NEW YORK, NY--(Marketwire - November 24, 2009) -
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First Quarter 2010 Highlights:
-- Completed the relocation of LRT manufacturing operation into our main
campus
-- Continuous improvement of profitability and reduction of cash
consumption while relocating product manufacturing operation from LRT into
our main campus
-- Obtained GMP re-certification in capsule, tablet, oral solution dosage
forms of pharmaceuticals
-- Submitted a new drug application (NDA) to the China SFDA for Codeine
Phosphate to treat acute moderate to severe cough
-- Obtained the clinical trial license from the China SFDA of
Tilidine/Naloxone capsules, an abuse resistant opioid drug to treat
moderate to severe pain
-- Completed a private placement of common stock for gross proceeds of $5
million
-- Completed the conversion of a $4.8million convertible note to common
stock
Revenues for the first quarter ended September 30, 2009 were $1,446,663, a 60% decrease from the revenues of $3,598,065 realized for the same period of last year. The decrease in revenue was caused by the impact of our relocation of the LRT manufacturing facility in the summer of 2009. The consolidation of the LRT facility with our own necessitated that we obtain GMP re-certification of six formulations at the new facility. This has delayed our fulfillment of certain purchase orders. Our new facility has successfully passed the GMP re-certification on capsule, tablet, granule and oral solution formulations by September 30, 2009. We expect that sales of our products to regain the growth trend after the completion of GMP re-certification of pill and tincture formulations in near future.
General and administrative expenses decreased to $877,484 during first quarter 2010 from $1,192,892 during the same period of last year, or a 26% decrease, reflecting our continuous efforts in cost control.
Our loss from operations decreased to $364,378 during the first quarter 2010 from $573,977 during the same period of last year. The 37% decrease in the loss was primarily due to the improvement of operation efficiency as well as greater control of operational expenditures.
Our net loss for the first quarter 2010 was $2,310,784. This included, however, an expense of $2,142,159 attributable to the increase in the fair value of our outstanding financial derivatives.
Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing, commented, "We are entering an exciting and busy year in 2010. We are pleased with our financial and business results of this quarter. During this quarter we revised our capital structure and improved our financial condition significantly, forming important basis of our future business expansion. We are confident 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 located in China specializing in research, development, manufacturing and distribution of a variety of narcotics and pain-management products. 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 BALANCE SHEETS
September 30, June 30,
2009 2009
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash $ 6,417,281 $ 1,271,922
Accounts receivable 1,296,787 1,064,381
Inventory 872,483 712,521
Deposits with suppliers 289,339 261,780
Deferred tax assets 4,140,298 3,331,045
Prepaid expenses and sundry current assets 408,121 302,449
------------- -------------
TOTAL CURRENT ASSETS 13,424,310 6,944,098
------------- -------------
LONG - TERM ASSETS
Property and equipment, net of accumulated
depreciation 24,578,597 29,324,362
Other intangible assets 1,521,608 1,549,497
Goodwill 18,943,519 18,926,527
------------- -------------
TOTAL LONG-TERM ASSETS 45,043,724 49,800,386
------------- -------------
TOTAL ASSETS $ 58,468,033 $ 56,744,484
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-Term borrowings $ 292,500 $ 292,193
Accounts payable 2,814,029 2,816,711
Deposit payable - 3,871,552
Current portion of long term debt - other 46,800 144,635
Current portion of long term debt -
stockholders 111,202 4,494,629
Loan payable - Bank 6,100,846 6,094,428
Accrued expenses and taxes payable and other
sundry current liabilities 2,632,869 2,403,185
------------- -------------
TOTAL CURRENT LIABILITIES 11,998,245 20,117,333
------------- -------------
LONG-TERM DEBT-- STOCKHOLDERS 4,108,523 4,104,201
------------- -------------
-- OTHER 3,382,520 3,491,113
------------- -------------
CONVERTIBLE DEBENTURES 1,068,513 1,023,733
------------- -------------
WARRANT AND DERIVATIVE LIABILITIES 5,511,061 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 September 30, 2009 and June 30, 2009,
respectively 91,670 82,828
Preferred stock, par value $0.001
300,000 shares authorized 277,018 shares
issued and outstanding at September 30, 2009
and June 30, 2009, respectively 277 277
Additional paid in capital 49,128,541 39,104,309
Accumulated deficit (17,320,012) (15,009,228)
Other comprehensive income 498,695 461,017
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 32,399,171 24,639,203
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 58,468,033 $ 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
September 30,
2009 2008
SALES $ 1,446,663 $ 3,598,065
COST OF SALES 450,143 1,937,345
------------ ------------
GROSS PROFIT 996,520 1,660,720
------------ ------------
COSTS AND EXPENSES:
Research and development expenses 113,303 266,329
General and administrative expenses 877,484 1,192,892
Selling expenses 260,893 631,018
Depreciation and amortization 109,217 144,458
------------ ------------
TOTAL COSTS AND EXPENSES 1,360,897 2,234,697
------------ ------------
LOSS FROM OPERATIONS -364,378 -573,977
------------ ------------
OTHER INCOME (EXPENSE):
Interest expense (592,085) (475,494)
Change in fair value of warrant and derivative
liabilities (2,142,159) 147,727
Gain on foreign currency transactions - 203,037
Loss on sale of assets (21,416) -
Forgiveness of debt - 1,459,751
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (2,755,659) 1,335,021
------------ ------------
INCOME (LOSS) BEFORE MINORITY INTEREST AND
INCOME TAXES (3,120,037) 761,044
Minority interest in (income) losses of
subsidiary - (55,232)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (3,120,037) 705,812
Income taxes (credit) (809,253) 79,693
------------ ------------
NET INCOME ( LOSS) (2,310,784) 626,119
OTHER COMPREHENSIVE INCOME ( LOSS) :
Foreign currency translation adjustment 37,678 26,349
------------ ------------
COMPREHENSIVE INCOME (LOSS) $ (2,273,106) 652,468
============ ============
BASIC AND DILUTED EARNINGS (LOSSES) PER COMMON
SHARE (0.03) 0.008
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 87,411,323 81,205,779
============ ============
CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended
September 30,
2009 2008
------------ ------------
OPERATING ACTIVITIES:
Net income (loss) $ (2,310,784) $ 626,119
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 284,634 311,599
Deferred tax assets (809,253) -
Impairment loss on land and buildings 21,416 0
Forgiveness of debt - (1,459,751)
Non-cash interest expense related to
debentures and warrants 44,780 81,030
Stocks issued for services 202,227 0
Change in fair value of warrants and
derivative liability 2,142,159 (147,727)
Minority interest - 55,232
Changes in operating assets and liabilities:
Accounts receivable (241,022) (267,123)
Inventories (159,213) 170,019
Prepaid expenses and sundry current assets (18,417) (107,574)
Accounts payable 115,423 56,269
Accrued expenses, taxes and sundry current
liabilities 485,074 61,415
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (242,975) (620,492)
------------ ------------
INVESTING ACTIVITIES:
Acquisition of property and equipment (293,018) (55,975)
Cash received from sale of assets 950,626 0
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES 657,608 (55,975)
------------ ------------
FINANCING ACTIVITIES:
Other borrowings (210,257) (1,458,417)
Loans from stockholders (1,121) 1,759,460
Sale of common stock 5,000,000 -
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,788,622 301,043
------------ ------------
EFFECT OF EXCHANGE RATE ON CASH (57,895) 109,486
------------ ------------
INCREASE (DECREASE) IN CASH 5,145,360 265,938
CASH - BEGINNING OF PERIOD 1,271,922 1,565,213
------------ ------------
CASH - END OF PERIOD $ 6,417,281 1,299,275
============ ============
Supplemental disclosures of cash flow
information:
Non-cash financing activities:
Conversion of 33MM RMB 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
============ ============
Contact:
Wei Zhang
China Aoxing Pharmaceutical Company, Inc
Email: chinaaoxing@gmail.com
Telephone: 646 - 367-1747
Website: www.chinapainmed.com
