JERSEY CITY, NJ / ACCESSWIRE / November 14, 2014 / 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 three month period ended September 30, 2014. Complete financial results can be found in the Quarterly Report on Form 10-Q filed by Aoxing Pharma on November 14, 2014.
Financial Results:
Revenue for the three months ended September 30, 2014 was $4,565,081, representing a 28% increase over the revenue of $3,577,108 realized during the three months ended September 30, 2013. The increase in revenue was primarily attributable to the increase in sales price of our main product, Zhongtongan, whose sales represented 90% of our overall sales revenue for the first quarter of the 2015 fiscal year. We are now selling Zhongtongan directly, which yields a higher sales price than agency sales. The increase was also attributable to Zhongtongan being marketed for gynecological and orthopaedic applications in addition to its core pediatric and stomotological market.
Our cost of goods sold was $1,387,534 for the three months ended September 30, 2014, which was 31% lower than the $2,014,663 in costs incurred during the three months ended September 30, 2013. A bad harvest in 2013 led to a sharp increase in the market price of raw materials, which has only recently begun to return to their prior level. As a result, gross margin was 70% during the three months ended September 30, 2014 compared to 43.7% in the same period of last year. The increase in gross margin, combined with increased revenue, led to gross profit of $3,177,547 during the three months ended September 30, 2014, 103% higher than the same period a year earlier. We expect our cost of goods sold to be reduced in the future as we continue to reduce energy consumption and increase production capacity and efficiency.
Operating expenses fell by 30% from the first quarter of fiscal 2014 to the first quarter of fiscal 2015, as reductions were recorded in all categories of operating expense:
- Research and development expenses were $107,550 during the three months ended September 30, 2014, representing a 40% decrease from $177,941 recorded during the three months ended September 30, 2013. R&D expenses often fluctuate significantly from one period to another, reflecting the progress and timing of our various development projects.
- General and administrative expenses were $511,486 in the three months ended September 30, 2014, 38% lower than $830,050 in the three months ended September 30, 2013. The decrease was primarily due to the reversal of $182,339 in previously recorded bad debt as a result of collection efforts during three months ended September 30, 2014.
- Selling expenses in the amount of $1,202,509 incurred during the three months ended September 30, 2014 were 26% lower than $1,617,989 spent on selling during the three months ended September 30, 2013. In 2013 we engaged a group of temporary sales personnel in an effort to boost sales of XiaoPiLing. The recent reduction in selling expenses was mainly due to the termination of that program.
- Depreciation and amortization expense fell by 23% from $181,426 to $139,276. The reduction occurred primarily because some of the equipment we are using has become fully depreciated.
We recorded income from operations of $1,216,726 for the quarter ended September 30, 2014 instead of a loss from operations of $1,244,961 the same period last year. This quarter's income from operations was mainly attributed to the increase in revenue and the reduction in cost of sales and selling expenses.
Net interest expense was $1,193,160 for the three months ended September 30, 2014, increased 11% from net interest expense of $1,074,690 for the three months ended September 30, 2013. The increment in interest expense was due to the increase in bank loans.
Nevertheless, after subtracting the interest expense from our operating income, we realized a net loss of $2,405 for the three months ended September 30, 2014.
Our cash balance as of September 30, 2014 was $2,343,822 compared to $2,329,660 as of June 30, 2014. The cash balance remained stable because the $2,287,758 in net cash used in operating activities during the quarter and $173,606 cash used for property and equipment was matched by $2,470,490 in net proceeds of our financing activities. Our working capital deficit on September 30, 2014 was $20,770,008, which was $2,524,180 less than the working capital deficit of $23,294,186 on June 30, 2014. The improvement in working capital was because in August we issued 11,862,278 shares of common stock to satisfy $4,626,289 in debt.
In November 2014 we raised $1,177,235 and provided an employee incentive by selling 4,527,830 shares of common stock to 22 of our employees.
Zhenjiang Yue, our Chairman and CEO, commented, "I am pleased with Aoxing Pharma's operating results, highlighted by continued growth in product sales and improved operating income, 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.
Aoxing Pharmaceutical 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). 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, 2014, 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.
CONTACT:
Aoxing Pharmaceutical Company:
646-367-1747
[email protected]
SOURCE: Aoxing Pharmaceutical Company, Inc.