HAIKOU, China, Nov. 14, 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 September 30, 2020.
Third Quarter Highlights
Ms. Zhilin Li, China Pharma's Chairwoman and CEO, commented, "Since the outbreak of COVID-19 early this year, it has continued to create a substantial negative impact on sales of pharmaceutical companies, including ours. Nevertheless, we achieved comparable drug sales revenue in the third quarter of 2020 compared to the same period last year, which showed certain improvements from the sales performance in the previous quarter (the second quarter of 2020), thanks to the efforts of the management and sales teams." Ms. Li continued, "We will continue to work on improving human health and 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."
Third Quarter Results
Revenue was both $2.4 million in the three months ended September 30, 2020 and 2019, respectively.
For the three months ended September 30, 2020, our cost of revenue was $2.4 million, or 98% of total revenue, comparing to $2.0 million, or 84% of total revenue, for the same period in 2019. The increase in cost of revenue was mainly due to declining production in the third quarter in addition to constant fixed costs leading to higher costs per unit of products and therefore higher sales costs of revenue in the third quarter of 2020.
Gross profit for the three months ended September 30, 2020 was $0.05 million, as compared to $0.37 million during the same period in 2019. Our gross profit margin in the three months ended September 30, 2020 was 2.0% as compared to 15.7% during the same period in 2019. The decrease in our gross profit margin was mainly due to the increased cost of revenue in the third quarter of 2020.
Our selling expenses for the three months ended September 30, 2020 and 2019 were $0.7 million and $0.6 million, respectively. Selling expenses accounted for 27.2% of the total revenue in the three months ended September 30, 2020, as compared to 25.8% during the same period in 2019. Because of the adjustments in our sales practices and the reformation of healthcare policies, we 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 $0.3 million for the three months ended September 30, 2020 and 2019, respectively. General and administrative expenses accounted for 12.1% and 14.0% of our total revenues in the three months ended September 30, 2020 and 2019, respectively.
Our operating loss for the three months ended September 30, 2020 was $1.0 million, compared to $0.6 million during the same period in 2019.
Net loss for the three months ended September 30, 2020 was $1.0 million, or $0.02 per basic and diluted common share, as compared to net loss of $0.7 million for the same period a year ago, or $0.02 per basic and diluted common share. The increase in net loss was mainly due to the increased cost of revenue in this period.
Nine Months Results
Revenue was both $7.9 million for the nine months ended September 30, 2020 and 2019, respectively.
For the nine months ended September 30, 2020, our cost of revenue was $6.5 million, or 82.5% of total revenue, comparing to $6.7 million, or 84.9% of total revenue, in the same period in 2019. The decrease in cost of revenue was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020 partially offset the increase in cost of revenue.
Gross profit for the nine months ended September 30, 2020 was $1.4 million, compared to $1.2 million in the same period in 2019. Our gross profit margin in the nine months ended September 30, 2020 was 17.5% compared to 15.1% in the same period in 2019. The increase in our gross profit margin was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020 partially offset the increase in cost of revenue.
Net loss for the nine months ended September 30, 2020 was $1.7 million, or $0.04 per basic and diluted common share, as compared to net loss of $2.0 million, or $0.04 per basic and diluted common share for the nine months ended September 30, 2019. The decrease of net loss was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Financial Condition
As of September 30, 2020, the Company had cash and cash equivalents of $0.3 million compared to $1.1 million as of December 31, 2019.
Our net accounts receivable was $0.5 million and $0.6 million as of September 30, 2020 and December 31, 2019.
For the nine months ended September 30, 2020, cash flow used in operating activities was $0.4 million, as compared to cash flow provided by operating activities of $0.6 million for the same period in 2019.
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 & Biotechnique 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) |
||||
September 30, |
December 31, |
|||
2020 |
2019 |
|||
ASSETS |
||||
Current Assets: |
||||
Cash and cash equivalents |
$ 346,611 |
$ 1,074,979 |
||
Restricted cash |
- |
109,908 |
||
Banker's acceptances |
38,465 |
45,756 |
||
Trade accounts receivable, less allowance for doubtful |
||||
accounts of $17,957,621 and $17,575,100, respectively |
535,060 |
635,371 |
||
Other receivables, less allowance for doubtful |
||||
accounts of $27,318 and $22,729, respectively |
91,389 |
46,643 |
||
Advances to suppliers |
106,880 |
404 |
||
Inventory |
3,513,570 |
3,588,824 |
||
Prepaid expenses |
401,747 |
77,120 |
||
Total Current Assets |
5,033,722 |
5,579,005 |
||
Property, plant and equipment, net |
15,836,890 |
16,313,827 |
||
Operating lease right of use asset |
70,733 |
136,779 |
||
Intangible assets, net |
183,545 |
205,611 |
||
TOTAL ASSETS |
$ 21,124,890 |
$ 22,235,222 |
||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
Current Liabilities: |
||||
Trade accounts payable |
$ 989,641 |
$ 1,366,330 |
||
Accrued expenses |
160,535 |
189,880 |
||
Other payables |
3,483,821 |
3,560,332 |
||
Advances from customers |
640,103 |
505,398 |
||
Other payables - related parties |
2,176,629 |
2,071,986 |
||
Operating lease liability, current portion |
73,690 |
91,306 |
||
Current portion of construction loan facility |
2,202,611 |
2,150,168 |
||
Current portion of lines of credit |
1,827,189 |
- |
||
Bankers' acceptance notes payable |
- |
109,908 |
||
Total Current Liabilities |
11,554,219 |
10,045,308 |
||
Non-current Liabilities: |
||||
Construction loan facility |
- |
2,150,168 |
||
Lines of credit, net of current portion |
939,781 |
- |
||
Operating lease liability, net of current portion |
- |
48,701 |
||
Deferred tax liability |
771,820 |
753,444 |
||
Total Liabilities |
13,265,820 |
12,997,621 |
||
Commitments and Contingencies (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 issued and outstanding, respectively |
43,580 |
43,580 |
||
Additional paid-in capital |
23,590,204 |
23,590,204 |
||
Accumulated deficit |
(27,630,142) |
(25,972,402) |
||
Accumulated other comprehensive income |
11,855,428 |
11,576,219 |
||
Total Stockholders' Equity |
7,859,070 |
9,237,601 |
||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 21,124,890 |
$ 22,235,222 |
||
CHINA PHARMA HOLDINGS, INC. |
||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
AND COMPREHENSIVE INCOME (LOSS) |
||||||||
(Unaudited) |
||||||||
For the Three Months |
For the Nine Months |
|||||||
Ended September 30, |
Ended September 30, |
|||||||
2020 |
2019 |
2020 |
2019 |
|||||
Revenue |
$ 2,400,667 |
$ 2,376,844 |
$ 7,935,345 |
$ 7,875,525 |
||||
Cost of revenue |
2,353,471 |
2,004,085 |
6,543,912 |
6,682,688 |
||||
Gross profit |
47,196 |
372,759 |
1,391,433 |
1,192,837 |
||||
Operating expenses: |
||||||||
Selling expenses |
654,090 |
613,110 |
1,707,827 |
1,597,667 |
||||
General and administrative expenses |
290,586 |
333,833 |
1,001,590 |
1,097,200 |
||||
Research and development expenses |
37,628 |
39,716 |
116,491 |
175,642 |
||||
Bad debt (benefit) expense |
17,386 |
31,304 |
42,314 |
54,708 |
||||
Total operating expenses |
999,690 |
1,017,963 |
2,868,222 |
2,925,217 |
||||
Loss from operations |
(952,494) |
(645,204) |
(1,476,789) |
(1,732,380) |
||||
Other income (expense): |
||||||||
Interest income |
3,665 |
11,840 |
5,263 |
27,216 |
||||
Interest expense |
(61,067) |
(67,590) |
(186,214) |
(251,624) |
||||
Net other expense |
(57,402) |
(55,750) |
(180,951) |
(224,408) |
||||
Loss before income taxes |
(1,009,896) |
(700,954) |
(1,657,740) |
(1,956,788) |
||||
Income tax expense |
- |
- |
- |
- |
||||
Net loss |
(1,009,896) |
(700,954) |
(1,657,740) |
(1,956,788) |
||||
Other comprehensive income - foreign currency |
||||||||
translation adjustment |
470,445 |
(909,889) |
279,209 |
(885,188) |
||||
Comprehensive loss |
$ (539,451) |
$ (1,610,843) |
$ (1,378,531) |
$ (2,841,976) |
||||
Loss per share: |
||||||||
Basic and diluted |
$ (0.02) |
$ (0.02) |
$ (0.04) |
$ (0.04) |
||||
Weighted average shares outstanding |
43,579,557 |
43,579,557 |
43,579,557 |
43,579,557 |
||||
CHINA PHARMA HOLDINGS, INC. |
||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
(Unaudited) |
||||
For the Nine Months |
||||
Ended September 30, |
||||
2020 |
2019 |
|||
Cash Flows from Operating Activities: |
||||
Net loss |
$ (1,657,740) |
$ (1,956,788) |
||
Depreciation and amortization |
1,978,363 |
2,261,800 |
||
Bad debt expense |
42,314 |
54,708 |
||
Inventory write off |
- |
87,542 |
||
Changes in assets and liabilities: |
||||
Trade accounts and other receivables |
(366,385) |
(407,733) |
||
Advances to suppliers |
(103,701) |
(2,980) |
||
Inventory |
561,139 |
1,436,878 |
||
Trade accounts payable |
(399,363) |
130,642 |
||
Accrued taxes payable |
123,921 |
23,321 |
||
Other payables and accrued expenses |
(250,851) |
(201,831) |
||
Change in bankers' acceptance notes payable |
(109,663) |
(773,264) |
||
Advances from customers |
119,199 |
(12,670) |
||
Prepaid expenses |
(314,361) |
(9,211) |
||
Net Cash (Used in) Provided by Operating Activities |
(377,128) |
630,414 |
||
Cash Flows from Investing Activities: |
||||
Purchases of property and equipment |
(1,099,878) |
(85,739) |
||
Net Cash Used in Investing Activities |
(1,099,878) |
(85,739) |
||
Cash Flows from Financing Activities: |
||||
Proceeds from lines of credit |
2,695,087 |
- |
||
Payments of construction term loan |
(2,145,389) |
(2,188,463) |
||
Proceeds from related party loan |
162,090 |
674,405 |
||
Payments of related party loan |
(77,530) |
(209,726) |
||
Net Cash Provided by (Used in) Financing Activities |
634,258 |
(1,723,784) |
||
Effect of Exchange Rate Changes on Cash |
4,472 |
(30,604) |
||
Net Decrease in Cash, Cash Equivalents and Restricted Cash |
(838,276) |
(1,209,713) |
||
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 |
$ 346,611 |
$ 1,250,814 |
||
Cash and Cash Equivalents |
346,611 |
761,606 |
||
Restricted cash |
- |
489,208 |
||
Cash, Cash Equivalents and Restricted Cash at End of Period |
$ 346,611 |
$ 1,250,814 |
||
Supplemental Cash Flow Information: |
||||
Cash paid for income taxes |
$ - |
$ - |
||
Cash paid for interest |
$ 176,055 |
$ 241,465 |
||
Supplemental Noncash Investing and Financing Activities: |
||||
Issuance of banker's acceptances |
$ - |
$ 2,641 |
||
Accounts receivable collected with banker's acceptances |
394,393 |
532,537 |
||
Inventory purchased with banker's acceptances |
402,582 |
553,183 |
||
Right-of-use assets obtained in exchange for operating lease obligations |
- |
231,130 |
||
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