LOS ANGELES, Nov. 14 /PRNewswire-FirstCall/ -- China Sky One Medical, Inc. , one of the leading producers and distributors for external-Chinese medicines in China, has announced third quarter 2006 financial results which will be reported in the Company’s 10-QSB filed with the S.E.C. today.
Financial highlights from the third quarter of 2006 compared to the third quarter of 2005 include:
-- Revenues increased 198% to $6.77 million in 3Q06 from $2.27 million in 3Q05. -- Net income increased 185% to $1.57 million in 3Q06 from $0.55 million in 3Q05. -- Gross income grew 195% to $4.57 million in 3Q06 from $1.55 million in 3Q05 -- Income from operations increased 188% to $1.89 million from $0.66 million in 3Q05
“The Company has reached a major milestone after the close of the Company’s private placement of equity securities in October,” stated Dr. Liu Yan-Qing, Chief Executive Officer and President of China Sky One Medical, “We now have the funds to begin implementing our plan to establish a cord blood stem cell and tissue bank, approved and licensed by the People’s Republic of China (PRC) and Heilongjiang Province, which will diversify our operations and eventually add to the Company’s continuous growth in revenue.”
Quarter Ended September 30, 2006
Revenues increased by 198% in the third quarter to $6.77 million from $2.27 million in the same quarter 2005, resulting in gross income of $4.57 million for the third quarter compared to gross income of $1.55 million in the third quarter of 2005. This was mainly attributable to sales associated with the introduction of numerous new products; an increase in domestic distribution centers; and a new sales line to sell other manufactured brands through its distribution channel.
Net income increased $1.0 million or 185% to $1.57 million for the three months ended September 30, 2006, or $0.14 per share, compared with $548,769, or $0.05 per share, at September 30, 2005.
Cost of sales increased by 206% to $2.2 million in the third quarter as compared to $0.7 million for the third quarter of 2005. This increase is tied to the growth of revenues, which was also due to the Company’s newly implemented sales program.
Nine Months Ended September 30, 2006
Revenues for the nine months ended September 30, 2006 increased by 163% to $15.9 million from $6.0 million in the same period in 2005, resulting in gross income of $11.5 million for the third quarter compared to gross income of $4.2 million in the third quarter of 2005.
Net income increased $2.5 million or 161% to $4.07 million for the nine months ended September 30, 2006, or $0.37 per share, compared with $1.56 million or $0.14 per share for the period ended September 30, 2005.
Balance Sheet
Cash and equivalents increased by $2.8 million or 95% to $5.74 million as of September 30, 2006, compared to $2.94 million at September 30, 2005. This increase was mainly due to funds from bank deposits generated from private stock issuances, of approximately $2.7 million.
Private Placement
China Sky One Medical, Inc., through Harbin Biotech, is in the process of implementing a plan to establish a cord stem cell and tissue bank at its newly established facility outside Harbin, Heilongjiang Province, PRC, which is expected to be completed in 2008 or 2009. The total expected project cost to complete the project is $30 million U.S. Dollars. The Company has recently completed a private offering of $3,000,000 of its equity securities, from which it has received net proceeds of approximately $2.7 million. A large portion of the proceeds from the private offering will be utilized to advance this project, to cover costs of purchasing necessary cell bank equipment; undertaking research and development and purchasing related research equipment; implementing a marketing and promotional plan; and defraying initial overhead and project costs.
Company Events
Through its subsidiaries, the Company has established several long term partnerships with well-known universities and enterprises in the PRC. It has built a gene medicine laboratory through a collaborative effort with Harbin Medical University; established a cell laboratory with North East Agricultural University; and founded a monoclonal antibody laboratory with Jilin University. As a result of one of these collaborations with Harbin Medical University, a product known as “Endothelin-1" is currently under development. At such time as development is successfully completed, the Company will commence efforts to market Endothelin-1 as a new anti-cancer medicine. There can be no assurance, of course, that these development efforts, or that any subsequent efforts to obtain regulatory approvals of the product, will be successful. The Company, in collaboration with Harbin Medical University, has completed a laboratory experimental study pertaining to Endothelin-1, which is required prior to clinical trials, and is currently applying for approval to enter clinical experiments. The Company has ownership of the intellectual property rights pertaining to this technology, and has obtained an invention patent in China.
The Company currently has ten biological products under development. These products are: a human urinary albumin elisa kit; an AMI detection kit; a HIV detection kit; a uterus cancer diagnostic kit; a breast cancer diagnostic kit; a liver cancer diagnostic kit; a rectum cancer diagnostic kit; a gastric cancer diagnostic kit; a gene recombination drug; and a multi-tumor marker protein chip detection kit. The development cycle for these products will be over the next three to four years. The Company is also working to establish two sales networks covering domestic and international markets.
About China Sky One Medical, Inc.
China Sky One Medical, Inc., a Nevada corporation, is a holding company whose principal operations are through its subsidiaries, which are engaged in the manufacture, marketing and distribution of pharmaceutical and medicinal products. Through its wholly owned subsidiaries, American California Pharmaceutical Group, Inc. (“ACPG”), Harbin Tian Di Ren Medical Science and Technology Company (“TDR”), Kangxi Medical Care Product Factory (“Kangxi”), and Harbin First Bio-Engineering Company Limited (“First”), the Company’s principal revenue source is the manufacture and sale of over-the-counter pharmaceutical products.
ACPG, a wholly-owned subsidiary of the Company, operates as a holding company for the other subsidiaries. TDR’s principal business is the manufacture and sale of branded nutritional supplements and over-the-counter plant and herb-based medicinal products. Its manufacturing facilities are in the City of Harbin, Heilongjiang Province. It has evolved into an integrated manufacturer, marketer, and distributor of external use natural Chinese medicinal products sold primarily to and through domestic pharmaceutical chain stores in China with its subsidiaries, Kangxi and First. Kangxi’s principal business activity is to manufacture and sell branded external use Chinese medicine and other natural products under the registered trademark “Kangxi.” It has 6 product lines: spray, ointment, powder, patch, cream, and miscellaneous health and beauty products. It has become one of the leading external use Chinese medicine factories with a full range of product lines and development capacity. First’s principal business activity is to research and develop the use of natural medicinal plants and biological technology products such as New Endothelin-1. First is one of the first companies in Heilongjiang Province conducting research and development of high technology biological products. Its facility is now under final inspection by the Chinese State Food and Drug Administration (“SFDA”) for the qualification as a certified GMP production facility. On July 31, 2006, Kangxi merged with First, with Kangxi’s existing business activities continuing under First. http://www.skyonemedical.com
Certain of the statements made herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People’s Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time
For more information, please contact: Alvin Pan 213-225-6226 Sinavest Corporate Relations www.sinavest.com China Sky One Medical, Inc. and Subsidiaries Consolidated Balance Sheet As of September 30, 2006 (Expressed in US Dollars) (Unaudited) 9/30/2006 12/31/2005 (Unaudited) (Pro forma) ASSETS Current Assets Cash and Cash Equivalents (Note 5) $5,742,310 $ 2,937,333 Accounts Receivable, Net of Allowances (Note 6) 2,142,080 1,258,113 Inventories (Note 7) 469,802 381,140 Subscription Receivable (Note 8) 495,000 - Prepaid Expense - 18,316 Total Current Assets 8,849,192 4,594,902 Property, Plant and Equipment Fixed Assets, net of accumulated depreciation (Note 9) 3,733,275 959,995 Land 510,886 510,886 Construction-in-progress - 2,443,898 Total Property, Plant and Equipment 4,244,161 3,914,779 Other Assets Intangible Assets (Note 10) 3,678,249 578,788 Total Other Assets 3,678,249 578,788 Total Assets $16,771,602 $ 9,088,469 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts Payable and Accrued Expenses (Note 11) $1,091,951 $724,050 Short-term Loans (Note 12) 705,255 495,840 Payable - Related Parties - 18,000 Wages Payable 273,346 122,643 Welfare Payable 127,495 97,745 Taxes Payable (Note 13) 620,572 145,621 Deferred Revenue - Government Grants (Note 14) 73,009 55,782 Total Current Liabilities 2,891,628 1,659,681 Total Liabilities 2,891,628 1,659,681 Commitment and Contingency (Note 20) Shareholders’ Equity Preferred Stock, $0.001 par value; 5,000,000 shares authorized; 0 shares issued and outstanding - - Common Stock, $0.001 par value; 20,000,000 shares authorized; 10,929,370 shares issued and outstanding, 934,605 shares unregistered (Note 8) 11,864 10,929 Additional Paid In Capital 5,380,128 2,847,438 Currency Exchange Adjustment 156,410 57,554 Retained Earnings 8,331,572 4,512,867 Total Shareholders’ Equity 13,879,974 7,428,788 Total Liabilities and Shareholders’ Equity $16,771,602 $ 9,088,469 China Sky One Medical, Inc. and Subsidiaries Consolidated Statement of Operations For the Three Months Ended September 30, 2006 (Expressed in US Dollars) (Unaudited) For the Three Months For the Nine Months Ended September 30 Ended September 30 2006 2005 2006 2005 (Unaudited) (Pro Forma) (Unaudited) (Pro Forma) REVENUES Sales (Note 3) $6,772,575 $2,268,897 $15,888,685 $6,036,590 Government Grant - - 52,244 - Less: Cost of Good Sold 2,207,373 720,962 4,402,127 1,816,171 Gross Profit 4,565,202 1,547,936 11,538,802 4,220,420 OPERATING EXPENSES General, Administrative and Selling Expenses 2,674,507 891,747 6,656,598 2,367,285 Total Operating Expenses 2,674,507 891,747 6,656,598 2,367,285 Income from Operations 1,890,695 656,189 4,882,204 1,853,135 Other Expense (Income) Interest Expenses 10,952 9,021 28,284 9,221 Interest Income (287) - - - Total Other Expense (Income) 10,665 9,021 28,284 9,221 Income before tax provision 1,880,030 647,167 4,853,920 1,843,913 Less: Provision for Income Taxes (Note 15) 313,503 98,398 782,169 281,394 Net Income $1,566,527 $548,769 $4,071,751 $1,562,519 Basic and diluted net income per share 0.14 0.05 0.37 0.14 Weighted average shares outstanding 11,240,905 10,929,370 11,033,215 10,929,370 China Sky One Medical, Inc. and Subsidiaries Consolidated Statement of Cash Flows For the Three Months Ended September 30, 2006 (Expressed in US Dollars) (Unaudited) Cash flows from operating activities: Net income $1,566,527 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 25,492 Compensation expense for stocks and warrants committed 71,111 Changes in assets and liabilities: Increase in accounts receivable (55,741) Increase in inventories (18,672) Decrease in prepaid accounts 63,023 Increase in accounts payable and accrued expenses 135,560 Increase in wages payable 16,832 Increase in welfare payable 14,675 Increase in taxes payable 52,136 Increase in deferred revenue 17,227 Net cash provided by operating activities 1,888,170 Cash flows from investing activities: Increase in fixed assets (2,791,406) Increase in intangible assets (129,345) Decrease in construction-in-process 2,776,700 Net cash used by investing activities (144,051) Cash flows from financing activities: Increase in subscription receivable (495,000) Increase in short-term loans 329,988 Unregistered common stocks (net) 2,153,871 Net cash provided by financing activities 1,988,859 Effect of foreign currency exchange adjustment 43,468 Net increase in cash 3,776,446 Cash at beginning of year 1,965,864 Cash at end of year $5,742,310
China Sky One Medical, Inc.
CONTACT: Alvin Pan of Sinavest Corporate Relations for China Sky OneMedical, Inc., +1-213-225-6226
Web site: http://www.skyonemedical.com/
