China Medicine (PINK:CHME)

On July 1, 2011, the Board of Directors (the “Board”) of China Medicine Corporation (the “Company”), after consultation with and upon the recommendation of the management of the Company and the Audit Committee of the Board (the “Audit Committee”), concluded that the Company’s previously issued financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal years ended December 31, 2006 and 2007, and the Quarterly Reports on Form 10-Q for the periods within the fiscal years 2006 and 2007 (collectively, “the previously issued financial statements”) should no longer be relied upon.

As previously disclosed in the Company’s Form 8-K filed with the Securities and Exchange Commission on March 23, 2011, in connection with the preparation of the Company’s financial statements for the year ended December 31, 2010, certain accounting and reporting errors were identified with respect to improper activities by certain employees of Guangzhou LifeTech Pharmaceutical Co., Ltd, a wholly-owned subsidiary of  the Company that the Company acquired on October 26, 2009. 

The management of the Company and the Audit Committee are conducting concurrent internal reviews with respect to these matters and in the course of such reviews, they observed that similar accounting and reporting errors also took place at Guangzhou Konzern Medicine Co., Ltd. (“Konzern”), another wholly-owned subsidiary of the Company, in relation to the subsidiary’s financial statements for the fiscal years ended December 31, 2008 and 2009.  Consequently, on March 17, 2011, the Board, concluded that the Company’s previously issued financial statements contained in the Company’s Annual Report on Form 10-K for the fiscal years ended December 31, 2008 and 2009, and the Quarterly Reports on Form 10-Q for the periods within the fiscal years 2008, 2009 and 2010 should no longer be relied upon.

On July 1, 2011, during the course of the on-going internal reviews mentioned above, the Board determined that the accounting and reporting errors at Konzern also occurred in fiscal years 2006 and 2007 in addition to fiscal years 2008, 2009 and the quarterly periods in fiscal year 2010, as previously reported, and such errors materially impacted the previously issued financial statements.  The Company currently is not able to and will not be able to quantify the impact of these errors and related accounting adjustments until the completion of its internal reviews but has concluded that the previously issued financial statements should no longer be relied upon. The Company anticipates that at the conclusion of the internal review by the Audit Committee and its legal counsel, with the assistance of Ernst & Young Advisory Services Limited, and the completion of a re-audit of the affected fiscal years, it will have revised financial results and will issue restated financial statements.
 
The Company’s Audit Committee has discussed the matters disclosed in this Item 4.02 with Frazer Frost, LLP, the Company’s  registered public accounting firm.
 
Management is assessing what changes may be necessary in the evaluation of the Company’s internal control over financial reporting and its disclosure controls and procedures and will not reach a final conclusion with respect to these matters until completion of the restatement process.

GUANGZHOU, China, March 24, 2011 /PRNewswire-Asia/ -- China Medicine Corporation today announced that it has filed with the United States Securities and Exchange Commission 1) a Current Report on Form 8-K to disclose that its previously issued financial statements should not be relied upon, and 2) a Form 12b-25 Notification of Late Filing for its Annual Report on Form 10-K for the year ended December 31, 2010. The Company expects to restate its previously issued financial statements for fiscal years 2008 and 2009, and the quarters within the fiscal years of 2008, 2009, and 2010, in order to correct certain accounting and reporting errors that impact the accuracy of the previously issued financial statements. Because of the nature and timing of the review, the Company will be unable to file its Annual Report on Form 10-K for the fiscal year ended December 31, 2010 with the SEC by March 31, 2011, the prescribed due date.

The Board of Directors of the Company, after consultation with and upon recommendation of the management of the Company and its Audit Committee, concluded that the Company's previously issued financial statements contained in its Annual Reports on Form 10-K for fiscal years 2008 and 2009, and the Quarterly Reports on Form 10-Q for the periods within the fiscal years of 2008, 2009 and 2010, should no longer be relied upon.

GUANGZHOU, China, March 23, 2011 /PRNewswire-Asia/ -- China Medicine Corporation today announced that the Company's Board of Directors authorized a voluntary withdrawal of the Company's application for listing its common stock on the Nasdaq Global Market.

On March 9, 2010, the Company announced its intention to list on Nasdaq in order to broaden its shareholder base, improve trading liquidity and raise the Company's profile in the investment community. On March 17, 2011, the Company notified Nasdaq of its intention to voluntarily withdraw its listing application and it received immediate confirmation of the acceptance of the withdrawal. The decision to withdraw at this time resulted from the inability of the Company to satisfy Nasdaq Listing Rule 5405(a)(1) regarding the $4.00 minimum bid price for initial listing on the Nasdaq Global Market. The voluntary withdrawal does not preclude the Company from making an application for listing on the Nasdaq Stock Market in the future. The Company's common stock will continue to be listed on the OTC Bulletin Board, under the ticker "CHME".