China Shenghuo Reports Full Year 2007 Financi...(Diluted $ ...),Health

Weighted-Average Shares Outstanding

Basic 19,387,619 17,198,308

Diluted 19,439,077 17,198,308

CHINA SHENGHUO PHARMACEUTICAL HOLDINGS, INC.

AUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended

December 31,

2007 2006

Cash Flows from Operating

Activities:

Net income $ 4,016,640 $ 3,001,496

Adjustments to reconcile net income

to net cash provided by operating

activities:

Depreciation and amortization 676,547 660,632

Deferred income taxes (1,002,915) (200,553)

Minority interest in income of

subsidiaries 295,143 313,444

Stock issued for services -- 1,118,161

Warrants issued for services 19,968 11,240

Change in current assets and

liabilities:

Accounts receivable 900,437 (7,335,970)

Employee advances (7,024,869) (1,066,054)

Advances to suppliers (595,358) 39,742

Inventory (1,311,644) 1,826,375

Other current assets (140,750) 39,610

Accounts payable (68,893) (208,173)

Accrued expenses and deposits 1,607,130 1,569,452

Advances from customers (236,998) 86,270

Unearned revenue
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