UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
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): September 14, 2011 (September 13, 2011)
Bohai Pharmaceuticals Group, Inc.
(Exact name of registrant as specified in its charter)
| Nevada | | 000-53401 | | 98-069745 |
| (State or other jurisdiction | | (Commission | | (IRS Employer |
| of incorporation) | | File Number) | | 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:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 4.02 Non-Reliance on Previously Issued Financial Statements
On September 13, 2011, the Audit Committee of the Board of Directors (the “Audit Committee”) and the full Board of Directors (the “Board”) of Bohai Pharmaceuticals Group, Inc. (the “Company”), after consultation with Company management and the Company’s previous and current independent registered public accounting firms, Parker Randall CF (H.K.) CPA Limited (“Parker Randall”) and Marcum Bernstein & Pinchuk LLP (“Marcum”), respectively, determined that the following previously filed financial statements of the Company should not be relied upon for the reasons stated herein:
| | (i) | The Company’s audited consolidated financial statements for the fiscal year ended June 30, 2010 contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2010, originally filed with the Securities and Exchange Commission (“SEC”) on September 28, 2010; |
| | (ii) | The Company’s unaudited financial statement for the three-month period ended September 30, 2010 contained in the Company’s Quarterly Reports on Form 10-Q, originally filed with the SEC on November 12, 2010; |
| | (iii) | The Company’s unaudited financial statement for the three-month period and six-month period ended December 31, 2010 contained in the Company’s Quarterly Reports on Form 10-Q, originally filed with the SEC on February 14, 2011; |
| | (iv) | The Company’s unaudited financial statement for the three-month period and nine-month period ended March 31, 2011 contained in the Company’s Quarterly Reports on Form 10-Q, originally filed with the SEC on May 16, 2011. |
The Company’s voluntary review of the above mentioned filings have led to the conclusion by management, the Audit Committee and the Board that the financial statements in such filings should be restated to be properly recognize certain non-cash deferred tax charges related to the Company’s pharmaceutical formulas as an intangible indefinite asset which the Company did not previously recognize.
After discussion, review and analysis of the accounting literature and the Company's prior disclosures relating to the foregoing matter, the Company has determined that the following adjustments to the aforementioned financial statements are appropriate:
Since 2005, the Company has not amortized its indefinite-lived drug formula for financial reporting purposes in accordance with US GAAP but did amortize these drug formulas for tax purposes, resulting in a difference for financial reporting purposes and tax purposes in the basis of these intangible assets.
Upon a further study by the Company of the deferred tax liability issues, the Company concluded that although the tax effect of such ammortization may be delayed indefinitely, the ability to do so is not a factor in the determination of whether a temporary difference exists. ASC 740-10-55-63 addresses this issue and states that “deferred tax liabilities may not be eliminated or reduced because an entity may be able to delay the settlement of those liabilities by delaying the events that would cause taxable temporary differences to reverse.” Accordingly, the Company has determined that a non-cash deferred tax liability should be recognized.
The Company’s consolidated financial statements as of and for the years ended June 30, 2010 and 2009 are being restated as follows:
Consolidated Statements of Income:
| | | For the year ended | | | For the year ended | |
| | | June 30, 2010 | | | June 30, 2009 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Income before provision for income taxes | | $ | 12,461,481 | | | $ | 12,461,481 | | | $ | 9,854,885 | | | $ | 9,854,885 | |
| Provision for income taxes | | | (2,973,289 | ) | | | (3,404,509 | ) | | | (1,906,985 | ) | | | (2,337,479 | ) |
| Net income | | $ | 9,488,192 | | | $ | 9,056,972 | | | $ | 7,947,900 | | | $ | 7,517,406 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 9,488,192 | | | $ | 9,056,972 | | | $ | 7,947,900 | | | $ | 7,517,406 | |
| Unrealized foreign currency translation gain (loss) | | | 135,653 | | | | 127,477 | | | | 106,233 | | | | 99,503 | |
| Comprehensive Income: | | $ | 9,623,845 | | | $ | 9,184,449 | | | $ | 8,054,133 | | | $ | 7,616,909 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share – basic | | $ | 0.64 | | | $ | 0.62 | | | $ | 0.60 | | | $ | 0.57 | |
| Earnings per share – diluted | | $ | 0.57 | | | $ | 0.55 | | | $ | 0.60 | | | $ | 0.57 | |
Consolidated Balance Sheets:
| | | As of June 30, 2010 | | | As of June 30, 2009 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Deferred tax liabilities | | $ | - | | | $ | 2,309,321 | | | $ | - | | | $ | 1,869,924 | |
| Total liabilities | | | 14,432,532 | | | | 16,741,852 | | | | 10,344,546 | | | | 12,214,470 | |
| | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive income | | | 626,584 | | | | 460,577 | | | | 490,931 | | | | 333,100 | |
| Retained earning | | | 31,921,832 | | | | 29,778,519 | | | | 22,433,640 | | | | 20,721,547 | |
| Total shareholders’ equity | | $ | 50,084,354 | | | $ | 47,775,034 | | | $ | 33,934,383 | | | $ | 32,064,458 | |
Consolidated Statements of Cash Flows:
| | | Year Ended | | | Year Ended | |
| | | June 30, 2010 | | | June 30, 2009 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Net income | | $ | 9,488,192 | | | $ | 9,056,972 | | | $ | 7,947,900 | | | $ | 7,517,406 | |
| Deferred tax liabilities | | | - | | | | 431,220 | | | | - | | | | 430,494 | |
| Net cash provided by (used in) operating activities | | $ | 13,214,620 | | | $ | 13,214,620 | | | $ | (1,513,062 | ) | | $ | (1,513,062 | ) |
The Company’s restated consolidated financial statements as of and for the nine months ended March 31, 2010 and 2009 are being restated as follows:
Consolidated Statements of Income:
| | | For the three months ended | | | For the nine months ended | |
| | | March 31, 2010 | | | March 31, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Income before provision for income taxes | | $ | 3,727,693 | | | $ | 3,727,693 | | | $ | 9,946,524 | | | $ | 9,946,524 | |
| Provision for income taxes | | | (585,135 | ) | | | (692,950 | ) | | | (2,193,931 | ) | | | (2,517,901 | ) |
| Net income | | $ | 3,142,558 | | | $ | 3,034,743 | | | $ | 7,752,593 | | | $ | 7,428,623 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,142,558 | | | $ | 3,034,743 | | | $ | 7,752,593 | | | $ | 7,428,623 | |
| Unrealized foreign currency translation gain (loss) | | | (157,384 | ) | | | (159,418 | ) | | | (108,823 | ) | | | (114,400 | ) |
| Comprehensive Income: | | $ | 2,985,174 | | | $ | 2,875,325 | | | $ | 7,643,770 | | | $ | 7,314,223 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share – basic | | $ | 0.20 | | | $ | 0.19 | | | $ | 0.48 | | | $ | 0.46 | |
| Earnings per share – diluted | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.37 | | | $ | 0.35 | |
Consolidated Statements of Income:
| | | For the three months ended | | | For the nine months ended | |
| | | March 31, 2009 | | | March 31, 2009 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Income before provision for income taxes | | $ | 2,528,403 | | | $ | 2,528,403 | | | $ | 7,437,907 | | | $ | 7,437,907 | |
| Provision for income taxes | | | (423,569 | ) | | | (531,193 | ) | | | (1,224,833 | ) | | | (1,547,704 | ) |
| Net income | | $ | 2,104,834 | | | $ | 1,997,210 | | | $ | 6,213,074 | | | $ | 5,890,203 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 2,104,834 | | | $ | 1,997,210 | | | $ | 6,213,074 | | | $ | 5,890,203 | |
| Unrealized foreign currency translation gain (loss) | | | (157,384 | ) | | | (159,067 | ) | | | (108,823 | ) | | | (113,871 | ) |
| Comprehensive Income: | | $ | 1,947,450 | | | $ | 1,838,144 | | | $ | 6,104,251 | | | $ | 5,776,333 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share – basic | | $ | 0.16 | | | $ | 0.15 | | | $ | 0.47 | | | $ | 0.45 | |
| Earnings per share – diluted | | $ | 0.16 | | | $ | 0.15 | | | $ | 0.47 | | | $ | 0.45 | |
Consolidated Balance Sheets:
| | | As of | | | As of | |
| | | March 31, 2010 | | | June 30, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Deferred tax liabilities | | $ | - | | | $ | 2,199,471 | | | $ | - | | | $ | 2,309,321 | |
| Total liabilities | | | 13,999,091 | | | | 16,198,562 | | | | 14,432,532 | | | | 16,741,853 | |
| | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive income | | | 382,108 | | | | 218,145 | | | | 626,584 | | | | 460,577 | |
| Retained earning | | | 29,402,584 | | | | 27,367,076 | | | | 31,921,832 | | | | 29,778,519 | |
| Total shareholders’ equity | | $ | 48,164,745 | | | $ | 45,965,274 | | | $ | 50,084,354 | | | $ | 47,775,034 | |
Consolidated Statements of Cash Flows:
| | | For the nine months ended | | |
| | | March 31, 2009 | | |
| | | As previously reported | | | As restated | | |
| Net income | | $ | 6,213,074 | | | $ | 5,890,203 | | |
| Deferred income tax provision | | | - | | | | 322,871 | | |
| Net cash provided by operating activities | | $ | 818,523 | | | $ | 818,523 | | |
Consolidated Statements of Cash Flows:
| | | For the nine months ended | | |
| | | March 31, 2010 | | |
| | | As previously reported | | | As restated | | |
| Net income | | $ | 7,752,593 | | | $ | 7,428,623 | | |
| Deferred income tax provision | | | - | | | | 323,970 | | |
| Net cash provided by operating activities | | $ | 4,144,506 | | | $ | 4,144,506 | | |
The Company’s consolidated financial statements as of and for the three months ended September 30, 2009 and 2010 are being restated as follows:
Consolidated Statements of Income:
| | | For the three months ended | | |
| | | September 30, 2010 | | |
| | | As previously reported | | | As restated | | |
| Comprehensive Income: | | | | | | | |
| Net income | | $ | 3,012,475 | | | | 3,012,475 | | |
| Unrealized foreign currency translation gain (loss) | | | 926,468 | | | | 888,370 | | |
| Comprehensive Income: | | $ | 3,938,943 | | | $ | 3,900,845 | | |
| | | For the three months ended | | |
| | | September 30, 2009 | | |
| | | As previously reported | | | As restated | | |
| Income before provision for income taxes | | $ | 2,477,715 | | | $ | 2,477,715 | | |
| Provision for income taxes | | | (555,474 | ) | | | (663,529 | ) | |
| Net income | | $ | 1,922,241 | | | $ | 1,814,186 | | |
| | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | |
| Net income | | $ | 1,922,241 | | | $ | 1,814,186 | | |
| Unrealized foreign currency translation gain (loss) | | | (47,583 | ) | | | (49,377 | ) | |
| Comprehensive Income: | | $ | 1,874,658 | | | $ | 1,764,809 | | |
| | | | | | | | | | |
| Earnings per share – basic | | $ | 0.15 | | | $ | 0.14 | | |
| Earnings per share – diluted | | $ | 0.15 | | | $ | 0.14 | | |
Consolidated Balance Sheets:
| | | For the three months ended | | | Year Ended | |
| | | September 30, 2010 | | | June 30, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Deferred tax liabilities | | $ | | | | $ | 2,347,418 | | | $ | - | | | $ | 2,309,321 | |
| Total liabilities | | | 16,433,680 | | | | 18,781,098 | | | | 14,432,532 | | | | 16,741,852 | |
| | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive income | | | 1,553,052 | | | | 1,348,947 | | | | 626,584 | | | | 460,577 | |
| Retained earnings | | | 34,934,307 | | | | 32,790,994 | | | | 31,921,832 | | | | 29,778,519 | |
| Total shareholders’ equity | | $ | 54,188,414 | | | $ | 51,840,997 | | | $ | 50,084,354 | | | $ | 47,775,034 | |
Consolidated Statement of Cash Flows:
| | | For the three months ended | | |
| | | September 30, 2009 | | |
| | | As previously reported | | | As restated | | |
| Net income | | $ | 1,922,241 | | | $ | 1,814,186 | | |
| Deferred income tax provision | | | - | | | | 108,055 | | |
| Net cash provided by operating activities | | $ | 2,640,537 | | | $ | 2,640,537 | | |
The Company’s consolidated financial statements as of and for the three and six months ended December 31, 2010 and 2009 are being restated as follows:
Consolidated Statements of Income:
| | | For the three months ended | | | For the six months ended | |
| | | December 31, 2009 | | | December 31, 2009 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Income before provision for income taxes | | $ | 4,335,429 | | | $ | 4,335,429 | | | $ | 6,692,616 | | | $ | 6,692,616 | |
| Provision for income taxes | | | (1,057,890 | ) | | | (1,165,990 | ) | | | (1,613,261 | ) | | | (1,829,416 | ) |
| Net income | | $ | 3,277,539 | | | $ | 3,169,439 | | | $ | 5,079,355 | | | $ | 4,863,200 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,277,539 | | | $ | 3,169,439 | | | $ | 5,079,355 | | | $ | 4,863,200 | |
| Unrealized foreign currency translation gain (loss) | | | 978 | | | | (771 | ) | | | 48,561 | | | | 45,018 | |
| Comprehensive Income: | | $ | 3,278,517 | | | $ | 3,168,668 | | | $ | 5,127,916 | | | $ | 4,908,218 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share – basic | | $ | 0.25 | | | $ | 0.24 | | | $ | 0.39 | | | $ | 0.37 | |
| Earnings per share – diluted | | $ | 0.25 | | | $ | 0.24 | | | $ | 0.39 | | | $ | 0.37 | |
Consolidated Statements of Income:
| | | For the three months ended | | | For the six months ended | |
| | | December 31, 2010 | | | December 31, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Comprehensive Income: | | | | | | | | | | | | |
| Net income | | $ | 6,540,895 | | | | 6,540,895 | | | $ | 9,553,370 | | | | 9,553,370 | |
| Unrealized foreign currency translation gain (loss) | | | 803,074 | | | | 772,435 | | | | 1,729,542 | | | | 1,660,804 | |
| Comprehensive Income: | | $ | 7,343,969 | | | $ | 7,313,330 | | | $ | 11,282,912 | | | $ | 11,214,174 | |
Consolidated Balance Sheets:
| | | As of | | | As of | |
| | | December 31, 2010 | | | June 30, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Deferred tax liabilities | | $ | | | | $ | 2,378,058 | | | $ | - | | | $ | 2,309,321 | |
| Total liabilities | | | 17,187,259 | | | | 19,565,317 | | | | 14,432,532 | | | | 16,741,852 | |
| | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive income | | | 2,356,126 | | | | 2,121,381 | | | | 626,584 | | | | 460,577 | |
| Retained earnings | | | 41,475,202 | | | | 39,331,889 | | | | 31,921,832 | | | | 29,778,519 | |
| Total shareholders’ equity | | $ | 62,323,011 | | | $ | 59,944,953 | | | $ | 50,084,354 | | | $ | 47,775,034 | |
Consolidated Statement of Cash Flows:
| | | For the six months ended | | |
| | | December 31, 2009 | | |
| | | As previously reported | | | As restated | | |
| Net income | | $ | 5,079,355 | | | $ | 4,863,200 | | |
| Deferred income tax provision | | | - | | | | 216,155 | | |
| Net cash provided by operating activities | | $ | 6,648,287 | | | $ | 6,648,287 | | |
The Company’s consolidated financial statements as of and for the three and nine months ended March 31, 2011 and 2010 are being restated as follows:
Consolidated Statements of Income:
| | | For the three months ended | | | For the nine months ended | |
| | | March 31, 2010 | | | March 31, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Income before provision for income taxes | | $ | 3,727,693 | | | $ | 3,727,693 | | | $ | 9,946,524 | | | $ | 9,946,524 | |
| Provision for income taxes | | | (585,135 | ) | | | (692,950 | ) | | | (2,193,931 | ) | | | (2,517,901 | ) |
| Net income | | $ | 3,142,558 | | | $ | 3,034,743 | | | $ | 7,752,593 | | | $ | 7,428,623 | |
| | | | | | | | | | | | | | | | | |
| Comprehensive Income: | | | | | | | | | | | | | | | | |
| Net income | | $ | 3,142,558 | | | $ | 3,034,743 | | | $ | 7,752,593 | | | $ | 7,428,623 | |
| Unrealized foreign currency translation gain (loss) | | | (157,384 | ) | | | (159,418 | ) | | | (108,823 | ) | | | (114,400 | ) |
| Comprehensive Income: | | $ | 2,985,174 | | | $ | 2,875,325 | | | $ | 7,643,770 | | | $ | 7,314,223 | |
| | | | | | | | | | | | | | | | | |
| Earnings per share – basic | | $ | 0.20 | | | $ | 0.19 | | | $ | 0.48 | | | $ | 0.46 | |
| Earnings per share – diluted | | $ | 0.16 | | | $ | 0.16 | | | $ | 0.37 | | | $ | 0.35 | |
Consolidated Statements of Income:
| | | For the three months ended | | | For the nine months ended | |
| | | March 31, 2011 | | | March 31, 2011 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Comprehensive Income: | | | | | | | | | | | | |
| Net income | | $ | 2,685,346 | | | $ | 2,685,346 | | | $ | 12,238,716 | | | $ | 12,238,716 | |
| Unrealized foreign currency translation gain (loss) | | | 415,307 | | | | 400,224 | | | | 2,144,849 | | | | 2,061,028 | |
| Comprehensive Income: | | $ | 3,100,653 | | | $ | 3,085,570 | | | $ | 14,383,565 | | | $ | 14,299,744 | |
Consolidated Balance Sheets:
| | | As of March 31, 2011 | | | As of June 30, 2010 | |
| | | As previously reported | | | As restated | | | As previously reported | | | As restated | |
| Deferred tax liabilities | | $ | - | | | $ | 2,393,151 | | | $ | - | | | $ | 2,309,321 | |
| Total liabilities | | | 10,978,652 | | | | 13,371,803 | | | | 14,432,532 | | | | 16,741,852 | |
| | | | | | | | | | | | | | | | | |
| Accumulated other comprehensive income | | | 2,771,443 | | | | 2,521,605 | | | | 626,584 | | | | 460,577 | |
| Retained earnings | | | 44,160,548 | | | | 42,017,235 | | | | 31,921,832 | | | | 29,778,519 | |
| Total shareholders’ equity | | $ | 67,472,050 | | | $ | 65,078,899 | | | $ | 50,084,354 | | | $ | 47,775,034 | |
Consolidated Statements of Cash Flows:
| | | For the nine months ended | | |
| | | March 31, 2010 | | |
| | | As previously reported | | | As restated | | |
| Net income | | $ | 7,752,593 | | | $ | 7,428,623 | | |
| Deferred income tax provision | | | - | | | | 323,970 | | |
| Net cash provided by operating activities | | $ | 4,144,506 | | | $ | 4,144,506 | | |
The Company will, as soon as is practicable, make these adjustments by filing with the SEC amendments to the above referenced reports which, in each case, will include restated consolidated financial statements and notes thereto, and other appropriate revisions to reflect the foregoing.
The Company’s management, Audit Committee and Board are assessing the effect of the pending restatements on its internal control over financial reporting and its disclosure controls and procedures and will not reach a final conclusion until completion of the restatement process.
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.
| September 14, 2011 | Bohai Pharmaceuticals Group, Inc. |
| | |
| | By: | /s/ Gene Hsiao |
| | | Name: Gene Hsiao |
| | | Title: Chief Financial Officer |
