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Biostar Pharmaceuticals, Inc. Announces First Quarter 2013 Financial Results

XIANYANG, China, May 16, 2013 /PRNewswire/ -- Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced financial results of the first quarter ended March 31, 2013.

Summary Financials

First Quarter 2013 and 2012 Results (unaudited)


Q1 2013

Q1 2012

CHANGE

Net Sales

$12.1 million

$15.9 million

-23.9%

Gross Profit

$6.7 million

$10.8 million

-38.3%

Net Income

$0.6 million

$2.2 million

-74.1%

EPS (Diluted)

$0.06

$0.23

-73.9%

First Quarter 2013 Financial Results

Revenue for the first quarter of 2013 decreased 23.9% to approximately $12.1 million compared to $15.9 million for the first quarter of 2012. The decrease was primarily due to decrease in sales of Biostar's capsule products as a result of the Capsule Incident, partially offset by the introduction of several new products. Sales of products under the Aoxing Pharmaceutical brand decreased by approximately $6.3 million, or 43.8%, for the three months ended March 31, 2013, compared to the same period in 2012. Sales of Shannxi Weinan's product increased by approximately $0.5 million or 33.2% for the three months ended March 31, 2013 compared to the same period in 2012. The Company introduced three new products to a local hospital in the 3rd quarter of 2012 and sales of these products contributed approximately $2.0 million to total net sales for the three months ended March 31, 2013.

Cost of goods sold for the three months ended March 31, 2013 was approximately $5.4 million or 44.7% of revenues, as compared to $5.1 million or 31.8% of revenues for the three months ended March 31, 2012. The increase in cost of goods sold was due to the introduction of new products and increase in the costs of raw material and labor, partially offset by the decrease in net sales and the temporarily discontinuation of several products. Gross profit for the first quarter of 2013 was approximately $6.7 million with gross margin of 55.3%, compared to gross profit of $10.8 million and gross margin of 68.2% for the first quarter of 2012. The decrease in gross margin was due to the increase in cost of goods sold and significant change in the sales of product mix.

Operating expenses for the three months ended March 31, 2013 were approximately $6.0 million, a decrease of 21.7% compared to the same period in 2012. The decrease was mainly attributable to approximately $1.0 million decrease in advertising expenses and approximately $0.7 million decrease in selling expenses.

Operating income for the first quarter of 2013 totaled approximately $0.7 million, a 77.1% decrease from $3.2 million reported for the first quarter of 2012. Operating margin were 6.0% and 20.0% for the first quarter of 2013 and 2012, respectively. The decrease was mainly attributed to the decrease of net sales in the first quarter of 2013.

Net income was approximately $0.6 million for the first quarter of 2013, a 74.1% decrease compared to $2.2 million for the first quarter of 2012. Diluted earnings per share were $0.06 for the first quarter of 2013 compared to $0.23 for the first quarter of 2012, based upon approximately 10.0 million and 9.4 million diluted common shares outstanding, respectively.

"We finished the first quarter of 2013 with positive momentum," commented Ronghua Wang, Chairman and Chief Executive Officer of Biostar. "Our net income was positive in the quarter and this reflects a gradual improvement in our sales. We expect the negative impact from the Capsule Incident is now behind us and we are optimistic that with our continued expansion of our product portfolio, supported by comprehensive marketing and distribution strategies, we are in position to leverage our product portfolio for optimal growth," Wang concluded.

Balance Sheet and Cash Flow

Cash and cash equivalents totaled approximately $6.5 million on March 31, 2013, compared to $1.8 million on December 31, 2012. Accounts receivable balance was approximately $16.5 million on March 31, 2013, versus approximately $21.9 million on December 31, 2012. Days sales outstanding (DSO) were at 123 days. The Company had a current ratio of 3.7 to 1 and stockholders' equity of approximately $58.8 million, with total assets of approximately $70.3 million versus total liabilities of approximately $11.5 million on March 31, 2013.

For the first three months of 2013, the Company generated approximately $6.2 million in cash from operations versus $5.7 million in cash generated from operations reported for the same period in 2012.

Conference Call

The Company will host a conference call to discuss the 2013 first quarter financial results on Thursday, May 16, 2013 at 9:00 a.m. ET. Interested participants should call +1-480-629-9713. The conference ID is 4620094. It is advisable to dial in approximately 5-10 minutes prior to 9:00 a.m. ET. This call is being web cast by ViaVid Broadcasting and can be accessed at the following link: http://public.viavid.com/index.php?id=104804.

About Biostar Pharmaceuticals, Inc.

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

Safe Harbor Relating to the Forward-Looking Statements

Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company's ability to achieve the projected sales through the efforts of the call center, to complete the contemplated clinical trials and capitalize on such opportunities, the Company's ability to recover its sales and revenue for the gel capsule segment of its business, the state of consumer confidence and market demand or the Company's products, success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our most recent Annual Report on Form 10-K for the year ended December 31, 2012, and other subsequent filings. These filings are available at www.sec.gov.  We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.

For more information contact:

Biostar Pharmaceuticals, Inc.
Ally Gong
Tel: +86-29-3368-6638
Email: [email protected]

 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



March 31, 2013


December 31, 2012



(Unaudited)


(Audited)









ASSETS









Current Assets







Cash and cash equivalents


$

6,457,126



$

1,759,078


Accounts receivable, net of allowance for doubtful accounts of $3,665,864 (2012/12/31: $3,645,817)



16,507,815




21,851,412


Inventories - note 2)



1,414,462




847,135


Deposits and other receivables - note 3)



7,751,359




7,740,673


Income tax recoverable



288,036




265,007


Loan receivables - note 4)



10,012,722




9,510,826


Total Current Assets



42,431,520




41,974,131











Non-current Assets









Deposits - note 3)



8,766,198




8,718,258


Deferred tax assets



3,325,303




3,665,951


Property and equipment, net - note 2)



6,912,234




6,980,521


Intangible assets, net - note 2)



8,857,670




9,136,439











Total Assets


$

70,292,925



$

70,475,300











LIABILITIES AND STOCKHOLDERS' EQUITY











Current Liabilities









Accounts and other payables


$

6,271,522



$

5,732,329


Short-term bank loans - note 5)



4,781,562




4,755,413


Due to a related party



-




1,585,138


Value-added tax payable



462,139




629,672


Total Current Liabilities



11,515,223




12,702,552











Commitment and contingencies- note 9)


















Stockholders' Equity









Common stock, $0.001 par value, 100,000,000 shares authorized, 9,993,549 shares issued and outstanding as at March 31, 2013 and December 31 - note 6)



9,993




9,993


Additional paid-in capital



23,272,923




23,266,776


Statutory reserve - note 8)



6,737,368




6,737,368


Retained earnings



23,790,717




23,229,743


Accumulated other comprehensive income



4,966,701




4,528,868


Total Stockholders' Equity



58,777,702




57,772,748











Total Liabilities and Stockholders' Equity


$

70,292,925



$

70,475,300


 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME

(Unaudited)




Three months ended March 31,




2013



2012









Sales, net


$

12,091,909



$

15,899,541


Cost of sales



5,403,019




5,063,150


Gross profit



6,688,890




10,836,391











Operating expenses:









Advertising expenses



1,886,681




2,848,933


Selling expenses



2,197,346




2,907,801


General and administrative expenses



1,077,748




1,100,706


Research and development expenses



796,001




791,127


Total operating expenses



5,957,776




7,648,567











Income from operations



731,114




3,187,824











Other income (expense)









Interest income



455,231




95,694


Interest expense



(95,688)




(15,035)


Other



(2,098)




248





357,445




80,907











Income before income taxes



1,088,559




3,268,731











Provision for income tax



527,585




1,101,316











Net Income


$

560,974



$

2,167,415











Foreign currency translation adjustment



437,833




255,460











Comprehensive Income


$

998,807



$

2,422,875











Net income per share









     Basic and diluted


$

0.06



$

0.23











Weighted average number of common shares outstanding









     Basic and diluted



9,993,549




9,398,892


 

BIOSTAR PHARMACEUTICALS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)




Three months ended March 31,




2013



2012


CASH FLOWS FROM OPERATING ACTIVITIES







Net income


$

560,974



$

2,167,415


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









Accrued interest



(449,075)




-


Deferred tax assets



360,387




516,128


Depreciation and amortization



458,931




456,376


Recognition of deferred research and development expenses



796,001




791,127


Stock-based compensation



6,147




43,282


Changes in operating assets and liabilities:









Accounts receivable



5,457,403




716,639


Inventories                                                                                                                



(562,015)




428,007


Deposits and other receivables



(764,161)




43


Accounts payable and accrued expenses



507,140




1,761,799


Value-added tax payable



(170,796)




(67,397)


Income tax payable/recoverable



(21,547)




(1,065,938)


Exchange difference



-




(901)


Net cash provided by operating activities



6,179,389




5,746,580











CASH FLOWS FROM INVESTING ACTIVITIES









Purchase of property and equipment



(4,352)




-


Payment for acquisition of Shaanxi Weinan



-




(822,173)


Net cash (used in) investing activities



(4,352)




(822,173)











CASH FLOWS FROM FINANCING ACTIVITIES









Repayment to a related party



(1,592,002)




-


Net cash (used in) financing activities



(1,592,002)




-











Effective of exchange rate changes on cash and cash equivalents



115,013




74,062











Net increase in cash and cash equivalents



4,698,048




4,998,469











Cash and cash equivalents, beginning balance



1,759,078




16,971,789


Cash and cash equivalents, ending balance


$

6,457,126



$

21,970,258











SUPPLEMENTAL DISCLOSURES:









Interest received


$

6,945



$

-


Interest payments


$

93,132



$

-


Income tax payments


$

188,745



$

1,660,292


SOURCE Biostar Pharmaceuticals, Inc.

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