China Sky One Reports Higher Revenues, Profits for 2007

China Sky One Medical, Inc. (CSKI.OB) announced its 2007 revenues climbed 148% to $49.3 million. The company’s net income came in at $15.3 million, which equals $1.15 per share fully diluted and a profit margin of 31%. The company makes and markets traditional Chinese Medicines, most of which are for external use. It also produces diagnostic products.

The company said the following were some of the achievements of the year:

• New Bio-Chemical Products series generated $3 million in revenue in 2007
• Exporting to overseas markets, a new venture, generated $12.4 million in revenues
• Takasima Industries began selling China Sky One’s patch products in Malaysia

China Sky One manufactures thirty-eight branded products and also sells eight products manufactured by other firms. The company broke down its revenues as follows:

Sprays $ 8,742.088 18%
Patches $ 1,402,736 3%
Ointments $ 3,209,732 7%
Liquids, Creams and Powders $ 1,704,979 3%
Health and Beauty mfg. by others $34,198,773 69%
Total $49,258,308 100%

At the end of 2007, China Sky One had $9.2 million in cash, approximately $15.4 million in working capital, and no debt. 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, China Sky One completed a private placement that raised $25.0 million. It then agreed to acquire Heilongjiang Tianlong Pharmaceutical, Inc., which like China Sky One, is an external-use drug manufacturer. In addition to GMP- certified manufacturing facilities, China Sky One will gain control of a portfolio of 69 approved drugs and a pipeline of 38 new drugs that are awaiting SFDA approval. Tianlong generated revenue of $5.2 million in 2007 with a net profit margin of 13% ($676,000). China Sky One projects revenues of approximately $7.5 million and net profit of approximately 30% in 2008 from the acquisition in 2008.

The following, taken from the company’s regulatory filings, is a description of some of its existing products:

Sumei Slim Patch

The Sumei Slim Patch is marketed and sold in the PRC as a natural way to lose weight. The Sumei Slim Patch uses Saponin, believed to regulate and restrain the excessive secretion of certain hormones, while promoting others.

Pain Killer Patch

A pain killer patch applied to the neck, shoulder and waist, this product is a treatment to fend off fever, promote well-being and relieve diarrhea. The patch is used for a number of ailments, including fever, headache, dysentery of a heat type, diarrhea and stiffness and pain in the neck caused by hypertension.

Anti-Hypertension Patch

The anti-hypertension patch is based on five thousand years of Chinese herbal vein therapy that has been adapted to a modern trans-dermal therapeutic system [TTS]. The product utilizes a Body-Yong-Guan point technique, which is believed to maximize the effectiveness of the medicinal ingredients. The product is believed to stimulate blood capillaries and is believed to be effective in improving circulation and in reducing blood pressure.

Dysmenorrheal Patch

This is a soft patch, applied externally, for pain relief from dysmenorrheal (menstrual cramps) that combines traditional Chinese point therapy and modern trans-dermal technology. This product contains a pure herb formula selected from rare Chinese herbs or plants which is refined to extract the effective ingredients. This product is believed to be effective in regulating microcirculation, in balancing the functions of the human body and in enhancing the immunity response of women. It is believed to be effective in treating the dysmenorrheal (cramping) in a woman’s critical days, and in regulating pain and catamenia (menstruation period).

Yin Ke Psoriasis Spray

Psoriasis is a skin disease that is difficult to treat. Our research scientists have focused their efforts in finding treatments for this disease. Yin Ke Psoriasis Spray is a spray that contains Chinese herbal ingredients that are believed to be effective in killing pathogenic ringworms inside or under the skin, causing scale-like skin to fall off, and allowing healthy skin to grow.

Wart Removing Spray

This product has been developed to eliminate the viruses in a tumors or warts. The product is effective in removing warts, through a strong permeation and sterilization process. The product is a highly concentrated washing liquid that is applied topically to the affected area.

Chilblain Ointment

This product contains Rhizoma Paridis, Rhizoina Bletilae and Camphor, and is refined from Chinese herbal materials. It is believed to be effective in improving blood circulation, and in eliminating various symptoms of Chilblain (a cold injury that appears as an inflamed swelling on the extremities), including itching and swelling.

Hemorrhoids Ointment

This product contains Acetate, Radix notoginseng, and Rhizoma coptidis. The product is made in a soft ointment that is effective in sterilizing and relieving hemorrhoid symptoms, including itching, distending pain, burning, and bleeding.

Tinea Pedis Spray, Ointment and Powder

This product contains Cortex Pseudolaricis and Cortex Phellodendri, and is a treatment for killing various pathogens on the skin surface and subcutaneously, such as mycete (a fungus), trichopytic, staphylococcal bacteria aureus, bacillus coli, and candida albicans (thrush).

Testing Kits Approved and Brought to Market in 2007:

Cardiac Arrest Early Examination Kit

This product is used for early stage diagnosis of myocardial infarction (heart attacks). We completed SFDA clinical testing of the Cardiac Arrest Early Examination Kit and began sales of this product in 2007. This kit is patented in PRC.

Kidney Disease Testing Kit

The Urinate Micro Albumin Examination Testing Kit is used in connection with early stage diagnosis for primary kidney disease, hypertension and diabetes. We completed SFDA clinical testing for the Urinate Micro Albumin Examination Testing Kit and commenced sales of this product in 2007. This kit is patented in PRC.

Disclosure: none.