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Share Name | Share Symbol | Market | Type |
---|---|---|---|
American Oriental Bioengineering, Inc. | NYSE:AOB | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.52 | 0.00 | 01:00:00 |
x
|
Quarterly
report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
quarterly period ended September 30,
2009
|
¨
|
Transition
report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the
transition period from
to
|
NEVADA
|
84-0605867
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
Large accelerated filer
|
¨
|
Accelerated filer
|
x
|
Non-accelerated
filer
|
¨
(Do
not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Title
of each class of common stock
|
Outstanding
as of September 30, 2009
|
|
Preferred
Stock, $0.001 par value
|
1,000,000
|
|
Common
Stock, $0.001 par value
|
78,321,439
|
PART
I – FINANCIAL INFORMATION
|
3
|
ITEM 1
– FINANCIAL STATEMENTS
|
3
|
ITEM 2
– MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
|
22
|
ITEM 3
– QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
31
|
ITEM 4
– CONTROLS AND PROCEDURES
|
31
|
PART
II – OTHER INFORMATION
|
32
|
ITEM 1
– LEGAL PROCEEDINGS
|
32
|
ITEM 1A
– RISK FACTORS
|
32
|
ITEM 2
– UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
32
|
ITEM 3
– DEFAULTS UPON SENIOR SECURITIES
|
32
|
ITEM 4
– SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
|
32
|
ITEM 5
– OTHER INFORMATION
|
32
|
ITEM 6
– EXHIBITS
|
33
|
SEPTEMBER
30,
2009
|
DECEMBER
31,
2008
|
|||||||
(UNAUDITED)
|
(RESTATED)
|
|||||||
CURRENT
ASSETS
|
||||||||
Cash
and cash equivalents
|
$
|
115,923,399
|
$
|
70,636,510
|
||||
Accounts
receivable, net of reserve of $512,013 and $226,330
|
||||||||
at
September 30 , 2009 and December 31, 2008,
respectively
|
37,961,967
|
36,982,167
|
||||||
Inventories,
net
|
15,291,710
|
13,042,123
|
||||||
Advances
to suppliers
|
2,798,860
|
3,593,979
|
||||||
Notes
receivable
|
122,300
|
708,076
|
||||||
Refundable
deposit
|
-
|
6,396,996
|
||||||
Deferred
tax assets
|
398,563
|
347,216
|
||||||
Other
current assets
|
1,154,315
|
744,903
|
||||||
Total
Current Assets
|
173,651,114
|
132,451,970
|
||||||
LONG-TERM
ASSETS
|
||||||||
Property,
plant and equipment, net
|
96,085,233
|
98,154,443
|
||||||
Land
use rights, net
|
154,233,322
|
148,988,870
|
||||||
Deposit
for long-term assets
|
-
|
6,347,174
|
||||||
Construction
in progress
|
26,645,307
|
25,385,835
|
||||||
Deferred
tax assets
|
127,823
|
1,313,832
|
||||||
Other
intangible assets, net
|
19,911,767
|
23,690,440
|
||||||
Goodwill
|
33,164,121
|
33,164,121
|
||||||
Investments
and advances in unconsolidated entities
|
54,995,237
|
54,963,064
|
||||||
Unamortized
financing cost
|
3,519,766
|
4,215,983
|
||||||
Total
Long-Term Assets
|
388,682,576
|
396,223,762
|
||||||
TOTAL
ASSETS
|
$
|
562,333,690
|
$
|
528,675,732
|
SEPTEMBER
30,
2009
|
DECEMBER
31,
2008
|
|||||||
(UNAUDITED)
|
(RESTATED)
|
|||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable
|
$
|
10,082,129
|
$
|
12,287,887
|
||||
Notes
payables
|
4,084,893
|
3,262,877
|
||||||
Other
payables and accrued expenses
|
19,556,446
|
19,766,652
|
||||||
Taxes
payable
|
1,108,783
|
420,671
|
||||||
Short-term
bank loans
|
9,652,509
|
7,140,148
|
||||||
Current
portion of long-term bank loans
|
59,771
|
58,659
|
||||||
Other
liabilities
|
2,334,788
|
2,253,440
|
||||||
Deferred
tax liability
|
176,449
|
178,931
|
||||||
Total
Current Liabilities
|
47,055,768
|
45,369,265
|
||||||
LONG-TERM
LIABILITIES
|
||||||||
Long-term
bank loans, net of current portion
|
759,597
|
804,521
|
||||||
Long-term
notes payable
|
-
|
269,908
|
||||||
Deferred
tax liabilities
|
15,502,047
|
17,635,511
|
||||||
Unrecognized
tax benefits
|
1,903,342
|
-
|
||||||
Convertible
notes
|
115,000,000
|
115,000,000
|
||||||
Total
Long-Term Liabilities
|
133,164,986
|
133,709,940
|
||||||
TOTAL
LIABILITIES
|
180,220,754
|
179,079,205
|
||||||
COMMITMENTS
AND CONTINGENCIES
|
||||||||
EQUITY
|
||||||||
SHAREHOLDERS’
EQUITY
|
||||||||
Preferred
stock, $0.001 par value; 2,000,000 shares
authorized;
|
||||||||
1,000,000
shares issued and outstanding at September 30 , 2009 and December 31,
2008, respectively
|
1,000
|
1,000
|
||||||
Common
stock, $0.001 par value; 150,000,000 shares
authorized;
|
||||||||
78,321,439
and 78,249,264 shares issued and outstanding at September 30, 2009 and
December 31, 2008, respectively.
|
78,321
|
78,249
|
||||||
Common
stock to be issued
|
291,000
|
376,335
|
||||||
Prepaid
forward repurchase contract
|
(29,998,616
|
)
|
(29,998,616
|
)
|
||||
Additional
paid-in capital
|
199,363,784
|
197,046,688
|
||||||
Retained
earnings (including Statutory Reserve amounted to
$19,924,918
|
||||||||
at
BOTH September 30 , 2009 and December 31, 2008,
respectively)
|
179,500,646
|
149,752,604
|
||||||
Accumulated
other comprehensive income
|
32,343,586
|
31,688,186
|
||||||
Total
Shareholders’ Equity
|
381,579,721
|
348,944,446
|
||||||
NON-CONTROLLING
INTEREST
|
533,215
|
652,081
|
||||||
TOTAL
EQUITY
|
382,112,936
|
349,596,527
|
||||||
TOTAL
LIABILITIES AND EQUITY
|
$
|
562,333,690
|
$
|
528,675,732
|
THREE
MONTHS ENDED
SEPTEMBER
30,
|
NINE
MONTHS ENDED
SEPTEMBER
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(RESTATED)
|
(RESTATED)
|
|||||||||||||||
SALES
REVENUE
|
$
|
78,818,666
|
$
|
70,593,949
|
$
|
196,117,893
|
$
|
168,372,552
|
||||||||
COST
OF GOODS SOLD
|
34,687,505
|
23,402,407
|
81,942,766
|
54,808,490
|
||||||||||||
GROSS
PROFIT
|
44,131,161
|
47,191,542
|
114,175,127
|
113,564,062
|
||||||||||||
Selling
and marketing
|
12,245,746
|
9,938,877
|
26,853,377
|
22,656,477
|
||||||||||||
Advertising
|
9,013,087
|
9,913,728
|
22,360,380
|
21,760,300
|
||||||||||||
General
and administrative
|
6,457,734
|
4,690,793
|
15,981,195
|
14,235,806
|
||||||||||||
Depreciation
and amortization
|
1,409,399
|
1,024,436
|
5,118,588
|
3,012,107
|
||||||||||||
Total
operating expenses
|
29,125,966
|
25,567,834
|
70,313,540
|
61,664,690
|
||||||||||||
INCOME
FROM OPERATIONS
|
15,005,195
|
21,623,708
|
43,861,587
|
51,899,372
|
||||||||||||
EQUITY
IN EARNINGS (LOSS) FROM UNCONSOLIDATED ENTITIES
|
(563,608
|
)
|
49,417
|
(299,072)
|
(591,650
|
)
|
||||||||||
INTEREST
EXPENSE
|
(1,106,805
|
)
|
(1,143,013
|
)
|
(4,306,143
|
)
|
(1,156,782
|
)
|
||||||||
OTHER
INCOME (EXPENSE), NET
|
(49,165
|
)
|
91,986
|
(164,103
|
)
|
(264,515
|
)
|
|||||||||
INCOME
BEFORE INCOME TAXES
|
13,285,617
|
20,622,098
|
39,092,269
|
49,886,425
|
||||||||||||
INCOME
TAXES
|
3,257,771
|
4,339,045
|
9,463,093
|
10,655,299
|
||||||||||||
NET
INCOME
|
10,027,846
|
16,283,053
|
29,629,176
|
39,231,126
|
||||||||||||
LESS:
NET INCOME (LOSS) ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
|
651
|
-
|
(118,866)
|
-
|
||||||||||||
NET
INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST
|
10,027,195
|
16,283,053
|
29,748,042
|
39,231,126
|
||||||||||||
OTHER
COMPREHENSIVE INCOME
|
142,118
|
646,405
|
655,400
|
15,743,396
|
||||||||||||
COMPREHENSIVE
INCOME
|
$
|
10,169,313
|
$
|
16,929,458
|
$
|
30,403,442
|
$
|
54,974,522
|
||||||||
NET
INCOME PER COMMON SHARE
|
||||||||||||||||
BASIC
|
$
|
0.13
|
$
|
0.22
|
$
|
0.40
|
$
|
0.51
|
||||||||
DILUTED
|
$
|
0.13
|
$
|
0.21
|
$
|
0.39
|
$
|
0.50
|
||||||||
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
||||||||||||||||
BASIC
|
74,636,155
|
75,101,869
|
74,592,447
|
77,164,602
|
||||||||||||
DILUTED
|
88,868,828
|
85,417,621
|
88,825,120
|
80,553,647
|
Nine
Months Ended
September
30 ,
|
||||||||
2009
|
2008
|
|||||||
(RESTATED)
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$
|
29,629,176
|
$
|
39,231,126
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
9,228,771
|
7,035,052
|
||||||
Loss
(gain) on disposal of plant and equipment
|
(2,283)
|
(7,016)
|
||||||
Amortization
of deferred issuance cost
|
696,216
|
193,394
|
||||||
Amortization
of deferred consulting expenses
|
24,000
|
152,500
|
||||||
Provision
(reversal) for doubtful accounts and slow moving
inventories
|
155,205
|
(189,096)
|
||||||
Deferred
taxes
|
(1,001,284)
|
897,889
|
||||||
Common
stock issued for services
|
160,800
|
68,000
|
||||||
Stock
option compensation expense
|
1,780,028
|
1,223,661
|
||||||
Independent
director stock compensation
|
291,000
|
279,334
|
||||||
Equity
in (income) loss from unconsolidated
entities
|
299,072
|
591,650
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
(Increase)
Decrease In:
|
||||||||
Accounts
receivable
|
(1,265,446)
|
(7,983,619)
|
||||||
Notes
receivable
|
585,776
|
1,669,891
|
||||||
Inventories
|
(2,124,681)
|
(4,899,509)
|
||||||
Advances
to suppliers and prepaid expenses
|
838,971
|
2,841,964
|
||||||
Other
current asset
|
(433,412)
|
1,115,016
|
||||||
Increase
(Decrease) In:
|
||||||||
Accounts
payable
|
(2,205,758)
|
1,351,984
|
||||||
Other
payables and accrued expenses
|
4,996,540
|
4,893,468
|
||||||
Taxes
payable
|
688,112
|
1,641,432
|
||||||
Other
liabilities
|
81,348
|
(1,275,988)
|
||||||
Unrecognized
tax benefits
|
1,903,342
|
- | ||||||
Net
cash provided by operating activities
|
44,325,493
|
48,831,133
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases
of construction in progress
|
(742,477)
|
(274,216)
|
||||||
Purchases
of property, plant and equipment
|
(756,009)
|
(20,236,226)
|
||||||
Purchase
of land use rights and other intangible assets
|
(757,662)
|
(15,407,685)
|
||||||
Refundable
deposit
|
6,397,106
|
(2,907,156)
|
||||||
Deposit
for long-term assets
|
(361,602)
|
(23,565,407)
|
||||||
Proceeds
from disposal of plant and equipment
|
52,229
|
7,774
|
||||||
Investments
in and advances to equity investments
|
(238,795)
|
(21,762,253)
|
||||||
Net
cash used in investing activities
|
3,592,790
|
(84,145,169)
|
||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds
from bank loans
|
9,951,673
|
6,584,312
|
||||||
Repayments
of bank loans
|
(7,501,752)
|
(6,624,824)
|
||||||
Proceeds
from notes payable
|
6,668,151
|
(71,240)
|
||||||
Net
proceeds from convertible notes
|
-
|
110,358,550
|
||||||
Prepaid
forward repurchase
|
-
|
(29,998,616)
|
||||||
Repayment
of notes payable and interest
|
(6,124,418)
|
-
|
||||||
Repayment
of convertible notes interest
|
(5,750,000)
|
-
|
||||||
Net
cash used in financing activities
|
(2,756,346)
|
80,248,182
|
||||||
NET
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
|
45,161,937
|
44,934,146
|
||||||
Effect
of exchange rate changes on cash
|
124,952
|
8,382,822
|
||||||
Cash
and cash equivalents, beginning of year
|
70,636,510
|
166,410,075
|
||||||
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
115,923,399
|
$
|
219,727,043
|
|
●
|
Persuasive
evidence of an arrangement exists,
|
|
●
|
Delivery
has occurred or services have been
rendered,
|
|
●
|
The
seller's price to the buyer is fixed or determinable,
and
|
|
●
|
Collectability
is reasonably assured.
|
September
30,
2009
|
September
30,
2008
|
||
Quarter
end RMB : US$ exchange rate
|
6.8376
|
6.8551
|
|
Average
quarterly RMB : US$ exchange rate
|
6.8412
|
6.8635
|
Three
Months Ended
September
30 ,
(Unaudited)
|
Nine
Months Ended
September
30 ,
(Unaudited)
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenue
from pharmaceutical products
|
$
|
66,023,106
|
$
|
62,095,466
|
$
|
159,141,380
|
$
|
143,747,290
|
||||||||
Revenue
from nutraceutical products
|
9,241,744
|
8,498,483
|
27,677,227
|
24,625,262
|
||||||||||||
Total
manufacturing revenue
|
75,264,850
|
70,593,949
|
186,818,607
|
168,372,552
|
||||||||||||
Distribution
revenue
|
3,553,816
|
-
|
9,299,286
|
-
|
||||||||||||
Total
sales revenue
|
$
|
78,818,666
|
$
|
70,593,949
|
$
|
196,117,893
|
$
|
168,372,552
|
Three
Months Ended
September
30 ,
(Unaudited)
|
Nine
Months Ended
September
30 ,
(Unaudited)
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||
Operating
income from pharmaceutical products
|
$
|
11,915,281
|
$
|
18,067,144
|
$
|
34,083,523
|
$
|
41,803,078
|
||||||||
Operating
income from nutraceutical products
|
3,080,589
|
3,556,564
|
10,181,561
|
10,096,294
|
||||||||||||
Total
manufacturing operating income
|
14,995,870
|
21,623,708
|
44,265,084
|
51,899,372
|
||||||||||||
Distribution
operating income
|
9,325
|
-
|
(403,497)
|
-
|
||||||||||||
Total
operating income
|
$
|
15,005,195
|
$
|
21,623,708
|
$
|
43,861,587
|
$
|
51,899,372
|
September
30 ,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
(Restated)
|
|||||||
Manufacturing
|
$ | 368,173,989 | $ | 316,767,049 | ||||
Distribution
|
52,888,727 | 52,445,008 | ||||||
Corporate
|
141,270,974 | 159,463,675 | ||||||
Total
assets
|
$ | 562,333,690 | $ | 528,675,732 |
|
·
|
Level 1—defined
as observable inputs such as quoted prices in active
markets;
|
|
·
|
Level 2—defined
as inputs other than quoted prices in active markets that are either
directly or indirectly observable;
and
|
|
·
|
Level 3—defined
as unobservable inputs in which little or no market data exists, therefore
requiring an entity to develop its own
assumptions.
|
As of March 31, 2009 | As of June 30, 2009 | |||||||||||||||||||||||
Previously
|
Adjustments
|
As
Restated
|
Previously
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Reported
|
Reported
|
|||||||||||||||||||||||
Deferred
tax assets
|
$ | 456,444 | $ | - | $ | 456,444 | $ | 421,660 | $ | - | $ | 421,660 | ||||||||||||
Goodwill
|
28,543,226 | 4,620,895 | 33,164,121 | 28,543,226 | 4,620,895 | 33,164,121 | ||||||||||||||||||
Total
assets
|
524,860,987 | 4,620,895 | 529,481,882 | 540,796,581 | 4,620,895 | 545,417,476 | ||||||||||||||||||
Deferred
tax liability - current
|
999,454 | (805,826 | ) | 193,628 | 1,121,738 | (943,828 | ) | 177,910 | ||||||||||||||||
Other
payables and accrued expenses
|
13,578,351 | 93,301 | 13,671,652 | 14,251,673 | 187,639 | 14,439,312 | ||||||||||||||||||
Deferred
tax liability - non current
|
16,102,048 | 1,556,973 | 17,659,021 | 15,963,766 | 1,698,702 | 17,662,468 | ||||||||||||||||||
Unrecognized
tax benefits
|
- | 387,095 | 387,095 | - | 774,190 | 774,190 | ||||||||||||||||||
Total
liabilities
|
170,340,559 | 1,231,543 | 171,572,102 | 172,588,137 | 1,716,703 | 174,304,840 | ||||||||||||||||||
Additional
paid-in capital
|
196,352,466 | 1,560,370 | 197,912,836 | 196,752,860 | 1,759,609 | 198,512,469 | ||||||||||||||||||
Retained
earnings
|
157,790,182 | (886,069 | ) | 156,904,113 | 171,019,548 | (1,546,097 | ) | 169,473,451 | ||||||||||||||||
Accumulated
other comprehensive income
|
29,464,472 | 2,715,051 | 32,179,523 | 29,510,788 | 2,690,680 | 32,201,468 | ||||||||||||||||||
Total equity
|
354,520,428 | 3,389,352 | 357,909,780 | 368,208,444 | 2,904,192 | 371,112,636 | ||||||||||||||||||
Total
liabilities and shareholders’ equity
|
$ | 524,860,987 | $ | 4,620,895 | $ | 529,481,882 | $ | 540,796,581 | $ | 4,620,895 | $ | 545,417,476 |
Three months ended March 31, 2009 | Three months ended June 30, 2009 | |||||||||||||||||||||||
Previously
|
Adjustments
|
As
Restated
|
Previously
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Reported
|
Reported
|
|||||||||||||||||||||||
General
and administrative
|
$ | 4,565,643 | $ | 348,527 | $ | 4,914,170 | $ | 4,315,714 | $ | 293,577 | $ | 4,609,291 | ||||||||||||
Income
from operations
|
11,213,435 | (348,527 | ) | 10,864,908 | 18,285,061 | (293,577 | ) | 17,991,484 | ||||||||||||||||
Income
before income tax
|
9,973,351 | (348,527 | ) | 9,624,824 | 16,475,405 | (293,577 | ) | 16,181,828 | ||||||||||||||||
Income
tax
|
2,103,299 | 366,465 | 2,469,764 | 3,369,107 | 366,451 | 3,735,558 | ||||||||||||||||||
Net
income
|
7,870,052 | (714,992 | ) | 7,155,060 | 13,106,298 | (660,028 | ) | 12,446,270 | ||||||||||||||||
Foreign
currency translation gain
|
378,466 | 112,871 | 491,337 | 46,316 | (24,371 | ) | 21,945 | |||||||||||||||||
Comprehensive
income
|
8,244,967 | (602,121 | ) | 7,642,846 | 13,275,682 | (684,399 | ) | 12,591,283 | ||||||||||||||||
Basic
EPS
|
0.11 | (0.01 | ) | 0.10 | 0.18 | (0.01 | ) | 0.17 | ||||||||||||||||
Diluted
EPS
|
$ | 0.11 | $ | (0.01 | ) | $ | 0.10 | $ | 0.17 | $ | (0.01 | ) | $ | 0.16 |
Three
months ended March 31, 2009
|
Six
months ended June 30, 2009
|
|||||||||||||||||||||||
Previously
Reported
|
Adjustments
|
As
Restated
|
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Net
income
|
$ | 7,870,052 | $ | (714,992 | ) | $ | 7,155,060 | $ | 20,976,350 | $ | (1,375,020 | ) | $ | 19,601,330 | ||||||||||
Deferred
tax
|
54,118 | (40,200 | ) | 13,918 | 67,471 | 57,865 | 125,336 | |||||||||||||||||
Stock
option compensation expense
|
234,631 | 255,226 | 489,857 | 673,035 | 454,465 | 1,127,500 | ||||||||||||||||||
Unrecognized
tax benefits
|
- | 387,095 | 387,095 | - | 774,190 | 774,190 | ||||||||||||||||||
Net
cash provided by operating activities
|
3,641,873 | (112,871 | ) | 3,529,002 | 26,540,242 | (88,500 | ) | 26,451,742 | ||||||||||||||||
Net
increase (Decrease) in cash and cash equivalents
|
3,160,019 | (112,871 | ) | 3,047,148 | 29,976,336 | (88,500 | ) | 29,887,836 | ||||||||||||||||
Effect
of exchange rate change on cash
|
$ | 103,073 | $ | 112,871 | $ | 215,944 | $ | 117,556 | $ | 88,500 | $ | 206,056 |
Three
Months Ended
September
30,
(Unaudited)
|
Nine
Months Ended
September
30,
(Unaudited)
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||
Numerator:
|
||||||||||||||||
Net
income attributable to controlling interest
|
$
|
10,027,195
|
$
|
16,283,053
|
$
|
29,748,042
|
$
|
39,231,126
|
||||||||
Interest
expense on convertible securities, net of taxes
|
1,437,500
|
1,197,917
|
4,312,500
|
1,197,917
|
||||||||||||
Amortization
of financing costs, net of taxes
|
232,072
|
193,394
|
696,217
|
193,394
|
||||||||||||
Less:
capitalization of interest on convertible securities
|
(543,254)
|
-
|
(543,254)
|
-
|
||||||||||||
Net
income, as adjusted
|
$
|
11,153,513
|
$
|
17,674,364
|
$
|
34,213,505
|
$
|
40,622,437
|
||||||||
Denominator:
|
||||||||||||||||
Weighted
average shares outstanding – Basic
|
74,636,155
|
75,101,869
|
74,592,447
|
77,164,602
|
||||||||||||
Effect
of dilutive instruments:
|
||||||||||||||||
Convertible
notes
|
14,232,673
|
10,315,752
|
14,232,673
|
3,388,385
|
||||||||||||
Warrants
|
-
|
-
|
-
|
660
|
||||||||||||
Weighted
average shares outstanding – Diluted
|
88,868,828
|
85,417,621
|
88,825,120
|
80,553,647
|
September
30,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
||||||||
Raw
materials
|
$
|
8,059,007
|
$
|
5,569,981
|
||||
Work
in progress
|
851,667
|
2,350,291
|
||||||
Finished
goods
|
6,419,113
|
5,289,280
|
||||||
15,329,787
|
13,209,552
|
|||||||
Less:
provision for slow moving inventories
|
(38,077)
|
(167,429)
|
||||||
Inventories,
net
|
$
|
15,291,710
|
$
|
13,042,123
|
September
30,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
||||||||
Cost
of land use rights
|
$
|
159,967,312
|
$
|
152,297,695
|
||||
Less:
Accumulated amortization
|
(5,733,990)
|
(3,308,825)
|
||||||
Land
use rights, net
|
$
|
154,233,322
|
$
|
148,988,870
|
September
30,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
||||||||
At
cost:
|
||||||||
Buildings
|
$
|
91,381,955
|
$
|
91,261,579
|
||||
Machinery
and equipment
|
20,878,274
|
20,665,315
|
||||||
Motor
vehicles
|
1,490,382
|
1,568,059
|
||||||
Office
equipment
|
2,136,840
|
1,543,300
|
||||||
Other
equipment
|
483,130
|
482,097
|
||||||
Leasehold
improvement
|
29,220
|
29,150
|
||||||
116,399,801
|
115,549,500
|
|||||||
Less
: Accumulated depreciation
|
||||||||
Buildings
|
(6,014,090)
|
(4,732,906)
|
||||||
Machinery
and equipment
|
(12,086,449)
|
(10,782,285)
|
||||||
Motor
vehicles
|
(1,081,223)
|
(998,535)
|
||||||
Office
equipment
|
(965,498)
|
(771,630)
|
||||||
Other
equipment
|
(145,392)
|
(91,078)
|
||||||
Leasehold
improvement
|
(21,916)
|
(18,623)
|
||||||
(20,314,568)
|
(17,395,057)
|
|||||||
Property,
plant and equipment, net
|
$
|
96,085,233
|
$
|
98,154,443
|
September
30,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
||||||||
At
cost:
|
||||||||
Product
licenses
|
$
|
15,523,534
|
15,485,939
|
|||||
Trademarks
|
10,584,294
|
10,558,660
|
||||||
Patents
|
4,807,822
|
4,796,179
|
||||||
Proprietary
technology
|
282,348
|
281,664
|
||||||
Software
|
73,819
|
73,640
|
||||||
31,271,817
|
31,196,082
|
|||||||
Less:
Accumulated amortization
|
(11,360,050)
|
(7,505,642)
|
||||||
Other
intangible assets, net
|
$
|
19,911,767
|
23,690,440
|
September
30,
2009
|
December
31,
2008
|
|||||||
(Unaudited)
|
||||||||
Cost
of investments:
|
||||||||
CAXG
|
$
|
22,759,612
|
$
|
18,000,000
|
||||
Nuo
Hua Affiliate
|
32,999,023
|
32,999,023
|
||||||
Jinji
Printing printing
|
86,067
|
86,067
|
||||||
Share
of equity income (loss):
|
||||||||
CAXG
|
(3,622,490)
|
(1,580,344
|
)
|
|||||
Nuo
Hua Affiliate
|
2,598,073
|
773,415
|
||||||
Jinji
Printing
|
44,921
|
42,303
|
||||||
Advances:
|
||||||||
CAXG
|
-
|
4,520,209
|
||||||
Jinji
Printing
|
130,031
|
122,391
|
||||||
Long-term
investment and advances
|
$
|
54,995,237
|
$
|
54,963,064
|
Three
Months Ended
September
30, 2009
(Unaudited)
|
Nine
Months Ended
September
30, 2009
(Unaudited)
|
|||||||
Equity
in income from Nuo Hua Affiliate
|
$
|
644,897
|
$
|
1,740,770
|
||||
Equity
in loss from CAXG
|
(1,209,349
|
) |
(2,042,146
|
) | ||||
Equity
in income from Jinji Printing
|
844
|
2,304
|
||||||
Total
equity in earnings (loss) from unconsolidated
entities
|
$
|
(563,608
|
) |
$
|
(299,072
|
) |
Three
Months Ended
September
30, 2008
(Unaudited)
|
Nine
Months Ended
September
30, 2008
(Unaudited)
|
|||||||
Equity
in loss from CAXG
|
43,799
|
(597,416)
|
||||||
Equity
in income from Jinji Printing
|
5,618
|
5,766
|
||||||
Total
equity in earnings (loss) from unconsolidated
entities
|
$
|
49,417
|
$
|
(591,650)
|
|
·
|
Total
offering is $115,000,000 aggregate principal amount of 5.00% Convertible
Senior Notes due on July 15,
2015.
|
|
·
|
Interest
at 5.00% per year, payable semiannually in arrears in
cash.
|
|
·
|
The
Notes are convertible, at the option of the holder, at any time prior to
the close of business on the second business day preceding the maturity
date based on an initial conversion rate of 107.6195 shares per $1,000
principal amount of Notes, which represents an initial conversion price of
approximately $9.29 per share.
|
|
·
|
The
initial conversion rate may be adjusted on January 15, 2009 if the volume
weighted average price (
“
VWAP
”
) of our
common stock for each of the 30 consecutive trading days ending on January
15, 2009 is less than $8.08 per share, then the conversion rate will be
increased as a one-time purchase price adjustment such that the conversion
price as adjusted would represent the greater of (1) 115.0% of such
arithmetic average of the daily VWAP and (2) $8.08. As of September 30,
2009, the conversion price was set at $8.08 per
share.
|
|
·
|
The
conversion rate is subject to certain adjustments. In particular, holders
who convert their Notes in connection with certain fundamental changes may
be entitled to a make whole premium in the form of additional shares of
our common stock.
|
|
·
|
Holders
may require the Company to purchase all or a portion of their Notes on
July 15, 2013 for cash at a price equal to 100% of the principal
amount of the Notes to be purchased, plus accrued and unpaid interest, if
any, to, but excluding, the purchase
date.
|
|
·
|
If
a fundamental change occurs, holders will have the right to require the
Company to purchase for cash all or any portion of their Notes. The
fundamental change purchase price will be 100% of the principal amount of
the Notes to be purchased plus accrued and unpaid interest, if any, to,
but excluding, the fundamental change purchase
date.
|
|
·
|
The
Notes will be unsecured, unsubordinated obligations and will rank equal in
right of payment to all of the Company’s existing and future unsecured and
unsubordinated indebtedness. The Notes will be effectively subordinated to
all of the Company’s existing and future secured
indebtedness.
|
Activity
|
Weighted Average
Exercise Price
|
|||||||
Outstanding
as of January 1, 2009
|
1,697,763
|
$
|
8.68
|
|||||
Granted
|
338,476
|
4.01
|
||||||
Exercised
|
-
|
-
|
|
|||||
Cancelled
|
-
|
-
|
||||||
Outstanding
as of September 30, 2009
|
2,036,239
|
$
|
7.91
|
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||
Range
of Exercise Prices
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(in
years)
|
Number
of
Shares
|
Weighted
Average
Exercise
Price
|
|||||||||||||||
$8.54
- $10.74
|
969,500
|
$
|
10.04
|
3
|
387,800
|
$
|
10.04
|
|||||||||||||
$4.95
- $8.35
|
728,263
|
$
|
6.88
|
4
|
82,753
|
$
|
8.35
|
|||||||||||||
$4.01
|
338,476
|
$
|
4.01
|
5
|
-
|
-
|
||||||||||||||
2,036,239
|
470,553
|
Nine
Months Ended
September
30,
(Unaudited)
|
||||||||
2009
|
2008
|
|||||||
(Restated)
|
||||||||
Tax
holiday effect
|
$
|
5,115,400
|
$
|
3,812,238
|
||||
Basic
net income per share excluding tax holiday effect
|
$
|
0.30
|
$
|
0.46
|
Three
Months Ended
September
30,
|
Three
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
||||||||||||||||
SALES
REVENUE
|
$
|
78,818,666
|
$
|
70,593,949
|
100
|
%
|
100
|
%
|
||||||||
COST
OF GOODS SOLD
|
34,687,505
|
23,402,407
|
44
|
33
|
||||||||||||
GROSS
PROFIT
|
44,131,161
|
47,191,542
|
56
|
67
|
||||||||||||
Selling
and marketing
|
12,245,746
|
9,938,877
|
16
|
14
|
||||||||||||
Advertising
|
9,013,087
|
9,913,728
|
11
|
14
|
||||||||||||
General
and administrative
|
6,457,734
|
4,690,793
|
8
|
7
|
||||||||||||
Depreciation
and amortization
|
1,409,399
|
1,024,436
|
2
|
1
|
||||||||||||
Total
operating expenses
|
29,125,966
|
25,567,834
|
37
|
36
|
||||||||||||
INCOME
FROM OPERATIONS
|
15,005,195
|
21,623,708
|
19
|
31
|
||||||||||||
Equity
in earnings (loss) from unconsolidated entities
|
(563,608)
|
49,417
|
(1
|
)
|
0
|
|||||||||||
Interest
expense, net
|
(1,106,805)
|
(1,143,013)
|
(1
|
)
|
(2
|
)
|
||||||||||
Other
income (expense), net
|
(49,165)
|
91,986
|
0
|
0
|
||||||||||||
INCOME
BEFORE INCOME TAXES
|
13,285,617
|
20,622,098
|
17
|
29
|
||||||||||||
Income
taxes
|
3,257,771
|
4,339,045
|
4
|
6
|
||||||||||||
NET
INCOME
|
10,027,846
|
16,283,053
|
13
|
23
|
||||||||||||
LESS:
NET INCOME ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
|
651
|
-
|
0
|
0
|
||||||||||||
NET
INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST
|
$
|
10,027,195
|
$
|
16,283,053
|
13
|
%
|
23
|
%
|
Three
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
Revenue
from pharmaceutical products
|
$
|
66,023,106
|
$
|
62,095,466
|
$
|
3,927,640
|
6
|
%
|
||||||||
Revenue
from nutraceutical products
|
9,241,744
|
8,498,483
|
743,261
|
9
|
%
|
|||||||||||
Total
manufacturing revenue
|
75,264,850
|
70,593,949
|
4,670,901
|
7
|
%
|
|||||||||||
Distribution
revenue
|
3,553,816
|
-
|
3,553,816
|
100
|
%
|
|||||||||||
Total
sales revenue
|
$
|
78,818,666
|
$
|
70,593,949
|
$
|
8,224,717
|
12
|
%
|
|
·
|
The
sales of our prescription pharmaceutical products increased from
$24,302,150 during the third quarter of 2008 to $29,825,894 in the same
period of 2009, or a 23% increase. This is primarily due to the increase
in sales of our prescription formulated Jinji capsule, Boke and CCXA
prescription pharmaceutical products despite the decrease in sales of our
SHL products. The overall increase in sales was supported by our
continuous marketing efforts, increase in new
prescription products offering, as well as expanding coverage
to the previously unaddressed rural market; Our newly launched products,
such as YuYeQingHuo Capsules which treat throat inflammation, have offset
some of the negative impact from the healthcare reform;
and
|
|
·
|
The
sales of our OTC pharmaceutical products decreased from $37,793,316 during
the third quarter of 2008 to $36,197,212in the same period of 2009, or a
4% decrease. This is primarily due to decrease in the sales of our Jinji
Yimucao, which is a product included the china’s essential drug list. Our
distributors reduced their order this quarter in anticipating a decrease
in average selling price when the government auctions begin in the fourth
quarter. We expect the sales of our OTC products will resume once the
selling price is stabilized. We continue to introduce new products to
diversify our product portfolio and reduce concentration risks. Our newly
launched products, such as Shedanchuan beiye which treat inflammation and
cough, have offset some of the negative impact from the healthcare
reform.
|
Three
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
||||||||||||
Pharmaceutical
products
|
$
|
26,901,622
|
$
|
20,017,437
|
$
|
6,884,185
|
34%
|
||||||||
Nutraceutical
products
|
4,387,620
|
3,384,970
|
1,002,650
|
30%
|
|||||||||||
Total
manufacturing cost
|
31,289,242
|
23,402,407
|
7,886,835
|
34%
|
|||||||||||
Distribution
cost
|
3,398,263
|
-
|
3,398,263
|
100%
|
|||||||||||
Total
cost
|
$
|
34,687,505
|
$
|
23,402,407
|
$
|
11,285,098
|
48%
|
Three
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
Promotional
materials and fees
|
$
|
8,063,949
|
$
|
6,524,206
|
$
|
1,539,743
|
24
|
%
|
||||||||
Payroll
|
1,341,682
|
1,427,577
|
(85,895)
|
-6
|
%
|
|||||||||||
Shipping
|
1,273,117
|
897,516
|
375,601
|
42
|
%
|
|||||||||||
Traveling
|
523,683
|
448,739
|
74,944
|
17
|
%
|
|||||||||||
Sales
conference
|
835,979
|
248,052
|
587,927
|
237
|
%
|
|||||||||||
Offices
supplies
|
156,117
|
156,749
|
(632)
|
0
|
%
|
|||||||||||
Other
expenses
|
51,219
|
236,038
|
(184,819)
|
-78
|
%
|
|||||||||||
TOTAL
|
$
|
12,245,746
|
$
|
9,938,877
|
$
|
2,306,869
|
23
|
%
|
|
·
|
Promotional
materials and fees increased 24% from $6,524,206 to $8,063,949 during the
third quarter of 2009 as compared to the same quarter of 2008. This was
primarily due to the increase in our promotion activities and initiatives
to support the continuous growth of our
revenue.
|
|
·
|
Shipping
increased 42% from $897,516 to $1,273,117 during the third quarter of 2009
as compared to the same quarter of 2008. This was primarily due to the
increase of net sales and the increase cost of
logistics.
|
|
·
|
Sales
conference increased 237% from $248,052 to $835,979 during the third
quarter of 2009 as compared to the same quarter of 2008. The increase was
mainly due to the additional internal conferences which being held to
plan, coordinate and to formulate sales policies in response to china’s
health care reform plan. The company held more external sales conference
to promote existing and new prescription products. We held more
promotional conferences for our SHL products in particular, to offset the
negative impact caused by fatal incidents and product quality issues of
similar products manufactured by other
companies.
|
Three
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
(Restated)
|
||||||||||||||||
Payroll
|
$
|
774,013
|
$
|
896,810
|
$
|
(122,797)
|
-14
|
%
|
||||||||
Directors’
remuneration
|
230,000
|
310,000
|
(80,000)
|
-26
|
%
|
|||||||||||
Professional
fees – accounting
|
913,925
|
141,783
|
772,142
|
545
|
%
|
|||||||||||
Maintenance
and repair
|
756,373
|
62,463
|
693,910
|
1111
|
%
|
|||||||||||
Staff
welfare and insurance
|
392,952
|
386,137
|
6,815
|
2
|
%
|
|||||||||||
Research
and development
|
637,657
|
437,712
|
199,945
|
46
|
%
|
|||||||||||
Trip
and traveling
|
257,927
|
237,465
|
20,462
|
9
|
%
|
|||||||||||
Office
supplies
|
176,861
|
137,119
|
39,742
|
29
|
%
|
|||||||||||
Vehicles
and utilities
|
152,716
|
137,605
|
15,111
|
11
|
%
|
|||||||||||
Stock
compensation
|
789,735
|
615,586
|
174,149
|
28
|
%
|
|||||||||||
Other
expenses
|
1,375,575
|
1,328,113
|
47,462
|
4
|
%
|
|||||||||||
TOTAL
|
$
|
6,457,734
|
$
|
4,690,793
|
$
|
1,766,941
|
38
|
%
|
|
·
|
Payroll
expenses decreased by $122,797, or 14% as compared to the same quarter
during 2008. These reflect the Company’s increased efforts in optimization
of human resource management and cost control;
and·
|
|
·
|
Accounting
related professional fees increased by $772,142, or 545% as compared to
the same quarter during 2008, due primarily to the increase in audit fees
relating to our increased number of subsidiaries being audited and
additional accrual of audit fee to our new auditors;
and
|
|
·
|
Research
and development increased by $199,945, or 46%, as compared to the same
period of 2008, due to our increased R&D effort on new products and
existing products enhancement; and
|
|
·
|
Maintenance
and repair fees increased by $693,910, or 1111%, as compared to the same
period of 2008. We incurred additional expense during the third quarter of
2009 in upgrading our existing equipments and technologies, as of result
of more stringent GMP manufacturing standards and to improve production
efficiency; and
|
|
·
|
Stock
compensation expense increased from $615,586 in the third quarter of 2008
to $789,735 in the same quarter of 2009 due to our additional amortization
cost of new stock options issued to the executives and the senior
management in late 2008 and the second quarter of
2009.
|
Nine
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
(Restated)
|
||||||||||||||||
SALES
REVENUE
|
$
|
196,117,893
|
$
|
168,372,552
|
100
|
%
|
100
|
%
|
||||||||
COST
OF GOODS SOLD
|
81,942,766
|
54,808,490
|
42
|
33
|
||||||||||||
GROSS
PROFIT
|
114,175,127
|
113,564,062
|
58
|
67
|
||||||||||||
Selling
and marketing
|
26,853,377
|
22,656,477
|
14
|
13
|
||||||||||||
Advertising
|
22,360,380
|
21,760,300
|
11
|
13
|
||||||||||||
General
and administrative
|
15,981,195
|
14,235,806
|
8
|
9
|
||||||||||||
Depreciation
and amortization
|
5,118,588
|
3,012,107
|
3
|
2
|
||||||||||||
Total
operating expenses
|
70,313,540
|
61,664,690
|
36
|
37
|
||||||||||||
INCOME
FROM OPERATIONS
|
43,861,587
|
51,899,372
|
22
|
30
|
||||||||||||
Equity
in loss from unconsolidated entities
|
(299,072)
|
(591,650
|
)
|
(0
|
)
|
(0
|
)
|
|||||||||
Interest
expense, net
|
(4,306,143)
|
(1,156,782
|
)
|
(2
|
)
|
(1
|
)
|
|||||||||
Other
expense, net
|
(164,103)
|
(264,515
|
)
|
(0
|
)
|
(0
|
)
|
|||||||||
INCOME
BEFORE INCOME TAXES
|
39,092,269
|
49,886,425
|
20
|
29
|
||||||||||||
Income
taxes
|
9,463,093
|
10,655,299
|
5
|
6
|
||||||||||||
NET
INCOME
|
29,629,176
|
39,231,126
|
15
|
23
|
||||||||||||
LESS:
NET LOSS ATTRIBUTABLE TO
NON-CONTROLLING INTEREST
|
(118,866)
|
-
|
0
|
0
|
||||||||||||
NET
INCOME ATTRIBUTABLE TO
CONTROLLING INTEREST
|
$
|
29,748,042
|
$
|
39,231,126
|
15
|
%
|
23
|
%
|
Nine
Months Ended
September
30,
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
||||||||||||||
2009
|
2008
|
|||||||||||||||
Revenue
from pharmaceutical products
|
$
|
159,141,380
|
$
|
143,747,290
|
$
|
15,394,090
|
11
|
%
|
||||||||
Revenue
from nutraceutical products
|
27,677,227
|
24,625,262
|
3,051,965
|
12
|
%
|
|||||||||||
Total
manufacturing revenue
|
186,818,607
|
168,372,552
|
18,446,055
|
11
|
%
|
|||||||||||
Distribution
revenue
|
9,299,286
|
-
|
9,299,286
|
100
|
%
|
|||||||||||
Total
sales revenue
|
$
|
196,117,893
|
$
|
168,372,552
|
$
|
27,745,341
|
16
|
%
|
|
·
|
The
sales of our prescription pharmaceutical products increased from
$58,879,490 during the first nine months of 2008 to $71,192,969 in the
same period of 2009, or a 21% increase. This is primarily due to the
increase in sales of our prescription formulated Jinji capsule, BOKE and
CCXA prescription pharmaceutical products despite the decrease in sales of
our SHL products. The overall increase in sales was supported by our
continuous marketing efforts, increase in new products offering, as well
as expanding coverage to the previously unaddressed rural market; Our
newly launched products, such as YuYeQingHuo Capsules which treat throat
inflammation, have offset some of the negative impact from the healthcare
reform and
|
|
·
|
The
sales of our OTC pharmaceutical products increased from $84,867,800 to
$87,948,411, or a 4% increase. This was attributable to the increase in
sales of our Boke and CCXA products as a result of improved recognition of
our product supported by our marketing campaigns. The increase was
partially offset by decrease in the sales of our Jinji Yimucao, which is a
product included the China’s essential drug list. Our distributors reduced
their order in anticipating a decrease in average selling price when the
government auctions begin in the fourth quarter. We expect the sales of
our OTC products will resume once the selling price is stabilized. We
continue to introduce new products to diversify our product portfolio and
reduce concentration risks. Our newly launched products, such as
Shedanchan beiye which treat inflammation and cough, have offset some of
the negative impact from the healthcare reform;
and
|
Nine
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
Pharmaceutical
products
|
$
|
61,195,896
|
$
|
45,114,645
|
$
|
16,081,251
|
36%
|
|||||||||
Nutraceutical
products
|
11,812,384
|
9,693,845
|
2,118,539
|
22%
|
||||||||||||
Total
manufacturing cost
|
73,008,280
|
54,808,490
|
18,199,790
|
33%
|
||||||||||||
Distribution
cost
|
8,934,486
|
-
|
8,934,486
|
100%
|
||||||||||||
Total
cost
|
$
|
81,942,766
|
$
|
54,808,490
|
$
|
27,134,276
|
50%
|
Nine
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
Promotional
materials and fees
|
$
|
15,476,289
|
$
|
12,007,766
|
$
|
3,468,523
|
29
|
%
|
||||||||
Payroll
|
4,066,574
|
4,236,514
|
(169,940)
|
|
-4
|
%
|
||||||||||
Shipping
|
3,127,419
|
2,362,105
|
765,314
|
32
|
%
|
|||||||||||
Traveling
|
1,790,547
|
1,786,251
|
4,296
|
0 |
%
|
|||||||||||
Sales
conference
|
1,676,922
|
1,035,266
|
641,656
|
62
|
%
|
|||||||||||
Offices
supplies
|
466,440
|
627,233
|
(160,793)
|
-26
|
%
|
|||||||||||
Other
expenses
|
249,186
|
601,342
|
(352,156)
|
-59
|
%
|
|||||||||||
TOTAL
|
$
|
26,853,377
|
$
|
22,656,477
|
$
|
4,196,900
|
19
|
%
|
|
·
|
Promotional
materials and fees increased 29% from $12,007,766 to $15,476,289 during
the nine months ended September 30, 2009 as compared to the same period of
2008. This was primarily due to the increase in our promotion activities
and initiatives to support the continuous growth of our
revenue.
|
|
·
|
Shipping
increased 32% from $2,362,105 to $3,127,419 during the first three
quarters of 2009 as compared to the same quarters of 2008. This was
primarily due to the increase of net sales and the increase cost of
logistics.
|
|
·
|
Sales
conference increased 62% from $1,035,266 to $1,676,922 during the third
quarter of 2009 as compared to the same quarter of 2008. The increase was
mainly due to the additional internal conferences which being held to
plan, coordinate and to formulate sales policies in response to china’s
health care reform plan. The company held more external sales conference
to promote existing and new prescription products. We held more
promotional conferences for our SHL products in particular, to offset the
negative impact caused by fatal incidents and product quality issues of
similar products manufactured by other
companies.
|
Nine
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
Increase/
(Decrease)
|
Increase/
(Decrease)
|
|||||||||||||
(Restated)
|
||||||||||||||||
Payroll
|
$
|
2,371,278
|
$
|
2,762,772
|
$
|
(391,494)
|
-14
|
%
|
||||||||
Directors’
remuneration
|
695,230
|
913,333
|
(218,103)
|
-24
|
%
|
|||||||||||
Professional
fees – accounting
|
2,342,122
|
1,332,659
|
1,009,463
|
76
|
%
|
|||||||||||
Maintenance
and repair
|
798,267
|
78,413
|
719,854
|
918
|
%
|
|||||||||||
Staff
welfare and insurance
|
1,011,631
|
1,207,057
|
(195,426)
|
-16
|
%
|
|||||||||||
Research
and development
|
1,269,653
|
926,124
|
343,529
|
37
|
%
|
|||||||||||
Trip
and traveling
|
754,309
|
768,232
|
(13,923)
|
-2
|
%
|
|||||||||||
Office
supplies
|
505,261
|
499,482
|
5,779
|
1
|
%
|
|||||||||||
Vehicles
and utilities
|
420,341
|
419,109
|
1,232
|
0
|
%
|
|||||||||||
Stock
compensation
|
2,255,435
|
1,655,493
|
599,942
|
36
|
%
|
|||||||||||
Other
expenses
|
3,557,668
|
3,673,132
|
(115,464)
|
-3
|
%
|
|||||||||||
TOTAL
|
$
|
15,981,195
|
$
|
14,235,806
|
$
|
1,745,389
|
12
|
%
|
|
·
|
Accounting
related professional fees increased by $1,009,463, or 76% as compared to
the same quarter during 2008, due primarily to the increase in audit fees
relating to our increased number of subsidiaries being audited; and
additional accrual of audit fee to our new auditors;
and
|
|
·
|
Maintenance
and repair fees increased by $719,854, or 918%, as compared to the same
period of 2008. We incurred additional expense during the three quarters
of 2009 in upgrading our existing equipments and technologies, as a result
of more stringent GMP manufacturing standards and to improve production
efficiency; and
|
|
·
|
Payroll
expenses decreased by $391,494, or 14% and Staff welfare and insurance
expenses decreased by $195,426, or 16% as compared to the same quarter
during 2008. These reflect the Company’s increased efforts in optimization
of human resource management and cost control;
and
|
|
·
|
Research
and development increased by $343,529, or 37%, as compared to the same
period of 2008, due to our increased R&D effort on new products and
existing products enhancement; and
|
|
·
|
Stock
compensation expense increased from $1,655,493 in the three quarters of
2008 to $2,255,435 in the same period of 2009 due to our additional
amortization cost of new stock options issued to the executives and the
senior management in late 2008 and the second quarter of
2009.
|
2009
|
2008
|
|||||||||||||||
Name
|
Original
Option Grant
|
Revised
Option Grant
|
Original
Option Grant
|
Revised
Option Grant
|
||||||||||||
Tony
Liu
|
90,285 | 60,780 | 307,428 | 111,850 | ||||||||||||
Yanchun
Li
|
79,746 | 53,685 | 271,543 | 98,794 | ||||||||||||
Jun
Min
|
59,810 | 40,264 | 203,657 | 74,096 | ||||||||||||
Binsheng
Li
|
49,271 | 33,169 | 167,771 | 61,040 | ||||||||||||
Wilfred
Chow
|
54,876 | 36,942 | 186,857 | 67,983 |
Exhibit No.
|
Description
|
10.1 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Tony Liu,
dated November 15, 2009
|
10.2 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Yanchun Li,
dated November 15, 2009
|
10.3 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Jun Min,
dated November 15, 2009
|
10.4 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Binsheng Li,
dated November 15, 2009
|
10.5 * | Amendment to 2008 Employment Agreement, by and between the Company and Wilfred Chow, dated November 15, 2009 |
10.6 * | Amendment to 2009 Employment Agreement, by and between the Company and Tony Liu, dated November 15, 2009 |
10.7 * | Amendment to 2009 Employment Agreement, by and between the Company and Yanchun Li, dated November 15, 2009 |
10.8 * | Amendment to 2009 Employment Agreement, by and between the Company and Jun Min, dated November 15, 2009 |
10.9 * | Amendment to 2009 Employment Agreement, by and between the Company and Binsheng Li, dated November 15, 2009 |
10.10 * | Amendment to 2009 Employment Agreement, by and between the Company and Wilfred Chow, dated November 15, 2009 |
10.11 | Form of Stock Award and Non-Qualified Stock Option Grant Agreement, filed herewith |
31.1
|
Certification
of Chief Executive Officer (Principal Executive Officer) pursuant to Rule
13a – 14(a) of the Securities Exchange Act, as
amended
|
31.2
|
Certification
of Acting Chief Financial Officer (Principal Financial Officer) pursuant
to Rule 13a – 14(a) of the Securities Exchange Act, as
amended
|
32.1
|
Certification
of Chief Executive Officer (Principal Executive Officer) and Chief
Financial Officer (Principal Financial Officer) pursuant to 18 U.S.C.
1350, as adopted.
|
Exhibit No.
|
Description
|
10.1
*
|
Amendment
to 2008 Employment Agreement, by and between the Company and Tony Liu,
dated November 15, 2009
|
10.2 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Yanchun Li,
dated November 15, 2009
|
10.3 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Jun Min,
dated November 15, 2009
|
10.4 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Binsheng Li,
dated November 15, 2009
|
10.5 * |
Amendment
to 2008 Employment Agreement, by and between the Company and Wilfred Chow,
dated November 15, 2009
|
10.6 * | Amendment to 2009 Employment Agreement, by and between the Company and Tony Liu, dated November 15, 2009 |
10.7 * | Amendment to 2009 Employment Agreement, by and between the Company and Yanchun Li, dated November 15, 2009 |
10.8 * | Amendment to 2009 Employment Agreement, by and between the Company and Jun Min, dated November 15, 2009 |
10.9 * | Amendment to 2009 Employment Agreement, by and between the Company and Binsheng Li, dated November 15, 2009 |
10.10 * | Amendment to 2009 Employment Agreement, by and between the Company and Wilfred Chow, dated November 15, 2009 |
10.11 | Form of Stock Award and Non-Qualified Stock Option Grant Agreement, filed herewith |
31.1
|
Certification
of Chief Executive Officer (Principal Executive Officer) pursuant to Rule
13a – 14(a) of the Securities Exchange Act, as
amended
|
31.2
|
Certification
of Acting Chief Financial Officer (Principal Financial Officer) pursuant
to Rule 13a – 14(a) of the Securities Exchange Act, as
amended
|
32.1
|
Certification
of Chief Executive Officer (Principal Executive Officer) and Chief
Financial Officer (Principal Financial Officer) pursuant to 18 U.S.C.
1350, as adopted.
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1 Year American Oriental Bioengineering, Inc. Chart |
1 Month American Oriental Bioengineering, Inc. Chart |
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