SHANGHAI, China, May 2 /Xinhua-PRNewswire-FirstCall/ -- Aamaxan Transport Group, Inc., (the "Company" or "ATG") (OTC Bulletin Board: AAXT) today announced that, effective April 15, 2008, it has completed the acquisition of all the outstanding common stock of Asian Business Management Group Limited, a British Virgin Islands corporation ("ABM"), pursuant to a share exchange agreement. ATG acquired all of the issued and outstanding shares of ABM common stock in exchange for 14,991,812 original issue shares of the Company's common stock (the "Share Exchange").
ABM, through its direct and indirect subsidiaries, including Shanghai Medical Technology Co., Ltd. ("Shanghai Medical"), a PRC company, is the largest provider of Hemodialysis equipment ("HDE") and other related supplies and services, including disposable and diagnostic products and pharmaceuticals, throughout Eastern China.
Simultaneously with the Share Exchange on April 14, 2008, the Company completed a private placement with institutional and accredited investors which resulted in gross proceeds to the Company of approximately $12.5 million through the issuance of approximately 4.0 million shares of Senior Convertible Preferred Stock, in addition to 2.0 million warrants to purchase common stock at $3.91 per share. As part of the private placement, management entered into a "make good agreement" and has placed 4.0 million of its shares into an escrow to secure its obligations to meet specific "Earnings per Share" targets for 2007 and 2008 of $0.31 and $0.45 respectively. If the targets are not achieved, a number of shares derived from the formula will be transferred pro-rata to the investors in the private placement.
With the implementation of China's National Healthcare Reform, the existing Dialysis patients market is projected to grow by 200% to 300% from 2007 to 2010. Total patients are expected to reach more than 350,000 by 2010 with a total product market value that exceeds $1 Billion.
In 2007, Shanghai medical distributed approximately 25% of the HD products and supplies in the PRC and is the largest single distributor of HD equipment and supplies in the PRC. The Company's existing clients include over 200 medical facilitates, which are comprised of 60 hospitals (including Shanghai's top five), blood bank and diagnostic centers in Shanghai and Eastern China, and thirty public health centers. Shanghai Medical utilizes over 20 distributors to reach Eastern China and has strategically partnered with the largest global providers of blood dialysis and diagnostic equipment, Fresenius (NYSE: FMS), to ensure that it meets the growing demand for Chinese dialysis products.
"We are very pleased to complete this financing and would like to thank the investors who participated," stated Mr. Chen Zhong, CEO and Chairman of Shanghai Medical. "The working capital will enable us to pursue our vision and growth strategy of becoming a dominant integrated service provider of Hemodialysis (HD) and Renal Care products in China. Specifically, we expect to expand both our geographic and vertical reach by strengthening our distribution and sales network, which will be complemented by an expanded portfolio of products and services. Additionally, we plan to expand into HD and Diagnostic service centers. The Company will continue to opportunistically evaluate acquisition opportunities which would complement our business. Finally, we will continue to improve both our operating efficiencies and profitability as we gain incremental market share by exploiting the inherent leverage in our business model."
2007 Year End Financial Results
Net revenues increased approximately 44.8% to $34.9 million for the year ended December 31, 2007, as compared to $24.1 million for 2006. Cost of sales increased by 54.9% to $21.5 million from $13.8 million for 2006. Gross profit for 2007 was approximately $13.4 million, an increase of 31.7% or $3.2 million from $10.2 million for 2006 with gross margins of 38.4% and 42.3% in each respective period. Operating expenses for the twelve months ended December 31, 2007 increased to $2.5 million from $1.1 million for the same period ended December 31, 2006. Income from operations was $10.9 million, compared to $9.1 million for 2006, which represented operating margins of 31.1% and 37.7% respectively.
For 2007, net income was $7.2 million with earnings of $0.32 per diluted share, compared to 2006 net income of $6.1 million.
Cash and cash equivalents totaled $2.3 million as of December 31, 2007 compared to $1.9 million on December 31, 2006, representing an increase of 21.2%. The company had $4.4 million in working capital and a current ratio of 1.95 to 1. Accounts receivable rose to $2.4 million from $2.2 million in 2006. On December 31, 2007 Shareholders' Equity was $14.1 million compared to $7.9 million on December 31, 2006.
Assuming a conversion of the convertible preferred shares, the company has 20.0 million shares outstanding post the merger and capital raise exclusive of the warrants.
About Shanghai Medical Technology Co., Ltd.
Shanghai Medical is a leading provider of Hemodialysis and renal care equipment, supplies, and related support services in Eastern China. Specifically, Shanghai Medical distributes and sells Hemodialysis equipment ("HDE") which includes the HD 4008B machine and CRRT machine, and disposable and diagnostic products used in Hemodialysis, including the F6HPS disposable, throughout the People's Republic of China.
Cautionary Statement Regarding Forward Looking Information
This press release may contain forward-looking information about the Company, Asian Group Management Group Ltd and Shanghai Medical. Forward-looking statements are statements that are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology, and statements which may include discussions of strategy, and statements about industry trends future performance, operations and products of each of the entities referred to above. Actual performance results may vary significantly from expectations and projections as a result of various factors, including without limitation and the risks set forth "Risk Factors" contained in the Company's Current Report on Form 8-K filed on April 21, 2008.
The shares of common stock issued in connection with the transactions have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration under the Securities Act and applicable state securities laws or an applicable exemption from those registration requirements. The Company has agreed to file a registration statement covering the resale of the shares of common stock issued in the private placement and certain other shares, within 45 days of closing.
This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities referenced herein in any jurisdiction to any person.
SOURCE Aamaxan Transport Group, Inc.; Shanghai Medical Technology Co., Ltd.