SOURCE: Aoxing Pharmaceutical Co., Inc.

May 18, 2010 08:30 ET

Aoxing Pharmaceutical Company Reports Third Quarter 2010 Financial and Operational Results

NEW YORK, NY--(Marketwire - May 18, 2010) -  Aoxing Pharmaceutical Company (NYSE Amex: AXN) ("Aoxing Pharma"), a specialty pharmaceutical company focusing on research, development, manufacturing and distribution of narcotic and pain-management products, today announced its financial and operational results for the three months ended March 31, 2010, or the third quarter of fiscal year 2010.

Third Quarter 2010 Highlights:

  • Successfully listed on the NYSE, AMEX under ticker "ANX"
  • Entered into a Joint-venture agreement with Johnson Matthey Plc to focus on research, development, manufacturing & marketing API for narcotics & neurological drugs in China
  • Strategic alliance with QRx Pharma Ltd. to collaborate in the development of two proprietary narcotic drugs for China & ex-China markets
  • Our leading product for dental pain, Zhongtongan, continued to expand gross margins
  • Continuous improvement of profitability and operating efficiency

Revenues for the three months ended March 31, 2010 were $1,561,915, comparable to the revenues of $1,587,989 realized during the three months ended March 31, 2009. Our product sales level remains low, due to the negative impact of our relocation and GMP re-certification of the LRT manufacturing facility started in the summer of 2009. This process has delayed our fulfillment of the purchase orders for those formulations manufactured in that facility. As of March 31, 2010, our new facility has successfully passed the GMP re-certification on capsule, tablet, granule and oral solution formulations, while we are preparing for re-certification on pill and tincture formulations.

General and administrative expenses were $916,912 in the three months ended March 31, 2010, or 15% higher than $797,954 in the three months ended March 31, 2009. The increase of general and administrative expenses reflects our ramp-up of operations in anticipation of growth in sales.

Our loss from operations decreased to $490,427 during the three months ended March 31, 2010 from $707,244 during the three months ended March 31, 2009. For the nine months ended March 31, 2010, loss from operations decreased to $1,140,030 from $1,747,956 during the nine months ended March 31, 2009. The 31% and 35% decreases in the loss were primarily due to the dominant role played by Zhongtongan in our sales as well as ongoing improvement of operational efficiency.

During the nine months ended March 31, 2010, net income attributable to the Company's shareholders was $3,181,148, as compared to a loss of $1,586,078 attributable to the Company's shareholders for the nine months ended March 31, 2009.

Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of Aoxing Pharma, commented, "We are very pleased to report another successful quarter as we achieved a number of significant milestones and are well-positioned to take advantage of growth opportunities. We will continue to seek international business collaborations to expand our pipeline and product opportunities similar to the deals we announced with QRxPharma and Johnson Matthey."

About Aoxing Pharmaceutical Company, Inc.

Aoxing Pharmaceutical Company, Inc. is a US incorporated specialty pharmaceutical company with its main 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 has the largest and most advanced manufacturing facility 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). It has strategic alliance partnership with QRxPharma and American Oriental Bioengineering, Inc. For more information: www.aoxingpharma.com.

Safe Harbor Statement from Aoxing Pharmaceutical Company, Inc.

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-K for the year ended June 30, 2009, 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.

   
   
AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES  
CONSOLIDATED BALANCE SHEETS  
   
   
   
               
    March 31,       June 30,  
               
2010   2009   
       
    (Unaudited)          
ASSETS          
CURRENT ASSETS:              
  Cash $ 3,212,657     $ 1,271,922  
  Accounts receivable   1,586,310       1,064,381  
  Inventory   1,730,433       712,521  
  Deposits with suppliers   950,851       252,128  
  Deferred tax assets   2,715,600       3,331,045  
  Prepaid expenses and sundry current assets   573,164       312,101  
TOTAL CURRENT ASSETS   10,769,014       6,944,098  
               
LONG - TERM ASSETS              
Property and equipment, net of accumulated depreciation   24,934,322       29,324,362  
Other intangible assets   1,473,747       1,549,497  
Goodwill   18,947,063       18,926,527  
TOTAL LONG-TERM ASSETS   45,355,132       49,800,386  
               
TOTAL ASSETS $ 56,124,146     $ 56,744,484  
               
               
LIABILITIES AND STOCKHOLDERS' EQUITY  
           
CURRENT LIABILITIES:              
  Short-Term borrowings $ 292,564     $ 292,193  
  Accounts payable   3,055,294       2,816,711  
  Deposit payable   -       3,871,552  
  Current portion of long term debt - other   419,830       144,635  
  Current portion of long term debt - related party   668,580       4,494,629  
  Accrued expenses and taxes payable and other sundry current liabilities   806,337       2,403,185  
  Loan payable - Bank   -       6,094,428  
  Convertible debentures   1,158,074       1,023,733  
TOTAL CURRENT LIABILITIES   6,400,679       21,141,066  
               
LONG-TERM DEBT-- RELATED PARTY   4,252,030       4,104,201  
    -- OTHER   6,974,491       3,491,113  
WARRANT AND DERIVATIVE LIABILITIES   312,930       3,368,901  
               
Common stock, par value $0.001, 100,000,000 shares authorized, 46,434,781 and 41,414,000 shares issued and outstanding at March 31, 2010 and June 30, 2009, respectively   46,435       41,414  
     
     
     
               
Additional paid in capital   49,440,384       39,104,586  
               
Accumulated deficit   (11,705,036 )     (14,791,039 )
               
Other comprehensive income   497,377       461,017  
TOTAL STOCKHOLDERS' EQUITY   38,279,161       24,815,978  
               
NONCONTROLLING INTEREST IN SUBSIDIARIES   (95,144 )     (218,189 )
TOTAL EQUITY   38,184,016       24,597,789  
               
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 56,124,146     $ 56,703,070  
               
 
 
 
AOXING PHARMACEUTICAL CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
 
 
                               
    For the three months ended       For the nine months ended  
  March 31,       March 31,  
    2010       2009       2010       2009  
                             
SALES $ 1,561,915     $ 1,587,989     $ 4,565,009     $ 7,501,763  
COST OF SALES   374,410       1,070,086       1,365,069       4,339,126  
GROSS PROFIT   1,187,506       517,903       3,199,941       3,162,637  
                               
COSTS AND EXPENSES:                              
  Research and development expense   314,069       143,197       506,133       483,434  
  General and administrative expenses   916,912       797,954       2,619,899       2,787,746  
  Selling expenses   336,939       169,809       885,236       1,293,344  
  Depreciation and amortization   110,013       114,187       328,703       346,069  
      TOTAL COSTS AND EXPENSES   1,677,932       1,225,147       4,339,970       4,910,593  
                               
LOSS FROM OPERATIONS   (490,427 )     (707,244 )     (1,140,030 )      (1,747,956 )
                               
OTHER INCOME (EXPENSE):                              
  Interest expense   (502,785 )     (495,489 )     (1,545,940 )     (1,400,868 )
  Change in fair value of warrant and derivative liabilities   574,438       1,502,314       3,055,971       506,028  
  Gain on foreign currency transactions   (8,274 )     (42,481 )     (8,033 )     220,579  
  Loss on sale of assets   -       (561,913 )     (21,415 )     (561,913 )
  Forgiveness of debt   0       0       3,579,085       1,459,654  
    TOTAL OTHER INCOME (EXPENSE)   63,379       402,431       5,059,667       223,480  
                               
INCOME (LOSS) BEFORE INCOME TAXES   (427,048 )     (304,813 )     3,919,637        (1,524,476 )
                               
Income taxes (credit)   (595,870 )      0       615,445       (98,686 )
NET INCOME (LOSS)   168,822       (304,813 )     3,304,192        (1,623,162 )
                               
Minority interest in income of subsidiary   (24,764 )     65,605       123,044       37,084  
INCOME (LOSS) ATTRIBUTABLE TO THE SHAREHOLDERS OF AOXING PHARMACEUTICAL CO.   193,585       -239,208       3,181,148       -1,586,078  
                               
OTHER COMPREHENSIVE INCOME (LOSS) :                              
  Foreign currency translation adjustment   26,426       159,152       36,360       (222,626 )
                               
COMPREHENSIVE INCOME (LOSS) $ 220,011       (80,056 )   $ 3,217,508        (1,808,704 )
                               
BASIC AND DILUTED EARNINGS (LOSSES) PER COMMON SHARE   0.00       (0.00 )     0.07       (0.02 )
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING   46,348,115       41,409,778       45,288,507       41,130,750  

Contact Information

  • Investor Relations Contact:
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    The Troup Group LLC
    Tel: +1 646 378 2923
    Email: bkorb@troutgroup.com