China Biologic Products (NASDAQ:CBPO)

Financial highlights for the first quarter 2012

• Total sales increased 37.0% to $47.2 million in the first quarter 2012 from $34.5 in the first quarter 2011.
• Gross profit increased 25.2% to $31.5 million in the first quarter 2012 from $25.2 million in the first quarter 2011.
• Income from operations increased 29.6% to $18.8 million in the first quarter 2012 from $14.5 million in the first quarter 2011.
• GAAP net income attributable to China Biologic increased 105.4% to $13.0 million in the first quarter 2012 from $6.3 million in the first quarter 2011.
• GAAP net income attributable to China Biologic per diluted share was $0.44 in the first quarter 2012 compared with $0.23 per diluted share in the first quarter 2011.
• Non-GAAP adjusted net income attributable to China Biologic increased 59.6% to $12.7 million in the first quarter 2012 from $8.0 million in the first quarter 2011.
• Non-GAAP net income attributable to China Biologic per diluted share was $0.48 in the first quarter 2012 compared with $0.31 per diluted share in the first quarter 2011.

CEO Comments

Mr. Colin (Chao Ming) Zhao, Chief Executive Officer & President of China Biologic, said, "Our results for the first quarter 2012 were quite good, with sales up 37.0%, net income attributable to China Biologic up 105.4%, and diluted earnings per share up 91.3%, compared with the first quarter 2011. Our adjusted non-GAAP net income attributable to China Biologic also was up 59.6%, first quarter 2012 from first quarter 2011.

"This performance is especially gratifying, given that our sources of raw plasma supply were reduced by the closing of four of our plasma collection stations in August last year as directed by the Guizhou provincial government. Those stations had accounted for about 34% of our total raw plasma volume collected in 2010. We believe our first quarter 2012 performance shows that our interim strategy is working well.

"The demand for most of our plasma products continues to hold relatively strong, driven in the long-term by China's growing and aging population, increasing urbanization, economic growth, and the government's promotion of health care and its strategies and policies that encourage the expansion in plasma collection and the use of plasma products.

"Most importantly, Mr. Zhu Chen, China's Minister of Health, has encouraged the country to double plasma supply from 2012 to 2016, as part of China's newest five-year plan. According to Mr. Chen, the current supply of plasma can barely meet half of the potential demand for plasma protein products. We continue to hope and believe that the Minister's statements will induce local governments to support and cooperate in broadening the regions for developing and building new plasma collection stations, which are vital to the nation's health.

"Our interim strategy to bridge the period of shorter raw plasma supply includes developing alternative solutions and opportunities to mitigate the plasma reduction from the closed collection stations, reallocation of resources from the closed stations to maximize their use within our company, and aggressively seeking new regions for new plasma stations. The process of locating and developing new stations includes numerous time-consuming activities and uncertainties, including analyzing and selecting the appropriate locations for successful plasma stations, gaining the extensive and detailed sequential approvals at various levels of government, station construction, equipment installation, inspections and licensing, and donor promotion and education programs.

"We also have adjusted our production plan and sales and marketing strategy to leverage our continuing plasma resources to maximize profit, given the changing market dynamics. We have focused on supplying our life-saving products through direct sales to those facilities with patients who have the most critical medical needs and to our best long-term customers. We are also focusing on our most profitable products. Our transition to direct sales continues to progress well. Clearly, those actions have started to deliver good performance in the first quarter of 2012.

"Our new product pipeline also continues to look good. We await approval from China's State Food and Drug Administration to begin selling our new Human Prothrombin Complex Concentrate and our new Human Coagulation Factor VIII. In addition, in the first quarter this year, we were authorized to begin phase III clinical trials for a new product, human fibrinogen, that is designed to be used to treat congenital or acquired fibrinogen deficiency associated with serious liver damage, cirrhosis, disseminated intravascular coagulation, or coagulation disorder resulting from the lack of fibrinogen related to postpartum hemorrhage, major surgery, trauma, or acute bleeding.

"Several words of caution are in order. If China's human health conditions change to require our products to help defend against major outbreaks of diseases, our inventory of plasma could be reduced, since we have less ability to collect higher levels of plasma due to having fewer plasma collection stations. As a result, we may not have the flexibility we currently have to choose the use of our plasma inventory to create and sell our most profitable products. Should major outbreaks of diseases occur, we would not likely be able to deliver improving financial performance. Because diseases are not easy to predict, we cannot estimate or assign a probability to that category of risk.

"With the additional assistance and support from our board of directors, we remain committed to accelerating our long-term earnings growth in the future by expanding our research and development and new product pipeline, increasing our direct sales to institutional customers rather than through distributors, expanding our geographic reach, locating and creating new raw plasma sources, and pursuing possible prudent acquisitions and mergers and potential international collaborations.

"With this good start to the year 2012, we are continuing to take the actions we believe will achieve our strategic goals that include creating long-term additional value for shareholders through outstanding products that are vital to human health."

BEIJING, March 23, 2012 /PRNewswire-Asia-FirstCall/ -- China Biologic Products, Inc. (NASDAQ: CBPO, "China Biologic" or the "Company"), one of the leading plasma-based biopharmaceutical companies in the People's Republic of China, today announced that its indirectly owned subsidiary, Shandong Taibang Biological Products Co., Ltd. ("Taibang"), recently received approval from the China State Food and Drug Administration ("SFDA") to begin clinical trials for its human fibrinogen to be used to treat congenital fibrinogen deficiency and acquired fibrinogen deficiency.Under Chinese regulations, the Company can begin with the phase III clinical trials, which includes the efficacy study, since phases I and II are not required for this product.

Mr. Chao Ming (Colin) Zhao, China Biologic's President & Chief Executive Officer, said, "We are very pleased to receive the SFDA's approval to enter clinical trials for our human fibrinogen product. Our human fibrinogen is made using our internally developed new manufacturing process, which improves product quality, compared with currently available products in the Chinese market. The new process also increases plasma utilization and production efficiency. We plan to secure a patent for our manufacturing invention. We believe this new product also will advance our plasma protein development pipeline. The phase III clinical trials are expected to last about two years, after which we will begin commercial production and sales, assuming the clinical trials prove that the product provides the safe and effective treatments we expect."

The Company began pre-clinical research in 2008 for its human fibrinogen, including its production process development and pharmaceutical research. In 2009, it completed pre-clinical inactivated virus research and validation work related to the product's development. In 2010, the Company conducted the pilot study for human fibrinogen and in mid-2010 submitted its application to the SFDA for approval to start human clinical trials for its human fibrinogen.

Full Year 2011 Results

• Total sales increased $13.4 million or 9.6% to $153.1 million for the year ended December 31, 2011, from $139.7 million in 2010, including the benefit of a 5.0% gain from foreign exchange translation. Total sales in terms of RMB increased 4.6% in 2011 from 2010.
• Gross profit increased $4.3 million or 4.2% to $107.1 million in 2011 from $102.7 million in 2010. The gross profit margin decreased by 3.6% to 69.9% in 2011 from 73.5% in 2010.
• Income from operations decreased by $36.4 million or 53.0% to $32.2 million in 2011 from $68.6 million in 2010. The year 2011 included a non-cash charge for impairment of goodwill of $18.2 million and non-cash loss on abandonment of long-lived assets of $6.6 million.
• GAAP net income attributable to China Biologic was $18.2 million in 2011 or $0.37 per diluted share, compared with $31.5 million or $1.30 per diluted share in 2010.
• Non-GAAP adjusted net income was $36.5 million or $1.37 per diluted share in 2011 compared with $39.0 million or $1.61 per diluted share in 2010.

Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic, said, "As we stated in July, the supply for raw plasma in our Guizhou facility was unfortunately impacted by the closures of our four plasma collection stations at the direction of the Guizhou provincial government's then newly imposed plan. Those stations had accounted for about 34% of our total raw plasma volume collected in 2010.

"Since then, we have developed alternative solutions and opportunities to mitigate the negative impacts of the closures of these plasma collection stations, reallocated resources from the closed stations to maximize their utilization within our company, and continued to aggressively explore new regions for new plasma stations. The process of locating and developing new stations includes numerous time-consuming activities and uncertainties, including analyzing and selecting the appropriate locations for successful plasma stations, gaining the extensive and detailed sequential approvals at various levels of government, station construction, equipment installation, inspections and licensing, and donor promotion and education programs.

"We have adjusted our production plan and sales and marketing strategy to leverage our continuing plasma resources to maximize profit, given the changing market dynamics. We have focused on supplying our life-saving products through our direct sales to those facilities with patients who have the most critical medical needs and to our best long-term customers. We are also focusing on our most profitable products.

"In his recent statement, Mr. Zhu Chen, China's Minister of Health, encouraged the country to double plasma supply from 2012 to 2016, as part of China's newest five year plan. According to Mr. Chen, the current supply of plasma can barely meet half of the potential demand for plasma protein products. We hope the Minister's statements will induce local government's support and cooperation in broadening regions for development and building of new plasma collection stations.

"The demand for most of our plasma products continues to hold relatively strong, with China's growing and aging population, increasing urbanization, and economic growth, the government's promotion of health care and its strategies and policies that encourage the expansion in plasma collection and use of plasma products.

"We remain committed to accelerating our long-term earnings growth in the future by focusing on broadening our research and development pipeline, strengthening our direct institutional sales, expanding our geographic reach, locating and creating new raw plasma sources, pursuing possible prudent acquisitions and mergers and potential international collaborations.

"We will continue to take the actions needed to achieve our strategic goals to create additional value for shareholders through outstanding products that are vital to human health."

Guidance and business outlook for 2012

China Biologic expects 2012 revenue to be in the range of $168 million and $176 million. This guidance assumes only organic growth and excludes acquisitions and construction of new facilities. The guidance necessarily assumes no significant adverse price changes as a result of provincial tendering or additional price control imposed by National Development and Reform Commission (NDRC) during 2012.

The Company expects 2012 adjusted net income to be in the range of $38 million to $40 million, excluding any non-cash charge or gain related to change in the fair value of derivative liabilities and stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2012 related to the expiration of the look-through exception for Subpart F income on December 31, 2011. To support its business expansion, the Company expects to have substantially higher expenses in 2012 to expand its geographic market coverage, add new customers, and increase direct sales to institutional customers of its products. Due to the expected expense increase associated with our marketing and sales efforts, we anticipate modest growth in adjusted net income for 2012 despite anticipated growth in sales in 2012.

 

• Total sales increased $5.3 million or 14.7% to $41.3 million in the third quarter 2011 from $36.0 million in the third quarter 2010, including the benefit of a 6.1% gain from foreign exchange translation. Total sales in RMB increased 8.6% in the third quarter 2011 from the third quarter of last year.
  
• Gross profit increased $0.2 million or 0.8% to $27.5 million in the third quarter 2011 from $27.3 million in the third quarter 2010. The gross profit margin was 66.7% in the third quarter 2011 compared with 75.9% in the third quarter 2010.
  
• (Loss) income from operations decreased $28.2 million or 149.9% to a loss of $9.4 million in the third quarter 2011 from $18.8 million in the third quarter 2010. The third quarter 2011 included a non-cash charge for impairment loss of goodwill of $18.1 million and a non-cash loss on abandonment of long-lived assets of $6.5 million.
  
• GAAP net (loss)/income attributable to China Biologic decreased $23.1 million or 168.2% to a net loss of $9.4 million in the third quarter 2011 from a net income of $13.7 million in the third quarter 2010.
  
• Diluted net loss per share was $0.37 in the third quarter 2011, down from diluted net income per share of $0.39 in the third quarter 2010.
  
• Excluding non-cash employee stock compensation, non-cash gain related to change in fair value of derivative liability, impairment loss of goodwill and loss on abandonment of long-lived assets and write-off of raw plasma materials due to the closure of the plasma collection stations of Guizhou Taibang, the non-GAAP adjusted net income attributable to China Biologic was $11.0 million or diluted net income per share of $0.42 in the third quarter 2011, from $10.5 million or $0.40 per diluted share in the third quarter 2010.

Financial highlights for the first quarter 2011

• Total sales increased 27.2% to $34.5 million in the first quarter 2011, from $27.1 million the first quarter 2010.
• Gross profit increased 23.9% to $25.2 million in the first quarter 2011, from $20.3 million the first quarter 2010.
• Income from operations increased 9.8% to $14.5 million in the first quarter 2011, from $13.2 million the first quarter 2010.
• Net income attributable to China Biologic decreased 40.8% to $6.3 million in the first quarter 2011, from $10.7 million in the first quarter 2010.
• Diluted earnings per share attributable to China Biologic decreased 11.5% to $0.23 in the first quarter 2011, from $0.26 per diluted share in the first quarter 2010.
• Non-GAAP adjusted net income attributable to China Biologic increased 5.2% to $8.0 million in the first quarter 2011, from $7.6 million in the first quarter 2010.
• Non-GAAP adjusted diluted earnings per share attributable to China Biologic increased 6.9% to $0.31 per diluted share in the first quarter 2011, from $0.29 in the first quarter 2010.

GeoTeam® Note: 2011 First quarter analyst EPS estimates were $0.23.

CEO Comments

Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic, said, "We are pleased with our 27% sales increase during the 2011 the first quarter from the first quarter of last year, which we primarily attribute to general price increases for many of our products due to a continued supply shortage. During the first quarter, we also continued to aggressively expand our direct sales to hospitals and inoculation centers in order to boost our future sales. We believe that our strategy to expand our direct institutional sales remains the best long-term model for serving our customers and expanding our products and markets in China.

"We expect that the following strategies will help improve our performance this year: (1) we expect our direct sales to continue expanding as a result of our direct and aggressive promotion; (2) the supply of raw material necessary for the production of hepatitis B and human rabies immunoglobulin products is expected to improve in the second half of the year; (3) we expect two of our new products to be approved by China's State Food and Drug Administration this year, potentially generating sales by year's end; and (4) we will continue to stringently control our expenses while sustaining our pursuit in achieving higher direct institutional sales.

"We believe that the successful implementation of the foregoing strategies, along with the continued expansion of China's economy, the government's continued emphasis on higher health standards, and our strategic locations and high operating standards, strengthens the Company's outlook for 2011, and so we continue to be optimistic that our results for 2011 will be good. To emphasize our confidence and determination, we are maintaining our previous guidance for the year 2011."

2010 Year End:

• Sales increased $20.7 million or 17.4% to $139.7 million for the year ended December 31, 2010 from $119.0 million in 2009.
• Gross profit increased $16.4 million or 18.9% to $102.7 million in 2010 from $86.4 million in 2009. Gross profit as a percent of sales increased to 73.5% in 2010 from 72.6% in 2009.
• Income from operations increased $8.1 million or 13.3% to $69.5 million in 2010 from $61.4 million in 2009.
• GAAP Net income attributable to China Biologic in 2010 was $31.5 million or $1.30 per diluted share, including a $3.2 million non-cash charge related to change in the fair value of derivative liabilities, compared with $2.2 million or $0.10 per diluted share in 2009, which includes a $28.9 million non-cash charge related to change in the fair value of derivative liabilities.
• Non-GAAP adjusted net income was $39.0 million or $1.61 per diluted share in 2010 compared with $31.5 million or $1.43 per diluted share in 2009.

GeoTeam Note: Adjusted Fourth Quarter  2010 vs. 2009 EPS was $0.52 vs. $0.51.

"We believe that our strategy of direct institutional sales remains the good long-term model for serving our customers for our products and markets in China. When we acquired Dalin, we converted its sales model to direct institutional sales from sales conducted mainly through distributors. In 2010, direct institutional sales of Dalin did not grow as quickly as we expected. We will continue to strengthen Dalin's direct institutional sales approach in 2011.

China Biologic expects 2011 revenue to be in the range of $154 million and $168 million. This guidance assumes only organic growth and excludes acquisitions and construction of new facilities. The guidance necessarily assumes no significant adverse price changes during 2011.

The Company expects 2011 adjusted net income to be in the range of $41 million to $43 million, excluding any non-cash charge or gain related to change in the fair value of derivative liabilities and stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2011 related to the expiration of the look-through exception for Subpart F income on December 31, 2011. To support its business expansion, the Company expects to have substantially higher expenses in 2011 to expand its geographic market coverage, add new customers, and increase direct sales to institutional customers of its products. Due to the expected expense increase associated with our marketing and sales efforts, we anticipate modest growth in adjusted net income for 2011 despite anticipated growth in sales in 2011.

Preliminary Results:

The Company has filed for a delay in its 10k

• Estimated revenues increased 17.4% to $139.7 million for the year ended December 31, 2010 from $119.0 million in 2009
• Estimated gross profit increased 18.9% to $102.7 million in 2010 from $86.4 million in 2009. Gross profit margin (gross profit as a percent of revenues) increased to 73.5% in 2010 from 72.6% in 2009.
• Estimated income from operations increased 13.3% to $69.5 million in 2010 from $61.4 million in 2009.

Estimated adjusted non-GAAP net income in 2010, although not yet disclosed, is expected to exceed China Biologic's upper end of its guidance range of $34 million to $36 million for the year 2010. Adjusted non-GAAP net income is defined below.

The Company's estimated revenues of $139.7 million were 1.6% lower than its minimum revenues guidance of $142 million to $149 million, which was primarily due to lower than expected demand for human albumin resulting from unexpected high volume of lower-priced human albumin imports into China and less than expected direct institution sales from Dalin. The Company chose not to compromise the reputation of its high-quality products by reducing prices.

Mr. Chao Ming (Colin) Zhao, Chief Executive Officer of China Biologic, said, "We are pleased with our progress and good operating and financial results for 2010. We believe our acquisitions from 2008 and 2009 are starting to deliver the expected good performance.

"China Biologic's outlook for 2011 remains good, with China's economy continuing to expand. Higher health standards are among the government's priorities. And our plasma collection stations and processing facilities are in good locations and are operating at high standards.

"In addition, we have completed the development stages for two new products and expect their approval by China's State Food and Drug Administration in 2011."

Third Quarter 2010 Highlights

• Revenues increased 33.2% period-over-period to $36.0 million.

• Gross profit rose 36.1% period-over-period to $27.3 million, representing a gross margin of 75.9%, as compared to 74.3% a year ago.

• Income from operations grew 34.2% to $18.8 million.

• GAAP net income attributable to controlling interest was $13.7 million, or $0. 53 per diluted share, including a $3.8 millionnon-cash gain from change in the fair value of derivative liabilities.

• Excluding the non-cash gain from change in fair value of derivative liabilities, interest on convertible notes and non-cash employee compensation, non-GAAP adjusted net income was $10.5 million or $0.39 per diluted share, a 48.7% increase from $7.1 million, or $0.33 per diluted share a year ago.

• The Company established Ning Yang Taibang Plasma Company and Yi Shui Taibang Plasma Company in July 2010 for the purpose of operating two new plasma stations in Shandong Province, PRC.

"Our 2010 third quarter results were very strong, with 33.2% growth in revenues and 48.7% growth in adjusted net income, driven by robust demand and an overall favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "During the quarter, we established two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and we expect to begin trial collections at the Yishui station by the end of the year and at the Ninyang station by early 2011.  We expect that when these sites are at their full capacity, we will realize up to 80 metric tons of incremental plasma collection capacity."

2010 Guidance and Business Outlook

China Biologic reaffirms its guidance for 2010 of

• revenues in the range of $142 million to $149 million.
• adjusted net income between $34 million and $36 million.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

Mr. Zhao added, "We believe that the results for the first nine months of 2010 reinforce the merits of China Biologic's strategy to acquire or build new locations, scale up our existing plasma infrastructure, and advance exciting products through our pipeline. From investing in strategic marketing to drive collection center donor volumes, to developing closer relationships with hospitals and inoculation centers, we intend to maximize the utilization of our growing plasma network. We expect that our strong balance sheet and solid operating cash flow will provide us with the resources to take advantage of opportunities created by rising consumer demand and tight supply conditions based on strict government regulation. On the research and development front, we continue to expect our applications for production of Human Prothrombin Complex Conentrate and Human Coagulation Factor VIII to be approved by the SFDA in early 2011. Heading into next year, we intend to leverage our expertise in the field to capitalize further on China's under-pentrated plasma market and build value for our shareholders."

Second Quarter 2010 Highlights 

• Revenues increased 23.3% year-over-year to $40.9 million.
  
• Gross profit rose 32.6% year-over-year to $31.8 million, representing a gross margin of 77.9%, as compared to 72.4% a year ago.
  
• Operating income grew 37.7% to $22.8 million.
  
• GAAP net income attributable to controlling interest was $12.9 million, or $0.49 per diluted share, including a $2.3 million non-cash gain from change in the fair value of derivative liabilities.
  
• Excluding the non-cash gain, interest on convertible notes and non-cash employee compensation, non-GAAP adjusted net income was $10.9 million or $0.41 per diluted share, a 31.2% increase from $8.3 million or $0.38 per diluted share a year ago

"Our second quarter results were very strong, with 23.3% growth in revenues and 31.2% growth in adjusted net income, primarily driven by robust demand and a favorable pricing environment for our plasma-based products," said Mr. Chao Ming Zhao, Chief Executive Officer of China Biologic. "We are moving forward with establishing our two new plasma collection stations in Yishui and Ninyang counties in Shandong Province, and expect to begin trial collections at the new locations by the end of the year. We also increased our focus on marketing and educational medical conferences in the second quarter, as part of our strategy to strengthen our ties with hospitals and clinics, since we believe that direct sales to these customers can secure our market share and support our long-term growth."

2010 Guidance and Business Outlook

China Biologic maintained its guidance for 2010:

• Revenues in the range of $142 million and $149 million.
• 2010 adjusted net income in the range of $34 million and $36 million.

As part of its scheduled annual maintenance and inspection process, the Company shut down its facility in Qianfeng for approximately 45 days in June and July and its Taibang facility for 30 days beginning in late July. Due to careful planning of production and inventories, this is expected to have minimal impact to the company's revenue generation.

Guidance for 2010 adjusted net income excludes any non-cash gain or loss related to change in the fair value of derivative liabilities, stock-based compensation expense and any adjustments in the U.S. federal income tax provision in 2010 related to the expiration of the look-through exception for Subpart F income on December 31, 2009, and excludes any acquisitions, new product approvals or operational impact from new plasma stations. The guidance also does not assume any material price or volume increases during the year.

China Biologic expects 2010 revenue to be in the range of $142 million to $149 million vs  $119 million in 2009. This guidance assumes only organic growthand does not include and excludes acquisitions or approval for the construction of new plasma collection stations. The guidance does not assume any material price or volume increases during 2010.

The Company expects 2010 non-GAAP^a net income to be in the range of $34 million to $36 million vs. $31.3 million in 2009.

As a matter of policy, the Company does not intend to update this guidance during the year.

Source: PR Newswire (March 23, 2010)

2009 Third quarter discussion per SEC 10Q filing

The continuing price increase of our products since 2008 was primarily attributable to the government’s stringent control on the quality standard of the plasma-based production industry, which resulted in a shortage in the supply of finished products. We were able to adjust our production plan to take advantage of the limited market supply of plasma resources to realize higher profit margins. In addition, there is a shortage in the market supply for human albumin products which has increased the value of our products in the market place. The plasma-based industry has been immune from the impact of the on-going global financial crisis as the demand for our products has out-paced supply. As a result, our selling price, cost of revenue and operating expenses during the third quarter of 2009 were not impacted by the global financial turmoil. With the acquisition of Dalin, and its operating subsidiary Qianfeng, we are better situated to serve our existing and new customers with expanded production capacity and market coverage. Our management expects that our revenue growth will remain strong for the remainder of 2009.

Source: See Release

^a EPS Figures exclude non-operating gains and losses. Non-GAAP information should not be viewed in isolation or as a substitute for reported, or GAAP information.For a more complete explanation of the company's definition of non-GAAP please refer to their Fourth Quarter financial press release.

^b The company issued net income guidance of $18 million to $22 million, but did not provide EPS guidance. The GeoTeam® used the March 31, 2009 outstanding share count of 21,434,942 to calculate an implied 2009 EPS figure. The lack of EPS guidance may cause some investors to infer that dilutive events are expected to occur in the near future. However, per the 10K page 45, it appears that the company does not need to raise cash via a capital raise:

"With the bank credit facilities that are available to us and other financing activities, we expect that cash on hand, funds generated from our operations and funds generated from companies that we may acquire in the future will be sufficient to satisfy our current and future commitments for at least the next twelve months."

Guidance Update:

The company did not provide EPS guidance.  Thus, investors may infer that dilutive events are expected to occur in the near future.  However, per the third quarter report  page 34, it appears that the company does not need to raise cash via a capital raise:

"Overall, we believe that cash flow from our operating activities and the existing credit facilities available to us should be adequate to sustain our operations at current levels through the next twelve months."

 A clarification of this situation is needed.  The GeoTeam^® would urge the company to issue address whether shares outstanding will remain stable in 2009.  If shares do remain stable 2009 tax adjusted net income guidance would be around $17 million ($.77), implying a forward P/E of only 2.6.

   Source: PR Newswire (November 12, 2008)