NANTONG CITY, China, April 19 /PRNewswire-Asia-FirstCall/ -- Sinobiopharma, Inc. (OTC Bulletin Board: SNBP) ("Sinobiopharma" or "the Company), a fully integrated and highly innovative specialty pharmaceutical company engaged in the research and development, and the manufacture and marketing of biopharmaceutical products in China, has announced its financial results for the third quarter ended February 28, 2010.
Q3 2010 Highlights
-- Total revenue increased 145% year-over-year to approximately $2.0
million from $0.8 million in the comparable period of 2009.
-- Gross margin increased 172% year-over-year to approximately $1.6
million, or 81% of sales from $0.6 million, or 73% of sales for the
same period of 2009.
-- Operating income increased $1.8 million to approximately $1.0 million
from a loss of $0.8 million for the same period of 2009.
-- Income before income tax expense increased $1.8 million to
approximately $1.0 million from a loss of $0.7 million for the same
period of 2009.
-- Industry leading operating margins of 52%. Net income increased $1.7
million to approximately $0.9 million from a net loss of approximately
$0.7 million in the third quarter of 2009.
-- EPS of $0.01 compare to $(0.01) for the same period 2009. The EPS for
the nine month period ended February 28, 2010 is $0.03 compare to
$($0.02) for the same period 2009
-- Revenue from Cisatracurium Besylate (marketed as "KuTai" in China)
increased 164% to approximately $2.0 million, or 98.5% of sales from
$0.7 million, or 91.5% of sales in the same period of 2009.
-- First quarter of positive working capital and $8.7 million in
Shareholder's equity.
-- Net worth increased dramatically from $776,831 at May 31, 2009 to
$8,998,121 at February 28, 2010. Total assets increased by $5,458,792,
from $5,956,443 at May 31, 2009 to $11,415,235 at February 28, 2010.
Dr. Lequn Lee Huang, Sinobiopharma's Chairman and CEO commented on the third quarter results: "Despite slower sales during the Chinese New Year holiday in February, we continued to achieve excellent revenue and net income growth. The steady performance demonstrated that the market has a proven need for our products and that our marketing efforts have started to yield positive results."
Third Quarter 2010 Results
Sales increased 145% to $1,993,412 for the three months ended February 28, 2010, from $813,326 for the three months ended February 28, 2009.
Gross margin increased 172% to $1,612,613 (81% of sales) for the three months ended February 28, 2010, from $592,311 (73% of sales) for the three months ended February 28, 2009.
The increase in sales was due to the continuing growth in sales of Cisatracurium Besylate. Sales of this product increased to $1,964,287 for the three months ended February 28, 2010, from $744,338 for the three months ended February 28, 2009, representing 98.5% of sales and 91.5% of sales for the three months that ended February 28, 2010, and February 28, 2009, respectively.
Operating expenses for the three months ended February 28, 2010 were $593,045, representing a 57% decrease as compared to $1,365,359 for the three months ended February 28, 2009. The decrease is primarily attributable to the stock option expense of $972,375 charged in the third quarter of 2009. There was no stock-based compensation expense for the three months ended February 28, 2010.
Income before income tax increased by $1,763,635 from a loss of $725,316 for the third quarter 2009 to $1,038,319 for the third quarter of 2010.
Income tax expense was $97,096 for the third quarter 2010; there was no income tax expense for the same period last year. The Company started to be subject to income tax with half tax rate beginning January 1, 2010. The applicable tax rate for this year is 11%.
Net income increased $1,666,539 from a net loss of $725,316 for the three months ended February 28, 2009 to a net income of $941,223 for the three months ended February 28, 2010. The increase in net income was due to the increase in sales and decrease of the stock-based compensation expense.
Earning Per Share was $0.01 compared to $(0.01) for the same period 2009.
Results for the nine months that ended February 28, 2010
Sales increased 100% to $5,424,647 for the nine months ended February 28, 2010, from $2,715,702 for the nine months ended February 28, 2009.
Gross margin increased 137% to $4,295,844 (79% of sales) for the nine months ended February 28, 2010, from $1,815,491 (67% of sales) for the nine months that ended February 28, 2009.
The increase in sales was due to the continuing growth in sales of Cisatracurium Besylate. Sales of this product increased to $5,261,860 for the nine months ended February 28, 2010, from $2,529,517 for the nine months ended February 28, 2009, representing 96% of sales and 93% of sales for the nine months that ended February 28, 2010, and February 28, 2009, respectively.
Operating expenses for the nine months ended February 28, 2010 were $1,859,986, a decrease of 45% as compared to $3,354,149 for the nine months ended February 28, 2009. The decrease is primarily attributable to the decrease of $1,620,625 in the stock-based compensation of $324,125 for the nine months ended February 28, 2010, compared to $1,944,750 for the nine months ended February 28, 2009. The stock options have been fully vested and expensed as of August 31, 2009.
Net income increased $3,874,632 from a net loss of $1,622,692 for the nine months ended February 28, 2009 to net income of $2,251,940 for the nine months ended February 28, 2010. The increase in net income was due to the increase in sales and decrease of the stock-based compensation expense.
Earning Per Share was $0.03 compared to $(0.02) for the same period 2009.
Financial Position
As of February 28, 2010, the Company had $790,142 in cash. Operating activities have generated $986,716 cash during the nine-month period that ended February 28, 2010. Working capital became positive in the period ended February 28, 2010 for the first time since the reverse take over in 2008. During this quarter, the Company raised $1,500,000 capital through a private placement. The Company has partially repaid the bank loan using funds from the placement, reducing an outstanding bank loan balance to $220,050. Net worth increased dramatically from $776,831 at May 31, 2009 to $8,998,121 at February 28, 2010. Total assets have increased by $5,458,792, from $5,956,443 at May 31, 2009 to $11,415,235 at February 28, 2010.
Business Outlook
Dr. Huang expressed the Company's satisfaction with its third quarter results. "The numbers show the growing strength of our financial performance and position," he said. "They also show the soundness of our strategy as we prepare to take the Company to the next level."
About Sinobiopharma
Sinobiopharma Inc. is a fully integrated and highly innovative specialty pharmaceutical company engaged in the research and development, manufacture and marketing of biopharmaceutical products in China, one of the world's fastest growing pharmaceutical markets. Known as Dong Ying (Jiangsu) Pharmaceutical Co. Ltd. in China, the Company's current therapeutic focus is on anesthesia-assisted agents and cardiovascular drugs.
FORWARD LOOKING STATEMENTS This news release may include "forward-looking statements" regarding Sinobiopharma, Inc., and its subsidiaries, business and project plans. Such forward looking statements are within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the United States Securities and Exchange Act of 1934, as amended, and are intended to be covered by the safe harbor created by such sections. Where Sinobiopharma, Inc. expresses or implies an expectation or belief as to future events or results, such expectation or belief is believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Sinobiopharma, Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.
-- FINANCIAL TABLES FOLLOW -
SINOBIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 28, May 31,
2010 2009
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $790,142 $891,132
Accounts receivable, net 1,131,625 208,673
Notes receivable -- 5,505
Inventories 835,901 547,317
Advance payments 210,730 39,825
Other receivables 298,904 --
Total Current Assets 3,267,302 1,692,452
Advance payment for intangible assets
to a shareholder 987,780 253,760
Property, plant and equipment, net 2,772,304 2,691,258
Intangible assets, net 4,387,849 1,318,973
$11,415,235 $5,956,443
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $369,391 $655,064
Short-term bank loans 220,050 732,000
Loans from government 1,420,569 1,844,193
Amounts due to shareholder 256,725 1,169,032
Advances from customers 102,946 136,755
Amounts due to Related party -- 256,200
Income taxes payable 97,136 --
Other payables 290,297 386,368
Total Current Liabilities 2,757,114 5,179,612
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Common stock; $0.0001 par value;
2,500,000,000 shares authorized;
117,587,608 shares issued and
outstanding at February 28, 2010
and 79,920,000 shares at May 31, 2009 11,759 7,992
Additional paid-in capital 13,853,827 8,254,991
Accumulated deficit (5,459,339) (7,711,278)
Accumulated other comprehensive income 251,874 225,126
Total Stockholders' Equity 8,658,121 776,831
$11,415,235 $5,956,443
SINOBIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
February 28, February 28,
2010 2009 2010 2009
SALES $1,993,412 $813,326 $5,424,647 $2,715,702
COST OF GOODS SOLD 380,799 221,015 1,128,803 900,211
GROSS MARGIN 1,612,613 592,311 4,295,844 1,815,491
OPERATING EXPENSES
Selling expenses 144,956 116,148 394,309 283,483
Research and development 30,683 27,352 317,396 157,771
Depreciation and
amortization 59,241 22,591 209,798 126,564
General and
administrative expenses 358,165 1,199,268 938,483 2,786,331
593,045 1,365,359 1,859,986 3,354,149
INCOME/(LOSS) FROM
OPERATIONS 1,019,568 (773,048) 2,435,858 (1,538,658)
OTHER INCOME/(EXPENSES)
Interest income 1,896 363 7,070 1,059
Interest expense (38,193) (53,544) (148,278) (181,017)
Other expenses 55,048 100,913 54,386 95,924
18,751 47,732 (86,822) (84,034)
INCOME/(LOSS) BEFORE
INCOME TAX EXPENSE 1,038,319 (725,316) 2,349,036 (1,622,692)
INCOME TAX EXPENSE (97,096) -- (97,096) --
NET INCOME/(LOSS) 941,223 (725,316) 2,251,940 (1,622,692)
OTHER COMPREHENSIVE
INCOME/(LOSS)
Foreign Currency
Translation Adjustment 5,209 4,438 26,748 12,279
COMPREHENSIVE INCOME
/(LOSS) $946,432 $(720,878) $2,278,688 (1,610,413)
Earnings/ (loss) per share:
Basic and diluted $0.01 $(0.01) $0.03 $(0.02)
Weighted average shares
Used in computation:
Basic and diluted 104,117,920 79,900,000 87,950,083 79,900,000
SINOBIOPHARMA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended Feb 28,
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) $2,251,940 $(1,622,692)
Adjustments to reconcile net
income/(loss) to net cash provided
by/(used in) operation activities
Depreciation and amortization 318,412 226,739
Loss on disposition of property
and equipment -- 426
Stock-based compensation 324,125 1,944,750
Imputed interest expense on
shareholders' loans 15,864 56,722
Amortization of discount in
interest expenses 68,235 105,311
Common shares issued for
consulting services 33,000 --
Gain from discount of no-interest loans (55,694) (96,364)
Changes in assets and liabilities:
Notes receivable 5,600 --
Accounts receivable, net (920,879) (135,538)
Inventories (264,843) 12,992
Advance payments (170,993) --
Other receivables (297,856) (194,091)
Accounts payable (286,315) (206,796)
Advance from customers (34,120) (206,828)
Income taxes payable 97,096 --
Other payables (96,856) 146,138
Net Cash Provided by Operating Activities 986,716 30,769
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (323,472) (138,320)
Advance payments for purchase of
intangible assets (731,317) --
Net Cash Used in Investing Activities (1,054,789) (138,320)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans 2,194,608 731,000
Subscription received for issuing stock -- 20,000
(Repayment) proceeds from
shareholder loans (651,694) 162,694
Repayment of bank loans (3,148,381) (576,800)
Repayments of loans by related parties -- 5,712
Proceeds from common stock issued 1,600,000 --
Payment for common stock issuance costs (15,000) --
Net Cash (Used in)/Provided by
Financing Activities (20,467) 342,606
EFFECT OF FOREIGN CURRENCY
FLUCTUATION ON CASH (12,450) (1,171)
NET (DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (100,990) 233,884
CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 891,132 267,327
CASH AND CASH EQUIVALENTS - ENDING
OF PERIOD $790,142 $501,211
Supplemental cash flow information:
Cash paid for interest expense $54,896 $--
Non-cash investing and financing Activities
100,000 common shares issued in exchange
of consulting service received $33,000 $--
17,500,000 common shares issued in
exchange of intangible assets $3,136,500 $--
4,234,275 common shares issued
to settle debts $508,113 $--
SOURCE Sinobiopharma, Inc.
