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

 
XI'AN, China, Nov.29, 2010 /PRNewswire-Asia-FirstCall/ -- DK Sinopharma, Inc. (OTC Bulletin Board: DKSP) ("DK Sinopharma" or the "Company"), announced its third quarter 2010 financial results. The Company's quarterly report on Form 10-Q was filed with the U.S. Securities & Exchange Commission on November 22, 2010.
 
Third Quarter 2010 Highlights
 
Sales increased by 66% year-over-year to $7,290,685.
 
Gross profit increased by 58% year-over-year to $3,088,846.
 
Net Income increased to $2,191,362 or a 139% year-over-year increase.
 
Earnings per share increased by $0.04 to $0.07 per share
 
"We are very pleased with our third quarter results and we are confident we will be able to continue our growth in sales and profit by expanding our market share and increasing our brand recognition. Our product lines are becoming increasingly visible in hospitals across China," stated Professor Dongke Zhao, President, Chief Executive Officer and Chairman of DK Sinopharma, Inc.
 
Third Quarter 2010 Results
 
Sales for the three months ended September 30, 2010 increased by 66% to $7,290,685 as compared with $4,382,522 for products sold in the same period ended September 30, 2009.  This increase is primarily due to an increase in sales for our new products, Galanthamine Hydrobromide, Cow-bezoar Detoxicating tables, Ganhai Stomach Recovery capsules, Camptothecine, VC Honeysuckle-fructusforsythiae tables and compound Salvia Root tablets. Sales to new customers have also contributed to the increase in sales.
 
Gross profit increased 58% to $3,088,846 for the three months ended September 30, 2010, as compared to $1,956,019 for the three months ended September 30, 2009. Our gross profit margin fell 3% to 42% as of the three months ended September 30, 2010 from 45% as of the same period in 2009, mainly due to the increase in subcontracting charges.
 
In the three months ended September 30, 2010, selling, general and administrative expenses were $998,913, a decrease of 15%, as compared to $1,177,302 compared to the same period of 2009. The decrease for the 3 months ended September 30, 2010 was due primarily to decrease in amortization of intangible assets, advertising expenses and the reversal of a write-off related to an advance made to a supplier.
 
As a result of the above, in the three months ended September 30, 2010, Net Income increased to $2,191,362 as compared with the corresponding periods in 2009 of $918,266, representing a 139% year-over-year increase.
 
 
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Nine months Results
 
In the nine months ended September 30, 2010, we achieved revenue of $20,018,100, an increase of 47% as compared with $13,575,614 for products sold in the same period ended September 30, 2009.  This increase is primarily due to the launch of new products and successful sales to new customers.  The Company's new products launched in 2010 were Galanthamine Hydromide, Hydroxycamptothecin, Tanshinone IIA, Cow-bezoar Detoxicating table, Ganhai Stomach Recovery capsule, Camptothecine, VC Honeysuckle-fructus Forsythiae table and compound Salvia Root. Increase in sales prices of the Company's major products, namely, Huanglong Cough & Dyspenca Capsules, Gynecological Inflammation Relieving Capsules, Hepatitis B Relieving and Curing Capsules and Sprain Relieving Plaster and successful market penetration into a new province, Jilin province, have also contributed to the increase in sales revenue.
 
Gross profit increased 36% to $8,262,544 for the nine months ended September 30, 2010, as compared to $6,072,254 for the nine months ended September 30, 2009. Our gross profit margin fell 4% to 41% as of the nine months ended September 30, 2010 from 45% as of the same period in 2009, mainly due to the increase in subcontracting charges and costs of raw and packing materials; effectively, the overall percentage increase in cost of sales offset an overall percentage increase in net sales
 
Selling, general and administrative expenses was $2,846,732 for the nine months ended September 30, 2010, an increase of 1% as compared to $2,814,031 for the same periods in 2009.
 
Net income achieved for nine months ended September 30, 2010 was $5,161,402, as compared with the corresponding periods in 2009 of $3,203,419, representing an increase of 61%.
 
Recent Events
 
On Sept. 16th, 2010, DK Sinopharma, Inc. successfully co-hosted the National Digestive & Cardiovascular Diseases Academic Conference along with China Pharmacology Academic Council and School of Medicine of Dalian University in Dalian. Many experts and scholars in digestive and cardiovascular systems attended the conference, including 92 doctors from large hospitals across the country.
 
On September 27, 2010, DK Sinopharma, Inc. successfully co-hosted the 2nd China Western Gynecological Diseases Research Forum along with China Physician Association Gynecology Branch and Shaanxi Pharmacology Academic Council. Many experts and scholars in gynecology attended the conference, including 146 gynecologists from large hospitals across China.
 
About DK Sinopharma, Inc.
 
DK Sinopharma, Inc. has its headquarters in Xi'an, Shaanxi Province, China. The Company identifies, discovers, develops, manufactures and distributes both prescription and over-the counter, including both conventional and Traditional Chinese Medicines, pharmaceutical products for the treatment of some of the most common ailments and diseases. Through the Company's operating entity, Yangling Dongke Maidisen Pharmaceutical Co. Ltd., the Company currently manufactures herbal extracts and 38 pharmaceutical products in the form of capsules, tablets, granules, semisolid ointment, powder, ointment, and paste ointment. We focus on varying diseases relating to respiratory system, digestive system, cardio-cerebral vascular system, antineoplastic, bone diseases-modifying antirheumatic, gynecological, and refill nutrition, among others. Yangling Dongke Maidisen Pharmaceutical Co. Ltd.'s manufacturing facilities are based in the City of Yangling in Shaanxi Province. Revenue was $20,018,100 and Net Income was $5,161,402 for the nine months ended September 30, 2010. Shareholders' Equity was $22,189,576 and Total Assets were $31,795,702 as at September 30, 2010. For more information see our website at http://www.dksinopharma.com.
 
Safe Harbor Statement
 
This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the company's ability to raise additional capital to finance the company's activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the company; the ability of the company to operate as a public company; the period of time for which its current liquidity will enable the company to fund its operations; the company's ability to protect its proprietary information; general economic and business conditions; the volatility of the company's operating results and financial condition; the company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the company's filings with the Securities and Exchange Commission and available on its website at http://www.sec.gov. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.
 
 
2
 
 
DK SINOPHARMA, INC.
CONSOLIDATED BALANCE SHEETS
   
September 30,
    
December 31,
  
   
2010
    
2009
  
   
(Unaudited)
    
(Audited)
  
             
ASSETS
            
Current Assets
            
Cash and cash equivalents
  
$
4,809,889
    
$
1,058,157
  
Accounts receivable
    
5,155,948
      
3,460,649
  
Other receivables
    
517,237
      
762,158
  
Advances to suppliers
    
7,465
      
537,578
  
Amount due from shareholder
    
80,096
      
-
  
Prepaid expenses
    
1,525
      
326,783
  
Inventories
    
10,185,352
      
10,509,797
  
Amount due from related parties
    
-
      
172,655
  
Total Current Assets
    
20,757,512
      
16,827,777
  
                 
    Property, plant and equipment, net
    
4,714,740
      
5,067,401
  
    Construction in progress
    
1,171
      
-
  
    Intangible assets, net
    
6,322,279
      
6,636,900
  
                 
Total Assets
  
$
31,795,702
    
$
28,532,078
  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
                
                 
Current Liabilities
                
Accounts payable
  
$
2,625,212
    
$
2,812,073
  
Accrued expenses and other payable
    
2,459,158
      
4,379,631
  
Customer and other deposits
    
-
      
384,084
  
Value-added tax payable
    
270,108
      
-
  
Short-term bank loan
    
4,180,290
      
1,320,190
  
Total Current Liabilities
    
9,534,768
      
8,895,978
  
                 
Derivative liability
    
71,358
      
-
  
Long-term bank loan
    
-
      
2,787,068
  
                 
Total Liabilities
    
9,606,126
      
11,683,046
  
                 
                 
Stockholders' Equity
                
                 
Common stock, $.001 par value, 70,000,000 shares authorized, 30,000,005 and 30,000,005 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively
    
30,000
      
30,000
  
Subscription receivable
    
(750)
      
(750)
  
Additional paid-in capital
    
10,310,340
      
10,310,340
  
Statutory reserves
    
2,448,456
      
2,448,456
  
Accumulated other comprehensive loss
    
51,439
      
(127,703)
  
Retained earnings
    
9,350,091
      
4,188,689
  
Total Stockholders' Equity
    
22,189,576
      
16849,032
  
                 
Total Liabilities and Stockholders' Equity
  
$
31,795,702
    
$
28,532,078
  

 
3
 
 
DK SINOPHARMA, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
   
Three months ended
    
Nine months ended
  
   
2010
  
2009
    
2010
  
2009
  
                     
                                 
Sales, net
  
$
7,290,685
    
$
4,382,522
    
$
20,018,100
    
$
13,575,614
  
                                 
Cost of sales
    
(4,201,839)
      
(2,426,503)
      
(11,755,556)
      
(7,503,360)
  
                                 
Gross profit
    
3,088,846
      
1,956,019
      
8,262,544
      
6,072,254
  
Selling, general and administrative expenses
    
(998,913)
      
(1,177,302)
      
(2,846,732)
      
(2,814,031)
  
Research and development cost
    
-
      
-
      
(172,391)
      
-
  
                                 
Income from operations
    
2,089,333
      
778,717
      
5,243,421
      
3,258,223
  
                                 
Other Income (Expense)
                                
Interest income
    
-
      
-
      
20,999
      
2,986
  
Interest expense
    
(66,283)
      
(50,285)
      
(216,802)
      
(242,196)
  
Other income
    
169,841
      
190,756
      
193,319
      
191,294
  
Derivative expense
    
-
              
(71,358)
      
-
  
Other expense
    
(2,129)
      
(922)
      
(8,177)
      
(6,888)
  
Total other Income (Expense)
    
101,429
      
139,549
      
(82,019)
      
(54,804)
  
                                 
Income before income taxes
    
2,191,362
      
918,266
      
5,161,402
      
3,203,419
  
                                 
Provision for income taxes
    
-
      
-
      
-
      
-
  
                                 
Net income
  
$
2,191,362
    
$
918,266
    
$
5,161,402
    
$
3,203,419
  
                                 
Weighted average common shares outstanding
                                
Basic
    
30,000,005
      
30,000,005
      
30,000,005
      
30,000,005
  
Diluted
    
30,000,005
      
30,000,005
      
30,000,005
      
30,000,005
  
                                 
Net income per common share
                                
Basic
  
$
0.07
    
$
0.03
    
$
0.17
    
$
0.11
  
Diluted
  
$
0.07
    
$
0.03
    
$
0.17
    
$
0.11
  
                                 
Net income
  
$
2,191,362
    
$
918,266
    
$
5,161,402
    
$
3,203,419
  
Foreign currency translation adjustment
    
165,377
      
-
      
179,142
      
11,067
  
Comprehensive income
  
$
2,356,739
    
$
918,266
    
$
5,340,544
    
$
3,214,486
  

 
4
 
 
DK SINOPHARMA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND 2009
(UNAUDITED)
   
2010
    
2009
  
                 
                 
CASH FLOWS FROM OPERATING ACTIVITIES
                
Net income
  
$
5,161,402
    
$
3,203,419
  
Adjustments to reconcile net income to net cash
                
provided by (used in) operating activities:
                
Depreciation and amortization
    
732,812
      
884,985
  
Written off of payable
    
20,999
      
-
  
Recovery of deposits paid to suppliers
    
(336,284)
      
-
  
Derivative liability
    
71,358
      
-
  
Changes in operating assets and liabilities:
                
Accounts receivable
    
(1,614,049)
      
1,095,153
  
Inventories
    
504,035
      
(4,157,759)
  
Advances to suppliers
    
868,575
      
(1,395,095)
  
Prepaid expenses and other receivable
    
604,044
      
(1,116,808)
  
Amount due from shareholder
    
55,975
      
(9,938)
  
Amount due to a related company
            
(5,866)
  
Accounts payable
    
(239,097)
      
1,766,095
  
Accrued expense and other payable
    
(2,050,627)
      
2,600,622
  
Customer and other deposits
    
(383,262)
      
-
  
VAT payable
    
306,212
      
-
  
                 
Net cash provided by operating activities
    
3,702,093
      
2,864,808
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Addition in share capital
    
-
      
300
  
Purchase of property and equipment
    
(41,405)
      
(1,361,617)
  
Purchase of intangible assets
    
(25,296)
      
-
  
                 
Net cash used in Investing activities
    
(66,701)
      
(1,361,317)
  
                 
CASH FLOWS FROM FINANCING ACTIVITIES
                
Payment from short-term loans
    
-
      
(1,315,307)
  
                 
Net cash used in financing activities
    
-
      
(1,315,307)
  
                 
Effect of exchange rate changes on cash and cash equivalents
    
116,340
      
(134,448)
  
                 
Net Increase (Decrease) in cash and cash equivalents
    
3,751,732
      
53,736
  
                 
Cash and cash equivalents, beginning balance
    
1,058,157
      
491,626
  
                 
Cash and cash equivalents, ending balance
  
$
4,809,889
    
$
545,362
  
                 
SUPPLEMENTAL DISCLOSURES:
                
Interest payments
  
$
216,802
    
$
242,196
  

 
5
 
 
DK SINOPHARMA, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2010 AND YEAR ENDED DECEMBER 31, 2009
(UNAUDITED)
   
Capital Stock
    
Subscription
    
Additional Paid-in
    
Other Comprehensive
    
Statutory
    
Retained
    
Total Stockholders
  
   
Amount
    
Receivables
    
Capital
    
Income
    
Reserves
    
Earnings
    
Equity
  
                                           
Balance December 31, 2008
  
$
30,000
    
$
(750)
    
$
10,310,340
    
$
(138,770)
    
$
275,233
    
$
1,973,568
    
$
12,449,621
  
                                                         
Foreign currency translation adjustments
    
-
      
-
      
-
      
11,067
      
-
      
-
      
11,067
  
                                                         
Transferred to Statutory reserve
    
-
      
-
      
-
      
-
      
2,173,223
      
(2,173,223)
      
-
  
                                                         
Dividend paid
    
-
      
-
      
-
      
-
      
-
      
(439,264)
      
(439,264)
  
                                                         
Income for the year ended December 31, 2009
    
-
      
-
      
-
      
-
      
-
      
4,827,608
      
4,827,608
  
                                                         
Balance December 31, 2009
    
30,000
      
(750)
      
10,310,340
      
(127,703)
      
2,448,456
      
4,188,689
      
16,849,032
  
                                                         
Foreign currency translation adjustments
    
-
      
-
      
-
      
179,142
      
-
      
-
      
179,142
  
                                                         
Income for the nine months ended September 30, 2010
    
-
      
-
      
-
      
-
      
-
      
5,161,402
      
5,161,402
  
                                                         
Balance September 30, 2010
  
$
30,000
    
$
(750)
    
$
10,310,340
    
$
51,439
    
$
2,448,456
    
$
9,350,091
    
$
22,189,576
  
 
DK Sinopharma, Inc.
 
  
Mr. Dongke Zhao, President and Chief Executive Officer
  
Ms. Yanhong Ren, Chief Financial Officer
  
Ms. Emily Zhang, Vice President Corporate Communications
  
   
   
Dongxing Building, 4th Floor, No.1 Xinke Road
  
Xi'an City, Shaanxi Province, PRC
  
Phone: 86-29-8224-7500-8612
  
Email: ir@dksinopharma.com
  
   

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