BEIJING, April 1 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (OTC Bulletin Board: LTUS) ("Lotus" or the "Company"), a growing developer, manufacturer and seller of medicine and drugs in the People's Republic of China (the "PRC") reported that its 2009 net earnings were approximately $16.4 million, or $0.33 per diluted share, compared with approximately $12.8 million, or $0.27 per diluted share, in 2008. Net revenues were approximately $57.8 million in 2009 compared with $73.8 million in 2008.
Full Year 2009 Results
-- Earnings Before Interest and Taxes (EBIT) in 2009, were approximately
$19.0 million, an increase of 29%, as compared with EBIT of $14.7
million in 2008.
-- Gross margin as a percentage of net revenues was 56 percent in 2009 as
compared with 45 percent in 2008.
-- Selling expenses were approximately $8.0 million in 2009 as compared to
approximately $14.9 million in 2008.
For the year ended December 31, 2009, wholesale revenues accounted for 78% of net revenues a decrease of 17% compared to the year ended December 31, 2008. This decrease was a result of the reduced unit prices of wholesale drugs in 2009 as a result of deflation in raw material prices, and reduced commissions paid to our sales representatives. Eight products accounted for approximately 84% of the our total wholesale revenues for the year ended December 31, 2009, including Maixin (Valsartan), Junxin (Levofloxacin Lactate for Injection), Muxin (Brimonidine), Ni Mai Jiao Lin (Nicergoline for Injection), Yipubishan (Octreotide Acetate Injection Solution), Recombinant Human Erythropoietin Injection, Recombinant Human Granulocyte Colony Stimulating Factor Injection, Recombinant Human Interleukin-2 for Injection. Offsetting the impact of a 37% decrease in average unit selling prices for these eight wholesale products was an increase in the sales quantities of these eight drugs by approximately 18% compared to 2008. The impact of these efforts resulted in EBIT margin in 2009 being 33%, compared to 20% in 2008.
Our retail sales accounted for 20% of net revenues in 2009, a decrease of 17% as compared to 2008. Lotus believes that this decrease was due to increased competition in Beijing.
Liquidity and Capital Resources
As of December 31, 2009, the Company had approximately $4.0 million in cash, compared to approximately $1.3 million as of December 31, 2008. Net cash provided by operating activities was approximately $31.4 million in 2009 as compared to approximately $37.4 million in 2008.
The Company believes that its internal cash flows and external financings will be able to support its proposed capital expenditures in 2010.
Outlook
"I'm pleased with our strong results for 2009," said Dr. Zhong Yi Liu, chairman and chief executive officer. "China's pharmaceutical sector presents us with tremendous growth opportunities. We have maintained strong relationships with our clients, leading research and development institutes and leading drug makers. At such time as we begin to use our new Beijing building complex, we hope to increase our sales and achieve both top and bottom line growth."
Based on information available to management at this time, Lotus anticipates its EBIT of fiscal year 2010 to grow by 15-20%, because its direct sales of drugs to third-party pharmacies in Beijing are expected to generate additional earnings.
About Lotus Pharmaceuticals, Inc. ( http://www.lotuspharma.com )
Lotus Pharmaceuticals, Inc. is a growing developer and producer of drugs and a licensed national seller of pharmaceutical items in the 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 disease, 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.
Safe Harbor Statement
This press release contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words "estimate," "project," "intent," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will likely," "should," "could," "would," "may," or words or expressions of similar meaning. Such statements are not guarantees of future performance and could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including, but not limited to, changes from anticipated levels of sales, future national or regional economic and competitive and regulatory conditions, changes in relationships with customers, access to capital, increased costs, difficulties in developing and marketing new products, marketing existing products, customer acceptance of existing and new products, the time to get new drugs approved by the State Food and Drug Administration and other factors. Additional information regarding risks can be found in the Company's Annual Report on Form 10K and its other filings with the SEC. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this press release.
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of December 31,
2009 2008
ASSETS
CURRENT ASSETS:
Cash $3,945,740 $1,278,808
Accounts receivable 1,784,194 6,132,912
Other receivable 16,132 15,757
Other receivable-related party -- 2,027,954
Inventories 1,039,867 3,787,802
Prepaid expenses and other assets
- current 856,691 121,274
Deferred debt costs - current 52,226 398,067
Total Current Assets 7,694,850 13,762,574
PROPERTY AND EQUIPMENT - net of
depreciation 16,223,775 6,896,886
OTHER ASSETS
Prepaid expenses - noncurrent 1,359,583 --
Deposits and Installments on
intangible assets 41,926,520 41,093,053
Intangible assets, net of
accumulated amortization 17,176,207 1,889,661
Deferred debt costs - noncurrent -- 66,344
Total Assets $84,380,935 $63,708,518
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $427,924 $895,283
Other payables 2,262,760 1,274,882
Taxes payable 3,131,908 5,015,908
Unearned revenue 1,163,771 565,629
Due to related parties - current 1,490,649 1,224,339
Series A convertible redeemable
preferred stock, $.001 par
value; 10,000,000 shares
authorized; 4,967,959 and
5,747,118 shares issued and
outstanding at December 31,
2009 and 2008, respectively,
net of discount 4,170,572 --
Total Current Liabilities 12,647,584 8,976,041
LONG-TERM LIABILITIES:
Due to related parties -
noncurrent 866,102 889,575
Notes payable - related parties 5,069,023 5,056,451
Series A convertible redeemable
preferred stock, $.001 par
value; 10,000,000 shares
authorized; 4,967,959 and
5,747,118 shares issued and
outstanding at December 31,
2009 and 2008, respectively,
net of discount -- 3,652,341
Total Liabilities 18,582,709 18,574,408
STOCKHOLDERS' EQUITY:
Common stock ($.001 par value;
200,000,000 shares authorized;
47,306,332 and 42,420,239 shares
issued and outstanding at December
31, 2009 and 2008, respectively) 47,306 42,420
Additional paid-in capital 15,649,328 11,554,381
Statutory reserves 5,674,324 3,750,529
Retained earnings 40,066,036 25,557,537
Accumulated other comprehensive
income 4,361,232 4,229,243
Total stockholders' Equity 65,798,226 45,134,110
Total Liabilities and
Stockholders' Equity $84,380,935 $63,708,518
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
For the Years Ended
December 31,
2009 2008
NET REVENUES:
Wholesale $44,842,525 $54,067,149
Retail 11,639,923 14,034,389
Other revenues 1,342,197 5,701,491
Total Net Revenues 57,824,645 73,803,029
COST OF SALES 25,353,714 40,651,042
GROSS PROFIT 32,470,931 33,151,987
OPERATING EXPENSES:
Selling expenses 8,040,161 14,902,646
Research and development -- 1,200,194
Loss on fixed assets impairment 1,719,884 --
General and administrative 3,391,875 1,979,203
Total Operating Expenses 13,151,920 18,082,043
INCOME FROM OPERATIONS 19,319,011 15,069,944
OTHER INCOME (EXPENSE):
Debt issuance costs (412,184) (361,436)
Registration rights penalty -- (650)
Interest income 48,520 12,626
Interest expense (2,154,373) (1,929,836)
Total Other Income (Expense) (2,518,037) (2,279,296)
INCOME BEFORE INCOME TAXES 16,800,974 12,790,648
INCOME TAXES 368,680 --
NET INCOME $16,432,294 $12,790,648
COMPREHENSIVE INCOME:
NET INCOME 16,432,294 12,790,648
OTHER COMPREHENSIVE INCOME:
Foreign currency
translation gain 131,989 2,247,686
COMPREHENSIVE INCOME $16,564,283 $15,038,334
NET INCOME PER COMMON SHARE:
Basic $0.37 $0.30
Diluted $0.33 $0.27
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 44,209,856 42,307,762
Diluted 50,046,381 48,054,880
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
December 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $16,432,294 $12,790,648
Adjustments to reconcile net income
from operations to net cash provided
by operating activities:
Depreciation and amortization 1,986,361 634,347
Loss on fixed assets impairment 1,719,884 --
Amortization of deferred debt
issuance costs 412,184 361,062
Amortization of debt discount -- 208,355
Amortization of discount on
convertible redeemable preferred
stock 1,196,106 962,604
Amortization of prepaid expense
attributable to warrants 14,849 163,338
Stock-based compensation 282,083 318,551
Interest expenses caused by
escrow shares transfer 337,500 --
Warrants revaluation -- 74,593
Decrease in allowance for
doubtful accounts and sales
returns -- (575,781)
Changes in assets and liabilities:
Accounts receivable 4,361,619 16,001,384
Inventories 2,755,869 (145,910)
Prepaid expenses and other
current assets 2,043,209 939,654
Accounts payable and accrued
expenses 213,431 1,360,568
Other current payables 668,662 --
Taxes payable (1,895,451) 4,336,947
Unearned revenue 596,414 (36,276)
Due to related parties 237,452 --
NET CASH PROVIDED BY OPERATING
ACTIVITIES 31,362,466 37,394,084
CASH FLOWS FROM INVESTING ACTIVITIES:
Deposits on patent right -- (2,872,635)
Deposits on land use right -- (32,124,672)
Payments on intangible assets (17,581,071) (5,465,762)
Purchase of property and
equipment (11,118,884) (1,438,419)
NET CASH USED IN INVESTING ACTIVITIES (28,699,955) (41,901,488)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of convertible debt -- (2,520,000)
Proceeds from sale of convertible
redeemable stocks -- 5,000,000
Payment of debt issuance costs -- (468,568)
Proceeds from related party
advances -- 965,986
Repayments of related party
advances -- (1,996,481)
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- 980,937
EFFECT OF EXCHANGE RATE ON CASH 4,421 247,318
NET INCREASE (DECREASE) IN CASH 2,666,932 (3,279,149)
CASH - beginning of year 1,278,808 4,557,957
CASH - end of year $3,945,740 $1,278,808
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $-- $103,250
Income taxes $-- $--
Non-cash investing and financing
activities:
Warrants issued for prepaid
financing costs and consulting
service $-- $505,752
Common stock issued for services $2,370,250 $318,551
Common stock issued for conversion
of convertible debt $-- $250,000
Common stock issued for
conversion of convertible
redeemable preferred stock $1,110,000 $-
Debt discount for grant of
warrants and beneficial
conversion feature $-- $2,310,263
Convertible redeemable preferred
stock issued for dividend
payable $432,125 $--
For more information, please contact:
Lotus Pharmaceuticals, Inc.
Yan ZENG, CFO
Tel: +86-10-6389-9868
Email: zy@lotuspharma.com
