Lotus Pharmaceuticals, Inc. Reports Strong 2008 Financi...(otus' drug stores was primarilyattributa...),Health

Date:4/22/2009

otus' drug stores was primarily attributable to the slowdown in economic growth and to reduced local traffic resulting from restricted city traffic during the 2008 Olympics held in Beijing. Lotus believes retail revenues will increase in 2009 as it increases its efforts to expand its OTC drugs sales channels to include other drugs stores and increase drugs of high profit margin concerning gastrointestinal illness and influenza.

Gross profit increased 44% to $33.4 million in 2008, compared to $23.2 million in 2007. Gross margin was 45% in 2008 compared to 41% in 2007. The increase in gross margin was primarily due to an increase in sales revenues and more efficient management of purchase prices of APIs and drugs manufactured by third parties, and production cost controls.

Operating expenses for 2008 increased 54% to approximately $18.3 million (25% of net revenues) compared to approximately $11.9 million (21% of net revenues) for 2007. This increase resulted from the increase in selling expenses from $6.5 million in 2007 to $14.9 in 2008 million, which was the result of increased product sales in 2008, and management's high commission and bonuses policy to incentivize sales and collections in order to generate sufficient cash to meet near term capital commitments, such as the new manufacturing plant construction project and the acquisition of a Chinese Class I drug patent. However, management has modified its sales and collection incentive policy and reduced the sales commission percentage and collection bonuses for 2009. General and administrative expenses were $ 2.2 million in 2008 as compared to $3.0 million in 2007, a decrease of 27% from 2007, which was a result of our continuous efforts to control corporate spending despite increases in professional fees.

As of December 31, 2008, the Company had cash of $1.3 million. A decrease of working capital from $24.6 million at the end of 2007 to $4.4 mill
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SOURCE Lotus Pharmaceuticals, Inc. Copyright©2009 PR Newswire. All rights reserved

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