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China Yingxia International, Inc. Reports First Quarter 2008 Results

Friday, May 16, 2008 General News J E 4
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HARBIN, China, May 15 China YingxiaInternational, Inc. (OTC Bulletin Board: CYXI) ("China Yingxia" or "theCompany"), a leading provider in the nutraceutical industry engaged in thedevelopment, manufacture and distribution of organic nutritional food products,supplements, and personal care products in the People's Republic of China("PRC"), today reported its financial results for the first quarter endedMarch 31, 2008.

First Quarter Fiscal Year 2008 Results

Revenue for the three months ended March 31, 2008, was $2.1 million, anincrease of 27.38% from $1.6 million for the same period in 2007. The increasein revenue was a direct result of increasing the number of franchisee ownedretail outlets, especially at the county level, and the introduction of newproducts in its nutritional foods line. The Company added 43 county levelfranchisees during the first quarter of 2008. The new franchisees contributedapproximately $180,112 to first quarter revenues. In addition, revenuegenerated from the four products introduced in its nutritional foods linesuch as herbal black fungus soup and crackers, fruit jam, soybean oil andhoney, contributed 26.83% of revenues in its nutritional foods product line,representing 9.46% of the Company's total revenues.

Gross profit for the first quarter of 2008 totaled $1.29 million, up48.34% compared with $0.87 million for the same period last year. Gross profitmargin was 60.95% for the first quarter 2008, from 52.34% for the same quarter2007. The higher gross margin for the first quarter 2008 was attributed to thepercentage increase in manufacturing its products in-house versus buying fromthird parties. For first quarter 2008, products manufactured in-houserepresented approximately 79.13% of total revenue compared to 36.16% of totalrevenue for the same period prior year.

Total operating expenses for the three months ended, March 31, 2008 were$0.5 million, up 54.87% from the same period in 2007. The increase inoperating expenses was primarily attributable to fees associated withmaintaining legal, accounting, and investor relations services.

Operating income increased 44.6% to $0.8 million in first quarter 2008,representing an operating margin of 37.73%, compared to $0.55 million and33.24% for the same period 2007.

Net income for first quarter 2008 was $0.7 million, or $0.01 per fullydiluted share, up 29.25% from net income of $0.55 million, in first quarter2008. Net margins increased slightly to 33.7% during the first quarter of 2008from 33.2% in the same period 2007.

"During the first quarter 2008 we experienced increase in revenues andnet income driven mostly by our ability to increase sales from new productintroductions and the opening of 43 additional county level franchisees" saidMs. Yingxia Jiao, Chief Executive Officer of China Yingxia.

Financial Condition

For the period ended, March 31, 2008, the Company had $2.9 million in cashand cash equivalents, $14.62 million in working capital and a current ratio of26:1. Yingxia did not have any debt outstanding and had $39 million instockholders' equity. Net cash used in operating activities totaled $0.2million for the three months ended March 31, 2008, largely impacted by theincrease in inventory of $3.2 million. Net cash provided by investingactivities totaled $1.5 million, mostly from the collection on short-term loanin the amount of $2.2 million. Net cash used in financing activities were nilfor the three month period ended March, 31, 2008.

Recent Events

In the first quarter of 2008, the Company opened a subsidiary in India tosell its nutritional foods product line and dietary supplements. On April 25,2008, Yingxia announced that it had completed the acquisition of GuangzhouChichi Network Technology Development Co., Ltd. (''Guangzhou Technology''),and Guangzhou Chichi Network Supermarket Chain Co.
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