omniture

China Sky One Medical Reports Third Quarter 2006 Financial Results

China Sky One Medical, Inc.
2006-11-15 13:00 2382

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

Source: China Sky One Medical, Inc.
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