NEW YORK, NY- China Aoxing Pharmaceutical Company, Inc. (
Financial Results
Revenue in the third quarter of 2009 increased 85% year over year to $1,587,989 from $857,065, reflecting the contribution of our newly acquired subsidiary, LRT, as well as continued demand for the Company's prescription and over-the-counter (OTC) pharmaceutical products.
Gross profit in the third quarter of fiscal year 2009 increased 28% to $517,903 from $403,609. The increase reflected higher net sales as a result of the contribution of our newly acquired subsidiary, LRT.
Operating loss in the third quarter was $707,244 compared to a loss of $1,411,428 in the prior year period, reflecting positive impact of cost control measures taken by the company recently. General and administration expenses were reduced by 39% to $797,954 from $1,316,804 in the prior year period as a result of tight control on expenditures and improvement of efficiencies.
Net loss in the third quarter was $239,208, compared to a net income of $7,449,659 in the prior year. However, the net income for both periods was significantly attributed to the changes in fair value of warrant and derivative liabilities in the amount of $1,502,314 and $8,981,552, respectively.
Mr. Juan Yue Han, Chairman and the CEO of China Aoxing, commented, "We are pleased with our third quarter performance and have met our near-term corporate objectives. On operation side, we made good progress on business integration, cost cutting and efficiency improvement. On pipeline development side, we continued receiving new drug approval from the China State Food and Drug Administration ("SFDA"). Our pipeline products progress well and we are planning to announce the clinical results in due course. We remain focused on becoming a premium specialty pharmaceutical company in narcotics and pain management."
CHINA AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONSTHREE MONTHS ENDED N(Unaudited)
INE MONTHS ENDED March 31, March 31,(Restated) (Restated) SALES2009 2008 2009 2008
$ 1,587,989 $ 857,065 $ 7,501,763 $ 3,101,236 COST OF SALES 1,070,086 453,456 4,339,126 1,550,8723,197 174,237 483,434 277,891 General and administratiGROSS PROFIT 517,903 403,609 3,162,637 1,550,364 COSTS AND EXPENSES: Research and development expense 1
4ve expenses 797,954 1,316,804 2,787,746 2,515,251 Selling expenses 169,809 198,928 1,293,344 764,722 Depreciation andSS FROM OPERATIONS (707,244) (1,411,428) (1,747,956) (2,370,963)amortization 114,187 125,068 346,069 363,463 TOTAL COSTS AND EXPENSES 1,225,147 1,815,037 4,910,593 3,921,327 L
O OTHER INCOME (EXPENSE): Interest expense (495,489) (329,497) (1,400,868) (1,915,473) Change in fair value of warrant and derivative liabilities 1,502,314 8,981,552 506,028 9,121,393 Gain on foreign(EXPENSE) 402,431 8,652,055 223,480 7,205,920currency translation (42,481) - 220,579 - Impairment loss (561,913) (561,913) Forgiveness of debt - - 1,459,654 - TOTAL OTHER INCOME LOSS BEFORE MINORITY INTEREST AND INCOME311,813 Income taxes 0 - (98,686)TAXES (304,813) 7,240,627 (1,524,476) 4,834,957 Minority interest in (income) losses of subsidiary 65,605 209,032 37,084 476,856 LOSS BEFORE INCOME TAXES (239,208) 7,449,659 (1,487,392) 5
, - NET INCOME (LOSS) (239,208) 7,449,659 (1,586,078) 5,311,813 OTHER COMPREHENSIVE LOSS: Foreign currency translation adjustment 159,152 192,409 (222,626) 414,968 COMPREHENSIVE INCOME (LOSS) $ (80,056) $ 7,642,068 $(1,808,704) $ 5,726,781 BASIC AND DILUTED(UnauditeEARNINGS PER COMMON SHARE (0.00) 0.18 (0.02) (0.13) WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 82,819,555 41,312,664 82,261,499 40,822,684 China Aoxing Pharmaceutical Co., Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
d) March 31, June 30, 2009 2008 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 987,894 $ 1,565,513and equipment, net of accumulated depreciationAccounts receivable 2,294,235 2,536,047 Inventories 701,462 848,959 Prepaid expenses and sundry current assets 754,996 303,208 TOTAL CURRENT ASSETS 4,738,587 5,253,727 LONG-TERM ASSETS: Property
30,333,047 30,331,143 Other intangible assets 1,578,321 1,635,375 Goodwill 18,924,641 18,904,845 TOTAL LONG-TERM ASSETS 50,836,009 50,871,363 TOTAL ASSETS $ 55,574,596 $ 56,125,090 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES:6,093,716 7,545,239 TOTAL CURRENT LIABIShort-term borrowings $ 5,112,353 $ 2,042,600 Accounts payable 3,565,614 3,544,795 Loan payable - other - 380,070 Due to stockholders 112,198 112,068 Accrued expenses and taxes payable 3,826,171 4,851,314 Notes payable - bank
LITIES 18,710,052 18,476,086 LONG-TERM DEBT - STOCKHOLDER 4,103,722 4,098,687 - OTHER 3,716,616 3,127,643 CONVERTIBLE DEBENTURES 978,953 1,098,362 WARRANT AND DERIVATIVE LIABILITIES 3,490,056 4,161,678 MINORITY INTEREST - 24,598 STOCKHOLDERS’ EQUITY:ted deficitCommon stock, $0.001 par value, 100,000,000 shares authorized 82,819,555 and 82,819,555 shares issued and outstanding at March 31, 2009 and June 30, 2008, respectively 82,820 81,090 Preferred stock, $0.001 par value 300,000 shares authorized 277,018 shares issued and outstanding 277 277 Additional paid-in capital 37,994,090 36,749,956 Accumul
a (13,900,224) (12,314,178) Other comprehensive income 398,234 620,891 TOTAL STOCKHOLDERS’ EQUITY 24,575,197 25,138,036TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 55,574,596 $ 56,125,090
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