Biostar Pharmaceuticals, Inc. Announces Its Quarterly Results for Three Months Ended June 30, 2016

News provided by

Biostar Pharmaceuticals, Inc.

Aug 22, 2016, 04:00 ET

XIANYANG, China, Aug. 22, 2016 /PRNewswire/ - Biostar Pharmaceuticals, Inc. (NASDAQ: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced its financial results for the second quarter ended June 30, 2016.

During the fiscal second quarter of 2016, the Company recognized:

  • Net sales of $0.6 million, a decrease of approximately $13.6 million, or 95.6% as compared to the same period in 2015.
  • Gross profit decreased by approximately $5.6 million, or 95.0% for the three months ended June 30, 2016 as compared to the same period in 2015.
  • Sales of Shaanxi Weinan Products increased by approximately $0.4 million, or 302.9% as compared to the same period in 2015.
  • Sales and Production of Aoxing Pharmaceutical Products remained temporarily suspended as the Company still working toward renewal of its GMP certificates.
  • The Company recorded a provision for doubtful accounts in the amount of $6.3 million during the second quarter.  Our results of operations were materially affected by this provision.
  • Net loss of $6.9 million as compared to net loss of $0.5 million for the second quarter 2015.

The Company's sales for the three months ended June 30, 2016 was derived from products manufactured by its subsidiary Shaanxi Weinan.  Aoxing's manufacturing operations remained temporarily halted as it still awaits the renewal of GMP Certificates; the Company does not have a definitive date of when the GMP renewal certificates will be secured.  It is currently using its best efforts to comply with inspections and regulating authorities.  To conserve capital as result of diminished sales and related cash flows, the Company has significantly reduced advertising and research activities during the three months ended June 30, 2016. As result of the Company's materially reduced sales, working capital deficit of $2,060,971 and cash balance of $207,110, the Company has determined that there is substantial doubt as to our ability to continue as a going concern. If the Company is unable to renew its GMP certificates and subsequently achieve regular production levels, the Company's results of operations may be materially adversely affected.

*The Company's Condensed Consolidated Balance Sheets, Statement of Operations, and Cash Flows can be found at the end of this press release. Please also refer the Company's Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission for further information regarding the Company's results of operations.

About Biostar Pharmaceuticals, Inc.

Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and controlled affiliate in China, develops, manufactures, and markets pharmaceutical and health supplement products for a variety of diseases and conditions. The Company's most popular product is its XinAoxingOleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. For more information please visit: http://www.biostarpharmaceuticals.com.

Safe Harbor Relating to the Forward-Looking Statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company's ability to complete the certification renewal process in the time frame currently anticipated, its ability to sustain its sales effort going forward, its ability promptly and effectively to return to the normal production levels, its ability to retain existing and retain new customers for its products, its ability to achieve the projected sales through the efforts of the call center, to complete the contemplated clinical trials and capitalize on such opportunities, the Company's ability to recover its sales and revenue following the repair and maintenance for GMP certification renewal, the state of consumer confidence and market demand or the Company's products, success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our most recent Annual Report on Form 10-K for the year ended December 31, 2015, and other subsequent filings. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

Investor Relations Contact

Please send questions or comments to:
Biostar Pharmaceuticals, Inc.
Investor Relations Coordinator
+86-29-3368-6638
[email protected]
http://www.biostarpharmaceuticals.com

BIOSTAR PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2016

2015

(Unaudited)


ASSETS




Current Assets




Cash and cash equivalents

$

207,110

$

38,898

Accounts receivable, net

7,751,439


15,814,880

Inventories

317,265


234,660

Deposits and other receivables

2,534


2,591

Income tax recoverable

74,527


76,280

Loan receivables, net

-


-

Total Current Assets

8,352,875


16,167,309






Non-current Assets






Deposits

15,730,016


16,099,958

Deferred tax assets, net

5,282,360


5,406,593

Property and equipment, net

6,406,336


6,810,933

Intangible assets, net

6,284,740


6,878,787

Total Non-Current Assets

33,703,452


35,196,271






Total Assets

$

42,056,327

$

51,363,580














LIABILITIES AND STOCKHOLDERS' EQUITY






Current Liabilities






Accounts and other payables

$

3,840,975

$

4,153,411

Short-term bank loans

2,431,172


2,773,199

Value-added tax payable

4,903


112,629

Warrants liability

14,854


59,202

Total Current Liabilities

6,291,904


7,098,441






Commitment and contingencies














Stockholders' Equity






Common stock, $0.001 par value, 100,000,000 shares authorized,

   2,210,913 shares issued and outstanding as of

   June 30, 2016 and December 31, 2015

2,210


2,210

Additional paid-in capital

30,316,774


30,316,774

Statutory reserve

7,354,413


7,354,413

Retained earnings

(4,365,395)


3,157,394

Accumulated other comprehensive income

2,456,421


3,434,348

Total Stockholders' Equity

35,764,423


44,265,139






Total Liabilities and Stockholders' Equity

$

42,056,327

$

51,363,580


The accompanying notes are an integral part of these condensed consolidated financial statements.

BIOSTAR PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

 Three months ended June 30,

 Six months ended June 30,

2016

2015

2016

2015










Sales, net

$

620,138

$

14,176,234

$

1,421,765

$

21,084,981

Cost of sales

321,250

8,237,555

777,907

11,565,052

Gross profit

298,888

5,938,679

643,858

9,519,929










Operating expenses:










Advertising expenses

-

2,491,577

-

3,868,741

Selling expenses

290,047

2,310,314

613,113

3,610,031

General and administrative expenses

539,433

1,183,795

1,229,856

1,959,550

Provision for doubtful debt

6,329,711

-

6,329,711

-

Research and development expenses

-

1,026,177

-

2,044,789

Total operating expenses

7,159,191

7,011,863

8,172,680

11,483,111










Loss from operations

(6,860,303)

(1,073,184)

(7,528,822)

(1,963,182)










Other income

-

2,080

-

2,080

Interest income

-

320,680

-

643,025

Interest expense

(76)

(1,396)

(38,315)

(62,851)

Fair value adjustment on warrants

16,156

90,321

44,348

80,454

  Total other income, net

16,080

411,685

6,033

662,708










Loss before income taxes

(6,844,223)

(661,499)

(7,522,789)

(1,300,474)










Income tax expenses (benefits)

58,225

(169,072)

-

(647,943)










Net loss

$

(6,902,448)

$

(492,427)

$

(7,522,789)

$

(652,531)










Foreign currency translation adjustment

(1,287,182)

279,920

(977,927)

660,985










Comprehensive (loss) income

$

(8,189,630)

$

(212,507)

$

(8,500,716)

$

8,454










Net loss per share










Basic

$

(3.12)

$

(0.22)

$

(3.40)

$

(0.30)

Diluted

$

(3.12)

$

(0.22)

$

(3.40)

$

(0.30)










Weighted average number of common shares outstanding










Basic

2,210,913

2,210,913

2,210,913

2,210,913

Diluted

2,210,913

2,210,913

2,210,913

2,210,913










The accompanying notes are an integral part of these condensed consolidated financial statements.

BIOSTAR PHARMACEUTICALS, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Six Months Ended June 30,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES




Net loss

$

(7,522,789)

$

(652,531)

Adjustments to reconcile net income to net cash provided by operating activities:






Accrued interest income

-


(318,987)

Deferred tax benefit

-


(647,943)

Depreciation and amortization

512,863


977,876

Recognition of deferred research and development expenses

-


1,022,395

Allowance for doubtful debts

6,329,711


-

Warrants liability

(44,348)


(80,454)

Provision for sales discounts

-


1,149,652






Changes in operating assets and liabilities:






Accounts receivable

1,497,574


(2,882,616)

Inventories

(89,451)


161,123

Deposits and other receivables

-


821,318

Accounts payable and accrued expenses

(223,052)


732,542

Value-added tax payable

(106,875)


157,183

 Net cash provided by operating activities

353,633


439,558






CASH FLOWS FROM INVESTING ACTIVITIES






Deposit paid for intended acquisition

-


(1,635,831)

Purchase of property, plant and equipment

-


(30,760)

Net cash used in investing activities

-


(1,666,591)






CASH FLOWS FROM FINANCING ACTIVITIES






Repayment of short-term bank loans

(282,903)


(188,121)

Net cash used in financing activities

(282,903)


(188,121)






Effect of exchange rate changes on cash and cash equivalents

97,482


43,320






Net increase (decrease) in cash and cash equivalents

168,212


(1,371,834)






Cash and cash equivalents, beginning balance

38,898


1,685,154

Cash and cash equivalents, ending balance

$

207,110

$

313,320






SUPPLEMENTAL DISCLOSURES:






Interest received

$

-

$

5,015

Interest paid

$

(38,315)

$

(59,867)


The accompanying notes are an integral part of these condensed consolidated financial statements.

SOURCE Biostar Pharmaceuticals, Inc.