omniture

Lotus Pharmaceuticals Announces First Quarter Fiscal 2011 Financial Results

2011-05-16 13:36 1274

BEIJING, May 16, 2011 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (OTCBB: LTUS) ("Lotus" or the "Company"), a profitable developer, manufacturer and seller of medicine and drugs in the People's Republic of China ("PRC"), today announced its financial results for the first quarter ended March 31, 2011. Summary financial data is provided below:

First Quarter Financial Highlights

  • Revenues for the three months ended March 31, 2011 decreased by 12.4% year-over-year to $12.9 million, down from $14.8 million in the first quarter of 2010
    • Wholesale revenues were $8.7 million, or 67.5% of total revenues
    • Retail revenues were $4.2 million, or 32.5% of total revenues
  • Gross profit for the first quarter was $6.2 million, a decrease of 27.7% compared to $8.5 million in the first quarter of 2010. Gross margin was 47.6% and 57.7% for the three months ended March 31, 2011 and 2010, respectively
  • Net income for the quarter decreased 54.7% to $2.2 million, compared to $4.9 million in the first quarter of 2010
  • Earnings per diluted share were $0.08 for the quarter, compared with diluted EPS of $0.18 achieved in the same period a year ago
Mr. Zhongyi Liu, Chairman and CEO of Lotus, stated, "While our first quarter results were impacted by changes in our wholesale segment, our retail sales continue to outperform with 29.1% growth versus the same period in 2010. The substantial increase in the retail segment was driven by our Over-the-Counter Drug Division's sales force. We expect this channel to continue being a major sales growth driver in the coming year. Construction of our Beijing facility continues to progress, and we anticipate additional capacity for growth and significant efficiency improvements once we move into the new building."

Mr. Liu continued, "We plan to focus our capital expenditures in the foreseeable future on the completion of our Beijing facility and our core business in Beijing. Lotus has a well-established nationwide sales and distribution network, strong product development capabilities, and access to capital. Due to the trends of consolidation and increasing regulatory oversight in China's pharmaceuticals industry, we believe these characteristics position Lotus to emerge as an industry leader."

First Quarter Results of Operations

Revenues

Revenues for the first quarter ended March 31, 2011 were $12.9 million, compared to $14.8 million in the first quarter of 2010. The decrease of 12.4%, or $1.9 million, was primarily due to decreased sales from the Company's wholesale distribution channel, partially offset by strong performance in its retail sales segment. Wholesale revenue decreased 24.2% year-over-year to $8.7 million, or 67.5% of total revenues. Retail revenues increased 29.1% year-over-year to $4.2 million, or 32.5% of total revenues. The growth in retail revenues was primarily attributable to the success of the Company's sales force and new general manager for its Over-the-Counter Drug Division, which served the Company's 10 stores and more than 1,000 other OTC drugstores in Beijing during the quarter.

Gross Profit

Gross profit for the first quarter ended March 31, 2011 was $6.2 million or 47.6% of total net revenues, as compared to $8.5 million or 57.7% of total net revenues for the quarter ended March 31, 2010.  The decrease of 27.7%, or $2.3 million, was primarily attributable to decreased sales and lower margins in the wholesale segment from 2010 to 2011. The decrease in wholesale gross margin was partially offset by higher growth in the lower-margin retail segment.

Income from Operations

Operating income amounted to $2.2 million for the quarter ended March 31, 2011 as compared to operating income of $5.3 million for the first quarter of 2010. The decrease of 57.7%, or $3.1 million, was due largely to decreased gross profit and increased research and development expenses.

Net Income

Net income for the quarter ended March 31, 2011 was $2.2 million as compared to $4.9 million for the quarter ended March 31, 2010, due to the reasons set forth above. Earnings per diluted share were $0.08 for the quarter, compared with diluted EPS of $0.18 for the first quarter of 2010.

Liquidity and Capital Resources

As of March 31, 2011, the Company's current assets were $5.3 million and current liabilities were $7.6 million. Cash and cash equivalents totaled $1.3 million as of March 31, 2011. The Company's shareholders' equity at March 31, 2011 was $93.9 million. The Company generated $3.6 million in cash from operating activities in the first quarter, compared to $2.3 million in the same quarter of 2010. The Company used $3.6 million in net cash for investing activities during the first quarter of 2011, compared to $5.1 million in the first quarter of 2010.

Recent Business Highlights

  • The Company announced that it will add an additional 9,000 square meters (97,000 square feet) to its new headquarters building in Chaoyang District, Beijing. The new construction will contain between 90 and 120 apartments for employees, bringing the total gross area to 34,000 square meters (366,000 square feet). Once completed, this state-of-the-art building will host the Company's GMP manufacturing facility, a storage warehouse, an R&D center, a sales and marketing center, and administrative offices, as well as employee apartments. Currently the exterior furnishing is completed, and the project is moving to the final interior furnishing stage. The Company expects to complete and move into the facility by the end of the year.
  • The Company has stated it plans to make the best use of its land asset in Inner Mongolia. Specifically, management plans to build a 100-mu pharmaceutical distribution center in Inner Mongolia, which is expected to begin construction in 2011 and will provide a base for continued sales into the five northwestern provinces. For the remaining estimated 900 mu of land, the Company intends to make the best use of the asset, including co-developing or selling it to a third party.
Business Outlook for 2011

Management anticipates that 2011 will be a transitional year for Lotus Pharmaceuticals, as the Company will be completing and moving into its new headquarters and shifting its focus to the wholesale business in Beijing and the surrounding areas. After the completion of the headquarters, the Company expects strong growth driven by the wholesale business in Beijing and surrounding areas starting in 2012.

The Company expects total revenue and profitability in 2011 will be lower than that of 2010. Specifically, the revenue from the wholesale segment will down from 2010, driven by the manufacturing disruption of Mu Xin and lower revenue from products with non-exclusive rights. However, management anticipates continued growth in Lotus' retail business in 2011, driven primarily by strong growth in the OTC sales division.

Conference Call and Webcast

Management will host a conference call to discuss these financial results on Tuesday, May 17, 2011 at 10:00 a.m. EDT (7:00 a.m. PDT).

To participate in the call, please dial (877) 941-1430, or (480) 629-9667 for international calls, approximately 10 minutes prior to the scheduled start time.

A replay of the call will be available for two weeks from 1:00 p.m. EDT on May 17, 2011, until 11:59 p.m. EDT on May 31, 2011. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4442028.

About Lotus Pharmaceuticals, Inc.

Lotus Pharmaceuticals, Inc. is a profitable developer and producer of drugs and a licensed national seller of pharmaceutical items in the People's Republic of China (PRC). Lotus operates its business through its two controlled entities: Liang Fang Pharmaceutical, Ltd. and En Ze Jia Shi Pharmaceutical, Ltd. Lotus' current drug development is focused on the treatment of cerebro-cardiovascular diseases, asthma and diabetes. Liang Fang sells drugs directly and indirectly through its national sales channels to hospitals, clinics and drugs stores in 30 provinces of the PRC.

Information Regarding Forward-Looking Statements

Except for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.

Contacts:

 

 

 

 

At the Company:

 

 

Xing Shen, Ph.D.

 

 

VP of Corporate Development
Lotus Pharmaceuticals, Inc.

 

 

Ph: 415-690-7688

 

 

Email: shen@lotuspharma.com

 

 

Web: http://www.lotuspharma.com

 

 

 

 

Investor Relations:

 

 

Dave Gentry, President

 

 

RedChip Companies, Inc.
Tel: +1-800-733-2447, Ext. 104
Email: info@redchip.com

 

 

Web: http://www.redchip.com

 

 

 

 

 



LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

 

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

(UNAUDITED)

 

 

 

 

 

As of

 

 

 

 

 

March 312011

 

 

December 312010

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash

 

$         1,310,924

 

 

$         1,339,972

 

 

 

Accounts receivable

 

1,335,780

 

 

1,973,150

 

 

 

Inventories

 

1,323,314

 

 

634,583

 

 

 

Prepaid expenses and other current assets

 

1,312,885

 

 

593,759

 

 

 

 

 

 

 

 

 

 

 

Total Current Assets

 

5,282,903

 

 

4,541,464

 

 

 

 

 

 

 

 

 

PROPERTY AND EQUIPMENT, net

 

43,091,575

 

 

39,337,935

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

 

 

 

 

Land use right held for development

 

29,422,456

 

 

29,236,891

 

 

 

Deposits and Installments on intangible assets

 

9,588,895

 

 

9,528,419

 

 

 

Land use rights, net

 

12,935,011

 

 

12,932,421

 

 

 

Other intangible assets, net

 

7,432,484

 

 

7,607,485

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$     107,753,324

 

 

$        103,184,615

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$              32,267

 

 

$                 37,829

 

 

 

Other payables and accrued liabilities

 

740,491

 

 

3,441,466

 

 

 

Taxes payable

 

4,162,463

 

 

2,024,565

 

 

 

Unearned revenue

 

545,238

 

 

504,442

 

 

 

Due to related parties

 

2,129,730

 

 

2,042,376

 

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

7,610,189

 

 

8,050,678

 

 

 

 

 

 

 

 

 

LONG-TERM LIABILITIES:

 

 

 

 

 

 

Due to related parties

 

936,392

 

 

869,067

 

 

 

Notes payable - related parties

 

5,275,098

 

 

5,241,829

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

13,821,679

 

 

14,161,574

 

 

 

 

 

 

 

 

 

COMMITMENTS AND CONTIGENCIES

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY:

 

 

 

 

 

 

Preferred stock ($.001 par value; 10,000,000 shares authorized;

619,824 and 607,107 shares issued and outstanding

at March 31, 2011 and December 31, 2010, respectively)

 

620

 

 

607

 

 

 

Common stock ($.001 par value; 100,000,000 shares authorized;

27,747,131 and 26,763,485  shares issued and outstanding

at March 31, 2011 and December 31, 2010, respectively)

 

27,747

 

 

26,763

 

 

 

Additional paid-in capital

 

23,785,665

 

 

21,679,147

 

 

 

Retained earnings

 

56,149,121

 

 

53,925,101

 

 

 

Statutory reserves

 

6,240,202

 

 

6,240,202

 

 

 

Accumulated other comprehensive income

 

7,728,290

 

 

7,151,221

 

 

 

 

 

 

 

 

 

 

 

Total stockholders' Equity

 

93,931,645

 

 

89,023,041

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

$     107,753,324

 

 

$        103,184,615

 

 

 

 

 

 

 

 

 

 



LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

 

 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

 

 

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2011

 

 

2010

 

 

 

 

 

 

 

 

NET REVENUES:

 

 

 

 

 

 

 Wholesale

 

 

$              8,719,023

 

 

$               11,498,086

 

 

 Retail

 

 

4,198,217

 

 

3,252,392

 

 

 

 

 

 

 

 

   Total Net Revenues

 

 

12,917,240

 

 

14,750,478

 

 

 

 

 

 

 

 

COST OF REVENUES:

 

 

 

 

 

 

 Wholesale

 

 

3,752,509

 

 

3,913,198

 

 

 Retail

 

 

3,011,797

 

 

2,330,431

 

 

 

 

 

 

 

 

   Total Cost of Revenues

 

 

6,764,306

 

 

6,243,629

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

6,152,934

 

 

8,506,849

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

    Selling expenses

 

 

1,403,546

 

 

2,168,953

 

 

    Research and development expenses

 

 

727,431

 

 

-

 

 

    General and administrative expenses

 

 

1,772,299

 

 

1,021,857

 

 

 

 

 

 

 

 

       Total Operating Expenses

 

 

3,903,276

 

 

3,190,810

 

 

 

 

 

 

 

 

INCOME FROM OPERATIONS

 

 

2,249,658

 

 

5,316,039

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE):

 

 

 

 

 

 

    Debt issuance costs

 

 

-

 

 

(52,226)

 

 

    Other income

 

 

46,514

 

 

198,434

 

 

    Interest income

 

 

690

 

 

1,280

 

 

    Interest expense

 

 

(61,629)

 

 

(432,402)

 

 

 

 

 

 

 

 

       Total Other Income (Expense)

 

 

(14,425)

 

 

(284,914)

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

2,235,233

 

 

5,031,125

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

149

 

 

102,207

 

 

 

 

 

 

 

 

NET INCOME

 

 

2,235,084

 

 

4,928,918

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME:

 

 

 

 

 

 

    Foreign currency translation gain

 

 

577,069

 

 

10,928

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

 

$              2,812,153

 

 

$                 4,939,846

 

 

 

 

 

 

 

 

NET INCOME PER COMMON SHARE:

 

 

 

 

 

 

   Basic

 

 

$                      0.08

 

 

$                          0.20

 

 

   Diluted

 

 

$                      0.08

 

 

$                          0.18

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:

 

 

 

 

 

 

   Basic

 

 

27,490,088

 

 

24,779,592

 

 

   Diluted

 

 

27,800,769

 

 

26,854,462

 

 

 

 

 

 

 

 

 



LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

(UNAUDITED)

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2011

 

 

2010

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net income

 

 

$      2,235,084

 

 

$      4,928,918

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

105,938

 

 

6,585

 

 

 

 

Amortization of intangible assets

 

 

301,889

 

 

438,227

 

 

 

 

Amortization of deferred debt issuance costs

 

 

-

 

 

52,226

 

 

 

 

Amortization of discount on convertible redeemable preferred stock

 

 

-

 

 

151,553

 

 

 

 

Interest expense attributable to beneficial conversion feature of preferred shares

 

 

-

 

 

184,660

 

 

 

 

Common shares issued for service

 

 

708,350

 

 

23,000

 

 

 

 

Common shares issued for compensation

 

 

1,388,101

 

 

-

 

 

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

647,990

 

 

114,778

 

 

 

 

Inventories

 

 

(682,698)

 

 

(2,261,039)

 

 

 

 

Prepaid expenses and other current assets

 

 

(716,077)

 

 

208,214

 

 

 

 

Accounts payable

 

 

(5,785)

 

 

84,918

 

 

 

 

Other payables and accrued liabilities

 

 

(2,713,995)

 

 

(734,981)

 

 

 

 

Taxes payable

 

 

2,118,824

 

 

(650,611)

 

 

 

 

Unearned revenue

 

 

37,484

 

 

(368,342)

 

 

 

 

Due to related parties

 

 

137,094

 

 

90,697

 

 

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY OPERATING ACTIVITIES

 

 

3,562,199

 

 

2,268,803

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchase of property and equipment

 

 

(3,599,641)

 

 

(5,090,025)

 

 

 

 

 

 

 

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(3,599,641)

 

 

(5,090,025)

 

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET CASH PROVIDED BY  FINANCING ACTIVITIES

 

 

-

 

 

-

 

 

 

 

 

 

 

 

 

 

 

EFFECT OF EXCHANGE RATE ON CASH

 

 

8,394

 

 

663

 

 

 

 

 

 

 

 

 

 

 

NET DECREASE IN CASH

 

 

(29,048)

 

 

(2,820,559)

 

 

 

 

 

 

 

 

 

 

 

CASH  - beginning of period

 

 

1,339,972

 

 

3,945,740

 

 

 

 

 

 

 

 

 

 

 

CASH - end of period

 

 

$     1,310,924

 

 

$        1,125,181

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW  INFORMATION:

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

 

Interest

 

 

$                        -

 

 

$                       -

 

 

 

 

Income taxes

 

 

$                    366

 

 

$                       -

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Common stock issued for conversion of convertible redeemable preferred stock

 

 

$                        -

 

 

$        2,166,000

 

 

 

 

Convertible redeemable preferred stock issued for dividend payable

 

 

$               11,064

 

 

$           321,308

 

 

 

 

 

 

 

 

 

 

 

 

 



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

 

 

 




Source: Lotus Pharmaceuticals, Inc.
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