China Kangtai Cactus Biotech Q1 Revenue Up 21% To $6.7M; Operating Income Up 72% To $2.0M

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 first quarter of 2011 increased 21% to $6.7 million, compared to $5.5 million in the same period of 2010. Income from operations rose 72% to $2.0 million, compared to $1.2 million in the same period of 2010. Net income for the first quarter of 2011 was $1.9 million or $0.08 per diluted share compared to $2.4 million for the same period of 2010, or $0.11 per diluted share. The first quarter results included the impact of the revaluation of Series A Preferred Stock and A, B, C and D warrants with characteristics of liabilities at fair value.

First Quarter Financial Highlights

• Revenue for the first quarter of 2011 increased 21% to $6.7 million, up from $5.5 million recorded in the same period of 2010
• Income from operations increased 72% to $2.0 million from $1.2 million in the first quarter of 2010.
• Adjusted net income (absent revaluation of Series A Preferred Stock and A, B, C and D warrants) rose 78% to $1.5 million or $0.07 per diluted share versus $0.8 million or $0.04 per diluted share in Q1 2010
• Net income decreased 21% to $1.9 million or $0.08 per diluted share versus $2.4 million in the first quarter of 2010
• Gross profit margin increased to 38% compared with 27% in Q1 of 2010

Q1 Product Categories Performance

• Sales of cactus cigarettes, launched in Q4 2009, increased 524% to $1.3 million, from $212,638 recorded in the first quarter of 2010
• Nutraceuticals revenue increased 40% to $2.5 million, up from $1.8 million recorded in the first quarter of 2010
• Cactus feed increased 96% to $0.9 million, up from $0.5 million recorded in the first quarter of 2010
• Beverage sales increased 20% to $1.7 million, up from $1.4 million recorded in the first quarter of 2010
• Raw & intermediated material decreased 87% to $218,042 million from $1.6 million recorded in the first quarter of 2010

Liquidity and Capital Resources

As of March 31, 2010, cash and cash equivalents were $2.6 million. Accounts receivables net of allowance were $8.7 million. Net cash used by operating activities was $117,372, a decrease from $4.5 million for the same period in 2010. Net cash provided by financing activities was $36,150. As of May 10, 2011, the company’s common stock issued and outstanding was 22,355,527.