KUNMING, China, May 16, 2011 /PRNewswire-Asia-FirstCall/ -- China
Shenghuo Pharmaceutical Holdings, Inc. (NYSE Alternext US: KUN)
("China Shenghuo" or the "Company"), today reported unaudited
financial results for the first quarter ended March 31, 2011.
First Quarter 2011
Highlights
- Total revenue increased to $9.4
million for the first quarter of 2011, representing 19%
year-over-year growth.
- Net cash provided by operating activities was approximately
$2.6 million, an increase of
approximately $0.6 million, from
approximately $2.0 million for the
first quarter ended March 31,
2010.
- Net income attributable to stockholders increased to
$99,373, as compared to $2,355 for the first quarter ended March 31, 2010.
First Quarter 2011
Results
Sales: Sales for the three months ended
March 31, 2011 was approximately
$9.4 million, an increase of
approximately $1.5 million, or 19 %,
from approximately $7.9 million for
the three months ended March 31,
2010. The increase in sales was primarily due to the
Company's main product Xuesaitong's sales increasing in
Tianjin City and Yunnan Province as Xuesaitong was listed on
the Provincial Insurance Catalog list of Tianjin City since the second quarter in 2010
and the Company strengthened sales promotion in Yunnan Province.
Cost of goods sold: Our cost of goods sold for the
three months ended March 31, 2011 was
approximately $3.8 million, an
increase of $1.7 million, or 83%,
from approximately $2.1 million for
the three months ended March 31,
2010. The increase in cost of goods sold was primarily due
to the increase of purchase price of Sanqi which is the main raw
material of our main product Xuesaitong. In addition, the
Zhonghuang Hotel began trial operation since January 2011 which has contributed $0.4 million to the increase of cost of goods
sold.
Gross profit: Our gross profit for the three
months ended March 31, 2011 was
approximately $5.6 million as
compared with approximately $5.8
million for the three months ended March 31, 2010, a decrease of $0.2 million, or 3%. Gross profit as a percentage
of revenues was approximately 59.7% for the three months ended
March 31, 2011, a decrease of 14.0%
from 73.7% for the three months ended March
31, 2010. The decrease in gross profit percentage was
primarily due to the increase of cost of goods sold set forth
above.
Selling expense: Selling expenses were
approximately $4.1 million for the
three months ended March 31, 2011, a
decrease of $1.0 million, or 19%,
from approximately $5.1 million for
the three months ended March 31,
2010. The primary reason for the decrease in selling
expenses was due to decrease of commission to sales representative
as a result of change of sales commission policy which took effect
since the second quarter of 2010.
General and administrative expense: General and
administrative expenses were approximately $1.0 million for the three months ended
March 31, 2011, an increase of
$0.3 million, or 51%, from
approximately $0.7 million for the
three months ended March 31, 2010.
The increase was primarily due to the increase of the management's
traveling expenses for expanding our sales channel. In addition,
Zhonghuang Hotel began trial operation since January 2011 which has contributed $78,733 to the increase of general and
administrative expense.
Research and development expense: Research and
development expense for the three months ended March 31, 2011 was $121,725, as compared to $80,851 for the period ended March 31, 2010, an increase of $40,874. The increase was primarily due to the
increase in the expenditures for outside experts for the Sh1002's
registration to FDA since late 2009.
Other expenses: Other expenses were $306,883 for the three months ended March 31, 2011, which consisted of interest
expense and non-operating expense, off set by subsidy income,
interest income and non-operating income, an increase of
$263,879, or 614%, from $43,004 for the three months ended March 31, 2010. The increase was mainly due to
less subsidy income from provincial government as compared to the
same period in 2010.
Income tax (expense) benefit: Income tax expense
was $14,980 for the three months
ended March 31, 2011 as compared to
income tax benefit of $29,984 for the
three months ended March 31, 2010.
The tax expense was mainly for tax accrued for the profit of
the Company.
Net income attributable to
stockholders: Net income
increased to $99,373 for the three
months ended March 31, 2011 as
compared to $2,355 for the three
months ended March 31, 2010. Offset
by the increase in raw material price and the expenses related to
the trial operation of Shenghuo Plaza, the increase in net income
was primarily due to decrease of selling expenses as a result of
decrease of sales commission to sales representatives.
About China Shenghuo
Founded in 1995, China Shenghuo is primarily engaged in the
research, development, manufacture, and marketing of Sanchi-based
medicinal and pharmaceutical, nutritional supplement and cosmetic
products. Through its subsidiary, Kunming Shenghuo Pharmaceutical
(Group) Co., Ltd., it owns thirty SFDA (State Food and Drug
Administration) approved medicines, including the flagship product
Xuesaitong Soft Capsules, which is currently being listed in the
2010 Provincial Insurance Catalogue of sixteen provinces and
remains in the 2009 Provincial Insurance Catalogue of three
provinces around China. At
present, China Shenghuo incorporates a sales network of agencies
and representatives throughout China, which markets Sanchi-based traditional
Chinese medicine to hospitals and drug stores as prescription and
OTC drugs primarily for the treatment of cardiovascular,
cerebrovascular and peptic ulcer disease. The Company also exports
medicinal products to Asian countries such as Indonesia, Singapore, Japan, Malaysia, and Thailand and to European countries such as the
United Kingdom, Tajikistan, Russia and Kyrgyzstan.
With the substantial completion of Shenghuo Plaza at the end of
2010, China Shenghuo entered into a new business - the hotel and
hospitality business. Two floors of Shenghuo Plaza are
designed to be utilized as 12 Ways Chinese Herbal Beauty
Demonstration Center. The balance of Shenghuo Plaza is used
as a business hotel - Zhonghuang Hotel, restaurant and banquet
facilities and an entertainment venue.
China Shenghuo is also expanding into the businesses of wellness
tourism. For more information, please visit
http://www.shenghuo.com.cn.
Safe Harbor Statement
This press release may contain certain "forward-looking
statements," as defined in the United
States Private Securities Litigation Reform Act of 1995,
that involve a number of risks and uncertainties. There can be no
assurance that such statements will prove to be accurate, and the
actual results and future events could differ materially from
management's current expectations. Such factors include, but are
not limited to, risks of litigation and governmental or other
regulatory proceedings arising out of or related to any of the
matters described in recent press releases, including arising out
of the restatement of the Company's financial statements; the
Company's ability to refinance or repay loans received; the
Company's uncertain business condition; the Company's continuing
ability to satisfy any requirements which may be prescribed by the
Exchange for continued listing on the Exchange; risks arising from
potential weaknesses or deficiencies in the Company's internal
controls over financial reporting; the Company's reliance on one
supplier for Sanchi; the possible effect of adverse publicity on
the Company's business, including possible contract cancellation;
the Company's ability to develop and market new products; the
Company's ability to establish and maintain a strong brand; the
Company's continued ability to obtain and maintain all
certificates, permits and licenses required to open and operate
retail specialty counters to offer its cosmetic products and
conduct business in China;
protection of the Company's intellectual property rights; market
acceptance of the Company's products; changes in the laws of
the People's Republic of China
that affect the Company's operations; cost to the Company of
complying with current and future governmental regulations; the
impact of any changes in governmental regulations on the Company's
operations; general economic conditions; and other factors detailed
from time to time in the Company's filings with the United States
Securities and Exchange Commission and other regulatory
authorities. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
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Company Contact:
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China Shenghuo Pharmaceutical
Holdings, Inc.
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Ms. Hongling Fei
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Director of Securities
Department
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+86-871-7282698
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Investor Relations
Contact:
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The Trout Group
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Mark Xu
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+86-15821996861
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CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE
SHEETS
(Amounts in
USD)
|
|
|
|
March31,
|
December
31,
|
|
|
2011
|
|
|
2010
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,409,304
|
|
$
|
1,669,387
|
|
Accounts and notes
receivable, net
|
|
13,721,299
|
|
|
11,531,027
|
|
Other receivables,
net
|
|
4,025,284
|
|
|
4,111,315
|
|
Advances to
suppliers
|
|
567,477
|
|
|
580,168
|
|
Inventories
|
|
2,759,759
|
|
|
2,599,351
|
|
Due from
related parties
|
|
279,077
|
|
|
190,614
|
|
Current deferred tax
assets
|
|
1,003,443
|
|
|
833,568
|
|
Other current
assets
|
|
143,964
|
|
|
208,111
|
|
Total current
assets
|
|
23,909,607
|
|
|
21,723,541
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
21,342,263
|
|
|
21,069,139
|
|
Other non-current
assets
|
|
2,497,063
|
|
|
2,554,193
|
|
|
$
|
47,748,933
|
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
|
|
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CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(CONT'D)
(Amounts in
USD)
|
|
|
|
March 31,
|
|
December
31,
|
|
|
2011
|
|
2010
|
|
Liabilities and
equity:
|
|
(Unaudited)
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
8,218,246
|
$
|
8,964,404
|
|
Other payables and
accrued expenses
|
|
11,148,834
|
|
9,699,857
|
|
Sales
representative deposits
|
|
4,811,569
|
|
4,936,429
|
|
Due
to related parties
|
|
-
|
|
79,864
|
|
Short-term
borrowings
|
|
4,722,313
|
|
5,289,178
|
|
Advances from
customers
|
|
2,747,517
|
|
1,158,649
|
|
Taxes payables
and other current
liabilities
|
|
1,540,686
|
|
881,506
|
|
Current portion of
long-term borrowings
|
|
6,097,468
|
|
6,039,833
|
|
Total current
liabilities
|
|
39,286,633
|
|
37,049,720
|
|
Long-term
borrowings
|
|
6,310,879
|
|
6,251,227
|
|
|
|
45,597,512
|
|
43,300,947
|
|
Commitments and
contingencies
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
Common
stock, $0.0001 par value, 100,000,000 shares authorized
and 19,679,400 shares issued and
outstanding, both
periods
|
|
1,968
|
|
1,968
|
|
Additional paid-in
capital
|
|
6,193,927
|
|
6,193,927
|
|
Appropriated
retained earnings
|
|
147,023
|
|
147,023
|
|
Accumulated
deficit
|
|
(5,841,066)
|
|
(5,940,439)
|
|
Accumulated other
comprehensive income
|
|
1,661,061
|
|
1,638,109
|
|
Total stockholder's
equity
|
|
2,162,913
|
|
2,040,588
|
|
Non-controlling
interest
|
|
(11,492)
|
|
5,338
|
|
Total equity
|
|
2,151,421
|
|
2,045,926
|
|
|
$
|
47,748,933
|
$
|
45,346,873
|
|
|
|
|
|
|
|
|
|
|
|
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CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
|
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CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
|
|
AND
COMPREHENSIVE INCOME
(UNAUDITED)
|
|
(Amounts in
USD, except shares)
|
|
|
|
|
|
|
|
|
|
Three months
ended March 31,
|
|
|
2011
|
|
2010
|
|
|
|
(Unaudited)
|
|
(Unaudited)
|
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Sales
|
$
|
9,441,626
|
$
|
7,907,002
|
|
Cost of goods
sold
|
|
3,805,692
|
|
2,076,353
|
|
Gross
profit
|
|
5,635,934
|
|
5,830,649
|
|
Operating
expenses:
|
|
|
|
|
|
Selling
expenses
|
|
4,076,430
|
|
5,051,714
|
|
General and
administrative expenses
|
|
1,030,215
|
|
684,259
|
|
Research and
development expense
|
|
121,725
|
|
80,851
|
|
|
|
5,228,370
|
|
5,816,824
|
|
Income from
operations
|
|
407,564
|
|
13,825
|
|
Other income
(expenses):
|
|
|
|
|
|
|
|
|
|
|
|
Subsidy
income
|
|
7,598
|
|
153,598
|
|
Interest and other
income (expense)
|
|
(314,481)
|
|
(196,602)
|
|
|
|
(306,883)
|
|
(43,004)
|
|
Income
(loss) before income tax expenses
|
|
100,681
|
|
(29,179)
|
|
Income tax (expense)
benefit
|
|
(14,980)
|
|
29,984
|
|
Net income
|
|
85,701
|
|
805
|
|
Less: net loss attributable to
non-controlling
interests
|
|
(13,672)
|
|
(1,550)
|
|
Net income
attributable to stockholders
|
$
|
99,373
|
$
|
2,355
|
|
Comprehensive
income:
|
|
|
|
|
|
Net income
|
|
85,701
|
|
805
|
|
Foreign currency
translation adjustment
|
|
19,794
|
|
331
|
|
Comprehensive
income
|
$
|
105,495
|
$
|
1,136
|
|
Less: comprehensive loss
attributable to
non-controlling
interests
|
|
(16,830)
|
|
(2,187)
|
|
Comprehensive
income attributable to
stockholders
|
|
122,325
|
|
3,323
|
|
Basic and
diluted earnings per share
|
$
|
0.01
|
$
|
0.00
|
|
Weighted-average number of
shares outstanding-basic and diluted
- basic and
diluted
|
|
19,679,400
|
|
19,679,400
|
|
|
|
|
|
|
|
|
|
|
CHINA
SHENGHUO PHARMACEUTICAL HOLDINGS, INC. AND
SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Amounts in
USD)
|
|
|
Three months
ended March 31,
|
|
|
2011
|
2010
|
|
|
(Unaudited)
|
(Unaudited)
|
|
Net cash provided by operating
activities
|
$
|
2,609,836
|
$
|
2,022,198
|
|
Cash flows from investing
activities:
|
|
|
|
|
|
Purchase of long-lived
assets
|
|
(2,290,979)
|
|
(3,205,176)
|
|
Proceeds from disposal of
property
|
|
169
|
|
131,913
|
|
Net cash used in investing
activities
|
|
(2,290,810)
|
|
(3,073,263)
|
|
|
|
|
|
|
|
Cash flows from financing
activities:
|
|
|
|
|
|
Proceeds from
borrowings
|
|
3,292,326
|
|
9,563,858
|
|
Payments on
borrowings
|
|
(3,886,067)
|
|
(9,636,020)
|
|
Net cash used in financing
activities
|
|
(593,741)
|
|
(72,162)
|
|
|
|
|
|
|
|
Effect of foreign
currency fluctuation on cash and cash
equivalents
|
|
14,632
|
|
492
|
|
Net decrease in cash and cash
equivalents
|
|
(260,083)
|
|
(1,122,735)
|
|
Cash and cash equivalents at
beginning of period
|
|
1,669,387
|
|
1,986,540
|
|
Cash and cash equivalents at end
of period
|
$
|
1,409,304
|
$
|
863,805
|
|
|
|
|
|
|
|
Supplemental
information
|
|
|
|
|
|
Cash paid for
interest
|
$
|
332,323
|
$
|
261,726
|
|
Cash paid for income
taxes
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
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SOURCE China Shenghuo Pharmaceutical Holdings, Inc.