Guangzhou, China, August 22, 2011 – China Medicine Corporation (Other OTC: CHME.PK) (the “Company”), a leading manufacturer, developer and distributor of Western pharmaceuticals, traditional Chinese medicines (“TCM”), and other health products in the People’s Republic of China, today announced that the Audit Committee (the “Audit Committee”) of the Board of Directors of the Company (the “Board”), has dismissed Frazer Frost as the Company’s independent auditor, effective August 16, 2011.
The audit reports of Frazer Frost on the financial statements of the Company as of and for the years ended December 31, 2009 and December 31, 2008 did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. However, as previously disclosed, 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 that the Company. The Company has been conducting an internal review with respect to these matters and has observed similar errors at Guangzhou Konzern Medicine Co., Ltd., another wholly-owned subsidiary of the Company in fiscal years 2006 to 2010. In connection with the audits of the Company’s financial statements for the fiscal years ended December 31, 2009 and 2008 and the subsequent interim period through August 16, 2011, except the matters mentioned above, there were: (i) no disagreements between the Company and Frazer Frost on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Frazer Frost, would have caused Frazer Frost to make reference to the subject matter of the disagreement in connection with their reports on the Company’s financial statements for such years, and (ii) no reportable events within the meaning set forth in Item 304(a)(1)(v) of Regulation S-K.
As the Company disclosed previously, its previously issued financial statements contained in its Annual Report on Form 10-K for the fiscal years 2006, 2007, 2008 and 2009, and the Quarterly Reports on Form 10-Q for the periods within the fiscal years 2006, 2007, 2008, 2009 and 2010 should not be relied upon and it expects to restate such previously issued financial statements. As a result, Frazer Frost did not review the Company’s quarterly financial statements for the fiscal quarters ended March 31, 2011 and June 30, 2011.
The Company is in a process of finalizing the search of a reputable, international independent registered public accounting firm and will make a timely announcement when the search is complete and the engagement of a successor independent registered public accounting firm becomes effective.
About China Medicine Corporation
China Medicine Corporation, a vertically integrated enterprise with a research and development center, manufacturing facility and well established sales network, engages in the production and distribution of prescription and over the counter drugs, traditional Chinese medicine products, herbs and dietary-supplements, medical devices, and medical formulations in
This press release contains forward-looking statements concerning the Company’s business and products. The Company’s actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, obtaining regulatory approval for new products, government support for rural health care, competition from existing and new competitors, changes in technology, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this cautionary statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Medicine Corporation undertakes no duty to revise or update any forward-looking statement to reflect events or circumstances after the date of this release.
In Beijing: Ms. Wen Lei Zheng: 86-10-6599-7968