First-quarter fiscal 2010 results announced by China Aoxing Pharmaceutical

Nov 24 2009

China Aoxing Pharmaceutical Company, Inc. (OTCBB: CAXG) ("China Aoxing"), a China-based pharmaceutical company specializing in research, development, manufacturing and distribution of narcotic and pain-management products, today announced financial and operational results for the three month ended September 30, 2009, or the first quarter of fiscal year 2010.

First Quarter 2010 Highlights:

-- Completed the relocation of LRT manufacturing operation into our main campus -- Continuous improvement of profitability and reduction of cash consumption while relocating product manufacturing operation from LRT into our main campus -- Obtained GMP re-certification in capsule, tablet, oral solution dosage forms of pharmaceuticals -- Submitted a new drug application (NDA) to the China SFDA for Codeine Phosphate to treat acute moderate to severe cough -- Obtained the clinical trial license from the China SFDA of Tilidine/Naloxone capsules, an abuse resistant opioid drug to treat moderate to severe pain -- Completed a private placement of common stock for gross proceeds of $5 million -- Completed the conversion of a $4.8million convertible note to common stock

Revenues for the first quarter ended September 30, 2009 were $1,446,663, a 60% decrease from the revenues of $3,598,065 realized for the same period of last year. The decrease in revenue was caused by the impact of our relocation of the LRT manufacturing facility in the summer of 2009. The consolidation of the LRT facility with our own necessitated that we obtain GMP re-certification of six formulations at the new facility. This has delayed our fulfillment of certain purchase orders. Our new facility has successfully passed the GMP re-certification on capsule, tablet, granule and oral solution formulations by September 30, 2009. We expect that sales of our products to regain the growth trend after the completion of GMP re-certification of pill and tincture formulations in near future.

General and administrative expenses decreased to $877,484 during first quarter 2010 from $1,192,892 during the same period of last year, or a 26% decrease, reflecting our continuous efforts in cost control.

Our loss from operations decreased to $364,378 during the first quarter 2010 from $573,977 during the same period of last year. The 37% decrease in the loss was primarily due to the improvement of operation efficiency as well as greater control of operational expenditures.

Our net loss for the first quarter 2010 was $2,310,784. This included, however, an expense of $2,142,159 attributable to the increase in the fair value of our outstanding financial derivatives.

Mr. Zhenjiang Yue, Chairman and Chief Executive Officer of China Aoxing, commented, "We are entering an exciting and busy year in 2010. We are pleased with our financial and business results of this quarter. During this quarter we revised our capital structure and improved our financial condition significantly, forming important basis of our future business expansion. We are confident about the prospects for our business in 2010 and will continue advancing the new generation of narcotics and pain medicine into the market place in China."