UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 22, 2005
CHINA BIOPHARMACEUTICALS HOLDINGS, INC.
------------------------------
(Exact name of registrant as specified in its charter)
Delaware 814-00063 13-2949462
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
Suite 1601, Buliding A, Jinshan Tower
No. 8, Shan Xi Road Nanjing, Jiangsu, China
--------------------------
(Address of principal executive offices)
(86) 25 8320 5758
-------------------------------------
(Registrant's telephone number, including area code)
(former name or former address, if changed since last report)
China Biopharmaceuticals Holdings, Inc.
Form 8-K/A
SECTION 2 -- FINANCIAL INFORMATION
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
As used in this report, "we", "us", "our" or "the Company" refer to China
Biopharmaceuticals Holdings, Inc.
As disclosed on our current reports on Form 8-K and Form 8-K/A filed with
the Commission on June 14, 2005 and June 15, 2005, respectively, we signed a
share purchase agreement ("Agreement") on June 11, 2005 to acquire controlling
ownership interest (approximately 51%) in Suzhou Erye Pharmaceutical Limited
Company ("Erye"), a Chinese company specialized in research and development,
production and sales of pharmaceutical products as well as chemicals used in
pharmaceutical products. As disclosed on our quarterly report on Form 10-QSB
filed with the Commission on August 15, 2005, on August 3, 2005 we signed an
amendment to the Agreement. Total consideration paid by the Company to acquire
51% ownership interest in Erye is $3,000,000 cash to be paid in installments,
and 3,300,000 of common shares valued at $1.00 per share or $3,300,000. Out of
the $3,000,000 to be paid in cash, $2,200,000 will be contributed to the
acquired Erye for working capital and/or expansion purposes. The Company has
agreed to have its common stock quoted on the Over The Counter Bulletin Board
system within a reasonable period of time.
All required legal procedures with relevant Chinese Government regulatory
and audit procedures have been completed and the title ownership of 51% of Erye
has been passed to the Company.
The Company hereby files financial statements as incorporated in Item 9.01
as the amendment to our filing of Form 8-K and 8-K/A current report dated
respectively June 14 and June 15, 2005.
SECTION 9 -- FINANCIAL STATEMENTS AND EXHIBITS
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Audited financial statements of Suzhou Erye Pharmaceutical Limited Company
as of and for the years ended December 31, 2004 and 2003 and unaudited interim
financial statements for the three months ended March 31, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
China Biopharmaceuticals Holdings, Inc.
By: /s/ MAO Peng
---------------------------------------
Name: MAO Peng
Title: Chairman and Chief Executive Officer
Dated: August 22, 2005
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
FINANCIAL STATEMENTS
At December 31, 2004 and March 31, 2005 (unaduited)
For the years ended December 31, 2004 and 2003
and the three months ended March 31, 2005 and 2004 (unaudited)
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
INDEX
-----
PAGE
INDEPENDENT AUDITOR'S REPORT 2
STATEMENTS OF ASSETS, LIABILITIES AND MEMBERS' EQUITY 3
STATEMENTS OF INCOME AND EXPENSES 4
STATEMENTS OF CHANGES IN MEMBERS' EQUITY 5
STATEMENTS OF CASH FLOWS 6
NOTES TO FINANCIAL STATEMENTS 7-14
1
KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
- --------------------------------------------------------------------------------
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038
TEL (212)406-7272 - FAX (212)513-1930
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Suzhou Erye Pharmaceutical Limited Company
We have audited the accompanying statement of assets, liabilities and members'
equity of Suzhou Erye Pharmaceutical Limited Company as of December 31, 2004 and
2003 and the related statements of income and expenses, members' equity and cash
flows for each of the years in the two years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Suzhou Erye Pharmaceutical
Limited Company at December 31, 2004 and 2003; and the results of its'
operations and cash flows for each of the years in the two years then ended in
conformity with accounting principles generally accepted in the United States of
America.
Kempisty & Company
Certified Public Accountants PC
New York, New York
July 15, 2005
2
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
STATEMENTS OF ASSETS, LIABILITIES AND MEMBERS' EQUITY
March 31, December 31,
2005 2004
------------ ------------
(unaudited)
------------
ASSETS
Current Assets:
Cash $ 746,277 $ 941,656
Accounts receivable, net (Note 3) 3,618,408 2,515,574
Advance to suppliers 700,344 538,360
Inventory (Note 4) 2,630,537 1,814,381
------------ ------------
Total current assets 7,695,566 5,809,971
Long-term investment (Note 5) -- 895,111
Property and Equipment, net (Note 6) 2,914,690 3,156,106
Other assets (Note 7) 3,279,895 3,743,086
------------ ------------
Total Assets $ 13,890,151 $ 13,604,274
============ ============
LIABILITIES AND MEMBERS' EQUITY
Current Liabilities:
Bank loans (Note 8) $ 2,319,681 $ 2,452,579
Accounts payable and accrued expenses 5,940,309 4,096,510
Other payable 1,259,409 1,314,005
Customer deposits 68,252 169,745
Taxes payable 667,727 584,876
------------ ------------
Total Current Liabilities 10,255,379 8,617,715
Long-term Liabilities
Long-term borrowing (Note 9) 128,066 128,066
Due to employees 349,034 1,381,917
Due to related parties 241,633 749,998
------------ ------------
Total Liabilities 718,733 2,259,981
Members' Equity 2,916,039 2,726,577
------------ ------------
Total Liabilities and Members' Equity $ 13,890,151 $ 13,604,274
============ ============
0 0
See Notes to Financial Statements
3
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
STATEMENTS OF INCOME AND EXPENSES
For the Three Months Ended For the Year Ended
March 31, March 31, December 31, December 31,
2005 2004 2004 2003
------------ ------------ ------------ ------------
(unaudited)
Revenues
Sales $ 5,183,805 $ 4,262,873 $ 17,742,404 $ 17,267,658
Sales taxes 12,517 15,212 67,783 70,629
Cost of sales 4,365,812 - 3,520,532 - 14,285,295 - 14,729,324
------------ ------------ ------------ ------------
Gross profit 805,475 727,129 3,389,326 2,467,704
Operating Expenses
Selling expenses 113,263 149,244 481,345 426,059
Selling, general and administrative 389,584 - 457,245 - 1,694,980 - 1,323,105
------------ ------------ ------------ ------------
Total Operating Expenses 302,629 120,640 1,213,001 718,540
Other Income
Other income, net (9,642) - (93,135) - 243,216 - 31,069
------------ ------------ ------------ ------------
Income before Income Taxes 292,986 27,505 1,456,217 749,608
Income taxes 103,524 - 23,026 - 506,347 - 138,388
------------ ------------ ------------ ------------
Net income $ 189,462 $ 4,479 $ 949,870 $ 611,220
============ ============ ============ ============
See Notes to Financial Statements.
4
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
YEARS ENDED DECEMBER 31, 2003 AND 2004; AND
THREE MONTHS ENDED MARCH 31, 2005 (unaudited)
Members' equity at January 1, 2003 $ 1,274,222
Net Income 611,220
Dividend paid (36,245)
-----------
Members' equity at December 31, 2003 1,849,197
Net Income 949,870
Dividend paid (72,490)
-----------
Members' equity at December 31, 2004 2,726,577
Net Income 189,462
-----------
Members' equity at March 31, 2005 $ 2,916,039
===========
See Notes to Financial Statements.
5
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
For the Three Months Ended For the Year Ended
March 31, December 31,
2005 2004 2004 2003
----------- ----------- ----------- -----------
(unaudited)
-----------
Operating Activities
Net income $ 189,462 $ 4,479 $ 949,870 $ 611,220
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation and amortization 115,320 115,320 476,737 455,095
Changes in operating assets and liabilities:
Decrease (Increase) in Accounts receivable (1,102,834) 473,225 (67,344) 2,358,499
Decrease (Increase) in Advance to suppliers (161,985) (264,510) (333,276) 234,724
Decrease (Increase) in Inventory (816,156) 162,016 (350,312) 530,174
Decrease (Increase) in Other assets 463,193 28,519 117,378 (3,746,947)
Increase (Decrease) in Accounts payable and accrued expense 1,843,799 (219,395) 812,588 366,140
Increase (Decrease) in Other payable (54,596) 17,765 (377,206) 183,869
Increase (Decrease) in Due to Related Parties (508,365) (120,817) (362,450) (1,083,004)
Increase (Decrease) in due to employees (1,032,884) (25,272) (166,321) (564,238)
Increase (Decrease) in Customer deposits (101,493) 20,745 104,752 (163,563)
Increase (Decrease) in Taxes payable 82,851 (2,766) 448,609 133,609
----------- ----------- ----------- -----------
Net cash provided (used) by operating activitie (1,083,687) 189,309 1,253,025 (684,422)
Investing Activities
Sale of long-term Investment 895,111 -- -- 751,949
Sale (Purchase) of fixed assets 126,096 (43,549) (214,236) 1,524,004
----------- ----------- ----------- -----------
Net cash provided (used) by investing activities 1,021,207 (43,549) (214,236) 2,275,953
Financing Activities
Payment of Dividend -- -- (72,490) (36,245)
Increase (Decrease) in bank loans (current) (132,898) -- (190,895) (1,237,903)
Increase (Decrease) in long-term debt -- (228,344) (767,150) --
----------- ----------- ----------- -----------
Net cash provided (used) by financing activities (132,898) -- (491,729) (2,041,298)
Increase (decrease) in cash (195,379) 145,760 547,060 (449,767)
Cash at beginning of period 941,656 394,596 394,596 844,363
----------- ----------- ----------- -----------
Cash at end of period $ 746,277 540,356 $ 941,656 394,596
=========== =========== =========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Interest $ 34,601 $ 52,270 $ 145,409 $ 187,179
=========== =========== =========== ===========
Income taxes $ 103,524 $ 23,026 $ 506,347 $ 138,388
=========== =========== =========== ===========
See Notes to Financial Statements.
6
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 1- ORGANIZATION AND OPERATIONS
Suzhou Erye Pharmaceutical Limited Company (the "Company" or "Erye"),
formerly known as The Second Pharmaceutical Manufacturing Company of
Suzhou City, was formerly state-owned and established in 1956 in
Suzhou City, Jiangshu Province, the People's Republic of China (the
"PRC"). In June 2003, the City of Suzhou sold Erye to its management
as part of the City's enterprises reform.
The principal activities of Erye are sales and manufacturing of
pharmaceutics approved for sale in Mainland China.
Note 2- SIGNIFICANT ACCOUNTING POLICIES
Economic and Political Risks
The Company faces a number of risks and challenges since its assets
are located in China and its revenues are derived from its operations
in China. China is a developing country with a young market economic
system overshadowed by the state. Its political and economic systems
are very different from the more developed countries and are still in
the stage of change. China also faces many social, economic and
political challenges that may produce major shocks and instabilities
and even crises, in both its domestic arena and its relationship with
other countries, including but not limited to the United States. Such
shocks, instabilities and crises may in turn significantly and
negatively affect the Company's performance.
Basis of Presentation
The accompanying financial statements are prepared in accordance with
generally accepted accounting principles in the United States of
America ("US GAAP"). This basis of accounting differs from that used
in the statutory accounts of the Company, which are prepared in
accordance with the "Accounting Standards for Business Enterprises"
and "Accounting system for Business Enterprises" in the PRC ("PRC
GAAP").
Certain accounting principles, which are stipulated by US GAAP, are
not applicable in the PRC. The difference between PRC GAAP accounts of
the Company and its US GAAP financial statements was immaterial.
Cash and Cash Equivalents
All highly liquid investments with original maturities of three months
or less are considered cash equivalents. Substantially all of the
Company's cash and cash equivalents are held by two financial
institutions.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenue
and expenses during the reporting period. Actual results when
ultimately realized could differ from those estimates.
7
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)
Employees' Benefits
Mandatory contributions are made to the Government's health,
retirement benefit and unemployment schemes at the statutory rates in
force during the period, based on gross salary payments. The cost of
these payments is charged to the statement of income in the same
period as the related salary cost.
Patent and Development Costs
The patent and development costs represent patented pharmaceutical
formulas, which have obtained official registration certificate or
official approval for clinical trials. No amortization is provided as
it is held for sale. Such costs comprise purchase costs of patented
pharmaceutical formulas, development costs, raw materials and other
related expenses of pharmaceutical formulas. Patent and development
costs are accounted for on an individual basis. The carrying value of
patent and development costs is reviewed for impairment annually, and
otherwise when events changes in circumstances indicate that the
carrying value may not be recoverable.
Research and Development Costs
Research and development costs of pharmaceutical formulas for
contracted projects are expensed when incurred.
Research costs of pharmaceutical formulas held for sale are expensed
whereas the development cost are expensed until the project attains
technical feasibility (i.e. obtained official approval for clinical
trials), and then such development costs are capitalized.
Fair Value of Financial Instruments
The carrying value of financial instruments including cash and cash
equivalents, receivables, accounts payable and accrued expenses,
approximates their fair value at December 31, 2004 due to the
relatively short-term nature of these instruments.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates in the US and the PRC expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
8
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)
Foreign Currency Translation
The Company maintains its books and accounting records in Renminb
("RMB"), thePRC's currency.contracts.ion of amounts from RMB in United
States dollars ("US$") has been made at the single rate of exchange of
US$1.00:RMB8.277. No representation is made that RMB amounts could
have been or could be, converted into US dollar at that rate. On
January 1, 1994, the PRC government introduced a single rate of
exchange as quoted daily by the People's Bank of China (the "Unified
Exchange Rate"). The quotation of the exchange rates does not imply
free convertibility of RMB to other foreign currencies. All foreign
exchange transactions continue to take place either through the Bank
of China or other banks authorized to buy and sell foreign currencies
at the exchange rates quoted by the People's Bank of China. Approval
of foreign currency payments by the Bank of China or other
institutions requires submitting a payment application form together
with supplier's invoices, shipping documents and signed
One July 21, 2005, the People's Bank of China, China's central bank,
announced that,beginning from July 21, 2005, China will implement a
regulated, managed floating exchange rate system based on market
supply and demand and in reference to a package of currencies. RMB
will no longer be pegged to the US dollar and the RMB exchange rate
regime will be improved with greater flexibility.
The People's Bank of China will announce the closing price of a
foreign currency such as the US dollar traded against the RMB in the
inter-bank foreign exchange market after the closing of the market on
each working day, and will make it the central parity for the trading
against the RMB on the following working day.
The exchange rate of the US dollar against the RMB will be adjusted to
8.11 yuan per US dollar on July 21, 2005.
The daily trading price of the US dollar against the RMB in the
inter-bank foreign exchange market will continue to be allowed to
float within a band of 0.3 percent around the central parity published
by the People's Bank of China, while the trading prices of the non-US
dollar currencies against the RMB will be allowed to move within a
certain band announced by the People's Bank of China.
The People's Bank of China will make adjustment of the RMB exchange
rate band when necessary according to market development as well as
the economic and financial situation.The People's Bank of China is
responsible for maintaining the RMB exchange rate basically stable at
an adaptive and equilibrium level.
Property, Plant and Equipment
Property, plant and equipment are carried at cost. The cost of repairs
and maintenance is expensed as incurred; major replacements and
improvements are capitalized.
When assets are retired or disposed of, the cost and accumulated
depreciation are removed from the accounts, and any resulting gains or
losses are included in income in the year of disposition.
Depreciation is calculated on a straight-line basis over the estimated
useful life of the assets. The percentages applied are:
Machines and equipment 10%
Vehicles 10%
Leasehold improvements 10%
9
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 2- SIGNIFICANT ACCOUNTING POLICIES (continued)
Valuation of Long-Lived assets
The Company periodically analyzes its long-lived assets for potential
impairment, assessing the appropriateness of lives and recoverability
of unamortized balances through measurement of undiscounted operating
cash flows on a basis consistent with accounting principles generally
accepted in the United States of America.
Interim Financial Information
The unaudited statements of assets, liabilities and members' equity,
the unaudited statements of income and expenses, changes in members'
equity, and cash flow have been prepared in accordance with United
States generally accepted accounting principles for interim financial
information. In our opinion, all adjustments (consisting solely of
normal recurring accruals) considered necessary for a fair
presentation of the financial position, results of operations and cash
flows as at March 31, 2005, have been included. Readers of these
financial statements should note that the interim results for the
three month period ended March 31, 2005, is not necessarily indicative
of the results that may be expected for the fiscal year as a whole.
Recent Accounting Pronouncements
In December 2003, the Security and Exchange Commission ("SEC')
released Staff Accounting Bulletin ("SAB") No. 104, Revenue
Recognition. SAB No. 104 revises or rescinds portions of the
interpretive guidance related to revenue recognition included in Topic
13 of the codification of the staff accounting bulletins. SAB No. 104
became effective when issued, and adoption by Eyre did not have a
material impact on its financial position or results of operations.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs. SFAS
No. 151 amends the guidance in ARB No. 43, Chapter 4, Inventory
Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material
(spoilage). ARB 43 previously stated that "under some circumstances,
items such as idle facility expense, excessive spillage, double
freight, and re-handling costs may be so abnormal as to require
treatment as current period charges...". This Statement requires that
those items be recognized as current-period charges regardless of
whether they meet the criterion of "so abnormal". In addition, this
Statement requires that allocation of fixed production.
10
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 3- ACCOUNTS RECEIVABLE
Accounts receivable consist of the following:
March 31, December 31,
2005 2004
------------ ------------
Accounts receivable $ 4,267,957 $3,183,555
less: Allowance for bad debt 649,549 667,981
------------ ------------
Accounts receivable, net $ 3,618,408 $2,515,574
============ ============
Note 4- INVENTORY
Inventory consists of following:
March 31, December 31,
2005 2004
------------ ------------
Finished goods $ 1,041,195 $ 375,032
Work in progress 887,751 735,659
Raw materials and low-value materials 701,590 703,690
------------ ------------
$ 2,630,537 $1,814,381
============ ============
Note 5- LONG-TERM INVESTMMENT
Long-term investment consists of following:
March 31, December 31,
2005 2004
------------ ------------
Investment in Suzhou Zhonghua Pharmaceutical Company $ -- $ 895,111
============ ============
Eyre invested $895,111 into Suzhou Zhonghua Pharmaceutical Company in
June 1993, and owned 12.59% of the company. Eyre adopted cost method
accounting since it did not control the company. Erye has not received
any dividend. In March 2005, Erye sold this investment to a related
party, Erye Trading Ltd. without any gain or loss
Note 6- FIXED ASSETS
Fixed assets consists of the following:
March 31, December 31,
2005 2004
------------ ------------
Plant and property $ 2,125,384 $2,570,878
Operationg equipment 4,009,463 6,278,667
Vehicle 43,579 43,579
------------ ------------
6,178,426 8,893,124
Less: Accumulated depreciation 3,466,451 5,790,690
------------ ------------
2,711,975 3,102,434
Construction in progress 202,715 53,672
------------ ------------
$ 2,914,690 $3,156,106
============ ============
11
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 7- OTHER ASSETS
Other assets consist of the following:
March 31, December 31,
2005 2004
------------ ------------
Restricted cash $ 43,837 $ 43,837
Intangible assets 3,397,521 3,910,186
less: accumulaed amortization 223,273 210,936
------------ ------------
3,174,248 3,699,249
------------ ------------
$ 3,218,086 $ 3,743,086
============ ============
Note 8- BANK LOANS
Short-term bank loans at March 31, 2005 consist of the following:
Loan Monthly
Financial Institutions Amount Duration Interest Rate Collateral
---------------------- ------ -------- ------------- ----------
Industrial And 1,510,209 3/15/2005-6/14/2005 0.56550% Land
Commercial Bank
Industrial Development 96,653 9/15/2004-9/14/2005 0.57350% None
Financing
Bank of
Communication 712,819 2/1/2005-6/30/2005 0.53000% Garranteed by former
----------- group company
$ 2,319,681
===========
Short-term bank loans at December 31, 2004 consist of the following:
Loan Monthly
Financial Institutions Amount Duration Interest Rate Collateral
---------------------- ------ -------- ------------- ----------
Industrial And
Commercial Bank 1,570,617 6/15/2004-3/14/2005 0.56550% Land
China Foudation
Company 30,204 5/1/2004-3/1/2005 0.57350% None
Bank of
Communication 30,204 2/1/2004-6/1/2005 0.53000% Guaranteed by former
group company
Industrial Development
Financing 96,653 9/15/2004-9/14/2005 0.57350% None
Bank of Communication 724,900 2/1/2004-1/31/2005 0.53000% Guaranteed by former
group company
-----------
$ 2,452,579
===========
12
SUZHOU ERYE PHARMECEUTICAL LIMITED COMPANY
NOTES TO FINANCIAL STATEMENTS
(Amounts and Disclosures at and for the Three Months
Ended March 31, 2005 and 2004 Are Unaudited)
Note 9- BANK LOANS
Long-term Bank loans at March 31, 2005 consist of the following:
Loan Monthly
Financial Institutions Amount Duration Interest Rate Collateral
---------------------- ------ -------- ------------- ----------
Industrial And
Commercial Bank $ 128,066 6/1/2004-5/31/2006 0.56550% None
=========
Long-term Bank loans at December 31, 2004 consist of the following:
Loan Monthly
Financial Institutions Amount Duration Interest Rate Collateral
---------------------- ------ -------- ------------- ----------
Industrial And
Commercial Bank $ 128,066 6/1/2004-5/31/2006 0.56550% None
=========
Note 10- COMMITMENTS AND CONTINGENCIES
The Company's operations are conducted in the PRC. Accordingly, the
Company's business, financial condition and results of operations may
be influenced by the political, economic and legal environments in the
PRC, and by the general state of the PRC economy.
The Company's operations in the PRC are subject to special
considerations and significant risks not typically associated with
companies in North America and Western Europe. These include risks
associated with, among others, the political, economic and legal
environments legal environments and foreign currency exchange.
The Company's results may be adversely affected by changes in the
political and social conditions in the PRC, and by changes in
governmental policies with respect to laws and regulations,
anti-inflationary measures, currency conversion and remittance abroad,
and rates and methods of taxation, among other things.
13