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China Yingxia International Announces Fiscal Year End 2006 Financial Results

Posted on: Monday, 2 April 2007, 12:00 CDT

-- Revenue for 2006 increased 36% to $8.4 million -- Net Income for 2006 increased 205% to $5.3 million (includes a tax gain of approximately $3 million) -- Gross Profit for 2006 increased 43% to $4.6 million

NEW YORK, N.Y., April 2 /Xinhua-PRNewswire-FirstCall/ -- China Yingxia International, Inc. (BULLETIN BOARD: CYXI) , a leading provider in the nutraceutical industry by engaging in the development, manufacture and distribution of organic nutritional food products, supplements, and personal care products in China, today announced financial results for 2006. During 2006, CYXI used raw materials from the Heilongjiang province in China to produce a variety of products including soybean-based foods and drinks, Longgu golden millet enriched products, organic rice products, and cactus-based herbal supplements.

China Yingxia's current business model includes a combination of research, planting, production, deep processing, storage, and sales. The Company fully owns the intellectual property rights to cactus dry powder and processing, Longgu golden rice processing, and fruit and vegetable functional food processing. The Company also has a partnership with King International Co., Inc. based in Queensland, Australia, which owns a patent in its world-leading soybean processing technology.

China Yingxia financial results for the year ended December 31st, 2006 is as follows.

Income Statement

Revenue increased 35.85% to $8.4 million as compared to $6.2 million for 2005. The increase of revenue was attributable to the introduction of new products. 56% of the increase stems from nutritional foods including organic rice products and a mix of Nestle(TM) products including chocolate, coffee, and instant cereal meals. The remaining 44% of the revenue increase was attributed to our personal care products including air and water purifiers, and showerheads. The number of total products sold increased to 186 in 2006 from 82 in 2005.

Cost of goods sold was $3.8 million for 2006 compared to $3 million for 2005. As a percentage of revenues, cost of goods sold was 45.7% for 2006, compared to 48.6% for 2005. The Company was able to lower cost of goods sold as a percentage of revenues as a result of its introduction of a new product mix with lower costs associated with raw materials and cost of production.

Gross profit increased 43.54% to $4.6 million for 2006 compared to $3.2 million for the same period in 2005. Gross margins increased to 54.35% in 2006 compared to 51.44% in 2005 as a result of the increase in new products. The Company was able to achieve this increase despite intentionally giving discounted pricing toward these new products to franchisees in an effort to gain consumer recognition and increase market share going forward.

Selling and general administrative expenses increased from $422,318 for 2005 to $1.74 million in 2006. China Yingxia incurred a one-time expense of $850,000 for going public in 2006. Excluding this one-time expense, SG&A totaled $889,221, an increase of $466,903 compared to 2005. This increase is attributed to the increase in sales of 35.85% year-on-year and the introduction of the new product mix, which increased advertising costs.

Research and development expenses increased to $488,404 compared to 0 in the same period during 2005. Although the R&D expense lowered the Company's EBITDA, the Company believes it has set the foundation for securing the Company's internal product development for the future.

The Company has recognized previously accrued income taxes in the amount of $3 million as income tax benefits. As a result of the completion of the reverse merger, the Company obtained its foreign-owned entity ("WOFE"). Therefore, the Company is exempt from income tax from January 1, 2004 through December 31, 2007. The Company has also been approved to have its tax rate reduced by 50% from January 1, 2008 to December 31, 2010. Typical Chinese enterprises pay a tax rate of 30% to the state government and 3% to the local government.

EBITDA for the year ended December 31, 2006 totaled $2.33 million, a decrease of 14.43% from $2.73 million for the year ended December 31, 2005. There was a one-time expense of $850,000 for going public in May 2006. Normalizing for this one-time event, EBITDA would have been $3.18 million or an increase of 16.4% in 2006.

Net Income for the year ended in 2006 totaled $5.3 million, an increase of 190% from $1.8 million for the year ended in 2005. The increase is primarily due to the income tax benefit discussed above.

Balance Sheet

Total assets for the year ended December 31, 2006 totaled $20.1 million. Included in the $20.1 million is $14.9 million of property, plant, and equipment. The Company has incurred direct costs of construction or acquisition and design fees for a new plant and office building. The new facility will cover 54,600 square meters, with a construction area of 16,300 square meters. Upon completion the capacity will be 60,000 tons of soybeans, 90,000 tons of millet, and 1,500 tons of cactus powder produced annually.

The Company reported total liabilities of $909,964 for the year ended 2006. The Company has no preferred shares or long-term debt outstanding. Total stockholders' equity was $19.2 million for the year ended 2006 or $.57 per share.

Statement of Cash Flows

Cash flows from operations during 2006 amounted to $8.4 million representing an increase of approximately 211% compared to $2.7 million in 2005. The increased cash flow was due primarily to the increase of net income. Advances to suppliers also decreased by $3.5 million during 2006, due to better control over payment to suppliers. These increases were partly offset by a decrease in accounts payable of $150,335 and increases in inventory of $929,194 during 2006, which resulted from our expanded scale of operations, which required support of increased sales and production activities and additional demands on working capital.

Cash flows used in investing activities amounted to $8.8 million for the year ended in 2006. The Company used $1.9 million for the purchase of plants and equipment and $3.8 million for the construction of our new facility.

Cash flow from financing activities solely consisted of paying off a note payable in the amount of $210,652.

Ms.Yingxia Jiao, Chairwoman and CEO of China Yingxia stated, "We are very pleased with our company's performance for 2006. We continue to show solid growth in our sales, which was attributable to the introduction of our new products. The total number of products we sell has grown dramatically in 2006 to 186. Although we have given discounted prices for our new product roll out, our gross profit continues to remain strong increasing 43% to $4.6 million for 2006 compared to 2005, while achieving strong growth."

Ms. Yingxia Jiao continued, "I view our performance in 2006 to be very solid financially as we initiated our growth strategy for 2007 during 2006 and we continue to execute according to plan. To diversify risk and increase returns on investment, we have already begun to expand our product base and enter new geographical expansion throughout China. We have also invested in a new facility, which will cover 54,600 square feet. Upon completion there will be a capacity of 60,000 tons of soybean, 90,000 tons of millet, and 1,500 tons of cactus powder produced annually."

"This will enable CYXI to provide many more products to many more outlets than the 500 retail outlets which marketed our products in 2006. We will continue focusing on more developed, coastal cities where dispensable income is high." Ms. Yingxia Jiao continued, "In 2007 I look forward to expanding into less restricted trading countries such as Southeast Asia and Russia. In the future, it is our goal to expand to Europe, North America, Japan, and Korea as well." At the time of this statement, Ms. Jiao and her team members are in Russia as part of a seven day trip to explore entry into the Russian market for the Company's products.

The Company will be hosting their first shareholder update call in late April. CYXI will alert all interested parties with an announcement in the near future. Additionally, management will be presenting at the China Investment Conference in New York City on April 24th and be available for meetings April 23-25, 2007. If anyone wants to schedule a meeting, please email Alan.Sheinwald@HCinternational.net.

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 in mainland China, and it currently has over 180 employees and 3 agricultural production bases. Yingxia's products include fresh cactus and cactus dry power, organic soybean, and Longgu golden rice. Yingxia is currently implementing an aggressive expansion plan which includes the construction of a new production facility of 16,300 square meters.

For more information about China Yingxia International, Inc. (OTC BB: CYXI.OB), please visit: http://www.chinayingxia.com/ .

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" 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 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.

For more information, please contact: Alan Sheinwald Partner HCI Emerging Growth Tel: +1-914-669-0222 Email: Alan.Sheinwald@HCinternational.net

China Yingxia International, Inc.

CONTACT: Alan Sheinwald, Partner HCI Emerging Growth, +1-914-669-0222,Alan.Sheinwald@HCinternational.net

Web Site: http://www.chinayingxia.com/

Source: PRNewswire

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