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China YCT International Group, Inc. Announces Third Quarter Fiscal 2009 Results

NEW YORK, Feb. 18 /PRNewswire-Asia-FirstCall/ -- China YCT International Group Inc., (OTC Bulletin Board: CYIG) ("China YCT" or "the Company"), a leading company engaged in the business of developing, manufacturing and marketing gingko-based products through its wholly owned subsidiary, Shandong Spring Pharmaceutical Co. Ltd, today announced its fiscal 2009 third quarter results for the period ended December 31, 2008.

    Third Quarter Highlights

    -- Revenue increased 60.4% period-over-period to $8.6 million
    -- Gross profit was $4.8 million, up 61.9% versus the third quarter 2008
    -- Income from operations grew to $3.0 million, an increase of 91.6%
       versus the third quarter 2008
    -- Net Income was $2.2 million, representing an increase of 130.3% period-
       over period

"Through the third quarter fiscal 2009, we continued to benefit from the ongoing trend of growth and expanding acceptance of our products. During the first nine months of fiscal year 2009, April 1 2008 through December 31, 2008, the Company kept experiencing the emergence and development of Shandong Spring Pharmaceutical as a marketing force. Having commenced revenue-producing operations only in January 2007, we realized $981,849 in revenue for the year ended March 31, 2007," commented Mr. Yan Tinghe, China YCT's Chairman and CEO, "During the first nine months of fiscal year 2009, which ended on December 31, 2008, we realized $21,973,438 in revenue."

Revenue for the third quarter of fiscal 2009 increased to $8.6 million, up 60.4% from $5.3 million for the third quarter of fiscal 2008. Overall, higher revenues were primarily attributable to increasing sales volume and income from our core business segments. During the past 2 years of operations, we have a total of 38 products each contributed to revenue, including health care supplements, cosmetics and toiletries and daily necessities, and no single product has accounted for more than 20% of our revenue. For the quarter ended December 31, 2008, health care supplements segment accounts for 61.4% of sales, and Cosmetics segment and Daily necessities segment accounts for 26.8% and 11.8% of sales, respectively.

Gross profit for the third quarter was $4.8 million, up 61.9% from gross profit of $2.9 million for the third quarter of fiscal 2008. Gross margin was 56.4% compared to 55.5% in the same period a year ago. The increase in gross profit is a result of our increase in revenues as we experienced an increase in demand for our products. Our gross margin largely remained unchanged. The increase in gross profit was mainly due to the increased revenue.

Selling expenses for the third quarter of fiscal 2009 were $1.7 million, or 20.4% of revenue, compared to $1.4 million, or 26.4% of revenue for the third fiscal quarter of fiscal 2008. The increase in the amount of SG&A expenses was primarily due to the increase in advertising expenditures. However, this increase can not be directly used to track and measure our ongoing SG&A expenses stream trend. It needs to be examined and measured in line with the movement of net sales. In particular, for the three-month periods ended December 31, 2008, the SG&A expenses to sales ratio is 20%, where it is 26% for the same period of fiscal year 2008. It sufficiently indicates we have made progress on reasonably controlling SG&A expenses. From this perspective, for the nine months ended December 31, 2008, our SG&A expense to sales ratio was 16%, representing a descending trend as compared to 23% for nine months ended December 31, 2007.

Operating income for the third quarter was $3.0 million compared to operating income of $1.5 million in the same period a year ago. Contributing to the operating income for the quarter was the significant increase in our sales.

Effective in January 2008, the income tax rate imposed by the government of China was reduced from 33% to 25%. The new tax provisions added to our improved results. Our net income for the third quarter of fiscal 2009 was $2.2 million compared to net income of $0.9 million in the prior year period. Fully diluted income per share was $0.08 compared to fully diluted earnings per share of $0.03 in the comparable period a year ago. Weighted average diluted shares outstanding for the quarter remained at 29.3 million.

Nine Months Financial Results

Revenues for the first nine months of fiscal 2009 were $21.9 million, up 106.7% from revenues of $10.6 million in the first nine months of fiscal 2008. Gross profit was $12.3 million, up 108.9% from gross profit of $5.9 million for the nine months of fiscal 2008. Gross margin was 56.1% compared to 54.9% for the comparable period a year ago. Operating income was $8.6 million, up 152.9% from operating income of $3.4 million in the first nine months of fiscal 2008. Net income was $6.4 million, up 188.4% from net income of $2.2 million in the same period a year ago. Fully diluted earnings per share were $0.22 compared to $0.08 in the first nine months of fiscal 2008. Diluted weighted average shares outstanding stayed at 29.3 million.

Financial Condition

As of December 31, 2008, the Company had $9,798,162 in working capital. Cash and cash equivalents were $10,297,023. In addition to $10,297,023 in cash and cash equivalents, the other significant portion of our current working capital consists of a loan receivable of $954,818 from Changqing Paper Co., an affiliated company also majority owned by our chairman, Mr. Yan Tinghe. Shareholders' equity was $15.7 million, compared to $9.0 million as of March 31, 2008. The Company generated $9.7 million in cash flow from operating activities in the first nine months of fiscal 2009.

"We believe that the mid- to long-term market opportunity for our products is growing at noticeable speed. Moreover, we have strengthened our balance sheet by reducing other receivable and current liabilities," Mr. Yan continued. "While the impact of the global economic slowdown will persist for the foreseeable future, we are seeing stronger operating results quarter-to- quarter, and we believe that, on a year-to-year basis, we will continue our strong growth into fiscal year 2010."

About China YCT International Group Inc.

Established in 2005, China YCT International Group, Inc., through its operating subsidiary, Shandong Spring Pharmaceutical Co. Ltd. ("Shandong Spring Pharmaceutical"), a corporation organized under the laws of the People's Republic of China, is a high-tech enterprise, which applies modern biological technology and integrates research & development, production and sales of ginkgo healthcare products, ginkgo cosmetics, daily-use chemical products, ginkgo glycoside products and biological medicines. All of Shandong YCT's businesses are currently in China.

Forward-Looking Statements

The statements contained herein that are not historical facts are "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should," or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. In particular, our statements regarding the potential growth of the markets are examples of such forward-looking statements. The forward-looking statements include risks and uncertainties, including but not limited to, general economic conditions and regulatory developments, not within our control. The factors discussed herein and expressed from time to time in our filings with the Securities and Exchange Commission could cause actual results and developments to be materially different from those expressed or implied by such statements. The forward-looking statements are made only as of the date of this filing, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

                       CHINA YCT INTERNATIONAL GROUP, INC.

                               Nine Months Ended        Three Months Ended
                                  December 31,              December 31,
                               2008         2007         2008        2007

    Revenues                $21,973,438  $10,628,628  $8,634,345  $5,381,028

    Cost of Goods Sold        9,587,697    4,701,605   3,777,786   2,382,088

    Gross Profit             12,385,741    5,927,023   4,856,559   2,998,940

    Operating Expenses
      Research and
       development expenses     139,603           --      62,386          --
      Selling, general and
       administrative         3,563,003    2,494,626   1,772,191   1,421,987

    Income before other
     Income and (Expenses)    8,683,135    3,432,397   3,021,981   1,576,953

    Other Income and
     (Expenses)                 (94,289)     (42,021)    (51,022)    (38,309)

    Income Before Income
     Taxes                    8,588,846    3,390,376   2,970,959   1,538,644

    Provision for Income
     Taxes                    2,130,969    1,151,938     728,584     565,130

    Net Income               $6,457,877   $2,238,438  $2,242,376    $973,514

    Other Comprehensive
      Foreign Currency
       Adjustment               302,570      352,673     301,912     182,648

    Comprehensive Income     $6,760,447   $2,591,111  $2,544,289  $1,156,162

    Basic and diluted
     income per common
      Basic                       $0.22        $0.08       $0.08       $0.03
      Diluted                     $0.22        $0.08       $0.08       $0.03

    Weighted average number
     of common shares
      Basic                  29,380,073   29,380,073  29,380,073  29,380,073
      Diluted                29,380,073   29,380,073  29,380,073  29,380,073

                       CHINA YCT INTERNATIONAL GROUP, INC.

                                           December 31, 2008   March 31, 2008
                                              (Unaudited)        (Audited)
    Current assets:
      Cash and cash equivalents                  $10,297,023       $1,614,336
      Inventory                                       64,450          737,153
      Advance to suppliers                                --          834,284
      Other receivable - related party               954,818        2,022,742
             Total Current Assets                 11,316,291        5,208,515

    Property and equipment, net of
     accumulated depreciation of
     $66,617 and $68,282, respectively             4,444,354        3,083,031

    Land use right, net of accumulated
     amortization                                  1,421,133        1,404,803

        Total Assets                             $17,181,778       $9,696,349


    Current liabilities:
      Accounts payable                              $461,708          $59,688
      Unearned Revenue                                35,506           33,742
      Tax payable                                    861,156          563,135
      Accrued expenses                                11,076           25,689
      Other payables                                      --            7,305
      Due to related party                            45,095               --
             Total Current Liabilities             1,414,541          689,560

    Stockholders' Equity
      Preferred stock series A, $500 par
       value, 45 shares authorized and
       outstanding as of December 31, 2008
       and March  31, 2007 respectively               22,500           22,500
      Preferred stock series B convertible,
       $0.001 par value, 5,000,000 shares
       authorized, - 0 - shares issued and
       outstanding                                        --               --
      Common stock, $0.001 par value,
       100,000,000 shares authorized;
       29,380,073 shares issued and outstanding
       as of December 31, 2008 and March 31,
       2008                                           29,380           29,380
      Additional paid-in capital                   4,063,039        4,063,039
      Accumulated other comprehensive
       income                                      1,160,333          857,763
      Retained earnings                           10,491,985        4,034,108
             Total Stockholders' Equity           15,767,237        9,006,790

        Total Liabilities and Stockholders'
         Equity                                  $17,181,778       $9,696,349

                       CHINA YCT INTERNATIONAL GROUP, INC.
               FOR THE NINE MONTHS ENDED DECEMBER 31, 2008 AND 2007

                                              Nine Months Ended December 31,
                                               2008                   2007
    Cash Flows From Operating Activities:
      Net income                            $6,457,877             $2,238,438
      Adjustments to reconcile net income
       to net cash provided by operating
          Depreciation and amortization         85,488                 48,767

        Changes in operating assets and
          Inventory                            672,703               (426,533)
          Advance to suppliers                 834,284                (88,020)
          Loan to related party              1,067,924                     --
          Accounts payable                     402,020                  4,667
          Unearned revenue                       1,764                     --
          Taxes payable                        298,021                256,577
          Accrued expenses and other
           payables                            (21,916)                33,701

                Cash provided by operating
                 activities                  9,798,162              2,067,597

    Cash Flows From Investing Activities:
          Purchase of plant and equipment           --                (35,927)
          Purchase of land use right                --               (304,473)
          Addition to construction in
           progress                         (1,328,402)              (425,133)

                Cash used in investing
                 activities                 (1,328,402)              (765,533)

    Cash Flows From Financing Activities
          Proceeds from (payment to)
           related party                        45,095               (534,683)

                Cash provided by financing
                 activities                     45,095               (534,683)

    Effect of exchange rate changes on
     cash and cash equivalents                 167,832                260,254

    Increase in cash and cash equivalents    8,682,687              1,027,635

    Cash and Cash Equivalents - Beginning
     of period                               1,614,336                679,770

    Cash and Cash Equivalents - Ending of
     period                                $10,297,023             $1,707,405

    Supplemental disclosures of cash flow

          Interest paid                            $--                    $--
          Income Taxes paid                 $1,877,874                    $--

SOURCE China YCT International Group Inc.
Copyright©2009 PR Newswire.
All rights reserved

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