Aoxing Pharmaceutical Company, Inc. Announces Financial Results for First
Quarter of 2014 Fiscal Year
JERSEY CITY, NJ -- (Marketwired) -- 11/14/13 -- 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 quarter ended September 30, 2013.
Complete financial results can be found in the Quarterly Report on
Form 10-Q filed by Aoxing Pharma on November 14, 2013.
Revenues for the three months ended September 30,
2013 were $3,577,108, representing a 37% increase over the revenues
realized in the comparable period 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 93% of sales during the quarter ended September 30, 2013.
Despite the increase in revenue, gross profit fell by 1.8% during the
quarter ended September 30, 2013. Recent shortages in certain raw
materials caused a spike in the cost of goods sold. 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 allowed it to make some crucial investments in
the future of its business. Operating expenses, therefore, were
swelled during the first quarter of fiscal 2014 by two categories of
-- Research and development ("R&D") expenses were $177,941 during the
three months ended September 30, 2013, representing a 37% increase
over R&D expense in the first quarter of fiscal 2013.
-- Selling expenses in the amount of $1,617,989 incurred during the three
months ended September 30, 2013 were more than double the $608,671 in
selling expenses incurred during the first quarter of fiscal 2012. The
increase in selling expenses was attributable to the television
advertising contracts totaling approximately $3.66 million that Aoxing
d in December 2012. Aoxing Pharma terminated the contracts
at the end of September 2013, believing they had achieved the goal of
increasing awareness of the Company's brand.
As a result of the reduced profit margin on its sales and increased
operating expenses, Aoxing Pharma recorded a loss from operations of
$1,244,961 for the three months ended September 30, 2013, compared
with an operating profit of $87,478 recorded in the same period a
year earlier. Interest expense increased by 109% to $1,074,690 in the
quarter ended September 30, 2013, due to the increase in bank loans
at the end of 2012. The resulting net loss recorded for the three
months ended September 30, 2013 was $2,350,974, whereas the Company's
net loss for the three months ended September 30, 2012 was $448,516.
On September 30, 2013, Aoxing Pharma had $1.5 million in cash on hand
and a working capital deficit of $23,688,749. The working capital
deficit was swelled during the recent quarter by the reclassification
of $11.5 million in loans payable from long-term to current.
Subsequent to the end of the quarter, SJZ Construction Investment
Corporation agreed to extend the maturity of its $3.2 million loan to
the Company from November 3, 2013 to November 11, 2014.
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.
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.
Aoxing Pharmaceutical Company:
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