x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
86-0827216
|
|
State
of other jurisdiction of
incorporation
or organization
|
(I.R.S.
Employer Identification No.)
|
168 Binbei Street, Songbei District, Harbin
City
|
||
Heilongjiang Province, People’s Republic of
China
|
150028
|
|
(Address of principal executive
offices)
|
(Zip
Code)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Large
accelerated filer
¨
|
Accelerated
filer
¨
|
Non-accelerated
filer
¨
(Do not
check if a smaller reporting company)
|
Smaller
reporting company
x
|
|
·
|
The
Company has included a description of the material terms of the Purchase
Agreement between the Company and Wang Shukui, who was the Company’s
largest raw material supplier for the fiscal year
2009.
|
|
·
|
The
Company has discussed in more details its current status in relation to
its future goal under “The Future”.
|
|
·
|
The
Company has added a discussion of requirements for obtaining Good
Manufacturing Practice Certification under
“Regulation”.
|
|
·
|
The
Company has included a flowchart to illustrate its manufacturing
process.
|
|
·
|
The
Company has added disclosure of its critical accounting
estimates.
|
|
·
|
The
Company has explained in detail the reasons for its growth in sales volume
and increase in inventory turnover.
|
|
·
|
The
Company has provided a breakdown of sales by product line and sales volume
for the fiscal years 2008 and 2009.
|
|
·
|
The
Company has included more disclosure in its “2010
Outlook.”
|
|
·
|
The
Company has provided explanations on of the factors that allowed the
Company to minimize account receivable levels relation to revenue and cost
of goods sold, respectively.
|
|
·
|
Certificates
of Amendment dated May 11, 2005, November 12, 2008 and February 11,
2009;
|
|
·
|
English
Translation of Land Use Agreement dated June 7, 2004, between Harbin
Humankind Biology Technology Co. Limited and Harbin City, Daochu District,
Songbei Township, Jinxin Village;
|
|
·
|
English
Translation of Lease Agreement dated August 20, 2008 between Harbin
HuadongPlaza Realty Management Co., Ltd. and Harbin Humankind Biology
Technology Co. Limited;
|
|
·
|
English
Translation of Cooperative Agreement dated September 17, 2008 between
Harbin Humankind Biology Technology Co. Limited and the Commercial Bureau
of Qing’an County;
|
|
·
|
English
Translation of Land Purchase Agreement dated July 7, 2009 between Harbin
Humankind Biology Technology Co. Limited and Harbin Songbei District
Construction and Development Management
Committee;
|
|
·
|
Technology
Transfer Agreement dated October 12, 2007 between the Company and Beijing
Jindelikang Bio-Technology Co.,
Ltd.;
|
|
·
|
Purchase
Agreement dated March 13, 2009 between the Company and Mr. Wang
Shukui;
|
|
·
|
Loan
Agreements between the Company and Xin Sun dated June 27, 2008, August 21,
2008, October 9, 2008, October 27, 2008, November 1,2008, December 30,
2008, January 22, 2009, February 2, 2009, February 22, 2009, May 24, 2009
and June 17, 2009.
|
Name of
Supplier
|
Products Supplied
|
Sales in 2009
(in dollars)
|
Sales in 2008
(in dollars)
|
|||||||
1
|
Wang
Shukui.
|
Frog
Oil, Aweto, Abalone oil,
Soybean
isoflavone
|
2,698,463.53
|
|||||||
2
|
Heilongjiang
Medicine Company
|
Aweto
|
307,017.54
|
231,542.98
|
||||||
3
|
Zhao
Degang
|
Bean
Oil, Glycerin, Vitamin E, XOS, Gelatin
|
85259.47
|
|||||||
4
|
Henan
Purui Bee Co.,Ltd.
|
Propolis
|
2474.10
|
31,625.18
|
||||||
5
|
Green
Agriculture Development Co. of Heilongjiang Land
Reclamation
|
Soybean
Oil
|
1900.32
|
|||||||
6
|
Zhejiang
Jinke Biology Chemical Co.
|
glucosamine
hydrochloride
|
3,285.81
|
|||||||
7
|
HebeiZhongtian
Chinese Medicine Co.
|
Aweto
|
87,977.92
|
|||||||
8
|
Harbin
Lianqiang Business Development Co.
|
SeaCucumber
|
2,923.97
|
Serial
No
|
Product
|
Efficacy*
|
||
1
|
Stomach-Tonic
Tablets
|
Invigorating
stomach and relieving pain. Used in the treatment of pain from stomach
distention, eructation with fetid odor and fecal disorders caused by
gasterasthenia and dyspeptic retention.
|
||
2
|
Pediatric
Compound Sulfamethoxazole Tablets (0.125g)
|
Used
in the treatment of 1. Urinary tract infection caused by sensitive strains
of
Escherichia
coli
,
Klebsiella
,
Enterobacter
,
Proteus mirabilis
,
Bacillus proteus
and
Proteus
morganli
. 2. Acute otitis media in children over 2 years old caused
by
Streptococcus
pneumoniae
or
Hemophilus influenza
.
3. Acute episode of adult chronic bronchitis caused by
Streptococcus
pneumoniae
or
Hemophilus influenza
.
4. Intestinal infection and
Shigella
infection
caused by sensitive strains of
Shigellaflexneri
and
Shigellasonnei
.
5. Pneumonia caused by
Pneumocystis carinii
.
6. Prevention of pneumonia caused by
Pneumocystis carinii.
This product can be used for patients with a history of
pneumonia caused by
Pneumocystis carinii
or
adult HIV-infected patients whose CD4 lymphocyte count is ≤200/mm3 or is
less than 20% of lymphocyte count. 7. Turista caused by enterotoxic
Escherichia
coli
.
|
||
3
|
Pediatric
Compound Sulfamethoxazole Tablets (0.25g)
|
Same
as above.
|
||
4
|
Pipemidic
Acid Tablets
|
Used
to treat urinary tract infection and bacterial infection of the intestines
caused by sensitive gram negative bacilli.
|
||
5
|
Metamizole
Sodium Tablets
|
Used
to relieve fever caused hyperpyrexia and also for headache, migrainous
headache, courbature, arthralgia, menalgia etc. The product also has
strong anti-rheumatism effects and can be used for acute rheumatic
arthritis, but because the product may induce severe adverse reaction, it
is seldom applied in the treatment of rheumatic
diseases.
|
||
6
|
Paracetamol
Tablets
|
Used
for fever caused by common cold or epidemic influenza and also for
relieving light and moderate pain such as headache, arthralgia, migraines,
tooth ache, courbature, neuralgia and menalgia.
|
||
7
|
Pediatric
Paracetamol, Artificial Cow-bezoar and Chlorphenamine Maleate
Tablets
|
Used
to relieve fever, headache, aching pain in extremities, sneezing,
rhinorrhea, nasal obstruction, pharyngodynia and other symptoms in
children caused by common cold or epidemic influenza.
|
||
8
|
Compound
Theophylling Hydrochloride Tablets
|
Used
to treat bronchial asthma.
|
||
9
|
Powerful
Loquat Syrup
|
Used
for the treatment of coughing and reduction of sputum caused by
bronchitis.
|
||
10
|
Purple
Orange Cough Syrup
|
Relieving
cough and eliminating sputum. Used to relieve coughing and excessive
phlegm as well as
expectoration.
|
11
|
Cough
Syrup of Loquat Leaf
|
Used
to clear lungs, relieve coughs and eliminate sputumand excessive
phlegm.
|
||
12
|
Children's
Cough Syrup
|
Eliminating
phlegm and relieving cough. Used to relieve coughs caused by the common
cold in children.
|
||
13
|
Pentoxyverine
Citrate and Ammonium Chloride Syrup
|
Used
for cough and expectoration.
|
||
14
|
Schisandra
Syrup
|
Tonifying
vital energy and invigorating the kidneys. Used in the treatment for
neurastheria, dizziness and insomnia.
|
||
15
|
Ginseng
Oral Liquid
|
Used
to nourish renal “qi” and promote fluid production to quench thirst. Used
to treat fatigue and acratia caused by deficiency of vital energy as well
as poor appetite, cardiopalmus and shortness of breath, insomnia and
forgetfulness.
|
||
16
|
Compound
Fluououracil Oral Solution
|
Used
in the therapeutic treatment of digestive tract cancer (colon carcinoma
and gastric carcinoma), mammary adenocarcinoma, primary hepatic
carcinoma.
|
||
17
|
Gossypol,
Potassium Chloride and Vitamins B Capsules
|
Used
in the treatment of uterine bleeding brought on by
menopause.
|
||
18
|
Compound
Belladonna and Aluminum Hydroxide Powder
|
Used
for relieving stomach pain, brash (heartburn) and acid reflux caused by
gastric hypersecretion.
|
||
19
|
Gentian
and Sodium Bicarbonate Powder
|
Used
for anorexia, gastric hypersecretion and
dyspepsia.
|
|
·
|
AuriculariaAuricula
Extracts,
|
|
·
|
Polysaccharide Of Group
Mushroom,
|
|
·
|
Grape
Seed,
|
|
·
|
MomordicaCharantia
Extracts,
|
|
·
|
Pumpkin
Polysaccharide,
|
|
·
|
Carotene,
|
|
·
|
Wheat Germ
Oil,
|
|
·
|
Seabuckthorn
Oil,
|
|
·
|
Health Gruel Series: Red Date
Gruel, Agaric Gruel, Eight-Treasure Gruel, Medlar Gruel, Walnut Gruel,
Chinese Yam Rhizome Gruel, Longan Gruel, Gingko Gruel, Lipid-Lowering
Gruel,
|
|
·
|
Health Tea Series: Fire Clearing
Tea, Antihypertensive Tea, Glucose-Lowering Tea, Lipid-Lowering Tea,
Detumescence Tea, Throat Smoothing Tea, Skin Nourishing Tea,Heat-Relieving
Tea, Pharyngitis Tea, Precious Eight-Treasure Tea, IT
Tea,
|
|
·
|
Cold-Region Grains: Green And
Harmless Series, Barley, Buckwheat, Maize Debris, Kidney Bean, Adzuki
Bean, Mung Bean, Sorghum Rice, Semen Coicis, Rice, Soy, Glutinous Rice,
Milet, Oat,
|
|
·
|
Northeast Precious Mountain
Product Series: Black Fungus, White Fungus, ArimillariaMellea, Shiitake
Fungus, HericiumErinaceus,
|
|
·
|
Miscellaneous
Mushrooms,
|
|
·
|
PteridiumAquilinum,
Swertia,
|
|
·
|
Dry Products Of Vegetables, Nuts,
Filbert, Pine Nut, Cathay Hickory, Walnut, Peanut, Fig,
Pistachio,
|
|
·
|
Dry Products of
Fruits.
|
Name of
Customer
|
Products Sold
|
Sales in 2009
(in dollars)
|
% of
Sales
in 2009
|
||||||||||
1
|
Li
Shuqin
|
GanodermaLucidum
and Aweto Soft Capsules
|
39,484.18
|
0.36
|
%
|
||||||||
2
|
Wang
Xinmei
|
GanodermaLucidum
and Aweto Soft Capsules
|
31,806.70
|
0.29
|
%
|
||||||||
3
|
JiQinglan
|
GanodermaLucidum
and Aweto Soft Capsules
|
31,806.70
|
0.29
|
%
|
||||||||
4
|
Heilongjiang
Jicheng Medicine Co.
|
Chaobao
Soft Capsule
|
18,645.31
|
0.17
|
%
|
||||||||
5
|
Changchun
Yihe Medical Technology Co.
|
calcium
tablet
|
18,645.31
|
0.17
|
%
|
||||||||
6
|
Gong
Shuqin
|
GanodermaLucidum
and Aweto Soft Capsules
|
18,645.31
|
0.17
|
%
|
||||||||
7
|
Chen
Yufu
|
GanodermaLucidum
and Aweto Soft Capsules
|
16,451.74
|
0.15
|
%
|
||||||||
8
|
Zhao
Meirong
|
GanodermaLucidum
and Aweto Soft Capsules
|
15,354.96
|
0.14
|
%
|
||||||||
9
|
Qingdao
Shiyitang Bio-technology Co.,Ltd.
|
GanodermaLucidum
and Aweto Soft Capsules
|
13,161.39
|
0.12
|
%
|
||||||||
10
|
Feng
Tao
|
Abalone,
GanodermaLucidum and Aweto Soft Capsules
|
13,161.39
|
0.12
|
%
|
||||||||
11
|
Other
customers
|
10,750,665.01
|
98
|
%
|
|||||||||
TOTAL
|
10,967,828
|
100.00
|
%
|
|
(i)
|
RMB 50,000,000
(approximately, $7.3 million) within 3 days of signing of the Share
Transfer Agreement;
|
|
(ii)
|
RMB5,000,000 (approximately
$700,000) as a deposit towards the purchase price;
and
|
|
(iii)
|
The remainder RMB
47,600,000 (approximately, $7 million) within 7 days of the
effective transfer of the equity interests to Harbin
Humankind.
|
|
·
|
Manufacturing
:
|
|
(a)
|
improving the manufacturing
techniques and staff
training;
|
|
(b)
|
guaranteeing high quality
material supply;
|
|
(c)
|
strengthening the working
procedure controls;
|
|
(d)
|
implementing Good Manufacturing
Practices (“GMP”)* to ensure a compliant standard in the food and medical
industries;
|
|
(e)
|
ensuring that all employees have
adequate training in health
regulations
|
|
·
|
Marketing: Adopt an effective
marketing mode to:
|
|
(a)
|
utilize direct distribution of
products to chain stores
nationwide;
|
|
(b)
|
build business alliances with
well-known enterprises to create private label
brands;
|
|
(c)
|
expand the marketing of our
products beyond the traditional
methods;
|
|
·
|
Product
Distribution:
|
|
(a)
|
enlarge our sales and marketing
force while developing new
markets;
|
|
(b)
|
strengthen the distribution
channel by developing promotion strategies and participating in trade
shows;
|
|
(c)
|
develop 3-5 new products to
market each year;
|
|
(d)
|
develop new markets through
innovation and research
|
*
|
Good Manufacturing Practice or
“GMP” is a term that is recognized worldwide for the control and
management of manufacturing and quality control testing of foods and
pharmaceutical products. An important part of GMP is documentation of
every aspect of the process, activities, and operations involved with drug
and medical device manufacture. Additionally, GMP requires that all
manufacturing and testing equipment has been qualified as suitable for
use, and that all operational methodologies and procedures (such as
manufacturing, cleaning, and analytical testing) utilized in the drug
manufacturing process have been validated (according to predetermined
specifications), to demonstrate that they can perform their purported
function(s).
|
|
·
|
We have more categories of
products and a diversified production
line.
|
|
·
|
We have lower cost and operating
expenses.
|
|
·
|
We have a strong and effective
research and development
team.
|
|
·
|
We are a self-owned enterprise,
and have the support of the local
government.
|
|
·
|
We have a geographical advantage
being located in Heilongjiang Province, the center of the healthcare
industry in China.
|
|
·
|
As a new-styled industrial
enterprise, we enjoy some financial support from the local
government.
|
Trademark
|
|
Certificate
No.
|
|
Category
|
|
Registrant
|
|
Valid Term
|
“Qunle”
|
No.3895929
|
No.5
: Dietetic foods adapted for medical purposes; Food preparations adapted
for medical purposes; Albuminous milk; Dietetic beverages adapted for
medical purposes; Milk sugar; Diabetic bread; Albuminous foodstuffs for
medical purposes; Food for babies; Dietetic substances adapted for medical
use; Nutritional additives for medical purposes
|
Harbin
Humankind
|
7/7/2006
to 7/6/2016
|
||||
“Qunle”
|
No.3896026
|
No.5
: ; Food preparations adapted for medical purposes; Albuminous
milk; Dietetic beverages adapted for medical purposes; Milk sugar;
Diabetic bread; Albuminous foodstuffs for medical purposes; Food for
babies; Dietetic substances adapted for medical use; Nutritional additives
for medical purposes
|
Harbin
Humankind
|
7/7/2006
to 7/6/2016
|
||||
“Wangzu”
|
No.4857905
|
No.30:
Molasses for food; Honey; pollen healthy grease; tortoise tuchahoe paste;
breed columbine extract; helix alga; non-medicial nutrition liquid;
non-medicial nutrition powder; non-medicial nutrition capsule; sugar candy
bird’s nest
|
Harbin
Humankind
|
5/14/2008
to
5/13/2018
|
“Kindlink”
|
No.3236981
|
No.5:
Food preparations adapted for medical purposes; Dietetic substances
adapted for medical use
|
Harbin
Humankind
|
12/7/2003
to 12/06/2013
|
||||
“Huimeijia”
|
No.5280303
|
No.5
: Medicine for human consumption; Medical nutrition
capsule; Fibres (Edible plant) [non-nutritive]; Injection; Raw
material drug; Troche; suppository; Food preparations adapted
for medical purposes; Dietetic foods adapted for medical purposes;
Dietetic substances adapted for medical use
|
Harbin
Humankind
|
7/21/2009
to 7/20/2019
|
||||
“Huide”
|
No.5280304
|
No.5
: Medicines for human consumption; Medical nutrition
capsule; Fibres (Edible plant) [non-nutritive]; Injection; Raw
material drug; Troche; suppository; Food preparations adapted
for medical purposes; Dietetic foods adapted for medical purposes;
Dietetic substances adapted for medical use
|
Harbin
Humankind
|
7/21/2009
to 7/20/2019
|
||||
“KDLK”
|
No.3230404
|
No.5
: Food preparations adapted for medical purposes; Dietetic foods adapted
for medical purposes; Dietetic substances adapted for medical
use
|
Harbin
Humankind
|
9/28/2003
to 9/27/2013
|
|
·
|
Pharmaceutical administration law
of the People’s Republic of China enacted January 12,
2001
|
|
·
|
Healthcare registration and
administration law, enacted January 7,
2005
|
|
·
|
Measures for the Administration
of Pharmaceutical Trade License, enacted January 4,
2004
|
|
·
|
Measures for the Supervision Over
and Administration of Pharmaceutical Production, enacted May 8,
2004
|
|
·
|
Food Safety Law of the People’s
Republic of China, enacted June 1,
2009
|
|
·
|
Regulation on the Implementation
of the Food Safety Law of the People’s Republic of China, enacted July 20,
2009
|
|
·
|
Regional
regulation: Heilongjiang Regional Medicinal Materials Resource
Protection Bylaw, enacted January 8,
2005
|
·
|
Electing
or defeating the election of
directors;
|
·
|
Amending
or preventing amendment of the Company’s Certificate of Incorporation or
By-laws;
|
·
|
Effecting
or preventing a merger, sale of assets or other corporate transaction;
and
|
·
|
Controlling
the outcome of any other matter submitted to the stockholders for
vote.
|
|
·
|
Additions or departures of key
personnel;
|
|
·
|
Limited “public float” following
the Securities Purchase Agreement, in the hands of a small number of
persons whose sales or lack of sales could result in positive or negative
pricing pressure on the market price for the common
stock;
|
|
·
|
Our ability to execute our
business plan;
|
|
·
|
Operating results that fall below
expectations;
|
|
·
|
Loss of any strategic
relationship;
|
|
·
|
Industry
developments;
|
|
·
|
Economic and other external
factors; and
|
|
·
|
Period-to-period fluctuations in
the Company’s financial
results.
|
Calendar Quarter
|
High Bid
|
Low Bid
|
||||||
Fiscal Year ended June 30,
2008
|
||||||||
2007
Third Quarter
|
$
|
1.10
|
$
|
0.20
|
||||
2007
Fourth Quarter
|
$
|
0.30
|
$
|
0.10
|
||||
2008
First Quarter
|
$
|
0.24
|
$
|
0.12
|
||||
2008
Second Quarter
|
$
|
0.36
|
$
|
0.16
|
||||
Fiscal Year ended June 30,
2009
|
||||||||
2008
Third Quarter
|
$
|
0.24
|
$
|
0.14
|
||||
2008
Fourth Quarter
|
$
|
2.00
|
*
|
$
|
0.02
|
*
|
||
2009
First Quarter
|
$
|
.40
|
*
|
$
|
0.0252
|
*
|
||
2009
Second Quarter
|
$
|
0.40
|
*
|
$
|
0.10
|
*
|
||
2009
Third Quarter
|
$
|
0.20
|
*
|
$
|
0.11
|
*
|
Prices reflect a 1-for-20 reverse
split of our common stock on November 13,
2008
|
|
·
|
the effect of political,
economic, and market conditions and geopolitical
events;
|
|
·
|
legislative and regulatory
changes that affect our
business;
|
|
·
|
the availability of funds and
working capital;
|
|
·
|
the actions and initiatives of
current and potential
competitors;
|
|
·
|
investor sentiment;
and
|
|
·
|
our
reputation.
|
|
June 30
|
|
||||||||||
|
|
2009
|
|
|
Variance
|
|
|
2008
|
|
|||
REVENUES
|
||||||||||||
Product
Sales (net of sales allowance)
|
$
|
10,967,828
|
1,336
|
%
|
$
|
763,599
|
||||||
Total
revenues
|
$
|
10,967,828
|
763,599
|
|||||||||
COST
OF GOODS SOLD
|
||||||||||||
Cost
of goods sold
|
4,877,286
|
744
|
%
|
578,129
|
||||||||
Gross
Profit
|
$
|
6,090,542
|
3,184
|
%
|
$
|
185,470
|
Year
|
Product Name
|
Quantity of Sales
|
Gross Sales ($)
|
|||
2008
|
Liquid
Calcium Capsule
|
190,980
capsules
|
1,438
|
|||
Selenium
Propolis Capsule
|
459,281
capsules
|
11,164
|
||||
Propolis
Capsule
|
236
capsules
|
15
|
||||
Frog
Oil Soft Capsule
|
9,824
capsules
|
383
|
||||
Abalone,
Sea cucumber and Frog oil soft capsule
|
1,777
boxes
|
357,354
|
||||
Ganodermalucidum
and Aweto Soft Capsules
|
1,766
boxes
|
355,038
|
||||
OEM
|
38,207
|
|||||
2009
|
Abalone,
Sea cucumber and Frog oil soft capsule
|
7,940
boxes
|
1,704,462
|
|||
Ganodermalucidum
and Aweto Soft Capsules
|
6,101
boxes
|
1,681,922
|
||||
Chao
Bao Capsule
|
1,500
boxes
|
28,082
|
||||
Jianwei
Calcium Tablet
|
1,030,360
tablets
|
22,448
|
||||
Propolis
and Black Ant Capsule
|
23,796
boxes
|
2,191,789
|
||||
Waterlilies
Soft Capsule(Sailuozhi)
|
13,546
boxes
|
3,144,578
|
||||
Colon
Cleanser Capsule
|
30,090
boxes
|
2,133,088
|
||||
|
OEM
|
|
|
61,460
|
|
a.
|
Large
increased ion sales volume in 2009 resulted in largely increased raw
materials consumption and purchases. The raw materials suppliers gave us a
favorable discount due to large raw materials purchases. Accordingly, the
purchase price for raw materials was
lower.
|
|
b.
|
The
costs of raw materials for Propolis and Black Ant Capsule and Colon
Cleanser Capsule were lower in
2009.
|
|
c.
|
The
bad macroeconomics performance in the PRC pushed down the wholesale price
levels of raw materials generally, which allowed us to obtain them at
lower cost than before.
|
|
a.
|
Depreciation
during the production process;
|
|
b.
|
Labor
consumed during the production;
|
|
c.
|
Water
charge and electric charge consumed in the
production;
|
|
d.
|
Low
value consumables and components and parts consumed in
production;
|
|
e.
|
Other
consumptions in production
|
|
For the Year Ended June 30
|
|||||||||||||||||||||||
|
2009
|
2008
|
||||||||||||||||||||||
Product Category*
|
Quantity
(Unit)
|
Sales USD
|
% of Sales
|
Quantity
(Unit)
|
Sales USD
|
% of
Sales
|
||||||||||||||||||
Frog
Oil Soft Capsule
|
32
|
382
|
0.05
|
%
|
||||||||||||||||||||
Propolis
Capsule
|
10
|
0
|
0
|
%
|
||||||||||||||||||||
Liquid
Calcium Capsule
|
3,380
|
1,415
|
0.19
|
%
|
||||||||||||||||||||
Selenium
Propolis Capsule
|
101,040
|
11,149
|
1.46
|
%
|
||||||||||||||||||||
Abalone,
Sea cucumber and Frog oil soft capsule
|
7,940
|
1,704,462
|
15.54
|
%
|
1,747
|
$
|
355,074
|
46.50
|
%
|
|||||||||||||||
Ganodermalucidum
and Aweto Soft Capsules
|
7,835
|
1,681,922
|
15.34
|
%
|
1,736
|
357,364
|
46.80
|
%
|
||||||||||||||||
Chao
Bao Capsule
|
1,500
|
28,082
|
0.26
|
%
|
0
|
0
|
0
|
%
|
||||||||||||||||
Jianwei
Calcium Tablet
|
36,320
|
22,448
|
0.2
|
%
|
0
|
0
|
0
|
%
|
||||||||||||||||
Propolis
and Black Ant Capsule
|
23,796
|
2,191,789
|
19.98
|
%
|
0
|
0
|
0
|
%
|
||||||||||||||||
Waterlilies
Soft Capsule(Sailuozhi)
|
13,546
|
3,144,578
|
28.67
|
%
|
0
|
0
|
0
|
%
|
||||||||||||||||
Colon
Cleanser Capsule
|
30,090
|
2,133,088
|
19.45
|
%
|
0
|
38,180
|
5
|
%
|
||||||||||||||||
OEM
Sales
|
61,460
|
0.56
|
%
|
|||||||||||||||||||||
Total
|
10,967,828
|
100
|
%
|
$
|
763,599
|
100
|
%
|
|
|
For the Year ended June 30
|
|
|||||||||
|
|
2009
|
|
|
Variance
|
|
|
2008
|
|
|||
Operating
Expenses
|
||||||||||||
Selling
, General and Administrative expenses
|
$
|
1,634,236
|
1,714
|
%
|
$
|
90,108
|
||||||
Depreciation
and amortization
|
53,729
|
-11.13
|
%
|
60,460
|
||||||||
R&D
Expenses
|
29,205
|
%
|
||||||||||
Total
operating expenses
|
$
|
1,717,170
|
1,040
|
%
|
$
|
150,568
|
|
|
June 30,09
|
|
|
June 30,08
|
|
||
As
of June 30:
|
||||||||
Cash
and cash equivalents
|
$
|
7,394,270
|
$
|
35,251
|
||||
Working
capital
|
$
|
2,410,264
|
$
|
(833,303
|
)
|
|||
Inventories
|
$
|
150,652
|
$
|
107,125
|
||||
Year
Ended June 30:
|
||||||||
Cash
provided by (used in):
|
||||||||
Operating
activities
|
$
|
7,051,480
|
$
|
260,559
|
||||
Investing
activities
|
$
|
(55,147
|
)
|
$
|
(273,292
|
)
|
||
Financing
activities
|
$
|
320,034
|
$
|
47,691
|
|
a.
|
Determine
end-of-period quantity and amount of finished-goods, semi-finished
products, raw materials, packing materials
etc.
|
|
b.
|
Based
on sales plan, the Company purchases raw materials and packing materials
by batches and calculate stock-in andstock-out quantity and amount
respectively. Summary calculation will be made based on actual quantity of
consumption atthe end of each
month.
|
|
c.
|
Collect
manufacturing overhead of each month, including depreciation, labor, water
charge, electric charge, theconsumptions of low value consumables.
Distribute manufacturing overhead based on volume of production and
makeexpense distribution sheet.
|
|
d.
|
Apportion
raw materials, packing materials and manufacturing overhead of each
products in each month to finished-goodsand semi-finished products. Carry
over Cost of Goods Sold according to sales
quantity.
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
|
Consolidated
Balance Sheets
|
F-4
|
|
Consolidated
Statements of Operations and Comprehensive Income
|
F-5
|
|
Consolidated
Statements of Stockholders’ Equity
|
F-7
|
|
Consolidated
Statements of Cash Flows
|
F-6
|
|
Notes
to Consolidated Financial Statements
|
F-8 - F-20
|
|
|
Years Ended
|
|
|||||
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
||
REVENUE
|
$
|
10,967,828
|
$
|
763,599
|
||||
COST
OF GOODS SOLD
|
4,877,286
|
578,129
|
||||||
Gross
Profit
|
6,090,542
|
185,470
|
||||||
OPERATING
EXPENSES
|
||||||||
Selling,
general & administrative expenses
|
1,634,236
|
90,108
|
||||||
Depreciation
and amortization expenses
|
53,729
|
60,460
|
||||||
Research
& development
|
29,205
|
-
|
||||||
Total
operating expenses
|
1,717,170
|
150,568
|
||||||
Operating
profit
|
4,373,372
|
34,902
|
||||||
OTHER
INCOME (EXPENSES)
|
||||||||
Interest
income
|
307
|
455
|
||||||
Interest
expenses
|
(65,995
|
)
|
(39,089
|
)
|
||||
Other
income
|
256
|
322
|
||||||
Other
expense
|
-
|
(640
|
)
|
|||||
Total
other income (expense)
|
(65,432
|
)
|
(38,952
|
)
|
||||
INCOME
(LOSS) BEFORE INCOME TAXES
|
4,307,940
|
(4,050
|
)
|
|||||
Income
taxes
|
1,483,486
|
28,663
|
||||||
Net
income (loss)
|
$
|
2,824,454
|
$
|
(32,713
|
)
|
|||
OTHER
COMPREHENSIVE INCOME
|
||||||||
Foreign
currency translation gain
|
$
|
15,297
|
$
|
235,025
|
||||
Comprehensive
income
|
$
|
2,839,751
|
$
|
202,312
|
||||
Basic
and diluted net loss per share
|
0.05
|
(0.00
|
)
|
|||||
Weight
average shares outstanding
|
62,234,737
|
61,203,088
|
|
Year ended June 30
|
|||||||
|
2009
|
2008
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | 2,824,454 | $ | (32,713 | ) | |||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities
|
||||||||
Depreciation
& amortization
|
74,513 | 74,800 | ||||||
Imputed
interest
|
65,995 | 39,088 | ||||||
Wrote
off intangible assets
|
289,636 | |||||||
Changes
in assets and liabilities -
|
||||||||
(Increase)
decrease in:
|
||||||||
Accounts
receivables and other receivables
|
(21,510 | ) | - | |||||
Inventory
|
(43,527 | ) | (97,392 | ) | ||||
Prepaid
expense
|
25,411 | 577 | ||||||
Accounts
payable and other payables
|
3,836,508 | 276,199 | ||||||
Net
cash provided by (used in) operating activities
|
7,051,480 | 260,559 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchases/
(transfer) of fixed assets
|
(44,628 | ) | (273,292 | ) | ||||
construction-in-progress
|
(10,519 | ) | ||||||
Net
cash provided by investing activities
|
(55,147 | ) | (273,292 | ) | ||||
Cash
flows from financing activities:
|
||||||||
Contributed
capital
|
1,464 | |||||||
Proceeds
from related party debt
|
318,570 | 118,779 | ||||||
Distribution
to principal shareholder
|
(71,088 | ) | ||||||
Net
cash provided by financing activities
|
320,034 | 47,691 | ||||||
Effect
of exchange rates on cash
|
42,652 | (8,004 | ) | |||||
Net
increase in cash and cash equivalents
|
7,359,019 | 26,954 | ||||||
Cash
and cash equivalents, at beginning of year
|
35,251 | 8,297 | ||||||
Cash
and cash equivalents, at end of year
|
$ | 7,394,270 | $ | 35,251 | ||||
Supplemental
cash flow information
|
||||||||
Cash
paid for income tax
|
$ | 226,986 | $ | 28,663 | ||||
Noncash
investing and financing activities:
|
||||||||
Fixed
assets and intangible assets purchased or wrote off on
account
|
289,636 | 46,420 |
|
Common shares
|
|||||||||||||||||||||||
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained
Earnings
(Accumulated
Deficit)
|
Accumulated
Other
Comprehensive
Income
|
Stockholders'
Equity
|
||||||||||||||||||
Balances,
June 30, 2008
|
61,203,088
|
$
|
6,120
|
$
|
1,342,490
|
$
|
(199,428
|
)
|
$
|
246,004
|
$
|
1,395,186
|
||||||||||||
Share
issued to minority holders in reverse merger
|
1,031,649
|
103
|
(103
|
)
|
-
|
|||||||||||||||||||
Contributed
capital
|
1,464
|
1,464
|
||||||||||||||||||||||
Imputed
interest on shareholder loan
|
65,995
|
65,995
|
||||||||||||||||||||||
Net
income for the year
|
-
|
2,824,454
|
2,824,454
|
|||||||||||||||||||||
Other
comprehensive income-Translation adjustment
|
15,297
|
15,297
|
||||||||||||||||||||||
Balances,
June 30, 2009
|
62,234,737
|
$
|
6,223
|
$
|
1,409,846
|
$
|
2,625,026
|
$
|
261,301
|
$
|
4,302,396
|
Building,
warehouse and Improvements
|
20
to 30 years
|
|
Land
use rights
|
50
years
|
|
Furniture
& Equipment
|
5
to 7 years
|
|
Transportation
Equipment
|
5
to 15 years
|
|
Machinery
and Equipment
|
7
to 15 years
|
|
·
|
acquisition costs will generally
be expensed as incurred;
|
|
·
|
Noncontrolling interests will be
valued at fair value at the date of acquisition;
and
|
|
·
|
liabilities related to contingent
consideration will be recorded at fair value at the date of acquisition
and subsequently remeasured each subsequent reporting
period
|
June
30,
|
||||||||
2009
|
2008
|
|||||||
Advances
on raw materials
|
9,553
|
2,116
|
||||||
Prepaid
services
|
32,828
|
|||||||
Total
prepaid expenses
|
$
|
9,553
|
$
|
34,944
|
June
30,
|
||||||||
2009
|
2008
|
|||||||
Finished
goods
|
$
|
26,623
|
$
|
14
|
||||
Raw
materials
|
109,057
|
82,650
|
||||||
Supplies
and packing materials
|
14,972
|
24,461
|
||||||
Total
inventory
|
$
|
150,652
|
$
|
107,125
|
June
30
|
||||||||
2009
|
2008
|
|||||||
Building
and warehouses
|
$
|
852,345
|
$
|
852,345
|
||||
Machinery
and equipment
|
159,921
|
159,921
|
||||||
Office
equipment
|
33,968
|
18,645
|
||||||
Vehicles
|
88,837
|
88,837
|
||||||
Other
|
24,657
|
24,657
|
||||||
Less:
Accumulated depreciation
|
(127,400
|
)
|
(68,841
|
)
|
||||
Total
|
$
|
1,032,328
|
$
|
1,075,564
|
June
30
|
||||||||
2009
|
2008
|
|||||||
Land
use right
|
$
|
925,956
|
$
|
765,683
|
||||
Less:
Accumulated amortization
|
(76,671
|
)
|
(61,255
|
)
|
||||
$
|
849,285
|
$
|
704,428
|
June
30
|
||||||||
2009
|
2008
|
|||||||
Provision
for PRC income tax - current taxes
|
$
|
1,483,486
|
$
|
28,663
|
||||
Provision
for PRC income tax - deferred taxes
|
-
|
-
|
||||||
Total
provision for income taxes
|
$
|
1,483,486
|
$
|
28,663
|
June
30
|
||||||||
2009
|
2008
|
|||||||
Pretax
Income( loss )
|
$
|
4,307,940
|
$
|
(4,050
|
)
|
|||
Statutory
tax rate
|
25
|
%
|
25
|
%
|
||||
Benefits
for PRC enterprise income tax at statutory rate
|
0
|
(1,012
|
)
|
|||||
Expenses
not deductible for taxes – temporary difference
|
278,867
|
|||||||
Expenses
not deductible for taxes – permanent difference
|
112,218
|
9,722
|
||||||
Increase
in valuation allowance related to deferred tax assets
|
15,416
|
19,953
|
||||||
Total
provision for income taxes
|
1,483,486
|
28,663
|
June
30
|
||||||||
2009
|
2008
|
|||||||
PRC
|
||||||||
Noncurrent
deferred tax assets :
|
||||||||
Amortization
of land use right and other intangible assets
|
$
|
15,416
|
$
|
19,953
|
||||
Valuation
allowance
|
(15,416
|
)
|
(19,953
|
)
|
||||
$
|
-
|
$
|
-
|
|
(i)
|
RMB 50,000,000 (approximately,
$7.3 million) within 3 days of signing of the Share Transfer
Agreement;
|
(ii)
|
RMB5,000,000 (approximately
$700,000) as a deposit towards the purchase price;
and
|
(iii)
|
The remainder RMB 47,600,000
(approximately, $7 million) within 7 days of the effective transfer
of the equity interests to Harbin
Humankind.
|
Name
|
Age
|
Position
|
||
Sun
Xin
|
|
43
|
|
Chairman,
Chief Executive Officer, Chief Financial Officer, Treasurer and a
director
|
|
·
|
Had a bankruptcy petition filed
by or against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years
prior to that time.
|
|
·
|
Been convicted in a criminal
proceeding or been subject to a pending criminal proceeding, excluding
traffic violations and other minor
offenses.
|
|
·
|
Been subject to any order,
judgment or decree, not subsequently reversed, suspended or vacated, of
any court of competent jurisdiction, permanently or temporarily enjoining,
barring, suspending or otherwise limiting his involvement in any type of
business, securities or banking
activities.
|
|
·
|
Been found by a court of
competent jurisdiction (in a civil action), the SEC, or the Commodities
Futures Trading Commission to have violated a federal or state securities
or commodities law, and the judgment has not been reversed, suspended or
vacated.
|
Directors and Executive Officers
|
Position/Title
|
Age
|
||
Xin
Sun
|
Chairman,
Chief Financial Officer, Treasurer
|
43
|
||
Baosen
Ma
|
President,
Secretary, Director
|
41
|
||
Kai
Sun
|
Director
|
38
|
||
Zhigang
Ma
|
Chief
Information Officer
|
29
|
Name of
Officer
|
Year
|
Salary($)
|
Bonus
|
Stock
Awards
|
Option
Awards
|
Non-Equity
Incentive Plan
Compensation
|
Non-qualified
Deferred
Compensation
|
All Other
Compensation
|
Total
|
|||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||
Sun,
Xin
|
2009
|
72,454
|
—
|
—
|
—
|
—
|
—
|
—
|
72,454
|
|||||||||||||||||||||||||
2008
|
2,624
|
—
|
—
|
—
|
—
|
—
|
—
|
2,624
|
||||||||||||||||||||||||||
2007
|
2,554
|
—
|
—
|
—
|
—
|
—
|
—
|
2,554
|
||||||||||||||||||||||||||
Thomas
Bontems
|
2008
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
|||||||||||||||||||||||||
(1)
|
2007
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
Title of Class
|
Name
|
Amount and Nature of
Beneficial Owner (2)
|
Percent of Class (3)
|
|||||||
Common
Stock
|
Sun
Xin
Chairman,
Chief Executive Officer,
Chief
Financial Officer and Treasurer
|
33,003,088 | 53.03 | % | ||||||
Common
Stock
|
Thomas
Bontems
Former
Chief Executive Officer (1)
|
13,813 | 0.02 | % | ||||||
Common
Stock
|
All
officers and directors as a group (1 person)
|
33,003,088 | 53.03 | % |
(1)
|
Mr. Bontems resigned as our Chief
Executive Officer with effect from December 31, 2008. On the same day, Mr.
Sun replaced Mr. Bontems as our Chief Executive
Officer.
|
(2)
|
The number of shares reflects the
1:20 reverse split of the Company’s common stock that became effective on
November 13, 2008.
|
(3)
|
Based on a 62,234,737 total
issued and outstanding shares of the Company as of October 9,
2009, which reflects the 1:20 post reverse split of the Company’s common
stock that became effective on November 13,
2008.
|
Audit Fees
|
Related Fee
|
Tax Fees
|
All Other Fees
|
|||||||||||||
2009
|
$
|
113,700
|
||||||||||||||
2008
|
$
|
40,000
|
Exhibit No.
|
Description
|
|
3.1
|
Articles
of Incorporation.*
|
|
3.2
|
By-laws.*
|
|
3.3
|
Certificate
of Amendment dated May 11, 2005.
|
|
3.4
|
Certificate
of Amendment dated November 12, 2008.
|
|
3.5
|
Certificate
of Amendment dated February 11, 2009.
|
|
4.1
|
Securities
Purchase Agreement dated September 10, 2007 between the Company, Thomas
Bontems and Sun Xin. **
|
|
10.1
|
Asset
Purchase and Sale Agreement dated September 10, 2007 between the Company
and Universal Fog Systems, Inc.**
|
|
10.2
|
Share
Exchange Agreement dated October 15, 2007 between the Company, Thomas
Bontem, Sun Xin, China Health Industries Holdings Limited and Harbin
Humankind Biology Technology Co. Limited.***
|
|
10.3
|
English
Translation of Land Use Agreement dated June 7, 2004, between Harbin
Humankind Biology Technology Co. Limited and Harbin City, Daochu District,
Songbei Township, Jinxin Village.
|
|
10.4
|
English
Translation of Lease Agreement dated August 20, 2008 between Harbin
Huadong Plaza Realty Management Co., Ltd. and Harbin Humankind Biology
Technology Co. Limited.
|
10.5
|
English
Translation of Cooperative Agreement dated September 17, 2008 between
Harbin Humankind Biology Technology Co. Limited and the Commercial Bureau
of Qing’an County.
|
|
10.6
|
English
Translation of Land Purchase Agreement dated July 7, 2009 between Harbin
Humankind Biology Technology Co. Limited and Harbin Songbei District
Construction and Development Management Committee.
|
|
10.7
|
Technology
Transfer Agreement dated October 12, 2007 between the Company and Beijing
Jindelikang Bio-Technology Co., Ltd.
|
|
10.8
|
Purchase
Order dated March 13, 2009 between the Company and Mr. Wang
Shukui.
|
|
10.9
|
Loan
Agreements between the Company and Xin Sun dated June 27,
2008.
|
|
10.10
|
Loan
Agreements between the Company and Xin Sun dated August 21,
2008.
|
|
10.11
|
Loan
Agreements between the Company and Xin Sun dated October 9,
2008.
|
|
10.12
|
Loan
Agreements between the Company and Xin Sun dated October 27,
2008.
|
|
10.13
|
Loan
Agreements between the Company and Xin Sun dated November 1,
2008.
|
|
10.14
|
Loan
Agreements between the Company and Xin Sun dated December 30,
2008.
|
|
10.15
|
Loan
Agreements between the Company and Xin Sun dated January 22,
2009.
|
|
10.16
|
Loan
Agreements between the Company and Xin Sun dated February 2,
2009.
|
|
10.17
|
Loan
Agreements between the Company and Xin Sun dated February 28,
2009.
|
|
10.18
|
Loan
Agreements between the Company and Xin Sun dated May 24,
2009.
|
|
10.19
|
Loan
Agreements between the Company and Xin Sun dated June 17,
2009.
|
|
16.1
|
Letter
from Turner, Stone & Company, L.L.P. to the Securities and Exchange
Commission dated April 2, 2008*****
|
|
21.1
|
List
of
Subsidiaries.****
|
*
|
Incorporated
by reference to the Company’s Registration Statement on Form 10-SB filed
with the SEC on December 1, 2004.
|
**
|
Incorporated
by reference to the Company’s Current Report on Form 8-K/A filed with the
SEC on February 20, 2008.
|
***
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with the
SEC on October 24, 2007.
|
****
|
Incorporated
by reference to the Company’s Current Report on Form 8-K and
Form 8-K/A filed with the SEC on January 7,
2009.
|
*****
|
Incorporated
by reference to the Company’s Current Report on Form 8-K filed with the
SEC on April 4, 2008.
|
CHINA
HEALTH INDUSTRIES HOLDINGS,
INC.
|
/s/ Xin Sun
|
By:
Xin Sun
|
Title:
Chief Executive Officer
|
Date:
November 11, 2010
|
/s/ Xin Sun
|
By:
Xin Sun
|
Title:
Chief Executive Officer, Chief Financial Officer and sole
director
|
Date:
November 11, 2010
|
Supplier:
|
Shukui
Wang
|
Contract
No.
|
20090313
|
Purchaser:
|
Harbin
Humankind Biology
Technology
Co. Limited
|
Date:
|
March
13, 2009
|
Product Name
|
Unit Price
(RMB/Kilo)
|
Specification
|
Quantity (Kilo)
|
Total Price
|
Remarks
|
|||||||||
Forest
Frog Oil
|
4,600 |
1KG
|
6 | 27,600 | ||||||||||
Forest
Frog Oil (small)
|
3,000 |
1KG
|
400 | 1,200,000 | ||||||||||
Abalone
Oil
|
16,000 |
1KG
|
50 | 800,000 | ||||||||||
Ants
Powder
|
160 |
1KG
|
520 | 83,200 | ||||||||||
Scutellaria
Baicalensis
|
200 |
1KG
|
520 | 10,400 | ||||||||||
Acanthopanax
|
200 |
1KG
|
520 | 10,400 | ||||||||||
Ganodorma
Lucidum
|
338.37 |
1KG
|
5 | 1,691.85 | ||||||||||
Propolis
|
280 |
1KG
|
520 | 291,200 | ||||||||||
Grape
Seeds Extract
|
200 |
1KG
|
100 | 20,000 | ||||||||||
Soy
Isoflavones
|
520 |
1KG
|
160 | 83,200 | ||||||||||
Lactobacillus
|
1,000 |
1KG
|
350 | 350,000 | ||||||||||
Aloe
|
110 |
1KG
|
700 | 77,000 | ||||||||||
Cordyceps
Sinensis
|
140,000 |
1KG
|
11 | 1,540,000 | ||||||||||
Total
|
4,494,691.85 |
Party
A
(
Seal
):
|
Party
B:
|
/s/
Xin Sun
|
|
Date:
|
Date:
June 27, 2008
|
Party
A (Seal) :
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
August 21, 2008
|
Party
A (Seal) :
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
October 9,
2008
|
Party
A (Seal) :
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
October 27,
2008
|
Party
A (Seal) :
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
November 1,
2008
|
Party
A (Seal) :
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
December 30,
2008
|
Party
A
(
Seal
):
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
January 22, 2009
|
Party
A
(
Seal
):
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
February 2, 2009
|
Party
A
(
Seal
):
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
February 28,
2009
|
Party
A
(
Seal
):
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
May 24, 2009
|
Party
A
(
Seal
):
|
Party
B:
|
Harbin
Humankind Biology
|
|
Technology
Co. Limited
|
/s/
Xin Sun
|
Date:
|
Date:
June 17, 2009
|