NEW YORK, NY--(Marketwire - February 17, 2010) -
China Aoxing Pharmaceutical Company, Inc.
(OTCBB:
CAXG) ("China Aoxing"), a China-based pharmaceutical company
specializing in research, development, manufacturing and distribution of
narcotic and
pain-management products, today announced financial and operational results
for the three months ended December 31, 2009, or the second quarter of
fiscal year 2010.
Second Quarter 2010 Highlights:
-- Successful restructuring Bank of China loan with forgiveness of
$3,579,085 in from bond holders
-- Continuous improvement of operating efficiency with record low
operating loss
-- Completed Phase II clinical study for oral TJSL capsules, a novel
investigational drug to treat primary dysmenorrhea, or menstrual pain,
in adult women
-- Completed pivotal clinical trial of Tilidine for acute and chronic
treatments of moderate to severe pain
-- Received GMP re-certification for four dosage forms at new
manufacturing facility
Revenues for the three months ended December 31, 2009 were $1,556,431, a
33% decrease from the revenues of $2,315,709 realized during the three
months ended December 31, 2008. The decrease in revenue was impacted by
the relocation of the LRT manufacturing facility in the summer of 2009.
The consolidation of the LRT facility necessitated GMP re-certification of
six formulations at the new facility, delaying fulfillment of the purchase
orders for those formulations. As of December 31, 2009, the new facility
has successfully passed the GMP re-certification on capsule, tablet,
granule and oral solution formulations while re-certification on pill and
tincture formulations is expected to conclude in the first half of 2010.
General and administrative expenses were $825,503 in the three months ended
December 31, 2009, similar to $796,900 in the three months ended December
31, 2008.
During the three months ended in December 31, 2009, the company continued
to improve its profitability and operating efficiency. Loss from
operations decreased to $285,225 during the three months ended December 31,
2009, or a 39% reduction from $466,735 incurred during the three months
ended December 31, 2008.
Net income for the three months ended December 31, 2009 was $5,446,154, and
income attributable to the Company after 5% minority interest was
$5,282,170, mainly attributable to the forgiveness of debt and the decrease
in the fair value of the outstanding financial derivatives. In comparison,
during the three months ended December 31, 2008, the recorded net loss was
$1,999,699, and the Company recorded net loss in the amount of $1,972,987
after 5% minority interest and an expense of $1,144,012 attributable to the
increase in the fair value of the outstanding financial derivatives.
Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing,
commented, "We are very pleased with our financial and business results of
this period. As promised, we successfully restructured our capital
structure and improved our financial condition significantly, forming the
important basis of our future business expansion. The GMP re-certification
of four dosage forms at our manufacturing facility is an important step and
will help alleviate product backlog. We are excited about the prospects
for our business in 2010 and will continue advancing the new generation of
narcotics and pain medicine into the market place in China."
About China Aoxing Pharmaceutical Company, Inc.
China Aoxing Pharmaceutical Company, Inc. (OTCBB: CAXG) is a pharmaceutical
company 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). 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-K for the year ended June
30, 2009, 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 SHEETS
December 31, June 30,
2009 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 6,383,715 $ 1,271,922
Accounts receivable 1,252,030 1,064,381
Inventory 1,127,255 712,521
Deposits with suppliers 378,432 261,780
Deferred tax assets 2,119,730 3,331,045
Prepaid expenses and sundry current assets 376,983 302,449
------------ ------------
TOTAL CURRENT ASSETS 11,638,145 6,944,098
------------ ------------
LONG - TERM ASSETS
Property and equipment, net of accummulated
depreciation 24,438,138 29,324,362
Other intangible assets 1,502,868 1,549,497
Goodwill 18,944,464 18,926,527
------------ ------------
TOTAL LONG-TERM ASSETS 44,885,470 49,800,386
------------ ------------
TOTAL ASSETS $ 56,523,615 $ 56,744,484
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-Term borrowings $ 292,517 $ 292,193
Accounts payable 3,056,835 2,816,711
Deposit payable - 3,871,552
Current portion of long term debt - other 46,803 144,635
Current portion of long term debt - related
party 111,208 4,494,629
Accrued expenses and taxes payable and other
sundry current liabilities 1,025,402 2,403,185
Loan payable - Bank - 6,094,428
Convertible debentures 1,113,294 1,023,733
------------ ------------
TOTAL CURRENT LIABILITIES 5,646,059 21,141,066
------------ ------------
LONG-TERM DEBT-- RELATED PARTY 4,825,431 4,104,201
------------ ------------
-- OTHER 7,346,328 3,491,113
------------ ------------
WARRANT AND DERIVATIVE LIABILITIES 887,369 3,368,901
------------ ------------
Common stock, par value $0.001, 100,000,000
shares authorized, 91,669,562 and 82,827,999
shares issued and outstanding at December 31,
2009 and June 30, 2009, respectively 91,670 82,828
Preferred stock, par value $0.001
300,000 shares authorized
0 shares issued and outstanding
at December 31,2009 and June 30, 2009,
respectively - -
Additional paid in capital 49,200,045 39,104,586
Accumulated deficit (11,873,857) (14,791,039)
Other comprehensive income 470,951 461,017
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 37,888,809 24,857,392
NONCONTROLLING INTEREST IN SUBSIDIARIES (70,381) (218,189)
------------ ------------
TOTAL EQUITY 37,818,428 24,639,203
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,523,615 $ 56,744,484
============ ============
CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
For the three months ended For the six months ended
December 31, December 31,
2009 2008 2009 2008
SALES $ 1,556,431 $ 2,315,709 $ 3,003,094 $ 5,913,774
COST OF SALES 540,516 1,331,695 990,659 3,269,040
------------ ------------ ------------ ------------
GROSS PROFIT 1,015,915 984,014 2,012,435 2,644,734
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Research and
development
expense 78,761 73,907 192,064 340,236
General and
administrative
expenses 825,503 796,900 1,702,987 1,989,792
Selling expenses 287,404 492,518 548,297 1,123,536
Depreciation and
amortization 109,473 87,424 218,690 231,882
------------ ------------ ------------ ------------
TOTAL COSTS AND
EXPENSES 1,301,141 1,450,749 2,662,038 3,685,446
------------ ------------ ------------ ------------
LOSS FROM
OPERATIONS (285,226) (466,735) (649,603) (1,040,712)
------------ ------------ ------------ ------------
OTHER INCOME
(EXPENSE):
Interest expense (451,070) (429,884) (1,043,155) (905,378)
Change in fair
value of warrant
and derivative
liabilities 4,623,692 (1,144,012) 2,481,533 (996,285)
Gain on foreign
currency
transactions 241 60,481 241 263,518
Loss on sale of
assets 0 - (21,415)
Forgiveness of debt 3,579,085 (555) 3,579,085 1,459,196
------------ ------------ ------------ ------------
TOTAL OTHER INCOME
(EXPENSE) 7,751,948 -1,513,970 4,996,289 (178,949)
------------ ------------ ------------ ------------
INCOME (LOSS)
BEFORE INCOME
TAXES 7,466,722 (1,980,705) 4,346,686 (1,219,661)
Income taxes
(credit) 2,020,568 18,994 1,211,315 98,687
------------ ------------ ------------ ------------
NET INCOME (LOSS) 5,446,154 (1,999,699) 3,135,371 (1,318,348)
Noncontrolling
interest in
subsidiaries 163,984 (26,712) 147,808 28,520
------------ ------------ ------------ ------------
INCOME (LOSS)
ATTRIBUTABLE TO
THE COMPANY 5,282,170 (1,972,987) 2,987,563 (1,346,868)
OTHER COMPREHENSIVE
INCOME (LOSS):
Foreign currency
translation
adjustment (27,744) (408,127) 9,934 (381,778)
------------ ------------ ------------ ------------
COMPREHENSIVE
INCOME (LOSS) $ 5,254,426 $ (2,381,114) $ 2,997,497 (1,728,646)
============ ============ ============ ============
BASIC AND DILUTED
EARNINGS (LOSSES)
PER COMMON SHARE 0.06 (0.02) 0.03 (0.02)
============ ============ ============ ============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 91,669,562 82,771,294 89,540,442 81,988,536
============ ============ ============ ============
CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six months ended
December 31,
2009 2008
OPERATING ACTIVITIES:
Net income (loss) $ 2,987,563 $ (1,346,868)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 538,657 601,310
Deferred tax assets 1,211,315 -
Loss on sale of assets 21,416 -
Forgiveness of debt (3,640,718) (1,459,196)
Non-cash interest expense related to
debentures and warrants 89,561 125,810
Stock issued for services 273,454 520,187
Change in fair value of warrants and derivative
liability (2,481,533) 996,285
Minority interest 147,808 28,520
Changes in operating assets and liabilities:
Accounts receivable (189,611) 237,456
Inventories (413,919) (32,383)
Prepaid expenses and sundry current assets (187,396) (200,211)
Accounts payable 122,885 28,006
Accrued expenses, taxes and sundry current
liabilities 922,215 (1,569,960)
------------ ------------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES (598,303) (2,071,044)
------------ ------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (420,692) (1,021,280)
Cash received from sale of assets 950,626 -
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 529,934 (1,021,280)
------------ ------------
FINANCING ACTIVITIES:
Repayment of bank loan (4,270,485)
Proceeds Other borrowings 3,753,122 2,989,634
Loans from related party 715,504 -
Sale of common stock 5,000,000 -
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,198,141 2,989,634
------------ ------------
EFFECT OF EXCHANGE RATE ON CASH (17,979) (342,551)
------------ ------------
INCREASE (DECREASE) IN CASH 5,111,793 (445,241)
CASH - BEGINNING OF PERIOD 1,271,922 1,565,513
------------ ------------
CASH - END OF PERIOD $ 6,383,715 1,120,272
============ ============
Supplemental disclosures of cash flow
information:
Non-cash financing activities:
Conversion of AOB loan and accrued interest
into common stock 4,830,847 -
============ ============
Conversion of convertible debentures into
common stock - 290,000
============ ============
Common stock issued as payment for accrued
interest - 25,570
============ ============
