HARBIN, China, Aug. 16 /PRNewswire-Asia-FirstCall/ -- Weikang Bio-Technology Group Co., Inc. (OTC Bulletin Board: WKBT) ("Weikang" or the "Company"), a leading developer, manufacturer and marketer of Traditional Chinese Medicine (TCM), Western prescription and OTC pharmaceuticals and other health and nutritional products in the People's Republic of China, today announced its fiscal 2010 second quarter results for period ended June 30, 2010.

    Second Quarter Highlights
    -- Revenue was $10.5 million
    -- Gross profit was $6.1 million with gross margin of 58.3%
    -- Net Income was $1.9 million with fully diluted earnings per share of
       $0.07
    -- Adjusting for non-cash, stock-based compensation of $0.9 million, non-
       GAAP net income was $2.8 million and non-GAAP fully diluted earnings
       per share was $0.10

"During the second quarter we experienced severely harsh weather which disrupted business operations and impacted our sales. In early May, 2010, the southern and central region of China experienced an unusual amount of heavy rainfall resulting in extreme flooding and high humidity. This extreme weather caused disruption to transportation in the region which in turn prompted a portion of our sales to be postponed," commented Dr. Ying Wang, Chairman & CEO of Weikang Bio-Technology Group Co., Inc. "However, we are pleased to note that the majority of the problems caused by the extreme weather have been resolved and with our strong product offering as well as new therapeutics to be launched this year, we are looking forward to return to healthy revenue and net income growth for the rest of 2010."

Revenue for the second quarter of 2010 was $10.5 million, down 20.5% from revenue of $13.2 million in the second quarter of 2009. Revenue from Tianfang was $7.0 million, or 66% of total sales, and revenue from WeiKang was $3.5 million, or 34% of total sales. Revenue for the quarter was adversely impacted due to the harsh rainfall in southern and central China which caused extreme flooding as well as an unusually high level of humidity in Harbin which impacted distribution as well as operations. Both conditions have improved considerably and operations have resumed to their regular production level.

Gross profit for the quarter decreased 13.7% to $6.1 million from 7.1 million in the same period of 2009. Gross margin for the second quarter of 2010 was 58.3% compared to 53.7% in the second quarter of 2009. The increase in gross margin over the previous year period is the result of an increase of the percent of total sales of the Company's higher margin products.

Operating expenses were $3.3 million or 31.1% of sales, compared to $3.0 million or 22.5% of sales in the second quarter of 2009. The increase in operating expenses was attributable to an increase in transportation expense due to the disruption in transportation as a result of the harsh weather conditions. The Company also recognized $900,485 in non-cash, stock-based compensation expenses that it did not incurred in the comparable period a year ago. Adjusting for the non-cash, stock-based compensation, operating expenses were $2.4 million or 22.5% of total sales. The non-cash, stock-based compensation relates to the private placement done on January 20, 2010 and associated investor relation expense as well as compensation to four Directors and a key employee. The Company has recorded $2.6 million as total deferred compensation.

Operating income for the second quarter was $2.9 million, down 30.8% from $4.1 million in the second quarter of 2009. Operating margin was 27.2% compared to 31.3% in the same period a year ago. Adjusting for the previously mentioned non-cash, stock-based compensation, non-GAAP operating income was $3.8 million in the second quarter of 2010 and operating margin was 35.8%.

Net income was $1.9 million in the second quarter of 2010, down 42.5% from $3.3 million in net income from the same period a year ago. Fully diluted earnings per share were $0.07 compared to fully diluted earnings per share of $0.13 in the second quarter of 2009. Excluding the non-cash, stock-based compensation, non-GAAP net income and fully diluted earnings per share for the second quarter of 2010 was $2.8 million and $0.10, respectively.

Financial Condition

As of June 30, 2010, Weikang Bio-Technology Group Co., Inc. had $20.5 million in cash and cash equivalents, $20.3 million in working capital and $13.4 million in total liabilities. Net cash provided by operating activities for the first six months of 2010 was $7.2 million. Shareholders' equity stood at $34.2 million, up from $23.4 million at year end 2009.

Six Months Financial Results

Revenue for the first six months of fiscal 2010 was $24.5 million, up 5% from $23.3 million in the same period a year ago. Gross profit was $14.4 million, up 13.3% from gross profit of $12.7 million for the first six months of fiscal 2009. Gross margin was 59.0% compared to 54.7% for the comparable period a year ago. Operating income was $9.2 million, up slightly from $9.1 million in the first six months of fiscal 2009. Adjusting for $1.9 million in non-cash, stock-based compensation, non-GAAP operating income was $11.1 million. Net income was $6.5 million, down 10.0% from $7.2 million in the same period a year ago. Fully diluted earnings per share were $0.23 compared to $0.28 in the first six months of fiscal 2009. Excluding the non-cash, stock-based compensation, non-GAAP net income and fully diluted earnings per share for the first six months of 2010 was $8.3 million and $0.30.

Recent Events

Mr. Baolin Sun was appointed as Weikang Bio-Technologly's new Chief Financial Officer as of July 23rd, 2010. Mr. Sun has more than twenty years experience in finance and accounting and obtained his Bachelor degree in Finance and Economics from Dongbei University of Finance and Economics.

Business Outlook

Weikang Bio-Technology intends to increase its sales by expanding its product offering as well as offering consumers value packages by bundling its therapeutics. At the end of August, 2010, the Company intends to launch a new value-add bundled package of its Rongrun Kidney Boost Tonic combined with newly launched therapeutics: Perilla Seed Soft Capsule, Forest Frog Oil Soft Capsule and Yangshen Pill. In the fourth quarter of 2010, Weikang Bio-Technology plans to launch two additional therapeutics, Sha Bai Shuanghuai Soft Capsules and Gouqi Xi Pu Soft Capsules which have the potential to add up to approximately $5.7 million in revenue and up to approximately $2.2 million in net income combined on an annual basis when it reaches full production.

"While the second quarter of 2010 was off due to events outside of managements' control, we are very positive about our outlook for the rest of 2010 as we have several exciting new products that we plan to launch by the end of the year," Mr. Wang continued. "Moreover, we believe our long-term growth opportunities are strong as we remain committed to expanding our distribution network and developing new high quality therapeutics. For example, a project that we believe has an exciting commercial potential is the development of licorice flavonoids for use in therapeutics which we anticipate has the possibility to contribute to over $13 million in annual sales when it reaches full production."

Conference Call

Weikang Bio-Technology Group Co., Inc. will host a conference call on Tuesday, August 17, 2010 at 9:00 a.m. Eastern Time to discuss fiscal 2010 second quarter results. To participate in the live conference call, please dial the following number fifteen minutes prior to the scheduled conference call time: 888-482-0024. International callers should dial 617-801-9702. When prompted by the operator, mention conference passcode 64593584.

If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Tuesday, August 17, 2010 at 10:30 a.m. Eastern Time. To access the replay, dial 888-286-8010 and enter the passcode 30290121. International callers should dial 617-801-6888 and enter the same passcode.

This conference call will be broadcast live over the Internet and can be accessed by all interested parties by clicking on http://weikangbio.com . Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those unable to participate during the live broadcast, a 90-day replay will be available shortly after the call by accessing the same link.

About Weikang Bio-Technology Group Co., Inc.

Weikang Bio-Technology Group Co., Inc. is principally engaged in developing, manufacturing and distributing Traditional Chinese Medicine (TCM), and health and nutritional supplements in China, in compliance with requisite Chinese licenses and approvals. The Company is also expanding its business scope to develop, manufacture and distribute Chinese herbal extract products and GMP certified western prescription and OTC pharmaceuticals through its acquisition of Tianfang. For more information, please visit http://www.weikangbio.com .

Use of Non-GAAP Financial Measures

To supplement Weikang Bio-Technology Group Co. condensed consolidated financial statements presented on a GAAP basis, Weikang is providing certain income statement information that is not calculated according to GAAP. Weikang believes that its non-GAAP disclosures are useful in evaluating its operating results as this information supplies the user with another view of the matching of costs and expenses. A reconciliation of the adjustments to GAAP results for the three and six month periods ended June 30, 2010 is included below. The non-GAAP information presented is supplemental and is not purported to be a substitute for information prepared in accordance with GAAP.

Non-GAAP financial results for the three and six month periods ended June 30, 2010 discussed in this release reflect operating results excluding the impact of the non-cash, stock-based compensation recognized under general and administrative expenses in connection to deferred compensation and associated investor relation expense related to its private placement financing in January 2010 as well as compensation to four Directors and a key employee.

Safe Harbor Statement

Certain statements in this press release and oral statements made by Weikang Bio-Technology Group Co., Inc. on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. These forward-looking statements are often identified by the use of forward-looking terminology such as "believes," "expects" or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.

                         --FINANCIAL TABLES FOLLOW--


            WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS

                                                 30-Jun-10       31-Dec-09
                                                (Unaudited)
    ASSETS
    CURRENT ASSETS
         Cash & cash equivalents                $20,485,278      $11,380,019
         Advances to suppliers
          and other receivables                     150,537           26,079
         Inventory                                1,045,905          285,395

         Deferred tax asset                         132,788               --
            Total current assets                 21,814,508       11,691,493
    NONCURRENT ASSETS
         Property and equipment, net              9,768,826       10,162,946
         Construction in progress                   446,823               --
         Intangible assets                       15,500,960       15,558,731
            Total noncurrent assets              25,716,609       25,721,677
    TOTAL ASSETS                                $47,531,117      $37,413,170
    LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES
         Accounts payable                           $13,669          $12,668
         Unearned revenue                                --           11,716
         Taxes payable                            1,522,402        2,247,410

         Due to related party                        25,034               --
             Total current liabilities            1,561,105        2,271,794

    ADVANCE FORM OFFICER                            650,000          650,000
    OTHER PAYABLES                                7,720,321        7,620,321
    CONTINGENCIES
    DEFERRED TAX LIABILITY                        3,421,953        3,450,005
    STOCKHOLDERS' EQUITY
         Common stock,  $.00001 par value;
          authorized shares 100,000,000;
          issued and outstanding shares
          28,024,388 and 25,486,800 at June
          30, 2010 and December 31, 2009,
          respectively                                  280              255
         Additional paid in capital               4,967,720          139,245

         Deferred compensation                     (753,306)              --
         Statutory reserve                        1,404,276        1,069,507
         Accumulated other comprehensive
          income                                  1,067,168          844,526
         Retained earnings                       27,491,600       21,367,517
             Total stockholders' equity          34,177,738       23,421,050
    TOTAL LIABILITIES AND STOCKHOLDERS'
     EQUITY                                     $47,531,117      $37,413,170


            WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF INCOME
                                 (Unaudited)

                          SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
                                2010        2009          2010        2009

    Net sales               $24,452,199 $23,306,974   $10,493,659 $13,195,767
    Cost of goods sold       10,014,363  10,564,767     4,374,061   6,103,182

    Gross profit             14,437,836  12,742,207     6,119,598   7,092,585

    Operating expenses
         Selling expenses     1,794,301     918,214     1,103,042     485,371
         General and
          administrative      2,617,383     747,756     1,427,532     541,287
         Research and
          development           802,907   1,937,928       732,579   1,937,928
         Total operating
          expenses            5,214,591   3,603,898     3,263,153   2,964,586

    Income from operations    9,223,245   9,138,309     2,856,445   4,127,999
    Non-operating income
    (expenses)
         Interest income         36,190       1,616        19,946       1,371
         Other income               194     521,913             1     265,635
         Other (expenses)        (1,907)    (35,433)       (1,224)    (22,464)
         Total non-operating
          income, net            34,477     488,096        18,723     244,542

    Income before income tax  9,257,722   9,626,405     2,875,168   4,372,541
    Income tax                2,798,867   2,438,475       957,758   1,038,216

    Net income                6,458,855   7,187,930     1,917,410   3,334,325
    Basic and diluted
     weighted average
     shares outstanding      27,692,734  25,268,474    28,021,751  25,306,723
    Basic and diluted net
     earnings per share           $0.23       $0.28         $0.07       $0.13




            WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF NON-GAAP INCOME
                                 (Unaudited)

                        SIX MONTHS ENDED JUNE 30,  THREE MONTHS ENDED JUNE 30,
                             2010        2009           2010         2009

    Net sales            $24,452,199 $23,306,974    $10,493,659  $13,195,767
    Cost of goods sold    10,014,363  10,564,767      4,374,061    6,103,182

    Gross profit          14,437,836  12,742,207      6,119,598    7,092,585

    Operating expenses
         Selling
          expenses         1,794,301     918,214      1,103,042      485,371
         General and
          administrative     739,688     747,756        527,047      541,287
         Research and
          development        802,907   1,937,928        732,579    1,937,928

         Total operating
          expenses         3,336,896   3,603,898      2,362,668    2,964,586

    Income from
     operations           11,100,939   9,138,309      3,756,930    4,127,999

    Non-operating income
    (expenses)
         Interest income      36,190       1,616         19,946        1,371
         Other income            194     521,913              1      265,635
         Other (expenses)     (1,907)    (35,433)        (1,224)     (22,464)

         Total non-
          operating income,
          net                 34,477     488,096         18,723      244,542

    Income before income
     tax                  11,135,417   9,626,405      3,775,653    4,372,541
    Income tax             2,798,867   2,438,475        957,758    1,038,216

    Net income             8,336,550   7,187,930      2,817,895    3,334,325

    Basic and diluted
     weighted average
     shares outstanding   27,692,734  25,268,474     28,021,751   25,306,723

    Basic and diluted
     net earnings per
     share                     $0.30       $0.28          $0.10        $0.13




                    WEIKANG BIO-TECHNOLOGY GROUP CO., INC
                RECONCILIATION OF NON- GAAP FINANCIAL MEASURES
               FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2010

                                        Net Income Diluted  Net Income Diluted
    Net Income (Loss) and Diluted EPS                EPS                 EPS
    Adjusted Amount Non-GAAP           $2,817,895   $0.10   $8,336,550  $0.30
    Adjustments
    Compensation adjustment (1)           857,170    0.03    1,769,180  0.064
    Stock-based compensation adjustment
     (2)                                   43,315    0.00      108,515  0.003
    Amount per consolidated statement
     of operations                      2,130,745    0.07    6,458,855   0.23

    (1) Non cash compensation expense in connection with the private
        placement done on January 20, 2010 and associated investor relation
        expense, the Company recorded $2.4 million total as deferred
        compensation.
    (2) Amortized stock-based compensation issued to a key employee and four
        Directors.



            WEIKANG BIO-TECHNOLOGY GROUP CO, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)


                                                   SIX MONTHS ENDED JUNE 30,
                                                      2010           2009
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                     $6,458,855     $7,187,930
    Adjustments to reconcile net income to
     net cash provided by operating activities:
    Depreciation and amortization                     599,057        587,162
    Stock issued for consulting expenses               65,200        127,500

    Deferred compensation                           1,812,494             --
    Changes in deferred tax                          (178,885)       (50,671)
    (Increase) decrease in current assets:

    Accounts receivable                                    --        (73,178)
    Advances to suppliers and other receivables      (124,277)       (49,501)
    Inventory                                        (755,128)      (275,882)
    Increase (decrease) in current liabilities:

    Accounts payable                                      927             --
    Unearned revenue                                  (11,721)      (219,533)
    Other payables                                    109,948          5,296
    Taxes payable                                    (743,596)       364,740
    Net cash provided by operating
     activities                                     7,232,874      7,603,863

    CASH FLOWS FROM INVESTING ACTIVITIES:

    Construction in progress                         (444,577)            --
    Acquisition of property & equipment                (8,869)        (2,187)
    Net cash used in investing activities            (453,446)        (2,187)

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Changes in due from management                         --      1,242,783

    Net proceeds from shares issued                 2,197,500             --

    Payment for purchase of Tianfang                       --     (3,812,283)
    Changes in due from related party                  24,908       (117,628)
    Net cash provided by (used in)
    financing activities                            2,222,408     (2,687,128)

    EFFECT OF EXCHANGE RATE CHANGE ON CASH &
     CASH EQUIVALENTS                                 103,423          5,220
    INCREASE IN CASH & CASH EQUIVALENTS             9,105,259      4,919,768
    CASH & CASH EQUIVALENTS, BEGINNING OF
     PERIOD                                        11,380,019         16,927
    CASH & CASH EQUIVALENTS, END OF PERIOD        $20,485,278     $4,936,695


    For more information, please contact:

    Company contact:
     Ren Hu, VP of Finance
     Weikang Bio-Technology Group Co., Inc.
     US Tel:  +1-201-887-0415
     China cell: +86-137-1872-8163
     Email: rhu@weikangbio.com

    Investors Relation contacts:
     John Marco, Partner, Elite IR
     Tel:   +1-310-819-2948
     Email: John.marco@elite-ir.com

     Leslie J. Richardson, Partner, Elite IR
     Tel:   +852-3183-0283
     Email: Leslie.richardson@elite-ir.com

SOURCE Weikang Bio-Technology Group Co., Inc.

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