Sinobiopharma (PINK:SNBP)

On October 25, 2011, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Sinobp, Inc., a Nevada corporation ("Parent"), and Sinobp1, Inc., a Nevada corporation ("MergerSub").  On November 1, 2011, holders of a majority of the voting rights of the capital stock of the Company approved the Merger Agreement and the transaction contemplated therein.  On November 8, 2011, in accordance with the terms of the Merger Agreement, the Company and MergerSub filed Articles of Merger with the Secretary of State of the State of Nevada, with an effective date of November 23, 2011 (the “Effective Date”), pursuant to which MergerSub will be merged with an into the Company, with the Company as the surviving entity (the “Surviving Corporation”).

Pursuant to the terms of the Merger Agreement, upon the Effective Date every share of the Company common stock, par value $.0001 per share (the “SNBP Shares”), issued and outstanding immediately prior to the Effective Date, exclusive of shares of the Company common stock owned by More Big Group Limited, Combiform Therapeutics Ltd., Well Start International Ltd. and Lequn Lee Huang (collectively, the “Excluded Shares”), will be converted into the right to receive $0.22 in cash, without interest (the “Per Share Amount”).  In order to receive payment for SNBP Shares, holders must either tender book-entry interests representing such SNBP Shares to Empire Stock Transfer through the book-entry system of The Depository Trust Company (“DTC”) as more fully described below.

NANTONG CITY, China, Aug. 31, 2011 (GLOBE NEWSWIRE) -- On August 30, 2011, Sinobiopharma (OTCBB:SNBP) (the "Company") filed a Form 15 as required by Rule 15d-6, which suspends the duty of an issuer that has less than 300 holders of record of its securities as of the beginning of its fiscal year (such as the Company) to file reports with the SEC.

The Company's Board of Directors has formed a special committee comprised solely of independent directors to consider a proposed transaction involving a merger of the Company with a corporation controlled by the Company's Chairman in which the public shareholders of the Company would receive cash equal to the fair value of their shares in the statutory merger process or, alternatively, pursuant to the exercise of dissenter's right that will be available in connection therewith. The Company anticipates issuing a news release upon entering into the related Agreement and Plan of Merger in the near future.

The Company has upgraded the manufacture facilities and devices during the quarter ended November 30, 2010, replacing an old freeze-dried powder device with an advanced one which will improve both production and the quality of Cisatracurium Besylate product. The Company had to halt the production of Cisatracurium Besylate for both September and October of 2010 in order to replace the old device, test the new device and resume the production. The decrease in sales was due to the fact that the Company stopped production of Cisatracurium Besylate in September and October. The Company had to hold the delivery of the products due to reduced inventory levesl in September and October even though the market need for Cisatracurium Besylate is still growing.

2011 Fiscal First Quarter: 

• Revenue of $1,856,398, as compared to $1,293,764.

• Net income of $685,098 as compared to $237,167.

• EPS was $0.01 vs. nil

On January 15, 2010, the Company raised $1,500,000 capital through a private placement by selling to the investors an aggregate of 15,000,000 shares of common stock, par value $0.0001 of the Company, for an aggregate purchase price of $1,500,000. As of May 31, 2010, the Company has paid off the bank loan. The operations of Dong Ying China have generated profits for the year ended May 31, 2010. The Company had $1,331,959 in cash.

The profit generated from operation is sufficient to enable the Company to support its current operations and pay current debt due for repayment. However, the Company plans to raise more capital through equity finance to provide cash to expand the business development, fund further drug product development and to launch new products. The Company is also working in developing markets to increase sales and generate positive cash flow of the existing products.

We are placing SNBP on the GeoSpecial on the Radar List. We are not overly excited about Sinobiopharma:

• At 85 million, Shares outstanding are well above our preferred minimum of 50 million.
• While our trading strategies are generally not based on technicals, investors may like to know that the chart has been in an overall down trend.

Why are we tracking Sinobiopharma?

• Albeit minimal, SNBP was able to report two profitable EPS quarters in a row of $0.01. (This appears to be the first time the company has reported a profit).
• The company just rectified a recent liquidity problem:

The Company’s chief executive officer, Lequn Huang, was issued 4,234,275 shares of common stock for the outstanding $508,113 in loans owed to Mr. Huang, while the Company’s chief financial officer, Xinjie Mu, was issued 833,333 shares of common stock for the outstanding $100,000 in loans due to Mr. Mu. Both conversions of debt to equity were converted at a price of $0.12 per share. (Source: form 8K, January 15, 2010)

• Sinobiopharma is selling right around it's book value per share of $0.36.

SNBP still has over $2 million of debt on its balance sheet and remains in a negative working capital position.

Because companies that have resolved liquidity issues have performed well for us over the past year, we will track the Sinobiopharma story for any improvements in its liquidity position.

On January 15, 2010, the Company issued an aggregate of 15,000,000 shares to the Buyers in the private placement. On January 11, 2010, the Company converted certain outstanding debt owed to its chief executive and financial officers into an aggregate of 5,067,608 shares of common stock of the Company. The Company’s chief executive officer, Lequn Huang, was issued 4,234,275 shares of common stock for the outstanding $508,113 in loans owed to Mr. Huang, while the Company’s chief financial officer, Xinjie Mu, was issued 833,333 shares of common stock for the outstanding $100,000 in loans due to Mr. Mu. Both conversions of debt to equity were converted at a price of $0.12 per share. The Company has no obligation to register the shares issued in this transaction.

Source:  form 8K (January 15, 2010)