China Pharma Holdings, Inc. Reports Fiscal Year 2021 Financial Results

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Mar 31, 2022, 08:00 ET

HAIKOU, China, March 31, 2022 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the fiscal year ended December 31, 2021.

Full Year Highlights

Revenue was $9.6 million in fiscal year 2021, compared to $10.9 million in fiscal year 2020;
Gross margin was 3.7% in fiscal year 2021, compared to 18.0% in fiscal year 2020;
Loss from operations was $2.9 million in fiscal year 2021, compared to $2.6 million in fiscal year 2020;
Net loss was $3.4 million in fiscal year 2021, compared to $2.9 million in fiscal year 2020. Loss per common share was both $0.07 per basic and diluted share in fiscal year 2021 and 2020, respectively.

Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "Affected by the centralized drug procurement policy in China, our products continued to bear huge price pressure in 2021, which negatively affected our income. In addition, the sporadic outbreaks of COVID-19 in several cities in China in 2021 and the related quarantine and control also negatively affect our sales and marketing activities. In terms of the progress of consistency evaluation, we had submitted the application materials of our existing key product, candesartan, to the National Medical Products Administration by the end of 2021."

Ms. Li continued, "Overall, we are very optimistic about the Company's future given the strong foundation of our business and market, including the favorable early-and-pilot-implementation policies in Hainan Free Trade Port. In the context of the epidemic, we have experienced great challenges. However, we also see considerable opportunities ahead of us thanks to those favorable policies that encourage the development, manufacture and commercialization of pharmaceutical and comprehensive healthcare products for the benefit of human health, and are working to accelerate our growth in professional high-end pharmaceutical manufacturing"

Full Year Results

Revenue was $9.6 million for the year ended December 31, 2021, which represented a decrease of $1.2 million, as compared to $10.9 million for the year ended December 31,2020. This was mainly due to the increase of our existing product sales revenue in 2021 did not exceed the one-time foreign trade orders recognized in 2020, which was approximately $1.7 million.

For the year ended December 31, 2021, our cost of revenue was $9.3 million, or 96.4% of total revenue, which represented an increase of $0.4 million from $8.9 million, or 82.0% of total revenue, in 2020. The increase in the proportion of costs to revenue is mainly due to the decline in revenue.

Gross profit for the year ended December 31, 2021 was $0.3 million, compared to $2.0 million in 2020. Our gross profit margin in 2021 was 3.6% compared to 18.0% in 2020. The decrease in our gross profit margin was mainly due to that on one hand, the one-time COVID-19 tester transaction we had in 2020 had a relatively high gross margin, on the other hand, the price decrease of our key products and the cost increase in our main raw materials and some packaging materials this year.

Our selling expenses for the year ended December 31, 2021 were $1.5 million, a decrease of $0.7 million compared to $2.2 million for the year ended December 31, 2020. Selling expenses accounted for 15.5% of the total revenue in 2021 compared to 20.4% in 2020. Because of adjustments in our sales practices and Chinese national centralized drug procurement, we reduced selling expenses to efficiently support our sales and the collection of accounts receivable. Especially in the context of the increasing impact of centralized drug procurement, like other players in the industry, we have reduced the promotion expenses.

Our general and administrative expenses for the year ended December 31, 2021 were $1.7 million, remained close to the amount of $1.8 million in 2020. General and administrative expenses accounted for 17.1% and 16.8% of our total revenues in 2021 and 2020, respectively.

Our research and development expenses for the year ended December 31, 2021 was $0.32 million, compared to $0.38 million in 2020. Research and development expenses accounted for 3.3% and 3.5% of our total revenues in 2021 and 2020, respectively. These expenditures were mainly spent on the consistency evaluation of our existing products.

Our bad debt benefit for the year ended December 31, 2021 was $255,215, as compared to bad debt expenses of $115,186 in 2020.

Our operating loss for the year ended December 31, 2021 was $2.9 million, compared to an operating loss of $2.6 million in 2020. The increase in Loss from Operations was mainly due to the decrease in revenue in 2021.

Net Loss for year ended December 31, 2021 was $3.4 million, or $0.07 each basic and diluted share, compared to net loss of $2.9 million, or $0.07 each basic and diluted share for the year ended December 31, 2020. The increase in net loss was mainly a result of the decrease in revenue.

Financial Condition

As of December 31, 2021, the Company had cash and cash equivalents of $4.9 million compared to $1.0 million as of December 31, 2020.

As of December 31, 2021, our net accounts receivable was $0.7 million, compared to $0.5 million as of December 31, 2020.

For the year ended December 31, 2021, net cash used in operating activities was $0.25 million, as compared to $0.04 million in 2020.

Receipt of Audit Opinion with Going Concern Explanatory Paragraph

The audit opinion issued by the Company's independent registered public accounting firm relating to the Company's audited consolidated financial statements (the "financial statements") for the year ended December 31, 2021 included a going concern explanatory paragraph. The financial statements were included in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the Securities and Exchange Commission on March 30, 2022. The explanatory paragraph in the opinion of the Company's independent registered public accounting firm notes that as discussed in Note 1 to the financial statements, the Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1 to the financial statements and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective business model is driven by market demand and supported by new GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit www.chinapharmaholdings.com. The Company routinely posts important information on its website.

Safe Harbor Statement

Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties may include, but are not limited to: the achievability of financial guidance; success of new product development; unanticipated changes in product demand; increased competition; downturns in the Chinese economy; uncompetitive levels of research and development; and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations, except as required by applicable law or regulation.

Contact:
Diana Huang
+86-15595806797
[email protected]

- FINANCIAL TABLES FOLLOW –

CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS


	December 31,	December 31,
	2021	2020
ASSETS
Current Assets:
Cash and cash equivalents	$ 4,859,059	$ 957,653
Banker's acceptances	91,362	53,736
Trade accounts receivable, less allowance for doubtful
accounts of $18,312,707 and $18,150,493, respectively	714,475	501,892
Other receivables, less allowance for doubtful
accounts of $32,210 and $27,289, respectively	29,564	27,652
Advances to suppliers	471	2,238
Inventory	3,339,686	3,705,119
Prepaid expenses	58,792	73,668
Total Current Assets	9,093,409	5,321,958

Property, plant and equipment, net	13,280,559	15,564,200
Operating lease right of use asset	127,958	49,687
Intangible assets, net	147,841	182,146
TOTAL ASSETS	$ 22,649,767	$ 21,117,991

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable	$ 926,749	$ 1,234,594
Accrued expenses	298,452	177,359
Other payables	1,884,161	2,748,208
Advances from customers	210,028	719,786
Borrowings from related parties	2,779,690	2,134,428
Operating lease liability	85,282	52,070
Construction loan facility	-	2,298,886
Current portion of lines of credit	4,328,936	2,038,345
Total Current Liabilities	10,513,298	11,403,676
Non-current Liabilities:
Convertible, redeemable note payable, net of issue discount	5,250,000	-
Lines of credit, net of current portion	-	904,228
Operating lease liability, net of current portion	44,181	-
Deferred tax liability	824,407	805,556
Total Liabilities	16,631,886	13,113,460
Commitments and Contingencies (Note 9)
Stockholders' Equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized;
no shares issued or outstanding	-	-
Common stock, $0.001 par value; 95,000,000 shares authorized;
47,339,557 shares and 45,579,557 shares issued and outstanding, respectively	47,340	45,580
Additional paid-in capital	25,645,367	24,452,684
Retained deficit	(32,238,655)	(28,839,179)
Accumulated other comprehensive income	12,563,829	12,345,446
Total Stockholders' Equity	6,017,881	8,004,531
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 22,649,767	$ 21,117,991

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CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)

	For the Years
	Ended December 31,
	2021	2020
Revenue	$ 9,641,925	$ 10,866,449
Cost of revenue	9,292,655	8,913,543

Gross profit	349,270	1,952,906

Operating expenses:
Selling expenses	1,495,007	2,215,394
General and administrative expenses	1,651,024	1,822,655
Research and development expenses	318,964	377,964
Bad debt (benefit) expense	(255,215)	115,186
Total operating expenses	3,209,780	4,531,199

Loss from operations	(2,860,510)	(2,578,293)

Other income (expense):
Interest income	3,035	5,675
Interest expense	(542,001)	(294,159)
Net other expense	(538,966)	(288,484)

Loss before income taxes	(3,399,476)	(2,866,777)
Income tax expense	-	-
Net loss	(3,399,476)	(2,866,777)
Other comprehensive income (loss) - foreign currency
translation adjustment	218,383	769,227
Comprehensive loss	$ (3,181,093)	$ (2,097,550)
Loss per share:
Basic and diluted	$ (0.07)	$ (0.07)
Weighted average shares outstanding	46,129,256	43,623,273

CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years
	Ended December 31,
	2021	2020
Cash Flows from Operating Activities:
Net loss	$ (3,399,476)	$ (2,866,777)
Depreciation and amortization	3,087,820	2,679,470
Bad debt (benefit) expense	(255,215)	115,186
Stock option compensation	15,243	-
Original issue discount accretion	250,000	-
Changes in assets and liabilities:
Trade accounts and other receivables	(545,534)	(613,678)
Advances to suppliers	1,798	(1,708)
Inventory	1,011,905	807,592
Trade accounts payable	(332,779)	(214,015)
Other payables and accrued expenses	415,309	(15,217)
Change in bankers' acceptance notes payable	-	(111,160)
Advances from customers	(520,414)	169,736
Prepaid expenses	21,505	8,311
Net Cash Used in Operating Activities	(249,838)	(42,260)

Cash Flows from Investing Activities:
Purchases of property and equipment	(438,055)	(867,307)
Net Cash Used in Investing Activities	(438,055)	(867,307)

Cash Flows from Financing Activities:
Payments of construction term loan	(2,325,039)	(2,174,669)
Payments of line of credit	(2,526,542)	(72,489)
Borrowings and interest from related party	1,183,414	206,908
Repayments to related party	(562,659)	(191,639)
Proceeds from convertible redeemable debt	5,000,000	-
Proceeds from lines of credit	3,828,564	2,856,066
Net Cash (Used In) Provided By Financing Activities	4,597,738	624,177

Effect of Exchange Rate Changes on Cash	(8,439)	58,156
Net Increase in Cash, Cash Equivalents and Restricted Cash	3,901,406	(227,234)
Cash and Cash Equivalents at Beginning of Period	957,653	1,184,887
Cash, Cash Equivalents and Restricted Cash at End of Period	$ 4,859,059	$ 957,653


Supplemental Cash Flow Information:
Cash paid for income taxes	$ -	$ -
Cash paid for interest	$ 218,232	$ 237,530

Supplemental Noncash Investing and Financing Activities:
Accounts receivable collected with banker's acceptances	$ 601,021	$ 687,347
Inventory purchased with banker's acceptances	565,079	682,791
Right-of-use assets obtained in exchange for operating lease obligations	168,606	229,673
Conversion of officer wages to common stock	-	864,480

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