Bohai Pharmaceuticals (OTC BB:BOPH)

Pursuant to an agreement between Bohai Pharmaceuticals Group, Inc. (the “Company”) and Euro Pacific Capital, Inc. (“Euro Pacific”), on May 14, 2012, the Company repaid a portion of amounts due under its two-year 8% convertible notes, as amended (the “Notes”), in the amount of approximately $314,000, which is equivalent to the amount of the first quarter 2012 interest payment on the Notes (calculated based on an annual rate of 12% as currently provided for in the Notes). The Company will use its best efforts to repay an additional amount of approximately $731,000 due under the Notes as soon as possible, but no later than June 30, 2012. Such $314,000 and $731,000 payments are referred to herein as the “Repayment.”

The Notes were issued in a financing completed by the Company in January 2010 for which Euro Pacific acted as placement agent. Euro Pacific also acts as representative of the Note holders.

In addition, and as a result of the Company’s payment of the $314,000 portion of the Repayment as described above, on May 15, 2012, the Company and Euro Pacific entered into a Second Amendment to the Notes (the “Second Amendment”) to extend the maturity date thereof from April 5, 2012 to October 5, 2012 (such extra six month period, the “Second Extended Period”); and (ii) maintain the interest rate on the Notes at an annual rate of 12% (or 6% for the Second Extended Period). Pursuant to the terms of the Second Amendment, if the reminder of the Repayment ($731,000) is not received and distributed to Note holders by June 30, 2012, the Second Extended Period will thereafter automatically expire and the outstanding balance of the Notes will become immediately due and payable.

Item 8.01 Other Information

On January 5, 2010, Bohai Pharmaceuticals Group, Inc. (the “Company”) entered into a Securities Purchase Agreement with certain accredited investors (the “Investors”), for which Euro Pacific Capital, Inc. (“Euro Pacific”) is acting as representative, whereby the Company issued two-year convertible notes in the aggregate amount of $12 million (collectively, the “Notes”) and warrants to purchase shares of the Company’s common stock.  As of the date of this Report, there is currently $10.45 million due under the Notes and the original maturity date of the Notes was January 5, 2012.

On December 31, 2011, the Company entered into an amendment to the Notes with Euro Pacific as representative of the Investors (the “Amendment”) which: (i) extended the maturity date of the Notes from January 5, 2012 to April 5, 2012 (such extra three month period, the “Extended Period”); and (ii) increased the interest rate on the Notes to an annual rate of 12% (or 3% for the Extended Period).  

Due to certain difficulties faced by the Company in China relating to the Company’s ability to convert its cash on hand from RMB (the Chinese currency) to US Dollars and in turn remit such amount outside China, the Company is currently in active discussions with Euro Pacific to (i) extend the maturity date of the Notes from April 5 to October 5, 2012 (such extra six month period, the “Second Extended Period”); and (ii) maintain the interest rate on the Notes as an annual rate of 12% (or 6% for the Second Extended Period). A second amendment to the Notes to memorialize the agreements of the Company and Euro Pacific with respect to the Second Extended Period is expected to be entered into by both parties in the near future.

To demonstrate the Company’s efforts to repay the Notes, the Company expects to repay up to 10% of the $10.45 million currently due under the Notes by April 13, 2012.  In addition to such proposed payment, and to further demonstrate the Company’s commitment to repay the Notes in full, the Company expects, as part of the contemplated Note amendment described above, to establish an RMB escrow account in China by April 13, 2012 with a reputable bank agreed upon by both Euro Pacific and the Company and to deposit into such escrow account the remaining outstanding amount of the Notes, which the Company will have no right to dispose of or use except for (i) conversion into US Dollars for the purpose of repayment of the Notes or (ii) releases from such escrow account from time to time in amounts equal to the decreases in the outstanding amount of the Notes, either by payments made by the Company or conversion of the Notes by Noteholders.

The Company expects to fulfill its obligations under the Notes on or before applicable due dates pursuant to the terms of the applicable agreements with Euro Pacific and the Investors (including the contemplated Note amendment described above).