Bohai Pharmaceuticals (OTC BB:BOPH)

We believe that we can meet our liquidity and capital requirements for our ongoing operations from our currently available working capital and maintain our operations at our current levels.

However, during the current fiscal year and thereafter, we will be required to fund two significant obligations (as well as others described under Obligations of Material Contracts below):

(i) the completion of the acquisition of Yantai Tianzheng (currently $12 million is due within 12 months, and a total of $29 million is due); and

(ii) the repayment our convertible promissory notes due January 5, 2012 (currently $10.45 million due).

As such, we will be required to raise substantial additional capital to fund these obligations, either through the issuance of debt or equity securities, bank loans or other methods. Readers are cautioned that additional funding, capital or loans may be unavailable to us on favorable terms, if at all. If adequate funds are not available, we would likely have to renegotiate the terms of these obligations, which we may be unable to do on favorable terms.