omniture

Lotus Pharmaceuticals Announces Second Quarter Fiscal 2011 Financial Results

2011-08-15 21:02 1181

BEIJING, August 15, 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 quarter ended June 30, 2011. Summary financial data is provided below:

Second Quarter Financial Highlights

  • Revenues for the three months ended June 30, 2011 decreased by 1.1% year-over-year to $18.7 million, down from $18.9 million in the second quarter of 2010
    • Wholesale revenues were $14.6 million, or 78% of total revenues
    • Retail revenues were $4.1 million, or 22% of total revenues

  • Gross profit for the second quarter was $4.9 million, a decrease of 50.1% compared to $9.8 million in the second quarter of 2010. Gross margin was 26.1% and 51.8% for the three months ended June 30, 2011 and 2010, respectively

  • Net income for the quarter decreased 71.9% to $1.8 million, compared to $6.3 million in the second quarter of 2010

  • Earnings per diluted share were $0.06 for the quarter, compared with diluted EPS of $0.24 achieved in the same period a year ago

Mr. Zhongyi Liu, Chairman and CEO of Lotus, stated, "Our 2011 second quarter results, especially those of the wholesale segment, were negatively impacted by changes in the competitive landscape and increases in labor costs. Retail sales continue to deliver solid results with 19.2% growth in revenue versus the same period in 2010. The increase in the retail segment was driven primarily by our Over-the-Counter division's sales. 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 by the end of the year."

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, and strong product development capabilities. With the completion of our new headquarters, we believe we are well positioned with respect to the ongoing consolidation of the Chinese pharmaceutical industry."

Second Quarter Results of Operations

Revenues

Revenues for the quarter ended June 30, 2011 were $18.7 million, compared to $18.9 million in the second quarter of 2010. The decrease of 1.1%, or $0.2 million, was primarily due to decreased sales from the Company's wholesale distribution channel, partially offset by the growth in its retail sales segment. Wholesale revenue decreased 5.6% year-over-year to $14.6 million, or 78% of total revenues. Retail revenues increased 19.2% year-over-year to $4.1 million, or 22% of total revenues. The growth in the retail segment was mainly due to an increase in revenue from our direct sales to other Over-the-Counter drug stores in Beijing.

Gross Profit

Gross profit for the second quarter ended June 30, 2011 was $4.9 million or 26.1% of total net revenues, as compared to $9.8 million or 51.8% of total net revenues for the quarter ended June 30, 2010. The decrease of 50.1%, or $4.9 million, was primarily attributable to lower product prices in 2011 compared to 2010.

Income from Operations

Operating income amounted to $1.8 million for the quarter ended June 30, 2011 as compared to operating income of $6.4 million for the second quarter of 2010. The decrease of 71.8%, or $4.6 million, was due largely to decreased gross profit.

Net Income

Net income for the quarter ended June 30, 2011 was $1.8 million as compared to $6.3 million for the quarter ended June 30, 2010, due to the reasons set forth above. Earnings per diluted share were $0.06 for the quarter, compared with diluted EPS of $0.24 for the second quarter of 2010.

Liquidity and Capital Resources

As of June 30, 2011, the Company's current assets were $7.2 million and current liabilities were $10.9 million. Cash and cash equivalents totaled $0.9 million as of June 30, 2011. The Company's shareholders' equity at June 30, 2011 was $ 97.2 million. The Company generated $6.7 million in cash from operating activities in the first half of fiscal 2011, compared to $8.9 million in the same period of 2010. The Company used $7.1 million cash for investing activities during the first half of fiscal 2011, compared to $11.8 million in the same period of 2010.

Recent Business Highlights

  • The Company continues to make progress in the construction of its headquarters building in Chaoyang District, Beijing. Currently the project is in its final interior furnishing stage. 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. The Company reiterates the plan to complete and move into the facility by the end of the year.

Business Outlook for 2011

Management expects 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 growth will resume, primarily driven by the wholesale business in Beijing starting in 2012.

Conference Call and Webcast

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

To participate in the call, please dial (877) 941-4774, or (480) 629-9760 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 August 17, 2011, until 11:59 p.m. EDT on August 31, 2011. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4466487.

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:


Xing Shen, Ph.D.

VP of Corporate Development

Lotus Pharmaceuticals, Inc.

Ph: 415-690-7688

Email: shen@lotuspharma.com

Web: http://www.lotuspharma.com




LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)




June 30,


December 31,


2011


2010

ASSETS




CURRENT ASSETS:




Cash

$886,445


$1,339,972

Accounts receivable

4,877,745


1,973,150

Inventories

895,176


634,583

Prepaid expenses and other current assets

539,847


593,759





Total Current Assets

7,199,213


4,541,464





PROPERTY AND EQUIPMENT, net

47,248,484


39,337,935





OTHER ASSETS




Land use right held for development or sale

29,905,396


29,236,891

Deposits and Installments on intangible assets

9,746,287


9,528,419

Land use rights, net

13,066,530


12,932,421

Other intangible assets, net

7,327,634


7,607,485





Total Assets

$114,493,544


$103,184,615





LIABILITIES AND SHAREHOLDERS' EQUITY








CURRENT LIABILITIES:




Accounts payable

$20,111


$37,829

Other payables and accrued liabilities

802,431


3,441,466

Taxes payable

7,321,783


2,024,565

Unearned revenue

534,231


504,442

Dividend payable

3,308


-

Due to related parties

2,186,596


2,042,376





Total Current Liabilities

10,868,460


8,050,678





LONG-TERM LIABILITIES:




Due to related parties

1,014,586


869,067

Notes payable - related parties

5,361,684


5,241,829





Total Liabilities

17,244,730


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 June 30, 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 June 30, 2011 and December 31, 2010, respectively)

27,747


26,763

Additional paid-in capital

23,785,665


21,679,147

Retained earnings

57,919,584


53,925,101

Statutory reserves

6,240,202


6,240,202

Accumulated other comprehensive income

9,274,996


7,151,221





Total stockholders' Equity

97,248,814


89,023,041





Total Liabilities and Stockholders' Equity

$114,493,544


$103,184,615








LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)












For the Three Months Ended


For the Six Months Ended



June 30,


June 30,



2011


2010


2011


2010










NET REVENUES:









Wholesale


$14,590,654


$15,464,138


$23,309,677


$26,962,224

Retail


4,103,783


3,442,355


8,302,000


6,694,747










Total Net Revenues


18,694,437


18,906,493


31,611,677


33,656,971










COST OF REVENUES:









Wholesale


10,679,431


6,613,650


14,431,940


10,526,848

Retail


3,127,962


2,492,101


6,139,759


4,822,532










Total Cost of Revenues


13,807,393


9,105,751


20,571,699


15,349,380










GROSS PROFIT


4,887,044


9,800,742


11,039,978


18,307,591










OPERATING EXPENSES:









Selling expenses


737,165


2,375,159


2,140,711


4,544,112

Research and development expenses


691,793


-


1,419,224


-

General and administrative expenses


1,669,887


1,075,348


3,442,186


2,097,205










Total Operating Expenses


3,098,845


3,450,507


7,002,121


6,641,317










INCOME FROM OPERATIONS


1,788,199


6,350,235


4,037,857


11,666,274










OTHER INCOME (EXPENSE):









Debt issuance costs


-


-


-


(52,226)

Other income


47,100


198,508


93,614


396,942

Interest income


876


906


1,566


2,186

Interest expense


(62,404)


(59,428)


(124,033)


(491,830)










Total Other Income (Expense)


(14,428)


139,986


(28,853)


(144,928)










INCOME BEFORE INCOME TAXES


1,773,771


6,490,221


4,009,004


11,521,346










INCOME TAXES


-


167,959


149


270,166










NET INCOME


1,773,771


6,322,262


4,008,855


11,251,180










OTHER COMPREHENSIVE INCOME:









Foreign currency translation gain


1,546,706


323,270


2,123,775


334,198










COMPREHENSIVE INCOME


3,320,477


6,645,532


$6,132,630


$11,585,378










NET INCOME PER COMMON SHARE:









Basic


$ 0.06


$ 0.24


$ 0.14


$ 0.44

Diluted


$ 0.06


$ 0.24


$ 0.14


$ 0.42










WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:









Basic


27,747,131


26,503,188


27,619,320


25,646,151

Diluted


28,057,043


26,934,693


27,929,627


26,838,338




LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


For the Six Months Ended


June 30,


2011


2010





CASH FLOWS FROM OPERATING ACTIVITIES:




Net income

$4,008,855


$11,251,180

Adjustments to reconcile net income from operations to net cash




provided by operating activities:




Depreciation

211,297


12,920

Amortization of intangible assets

607,476


876,619

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


120,450

Common shares issued for compensation

1,388,101


109,500

Changes in assets and liabilities:




Accounts receivable

(2,822,719)


(3,240,293)

Inventories

(242,920)


(637,828)

Prepaid expenses and other current assets

66,602


354,472

Accounts payable

(18,344)


64,675

Other payables and accrued liabilities

(2,679,315)


(630,615)

Taxes payable

5,183,422


592,024

Unearned revenue

18,020


(519,697)

Due to related parties

225,364


166,492





NET CASH PROVIDED BY OPERATING ACTIVITIES

6,654,189


8,908,338





CASH FLOWS USED IN INVESTING ACTIVITIES:




Purchase of property and equipment

(7,132,250)


(11,780,895)





NET CASH USED IN INVESTING ACTIVITIES

(7,132,250)


(11,780,895)





CASH FLOWS FROM FINANCING ACTIVITIES:








NET CASH PROVIDED BY FINANCING ACTIVITIES

-


-





EFFECT OF EXCHANGE RATE ON CASH

24,534


5,541





NET DECREASE IN CASH

(453,527)


(2,867,016)





CASH - beginning of period

1,339,972


3,945,740





CASH - end of period

$886,445


$1,078,724





SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:




Cash paid for:




Interest

$ -


$ -

Income taxes

$3,672


$3,746





Non-cash investing and financing activities:




Common stock issued for services

$ -


$397,050

Common stock issued for conversion of convertible redeemable preferred stock

$ -


$4,048,200

Convertible redeemable preferred stock reclassified to permanent equity

$ -


$595,233

Convertible preferred stock issued for dividend payable

$11,064


$321,308



Source: Lotus Pharmaceuticals, Inc.
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