JERSEY CITY, N.J., Oct. 15, 2012 /PRNewswire/ -- Aoxing Pharmaceutical Company, Inc. (NYSE MKT: AXN) ("Aoxing Pharma"), a specialty pharmaceutical company focusing on research, development, manufacturing, and distribution of narcotic, pain-management, and addiction treatment pharmaceuticals, today announced its financial and operational results for its 2012 fiscal year, which ended on June 30, 2012. Complete financial results can be found in the Annual Report on Form 10-K filed by Aoxing Pharma on October 15, 2012.
Sales for the year ended June 30, 2012 were $8,134,077, representing a 22% increase over the sales realized during the 2011 fiscal year. The increase was primarily attributable to the 33% increase in sales of the Company's main product, Zhongtongan, which is now being marketed for gynecological and orthopaedic applications in addition to its core dental market. Sales of Zhongtongan accounted for 89% of fiscal 2012 sales.
Gross margin for fiscal 2012 was 60.2%, an increase from the gross margin of 50.0% achieved in fiscal 2011. The increase was primarily the result of a strategic decision to reduce emphasis on sale of lower margin products. As a result of increased sales and improved margin, Aoxing Pharma's gross profit for fiscal 2012 increased by 47% to $4,899,823.
General and administrative expenses in fiscal 2012 were $3,055,424, a reduction of 39% from the prior year. The reduction in expenses was primarily attributable to a 49% reduction in stock compensation expenses, a reduction in bad debt expense from $917,959 in fiscal 2011 to $18,981 in fiscal 2012, and a reduction in staffing that yielded $230,000 in compensation savings.
In fiscal 2012, Aoxing Pharma's operating expenses were swelled by recording an impairment loss on goodwill of $13,398,614. The loss was recorded because the report of a valuation expert on the fair market value of Aoxing Pharma's operating company indicated that the implied fair value of the operating company was less than the carrying value in that amount.
Primarily due to the $13,398,614 impairment loss, Aoxing Pharma recorded a net loss of $15,877,754 for fiscal 2012, compared to a net loss of $7,817,918 in fiscal 2011.
The audit opinion of BDO China Dahua CPA Co., Ltd. with respect to Aoxing Pharma's financial statements for the year ended June 30, 2012 expressed substantial doubt about the ability of Aoxing Pharma to continue as a going concern. The reasons for that doubt were that Aoxing Pharma continues to incur losses from operations, has negative cash flow from operations, and has a working capital deficit. Aoxing Pharma intends to address these problems by obtaining extensions of the maturity dates of its debts, securing additional financing, and implementing cost reduction strategies.
On June 30, 2012, Aoxing Pharma had $3.68 million cash on hand. On August 14, 2012, Aoxing Pharma entered into a refinancing agreement with Beijing International Trust Co., Ltd and obtained a new loan of approximately $7.12 million with a term of two years. A portion of the loan proceeds was used to repay Aoxing Pharma's outstanding loan from China CITIC Bank of approximately $3.96 million. The remainder increased Aoxing Pharma's cash balance by $3.16 million.
Zhenjiang Yue, our Chairman and CEO, commented, "The Chinese pharmaceutical market remained challenging during the year. I am pleased with Aoxing Pharma's operating results, highlighted by continued growth in product sales and reduction of operating expenses."
About Aoxing Pharmaceutical Company, Inc.
Aoxing Pharmaceutical Company, Inc. is a US incorporated specialty pharmaceutical company with its operations in China, specializing in research, development, manufacturing and distribution of a variety of narcotics and pain-management products. Headquartered in Shijiazhuang City, outside Beijing, Aoxing has the largest and most advanced manufacturing facility in China for highly regulated narcotic medicines. Its facility is one of the few GMP facilities licensed for the manufacture of narcotic medicines by the China State Food and Drug Administration (SFDA). It has a joint venture collaboration with Johnson Matthey Plc to produce and market narcotics and neurological drugs in China. For more information, please visit: www.aoxingpharma.com.
Safe Harbor Statement from Aoxing Pharmaceutical Company, Inc.
Certain 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. All forward-looking statements included herein are based upon information available to the Company as of the date hereof and, except as is expressly required by the federal securities laws, the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, changed circumstances or future events or for any other reason. To the extent that any statements made here are not historical, these statements are essentially forward-looking. The Company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and/or similar expressions to identify forward-looking statements in this press release. Undue reliance should not be placed on forward-looking information. The economic, competitive, governmental, technological and other risk factors identified in the Company's filings with the Securities and Exchange Commission, specifically, Item 1A, "Risk Factors," in the Form 10-K for the year ended June 30, 2012, 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.
Aoxing Pharmaceutical Company:
SOURCE Aoxing Pharmaceutical Company, Inc.