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China Aoxing Pharmaceutical Co., Inc.: China Aoxing Pharmaceutical Company Reports Third Quarter Fiscal Year 2009 Financial Res

^{Published on 2009-05-18 03:25:32, Last Modified on 2009-05-18 03:27:39 - Market Wire}
 

NEW YORK, NY--(Marketwire - May 18, 2009) - China Aoxing Pharmaceutical Company, Inc. (OTCBB: [ CAXG ]) ("China Aoxing"), a pharmaceutical company specializing in research, development, manufacturing and marketing of narcotic and pain-management products, today announced its unaudited financial results for the third quarter of fiscal year 2009, which ended on March 31, 2009.

Financial Results

Revenue in the third quarter of 2009 increased 85% year over year to $1,587,989 from $857,065, reflecting the contribution of our newly acquired subsidiary, LRT, as well as continued demand for the Company's prescription and over-the-counter (OTC) pharmaceutical products.

Gross profit in the third quarter of fiscal year 2009 increased 28% to $517,903 from $403,609. The increase reflected higher net sales as a result of the contribution of our newly acquired subsidiary, LRT.

Operating loss in the third quarter was $707,244 compared to a loss of $1,411,428 in the prior year period, reflecting positive impact of cost control measures taken by the company recently. General and administration expenses were reduced by 39% to $797,954 from $1,316,804 in the prior year period as a result of tight control on expenditures and improvement of efficiencies.

Net loss in the third quarter was $239,208, compared to a net income of $7,449,659 in the prior year. However, the net income for both periods was significantly attributed to the changes in fair value of warrant and derivative liabilities in the amount of $1,502,314 and $8,981,552, respectively.

Mr. Juan Yue Han, Chairman and the CEO of China Aoxing, commented, "We are pleased with our third quarter performance and have met our near-term corporate objectives. On operation side, we made good progress on business integration, cost cutting and efficiency improvement. On pipeline development side, we continued receiving new drug approval from the China State Food and Drug Administration ("SFDA"). Our pipeline products progress well and we are planning to announce the clinical results in due course. We remain focused on becoming a premium specialty pharmaceutical company in narcotics and pain management."

About China Aoxing Pharmaceutical Company, Inc.

China Aoxing Pharmaceutical Company, Inc. (OTCBB: [ CAXG ]) is a pharmaceutical company located in China specializing in research, development, manufacturing and distribution of a variety of narcotics and pain-management products. It has a strategic alliance with American Oriental Bioengineering, Inc. (NYSE: [ AOB ]) to develop and market various narcotic drugs in China. Headquartered in Shijiazhuang City, the pharmaceutical capital of China, outside of Beijing, China Aoxing has China's largest and the most advanced manufacturing facility for highly regulated narcotic medicines, addressing a very under-served and fast-growing market in China. Its facility is one of the few GMP facilities licensed for narcotics medicines. The Company is working closely with the Chinese government and SFDA to assure the strictly regulated availability to medical professionals of its narcotic drugs and pain medicines throughout China.

Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other risk factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-KSB for the year ended June 30, 2008, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.

 CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED March 31, March 31, 2009 2008 2009 2008 (Restated) (Restated) SALES $ 1,587,989 $ 857,065 $ 7,501,763 $ 3,101,236 COST OF SALES 1,070,086 453,456 4,339,126 1,550,872 GROSS PROFIT 517,903 403,609 3,162,637 1,550,364 COSTS AND EXPENSES: Research and development expense 143,197 174,237 483,434 277,891 General and administrative expenses 797,954 1,316,804 2,787,746 2,515,251 Selling expenses 169,809 198,928 1,293,344 764,722 Depreciation and amortization 114,187 125,068 346,069 363,463 TOTAL COSTS AND EXPENSES 1,225,147 1,815,037 4,910,593 3,921,327 LOSS FROM OPERATIONS (707,244) (1,411,428) (1,747,956) (2,370,963) OTHER INCOME (EXPENSE): Interest expense (495,489) (329,497) (1,400,868) (1,915,473) Change in fair value of warrant and derivative liabilities 1,502,314 8,981,552 506,028 9,121,393 Gain on foreign currency translation (42,481) - 220,579 - Impairment loss (561,913) (561,913) Forgiveness of debt - - 1,459,654 - TOTAL OTHER INCOME (EXPENSE) 402,431 8,652,055 223,480 7,205,920 LOSS BEFORE MINORITY INTEREST AND INCOME TAXES (304,813) 7,240,627 (1,524,476) 4,834,957 Minority interest in (income) losses of subsidiary 65,605 209,032 37,084 476,856 LOSS BEFORE INCOME TAXES (239,208) 7,449,659 (1,487,392) 5,311,813 Income taxes 0 - (98,686) - NET INCOME (LOSS) (239,208) 7,449,659 (1,586,078) 5,311,813 OTHER COMPREHENSIVE LOSS: Foreign currency translation adjustment 159,152 192,409 (222,626) 414,968 COMPREHENSIVE INCOME (LOSS) $ (80,056) $ 7,642,068 $(1,808,704) $ 5,726,781 BASIC AND DILUTED EARNINGS PER COMMON SHARE (0.00) 0.18 (0.02) (0.13) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 82,819,555 41,312,664 82,261,499 40,822,684 China Aoxing Pharmaceutical Co., Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS (Unaudited) March 31, June 30, 2009 2008 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 987,894 $ 1,565,513 Accounts receivable 2,294,235 2,536,047 Inventories 701,462 848,959 Prepaid expenses and sundry current assets 754,996 303,208 TOTAL CURRENT ASSETS 4,738,587 5,253,727 LONG-TERM ASSETS: Property and equipment, net of accumulated depreciation 30,333,047 30,331,143 Other intangible assets 1,578,321 1,635,375 Goodwill 18,924,641 18,904,845 TOTAL LONG-TERM ASSETS 50,836,009 50,871,363 TOTAL ASSETS $ 55,574,596 $ 56,125,090 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Short-term borrowings $ 5,112,353 $ 2,042,600 Accounts payable 3,565,614 3,544,795 Loan payable - other - 380,070 Due to stockholders 112,198 112,068 Accrued expenses and taxes payable 3,826,171 4,851,314 Notes payable - bank 6,093,716 7,545,239 TOTAL CURRENT LIABILITIES 18,710,052 18,476,086 LONG-TERM DEBT - STOCKHOLDER 4,103,722 4,098,687 - OTHER 3,716,616 3,127,643 CONVERTIBLE DEBENTURES 978,953 1,098,362 WARRANT AND DERIVATIVE LIABILITIES 3,490,056 4,161,678 MINORITY INTEREST - 24,598 STOCKHOLDERS’ EQUITY: Common stock, $0.001 par value, 100,000,000 shares authorized 82,819,555 and 82,819,555 shares issued and outstanding at March 31, 2009 and June 30, 2008, respectively 82,820 81,090 Preferred stock, $0.001 par value 300,000 shares authorized 277,018 shares issued and outstanding 277 277 Additional paid-in capital 37,994,090 36,749,956 Accumulated deficit (13,900,224) (12,314,178) Other comprehensive income 398,234 620,891 TOTAL STOCKHOLDERS’ EQUITY 24,575,197 25,138,036 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 55,574,596 $ 56,125,090