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Organization and Description of Business |
Weikang Bio-Technology Group Co., Inc., a Nevada corporation
(“Weikang” or “the Company”) was
incorporated on May 12, 2004 in Florida as Expedition Leasing, Inc.
(“Expedition”). The Company reincorporated in Nevada
and changed to its present name on July 12, 2008, pursuant to an
acquisition of Sinary Bio-Technology Holdings Group, Inc.
(“Sinary”), a Nevada corporation and Sinary’s
wholly owned subsidiary, Heilongjiang Weikang Biotechnology Group
Co., Ltd. (“Heilongjiang Weikang”), a limited liability
company organized and existing under the laws of the People’s
Republic of China (“PRC”). Upon completion of the
transaction on December 7, 2007, Sinary and Heilongjiang Weikang
became our wholly-owned subsidiaries. The Company develops,
manufactures and distributes Traditional Chinese Medicine ("TCM")
through Heilongjiang Weikang in the PRC.
On December 7, 2007, the Company (as Expedition) entered into a
Share Exchange Agreement (the “Exchange Agreement”)
with Sinary Bio-Technology Holdings Group, Inc., a Nevada
corporation (“Sinary”) and Weili Wang, its sole
shareholder, pursuant to which the Company issued 24,725,200 shares
of common stock to Weili Wang for all of the common shares of
Sinary. Concurrently, Sinary paid $650,000 to certain former
shareholders of the Company, who surrendered 24,725,200 shares of
the Company’s common stock held by them to the Company for
cancellation. This payment was advanced to Sinary by Yin Wang (the
“Advance”). As a result, Weili Wang owned 98% of the
Company after the share exchange. On the Closing Date, Sinary
became a wholly-owned subsidiary of the Company and Mr. Yin Wang
was appointed the Company’s Chief Executive Officer and
Chairman of the Board.
Prior to the acquisition of Sinary, the Company was a non-operating
public shell corporation. Pursuant to Securities and Exchange
Commission (“SEC”) rules, the merger or acquisition of
a private operating company into a non-operating public shell
corporation with nominal net assets is considered a capital
transaction, rather than a business combination. Accordingly, for
accounting purposes, the transaction was treated as a reverse
acquisition and recapitalization, and pro forma information is not
presented. Transaction costs incurred in the reverse acquisition
were expensed.
Sinary was incorporated under the laws of the State of Nevada on
August 31, 2007. On October 25, 2007, Sinary entered into an Equity
Interests Transfer Agreement (the “Transfer Agreement”)
with Yin Wang and Wei Wang, the stockholders of Heilongjiang
Weikang, a limited liability company in the PRC, (the
“Heilongjiang Shareholders”) to acquire 100% of the
equity interests of Heilongjiang Weikang for 57 million Renminbi
(“RMB”), or approximately $7.6 million (the
“Acquisition Price”).
On August 6, 2010, Sinary and Yin Wang and Wei Wang, entered into a
Settlement Agreement and Release pursuant to which Yin Wang and Wei
Wang waived their rights to payment of both the Acquisition Price
of approximately $7.6 million and the Advance of $650,000 and
contributed the Acquisition Price and the Advance to the Company's
capital.
Heilongjiang Weikang was incorporated in Heilongjiang Province,
PRC, on March 29, 2005, and was formerly known as Heilongjiang
Province Weikang Bio-Engineering Co., Ltd. Heilongjiang Weikang
develops, manufactures and distributes TCM in the PRC.
On July 22, 2008, Heilongjiang Weikang completed the acquisition of
100% of the issued and outstanding equity interests of Tianfang
(Guizhou) Pharmaceutical Co., Ltd. (“Tianfang”), a
Chinese LLC, for $15,000,000, pursuant to a stock transfer
agreement entered into on June 30, 2008 by and among Heilongjiang
Weikang, Tianfang, and Tianfang’s two shareholders: Beijing
Shiji Qisheng Trading Co., Ltd., a Chinese LLC (“Shiji
Qisheng”) and Tri-H Trade (U.S.A.) Co., Ltd., a California
corporation (“Tri-H”, and together with Shiji Qisheng
collectively as the “Selling Shareholders”).
Tianfang was incorporated in Guizhou Province, PRC, in 1998.
Tianfang is engaged in the development, manufacture and
distribution of over the counter (“OTC”)
pharmaceuticals. The Company has expanded its market share to the
southern part of China through the acquisition of Tianfang.
On January 6, 2010, Weili Wang formed Lucky Wheel Limited
(“Lucky Wheel”), a British Virgin Islands corporation
and issued to herself 10,000 ordinary shares or 100% of the issued
and outstanding share capital of Lucky Wheel. In June 2010 Ms.
Weili Wang transferred 22,925,200 of her shares of the
Company’s common stock (82% of the Company’s issued and
outstanding common stock) to Lucky Wheel. On May 5, 2010, Ms. Weili
Wang and Ying Wang entered into a Call Option Agreement (the
“Option Agreement”), pursuant to which Weili Wang
granted Yin Wang an irrevocable and unconditional option to
purchase all of her ordinary shares of Lucky Wheel (the
“Option Shares”) for U.S. $0.10 per ordinary share for
a total of $1,000. Mr. Wang has the right to purchase 34% of the
Option Shares on December 31, 2010 and 33% on December 31, 2011 and
December 31, 2012, respectively. The Option Agreement expires June
29, 2015. If and when the option is fully exercised, Yin Wang will
become the sole shareholder of Lucky Wheel whose sole asset is
22,925,200 shares of the Company’s common stock. Mr. Wang is
expected to use his personal funds to pay for the Option
Shares.
In connection with the transactions described in the Transfer
Agreement, on November 9, 2007, the Heilongjiang Office of the
State Administration for Industry and Commerce registered Sinary as
the 100% owner of Heilongjiang Weikang’s registered capital
and issued a foreign invested enterprise business license (the
“FIE Business License”) to Heilongjiang Weikang. The
initial FIE Business License was valid until June 30, 2010. On
March 12, 2010, the Harbin City of Administration for Industry and
Commerce extended the FIE Business License until November 9,
2027.