JERSEY CITY, NJ--(Marketwired - Feb 19, 2014) - 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 three and six month periods ended December 31, 2013. Complete financial results can be found in the Quarterly Report on Form 10-Q filed by Aoxing Pharma on February 19, 2014.
Revenues for the three and six months ended December 31, 2013 were $3,466,807 and $7,043,915, respectively, representing a 5% and a 19% increase over the revenues realized in the comparable periods of fiscal year 2013. 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 90% of sales during the quarter ended December 31, 2013.
Despite the increase in revenue, gross profit fell by 27% during the quarter and 16% during the six months ended December 31, 2013. Recent shortages in certain raw materials cause a 71% spike in the cost of goods sold during the six month period. The Company expects raw material prices to subside in coming periods.
Aoxing Pharma completed a $10.2 million financing at the end of September 2012, which it utilized to fund sharp increases in research and development expenses and selling expenses. Entering the fall of 2013, Aoxing Pharma cut back on both categories of expenses, in order to stabilize its cash flows. For that reason, operating expenses during the three and six months ended December 31, 2013 were 51% and 16% lower, respectively, than operating expenses in the comparable periods of fiscal 2013. As a result, despite the reduction in gross profit, Aoxing Pharma's loss from operations was reduced by 72% during the quarter ended December 31, 2013 and 16% during the six months then ended.
Net interest expense increased by 84% to $2,329,092 in the six months ended December 31, 2013, due to the increase in bank loans at the end of 2012. The resulting net loss recorded for the three months ended December 31, 2013 was $1,917,469, whereas the Company's net loss for the three months ended December 31, 2012 was $3,135,661. The net loss of $4,268,443 for the six months ended December 31, 2013 exceeded the net loss of $3,584,176 recorded in the comparable period of the prior year.
On December 31, 2013, Aoxing Pharma had $3.9 million in cash on hand and a working capital deficit of $25,181,211. The working capital deficit was swelled during the current fiscal year by the reclassification of $10.1 million in loans payable from long-term to current.
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 allows us to continue to develop our business despite our negative working capital."
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.