Section 174 of the Delaware General Corporation Law; or |
| • | for a transaction from which the director derived an improper personal benefit. |
As permitted by Section 145 of the Delaware General Corporation Law, the registrant’s certificate of incorporation provides that it shall indemnify any and all persons whom it has the power to indemnify under Delaware law from and against any and all of the expenses, liabilities or other matters referred to in or covered by Section 145 of the Delaware General Business Corporation Law, and the indemnification provided for in the certificate of incorporation shall not be deemed to be exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in such person’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person.
Further, the registrant’s bylaws provide that it shall indemnify its officers and directors upon a determination by a majority of the board of directors who were not parties to such action, by independent legal counsel in a written opinion or by the stockholders that the person seeking indemnification has acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and had no reasonable cause to believe such person’s conduct was unlawful. Any expense incurred by a director or officer in defending or investigating a threatened or pending action, suit or proceeding shall be paid by the registrant in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it shall ultimately be determined that such director or officer is not entitled to be indemnified by the registrant.
The registrant may, to the extent authorized by the board of directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the registrant similar to those conferred to directors and officers of the registrant as described above.
The registrant has insurance policies providing for indemnification of officers and directors against liabilities and expenses incurred by any of them in certain proceedings and under certain conditions, such as in the absence of fraud.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors and officers of the registrant pursuant to the foregoing provisions or otherwise, the registrant has been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
II-1
Exhibit Number | | Description |
| |
|
5.1 | | Opinion of Morgan, Lewis & Bockius LLP* |
| | |
23.1 | | Consent of Grant Thornton, Hong Kong* |
| | |
23.3 | | Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)* |
| | |
24.1 | | Power of Attorney (included on signature page of registration statement)* |
II-2
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (iii) | To reflect in the prospectus any facts or events arising after the effective date of this registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
| (iiii) | To include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in this registration statement; |
provided, however , that:
Paragraphs (1)(i), (1)(ii) and (1)(iii) of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities and Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
| (i) | Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and |
| (iii) | Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness of the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at the date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date. |
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| (i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| (ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
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| (iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
| (iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(6) The registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused Form S-3 to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Plymouth Meeting, in the Commonwealth of Pennsylvania on January ___, 2007.
| | Beijing Med-Pharm Corporation (Registrant) |
January 18, 2007
| | By: | /s/ DAVID GAO
|
| | |
|
| | | | Name: David Gao |
| | | | Title: President and Chief Executive Officer |
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SIGNATURES AND POWER OF ATTORNEY
We, the undersigned officers and directors of Beijing Med-Pharm Corporation, hereby severally constitute and appoint David Gao and Fred M. Powell and each of them singly, our true and lawful attorneys with full power to any of them, and to each of them singly, to sign for us and in our names in the capacities indicated below, the registration statement on Form S-3 filed herewith and any and all pre-effective and post-effective amendments to said registration statement and generally to do all such things in our name and behalf in our capacities as officers and directors to enable Beijing Med-Pharm Corporation to comply with the provisions of the Securities Act of 1933, as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said registration statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | | Title | | Date |
| |
| |
|
/S/ DAVID GAO | | President, Chief Executive Officer and Director (Principal Executive Officer) | | January 18, 2007 |
|
David Gao |
| | | | |
/S/ FRED M. POWELL | | Chief Financial Officer (Principal Financial and Accounting Officer) | | January 18, 2007 |
|
Fred M. Powell |
| | | | |
/S/ MARTYN D. GREENACRE | | Chairman of the Board of Directors | | January 18, 2007 |
|
Martyn D. Greenacre |
| | | | |
/S/ MICHEL Y. DE BEAUMONT | | Director | | January 18, 2007 |
|
Michel Y. de Beaumont |
| | | | |
/S/ JACK M. FERRARO | | Director | | January 18, 2007 |
|
Jack M. Ferraro |
| | | | |
/S/ FRANK J. HOLLENDONER | | Director | | January 18, 2007 |
|
Frank J. Hollendoner |
| | | | |
/S/ ALBERT YEUNG | | Director | | January 18, 2007 |
|
Albert Yeung |
| | | | |
/s/ JOHN W. STAKES, M.D. | | Director | | January 18, 2007 |
|
John W. Stakes, M.D. |
| | | | |
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EXHIBIT INDEX
Exhibit Number | | Description |
| |
|
5.1 | | Opinion of Morgan, Lewis & Bockius LLP* |
| | |
23.1 | | Consent of Grant Thornton, Hong Kong* |
| | |
23.3 | | Consent of Morgan, Lewis & Bockius LLP (included in Exhibit 5.1)* |
| | |
24.1 | | Power of Attorney (included on signature page of registration statement)* |
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