EX-99.1 2 ex991.htm EXHIBIT 99.1 ex991.htm
Exhibit 99.1
 
 

 
Company Contact: 
Mr. Ren Hu 
Chief Financial Officer     
China Yingxia International, Inc 
Tel: +1-201-887-0415  
E-mail: arenhu@gmail.com
Investor Relations Contact:
Mr. Crocker Coulson
President
CCG Investor Relations
Tel: +1-646-213-1915
E-mail: crocker.coulson@ccgir.com
www.ccgirasia.com
 
Linda Salo, Financial Writer
Tel: 646-922-0894      
E-mail: linda.salo@ccgir.com
www.ccgirasia.com
 
China Yingxia International, Inc.
 
Reports Third Quarter 2008 Results
 
HARBIN, China – November 17, 2008.  China Yingxia International, Inc. (OTC Bulletin Board: CYXI) ("China Yingxia" or "the Company"), a provider in the health and nutritional food industry engaged in the development, manufacture and distribution of nutritional food products, dietary supplements, and raw cactus plants in the People's Republic of China ("PRC"), reported its financial results for the third quarter ended September 30, 2008 on Friday November 14, 2008.

Third Quarter 2008 Highlights
- Revenue increased 112.3% year-over-year to $7.5 million
- Gross profit increased 50.9% year-over-year to $3.9 million; gross margin was 52.8%
- Operating income increased 99.4% year-over-year to $3.4 million
- Net income increased 88.0% year-over-year to $3.2 million, or $0.06 per fully diluted share
- Added 146 new franchise stores
- Shanghai Jin Ao Food Co., Ltd (“Jin Ao”) subsidiary contributed 10.3% of revenues
- Appointed Fanke Kong as Vice President of Finance

“Our sales in the third quarter of 2008 more than doubled from the third quarter last year, supported by strong performance of our nutritional food segment. We have continued to shift our product mix towards nutritional food products, and were pleased to see growth more than triple in this product segment from last year,” said Ms. Yingxia Jiao, CEO of China Yingxia. “During the quarter, sales from our Jin Ao subsidiary contributed 10.3% of revenues, demonstrating the potential of this acquisition to our revenue growth.”
 
1

Third Quarter Fiscal Year 2008 Results

Revenue for the three months ended September 30, 2008, was $7.5 million, increasing 112.3% from $3.5 million in the same period in 2007. Sales in the cactus product segment contributed 49.3% of total revenue in the third quarter of 2008, compared to 32.1% in the corresponding quarter last year. The nutritional product segment contributed 17.7% of total revenue, compared to 11.9% in the corresponding quarter last year, increasing by 216.2% year-over-year. Revenue from the Jin Ao subsidiary represented 10.3% of total revenue in the quarter.  Dietary supplements, personal care products, cosmetics and the Chichi Network Companies accounted for the remaining 22.8% of revenue.

China Yingxia also expanded its sales channels during the third quarter of 2008, adding 146 new franchise stores across China.

Gross profit was $3.9 million, up 50.9% from the same period previous year. Gross profit margin was 52.8% in the third quarter of 2008 compared to 74.3% during the same period a year ago. The high gross profit margin in the third quarter of 2007 was due to the Company growing all cactus plants in its own greenhouses, while the Company outsourced the farming of cactus plants to local farmers in the third quarter of 2008. In addition, the lower gross profit margins of Jin Ao and Chi Chi Network subsidiaries impacted total gross profit margin in the third quarter of 2008.

Operating expenses totaled $0.5 million, or 7.0% of total revenue, in the third quarter of 2008, a decrease of 41.5% from $0.9 million, or 25.5% of revenue, in the same period last year. The decrease was due to significantly lower selling, general and administrative expenses, as the Company streamlined management expenses and professional services fees, and did not pay any sales commission during 2008. The Company’s research and development expenditures decreased 87.9% from the third quarter of 2007 as the Company has entered a slow research and development phase.

Operating income for the third quarter of 2008 was $3.4 million, up 99.4% from $1.7 million in the equivalent period a year ago.  Operating margin was 45.8% compared to 48.7% in the third quarter of 2007.

The Company paid income taxes of $153,481 as opposed to nil in the same period last year.

Net income was $3.2 million or $0.06 per fully diluted share, an increase of 88.0% from $1.7 million or $0.04 during the corresponding period prior year. Net profit margin was 43.2% compared to 48.8% in the previous year.  Fully diluted weighted average shares used to calculate earnings per share was 49.7 million in the third quarter of 2008, compared to 43.7 million in the third quarter of 2007.

Nine Months Results

For the nine months ended September 30, 2008, total sales were $16.0 million, an increase of 54.0% from the nine month period ended 2007. Gross profit for the nine months ended September 30, 2008 was $8.8 million, up 37.9% from gross profit of $6.4 million in the comparable period a year ago.  Gross profit margin was 55.0% compared to 61.4% for the first nine months of 2008 and 2007, respectively.  Income from operations for the period was $7.4 million, up 55.9% from $4.7 million in the first nine months of 2007.  Net income for the nine months ended September 30, 2008 was $7.0 million, an increase of 48.8% from $4.7 million for the nine months ended September 30, 2007.  Fully diluted earnings per share were $0.14 for the nine months ended September 30, 2008 compared to $0.13 for the nine months ended September 30, 2007. Fully diluted weighted average shares used to calculate earnings per share was 49.7 million in nine months ended September 30, 2008, up from 37.0 million in the nine months ended September 30, 2007.

Financial Condition

As of September 30, 2008, the Company had $5.4 million in cash and cash equivalents and no long-term debt outstanding. Working capital was $21.2 million as of September 30, 2008, compared to $14.8 million as of December 2007. As of September 30, 2008 the current ratio was 17:1. Total shareholder’s equity amounted to $46.8 million as of September, 30 2008, compared to $36.8 million as of December 31, 2007. For the nine months ended September 30, China Yingxia’s net cash flow from operating activities totaled $1.5 million. Net cash flow provided by investing activities totaled $1.8 million for the nine months ended September 30, 2008, due to the collection of short-term loans and loans to related parties.
 
2

Recent Events

In September 2008, the Company announced that its Board of Directors has approved and authorized a share repurchase program for up to $2 million of its common stock. China Yingxia will repurchase shares on the open market or through privately negotiated transactions through September 30, 2009. The repurchase program may be discontinued or expanded by the Board of Directors in the future.

Business Outlook

The slowdown in domestic consumption growth in China is expected to be milder compared to the slowdown in export or fixed investment growth. Consequently, China Yingxia plans to focus on its nutritional foods segment and the soy milk products from its Jin Ao subsidiary. The Company expects the subsidiary to contribute a larger share of net income in 2009 as the capacity utilization of the facility improves, and has started to aggressively market its soy milk products to larger supermarkets through promotional programs.

As the Company has completed the most capital intensive phase of its expansion, the current focus is on improving the efficiency of its distribution channel. Excluding Jin Ao’s soy milk products, the Company’s distribution model relies on the development of new franchisees. During the quarter, the Company added 146 new franchisees, bringing total to 1,419 of the targeted 1,500 by the end of fiscal 2008.

“Our franchisee-based model allows us to expand our retail presence without committing significant amounts of capital to the distribution network," said Ms. Yingxia Jiao, CEO of China Yingxia. "In addition, we have seen an increase in consumers shifting from cow’s milk to soy milk especially after the incidents involving contaminated cow’s milk and the timing for ramping up our soy milk promotion program is hence perfect.”

China Yingxia reaffirms previously issued guidance for fiscal 2008 with full year revenue of $25.9 million, and net income of $12.9 million, or $0.26 per fully diluted share.
 
Conference Call
 
China Yingxia will conduct a conference call on Tuesday, November 18, 2008, at 9:00 a.m. EST, to discuss its financial results for the third quarter of 2008. To participate in this conference call, please dial 800 688 0796, five to ten minutes prior to the conference call start time (to allow time for registration) and reference the conference ID 761 841 28. International callers should dial 617.614.4070 and use the same conference ID. A digital replay of the call will be available starting Tuesday, November 18, 2008, 11:00 a.m. EST, and ending 14 days later. To listen to the replay, please dial 888-286-8010 and enter the conference ID number 73629297. International callers should dial 617-801-6888 and enter the same conference ID number.
 
About China Yingxia International, Inc

China Yingxia International, Inc., through its 100%-owned subsidiary, Harbin Yingxia Industrial Group Co., Ltd. ('Yingxia'), is primarily engaged in the development, production and sales of health food products in China. Yingxia is located in the Province of Heilongjiang, Peoples Republic of China. Yingxia's products include soybean-based foods and drinks, longgu golden millet enriched products, organic rice products, raw cacti, cactus and other herbal-based supplements, cosmetics, personal care products, and Nestle products.

Safe Harbor Statement

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,' ‘expect’ 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 or forecasting financial results 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.
 
- FINANCIAL TABLES FOLLOW-
 
3

CHINA YINGXIA INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

   
Septermber 30,
    
December 31,
  
ASSETS
  
2008
    
2007
  
   
(Unaudited)
        
Current assets:
            
Cash and cash equivalents
  
$
5,376,431
    
$
736,683
  
Account receivables, net of allowance for doubtful accounts
    
3,823,656
      
20,081
  
Inventory
    
8,377,587
      
5,527,135
  
Tax Receivable
    
24,112
      
32,317
  
Short-term loan receivable
    
-
      
2,194,774
  
Prepaid
    
368
      
-
  
Other receivables
    
2,872,842
      
3,150,777
  
Advances to suppliers
    
1,910,519
      
1,434,059
  
Loan Receivable from related parties
    
94,600
      
2,037,551
  
           Total Current Assets
    
22,480,115
      
15,133,377
  
                 
Property and equipment, net of accumulated depreciation
    
22,525,928
      
15,515,896
  
                 
Other Assets
                
Goodwill
    
419,722
      
-
  
Deposits on buildings and land
    
1,564,042
      
1,718,077
  
Investment Advance
    
338,739
      
4,112,631
  
Intangible assets, net
    
744,125
      
666,785
  
           Total other assets
    
3,066,628
      
6,497,493
  
                 
     Total Assets
  
$
48,072,671
    
$
37,146,766
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
Current liabilities:
                
Accounts payable
  
$
837,242
    
$
2,911
  
Unearned revenue
    
39,591
      
6,509
  
Tax Payable
    
274,660
      
-
  
Accrued expenses and other payables
    
165,577
      
357,976
  
           Total Current Liabilities
    
1,317,070
      
367,396
  
                 
                 
     Total Liabilities
    
1,317,070
      
367,396
  
                 
Stockholders' Equity
                
Preferred stock, $0.001 par value, 10,000,000 shares authorized; - 0 - shares
  
outstanding at  September 30,2008 and December 31, 2007
    
-
      
-
  
Common stock, $0.001 par value, 100,000,000 shares authorized;
                
44,469,787 and 44,439,787 shares outstanding at September 30,2008
                
and December 31, 2007, respectively
    
44,480
      
44,440
  
Additional paid in capital
    
16,841,627
      
16,799,667
  
Accumulated other comprehensive income
    
5,796,719
      
2,885,038
  
Statutory reserves
    
901,463
      
901,463
  
Retained earnings
    
23,171,312
      
16,148,762
  
           Total Stockholders' Equity
    
46,755,601
      
36,779,370
  
                 
 
$
48,072,671
    
$
37,146,766
  

 
4
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 and 2007

   
Nine Months Ended September 30,
    
Three Months Ended September 30,
  
   
2008
    
2007
    
2008
    
2007
  
   
(Unaudited)
    
(Unaudited)
    
(Unaudited)
    
(Unaudited)
  
                         
Sales
  
$
15,985,310
    
$
10,380,713
    
$
7,457,814
    
$
3,513,674
  
                                 
Cost of Sales
    
7,192,816
      
4,003,789
      
3,519,908
      
904,604
  
                                 
Gross Profit
    
8,792,494
      
6,376,924
      
3,937,907
      
2,609,070
  
                                 
Operating Expenses
                                
  Research & Development Expense    
30,699
      
279,286
      
17,528
      
144,547
  
  Selling, general and administrative    
1,407,004
      
1,381,388
      
507,335
      
753,152
  
                                 
  Income before other Income and (Expenses)    
7,354,791
      
4,716,250
      
3,413,044
      
1,711,371
  
                                 
Other Income and (Expenses)
                                
  Interest Income (expense)    
(36,746
)
    
-
      
(35,421
)
    
-
  
  Other  Income    
50,256
      
2,898
      
-
      
2,580
  
  Other Expense    
(2,026
)
    
-
      
(1,711
)
    
-
  
Other Income and Expenses Total Other Income and (Expenses)
    
11,484
      
2,898
      
(37,132
)
    
2,580
  
                                 
Income Before Income Taxes (Benefits)
    
7,366,275
      
4,719,148
      
3,375,912
      
1,713,951
  
                                 
Provision for Income Taxes (Benefits)
    
343,725
      
-
      
153,481
      
-
  
                                 
Net Income
  
$
7,022,550
    
$
4,719,148
    
$
3,222,431
    
$
1,713,951
  
                                 
Other Comprehensive Income
                                
  Foreign Currency Translation Adjustment    
2,911,681
      
1,005,178
      
487,241
      
478,188
  
                                 
Comprehensive Income
  
$
9,934,231
    
$
5,724,326
    
$
3,709,671
    
$
2,192,139
  
                                 
Basic and Diluted Income per common share
                                
  Basic  
$
0.16
    
$
0.13
    
$
0.07
    
$
0.04
  
  Diluted  
$
0.14
    
$
0.13
    
$
0.06
    
$
0.04
  
                                 
Weighted average common share outstanding
                                
  Basic    
44,463,546
      
35,866,849
      
44,469,787
      
40,309,204
  
  Diluted    
49,728,231
      
36,995,845
      
49,736,552
      
43,659,377
  


 
5
 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 and 2007
 
   
Nine Months Ended June 30,
  
   
2008
    
2007
  
   
(Unaudited)
    
(Unaudited)
  
Cash Flows From Operating Activities:
            
Net income
  
$
7,022,550
    
$
4,719,148
  
Adjustments to reconcile net income to net cash
                
  provided by (used in) operating activities:
                
  Depreciation and amortization
    
868,227
      
522,675
  
  Amortization of stock-based compensation
    
42,000
      
-
  
                 
  Changes in operating assets and liabilities:
                
  Accounts receivable
    
(3,803,576
)
    
(439,134
)
  Inventory
    
(2,850,453
)
    
(870,399
)
  Tax Receivable
    
8,205
      
-
  
  Prepaid expenses
    
(368
)
    
95,479
  
  Other receivable
    
(270,815
)
    
(3,000,319
)
  Advances to suppliers
    
(476,461
)
    
(3,809,214
)
  Accounts payable
    
834,332
      
1,273,018
  
  Unearned revenue
    
33,082
      
3,337
  
  Taxes payable
    
274,660
      
29,427
  
  Accrued expenses and other payables
    
(192,399
)
    
228,153
  
  Cash provided by (used in) operating activities
    
1,488,985
      
(1,247,829
)
                 
Cash Flows From Investing Activities:
                
  Purchase of property and equipment
    
(983,330
)
    
(1,170,900
)
  Purchase of intangible assets
    
-
      
(106,523
)
  Additions to construction in process
    
(310,306
)
    
(761,145
)
Investment advance to India branch
    
(329,316
)
    
-
  
Acquisition of subsidiaries
    
(176,733
)
    
-
  
Collection of short term loan
    
2,194,774
      
-
  
Deposits on buildings and land
    
(501,133
)
    
-
  
Advances to affiliates
    
-
      
(6,657,858
)
Collections on loans/Advance to related parties
    
1,942,951
      
1,332,381
  
  Cash provided by (used in) investing activities
    
1,836,908
      
(7,364,044
)
                 
Cash Flows From Financing Activities:
                
  Net proceeds from issuance of common stock
    
-
      
9,306,743
  
  Cash provided by financing activities
    
-
      
9,306,743
  
                 
Effect of exchange rate changes on cash and cash equivalents
    
1,313,855
      
729,164
  
                 
Increase in cash and cash equivalents
    
4,639,748
      
1,424,034
  
                 
Cash and Cash Equivalents - Beginning of period
    
736,683
      
77,867
  
                 
Cash and Cash Equivalents - End of period
  
$
5,376,431
    
$
1,501,901
  
Supplemental disclosures of cash flow information:
                
                 
1 Interest paid
  
$
169,003
    
$
-
  
2 Income Taxes paid
  
$
279,477
    
$
-
  
Supplemental disclosure of non-cash transactions
                
3 Transfer Investment Advance to Property & Equipment
  
$
4,295,425
    
$
-
  
 

6