WEB NEWS Share Structure
Item 8.01 Other Events.
On March 21, 2014, the Board of Directors of American Oriental Bioengineering, Inc. (the “Company”), set March 25, 2014 at 4:01 p.m. ET as the effective date and time of the 1-for-501 reverse stock split (the “Reverse Stock Split”) of the Company’s common stock, par value $0.002 per share. The Company’s common stock is currently quoted in the over-the-counter markets. As required, FINRA must review the Reverse Stock Split transaction and set the date to effect the Reverse Stock Split in the market. As of today, FINRA is still in the process of completing its review. As a result, although the Reverse Stock Split will be effective under Nevada law, the effect of the Reverse Stock Split will not be reflected in the over-the-counter market until a date in the future. At such time that the Company is made aware that FINRA has completed its review and set a date to effect the Reverse Stock Split in the over-the-counter market, the Company will provide an update to its stockholders.
Share Structure
Item 5.07 Submission of Matters to a Vote of Security Holders.
On March 14, 2014, the Company held a Special Meeting of its common stock and series A preferred stockholders to vote on a proposal to effect a 1-for 501 reverse stock split of the Company’s common stock. The result of the vote was as follows:
Votes
For Against Abstain
26,702,333 1,826,200 26,599
Comments & Business Outlook
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three Months Ended September 30,
Nine Months Ended September 30,
2013
2012
2013
2012
Revenues
$
17,936,408
$
29,493,459
$
59,167,308
$
82,685,661
Cost of sales
14,828,508
23,037,097
46,572,599
65,355,231
GROSS PROFIT
3,107,900
6,456,362
12,594,709
17,330,430
Selling, general and administrative expenses
9,497,545
12,005,502
32,992,571
36,047,706
Advertising costs
5,486,702
9,385,016
11,840,480
23,517,447
Research and development costs
3,245,188
1,681,649
6,374,904
4,977,883
Depreciation and amortization expenses
1,720,678
1,803,167
5,439,961
5,462,599
Provision for reserves and doubtful accounts
2,130,784
777,947
1,896,295
3,831,195
Long term crop inventory costs
–
–
2,361,383
–
Total operating expenses
22,080,897
25,653,281
60,905,594
73,836,830
LOSS FROM OPERATIONS
(18,972,997
)
(19,196,919
)
(48,310,885
)
(56,506,400
)
Gain on extinguishment of convertible notes
–
40,413,555
–
40,413,555
Equity in losses from equity method investments
(1,005,915
)
(267,470
)
(2,978,288
)
(1,756,517
)
Interest expense, net
(897,875
)
(1,423,839
)
(2,664,873
)
(4,975,119
)
Other income (expense), net
(41,207
)
94,724
130,622
443,473
INCOME (LOSS) BEFORE INCOME TAX
(20,917,994
)
19,620,051
(53,823,424
)
(22,381,008
)
Provision for income taxes
258,611
487,280
1,308,937
1,441,245
NET INCOME (LOSS)
(21,176,605
)
19,132,771
(55,132,361
)
(23,822,253
)
Income attributable to non-controlling interest
–
(15,320
)
–
(4,418
)
NET INCOME (LOSS) ATTRIBUTABLE TO AMERICAN ORIENTAL BIOENGINEERING, INC. COMMON SHAREHOLDERS
(21,176,605
)
19,117,451
(55,132,361
)
(23,826,671
)
OTHER COMPREHENSIVE INCOME (LOSS)
Foreign currency translation gain (loss)
2,539,742
(669,718
)
9,923,061
3,317,618
COMPREHENSIVE INCOME (LOSS)
$
(18,636,863
)
$
18,447,733
$
(45,209,300
)
$
(20,509,053
)
EARNINGS (LOSS) PER COMMON SHARE
Basic
$
(0.58
)
$
0.51
$
(1.51
)
$
(0.62
)
Diluted
$
(0.58
)
$
0.50
$
(1.51
)
$
(0.62
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic
36,539,591
37,403,519
36,559,336
38,722,635
Diluted
36,539,591
38,287,158
36,559,336
38,722,635
Comments & Business Outlook
AMERICAN ORIENTAL BIOENGINEERING, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Three Months Ended June 30,
Six Months Ended June 30,
2013
2012
2013
2012
Revenues
$
20,224,137
$
27,446,926
$
41,230,900
$
53,192,202
Cost of sales
15,238,203
24,254,680
31,744,091
42,318,134
GROSS PROFIT
4,985,934
3,192,246
9,486,809
10,874,068
Selling, general and administrative expenses
11,018,304
12,060,135
23,495,026
24,042,204
Advertising costs
2,708,324
7,976,078
6,353,778
14,132,431
Research and development costs
1,722,671
1,729,301
3,129,716
3,296,234
Depreciation and amortization expenses
1,855,076
1,578,733
3,719,283
3,659,432
Provision for reserves and doubtful accounts
(1,998,441
)
2,067,462
(234,489
)
3,053,248
Long term crop inventory costs
–
–
2,361,383
–
Total operating expenses
15,305,934
25,411,709
38,824,697
48,183,549
LOSS FROM OPERATIONS
(10,320,000
)
(22,219,463
)
(29,337,888
)
(37,309,481
)
Equity in losses from equity method investments
(1,004,141
)
(1,297,597
)
(1,972,373
)
(1,489,047
)
Interest expense, net
(1,003,307
)
(1,808,010
)
(1,766,998
)
(3,551,280
)
Other income (expense), net
185,630
67,702
171,829
348,749
LOSS BEFORE INCOME TAX
(12,141,818
)
(25,257,368
)
(32,905,430
)
(42,001,059
)
Provision for income taxes
699,081
510,897
1,050,326
953,965
NET LOSS
(12,840,899
)
(25,768,265
)
(33,955,756
)
(42,955,024
)
(Income) loss attributable to non-controlling interest
–
(18,932
)
–
10,902
NET LOSS ATTRIBUTABLE TO AMERICAN
ORIENTAL BIOENGINEERING, INC.
(12,840,899
)
(25,787,197
)
(33,955,756
)
(42,944,122
)
OTHER COMPREHENSIVE INCOME
Foreign currency translation gain
6,700,988
1,395,552
7,383,319
3,987,336
COMPREHENSIVE LOSS
$
(6,139,911
)
$
(24,391,645
)
$
(26,572,437
)
$
(38,956,786
)
LOSS PER COMMON SHARE, BASIC AND DILUTED
$
(0.35
)
$
(0.66
)
$
(0.93
)
$
(1.09
)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED
36,494,567
39,310,889
36,569,427
39,393,125
Investor Alert
On June 15, 2012, American Oriental Bioengineering, Inc. (the “Company”) dismissed Ernst & Young Hua Ming (“EY”), as its independent registered public accounting firm. The decision to dismiss EY was approved by the Company’s Audit Committee on June 15, 2012. At the time of delivery, EY’s reports on the financial statements of the Company as of and for the years ended December 31, 2010 and 2009 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. Although there were no disagreements or differences of opinion that should be reported as set forth in Item 304(a)(i)(iv) under Regulation S-K, there were “reportable events”, as defined in Item 304(a)(1)(v) of Regulation S-K, which are set forth below.
During EY’s audit of the Company’s December 31, 2011 financial statements, EY identified inconsistencies , which were communicated to the Audit Committee on March 13, 2012, as a result of which an independent investigation was launched. As of the date of EY’s dismissal, the investigation was not completed, and EY’s concerns over these inconsistencies were not resolved. Consequently, EY concluded that it is unable to rely on management’s representations provided in connection with its audits of the financial statements for the years ended December 2009 and 2010, the effectiveness of the Company’s internal control over financial reporting as of December 31, 2009 and 2010, and its review of the Company’s unaudited interim financial information for the quarters ended September 30, 2009 through September 30, 2011. On June 15, 2012, the Company received a letter from EY in which it withdrew its reports on the financial statements and related internal control over financial reporting for the years ended and as of December 31, 2009 and 2010 and accordingly, its reports issued thereto on March 15, 2010 and 2011 can no longer be relied upon. The inconsistencies EY identified, which were not resolved at the time of its dismissal, and its inability to rely on management’s representations leading to the withdrawal of its reports, constitute reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
Hot Bio-Tech News
NEWARK, N.J. ,
June 9, 2012 /PRNewswire-Asia-FirstCall / -- American Oriental Bioengineering, Inc., (the "Company" or "AOBI"), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over-the-counter ("OTC") products, today announced that Boke Pharmaceutical Co, Ltd., one of the Company's wholly owned subsidiaries has passed the short notice inspections of its capsule products directed by China State Food and Drug Administration ("SFDA").
Investor Alert
NEWARK, N. J., June 1, 2012 /PRNewswire-Asia-FirstCall / -- American Oriental Bioengineering, Inc. (NYSE: AOB) (the "Company"), today announced that it received written notification on May 25, 2012, from the NYSE Regulation, Inc. staff, on behalf of the New York Stock Exchange LLC ("NYSE"), that the staff had determined to immediately suspend trading in the common stock of the Company and file a delisting application with the United States Securities and Exchange Commission (the "SEC") pursuant to Section 804.00 of the Listed Company Manual. The staff stated in its notice that it had determined that the Company no longer meets the standard for continued listing on the NYSE and that it is necessary and appropriate for the protection of investors to immediately suspend trading in its common stock and initiate delisting proceedings. Trading in the Company's common stock on the NYSE had been halted since March 16, 2012.
As a result of the above actions, on Tuesday, May 29, 2012, the Company's common stock commenced quotation on the OTC Markets under the ticker symbol "AOBI."
Investor Alert
On March 30, 2012, American Oriental Bioengineering (the “Company”), received a letter from The New York Stock Exchange , Inc. (the “NYSE”), which stated, among other things, that the Company has failed to timely file its annual report with the Securities and Exchange Commission. Section 802.01E of the NYSE Listed Company Manual sets forth procedures applicable to a company that fails to timely file its annual report.
Under Section 802.01E, the NYSE allows a company six months to file its annual report from the due date of its annual report, which would be October 29, 2012 for the Company. If the Company fails to file its annual report within that time period, the NYSE may, in its sole discretion, allow the Company’s securities to remain listed for up to an additional six months, or may, in its sole discretion commence suspension and delisting procedures.
Investor Alert
At an audit committee meeting of the Board of Directors of the Registrant held on March 13, 2012,
Ernst & Young Hua Ming, informed the audit committee of certain inconsistencies noted during the performance of their audit for the year ended December 31, 2011. As a result, management and the audit committee agreed that the audit committee would immediately commence an independent investigation into the matters identified. Considering the recent commencement of the investigation, the Company was unable to file its Annual Report on Form 10-K for the 2011 fiscal year (the “Form 10-K”), by its prescribed due date of March 15, 2012. Although the length of the investigation is uncertain at this time, the Company will endeavor to file the Form 10-K as soon as possible upon the completion of the investigation.
Share Structure
NEWARK, N.J. , February 22, 2012 /PRNewswire-Asia-FirstCall / -- American Oriental Bioengineering, Inc. (NYSE: AOB) (the "Company") today announced that on January 31, 2012 , its board of directors adopted resolutions approving a reverse stock split (the "Reverse Split") of the outstanding shares of the Company's common stock ("Common Stock") at a ratio of one (1) share for every two (2) shares outstanding, so that every two (2) outstanding shares of Common Stock before the Reverse Split shall represent one (1) share of Common Stock after the Reverse Split.
Pursuant to the Company's Amended Articles of Incorporation filed with the Nevada Secretary of State, the maximum number of shares of Common Stock that the Company is authorized to issue will also be reduced from 150,000,000 to 75,000,000. The Reverse Split will be effected without obtaining shareholder approval pursuant to Nevada law. The effective date of the Reverse Split with the Nevada Secretary of State is set for Friday, February 24, 2012 . Accordingly, the New York Stock Exchange has set the effective date of the Reverse Split for Monday, February 27, 2012 . The Reverse Split is part of the Company's strategy to maintain the listing of its shares on the New York Stock Exchange.
Currently, the Company has approximately 78,503,381 shares of Common Stock outstanding. After the Reverse Split, the Company would have approximately 39,251,867 shares outstanding. Each stockholder's percentage ownership interest in the Company and proportional voting power will remain unchanged after the Reverse Split except for minor changes and adjustments resulting from rounding of fractional interests. The rights and privileges of the holders of Common Stock shall be substantially unaffected by the Reverse Split
Comments & Business Outlook
Third Quarter 2011 Results
Total revenue for the third quarter of 2011 was $53.9 million , compared to $91.5 million in the same period of 2010.
Net income for the third quarter of 2011 was $ 7.7 million , or $ 0.10 per diluted share, compared to $4.2 million , or $ 0.06 per diluted share, in the same period of 2010.
Mr. Tony Liu , Chairman and Chief Executive Officer of AOB, commented: "China remains as a major commercial opportunity with significant growth potential. Leaving aside near-term healthcare reform policy headwinds, we keep long-term positive view on the pharmaceutical business. The financial results demonstrate our ability to execute and deliver on a consistent basis. We are fully committed to executing our growth strategy, driving innovation and delivering value to our customers and our shareholders."
Investor Alert
JERSEY CITY, N.J. , November 9, 2011 /PRNewswire-Asia-First Call / -- American Oriental Bioengineering, Inc. (NYSE: AOB), ("the Company" or "AOBO"), a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter ("OTC") products, today announced that it will reschedule its release of its third quarter 2011 financial results and earnings conference call.
We will notify you of the rescheduled earnings conference and the release of the financial results of the third quarter of this year in a separate press release. We are sorry for any inconvenience caused by this delay.
Investor Alert
JERSEY CITY, N.J. ,
October 7, 2011 /
PRNewswire-Asia-FirstCall / -- American Oriental Bioengineering, Inc. (NYSE: AOB), or (the "Company") today announced that the Company submitted its plan to cure stock price deficiency with respect to the listing standard of the
New York Stock Exchange ("NYSE") on October 5, 2011 .
Investor Alert
JERSEY CITY , N. J., September 28, 2011 /PRNewswire-Asia-FirstCall / -- American Oriental Bioengineering, Inc. (NYSE: AOB) (the "Company") today announced that the New York Stock Exchange (the "NYSE") has notified the Company that the Company has fallen below the NYSE's continued listing standard that requires a minimum average closing price of $1.00 per share over 30 consecutive trading days.
Under NYSE rules, the Company has six months from receipt of the notice to cure the deficiency by regaining compliance with the minimum share price requirement. Subject to compliance with the NYSE's other continued listing requirements, the Company's common stock will continue to be listed and trade on the NYSE during the six month cure period.
Under NYSE rules, the Company has ten business days following receipt of the notice, which will be October 5, 2011 , to respond by letter to the NYSE and indicate its intention to cure this deficiency, or, the Company will be subject to suspension and delisting procedures by the NYSE. The Company is currently looking at all of the options available with respect to curing this deficiency and intends to send a letter to the NYSE within this timeframe.
Comments & Business Outlook
Second Quarter 2011 Financial Performance
In the second quarter of 2011, revenue decreased to $54.1 million from $77.3 million in the same period of 2010.
The Company generated revenue of $50.3 million from its manufacturing business in the second quarter of 2011 compared with $73.7 million in the prior year period. Revenue from pharmaceutical products decreased to $40.7 million from $63.8 million in the prior year period. Nutraceutical products generated revenue of approximately $9.5 million in the second quarter of 2011, compared to $9.9 million in the prior year period. We decreased the manufacturing of certain generic drugs strategically shifted the products mix toward higher-margin products from lower margin products in order to minimize the impact from the increased cost of certain raw materials and the continuing government price cut on certain products.
The Company generated $3.8 million from its distribution business, Nuo Hua, in the second quarter of 2011, an increase of 5.2% from $3.6 million in the prior year period.
Gross profit in the second quarter of 2011 was $25.8 million compared to $39.8 million in the second quarter of 2010. Gross margin was 47.8% compared to 51.5% in the prior year period. The margin pressure was mainly caused by the increased costs of certain raw materials and newly levied urban construction and maintenance tax and educational surcharge to foreign invested companies in China since December, 2010.
Operating income in the second quarter of 2011 decreased to $6.3 million compared with $9.1 million in the prior year period. Total operating expenses decreased 36.4% to $19.6 million from $30.8 million in the prior year period. Selling, general and administrative expenses decreased 32.4% to $11.3 million from $16.7 million in the prior year period. The decrease reflects management's continuing efforts to stringently control the spending. Advertising expense decreased 63.1% to $3.4 million in the second quarter of 2011 from $9.2 million in the prior year period, reflecting reduced advertising efforts on some of OTC drugs to correspond to the Company's selective product sales strategy and optimal product portfolio. Research and development expenses decreased 3.9% to $3.1 million from $3.3 million in the prior year period while the company continues to invest in its innovation and technology improvement.
The Company generated a gain of $1.4 million due to changes in ownership of unconsolidated entities, including investments in Nuo Hua Affiliate and Aoxing Pharmaceutical Company, Inc. ("AXN").
Net income attributable to controlling interest for the second quarter of 2011 was $3.6 million, or $0.05 per diluted share, compared to $5.1 million, or $0.07 per diluted share, in the prior year period.
Mr. Tony Liu, Chairman and Chief Executive Officer of AOB, commented, "Our second quarter 2011 financial results were in line with our expectations considering the increased costs of certain raw materials and the government's price reduction on certain drugs. The financial performance reflects our continuing efforts on profitability and cost control, which largely absorbed revenue pressure and mitigated margin decline. We are also excited to benefit from our long-term investments in R&D both domestically and internationally."
Comments & Business Outlook
First Quarter Results :
In the first quarter of 2011, revenue decreased to $52.0 million from $53.7 million in the same period of 2010.
Net income attributable to controlling interest for the first quarter of 2011 was $0.9 million, or $0.01 per diluted share, compared to $3.1 million, or $0.04 per diluted share , in the prior year period.
Mr. Tony Liu, Chairman and Chief Executive Officer of AOB, commented, "We are pleased with our financial performance despite the increasingly challenging economic and regulatory environment in China and worldwide. Our first quarter results reflect our continuing efforts on profitability focus and cost control. We dynamically adjusted our product mix to minimize the negative impact from the increased costs of certain raw materials and the government's price reduction on certain drugs. In addition, we believe our continued investments in CAPEX and R&D will give us a competitive advantage in the long term, especially under the stricter regulatory environment ."
Comments & Business Outlook
NEW YORK, March 21, 2011 /PRNewswire-Asia / -- American Oriental Bioengineering, Inc. announced at its 2010 earnings conference call, held on March 15, 2010, that its board of directors authorized a share buyback program for the repurchase of up to $20 million of the Company's outstanding common stock over the next two years.
Purchases under this program may be made, from time to time, in the open market, privately negotiated transactions, block trades, and accelerated stock repurchase transactions or otherwise, as determined by the Company and will be funded from available working capital. The number of shares to be purchased and the timing of purchases will be based on several factors, including the price of the Company's stock, general business and market conditions and other investment opportunities. The Company believes the program should enhance shareholder value over time.
As of March 21, 2010 the Company had 78,598,604 shares of common stock outstanding.
Comments & Business Outlook
Fourth Quarter Results :
In the fourth quarter of 2010, revenue decreased to $83.4 million from $100.0 million in the same period of 2009
Gross profit in the fourth quarter of 2010 was $42.4 million compared to $52.6 million in the fourth quarter of 2009
Net income attributable to controlling interest for the fourth quarter of 2010 was $2.8 million, or $0.04 per diluted share, compared to $11.7 million, or $0.14 per diluted share.
Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, "We are pleased with our fiscal year 2010 financial results in which we demonstrated steady growth despite the increasingly challenging economic environment worldwide and China's rapidly changing regulatory environment. Our growth in 2010 was consistent with our expectations and reflects our continued efforts on profitability focus and cost control. We dynamically adjust our product mix to minimize the negative impact from the increased cost of certain raw materials, as well as the government's price cut on certain drugs. In addition, our long-term investments in science and technology have achieved initial results, which were demonstrated by the strong sales from the new products supported by our R&D efforts. Overall, we remain enthusiastic about the tremendous opportunities in China's healthcare sector, and we are looking forward to more progress in the fiscal year ahead."
Liquidity Requirements
We currently generate our cash flow through operations. We expect our existing cash and cash flow generated from operations will be sufficient to sustain our working capital, capital expenditures, and milestone payments for the next twelve months. From time to time, we may identify new expansion opportunities for which there will be a need to use cash.
We rely largely on operating cash flow to fund our capital expenditure needs. Due to our significant operating cash flow, we believe we have the ability to meet our capital expenditure needs and foresee no delays to planned capital expenditures .
Comments & Business Outlook
Third Quarter 2010 Financial Performance
Revenue continued its double-digit growth, increasing 16.1% year over year to $91.5 million from $78.8 million .
Gross profit in the third quarter of 2010 increased 7.1% to $47.3 million from $44.1 million in the third quarter of 2009.
Gross margin was 51.7%, compared to 56.0% in the prior year period.
Net income attributable to controlling interest for the third quarter of 2010 was $5.3 million , or $0.07 per diluted share, compared to $10.0 million , or $0.13 per diluted share , in the prior year period.
