Huifeng Bio-Pharmaceutical Reported Third-Quarter 2010 Financial Results and Raises its 2010 Year-End Guidance

XI'AN, China, Nov. 16, 2010 /PRNewswire-Asia-FirstCall/ -- Huifeng Bio-Pharmaceutical Technology, Inc. (OTC Bulletin Board: HFGB), specializing in developing and producing botanical extracts and other raw materials for pharmaceuticals and food additives today announced its financial results for its third-quarter 2010.

Third Quarter 2010 Highlights

• Net Revenues grew 66.2% year over year to $7,422,334
• Gross profit was $3,906,538, up 165.5% from the third quarter of 2009 with gross margin of 52.6%, significantly increased 19.7% from 32.9% for the third quarter of 2009.
• Net income was $2,155,930, an increase of $1,153,925 or 115% from the third quarter 2009, and earnings per diluted share were $0.08 based on 25.9 million shares.
• Company increases full-year guidance for net income to $5.5-$6 million from    previous guidance of $4.5-$5 million.

"We are pleased to announce record financial results and robust growth in both our revenue and net income," Mr. Jing'an Wang, the Company's CEO, commented. "Net Revenues grew 66.2% year over year, as we experienced increased sales in our Diosmin and Rutin product lines. Our gross margins for the third-quarter 2010 increased 165%, which is a result of higher selling prices and further economies of scale.  This strong performance and growth has led us to raise our full-year net income guidance for 2010."

"We are also very excited about the construction of our new 500 ton Diosmin plant, which we expect will be completed in 2011 and the final stages of the European COS audit and certification process.  We believe that with European COS certification and our new 500 ton COS Standard Diosmin, the Company is  positioned to be the leading producer of Diosmin for years to come." Mr. Wang continued.

For the Three Months Ended September 30, 2010 and 2009

Revenues for the quarter ended September 30, 2010 were $7,422,334, an increase of $2,956,564, or 66.2%, from $4,465,770 for the same quarter in 2009. Our increase in sales revenues for the third quarter of 2010 was mainly due to the increase in our sales of pharmaceutical raw-material and pharmaceutical intermediates, which include our products of Rutin, Troxerutin and Quercetin. An analysis of our results in sales of our products is as follows:

Cost of sales for the quarter ended September 30, 2010 was $3,515,796, an increase of $521,191, or 17.4%, from $2,994,605 for the quarter ended September 30, 2009. Compared to the quarter ended September 30, 2009, the increase in cost of sales for the third quarter of 2010 was caused by an increase in sales of our pharmaceutical intermediates. An analysis of our results in cost of sales of our products is as follows:  

Our gross margin for the quarter ended September 30, 2010 was $3,906,538, an increase of $2,435,373, or 165%, from $1,471,165 for the same quarter in 2009 as a result of the increase in our products sold and a significant increase in the selling price of our products, mainly due to the sales increase of pharmaceutical raw-material and pharmaceutical intermediates.

 Our gross margin as a percentage of revenues for 2010 increased 19.6% from 33% for the third quarter of 2009 to 52.6% in the same quarter in 2010, mainly because of a significant increase in the selling price of our products.

For the Nine Months Ended September 30, 2010 and 2009

Revenues for the nine months ended September 30, 2010 were $18,273,172, an increase of $9,389,982, or 106%, from $8,883,190 for the same period in 2009. Our increase in revenues for the nine months ended September 30, 2010 was mainly due to the increase in our sales of pharmaceutical raw-material and pharmaceutical intermediates, which include our products of Rutin, Troxerutin, L-Rhamnose, Quercetin and Diosmin. An analysis of our results in sales of our products is as follows: 

Cost of sales for the nine months ended September 30, 2010 were $10,276,838, an increase of $4,316,373, or 72.4%, from $5,960,465 for the nine months ended September 30, 2009. The increase in the cost of sales for the nine months ended September 30, 2010 was caused by an increase in sales of pharmaceutical intermediates and pharmaceutical raw-materials, which include our products L-Rhamnose, Quercetin and Diosmin. An analysis of our results in cost of sales of our products is as follows:

The gross profit margin for the nine months ended September 30, 2010 was $7,996,334, an increase of $5,073,609 or 173.6% from $2,922,725 for the nine months ended September 30, 2009 as a result of an increase in sales of our products and a significant increase in the selling price of our products, mainly due to an increase in sales of our pharmaceutical raw-material and pharmaceutical intermediates.

Our gross margin as a percentage of sales for the nine months ended September 30, 2010 increased by 10.8% to 43.8% from 33% in the same period in 2009. The increase in gross margin was mainly due to the increase in the selling price of raw-materials.

Financial condition

Cash and cash equivalents as of September 30, 2010 were $2,088,599.

In the nine months ended September 30, 2010, cash provided by operating activities was $2,931,146, compared to cash used in operating activities of $169,785 for the nine months ended September 30, 2009, mainly due to the significant increase in our net income from continuing operations. In the nine months ended September 30, 2010, cash used in investing activities was $545,997 compared to cash used in investing activities of $194,238 for the same period in 2009, mainly as a result of the purchase of new production machinery and equipment. Cash used in financing activities in the nine months ended September 30, 2010 was $854,937, compared to cash provided by financing activities of $263,062 in the same period in 2009, primarily as the result of the repayment of a bank loan and the repayment of amounts owed to six Note holders.

The Company Increases its 2010 Guidance

The Company reaffirms its expectation that it will earn approximately $25 million in revenues for the year ended December 31, 2010, however, the Company now expects to earn net income for the year ended December 31, 2010 of approximately $5.5-$6 million, an increase of $1 million from its previous guidance of approximately $4.5-$5 million. The Company expects continued revenue growth in the last quarter of 2010 as it enters its most profitable selling period.

About Huifeng Bio-Pharmaceutical Technology, Inc.

Huifeng Bio-Pharmaceutical Technology, Inc., located in Xi'an, People's Republic of China, develops and produces plant extracts and pharmaceutical raw materials for use in pharmaceutical, nutraceutical and food production. It is the leading Chinese producer of rutin and related plant-derived chemicals in a class called flavonoids, with medicinal and other beneficial properties. Founded in 2002, Huifeng uses proprietary patented processes to extract rutin more efficiently than traditional extraction techniques. The Company is diversifying its product lines through internal development, acquisition and cooperation with scientific research organizations. More information can be found on the Company's web site at: http://www.hfgb.cn/

Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including changes from anticipated levels of sales, future national or regional economic and competitive conditions, changes in relationships with customers, access to capital, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, and other factors disclosed in the Company's Annual Report on Form 10K for the year ended Dec. 31, 2009 and all of the Company's subsequent Quarterly Reports on Form 10Q, especially in the "Risk Factors" sections of these reports. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.

SOURCE Huifeng Bio-Pharmaceutical Technology, Inc.