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Benda Pharmaceutical Reports Third Quarter 2008 Financial Results
Date:11/18/2008

HUBEI PROVINCE, China, Nov. 18 /PRNewswire-FirstCall/ -- Benda Pharmaceutical, Inc. (OTC Bulletin Board: BPMA), a China-based pharmaceutical company producing both Gendicine(R), a commercialized gene therapy medicine for the treatment of cancer, and traditional Chinese and conventional medicines, today announced financial results for the three and nine month periods ended September 30, 2008. The Company intends to file its Form 10-Q with the SEC today.

Nine Months Ended September 30, 2008

Revenue in the first nine months of 2008 increased 25.7% to $19.9 million from $15.8 million in the first nine months of 2007, primarily reflecting increased sales at Benda Ebei. SiBiono generated revenue of $1.8 million in the first nine months of 2008, down from $3.3 million in the prior year period. The decline in SiBiono-related revenue reflects the Company's reorganization of personnel in the department.

Gross profit in the first nine months of 2008 was $7.2 million, a 5.7% decrease from $7.7 million in the first nine months of 2007. Gross margin was 36.5%, compared with 48.7% in the same period in 2007. Gross margin performance reflected a drop in sales of Gendicine, which has historically generated a comparatively higher gross margin.

Operating loss in the first nine months of 2008 was $0.7 million, an improvement from an operating loss of $5.3 million in the first nine months of 2007. Operating expenses in the first nine months of 2008 was approximately $7.9 million, compared with $13.0 million in the first nine months of 2007. Operating expense reflects promotional fees for Gendicine and the introduction of new products in Benda Ebei, as well as a $1.4 million penalty paid to investors for registration delays. The Company incurred significantly higher operating costs in the prior year period related to the acquisition of SiBiono.

Net loss in the first nine months of 2008 improved to $4.7 million, or $0.05 per diluted share, from a net loss of $7.3 million, or $0.06 per diluted share, in the first nine months of 2007. Net loss in the first nine months of 2008 includes the impact of approximately $3.3 million in interest expenses related to the Company's outstanding convertible notes and the $1.4 million payment to investors related to the timing of the effectiveness of its registration statement on Form S-1. The Company was granted effectiveness on the S-1 filing and does not anticipate further penalty payments related to this S-1 filing going forward.

Three Months Ended September 30, 2008

Revenue in the third quarter of 2008 decreased 12.2% to $6.6 million from $7.6 million in the third quarter of 2007, primarily reflecting increased sales at Benda Ebei, offset by sales declines at SiBiono related to the Company's reorganization of personnel in the department. Benda management concluded the reorganization during the third quarter of 2008, and SiBiono has resumed production and sales. In the third quarter of 2008, the Company sold 3,021 vials of Gendicine, a sequential increase from sales of 1,087 vials sold in the first quarter of 2008 and 2,439 vials sold in the second quarter of 2008.

Gross profit in the third quarter of 2008 was $2.4 million, a decrease of 36.1% from $3.8 million in the third quarter of 2007. Gross margin was 36.5%, compared with 50.1% in the same period of 2007. The decline in gross margin was primarily due to a re-engineering of SiBiono's production department, which affected the sales of Gendicine. However, management believes that the re-engineering will lead to revenue growth in the coming quarters.

Operating income in the third quarter of 2008 decreased to $0.6 million from $1.7 million in the third quarter of 2007. Operating expense in the third quarter was approximately $1.8 million, compared with $2.1 million in the third quarter of 2007, reflecting the penalty payment of $0.3 million referenced above as well as advertising expenditure at SiBiono and Benda Ebei.

Net loss in the third quarter of 2008 was $0.8 million, or a net loss of $0.01 per basic and diluted share, compared to net income of $1.0 million, or net income of $0.01 per basic and diluted share, in the third quarter of 2007.

Charles Wan, Chairman and Chief Executive Officer of Benda, commented, ''We continue to be focused on enhancing our revenue performance at SiBiono, as well as our gross margin performance across the organization. The reorganization of personnel at SiBiono was completed in the third quarter and full-scale production is expected to resume in the fourth quarter of 2008. We continue to be optimistic about the market opportunities for SiBiono in the future.''

    Business Update
    -- Management update: The Company appointed George Zhou as Chief Operating
       Officer, effective August 13, 2008.
    -- Jiangling Benda plant update:  On April 9, 2008, Jiangling Benda
       received the GMP Certificate from the Chinese State Food and Drug
       Administration ("SFDA"), authorizing the production of Ribavirin.  The
       Company believes the certification is a major step toward
       commercializing Ribavirin in the domestic market.  To achieve
       full-scale production and further expansion, management is working with
       local banks to negotiate financing.
    -- Yidu Benda plant update: Yidu Benda completed its upgrade of the waste
       water system and passed the government's verification and testing of
       equipment in October 2007 and received "Environmental Influence
       Report" and "Safety Assessment Report" from the Yichang Environmental
       Protection Bureau and Yichang Safety Supervision Bureau in November and
       December of 2007, respectively. With this approval, Yidu Benda is
       allowed to perform trial production and test the production process at
       the plant, which will be followed by a test of the production results,
       held by the government bodies.  While those tests are performed, the
       management has been searching for high-margin products that will be
       accretive once production has fully resumed.
    -- SiBiono Arbitration: On November 27, 2007, Benda Ebei received an
       arbitration award from Shenzhen Arbitration Commission which determined
       that it should purchase a 6.24% stake in SiBiono from Xiaozhi Zhang,
       one of the shareholders of SiBiono, with the total consideration at
       RMB12.48 million, plus the penalty and related legal and arbitration
       expenses, totaling approximately RMB12.8 million. However, following
       this arbitration award, Benda Ebei found that Xiaozhi Zhang does
       not own all 6.24% of SiBiono's common stock and actually only owns
       3.28%. Therefore, based on this ground, Benda Ebei filed an application
       to Shenzhen Peoples' Court on May 22, 2008 to terminate the above
       mentioned arbitration award.  The application has been accepted by the
       Shenzhen Peoples' Court and is waiting for its further investigation.
    -- Intellectual Property Lawsuit:  On August 27, 2008, SiBiono received
       Case Acceptance Letters from the Guangdong Province Shenzhen City
       (Middle) Peoples' Court accepting a lawsuit against Zhaohui Peng, one
       of the shareholders of SiBiono and the inventor of Gendicine, to
       transfer title of all patents to SiBiono.  The patent, "A new method
       for manufacturing recombinant adenovirus", one of the main patents
       used to produce Gendicine(R), has been assigned to SiBiono; however,
       the other 5 approved patents in PRC still have not been assigned to
       SiBiono.  The Company believes that all the above mentioned patents
       should be rightfully transferred to SiBiono.

About Benda Pharmaceutical, Inc.

Benda Pharmaceutical, Inc. ( http://www.bendapharma.com ), a China-based pharmaceutical company, produces traditional Chinese and conventional medicines, as well as Gendicine(R), a commercialized gene therapy medicine for the treatment of cancer.

Safe Harbor Statement

The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward- looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.

                   Benda Pharmaceutical, Inc. Income Statement
                 (In thousands, except share and per share data)

                            NINE MONTHS ENDED         THREE MONTHS ENDED
                              SEPTEMBER 30,              SEPTEMBER 30,
                            2008         2007         2008         2007
                         (Unaudited)  (Unaudited)  (Unaudited)  (Unaudited)

     Revenue             $19,860,057  $15,796,295   $6,634,434   $7,559,443
       Cost of goods
        sold             (12,610,394)  (8,106,393)  (4,213,540)  (3,770,279)
     Gross profit          7,249,663    7,689,902    2,420,894    3,789,164

     Selling expenses     (2,122,689)    (675,013)    (691,477)    (330,127)

     General and
      administrative
      expenses
       Amortization of
        intangible
        assets              (148,591)     (89,107)     (50,643)     (33,888)
       Amortization of
        debt issue costs    (198,360)    (134,653)     (66,603)     (67,384)
       Depreciation         (373,639)    (223,418)    (130,144)      (9,162)
       Bad debts            (534,124)    (502,273)     239,769      274,586
       Director
        remuneration        (162,968)     (58,959)     (22,500)     (25,014)
       Penalty to
        Investors         (1,380,173)    (540,000)    (266,768)    (420,000)
       Brokerage fee              --     (291,124)          --      (51,161)
       Cash bonus                 --     (173,400)          --           --
       Consulting and
        professional fees         --   (8,222,184)          --     (339,768)
       Other general and
        administrative
        expenses          (2,764,256)  (1,801,814)    (743,982)    (827,675)
     Total general and
      administrative
      expenses            (5,562,111) (12,036,932)  (1,040,871)  (1,499,466)
     Gains / (losses) on
      disposals of fixed
      assets                      --       (8,398)          --       (8,398)
     Research and
      development
      expenses              (249,357)    (310,084)     (79,576)    (212,965)
       Total operating
        expenses          (7,934,157) (13,030,427)  (1,811,924)  (2,050,956)
     Operating income /
      (loss)                (684,494)  (5,340,525)     608,970    1,738,208

     Interest income /
      (expenses)          (3,339,457)  (2,207,878)    (998,877)  (1,141,472)
     Other income
      (expenses)              10,140      113,364     (237,918)      23,206
     Government
      subsidies / grants          --    1,690,974           --    1,417,859

     Income / (loss)
      before minority
      interest and
      income taxes        (4,013,811)  (5,744,065)    (627,825)   2,037,801
     Income taxes           (907,176)          --     (382,368)          --
     Minority interest       256,486   (1,525,486)     168,270   (1,058,870)

     Net income / (loss) $(4,664,501) $(7,269,551)   $(841,923)    $978,931

     Earnings / (loss)
      per share - basic       $(0.05)      $(0.08)      $(0.01)       $0.01

     Weighted average
      shares outstanding
      - basic            100,887,853   96,872,524  101,556,376   97,359,178

     Earnings / (loss)
      per share - diluted     $(0.05)      $(0.06)      $(0.01)       $0.01

     Weighted average
      shares outstanding
      - diluted          100,887,853  125,103,425  101,556,376  131,377,347




                  Benda Pharmaceutical, Inc., Balance Sheet
               (In thousands, except share and per share data)

                                             September 30    December 31
                                                 2008            2007
                                             (Unaudited)
    Assets
      Current Assets
       Cash and cash equivalents               $1,685,375      $1,266,240
       Trade receivables, net                  11,895,149      10,472,233
       Other receivables                          326,620         453,595
       Refundable purchase price paid                  --       1,200,000
       Short-term loan receivables                146,304              --
       Due from related parties                    11,559              --
       Inventories                              2,788,243       1,952,348
       Prepaid expenses and deposits            1,187,384         933,299
              Total current assets             18,040,634      16,277,715
      Due from related parties                  2,767,180       2,630,019
      Property and equipments, net             28,301,078      27,123,035
      Intangible assets, net                    6,414,931       6,494,510
      Goodwill                                  7,892,402       7,395,752
      Restricted cash                           5,905,365       3,957,624
      Other assets                              1,825,869       1,710,972
      Refundable purchase price paid            1,200,000              --
      Debt issue costs                            129,585         327,945
    Total Assets                              $72,477,044     $65,917,572

    Liabilities & Shareholders' Equity
      Current Liabilities
       Bank indebtedness                       $1,259,525        $874,490
       Bank loans payable (current portion)     2,976,792       2,867,004
       Long term debt payable
        (current portion)                       2,228,395       1,787,239
       Accounts payable and accrued
        liabilities                             6,244,768       4,665,984
       Commercial notes payable                 8,985,183       5,118,758
       Taxes payable                              997,717       1,279,385
       Acquisition price payable                1,422,778       1,333,246
       Wages payable                              942,144         664,785
       Due to related parties                   1,097,171              --
        Total current liabilities              26,154,473      18,590,891
      Long term debt payable
       (long term portion)                             --         425,001
      Long-term convertible promissory notes    5,489,742       2,875,075
      Due to related parties (Long-term)          997,550       3,193,618
               Total liabilities               32,641,765      25,084,585

    Minority interest                           5,607,044       5,502,755

    Redeemable common stock, 2,049,560
     shares at $3.6 per share                   7,376,366       7,376,366

    Shareholders' Equity
      Preferred stock, $0.001 par value;
       5,000,000 shares authorized;
       None issued and outstanding                     --              --
      Common stock, $0.001 par value;
       150,000,000 shares authorized;
       105,155,355 shares issued and
       outstanding as of 9/30/2008;
       100,170,071 shares issued and
       outstanding as of 12/31/2007               105,155         100,170
      Additional paid in capital               22,108,427      21,547,929
      Retained earnings (unrestricted)         (4,564,049)        100,452
      Statutory surplus reserve fund            2,310,681       2,310,681
      Accumulative other comprehensive income   6,387,795       3,390,774
      Shares issuable for acquisition
       and services                               503,860         503,860
      Total Shareholders' Equity               26,851,869      27,953,866
    Total Liabilities & Shareholders'
     Equity                                   $72,477,044     $65,917,572


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SOURCE Benda Pharmaceutical, Inc.
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