Announces 2010 Earnings Guidance
BEIJING, May 15 /PRNewswire-Asia/ -- 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") today reported its financial results for the first quarter ended March 31, 2010.
First Quarter 2010 Highlights and Recent Developments:
-- Diluted EPS of $0.09, up 27% from first quarter 2009
-- Net revenues of $14.9 million, up 26% from first quarter 2009
-- Net income of $4.9 million, up 38% from first quarter 2009
-- Gross margin of 58%, as compared with 56% from first quarter of 2009
-- Net margin of 33%, as compared with 30% from first quarter of 2009
-- Reduced our current liability under the outstanding Series A Preferred
Stock from $2,477,433 on March 31, 2010 to $621,333 May 13, 2010 due to
the conversion of preferred shares to common stocks
-- Added five prescription drugs under the National Health Insurance
Program to deliver through the wholesale channel nationwide, achieving
the goal of increasing product for 2010
-- Continued Sarbanes-Oxley compliance project, to be fully and timely
compliant in 2010
-- Commenced construction of the Beijing building complex which is
scheduled for completion in 2010
-- Received SFDA's approval for R-Bambuterol(R) Hydrochloride Tablets to
commence clinical trials as a Class 1 New Drug for special/fast track
review
-- Approved extension of contract term from 10 years to 30 years between
Lotus Pharmaceuticals, Inc.'s wholly-owned foreign enterprise and two
operating entities in China
Revenues for the first quarter of 2010 increased 26% to $14.9 million, up from $11.8 million in the first quarter of 2009. As compared to the first quarter of 2009, wholesale revenues, which were 77% of total net revenues for the first quarter of 2010, increased 29%; and retail revenues, which were 22% of total net revenues for the first quarter of 2010, increased 52% for the first quarter of 2010. The increase in wholesale revenues was mainly attributed to strong sales from two areas: 1) sales increases in the three core prescription drugs-Valsartan Capsules, Brimonidine Tartrate Eye Drops and Yipubishan-Octreotide Acetate Injection resulting from increased demand from existing channels and an expanded sales network. These three drugs continue to gain popularity in the market for their safety, efficacy and stability; and 2) revenues contributed from five new prescription drugs added this quarter. For 2010, the Company has not raised prices for its prescription drugs and maintains its pricing from 2009. However, if the market price demands adjustment, the Company will act accordingly.
The increase in retail revenues was attributable to direct sales to Over-the-Counter ("OTC") drug outlets in Beijing. Currently, the Company has established direct sales to over 1000 drug stores in Beijing with nearly 1000 over-the-counter drugs produced by third party manufacturers. The Company has exclusive distribution rights to 40% of such drugs. This new segment is expected to grow with our strong and experienced sales team recruited at the end of 2009 and the opportunities in Beijing. Once the 10,000sqm storage facility is built and fully utilized, it can fully support the expansion of direct sales to OTC drug stores as well as hospitals.
Gross profit in the first quarter increased 31% year over year to $8.7 million from $6.6 million. Gross margin increased to 58% in the first quarter 2010 from 56% in the prior year corresponding period.
Net income for the 2010 first quarter was $4.9 million, or $0.09 per diluted share, compared with $3.6 million, or $0.07 per diluted share, in the first quarter of 2009. Net margin increased to 33% in the first quarter 2010 from 30% in the prior year comparable period.
The Company's cash position at the end of the first quarter was $1.1 million, as compared to $3.9 million at the end of 2009. Its adjusted working capital ratio was 1.0X due to its adjusted current liabilities calculation. The adjusted current liability amount is $7,286,444 instead of $9,142,544 because current liabilities under Series A convertible redeemable preferred stock have been reduced to $621,333 as of May 13, 2010 after conversion of preferred shares to common shares.
CEO Dr. Liu commented, "We have delayed the buildup in Inner Mongolia to focus on our efforts in Beijing. We use our internally generated cash to fund the construction of the Beijing new building complex so that our dispersed operating units can be consolidated into one single location. We are positioning to capture the fast growing demand in the pharmaceutical sector by establishing the foundations of a modern facility, a pipeline of innovative drugs under patent protection and an excellent sales network."
2010 Earnings Guidance
Looking forward for the balance of 2010, the Company continues to expect to grow its revenues and net income by 20-30% compared to its performance in 2009. The growth drivers are growth in direct sales to OTC drug stores and hospitals, increased medical equipment sales and increased prescription drug sales.
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.
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.
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of
March 31, 2010 December 31, 2009
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS:
Cash $1,125,181 $3,945,740
Accounts receivable 1,669,704 1,784,194
Other receivable 16,135 16,132
Inventories 3,301,050 1,039,867
Prepaid expenses and other assets -
current 1,091,909 856,691
Deferred debt costs -- 52,226
Total Current Assets 7,203,979 7,694,850
PROPERTY AND EQUIPMENT - net of
depreciation 21,309,774 16,223,775
OTHER ASSETS
Prepaid expenses - noncurrent 1,169,167 1,359,583
Deposits and Installments on
intangible assets 9,215,781 9,214,299
Intangible assets, net of accumulated
amortization 49,458,233 49,888,428
Total Assets $88,356,934 $84,380,935
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $301,442 $427,924
Other payables 1,418,234 2,262,760
Taxes payable 2,481,808 3,131,908
Unearned revenue 795,620 1,163,771
Due to related parties - current 1,668,007 1,490,649
Series A convertible redeemable
preferred stock, $.001 par value;
10,000,000 shares authorized;
2,847,623 and 4,967,959 shares
issued and outstanding at March 31,
2010 and December 31, 2009,
respectively, net of discount 2,477,433 4,170,572
Total Current Liabilities 9,142,544 12,647,584
LONG-TERM LIABILITIES:
Due to related parties - noncurrent 859,819 866,102
Notes payable - related parties 5,069,839 5,069,023
Total Liabilities 15,072,202 18,582,709
STOCKHOLDERS' EQUITY:
Common stock ($.001 par value;
200,000,000 shares authorized;
50,863,217 and 47,306,332 shares
issued and outstanding at March 31,
2010 and December 31, 2009,
respectively) 50,863 47,306
Additional paid-in capital 18,192,431 15,649,328
Statutory reserves 6,240,202 5,674,324
Retained earnings 44,429,076 40,066,036
Accumulated other comprehensive
income 4,372,160 4,361,232
Total stockholders' Equity 73,284,732 65,798,226
Total Liabilities and Stockholders'
Equity $88,356,934 $84,380,935
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
For the Three Months Ended
March 31,
2010 2009
NET REVENUES:
Wholesale $11,498,086 $8,940,405
Retail 3,252,392 2,137,188
Other revenues 198,434 746,694
Total Net Revenues 14,948,912 11,824,287
COST OF SALES 6,243,629 5,186,158
GROSS PROFIT 8,705,283 6,638,129
OPERATING EXPENSES:
Selling expenses 2,168,953 1,701,799
General and administrative 1,021,857 747,206
Total Operating Expenses 3,190,810 2,449,005
INCOME FROM OPERATIONS 5,514,473 4,189,124
OTHER INCOME (EXPENSE):
Debt issuance costs (52,226) (99,517)
Interest income 1,280 1,319
Interest expense (432,402) (448,097)
Total Other Income (Expense) (483,348) (546,295)
INCOME BEFORE INCOME TAXES 5,031,125 3,642,829
INCOME TAXES 102,207 74,727
NET INCOME $4,928,918 $3,568,102
COMPREHENSIVE INCOME:
NET INCOME 4,928,918 3,568,102
OTHER COMPREHENSIVE INCOME:
Foreign currency translation gain 10,928 62,111
COMPREHENSIVE INCOME $4,939,846 $3,630,213
NET INCOME PER COMMON SHARE:
Basic $0.10 $0.08
Diluted $0.09 $0.07
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 49,559,184 43,048,060
Diluted 53,708,923 49,254,950
LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
March 31,
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $4,928,918 $3,568,102
Adjustments to reconcile net income
from operations to net cash
provided by operating activities:
Depreciation and amortization 444,812 362,467
Amortization of deferred debt
issuance costs 52,226 99,517
Amortization of discount on
convertible redeemable preferred
stock 151,553 288,783
Amortization of prepaid expense
attributable to warrants -- 14,849
Interest expense attributable to
beneficial conversion feature of
preferred shares 184,660 --
Stock-based compensation 23,000 --
Changes in assets and liabilities:
Accounts receivable 114,778 4,744,877
Inventories (2,261,039) 66,423
Prepaid expenses and other current
assets 208,214 1,329,083
Accounts payable and accrued expenses 194,827 (666,522)
Other current payables (844,890) --
Taxes payable (650,611) (3,027,383)
Unearned revenue (368,342) 228,143
Due to related parties 90,697 --
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,268,803 7,008,339
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments on intangible assets -- (4,965,976)
Purchase of property and equipment (5,090,025) (2,153,243)
NET CASH USED IN INVESTING ACTIVITIES (5,090,025) (7,119,219)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from related party advances -- 59,314
NET CASH PROVIDED BY FINANCING
ACTIVITIES -- 59,314
EFFECT OF EXCHANGE RATE ON CASH 663 1,527
NET DECREASE IN CASH (2,820,559) (50,039)
CASH - beginning of period 3,945,740 1,278,808
CASH - end of period $1,125,181 $1,228,769
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for:
Interest $-- $--
Income taxes $-- $--
Non-cash investing and financing
activities:
Common stock issued for services $253,000 $249,000
Common stock issued for conversion of
convertible redeemable preferred
stock $2,166,000 $--
Convertible redeemable preferred
stock issued for dividend payable $321,308 $400,000
