See accompanying notes to Unaudited Condensed
Consolidated Financial Statements.
See accompanying notes to Unaudited Condensed
Consolidated Financial Statements.
See accompanying notes to Unaudited Condensed
Consolidated Financial Statements.
See accompanying notes to Unaudited Condensed
Consolidated Financial Statements.
See accompanying notes to Unaudited Condensed
Consolidated Financial Statements.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
March 31, 2014 AND 2013
NOTE 1 – BASIS OF PRESENTATION, SIGNIFICANT CONCENTRATION
AND RISKS
|
(a)
|
Basis of Presentation
|
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”). Certain information and footnote disclosures normally included in financial statements prepared in accordance
with U.S. GAAP have been condensed or omitted as permitted by rules and regulations of the U.S. Securities and Exchange Commission
(“SEC”). The December 31, 2013 consolidated balance sheet was derived from the audited consolidated financial statements
of China Biologic Products, Inc. (the “Company”). The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the December 31, 2013 audited consolidated financial statements of the Company included in the
Company’s annual report on Form 10-K for the year ended December 31, 2013.
In the opinion of management, all adjustments
(which include normal recurring adjustments) necessary to present a fair statement of the financial position as of March 31, 2014,
the results of operations for the three months ended March 31, 2014 and 2013, and cash flows for the three months ended March 31,
2014 and 2013, have been made. All significant intercompany transactions and balances are eliminated on consolidation.
The preparation of the unaudited condensed
consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited
condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates. Significant items subject to such estimates and assumptions include the useful lives
of property, plant and equipment and intangibles with definite lives, the allowance for doubtful accounts, the fair value determinations
of equity instruments and stock compensation awards, the realizability of deferred tax assets and inventories, the recoverability
of intangible assets, land use rights and property, plant and equipment, and accruals for income tax uncertainties and other contingencies.
|
(b)
|
Significant Concentration and Risks
|
The Company’s operations are carried
out in the People’s Republic of China (the “PRC”) and are subject to specific considerations and significant
risks not typically associated with companies in North America and Western Europe. Accordingly, the Company’s business, financial
condition and results of operations may be influenced by the political, economic and legal environment in the PRC, and by the general
state of the PRC economy. The Company’s results may be adversely affected by changes in governmental policies with respect
to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation,
among other matters.
The Company maintains cash and deposit
balances at financial institutions which, from time to time, may exceed Federal Deposit Insurance Corporation insured limits for
its bank accounts located in the United States or may exceed Hong Kong Deposit Protection Board insured limits for its bank accounts
located in Hong Kong. Cash and deposit balances maintained at financial institutions or state-owned banks in the PRC are not covered
by insurance. Total cash at banks and deposits as of March 31, 2014 and December 31, 2013 amounted to $179,041,514 and $180,858,848,
respectively, of which $253,883 and $679,022 are insured, respectively. The Company has not experienced any losses in uninsured
bank deposits and does not believe that it is exposed to any significant risks on cash held in bank accounts.
The Company’s two major products
are human albumin and human immunoglobulin for intravenous injection (“IVIG”). Human albumin accounted for 42.3% and
37.9% of the total sales for the three months ended March 31, 2014 and 2013, respectively. IVIG accounted for 36.5% and 47.5% of
the total sales for the three months ended March 31, 2014 and 2013, respectively. If the market demands for human albumin and IVIG
cannot be sustained in the future or the price of human albumin and IVIG decreases, the Company’s operating results could
be adversely affected.
Substantially all of the Company’s
customers are located in the PRC. There was one customer that individually comprised 10% or more of the total sales during the
three months ended March 31, 2014. There were no customers that individually comprised 10% or more of the total sales during the
three months ended March 31, 2013. No individual customer represented 10% or more of trade receivables at March 31, 2014 and December
31, 2013, respectively. The Company performs ongoing credit evaluations of its customers’ financial condition and, generally,
requires no collateral from its customers.
There were no suppliers that comprised
10% or more of the total purchases for the three months ended March 31, 2014 and 2013, respectively. No vendors individually represented
more than 10% of accounts payable at March 31, 2014 and December 31, 2013, respectively.
NOTE 2 – ACCOUNTS RECEIVABLE
Accounts receivable at March 31, 2014 and
December 31, 2013 consisted of the following:
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Accounts receivable
|
|
|
23,923,319
|
|
|
|
17,730,821
|
|
Less: Allowance for doubtful accounts
|
|
|
(438,599
|
)
|
|
|
(460,689
|
)
|
Total
|
|
|
23,484,720
|
|
|
|
17,270,132
|
|
A reversal of the allowance for doubtful
accounts of $18,286 and nil was recorded during the three months ended March 31, 2014 and 2013, respectively. There was no write-off
of accounts receivable for the three months ended March 31, 2014 and 2013, respectively.
NOTE 3 – INVENTORIES
Inventories at March 31, 2014 and December
31, 2013 consisted of the following:
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Raw materials
|
|
|
51,257,420
|
|
|
|
47,400,578
|
|
Work-in-process
|
|
|
22,542,625
|
|
|
|
20,720,666
|
|
Finished goods
|
|
|
16,911,760
|
|
|
|
20,513,611
|
|
Total
|
|
|
90,711,805
|
|
|
|
88,634,855
|
|
An inventory write-down of $9,092 and nil
was recorded during the three months ended March 31, 2014 and 2013, respectively.
NOTE 4 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment at March
31, 2014 and December 31, 2013 consisted of the following:
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Buildings
|
|
|
31,745,138
|
|
|
|
31,714,173
|
|
Machinery and equipment
|
|
|
50,590,886
|
|
|
|
36,919,094
|
|
Furniture, fixtures, office equipment and vehicles
|
|
|
7,493,172
|
|
|
|
8,141,993
|
|
Total property, plant and equipment, gross
|
|
|
89,829,196
|
|
|
|
76,775,260
|
|
Accumulated depreciation
|
|
|
(25,837,733
|
)
|
|
|
(25,658,760
|
)
|
Total property, plant and equipment, net
|
|
|
63,991,463
|
|
|
|
51,116,500
|
|
Construction in progress
|
|
|
8,968,612
|
|
|
|
19,050,642
|
|
Prepayments for property, plant and equipment
|
|
|
2,359,195
|
|
|
|
2,981,930
|
|
Property, plant and equipment, net
|
|
|
75,319,270
|
|
|
|
73,149,072
|
|
Depreciation expense for the three months
ended March 31, 2014 and 2013 was $1,472,397 and $1,534,507, respectively.
NOTE 5 – DEPOSITS RELATED TO LAND
USE RIGHTS
In 2012, Guizhou Taibang made a refundable
payment of RMB83,400,000 (approximately $13,535,820) to the local government in connection with the public bidding for a land use
right in Guizhou Province. Given the decrease of the land area to be provided by the local government, RMB23,000,000 (approximately
$3,732,900) was refunded by the local government. The remaining deposits will be refunded within one year following the completion
of the bidding process.
NOTE 6 – RESTRICTED CASH AND DEPOSIT
On August 7, 2013, the Company made a time
deposit of RMB186,000,000 (approximately $30,000,000) with China Merchants Bank Beijing Branch (“CMB BJ Branch”) as
a security for an 18-month US$30,000,000 loan lent by China Merchants Bank Co., Ltd., New York Branch (“CMB NY Branch”)
(see Note 7).
In February 2014, the Company made time
deposits of RMB246,500,000 (approximately $40,000,000) and RMB194,600,000 (approximately $31,583,580) with CMB BJ Branch as a security
for a 24-month $40,000,000 loan and an 18-month $30,000,000 loan respectively lent by CMB NY Branch (see Note 7).
NOTE 7 – BANK LOANS
The Company’s bank loans at March
31, 2014 and December 31, 2013 consisted of the following:
|
|
Maturity
|
|
Annual
|
|
|
March 31,
|
|
|
December 31,
|
|
Loans
|
|
date
|
|
interest rate
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
USD
|
|
|
USD
|
|
Short-term bank loan, unsecured
|
|
May 12, 2014
|
|
|
6.00
|
%
|
|
|
-
|
|
|
|
4,911,000
|
|
Short-term bank loan, unsecured
|
|
December 22, 2014
|
|
|
6.00
|
%
|
|
|
4,869,000
|
|
|
|
4,911,000
|
|
Current portion of long-term bank loans
|
|
February 7, 2015
|
|
|
See note (b)
|
|
|
|
30,000,000
|
|
|
|
-
|
|
Total
|
|
|
|
|
|
|
|
|
34,869,000
|
|
|
|
9,822,000
|
|
Interest expense on short-term bank loans
was $132,744 and $119,490 for the three months ended March 31, 2014 and 2013, respectively.
The Company did not have any revolving
line of credit at March 31, 2014.
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Long-term bank loans
|
|
|
100,000,000
|
|
|
|
30,000,000
|
|
Less: current portion of long-term bank loans
|
|
|
30,000,000
|
|
|
|
-
|
|
Total non-current bank loans
|
|
|
70,000,000
|
|
|
|
30,000,000
|
|
On August 8, 2013, the Company entered
into a credit facility agreement with CMB NY Branch to finance the share repurchase (see Note 15). Pursuant to the facility agreement,
CMB NY Branch lends to the Company an 18-month $30,000,000 loan bearing an interest rate of 3-month LIBOR plus 1.6% per annum
and a facility fee of 0.7% per annum. The loan is secured by a time deposit of RMB186,000,000 (approximately $30,000,000) held
at CMB BJ Branch.
The Company entered into a credit facility
agreement with CMB NY Branch on February 25, 2014. Pursuant to the facility agreement, CMB NY Branch lent to the Company a 24-month
$40,000,000 loan and an 18-month $30,000,000 loan, secured by time deposits of RMB246,500,000 (approximately $40,000,000) and RMB194,600,000
(approximately $31,583,580), respectively, held at CMB BJ Branch. Both loans bear an interest rate of 3-month LIBOR plus 1.3% per
annum and a facility fee of 1.2% per annum.
NOTE 8 – INCOME TAX
On October 31, 2011, Shandong Taibang received
a notice from the Shandong provincial government that the High and New Technology Enterprise qualification has been renewed for
an additional three years which entitled it to a 15% preferential income tax rate from 2011 to 2013. Subject to reapplication,
Shandong Taibang’s High-Tech Enterprise status will enable it to continue to enjoy the preferential income tax rate. Management
believes that Shandong Taibang meets all the criteria for the reapplication of High-Tech Enterprise status.
According to Cai Shui [2011] No. 58 dated
July 27, 2011, Guizhou Taibang, being a qualified enterprise located in the western region of PRC, enjoys a preferential income
tax rate of 15% effective retroactively from January 1, 2011 to December 31, 2020.
The Company’s effective income tax
rates were 18% and 17% for the three months ended March 31, 2014 and 2013, respectively.
As of and for the three months ended March
31, 2014, the Company did not have any unrecognized tax benefits and thus no interest and penalties related to unrecognized tax
benefits were recorded. In addition, the Company does not expect that the amount of unrecognized tax benefits to change significantly
within the next 12 months.
NOTE 9 – OPTIONS AND NONVESTED
SHARES
Options
A summary of stock options activity for
three months ended March 31, 2014 is as follow:
|
|
Number of Options
|
|
|
Weighted Average
Exercise Price
|
|
|
Weighted Average
Remaining
Contractual Term in
Years
|
|
|
Aggregate Intrinsic
Value
|
|
|
|
|
|
|
USD
|
|
|
|
|
|
USD
|
|
Outstanding at December 31, 2013
|
|
|
1,882,376
|
|
|
|
9.98
|
|
|
|
7.20
|
|
|
|
35,518,897
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(51,428
|
)
|
|
|
4.00
|
|
|
|
|
|
|
|
1,554,782
|
|
Forfeited and expired
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
Outstanding at March 31, 2014
|
|
|
1,830,948
|
|
|
|
10.15
|
|
|
|
7.03
|
|
|
|
45,043,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vested and expected to vest
|
|
|
1,830,948
|
|
|
|
10.15
|
|
|
|
7.03
|
|
|
|
45,043,505
|
|
Exercisable at March 31, 2014
|
|
|
1,330,948
|
|
|
|
10.32
|
|
|
|
6.56
|
|
|
|
32,516,005
|
|
For the three months ended March 31, 2014
and 2013, the Company recorded stock compensation expense of $427,447 and $1,464,933, respectively, in general and administrative
expenses.
At March 31, 2014, approximately $3,226,575
of stock compensation expense with respect to the non-vested stock options is expected to be recognized over approximately 1.97
years.
Nonvested shares
A summary of nonvested shares activity for the three months
ended March 31, 2014 is as follows:
|
|
Number of
nonvested shares
|
|
|
Grant date weighted
average fair value
|
|
|
|
|
|
|
USD
|
|
Outstanding at December 31, 2013
|
|
|
362,750
|
|
|
|
20.91
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
Vested
|
|
|
(5,625
|
)
|
|
|
18.58
|
|
Forfeited
|
|
|
-
|
|
|
|
-
|
|
Outstanding at March 31, 2014
|
|
|
357,125
|
|
|
|
20.94
|
|
For the three months ended March 31, 2014
and 2013, the Company recorded stock compensation expense of $553,518 and $169,802 respectively in general and administrative expenses.
At March 31, 2014, approximately $6,171,398
of stock compensation expense with respect to nonvested shares is expected to be recognized over approximately 2.94 years.
NOTE 10 – FAIR VALUE MEASUREMENTS
Management used the following methods and
assumptions to estimate the fair value of financial instruments at the relevant balance sheet dates:
•
Short-term financial instruments (including cash, time deposit, accounts receivable, other receivables, short-term bank loans including
current portion of long-term bank loans, accounts payable, other payables and accrued expenses, and amount due to related parties)
– The carrying amounts of the short-term financial instruments approximate their fair values because of the short maturity
of these instruments.
•
Restricted cash and deposit – The carrying amounts of the restricted cash and deposit approximate their fair value. The fair
value is estimated using discounted cash flow analysis based on the Company’s incremental borrowing rates for similar borrowing.
•
Long-term bank loan excluding current portion of long-term bank loans– fair value is based on the amount of future cash flows
associated with the long-term bank loan discounted at the Company’s current borrowing rate for similar debt instruments of
comparable terms. The carrying value of the long-term bank loan approximate its fair value as the long-term bank loan carry variable
interest rate which approximate rate currently offered by the Company’s bankers for similar debt instruments of comparable
maturities.
NOTE 11 – SALES
The Company’s sales are primarily
derived from the manufacture and sale of Human Albumin and Immunoglobulin products. The Company’s sales by significant types
of product for the three months ended March 31, 2014 and 2013 are as follows:
|
|
For the three months ended
|
|
|
|
March 31, 2014
|
|
|
March 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Human Albumin
|
|
|
23,781,001
|
|
|
|
20,501,311
|
|
Immunoglobulin products:
|
|
|
|
|
|
|
|
|
Human Immunoglobulin for Intravenous Injection
|
|
|
20,529,771
|
|
|
|
25,661,871
|
|
Other Immunoglobulin products
|
|
|
8,283,248
|
|
|
|
5,099,725
|
|
Placenta Polypeptide
|
|
|
2,626,553
|
|
|
|
2,184,163
|
|
Others
|
|
|
1,046,004
|
|
|
|
584,662
|
|
Total
|
|
|
56,266,577
|
|
|
|
54,031,732
|
|
NOTE 12 – COMMITMENTS AND CONTINGENCIES
Capital commitments
At March 31, 2014, commitments outstanding
for the purchase of property, plant and equipment approximated $6,150,000.
Legal proceedings
Dispute among Guizhou Taibang Shareholders over Raising
Additional Capital
In May 2007, a 91% majority of Guizhou
Taibang’s shareholders approved a plan to raise additional capital from private strategic investors through the issuance
of an additional 20,000,000 shares of Guizhou Taibang at RMB2.80 per share. The plan required all existing Guizhou Taibang shareholders
to waive their rights of first refusal to subscribe for the additional shares. The remaining 9% minority shareholder of Guizhou
Taibang’s shares, Guizhou Jie’an Company (“Jie’an”), did not support the plan and did not waive its
right of first refusal. In May 2007, the majority shareholders caused Guizhou Taibang to sign an Equity Purchase Agreement with
certain investors, pursuant to which the investors agreed to invest an aggregate of $7,475,832 (or RMB50,960,000) in exchange for
18,200,000 shares, or 21.4%, of Guizhou Taibang’s equity interests. At the same time, Jie’an also subscribed for 1,800,000
shares, representing its pro rata share of the 20,000,000 shares being offered. The proceeds from all parties were received by
Guizhou Taibang in accordance with the agreement.
In June 2007, Jie’an brought suit
in the High Court of Guizhou province, China, against Guizhou Taibang and the three other original shareholders of Guizhou Taibang,
alleging the illegality of the Equity Purchase Agreement. In its complaint, Jie’an claimed that it had a right to acquire
the 18,200,000 shares offered to the strategic investors under the Equity Purchase Agreement. In September 2008, the Guizhou High
Court ruled against Jie’an and sustained the Equity Purchase Agreement. In November 2008, Jie’an appealed the Guizhou
High Court judgment to the People’s Supreme Court in Beijing. In May 2009, the People’s Supreme Court sustained the
original ruling and denied the rights of first refusal of Jie’an over the 18,200,000 shares.
During the second quarter of 2010, Jie’an
requested that Guizhou Taibang register its 1.8 million shares of additional capital injection with the local Administration for
Industry and Commerce, or AIC, pursuant to the Equity Purchase Agreement, and such request was approved by the majority shareholders
of Guizhou Taibang in a shareholders meeting held in the second quarter of 2010. However, the Board of Directors of the Company
is withholding its required ratification of the shareholders’ approval of Jie’an’s request, pending the outcome
of the ongoing litigation. In March 2012, the Company received a subpoena that Jie’an brought suit in the People’s
Court of Huaxi District, Guizhou Province, against Guizhou Taibang, alleging Guizhou Taibang’s withholding of its request.
Jie’an requested that Guizhou Taibang register its 1.8 million shares of capital injection, pay dividends associated with
these shares, as well as the related interest and penalty from May 2007 to December 2011 amounting to $3,967,500 (or RMB25,000,000)
in aggregate, and return the over-paid subscription of $228,528 (or RMB1,440,000), as well as the interest and penalty, amounting
to $1,587,000 (or RMB10,000,000) in aggregate. The People’s Court of Huaxi District, Guizhou Province, has accepted Jie’an’s
suit. In May 2012, Guizhou Taibang was informed by the court that the case was postponed upon the request from Jie’an.
In December 2013, Jie’an brought
suit again in the People’s Court of Huaxi District, Guizhou Province, against Guizhou Taibang, again alleging Guizhou Taibang’s
withholding of its request. The People’s Court of Huaxi District, Guizhou Province, has accepted Jie’an’s suit
and heard the case on February 26, 2014. The Company is awaiting the judgment as of the date of this report. If the Company decides
to ratify the approval or the case is ruled in Jie’an’s favor, Dalin’s ownership in Guizhou Taibang will be diluted
from 54% to 52.54% and Jie’an may be entitled to receive its pro rata share of Guizhou Taibang’s profits since the
date on which Jie’an’s capital contribution became effective. As this case is closely tied to the outcome of the strategic
investors’ dispute stated below, the Company does not expect Jie’an to prevail. As of March 31, 2014, the Company had
recorded, in its balance sheet, payables to Jie’an in the amounts of RMB5,040,000 (approximately $817,992) for the additional
funds received in relation to the 1.8 million shares of capital infusion, RMB1,440,000 (approximately $233,712) for the over-paid
subscription and RMB3,035,737 (approximately $492,700) for the accrued interest.
As a result of this dispute, the strategic
investors’ equity ownership in Guizhou Taibang and the related increase in registered capital of Guizhou Taibang have not
been registered with the local AIC. In January 2010, the strategic investors brought suit in the High Court of Guizhou Province
against Guizhou Taibang alleging Guizhou Taibang’s failure to register their equity interest in Guizhou Taibang with the
local AIC and requesting the distribution of their share of Guizhou Taibang’s dividends declared since 2007. Dalin was also
joined as a co-defendant as it is the majority shareholder and exercises control over Guizhou Taibang’s day-to-day operations.
In October, 2010, the High Court of Guizhou
ruled in favor of the Company and denied the strategic investors’ right as shareholders of Guizhou Taibang, as well as their
entitlement to the dividends. In light of this ruling, the Company returned the proceeds of $1,699,040 (or RMB11,200,000) to one
of the strategic investors in November 2010. In October 2010, the other strategic investors appealed to the PRC Supreme Court in
Beijing on the ruling of the High Court of Guizhou. The PRC Supreme Court overruled the decision of the High Court of Guizhou and
remanded the case to the High Court of Guizhou for retrial. In January 2012, the strategic investors re-filed their case to the
High Court of Guizhou requesting, in addition to the share distribution, the distribution of dividends and interest in the amount
of RMB18,349,345 (approximately $2,978,099) and RMB2,847,000 (approximately $462,068), respectively. In December 2012, the High
Court of Guizhou affirmed the judgment against the strategic investors. In January 2013, the strategic investors appealed to the
PRC Supreme Court on the ruling again and the appeal was accepted.
In September 2013, the PRC Supreme Court
made the final judgment against the strategic investors and denied the strategic investors’ right as shareholders of Guizhou
Taibang and their claim for the related dividend distribution. In November 2013, the strategic investors requested the PRC Supreme
Court to reconsider the judgment and such request was rejected by the PRC Supreme Court on January 17, 2014. As of March 31, 2014,
Guizhou Taibang had made provision for the strategic investors’ initial fund along with RMB17,777,742 (approximately $2,885,328)
in accrued interest, and RMB509,600 (approximately $82,708) for the 1% penalty imposed by the agreement for any breach in the event
that Guizhou Taibang is required to return their original investment amount to the strategic investors.
In April 2013, the Company countersued
the strategic investors in the Intermediate Court of Guiyang City alleging their breach of the Security Law in the PRC and requested
a consideration of $6,064,800 (or RMB38,000,000) for the related expenses and losses, and Guizhou Intermediate Court accepted the
case. The Company is awaiting the hearing of the above case as of the date of this report.
NOTE 13 – RELATED PARTY TRANSACTIONS
The material related party transactions
undertaken by the Company with related parties for the three months ended March 31, 2014 and 2013 are presented as follows:
|
|
For the three months ended
|
|
|
|
March 31, 2014
|
|
|
March 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Commission expenses with related parties
(1)
|
|
|
798,795
|
|
|
|
643,255
|
|
The related party balances as at March
31, 2014 and December 31, 2013 are presented as follows:
Liabilities
|
|
Purpose
|
|
March 31, 2014
|
|
|
December 31, 2013
|
|
|
|
|
|
USD
|
|
|
USD
|
|
Other payable – a related party
(1)
|
|
Commission
|
|
|
340,019
|
|
|
|
351,955
|
|
Other payable – a related party
(2)
|
|
Loan
|
|
|
2,363,088
|
|
|
|
2,383,472
|
|
Other payable – a related party
(3)
|
|
Contribution
|
|
|
2,904,845
|
|
|
|
2,929,903
|
|
Other payable – related parties
(4)
|
|
Contribution
|
|
|
1,544,404
|
|
|
|
1,541,640
|
|
Total other payable – related parties
|
|
|
|
|
7,152,356
|
|
|
|
7,206,970
|
|
|
(1)
|
During the year ended December 31, 2011, Guizhou Taibang
signed an agency contract with Guizhou Eakan Co., Ltd. (“Guizhou Eakan”), an affiliate of one of the Guizhou Taibang’s
noncontrolling interest shareholders, pursuant to which Guizhou Taibang would pay commission to Guizhou Eakan for the promotion
of the product of Placenta Polypeptide. At March 31, 2014 and December 31, 2013, Guizhou Taibang accrued commission payable of
$340,019 and
$351,955
for service rendered by Guizhou Eakan, respectively.
For the three months ended March 31, 2014 and 2013, commission expense for service rendered by Guizhou Eakan was $798,795 and
$643,255, respectively.
|
|
(2)
|
Guizhou Taibang has payables to Guizhou Eakan Investing
Corp., amounting to approximately $2,363,088 and $2,383,472 at March 31, 2014 and December 31, 2013, respectively. Guizhou Eakan
Investing Corp. is one of the noncontrolling interest shareholders of Guizhou Taibang. The Company borrowed this interest free
advance for working capital purpose for Guizhou Taibang. The balance is due on demand.
|
|
(3)
|
In December 2013, Guizhou Taibang received a contribution
of RMB17,898,000 (approximately $2,904,845) from Guizhou Eakan Investing Corp. pending for the registration with the local AIC.
|
|
(4)
|
Guizhou Taibang has payables to Jie’an, a noncontrolling interest shareholder of
Guizhou Taibang, amounting to approximately $1,544,404 and $1,541,640 at March 31, 2014 and December 31, 2013, respectively.
In 2007, Guizhou Taibang received additional contributions from Jie’an of $962,853 (or RMB6,480,000) to maintain
Jie’an’s equity interest in Guizhou Taibang at 9%. However, due to a legal dispute among shareholders over
raising additional capital as discussed in the legal proceeding section (see Note 12), the contribution is subject to
be returned to Jie’an. During the second quarter of 2010, Jie’an requested that Guizhou Taibang register its 1.8
million shares of additional capital contribution with the local AIC, pursuant to the Equity Purchase Agreement, and such
registration was approved by the majority shareholders of Guizhou Taibang in a shareholders’ meeting held in the
second quarter of 2010. However, the Board of
Directors of the Company is withholding its required ratification of the
shareholders’ approval of Jie’an’s request until the completion of the ongoing litigations. If the Company
decided to ratify the approval, Dalin’s ownership in Guizhou Taibang will be diluted from 54% to 52.54% and
Jie’an will be entitled to receive its pro rata share of Guizhou Taibang’s profits since the date on
which Jie’an’s contribution became effective. As this case is closely tied to the outcome of the strategic
investors’ dispute stated above, the
Company has recorded, in its balance sheet, payables to Jie’an in the amounts of RMB5,040,000
(approximately $817,992) for the additional funds received in relation to the 1.8 million shares of capital infusion,
RMB1,440,000 (approximately $233,712) for the over-paid subscription and RMB3,035,737 (approximately $492,700) for the
accrued interest and penalty at March 31, 2014.
|
NOTE 14 - NET INCOME PER SHARE
The following table sets forth the computation
of basic and diluted net income per share for the periods indicated:
|
|
For the three months ended
|
|
|
|
March 31, 2014
|
|
|
March 31, 2013
|
|
|
|
USD
|
|
|
USD
|
|
Net income attributable to China Biologic Products, Inc.
|
|
|
18,273,671
|
|
|
|
14,915,860
|
|
Earnings allocated to participating nonvested shares
|
|
|
(259,779
|
)
|
|
|
(72,594
|
)
|
Net income used in basic/diluted net income per common stock
|
|
|
18,013,892
|
|
|
|
14,843,266
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used in computing basic net income per common stock
|
|
|
24,950,549
|
|
|
|
26,785,541
|
|
Diluted effect of stock option
|
|
|
1,182,380
|
|
|
|
1,129,965
|
|
Weighted average shares used in computing diluted net income per common stock
|
|
|
26,132,929
|
|
|
|
27,915,506
|
|
|
|
|
|
|
|
|
|
|
Net income per common stock – basic
|
|
|
0.72
|
|
|
|
0.55
|
|
Net income per common stock – diluted
|
|
|
0.69
|
|
|
|
0.53
|
|
During the three months ended March 31,
2014 and 2013, no option was antidilutive and excluded from the calculation of diluted net income per common stock.
NOTE 15 – SHARE REPURCHASE
On January 27, 2014, the Company entered
into a redemption agreement with one of its individual shareholders, pursuant to which the Company repurchased 2,500,000 shares
of common stock for a consideration of $70,000,000. The transaction was completed on February 28, 2014.