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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Biostar Pharmaceuticals Inc (CE) | USOTC:BSPM | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
20-8747899
|
|
(State or other jurisdiction of incorporation of origination)
|
(I.R.S. Employer Identification Number)
|
No. 588 Shiji Xi Avenue
Xianyang, Shaanxi Province
People’s Republic of China
|
712046
|
|
(Address of principal executive offices)
|
(Zip code)
|
Title of each class
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
NASDAQ Stock Market LLC
(NASDAQ Capital Market)
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
||
Non-accelerated filer
¨
|
Smaller reporting company
x
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Page
|
||
PART I
|
||
Item 1.
|
4
|
|
Item 1A.
|
19
|
|
Item 1B.
|
33
|
|
Item 2.
|
34
|
|
Item 3.
|
34
|
|
Item 4.
|
34
|
|
PART II
|
||
Item 5.
|
35
|
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Item 6.
|
35
|
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Item 7.
|
36
|
|
Item 7A.
|
43
|
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Item 8.
|
F-1
|
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Item 9.
|
44
|
|
Item 9A.
|
44
|
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Item 9B.
|
44
|
PART III
|
||
Item 10.
|
45
|
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Item 11.
|
48
|
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Item 12.
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50
|
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Item 13.
|
52
|
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Item 14.
|
53
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Item 15.
|
54
|
|
55
|
Name
|
Treatments
|
Benefits and Side Effects
|
SFDA Classification
|
|||
XinAoxing Oleanolic Acid Capsule
|
Hepatitis B
|
Relieves hepatic injury, reduce glutamic-pyruvic transaminase activity, reduce r-GLO. Believed to promote hepatic cell regeneration, to be effective in hepatic coma treatment, to inhibit fibrous hyperplasia and prevent hepatocirrhosis. Used to reduce hepatic damage caused by HBV regeneration.
|
OTC
|
|||
Ganwang Compound Paracetamol Capsule
|
Colds, runny nose, sore throat, headache and fever
|
Relieves the symptoms of the common cold, including runny nose, sniffles and sneezing. Some patients experience symptoms of anorexia, queasiness and upset stomach after use.
|
OTC
|
|||
Tianqi Dysmenorrhea Capsule
|
Dysmenorrhea
|
Used as Chinese traditional medicine for treatment of pain and other symptoms associated with menstruation. There are no known side effects.
|
OTC
|
|||
Hernia Belt
|
Hernia
|
Relieves hernia, no side effects.
|
Medical Device
|
|||
Tangning Capsule
|
Diabetes
|
Believed to treat type II diabetes
|
Nutrient, OTC
|
|||
Yizi Capsule
|
Fertility
|
Believed to aid fertility and helps in fetal development during pregnancy.
|
Nutrient, OTC
|
|||
Shengjing Capsule
|
Kidney
|
Believed to replenish kidney function.
|
Nutrient, OTC
|
|||
Aoxing Ointment
|
Psoriasis, vitiligo and various dermatitis
|
Used to treat psoriasis, vitiligo and various dermatitis.
|
Nutrient, OTC
|
|||
Jingang Tablets
|
For waist and knees, impotence, nocturnal emission, premature ejaculation, frequent urination
|
Used to protect the kidneys and increase blood flow in sexual organs by triggering production of natural hormones in the body.
|
Prescription
|
|||
Compound Paracetamol and Amantadine Hydrochloride Tablets
|
Colds, influenza
|
Used to alleviate the symptoms of fever, headache, aching limbs, sneezing, runny nose, stuffy nose, sore throat caused by common cold and influenza.
|
OTC
|
|||
Danxiang Rhinitis Tablets
|
For chronic simple rhinitis, allergic rhinitis, acute and chronic sinusitis.
|
Used as anti-inflammatory drug, alleviating cold symptoms, analgesic Tongqiao.
|
Prescription
|
|||
Deafness Tongqiao pills
|
For hepatobiliary Huosheng, head swelling, deafness and tinnitus, pus in ears, dry stool, urine-yellow.
|
Used to circulate blood flow, unblock orifice, and relieve chest oppressing symptoms.
|
OTC
|
Yanlixiao Capsules
|
For heat syndrome bacillary dysentery, acute tonsillitis, acute and chronic bronchitis, acute gastroenteritis, acute mastitis and other infectious diseases.
|
Used for clearing and detoxifying, anti-inflammatory.
|
Prescription
|
|||
Piracetam Tablets
|
Adapts to acute and chronic cerebrovascular disease, traumatic brain injury, memory loss, mild and moderate brain dysfunction caused by multiple reasons of a variety of toxic encephalopathy. And also for children retarded mental development.
|
Prescription
|
||||
Huangyangning Tablets
|
For the patients with the symptoms of chest stuffiness and pains, Knotted and intermittent pulse; coronary heart disease, arrhythmias
|
Helps Qi and blood circulation; relieve pain.
|
Prescription
|
|||
Hyperthyroidism Capsules
|
For the patients of hyperthyroidism with the symptoms of palpitations, sweating, irritability, dry throat, rapid pulse, and other symptoms of hyperthyroidism.
|
Used to improve blood circulation and suppress clustering of red blood cells and platelets.
|
Prescription
|
|||
Zhitongtougu Ointment
|
Joint pain, swelling, tenderness or dysfunction.
|
Used for alleviating cold symptoms, blood stagnation line, tongluo and relieving pain. Also used for patients with knee, lumbar blood stasis.
|
OTC
|
|||
Fosfomycin Calcium Capsules
|
Prescribes orally for the following infections caused by pathogen that is sensitive to fosfomycin pathogens: 1. Intestinal infections: bacterial enteritis, dysentery. 2. Urinary tract infections: cystitis, pyelonephritis,urethritis. 3. Dermatology and soft tissue infections: furunculosis, hidradenitis, lymphadenitis, folliculitis. 4. Respiratory tract infection: Nasopharyngitis, tonsillitis, bronchitis. 5. Ophthalmology: hordeolum, dacryocystitis. 6. GynaeVaginitis, cervicitis.
|
Prescription
|
||||
Wenweishu Capsules
|
Used to help with chronic gastritis, pain of epigastric cold.
|
OTC
|
||||
Yituo Erythromycin particles
|
1. The alternative medicine for the patients who is sensitive to penicillin: 2. Legionella 3. Mycoplasma pneumoniae pneumonia 4. genitourinary infection caused by other chlamydia, mycoplasma. 6. Chlamydia trachomatis conjunctivitis. 7. Oral infections caused by anaerobic bacteria. 8. Campylobacter jejuni enteritis. 9. Pertussis. 10. Rheumatic fever recurrence, infective endocarditis.
|
Prescription
|
||||
Chuzhang Zehaifu Tablets
|
For cataract.
|
Clears the abnormalities in the body, such as black bile and kidney deficiencies. Also helps with eye problems, such as redness, dry eyes, and blurred vision.
|
OTC
|
|||
Muxiang Shunqi Pills
|
Abdominal pain, bloating.
|
Believes to promote Qi circulation and resolve dampness inside the body. Protects and strengthen the spleen and stomach. For distension, abdominal distention, nausea and vomiting, loss of appetite caused by the dampness obstructing spleen and stomach, chest and diaphragm.
|
||||
Sifangwei Capsules
|
Stomach pain, Hyperacidity
|
Smoothing the liver stomach pain, Acid to relieve pain. For stomach pain, too much gastric acidity, indigestion, stomach and duodenum ulcer with the above symptoms caused by liver stomach discord.
|
Prescription
|
|||
Aspirin Enteric-coated Tablets
|
Antithrombotic
|
Prevention of transient ischemic attack, myocardial infarction, atrial fibrillation, unstable angina.
|
Prescription
|
Products
|
Competitors
|
Xin Ao Xing Oleanlic Acid Capsule
|
Wulanhaote Zhong Meng pharmaceutical Co., Ltd., Yang Ling Mai Di Sen Pharmaceutical Co., Ltd. and other suppliers of prescription medicines that are used for hepatitis treatment
|
Ganwang Compound Paracetamol & Amantadine Hydrochloride Capsule
|
Jiang Xi Ren He Pharmaceuticals, Inc. and Hainan Asia Pharmaceuticals, Inc.
|
Danshen Granule
|
Yun Nan Yong An Pharmaceuticals, Inc. and Hai Nan Min Hai Pharmaceuticals, Ltd.
|
Taohuasan Pediatric Medicine
|
Shandong Bai Cao Pharmaceuticals, Ltd., and Chang Chun Ren Min Pharmaceuticals, Ltd.
|
Tianqi Dysmenorrhea Capsule
|
Yun Nan Yu Xi City Wei He Pharmaceutical, Ltd., and Shandong Phoenix Pharmaceuticals, Ltd.
|
Nutrient Products
|
Wulanhaote Zhong Meng Pharmaceutical Co., Ltd., Yang Ling Mai Di Sen Pharmaceutical Co., Ltd. and other traditional Chinese medicine suppliers
|
Drug Administration Law of the PRC
was promulgated by the Standing Committee of National People’s Congress on February 28, 2001 and effective as of December 1, 2001, and its implementing guidelines were promulgated by the State Council on August 4, 2004 and effective as of September 15, 2002. According to Drug Administration Law of the PRC and its implementing guidelines, a pharmaceutical manufacturer is required to obtain a Pharmaceutical Manufacturing Permit and Drug Approval Number for each manufactured drug from the relevant SFDA’s provincial branch, which will be valid for five years and is renewable upon application before expiration. Accordingly, we are required to apply for these approvals and any extensions thereof for each of our products.
|
Administration Regulations for Drug Registration
was promulgated by the SFDA on July 10, 2007, and was effective as of October 1, 2007. The Administration Regulations for Drug Registration specifies the requirements and procedure for obtaining a Drug Approval Number for a new drug. It includes the requirements for clinical trial of new drugs, procedure for registering imported medicine and reporting and approval procedure for generic medicine
.
The Drug Approval Number is valid for five years and can be re-registered upon expiration. We are required to obtain a Drug Approval Number for each of our new drugs and reapply for an extension prior to the expiration date the drugs.
|
Good Manufacturing Practices (GMP) for Pharmaceutical Products
, as revised in 1998 was promulgated by the SFDA on June 18, 1999 and became effective as of August 1, 1999, and the
Authentication Regulations for Drug GMP
was promulgated by the SFDA on September 7, 2005 and became effective on October 1, 2005.
A pharmaceutical manufacturer must meet the GMP standards and obtain the GMP Certificate with a five-year validity period from SFDA. Before the GMP Certification expires, the pharmaceutical manufacturer must apply again and complete the relevant procedures, which may take about 120 working days, to obtain a new GMP Certificate. On October 24, 2007, the SFDA issued new guidelines for authentication standards of GMP, effective as of January 1, 2008. The new guideline may result in a rise of cost for a pharmaceutical manufacturer to meet the new standards in order to maintain the GMP qualification. If a pharmaceutical manufacturer fails to obtain or maintain GMP Certification and still carries on production of its drugs, it will be fined and its Pharmaceutical Manufacturing Permit may be revoked under serious circumstances. We are required to apply for a GMP certificate for each of our products and reapply prior to the expiration date and maintain our Pharmaceutical Manufacturing Permit.
|
Administration Regulations for Drug Call-back
was promulgated by the SFDA on December 10, 2007 and effective on the same day. According to the Administration Regulations for Drug Call-back, the pharmaceutical manufacturer should establish a drug call-back system and collect information regarding the drug safety. If a manufacturer discovers any unreasonable danger of drug that threatens people’s safety and health, it should immediately stop the manufacturing and sale of such drug, notify the distributors and report to the branch of the SFDA. This regulation also stipulates the procedures of drug call-back and danger valuation standards established and maintain a drug call back system in conformance the regulations.
|
Administration Regulations for Drug Instructions and Labels
was promulgated by the SFDA on March 15, 2006 and was effective as of June 1, 2006. According to Administration Regulations for Drug Instructions and Labels, the contents of instructions and labels of each drug must be approved by the SFDA, and the smallest packing unit of drug shall be attached with instruction. We have developed, received approval and maintain drug labeling in conformance with the regulations for our existing products and must do so for new products.
|
Supervision Administration Regulations for Drug Distribution
was promulgated by the SFDA on January 31, 2007 and effective as of May 1, 2007. According to Supervision Administration Regulations for Drug Distribution, a pharmaceutical manufacturer can only sell drugs produced by itself, and it shall not sell drugs produced by other manufacturers or produced by itself but for commissioning manufacturing purposes. We do not resell drugs from any other pharmaceutical manufacturers.
|
Regulations for Drug Advertisement Censoring
was promulgated by the SFDA and State Administration for Industry and Commerce (the “SAIC”) on March 13, 2007 and effective as of May 1, 2007.
The
Standards for Drug Advertisement Censoring and Publication
was promulgated by the SFDA and the SAIC
on March 3, 2007 and made effective as of May 1, 2007. According to Regulations for Drug Advertisement Censoring, a pharmaceutical manufacturer must obtain a Drug Advertisement Approval Number from the provincial branch of the SFDA which is valid period of one year if the drug advertisement describes the functions or benefits of a drug. However, if an over the counter drug advertisement in any media, or a prescription drug advertisement in professional medical magazine, only refers to the name of the drug, including the general name and commercial name, without any other addition promotional information, the advertisement does not need to be censored or approved. We have obtained a Drug Advertisement Approval Number for all our drugs and review all of our OTC drug advertisements so that they are in conformance with the regulations relating to advertising these products.
|
|
Food Hygiene Law and Rules on Food Hygiene Certification
mandates that a distributor of nutritional supplements and other food products must obtain a food hygiene certificate from relevant provincial or local health regulatory authorities. The grant of such certificate is subject to an inspection of the distributor’s facilities, warehouses, hygienic environment, quality control systems, personnel and equipment. The food hygiene certificate is valid for four years, and the holder must apply for renewal of the certificate within six months prior to its expiration.
|
|
·
|
Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules;
|
|
·
|
Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.
|
|
·
|
In 2006, Aoxing Pharmaceutical entered into a technological cooperation agreement with Shaanxi University of Science and Technology (“Shaanxi University”) under which Shaanxi University agreed to provide interns to assist with our product development for payment from us of RMB 600 per month to the interns. Additionally, Shaanxi University agreed to provide advisory educational services to improve our pharmaceutical production techniques. We are authorized to use the education material in our production process but do not own the educational materials. Shaanxi University also agreed to assist us in developing improved production techniques for new drugs, the ownership of which shall be held by Aoxing Pharmaceutical. The fees to be paid to Shaanxi University for new drug development will be made under a separate agreement, although there is currently no funding requirement.
|
|
·
|
Also, in 2006, Aoxing Pharmaceuticals entered into a technological cooperation agreement with the College of Life Sciences of Northwest University (“Northwest University”), pursuant to which we agreed to make our facilities available for practical studies for interns from Northwest University. In return, Northwest University agreed to assign its personnel to teach our staff various agricultural sciences associated with growing plants and herbs used in traditional Chinese medicines (“TCM”). We are authorized to use the education material in our production process but do not own the educational materials. In addition, the parties agreed to cooperate on the development of new TCM, the ownership of which will be held by us. The fees to be paid Northwest University for new drug development were made under a separate agreement, although we have currently not entered into any such agreement.
|
|
·
|
On January 5, 2007, Aoxing Pharmaceutical entered into a cooperation agreement with Xianyang Material Medical Institute (“Xianyang Institute”) for the development of a new drug called Zenbaowan Capsule. Under the agreement, Xianyang Institute is responsible for the research and development of the new drug in compliance with the PRC Drug Administration Law and the Administration Regulations for Drug Registration, as well as the SFDA application process for, the new drug. In addition, the parties agreed to long term technical cooperation on products mutually identified in the future under the terms of separate agreements. Any product developed by Xianyang Institute under this agreement, and the intellectual property rights related thereto, will be owned by us. We agreed to pre-pay all application expenses and to pay Xianyang Institute the aggregate consideration of RMB 180,000 (approximately $24,290), of which 50% will be paid on the first day that Zenbaowan Capsule passes the first materials and production site examinations by the SFDA, and 50% upon accreditation and receipt of the drug approval number from the SFDA. The agreement can be terminated by either party without notice. No payments have been made to date.
|
|
·
|
On December 15, 2010, Aoxing Pharmaceutical entered into a product research and development agreement with Northwest University to jointly conduct the research, development and production of a medicine, Danshensu Borneol Ester (“DBZ”), for treatment of ischemic cerebrovascular disease. Pursuant to the agreement, Aoxing acquired a 60% equity interest in DBZ and is entitled to 60% of the after-tax profits after the product is put into production. Aoxing has the exclusive right to produce and sell the product in China and own the exclusive approval number. Northwest University shall not transfer the product to any third party in China. As of the date of this Annual Report, we have paid an aggregate of RMB 72 million (approximately $11.5 million) to Northwest University in connection with the agreement.
|
|
·
|
raise adequate capital for expansion and operations;
|
|
·
|
implement our business model and strategy and adapt and modify them as needed;
|
|
·
|
increase awareness of our brand name, protect our reputation and develop customer loyalty;
|
|
·
|
manage our expanding operations and service offerings, including the integration of any future acquisitions;
|
|
·
|
maintain adequate control of our expenses; or
|
|
·
|
anticipate and adapt to changing conditions in the medical over the counter, pharmaceutical and nutritional supplement markets in which we operate as well as the impact of any changes in government regulations, mergers and acquisitions involving our competitors, technological developments and other significant competitive and market dynamics.
|
•
|
we established our PRC entities by means of direct investment other than by merger and acquisition of any equity interest or assets of a PRC domestic company owned by PRC companies and/or PRC individuals as defined under the M&A Rules that are our beneficial owners after the effective date of the M&A Rules;
|
||
•
|
the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like ours under this Prospectus Supplement are subject to this regulation;
|
||
•
|
given that no provision in this regulation clearly classified contractual arrangements as a type of transaction subject to its regulation, we are not required to submit an application to the CSRC for its approval.
|
Location
|
Principal Activities
|
Area (Sq meter)
|
LUR and Lease Term
|
||||
No. 588 Shiji Xi Road, Xianyang, Shaanxi Province, PRC 712000
|
Headquarter, GMP Facility, R&D
|
19,036
|
50-year land use right expiring in June 2056
|
||||
Wuquan Village Jiangcun Town Hu Country Xi'an City
|
Herb cultivation
|
343,983
|
40-year land lease expiring on May 4, 2049
|
||||
Weihua Road, Weinan City, Shaanxi, PRC
|
GMP Facility, R&D
|
63,851
|
50-year land use right expiring in August 2053
|
Quarter Ended
|
High
|
Low
|
||||||
December 31, 2014
|
$
|
8.47
|
$
|
7.91
|
||||
September 30, 2014
|
$
|
11.76
|
$
|
11.20
|
||||
June 30, 2014
|
$
|
10.29
|
$
|
9.52
|
||||
March 31, 2014
|
$
|
14.49
|
$
|
13.37
|
||||
December 31, 2015
|
$
|
2.94
|
$
|
2.80
|
||||
September 30, 2015
|
$
|
5.04
|
$
|
4.90
|
||||
June 30, 2015
|
$
|
7.70
|
$
|
7.07
|
||||
March 31, 2015
|
$
|
8.89
|
$
|
8.19
|
Year ended December 31,
|
Increase (Decrease) due to changes in
|
|||||||||||||||||||
2015
|
2014
|
Product offering
|
Sales volume
|
Sales price
|
||||||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||||||
Xin Aoxing Capsule
|
$
|
9,076,174
|
$
|
21,193,331
|
$
|
-
|
$
|
(12,117,157
|
)
|
$
|
-
|
|||||||||
Other Aoxing Pharmaceutical products
|
3,101,887
|
13,785,726
|
-
|
|
(10,683,839
|
)
|
-
|
|||||||||||||
Sub-total
|
12,178,061
|
34,979,057
|
-
|
|
(22,800,996
|
)
|
-
|
|||||||||||||
Shaanxi Weinan products
|
4,151,872
|
7,806,259
|
-
|
(3,654,387
|
)
|
-
|
||||||||||||||
Hospital products
|
12,438,549
|
18,631,271
|
-
|
(6,192,722
|
)
|
-
|
||||||||||||||
Total gross sales
|
$
|
28,768,482
|
$
|
61,416,587
|
$
|
-
|
|
$
|
(32,648,105
|
)
|
$
|
-
|
||||||||
Sales discount
|
(1,638,873
|
)
|
-
|
|||||||||||||||||
Total net sales
|
$
|
27,129,609
|
$
|
61,416,587
|
Year ended December 31,
|
Increase (Decrease) due to changes in
|
|||||||||||||||||||
2015
|
2014
|
Product offering
|
Sales volume
|
Product cost
|
||||||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||||||
Xin Aoxing Capsule
|
$
|
1,570,515
|
$
|
3,673,311
|
$
|
-
|
$
|
(2,102,796
|
)
|
$
|
-
|
|||||||||
Other Aoxing Pharmaceutical products
|
2,327,039
|
9,770,526
|
-
|
|
(7,443,487
|
)
|
-
|
|
||||||||||||
Sub-total
|
3,897,554
|
13,443,837
|
-
|
|
(9,546,283
|
)
|
-
|
|||||||||||||
Shaanxi Weinan products
|
2,283,613
|
3,591,955
|
-
|
(1,308,342
|
)
|
-
|
|
|||||||||||||
Hospital products
|
9,844,377
|
14,104,433
|
-
|
(4,260,056
|
)
|
-
|
|
|||||||||||||
Medical device
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total cost of sales
|
$
|
16,025,544
|
$
|
31,140,225
|
$
|
-
|
|
$
|
(15,114,681
|
)
|
$
|
-
|
Year ended December 31,
|
||||||||||||||||
2015
|
2014
|
|||||||||||||||
Gross Profit
|
Product Gross Margin %
|
Gross Profit
|
Product Gross Margin%
|
|||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||
Xin Aoxing Capsule
|
$
|
7,505,659
|
82.7
|
%
|
$
|
17,520,020
|
82.7
|
%
|
||||||||
Other Aoxing Pharmaceutical products
|
774,848
|
25.0
|
%
|
4,015,200
|
29.1
|
%
|
||||||||||
Sub-total
|
8,280,507
|
68.0
|
%
|
21,535,220
|
61.6
|
%
|
||||||||||
Shaanxi Weinan products
|
1,868,259
|
45
|
%
|
4,214,304
|
54.0
|
%
|
||||||||||
Hospital products
|
2,594,172
|
20.9
|
%
|
4,526,838
|
15.0
|
%
|
||||||||||
Medical device
|
-
|
-
|
%
|
-
|
-
|
%
|
||||||||||
Sales discount
|
(1,638,873
|
)
|
-
|
%
|
-
|
-
|
%
|
|||||||||
Total gross profit
|
$
|
11,104,065
|
40.9
|
%
|
$
|
30,276,362
|
49.3
|
%
|
Year Ended December 31,
|
||||||||||||||||||||
2015
|
2014
|
|||||||||||||||||||
Operating expenses
|
% of net sales
|
Operating expenses
|
% of net sales
|
% change
|
||||||||||||||||
Advertising expenses
|
$
|
3,803,780
|
14.0
|
%
|
$
|
8,594,303
|
14.0
|
%
|
(55.7
|
%)
|
||||||||||
Selling expenses
|
4,835,398
|
17.8
|
%
|
9,892,447
|
16.1
|
%
|
(51.1
|
%)
|
||||||||||||
General and administrative expenses
|
4,648,902
|
17.1
|
%
|
7,718,388
|
12.6
|
%
|
(39.8
|
%)
|
||||||||||||
Research and development expenses
|
4,020,909
|
14.8
|
%
|
2,766,162
|
4.5
|
%
|
45.4
|
%
|
||||||||||||
Provision for doubtful debts
|
4,666,730
|
17.2
|
%
|
-
|
-
|
%
|
100
|
%
|
||||||||||||
Impairment loss on loan receivables
|
8,845,999
|
32.6
|
%
|
-
|
-
|
%
|
100
|
%
|
||||||||||||
Impairment loss on prepaid lease payment
|
1,066,115
|
3.9
|
%
|
-
|
-
|
%
|
100
|
%
|
||||||||||||
Impairment loss on intangible assets
|
2,973,796
|
11.0
|
%
|
990,603
|
1.6
|
%
|
(200.2
|
%)
|
||||||||||||
Construction in progress written off
|
-
|
-
|
%
|
1,627,154
|
2.6
|
%
|
(100
|
%)
|
||||||||||||
Total operating expenses
|
$
|
34,861,629
|
128.5
|
%
|
$
|
31,589,057
|
51.4
|
%
|
14.3
|
%
|
1.
|
If after taking legal action, it appears that an accounts receivable is not likely to become collectible, such accounts receivable will be written off if it is more than two years old.
|
2.
|
If during the collection period, the customer provides bankruptcy or other insolvency documentation, the corresponding accounts receivable will be written off.
|
3.
|
If we are no longer able to locate a particular customer in order for us to take any collection or legal actions, the accounts receivable for such customer will be written off if it is more than two years old.
|
Payments due by period ($ million)
|
||||||||||||||||||||
Total
|
Within 1 year
|
1-3 years
|
3-5 years
|
>5 years
|
||||||||||||||||
Research and development contracts
|
$
|
0.8
|
$
|
0.8
|
$
|
-
|
-
|
-
|
||||||||||||
Purchase of a health product manufacturer
|
4.9
|
4.9
|
-
|
-
|
-
|
|||||||||||||||
Acquire a project for mining rights, mining assets and a mining company
|
0.2
|
0.2
|
-
|
-
|
-
|
|||||||||||||||
Total contractual obligations
|
$
|
5.9
|
$
|
5.9
|
$
|
-
|
-
|
-
|
AS OF DECEMBER 31,
|
||||||||
2015
|
2014
|
|||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
38,898
|
$
|
1,685,154
|
||||
Accounts receivable, net
|
15,814,880
|
26,962,078
|
||||||
Inventories
|
234,660
|
673,989
|
||||||
Deposits and other receivables
|
2,591
|
4,471,992
|
||||||
Income tax recoverable
|
76,280
|
67,370
|
||||||
Loan receivable, net
|
-
|
9,772,464
|
||||||
Total Current Assets
|
16,167,309
|
43,633,047
|
||||||
Non-current Assets
|
||||||||
Deposits
|
16,099,958
|
8,795,218
|
||||||
Deferred tax assets, net
|
5,406,593
|
7,065,523
|
||||||
Property and equipment, net
|
6,810,933
|
8,483,113
|
||||||
Intangible assets, net
|
6,878,787
|
13,270,330
|
||||||
Total Non-Current Assets
|
35,196,271
|
37,614,184
|
||||||
Total Assets
|
$
|
51,363,580
|
$
|
81,247,231
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts and other payables
|
$
|
4,153,411
|
$
|
5,001,086
|
||||
Short-term bank loans
|
2,773,199
|
3,094,614
|
||||||
Valued-added tax payable
|
112,629
|
432,885
|
||||||
Warrants liability
|
59,202
|
383,295
|
||||||
Total Current Liabilities
|
7,098,441
|
8,911,880
|
||||||
Commitment and contingencies
|
||||||||
Stockholders' Equity
|
||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized,
2,210,913 shares issued and outstanding as of December 31, 2015 and 2014
|
2,210
|
2,210
|
||||||
Additional paid-in capital
|
30,316,774
|
30,316,774
|
||||||
Statutory reserve
|
7,354,413
|
7,354,413
|
||||||
Retained earnings
|
3,157,394
|
28,269,956
|
||||||
Accumulated other comprehensive income
|
3,434,348
|
6,391,998
|
||||||
Total Stockholders' Equity
|
44,265,139
|
72,335,351
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
51,363,580
|
$
|
81,247,231
|
FOR THE YEARS ENDED DECEMBER 31,
|
||||||||
2015
|
2014
|
|||||||
Sales, net
|
$
|
27,129,609
|
$
|
61,416,587
|
||||
Cost of sales
|
16,025,544
|
31,140,225
|
||||||
Gross profit
|
11,104,065
|
30,276,362
|
||||||
Operating expenses:
|
||||||||
Advertising expenses
|
3,803,780
|
8,594,303
|
||||||
Selling expenses
|
4,835,398
|
9,892,447
|
||||||
General and administrative expenses
|
4,648,902
|
7,718,388
|
||||||
Research and development expenses
|
4,020,909
|
2,766,162
|
||||||
Impairment loss on intangible assets
|
2,973,796
|
990,603
|
||||||
Provision for doubtful accounts receivable
|
4,666,730
|
-
|
||||||
Impairment loss on loan receivables
|
8,845,999
|
-
|
||||||
Impairment loss on prepaid lease payment
|
1,066,115
|
-
|
||||||
Construction in progress written off
|
-
|
1,627,154
|
||||||
Total operating expenses
|
34,861,629
|
31,589,057
|
||||||
Loss from operations
|
(23,757,564
|
)
|
(1,312,695
|
)
|
||||
Other (expense) income
|
||||||||
Interest income
|
8,895
|
1,330,329
|
||||||
Interest expense
|
(283,596
|
)
|
(154,547
|
)
|
||||
Fair value adjustment on warrants
|
324,093
|
577,599
|
||||||
Gain on disposal of intangible assets
|
-
|
-
|
||||||
Additional compensation received for the disposed land use rights
|
-
|
1,093,878
|
||||||
Other (expense) income, net
|
(84,544
|
)
|
67
|
|||||
Total other (expense) income, net
|
(35,152
|
)
|
2,847,326
|
|||||
(Loss) Income before income taxes
|
(23,792,716
|
)
|
1,534,631
|
|||||
Provision for income tax (Income tax benefit)
|
1,319,846
|
(3,313,581
|
)
|
|||||
(Loss) Net income
|
$
|
(25,112,562
|
)
|
$
|
4,848,212
|
|||
Foreign currency translation adjustment
|
(2,957,650
|
)
|
(208,456
|
)
|
||||
Comprehensive (loss) income
|
$
|
(28,070,212
|
)
|
$
|
4,639,756
|
|||
(Loss) Earning per share
|
||||||||
Basic
|
$
|
(11.4
|
)
|
$
|
2.3
|
|||
Diluted
|
$
|
(11.4
|
)
|
$
|
2.3
|
|||
Weighted average number of common shares outstanding
|
||||||||
Basic
|
2,210,913
|
2,071,343
|
||||||
Diluted
|
2,210,913
|
2,071,343
|
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Deferred
|
Other
|
Total
|
|||||||||||||||||||||||||||||
Common Stock
|
Paid-in
|
Stock-Based
|
Statutory
|
Retained
|
Comprehensive
|
Stockholders'
|
||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Reserve
|
Earnings
|
Income
|
Equity
|
|||||||||||||||||||||||||
Balance, January 1, 2014
|
12,676,113
|
$
|
12,676
|
$
|
25,748,669
|
$
|
(365,017
|
)
|
$
|
7,126,432
|
$
|
23,649,725
|
$
|
6,600,454
|
$
|
62,772,939
|
||||||||||||||||
7-to-1 Reverse Split
|
(10,865,199
|
)
|
(10,865
|
)
|
10,865
|
-
|
-
|
-
|
-
|
0
|
||||||||||||||||||||||
Stock-based compensation
|
164,285
|
164
|
1,655,836
|
365,017
|
-
|
-
|
-
|
2,021,017
|
||||||||||||||||||||||||
Shares issuance in public offering
|
235,714
|
235
|
2,901,404
|
-
|
-
|
-
|
-
|
2,901,639
|
||||||||||||||||||||||||
Transfer to statutory reserve
|
-
|
-
|
-
|
-
|
227,981
|
(227,981
|
)
|
-
|
-
|
|||||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
-
|
4,848,212
|
-
|
4,848,212
|
||||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
-
|
(208,456
|
)
|
(208,456
|
)
|
||||||||||||||||||||||
Balance, December 31, 2014
|
2,210,913
|
$
|
2,210
|
$
|
30,316,774
|
$
|
-
|
$
|
7,354,413
|
$
|
28,269,956
|
$
|
6,391,998
|
$
|
72,335,351
|
|||||||||||||||||
Balance, December 31, 2014
|
2,210,913
|
$
|
2,210
|
$
|
30,316,774
|
$
|
-
|
$
|
7,354,413
|
$
|
28,269,956
|
$
|
6,391,998
|
$
|
72,335,351
|
|||||||||||||||||
Net (loss)
|
-
|
-
|
-
|
-
|
-
|
(25,112,562
|
)
|
-
|
(25,112,562
|
)
|
||||||||||||||||||||||
Foreign currency translation adjustment
|
-
|
-
|
-
|
-
|
-
|
(2,957,650
|
)
|
(2,957,650
|
)
|
|||||||||||||||||||||||
Balance, December 31, 2015
|
2,210,913
|
$
|
2,210
|
$
|
30,316,774
|
$
|
-
|
$
|
7,354,413
|
$
|
3,157,394
|
$
|
3,434,348
|
$
|
44,265,139
|
FOR THE YEARS ENDED DECEMBER 31,
|
||||||||
2015
|
2014
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net (loss) income
|
$
|
(25,112,562
|
)
|
$
|
4,848,212
|
|||
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
||||||||
Deferred income tax expense (benefit)
|
1,332,951
|
(4,284,655
|
)
|
|||||
Depreciation and amortization
|
2,320,195
|
3,086,188
|
||||||
Provision for doubtful debts
|
4,666,730
|
-
|
||||||
Recognition of deferred research and development expenses
|
4,020,909
|
2,766,162
|
||||||
Impairment loss on intangible assets
|
2,973,796
|
990,603
|
||||||
Impairment loss on loan receivable
|
8,845,999
|
-
|
||||||
Impairment loss on prepaid lease payment
|
1,066,115
|
-
|
||||||
Construction in progress written off
|
-
|
1,627,154
|
||||||
Loss on disposal of property, plant and equipment
|
738,834
|
3,275
|
||||||
Additional compensation received for the disposed land use rights
|
-
|
(1,093,878
|
)
|
|||||
Stock-based compensation
|
-
|
2,021,017
|
||||||
Warrants liability
|
(324,093
|
)
|
(577,599
|
)
|
||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
5,448,178
|
(7,441,446
|
)
|
|||||
Inventories
|
420,584
|
152,454
|
||||||
Deposits and other receivables
|
392,425
|
244,270
|
||||||
Accounts payable and accrued expenses
|
(602,958
|
)
|
573,102
|
|||||
Value-added tax payable
|
(309,890
|
)
|
90,148
|
|||||
Income tax payable
|
-
|
305,611
|
||||||
Net cash provided by operating activities
|
5,877,213
|
3,310,618
|
||||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property, plant and equipment
|
(59,475
|
)
|
(2,869,204
|
)
|
||||
Proceeds from disposal of property, plant and equipment
|
-
|
2,929
|
||||||
Deposit paid for research and development - Note 3(a)
|
-
|
(4,067,885
|
)
|
|||||
Deposit paid for intended acquisitions - Notes 3(c) and 3(d)
|
(8,122,236
|
)
|
(4,881,462
|
)
|
||||
Proceeds from disposal of two drug approval numbers
|
-
|
1,390,661
|
||||||
Receipt from loan receivable
|
804,182
|
-
|
||||||
Compensation received for disposed land use rights
|
-
|
1,546,822
|
||||||
Net cash used in investing activities
|
(7,377,529
|
)
|
(8,878,139
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceeds from short-term bank loans
|
-
|
3,254,307
|
||||||
Repayment of short-term bank loans
|
(160,836
|
)
|
(162,715
|
)
|
||||
Proceeds from stock issuance and warrants
|
-
|
3,862,533
|
||||||
Net cash (used in) provided by financing activities
|
(160,836
|
)
|
6,954,125
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
14,896
|
218,478
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(1,646,256
|
)
|
1,605,082
|
|||||
Cash and cash equivalents, beginning balance
|
1,685,154
|
80,072
|
||||||
Cash and cash equivalents, ending balance
|
$
|
38,898
|
$
|
1,685,154
|
||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Interest received
|
$
|
8,896
|
$
|
1,330,329
|
||||
Interest paid
|
$
|
(133,618
|
)
|
$
|
(154,547
|
)
|
||
Income tax payments
|
$
|
-
|
$
|
(665,621
|
)
|
●
|
Shaanxi Biostar has the full right to control and administer the financial affairs and daily operation of Aoxing Pharmaceutical and has the right to manage and control all assets of Aoxing Pharmaceutical. The registered owners of Aoxing Pharmaceutical as a group have no right to make any decision about Aoxing Pharmaceutical’s activities without the consent of Shaanxi Biostar.
|
●
|
Shaanxi Biostar is assigned all voting rights of Aoxing Pharmaceutical and has the right to appoint all directors and senior management personnel of Aoxing Pharmaceutical. The registered owners of Aoxing Pharmaceutical possess no substantive voting rights.
|
●
|
Shaanxi Biostar is committed to provide financial support if Aoxing Pharmaceutical requires additional funds to maintain its operations and to repay its debts.
|
●
|
Shaanxi Biostar is entitled to a management fee equal to Aoxing Pharmaceutical’s net profits and is obligated to assume all operation risks and bear all losses of Aoxing Pharmaceutical. Therefore, Shaanxi Biostar is the primary beneficiary of Aoxing Pharmaceutical.
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Raw materials
|
$
|
164,352
|
$
|
380,529
|
||||
Work in process
|
51,041
|
143,475
|
||||||
Finished goods
|
19,267
|
132,491
|
||||||
Goods in transit
|
-
|
17,494
|
||||||
$
|
234,660
|
$
|
673,989
|
Buildings
|
30 years
|
|
Building improvements
|
30 years
|
|
Machinery & equipment
|
5-10 years
|
|
Furniture & fixtures and vehicles
|
5-10 years
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Buildings
|
$
|
2,548,537
|
$
|
3,651,647
|
||||
Building improvements
|
5,517,178
|
5,895,382
|
||||||
Machinery & equipment
|
1,187,421
|
1,224,229
|
||||||
Furniture & fixtures
|
53,192
|
68,853
|
||||||
Vehicle
|
111,701
|
119,553
|
||||||
Construction in progress
|
483,004
|
516,959
|
||||||
9,901,033
|
11,476,623
|
|||||||
Less: Accumulated depreciation
|
(3,090,100
|
)
|
(2,993,510
|
)
|
||||
$
|
6,810,933
|
$
|
8,483,113
|
Land use rights
|
50 years
|
|
Proprietary technologies
|
10 years
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Land use rights
|
$
|
3,083,608
|
$
|
3,521,705
|
||||
Proprietary technologies
|
16,065,254
|
19,006,655
|
||||||
19,148,862
|
22,528,360
|
|||||||
Less: Accumulated amortization and impairment
|
(12,270,075
|
)
|
(9,258,030
|
)
|
||||
$
|
6,878,787
|
$
|
13,270,330
|
Years Ending December 31,
|
||||
2016
|
$ |
1,135,712
|
||
2017
|
1,135,712
|
|||
2018
|
1,135,712
|
|||
2019
|
1,071,108
|
|||
2020
|
114,958
|
|||
Thereafter
|
$
|
2,285,585
|
·
|
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
|
·
|
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
|
·
|
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
|
Carrying amount
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Estimated
fair value
|
|||||||||||||
Financial assets
|
||||||||||||||||
Carried at (amortized) cost:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
38,898
|
$
|
-
|
$
|
-
|
$
|
38,898
|
||||||||
Loan receivable
|
-
|
-
|
-
|
-
|
||||||||||||
$
|
38,898
|
$
|
-
|
$
|
-
|
$
|
38,898
|
Carrying amount
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Estimated
fair value
|
|||||||||||||
Financial liabilities
|
||||||||||||||||
Carried at (amortized) cost:
|
||||||||||||||||
Short-term bank loans
|
$
|
-
|
$
|
-
|
$
|
2,773,199
|
$
|
2,773,199
|
||||||||
Carried at fair value:
|
||||||||||||||||
Warrants liability
|
-
|
-
|
59,202
|
59,202
|
||||||||||||
$
|
-
|
$
|
-
|
$
|
2,832,401
|
$
|
2,832,401
|
Carrying amount
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Estimated
fair value
|
|||||||||||||
Financial assets
|
||||||||||||||||
Carried at (amortized) cost:
|
||||||||||||||||
Cash and cash equivalents
|
$
|
1,685,154
|
$
|
-
|
$
|
-
|
$
|
1,685,154
|
||||||||
Loan receivable
|
-
|
-
|
9,772,464
|
9,772,464
|
||||||||||||
$
|
1,685,154
|
$
|
-
|
$
|
9,772,464
|
$
|
11,457,618
|
Carrying amount
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Estimated
fair value
|
|||||||||||||
Financial liabilities
|
||||||||||||||||
Carried at (amortized) cost:
|
||||||||||||||||
Short-term bank loans
|
$
|
-
|
$
|
-
|
$
|
3,094,614
|
$
|
3,094,614
|
||||||||
Carried at fair value:
|
||||||||||||||||
Warrants liability
|
-
|
-
|
383,295
|
383,295
|
||||||||||||
$
|
-
|
$
|
-
|
$
|
3,477,909
|
$
|
3,477,909
|
Liabilities:
|
||||
Warrants
liability as of January 1, 2015
|
$
|
383,295
|
||
Change in fair value of warrants
|
(324,093
|
)
|
||
Warrants liability as of December 31, 2015
|
$
|
59,202
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
Current portion
|
||||||||
a) Deposits paid for research and development of new medicine
|
$
|
-
|
$
|
4,071,860
|
||||
b) Prepaid sale commission
|
-
|
348,745
|
||||||
c) Other receivables and prepaid expenses
|
2,591
|
51,387
|
||||||
Prepaid expenses and other receivables
|
$
|
2,591
|
$
|
4,471,992
|
||||
Non-current portion
|
||||||||
d) Deposit paid for intended acquisition a health product material supplier
|
$
|
12,402,360
|
$
|
4,886,232
|
||||
e) Deposit paid for intended acquisition a health product manufacturer
|
3,697,598
|
3,908,986
|
||||||
Deposits
|
$
|
16,099,958
|
$
|
8,795,218
|
a.
|
Deposits paid for research and development represents progress payment for the development of a new drug, less amounts recognized as research and development expense. In December 2010, the Company entered into an agreement with a research institution to jointly develop a new drug for treatment of cardiovascular disease. In year 2014, the Company paid approximately $4 million as further prepaid research fee for the testing process of the new drug which to be performed in year 2015 by the research institution. The amount of approximately $4.0 million bought forward from year 2014 had been fully recognized as research and development expense during the year ended December 31, 2015 when the relevant service is provided by the research institution.
|
b.
|
The amount represents prepayment of sale commission expense to a distributor which will be used for the deduction of future sale commission payment. The amount was fully utilized during the year ended December 31, 2015.
|
c.
|
In December 2014, the Company signed a letter of intent to acquire 100% interest in a company in the PRC, which is principally engaged in supply of raw materials to produce health product, for an aggregate consideration of approximately $12.6 million (RMB 82 million) in cash. The completion of the acquisition is subject to the completion of a valuation report and certain conditions set out in the letter of intent being met. The deposit is fully refundable if certain conditions set out in the letter of intent are not met. The remaining balance of $0.2 million (RMB 1.5 million) was expected to be settled by the second quarter of 2016.
|
d.
|
In November 2013, the Company signed a letter of intent to acquire 100% interest in a health product manufacturer for an aggregate consideration of approximately $8.6 million (RMB 56 million), consisting of approximately $4.6 million (RMB 30 million) in cash and shares of the Company’s common stock valued at approximately $4.0 million (RMB 26 million), the acquisition is in final stage and the Company is reviewing the draft of shares transfer agreement. It is expected to be completed in the second quarter of 2016.
|
Balance as at December 31,
|
||||||||||
Inception date
|
Details
|
2015
|
2014
|
|||||||
May 26, 2014
|
RMB 20 million, one year term loan, annual interest rate at 7.80%. During the year ended December 31, 2015, the Company repaid RMB 1 million and paid interest of RMB 0.8 million; as of December 31, 2015, the Company had cumulatively repaid RMB 2 million and recorded accrued interest expenses of RMB 0.9 million.
|
$
|
2,773,199
|
$
|
3,094,614
|
For the year ended December 31, 2014
|
Shares issued
|
Value
|
||||||
i. issued to selected investors through placement agent, at $17.43 per share less financing cost
|
235,714
|
$
|
3,862,533
|
|||||
ii. issued to employees based on 2013 Incentive Stock Plan, valued at $10.08 per share
|
164,285
|
1,656,000
|
||||||
Total common stock issued during the year ended December 31, 2014
|
399,999
|
$
|
5,518,533
|
Common stock
|
$ |
235
|
||
Warrants liability - Note 6(b)
|
960,894
|
|||
Additional paid-in-capital
|
2,901,404
|
|||
3,862,533
|
Outstanding as at December 31,
|
||||||||||||
Expiry date
|
Exercise Price
|
2015
|
2014
|
|||||||||
June 30, 2014
|
$
|
57.54
|
-
|
-
|
||||||||
March 12, 2017 *
|
22.61
|
108,428
|
108,428
|
|||||||||
108,428
|
108,428
|
Fair Value as of
December 31, 2015
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||
Liabilities:
|
||||||||
Warrants expiring March 2017
|
$
|
59,202
|
$
|
59,202
|
For the Year Ended December 31, 2015
|
||||||||||||
Weighted Average
|
||||||||||||
Number of options
|
Exercise Price ($)
|
Remaining Life (years)
|
||||||||||
Outstanding at beginning of period
|
9,143
|
34.79
|
1.54
|
|||||||||
Granted, exercised or forfeited
|
-
|
-
|
-
|
|||||||||
Expired
|
(2,381
|
)
|
-
|
-
|
||||||||
Outstanding at end of period
|
6,762
|
26.39
|
0.54
|
For the Year Ended December 31, 2014
|
||||||||||||
Weighted Average
|
||||||||||||
Number of options
|
Exercise Price ($)
|
Remaining Life (years)
|
||||||||||
Outstanding at beginning of period
|
55,174
|
54.67
|
1.08
|
|||||||||
Granted, exercised or forfeited
|
-
|
-
|
-
|
|||||||||
Expired
|
(46,031
|
)
|
58.59
|
-
|
||||||||
Outstanding at end of period
|
9,143
|
34.79
|
1.54
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Current:
|
||||||||
USA
|
$
|
-
|
$
|
-
|
||||
PRC
|
-
|
971,074
|
||||||
-
|
971,074
|
|||||||
Deferred:
|
||||||||
USA
|
-
|
-
|
||||||
PRC
|
1,319,846
|
(4,284,655
|
)
|
|||||
Provision for income taxes (Income tax benefit)
|
$
|
1,319,846
|
$
|
(3,313,581
|
)
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Income tax at USA statutory rate (34%)
|
$
|
(8,089,523
|
)
|
$
|
521,774
|
|||
Foreign rate differential
|
2,154,408
|
(324,564
|
)
|
|||||
Tax effect of permanent differences due to:
|
||||||||
Non deductible expenses
|
171,932
|
406,788
|
||||||
Under provision in prior year
|
-
|
464,943
|
||||||
Others
|
297,348
|
(6,108
|
)
|
|||||
Change in valuation allowance
|
6,785,681
|
656,423
|
||||||
Utilization of previously unrecognized tax losses
|
-
|
(672,068
|
)
|
|||||
Recognition of previously unrecognized deferred tax
|
-
|
(4,360,769
|
)
|
|||||
(Income tax benefit) Provision for income taxes
|
$
|
1,319,846
|
$
|
(3,313,581
|
)
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
USA Tax benefit on net operating loss carry forward
|
$
|
2,873,434
|
2,970,167
|
|||||
Valuation allowance
|
(2,873,434
|
)
|
(2,970,167
|
)
|
||||
Deferred tax asset - USA
|
$
|
-
|
$
|
-
|
December 31,
|
December 31,
|
|||||||
2015
|
2014
|
|||||||
PRC Tax benefit on net operating loss carry forward
|
$
|
4,497,612
|
$
|
2,992,715
|
||||
Tax effect of temporary differences due to
|
||||||||
Depreciation, amortization and impairment of assets
|
5,426,964
|
2,169,318
|
||||||
Provision of bad debts
|
1,737,314
|
655,168
|
||||||
Provision of commission expense
|
455,930
|
655,351
|
||||||
Others
|
396,126
|
592,971
|
||||||
Valuation allowance
|
(7,107,353
|
)
|
-
|
|||||
Deferred tax asset - PRC
|
$
|
5,406,593
|
$
|
7,065,523
|
Years Ended
December 31,
|
||||||||
2015
|
2014
|
|||||||
Basic (loss) earnings per share:
|
||||||||
Numerator:
|
||||||||
Net (loss) income used in computing basic earnings per share
|
$
|
(25,112,562
|
)
|
$
|
4,848,212
|
|||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
2,210,913
|
2,071,343
|
||||||
Basic (loss) earnings per share
|
$
|
(11.4
|
)
|
$
|
2.3
|
|||
Diluted (loss) earnings per share:
|
||||||||
Numerator:
|
||||||||
Net (loss) income used in computing diluted earnings per share
|
$
|
(25,112,562
|
)
|
$
|
4,848,212
|
|||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
2,210,913
|
2,071,343
|
||||||
Diluted (loss) earnings per share
|
$
|
(11.4
|
)
|
$
|
2.3
|
Year Ended December 31,
|
||||||||
2015
|
2014
|
|||||||
Accumulated other comprehensive income, beginning of period
|
$
|
6,391,998
|
$
|
6,600,454
|
||||
Change in cumulative translation adjustment
|
(2,957,650
|
)
|
(208,456
|
)
|
||||
Accumulated other comprehensive income, end of period
|
$
|
3,434,348
|
$
|
6,391,998
|
Total capital payment commitment
|
December 31, 2015
|
December 31, 2014
|
||||||||||
a) Three agreements with certain research institutes to conduct clinical trials for two new and one existing drugs.
|
$
|
2.1
|
$
|
0.8
|
$
|
0.8
|
||||||
b) In December 2014, the Company signed a letter of intent to acquire 100% interest in a company in the PRC, which is principally engaged in supply of raw materials to produce health product, for an aggregate consideration of approximately $12.6 million (RMB 82 million) in cash.
|
12.6
|
0.2
|
8.5
|
|||||||||
c) In November 2013, the Company signed a letter of intent to acquire 100% interest in a health product manufacturer for an aggregate consideration of approximately $8.6 million (RMB 56 million), consisting of approximately $4.6 million (RMB 30 million) in cash and shares of the Company’s common stock valued at approximately $4.0 million (RMB 26 million), subject to the completion of a due diligence report and certain conditions set out in the letter of intent being met.
|
8.6
|
4.9
|
5.3
|
|||||||||
Total capital payment commitment
|
$
|
5.9
|
$
|
14.6
|
Sales and accounts receivable risks concentration
|
|||||||||||||||||
Percentage of total sales during the
|
Percentage of total accounts receivable as at
|
||||||||||||||||
Customer
|
year ended December 31,
|
December 31, 2015
|
December 31, 2014
|
||||||||||||||
2015
|
2014
|
||||||||||||||||
A |
19
|
%
|
19
|
%
|
28
|
%
|
12
|
%
|
|||||||||
B |
46
|
%
|
30
|
%
|
66
|
%
|
53
|
%
|
|||||||||
Total risks concentration
|
65
|
%
|
49
|
%
|
94
|
%
|
65
|
%
|
Name
|
Position
|
Age
|
Date of Appointment
|
|||
Ronghua Wang
|
Chairman, Chief Executive Officer
|
60 |
November 1, 2007
|
|||
Qinghua Liu
|
Interim Chief Financial Officer and Director
|
48 |
November 1, 2008
|
|||
Leung King-fai
|
Independent Director (1)(4)
|
42 |
April 7, 2011
|
|||
Haipeng Wu
|
Independent Director (1)(2)(3)
|
58 |
July 1, 2007
|
|||
Zhongyang Shang
|
Independent Director (1)(2)(3)
|
64 |
December 30, 2009
|
|||
Shuang Gong
|
Secretary of Board
|
48 |
April 1, 2008
|
|||
Zhenghong Wang
|
Chief Operating Officer
|
35 |
March 26, 2012
|
·
|
any bankruptcy petition filed by or against, or any appointment of a receiver, fiscal agent or similar Officer for, the business or property of such person, or any partnership in which such person was a general partner or any corporation of which such person was an executive officer either, in each case, at the time of the filing for bankruptcy or within two years prior to that time;
|
·
|
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
·
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining such person from, or otherwise limiting, the following activities:
|
·
|
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to act as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, Director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
|
·
|
being found by a court of competent jurisdiction in a civil action, the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or federal commodities law, and the judgment in such civil action or finding by the SEC or the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated;
|
·
|
being the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial instructions or insurance companies, including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
·
|
being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a) (26) of the Exchange Act), any registered entity (as defined in Section 1(a) (29) of the Commodity Exchange Act), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or person associated with a member.
|
·
|
Review whether or not management has maintained the reliability and integrity of the accounting policies and financial reporting and disclosure practices of the Company;
|
·
|
Review whether or not management has established and maintained processes to ensure that an adequate system of internal controls is functioning within the Company;
|
·
|
Review whether or not management has established and maintained processes to ensure compliance by the Company with legal and regulatory requirements that may impact its financial reporting and disclosure obligations;
|
·
|
Oversee the selection and retention of the Company’s independent registered public accounting firm, and their qualifications and independence;
|
·
|
Prepare a report of the Audit Committee for inclusion in the proxy statement for the Company’s annual meeting of shareholders;
|
·
|
Review the scope and cost of the audit, the performance of the independent registered public accounting firm, and their report on the annual financial statements of the Company; and
|
·
|
Perform all other duties as the Board may from time to time designate.
|
·
|
Establish director compensation plan or any executive compensation plan or other employee benefit plan which requires shareholder approval;
|
·
|
Establish significant long-term director or executive compensation and director or executive benefits plans which do not require stockholder approval;
|
·
|
Determine if any other matter, such as severance agreements, change in control agreements, or special or supplemental executive benefits, within the Committee's authority;
|
·
|
Design overall compensation policy and executive salary plan; and
|
·
|
Setting the annual base salary, annual bonus, and annual and long-term equity-based or other incentives of each corporate officer, including the CEO.
|
Name/Office
|
Year
|
Salaries ($)
|
Bonus ($)
|
Option Awards ($)(4)
|
Non-Equity
Incentive Plan
Compensation
Earnings ($)
|
Non-Qualified Deferred Compensation Earnings ($)
|
All Other
Compensation ($)
|
Total ($)
|
||||||||||||||||||||||
Ronghua Wang
|
2015
|
17,370
|
-
|
-
|
|
-
|
-
|
17,370
|
||||||||||||||||||||||
Chairman, CEO (1)
|
2014
|
17,573
|
-
|
-
|
|
-
|
-
|
17,573
|
||||||||||||||||||||||
Qinghua Liu
|
2015
|
12,931
|
-
|
-
|
|
-
|
-
|
12,931
|
||||||||||||||||||||||
Interim CFO (2)
|
2014
|
11,292
|
-
|
-
|
|
-
|
-
|
11,292
|
||||||||||||||||||||||
Zhenghong Wang
|
2015
|
-
|
-
|
-
|
|
-
|
-
|
-
|
||||||||||||||||||||||
COO (3)
|
2014
|
-
|
-
|
-
|
|
-
|
-
|
-
|
Name
|
Grant Date
|
Number of Securities Underlying Unexercised Options Exercisable*
|
Number of Securities Underlying Unexercised Options Unexercisable
|
Option Exercise Price ($)*
|
Option Expiration Date
|
|||||||
Zack Zibing Pan (2)
|
4/7/2011
|
3,333
|
(1)
|
41.37
|
4/6/2016
|
|||||||
4/20/2012
|
3,428
|
(2)
|
11.76
|
4/19/2017
|
No-Equity
|
Non-Qualified
Deferred
|
|||||||||||||||||||||||
Stock
|
Incentive Plan
|
Compensation
|
All other
|
|||||||||||||||||||||
Fees
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|||||||||||||||||||
($)
|
($)
|
($)
|
($)
|
($)
|
($)
|
|||||||||||||||||||
Qinghua Liu
|
12,931
|
-
|
-
|
-
|
-
|
12,931
|
||||||||||||||||||
Haipeng Wu
|
9,650
|
-
|
-
|
-
|
-
|
9,650
|
||||||||||||||||||
King-fai Leung
|
9,650
|
-
|
-
|
-
|
-
|
9,650
|
Number of Securities to Be Issued
Upon Exercise of Outstanding
Options, Warrants, and Rights (a)
|
Weighted Average
Exercise
Price of
Outstanding
Options, Warrants, and Rights (b)
|
Number of Securities Remaining
Available for Future Issuance (c)
|
||||||||||
Equity compensation plans approved by security holders
|
||||||||||||
2009 Plan*
|
51,746
|
$
|
57.54
|
-
|
||||||||
2011 Plan
|
3,428
|
11.76
|
38,000
|
|||||||||
2012 Plan
|
-
|
-
|
-
|
|||||||||
2013 Plan
|
-
|
-
|
-
|
|||||||||
2014 Plan
|
-
|
-
|
214,286
|
|||||||||
2015 Plan
|
-
|
-
|
214,286
|
|||||||||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
|
|||||||||
TOTAL
|
55,174
|
$
|
54.67
|
252,286
|
·
|
each person known to us that beneficially owns more than 5% of our outstanding shares of common stock;
|
·
|
each of our directors;
|
·
|
each of our named executive officers; and
|
·
|
all of our current directors and executive officers as a group.
|
Name of Beneficial Owner (1)
|
Amount of Beneficial Ownership
|
Percent of Class
|
||||||
Ronghua Wang (2)
|
437,475
|
19.7
|
%
|
|||||
Liu Qinghua (3)
|
3,953
|
*
|
||||||
Haipeng Wu (3)
|
952
|
*
|
||||||
Zhenghong Wang (3)
|
952
|
*
|
||||||
Shuang Gong (3)
|
6,334
|
*
|
||||||
Leung King-fai (3)
|
952
|
*
|
||||||
Zhongyang Shang (3)
|
2,381
|
*
|
||||||
All directors and executive officers of the Company (seven persons)
|
452,999
|
20.3
|
%
|
(1)
|
Unless otherwise indicated, the address for each of beneficial owner is: No. 588 Shiji Xi Avenue, Xianyang City, Shaanxi province, PRC, 712046.
|
(2)
|
Includes
10,476
shares of common stock issuable upon exercise of stock options that were granted on October 22, 2009.
|
(3)
|
Consists of shares of common stock issuable upon exercise of stock options there were granted on October 22, 2009.
|
Services Performed
|
2015
|
2014
|
||||||
Audit Fees (1)
|
$
|
200,000
|
$
|
155,000
|
||||
Audit-Related Fees
|
$
|
-
|
$
|
-
|
||||
Tax Fees
|
$
|
-
|
$
|
-
|
||||
All Other Fees
|
$
|
-
|
$
|
-
|
||||
Total Fees
|
$
|
200,000
|
$
|
155,000
|
(1)
|
Audit fees – the fees related to the audit of our annual financial statements and the revision of our quarterly financial statements.
|
2.1
|
Assets Acquisition Agreement with Xi’an Meipude Biotechnology Co., Ltd. (5)
|
3.1
|
Articles of Incorporation filed with the corporate secretary of State of the State of Maryland on March 27, 2007 (1)
|
3.2
|
Articles of Amendment filed with the corporate secretary of State of the State of Maryland on August 1, 2007 (1)
|
3.3
|
Articles of Amendment filed with the corporate secretary of State of the State of Maryland on September 14, 2007 (1)
|
3.4
|
Certificate of Designation for the Series B Convertible Preferred Stock as filed with the corporate secretary of State of Maryland on November 2, 2009 (2)
|
3.5
|
Articles of Amendment to the Articles of Incorporation filed with the corporate secretary of State of the State of Maryland on April 3, 2012. (12)
|
3.6
|
Bylaws (1)
|
4.1
|
2009 Incentive Stock Plan ** (3)
|
4.2
|
2011 Stock Option Compensation Plan (11)**
|
4.3
|
2012 Stock Option Compensation Plan (13) **
|
10.1
|
Labor Contract between Shaanxi Aoxing Pharmaceutical Co., Ltd. and Ronghua Wang dated June 30, 2010 (6)
|
10.2
|
Form of Director Offer Letter (4)
|
10.3
|
Employment Agreement with Zack Pan dated as of April 7, 2011 (7) **
|
10.4
|
Amendment No. 1 to the Employment Agreement with Zack Pan dated as of April 20, 2012 (9)**
|
10.5
|
Share Transfer Agreement (8)
|
10.6
|
Supplemental Agreement to Share Transfer Agreement (10)
|
10.7
|
Product Research and Development Agreement, dated December 16, 2010, by and between Shanxi Aoxing Pharmaceutical Co., Ltd. and Northwest University, Colleague of Life Science*
|
10.8
|
The Supplemental Agreement to Share Transfer Contract, dated March 11, 2013, by and between Shaanxi Aoxing Pharmaceutical Co., Ltd. and all the former equity holders of Shaanxi Weinan Huaren Pharmaceuticals. Ltd.
|
14.1
|
Code of Ethics (4)
|
21
|
|
23.1
|
|
23.2
|
|
23.3
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
101.INS
|
XBRL Instance Document
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Calculation Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Document
|
BIOSTAR PHARMACEUTICALS, INC.
(Registrant)
|
|||
Date: April 14, 2016
|
By:
|
/s/ Ronghua Wang
|
|
Ronghua Wang
Chief Executive Officer and President
(Principal Executive Officer)
|
Date: April 14, 2016
|
By:
|
/s/ Qinghua Liu
|
|
Qinghua Liu
Interim Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: April 14, 2016
|
By:
|
/s/ Qinghua Liu
|
|
Qinghua Liu, Interim Chief Financial Officer and Director
|
|||
Date: April 14, 2016
|
By:
|
/s/ Haipeng Wu
|
|
Haipeng Wu, Director
|
|||
Date: April 14, 2016
|
By:
|
/s/ King-fai Leung
|
|
King-fai Leung, Director
|
|||
Date: April 14, 2016
|
By:
|
/s/ Zhongyang Shang
|
|
Zhongyang Shang, Director
|
1 Year Biostar Pharmaceuticals (CE) Chart |
1 Month Biostar Pharmaceuticals (CE) Chart |
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