HAIKOU CITY, China, May 15,
2020 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE
American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE
American-listed corporation with a fully-integrated specialty
pharmaceuticals subsidiary based in China, today announced financial results for
the quarter ended March 31, 2020.
First Quarter Highlights
- Revenue decreased 39.8% to $1.8
million in first quarter 2020 from $2.9 million in the same period of 2019;
- Gross margin was 11.0% in first quarter 2020, compared to 22.4%
in the same period of 2019;
- Loss from operations was $0.6
million in first quarter 2020 compared to $0.3 million in the same period of 2019, a
deterioration of $0.3 million;
- Net loss was $0.7 million in
first quarter 2020 compared to $0.4
million in the same period of 2019. Loss per common share
was $0.02 per basic and diluted share
in first quarter 2020, compared to $0.01 per basic and diluted share in first
quarter 2019.
Ms. Zhilin Li, China Pharma's
Chairman and CEO, commented, "The current outbreak of COVID-19 has
had a material and adverse effect on the Company's business
operations. We had experienced disruptions and restrictions on
our ability to travel and to distribute our products, as
well as temporary closures of our facilities or the facilities
of the suppliers or customers. In addition, COVID-19 has resulted
in a widespread health crisis that adversely affected the economies
and financial markets of China and
many other countries." Ms. Li continued, "along with the lasting
efforts to place emphasis on the marketing and sales of our current
exiting pharmaceutical products, we continue to explore in the
field of comprehensive healthcare. Comprehensive healthcare focuses
on people's daily life, aging and disease and pays attention to all
kinds of risk factors and misunderstandings affecting health. We
launched wash-free sanitizer and mask production lines
recently to address the market needs caused by COVID-19. We
aim to leverage our expertise in the PRC for the development,
manufacture and commercialization of pharmaceutical and
comprehensive healthcare products for the benefit of human
health."
First Quarter Results
Revenue decreased by 39.8% to $1.8
million for the three months ended March 31, 2020, as compared to $2.9 million for the three months ended
March 31, 2019. This decrease was
mainly due to the negative impact of the outbreak of COVID-19.
Since the Chinese New Year holiday in early February, almost all
Chinese companies, including us, have delayed the resumption of
work. Our work resumption rate has gradually returned to 90% by the
end of March 2020.
For the three months ended March 31,
2020, our cost of revenue was $1.6
million, or 89% of total revenue, while cost of revenue was
$2.3 million, or 78% of total
revenue, for the same period in 2019.
Gross profit for the three months ended March 31, 2020 was $0.2
million, as compared to $0.7
million during the same period in 2019. Our gross profit
margin in the three months ended March 31,
2020 was 11.0% as compared to 22.4% during the same period
in 2019. The decrease in our gross profit margin was mainly due to
the decrease in revenue and the increased ratio of fixed cost to
revenue.
Our selling expenses for the three months ended March 31, 2020 and 2019 were $0.3 million and $0.5
million, respectively. Selling expenses accounted for
18.5% of the total revenue in the three months ended March 31, 2020, as compared to 16.3% during the
same period in 2019. As a result of the adjustment of many policies
of healthcare reform, we had reduced the number of personnel and
expenses to efficiently support our sales and the collection of
accounts receivable.
Our general and administrative expenses were both $0.4 million for the three months ended
March 31, 2020 and 2019,
respectively. It accounted for 22.0% and 14.6% of our total revenue
in the three months ended March 31,
2020 and 2019, respectively.
Our research and development expenses for the three months ended
March 31, 2020 were $0.05 million, as compared to $0.07 million in the same period in 2019.
Research and development expenses accounted for 2.8% and 2.4% of
our total revenue in the three months ended March 31, 2020 and 2019, respectively. These
expenditures were mainly for the consistency evaluations of our
existing products.
Our bad debt expenses for the three months ended March 31, 2020 were $30,246, as compared to $13,312 for the same period in 2019. The increase
in our bad debt expenses in this period was partially due to the
slow-down collection of bad debt because of the nationwide delayed
work resumption caused by COVID-19.
Net loss for the three months ended March
31, 2020 was $0.7 million, or
$0.02 each basic and diluted share,
as compared to a net loss of $0.4
million, or $0.01 each basic
and diluted share, for the same period a year ago. The increase in
net loss was mainly a result of decreased revenue, whereas the
expenditures did not decrease in proportion to revenue due to fixed
costs.
Financial Condition
As of March 31, 2020 the
Company had cash and cash equivalents of $0.1 million compared to $1.1 million as of December 31, 2019. As of March 31, 2020, our net accounts receivable was
$0.9 million, compared to
$0.6 million as of December 31, 2019. Cash flow used
in operating activities was both $0.2 million for the three months ended
March 31, 2020 and 2019,
respectively.
In April 2020, the Company
obtained a line of credit from Postal Savings Bank of China for an aggregate amount of RMB 10,000,000 (approximately $1.4 million), of which RMB 5,000,000 (approximately $0.7 million) have been advanced. The loan bears
interest at a rate of 4.25% per annum. Advances on the line of
credit are due two years from the date of the advance. A third
party company has guaranteed the loan as being the second priority
creditor in the collateral in certain land use rights and buildings
next to the creditor of the Company's construction loan facility.
In addition, the Company's Chief Executive Officer and Chair of the
Board personally guaranteed the new line of credit. The Company has
an additional RMB 5,000,000
(approximately $0.7 million)
available under the line, subject to a risk review and approval by
the third party guarantee company.
The Company will hold a conference call at 8:30 am E.T. on May 15,
2020 to discuss the results of the first quarter 2020.
Listeners may access the call by dialing 1-866-519-4004 or
65-671-350-90 for international callers, Conference ID # 1872457. A
replay of the call will be accessible through May 23, 2020 by dialing 1-855-452-5696 or
61-281-990-299 for international callers, Conference ID #
1872457.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical
company that develops, manufactures and markets a diversified
portfolio of products, focusing on conditions with high incidence
and high mortality rates in China,
including cardiovascular, CNS, infectious, and digestive diseases.
The Company's cost-effective business model is driven by market
demand and supported by new GMP-certified product lines covering
the major dosage forms. In addition, the Company has a broad and
expanding nationwide distribution network across all major cities
and provinces in China. The
Company's wholly-owned subsidiary, Hainan Helpson Medical &
Biotechnology Co., Ltd., is located in Haikou City, Hainan
Province. For more information about China Pharma Holdings,
Inc., please visit www.chinapharmaholdings.com. The Company
routinely posts important information on its website.
Safe Harbor Statement
Certain statements in this press release constitute
forward-looking statements for purposes of the safe harbor
provisions under The Private Securities Litigation Reform Act of
1995. Any statements set forth above that are not historical facts
are forward-looking statements that involve risks and uncertainties
that could cause actual results to differ materially from those in
the forward-looking statements. Such risks and uncertainties may
include, but are not limited to: the achievability of financial
guidance; success of new product development; unanticipated changes
in product demand; increased competition; downturns in the Chinese
economy; uncompetitive levels of research and development; and
other information detailed from time to time in the Company's
filings and future filings with the United States Securities and
Exchange Commission. The forward-looking statements made herein
speak only as of the date of this press release and the Company
undertakes no duty to update any forward-looking statement to
conform the statement to actual results or changes in the Company's
expectations, except as required by applicable law or
regulation.
- FINANCIAL TABLES FOLLOW –
CHINA PHARMA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
145,932
|
|
$
1,074,979
|
Restricted
cash
|
|
331,038
|
|
109,908
|
Banker's
acceptances
|
|
48,096
|
|
45,756
|
Trade accounts
receivable, less allowance for doubtful
|
|
|
|
|
accounts of
$17,334,819 and $17,575,100, respectively
|
|
855,084
|
|
635,371
|
Other receivables,
less allowance for doubtful
|
|
|
|
|
accounts of $22,320
and $22,729, respectively
|
|
52,648
|
|
46,643
|
Advances to
suppliers
|
|
1,050,083
|
|
404
|
Inventory
|
|
3,625,000
|
|
3,588,824
|
Prepaid
expenses
|
|
253,321
|
|
77,120
|
Total Current
Assets
|
|
6,361,202
|
|
5,579,005
|
|
|
|
|
|
Property and
equipment, net
|
|
15,768,241
|
|
16,313,827
|
Operating lease
right of use asset
|
|
112,447
|
|
136,779
|
Intangible assets,
net
|
|
193,774
|
|
205,611
|
TOTAL
ASSETS
|
|
$
22,435,664
|
|
$
22,235,222
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
847,760
|
|
$
1,366,330
|
Accrued
expenses
|
|
245,743
|
|
189,880
|
Other
payables
|
|
3,642,539
|
|
3,560,332
|
Advances from
customers
|
|
1,940,728
|
|
505,398
|
Other payables -
related parties
|
|
2,097,447
|
|
2,071,986
|
Operating lease
liability, current portion
|
|
90,974
|
|
91,306
|
Current portion of
construction loan facility
|
|
1,975,978
|
|
2,150,168
|
Bankers' acceptance
notes payable
|
|
331,038
|
|
109,908
|
Total Current
Liabilities
|
|
11,172,207
|
|
10,045,308
|
Non-current
Liabilities:
|
|
|
|
|
Construction loan
facility
|
|
2,117,119
|
|
2,150,168
|
Operating lease
liability, net of current portion
|
|
24,803
|
|
48,701
|
Deferred tax
liability
|
|
741,863
|
|
753,444
|
Total
Liabilities
|
|
14,055,992
|
|
12,997,621
|
Risks and
Uncertainties (Note 13)
|
|
|
|
|
Stockholders'
Equity:
|
|
|
|
|
Preferred stock,
$0.001 par value; 5,000,000 shares authorized;
|
|
|
|
|
no shares issued or
outstanding
|
|
-
|
|
-
|
Common stock, $0.001
par value; 95,000,000 shares authorized;
|
|
|
|
|
43,579,557 shares and
43,579,557 shares outstanding, respectively
|
|
43,580
|
|
43,580
|
Additional paid-in
capital
|
|
23,590,204
|
|
23,590,204
|
Accumulated
deficit
|
|
(26,633,299)
|
|
(25,972,402)
|
Accumulated other
comprehensive income
|
|
11,379,187
|
|
11,576,219
|
Total
Stockholders' Equity
|
|
8,379,672
|
|
9,237,601
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
22,435,664
|
|
$
22,235,222
|
CHINA PHARMA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE
INCOME (LOSS)
|
(Unaudited)
|
|
|
|
|
|
|
|
For the Three
Months
|
|
|
Ended March
31,
|
|
|
2020
|
|
2019
|
Revenue
|
|
$
1,763,955
|
|
$
2,929,273
|
Cost of
revenue
|
|
1,569,516
|
|
2,272,743
|
|
|
|
|
|
Gross
profit
|
|
194,439
|
|
656,530
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
expenses
|
|
326,095
|
|
478,691
|
General and
administrative expenses
|
|
388,559
|
|
428,817
|
Research and
development expenses
|
|
48,819
|
|
69,918
|
Bad debt
expense
|
|
30,246
|
|
13,312
|
Total operating
expenses
|
|
793,719
|
|
990,738
|
|
|
|
|
|
Loss from
operations
|
|
(599,280)
|
|
(334,208)
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
Interest
income
|
|
386
|
|
3,257
|
Interest
expense
|
|
(62,003)
|
|
(86,780)
|
Net other
expense
|
|
(61,617)
|
|
(83,523)
|
|
|
|
|
|
Loss before income
taxes
|
|
(660,897)
|
|
(417,731)
|
Income tax
expense
|
|
-
|
|
-
|
Net
loss
|
|
$
(660,897)
|
|
$
(417,731)
|
Other comprehensive
income - foreign currency
|
|
|
|
|
translation
adjustment
|
|
(197,032)
|
|
835,865
|
Comprehensive
income (loss)
|
|
$
(857,929)
|
|
$
418,134
|
Loss per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
(0.02)
|
|
$
(0.01)
|
Weighted average
shares outstanding
|
|
43,579,557
|
|
43,579,557
|
CHINA PHARMA
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
For the Three
Months
|
|
|
Ended March
31,
|
|
|
2020
|
|
2019
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net loss
|
|
$
(660,897)
|
|
$
(417,731)
|
Depreciation and
amortization
|
|
655,921
|
|
795,483
|
Bad debt
expense
|
|
30,246
|
|
13,312
|
Changes in assets and
liabilities:
|
|
|
|
|
Trade accounts and
other receivables
|
|
(341,165)
|
|
(145,935)
|
Advances to
suppliers
|
|
(1,065,639)
|
|
(107,839)
|
Inventory
|
|
(24,688)
|
|
389,589
|
Trade accounts
payable
|
|
(505,131)
|
|
6,079
|
Accrued taxes
payable
|
|
52,503
|
|
(51,879)
|
Other payables and
accrued expenses
|
|
103,541
|
|
(386,336)
|
Change in bankers'
acceptance notes payable
|
|
226,206
|
|
(326,983)
|
Advances from
customers
|
|
1,465,030
|
|
(12,285)
|
Prepaid
expenses
|
|
(180,082)
|
|
8,065
|
Net Cash Provided
by Operating Activities
|
|
(244,155)
|
|
(236,460)
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(347,795)
|
|
(73,866)
|
Net Cash Used in
Investing Activities
|
|
(347,795)
|
|
(73,866)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Payments of
construction term loan
|
|
(143,286)
|
|
(148,227)
|
Advances from related
party
|
|
36,293
|
|
-
|
Payments of related
party payables
|
|
-
|
|
(119,561)
|
Net Cash Used in
Financing Activities
|
|
(106,993)
|
|
(267,788)
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash
|
|
(8,974)
|
|
55,484
|
Net (Decrease)
Increase in Cash, Cash Equivalents and Restricted
Cash
|
|
(707,917)
|
|
(522,630)
|
Cash, Cash
Equivalents and Restricted Cash at Beginning of Period
|
|
1,184,887
|
|
2,460,527
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
|
$
476,970
|
|
$
1,937,897
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
145,932
|
|
961,277
|
Restricted
cash
|
|
331,038
|
|
976,620
|
Cash, Cash
Equivalents and Restricted Cash at End of Period
|
|
$
476,970
|
|
$
1,937,897
|
|
|
|
|
|
Supplemental Cash
Flow Information:
|
|
|
|
|
Cash paid for income
taxes
|
|
$
-
|
|
$
-
|
Cash paid for
interest
|
|
$
57,044
|
|
$
80,693
|
|
|
|
|
|
Supplemental
Noncash Investing and Financing Activities:
|
|
|
|
|
Accounts receivable
collected with banker's acceptances
|
|
$
71,127
|
|
$
175,793
|
Inventory purchased
with banker's acceptances
|
|
68,037
|
|
145,614
|
Right-of-use assets
obtained in exchange for operating lease obligations
|
|
-
|
|
236,055
|
View original
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SOURCE China Pharma Holdings, Inc.