China Health Industries Holdings, Inc. Reports Financial Results for the Second Quarter Ended December 31, 2018
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Mr. Xin Sun, Chief Executive Officer and Chairman of China Health Industries, commented, "We are pleased to report our financial results for the second quarter of our 2019 fiscal year. Our revenue increased by 50.03% compared to the same period of the previous year as we continue to develop, manufacture and distribute new hemp derivative products”.
Second Quarter of Fiscal 2019 Selected Financial Results
For the Three Months Ended December 31, 2018:
December 31, | December 31, | ||||||||||
2018 | 2017 | Variance | % | ||||||||
Revenues | $ | 2,714,157 | $ | 1,809,040 | $ | 905,117 | 50.03% | ||||
Humankind | 2,684,885 | $ | 1,809,040 | $ | 875,845 | 48.41% | |||||
HLJ Huimeijia | 29,272 | - | 29,272 | - | |||||||
Cost of Goods Sold | $ | 688,076 | $ | 1,153,077 | $ | (465,001) | (40.33%) | ||||
Humankind | 653,157 | $ | 1,153,077 | $ | (499,920) | (43.36%) | |||||
HLJ Huimeijia | 34,919 | - | 34,919 | - | |||||||
Gross Profit | $ | 2,026,081 | $ | 655,963 | $ | 1,370,118 | 208.87% | ||||
Humankind | 2,031,728 | 655,963 | 1,375,765 | 209.7% | |||||||
HLJ Huimeijia | (5,647) | - | (5,647) | - |
Revenue
Total revenues increased by $905,117, or 50.03%, for the three months ended December 31, 2018, as compared to the same period in 2017. The increase in revenues was primarily due to an increase of $875,845 or 48.41% in Humankind’s revenues for the three months ended December 31, 2018, as compared to the same period in 2017. The increase in Humankind’s sales revenues was primarily due to the increased demand of new products. The increase in HLJ Huimeijia’s sales revenue was primarily due to small-scale production after obtaining a new GMP certificate.
Cost of Goods Sold
Our total cost of sales decreased by $465,001, or 40.33% for the three months ended December 31, 2018, as compared to the same period in 2017. The decrease in the overall cost of sales was attributed to the decrease of $499,920 or 43.36% in Humankind’s cost of sales for the three months ended December 31, 2018 as compared to the same period in 2017. This decrease aligned with the decrease in sales volume of products sold by Humankind. The significant decline in the cost of the main business was mainly due to the lower unit cost of new products and the fact that the old products were no longer sold for the three months ended December 31, 2018, as compared with the same period in 2017. The increase in HLJ Huimeijia cost of sales was primarily due to the small-scale production.
Gross Profit
Our gross margin increased by $1,370,118, or 208.87%, for the three months ended December 31, 2018 as compared to the same period in 2017. This change was consistent with the change in the main products in Humankind. As HLJ Huimeijia resumed production for a short period of time, the output of the products is small, but the fixed cost of the apportionment has not decreased, resulting in high cost of the product. After the Company operates normally, the cost is expected to return to a reasonable level.
Net Income
Net Income was $1,117,265 for the three months ended December 31, 2018, as compared to a net loss of $110,573 for the three months ended December 31, 2017. This increase of $1,227,838 in net profit was primarily attributable to an increase of $939,049 in the net income from Humankind.
Net Income per share was $0.0170 for the three months ended December 31, 2018 and net loss per share was $0.0017 for the three months ended December 31, 2017. This increase was primarily a result of the aforementioned increase in net profit.
For the Six Months Ended December 31, 2018:
December 31, | December 31, | |||||||||
2018 | 2017 | Variance | % | |||||||
Revenues | $ | 4,855,982 | $ | 3,325,007 | $ | 1,530,975 | 46.04% | |||
Humankind HLJ | 4,810,393 | $ | 3,325,007 | $ | 1,485,386 | 44.67% | ||||
Huimeijia | 45,589 | - | 45,589 | - | ||||||
Cost of Goods Sold | $ | 1,161,817 | $ | 2,132,710 | $ | (970,893) | (45.52%) | |||
Humankind | 1,106,433 | $ | 2,132,710 | $ | (1,026,277) | (48.12%) | ||||
HLJ Huimeijia | 55,384 | - | 55,384 | - | ||||||
Gross Profit | $ | 3,694,165 | $ | 1,192,297 | $ | 2,501,868 | 209.84% | |||
Humankind | 3,703,960 | 1,192,297 | 2,511,663 | 210.66% | ||||||
HLJ Huimeijia | (9,795 | ) | - | (9,795) | - |
Revenue
Total revenues increased by $1,530,975, or 46.04% for the six months ended December 31, 2018, as compared to the same period in 2017. The increase in revenues was primarily due to an increase of $1,485,386 or 44.67% in Humankind’s revenues for the six months ended December 31, 2018, as compared to the same period in 2017. The increase in Humankind’s sales revenues was primarily due to the increased demand of the new products. The increase in HLJ Huimeijia’s sales revenue was primarily due to small-scale production after obtaining a new GMP certificate.
Cost of Goods Sold
Our total cost of sales decreased by $970,893, or 45.52%, for the six months ended December 31, 2018, as compared to the same period in 2017. The decrease in the overall cost of sales was attributed to the decrease of $1,026,277 or 48.12% in Humankind’s cost of sales for the six months ended December 31, 2018, as compared to the same period in 2017. The significant decline in the cost of the main business was mainly due to the lower unit cost of new products and the fact that the old products were no longer sold for the six months ended December 31, 2018, as compared to the same period in 2017.
Gross Profit
Our gross margin increased by $2,501,868, or 209.84%, for the six months ended December 31, 2018, as compared to the same period in 2017. This change was consistent with the change in the main products in Humankind. As HLJ Huimeijia resumed production for a short period of time, the output of the product is small, but the fixed cost of the apportionment has not decreased, resulting in high cost of the products. After the Company operates normally, the cost is expected to return to a reasonable level.
Net Income
Net Income was $1,749,481 for the six months ended December 31, 2018, as compared to the net loss $289,743 for the six months ended December 31, 2017. This increase of $2,039,224 in net profit was primarily attributable to an increase of $1,744,458 in Humankind.
Net Income per share was $0.0267 for the six months ended December 31, 2018 and net loss per share was $0.0044 for the six months ended December 31, 2017. This increase was primarily a result of the aforementioned increase in net profit.
About Us
China Health Industries Holdings, Inc. (www.chinahealthindustries.com) is a holding company vertically integrated with the operations in its subsidiaries in China, specializing in R&D, production, marketing and distribution of hemp derivative products, medicines and health supplement products.
China Health owns GMP certified plants and facilities, manufactures 21 CFDA approved medicines and 14 health supplement products covering five kinds of dosage forms, including soft capsule, hard capsule, tablet, granule and oral liquid. Our product series cover hemp derivative foods, hemp derivative medicines, externally used medicines and health foods.
Safe Harbor Statement
This press release contains certain statements that may include "forward-looking statements". All statements other than statements of historical fact included herein are "forward-looking statements". These forward-looking statements are often identified by the use of forward-looking terminology such as "believes", "expects" or similar expressions, involving known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties; thus, these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the risk factors discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission (“SEC”) and available on the SEC's website (http://www.sec.gov). All forward-looking statements attributable to the Company, or persons acting on its behalf, are expressly qualified in their entirety by these risk factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
Company Contact:
Melody Zhang
IR Contact
China Health Industries Holdings, Inc.
Tel: 86-451-88100688
Email: [email protected]
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
December 31, | June 30, | |||||
2018 | 2018 | |||||
ASSETS | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | 32,748,905 | $ | 32,614,910 | ||
Accounts receivable, net | 2,676,783 | 1,455,433 | ||||
Inventory | 820,343 | 452,397 | ||||
Other receivables, net | 27,390 | 30,611 | ||||
Advances to suppliers | 18,791 | 94,749 | ||||
Prepayments | 47,530 | 20,462 | ||||
Total current assets | 36,339,742 | 34,668,562 | ||||
Property, plants and equipment, net | 3,542,840 | 3,724,490 | ||||
Intangible assets, net | 3,012,293 | 3,372,501 | ||||
Construction in progress | 1,174,800 | 1,134,834 | ||||
Prepayments – Non-Current | 19,387 | 30,212 | ||||
Deferred tax assets | 2,232 | 1,970 | ||||
Total assets | $ | 44,091,294 | $ | 42,932,569 | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities | ||||||
Short-term loans | $ | - | $ | - | ||
Accounts payable and accrued expenses | 499,971 | 400,109 | ||||
Other payables | 76,341 | 67,800 | ||||
Advances from customers | 377,560 | 163,459 | ||||
Related party debts | 6,419,954 | 6,393,730 | ||||
Wages payable | 290,112 | 234,668 | ||||
Total current liabilities | 8,440,491 | 7,688,189 | ||||
Equity | ||||||
Common stock, ($0.0001 par value per share, 300,000,000 shares authorized, 65,539,737 and 65,539,737 shares issued and outstanding as of December 31, 2018 and June 30, 2018, respectively) | 6,554 | 6,554 | ||||
Additional paid-in capital | 521,987 | 521,987 | ||||
Accumulated other comprehensive income (loss) | (567,756) | 775,302 | ||||
Statutory reserves | 38,679 | 38,679 | ||||
Retained earnings | 35,651,339 | 33,901,858 | ||||
Total stockholders’ equity | 35,650,803 | 35,244,380 | ||||
Total equity | 35,650,803 | 35,244,380 | ||||
Total liabilities and equity | $ | 44,091,294 | $ | 42,932,569 | ||
Taxes payable | 776,553 | 428,423 |
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
For the three Months | For the Six Months | |||||||||||
Ended | Ended | |||||||||||
December | December | December | December | |||||||||
31, | 31, | 31, | 31, | |||||||||
2018 | 2017 | 2018 | 2017 | |||||||||
REVENUE | $ | 2,714,157 | $ | 1,809,040 | $ | 4,855,982 | $ | 3,325,007 | ||||
COST OF GOODS SOLD | 688,076 | 1,153,077 | 1,161,817 | 2,132,710 | ||||||||
GROSS PROFIT | 2,026,081 | 655,963 | 3,694,165 | 1,192,297 | ||||||||
OPERATING EXPENSES | ||||||||||||
Depreciation and amortization expenses | 142,758 | 66,750 | 284,280 | 208,604 | ||||||||
Total operating expenses | 549,063 | 692,356 | 1,304,575 | 1,392,062 | ||||||||
INCOME (LOSS) FROM OPERATIONS | 1,477,018 | (36,393 | ) | 2,389,590 | (199,765 | ) | ||||||
OTHER INCOME/(EXPENSES) | ||||||||||||
Interest income | 26,590 | 27,863 | 54,716 | 52,203 | ||||||||
Interest expense | (1 | ) | (25,062 | ) | (3 | ) | (48,402 | ) | ||||
Other income/(expenses), net | 15,973 | 147 | 15,597 | 36,138 | ||||||||
Bank charges | (274 | ) | (415 | ) | (709 | ) | (877 | ) | ||||
Exchange Gain | - | 12,675 | - | - | ||||||||
Total other income, net | 42,288 | 15,208 | 69,601 | 39,062 | ||||||||
INCOME/(LOSS) BEFORE INCOME TAXES | 1,519,306 | (21,185 | ) | 2,459,191 | (160,703 | ) | ||||||
Provision for income taxes | (402,041 | ) | (89,388 | ) | (709,710 | ) | (129,040 | ) | ||||
NET INCOME (LOSS) | 1,117,265 | (110,573 | ) | 1,749,481 | (289,743 | ) | ||||||
Foreign currency translation loss | (44,937 | ) | 789,814 | (1,343,060 | ) | 3,035,658 | ||||||
COMPREHENSIVE INCOME | 1,072,328 | 679,241 | 406,421 | 2,745,915 | ||||||||
Basic & diluted income (loss) per share | $ | 0.0170 | $ | (0.0017) | $ | 0.0267 | $ | (0.0044 | ) | |||
Weighted average shares outstanding: | ||||||||||||
Basic & diluted weighted average shares outstanding | 65,539,737 | 65,539,737 | 65,539,737 | 65,539,737 | ||||||||
Selling, general and administrative expenses | 406,305 | 625,606 | 1,020,295 | 1,183,458 |
CHINA HEALTH INDUSTRIES HOLDINGS, INC. AND SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended | ||||||
December 31, | December31, | |||||
2018 | 2017 | |||||
Cash Flows from Operating Activities | ||||||
Net income (loss) available to China Health Industries Holdings | $ | 1,749,481 | $ | (289,743) | ||
Net income (loss) from continuing operations | 1,749,481 | (289,743) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||
Depreciation and amortization expenses | 388,576 | 289,596 | ||||
Provision for doubtful accounts | 13 | 2,118 | ||||
Provision for inventories | (154,767) | (60,719) | ||||
Deferred taxes loss/(gain) | (337) | (348) | ||||
Changes in operating assets and liabilities | ||||||
Accounts receivable | (1,279,100) | 157,408 | ||||
Other receivables | 2,079 | (1,307) | ||||
Inventory | (231,096) | 57,255 | ||||
Advance to suppliers and prepaid expenses | 54,401 | (27,320) | ||||
Accounts payables and accrued expenses | 115,066 | (4,332) | ||||
Advance from customers and other payables | 231,888 | (3,694 | ||||
Amounts due to related parties | 248,961 | 1,882,464 | ||||
Wages payable | 64,401 | (17,560) | ||||
Taxes payable | 360,982 | (200,581) | ||||
Net cash provided by operating activities | 1,550,548 | 1,783,237 | ||||
Cash Flows from Investing Activities | ||||||
Expenditure in short term investment | - | 9,034,534 | ||||
Purchases of property, plant and equipment | (112,055) | 15,354 | ||||
Expenditure in construction in progress | (82,709) | (18,338) | ||||
Disposal of property, plant and equipment | - | 361 | ||||
Proceeds from disposal of subsidiaries | - | 903,453 | ||||
Net cash used in investing activities | (194,764) | 9,935,364 | ||||
Cash Flows from Financing Activities | ||||||
Payment of short term loans | - | (1,505,756) | ||||
Net cash provided by financing activities | - | (1,420,671) | ||||
Effect of exchange rate changes on cash and cash equivalents | (1,221,789) | 1,099,331 | ||||
Net increase in cash and cash equivalents | 133,995 | 11,397,261 | ||||
32,614,910 | 21,197,448 | |||||
Cash and cash equivalents, ending balance | 32,748,905 | 32,594,709 | ||||
Supplemental cash flow information | ||||||
Cash paid for income taxes | $ | 420,968 | $ | 972,690 | ||
Cash paid for interest expense | $ | - | $ | 48,400 | ||
Non-cash activities: | ||||||
Loan from related party for the construction of a facility | $ | 584,147 | $ | 479,985 | ||
Proceeds from related party debts | - | 85,085 |
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