China Kangtai Cactus Biotech Q2 Revenue Up 34% to $8.7M; Net Income up 989% to $3M; First Half Year Revenue Up 45% to 14.3M; Net Income up 765% to $5.4M

HARBIN, China--(BUSINESS WIRE)--China Kangtai Cactus Biotech Inc. (OTCBB: CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based products in China, announced today that revenue for the second quarter ended June 30, 2010 increased 34% to $8.7 million from $6.5 million in the second quarter of 2009. Net income was up 989% to $5.4 million or $0.14 per diluted share.

Second Quarter Financial Highlights

Revenue for the second quarter increased 34% to $8.7 million, up from $6.5 million recorded in the second quarter of 2009
Net income rose 989% to $3 million of $0.14 per diluted share versus loss of $337,486 in Q2 2009.
Adjusted net income (absent revaluation of Series A preferred Stock and A, B, C and D warrants) rose 10% to $1.6 million of $0.07 per diluted share versus $1.4 million or $0.07 per diluted share in Q2 2009
Gross profit margin was 38% compared with 42% in the second quarter of 2009.
Income from operations increased 25% to $2.3 million from $1.8 million in the second quarter of 2009.
Weighted average number of diluted shares outstanding was 22.1 million as of June 30, 2010 compared with 19 million as of June 30, 2009

Q2 Product Categories Performance

Cactus feed increased 322% to $1.3 million, up from $0.3 million recorded in the second quarter of 2009
Beverage sales increased 51% to $3.2 million, up from $2.1 million recorded in the second quarter of 2009
Raw & intermediated material decreased 93% to $44,404 from $0.6 million recorded in the second quarter of 2009
Sales of cactus cigarettes, launched in Q4 2009, increased 294% to $837,752, from $212,638 recorded in the second quarter of 2010
Nutraceuticals revenue remained the same as that of 2009 to be $3.3 million.
Packaged foods provided no revenue in the quarter, compared to $131,145 in Q2 of 2009.

Six Months Financial Highlights:

Revenue for the six months increased 45% to $14 million, up from $9.8 million recorded in the same period of 2009
Net income rose 765% to $5.4 million of $0.25 per diluted share versus $619,187 of $0.03 per diluted share in the same period of 2009
Adjusted net income (absent revaluation of Series A preferred Stock and A, B, C and D warrants) rose 13.5% to $2.4 million of $0.11 per diluted share versus $2.1 million or $0.11 per diluted share in the same period of 2009
Gross profit margin was 34% compared with 40% in the same period of 2009.
Income from operations increased 28% to $3.5 million from $2.7 million in the same period of 2009

Six Months Product Categories Performance

Cactus feed sales increased 214% to $1.8 million, up from $0.6 million recorded in the same period of 2009
Beverage sales increased 48% to $4.6 million, up from $3.1 million recorded in the same period of 2009
Raw & intermediated material sales increased 35% to $1.7 million from $1.2 million recorded in the same period of 2009
Nutraceutical sales revenue increased 10% to $5.1 million, up from $4.7 million in the same period of 2009.
Packaged foods provided no revenue in first half of the year, compared to $254,759 in the first half of 2009.

Liquidity and Capital Resources

As of June 30, 2010, cash and cash equivalents were $2.3 million. Accounts receivable net of allowance were $4.8 million. Net cash provided by operating activities was $6 million, an improvement from 1.3 million a year earlier. Net cash used for investing activities was $7.7 million. Net cash provided by financing activities was $869,958. As of August 16, 2010, the company’s common stock issued and outstanding was 20,990,762.

Management Comment

China Kangtai CEO Jinjiang Wang said, "The second quarter of 2010 was an exciting period for us. We achieved excellent sales levels in our cactus feed, beverage, cactus cigarette and nutraceutical segments. Revenue attributed to cactus feed increased 322% compared to the same period of 2009. Cigarette sales increased 294% from the first quarter of 2010. Significant growth resulted from the fact that our company’s products are efficiently marketed and well accepted by consumers. Another major factor is the feed patent bought last year, which provided us opportunities to further penetrate feed market.

“The decease in sales of raw and intermediated materials and packaged foods resulted from the changing of our product mix. The increase in cost of sales and decrease in gross profit rates was primarily attributable to the increased sales of our cactus feed products, which has gross profit rate of 17%.”

“Our newly acquired tobacco plant, which has the capacity to produce 260 million cigarettes a year, is an excellent opportunity for us our further expand this segment. Strong cactus cigarette revenue increases in the first half of year underscored the growing demand for our product. We anticipate cactus cigarettes revenue will continue to rise for the second half of the year,” Mr. Wang said.

About China Kangtai Cactus Biotech, Inc.

China Kangtai Cactus Biotech, Inc. is a leading grower, developer, producer, and marketer of cactus-derived products, including nutraceuticals, nutritious food, health and energy drinks, beer, wine and liquor, extracts and powders, and animal feed. China Kangtai controls over 387 acres of plants and maintains an active R&D group that holds 18 product patents and is seeking another 12. China Kangtai's high-quality “green” products are sold throughout China via a distribution network that covers 12 of China's 23 provinces and two of China's four municipalities. More information may be found at http://www.biocactus.com or via e-mail: chinakangtai@gmail.com.

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This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulation, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the company, are expressly qualified by the cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.