China Kangtai Cactus Biotech Full Year Revenue Up 36% to $36M; Net Income up Significantly to $11.8M; Q4 Revenue Up 44% to $12.3M; Net Income Up 959% to $3.6M

HARBIN, China--(EON: Enhanced Online News)--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 2010 revenue increased 36% to $36 million, compared to $26.5 million in 2009. Net income for 2010 increased to $11.8 million or $0.56 per diluted share compared to net income of $0.48 million for 2009, or $0.02 per diluted share. The Company’s 2009 net income was impacted by the reclassification of outstanding Series A Preferred Stock and A, B, C and D warrants from stockholders’ equity to liabilities at fair value.

“Cactus cigarette products opened enormous opportunities for our company in 2010 and we have great expectations for the future. We expect our agreements with both China Tobacco Shandong and Shandong Yishui Ruibosi will stimulate cigarette revenue to new levels this year and further broaden shareholder value”

Fourth Quarter Financial Highlights

Revenue for the fourth quarter of 2010 increased 44% to $12.3 million, up from $8.5 million in the same period of 2009
Net income rose 959% to $3.6 million or $0.18 per diluted share versus a loss of $0.42 million in the fourth quarter of 2009
Adjusted net income (excluding the reclassification of Series A preferred Stock and A, B, C and D warrants) rose 7% to $3.6 million or $0.17 per diluted share versus $3.3 million or $0.17 per diluted share in Q4 2009
Gross profit margin increased to 42% compared to 39% in Q4 of 2009
Income from operations increased 42% to $4.7 million from $3.3 million in Q4 2009.

Q4 Product Categories Performance

Nutraceuticals revenue increased 80% to $4.3 million, up from $2.4 million recorded in the fourth quarter of 2009
Cactus feed increased 54% to $1.4 million, up from $0.9 million recorded in the fourth quarter of 2009
Beverage sales increased 21.2% to $4.1 million, up from $3.4 million recorded in the fourth quarter of 2009
Sales of cactus cigarettes, launched in Q4 2009, increased 337% to $1.2 million, from $274,971 recorded in the fourth quarter of 2009
Packaged foods provided no revenue in the quarter, compared to $128,465 in Q4 of 2009
Raw & intermediate material decreased 12% to $1.2 million from $1.4 million recorded in the fourth quarter of 2009

Full Year Financial Highlights:

Revenue in 2010 increased 36% to $36 million, up from $26.5 million recorded in 2009
Net income rose 2,356% to $11.8 million or $0.56 per diluted share versus $480,125 or $0.02 per diluted share in 2009
Adjusted net income (excluding the reclassification of Series A Preferred Stock and A, B, C and D warrants) rose 13% to $7.3 million or $0.35 per diluted share versus $6.5 million or $0.33 per diluted share in 2009
Gross profit margin was 38% compared to 40% in 2009
Income from operations increased 19% to $11.3 million from $9.5 million in 2009

Full Year Product Categories Performance

Sales of cactus cigarettes increased 818% to $2.9 million, from $317,133 recorded in the same period of 2009
Cactus feed sales increased 99% to $4.6 million, up from $2.3 million recorded in the same period of 2009
Beverage sales increased 35% to $12.6 million, up from $9.3 million recorded in the same period of 2009
Raw & intermediate material sales decreased 15% to $2.9 million from $3.5 million recorded in the same period of 2009
Nutraceutical sales revenue increased 21% to $13 million, up from $10.7 million in the same period of 2009
Packaged foods provided no revenue in 2010, compared to $384,337 in the same period of 2009

Liquidity and Capital Resources

As of December 31, 2010, cash and cash equivalents were $2.6 million. Accounts receivables, net of allowance, were $7.4 million. Net cash provided by operating activities was $11 million, an improvement from $7.7 million in 2009. Net cash used for investing activities was $13.3 million. Net cash provided by financing activities was $1.6 million. As of March 24, 2011, the Company’s common stock issued and outstanding was 22,305,527.

Investment Agreement

On December 17, 2010, the Company issued 15,000 shares of its common stock for consulting services and 1,000,000 shares of its common stock pursuant to the Investment Agreement with Kodiak. The Company received net proceeds from Kodiak of $742,678 ($784,678 gross based on a price of $0.79 per share, less $42,000 fees and costs charged by Kodiak). The proceeds will be used to maintain the financial liquidity of the cigarette factory in Macao.

Management Comment

China Kangtai CEO, Jinjiang Wang, said, “2010 was a highly successful year for our company with significant improvement in our financial results. Our cactus cigarette, cactus feed and beverage and nutraceutical products all showed strong improvement. Revenue from the sale of cactus feed increased 99% reflecting the value of the cactus patent that we acquired in early 2010. The significant increase in total revenue was attributable to our efficient product marketing and increased customer acceptance.”

“The decrease in sales of raw and intermediate materials and packaged foods reflected changes in our product mix. Increases in cost of sales and decreases in gross profit percentage were primarily attributable to increased sales of cactus feed products. Gross profit was approximately 16% for cactus feed. Operating expenses for 2010 increased 125% to $2.2 million in 2010. This was mainly due to increases in R&D expenses, amortization expense and general and administrative expenses.”

“Cactus cigarette products opened enormous opportunities for our company in 2010 and we have great expectations for the future. We expect our agreements with both China Tobacco Shandong and Shandong Yishui Ruibosi will stimulate cigarette revenue to new levels this year and further broaden shareholder value,” 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.

China Kangtai’s online investor kit, including an investment profile, press releases, current price quotes, stock charts and more is available at http://www.hawkassociates.com/profile/ckgt.cfm. To subscribe to future releases via e-mail alert, visit http://www.hawkassociates.com/about/alert/.

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.