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Wed, October 14, 2009 China Aoxing Pharmaceutical Co., Inc.: China Aoxing Pharmaceutical Company Reports Fiscal Year 2009 Financial Results
NEW YORK, NY--(Marketwire - October 14, 2009) - China Aoxing Pharmaceutical Company, Inc. (
Revenues for our fiscal year ended June 30, 2009 were $8,941,907, representing a 27% increase from revenues of $7,065,015 for our fiscal year ended June 30, 2008. The increase was driven by our increased marketing efforts, improved brand recognition and effective pricing strategy.
Gross profit in the year ended June 30, 2009 increased by $576,213 from gross profit during the year ended June 30, 2008.
Research and development expenses increased from $700,202 in fiscal year 2008 to $722,567 in fiscal year 2009 as we continued advancing our development programs including Oxycodone, Tilidine, Codeine Phosphate, Buprenorphine and other products.
General and administrative expenses decreased from $4,001,282 in fiscal year 2008 to $3,804,296 in fiscal year 2009, as a result of our efforts to control expenditures on both cash and non-cash based items. During the fiscal year 2009, we reduced our staff from 465 employees at June 30, 2008 to our current roster of 360 employees. We also reduced professional fees by 45% on legal, accounting, and other services.
Loss from our operations was $4,003,065 in fiscal year 2009 as compared to the loss of $3,578,966 in fiscal year 2008, an increase in $424,098 or 12%, primarily due to the increase in our bad debt reserve in the amount of $1,461,789 in fiscal year 2009, which offset the savings achieved from the operation improvement.
We incurred interest expenses of $1,919,143 in fiscal year 2009, compared to $2,514,840 in fiscal year 2008, a 24% decrease primarily due to the conversion of our 10% convertible debenture into common stock as of September 30, 2008.
We continue improving our capital structure and financial strength and anticipate that interest expense will continue to decrease in the coming years. The completion of a $5 million private placement of equity in early August 2009 was an important first step in that program. Also in late August 2009, we paid off a convertible term note to American Oriental Bioengineering Inc. ("AOB") in the total amount of $4,830,847, in the form of 3,578,405 shares of restricted common stock. As of October 14, 2009, AOB owns 33,578,405 shares, or approximately 37% of our common stock.
During the fiscal year 2009, we recorded impairment loss in the amount of $2,345,420, primarily attributable to our revaluation of LRT's property and equipment in connection with our consolidation efforts of LRT subsidiary. The impairment loss was offset in part by a one-time gain on forgiveness of debt in the amount of $1,461,299 during the same year.
Net cash outflows from operations during fiscal year ended June 30, 2009 amounted to $642,598, representing 34% improvement compared with net cash outflows from operation of $982,947 in the fiscal year 2008. Our cash flows used in investing activities amounted to $2,227,309 in acquisition of property and equipment in fiscal year 2009 as compared to $17,135,612 in fiscal year 2008. During fiscal year 2008, we paid $12,232,123 and $3.42m respectively to acquire 100% equity ownership of LRT and 35% of equity ownership of Hebei Aoxing Pharmaceutical Group Company, our main operating subsidiary in China.
According to the accounting treatment of embedded derivative instruments required by the US GAAP, the Company recognized other income of approximately $627,183 and $8,547,000 during the years ended June 30, 2009 and 2009 respectively, as a result of marking-to-market the value of warrants and derivative liabilities related to the convertible debentures issued by the Company in earlier periods. In addition, we also recognized income tax credit of $3,281,059 in fiscal year 2009. As a result, the net loss for the fiscal year 2009 was $2,695,050, or $0.03 per fully diluted share, compared to a net income of $3,646,859, or $0.08 per fully diluted share in the prior year.
Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing, commented, "We are very pleased with our 2009 fiscal year financial and business results. We revised our capital structure and improved our financial condition significantly, forming an important basis of our future business expansion. Our clinical development team achieved significant progress toward finishing several clinical trials of narcotic products by June 2009. In addition, we are very optimistic about new product licenses and product launches in the coming year, which would lead us to a new commercialization era in the company history."
About China Aoxing Pharmaceutical Company, Inc.
China Aoxing Pharmaceutical Company, Inc. (
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 BALANCE SHEET ----June 30,---- 2009 2008 ASSETS CURRENT ASSETS: Cash $ 1,271,922 $ 1,565,513 Accounts receivable, net of allowance for doubtful accounts of $1,461,091 and $0 1,064,381 2,536,047 Inventory 712,521 848,959 Deposits with suppliers 261,780 78,052 Deferred tax assets 3,331,045 - Prepaid expenses and sundry current assets 302,449 225,156 ------------ ------------ TOTAL CURRENT ASSETS 6,944,098 5,253,727 ------------ ------------ LONG-TERM ASSETS Property and equipment, net of accumulated depreciation 29,324,362 30,331,143 Other intangible assets 1,549,497 1,635,375 Goodwill 18,926,527 18,904,845 ------------ ------------ TOTAL LONG-TERM ASSETS 49,800,386 50,871,363 ------------ ------------ TOTAL ASSETS $ 56,744,484 $ 56,125,090 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-Term borrowings $ 292,193 $ 291,800 Accounts payable 2,816,711 3,544,795 Deposit payable 3,871,552 - Current portion of long term debt - other 144,635 380,070 Current portion of long term debt - stockholders 4,494,629 1,862,868 Accrued expenses and taxes payable and other sundry current liabilities 2,403,185 4,851,314 Loan payable - Bank 6,094,428 7,545,239 ------------ ------------ TOTAL CURRENT LIABILITIES 20,117,333 18,476,086 ------------ ------------ LONG-TERM DEBT -- STOCKHOLDERS 4,104,201 4,098,687 ------------ ------------ -- OTHER 3,491,113 3,127,643 ------------ ------------ CONVERTIBLE DEBENTURES 1,023,733 1,098,362 ------------ ------------ WARRANT AND DERIVATIVE LIABILITIES 3,368,901 4,161,678 ------------ ------------ MINORITY INTEREST - 24,598 ------------ ------------ Common stock, par value $0.001, 100,000,000 shares authorized, 82,827,999 and 81,089,919 shares issued and outstanding at June 30, 2009 and 2008, respectively 82,828 81,090 Preferred stock, par value $0.001, 300,000 shares authorized, 277,018 shares issued and outstanding at June 30,2009 and 2008, respectively 277 277 Additional paid in capital 39,104,309 36,749,956 Accumulated deficit (15,009,228) (12,314,178) Other compensive income 461,017 620,891 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 24,639,203 25,138,036 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,744,484 $ 56,125,090 ============ ============ CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS) Year ended June 30, 2009 2008 SALES $ 8,941,907 $ 7,065,015 COST OF SALES 5,135,661 3,834,982 ------------ ------------ GROSS PROFIT 3,806,246 3,230,033 ------------ ------------ COSTS AND EXPENSES: Research and development expense 722,567 700,202 General and administrative expenses 3,804,296 4,001,282 Bad Debt expenses 1,461,789 - Selling expenses 1,480,118 1,449,909 Depreciation and amortization 340,541 657,606 ------------ ------------ TOTAL COSTS AND EXPENSES 7,809,311 6,808,999 ------------ ------------ LOSS FROM OPERATIONS (4,003,065) (3,578,966) ------------ ------------ OTHER INCOME (EXPENSE): Interest expense (1,919,143) (2,514,840) Change in fair value of warrant and derivative liabilities 627,183 8,547,374 Gain on foreign currency transactions 203,037 677,365 Impairment loss (2,345,420) - Forgiveness of debt 1,461,299 - ------------ ------------ TOTAL OTHER INCOME (EXPENSE) (1,973,044) 6,709,899 ------------ ------------ INCOME (LOSS) BEFORE MINORITY INTEREST AND INCOME TAXES (5,976,109) 3,130,933 Minority interest in (income) losses of subsidiary - 515,926 ------------ ------------ INCOME (LOSS) BEFORE INCOME TAXES (5,976,109) 3,646,859 Income taxes (credit) 3,281,059 - ------------ ------------ NET INCOME (LOSS) (2,695,050) 3,646,859 OTHER COMPREHENSIVE INCOME (LOSS): Foreign currency translation adjustment (159,874) 239,483 ------------ ------------ COMPREHENSIVE INCOME (LOSS) $ (2,854,924) $ 3,886,342 ============ ============ BASIC AND DILUTED EARNINGS (LOSSES) PER COMMON SHARE $ (0.03) $ 0.08 ============ ============ WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 82,402,736 49,242,639 ============ ============ CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year ended June 30, 2009 2008 OPERATING ACTIVITIES: Net income (loss) $ (2,695,050) $ 3,646,859 Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,017,559 730,570 Deferred tax assets (3,331,045) - Impairment loss on land and building 2,345,420 - Bad debt 1,461,453 - Forgiveness of debt (1,460,963) - Non-cash interest expense related to debentures and warrants 215,371 1,432,462 Stocks issued for services and interest 1,000,506 1,695,898 Change in fair value of warrants and derivative liability (627,183) (8,547,374) Minority interest (24,598) (515,927) Changes in operating assets and liabilities: Accounts receivable 25,543 (525,085) Inventories 137,581 (168,807) Prepaid expenses and sundry current assets (272,729) 85,506 Accounts payable (1,240,164) 1,627,658 Accrued expenses, taxes and sundry current liabilities 2,805,701 (442,707) ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (642,598) (980,947) ------------ ------------ INVESTING ACTIVITIES: Acquisition of property and equipment (2,227,309) (1,483,489) Cash paid for acquisition of subsidiary - (12,232,123) Acquisition of minority interest - (3,420,000) ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES (2,227,309) (17,135,612) ------------ ------------ FINANCING ACTIVITIES: Repayment of bank borrowings - (4,895,950) Other borrowings 123,316 2,837,959 Loans from stockholders 2,629,655 2,953,664 Sale of convertible debentures - 425,000 Sale of common stock - 17,100,000 ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 2,752,971 18,420,673 ------------ ------------ EFFECT OF EXCHANGE RATE ON CASH (178,655) (247,728) ------------ ------------ INCREASE (DECREASE) IN CASH (295,591) 56,386 CASH - BEGINNING OF PERIOD 1,567,513 1,511,127 ------------ ------------ CASH - END OF PERIOD $ 1,271,922 1,567,513 ============ ============ Supplemental disclosures of cash flow information: Non-cash financing activities: Conversion of convertible debentures into common stock 290,000 - ============ ============
