MIAMI, FL--(Marketwire - November 17, 2008) - China West has filed a second arbitration for $7.5 million USD against Genesis Pharmaceuticals (OTCBB: GNPH) for its breach of contract and failure to carry out its obligation under the Genesis Equity Partners operating agreement and contractual obligations.
China West, LLC and China West II, LLC now have a total of $13.5 million in arbitration claims currently pending against Genesis Pharmaceuticals, Inc.
In 2006, Genesis Technology Group, Inc. (GTEC), China West, LLC and Joshua Tan, a director of Genesis, formed GENESIS EQUITY PARTNERS LLC (GEP), a Florida limited liability company, for the purpose of completing private-to-public reverse merger programs for Chinese companies. GTEC owned 51%, China West owned 25% and Tan owned 24% of GEP.
In 2007, GEP entered into an agreement with a Chinese pharmaceutical company known as Laiyang Jiangbo Pharmaceuticals Co. Ltd. (LJP) pursuant to which GEP would fund the legal, accounting and other work necessary to complete a reverse merger with a U.S. publicly traded company. GTEC decided it would be the merger partner for LJP and the reverse merger occurred on October 1, 2007. The reverse merger company was named GENESIS PHARMACEUTICAL ENTERPRISES, INC. GTEC received 25% of the new company. In breach of its contractual and fiduciary duties, Genesis did not distribute to China West its 25% share of the shares GTEC received as provided under the GEP operating agreement. The value of the shares China West was entitled to receive was $7.5 million. On May 12, 2007 from Beijing, Dr. Shaohua Tan, then a Genesis Director, observed: “I just came back with a signed Contract with our GEP No. 6 partner, Laiyang Jiangbo Pharmaceutical Co., Ltd, for a 30% stake for GEP.” Tan further stated, “With 2006 revenue over RMB713 million ($92.7 million) and profit margin over 16%, this company is one of largest pharmaceutical companies in Northeast China, also, one of the major pharmaceutical companies in China. It is so far the largest GEP partner, about 3 times bigger than Lotus.
“There has been a major effort to close this deal with months of hard work and contributions from our alliance. Considering that the initial offer was only 15%, you can imagine the difficulty to close this deal at a satisfactory conclusion.” China West, LLC, and China West II, LLC is represented by Jeffrey Tew, Esq., Tew Cardenas, 15th Floor Four Seasons Tower, 1441 Brickell Avenue, Miami, FL 33131. Genesis is represented by Benjamin Olive, Esq., Olive & Associates, 2438 E. Las Olas Blvd., Fort Lauderdale, FL 33301.
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