Jiangbo Pharmaceuticals Reports Results for the Third Quarter of its Fiscal Year...

Jiangbo Pharmaceuticals Reports Results for the Third Quarter of its Fiscal
Year 2009

LAIYANG, China, May 18 /PRNewswire-Asia-FirstCall/ -- Jiangbo
Pharmaceuticals, Inc. (OTC Bulletin Board: JGBO) (''Jiangbo'' or the
''Company''), a U.S. pharmaceutical company with its principal operations in
the People's Republic of China, today announced its financial results for the
third quarter ended March 31, 2009 of its fiscal year 2009.
Third Quarter of Fiscal Year 2009 Highlights
-- Total revenue, which reflects newly associated expense restructuring,
was $25.7 million, compared to $28.1 million in the corresponding
quarter of 2008
-- Gross profit was $18.9 million, compared to $21.8 million in the
corresponding quarter of 2008, and gross margin was 73.4% compared to
77.4% in the corresponding quarter of 2008
-- Operating income was $13.3 million, a 53.6% increase from $8.7 million
for the three months ended March 31, 2008
-- Net income was $8.9 million, or $0.44 per fully diluted share, up from
$4.5 million, or $0.46 per fully diluted share, for the three months
ended March 31, 2008
-- Non-GAAP adjusted net income was $10.0 million, or $0.97 per weighted
average share for the three months ended March 31, 2009, up 66.5% from
non-GAAP adjusted net income of $6.0 million, or $0.61 per weighted
average number of shares, for the quarter ended March 31, 2008
-- Acquired Shandong Hongrui Pharmaceutical Factory ("Hongrui") for
approximately $11.2 million consisting of RMB58.6 million in cash
(approximately $8.6 million) and 643,651 shares of Jiangbo's common
stock amounting to approximately $2.6 million
-- Obtained the legal rights to manufacture and distribute Hongrui's 22
Traditional Chinese Medicines
-- Restructured its sales network to distribute products through 28 large
regional distributors
-- Changed the corporate name from Genesis Pharmaceuticals Enterprises,
Inc. to ''Jiangbo Pharmaceuticals, Inc.'' and its stock symbol from
''GNPH'' to ''JGBO''.
-- Launched a new website: http://www.jiangbopharma.com/

''Jiangbo had strong financial performance in the third quarter of our
fiscal year 2009. Significant increases in sales of Radix Isatidis Dispersible
Tablets and Baobaole Chewable Tablets, both of which are Traditional Chinese
Medicines, contributed to revenue and operating income growth,'' said Mr. Wubo
Cao, Chairman and Chief Executive Officer of Jiangbo.
Third Quarter of Fiscal Year 2009 Results
Total revenue for the three months ended March 31, 2009 was $25.7 million,
compared to $28.1 million for the three months ended March 31, 2008.
In January 2009, Jiangbo restructured its distribution and sales system to
concentrate on using 28 large independent regional distributors. The
independent distributors agreed to take on higher direct marketing and sales
expenses if they received lower unit prices for the Company's products. The
Company lowered its per unit prices for its three major products to the
independent distributors. Jiangbo's new strategy is to use independent
distributors for the distribution and sale of its three major products in
order to gain access to their knowledge of and access to specific local
markets.
The Company lowered its unit prices charged to independent distributors by
an average of 26.0% for Clarithromycin Sustained-released tablets, Itopride
Hydrochloride granules and Baobaole chewable tablets. The decrease in revenue
from lower prices for these three major products was partially offset by an
increase in sales revenue from Radix Isatidis Dispersible tablets, a new
product launched in December 2008, and other Traditional Chinese Medicines
acquired from Hongrui in January 2009.
Sales volume for Clarithromycin Sustained-released tablets and Baobaole
chewable tables was higher in the three months ended March 31, 2009 than in
the three months ended March 31, 2008. Clarithromycin Sustained-released
tablets, Itopride hydrochloride granules and Baobaole chewable accounted for
approximately 88.6 % of the total revenue in the three months ended March 31,
2009. Sales volume for Radix Isatidis Dispersible tablets grew throughout the
three months ended March 31, 2009.
Gross profit in the third quarter of fiscal year 2009 was $18.9 million,
compared to $21.8 million in the prior year's corresponding period. Gross
margin was 73.4%, compared to 77.4% in the prior year's corresponding period
because of the impact of lower unit sale prices for the Company's three major
products.
Research and development costs were $1.1 million for the three months
ended March 31, 2009, compared to $1.0 million for the three months ended
March 31, 2008.
Selling, general and administrative expenses were $4.5 million for the
three months ended March 31, 2009, a decrease of 63.1% from $12.1 million in
the three months ended March 31, 2008. Salaries, wages and related benefits
decreased by 73.1% from $7.5 million for the three months ended March 31, 2008
to $2.0 million for the three months ended March 31, 2009 primarily because of
the significant decrease in commissions paid to the Company's sales
representatives. Overall sales commissions declined as a result of cost
savings associated with the increased use of 28 independent distributors.
Income from operations was $13.3 million for the three months ended March
31, 2009, a 53.6% increase from $8.7 million for the three months ended March
31, 2008.
Other expense, comprised primarily of interest earned, interest owed and
amortized debt discount, was $1.1 million compared to $2.0 million for the
three months ended March 31, 2008.
Net income for the three months ended March 31, 2009 was $8.9 million,
$0.44 diluted earnings per share, compared to $4.5 million, and $0.46 diluted
earnings per share, for the three months ended March 31, 2008.
Excluding a loss from discontinued operations of $103,008, a gain on
trading securities of $204,134, and amortization of debt discount and issuance
costs related to convertible debentures of $1.2 million, non-GAAP adjusted net
income for the three months ended March 31, 2008 was $10.0 million, $0.97 per
share, compared to adjusted net income of $6.0 million, $0.61 per share, for
the three months ended March 31, 2008.
Nine Month Operating Highlights
Total revenue for the nine month period ended March 31, 2009 was $86.2
million, up 21.0% from $71.3 million for the nine month period ended March 31,
2008.
Gross profit for the nine month period ended March 31, 2009 totaled $66.5
million, up 24.2% from $53.5 million for the nine month period ended March 31,
2008. Gross profit margin was 77.1% for the nine month period ended March 31,
2009, compared to 75.1% for the corresponding period in 2008.
Operating income for the nine month period ended March 31, 2009 totaled
$32.1 million, a 45.3% increase from $22.1 million in the corresponding period
in 2008. The Company's operating margin increased to 37.2% from 31.0% compared
to the same period in 2008, as result of the Company's continuing efforts to
reduce its expenses and control its costs.
Net income for the nine month period ended March 31, 2009 was $17.4
million, $1.27 diluted earnings per share, compared to $12.9 million, $1.14
diluted earnings per share, for the corresponding period in 2008. Total shares
outstanding as of May 14, 2009 were 10,351,448.
Excluding a loss from discontinued operations of $1.7 million, a loss on
trading securities of $1.3 million, and amortization of debt discount and
issuance costs related to convertible debentures of $3.2 million, non-GAAP
adjusted net income for the nine month period ended March 31, 2008 was $23.5
million, $2.37 per share, compared to adjusted net income of $14.8 million,
$2.28 per share, for the nine month period ended March 31, 2008.
Financial Condition
As of March 31, 2009, the Company had $86.1 million in cash and restricted
cash. Working capital was $85.6 million, up from $72.5 million as of June 30,
2008. Current liabilities were $27.4 million and convertible debt, net of
$29.8 million discount, was $5.0 million. Shareholders' equity was $113.9
million, compared to $95.5 million as of June 30, 2008.
The Company generated $41.1 million in cash flow from operating activities
in the first nine months of its fiscal year 2009, compared to $17.7 million
for the first nine months of its fiscal year 2008. The Company believes that
its strong cash position will sustain its future working capital needs and
successfully implement its growth strategies which include the expansion of
manufacturing facilities.
Recent Events
On April 23, 2009, the Company announced that it changed its corporate
name from ''Genesis Pharmaceuticals Enterprises, Inc.'' to ''Jiangbo
Pharmaceuticals, Inc.'' to align the name of the public company with the name
of its products. Management wants to associate the brand name ''Jiangbo'' with
the Company while it continues to develop its brand and corporate image, and
expands its product line.
Jiangbo's stock started trading on the Over the Counter Bulletin Board
under ticker symbol "JGBO" on May 12, 2009. The Company's shares ceased
trading under the ticker symbol "GNPH" at the close of business on May 11,
2009. The Company's shares are identified under a new CUSIP Number: 47737 R 10
1. The Company still plans to apply to list its common stock on a senior U.S.
stock exchange.
In April, the Company announced that it began marketing and selling three
Traditional Chinese Medicines. They are Yi Mu Cao Gao (a motherwort herb
electuary sticky syrup), Gan Mao Zhi Ke Ke Li (an antipyretic and antitussive
granule), and Kang Gu Sui Yan Pian (an osteomyelitis treatment tablet). In
April, Jiangbo started to produce Laiyang Pear Cough Syrup and New Compound
Foliumisatidis Tablets. Laiyang Pear Cough Syrup helps relieve coughs arising
from colds and other illnesses. Market feedback has shown that children like
its fresh pear taste. New Compound Foliumisatidis Tablets address influenza
symptoms and includes both western chemical ingredients and traditional
Chinese herbs.
Sales of these five products are expected to be $2.0 million in the fourth
quarter of the Company's fiscal year 2009, which ends on June 30, 2009, and an
estimated $8.0 million in fiscal year 2010.
Business Outlook and Guidance
In April, the Company reaffirmed operating income guidance of $40 to $43
million for its fiscal year ending June 30, 2009, and adjusted its revenue
guidance for its fiscal year ending June 30, 2009 from a range of $122 million
to $130 million to a range of $111 million to $116 million. This adjustment to
revenue guidance was mainly because of the Company's charging lower unit
prices to the 28 independent distributors which sell and distribute the
Company's three major products. The Company expects to meet or exceed its
fiscal year 2009 guidance.
On April 6, 2009, China unveiled its ''Guideline of Deepening the Reform
of Health Care System'' (''Guideline''), a blueprint for health care over the
next decade. By 2020, the world's most populous nation plans to have a basic
health care system that can provide "safe, effective, convenient and
affordable" health services to urban and rural residents. The State Council
announced an investment of 850 billion Yuan (US $124 billion) to implement the
health care reform plan in China.
''We believe that the Chinese government's planned reforms for China's
healthcare system will increase demand for Jiangbo's products because a number
of Jiangbo products are used to treat common and widespread illnesses. Several
of our products should be good candidates for inclusion on provincial and the
national drug lists, which are used to stock clinics and hospitals. We look
forward to working with the government's planned programs to help meet the
needs of an increasing number of China's consumers,'' concluded Mr. Cao.
Conference Call
Jiangbo Pharmaceuticals, Inc. management will host a conference call at
9:30a.m. Eastern Time on Tuesday, May 19, 2009 to discuss financial results
for the quarter ended March 31, 2009. Mr. Wubo Cao, Chairman and CEO, Mr.
Haibo Xu, COO and Ms. Elsa Sung, CFO, of Jiangbo will be present for the
conference call. To participate in this live conference call, please dial the
following number five to ten minutes prior to the scheduled conference call
time of 9:30 a.m. Eastern Time on Tuesday, May 19, 2009: (888) 481-7939.
International callers should call (617) 847-8707. The Conference Passcode is
564 145 01. Replay of the conference call will be available from Tuesday, May
19, 2009 at 11:30 a.m. Eastern for 14 days. To access the replay, call (888)
286-8010. International callers should call (617) 801-6888. The Conference
Passcode is: 547 268 69.
Use of Non-GAAP Financial Information
This press release includes certain financial information, adjusted net
income and adjusted fully diluted earnings per share, which are not presented
in accordance with GAAP. Adjusted net income was derived by taking net income
and adjusting it with a loss from discontinued operations, unrealized losses
on trading securities and non-cash amortization of debt discount and debt
issuance costs related to convertible securities. The Company's management
believes that these non-GAAP measures provide investors with a better
understanding of the Company's historical results from its core business
operations. To supplement the Company's condensed consolidated financial
statements presented on a GAAP basis, the Company has provided non-GAAP
financial information, which is adjusted net income and adjusted earnings per
share, excluding the impact of these items in this release. The non-GAAP
information is not meant to be considered in isolation or as a substitute for
GAAP financials. The non-GAAP financial information provided by the Company
may also differ from non-GAAP information provided by other companies. A
table below provides a reconciliation of the non-GAAP financial information to
the nearest GAAP measure.
About Jiangbo Pharmaceuticals, Inc.
Jiangbo Pharmaceuticals, Inc. is a U.S. public company engaged in the
research, development, production, marketing and sales of pharmaceutical
products in the People's Republic of China. Its operations are located in
Eastern China in an Economic Development Zone in Laiyang City, Shandong
province. Jiangbo is a major pharmaceutical company in China producing both
western and Chinese herbal-based medical drugs in tablet, capsule, granule,
syrup and electuary (sticky syrup) form. http://www.jiangbopharma.com
Safe Harbor Statement
Certain statements in this press release that are not historical facts are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are not guarantees of future
performance and are subject to risks and uncertainties that could cause the
Company's actual results and financial position to differ materially from
those included within the forward-looking statements. Forward-looking
statements involve risks and uncertainties, including those relating to the
Company's ability to introduce, manufacture and distribute new drugs. Actual
results may differ materially from predicted results, and reported results
should not be considered as an indication of future performance. The potential
risks and uncertainties include, among others, the Company's ability to obtain
raw materials needed in manufacturing, the continuing employment of key
employees, the failure risks inherent in testing any new drug, the possibility
that regulatory approvals may be delayed or become unavailable, patent or
licensing concerns that may include litigation, direct competition from other
manufacturers and product obsolescence. More information about the potential
factors that could affect the Company's business and financial results is
included in the Company's filings, available via the United States Securities
and Exchange Commission.
For more information, please contact:

Jiangbo Pharmaceuticals, Inc.
Ms. Elsa Sung, CFO
Tel: +1-954-727-8435
Email: elsasung@jiangbo.com
Web: http://www.jiangbopharma.com

CCG Investor Relations, Inc.
Mr. Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com

JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
(FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.)
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(UNAUDITED)

For the Three Months Ended For the Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
REVENUES:
Sales $25,725,837 $26,231,191 $85,991,330 $66,648,051
Sales-related
parties -- 1,869,092 243,943 4,611,849
TOTAL REVENUE 25,725,837 28,100,283 86,235,273 71,259,900

Cost of sales 6,853,810 5,896,113 19,705,020 16,626,461
Cost of sales -
related parties -- 441,709 54,500 1,117,918
COST OF SALES 6,853,810 6,337,822 19,759,520 17,744,379

GROSS PROFIT 18,872,027 21,762,461 66,475,753 53,515,521

RESEARCH AND
DEVELOPMENT EXPENSE 1,098,675 967,930 3,295,125 2,170,240

SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 4,477,356 12,136,164 31,111,752 29,269,330

INCOME FROM OPERATIONS 13,295,996 8,658,367 32,068,876 22,075,951

OTHER (INCOME) EXPENSE:
Other (income)
expense, net (281,570) 1,244,892 1,062,959 1,217,385
Other (income)-
related parties (76,552) (27,415) (313,276) (80,851)
Non-operating
(income) expense 150,466 (529) (471) (232)
Interest expense,
net 1,241,843 526,509 4,143,968 925,993
Loss from
discontinued
operations 103,008 228,812 1,693,830 341,743
OTHER EXPENSE, NET 1,137,195 1,972,269 6,587,010 2,404,038

INCOME BEFORE PROVISION
FOR INCOME TAXES 12,158,801 6,686,098 25,481,866 19,671,913

PROVISION FOR INCOME
TAXES 3,302,953 2,211,265 8,093,320 6,808,625

NET INCOME $8,855,848 $4,474,833 $17,388,546 $12,863,288

OTHER COMPREHENSIVE
INCOME:
Unrealized holding
(loss) gain $(200,025) $(270,351) $(2,147,642) $1,347,852
Foreign currency
translation
adjustment (201,173) 1,960,948 378,284 3,428,779

COMPREHENSIVE
INCOME $8,454,650 $6,165,430 $15,619,188 $17,639,919

BASIC WEIGHTED AVERAGE
NUMBER OF SHARES 10,277,762 9,740,129 9,937,190 6,507,435

BASIC EARNINGS PER
SHARE $0.86 $0.46 $1.75 $1.98

DILUTED WEIGHTED
AVERAGE NUMBER OF
SHARES 10,907,231 9,740,129 10,599,615 7,081,791

DILUTED EARNINGS PER
SHARE $0.44 $0.46 $1.27 $1.14

JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
(FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.)
CONSOLIDATED BALANCE SHEETS

A S S E T S
March 31, June 30,
2009 2008
(Unaudited)

CURRENT ASSETS:
Cash $82,338,527 $48,195,798
Restricted cash 3,713,775 7,839,785
Investments 672,682 2,055,241
Accounts receivable, net of allowance for
doubtful accounts of $525,268 and
$155,662, respectively 21,688,723 24,312,077
Accounts receivable - related parties 187,766 673,808
Inventories 3,863,947 3,906,174
Other receivables 81,784 152,469
Other receivables-related parties 317,412 --
Advances to suppliers and other assets 130,088 1,718,504
Total current assets 112,994,704 88,853,856

PLANT AND EQUIPMENT, net 14,162,421 11,225,844

OTHER ASSETS:
Restricted investments 400,050 2,481,413
Financing costs, net 1,406,717 1,916,944
Intangible assets, net 17,404,557 9,916,801
Total other assets 19,211,324 14,315,158

Total assets $146,368,449 $114,394,858

L I A B I L I T I E S A N D S H A R E H O L D E R S' E Q U I T Y

CURRENT LIABILITIES:
Accounts payable $5,523,666 $2,341,812
Short term bank loans 2,197,500 2,772,100
Notes payable 3,713,775 5,843,295
Other payables 4,074,203 3,671,703
Customer deposit 4,102,000 --
Other payables - related parties 176,666 324,972
Accrued liabilities 754,315 173,604
Liabilities assumed from reorganization 1,613,935 1,084,427
Taxes payable 5,276,690 166,433
Total current liabilities 27,432,750 16,378,346

CONVERTIBLE DEBT, net of discount $29,820,431
and $32,499,957 as of March 31, 2009 and
June 30, 2008, respectively 5,019,569 2,500,043

Total liabilities 32,452,319 18,878,389

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
Preferred stock Series ($0.001 par value;
20,000,000 shares authorized; none issue,
or outstanding) -- --
Common stock ($0.001 par value,
22,500,000 and 15,000,000 shares authorized,
respectively; 10,435,099 and 9,767,844
shares issued and outstanding, respectively) 10,436 9,770
Paid-in-capital 76,168,319 45,554,513
Capital contribution receivable (27,845,000)
(11,000)
Retained earnings 56,390,950 39,008,403
Statutory reserves 3,253,878 3,253,878
Accumulated other comprehensive income 5,931,547 7,700,905
Total shareholders' equity 113,916,130 95,516,469
Total liabilities and shareholders' equity $146,368,449 $114,394,858

JIANGBO PHARMACEUTICALS, INC. AND SUBSIDIARIES
(FORMERLY GENESIS PHARMACEUTICALS ENTERPRISES, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

For the Nine Months Ended
March 31,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $17,388,546 $12,863,288
Loss from discontinued operations 1,693,830 341,743
Income from continuing operations 19,082,376 13,205,031
Adjustments to reconcile net income
to cash, net of acquisition
provided by (used in) operating
activities:
Depreciation 464,094 375,456
Amortization of intangible assets 371,925 113,578
Amortization of deferred debt
issuance costs 510,227 47,583
Amortization of debt discount 2,679,526 671,296
Bad debt expense 368,840 (112,459)
Gain on sale of marketable securities (106,865) 19,819
Unrealized loss (gain) on trading
securities 1,255,522 1,150,516
Other non-cash settlement (20,000) --
Stock-based compensation 43,340 28,750
Changes in operating assets and
liabilities
Accounts receivable 2,353,566 (7,246,740)
Accounts receivable - related parties 488,646 (1,403,383)
Notes receivables -- 59,790
Inventories 205,471 27,542
Other receivables 63,170 (254,886)
Other receivables- related parties (317,303) (81,384)
Advances to suppliers and other
assets 1,602,693 (391,526)
Accounts payable 3,171,180 1,159,105
Accrued liabilities 682,145 301,290
Other payables 194,283 2,146,659
Other payables - related parties (58,580) (962,509)
Customer deposit 4,100,600 --
Liabilities assumed from
reorganization (1,164,323) (1,162,133)
Taxes payable 5,107,831 10,006,057
Net cash provided by
operating activities 41,078,364 17,697,452

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash used in acquisition (8,581,970) --
Proceeds from sale of marketable
securities 167,623 605,882
Prepayment for land use right -- (8,246,830)
Cash receipt from reverse
acquisition -- 534,950
Purchase of equipment (130,814) (401,302)
Net cash used in investing
activities (8,545,161) (7,507,300)

CASH FLOWS FINANCING ACTIVITIES:
Restricted cash 4,149,305 (5,361,849)
Proceeds from sale of common stock
and options exercised -- 337,500
Proceeds from sale of treasury stock -- 1,977
Proceed from convertible debt -- 5,000,000
Payments on debt issuance costs -- (354,408)
Payments for dividend -- (10,520,000)
Proceeds from bank loans 2,196,750 3,255,360
Payments for bank loans (2,782,550) (5,425,600)
Proceed from officers -- 27,128
Proceeds from notes payable 7,009,097 10,729,040
Principal payments on notes payable (9,161,912) (5,367,191)
Net cash provided (used) in
financing activities 1,410,690 (7,678,043)

EFFECTS OF EXCHANGE RATE CHANGE IN CASH 198,836 1,324,727

INCREASE (DECREASE) IN CASH 34,142,729 3,836,836

CASH, beginning of the period 48,195,798 17,737,208

CASH, end of the period $82,338,527 $21,574,044

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $1,130,837 $331,431
Income taxes paid $4,883,039 $3,615,867
Non-cash investing and financing
activities:
Common stock issued to acquire Hongrui $2,597,132 --

GENESIS PHARMACEUTICALS ENTERPRISES, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP NET INCOME

For Three Months Ended For Nine Months Ended
March 31 March 31, March 31 March 31
2009 2008 2009 2008

Net Income 8,855,848 4,474,833 17,388,546 12,863,288
Loss from discontinued
operations 103,008 228,812 1,693,830 341,743
Unrealized loss (gain) on
trading securities, net (204,134) 1,159,409 1,255,522 1,150,516
Amortization of debt
discount and debt
issuance costs related to
convertible debentures 1,203,365 118,149 3,189,752 481,589

Adjusted Net Income 9,958,087 5,981,203 23,527,650 14,837,136

Basic Weight Average
Number of Shares 10,277,762 9,740,129 9,937,189 6,507,435

Adjusted Earnings Per
Weighted Average Number of
Shares $0.97 $0.61 $2.37 $2.28

SOURCE Jiangbo Pharmaceuticals, Inc

Elsa Sung, CFO, Jiangbo Pharmaceuticals, Inc. at +1-954-727-8435 or
elsasung@jiangbo.com; Crocker Coulson, President, CCG Investor Relations, Inc.
at +1-646-213-1915 or crocker.coulson@ccgir.com ;