HUBEI PROVINCE, China, Nov. 19 /PRNewswire/ --
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
