BEIJING, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ -- Lotus Pharmaceuticals, Inc. (OTCBB: LTUS) ("Lotus" or the "Company"), a profitable developer, manufacturer and seller of medicine and drugs in the People's Republic of China ("PRC"), today announced its financial results for the quarter ended June 30, 2011. Summary financial data is provided below:
Second Quarter Financial Highlights
Mr. Zhongyi Liu, Chairman and CEO of Lotus, stated, "Our 2011 second quarter results, especially those of the wholesale segment, were negatively impacted by changes in the competitive landscape and increases in labor costs. Retail sales continue to deliver solid results with 19.2% growth in revenue versus the same period in 2010. The increase in the retail segment was driven primarily by our Over-the-Counter division's sales. Construction of our Beijing facility continues to progress, and we anticipate additional capacity for growth and significant efficiency improvements once we move into the new building by the end of the year."
Mr. Liu continued, "We plan to focus our capital expenditures in the foreseeable future on the completion of our Beijing facility and our core business in Beijing. Lotus has a well-established nationwide sales and distribution network, and strong product development capabilities. With the completion of our new headquarters, we believe we are well positioned with respect to the ongoing consolidation of the Chinese pharmaceutical industry."
Second Quarter Results of OperationsRevenuesRevenues for the quarter ended June 30, 2011 were $18.7 million, compared to $18.9 million in the second quarter of 2010. The decrease of 1.1%, or $0.2 million, was primarily due to decreased sales from the Company's wholesale distribution channel, partially offset by the growth in its retail sales segment. Wholesale revenue decreased 5.6% year-over-year to $14.6 million, or 78% of total revenues. Retail revenues increased 19.2% year-over-year to $4.1 million, or 22% of total revenues. The growth in the retail segment was mainly due to an increase in revenue from our direct sales to other Over-the-Counter drug stores in Beijing.
Gross ProfitGross profit for the second quarter ended June 30, 2011 was $4.9 million or 26.1% of total net revenues, as compared to $9.8 million or 51.8% of total net revenues for the quarter ended June 30, 2010. The decrease of 50.1%, or $4.9 million, was primarily attributable to lower product prices in 2011 compared to 2010.
Income from OperationsOperating income amounted to $1.8 million for the quarter ended June 30, 2011 as compared to operating income of $6.4 million for the second quarter of 2010. The decrease of 71.8%, or $4.6 million, was due largely to decreased gross profit.
Net IncomeNet income for the quarter ended June 30, 2011 was $1.8 million as compared to $6.3 million for the quarter ended June 30, 2010, due to the reasons set forth above. Earnings per diluted share were $0.06 for the quarter, compared with diluted EPS of $0.24 for the second quarter of 2010.
Liquidity and Capital ResourcesAs of June 30, 2011, the Company's current assets were $7.2 million and current liabilities were $10.9 million. Cash and cash equivalents totaled $0.9 million as of June 30, 2011. The Company's shareholders' equity at June 30, 2011 was $ 97.2 million. The Company generated $6.7 million in cash from operating activities in the first half of fiscal 2011, compared to $8.9 million in the same period of 2010. The Company used $7.1 million cash for investing activities during the first half of fiscal 2011, compared to $11.8 million in the same period of 2010.
Recent Business Highlights
Business Outlook for 2011Management expects that 2011 will be a transitional year for Lotus Pharmaceuticals, as the Company will be completing and moving into its new headquarters and shifting its focus to the wholesale business in Beijing and the surrounding areas. After the completion of the headquarters, the Company expects growth will resume, primarily driven by the wholesale business in Beijing starting in 2012.
Conference Call and WebcastManagement will host a conference call to discuss these financial results on Wednesday, August 17, 2011 at 10:00 a.m. EDT (7:00 a.m. PDT).
To participate in the call, please dial (877) 941-4774, or (480) 629-9760 for international calls, approximately 10 minutes prior to the scheduled start time.
A replay of the call will be available for two weeks from 1:00 p.m. EDT on August 17, 2011, until 11:59 p.m. EDT on August 31, 2011. The number for the replay is (877) 870-5176, or (858) 384-5517 for international calls; the passcode for the replay is 4466487.
About Lotus Pharmaceuticals, Inc. Lotus Pharmaceuticals, Inc. is a profitable developer and producer of drugs and a licensed national seller of pharmaceutical items in the People's Republic of China (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 diseases, 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.
Information Regarding Forward-Looking StatementsExcept for historical information contained herein, the statements in this press release are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause our actual results in future periods to differ materially from forecasted results. These risks and uncertainties include, among other things, product demand, market competition, and risks inherent in our operations. These and other risks are described in our filings with the U.S. Securities and Exchange Commission.Contacts:Xing Shen, Ph.D.VP of Corporate DevelopmentLotus Pharmaceuticals, Inc.Ph: 415-690-7688Email: email@example.comWeb: http://www.lotuspharma.comLOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(UNAUDITED)June 30, December 31,2011 2010ASSETSCURRENT ASSETS:Cash
895,176634,583Prepaid expenses and other current assets
539,847593,759Total Current Assets
7,199,2134,541,464PROPERTY AND EQUIPMENT, net
47,248,48439,337,935OTHER ASSETSLand use right held for development or sale
29,905,39629,236,891Deposits and Installments on intangible assets
9,746,2879,528,419Land use rights, net
13,066,53012,932,421Other intangible assets, net
$114,493,544$103,184,615LIABILITIES AND SHAREHOLDERS' EQUITYCURRENT LIABILITIES:Accounts payable
$20,111$37,829Other payables and accrued liabilities
3,308-Due to related parties
2,186,5962,042,376Total Current Liabilities
10,868,4608,050,678LONG-TERM LIABILITIES:Due to related parties
1,014,586869,067Notes payable - related parties
17,244,73014,161,574COMMITMENTS AND CONTIGENCIESSTOCKHOLDERS' EQUITY:Preferred stock ($.001 par value; 10,000,000 shares authorized;9,824 and 607,107 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)
620607Common stock ($.001 par value; 100,000,000 shares authorized;27,747,131 and 26,763,485 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)
27,74726,763Additional paid-in capital
6,240,2026,240,202Accumulated other comprehensive income
9,274,9967,151,221Total stockholders' Equity
97,248,81489,023,041Total Liabilities and Stockholders' Equity
$114,493,544$103,184,615LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME(UNAUDITED)For the Three Months EndedFor the Six Months EndedJune 30,June 30,2011201020112010NET REVENUES: Wholesale$14,590,654$15,464,138$23,309,677$26,962,224 Retail4,103,7833,442,3558,302,0006,694,747Total Net Revenues18,694,43718,906,49331,611,67733,656,971COST OF REVENUES: Wholesale10,679,4316,613,65014,431,94010,526,848 Retail3,127,9622,492,1016,139,7594,822,532Total Cost of Revenues13,807,3939,105,75120,571,69915,349,380GROSS PROFIT4,887,0449,800,74211,039,97818,307,591OPERATING EXPENSES:Selling expenses737,1652,375,1592,140,7114,544,112Research and development expenses691,793-1,419,224-General and administrative expenses1,669,8871,075,3483,442,1862,097,205Total Operating Expenses3,098,8453,450,5077,002,1216,641,317INCOME FROM OPERATIONS1,788,1996,350,2354,037,85711,666,274OTHER INCOME (EXPENSE):Debt issuance costs---(52,226)Other income47,100198,50893,614396,942Interest income8769061,5662,186Interest expense(62,404)(59,428)(124,033)(491,830)Total Other Income (Expense)(14,428)139,986(28,853)(144,928)INCOME BEFORE INCOME TAXES1,773,7716,490,2214,009,00411,521,346INCOME TAXES-167,959149270,166NET INCOME1,773,7716,322,2624,008,85511,251,180OTHER COMPREHENSIVE INCOME:Foreign currency translation gain1,546,706323,2702,123,775334,198COMPREHENSIVE INCOME3,320,4776,645,532$6,132,630$11,585,378NET INCOME PER COMMON SHARE:Basic$
.42WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:Basic27,747,13126,503,18827,619,32025,646,151Diluted28,057,04326,934,69327,929,62726,838,338LOTUS PHARMACEUTICALS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)For the Six Months EndedJune 30,20112010CASH FLOWS FROM OPERATING ACTIVITIES:Net income
$4,008,855$11,251,180Adjustments to reconcile net income from operations to net cashprovided by operating activities:Depreciation
211,29712,920Amortization of intangible assets
607,476876,619Amortization of deferred debt issuance costs
-52,226Amortization of discount on convertible redeemable preferred stock
-151,553Interest expense attributable to beneficial conversion feature of preferred shares
-184,660Common shares issued for service
708,350120,450Common shares issued for compensation
1,388,101109,500Changes in assets and liabilities:Accounts receivable
(242,920)(637,828)Prepaid expenses and other current assets
(18,344)64,675Other payables and accrued liabilities
18,020(519,697)Due to related parties
225,364166,492NET CASH PROVIDED BY OPERATING ACTIVITIES
6,654,1898,908,338CASH FLOWS USED IN INVESTING ACTIVITIES:Purchase of property and equipment
(7,132,250)(11,780,895)NET CASH USED IN INVESTING ACTIVITIES
(7,132,250)(11,780,895)CASH FLOWS FROM FINANCING ACTIVITIES:NET CASH PROVIDED BY FINANCING ACTIVITIES
--EFFECT OF EXCHANGE RATE ON CASH
24,5345,541NET DECREASE IN CASH
(453,527)(2,867,016)CASH - beginning of period
1,339,9723,945,740CASH - end of period
$886,445$1,078,724SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:Cash paid for:Interest
$3,672$3,746Non-cash investing and financing activities:Common stock issued for services
-$397,050Common stock issued for conversion of convertible redeemable preferred stock
-$4,048,200Convertible redeemable preferred stock reclassified to permanent equity
-$595,233Convertible preferred stock issued for dividend payable
|SOURCE Lotus Pharmaceuticals, Inc.|
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