SOURCE: Aoxing Pharmaceutical
JERSEY CITY, NJ--(Marketwired - Oct 15, 2013) - 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 the year ended June 30, 2013. Complete financial results can be found in the Annual Report on Form 10-K filed by Aoxing Pharma on October 15, 2013.
Revenue for the year ended June 30, 2013 was $10,829,839, representing a 33% increase over the revenue realized in fiscal year 2012. The increase in revenue was mainly attributable to the increase in sales of our main product, Zhongtongan, which is now being marketed for gynecological and orthopaedic applications in addition to its core pediatric and stomotological market. Sales of Zhongtongan accounted for 91% of sales during the 2013 fiscal year.
Aoxing Pharma completed a $10.2 million financing at the end of September 2012, which allowed it to make some crucial investments in the future of its business. Operating expenses, therefore, were swelled during the fiscal 2013 by two categories of targeted investment:
- Research and development ("R&D") expenses were $1,480,217 during the year ended June 30, 2013, representing a 156% increase over R&D expense in fiscal 2012.
- Selling expenses in the amount of $7,447,141 incurred during the year ended June 30, 2013 were several fold higher than the selling expenses incurred during fiscal 2012. The increase in selling expenses was attributable to the addition of 330 employees to the sales staff, increases in travel expenses, and the expenses of an expanded advertising and marketing campaign. During the year, Aoxing Pharma signed advertising contracts totaling approximately $4.8 million with five different television stations, covering the period from December 2012 to December 2013.
At the end of fiscal 2013 Aoxing Pharma engaged an independent valuation expert to test the goodwill on Aoxing Pharma's balance sheet that arose from its purchases of Shijiazhuang Lerentang Pharmaceutical Company Limited and 35% of Hebei Aoxing in 2008. As a result of that valuation, management recorded an impairment loss on goodwill of $7,055,364.
Primarily as a result of these expenses, Aoxing Pharma recorded a loss from operations of $14,221,445 for the year ended June 30, 2013, approximately equal to the loss from operations of $14,548,524 recorded in fiscal 2012. Due primarily to net interest expense of $2,986,568, Aoxing Pharma incurred a net loss of $17,290,618 for the year ended June 30, 2013, compared to a net loss of $15,877,754 for the year ended June 30, 2012.
On June 30, 2013, Aoxing Pharma had $4.0 million in cash on hand and a working capital deficit of $9,811,310, which represented a further decline from its working capital deficit of $9,112,842 at June 30, 2012. The increase in the working capital deficit during fiscal 2013 was modest, despite the $17.2 million net loss, because Aoxing Pharma entered into a refinancing agreement with Beijing International Trust Co., Ltd., and replaced short-term loans of approximately $7.1 million with a two-year term loan of approximately $10.2 million.
Zhenjiang Yue, our Chairman and CEO, commented, "The Chinese pharmaceutical market continues to be challenging. I am pleased with Aoxing Pharma's operating results, highlighted by continued growth in product sales, as well as by the faith that our lenders have shown in our business model, which has enabled us to improve our balance sheet."
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 Pharma 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). Aoxing Pharma 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, 2013, 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.