We reimburse our sales representatives for selling and marketing expenses when they submit the appropriate documentation. We reimburse our sales representatives for their accrued selling expenses when related accounts receivable are collected.
General and administrative expenses: General and administrative expenses were approximately $5.1 million for the year ended December 31, 2012, an increase of approximately $0.1 million, or 2%, from approximately $5.0 million for the year ended December 31, 2011. The increase was mainly due to increased travel expense and expenses related to the commencement of operations in 2012 by Shilin Shenghuo Pharmaceutical Co., a subsidiary of the Company engaged in the business of medicinal herb planting and wellness tourism.
Research and development expenses: Research and development expense for the year ended December 31, 2012 was approximately $0.63 million as compared to approximately $0.71 million for the year ended December 31, 2011. The decrease was primarily due to an absence of clinical testing expenses for Sh1002 in America in 2012. We conducted Phase I clinical tests of Sh1002 in America in 2011 but did not proceed with Phase II testing in 2012.
Net other expense: Net other expense, which includes interest income, subsidy income, interest expense, other income and other expense, was approximately $1.1 million for the year ended December 31, 2012 as compared to approximately $1.5 million for the year ended December 31, 2011, a decrease of approximately $0.4 million, or 27%. The decrease was mainly due to an increase in subsidy income from the provincial government as compared to the same period in 2011 and less interest expenses in 2012.
Income tax benefit: Income tax benefit was $494,313 for the year ended December 31, 2012 as compared to income tax benefit $11,765 for the year ended December 31, 2011. The tax benefit was mainly from the medicine business of the Company, deferred tax benefits from accrued expenses and provisions for inventory.
Net (loss) income attributable to stockholders: We incurred a net loss attributable to stockholders of approximately $2.5 million for the year ended December 31, 2012 as compared to net income attributable to stockholders of approximately $0.1 million for the year ended December 31, 2011. The net loss attributable to stockholders was primarily due to the increase of cost of sales described above.
About China Shenghuo
Founded in 1995, China Shenghuo is primarily engaged in the research, development, manufacture, and marketing of Sanqi-based medicinal and pharmaceutical, nutritional supplement and cosmetic products. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co., Ltd., it owns thirty SFDA (State Food and Drug Administration) approved medicines, including the flagship product Xuesaitong Soft Capsules. At present, China Shenghuo incorporates a sales network of agencies and representatives throughout China, which markets Sanqi-based traditional Chinese medicine to hospitals and drug stores as prescription and OTC drugs primarily for the treatment of cardiovascular, cerebrovascular and peptic ulcer disease. The Company also exports medicinal products to Asian countries such as Indonesia, Singapore, Japan, Malaysia, and Thailand and to European countries such as the United Kingdom, Tajikistan, Russia and Kyrgyzstan.
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