-Revenue for the First 9 Months Increased 24.7% Over the Prior Year Period-
DALIAN, China, Nov. 14 /Xinhua-PRNewswire-FirstCall/ -- China Bio-Immunity Corporation (BULLETIN BOARD: CHHB) (China Bio-Immunity" or "the Company"), a China-based company that develops, produces, manufactures and markets proprietary vaccine-based prophylactics and therapeutics, today announced financial results for the quarter and nine months ended September 30, 2008.
Nine Months Ended September 30, 2008
Revenue in the first nine months of 2008 increased 24.7% year over year to $22.7 million from $18.2 million, while gross profit increased 17.2% to $16.8 million from $14.3 million during the same time period last year. Operating expenses increased 146.9% year over year to $4.3 million from $1.8 million for the nine months ended September 30 2007, representing an increase of $2.6 million, of which $0.8 million was a nonrecurring, non-cash warrants expense the Company incurred during its reverse merger.
Excluding this nonrecurring expense, operating income in the first nine months of 2008 would have increased by 5.5% to $13.3 million and net income would have increased by 4.0% to $11.0 million from the prior year's period. Including this expense, in the first nine months of 2008, operating income decreased 0.8% to $12.5 million from $12.6 million in the third quarter of 2007 and net income decreased 3.9% to $10.2 million, or $0.75 per diluted share, from $10.6 million, or $0.80 per diluted share, in the prior year's period.
The decrease in net income was also due to an increase in the tax rate related to new tax regulations in the People's Republic of China which went into effect on January 1, 2008. Diluted share count in the first nine months of 2008 was 13,624,026, compared with 13,246,697 in the same period in 2007.
Three Months Ended September 30, 2008
Revenue in the third quarter of 2008 decreased 24.5% or $3.1 million year over year to $9.6 million from $12.7 million in the prior year period. The decline was primarily attributable to declines in sales of the Rabies Powder Vaccine. Revenue from the Rabies Powder Vaccine decreased 88.1% to $0.4 million from $3.1 million in the third quarter of 2007, accounting for only 3.8% of the total revenue for the three months ended September 30, 2008, compared to 24.1% of the total revenue in the same period in 2007.
The decrease was attributable to two primary factors. First, in November 2007 the Company submitted an application to regulatory authorities to change the expiration time of the Rabies Powder Vaccine product from 12 months to 30 months. Subsequent to approval of the application, in early February 2008, production resumed. Due to the timing of the production cycle, the Company manufactured significantly fewer doses of the vaccine to meet the market demand in the third quarter.
Second, the Rabies Powder Vaccine must be sold with a separately packaged dose of injection water, which the Company purchases from external vendors. During the first half year of 2008 there was a significant shortage of this product, which in turn limited sales. In July 2008, the Company contracted with another vendor and the problem was resolved.
Revenue from the rabies liquid vaccine decreased 3.5% to $8.7 million from $9.1 million in the prior year's third quarter, largely because of the restriction on liquids transported via train or airplane during the Olympic and Paralympic Games. The Company's mumps vaccine generated $0.5 million in revenue during the third quarter of 2008, an 18.5% year over year decrease from $0.61 million in the third quarter of 2007.
While gross profit in the third quarter of 2008 decreased 18.8% to $8.2 million from $10.1 million in the third quarter of 2007, gross margin increased to approximately 85.1% from 79.1% in the prior year's period. The improvement in gross margin was primarily attributable to a greater dominance of higher margin rabies liquid vaccine in the revenue mix and a decrease in the unit cost of goods sold. The decline in cost of goods sold can be partially attributed to improvements in the purification process and to the rabies virus harvest frequency which improved production capacity and product output.
Operating income in the third quarter of 2008 decreased 35.7% to $6.0 million from $9.3 million in the third quarter of 2007, while operating margin was 62.2%, compared with 73.0% in the third quarter of the prior year. Operating expenses increased 184.9% to $2.2 million from $0.8 million during the comparable period in 2007. The higher operating expenses were a direct result of a significant increase in general and administrative expenses associated with becoming a publicly traded company in the United States. Selling expenses decreased 30.4% year over year to $0.07 million from $0.09 million in the prior year's period.
Net income in the third quarter of 2008 decreased 44.7% to $4.3 million, or $0.30 per diluted share, from $7.9 million, or $0.59 per diluted share, in the prior year's period. The decrease in net income occurred as a result of lower revenues combined with higher general, administrative and tax expenses. Diluted share count in the third quarter of 2008 was 14,378,685, compared with 13,246,697 in the third quarter of 2007.
Mr. Quanfeng Wang, Chief Executive Officer of China Bio-Immunity, commented, "Although our revenue during the quarter was meaningfully impacted by changes to the expiration time of the Rabies Powder Vaccine, we believe the extended expiration date will give us a greater competitive edge and allow us to improve the pricing of this product, increasing our overall sales revenue. We expect to reach total revenue of at least $28.0 million for the year ending 2008, reflecting continued demand for our leading products and high recognition of our brand name."
The Company will hold a conference call at 9:00 am ET on November 17, 2008, to discuss its fiscal third quarter 2008 results. Listeners may access the call by dialing 1-888-264-8952 or 1-913-312-1492 for international callers. A webcast will also be available through the Company website at http://www.jgad-/ bio.com . A replay of the call will be available through December 1, 2008. Listeners may access the replay by dialing 1-888-203-1112 or 1-719-457-0820 for international callers, access code: 9830874.
About China Bio-Immunity
Based in Dalian, China, China Bio-Immunity develops, produces, manufactures and markets internally developed vaccine-based prophylactics and therapeutics. The Company sells and markets its products in the 24 main provinces and major cities in the People's Republic of China ("P.R.C."). Its principal products, Rabies Vaccine and Mumps Vaccine, are sold and distributed by a network of wholesale distributors, as well as through retail customers. In addition to the current distribution structure, the Company plans to further market its products through distribution agreements with local agents in several developing countries, including, but not limited to India, South Africa, and countries throughout Southeast Asia. To learn more about the Company, visit http://www.jgad-bio.com/ .
Safe Harbor Statement
Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company's filings with the Securities and Exchange Commission, including the Form 10-Q for the quarter ended September 30, 2008, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
CHINA BIO-IMMUNITY CORPORATION (FORMERLY EASY GOLF CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 REVENUES $9,599,685 $12,722,324 $22,741,065 $18,241,343 COST OF GOODS SOLD 1,429,477 2,657,594 5,920,636 3,895,165 GROSS PROFIT 8,170,208 10,064,730 16,820,429 14,346,178 Selling expenses 65,693 94,396 218,600 252,871 General and administrative expenses 2,133,347 677,571 4,098,457 1,493,191 Total operating expenses 2,199,040 771,967 4,317,057 1,746,062 INCOME FROM 5,971,168 9,292,763 12,503,372 12,600,116 OPERATIONS OTHER INCOME (EXPENSES), NET Interest expense, net -130,132 -103,102 -397,663 -300,082 Investment income -- -- 83,372 -- Other income (expenses), net 285,879 -1,553 742,228 100,392 Government grant -- -- 110,787 -- Total other income (expenses), net 155,747 -104,655 538,724 -199,690 INCOME FROM OPERATIONS BEFORE TAXES 6,126,915 9,188,108 13,042,096 12,400,426 INCOME TAX EXPENSE 1,788,349 1,335,865 2,869,367 1,818,136 NET INCOME 4,338,566 7,852,243 10,172,729 10,582,290 OTHER COMPREHENSIVE INCOME Foreign currency translation gain 256,952 11,047 1,888,034 592,884 OTHER COMPREHENSIVE INCOME 256,952 11,047 1,888,034 592,884 COMPREHENSIVE INCOME $4,595,518 $7,863,290 $12,060,763 $11,175,174 WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC 14,337,642 13,246,697 13,610,345 13,246,697 WEIGHTED AVERAGE SHARES OUTSTANDING, DILUTED 14,378,685 13,246,697 13,624,026 13,246,697 NET INCOME PER SHARE, BASIC $0.30 $0.59 $0.75 $0.80 NET INCOME PER SHARE, DILUTED $0.30 $0.59 $0.75 $0.80 CHINA BIO-IMMUNITY CORPORATION (FORMERLY EASY GOLF CORPORATION) AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS 30-Sep-08 31-Dec-07 (Unaudited) CURRENT ASSETS Cash and cash equivalents $13,946,737 $6,837,792 Accounts receivable 5,707,994 3,659,399 Inventories 6,704,695 4,969,151 Prepayments 1,046,942 619,434 Other receivables and other assets 40,800 22,446 Due from related party 384,432 -- Deferred taxes 505,457 -- 28,337,057 16,108,222 LONG-TERM ASSETS Plant and equipment, net 12,598,146 10,958,371 Land use rights, net 3,747,963 1,336,444 Technology, net 1,051,744 1,112,891 Deferred taxes 1,959 -- 17,399,812 13,407,706 TOTAL ASSETS $45,736,869 $29,515,928 LIABILITIES AND SHAREHOLDERS' EQUITY 30-Sep-08 31-Dec-07 (Unaudited) CURRENT LIABILITIES Accounts payable and accrued expenses $2,858,598 $1,573,069 Customer deposits 39,009 186,650 Income taxes payable 2,281,200 487,851 Short-term loans 7,333,206 5,749,801 Deferred revenue 103,304 95,994 Due to related companies -- 1,375,641 Deferred taxes 194,660 572,771 12,809,977 10,041,777 LONG-TERM LIABILITIES Deferred taxes 143,103 73,443 143,103 73,443 TOTAL LIABILITIES 12,953,080 10,115,220 SHAREHOLDERS' EQUITY Common stock, $.001 par value; 50,000,000 shares authorized; 15,000,001 and 13,246,698 shares, issued and outstanding at September 30, 2008 and December 31, 2007, respectively 15,000 13,247 Additional paid-in capital 7,348,081 6,027,516 Retained earnings (the restricted portion is $2,930,563 and $1,776,364 at September 30, 2008 and at December 31, 2007, respectively) 21,715,633 11,542,904 Accumulated other comprehensive income 3,705,075 1,817,041 32,783,789 19,400,708 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $45,736,869 $29,515,928
