omniture

China Sky One Medical Reports Third Quarter 2007 Financial Results

2007-11-14 05:58 569

-- 3Q07 Revenue Up 148% to $16.8 Million --

-- 3Q07 Net Income Up 195% to $5.4 Million --

HARBIN, China, Nov. 13 /Xinhua-PRNewswire-FirstCall/ -- China Sky One Medical, Inc. (OTC Bulletin Board: CSKI), a manufacturer, marketer and distributor of pharmaceutical, medicinal and diagnostic products in China, today announced financial results for the three month and nine month periods ending September 30, 2007.

Financial Highlights for the Third Quarter of 2007 Include:

-- Revenue increased 148% to $16.8 million from $6.8 million in 3Q06

-- Gross profit increased 187% to $13.1 million from $4.6 million in 3Q06

-- Gross margin increased 10.7% to 78.1% compared to 67.4% in 3Q06

-- Operating income increased 254% to $6.6 million from $1.9 million in

3Q06

-- Net income increased 195% year over year to $5.4 million, or $0.44

per diluted share

Mr. Liu Yan-Qing, Chief Executive Officer and President of China Sky One Medical, Inc. stated, "We are so pleased with our third quarter and nine month financial results, which reflected record-high revenue and net income growth and exceeded our expectations. We continue to operate in a highly favorable market that is outpacing GDP growth, while our extensive distribution network and 1,400 sales representatives strengthen our presence throughout China's key cities like Shanghai and Beijing."

Third Quarter Ended September 30, 2007

Revenue for the third quarter increased 148% to $16.8 million from $6.8 million in the third quarter of 2006, which is mainly due to continued sales growth of the Company's own product line and a contract service line of manufacturer's products sold through the Company's distribution channel. During the third quarter, the Company continued to experience robust export sales of Slim Patch, which contributed $4.5 million of revenue, up significantly from approximately $435,000 in the third quarter of 2006. Sales of other manufactured brands through the Company's distribution network contributed $4.3 million of revenue during the third quarter, up from $1.8 million in the same period of 2006.

Liu continued, "Demand for our diverse product portfolio of Traditional Chinese Medicine, Western medicines and diagnostic kits as well as for our leading TDR and Kangxi brands, drove our revenue results in the third quarter of 2007. Additionally, we were pleased with the performance from our Slim Patch in Malaysia, where it is sold under the Takasima brand and contributed $2.5 million to our export sales in the quarter."

Gross profit increased 187% to $13.1 million from $4.6 million in the third quarter of 2006. Gross margin in the third quarter 2007 increased to 78.1% compared to 67.4% in the prior year's period, which exceeded management's expectations. Strong gross margin performance reflects China Sky One Medical's bargaining position with raw material suppliers, as the Company increased its purchasing power with additional scale.

Operating income in the third quarter of 2007 was $6.6 million compared to $1.9 million in the same period of 2006. Operating margin was 39.3%. Selling, general and administrative expenses increased 95% to $5.1 million from $2.6 million in the third quarter of 2006, and include advertising expenses of $1.5 million, as the Company invests in its proprietary brands. Increased expenses also reflect new hires in the sales force. Research and development expenses increased to $1.4 million from only $56,086 in the same period last year, reflecting the Company's increasing efforts on product development.

Net income for the third quarter of 2007 was $5.4 million, or $0.44 per diluted share, compared to $1.8 million in the third quarter of 2006.

Nine Months Ended September 30, 2007

For the nine months ended September 30, 2007, revenue increased 130% to $36.6 million from $15.9 million in the first nine months of 2006. During this same time period, gross profit improved 147% to $28.5 million from $11.5 million. Gross margin of 77.9% compared to 72.4% in the first nine months of 2006. Operating income in the first nine months of 2007 was $13.7 million compared to $1.7 million in the same period of 2006. Net income was $11.2 million, or $0.90 per diluted share, compared to $1.7 million, or $0.15 per diluted share, in the first nine months of 2006.

Balance Sheet

As of September 30, 2007, the Company had $7.0 million of cash, compared to $5.2 million at June 30, 2007. As of September 30, 2007, the Company had working capital of $10.3 million and no long-term debt.

Mr. Liu added, "In addition to our already diversified portfolio of proprietary and 3rd party manufactured TCM and Western medicinal products, we continue to develop our rapid diagnostic kit product line and are in the midst of developing 18 different products for oncology and infectious disease. We believe these exciting new products position us well for long-term growth."

"As we move through the last part of the year, we expect to realize fourth quarter revenue of at least $13.0 million, which is up more than three-fold from $3.9 million in the fourth quarter of last year despite the seasonality of the slow winter months on spray product sales. We also continue to anticipate gross margins in the mid-70s and we look forward to entering 2008 with continued sales momentum throughout our diversified product portfolio," concluded Liu.

Business Update

-- Receives government grant for development of new cancer products. As previously announced, the Company will receive a grant of $1.5 million over the next two years in support of the Company's research and development efforts on six cancer diagnostic products. The Company expects to commence the clinical trial in the first half of 2008 to test sensitivity.

-- Eight of the Company's new diagnosis kit products entered into the clinical trial stage in August 2007, including: Rapid Diagnosis Kit for Human Urine Microalbumin, Urine One Step LH Test, Rapid Detect Kit for Prealbumin, Rapid Detect Kit for APO B, Rapid Detect Kit for APO A1, Rapid Detect Kit for Magnesium Ion, Semi-quantitive Uterine Cancer One Step Test, and Semi-quantitive Calcium Ion.

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 manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic kit products. Through its wholly-owned subsidiaries, Harbin Tian Di Ren Medical Science and Technology Company ("TDR") 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. http://www.skyonemedical.com.

Safe Harbor Statement

Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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. 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.

(financial tables to follow)

China Sky One Medical, Inc. and Subsidiaries

Condensed Consolidated Balance Sheet

September 30, 2007

(Unaudited)

ASSETS

Current Assets

Cash and cash equivalents $6,982,621

Accounts receivable, net 7,778,992

Other receivables 29,691

Inventories 978,314

Prepaid expenses 20,559

Total current assets 15,790,177

Property and equipment, net 4,658,655

Construction in progress 2,056,063

Intangible assets, net 1,929,362

Deposit on land use rights 7,780,234

$32,214,491

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable and accrued

expenses $3,064,393

Wages payable 383,831

Welfare payable 197,821

Taxes Payable 1,813,278

Total current liabilities 5,459,323

Stockholders' Equity

Preferred stock ($0.001 par value,

5,000,000 shares authorized,

none issued and outstanding) --

Common stock ($0.001 par value,

20,000,000 shares authorized,

12,114,196 issued and

outstanding) 12,114

Additional paid-in capital 9,163,027

Accumulated other comprehensive

income 1,296,923

Retained earnings 16,283,104

Total stockholders’ equity 26,755,168

$32,214,491

China Sky One Medical, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

For the Three and Nine Months Ended September 30, 2007 and 2006

(Unaudited)

For the Three Months For the Nine Months

Ended September 30, Ended September 30,

2007 2006 2007 2006

(Restated) (Restated)

Revenues $16,770,570 $6,772,575 $36,594,933 $15,940,929

Cost of Goods Sold 3,669,012 2,207,373 8,104,355 4,402,127

Gross Profit 13,101,558 4,565,202 28,490,578 11,538,802

Operating Expenses

Selling, general and

administrative 5,100,408 2,618,421 12,798,383 7,684,244

Depreciation and

amortization 55,565 30,381 276,507 135,394

Research and

development 1,355,784 56,086 1,751,624 1,989,461

Total operating

expenses 6,511,757 2,704,888 14,826,514 9,809,099

Other Income (Expense)

Interest income and

other income 2,282 -- 14,309 --

Interest expense -- (10,952) (16,494) (28,284)

Total other income

(expense) 2,282 (10,952) (2,185) (28,284)

Net Income Before

Provision for Income

Tax 6,592,083 1,849,362 13,661,879 1,701,419

Provision for Income

Taxes

Current 1,145,812 -- 2,433,964 468,666

Deferred -- -- -- (468,666)

1,145,812 -- 2,433,964 --

Net Income $5,446,271 $1,849,362 $11,227,915 $1,701,419

Basic Earnings Per

Share $0.45 $0.16 $0.93 $0.15

Basic Weighted Average

Shares Outstanding 12,110,201 11,240,905 12,077,491 11,033,215

Diluted Earnings Per

Share $0.44 $0.16 $0.90 $0.15

Diluted Weighted

Average Shares

Outstanding 12,502,332 11,240,905 12,468,186 11,033,215

The Components of Other

Comprehensive Income

Net Income $5,446,271 $1,849,362 $11,227,915 $1,701,419

Foreign currency

translation

adjustment 288,267 14,489 874,804 43,468

Comprehensive Income $5,734,538 $1,863,851 $12,102,719 $1,744,887

Source: China Sky One Medical, Inc.
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