Bohai Pharmaceuticals (BOPH) 8-K/A Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 12, 2010 (June 21, 2010)

Bohai Pharmaceuticals Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada	000-53401	98-0588402
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

c/o Yantai Bohai Pharmaceuticals Group Co. Ltd.

No. 9 Daxin Road, Zhifu District

Yantai, Shandong Province, China 264000

(Address of principal executive offices)

Registrant’s telephone number, including area code: +86(535)-685-7928

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

This Amendment No. 1 to Form 8-K is being filed to revise and amend the Current Report on Form 8-K filed by Bohai Pharmaceuticals Group, Inc. on June 24, 2010 in response to the comments provided by the staff (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”).

Item 4.02  Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On June 21, 2010, the Board of Directors, consisting of Mr. Hongwei Qu (the “Board”), of Bohai Pharmaceuticals Group, Inc. (the “Company”), after consultation with Company management and the Company’s independent registered public accounting firm, Parker Randall CF (H.K.) CPA Limited (“Parker Randall”), determined that previously filed unaudited financial statements of the Company for the three- and nine-month periods ended March 31, 2010 contained in the Company’s Quarterly Report on Form 10-Q, filed originally with the SEC on May 17, 2010 (the “March 2010 10-Q”) should not be relied upon.

The Company’s determination that the aforementioned financial statements should not be relied upon resulted from an evaluation of written comments (the “SEC Comments”) made by the Staff in connection with the SEC’s review of the Company’s pending Registration Statement on Form S-1 (File No. 333-165149) (the “Registration Statement”) and the SEC’s review of the Company’s financial statements contained therein.

In the SEC Comments, the Staff indicated its view that: (i) the Company’s outstanding common stock purchase warrants (including placement agent warrants) , issued January 5, 2010, to purchase up to an aggregate of 6,600,000 shares of Company common stock (the “Warrants”) should be classified as a liability and (ii) the conversion option embedded in the Company’s 8% convertible notes, issued January 5, 2010 (the “Notes”) and the Warrants should be measured at fair value through earnings each period until such time as the Notes are converted or expired.  On June 9, 2010, the Company advised Parker Randall of the SEC Comments. On June 24, 2010, the Company, with the concurrence of Parker Randall, amended the March 2010 10-Q via a first amendment thereto (“Amendment No. 1”) in a manner intended to properly account for the Notes and the Warrants.

After the Company’s further review of relevant accounting standards and additional comments of the Staff, and following discussions between the Company, the Staff, the Company’s advisors and Parker Randall, the Company determined that its previously-issued financial statements included in Amendment No. 1 should be further restated to:

1. More fully disclose and discuss the Company’s valuation of the Notes and the Warrants;

2. Account for the Warrants as a liability and measure the Warrants at fair value utilizing such revised valuation; and

3. Reverse its prior treatment of the embedded conversion options contained in the Notes as derivative instruments as defined in FASB ASC 815-10-15-83 (as was undertaken in Amendment No. 1) because the Notes do not permit or require net settlement, there is no market mechanism outside the contracts that permits net settlement and, as at January 5, 2010 and March 31, 2010, the shares to be received on conversion of the Notes are not readily convertible to cash. 

4. Revise the accounting for the fees incurred by the Company in connection with the issuance of the Notes and Warrants, to defer such fees and amortize them over the expected two-year life of the Notes.

The tables below reflects the resulting changes to the financial statements (with the numbers set forth under “As Previously Reported” being the results as disclosed in Amendment No. 1):

	Three Months Ended March 31, 2010					Nine Months Ended March 31, 2010
	As Previously Reported			As Restated		As Previously Reported			As Restated
Statement of Income Data:
Net sales	$	15,092,008		$	15,092,008	$	45,342,480		$	45,342,480
Cost of sales		2,609,515			2,609,515		7,475,740			7,475,740
Gross profit		12,482,493			12,482,493		37,866,740			37,866,740
Selling, general and administrative expenses		9,465,589			9,202,873		28,471,469			28,208,753
Interest expense		260,574			381,700		416,882			538,008
Operating income		2,756,330			2,897,920		8,978,389			9,119,979
Other income		-			-		18,864			18,864
Finance and non-operating income (expense)		(1,973,702	)		829,773		(1,995,794	)		807,681
Income before taxes		782,628			3,727,693		7,001,459			9,946,524
Income taxes		585,135			585,135		2,193,931			2,193,931
Net income	$	197,493		$	3,142,558	$	4,807,528		$	7,752,593

Balance Sheet Data:
	March 31, 2010				June 30, 2009
	As Previously Reported		As Restated		As Previously Reported		As Restated
Current assets	$	35,045,737	$	35,045,737	$	28,357,010	$	28,357,010
Other non-current assets		25,219,222		25,219,222		25,447,999		25,447,999
Deferred fees on convertible notes		-		1,898,877		-		-
Total assets		60,264,959		62,163,836		53,805,009		53,805,009
Current liabilities		9,240,124		8,554,324		20,248,229		20,248,229
Derivative liabilities – warrants		-		5,323,640		-		-
Convertible notes, net		11,863,217		121,127		-		-
Total liabilities		21,103,341		13,999,091		20,248.229		20,248.229
Stockholders’ Equity
Additional paid-in capital		3,378,203		9,553,666		2,974,520		2,974,520
Retained earnings		26,457,519		29,402,584		22,050,068		22,050,068
Accumulated other comprehensive income		499,509		382,108		490,931		490,931
Other capital accounts		8,826,387		8,826,387		8,041,261		8,041,261
Total stockholders’ equity		39,161,618		48,164,745		33,556,780		33,556,780
Total liabilities and stockholders’ equity	$	60,264,959	$	62,163,836	$	53,805,009	$	53,805,009

The table below summarizes the effects of the changes made to the Company’s financial statements:

Statement of Income Data:

	Three Months Ended March 31, 2010			Nine Months Ended March 31, 2010
Net income, as previously reported	$	197,493		$	4,807,528
Adjustments:
Deferred fees		1,297,041			1,297,041
Interest expense on convertible notes		(121,126	)		(121,126	)
Change in warrant liabilities		1,769,150			1,769,150
Total net income adjustment		2,945,065			2,945,065
Net income, as restated	$	3,142,558		$	7,752,593

Balance Sheet Data:

	March 31, 2010			June 30, 2009
Total assets, as previously reported	$	60,264,959		$	53,805,009
Deferred fees on convertible notes, as restated		1,898,877			—
Total assets, as restated		62,163,836			53,805,009
Total liabilities, as previously reported		21,103,341			20,248,229
Adjustments:
Convertible notes		(11,742,090	)		—
Warrant liabilities, reclassified		685,800			—
Warrant liabilities, restated		4,637,840			—
Total liabilities adjustment		(7,104,250	)		—
Total liabilities, as restated		13,999,091			20,248,229
Shareholders’ equity, as previously reported		39,161,618			33,556,780
Adjustments:
Accumulated other comprehensive income		(117,401	)		—
Additional paid-in capital - beneficial conversion feature		6,175,463			—
Net income adjustment		2,945,065			—
Net Shareholders equity adjustment		9,003,127			—
Shareholders’ equity, restated	$	48,164,745		$	33,556,780

Because the Company will be restating its financial statements appearing in Amendment No. 1 based on the foregoing, the Company is filing this Current Report on Form 8-K/A to disclose that its financial statements set forth in Amendment No.1 should no longer be relied upon, and that restated financial statements to be presented in a second amendment on Form 10-Q/A will be filed with SEC concurrently herewith.

The Company’s executive officers discussed with Parker Randall the matters disclosed in this Item 4.02 of Form 8-K/A and the Company has provided a copy of this disclosure to Parker Randall.  The Company’s executive officers and the Board are assessing the effect of the pending restatements on the Company’s internal control over financial reporting and its disclosure controls and procedures.

Cautionary Note on Forward Look Statements

This Current Report on Form 8-K/A and the exhibits hereto and the statements of representatives and partners of Bohai Pharmaceuticals Group, Inc. (the “Company”) related thereto contain or may contain, among other things, certain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995.  Such forward-looking statements involve significant risks and uncertainties.  Such statements may include, without limitation, statements with respect to the Company’s plans, objectives, projections, expectations and intentions and other statements identified by words such as “projects”, “may”, “could”, “would”, “should”, “believes”, “expects”, “anticipates”, “estimates”, “intends”, “plans” or similar expressions.  These statements are based upon the current beliefs and expectations of the Company’s management and are subject to significant risks and uncertainties, including those detailed in the Company’s filings with the Securities and Exchange Commission.  Actual results, including, without limitation, those relating to the Company’s financial statements, may differ significantly from those set forth in the forward-looking statements.  These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company’s control).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

August 12, 2010	Bohai Pharmaceuticals Group, Inc.
	By:	/s/ Hongwei Qu
		Name:	Hongwei Qu
		Title:	President and Chief Executive Officer