8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)          July 20, 2010

LOTUS PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Nevada	001-32581	20-0507918
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

16 Cheng Zhuang Road, Feng Tai District, Beijing 100071 People’s Republic of China	N/A
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code 86-10-63899868

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Effective July 20, 2010, Lotus Pharmaceuticals, Inc. (the “Company”) terminated its Standby Equity Distribution Agreement (the “SEDA”) with YA Global Master SPV Ltd. (“YA Global”) that was executed as of March 3, 2010. The Company determined that it would not utilize the SEDA because it has sufficient working capital, including sufficient capital to carry out the construction and outfitting of its new building complex in Beijing, which is expected to open in 2010. Neither the Company nor YA Global have any further obligations to the other under the SEDA.

Pursuant to the SEDA, the Company, at its sole and exclusive option, could have periodically sold to YA Global shares of its common stock, $0.001 par value per share (the “Common Stock”) for a total purchase price of up to ten million dollars ($10,000,000). For each share of Common Stock purchased pursuant to an advance under the SEDA, YA Global would have paid the Company the amount higher of $0.87, the minimum acceptable price, or ninety-three (93%) of the lowest daily volume weighted average price of the Common Stock during the five (5) consecutive trading days following delivery by the Company of an advance notice. The Company was not obligated to utilize any of the $10 million available under the SEDA and there were no minimum commitments, minimum use penalties or penalties for the termination of the SEDA.

The agreement which terminated the SEDA is attached as an exhibit to this Form 8-K.

Item 8.01 Other Events.

On July 22, 2010, Lotus Pharmaceuticals, Inc. issued a press release announcing the termination of the SEDA. The full text of the press release issued in connection with this announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description

10.1 Termination Agreement, dated as of July 20, 2010, by and between Lotus Pharmaceuticals, Inc. and YA Global Master SPV Ltd

99.1 Press release issued by Lotus Pharmaceuticals, Inc. on July 22, 2010

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	LOTUS PHARMACEUTICALS, INC.
Date: July 22, 2010	By:  /s/ Liu Zhongyi Name: Liu Zhongyi Title: Chairman and Chief Executive Officer

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EX-10

Exhibit 10.1

AGREEMENT

AGREEMENT made as of this 20th day of July, 2010 by and among Yorkville Global Master SPV Ltd., a Cayman Islands exempt limited partnership, with a principal office located at 101 Hudson Street, Suite 3710, Jersey City, NJ 07302 (“Yorkville”), and Lotus Pharmaceuticals Inc., a corporation organized under the laws of  Nevada, with a principal office located at  16 Cheng Zhuang Road Feng Tai District Beijing 100071 Peoples Republic of China (“Lotus”).

R E C I T A L S

The parties hereby acknowledge the truth and accuracy of the following recitals:

WHEREAS, Yorkville and Lotus entered into a Standby Equity Distribution Agreement SEDA as of  March 3, 2010;

WHEREAS, the Parties desire to acknowledge and consent to, the termination of the SEDA in its entirety and to release each other from all obligations and liabilities with respect to the SEDA;

NOW, THEREFORE, in consideration of the premises and of the mutual covenants hereinafter set forth, the sufficiency of which is hereby acknowledged, Yorkville and Lotus hereby agree as follows:

1.  The SEDA and any and all of the respective rights, benefits, and obligations of Yorkville and Lotus existing or arising under, pursuant to or in connection with the SEDA are hereby cancelled and rendered null and void in their entirety subject to and upon the terms and conditions set forth herein.

2.  By reason of this Agreement, the parties expressly acknowledge, agree, and stipulate as follows:

a.        No party owes any sums to any other party under, or pursuant to the SEDA or otherwise. No party has any claim or cause of action against the other arising out of, pursuant to, or in connection with, the SEDA through and as of the date hereof;

b.         Upon the cancellation and termination of the SEDA effected by the provisions hereof, no party shall have any remaining duties or obligations whatsoever to the other with respect to any matter or transaction regarding the SEDA

3.  Both Yorkville and Lotus  (each as “RELEASOR(S)” and “RELEASEE(S)” to each other) mutually agree to release and discharge each other and their affiliates, shareholders, directors, officers and employees from all action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever, in law, admiralty or equity, against the RELEASEE(S), which the RELEASOR(S) and/or the RELEASOR(S)'S successors and assigns ever had, now have or hereafter can, shall or may have, for, upon, or by reason of any matter, cause or thing whatsoever, to the day of the date of this Agreement.

4.  The parties expressly agree that this Agreement shall be governed by and shall be interpreted, construed, and enforced in accordance with the laws of the State of New  Jersey, without giving effect to provisions as to conflicts of laws and with the same force and effect as if this Agreement were fully executed and to be performed wholly within the State of New  Jersey.

5.  All the terms and provisions of this Agreement shall be binding upon, inure to the benefit of, and be enforceable by the parties hereto and their respective successors and assigns.

6.  This Agreement constitutes the entire agreement of the parties hereto with respect to the matters herein contained and may not be altered, modified, or amended except in writing, executed, and delivered by or on behalf of the parties.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.

Yorkville Global Master SPV Ltd.
By: Yorkville Advisors, LLC
Its Investment Manager
By:	/s/ David Gonzalez
	Name:  David Gonzalez
	Title:  Manager
Lotus Pharmaceuticals, Inc.
By:	Liu Zhongyi
	Name:  Liu Zhongyi
	Title:  Chief Executive Officer

EX-99

Exhibit 99.1

Lotus Pharmaceuticals Terminates SEDA

BEIJING, July 22, 2010 - Lotus Pharmaceuticals, Inc. (OTC Bulletin Board: LTUS) (“Lotus” or the “Company”), a growing developer, manufacturer and seller of medicine and drugs in the People’s Republic of China (the “PRC”), announced today that it has entered into a termination agreement with Yorkville Global Master SPV Ltd.(“Yorkville”) whereby the parties agreed to mutually terminate the Standby Equity Distribution Agreement, dated March 3, 2010, between the company and Yorkville (the “SEDA”) with no further obligations.

CEO, Dr. Zhongyi Liu, commented, “We appreciate the capital commitment from Yorkville, but we won’t utilize the SEDA.  The reason is that currently we have sufficient working capital and growth capital to carry out the construction and outfitting of our new building complex in Beijing, which is expected to open in 2010. We will consider alternative funding options and structures only when our stock valuation improves, in order to protect against stock dilution.”

About Lotus Pharmaceuticals, Inc. (www.lotuspharma.com)

Lotus Pharmaceuticals, Inc. is a growing developer and producer of drugs and a licensed national seller of pharmaceutical items in the PRC. Lotus operates its business through its two controlled entities: Liang Fang Pharmaceutical, Ltd. and En Ze Jia Shi Pharmaceutical, Ltd.  Lotus’ current drug development is focused on the treatment of cerebro-cardiovascular disease, asthma and diabetes.  Liang Fang sells drugs directly and indirectly through its national sales channels to hospitals, clinics and drugs stores in 30 provinces of the PRC.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words “estimate,” “project,” “intent,” “forecast,” “anticipate,” “plan,” “planning,” “expect,” “believe,” “will likely,” “should,” “could,” “would,” “may,” or words or expressions of similar meaning. Such statements are not guarantees of future performance and could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including, but not limited to, changes from anticipated levels of sales, future nation al or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, increased costs, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, the time to get new drugs approved by the State Food and Drug Administration and other factors.  Additional information regarding risks can be found in the Company's Annual Report on Form 10K and its other filings with the SEC.  Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct.  The Company has no obligation to update the forward-looking information contained in this press release.

Lotus Pharmaceuticals, Inc.

Yan ZENG, CFO

Tel: (010) 6389 9868

zy@lotuspharma.com