##### 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, 2005
 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
(State or other jurisdiction of
incorporation or organization)
    
    20-0434726
(I.R.S. Employer
Identification No.)600 W. Germantown Pike, Suite 400
Plymouth Meeting, Pennsylvania
(Address of principal executive offices)
    
    19462
(Zip Code)
 (610) 940-1675
Registrants telephone number, including area code
 
 þ o
 o þ
 o þ




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BEIJING MED-PHARM CORPORATION
 INDEX
 Page No.Part I. FINANCIAL INFORMATIONItem 1. Financial Statements (unaudited)Consolidated Balance Sheets, September 30, 2005 and December 31, 2004
    
    
    3Consolidated Statements of Operations for the three and nine months ended September 30, 2005 and 2004
    
    
    4Consolidated Statements of Stockholders Equity for the nine months ended September 30, 2005
    
    
    5Consolidated Statements of Cash Flows for the nine months ended September 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results Of Operations
    
    
    12Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4. Controls and Procedures
    
    
    36Part II OTHER INFORMATIONItem 5. Other Information
    
    
    37Item 6. Exhibits
    
    
    38SIGNATURESExclusive Patent and Know How Licence AgreementAgreement, dated July 19, 2005Certificate of the Chief Executive OfficerCertificate of the Chief Financial OfficerCertificate of the Chief Executive Officer required by Rule 13a-14(b)Certificate of the Chief Financial Officer required by Rule 13a-14(b)
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements (Unaudited)
 BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    September 30,2004
    
    
    2005AssetsCurrent Assets:Cash and Cash Equivalents
    
    $
    6,267,672
    
    
    $
    3,187,485Accounts Receivable
    
    
    38,817
    
    
    
    7,046Other Receivables
    
    
    23,394
    
    
    
    22,097Purchase Deposit on Acquisition of Beijing Wanwei
    
    
    1,132,530
    
    
    
    1,133,627Due from Affiliated Entity
    
    
    20,113
    
    
    
    20,113Prepaid Expenses and Other Current Assets
    
    
    17,518
    
    
    
    97,448Total Current Assets
    
    
    7,500,044
    
    
    
    4,467,816Property and Equipment, Net
    
    
    52,892
    
    
    
    41,745Total Assets
    
    $
    7,552,936
    
    
    $
    4,509,561Liabilities and Stockholders EquityCurrent Liabilities:Accounts Payable
    
    $
    118,440
    
    
    $
    35,906Accrued Payroll
    
    
    111,272
    
    
    
    44,977Accrued Professional Fees
    
    
    396,171
    
    
    
    186,000Accrued Other
    
    
    50,602
    
    
    
    302,113Contract Allowance
    
    
    
    
    
    
    459,678Due to Investors
    
    
    118,750
    
    
    
    118,750Total Current Liabilities
    
    
    795,235
    
    
    
    1,147,424Stockholders Equity:Common Stock, $.001 Par Value; 50,000,000 Shares
    
    
    17,682
    
    
    
    17,682Authorized; 17,680,916 Shares Issued and
OutstandingAdditional Paid in Capital
    
    
    8,906,007
    
    
    
    9,205,315Common Stock Warrants
    
    
    1,278,588
    
    
    
    1,278,588Accumulated Deficit
    
    
    (3,444,576
    )
    
    
    (7,139,448
    )Total Stockholders Equity
    
    
    6,757,701
    
    
    
    3,362,137Total Liabilities and Stockholders Equity
    
    $
    7,552,936
    
    
    $
    4,509,561
  3




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##### Table of Contents



BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
 Three months ended
    
    
    Nine months endedSeptember 30,
    
    
    September 30,2004
    
    
    2005
    
    
    2004
    
    
    2005Net Revenues
    
    $
    35,843
    
    
    $
    23,086
    
    
    $
    133,085
    
    
    $
    123,839Cost of Services
    
    
    101,112
    
    
    
    85,874
    
    
    
    229,272
    
    
    
    784,433Gross Margin
    
    
    (65,269
    )
    
    
    (62,788
    )
    
    
    (96,187
    )
    
    
    (660,594
    )Sales and Marketing Expenses
    
    
    11,147
    
    
    
    14,172
    
    
    
    18,425
    
    
    
    35,367General & Administration Expenses
    
    
    640,884
    
    
    
    1,097,083
    
    
    
    1,153,495
    
    
    
    3,076,765Total Operating Expenses
    
    
    652,031
    
    
    
    1,111,255
    
    
    
    1,171,920
    
    
    
    3,112,132Loss From Operations
    
    
    (717,300
    )
    
    
    (1,174,043
    )
    
    
    (1,268,107
    )
    
    
    (3,772,726
    )Other Income (Expense):Interest Income
    
    
    45,964
    
    
    
    42,639
    
    
    
    46,029
    
    
    
    124,525Interest Expense
    
    
    (3,532
    )
    
    
    
    
    
    
    (3,632
    )
    
    
    (17,252
    )Other Income (Expense)
    
    
    
    
    
    
    10,274
    
    
    
    
    
    
    
    (919
    )Total Other (Expense) Income
    
    
    42,432
    
    
    
    52,913
    
    
    
    42,397
    
    
    
    106,354Loss Before Provision For
(Benefit From) Income Taxes
    
    
    (674,868
    )
    
    
    (1,1,21,130
    )
    
    
    (1,225,710
    )
    
    
    (3,666,372
    )Provision For Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Net Loss
    
    $
    (674,868
    )
    
    $
    (1,121,130
    )
    
    $
    (1,225,710
    )
    
    $
    (3,681,372
    )Basic and Fully-Diluted (Loss)
Earnings Per Share
    
    $
    (0.04
    )
    
    $
    (0.06
    )
    
    $
    (0.08
    )
    
    $
    (0.21
    )Basic and Fully-Diluted
Weighted-average Shares
Outstanding
    
    
    17,680,916
    
    
    
    17,680,916
    
    
    
    15,625,015
    
    
    
    17,680,916
  4




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BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Unaudited)
 Common StockAdditional
    
    
    Common
    
    
    
    
    
    
    TotalNumber
    
    
    $.001 Par
    
    
    Paid-in
    
    
    Stock
    
    
    Accumulated
    
    
    Stockholdersof Shares
    
    
    Value
    
    
    Capital
    
    
    Warrants
    
    
    Deficit
    
    
    EquityBalance as of December 31, 2004
    
    
    17,680,916
    
    
    $
    17,682
    
    
    $
    8,906,007
    
    
    $
    1,278,588
    
    
    $
    (3,444,576
    )
    
    $
    6,757,701Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    99,769
    
    
    
    
    
    
    
    
    
    
    
    99,769Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (907,605
    )
    
    
    (907,605
    )Balance as of March 31, 2005
(Unaudited)
    
    
    17,680,916
    
    
    $
    17,682
    
    
    $
    9,005,776
    
    
    $
    1,278,588
    
    
    $
    (4,352,181
    )
    
    $
    5,949,865Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    99,771
    
    
    
    
    
    
    
    
    
    
    
    99,771Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,652,637
    )
    
    
    (1,652,637
    )Balance as of June 30, 2005
(Unaudited)
    
    
    17,680,916
    
    
    $
    17,682
    
    
    $
    9,105,547
    
    
    $
    1,278,588
    
    
    $
    (6,004,818
    )
    
    $
    4,396,999Currency Translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,500
    )
    
    
    (13,500
    )Stock-Based Compensation
    
    
    
    
    
    
    
    
    
    
    99,768
    
    
    
    
    
    
    
    
    
    
    
    99,768Net Loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,121,130
    )
    
    
    (1,121,130
    )Balance as of September 30,
2005 (Unaudited)
    
    
    17,680,916
    
    
    $
    17,682
    
    
    $
    9,205,315
    
    
    $
    1,278,588
    
    
    $
    (7,139,448
    )
    
    $
    3,362,137
  5




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BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 For the nine months ended September 30
    
    2004
    
    
    2005Cash Flows from Operating Activities:Net Loss
    
    $
    (1,225,711
    )
    
    $
    (3,681,372
    )Adjustments to Reconcile Net Loss to Net Cash Used InOperating Activities:Depreciation
    
    
    4,884
    
    
    
    6,494Loss on assets disposed
    
    
    
    
    
    
    11,384Currency Translation
    
    
    
    
    
    
    (13,500
    )Stock-Based Compensation
    
    
    195,825
    
    
    
    299,308Decrease in Accounts Receivable
    
    
    (9,764
    )
    
    
    31,771(Increase) Decrease in Other Receivables
    
    
    (8,511
    )
    
    
    200(Increase) in Prepaid Expenses and Other
Current Assets
    
    
    (63,024
    )
    
    
    (79,930
    )Increase (Decrease) in Accounts Payable
    
    
    18,863
    
    
    
    (82,534
    )Increase (Decrease) in Accrued Payroll
    
    
    33,240
    
    
    
    (66,295
    )Increase (Decrease) in Accrued Professional Fees
    
    
    98,282
    
    
    
    (210,171
    )Increase in Contract Allowance
    
    
    
    
    
    
    459,678Increase in Accrued Other
    
    
    41,074
    
    
    
    251,511Net Cash Used in Operating Activities
    
    
    (914,842
    )
    
    
    (3,073,456
    )Cash Flows from Operating Activities:Acquisition of Property and Equipment
    
    
    (35,526
    )
    
    
    (6,731
    )Net Cash Used in Investing Activities
    
    
    (35,526
    )
    
    
    (6,731
    )Gross Proceeds from Sale of Common Stock
    
    
    10,000,000
    
    
    
    Costs Incurred in Connection with Common Stock
Issuance
    
    
    (1,202,745
    )
    
    
    Advance to Affiliated Entities
    
    
    (20,113
    )
    
    
    Increase in Due to Investors
    
    
    118,750
    
    
    
    Net Cash Provided by Financing Activities
    
    
    8,895,892
    
    
    
    Net Increase in Cash and Equivalents
    
    
    7,945,524
    
    
    
    (3,080,187
    )Cash and Equivalents, Beginning
    
    
    56,280
    
    
    
    6,267,672Cash and Equivalents, Ending
    
    $
    8,001,804
    
    
    $
    3,187,485Supplemental Disclosure of Cash Flows InformationCash Paid During the Year for:Income Taxes
    
    $
    1,553
    
    
    $
    15,000Interest
    
    
    
    
    
    
    
  6




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BEIJING MED-PHARM CORPORATION AND SUBSIDIARY
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
 1. Basis of Presentation:
  Earnings Per Share:
 2. Restatement:
   7




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CONSOLIDATED BALANCE SHEETS
 As of December 31, 2004(Reported)
    
    
    Adjustments
    
    
    (Restated)Current Assets:Cash and Cash Equivalents
    
    $
    6,267,672
    
    
    
    
    
    
    $
    6,267,672Accounts Receivable
    
    
    38,817
    
    
    
    
    
    
    
    38,817Other Receivables
    
    
    23,394
    
    
    
    
    
    
    
    23,394Purchase Deposit on Acquisition of Beijing Wanwei
    
    
    1,132,530
    
    
    
    
    
    
    
    1,132,530Due from Affiliated Entity
    
    
    20,113
    
    
    
    
    
    
    
    20,113Prepaid Expenses and Other Current Assets
    
    
    17,518
    
    
    
    
    
    
    
    17,518Total Current Assets
    
    
    7,500,044
    
    
    
    
    
    
    
    7,500,044Property and Equipment, Net
    
    
    52,892
    
    
    
    
    
    
    
    52,892Total Assets
    
    $
    7,552,936
    
    
    $
    
    
    
    $
    7,552,936Liabilities and Stockholders EquityCurrent Liabilities:Accounts Payable
    
    $
    118,440
    
    
    
    50,602
    
    
    $
    169,042Accrued Payroll
    
    
    111,272
    
    
    
    
    
    
    
    111,272Accrued Professional Fees
    
    
    396,171
    
    
    
    
    
    
    
    396,171Accrued Other
    
    
    
    
    
    
    
    
    
    
    Due to Investors
    
    
    118,750
    
    
    
    
    
    
    
    118,750Total Current Liabilities
    
    
    744,633
    
    
    
    50,602
    
    
    
    795,235Stockholders Equity:Common stock
    
    
    17,682
    
    
    
    
    
    
    
    17,682Additional Paid in Capital
    
    
    8,906,007
    
    
    
    
    
    
    
    8,906,007Common Stock Warrants
    
    
    1,278,588
    
    
    
    
    
    
    
    1,278,588Accumulated Deficit
    
    
    (3,393,974
    )
    
    
    (50,602
    )
    
    
    (3,444,576
    )Total Stockholders Deficit
    
    
    6,808,303
    
    
    
    (50,602
    )
    
    
    6,757,701Total Liabilities and Stockholders Equity
    
    $
    7,552,936
    
    
    $
    
    
    
    $
    7,552,936
 8




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CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended December 31, 2004(Reported)
    
    
    Adjustments
    
    
    (Restated)Net Revenue
    
    $
    259,906
    
    
    
    (50,602
    )
    
    $
    209,304Cost of Services
    
    
    317,777
    
    
    
    
    
    
    
    317,777Gross Margin
    
    
    (57,871
    )
    
    
    (50,602
    )
    
    
    (108,473
    )Sales and Marketing Expenses
    
    
    63,334
    
    
    
    
    
    
    
    63,334General & Administration Expenses
    
    
    2,201,009
    
    
    
    
    
    
    
    2,201,009Bad debt expense
    
    
    
    
    
    
    
    
    
    
    Total Operating Expenses
    
    
    2,264,343
    
    
    
    
    
    
    
    2,264,343Loss From Operations
    
    
    (2,322,214
    )
    
    
    (50,602
    )
    
    
    (2,372,816
    )Other Income (Expense)Interest Income
    
    
    77,906
    
    
    
    
    
    
    
    77,906Interest Expense
    
    
    (6,709
    )
    
    
    
    
    
    
    (6,709
    )Total Other (Expense) Income
    
    
    71,197
    
    
    
    
    
    
    
    71,197Loss Before Provision For
(Benefit From) Income Taxes
    
    
    (2,251,017
    )
    
    
    (50,602
    )
    
    
    (2,301,619
    )Provision For Income Taxes
    
    
    
    
    
    
    
    
    
    
    Net Loss
    
    $
    (2,251,017
    )
    
    $
    (50,602
    )
    
    $
    (2,301,619
    )
 9




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CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended December 31, 2004(Reported)
    
    
    Adjustments
    
    
    (Restated)Cash Flows from Operating Activities:Net Loss
    
    $
    (2,251,017
    )
    
    
    (50,602
    )
    
    $
    (2,301,619
    )Adjustments to Reconcile Net Loss to Net
Cash Used InOperating Activities:Depreciation
    
    
    7,218
    
    
    
    
    
    
    
    7,218Stock-Based Compensation
    
    
    295,594
    
    
    
    
    
    
    
    295,594(Increased) Decrease in Accounts Receivable
    
    
    (23,322
    )
    
    
    
    
    
    
    (23,322
    )(Increased) Decrease in Other Receivables
    
    
    (12,319
    )
    
    
    
    
    
    
    (12,319
    )(Increased) Decrease in Prepaid
Expenses and Other Current Assets
    
    
    (17,048
    )
    
    
    
    
    
    
    (17,048
    )(Increased) Decrease in Accounts Payable
    
    
    13,533
    
    
    
    
    
    
    
    13,533(Increased) Decrease in Accrued Payroll
    
    
    93,009
    
    
    
    
    
    
    
    93,009(Increased) Decrease in Accrued
Professional Fees
    
    
    396,171
    
    
    
    
    
    
    
    396,171(Increased) Decrease in Accrued Other
    
    
    (9,528
    )
    
    
    50,602
    
    
    
    41,074Net Cash Used in Operating Activities
    
    
    (1,507,709
    )
    
    
    
    
    
    
    (1,507,709
    )Cash Flows from Operating Activities:Purchase Deposit on Acquisition of Beijing
Wanwei
    
    
    (1,132,530
    )
    
    
    
    
    
    
    (1,132,530
    )Acquisition of Property and Equipment
    
    
    (38,831
    )
    
    
    
    
    
    
    (38,831
    )Net Cash Used in Investing Activities
    
    
    (1,171,361
    )
    
    
    
    
    
    
    (1,171,361
    )Net Proceeds from Sale of Common Stock
    
    
    8,791,825
    
    
    
    
    
    
    
    8,791,825Increase in Due to Investors
    
    
    118,750
    
    
    
    
    
    
    
    118,750Advance to Affiliated Entity
    
    
    (20,113
    )
    
    
    
    
    
    
    (20,113
    )Net Cash Provided by Financing Activities
    
    
    8,890,462
    
    
    
    
    
    
    
    8,890,462Net Increase in Cash and Equivalents
    
    
    6,211,392
    
    
    
    
    
    
    
    6,211,392Cash and Equivalents, Beginning
    
    
    56,280
    
    
    
    
    
    
    
    56,280Cash and Equivalents, Ending
    
    $
    6,267,672
    
    
    $
    
    
    
    $
    6,267,672
 3. Acquisition:
   10




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##### Table of Contents



4. Segment Information:
  5. Commitment:
     6. Subsequent Event
  11




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##### Table of Contents



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 post-effective amendment number one to the Companys Registration Statement
on Form S-1, filed on September 6, 2005.
 Forward-Looking Statements
  Overview
    12




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##### Table of Contents




    
    pre-market entry analysis;
    
    clinical trial management;
    
    product registration;
    
    market research; and
    
    pharmaceutical marketing to physicians, hospitals and other healthcare providers.
      13




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##### Table of Contents



Liquidity and Capital Resources
    14




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##### Table of Contents




    
    our operating expenses and general working capital;
    
    the marketing of our current and future products;
    
    our pursuit of internal growth and strategic acquisitions;
    
    our integration of Wanwei and BMP China; and
    
    the expenses necessary to maintain our status as a reporting company under the
Exchange Act and to periodically update the information in our Registration Statement
on Form S-1, as amended.
       15




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##### Table of Contents



Critical Accounting Estimates
   Revenue Recognition
  Accounts Receivable and Bad Debts
  16




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##### Table of Contents



Contract Allowance
  Deferred Taxes
  Results from Operations
 Three Months Ended September 30, 2005 compared to Three Months Ended September 30, 2004
 Net Revenue:
  Cost of Services:
  Sales and Marketing:
  General and Administrative Expenses:
  17




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##### Table of Contents



Interest Income:
  Nine Months Ended September 30, 2005 Compared to Nine Months ended September 30, 2004
 Net Revenue
  Cost of Services:
  Sales and Marketing Expenses
  General and Administrative Expenses:
  18




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Interest Income:
  Off-Balance Sheet Arrangements
  19




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##### Table of Contents



Recent Accounting Pronouncements
     20




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Certain Risks Related to Our Business
 Investing in our common stock involves significant risks. In addition to all of the other
information contained in this report and our other SEC filings, you should carefully consider the
risks and uncertainties described below before deciding to invest in our common stock. These risks
may materially harm our business, our financial condition or our results of operations, which in
turn could adversely affect the market price of our common stock.
 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 unable to acquire, or may be delayed in acquiring Wanwei.
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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.
 We may continue to experience delays in product introduction and marketing or interruptions in
supply.
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If we complete the proposed Wanwei acquisition, the level of business we receive from Wanhui
Shuanghe may cease or decrease significantly.
   Our revenues for 2004 were, and in subsequent periods may continue to be, substantially lower as
compared to 2003 as a result of the termination in December 2003 of our agreement with Wanhui
Shuanghe.
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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.
  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.
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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.
  
    
    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 the Wanwei acquisition 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 offer
exclusively through a distribution arm may fail.
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
    
    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 have only recently become subject to the reporting requirements of the Exchange Act, we
have no experience attempting to comply 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.
   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.
  
    
    the proper recognition of expenses from our sub-offices that were not recorded
in the income statement and were incorrectly included in prepaid expenses; and
    
    improper revenue cut-off in that sales for which shipment had occurred prior to
our year-end were not properly recorded in the period in which the shipment was made.
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We are a holding company with no operations of our own and depend on our subsidiaries for revenue.
   The fixed price nature of some of our contracts could hurt our operating results.
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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.
  Government control of currency conversion could adversely affect our operations and financial
results.
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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.
  
    
    level of government involvement;
    
    economic structure;
    
    allocation of resources;
    
    level of development;
    
    inflation rates;
    
    growth rate; and
    
    control of foreign exchange.
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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 have limited business insurance coverage in China.
  Any future outbreak of Severe Acute Respiratory Syndrome, or SARS, or any other epidemic in China
could have a material adverse effect on our business operations, financial condition and results of
operations.
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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.
   Price control regulations may decrease our profitability.
   The bidding process with respect to the purchase of pharmaceutical products may lead to reduced
revenue.
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If the medicines Wanwei distributes are replaced by other medicines or removed from Chinas social
insurance catalogue in the future, Wanweis revenue may suffer.
  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.
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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;
    
    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.
  As a stock quoted on the Pink Sheets, our common stock, which is deemed to be penny stock,
currently has limited liquidity.
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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Exchange Rate Sensitivity
  Interest Rate Sensitivity
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ITEM 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
  (b) Changes in Internal Control Over Financial Reporting
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ITEM 5. Other Information
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ITEM 6. Exhibits
  4.1
    
    Form of Subscription Agreement, dated October 19, 2005, between Beijing
Med-Pharm Corporation and each of the signatories thereto (incorporated by
reference to Exhibit 4.1 to Beijing Med-Pharm Corporations Current
Report on Form 8-K filed on October 20, 2005).4.2
    
    Form of Warrant, dated October 19, 2005, between Beijing Med-Pharm
Corporation and each of the signatories thereto (incorporated by reference
to Exhibit 4.2 to Beijing Med-Pharm Corporations Current Report on Form
8-K filed on October 20, 2005).10.1
    
    Exclusive Patent and Know How Licence Agreement, dated
October 26, 2005, among Beijing Med-Pharm Corporation,
Psioncology Pte. Ltd., and Psimedica Ltd.10.2
    
    Agreement, dated July 19, 2005, between Beijing Med-Pharm Corporation
and MCM Klosterfrau GmbH, as amended on September 20, 2005.31.1
    
    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, 2005
    
    DAVID GAODavid GaoChief Executive Officer(Principal Executive Officer)Date: November 14, 2005
    
    FRED M. POWELLFred M. PowellChief Financial Officer(Principal Financial and Accounting Officer)
 39