Aoxing Pharmaceuticals Q1 Revenue Up 92 Percent; Net Income Of $1.35 Million

Direct-To-Customer Sales Program Helps Raise Gross Margin To 80 Percent

Nov 13, 2015, 08:30 ET from Aoxing Pharmaceutical Company, Inc.

JERSEY CITY, N.J., Nov. 13, 2015 /PRNewswire/ -- Aoxing Pharmaceutical Company, Inc. (NYSE MKT: AXN) today announced that, for the first quarter of fiscal 2016 ended September 30, 2015, the company achieved revenue of $8,744,822, a 92 percent improvement on revenue of $4,565,081 recorded in the same quarter in fiscal 2015.

The company's net income in Q1 fiscal 2016 was $1,348,433, or .02 per share, compared to a net loss of $2,405, or $(.00) per share, in like year-ago quarter.

Weighted average number of shares outstanding was 69,852,302 for Q1 fiscal 2016 and 53,098,267 for Q1 fiscal 2015.

Aoxing's cash balance as of September 30, 2015 was $8,171,875, compared to $2,343,822 as of September 30, 2014.

The company's year-over-year increase in first quarter revenue was primarily attributable to a higher proportion of direct product sales made by Aoxing to its end customers, allowing for higher gross margins. Aoxing's Q1 revenue also improved as a result of procurement from four provincial governments of the company's lead TCM product, Zhongtongan. This procurement commenced as a result of Zhongtongan being included in the government essential drug procurement lists in these provinces.

Gross margin for the three months ended September 30, 2015 was 80% compared to gross margin of 70% in the like year-ago quarter.

Aoxing's improved bottom line performance in the first quarter of fiscal 2016 compared to the first quarter of the previous fiscal year was primarily the result of the company's increased revenue and improved gross profit, as well as a 22% decrease in net interest expense due to a reduction in loan balances. Q1 fiscal 2016 earnings, however, were impacted by a 96% rise in operating expenses primarily related to the company's development of new narcotic products and its drive to market its products directly to end users.

Mr. Zhenjiang Yue, Chairman and CEO of Aoxing Pharma, said, "We are proud to have achieved these strong first quarter results. Our Zhongtongan product, now included in the government essential drug procurement lists in four new provinces, has continued to accelerate our sales growth in Q1 2016.  Our Tilidine HCL pain management tablets, scheduled for market introduction later this fiscal year, should add to this growth and produce substantial revenue by the end of fiscal 2016."

Mr. Yue added that Aoxing expects to receive clearance to market its Oxycodone/Acetaminophen Tablets and Capsules before the end of the current fiscal year, helping the company achieve fiscal 2016 revenue of at least $45 million.

In a measure to reduce company debt, on November 4, 2015, Aoxing reached an agreement with three of its creditors to convert $2.66 million in high interest bearing debt into 2,046,995 restricted shares of common stock at $1.30 per share.

About the Company

Aoxing Pharmaceutical Company, Inc. is a U.S. 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 Food and Drug Administration ("CFDA"). For more information, please visit: www.aoxingpharma.com.

Safe Harbor Statement

This press release contains certain statements that may include "forward-looking statements." All statements other than statements of historical fact included herein are "forward-looking statements." These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

 

CONSOLIDATED BALANCE SHEETS








September 30,



June 30,



2015



2015

  ASSETS


(Unaudited) 




CURRENT ASSETS:






Cash and cash equivalents

$

8,171,875


$

5,371,545

Accounts receivable, net of allowance for doubtful accounts of $1,378,640 and $1,364,330, respectively


7,000,258



5,854,055

Inventories, net


3,223,582



3,240,026

Prepaid expenses and other current assets


6,949,982



6,630,407

TOTAL CURRENT ASSETS


25,345,697



21,096,033







LONG-TERM ASSETS:






Property and equipment, net of accumulated depreciation


27,381,595



28,651,717

Deferred income tax


1,735,016



2,711,610

Other intangible assets, net


450,875



484,857

Investment in joint venture


68,828



96,475

TOTAL LONG-TERM ASSETS


29,636,314



31,944,659

TOTAL ASSETS

$

54,982,011


$

53,040,692







LIABILITIES AND SHAREHOLDERS' EQUITY












CURRENT LIABILITIES:






Short-term borrowings

$

11,343,312


$

12,484,356

Accounts payable


2,933,000



3,625,139

Notes payable


1,568,923



1,631,641

Loan payable – bank


15,218,551



16,316,408

Current portion of loan payable - related parties


13,638



5,793

Current portion of loan payable – others


1,308,876



-

Accrued expenses and other current liabilities


7,273,021



7,176,325

TOTAL CURRENT LIABILITIES


39,659,321



41,239,662







LONG-TERM LIABILITIES:






Loan payable - related parties


1,355,549



8,158

Loan payable – others


-



1,361,199

Deferred income


354,577



368,751

TOTAL LONG-TERM LIABILITIES


1,710,126



1,738,108







Common stock, par value $0.001, 100,000,000 shares authorized, 72,252,200 and 69,839,259 shares issued and outstanding on September 30, 2015 and June 30, 2015


72,252



69,839

Additional paid in capital


69,326,037



66,457,250

Accumulated deficit


-57,087,032



-58,354,968

Accumulated other comprehensive income


2,429,535



3,066,026

TOTAL SHAREHOLDERS' EQUITY OF THE COMPANY


14,740,792



11,238,147







NONCONTROLLING INTEREST IN SUBSIDIARIES


-1,128,228



-1,175,225

TOTAL EQUITY


13,612,564



10,062,922







TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

54,982,011


$

53,040,692

 

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

(Unaudited)









For the Three Months Ended



September 30,



2015



2014







SALES


$

8,744,822



$

4,565,081

COST OF SALES



1,758,079




1,387,534

GROSS PROFIT



6,986,743




3,177,547









OPERATING EXPENSES:








Research and development expense



377,306




107,550

General and administrative expenses



944,358




511,486

Selling expenses



2,394,346




1,202,509

Depreciation and amortization



131,530




139,276

TOTAL OPERATING EXPENSES



3,847,540




1,960,821









INCOME FROM OPERATIONS



3,139,203




1,216,726









OTHER INCOME/(EXPENSE):








Interest expense, net of interest income



-929,029




-1,193,160

Gain on foreign currency transactions



58,593




-

Equity in loss of joint venture, net of tax



-24,291




-25,971

Subsidy income



47,760




-









TOTAL OTHER INCOME/(EXPENSE)



-846,967




-1,219,131









PROFIT/(LOSS)BEFORE INCOME TAX



2,292,236




-2,405









Income tax



943,803




-

NET PROFIT/ (LOSS)



1,348,433




-2,405









Net income attributed to non-controlling interest in subsidiaries



80,497




5,467

INCOME/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY



1,267,936




-7,872









OTHER COMPREHENSIVE INCOME :








Foreign currency translation adjustment



-669,991




13,809









COMPREHENSIVE PROFIT/(LOSS)



597,945




5,937









Other comprehensive income attributable to non-controlling interest



-33,500




690









COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY


$

631,445



$

5,247

















BASIC AND DILUTED LOSS PER COMMON SHARE


$

0.02



$

-

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING



69,852,302




53,098,267

 

 

 

SOURCE Aoxing Pharmaceutical Company, Inc.