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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
|
Quarterly 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)
|
Large accelerated filer ¨
|
Accelerated filer ¨
|
||
Non-accelerated filer ¨
|
Smaller reporting company x
|
Page
|
||
PART I
|
FINANCIAL INFORMATION
|
|
Item 1.
|
F-1
|
|
Item 2.
|
3
|
|
Item 3.
|
11
|
|
Item 4.
|
11
|
|
PART II
|
OTHER INFORMATION
|
|
Item 1.
|
12
|
|
Item 1A.
|
12
|
|
Item 2.
|
12
|
|
Item 3.
|
12
|
|
Item 4.
|
12
|
|
Item 5.
|
12
|
|
Item 6.
|
13
|
|
14
|
Page(s)
|
|
Financial Statements
|
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
BIOSTAR PHARMACEUTICALS, INC
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
$
|
7,799,188
|
$
|
80,072
|
||||
Note receivable - note 2)
|
-
|
1,636,072
|
||||||
Accounts receivable, net of allowance for doubtful accounts of $4,590,336 (December, 2013 : $2,454,108) - note 2)
|
29,366,966
|
17,965,082
|
||||||
Inventories - note 2)
|
739,464
|
830,311
|
||||||
Deposits and other receivables - note 3)
|
719,594
|
5,282,574
|
||||||
Income tax recoverables - note 7)
|
501,957
|
374,958
|
||||||
Loan receivables - note 4)
|
10,041,596
|
9,816,433
|
||||||
Total Current Assets
|
49,168,765
|
35,985,502
|
||||||
Non-current Assets
|
||||||||
Deposits - note 3)
|
3,900,283
|
3,926,573
|
||||||
Deferred tax assets
|
3,225,768
|
2,789,175
|
||||||
Property and equipment, net - note 2, 5)
|
7,757,851
|
7,728,700
|
||||||
Intangible assets, net - note 2, 5)
|
14,927,548
|
17,134,494
|
||||||
Total Assets
|
$
|
78,980,215
|
$
|
67,564,444
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current Liabilities
|
||||||||
Accounts and other payables
|
$
|
5,665,811
|
$
|
4,447,314
|
||||
Short-term bank loans - note 2, 5)
|
3,250,236
|
-
|
||||||
Value-added tax payable
|
-
|
344,191
|
||||||
Total Current Liabilities
|
8,916,047
|
4,791,505
|
||||||
Non-current Liability
|
||||||||
Warrant liabilities - note 6)
|
619,344
|
-
|
||||||
Total Liabilities
|
9,535,391
|
4,791,505
|
||||||
Commitment - note 10)
|
||||||||
Stockholders' Equity
|
||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized, 15,476,113 and 12,676,113 shares issued and outstanding as at September 30, 2014 and December 31, 2013
|
15,476
|
12,676
|
||||||
Additional paid-in capital
|
30,303,508
|
25,748,669
|
||||||
Deferred stock-based compensation - note 6)
|
(66,367
|
)
|
(365,017
|
)
|
||||
Statutory reserves - note 8)
|
7,126,432
|
7,126,432
|
||||||
Retained earnings
|
25,841,456
|
23,649,725
|
||||||
Accumulated other comprehensive income - note 11)
|
6,224,319
|
6,600,454
|
||||||
Total Stockholders' Equity
|
69,444,824
|
62,772,939
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
78,980,215
|
$
|
67,564,444
|
BIOSTAR PHARMACEUTICALS, INC
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
AND COMPREHENSIVE INCOME
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2014
|
2013
|
2014
|
2013
|
|||||||||||||
Sales, net
|
$
|
14,651,054
|
$
|
15,009,432
|
$
|
47,031,072
|
$
|
41,752,195
|
||||||||
Cost of sales
|
7,674,053
|
8,068,096
|
23,533,445
|
21,242,519
|
||||||||||||
Gross profit
|
6,977,001
|
6,941,336
|
23,497,627
|
20,509,676
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Advertising expenses
|
2,290,277
|
931,938
|
6,397,644
|
5,368,890
|
||||||||||||
Selling expenses
|
2,161,641
|
2,584,700
|
6,633,651
|
7,403,334
|
||||||||||||
General and administrative expenses
|
1,651,457
|
1,867,707
|
8,516,038
|
4,404,273
|
||||||||||||
Research and development expenses
|
690,189
|
811,009
|
2,074,621
|
2,412,623
|
||||||||||||
Impairment of intangible assets
|
-
|
-
|
-
|
239,203
|
||||||||||||
Total operating expenses
|
6,793,564
|
6,195,354
|
23,621,954
|
19,828,323
|
||||||||||||
Income (loss) from operations
|
183,437
|
745,982
|
(124,327)
|
681,353
|
||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income
|
309,634
|
348,281
|
960,532
|
1,134,916
|
||||||||||||
Interest expense
|
-
|
(98,111
|
)
|
-
|
(293,320
|
)
|
||||||||||
Fair value adjustment on warrants
|
(51,612)
|
-
|
341,550
|
-
|
||||||||||||
Other income (expense)
|
45,469
|
370
|
1,093,929
|
(1,093
|
)
|
|||||||||||
303,491
|
250,540
|
2,396,011
|
840,503
|
|||||||||||||
Income before income taxes
|
486,928
|
996,522
|
2,271,684
|
1,521,856
|
||||||||||||
Provision for income tax
|
247,361
|
608,705
|
79,953
|
1,305,056
|
||||||||||||
Net Income
|
239,567
|
387,817
|
$
|
2,191,731
|
$
|
216,800
|
||||||||||
Foreign currency translation adjustment
|
58,895
|
1,336,712
|
(376,135
|
)
|
1,774,545
|
|||||||||||
Comprehensive income
|
$
|
298,462
|
$
|
1,724,529
|
$
|
1,815,596
|
$
|
1,991,345
|
||||||||
Net income per share
|
||||||||||||||||
Basic
|
$
|
0.02
|
$
|
0.03
|
$
|
0.15
|
$
|
0.02
|
||||||||
Diluted
|
0.02
|
0.03
|
0.15
|
0.02
|
||||||||||||
Weighted average number of common shares outstanding
|
||||||||||||||||
Basic
|
15,288,613
|
12,024,685
|
14,221,351
|
11,197,451
|
||||||||||||
Diluted
|
15,288,613
|
12,024,685
|
14,223,014
|
11,197,451
|
BIOSTAR PHARMACEUTICALS, INC
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
Nine Months Ended September 30,
|
||||||||
2014
|
2013
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net income
|
$
|
2,191,731
|
$
|
216,800
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Accrued interest
|
-
|
(1,072,394
|
)
|
|||||
Deferred tax expense (benefit)
|
(455,838
|
)
|
533,637
|
|||||
Depreciation and amortization
|
2,468,737
|
2,026,796
|
||||||
Provision for doubtful accounts
|
2,155,357
|
-
|
||||||
Loss on disposal
|
3,274
|
- | ||||||
Recognition of deferred research and development expenses
|
1,383,081
|
2,412,623
|
||||||
Stock-based compensation
|
1,954,650
|
613,647
|
||||||
Warrant liability
|
(341,550
|
)
|
-
|
|||||
Impairment of intangible assets
|
-
|
239,203
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
(12,064,808
|
)
|
9,250,156
|
|||||
Inventories
|
85,394
|
(340,375
|
)
|
|||||
Deposits and other receivables
|
1,297,726
|
482,525
|
||||||
Accounts payable and accrued expenses
|
1,249,789
|
(641,335
|
)
|
|||||
Value-added tax payable
|
(342,315)
|
(126,573
|
)
|
|||||
Income tax payable/recoverable
|
(129,671
|
)
|
113,299
|
|||||
Net cash (used in) provided by operating activities
|
(544,443
|
)
|
13,708,009
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Purchase of property, plant and equipment
|
(484,778
|
)
|
(978,377
|
)
|
||||
Deposit paid for research and development
|
-
|
(2,734,306
|
)
|
|||||
Sales proceed of property, plant and equipment
|
2,929
|
-
|
|
|||||
Settlement of outstanding receivable from disposal of land use right
|
1,561,223
|
160,842
|
||||||
Net cash provided by (used in) investing activities
|
1,079,374
|
(3,551,841
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Proceed of bank loan
|
3,254,308
|
-
|
||||||
Advance from (repayment to) a related party
|
70,165
|
(1,608,415
|
)
|
|||||
Proceeds from stock issuance and warrants
|
3,862,533
|
-
|
||||||
Net cash provided by (used in) financing activities
|
7,187,006
|
(1,608,415
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(2,821
|
)
|
244,400
|
|||||
Net increase in cash and cash equivalents
|
7,719,116
|
8,792,153
|
||||||
Cash and cash equivalents, beginning balance
|
80,072
|
1,759,078
|
||||||
Cash and cash equivalents, ending balance
|
$
|
7,799,188
|
$
|
10,551,231
|
||||
SUPPLEMENTAL DISCLOSURES:
|
||||||||
Interest payments
|
$
|
(82,855
|
)
|
$
|
(189,359
|
)
|
||
Income tax payments
|
$
|
(665,463
|
)
|
$
|
(658,120
|
)
|
||
Interest received
|
$
|
669,409
|
$
|
1,134,916
|
o
|
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.
|
o
|
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.
|
o
|
Shaanxi Biostar is committed to provide financial support if Aoxing Pharmaceutical requires additional funds to maintain its operations and to repay its debts.
|
o
|
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.
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Raw materials
|
$
|
403,869
|
$
|
423,192
|
||||
Work in process
|
30,317
|
93,125
|
||||||
Finished goods
|
224,821
|
224,530
|
||||||
Goods in transit
|
80,457
|
89,464
|
||||||
$
|
739,464
|
$
|
830,311
|
Buildings
|
30 years
|
Building improvements
|
30 years
|
Machinery & equipment
|
5-10 years
|
Furniture, fixtures & vehicles
|
5-10 years
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Buildings
|
$
|
3,628,929
|
$
|
3,653,390
|
||||
Building improvements
|
3,003,618
|
3,023,864
|
||||||
Machinery & equipment
|
1,214,191
|
1,209,401
|
||||||
Furniture & fixtures
|
68,425
|
68,886
|
||||||
Vehicle
|
118,810
|
134,386
|
||||||
Construction in progress
|
2,607,810
|
2,150,927
|
||||||
10,641,783
|
10,240,854
|
|||||||
Less: Accumulated depreciation
|
(2,883,932
|
)
|
(2,512,154
|
)
|
||||
$
|
7,757,851
|
$
|
7,728,700
|
Land use rights
|
50 years
|
Proprietary technologies
|
10 years
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Land use rights
|
$
|
3,516,513
|
$
|
3,540,216
|
||||
Proprietary technologies
|
18,978,854
|
19,106,783
|
||||||
22,495,367
|
22,646,999
|
|||||||
Less: Accumulated amortization and impairment
|
(7,567,819
|
)
|
(5,512,505
|
)
|
||||
$
|
14,927,548
|
$
|
17,134,494
|
Years Ending December 31,
|
||||
2014
|
$
|
685,104
|
||
2015
|
2,740,419
|
|||
2016
|
1,586,585
|
|||
2017
|
1,586,585
|
|||
2018
|
1,586,585
|
|||
Thereafter
|
6,742,270
|
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Current portion
|
||||||||
a) Deposits paid for research and development of new medicine
|
$
|
690,675
|
$
|
2,781,323
|
||||
b) Deposits paid for purchase of inventory
|
-
|
654,429
|
||||||
c) Receivable from disposition of two drug approval numbers
|
-
|
1,390,661
|
||||||
d) Receivable from land use rights disposed
|
-
|
455,427
|
||||||
Other receivables
|
28,919
|
734
|
||||||
$
|
719,594
|
$
|
5,282,574
|
|||||
Non-Current portion
|
||||||||
e) Deposits paid for intended acquisition of a health product manufacturer
|
3,900,283
|
3,926,573
|
||||||
$
|
3,900,283
|
$
|
3,926,573
|
a.
|
Deposits paid for research and development 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. The development is to be carried out by the research institute. Pursuant to the agreement, the Company’s total commitment is about $11.5 million, in exchange for 60% share of the intellectual property upon successful development of the drug. In the event that the research institute fails to successfully develop the drug, the Company’s contribution is fully refundable.
|
b.
|
Deposits paid for purchase of inventory represented prepayments of inventory to one supplier.
|
c.
|
During the year ended December 31, 2013, the Company sold intangible assets relating to two drug approval numbers with a carrying value of approximately $0.2 million to an arm’s length party for approximately $1.4 million (RMB 8.5 million), resulting in a gain on disposal of approximately $1.2 million.
|
d.
|
During the year ended December 31, 2011, the Company disposed two land use rights reclaimed by local governments. As of June 30, 2014, all land use rights receivables had been received.
|
e.
|
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 $9.2 million (RMB 56 million), consisting of approximately $4.9 million (RMB 30 million) in cash and shares of the Company’s common stock valued at approximately $4.3 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. As at September 30, 2014, the due diligence report is still in progress. The deposit is fully refundable if certain conditions set out in the letter of intent are not met.
|
For the year ended December 31, 2013
|
Shares issued
|
Value
|
||||||
i. issued in connection with the execution of the Weinan Supplemental Agreement, to acquire 13 drug approvals from the former equity holders of Shaanxi Weinan. (Note 1), valued at $0.85 per share, representing the fair value of the shares at the date of the execution of the Weinan Supplemental Agreement
|
1,602,564
|
$
|
1,362,179
|
|||||
ii. awarded to employees based on 2012 Incentive Stock Plan, fair value at $0.82 per share
|
750,000
|
613,647
|
||||||
iii. issued to two consulting firm corporate advisory services during the year, average fair value at $1.00 per share
|
110,000
|
110,550
|
||||||
iv. issued to a consulting firm and the consulting firm’s employees for an one year corporate advisory agreement from November 29, 2013, fair value at $1.81 per share
|
220,000
|
398,200
|
||||||
Total common stock issued during the year ended December 31, 2013
|
2,682,564
|
$
|
2,484,576
|
For the nine months ended September 30, 2014
|
Shares issued
|
Value
|
||||||
v. issued to selected investors through public offering, valued at $2.49 per share less financing costs
|
1,650,000
|
$
|
3,862,533
|
|||||
vi. awarded to employees based on 2013 Incentive Stock Plan, fair value at $1.44 per share
|
1,150,000
|
$
|
1,656,000
|
|||||
Total common stock issued during the nine months ended September 30, 2014
|
2,800,000
|
$
|
5,518,533
|
i) Common stock
|
1,650
|
|||
ii) Warrant liabilities - note b)below
|
960,894
|
|||
iv) Additional paid-in-capital
|
2,899,989
|
|||
$
|
3,862,533
|
Outstanding at,
|
||||||||||||
Expiry date
|
Exercise Price
|
September 30, 2014
|
December 31, 2013
|
|||||||||
June 30, 2014
|
$
|
8.22
|
-
|
10,784
|
||||||||
November 1, 2014*
|
9.00
|
166,667
|
166,667
|
|||||||||
March 12, 2017 **
|
3.23
|
759,000
|
-
|
|||||||||
925,667
|
177,451
|
Fair Value as of
September 30, 2014
|
Significant
Unobservable
Inputs
(Level 3)
|
|||||||
Liabilities:
|
||||||||
Warrants expiring March 2017
|
$
|
619,344
|
$
|
619,344
|
Liabilities:
|
||||
Warrant liability at issuance date of March 13, 2014
|
$
|
960,894
|
||
Change in fair value of warrants
|
(341,550
|
)
|
||
Warrant liability as of September 30, 2014
|
$
|
619,344
|
Weighted Average
|
||||||||||||
Number of options
|
Exercise Price ($)
|
Remaining Life (years)
|
||||||||||
Balance, December 31, 2013
|
386,222
|
7.81
|
1.08
|
|||||||||
Balance, September 30, 2014
|
386,222
|
7.81
|
0.40
|
|||||||||
Vested and exercisable as at September 30, 2014
|
386,222
|
7.81
|
0.40
|
September 30, 2014
|
September 30, 2013
|
|||||||
PRC
|
$
|
4,329,471
|
$
|
2,342,779
|
||||
Others
|
(2,057,787
|
)
|
(820,923
|
)
|
||||
Total income before income taxes
|
$
|
2,271,684
|
$
|
1,521,856
|
September 30, 2014
|
September 30, 2013
|
|||||||
Current taxes
|
$
|
535,791
|
$
|
771,419
|
||||
Deferred taxes
|
(455,838
|
)
|
533,637
|
|||||
Provision for income taxes
|
$
|
79,953
|
$
|
1,305,056
|
September 30, 2014
|
September 30, 2013
|
|||||||
PRC federal statutory tax rate
|
25
|
%
|
25
|
%
|
||||
Computed expected income tax expense
|
$
|
567,921
|
$
|
380,464
|
||||
Utilisation of tax losses not recognised
|
(1,063,264
|
)
|
-
|
|||||
Tax effect of unused tax losses not recognised
|
526,751
|
144,737
|
||||||
Tax effect of non-deductible expenses
|
1,121,232
|
1,057,577
|
||||||
Tax effect of non-taxable income
|
(1,072,687
|
)
|
(277,722
|
)
|
||||
Income tax
|
$
|
79,953
|
$
|
1,305,056
|
Nine Months Ended September 30,
|
||||||||
2014
|
2013
|
|||||||
Basic earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing basic earnings per share
|
$
|
2,191,732
|
$
|
216,800
|
||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
14,221,351
|
11,197,451
|
||||||
Basic earnings per share
|
$
|
0.15
|
$
|
0.02
|
||||
Diluted earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing diluted earnings per share
|
$
|
2,191,732
|
$
|
216,800
|
||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
14,221,351
|
11,197,451
|
||||||
Weighted average effect of dilutive securities:
|
||||||||
Stock warrants and options
|
1,663
|
-
|
||||||
Shares used in computing diluted earnings per share
|
14,223,014
|
11,197,451
|
||||||
Diluted earnings per share
|
$
|
0.15
|
$
|
0.02
|
Three Months Ended September 30,
|
||||||||
2014
|
2013
|
|||||||
Basic earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing basic earnings per share
|
$
|
239,568
|
$
|
387,817
|
||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
15,288,613
|
12,024,685
|
||||||
Basic earnings per share
|
$
|
0.02
|
$
|
0.03
|
||||
Diluted earnings per share:
|
||||||||
Numerator:
|
||||||||
Net income used in computing diluted earnings per share
|
$
|
239,568
|
$
|
387,817
|
||||
Denominator:
|
||||||||
Weighted average common shares outstanding
|
15,288,613
|
12,024,685
|
||||||
Weighted average effect of dilutive securities:
|
||||||||
Stock warrants and options
|
-
|
-
|
||||||
Shares used in computing diluted earnings per share
|
15,288,613
|
12,024,685
|
||||||
Diluted earnings per share
|
$
|
0.02
|
$
|
0.03
|
i)
|
Acquisition of a health product manufacturer
|
ii)
|
Capital commitment contracted but not yet provided for :-
|
2014 Q3 | ||||||||
USD
|
||||||||
At September 30, 2014, the Company has commitment contracted but not provided for
|
||||||||
- Construction in process
|
471,146 |
(RMB
|
2,900,000 | ) | ||||
- Acquisition of machinery
|
1,517 |
(RMB
|
9,340 | ) | ||||
472,663 |
(RMB
|
2,909,340 | ) |
September 30,
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Accumulated other comprehensive income, beginning of period
|
$
|
6,600,454
|
$
|
4,528,868
|
||||
Change in foreign currency translation adjustment
|
(376,135
|
)
|
2,071,586
|
|||||
Accumulated other comprehensive income, end of period
|
$
|
6,224,319
|
$
|
6,600,454
|
Sales risks concentration
|
|||||||||
Percentage of total sales during the
|
|||||||||
Customer
|
Nine Months Ended September 30,
|
||||||||
2014
|
2013
|
||||||||
A |
28
|
%
|
15
|
%
|
|||||
B |
21
|
%
|
16
|
%
|
|||||
Total risks concentration
|
49
|
%
|
31
|
%
|
Three Months Ended September 30,
|
%
|
|||||||||||||||||||
2014
|
2013
|
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
|||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 5,393,328 | 36.8 | % | $ | 6,364,025 | 42.4 | % | -15.3 | % | ||||||||||
Other Aoxing Pharmaceutical products
|
3,853,767 | 26.3 | % | 3,927,412 | 26.2 | % | -1.9 | % | ||||||||||||
Aoxing new products
|
1,877,752 | 12.8 | % | 531,156 | 3.5 | % | 253.5 | % | ||||||||||||
Sub-total
|
11,124,847 | 75.9 | % | 10,822,593 | 72.1 | % | 2.8 | % | ||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
409,872 | 2.8 | % | 1,981,235 | 13.2 | % | -79.3 | % | ||||||||||||
Shaanxi Weinan products (new)
|
15,092 | 0.1 | % | 447,507 | 3.0 | % | -96.6 | % | ||||||||||||
Sub-total
|
424,964 | 2.9 | % | 2,428,742 | 16.2 | % | -82.5 | % | ||||||||||||
Hospital products
|
3,101,243 | 21.2 | % | 1,758,097 | 11.7 | % | 76.4 | % | ||||||||||||
Total sales
|
$ | 14,651,054 | 100 | % | $ | 15,009,432 | 100 | % | -2.4 | % |
Nine Months Ended September 30,
|
%
|
|||||||||||||||||||
2014 | 2013 |
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
|||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 16,311,403 | 34.7 | % | $ | 17,917,185 | 42.9 | % | -9.0 | % | ||||||||||
Other Aoxing Pharmaceutical products
|
10,897,625 | 23.2 | % | 10,202,781 | 24.5 | % | 6.8 | % | ||||||||||||
Aoxing new products
|
4,453,117 | 9.5 | % | 1,144,900 | 2.7 | % | 289.0 |
%
|
||||||||||||
Sub-total
|
31,662,145 | 67.3 | % | 29,264,866 | 70.1 | % | 8.2 | % | ||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
6,173,194 | 13.1 | % | 5,484,980 | 13.1 | % | 12.5 | % | ||||||||||||
Shaanxi Weinan products (new)
|
419,599 | 0.9 | % | 1,343,944 | 3.2 | % | -68.8 | % | ||||||||||||
Sub-total
|
6,592,793 | 14.0 | % | 6,828,924 | 16.3 | % | -3.5 | % | ||||||||||||
Hospital products
|
8,776,134 | 18.7 | % | 5,658,405 | 13.6 | % | 55.1 | % | ||||||||||||
Total sales
|
$ | 47,031,072 | 100 | % | $ | 41,752,195 | 100 | % | 12.6 | % |
Three Months Ended September 30,
|
%
|
|||||||||||||||||||
2014 | 2013 |
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
|||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 925,357 | 12.0 | % | $ | 2,633,018 | 32.6 | % | -64.9 | % | ||||||||||
Other Aoxing Pharmaceutical products
|
2,741,662 | 35.7 | % | 2,765,458 | 34.3 | % | -0.9 | % | ||||||||||||
Aoxing new products
|
1,547,063 | 20.2 | % | 382,269 | 4.7 | % | 304.7 | % | ||||||||||||
Sub-total
|
5,214,082 | 67.9 | % | 5,780,745 | 71.6 | % | -9.8 | % | ||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
224,130 | 2.9 | % | 846,953 | 10.5 | % | -73.5 | % | ||||||||||||
Shaanxi Weinan products (new)
|
12,120 | 0.2 | % | 186,151 | 2.3 | % | -93.5 | % | ||||||||||||
Sub-total
|
236,250 | 3.1 | % | 1,033,104 | 12.8 | % | -77.1 | % | ||||||||||||
Hospital products
|
2,223,721 | 29.0 | % | 1,254,247 | 15.6 | % | 77.3 | % | ||||||||||||
Total cost of sales
|
$ | 7,674,053 | 100 | % | $ | 8,068,096 | 100 | % | -4.9 | % |
Nine Months Ended September 30,
|
%
|
|||||||||||||||||||
2014 | 2013 |
change
|
||||||||||||||||||
Aoxing Pharmaceutical Products
|
%
|
|||||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$ | 2,754,641 | 11.7 | % | $ | 6,370,631 | 30.0 | % | -56.8 | % | ||||||||||
Other Aoxing Pharmaceutical products
|
7,726,188 | 32.8 | % | 7,088,358 | 33.3 | % | 9.0 | % | ||||||||||||
Aoxing new products
|
3,650,214 | 15.5 | % | 824,604 | 3.9 | % | 342.7 | % | ||||||||||||
Sub-total
|
14,131,043 | 60.0 | % | 14,283,593 | 67.2 | % | -1.1 | % | ||||||||||||
Shannxi Weinan Products
|
||||||||||||||||||||
Shaanxi Weinan products
|
2,778,742 | 11.8 | % | 2,357,249 | 11.1 | % | 17.9 | % | ||||||||||||
Shaanxi Weinan products (new)
|
317,549 | 1.3 | % | 566,367 | 2.7 | % | -43.9 | % | ||||||||||||
Sub-total
|
3,096,291 | 13.1 | % | 2,923,616 | 13.8 | % | 5.9 | % | ||||||||||||
Hospital products
|
6,306,111 | 26.7 | % | 4,035,310 | 19.0 | % | 56.3 | % | ||||||||||||
Total cost of sales
|
$ | 23,533,445 | 100 | % | $ | 21,242,519 | 100 | % | 10.8 | % |
Three Months Ended September 30,
|
||||||||||||||||
2014
|
2013
|
|||||||||||||||
Gross Profit
|
Product Gross Margin %
|
Gross Profit
|
Product Gross Margin %
|
|||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$
|
4,467,971
|
82.8
|
%
|
$
|
3,731,007
|
58.6
|
%
|
||||||||
Other Aoxing Pharmaceutical products
|
1,112,105
|
28.9
|
%
|
1,161,954
|
29.6
|
%
|
||||||||||
Aoxing New Product
|
330,689
|
17.6
|
%
|
148,887
|
28.0
|
%
|
||||||||||
Sub-total
|
5,910,765
|
53.1
|
%
|
5,041,848
|
46.6
|
%
|
||||||||||
Shaanxi Weinan Products
|
||||||||||||||||
Shaanxi Weinan products
|
185,742
|
45.3
|
%
|
1,134,282
|
57.3
|
%
|
||||||||||
Shaanxi Weinan products (new)
|
2,972
|
19.7
|
%
|
261,356
|
58.4
|
%
|
||||||||||
Sub-total
|
188,714
|
44.4
|
%
|
1,395,638
|
57.5
|
%
|
||||||||||
Hospital products
|
877,522
|
28.3
|
%
|
503,850
|
28.7
|
%
|
||||||||||
Total gross profit
|
$
|
6,977,001
|
47.6
|
%
|
$
|
6,941,336
|
46.2
|
%
|
Nine Months Ended September 30,
|
||||||||||||||||
2014
|
2013
|
|||||||||||||||
Gross Profit
|
Product Gross Margin %
|
Gross Profit
|
Product Gross Margin %
|
|||||||||||||
Aoxing Pharmaceutical Products
|
||||||||||||||||
Xin Aoxing Oleanolic Acid Capsule
|
$
|
13,556,762
|
83.1
|
%
|
$
|
11,546,554
|
64.4
|
%
|
||||||||
Other Aoxing Pharmaceutical products
|
3,171,437
|
29.1
|
%
|
3,114,423
|
30.5
|
%
|
||||||||||
Aoxing New Product
|
802,903
|
18.0
|
%
|
320,296
|
28.0
|
%
|
||||||||||
Sub-total
|
17,531,102
|
55.4
|
%
|
14,981,273
|
52.1
|
%
|
||||||||||
Shaanxi Weinan Products
|
||||||||||||||||
Shaanxi Weinan products
|
3,394,452
|
55.0
|
%
|
3,127,731
|
57.0
|
%
|
||||||||||
Shaanxi Weinan products (new)
|
102,050
|
24.3
|
%
|
777,577
|
57.9
|
%
|
||||||||||
Sub-total
|
3,496,502
|
53.0
|
%
|
3,905,308
|
57.2
|
%
|
||||||||||
Hospital products
|
2,470,023
|
28.1
|
%
|
1,623,095
|
28.7
|
%
|
||||||||||
Total gross profit
|
$
|
23,497,627
|
50.0
|
%
|
$
|
20,509,676
|
49.1
|
%
|
Three months ended September 30, | ||||||||||||||||||||
2014
|
2013
|
|||||||||||||||||||
Operating expenses |
% of net sales
|
Operating expenses
|
% of net sales
|
% change
|
||||||||||||||||
Advertising expenses
|
$ | 2,290,277 | 15.6 | % | $ | 931,938 | 6.2 | % | 145.8 | % | ||||||||||
Selling expenses
|
2,161,641 | 14.8 | % | 2,584,700 | 17.2 | % | (16.4 | )% | ||||||||||||
General and administrative expenses
|
1,651,457 | 11.3 | % | 1,867,707 | 12.4 | % | (11.6 | ) % | ||||||||||||
Research and development expenses
|
690,189 | 4.7 | % | 811,009 | 5.4 | % | (14.9 | )% | ||||||||||||
Total operating expenses
|
$ | 6,793,564 | 46.4 | % | $ | 6,195,354 | 41.3 | % | 9.7 | % |
Nine months ended September 30, | ||||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Operating expenses | % of net sales | Operating expenses | % of net sales | % change | ||||||||||||||||
Advertising expenses
|
$ | 6,397,644 | 13.6 | % | $ | 5,368,890 | 12.9 | % | 19.2 | % | ||||||||||
Selling expenses
|
6,633,651 | 14.1 | % | 7,403,334 | 17.7 | % | (10.4 | )% | ||||||||||||
General and administrative expenses
|
8,516,038 | 18.1 | % | 4,404,273 | 10.5 | % | 93.4 | % | ||||||||||||
Research and development expenses
|
2,074,621 | 4.4 | % | 2,412,623 | 5.8 | % | (14.0 | )% | ||||||||||||
Impairment of intangible assets
|
- | - | 239,203 | 0.6 | % | (100 | )% | |||||||||||||
Total operating expenses
|
$ | 23,621,954 | 50.2 | % | $ | 19,828,323 | 47.5 | % | 19.1 | % |
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
|
5.3
|
5.3
|
-
|
-
|
-
|
|||||||||||||||
Weinan construction project and
|
||||||||||||||||||||
purchase of machinery
|
0.5
|
0.5
|
-
|
-
|
-
|
|||||||||||||||
-
|
-
|
|||||||||||||||||||
Total contractual obligations
|
$
|
6.6
|
$
|
6.6
|
$
|
-
|
-
|
-
|
1.1
|
Placement Agency Agreement, dated March 1, 2014, by and away the Company, Moody Capital Solutions, Inc. and Axiom Capital Management, Inc. (7)
|
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 of Biostar Pharmaceuticals, Inc. (3)
|
3.6
|
Bylaws (1)
|
4.1
|
2009 Incentive Stock Plan ** (4)
|
4.2
|
2011 Stock Option Compensation Plan (5)**
|
4.3
|
2012 Stock Option Compensation Plan (6)**
|
4.1
|
Form of Warrant to purchase Shares of Common Stock by the Company in favor of the Investors. (7)
|
10.1
|
Securities Purchase Agreement, dated March 10, 2014, by and between the Company and the Investors. (7)
|
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: November 14, 2014
|
By:
|
/s/ Ronghua Wang
|
|
Ronghua Wang, Chief Executive Officer and President
(Principal Executive Officer)
|
Date: November 14, 2014
|
By:
|
/s/ Qinghua Liu
|
|
Qinghua Liu, Interim Chief Financial Officer
(Principal Financial and Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Biostar Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: November 14, 2014
|
/s/Ronghua Wang
|
|
Ronghua Wang
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Biostar Pharmaceuticals, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.
|
Date: November 14, 2014
|
/s/Qinghua Liu
|
|
Qinghua Liu, Interim Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
|
Date: November 14, 2014
|
/s/Ronghua Wang
|
|
Ronghua Wang
|
||
Chief Executive Officer
|
||
(Principal Executive Officer)
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.
|
Date: November 14, 2014
|
/s/Qinghua Liu
|
|
Qinghua Liu, Interim Chief Financial Officer
|
||
(Principal Financial and Accounting Officer)
|
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