Biostar Pharmaceuticals, Inc. Announces Third Quarter 2014 Financial Results



XIANYANG, China, November 14, 2014 /PRNewswire/ — Biostar Pharmaceuticals, Inc. (NASDAQ: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced its financial results for the third quarter ended September 30, 2014.

Highlights for the Third Quarter 2014

  • Net sales decreased by approximately $400,000 or 2.4% compared to the same period in 2013
  • Gross profit increased slightly by approximately $36,000 or 0.5% for the three months ended September 30, 2014
  • Cash, cash equivalents totaled $7.80 million as of September 30, 2014 compared to $80,072 as of December 31, 2013
  • Revenue from hospital products grew 76.4% to $3.10 million from $1.76 million compared to the same period of last year.

Mr. Ronghua Wang, Chairman and CEO of Biostar Pharmaceutical, commented, "In the past six months, we launched production of several new drugs which resulted in the revenue increases in from Aoxing new products in this quarter by 253.5%, as compared to the same period last year. Strengthening of the marketing campaign of our new products is intended to capture a larger market share in this industry," he continued. "In addition, the gross margin of Xin Ao Xing Oleanolic Acid Capsule, our flagship drug for the treatment of chronic Hepatitis B virus (HBV), increased to 82.8% from 58.6%."

"In the last three months of 2014, we are in the process of building our sales team to market Biostar’s proprietary drug products to hospitals," Chairman Wang continued. "We continue our focus on new drug development and innovative sales and marketing as we believe it contributes to the strength of our Company going forward," he concluded.

About Biostar Pharmaceuticals, Inc.

Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and controlled affiliate in China, develops, manufactures and markets pharmaceutical and health supplement products for a variety of diseases and conditions. The Company’s most popular product is its Xin Aoxing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. For more information please visit: http://www.biostarpharmaceuticals.com.

Safe Harbor Relating to the Forward-Looking Statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company’s ability to sustain its sales effort going forward, its ability to retain existing and retain new customers for its products, its ability to achieve the projected sales through the efforts of the call center, to complete the contemplated clinical trials and capitalize on such opportunities, the Company’s ability to recover its sales and revenue for the gel capsule segment of its business, the state of consumer confidence and market demand or the Company’s products, success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our most recent Annual Report on Form 10-K for the year ended December 31, 2013, and other subsequent filings. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

BIOSTAR PHARMACEUTICALS, INC

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2014

2013

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents

$

7,799,188

$

80,072

Note receivable

1,636,072

Accounts receivable, net of allowance for doubtful accounts of $4,590,336 (December, 2013 : $2,454,108)

29,366,966

17,965,082

Inventories

739,464

830,311

Deposits and other receivables

719,594

5,282,574

Income tax recoverables

501,957

374,958

Loan receivables

10,041,596

9,816,433

Total Current Assets

49,168,765

35,985,502

Non-current Assets

Deposits

3,900,283

3,926,573

Deferred tax assets

3,225,768

2,789,175

Property and equipment, net

7,757,851

7,728,700

Intangible assets, net

14,927,548

17,134,494

Total Assets

$

78,980,215

$

67,564,444

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities

Accounts and other payables

$

5,665,811

$

4,447,314

Short-term bank loans

3,250,236

Value-added tax payable

344,191

Total Current Liabilities

8,916,047

4,791,505

Non-current Liability

Warrant liabilities

619,344

Total Liabilities

9,535,391

4,791,505

Commitment

Stockholders’ Equity

Common stock, $0.001 par value, 100,000,000 shares authorized, 15,476,113 and 12,676,113 shares issued and outstanding as at September 30, 2014 and December 31, 2013

15,476

12,676

Additional paid-in capital

30,303,508

25,748,669

Deferred stock-based compensation

(66,367)

(365,017)

Statutory reserves

7,126,432

7,126,432

Retained earnings

25,841,456

23,649,725

Accumulated other comprehensive income

6,224,319

6,600,454

Total Stockholders’ Equity

69,444,824

62,772,939

Total Liabilities and Stockholders’ Equity

$

78,980,215

$

67,564,444

BIOSTAR PHARMACEUTICALS, INC

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)

Three months ended September 30,

Nine months ended September 30,

2014

2013

2014

2013

Sales, net

$

14,651,054

$

15,009,432

$

47,031,072

$

41,752,195

Cost of sales

7,674,053

8,068,096

23,533,445

21,242,519

Gross profit

6,977,001

6,941,336

23,497,627

20,509,676

Operating expenses:

Advertising expenses

2,290,277

931,938

6,397,644

5,368,890

Selling expenses

2,161,641

2,584,700

6,633,651

7,403,334

General and administrative expenses

1,651,457

1,867,707

8,516,038

4,404,273

Research and development expenses

690,189

811,009

2,074,621

2,412,623

Impairment of intangible assets

239,203

Total operating expenses

6,793,564

6,195,354

23,621,954

19,828,323

Income (loss) from operations

183,437

745,982

(124,327)

681,353

Other income (expense)

Interest income

309,634

348,281

960,532

1,134,916

Interest expense

(98,111)

(293,320)

Fair value adjustment on warrants

(51,612)

341,550

Other income (expense)

45,469

370

1,093,929

(1,093)

303,491

250,540

2,396,011

840,503

Income before income taxes

486,928

996,522

2,271,684

1,521,856

Provision for income tax

247,361

608,705

79,953

1,305,056

Net Income

239,567

387,817

$

2,191,731

$

216,800

Foreign currency translation adjustment

58,895

1,336,712

(376,135)

1,774,545

Comprehensive income

$

298,462

$

1,724,529

$

1,815,596

$

1,991,345

Net income per share

Basic

$

0.02

$

0.03

$

0.15

$

0.02

Diluted

0.02

0.03

0.15

0.02

Weighted average number of common shares outstanding

Basic

15,288,613

12,024,685

14,221,351

11,197,451

Diluted

15,288,613

12,024,685

14,223,014

11,197,451

BIOSTAR PHARMACEUTICALS, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Nine Months Ended September 30,

2014

2013

CASH FLOWS FROM OPERATING ACTIVITIES

Net income

$

2,191,731

$

216,800

Adjustments to reconcile net income to net cash provided by operating activities:

Accrued interest

(1,072,394)

Deferred tax expense (benefit)

(455,838)

533,637

Depreciation and amortization

2,468,737

2,026,796

Provision for doubtful accounts

2,155,357

Loss on disposal

3,274

Recognition of deferred research and development expenses

1,383,081

2,412,623

Stock-based compensation

1,954,650

613,647

Warrant liability

(341,550)

Impairment of intangible assets

239,203

Changes in operating assets and liabilities:

Accounts receivable

(12,064,808)

9,250,156

Inventories

85,394

(340,375)

Deposits and other receivables

1,297,726

482,525

Accounts payable and accrued expenses

1,249,789

(641,335)

Value-added tax payable

(342,315)

(126,573)

Income tax payable/recoverable

(129,671)

113,299

Net cash (used in) provided by operating activities

(544,443)

13,708,009

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment

(484,778)

(978,377)

Deposit paid for research and development

(2,734,306)

Sales proceed of property, plant and equipment

2,929

Settlement of outstanding receivable from disposal of land use right

1,561,223

160,842

Net cash provided by (used in) investing activities

1,079,374

(3,551,841)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceed of bank loan

3,254,308

Advance from (repayment to) a related party

70,165

(1,608,415)

Proceeds from stock issuance and warrants

3,862,533

Net cash provided by (used in) financing activities

7,187,006

(1,608,415)

Effect of exchange rate changes on cash and cash equivalents

(2,821)

244,400

Net increase in cash and cash equivalents

7,719,116

8,792,153

Cash and cash equivalents, beginning balance

80,072

1,759,078

Cash and cash equivalents, ending balance

$

7,799,188

$

10,551,231

SUPPLEMENTAL DISCLOSURES:

Interest payments

$

(82,855)

$

(189,359)

Income tax payments

$

(665,463)

$

(658,120)

Interest received

$

669,409

$

1,134,916


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