Benda Pharmaceutical Reports Fourth Quarter and Full Year 2007 Financial Results

HUBEI PROVINCE, China, March 31 /Xinhua-PRNewswire-FirstCall/ -- Benda
Pharmaceutical, Inc. (OTC Bulletin Board: BPMA), a China-based pharmaceutical
company producing both Gendicine(R), a commercialized gene therapy medicine
for the treatment of cancer, and traditional Chinese and conventional
medicines, today announced financial results for the fourth quarter and fiscal
year ended December 31, 2007. The Company plans to file its Annual Report
with the SEC today.
Full Year Ended December 31, 2007
Revenue in the fiscal year 2007 increased 66% to $26.4 million from $15.9
million in 2006. Revenue performance reflects increased sales from Benda's
subsidiaries, Benda Ebei and Jiangling Benda, and approximately $5.8 million
in revenue from Gendicine since Benda's acquisition of SiBiono in April 2007.
Gross profit during this period increased 97% to $12.5 million from $6.3
million in 2006. Gross margin increased 770 basis points to 47.3% from 39.6%
in the same period of 2006, reflecting the higher margin revenue contribution
from Gendicine sales.
The Company's general and administrative expenses in 2007 were $13.9
million compared to $2.5 million in 2006. The $11.4 million increase in 2007
was driven by $9.4 million in non-recurring costs, including $8.4 million in
non-cash stock compensation expense for consulting services related to the
acquisition of SiBiono and a $1.0 million cash penalty recorded in 2007
because of the late submission of the effective registration statement. For
additional information regarding these items, please refer to the Company's
Annual Report. Excluding these non-recurring expenses, operating income for
the year 2007 would have been $5.8 million, up 92% from $3.0 million in 2006.
In 2007, Benda recognized $2.9 million in interest expense, related to the
Company's convertible note issued in March 2007.
Mr. Charles Wan, Chief Executive Officer of Benda Pharmaceutical,
commented, "We realized significant costs in 2007, some of which we consider
to be non-recurring in nature, and we are disappointed that these costs offset
the progress we made during the year. We are also working diligently to meet
the filing requirements of our previous financing."
Net loss in fiscal year 2007 was $7.8 million, or $0.06 per diluted share,
compared with net income of $2.3 million, or $0.03 per diluted share in 2006.
During the year over year period, the diluted weighted average of shares
outstanding increased 70% to 127.5 million from 74.9 million. Excluding the
stock compensation expense and penalty payment, net income for the year 2007
would have been $1.5 million, or $0.01 per diluted share.
Three Months Ended December 31, 2007
Revenue in the fourth quarter of 2007 increased 197% to $10.6 million from
$3.6 million in the fourth quarter of 2006, reflecting increased sales from
subsidiaries Benda Ebei and Jiangling Benda, as well as $2.5 million from
SiBiono's flagship product, Gendicine.
Gross profit in the fourth quarter of 2007 increased 441% to $4.8 million
from $0.9 million in the fourth quarter of 2006. Gross margin was 45.3%,
compared with 24.4% in the same period of 2006, reflecting the higher margin
revenue contribution from Gendicine sales.
Mr. Wan continued, "We are pleased with the increase in sales from Benda
Ebei in the fourth quarter, as well as with Gendicine's revenue performance,
which was encouraging throughout the year. We are particularly pleased that
Gendicine, which generates higher gross margins than our traditional products,
can potentially help us increase profitability over the long term. We believe
the market opportunity for Gendicine is extremely compelling. When we
acquired SiBiono in April of 2007, only 1,869 vials of Gendicine had been sold
in the first three months of the year. We ended 2007 with sales of more than
21,000 vials, generating approximately $5.8 million in revenue and
significantly enhancing our gross margin performance."
Operating income in the fourth quarter 2007 was $2.1 million, compared
with an operating loss of $0.3 million in the fourth quarter of 2006.
Operating expenses in the fourth quarter were approximately $2.7 million,
compared with $1.2 million in the fourth quarter of 2006. Approximately $0.6
million of the operating expenses in the fourth quarter of 2007 reflect the
penalty and non-cash expense mentioned above. The remaining increase in
operating expenses reflects additional sales and marketing expenditure to
drive potential Gendicine sales.
In the fourth quarter of 2007, Benda realized interest expense of $1.2
million, related to the Company's convertible note issued in March 2007.
Net loss in the fourth quarter of 2007 was $0.3 million, roughly breakeven
on a diluted share basis, compared to net loss of $0.7 million, or a loss of
$0.01 per diluted share in the fourth quarter of 2006. During the year over
year period, the diluted weighted average of shares outstanding increased 70%
to 127.5 million from 74.9 million. Excluding the stock compensation expense
and penalty payment, net income in the fourth quarter 2007 would have been
approximately $0.4 million, or breakeven on a diluted share basis.
Balance Sheet
As of December 31, 2007, the Company had cash and cash equivalents of $1.3
million, trade receivables of $10.5 million, and total inventories of $2.0
million.
Business Update
-- Gendicine sales: Benda Pharmaceutical sold approximately 21,000 vials
of Gendicine during the nine months in which it owned SiBiono in 2007,
generating approximately $5.8 million in revenue.
-- Yidu Benda plant update: Yidu Benda's plant was temporarily closed in
January 2007 in order to bring its waste water treatment system into
compliance with new local environmental regulation. The waste water
system passed the government's equipment verification tests in October
2007. However, before resuming operations, Yidu Benda must conduct
further testing with relevant government authorities and, at this time,
management cannot estimate the exact timing of the process.
-- Jiangling Benda plant update: The upgrade process of Jiangling Benda
has been completed and is now waiting for a GMP Certificate from
China's State Food and Drug Administration (SFDA). However, due to the
overhaul and restructuring of the SFDA, Benda management cannot
estimate the exact timing for obtaining a GMP certificate.
-- Intellectual property: SiBiono, a subsidiary of Benda Pharmaceutical,
recently entrusted Grandall Legal Group Shenzhen Law Firm to issue a
legal letter to Zhaohui Peng, one of the shareholders of SiBiono and
the inventor of Gendicine, to request that Peng transfer all existing
title of patents to SiBiono. SiBiono has received two of the six
outstanding patents, and is currently in negotiations with Peng
regarding the remaining patent transfers.

Financial Guidance
While the Company remains confident in its ability to pursue opportunities
in China's healthcare market, the Company is withdrawing any previously stated
financial projections at this time. The Company is diligently working to meet
the previously announced terms of its March 2007 financing, which included
receiving effective status for its registration statement.
The Company's operating priorities include the roll out of Gendicine to
new hospitals and clinics in 2008. These operating priorities also include
ultimately utilizing additional capacity at Jiangling Benda and Yidu Benda,
although these facilities require either GMP approval or re-examination by
government authorities, the time frame of which relies entirely on the
relevant government authorities and not on Benda Pharmaceutical.
About Benda Pharmaceutical, Inc.
Benda Pharmaceutical, Inc. ( http://www.bendapharma.com ), a China-based
pharmaceutical company, produces traditional Chinese and conventional
medicines, as well as Gendicine(R), a commercialized gene therapy medicine for
the treatment of cancer.
Safe Harbor Statement
The information contained herein includes forward-looking statements.
These statements relate to future events or to our future financial
performance, and involve known and unknown risks, uncertainties and other
factors that may cause our actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by these forward-
looking statements. You should not place undue reliance on forward-looking
statements since they involve known and unknown risks, uncertainties and other
factors which are, in some cases, beyond our control and which could, and
likely will, materially affect actual results, levels of activity, performance
or achievements. Any forward-looking statement reflects our current views with
respect to future events and is subject to these and other risks,
uncertainties and assumptions relating to our operations, results of
operations, growth strategy and liquidity. We assume no obligation to publicly
update or revise these forward-looking statements for any reason, or to update
the reasons actual results could differ materially from those anticipated in
these forward-looking statements, even if new information becomes available in
the future. The safe harbor for forward-looking statements contained in the
Securities Litigation Reform Act of 1995 protects companies from liability for
their forward-looking statements if they comply with the requirements of the
Act.

BENDA PHARMACEUTICAL, INC.
CONSOLIDATED STATEMENT OF INCOME

Year Ended December 31,
2007 2006
(Audited) (Audited)

Revenues $26,384,608 $15,932,075
Other Sales -- 2,937
Cost of goods sold (13,913,034) (9,594,852)
Gross profit 12,471,574 6,340,160
Selling expenses (1,581,655) (599,571)
General and administrative expenses
Amortization of intangible assets (141,681) (96,615)
Amortization of debt issue costs (201,255) --
Depreciation (333,964) (132,747)
Bad debts (287,482) (364,064)
Director remuneration (94,247) --
Penalty to investors (1,022,275) --
Finder fee (293,751) --
Cash bonus -- --
Consulting and professional fees (8,353,615) (326,403)
Other general and administrative
expenses (3,173,307) (1,533,775)
Total general and administrative
expenses (13,901,577) (2,453,604)
Gains / (losses) on disposals of fixed
assets (30,027) (249,381)
Research and development expenses (553,962) (30,821)
Total operating expenses (16,067,221) (3,333,377)
Operating income / (loss) (3,595,647) 3,006,783
Interest income / (expense) (3,389,676) (108,811)
Other income (expenses) 55,964 (281,190)
Government subsidies / grants 2,276,574 --
Income / (loss) before minority
interest and income taxes (4,652,785) 2,616,782
Income taxes (965,183) 0
Minority interest (2,211,627) (298,024)
Net income / (loss) $(7,829,595) $2,318,758
Earnings / (loss) per share - basic $(0.08) $0.03
Weighted average shares outstanding -
basic 98,181,685 73,414,057
Earnings / (loss) per share - diluted $(0.06) $0.03
Weighted average shares outstanding -
diluted 127,534,003 74,864,283

Quarter Ended December 31,
2007 2006
(Unaudited) (Unaudited)

Revenues $10,588,313 $3,566,652
Other Sales -- 2,937
Cost of goods sold (5,807,182) (2,686,448)
Gross profit 4,781,131 883,141
Selling expenses (906,642) (177,925)
General and administrative expenses
Amortization of intangible assets 201,906 97,412
Amortization of debt issue costs (66,602) --
Depreciation 4,018 291,236
Bad debts 214,791 53,759
Director remuneration (35,288) --
Penalty to investors (482,275) --
Finder fee (2,627) --
Cash bonus 173,400 --
Consulting and professional fees (131,431) (326,403)
Other general and administrative
expenses (1,421,548) (1,142,143)
Total general and administrative
expenses (1,545,656) (1,026,139)
Gains / (losses) on disposals of fixed
assets (21,629) (1,172)
Research and development expenses (243,878) 2,317
Total operating expenses (2,717,805) (1,202,919)
Operating income / (loss) 2,063,326 (319,778)
Interest income / (expense) (1,181,798) 9,863
Other income (expenses) (57,400) (279,756)
Government subsidies / grants 585,600 --
Income / (loss) before minority
interest and income taxes 1,409,728 (589,671)
Income taxes (965,183) 0
Minority interest (702,063) (76,321)
Net income / (loss) $(257,518) $(665,992)
Earnings / (loss) per share - basic $(0.00) $(0.01)
Weighted average shares outstanding -
basic 98,181,685 73,414,057
Earnings / (loss) per share - diluted $(0.00) $(0.01)
Weighted average shares outstanding -
diluted 127,534,003 74,864,283

BENDA PHARMACEUTICAL, INC.
CONSOLIDATED BALANCE SHEET

December 31, December 31,
2007 2006
Assets
Current Assets
Cash and cash equivalents $1,266,240 $1,676,119
Trade receivables, net 10,472,233 6,193,585
Other receivables 453,595 99,733
Refundable purchase price paid 1,200,000 5,367,801
Inventories 1,952,348 701,339
Prepaid expenses and deposits 933,299 372,548
Total current assets 16,277,715 14,411,124
Due from related parties 2,630,019 1,976,815
Property and equipments, net 26,275,871 13,673,067
Intangible assets, net 6,359,000 1,501,483
Goodwill 7,395,752 --
Restricted cash 3,957,624 --
Other assets 1,710,972 --
Debt issue costs 327,945 --
Total Assets $64,934,898 $31,562,489
Liabilities & Shareholders' Equity
Current Liabilities
Bank indebtedness $874,490 $--
Bank loans payable (current portion) 2,867,004 256,492
Long-term debt payable (current
portion) 1,787,239 --
Accounts payable and accrued
liabilities 4,665,984 1,823,030
Commercial notes payable 5,118,758 --
Taxes payable 1,279,385 226,931
Acquisition price payable 1,333,246 --
Wages payable 664,786 145,903
Deferred revenues -- 1,732
Total current liabilities 18,590,892 2,454,088
Long-term debt payable (long term
portion) 425,001 --
Long-term convertible promissory
notes 2,875,075 --
Due to related parties (Long-term) 3,193,618 3,034,365
Total liabilities 25,084,586 5,488,453
Commitments and contingencies -- --
Minority interest 5,453,622 2,154,356
Redeemable common stock, 2,049,560
shares at $3.6 per share 7,376,366 --
Shareholders' Equity
Preferred stock, $0.001 par value;
5,000,000 shares authorized;
None issued and outstanding -- --
Common stock, $0.001 par value;
150,000,000 shares authorized;
100,170,071 shares issued and
outstanding as of 12/31/2007;
96,258,411 shares issued and
outstanding as of 12/31/2006 100,170 96,258
Additional paid in capital 21,547,929 13,099,424
Retained earnings (unrestricted) (833,090) 7,437,663
Statutory surplus reserve fund 2,310,681 1,869,523
Accumulative other comprehensive
income 3,390,774 1,090,408
Shares issuable for acquisition and
services 503,860 326,403
Total Shareholders'
Equity 27,020,324 23,919,680
Total Liabilities & Shareholders'
Equity $64,934,898 $31,562,489

SOURCE Benda Pharmaceutical, Inc.

In the U.S.: Ashley Ammon MacFarlane and Christine Duan, +1-203-682-8200, or
in Asia: Xuyang Zhang at +86-10-8523-3087, all of Integrated Corporate
Relations, Inc. Investor Relations, for Benda Pharmaceutical, Inc.