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China Qinba Pharmaceuticals, Inc. was incorporated on May 29, 2008 under the laws of Delaware. On August 18, 2008, China Qinba formed Xi’an Development Co., Ltd. as a wholly foreign-owned enterprise (“WFOE”) organized under the laws of the People’s Republic of China (“PRC”) (“Xi’an Development”).

Xi’an Pharmaceuticals, our operating entity, was incorporated in the PRC on October 15, 1969. Xi’an Pharmaceuticals is in the business of manufacturing, marketing and sales of pharmaceuticals in China.

Subsidiaries

As a result of the Merger Transaction, China Qinba and Xi’an Development are our wholly-owned subsidiaries. Xi’an Pharmaceuticals, the entity through which we operate our business, currently has no subsidiaries, either wholly-owned or partially-owned.

Our Business

Xi’an Pharmaceuticals was formed in October 15, 1969 under the laws of the PRC and is engaged in the research, development, manufacture, packaging, marketing and distribution of pharmaceutical and medical products in China for human use for a variety of diseases and conditions. All of our operations are conducted in the People’s Republic of China where our two manufacturing facilities are located, one in Xixiang County in Hanzhong and one in Xi’an Jinghe Industrial Zone. We manufacture pharmaceutical products in the form of capsules, oral solutions, tablets, granules, syrups, medicinal teas, tincture and solutions for injection that are either small volume parenteral solutions that are freeze dried powders or large volume parenteral solutions. Certain of the pharmaceutical products we manufacture are used in the treatment of viral pneumonia, hypotonicity dehydration, viral influenza and many other diseases and indications.

We currently manufacture 85 pharmaceutical products which are sold to numerous distributors who distribute our products pursuant to distribution agreements to licensed healthcare providers such as hospitals, clinics and pharmacies. We currently have 35 active distribution agreements. The raw materials used to manufacture our products include various medicinal herbs such as tumeric and zedoary, which we obtain from specified and qualified suppliers with national qualifications, and sulfamethoxazole, an antibiotic, which is primarily used in the manufacture of Fufang Qiguanyan Pian. We also enter into trading agreements for the supply of many of the materials used to manufacture and package our products including aluminum foil, which we use as the inner packing materials used in tablets production. Xi’an Pharmaceuticals has written agreements with substantially all of its suppliers. The agreements with three of Xi’an Pharmaceuticals’ largest suppliers each commenced January 1, 2008 and expire December 31, 2010. These agreements typically provide that the suppliers are to supply product to Xi’an Pharmaceuticals within a specified period of time after Xi’an Pharmaceuticals’ placement of an order. Typically, Xi’an Pharmaceuticals is required to pay for the products within 60 days of their receipt. The price paid for the products shall be the market price publicized at the time of purchase.

Our focus has been on the development and sale of pharmaceutical products based on traditional Chinese medicines designed to address numerous diseases and indications, with an emphasis on sales to community hospitals and rural medical institutions.

Principal Products

In the fiscal year ended December 31, 2009, our revenues were principally derived from sales of products listed below. We have SFDA1 approval for all medicines and active pharmaceutical ingredients that we market. Detailed information is provided in the table of products below.

We market our pharmaceutical products under numerous brand names, including “Xiaonengren” for our pediatric series of drugs. The following is a list of some of our approved pharmaceutical products and their intended uses.


China Pharmaceuticals, Inc. (CFMI) Reports Record Q2 Results: Sales Grow 105%

China Pharmaceuticals, Inc. (OTCBB:CFMI)
Intraday Stock Chart

Today : Monday 30 August 2010

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China Pharmaceuticals, Inc. (OTC Bulletin Board: CFMI) ("China Pharmaceuticals Inc." or the "Company"), one of China’s leading manufacturers and distributors of prescription and over-the-counter pharmaceuticals, today announced record financial results for its second quarter ended June 30, 2010. The Company's annual report on Form 10-Q was filed on August 23, 2010 with the United States Securities and Exchange Commission.

"We are extremely delighted to report a strong second quarter of 2010, with revenues and Net income significantly exceeding our expectations. We continue to believe that the factors that contributed to this performance were strong sales from our new products and the highly effective restructuring of our sales and marketing network. With $10,447,588 in Net sales for the quarter ended June 30, 2010, representing a 105% increase over the same quarter last year, along with a particularly robust $5,371,366 in recorded Net income, representing a 208% increase over the same quarter last year, we continue to be extremely pleased with the company’s performance to date and its growth prospects for the future,” stated Mr. Guozhu Wang, Chairman and Chief Executive Officer of China Pharmaceuticals, Inc. "We are focused on continuing to expand our portfolio of high margin products and aggressively expanding our sales and marketing network that will allow us to continue to build sustainable growth in revenues and profits."

Second Quarter 2010 Highlights versus second quarter 2009:

  • Total revenue for the quarter increased 105% over the same period last year.
  • Gross profit increased by 89%.
  • Operating income rose 204%.
  • Net income grew 208%.
  • Diluted earnings per share of $0.16.

Total revenue for the quarter ended June 30, 2010 increased 105% to $10,447,588 from $5,084,112 for the second quarter ended June 30, 2009. Gross profit rose 89% to $6,080,998, as compared to $3,217,017 for the second quarter last year. Operating income grew 204% to $6,355,754 from $2,089,349 for the second quarter ended June 30, 2009. Net income increased 208% to $5,371,366, producing diluted earnings per share of $0.16, as compared to the second quarter ended June 30, 2009, which produced $1,743,935 in Net income and diluted earnings per share of $0.06.

Six months ended June 30, 2010 versus six months ended June 30, 2009:

  • Total revenue increased 79% over the same period last year.
  • Gross profit increased by 72%.
  • Operating income rose 77%.
  • Net income grew 69%.
  • Diluted earnings per share of $0.19.

Total revenue for the six months period ended June 30, 2010 increased 79% to $17,500,787 from $9,777,545 for the six months period ended June 30, 2010. Gross profit rose 72% to $10,314,019, as compared to $5,981,156 for the six months period ended last year. Operating income grew 77% to $7,571,000 from $4,278,503 for the six months period ended June 30, 2009. Net income increased 69% to $6,015,553, producing diluted earnings per share of $0.19, as compared to the six months period ended June 30, 2009, which produced $3,546,704 in Net income and diluted earnings per share of $0.13.

Financial Condition as at June 30, 2010:

As of June 30, 2010, the Company had $6,739,263 in cash. Working capital was $17,942,308, up from $9,243,121 as at December 31, 2009, representing an increase of 94%. Long term debt remains at Nil. Shareholders' equity as at June 30, 2010 was $36,883,263, as compared to $28,624,514 at the end of December 31, 2009. Total assets as at June 30, 2010 amounted to $40,135,508.

Outlook for 2010:

"Fiscal 2010 continues to be a transitional year for China Pharmaceuticals, Inc. as we prepare for the introduction of new drugs, and pursue additional opportunities for both organic growth and potential strategic acquisitions. Our current outlook reflects only the drugs that we have in hand today and will be subject to update as we execute strategic initiatives to expand our market position and profitability in the future. Based on our performance to date, we continue to remain extremely optimistic regarding our future growth prospects and look forward to sharing further details with our shareholders as we proceed with our expansion plans," concluded Mr. Guozhu Wang.

About China Pharmaceuticals, Inc.:

China Pharmaceuticals, Inc., www.chinapharmaceuticalsinc.com, has its headquarters based in the industrial city of Xi’an, Shaanxi Province, China. The Company identifies, discovers, develops, manufactures, and distributes both prescription and over-the counter pharmaceutical products, including both conventional and traditional Chinese medicines, for the treatment of some of the most common ailments and diseases. China Pharmaceuticals Inc. currently manufactures 132 pharmaceutical products in 11 dosage forms including capsules, oral solutions, tablets, granules, syrups, medicinal teas, tincture and solutions for injection. The company currently markets and distributes 111 prescription drugs representing 84% of sales distributed via 31 sales offices (including 2 company-owned distribution and logistics centers) to a network of hospitals and clinics nation-wide. The Company operates 2 modern hi-tech manufacturing facilities, with 486 employees, based in Hanzhong and the Xi’an Jinghe Industrial Zone, both in Shaanxi Province.

 
 
 
Table of Products Manufactured by Xi’an Pharmaceuticals

 
Product
No.
 
Product Name
 
Indications
1
 
Metronidazole and Glucose Injection
 
Varieties of tract infections caused by Anaerobion, trichomoniasis and amebic dysentery.
2
 
Sodium Chloride Injection
 
Hypotonicity dehydration solvent or thinner for injection.
3
 
Glucose and Sodium Chloride Injection
 
Body fluid loss; supply body fluid, electrolyte, energy preoperation, intraoperation and postoperation.
4
 
Glucose Injection
 
Supply energy and body fluid, total, total parenteral nutrition, hypoglycemia, hypertonic solution for dehydrating agent.
5
 
Compound Sodium Chloride Injection
 
Hypotonicity dehydration solvent or thinner for injection.
6
 
Mannitol Injection
 
Hydrocephalus, glaucoma, edema caused by deep burning or scald, acute renal failure and ascites.
7
 
Heartleaf Houttuynia Herb Injection
 
Clear heat, detoxification, promote diuresis. Used for lung abscess, phlegm, cough, urinary tract infections.
8
 
Sterilized Water for Injection
 
Solvent of sterilized powder for injection, thinner of injection, or wash solution for operation endoscope in urology Surgery.
9
 
Zedoary Turmeric Oil and Glucose Injection
 
Viral pneumonia, viral influenza, encephalitis, myocarditis, viral enteritis, mumps, stomatitis.
10
 
Zedoary Turmeric Oil and Glucose Injection
 
Anti-viral drug for children’s viral pneumonia.
11
 
Citicoline Sodium and Glucose Injection
 
Irritable neurocranium trauma, disturbance of consciousness after brain operation.
12
 
Fluconazole Injection
 
Mycotic infections by candida, cryptococcosis, coccidioidomycosis.
13
 
Fructose Sodium Diphosphate Injection
 
Hypophosphataemia angina, acute myocardial infarction and arrhythmia of coronary heart disease and myocardial ischemia of cardiac failure.
14
 
Matrine and Sodium Chloride Injection
 
Chronic active hepatitis, chronic prolonged hepatitis.
15
 
Glycerin Sodium Chloride Injection
 
High osmosis dehydrant. Reduce high cranial pressure caused by intracerebral hemorrhage, cerebral infarction, trauma, meningitis and brain tumor.
16
 
Xylitol and Sodium Chloride Injection
 
Supply heat, improve glycometabolism and remove ketonemia, used as substitute of sugar for diabetics.
17
 
Ligustrazine Hydrochloride Glucose Injection
 
Insufficient blood supply, cerebral embolism, angiitis, coronary heart disease, angina.
18
 
Levofloxacin and Glucose Injection
 
Respiratory tract infections, urinary tract infections, genital tract infections, skin soft tissue infections, enteral infections, septicemia.
19
 
Dexamethasone Sodium Phosphate Injection
 
Hypoadrenocorticism, rheumatoid arthritis, cerebral edema, congenital adrenal cortical hyperplasia.
20
 
Atropine Sulfate Injection
 
Toxic shock caused by serious infection, internal organs angina, preanesthetic medication, antiarrhythmic.
21
 
Kanamycin Sulfate
 
Systemic infections caused by various gram negative bacteria.
22
 
Gentamycin Sulfate
 
Urinary tract infection, septicemia, skin soft tissue infection, enteral infection caused by ordinary pathogen and preoperative prophylactic medication.
 
_____________________
1The Chinese government agency, SFDA, is analogous to the Food and Drug Administration (“FDA”) in the United States. Unlike the FDA, however, the SFDA provides intellectual property and competitive protection to certain classes of approved drugs.
 

 
23
 
Hydrocortisone Injection
 
Toxic symptom caused by various infections, hypocorticoidism caused by various infections, anaphylactic shock.
24
 
Lappaconitine Hydrobromide for Injection
 
Non-addictive analgesics, strong analgesic effect, have effect of local anaesthesia, temperature reduction, antifebrile and detumescence.
25
 
Vitamin B12 Injection
 
Pernicious anemia, megaloblastic anemia, anemia caused by antifolate drugs, stearrhea.
26
 
Procaine Hydrochloride Injection
 
Local anesthetics, used for infiltration anesthesia, mental conduction block.
27
 
Bupleurum injection
 
Clear heat, relieve exterior syndrome, for cold treatment. Fever of influenza and malaria.
28
 
Lidocaine hydrochloride Injection
 
Local anesthetics, antiarrhythmic.
29
 
Analgin Tablets
 
Clear heat and kill pain.
30
 
Compound Sulfamethoxazole Tablets
 
Sulfa antibacterial drug.
31
 
Inosine Tablets
 
Coenzyme drug, improve metabolism, for various liver and heart diseases, leukocytopenia, central retinitis, optic atrophy.
32
 
Metronidazole Tablet
 
Amebicide, antitrichomonal agent, Anti-anaerobic bacteria.
   
Vitamin C Tablets
 
Vitamin C, prevent and treat scurvy.
34
 
Occrycetin Tablets
 
Broad spectrum antibiotics. Used for rickettsiosis, brucellosis, mycoplasmalpneumonia, Chlamydia infection, sensitive Gram-positive cocci, subinfection caused by coccus-negative.
35
 
Lidan Paishi Pian
 
Clear heat and promote diuresis, cholagogue and remove calculi, biliary tract infection, cholecystitis.
36
 
Rhubarb Sodium Bicarbonate Tablets
 
Stomachic and acid making. Used for inappetence and hyperchlorhydria.
37
 
Dried Yeast Tablets
 
Vitamin medicine.
38
 
Berberine Hydrochloride Tablets
 
Antibacterial drug, used for intestinal infection of dysentery bacillus.
39
 
Compound Tablet of Fritillary Bulb
 
Clear lung heat, eliminate phlegm, and relieve cough and asthma. Used for wind cold cough and asthma, chest distress, acute and chronic bronchitis.
40
 
compound tablet of red sage root
 
Activate blood and dissolve stasis, regulate vital energy and alleviate pain, used for chest distress and angina.
41
 
Qinghuo Zhimai Pian
 
Clear heat, detoxification and purgation.
42
 
Xanthinol Nicotinate Tablets
 
Ischemic cerebrovascular diseases like cerebral infarction and thrombosis, brain damages like apoplectic sequela, cerebral trauma, brain surgery sequela, also used for thromboangitis obliterans and phlebitis.
43
 
Tolperisone Hydrochloride Injection
 
Central muscle relaxant, vasodilatation. Increase blood volume, used for atherosclerosis and apoplexy sequela.
44
 
Fufang Huzhang Anmin Pian
 
Clear heat and detoxification, used for fever, rhinorrhoea, headache, faucitis.
45
 
Berberine Hydrochloride and Trimethoprim Tablets
 
Gastroenteropathy caused by sensitive bacteria, intestinal infection like bacillary dysentery.
46
 
Fufang Qiguanyan Pian
 
Relieve inflammation, reduce phlegm, relieve asthma, for acute and chronic bronchitis.
47
 
Qinggan Pian
 
Clear heat and detoxification, cholagogue and remove calculi. Used for cold and fever, throat irritation, parotitis, muggy jaundice.
48
 
Paracetamol,Caffein,Atificial Cow-bezoar and chlorphenamine Maleate Tablets
 
Relieve fever, headache, blocked nose, sore throat and sneezing caused by common cold and influenza.
49
 
Sanhuang Pian
 
Clear heat and detoxification, purge pathogenic fire, purgation. Used for body heat, conjunctival congestion, ulcers in mouth and nose, throat irritation, bleeding gum, upset and thirsty, yellow urine, constipation, acute gastroenteritis, and dysentery.
50
 
Norfloxacin Capsules
 
Urinary tract infections, gonorrhoea, prostatitis, enteral infections, typhia, salmonella bacteria infections.
51   Paracetamol,Caffein,Atificial Cow-bezoar and chlorphenamine Maleate capsules   Relieve fever, headache, blocked nose and sore throat caused by common cold and influenza.


 


 

 
52
 
Compound Rifampicin Capsules
 
Various tuberculosis, improve tolerance with other anti-tuberculosis drugs, shorten treatment period, reduce adverse reaction, defer occurrence of antibiotic-resistant bacteria. Used for extrapulmonary tuberculosis, lepriasis, common bacterial infections.
53
 
Pediatric Paracetamol Atificial Cow-bezoar and Chlorphenamine Maleate Granules
 
Relieve headache, fever, sore throat and blocked nose caused by cold.
54
 
Isatis Root Granules
 
Clear heat and detoxification, cool blood, relieve sore throat, detumescence. Used for body heat, sore throat, tonsillitis and parotitis.
55
 
Yinhua Ganmao Chongji
 
Clear heat, relieve exterior syndrome, relieve sore throat, cold, fever, headache, throat irritation.
56
 
Ganmao Tuire Keli
 
Clear heat and detoxification. Used for respiratory tract infection, acute tonsillitis and faucitis.
57
 
Runhou Yaocha
 
Good for lung and can reduce internal heat, smooth throat, purge, engender saliva, relieve sore throat, clear throat, invigorate spleen, nourish kidney and revive energy. Used for dry throat, sore throat, foreign body sensation.
58
 
Inosine Oral Solution
 
Coenzyme drug, improve metabolism, for various liver and heart diseases, leukocytopenia, thrombocytopenia central retinitis, optic atrophy.
59
 
Compound Guaiacol Potassium Sulfonale Oral Solution
 
Relieve cough and phlegm.
60
 
Xiao’aiping Koufuye
 
Anticancer, relieve asthma, diminish inflammation. Used for esophageal cancer, gastric cancer, lung cancer, liver cancer, Lymphoma, colon cancer, Cervical cancer, septicemia. Also for radiation treatment, chemotherapy, post-operation treatment, chronic bronchitis, bronchial asthma.
61
 
Qiangli Pipa Lu
 
Nourish yin and clear lung heat, relieve cough, eliminate phlegm, repeated cough, bronchitis.
62
 
Xiao’er Zhike Tangjiang
 
Clear phlegm and relieve cough. Used for pediatric cough caused by cold.
63
 
Zhike Pipa Lu
 
Clear lung heat, relieve cough, eliminate phlegm. cough, phlegm, xerostomia caused by wind-heat. Used for bronchitis cough and pediatric cold.
64
 
Banxia Tangjiang
 
Clear cough and reduce phlegm, and bronchitis.
65
 
Fritillary and Loquat Syrup
 
Clear heat and ventilate lung, clear phlegm and relieve cough. Used for cough and phlegm, sore and swelling throat, chest distress, cold, chronic bronchitis caused by wind heat invading lung and internal heat.
66
 
Fei’er Tangjiang
 
Pediatric nutrient, hypofunction of spleen and stomach, do not feel like eating.
67
 
Sufei Ke Tangjiang
 
Cough and phlegm, bronchitis.
68
 
Zinc Sulfate Syrup
 
Anti zinc deficiency drug, used for pediatric slow growth, malnutrition, anorexia, oral ulcer, post-surgery wound healing caused by zinc deficiency.
69
 
Orange Tincture
 
Fragrant and promote digestion.
70
 
Weiling Heji
 
Nourish yin and blood, soothe nerves. Used for over fatigue, neurasthenia, amnesia and insomnia.
71
 
Methylrosanilinium Chloride Solution
 
Sterilization and antisepsis. Used for superficial injury, anabrosis, ulcer and skin infection.
72
 
Merbromin Solution
 
Skin mucosa ulcer and injury sterilization.
73
 
Iodine Tincture
 
Sterilization and antisepsis.
74
 
Zingiberis Tincture
 
Promote digestion and dispel cold.
75   Weiling Heji   Promote digestion, acid-making, kill pain. Used for gastritis, gastric ulcer and duodenal ulcer.
 
 


 

 
76
 
Baixuanxiatare Pian
 
Clear unusual mucilaginous substance, bile, sepsis, detumescence, antipruritics. Used for tinea manuum, tinea corporis, tinea pedis, tinea versicolor, psoriasis, allergic dermatitis, shingles and acne.
77
 
Isosor Bide Mononitrate Injection
 
Long term treatment of coronary heart disease, prevent angina, continuous angina treatment of post myocardial infarction, treat chronic congestive heart disease with digitalis or diuretics.
78
 
Azithromycin for Injection
 
Used for infection caused by sensitive strains, like intravenous drip of community-acquired pneumonia caused by Chlamydia pneumoniae, mycoplasma pneumoniae, staphylococcus aureus, streptococcus pneumoniae.
79
 
Clindamycin Phosphate Injection
 
Serious infection caused by staphyloccus aureus and anaerobic bacteria. Ideal effect of osteomyelitis caused by sensitive bacteria.
80
 
Fleroxacin
 
Mainly used for systematic infection treatment, like acute respiratory infection, urinary infection, gynecological infection, ordinary otolaryngology infection and skin soft tissue infection.
81
 
Naoxinqing Capsule
 
Increase pipe, vein and brain blood, improve blood and oxygen supply status of heart and brain tissue, and increase electrophoretic mobility of erythrocyte. Used for coronary heart disease, angina, cerebral arteriosclerosis, ischemic cerebrovascular disease.
82
 
Weili Capsule
 
Kill pain and promote circulation, digestion and gall. Used for improper diet, phlegm, vomit, stomachache, bad appetite, constipation, acute gastritis and cholecystitis.
83
 
Zhiyanxiao Capsule
 
Clear heat and detoxification, promote circulation, stop bleeding, kill pain and swelling. Used for old patients’ hemorrhoids symptom like dyschizia, hematochezia hemorrhoids inflammation and anal fissure.
84
 
Yinyangsuo Capsule
 
Treat renal and impotence, promote body fluid production. Used for impotence, ache and weak at waist and knee, body fluid deficiency, and dizziness.
85
 
Stanch Capsule
 
Clear heat and cool blood. Used for menorrhagia, nose bleed, hemoptysis, hematemesis and emptysis caused by blood heat.
 
Marketing and Sales
 
We have a trained marketing team and maintain sales offices or agents in approximately 30 provinces throughout China. The sales network covers approximately 146 cities and is staffed by approximately 168 sales representatives with an average per representative of a decade of pharmaceuticals sales experience.
 
In accordance with the Drug Control Law of the Peoples Republic of China, we use a distribution system comprised of independent regional distributors. In our typical distribution contract, a distributor will be provided with certain sales targets (an annual sales income level) for the term of the agreement according to a set retail price. We are responsible for guaranteeing the quality of the products. At the end of the term, we pay the distributor a commission based upon the annual sales made by the distributor. The distributor is provided a rebate for each product sold, which rebate increases as the sales volume increases. If the distributor completes the sales minimum within the prescribed period, the distributor will be given greater economic incentives and future distribution opportunities. If the distributor fails to complete the sales task within the prescribed period, we will not renew our contract with the distributor and instead will sign with other competent distributors. We also sell pharmaceutical products via the Internet and deliver product information on certain professional websites.
 

 

CHINA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2010
 
 
             
 
 
JUNE 30, 2010
   
DECEMBER 31, 2009
 
   
(UNAUDITED)
   
(AUDITED)
 
ASSETS
           
             
CURRENT ASSETS
           
     Cash & cash equivalents
  $ 6,739,926     $ 6,685,630  
     Accounts receivable, net
    12,150,095       3,525,444  
     Inventory
    1,594,175       396,513  
     Prepayment and other receivables
    612,348       708,761  
     Trade deposit
    92,561       2,991,628  
     Due from officer
    5,448       5,427  
                 
        Total current assets
    21,194,554       14,313,403  
                 
NONCURRENT ASSETS
               
      Property and equipment, net
    7,483,727       7,686,245  
      Construction in progress
    3,386,885       3,373,819  
      Intangible assets
    8,070,342       8,321,329  
                 
        Total noncurrent assets
    18,940,954       19,381,393  
                 
TOTAL ASSETS
  $ 40,135,508     $ 33,694,796  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES
               
     Accounts payable
  $ 1,413,932       744,880  
     Trade deposit received
    4,268       83,879  
     Short-term bank loans
    -       2,493,692  
     Accrued liabilities and other payables
    468,029       778,290  
     Value-added tax payable
    369,037       318,142  
     Income tax payable
    996,979       651,399  
                 
         Total current liabilities
    3,252,246       5,070,282  
                 
CONTINGENCIES AND COMMITMENT
               
                 
STOCKHOLDERS' EQUITY
               
       Preferred stock, par value, $0.0001 per share,
           20,000,000 shares authorized
    -       -  
       Common stock, par value, $0.0001 per share; 100,000,000 shares
           authorized, 33,041,677 and 28,000,000 shares issued and
           outstanding at June 30, 2010 and December 31, 2009, respectively
    3,304       2,800  
       Paid in capital
    8,730,490       6,580,150  
       Statutory reserve
    2,854,617       2,137,797  
       Accumulated other comprehensive income
    164,890       72,543  
       Retained earnings
    25,129,962       19,831,224  
                 
         Total stockholders' equity
    36,883,263       28,624,514  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 40,135,508     $ 33,694,796  
                 

 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
4

 
 
CHINA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
 
                         
   
Six Months Ended June 30,
   
Three Months Ended June 30,
 
   
2010
   
2009
   
2010
   
2009
 
                         
Net sales
  $ 17,500,787     $ 9,777,545     $ 10,447,588     $ 5,084,112  
                                 
Cost of goods sold
    7,186,768       3,796,389       4,366,590       1,867,095  
                                 
Gross profit
    10,314,019       5,981,156       6,080,998       3,217,017  
                                 
Operating expenses
                               
     Selling,  general and administrative expenses
    2,743,019       1,702,652       (274,756 )     1,127,667  
                                 
Income from operations
    7,571,000       4,278,503       6,355,754       2,089,349  
                                 
Non-operating income (expenses)
                               
     Interest income
    7,876       12,442       7,756       41  
     Interest expense
    (29,324 )     (57,181 )     (29,324 )     (57,181 )
     Financial expense
    (405 )     (81,304 )     29,248       (63 )
     Other income
    -       54,692       -       54,101  
                                 
     Total non-operating income (expenses), net
    (21,852 )     (71,351 )     7,681       (3,103 )
                                 
Income before income tax
    7,549,148       4,207,152       6,363,435       2,086,247  
                                 
Income tax
    1,533,594       660,448       992,068       342,312  
                                 
Net income
    6,015,553       3,546,704       5,371,366       1,743,935  
                                 
Other comprehensive item
                               
     Foreign currency translation
    92,347       -       110,631       (6,401 )
                                 
Comprehensive Income
  $ 6,107,900     $ 3,546,704     $ 5,481,997     $ 1,737,534  
                                 
Basic weighted average shares outstanding
    31,313,774       28,000,000       32,459,259       28,000,000  
                                 
Diluted weighted average shares outstanding
    31,823,802       28,000,000       33,573,521       28,000,000  
                                 
Basic earnings per share
  $ 0.19     $ 0.13     $ 0.17     $ 0.06  
                                 
Diluted earnings per share
  $ 0.19     $ 0.13     $ 0.16     $ 0.06  
                                 
                                 

The accompanying notes are an integral part of these consolidated financial statements.
 
CHINA PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
 
             
ASSETS
           
   
12/31/2009
   
12/31/2008
 
Current Assets
           
Cash and cash equivalents
  $ 6,685,630     $ 5,049,188  
Cash pledged
    -       193,657  
Accounts receivable
    3,525,544       5,204,418  
Due from officer
    5,427       -  
Inventories
    396,513       249,716  
Prepayments and other receivables
    708,761       734,660  
    Trade deposit paid
    2,991,628       320,780  
Total Current Assets
    14,313,403       11,752,419  
                 
Property and equipment, net
    7,686,245       8,101,407  
Construction in progress
    3,373,819       -  
Intangible assets, net
    8,321,329       7,113,137  
Total Assets
  $ 33,694,796     $ 26,966,963  
                 
 LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current Liabilities
               
Accounts payable
  $ 744,880     $ 1,793,187  
Bank acceptance payable
    -       193,657  
Accrued expenses and other payables
    778,290       449,561  
Trade deposit received
    83,879       179,484  
Short-term bank loans
    2,493,692       3,800,058  
Amount due to a shareholder
    -       32,885  
Value-added tax payable
    318,142       234,513  
    Income tax payable
    651,399       314,448  
Total Current Liabilities
    5,070,282       6,997,793  
                 
Long-term Liabilities
               
     Long-term bank loan
    -       292,312  
        Total Liabilities
    5,070,282       7,290,105  
                 
Stockholders’ Equity                
Preferred stock, par value, $0.0001 per share 20,000,000 shares authorized, none outstanding Common stock, par value, $0.0001 per share, 100,000,000 shares authorized, 31,675,000 and 31,450,000 shares issued and outstanding
    3,168       3,145  
Common stock subscribed, par value, $0.0001 per share, 25,000 and 250,000 shares issued
    2       25  
Paid-in capital
    6,580,780       6,580,780  
Subscriptions receivable
    (1,000 )     (10,000 )
Statutory reserves
    2,137,797       1,247,175  
Accumulated other comprehensive loss
    72,543       41,266  
Retained earnings
    19,831,224       11,814,467  
Total Stockholders’ Equity
    28,624,514       19,676,858  
Total Liabilities and Stockholders’ Equity
  $ 33,694,796     $ 26,966,963  
 
The accompanying notes are an integral part of these financial statements


 


 


 
CHINA PHARMACEUTICALS, INC.
 
CONSOLIDATED STATEMENTS OF INCOME
 
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
       
   
2009
   
2008
 
             
Sales, net
  $ 26,708,285     $ 18,174,003  
                 
Cost of sales
    (12,408,035 )     (7,090,427 )
                 
Gross profit
    14,300,250     $ 11,083,576  
                 
Selling, general and administrative expenses
    (3,386,961 )     (2,084,026 )
                 
Income from operations
    10,913,289       8,999,550  
                 
Other Income (Expense)
               
Interest  income
    12,531       32,635  
Other income
    145,382       13,014  
    Interest expense
    (350,211 )     (407,183 )
    Other expense
    (14,900 )     (3,687 )
Total other Income (Expense)
    (207,198 )     (365,221 )
                 
Income before income taxes
    10,706,091       8,634,329  
                 
Provision for income taxes
    (1,798,712 )     (1,296,191 )
                 
Net income
  $ 8,907,379     $ 7,338,138  
                 
Net income per common share
               
Basic
    0.28     $ 0.23  
Diluted
    0.28     $ 0.23  
                 
Weighted average common shares outstanding
               
Basic
    31,562,500       31,350,000  
Diluted
    31,562,500       31,350,000  
                 
Net income
  $ 8,907,379     $ 7,338,138  
Other comprehensive income
    31,277       260,635  
Comprehensive income (loss)
  $ 8,938,656     $ 7,598,773  

 

 

 
The accompanying notes are an integral part of these financial statements.


 


 

 
CHINA PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR YEARS ENDED DECEMBER 31, 2009 and 2008

 
   
Common Stock
   
Stock subscribed
    Paid- in     Subscription     Statutory     Comprehensive Income     Retained    
Total
Shareholders’
 
   
Shares
   
Amount
   
Shares
   
Amount
   
Capital
   
receivable
   
Reserves
   
(Loss)
   
Earnings
   
 Equity
 
Balance 12/31/2007
    31,250,000     $ 3,125                 $ 6,070,825           $ 576,078     $ (219,369 )   $ 5,147,426     $ 11,578,085  
Transfer Reserves
                                              671,097               (671,097 )     -  
Capital Contribution
    200,000       20                   499,980                                     500,000  
Common Subscribed
                    250,000       25       9,975       (10,000 )                             -  
Comprehensive income
                                                            260,635               260,635  
Net Income
                                                                    7,338,138       7,338,138  
                                                                                 
Balance 12/31/2008
    31,450,000     $ 3,145       250,000       25     $ 6,580,780       (10,000 )   $ 1,247,175     $ 41,266     $ 11,814,467     $ 19,676,858  
Transfer Reserves
                                                    890,622               (890,622 )     -  
Capital Contribution
    225,000       23       (225,000 )     (23 )             9,000                               9,000  
Comprehensive income
                                                            31,277               31,277  
Net Income
                                                                    8,907,379       8,907,379  
Balance 12/31/2009
    31,675,000     $ 3,168       25,000     $ 2     $ 6,580,780     $ (1,000 )   $ 2,137,797     $ 72,543     $ 19,831,224     $ 28,624,514  

 

 

 
 

 

 

 

 

 

 

 
The accompanying notes are an integral part of these financial statements.
 


 


 

 
CHINA PHARMACEUTICALS, INC.
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
 
   
2009
   
2008
 
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net income
  $ 8,907,379     $ 7,338,138  
Adjustments to reconcile net income to net cash
               
provided by operating activities:
               
Depreciation and amortization
    818,446       639,339  
Provision for impairment loss on intangible assets
    737,315          
Loss on assets disposed
    6,649       12,745  
Changes in operating assets and liabilities:
               
Cash pledged
    193,657       (193,657 )
Accounts receivable
    1,678,874       (2,866,193 )
Due from officer
    (5,427 )     -  
Prepaid and other receivables
    25,899       (667,543 )
Trade deposit paid
    (2,670,748 )     (55,554 )
Inventory
    (146,797 )     592,354  
Accounts payable and accrued expenses
    (719,578 )     (227,149 )
Bank acceptance payable
    (193,657 )     187,451  
Trade deposit received
    (95,605 )     100,357  
Due to shareholers
    (32,885 )     3,537  
VAT tax payable
    83,629       82,745  
    Income tax payable
    336,951       304,372  
Total adjustment
    16,723       (2,087,196 )
                 
Net cash provided by (used in) operating activities
    8,924,102       5,250,942  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchase of property & equipment
    (12,697 )     (10,041 )
    Construction in progress
    (3,373,819 )     -  
    Intangible assets
    (2,342,743 )     (2,612,990 )
    Proceeds of assets disposed
    -       15,562  
Net cash used in Investing activities
    (5,729,259 )     (2,607,469 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Borrowings from short-term bank loan
    2,903,036       3,536,818  
Repayment of short-term bank loan
    (4,501,714 )     (3,678,291 )
Proceeds of issuance of  stock
    9,000       500,000  
Net cash provided by (used in) financing activities
    (1,589,678 )     358,527  
                 
Effect of exchange rate changes on cash and cash equivalents
    31,277       236,224  
                 
Net Increase (Decrease) in cash and cash equivalents
    1,636,442       3,238,224  
                 
Cash and cash equivalents, beginning balance
    5,049,188       1,810,964  
Cash and cash equivalents, ending balance
    6,685,630     $ 5,049,188  
SUPPLEMENTAL DISCLOSURES:
               
Interest payments
    345,490     $ 407,183  
    Income tax payments    
1,147,313
    $ 991,820  
 
 
The accompanying notes are an integral part of these financial statements.


 

 
 
CHINA PHARMACEUTICALS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2009
 
Note 1 – ORGANIZATION

 
China Pharmaceuticals, Inc. (“the Company”), formerly named Allstar Restaurants, was incorporated in the United States in Nevada on December 22, 2004. China Qinba Pharmaceuticals, Inc. (“China Qinba”), a wholly-owned subsidiary of the Company, was incorporated in the United States in Delaware on May 29, 2008. China Qinba formed and owned 100% of Xi’an Pharmaceuticals Development Co., Ltd. (“Xi’an Pharmaceuticals” or the “WOFE”) in the People’s Republic of China (“PRC”) on August 18, 2008.

 
On October 28, 2008, WOFE entered into a series of agreements including a Management Entrustment Agreement, a Shareholders’ Voting Proxy Agreement, an Exclusive Option Agreement and a Share Pledge Agreement (the “Agreements”) with Xi’an Qinba Pharmaceutical Co., Ltd ("Xi’an Qinba") and its shareholders (the “Transaction”). Xi’an Qinba is a corporation formed under the laws of the PRC. According to these Agreements, WOFE acquired management control of Xi’an Qinba whereby WOFE is entitled to all of the net profits of Xi’an Qinba as a management fee, and is obligated to fund Xi’an Qinba’s operations and pay all of the debts.  In exchange for entering into the Agreements, on October 28, 2008, WOFE issued 25,000,000 shares of its common stock to Xi’an Qinba owners, representing approximately 80% of the Company’s common stock outstanding after the Transaction.  Consequently, the owners of Xi’an Qinba own a majority of WOFE's common stock immediately following the Transaction, therefore, the Transaction is being accounted for as a "reverse acquisition", and Xi’an Qinba is deemed to be the accounting acquirer in the reverse acquisition between Xi’an Qinba and WOFE

 
These contractual arrangements completed on October 28, 2008 provide that WOFE has controlling interest in Xi’an Qinba as defined by FASB Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46R”), included in the FASB Accounting Standards Codification (“ASC”) 810, Consolidation, an Interpretation of Accounting Research Bulletin No. 51, included in in the Codification as ASC 810, Consolidation, which requires WOFE to consolidate the financial statements of Xi’an Qinba and ultimately consolidate with its parent company, China Qinba (see Note 2, “Principles of Consolidation”).

 
On February 12, 2010, the Company completed its merger with China Qinba in accordance with a Merger Agreement (the “Merger Transaction”). The Merger Transaction is being accounted for as a reverse acquisition. In accordance with the Accounting and Financial Reporting Interpretations and Guidance prepared by the staff of the U.S. Securities and Exchange Commission, the Company (the legal acquirer) is considered the accounting acquiree and China Qinba (the legal acquiree) is considered the accounting acquirer for accounting purposes. Subsequent to the Merger Transaction, the financial statements of the combined entity will in substance be those of China Qinba. The assets, liabilities and historical operations prior to the Merger Transaction will be those of China Qinba. Subsequent to the date of the Merger Transaction, China Qinba is deemed to be a continuation of the business of the Company. Therefore, post-merger financial statements will include the combined balance sheet of the Company and China Qinba, the historical operations of the Company and China Qinba from the closing date of the Merger Transaction forward.

 
Upon the closure of the Merger Transaction, the Company changed its name from Allstar Restaurants to China Pharmaceutical, Inc.

 
The Company, through its subsidiary and exclusive contractual arrangement with Xi’an Qinba Pharmaceutical Co., Ltd., is engaged in the business of manufacturing and marketing over-the-counter (“OTC”) and prescription pharmaceutical products which include capsules, granules and powder type medicines.
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#19 CFMI revoked: Renee 05/13/2015 09:48:39 AM
#18 CFMI SEC Suspension for Financials delinquencies: Renee 02/27/2015 09:39:09 AM
#17 CFMI .0199 China Pharmaceuticals on-watch Shares Outstanding 75,237,972 SuperC 05/30/2013 07:34:20 AM
#16 CFMI.. $6.00 10 bagger 10/21/2010 11:00:15 AM
#15 CFMI.. 10 bagger 10/04/2010 10:19:21 AM
#14 Reverse Split completed. EarnestDD 09/07/2010 12:02:23 PM
#13 CFMI.. $1.81.. 10 bagger 08/30/2010 10:40:17 AM
#11 CFMI--OTC.BB STOCK $$$TOCK 007 08/30/2010 08:35:08 AM
#10 CFMI Outstanding Shares $$$TOCK 007 08/30/2010 08:34:52 AM
#9 CFMI NEWS $$$TOCK 007 08/30/2010 08:28:42 AM
#8 CFMI No releases during the past month.. hank 10 bagger 08/05/2010 10:28:02 PM
#7 CFMI,, CFMID.. 10 bagger 06/15/2010 12:01:48 PM
#6 Haha, Down 10% on record earnings? tburr 04/21/2010 11:17:45 AM
#5 CFMI $1.55 Earnings.. 10 bagger 04/20/2010 09:44:24 PM
#4 CFMI.. $1.55 10 bagger 04/16/2010 01:31:43 PM
#3 CFMI..$1.55 Background.. OTCBB AREN Completes Name Change to China Pharmac 10 bagger 04/16/2010 01:30:10 PM
#2 Generic ;Pharma co in restaurant business? what kind mlkrborn 04/16/2010 06:25:09 AM
#1 Symbol History Stock 04/15/2010 08:56:36 PM
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