LOS ANGELES, Nov. 15 /Xinhua-PRNewswire/ -- China Sky One Medical, Inc.
(OTC Bulletin Board: CSKI), 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
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