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China Sky One Medical, Inc. Announces Record Fourth Quarter and Fiscal Year 2007 Results
Date:4/2/2008

HARBIN, China, April 2, 2008 /Xinhua-PRNewswire-FirstCall/ -- China Sky One Medical, Inc. (OTC Bulletin Board: CSKI) ("China Sky One" or "the Company"), a manufacturer, marketer and distributor of pharmaceutical, medicinal and diagnostic products in China, today announced record financial results for the fourth quarter and fiscal year ended December 31, 2007.

Fourth Quarter 2007 Highlights

-- Total revenues increased to $12.7 million, up 223% from the fourth

quarter of 2006

-- Gross profit reached $9.9 million, up 201% from the fourth quarter of

2006

-- Operating income totaled $4.9 million, up from a loss of $532,262 in

the fourth quarter of 2006

-- Net income increased to $4.1 million, or $0.31 per diluted share, up

from a loss of $1.0 million, or ($0.08) per diluted share, in the

fourth quarter of 2006

Full Year 2007 Highlights

-- Total revenues increased 148% in 2007 to $49.3 million

-- Gross profit increased 159% in 2007 to $38.4 million

-- Gross profit margin increased 328 basis points to 77.8%

-- Operating income increased 863% to $18.6 million

-- Net income increased to $15.3 million, or $1.15 per diluted share, up

from $0.6 million, or $0.05 per diluted share in 2006

-- New Bio-Chemical Products series generated $3 million in revenue in

2007

-- Began exporting to overseas markets, generating $12.4 million in

revenues

-- Entered into an exclusive strategic partnership with Takasima

Industries to sell the Company's patch products in Malaysia

"This was a very successful year for China Sky One, both in terms of financial performance and the execution of our business strategy. We achieved significant growth in revenues, due in large part to our strategy of hiring direct territory managers and sales agents to assure that our products and their benefits are reaching our customers./p>

2007 2006

Cash flows from operating activities

Net Income $ 15,332,945 $ 624,415

Adjustments to reconcile net cash provided by

operating activities

Depreciation and amortization 443,063 246,556

Share-based compensation expense 235,468 2,878,031

Preferential conversion feature of note -- 177,803

Net change in assets and liabilities

Accounts receivables and other receivables (7,478,964) (1,994,678)

Inventories (73,142) 105,655

Construction in progress -- 2,517,215

Prepaid expenses and other 93,463 (87,979)

Accounts payable and accrued liabilities 1,963,542 101,698

Related party payable -- (18,540)

Wages payable 102,534 141,776

Welfare payable 70,280 45,056

Taxes payable 960,170 433,419

Deferred revenue (47,879) 12,112

Net cash provided by operating activities 11,601,480 5,182,539

Cash flows from investing activities

Purchases of fixed assets (2,222,448) (3,022,448)

Land deposit (8,003,205) --

Purchase of intangible assets (35,280) (1,574,059)

Net cash used in investing activities (10,260,933) (4,596,507)

Cash flows from financing activities

Sale of common stock for cash -- 2,715,000

Issuance of convertible notes -- 200,000

Proceeds from short-term loan -- 15,832

Proceeds from warrants conversion 515,834 --

Payment to short-term loan (548,350) --

Net cash provided by (used in) financing

activities (32,516) 2,930,832

Effect of exchange rate 1,296,039 132,603

Net increase in cash 2,604,070 3,649,467

Cash and cash equivalents at beginning of year 6,586,800 2,937,333

Cash and cash equivalents at end of year $ 9,190,870 $6,586,800

Supplemental disclosure of cash flow information

Interest paid $ 10,457 $ 36,429

Taxes paid $ 2,359,003 $ 767,701

Non-cash Investing and financing activities:

Cashless exercise of warrants $ 5 $ --

For more information, please contact:

China Sky One Medical, Inc.

Ms. Xiaoyan Han, CFO

Tel: +86-133-5999-3681

Email: tdrhan@163.com

CCG Elite Investor Relations Inc.

Mr. Crocker Coulson, President

Tel: +1-646-213-1915 (New York)

Email: crocker.coulson@ccgir.com

We also introduced a new line of bio-chemical products and expanded into the high margin overseas markets," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc. "We have a strong pipeline of new products, and plan to begin clinical testing of eight new kit products in 2008. We are also excited about our research and development efforts in the areas of stem cell research and our cancer treatment drug Endothelin-1. We hope to complete clinical trials of Enothelin-1 in 2013 and plan to open a cord stem cell and tissue bank at our newly established facility outside Harbin in late 2008 or 2009."

Fourth Quarter 2007 Results

China Sky One's total revenues in the fourth quarter were $12.7 million, an increase of 223% on year-over-year basis. This was primarily the result of strong performance associated with the Company's continued efforts to develop its sales distribution channels. Product sales increased 237.5% year-over- year to $9.3 million, or 73.5% of total revenues. Contract sales increased 188.2% year-over-year to $3.4 million and accounted for 26.5% of revenues in the fourth quarter of 2007.

Gross profit in the fourth quarter of 2007 was $9.9 million, an increase of 201% on year-over-year basis. Gross margin was 77.7% of total revenues, down from 83.2% of total revenues in the fourth quarter of 2006. The decline in gross margin was due to high production efficiency of core products according to the market demand, which resulted in a temporary, unusually high gross margin in the fourth quarter of 2006.

Operating expenses in the fourth quarter of 2007 were $4.9 million, up 30% from $3.8 million in the fourth quarter of 2006. This increase was much less than the increase in sales, although it was primarily the result of higher selling, general and administrative expenses associated with the Company's sales growth. Research and development expenses were $1.4 million in the fourth quarter, compared with $37,327 in the fourth quarter of 2006. Operating expenses were 38.8% of total revenues in the fourth quarter of 2007, improved from 96.7% in the fourth quarter of 2006 due to efficiencies as the Company grows in scale.

Operating income was $4.9 million, compared with a loss of $532,262 in the fourth quarter of 2006. Operating margin was 38.9%, compared to negative 13.5% in the fourth quarter of 2006.

Provision for income taxes was $0.9 million in the fourth quarter of 2007, compared to $0.3 million in the same quarter of the previous year.

Net income for the fourth quarter of 2007 was $4.1 million, or $0.31 per diluted share, compared to loss of $1.0 million, or ($0.08) per diluted share, in the fourth quarter of 2006.

Full Year 2007 Results

For the full year 2007, total revenues were $49.3 million, up 148% from $19.8 million in 2006. Product sales increased 171% year-over-year to $36.3 million, or 74% of total revenues, and contract sales increased 104% year-over-year to $13.0 million, or 26% of total revenues, in 2007. Gross profit for the full year 2007 was $38.4 million, an increase of 159% from $14.8 million in 2006. Gross profit margin increased from 74.5% in 2006 to 77.8% in 2007. Operating income was $18.6 million, up 863% from $1.9 million in 2006. Operating margin was 37.7%, up from 9.7% in 2006. Net income for 2007 was $15.3 million or $1.15 per diluted share, compared to $0.6 million, or $0.05 per diluted share, in 2006.

Financial Condition

As of December 31, 2007, China Sky One had $9.2 million in cash and equivalents, approximately $15.4 million in working capital, and no debt. Stockholders' equity at December 31, 2007 was $32.2 million, a 125% increase over the $14.3 million recorded at December 31, 2006. The Company generated $11.6 million in net cash flow from operating activities in 2007, up from $5.2 million in 2006.

In February 2008, the Company completed a private placement of its common stock and warrants generating $25.0 million in gross proceeds.

Recent Events

In February 2008, China Sky signed an agreement to acquire Heilongjiang Tianlong Pharmaceutical, Inc. ("Tianlong"), an external-use drug manufacturing specialty pharmaceutical company, through which the Company will obtain $8.3 million in assets, which include $0.5 million in inventory, land use rights, GMP-certified manufacturing facilities, state-of-the-art production equipment, a research and development center, a portfolio of 69 approved drugs (in 98 forms) and a pipeline of 38 new drugs, all of which have been submitted to the SFDA for approval. The acquisition is subject to a due diligence review of Tianlong, as well as approval by the appropriate regulatory authorities in the PRC. In 2007, Tianlong generated revenue of $5.2 million with a net profit margin of 13%. China Sky One Medical expects Tianlong to be accretive to earnings, generating revenues of approximately $7.5 million and net profit of approximately 30% in 2008.

In March 2008, the Company appointed four new independent directors to its board: Song Chun Fang, Jiang Qi Feng, Zhao Jie and Qian Xu Feng. As a result, the number of directors has increased from three to seven and the majority of the Company's directors are now independent. The Company also formed finance, executive, compensation and corporate governance and nominating committees.

In March 2008, the Company filed an application to list its shares on the American Stock Exchange.

2008 Outlook

"In 2008, we expect to see continued growth in sales and anticipate a growing contribution from sales of our proprietary products. We plan to utilize the capital raised in our private placement to fund our exciting new R&D initiatives and to make strategic acquisitions. We anticipate completing complete our acquisition of Tianlong, which will not only be accretive to earnings, but will expand our product lines and improve our production and R&D capabilities. Additionally, we plan to use our sales and marketing expertise and the benefits of scale to improve profitability," said Mr. Liu.

Conference Call

The Company will conduct a conference call at 11:00 a.m. Eastern Time on Thursday, April 3, 2008 to discuss the fourth quarter and fiscal year 2007 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 888-552-2116. International callers should dial 706-634-2457. The Conference ID for this call is 42056418. If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Thursday, April 3, 2008 at 12:30 p.m. Eastern Time. To access the replay, dial 800-642-1687, international callers dial 706-645-9291, conference ID 42056418.

About China Sky One Medical, Inc.

China Sky One Medical, Inc., a Nevada corporation, is engaged in the manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic 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 manufactures and distributes over-the-counter pharmaceutical products as its primary revenue source. For more information, visit 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. The Company cannot provide any assurance that its application to list on the American Stock Exchange will be approved or that the liquidity and marketability of its shares will improve. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the inability of the company to meet the listing standards, 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 Follow--

China Sky One Medical, Inc. and Subsidiaries

Audited Consolidated Statements of Operations

Years Ended December 31,

2007 2006

Revenues $ 49,318,308 $ 19,881,715

Cost of Goods Sold 10,939,531 5,063,084

Gross Profit 38,378,777 14,818,631

Operating Expenses

Selling, general and administrative 16,163,577 10,738,285

Depreciation and amortization 443,063 121,522

Research and development 3,158,351 2,026,788

Total operating expenses 19,764,991 12,886,595

Other Income (Expense)

Other income 48,889 --

Interest expense (10,557) (227,857)

Total other income (expense) 38,332 (227,857)

Net Income Before Provision for Income Tax 18,652,118 1,704,179

Provision for Income Taxes

Current 3,319,173 764,462

Deferred -- 315,302

3,319,173 1,079,764

Net Income $ 15,332,945 $ 624,415

Basic Earnings Per Share $ 1.27 $ 0.05

Diluted Earnings Per Share $ 1.15 $ 0.05

Basic Weighted Average Shares Outstanding 12,094,949 12,031,536

Diluted Weighted Average Shares Outstanding 13,370,528 12,941,283

The Components of Other Comprehensive

Income

Net Income $ 15,332,945 $ 624,415

Foreign currency translation adjustment 1,849,724 364,565

Comprehensive Income $ 17,182,669 $ 988,980

China Sky One Medical, Inc. and Subsidiaries

Audited Consolidated Statements of Operations

Three Months Ended December 31,

2007 2006

Revenues $ 12,723,375 3,940,786

Cost of Goods Sold 2,835,176 660,957

Gross Profit 9,888,199 3,279,829

Operating Expenses

Selling, general and administrative 3,365,194 3,788,636

Depreciation and amortization 166,556 (13,872)

Research and development 1,406,727 37,327

Total operating expenses 4,938,477 3,812,091

Other Income (Expense)

Other income 34,580 --

Interest expense 5,937 (199,573)

Total other income (expense) 40,517 (199,573)

Net Income Before Provision for Income Tax 4,990,239 (731,835)

Provision for Income Taxes

Current 885,209 (17,707)

Deferred -- 315,302

885,209 297,595

Net Income $ 4,105,030 $ (1,029,430)

Basic Earnings Per Share $ 0.34 $ (0.09)

Diluted Earnings Per Share $ 0.31 $ (0.08)

Basic Weighted Average Shares Outstanding 12,094,949 12,031,536

Diluted Weighted Average Shares Outstanding 13,370,528 12,941,283

The Components of Other Comprehensive Income

Net Income $ 4,105,030 $ (1,029,430)

Foreign currency translation adjustment 995,154 364,565

Comprehensive Income $ 5,100,184 $ (708,333)

China Sky One Medical, Inc. and Subsidiaries

Audited Consolidated Balance Sheets

December 31, 2007 and 2006

2007 2006

Current Assets

Cash and cash equivalents $ 9,190,870 $ 6,586,800

Accounts receivable, net 10,867,106 3,199,026

Other receivables 40,200 --

Inventories 371,672 278,562

Prepaid expenses 17,707 103,734

Total current assets 20,487,555 10,168,122

Property and equipment, net 6,861,432 4,503,397

8,003,205

Intangible assets, net 1,933,014 2,009,517

$ 37,285,206 $16,681,036

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Accounts payable and accrued expenses $ 2,845,308 $ 822,786

Wages payable 381,482 260,290

Welfare payable 221,911 141,489

Taxes Payable 1,567,188 566,416

Deferred revenue 24,504 67,541

Notes Payable -- 511,672

Total current liabilities 5,040,393 2,370,194

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, 12,228,363 and

12,031,536 issued and outstanding, respectively) 12,228 12,032

Additional paid-in capital 9,572,608 8,821,502

Accumulated other comprehensive income 2,271,843 422,119

Retained earnings 20,388,134 5,055,189

Total stockholders' equity 32,244,813 14,310,842

$ 37,285,206 $16,681,036

China Sky One Medical, Inc. and Subsidiaries

Audited Consolidated Statements of Cash Flows

Years Ended December 31,<
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SOURCE China Sky One Medical, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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