China-Biotics Announces Record Results for First Quarter of Fiscal 2007; Company Reports Revenues of $8.0 million, up 85.6% vs. 1Q06; Net Income of $2.9 million up 63.5%; EPS of $0.17.SHANGHAI Shanghai (shăng`hī`, shäng`hī`), city (1994 est. pop. 12,980,000), in, but independent of, Jiangsu prov., E China, on the Huangpu (Whangpoo) River where it flows into the Chang (Yangtze) estuary. , China -- China-Biotics, Inc. (OTCBB OTCBB See OTC Bulletin Board (OTCBB). : CHBT), one of China's largest producers of probiotic pro·bi·ot·ic n. A dietary supplement containing live bacteria or yeast that supplements normal gastrointestinal flora, given especially after depletion of flora caused by infection or ingestion of an antibiotic drug. products and food supplements, which benefit and improve microbial microbial pertaining to or emanating from a microbe. microbial digestion the breakdown of organic material, especially feedstuffs, by microbial organisms. balance in the human body, announced record financial results for the first quarter of fiscal 2007 which ended on June 30, 2006. First Quarter Highlights: --Revenues benefited from overall market and seasonal strength related to gift giving and corporate purchases surrounding several public holidays and the Chinese Dragon
The Chinese dragon is a Chinese mythical creature, depicted as a long, scaled, snake-like creature with four claws. Boat Festival. --The Company opened four retail stores throughout the greater Shanghai area subsequent to the successful initial pilot store launched in fourth quarter of fiscal 2006. --The Company invested approximately $800,000 to improve existing production and research facilities. Financial Results For the first quarter ended June 30, 2006, the Company reported revenue of $8.0 million as compared to $4.3 million for the first quarter of 2005, representing an increase of 85.6 percent. Growth primarily resulted from an increase in sales volume of the Company's product portfolio, including Shining Essence, the Company's best selling product, which increased 58 percent versus last year and accounted for 62.1 percent of total sales revenue in the quarter ended June 30, 2006. Shining Signal Capsules accounted for nearly 20 percent of revenues and increased over 179 percent to $1.6 million as compared to the first quarter of 2005. In addition, new products launched during the quarter began to provide initial contributions and made up the balance of revenues. Mr. Song Jin An, China-Biotics' Chairman and Chief Executive Officer, commented "We are very pleased with our financial results for the first fiscal quarter as we were able to maintain strong profitability while leveraging increased manufacturing capacity to meet growing demand for our products. During the quarter we embarked on our much anticipated retail strategy by opening four locations within Shanghai and are pleased with initial results. As a result of continued strong demand for our products aided by several seasonal trends we were able to offset initial startup and promotional expenses Noun 1. promotional expense - the cost of promoting a product business expense, trade expense - ordinary and necessary expenses incurred in a taxpayer's business or trade and still report record profitability." Cost of sales increased for the quarter by 84.0 percent to $2.4 million, which were directly related to the increased sales volume. Due to improving manufacturing efficiencies, tight cost controls and higher sales volumes, the average unit cost of all products decreased 16 percent despite increases of approximately 20 percent in the overall material costs, including both raw materials and packaging. Gross profit increased by 86.2 percent to $5.6 million and increased as a percentage of revenue to 70.5 percent as compared to $3.0 million or 70.3 percent of revenue for second quarter 2005. Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $1.7 million for first quarter, up 308.6 percent as compared to $0.4 million for the quarter which ended June 30, 2005. The increase in total expenses were primarily related to additional advertising for various market promotion activities and expenses resulting from the opening of new retail locations. The Company also experienced a $0.3 million increase in general and administrative expense as a result of operational growth and increased expenses related to going public. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. totaled approximately $4.0 million for first quarter 2006, up approximately 51.4 percent from first quarter 2005. As a result of higher overall expense levels, as a percent of revenue, operating income was 49.6 percent compared to 60.8 percent for the prior year period. In addition to the Value Added Tax value added tax n (BRIT) → impuesto sobre el valor añadido or agregado (LAM) value added tax n (Brit (VAT) which is paid directly before net revenues are reported, the provision for income taxes was $1.1 million for first quarter of fiscal 2006 as compared to $0.9 million for first quarter 2005, representing an effective tax rate of 28.1 percent and 33.3 percent for each respective period. Net income for the quarter totaled $2.9 million, a 63.5 percent increase from the $1.8 million for the previous first quarter. Reported earnings per share were $0.17 based on 17.1 million diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. shares outstanding on June 30, 2006. Since the merger and subsequent private placement occurred during fiscal 2006, last year's first quarter did not include the associated shares and does not provide a reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. year over year comparable analysis. Cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses for the first quarter was approximately $1.0 million compared to $2.3 million in the second quarter of 2005, with the majority of the variance coming from an increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying . The Company ended the quarter with a cash balance, including restricted cash, of $20.6 million, essentially unchanged from 20.7 million as of March 31, 2006. Working capital was $12.9 million at quarter's end with the Company showing a current ratio of 1.6 to 1. The Company does carry a current liability of $16.0 million related to a potential taxes payable, with further details available in the Company's 10-KSB and 10-QSB reports. Stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. increased 23.6 percent to $15.2 million as compared to $12.3 million at March 31, 2006. Probiotics Probiotics Bacteria that are beneficial to a person's health, either through protecting the body against pathogenic bacteria or assisting in recovery from an illness. Mentioned in: Colonic Irrigation, Dysentery, Gastroenteritis Overview Probiotics are described as "live microorganisms administered in adequate amounts which confer a beneficial health effect on the host," by the Food and Agriculture Organization of the United Nations Noun 1. Food and Agriculture Organization of the United Nations - the United Nations agency concerned with the international organization of food and agriculture FAO, Food and Agriculture Organization . The beneficial effects of probiotics consumption can include improvement of the general intestinal in·tes·ti·nal adj. Of, relating to, or constituting the intestine. intestinal pertaining to the intestine. intestinal accident (GI) tract health, enhancement of the immune system immune system Cells, cell products, organs, and structures of the body involved in the detection and destruction of foreign invaders, such as bacteria, viruses, and cancer cells. Immunity is based on the system's ability to launch a defense against such invaders. , synthesized syn·the·sized adj. 1. Relating to or being an instrument whose sound is modified or augmented by a synthesizer. 2. Relating to or being compositions or a composition performed on synthesizers or synthesized instruments. and enhanced bioavailability bioavailability /bio·avail·a·bil·i·ty/ (bi?o-ah-val?ah-bil´i-te) the degree to which a drug or other substance becomes available to the target tissue after administration. bi·o·a·vail·a·bil·i·ty n. of nutrients, reduction of symptoms of lactose intolerance Lactose Intolerance Definition Lactose intolerance refers to the inability of the body to digest lactose. Description Lactose is the form of sugar present in milk. , decreased prevalence of allergy allergy, hypersensitive reaction of the body tissues of certain individuals to certain substances that, in similar amounts and circumstances, are innocuous to other persons. Allergens, or allergy-causing substances, can be airborne substances (e.g. in susceptible individuals In epidemiology a susceptible individual (sometimes known simply as a susceptible) is a member of a population who is at risk of becoming infected by a disease, if he or she is exposed to the infectious agent. and reduction of risks of certain cancers. About China-Biotics, Inc. Based in Shanghai, China-Biotics is an emerging leader in the research, development, production, marketing and distribution of probiotics products in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China. Probiotics products contain live microbial food supplements which beneficially affect the host by improving its intestinal microbial balance. Currently, the Company produces and distributes proprietary probiotics, which are approved by the Ministry of Health in China and have been tested by the Shanghai Preventive Medicine preventive medicine, branch of medicine dealing with the prevention of disease and the maintenance of good health practices. Until recently preventive medicine was largely the domain of the U.S. Research Institute. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Statements in this release that are not statements of historical fact may be deemed to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Forward-looking statements involve risks and uncertainties, including statements regarding our capital needs, business strategy and expectations. You should not rely on forward-looking statements as predictions of future events or results. Any or all of our forward-looking statements may turn out to be wrong. They can be affected by inaccurate assumptions, risks and uncertainties and other factors which could cause actual events or results to be materially different from those expressed or implied in the forward-looking statements. In evaluating these statements, you should consider various factors, including the risks described under "Risk Factors" in our Form 10-KSB filed with the SEC on June 30, 2006 and our other SEC filings. These factors may cause our actual results to differ materially from any forward-looking statement. In addition, new factors emerge from time to time and it is not possible for us to predict all factors that may cause actual results to differ materially from those contained in any forward-looking statements. We do not intend to publicly update any forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or , except as required by applicable law.
CHINA-BIOTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts expressed in US Dollars)
ASSETS
------
3 months ended Fiscal year end
CURRENT ASSETS June 30, 2006 March 31, 2006
Cash and cash equivalents $ 20,025,376 $ 19,840,812
Restricted Cash $ 668,118 $ 752,778
Accounts receivable, net $ 13,517,664 $ 10,941,595
Inventories, net $ 163,749 $ 257,584
Prepayment $ 71,365 $ 31,200
Travel Advances $ 8,959 $ 8,972
TOTAL CURRENT ASSETS $ 34,455,231 $ 31,832,941
PLANT AND EQUIPMENT, NET $ 2,317,846 $ 1,594,047
TOTAL ASSETS $ 36,773,077 $ 33,426,988
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 1,575,288 $ 1,826,441
Tax payables $ 15,990,526 $ 15,316,318
Loan from stockholders $ 2,297,570 $ 2,290,230
Other payables and accruals $ 1,664,004 $ 1,656,987
TOTAL CURRENT LIABILITIES $ 21,527,388 $ 21,089,976
STOCKHOLDERS' EQUITY
Preferred stock - par value $0.01,
10,000,000 shares authorized,
no shares issued and outstanding
Common stock, par value $0.0001,
100,000,000 shares authorized,
17,080,000 shares issued and
outstanding $ 1,708 $ 1,708
Additional paid-in capital $ 7,863,031 $ 7,863,031
Retained earnings $ 4,255,570 $ 1,379,914
Accumulated and other comprehensive
income (loss) $ 99,586 $ 66,565
Capital and statutory reserves $ 3,025,794 $ 3,025,794
TOTAL STOCKHOLDERS' EQUITY $ 15,245,689 $ 12,337,012
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 36,773,077 $ 33,426,988
CHINA-BIOTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in US Dollars)
Three months ended
June 30,
------------------------------
2005 2006
-------------- --------------
Net sales $ 4,312,847 $ 8,002,964
Cost of sales (1,282,030) (2,358,739)
-------------- --------------
Gross profit $ 3,030,817 $ 5,644,225
-------------- --------------
Operating expenses:
Selling expenses $ (317,651) $ (1,269,532)
General and administrative expenses (92,423) (405,990)
-------------- --------------
Total operating expenses $ (410,074) $ (1,675,522)
-------------- --------------
Income from operations $ 2,620,743 $ 3,968,703
-------------- --------------
Other income and expenses:
Other income $ 17,319 $ 35,523
Other expenses - (3,859)
-------------- --------------
Total other income (expenses) $ 17,319 $ 31,664
-------------- --------------
Income before taxes $ 2,638,062 $ 4,000,367
Provision for income taxes (879,136) (1,124,711)
-------------- --------------
Net income $ 1,758,926 $ 2,875,656
============== ==============
Earnings per share:
Basic and diluted $ 1.57 $ 0.17
============== ==============
Weighted average shares outstanding
Basic and diluted 1,118,600 17,080,000
============== ==============
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