##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE QUARTERLY PERIOD ENDED September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 FOR THE TRANSITION PERIOD FROM  TO
 Commission file number 000-51409
 BEIJING MED-PHARM CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-0434726(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)600 W. Germantown Pike, Suite 400Plymouth Meeting, Pennsylvania
    
    19462(Address of principal executive offices)
    
    (Zip Code)
 (610) 940-1675
(Registrants telephone number, including area code)
 þ o
  o o þ
 o þ




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##### 



BEIJING MED-PHARM CORPORATION
INDEX
 PageNo.Part I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of September 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Condensed Consolidated Statements of Operations (Unaudited) for the three and nine months ended
September 30, 2007 and 2006
    
    
    4Condensed Consolidated Statements of Stockholders Equity (Unaudited) for the three and nine
months ended September 30, 2007
    
    
    5Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September
30, 2007 and 2006
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results Of Operations
    
    
    13Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    23Item 4. Controls and Procedures
    
    
    23Part II OTHER INFORMATIONItem 1A. Risk Factors
    
    
    24Item 6. Exhibits
    
    
    38SIGNATURESCertificate of the Chief Executive OfficerCertificate of the Chief Financial OfficerCertificate of the Chief Executive Officer required by Rule 13a-14(a)Certificate of the Chief Financial Officer required by Rule 13a-14(a)
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Unaudited)September 30,
    
    
    December 31,2007
    
    
    2006AssetsCurrent Assets:Cash and Cash Equivalents
    
    $
    34,417,280
    
    
    $
    15,330,606Restricted Cash
    
    
    516,144
    
    
    
    108,000Accounts Receivable, net of allowance for doubtful accounts of $0
    
    
    10,138,905
    
    
    
    7,237,167Inventory, net of allowance for obsolescence of $0
    
    
    2,403,913
    
    
    
    1,969,547Note Receivable from Rongheng
    
    
    659,000
    
    
    
    Other Receivables
    
    
    418,485
    
    
    
    350,151Deposit on Acquisition
    
    
    4,800,100
    
    
    
    VAT Receivable
    
    
    565,815
    
    
    
    597,119Prepaid Expenses and Other Current Assets
    
    
    1,361,588
    
    
    
    597,439Total Current Assets
    
    
    55,281,230
    
    
    
    26,190,029Restricted Cash
    
    
    157,000
    
    
    
    157,000Property and Equipment, net
    
    
    418,572
    
    
    
    312,594Investments, at Cost
    
    
    132,971
    
    
    
    128,205Intangible Assets, net of accumulated amortization
    
    
    536,972
    
    
    
    728,722Total Assets
    
    $
    56,526,745
    
    
    $
    27,516,550Liabilities and Stockholders EquityCurrent Liabilities:Notes Payable
    
    $
    117,378
    
    
    $
    117,378Related Party Notes Payable
    
    
    26,696
    
    
    
    548,422Accounts Payable
    
    
    7,534,109
    
    
    
    6,063,956Accounts Payable Wanhui Group
    
    
    
    
    
    
    214,227Deferred Revenue
    
    
    162,441
    
    
    
    18,159Accrued Payroll
    
    
    536,558
    
    
    
    533,290Accrued Professional Fees
    
    
    308,360
    
    
    
    140,349Accrued Taxes and related expenses
    
    
    86,605
    
    
    
    85,603Accrued Social Welfare and related expenses
    
    
    211,803
    
    
    
    204,134Accrued Contract Allowance
    
    
    463,524
    
    
    
    462,581Accrued Other
    
    
    785,767
    
    
    
    442,172Total Current Liabilities
    
    
    10,233,241
    
    
    
    8,830,271Notes Payable, long term
    
    
    29,469
    
    
    
    126,495Total Liabilities
    
    $
    10,262,710
    
    
    $
    8,956,766Stockholders Equity:Common Stock, $.001 Par Value; 50,000,000 Shares Authorized;
30,397,522 and 26,522,868 Shares Issued and Outstanding as of
September 30, 2007 and December 31, 2006, respectively
    
    $
    30,398
    
    
    $
    26,523Additional Paid in Capital
    
    
    57,113,362
    
    
    
    28,039,112Common Stock Warrants
    
    
    9,866,707
    
    
    
    6,371,332Accumulated Deficit
    
    
    (21,009,044
    )
    
    
    (15,964,418
    )Accumulated Other Comprehensive Income
    
    
    262,612
    
    
    
    87,235Total Stockholders Equity
    
    
    46,264,035
    
    
    
    18,559,784Total Liabilities and Stockholders Equity
    
    $
    56,526,745
    
    
    $
    27,516,550
  3




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##### Table of Contents



BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Revenues
    
    $
    8,979,197
    
    
    $
    6,898,886
    
    
    $
    21,844,512
    
    
    $
    17,020,467Cost of Sales
    
    
    8,474,137
    
    
    
    6,683,601
    
    
    
    20,329,696
    
    
    
    16,457,460Gross Margin
    
    
    505,060
    
    
    
    215,285
    
    
    
    1,514,816
    
    
    
    563,007Sales and Marketing Expenses
    
    
    407,405
    
    
    
    295,593
    
    
    
    1,134,341
    
    
    
    885,198General & Administration Expenses
    
    
    2,072,857
    
    
    
    1,116,760
    
    
    
    5,827,608
    
    
    
    4,055,413Loss on Disposal of Asset
    
    
    19,586
    
    
    
    407,348
    
    
    
    19,586
    
    
    
    407,348Total Operating Expenses
    
    
    2,499,848
    
    
    
    1,819,701
    
    
    
    6,981,535
    
    
    
    5,347,959Loss From Operations
    
    
    (1,994,788
    )
    
    
    (1,604,416
    )
    
    
    (5,466,719
    )
    
    
    (4,784,952
    )Other Income (Expense):Interest Income
    
    
    171,877
    
    
    
    31,763
    
    
    
    441,453
    
    
    
    123,985Interest Expense
    
    
    (46,564
    )
    
    
    (27,519
    )
    
    
    (90,188
    )
    
    
    (51,108
    )Other Income
    
    
    70,829
    
    
    
    45,706
    
    
    
    70,829
    
    
    
    42,291Total Other Income
    
    
    196,142
    
    
    
    49,950
    
    
    
    422,094
    
    
    
    115,168Loss Before Provision For Income Taxes
    
    
    (1,798,646
    )
    
    
    (1,554,466
    )
    
    
    (5,044,625
    )
    
    
    (4,669,784
    )Provision For Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,863Net Loss
    
    $
    (1,798,646
    )
    
    $
    (1,554,466
    )
    
    $
    (5,044,625
    )
    
    $
    (4,703,647
    )Basic and Diluted Loss Per Share
    
    $
    (0.06
    )
    
    $
    (0.07
    )
    
    $
    (0.19
    )
    
    $
    (0.21
    )Basic and Diluted Weighted-average
Shares Outstanding
    
    
    28,394,329
    
    
    
    23,154,067
    
    
    
    27,247,195
    
    
    
    22,612,327
  4




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##### Table of Contents



BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited)
 AccumulatedOtherComprehensiveCommon Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income$.001
    
    
    Additional
    
    
    Common
    
    
    
    
    
    
    Foreign
    
    
    TotalNumber
    
    
    Par
    
    
    Paid-in
    
    
    Stock
    
    
    Accumulated
    
    
    Currency
    
    
    Stockholdersof Shares
    
    
    Value
    
    
    Capital
    
    
    Warrants
    
    
    Deficit
    
    
    Translation
    
    
    EquityBalance as of
December 31, 2006
    
    
    26,522,868
    
    
    $
    26,523
    
    
    $
    28,039,112
    
    
    $
    6,371,332
    
    
    $
    (15,964,418
    )
    
    $
    87,235
    
    
    $
    18,559,784Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    316,028
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    316,028Warrant Exercise
    
    
    118,323
    
    
    
    118
    
    
    
    1,013,526
    
    
    
    (479,833
    )
    
    
    
    
    
    
    
    
    
    
    533,811Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,687,571
    )
    
    
    
    
    
    
    (1,687,571
    )Other Comprehensive LossForeign Currency
Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,597
    
    
    
    39,597Total
Comprehensive
Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,647,974
    )Balance as of March 31,
2007
    
    
    26,641,191
    
    
    $
    26,641
    
    
    $
    29,368,666
    
    
    $
    5,891,499
    
    
    $
    (17,651,989
    )
    
    $
    126,832
    
    
    $
    17,761,649Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    356,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    356,396Warrant and Option
Exercises
    
    
    213,752
    
    
    
    214
    
    
    
    663,893
    
    
    
    (397,000
    )
    
    
    
    
    
    
    
    
    
    
    267,107Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,558,408
    )
    
    
    
    
    
    
    (1,558,408
    )Other Comprehensive LossForeign Currency
Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71,746
    
    
    
    71,746Other Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,486,662
    )Balance as of June 30,
2007
    
    
    26,854,943
    
    
    $
    26,855
    
    
    $
    30,388,955
    
    
    $
    5,494,499
    
    
    $
    (19,210,397
    )
    
    $
    198,578
    
    
    $
    16,898,490Common Stock Issuance
    
    
    3,531,454
    
    
    
    3,532
    
    
    
    32,602,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,605,890Cost in Connection with
Common Stock Issuance
    
    
    
    
    
    
    
    
    
    
    (2,003,215
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,003,215
    )Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    460,396
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    460,396Common Stock Warrants
Issuance
    
    
    
    
    
    
    
    
    
    
    (4,378,898
    )
    
    
    4,378,898Warrant and Option
Exercises
    
    
    11,125
    
    
    
    11
    
    
    
    43,766
    
    
    
    (6,690
    )
    
    
    
    
    
    
    
    
    
    
    37,087Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,798,647
    )
    
    
    
    
    
    
    (1,798,647
    )Other Comprehensive LossForeign Currency
Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,034
    
    
    
    64,034Other Comprehensive Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,734,613
    )Balance as of September
30, 2007
    
    
    30,397,522
    
    
    $
    30,398
    
    
    $
    57,113,362
    
    
    $
    9,866,707
    
    
    $
    (21,009,044
    )
    
    $
    262,612
    
    
    $
    46,264,035
  5




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##### Table of Contents



BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the nine months endedSeptember 30,2007
    
    
    2006Cash Flows from Operating Activities:Net Loss
    
    $
    (5,044,625
    )
    
    $
    (4,703,647
    )Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities:Depreciation and amortization of Property and Equipment
    
    
    84,600
    
    
    
    65,851Amortization of Intangible Assets
    
    
    191,750
    
    
    
    196,794Stock-Based Compensation
    
    
    1,132,820
    
    
    
    660,110Loss on Disposal of Asset
    
    
    19,586
    
    
    
    407,348Increase in Accounts Receivable
    
    
    (2,901,738
    )
    
    
    (1,914,995
    )Increase in Inventory
    
    
    (434,365
    )
    
    
    (195,100
    )Increase in Other Receivables
    
    
    (68,334
    )
    
    
    (4,972
    )Decrease (Increase) in Value Added Tax Receivable
    
    
    31,304
    
    
    
    (124,611
    )Increase in Prepaid Expenses and Other Current Assets
    
    
    (764,150
    )
    
    
    (8,986
    )Increase in Accounts Payable
    
    
    1,470,153
    
    
    
    649,232Increase in Deferred Revenue
    
    
    144,282
    
    
    
    378Increase (Decrease) in Accrued Payroll
    
    
    3,268
    
    
    
    (24,284
    )Increase (Decrease) in Accrued Professional Fees
    
    
    168,011
    
    
    
    (164,650
    )Increase in Accrued Taxes and related expenses
    
    
    1,002
    
    
    
    Increase in Accrued Social Welfare and related expenses
    
    
    7,668
    
    
    
    Increase in Contract Allowances
    
    
    943
    
    
    
    9,621Increase in Accrued Other
    
    
    343,596
    
    
    
    129,096Net Cash Used in Operating Activities
    
    
    (5,614,229
    )
    
    
    (5,022,815
    )Cash Flows from Investing Activities:Acquisition payment due to Wanhui Group
    
    
    (214,227
    )
    
    
    (412,089
    )Acquisition of Property and Equipment
    
    
    (210,165
    )
    
    
    (209,414
    )Cash Paid for Acquisition
    
    
    (4,800,100
    )Note Receivable from Rongheng
    
    
    (659,000
    )
    
    
    Net Cash Used In Investing Activities
    
    
    (5,883,492
    )
    
    
    (621,503
    )Cash Flows from Financing Activities:Net Proceeds from Exercise of Common Stock Warrants and Options
    
    
    838,005
    
    
    
    2,594,228Net Proceeds from Common Stock Issuance
    
    
    30,602,675
    
    
    
    Payments on Note Payable
    
    
    (618,752
    )
    
    
    (83,419
    )Increase in restricted cash
    
    
    (408,144
    )
    
    
    Net Cash Provided by Financing Activities
    
    
    30,413,784
    
    
    
    2,510,809Effect of exchange rate changes on cash
    
    
    170,611
    
    
    
    22,094Net Increase (Decrease) in Cash and Equivalents
    
    
    19,086,674
    
    
    
    (3,111,415
    )Cash and Cash Equivalents, Beginning
    
    
    15,330,606
    
    
    
    6,905,911Cash and Cash Equivalents, Ending
    
    $
    34,417,280
    
    
    $
    3,794,496Supplemental Disclosure of Cash Flow Information:Cash Paid During the Years for:Income Taxes
    
    $
    0
    
    
    $
    50,290Interest
    
    
    57,963
    
    
    
    51,793
  6




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##### Table of Contents



BEIJING MED-PHARM CORPORATION AND SUBSIDIARIES
 
 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 1. Basis of Presentation:
  Earnings Per Share:
 New Accounting Policy: Accounting for Uncertainty in Income Taxes Accounting for Contingencies Accounting for Income Taxes
    7




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New Accounting Pronouncement:
   Reclassifications:
 2. Acquisitions:
   8




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##### Table of Contents



3. Segment Information:
     Three months ended September 30,
    
    
    Nine months ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Pharmaceutical Distribution
    
    $
    8,978,169
    
    
    
    6,869,119
    
    
    $
    21,822,879
    
    
    
    16,933,989Sales and Marketing
    
    
    1,028
    
    
    
    29,767
    
    
    
    21,633
    
    
    
    86,478Sales and Marketing intersegment
    
    
    43,880
    
    
    
    30,041
    
    
    
    284,650
    
    
    
    393,974Eliminations
    
    
    (43,880
    )
    
    
    (30,041
    )
    
    
    (284,650
    )
    
    
    (393,974
    )Total Revenue
    
    $
    8,979,197
    
    
    
    6,898,886
    
    
    $
    21,844,512
    
    
    
    17,020,467Pharmaceutical Distribution
    
    $
    44,286
    
    
    
    (28,739
    )
    
    $
    (106,358
    )
    
    
    (252,846
    )Sales and Marketing
    
    
    (818,456
    )
    
    
    (553,421
    )
    
    
    (1,918,341
    )
    
    
    (1,398,397
    )Corporate
    
    
    (1,081,496
    )
    
    
    (1,059,454
    )
    
    
    (3,727,470
    )
    
    
    (3,098,746
    )Eliminations
    
    
    (139,122
    )
    
    
    37,198
    
    
    
    285,450
    
    
    
    (34,963
    )Total Operating Loss
    
    $
    (1,994,788
    )
    
    
    (1,604,416
    )
    
    $
    (5,466,719
    )
    
    
    (4,784,952
    )
 4. Shareholders Equity
  Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Weighted average basic shares
    
    
    28,394,329
    
    
    
    23,154,067
    
    
    
    27,247,195
    
    
    
    22,612,327
  9




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##### Table of Contents



Three months ended September 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Number of shares
    
    
    2,185,997
    
    
    
    1,240,764
    
    
    
    2,052,482
    
    
    
    1,543,259Range of exercise price
    
    $
    1.15  $10.90
    
    
    $
    1.15-$4.20
    
    
    $
    1.15  $10.90
    
    
    $
    1.15-$4.20
 5. Stock-Based Compensation:
   Three months endedSeptember 30,
    
    Nine months ended September 30,2007
    
    2006
    
    2007
    
    2006Expected life (years)
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    5.0Risk-free interest rate
    
    
    5.23
    %
    
    
    4.77-5.11
    %
    
    
    5.15%-5.23
    %
    
    
    4.32-5.19
    %Expected Volatility
    
    
    80
    %
    
    
    109.70
    %
    
    
    78.8-80
    %
    
    
    93.6-109.7
    %Expected Dividend yield
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
   10




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##### Table of Contents



Weighted-Weighted-
    
    
    AverageAverage
    
    
    RemainingExercise
    
    
    Contractual
    
    
    AggregatePrice
    
    
    Term
    
    
    IntrinsicOptions
    
    
    per Share
    
    
    (in years)
    
    
    ValueOutstanding on January 1, 2007
    
    
    2,103,000
    
    
    $
    2.08
    
    
    
    
    
    
    
    Granted
    
    
    40,000
    
    
    
    7.95
    
    
    
    
    
    
    
    Outstanding on March 31, 2007
    
    
    2,143,000
    
    
    $
    2.18
    
    
    
    7.78
    
    
    $
    4,682,150Granted
    
    
    460,000
    
    
    
    9.23
    
    
    
    
    
    
    
    Exercised
    
    
    (35,728
    )
    
    
    1.75
    
    
    
    
    
    
    
    Outstanding on June 30, 2007
    
    
    2,567,272
    
    
    $
    3.45
    
    
    
    7.94
    
    
    $
    8,865,022Granted
    
    
    317,000
    
    
    
    9.87
    
    
    
    
    
    
    
    Exercised
    
    
    (8,125
    )
    
    
    4.14
    
    
    
    
    
    
    
    Outstanding on September 30, 2007
    
    
    2,876,147
    
    
    $
    4.16
    
    
    
    7.94
    
    
    $
    11,960,025Exercisable on September 30, 2007
    
    
    1,376,436
    
    
    $
    1.69
    
    
    
    6.92
    
    
    $
    2,322,551
   Weighted-AverageGrant-Date FairNonvested Shares
    
    Shares
    
    
    ValueNonvested at January 1, 2007
    
    
    1,147,175
    
    
    $
    1.89Granted
    
    
    817,000
    
    
    
    6.36Vested
    
    
    (464,464
    )
    
    
    2.16Non-vested at September 30, 2007
    
    
    1,499,711
    
    
    $
    4.52
  11




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6. Note Receivable:
  7. Common Stock:
   8. Subsequent events:
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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion should be read in conjunction with the Consolidated
Financial Statements and notes thereto contained herein and in conjunction with the
financial statements and notes thereto included in the Companys Annual Report on Form 10-K
for the year ended December 31, 2006, filed with the SEC on March 26, 2007.
 Forward-Looking Statements
  Overview
  
    
    pre-market entry analysis;
    
    clinical trial management;
    
    product registration;
    
    market research;
    
    pharmaceutical marketing to physicians, hospitals and other healthcare providers; and
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
    
    Pharmaceutical distribution.
  
    
    western medicines;
    
    traditional Chinese medicines;
    
    bio-chemical medicines; and
    
    medical applications.
 Rongheng
  st
 GPC Joint Venture
  GPC Acquisition
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Alliance BMP Limited Governance
  Sunstone
 Completion of 49% Acquisition of Sunstone
  Agreement to Purchase 51% of Sunstone
   Registered Direct Financing
  15




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Secured Promissory Notes
  Our Opportunity
   Our Strategy and Solution
  
    
    combine our market development sources with market fulfillment services;
    
    use our marketing arm to create demand for products that we offer
exclusively through our distribution arm on a national basis in China;
    
    grow both internally and through strategic acquisitions of product
marketing and distribution rights and of other distributors; and
    
    provide an experienced management team and transparent
financial reporting through the reports that we are required to file as
a reporting company under the Securities Exchange Act of 1934, as
amended, or the Exchange Act.
 Our Product Portfolio
  
    
    Propess. Propess vaginal insert, or Propess, is a vaginal insert used
to ripen the cervix in preparation for childbirth when labor is
induced. The manufacturer of Propess is Cytokine PharmaSciences, Inc.,
or Cytokine. We entered into an agreement with Cytokine in August 2005
to market and distribute Propess in China. We began marketing Propess
and recorded revenues with respect to this product during the first
nine months of 2006.
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
    
    Anpo. Anpo, or ritodrine hydrochloride, is a muscle relaxant
available in both injectable and oral forms, and is used for managing
pre-term labor. In July 2006, we entered into an agreement with Taiwan
Biotech Co. Ltd. to serve as the exclusive distributor of Anpo in
mainland China. We began marketing Anpo and recorded revenues with
respect to this product during the last nine months of 2006.
    
    Misopess. Misopess vaginal insert, or Misopess, is a vaginal insert
under investigation in several countries for cervical ripening and
induction of labor. The manufacturer of Misopess is Cytokine. We
entered into an agreement with Cytokine in November 2006 to conduct
late-stage clinical development, registration, sales, marketing and
distribution in China. Under terms of the agreement, we will initiate
a Chinese registration trial of Misopess, with the expectation that,
once Mispoess receives US FDA approval, data from this single trial
will permit a regulatory application with the SFDA in late 2008 or
2009.
    
    Fentora. Fentora, or fentanyl buccal tablet, received US FDA approval
in September 2006 for the management of breakthrough pain in patients
with cancer. The manufacturer of Fentora is Cephalon, Inc, or
Cephalon. We entered into a service agreement with Cephalon in
December 2006 under which we will complete the clinical development
and registration process for Fentora in China.
    
    Clindesse. Clindesse, or clindamycin phosphate vaginal cream, is
indicated for the treatment of bacterial vaginosis in non-pregnant
women. The manufacturer of Clindesse is KV Pharmaceutical Company
(KV). Under the terms of the agreement we entered into with KV in July
2007, we will complete late stage clinical development and
registration of Clindesse(TM) with the SFDA prior to assuming
responsibilities for sales, marketing and distribution in China.
    
    Ondansetron. Ondansetron Flashtab ®, is a generic form of Zofran ®,
a 5-HT(3) antagonist used to reduce nausea and vomiting induced by
cytotoxic chemotherapy and radiotherapy and to prevent post-operative
nausea and vomiting. The manufacturer of Orndestron is Shanghai
Ethypharm (Ethypharm). Under the terms of the agreement we entered
into with Ethypharm in July 2007, Ethypharm will pursue registration
of Orndansetron and we will then be responsible for sales, marketing,
distribution and supply in China.
    
    Galake.Galake is currently approved for marketing in China and is
indicated for the relief of pain associated with conditions including
trauma, surgery, cancer, lower back pain, arthritis and headache. The
manufacturer of Galake is Lotus Healthcare, Inc. (Lotus). Under the
terms of the agreement we entered into with Lotus, we will promote and
sell Galake in China.
    
    Ferriprox.Ferriprox is currently approved for marketing in China and
treats iron overload in the bloodstream which is often associated with
thalassemia, a disease that can lead to organ damage and heart
failure. The manufacturer of Ferriprox is Apotex, Inc. (Apotex). Under
the terms of the agreement we entered into with Apotex, we will be
responsible for sales, marketing, distribution and supply in China
  Critical Accounting Policies
 Uncertainty in Income Taxes
 Accounting for Uncertainty
in Income Taxes
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Accounting for Contingencies Accounting for Income Taxes
     Revenue Recognition
  Results of Operations
 Three Months Ended September 30, 2007 Compared to Three Months Ended September 30, 2006
 Net Revenue:
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Cost of Sales:
  Sales and Marketing Expenses:
  General and Administrative Expenses:
  Interest Income:
  Nine months Ended September 30, 2007 Compared to Nine months Ended September 30, 2006
 Net Revenue
  19




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Cost of Sales:
  Sales and Marketing Expenses:
  General and Administrative Expenses:
  Interest Income and Expense:
  Liquidity and Capital Resources
  20




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##### Table of Contents




    
    Our operating expenses and general working capital;
    
    The marketing of our current and future products;
    
    The licensing of additional products for marketing and distribution;
    
    Our pursuit of internal growth and the strategic acquisition of Shanghai Rongheng
Pharmaceutical Company Limited (Rongheng); and
    
    The expenses necessary to maintain our status as an Exchange Act reporting company.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Rate Sensitivity
  Interest Rate Sensitivity
  
 ITEM 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
  (b) Changes in Internal Control Over Financial Reporting
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PART II  OTHER INFORMATION
 
 ITEM 1A. Risk Factors
  RISKS RELATING TO OUR BUSINESS
 We have a history of operating losses and anticipate that we will continue to incur losses for the
foreseeable future.
   We may be unsuccessful in our strategy of expanding our product portfolio, acquiring complementary
businesses or integrating acquired businesses.
   
    
    the assimilation of new operations, technologies and personnel;
    
    unforeseen or hidden liabilities;
    
    the diversion of resources from our existing businesses;
    
    the inability to generate sufficient revenue to offset the costs and expenses of acquisitions; and
    
    the potential loss of, or harm to relationships with, employees, customers and suppliers as a
result of the integration of new businesses.
 The commercial success of our products depends upon the degree of market acceptance among the
medical community. Failure to attain market acceptance among the medical community would have an
adverse impact on our operations and profitability.
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
    
    the safety and effectiveness of the product;
    
    the effectiveness of our efforts to market our products to hospitals and physicians;
    
    the products cost effectiveness;
    
    the products perceived advantages and disadvantages relative to competing products or treatments; and
    
    the prevalence and severity of side effects.
  We may continue to experience delays in product introduction and marketing or interruptions in
supply.
   We may be unable to compete successfully against new and existing competitors.
  If we fail to increase our brand recognition, we may face difficulty in obtaining new customers and
business partners.
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Our operating results may fluctuate as a result of factors beyond our control.
  
    
    the costs of pharmaceutical products and development;
    
    the relative speed and success with which we can obtain and maintain customers,
merchants and vendors for our services and manufacturers and suppliers of products
to market to our customers;
    
    capital expenditures for equipment;
    
    marketing and promotional activities and other costs;
    
    changes in our pricing policies, suppliers and competitors;
    
    the ability of our suppliers to provide products in a timely manner to our customers;
    
    changes in operating expenses;
    
    increased competition in our markets; and
    
    other general economic and seasonal factors.
 We may be unable to obtain additional capital when necessary and on terms that are acceptable to
us.
  We may be unsuccessful in attracting or retaining key sales, marketing and other personnel.
  We may be unable to manage our growth effectively.
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##### Table of Contents




    
    continue to improve our financial and management controls and
reporting systems and procedures to support the proposed
expansion of our business operations as a result of our
acquisition of Wanwei, the 49% of the issued share capital of
Hong Kong Fly International Health Care Limited (Hong Kong
Health Care), a Hong Kong corporation that holds a 100% equity
interest in Sunstone Pharmaceutical Co., Ltd. (Sunstone) and
the acquisition of any additional distribution channels in the
future; and
    
    locate or hire, at reasonable compensation rates, qualified
personnel and other employees necessary to expand our capacity in
order to accommodate the proposed expansion of our business
operations.
  We only offer products and services related to pharmaceuticals and, if demand for these products
and services decreases, or if competition increases, we will have no other ways to generate
revenue.
  Our business strategy to use our marketing arm to create demand for products that we will offer
exclusively through a distribution arm may fail.
  
    
    obtain a sufficient number of effective distribution channels, whether
through internal growth or strategic acquisition;
    
    create sufficient demand for products that we will distribute exclusively; and
    
    enter into and maintain exclusive distribution and marketing relationships
with pharmaceutical manufacturers on profitable terms.
  Because we only recently became subject to the reporting requirements of the Exchange Act, we have
limited experience in complying with public company obligations. Attempting to comply with these
requirements will increase our costs and require additional management resources and we still may
fail to comply.
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##### Table of Contents



If we are unable to satisfy the regulatory requirements relating to internal controls, or if our
internal controls over financial reporting are not effective, our stock price could decline.
  We may not achieve our projected development goals in the time frames we announce and expect.
  We are a holding company with no operations of our own and depend on our subsidiaries for revenue.
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RISKS RELATING TO OUR ACQUISITIONS
 We may be unable to acquire, or may be delayed in acquiring, Shanghai Rongheng Pharmaceutical
Company Limited, or Rongheng.
  We may be unable to complete the joint venture transaction Alliance BMP Limited and Guangzhou
Pharmaceuticals Corporation, or GPC.
  We may not be able to complete the joint venture transaction contemplated by our non-binding letter
of intent with Biaodian Medical Information Co., Ltd., or Biaodian.
  We may be unable to acquire, or may be delayed in acquiring, the remaining 51% interest in
Sunstone.
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##### Table of Contents



As a holder of an indirect minority interest in Sunstone, we may be exposed to liability from
Sunstones historical operations.
  Remedial measures undertaken by Sunstone may not prevent recurrences of certain of its historical
business practices.
  Because we purchased a minority interest in Sunstone, we will not have control over Sunstones
operations or financial reporting function.
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Because we do not or will not initially have majority control of a number of our subsidiaries and
joint ventures, we are dependent on the majority owners of these subsidiaries and joint ventures to
operate these enterprises in a manner consistent with our plans and requirements.
  RISKS RELATING TO DOING BUSINESS IN CHINA
 We face increased risks of doing business due to the extent of our operations in China.
  
    
    fluctuations in foreign currency exchange rates and controls;
    
    competitive disadvantages to established foreign businesses with significant current
market share and business and customer relationships;
    
    nationalization;
    
    tax and regulatory policies of local governments and the possibility of trade embargoes;
    
    political instability, war or other hostilities; and
    
    laws and policies of the United States and China affecting foreign trade and investment.
  Fluctuations in the Chinese Renminbi could adversely affect our results of operations.
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##### Table of Contents



Government control of currency conversion could adversely affect our operations and financial
results.
  The ability of our Chinese operating subsidiaries to pay dividends may be restricted due to our
corporate structure.
   We may be restricted in our ability to transfer funds to our Chinese operating subsidiaries, which
may restrict our ability to act in response to changing market conditions.
  Chinas economic, political and social conditions, and its government policies, could adversely
affect our business.
  32




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##### Table of Contents




    
    level of government involvement;
    
    economic structure;
    
    allocation of resources;
    
    level of development;
    
    inflation rates;
    
    growth rate; and
    
    control of foreign exchange.
  A slow-down of the Chinese economy could adversely affect our growth and profitability.
  The legal system in China has inherent uncertainties that could limit the legal protections
available to us.
  We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination
that we violated the Foreign Corrupt Practices Act could have a material adverse effect on our
business.
  33




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##### Table of Contents



We have limited business insurance coverage in China.
  Any future outbreak of health epidemics, such as Severe Acute Respiratory Syndrome, or SARS, Asian
Influenza, or Asian Bird Flu, or any other epidemic in China could have a material adverse effect
on our business operations, financial condition and results of operations.
  RISKS RELATING TO PHARMACEUTICAL DISTRIBUTION IN CHINA AND WANWEI
 The absence of express laws and regulations in China regarding foreign investment in Chinas
pharmaceutical distribution sector may cause uncertainty.
  Wanwei may be unable to obtain renewals of necessary pharmaceutical distribution permits.
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##### Table of Contents



Anti-corruption measures taken by the PRC government to correct improper sales practices in the
pharmaceutical industry could adversely affect our revenue and reputation.
   Price control regulations may decrease our profitability.
   The bidding process with respect to the purchase of pharmaceutical products may lead to reduced
revenue.
   If the medicines Wanwei distributes are replaced by other medicines or are removed from Chinas
Insurance Catalogue in the future, Wanweis revenue may suffer.
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##### Table of Contents



RISKS RELATING TO OUR COMMON STOCK
 Sales of substantial amounts of our common stock in the public market could depress the market
price of our common stock.
  If the ownership of our common stock continues to be highly concentrated, it may prevent you and
other stockholders from influencing corporate decisions, such as significant corporate transactions
and the election and replacement or removal of directors and management, and may also result in
conflicts of interest that could cause our stock price to decline.
  Our common stock may experience extreme price and volume fluctuations, which could lead to costly
litigation for us and make an investment in us less appealing.
  
    
    announcements concerning our competitors or the pharmaceutical distribution industry in general;
    
    rate of sales and customer acceptance;
    
    changing factors related to doing business in China;
    
    interruption of supply or changes in our agreements with manufacturers or distributors;
    
    new regulatory pronouncements and changes in regulatory guidelines and timing of regulatory approvals;
    
    general and industry-specific economic conditions;
    
    additions to or departures of our key personnel;
    
    variations in our quarterly financial and operating results;
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
    
    changes in market valuations of other companies that operate in our business segments or in our industry;
    
    lack of adequate trading liquidity;
    
    announcements about our business partners;
    
    changes in accounting principles; and
    
    general market conditions.
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ITEM 6. Exhibits
 2.1
    
    Sale and Purchase Agreement, dated as of September 28, 2007, by and among Beijing Med-Pharm
Corporation, Han Zhiqiang and Tong Zhijun (Filed as Exhibit 4.1 to our report on Form 8-K dated
September 28, 2007 and filed with the Securities and Exchange Commission on October 4, 2007
(September Form 8-K) and incorporated herein by reference).2.2
    
    Supplementary Agreement, dated as of September 28, 2007, by and among Beijing Med-Pharm
Corporation, Han Zhiqiang and Tong Zhijun (Filed as Exhibit 2.1 to the September Form 8-K and
incorporated herein by reference).4.1
    
    Form of Warrant to purchase shares of Common Stock (Filed as Exhibit 4.1 to our report on Form
8-K dated August 17, 2007 and filed with the Securities and Exchange Commission on August 23,
2007 (August Form 8-K) and incorporated herein by reference).4.2
    
    Form of Subscription Agreement (Filed as Exhibit 10.2 to the August Form 8-K and incorporated
herein by reference).4.3
    
    Form of Subscription Agreement (Filed as Exhibit 4.1 to our report on Form 8-K dated October 31,
2007 and filed with the Securities and Exchange Commission on November 6, 2007 (October
Form 8-K) and incorporated herein by reference).4.4
    
    Form of Five Year Warrant (Filed as Exhibit 4.2 to the October Form 8-K and incorporated herein
by reference).4.5
    
    Form of 18 Month Warrant (Filed as Exhibit 4.3 to the October Form 8-K and incorporated herein
by reference).4.6
    
    Form of Note (Filed as Exhibit 4.4 to the October Form 8-K and incorporated herein by reference).10.1
    
    Placement Agent Agreement, dated August 17, 2007, between Beijing Med-Pharm Corporation and
Philadelphia Brokerage Corporation (Filed as Exhibit 10.1 to the August Form 8-K and
incorporated herein by reference).31.1
    
    Certificate of the Chief Executive Officer of Beijing Med-Pharm Corporation required by
Rule 13a-14(a) under the Exchange Act.31.2
    
    Certificate of the Chief Financial Officer of Beijing Med-Pharm Corporation required by
Rule 13a-14(a) under the Exchange Act32.1
    
    Certificate of the Chief Executive Officer of Beijing Med-Pharm Corporation required by
Rule 13a-14(b) under the Exchange Act32.2
    
    Certificate of the Chief Financial Officer of Beijing Med-Pharm Corporation required by
Rule 13a-14(b) under the Exchange Act
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SIGNATURES
  Beijing Med-Pharm CorporationDate: November 14, 2007
    /s/ DAVID GAODavid GaoChief Executive Officer
(Principal Executive Officer)Date: November 14, 2007
    /s/ FRED M. POWELLFred M. PowellChief Financial Officer
(Principal Financial and Accounting Officer) 39