HAIKOU CITY, China, May 15, 2020 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended March 31, 2020.
First Quarter Highlights
Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "The current outbreak of COVID-19 has had a material and adverse effect on the Company's business operations. We had experienced disruptions and restrictions on our ability to travel and to distribute our products, as well as temporary closures of our facilities or the facilities of the suppliers or customers. In addition, COVID-19 has resulted in a widespread health crisis that adversely affected the economies and financial markets of China and many other countries." Ms. Li continued, "along with the lasting efforts to place emphasis on the marketing and sales of our current exiting pharmaceutical products, we continue to explore in the field of comprehensive healthcare. Comprehensive healthcare focuses on people's daily life, aging and disease and pays attention to all kinds of risk factors and misunderstandings affecting health. We launched wash-free sanitizer and mask production lines recently to address the market needs caused by COVID-19. We aim to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical and comprehensive healthcare products for the benefit of human health."
First Quarter Results
Revenue decreased by 39.8% to $1.8 million for the three months ended March 31, 2020, as compared to $2.9 million for the three months ended March 31, 2019. This decrease was mainly due to the negative impact of the outbreak of COVID-19. Since the Chinese New Year holiday in early February, almost all Chinese companies, including us, have delayed the resumption of work. Our work resumption rate has gradually returned to 90% by the end of March 2020.
For the three months ended March 31, 2020, our cost of revenue was $1.6 million, or 89% of total revenue, while cost of revenue was $2.3 million, or 78% of total revenue, for the same period in 2019.
Gross profit for the three months ended March 31, 2020 was $0.2 million, as compared to $0.7 million during the same period in 2019. Our gross profit margin in the three months ended March 31, 2020 was 11.0% as compared to 22.4% during the same period in 2019. The decrease in our gross profit margin was mainly due to the decrease in revenue and the increased ratio of fixed cost to revenue.
Our selling expenses for the three months ended March 31, 2020 and 2019 were $0.3 million and $0.5 million, respectively. Selling expenses accounted for 18.5% of the total revenue in the three months ended March 31, 2020, as compared to 16.3% during the same period in 2019. As a result of the adjustment of many policies of healthcare reform, we had reduced the number of personnel and expenses to efficiently support our sales and the collection of accounts receivable.
Our general and administrative expenses were both $0.4 million for the three months ended March 31, 2020 and 2019, respectively. It accounted for 22.0% and 14.6% of our total revenue in the three months ended March 31, 2020 and 2019, respectively.
Our research and development expenses for the three months ended March 31, 2020 were $0.05 million, as compared to $0.07 million in the same period in 2019. Research and development expenses accounted for 2.8% and 2.4% of our total revenue in the three months ended March 31, 2020 and 2019, respectively. These expenditures were mainly for the consistency evaluations of our existing products.
Our bad debt expenses for the three months ended March 31, 2020 were $30,246, as compared to $13,312 for the same period in 2019. The increase in our bad debt expenses in this period was partially due to the slow-down collection of bad debt because of the nationwide delayed work resumption caused by COVID-19.
Net loss for the three months ended March 31, 2020 was $0.7 million, or $0.02 each basic and diluted share, as compared to a net loss of $0.4 million, or $0.01 each basic and diluted share, for the same period a year ago. The increase in net loss was mainly a result of decreased revenue, whereas the expenditures did not decrease in proportion to revenue due to fixed costs.
Financial Condition
As of March 31, 2020 the Company had cash and cash equivalents of $0.1 million compared to $1.1 million as of December 31, 2019. As of March 31, 2020, our net accounts receivable was $0.9 million, compared to $0.6 million as of December 31, 2019. Cash flow used in operating activities was both $0.2 million for the three months ended March 31, 2020 and 2019, respectively.
In April 2020, the Company obtained a line of credit from Postal Savings Bank of China for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced. The loan bears interest at a rate of 4.25% per annum. Advances on the line of credit are due two years from the date of the advance. A third party company has guaranteed the loan as being the second priority creditor in the collateral in certain land use rights and buildings next to the creditor of the Company's construction loan facility. In addition, the Company's Chief Executive Officer and Chair of the Board personally guaranteed the new line of credit. The Company has an additional RMB 5,000,000 (approximately $0.7 million) available under the line, subject to a risk review and approval by the third party guarantee company.
The Company will hold a conference call at 8:30 am E.T. on May 15, 2020 to discuss the results of the first quarter 2020. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 1872457. A replay of the call will be accessible through May 23, 2020 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 1872457.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective business model is driven by market demand and supported by new GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit www.chinapharmaholdings.com. The Company routinely posts important information on its website.
Safe Harbor Statement
Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties may include, but are not limited to: the achievability of financial guidance; success of new product development; unanticipated changes in product demand; increased competition; downturns in the Chinese economy; uncompetitive levels of research and development; and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations, except as required by applicable law or regulation.
- FINANCIAL TABLES FOLLOW –
CHINA PHARMA HOLDINGS, INC. |
||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||
(Unaudited) |
||||
March 31, |
December 31, |
|||
2020 |
2019 |
|||
ASSETS |
||||
Current Assets: |
||||
Cash and cash equivalents |
$ 145,932 |
$ 1,074,979 |
||
Restricted cash |
331,038 |
109,908 |
||
Banker's acceptances |
48,096 |
45,756 |
||
Trade accounts receivable, less allowance for doubtful |
||||
accounts of $17,334,819 and $17,575,100, respectively |
855,084 |
635,371 |
||
Other receivables, less allowance for doubtful |
||||
accounts of $22,320 and $22,729, respectively |
52,648 |
46,643 |
||
Advances to suppliers |
1,050,083 |
404 |
||
Inventory |
3,625,000 |
3,588,824 |
||
Prepaid expenses |
253,321 |
77,120 |
||
Total Current Assets |
6,361,202 |
5,579,005 |
||
Property and equipment, net |
15,768,241 |
16,313,827 |
||
Operating lease right of use asset |
112,447 |
136,779 |
||
Intangible assets, net |
193,774 |
205,611 |
||
TOTAL ASSETS |
$ 22,435,664 |
$ 22,235,222 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current Liabilities: |
||||
Trade accounts payable |
$ 847,760 |
$ 1,366,330 |
||
Accrued expenses |
245,743 |
189,880 |
||
Other payables |
3,642,539 |
3,560,332 |
||
Advances from customers |
1,940,728 |
505,398 |
||
Other payables - related parties |
2,097,447 |
2,071,986 |
||
Operating lease liability, current portion |
90,974 |
91,306 |
||
Current portion of construction loan facility |
1,975,978 |
2,150,168 |
||
Bankers' acceptance notes payable |
331,038 |
109,908 |
||
Total Current Liabilities |
11,172,207 |
10,045,308 |
||
Non-current Liabilities: |
||||
Construction loan facility |
2,117,119 |
2,150,168 |
||
Operating lease liability, net of current portion |
24,803 |
48,701 |
||
Deferred tax liability |
741,863 |
753,444 |
||
Total Liabilities |
14,055,992 |
12,997,621 |
||
Risks and Uncertainties (Note 13) |
||||
Stockholders' Equity: |
||||
Preferred stock, $0.001 par value; 5,000,000 shares authorized; |
||||
no shares issued or outstanding |
- |
- |
||
Common stock, $0.001 par value; 95,000,000 shares authorized; |
||||
43,579,557 shares and 43,579,557 shares outstanding, respectively |
43,580 |
43,580 |
||
Additional paid-in capital |
23,590,204 |
23,590,204 |
||
Accumulated deficit |
(26,633,299) |
(25,972,402) |
||
Accumulated other comprehensive income |
11,379,187 |
11,576,219 |
||
Total Stockholders' Equity |
8,379,672 |
9,237,601 |
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 22,435,664 |
$ 22,235,222 |
||
CHINA PHARMA HOLDINGS, INC. |
||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||
AND COMPREHENSIVE INCOME (LOSS) |
||||
(Unaudited) |
||||
For the Three Months |
||||
Ended March 31, |
||||
2020 |
2019 |
|||
Revenue |
$ 1,763,955 |
$ 2,929,273 |
||
Cost of revenue |
1,569,516 |
2,272,743 |
||
Gross profit |
194,439 |
656,530 |
||
Operating expenses: |
||||
Selling expenses |
326,095 |
478,691 |
||
General and administrative expenses |
388,559 |
428,817 |
||
Research and development expenses |
48,819 |
69,918 |
||
Bad debt expense |
30,246 |
13,312 |
||
Total operating expenses |
793,719 |
990,738 |
||
Loss from operations |
(599,280) |
(334,208) |
||
Other income (expense): |
||||
Interest income |
386 |
3,257 |
||
Interest expense |
(62,003) |
(86,780) |
||
Net other expense |
(61,617) |
(83,523) |
||
Loss before income taxes |
(660,897) |
(417,731) |
||
Income tax expense |
- |
- |
||
Net loss |
$ (660,897) |
$ (417,731) |
||
Other comprehensive income - foreign currency |
||||
translation adjustment |
(197,032) |
835,865 |
||
Comprehensive income (loss) |
$ (857,929) |
$ 418,134 |
||
Loss per share: |
||||
Basic and diluted |
$ (0.02) |
$ (0.01) |
||
Weighted average shares outstanding |
43,579,557 |
43,579,557 |
||
CHINA PHARMA HOLDINGS, INC. |
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(Unaudited) |
||||
For the Three Months |
||||
Ended March 31, |
||||
2020 |
2019 |
|||
Cash Flows from Operating Activities: |
||||
Net loss |
$ (660,897) |
$ (417,731) |
||
Depreciation and amortization |
655,921 |
795,483 |
||
Bad debt expense |
30,246 |
13,312 |
||
Changes in assets and liabilities: |
||||
Trade accounts and other receivables |
(341,165) |
(145,935) |
||
Advances to suppliers |
(1,065,639) |
(107,839) |
||
Inventory |
(24,688) |
389,589 |
||
Trade accounts payable |
(505,131) |
6,079 |
||
Accrued taxes payable |
52,503 |
(51,879) |
||
Other payables and accrued expenses |
103,541 |
(386,336) |
||
Change in bankers' acceptance notes payable |
226,206 |
(326,983) |
||
Advances from customers |
1,465,030 |
(12,285) |
||
Prepaid expenses |
(180,082) |
8,065 |
||
Net Cash Provided by Operating Activities |
(244,155) |
(236,460) |
||
Cash Flows from Investing Activities: |
||||
Purchases of property and equipment |
(347,795) |
(73,866) |
||
Net Cash Used in Investing Activities |
(347,795) |
(73,866) |
||
Cash Flows from Financing Activities: |
||||
Payments of construction term loan |
(143,286) |
(148,227) |
||
Advances from related party |
36,293 |
- |
||
Payments of related party payables |
- |
(119,561) |
||
Net Cash Used in Financing Activities |
(106,993) |
(267,788) |
||
Effect of Exchange Rate Changes on Cash |
(8,974) |
55,484 |
||
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash |
(707,917) |
(522,630) |
||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period |
1,184,887 |
2,460,527 |
||
Cash, Cash Equivalents and Restricted Cash at End of Period |
$ 476,970 |
$ 1,937,897 |
||
Cash and Cash Equivalents |
145,932 |
961,277 |
||
Restricted cash |
331,038 |
976,620 |
||
Cash, Cash Equivalents and Restricted Cash at End of Period |
$ 476,970 |
$ 1,937,897 |
||
Supplemental Cash Flow Information: |
||||
Cash paid for income taxes |
$ - |
$ - |
||
Cash paid for interest |
$ 57,044 |
$ 80,693 |
||
Supplemental Noncash Investing and Financing Activities: |
||||
Accounts receivable collected with banker's acceptances |
$ 71,127 |
$ 175,793 |
||
Inventory purchased with banker's acceptances |
68,037 |
145,614 |
||
Right-of-use assets obtained in exchange for operating lease obligations |
- |
236,055 |
||
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