Full Press Release Details
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
| As of | ||||||||
| March 31, 2023 | September 30, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 12,954,516 | $ | 5,711,458 | ||||
| Short-term investments | 13,314,902 | 13,148,594 | ||||||
| Accounts receivable, net | 17,519,268 | 15,183,890 | ||||||
| Inventories, net | 2,868,248 | 2,206,488 | ||||||
| Advance to suppliers | 207,719 | 16,701 | ||||||
| Prepayment for acquisition | 3,640,275 | 3,514,450 | ||||||
| Prepaid expenses and other current assets | 2,010,285 | 1,724,099 | ||||||
| TOTAL CURRENT ASSETS | 52,515,213 | 41,505,680 | ||||||
| Property, plant and equipment, net | 4,144,360 | 4,250,638 | ||||||
| Prepayments made to a related party for purchase of property | 2,329,776 | 2,249,248 | ||||||
| Prepayments for construction in progress | 9,660,198 | 9,326,296 | ||||||
| Intangible assets, net | 160,470 | 157,451 | ||||||
| Investment in equity securities | 728,055 | 702,890 | ||||||
| Deferred tax assets | 830,259 | 1,347,672 | ||||||
| TOTAL NONCURRENT ASSETS | 17,853,118 | 18,034,195 | ||||||
| TOTAL ASSETS | $ | 70,368,331 | $ | 59,539,875 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term bank loans | $ | 4,077,108 | $ | 3,936,184 | ||||
| Accounts payable | 11,239,025 | 3,075,393 | ||||||
| Taxes payable | 325,389 | 167,350 | ||||||
| Due to related parties | 5,442,645 | 3,379,263 | ||||||
| Accrued expenses and other current liabilities | 2,157,493 | 2,539,362 | ||||||
| TOTAL CURRENT LIABILITIES | 23,241,660 | 13,097,552 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Ordinary shares, $ 0.01875 par value, 166,666,666 shares authorized, 3,625,000 shares issued and outstanding as of March 31, 2023 and September 30, 2022 * | 67,969 | 67,969 | ||||||
| Additional paid in capital | 29,279,159 | 29,279,159 | ||||||
| Statutory reserve | 2,439,535 | 2,439,535 | ||||||
| Retained earnings | 15,606,938 | 16,322,365 | ||||||
| Accumulated other comprehensive loss | ( 266,930 | ) | ( 1,666,705 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 47,126,671 | 46,442,323 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 70,368,331 | $ | 59,539,875 |
notes are an integral part of these unaudited condensed consolidated financial statements.
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
| For the Six Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| REVENUE | $ | 18,467,186 | $ | 24,202,340 | ||||
| COST OF REVENUE AND RELATED TAX | 12,339,044 | 10,445,906 | ||||||
| GROSS PROFIT | 6,128,142 | 13,756,434 | ||||||
| OPERATING EXPENSES | ||||||||
| Selling expenses | 2,330,508 | 9,079,771 | ||||||
| General and administrative expenses | 1,380,053 | 1,830,923 | ||||||
| Research and development expenses | 2,268,335 | 144,461 | ||||||
| Total operating expenses | 5,978,896 | 11,055,155 | ||||||
| INCOME (LOSS) FROM OPERATIONS | 149,246 | 2,701,279 | ||||||
| OTHER INCOME (EXPENSES) | ||||||||
| Interest expense, net | ( 74,569 | ) | ( 88,389 | ) | ||||
| Other income, net | 17,323 | 634 | ||||||
| Short-term investment income | 166,931 | 696,430 | ||||||
| Total other income, net | 109,685 | 608,675 | ||||||
| INCOME (LOSS) BEFORE INCOME TAX PROVISION | 258,931 | 3,309,954 | ||||||
| PROVISION FOR INCOME TAXES | 974,358 | 1,578,219 | ||||||
| NET INCOME (LOSS) | ( 715,427 | ) | 1,731,735 | |||||
| OTHER COMPREHENSIVE INCOME | ||||||||
| Foreign currency translation adjustment | 1,399,775 | 492,194 | ||||||
| COMPREHENSIVE INCOME | $ | 684,348 | $ | 2,223,929 | ||||
| Earnings per common share - basic and diluted | $ | ( 0.20 | ) | $ | 0.48 | |||
| Weighted average shares - basic and diluted * | $ | 3,625,000 | $ | 3,625,000 |
notes are an integral part of these unaudited condensed consolidated financial statements.
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' EQUITY
ENDED MARCH 31, 2023 AND 2022
| Accumulated | ||||||||||||||||||||||||||||
| Additional | Other | |||||||||||||||||||||||||||
| Ordinary Share | Paid in | Statutory | Retained | Comprehensive | ||||||||||||||||||||||||
| Shares * | Amount | Capital | Reserve | Earnings | Income | Total | ||||||||||||||||||||||
| Balance at September 30, 2021 | 3,625,000 | $ | 67,969 | $ | 29,279,159 | $ | 2,439,535 | $ | 25,058,931 | $ | 2,088,759 | $ | 58,934,353 | |||||||||||||||
| Net income | - | - | - | - | 1,731,735 | - | 1,731,735 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 492,194 | 492,194 | |||||||||||||||||||||
| Balance at March 31, 2022 | 3,625,000 | $ | 67,969 | $ | 29,279,159 | $ | 2,439,535 | $ | 26,790,666 | $ | 2,580,953 | $ | 61,158,282 | |||||||||||||||
| Balance at September 30, 2022 | 3,625,000 | $ | 67,969 | $ | 29,279,159 | $ | 2,439,535 | $ | 16,322,365 | $ | ( 1,666,705 | ) | $ | 46,442,323 | ||||||||||||||
| Net income | - | - | - | - | ( 715,427 | ) | - | ( 715,427 | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | 1,399,775 | 1,399,775 | |||||||||||||||||||||
| Balance at March 31, 2022 | 3,625,000 | $ | 67,969 | $ | 29,279,159 | $ | 2,439,535 | $ | 15,606,938 | $ | ( 266,930 | ) | $ | 47,126,671 |
notes are an integral part of these unaudited condensed consolidated financial statements.
UNIVERSE PHARMACEUTICALS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
| For the Six Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | ( 715,427 | ) | $ | 1,731,735 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation and amortization | 257,781 | 292,111 | ||||||
| Loss from disposal of fixed assets | ( 115 | ) | 1,011 | |||||
| Changes in allowance for doubtful accounts | - | 100,406 | ||||||
| Changes in inventory reserve | ( 84,956 | ) | ( 16,508 | ) | ||||
| Deferred income tax provision (benefit) | 556,867 | ( 100,406 | ) | |||||
| Short-term investment income | ( 166,931 | ) | ( 696,430 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | ( 1,763,903 | ) | ( 3,060,116 | ) | ||||
| Inventories | ( 488,746 | ) | ( 860,517 | ) | ||||
| Advance to suppliers, net | ( 187,460 | ) | 2,664,149 | |||||
| Prepayment for advertising | - | 7,593,960 | ||||||
| Advances to related parties | - | ( 110,241 | ) | |||||
| Prepaid expenses and other current assets | ( 220,969 | ) | ( 240,164 | ) | ||||
| Accounts payable | 7,928,308 | ( 1,751,013 | ) | |||||
| Taxes payable | 149,684 | ( 157,280 | ) | |||||
| Accrued expenses and other current liabilities | ( 465,431 | ) | 727,506 | |||||
| Net cash provided by operating activities | 4,798,702 | 6,118,203 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment | ( 646 | ) | ( 55,629 | ) | ||||
| Proceeds from disposal of equipment | - | 538 | ||||||
| Net cash used in investing activities | ( 646 | ) | ( 55,091 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from short-term bank loans | 1,146,776 | 1,255,200 | ||||||
| Repayment of bank loans | ( 1,146,776 | ) | ( 1,255,200 | ) | ||||
| Proceeds from (repayment of) related party borrowings | 2,080,918 | ( 19,991 | ) | |||||
| Net cash provided by (used in) financing activities | 2,080,918 | ( 19,991 | ) | |||||
| Effect of changes of foreign exchange rates on cash | 364,084 | 115,271 | ||||||
| Net increase in cash | 7,243,058 | 6,158,392 | ||||||
| Cash, beginning of period | 5,711,458 | 8,077,908 | ||||||
| Cash, end of period | $ | 12,954,516 | $ | 14,236,300 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Cash paid for interest | $ | 90,044 | $ | 103,765 | ||||
| Cash paid for income tax | $ | 575,132 | $ | 1,880,314 | ||||
| Supplemental non-cash financing activity: | ||||||||
| Cost of construction in progress paid in prior years | $ | - | $ | 448,342 |
notes are an integral part of these unaudited condensed consolidated financial statements.
UNIVERSE PHARMACEUTICALS
INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
AND BUSINESS DESCRIPTION
Pharmaceuticals Inc. ("Universe INC" or the "Company") was incorporated under the laws of the Cayman Islands on
December 11, 2019 as an exempted company with limited liability.
INC owns 100% equity interest of Universe Pharmaceuticals (International) Group ("Universe HK"), an entity incorporated
on May 21, 2014 in accordance with the laws and regulations in Hong Kong.
Universe Pharmaceuticals Technology Co., Ltd. ("Universe Technology") was formed on April 8, 2019, as a wholly foreign-owned
enterprise ("WFOE") in the People's Republic of China ("PRC" or "China").
INC, Universe HK and Universe Technology are currently not engaging in any active business operations and are merely acting as holding
Universe Pharmaceuticals Co., Ltd. ("Jiangxi Universe") was incorporated on March 2, 1998 in accordance with PRC laws
and is engaged in the research and development and manufacturing of modernized traditional Chinese medicines. Jiangxi Universe owns 100%
of the equity interests of Jiangxi Universe Pharmaceuticals Commercial Trade Co., Ltd. ("Universe Trade"), which was incorporated
on March 10, 2010 for the purposes of handling the sales and distribution of the pharmaceutical products manufactured by Jiangxi Universe.
of the Company's legal structure (the "Reorganization") was completed on December 11, 2019. The Reorganization involved
the incorporation of Universe INC and Universe Technology, and the transfer of 100% of the equity interests of Jiangxi Universe to
Universe Technology. Consequently, Universe INC, through its subsidiary Universe HK, directly controls Universe Technology and Jiangxi
Universe, and became the ultimate holding company of all other entities mentioned above.
has been accounted for as a recapitalization among entities under common control, since the same controlling shareholders controlled all
these entities before and after the Reorganization. The consolidation of the Company and its subsidiaries has been accounted for at historical
cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented
in the accompanying consolidated financial statements. Results of operations for the periods presented comprise those of the previously
separate entities combined from the beginning of the period to the end of the period, eliminating the effects of intra-entity transactions.
25, 2021, the Company closed its initial public offering (the "IPO") of 5,000,000 ordinary shares, par value $0.003125 per
share (the "ordinary shares") at a public offering price of $5.00 per share. On March 29, 2021, the underwriter exercised
in full its over-allotment option to purchase an additional 750,000 ordinary shares. The closing for the sale of the over-allotment
shares took place on March 31, 2021. Gross proceeds from the IPO totaled $28.75 million. Net proceeds of the IPO, including over-allotment
shares, were approximately $25.6 million. In connection with the IPO, the Company's ordinary shares began trading on the Nasdaq
Global Market under the symbol "UPC" on March 23, 2021.
2021, through the Company's PRC subsidiary, Jiangxi Universe, the Company established a wholly controlled subsidiary, Guangzhou
Universe Hanhe Medical Research Co., Ltd. ("Universe Hanhe") in Guangzhou City, China, for the business purpose of conducting
research and development of new pharmaceutical products in order to diversify the Company's product offerings in the near future.
As of March 31, 2023 and as of the date of this report, Universe Hanhe has no active business operations.
On July 27, 2023, the
Company completed a share consolidation of six (6) ordinary shares with par value of $0.003125 per share each in the Company's issued
and unissued share capital into one (1) ordinary share with par value of US$0.01875 (the "Share Consolidation"). As a result
of the Share Consolidation, each six (6) pre-consolidation ordinary shares outstanding were automatically combined and converted to one
issued and outstanding ordinary share without any action on the part of the shareholders. The Company's unaudited condensed consolidated
financial statements were retrospectively restated for effect of the 6-for-1 share consolidation.
Details of the subsidiaries of
the Company as of March 31, 2023 are set out below:
| Date of | Place of | % of | ||||||
| Name of Entity | Incorporation | Incorporation | Ownership | Principal Activities | ||||
| Universe INC | December 11, 2019 | Cayman Islands | Parent, 100 % | Investment holding | ||||
| Universe HK | May 21, 2014 | Hong Kong | 100 % | Investment holding | ||||
| Universe Technology | April 18, 2019 | PRC | 100 % | WFOE, Investment holding | ||||
| Jiangxi Universe | March 2, 1998 | PRC | 100 % | Research and development and manufacturing of modernized traditional Chinese medicines | ||||
| Universe Trade | March 10, 2010 | PRC | 100 % | Sales of modernized traditional Chinese medicines | ||||
| Universe Hanhe | May 12, 2021 | PRC | 100 % | Research and development of new pharmaceutical products |
through its wholly-owned subsidiaries, is primarily engaged in the development, manufacturing and sale of traditional Chinese medicines
derivatives ("TCMD") products targeted to the elderly to address their physical conditions in the aging process and to promote
their general well-being. In addition, the Company also sells biochemical drugs, medical instruments, traditional Chinese medicine pieces
products and dietary supplements (collectively, "third-party products"). All of these TCMD and third-party products are currently
sold to customers including pharmaceutical companies, hospitals, clinics and drugstore chains throughout China.
SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
unaudited condensed consolidated financial statements include the financial statements of Universe INC, Universe HK, Universe Technology,
Jiangxi Universe, Universe Trade and Universe Hanhe. All inter-company balances and transactions are eliminated upon consolidation.
the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States
of America ("US GAAP"), management makes estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates are based on information as of the date of the unaudited condensed consolidated financial
statements. Significant estimates required to be made by management include, but are not limited to, the allowance for estimated uncollectible
receivables, the realizability of advance to suppliers, inventory valuations, useful lives of property, plant and equipment, intangible
assets, the recoverability of long-lived assets, provision necessary for contingent liabilities, revenue recognition and realization of
deferred tax assets. Actual results could differ from those estimates.
operations of the Company are mainly located in the PRC. Accordingly, the Company's business, financial condition, and results of
operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy.
The Company's results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although
the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations
including its organization and structure disclosed in Note 1, this may not be indicative of future results.
and commercialization of new pharmaceutical products is highly competitive, and the industry currently is characterized by rapidly changing
technologies, significant competition and a strong emphasis on intellectual property. The Company may face competition with respect to
its current and future pharmaceutical product candidates from major pharmaceutical companies in China.
business, financial condition and results of operations may also be negatively impacted by risks related to natural disasters, extreme
weather conditions, health epidemics and other catastrophic incidents, which could significantly disrupt the Company's operations.
currency on hand and deposits held by banks that can be added or withdrawn without limitation. The Company maintains most of its bank
accounts in the PRC. Cash balances in bank accounts in the PRC are not insured by the Federal Deposit Insurance Corporation or other programs.
receivable are presented net of allowance for doubtful accounts. The Company determines the adequacy of reserves for doubtful accounts
based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when
there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management's best
estimate of specific losses on individual exposures, as well as a provision on historical trends of collections. Actual amounts received
may differ from management's estimate of credit worthiness and the economic environment. Delinquent account balances are written-off
against the allowance for doubtful accounts after management has determined that collection is not probable. Allowance for uncollectable
balances amounted to $820,177 and $791,827 as of March 31, 2023 and September 30, 2022, respectively.