Unassociated Document
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

Form 8-K
Amendment No. 1

Current Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):
November 13, 2009


Renhuang Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)


Nevada
(State or other
jurisdiction of incorporation)
  
O-24512
(Commission
File Number)
  
88-1273503
(I.R.S. Employer
Identification No.)
         
         
No. 281, Taiping Road, Taiping District,
Harbin, Heilongjiang Province, 150050
P. R. China
(Address of principal executive offices)  (zip code)
         
         
86-451-5762-0378
(Registrant’s telephone number, including area code)
         
         
 (Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
EXPLANATORY NOTE
This amendment no. 1 to our Current Report on Form 8-K initially filed with the Securities and Exchange Commission on October 1, 2009 is being filed to disclose the circumstances that led to the discovery of the error described in this Form 8-K/A.
 
 
 
 
  
Item 4.02
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
 
 On September 18, 2009, the management of Renhuang Pharmaceuticals, Inc., a Nevada corporation (the “Company”), concluded that the Company’s previously issued audited consolidated financial statements for the year ended October 31, 2008, included in the Company’s Annual  Report on Form 10-K filed with the U.S. Securities and Exchange Commission on September 8, 2009 (the “Form 10-K”), contained the errors specified below and should no longer be relied upon. Therefore, the Company plans to restate its financial statements for such period and will present the restated financial statements in an amendment to the Form 10-K, which the Company expects to file as soon as practicable.  Such restatement pertains to the following issue:
 
 
·
The Company provides incentive sales rebate to its sales agents.  The rebate rate, which is determined on a product basis, averaged sixteen percent of sales for the year ended October 31, 2008. We understated the sales rebate in 2008 by RMB 11,904,896 (approx. US$ 1.7 million).  This amount was an audit adjustment in 2007, recorded to reflect 2007 sales rebate on an accrual basis.  As we booked the sales rebate using the  cash basis, our prior auditor proposed an adjusting entry to record unaccrued sales rebate. In 2008, our accountant staff followed the same logic to adjust the sales rebate.  Firstly, we reversed the 2007 rebate payable of RMB 11,904,896 as it was paid in 2008 already. Secondly, we recorded the 2008 unaccrued sales rebate of RMB 14,670,000 (i.e. rebate incurred RMB 57,993,198 – rebate booked in expenses RMB 43,323,178 = RMB 14,670,000). However, when we calculated the understated sales rebate for 2008, we disregarded the RMB 11,904,896 that was included in cash payments of RMB 43,323,178. Therefore, the sales rebate expenses account was understated by RMB 11,904,896 (approx. US$ 1.7 million), resulting in sales overstatement of approximately US$ 1,7 million for the year ended October 31, 2008.
 
The decision to restate the financial statements as of and for the year ended October 31, 2008 was approved by the Company’s board of directors (the “Board”) on September 18, 2009. Representatives of the Board and members of the Company’s executive management team have discussed the above matters with the Company’s independent registered public accounting firm.

The restatement will affect the following financial statement line items for the year ended October 31, 2008:
 
Assets as of October 31, 2008
  
As Originally Reported
    
To Be Restated
  
             
CURRENT ASSETS
            
Accounts receivable, net
    
22,588,580
      
20,844,478
  
TOTAL CURRENT ASSETS
    
35,128,995
      
33,384,894
  
TOTAL ASSETS 
    
37,749,944
      
36,005,843
  
 
Liabilities and Stockholders’ Equity
 as of October 31, 2008
  
As Originally Reported
    
To Be Restated
  
             
Reserves
  
3,036,617
    
2,867,674
  
Retained earnings
    
22,765,757
      
21,245,267
  
Accumulated other comprehensive income
    
3,355,986
      
3,301,318
  
TOTAL STOCKHOLDERS’ EQUITY 
    
35,788,857
      
34,044,756
  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
    
37,749,944
      
36,005,843
  
 
 
 
 

Income and Comprehensive Income
 for the Year Ended October 31, 2008
  
As Originally Reported
    
To Be Restated
  
             
Sales
  
36,163,919
    
34,474,490
  
Gross Profit
    
20,183,281
      
18,493,852
  
Income from Operations
    
11,862,836
      
10,173,407
  
Net Income
    
11,980,528
      
10,291,099
  
Foreign Currency Translation Adjustment
    
2,446,528
      
2,391,856
  
Comprehensive Income
    
14,427,056
      
12,682,955
  
Basic Earnings Per Share
    
0.34
      
0.29
  
Diluted Earnings Per Share
    
0.34
      
0.29
  
 
Changes in Stockholders’ Equity
for the Year Ended October 31, 2008
  
As Originally Reported
    
To Be Restated
  
             
Transfer to reserves
  
1,194,883
    
1,025,940
  
Balance at October 31, 2008, Reserves
    
3,036,617
      
2,867,674
  
Balance at October 31, 2008, Retained Earnings
    
22,765,757
      
21,245,271
  
Balance at October 31, 2008, Accumulated Other comprehensive income
    
3,355,986
      
3,301,314
  
Balance at October 31, 2008, Total Stockholders' Equity
    
35,788,857
      
34,044,756
  
 
Cash Flows for the Year Ended October 31, 2008
  
As Originally Reported
    
To Be Restated
  
             
Net income
  
11,980,528
    
10,291,099
  
Accounts receivable
    
13,120,769
      
11,431,340
  

 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Dated:  November 13, 2009
Renhuang Pharmaceuticals, Inc.,
  
 
a Nevada corporation
  
     
     
 
/s/ Shaoming Li 
  
 
By:     Shaoming Li 
  
 
Its:     Chief Executive Officer