NEW YORK, Feb. 21 /PRNewswire-FirstCall/ -- China Aoxing Pharmaceutical Company, Inc. , a pharmaceutical company based in China that has developed a patented manufacturing process for a variety of generic analgesic drugs, including Oxycodone, Pholcodine, Naloxone, and Tilidine, today announced financial results for the second quarter of fiscal 2007, ended December 31, 2006.
China Aoxing Pharmaceutical Company reported revenues of $346,000 in the second quarter of fiscal 2007, reflecting sales of Shuanghuanglian, a traditional Chinese medicine treatment for cough and cold. The Company commenced sales and distribution of Shuanghuanglian in December 2006. Gross profit during this period was $188,000, a gross profit margin of 54.4%.
Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing Pharmaceutical stated, “We are pleased to announce our Company’s first quarter of revenues, which reflects our early sales of Shuanghuanglian, a well-known traditional Chinese medical product. Our results also reflect the costs associated with the launch of our first narcotic product, Naloxone, which we announced today. We have worked diligently over the past five years to enter the Chinese narcotics sector with drugs like Naloxone, and we have amassed SFDA approval for more than seven different opiate products, all of which are industry standards in the United States and Europe. In China, these products are highly controlled and only available through a handful of manufacturers, so we are particularly excited about our growth opportunities as we move aggressively into the commercialization stage of our product pipeline.”
Total costs and expenses for the second quarter of fiscal 2007 were $1.2 million, which reflects approximately $492,000 of amortized deferred interest. The Company recognized additional interest expense of $402,000, as well as $263,000 of general and administrative expenses attributable to the production and launch of Naloxone Hydrochloride (“Naloxone”), an opiate antagonist clinically proven to reverse the effects of narcotic drugs. The Company reported a net loss of $1.0 million in the second quarter of fiscal 2007.
China Aoxing Pharmaceutical Company received the State Federal Drug Administration (SFDA) license for Naloxone in April 2006, and received the required Good Manufacturing Practices (“GMP”) certification for Naloxone in November 2006. The Company began raw material production shortly thereafter, in December 2006, and today announced the product launch of injectable Naloxone in four dosage strengths: 0.4mg(1ml), 1mg(1ml), 2mg(2ml) and 4mg(10ml). China Aoxing Pharmaceutical Company expects to distribute Naloxone in hospitals, health clinics and government depots throughout China.
Zhenjiang concluded, “We are pleased to address our shareholders directly as we embark on quarterly financial reporting. As we look ahead to the rest of the year and fiscal 2008, we expect to strengthen our R&D pipeline, expand our sales and marketing efforts and invest in our nationwide distribution network for narcotic drugs. Our goal is to be the leading, fully integrated specialty pharmaceutical company in China.”
Balance Sheet
As of December 31, 2006, the Company had $1.4 million of cash. China Aoxing Pharmaceutical had a working capital deficit of approximately $4.9 million as of December 31, 2006. The Company had long term debt of $13.0 million as of December 31, 2006.
About China Aoxing Pharmaceutical Group
Hebei Aoxing Pharmaceutical Group is a corporation organized under the laws of the People’s Republic of China that has developed a patented manufacturing process for a variety of generic analgesic drugs, including Oxycodone, Pholcodine, Naloxone, and Tilidine. Hebei Aoxing is one of only a handful of companies in China to be granted the license to manufacture these drugs and is working closely with the Chinese government to assure their availability throughout China. China Aoxing Pharmaceutical Company acquired Hebei Aoxing in a reverse merger transaction in April of 2006.
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. You are urged to read the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risk factors contained therein. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
(Financial Tables to Follow) CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES BALANCE SHEETS (U.S. $) DECEMBER 31, 2006 JUNE 30, 2006 (Unaudited) ASSETS CURRENT ASSETS: Cash $1,384,422 $777 Accounts receivable 406,320 - Inventories 68,145 - Prepaid expenses 214,233 156,463 TOTAL CURRENT ASSETS 2,073,120 157,240 PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION 18,380,353 17,822,043 DEFERRED INTEREST 10,571,601 - TOTAL ASSETS $31,025,074 $17,979,283 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Short-term borrowings $256,400 $249,798 Accounts payable 1,284,721 789,957 Loans payable -- other 393,843 499,849 Due to stockholders and officers 790,195 29,014 Accrued expenses and taxes payable 1,269,234 995,998 Current portion of long-term debt 6,889,468 2,997,564 TOTAL CURRENT LIABILITIES 10,883,861 5,562,180 LONG-TERM DEBT 4,230,600 7,898,582 CONVERTIBLE DEBENTURES 1,989,000 - STOCKHOLDERS’ EQUITY 13,921,613 4,518,521 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $31,025,074 $17,979,283 CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (U.S. $) THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, 2006 2005 2006 2005 REVENUES $345,907 $ - $345,907 $ - COST OF SALES 157,567 - 157,567 - GROSS PROFIT 188,340 - 188,340 - COSTS AND EXPENSES (INCOME): Research and development costs 115,454 2,259 125,521 20,357 General and administrative expenses 262,729 197,418 521,028 437,546 Grant from local government (63,250) - (63,250) - Interest expense 402,322 151,562 731,353 313,823 Amortization of deferred interest 492,303 - 492,303 - TOTAL COSTS AND EXPENSES 1,209,558 351,239 1,806,955 771,726 NET LOSS $(1,021,218) $(351,239) $(1,618,615) $(771,726) BASIC AND DILUTED EARNINGS PER SHARE $ (0.03) N/A $ (0.04) N/A WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 40,104,883 N/A 40,073,541 N/A
China Aoxing Pharmaceutical Company, Inc.
CONTACT: Dr. Hui Shao, Senior Vice President, China Aoxing Pharmaceutical,+1-201-420-1075; Ashley Ammon MacFarlane & Bill Zima, Integrated CorporateRelations, Inc., +1-203-682-8200
