Skystar Bio-Pharmaceutical Company
Skystar Bio-Pharmaceutical — Investor Presentation (March 2010)
41 slides from Skystar Bio-Pharmaceutical's investor presentation, Mar 17, 2010
Slide 1: Skystar Bio-Pharmaceutical Co., Ltd.
at SKYSTAR Bio-PHARMACEUTICAL CO.,LTD. SKYSTAR Weibing Lu, Chairman and CEO Bennet Tchaikovsky, CFO Scott Cramer, Director & US Representative
Slide 2: Safe Harbor Statement
Safe Harbor Statement Statements in this presentation may be “forward-looking statements” within the meaning of federal securities laws. The matters discussed herein that are forward-looking statements are based on current management expectations that involve risks and uncertainties that may result
Slide 3: Company Overview
Company Overview Leading China-based manufacturer and distributor of veterinary vaccines, medicines, microorganisms and feed additives Only US-listed pure play in the China animal health sector -GMP production facilities and processes -Headquartered in Xi’an, Shaanxi Province, China -Over 200 employ
Slide 4: 2009 Recent Events
2009 Recent Events fsesten WBE Bo Pranmaceunca.co..7a
Slide 5: 2009 Recent Events
2009 Recent Events
Slide 6: Skystar Snapshot
Skystar Snapshot fase Stock Price (March 12, 2010) $10.10 52 Week Range $1.50-12.34 Shares Outstanding 7.10M Market Cap 63.4M P/E (TTM — Adjusted)* 5.06 YTD Revenues $22.84M YTD EPS / Adjusted EPS* $1.30 / $1.38 All figures reflect the effect ofa forward 2-for-1 spit of Skystar's common stock effect
Slide 7: Why Invest in Skystar
Why Invest in Skystar » Growing and extensive product portfolio that covers all key segments of the animal farming industry » Proven track record of growing revenue, gross profit and adjusted net income » 2003 — 2008 CAGR of 84.39% in revenues; 84.36% in gross margins;131.85% in adjusted net income
Slide 8: Why Invest in Skystar
Why Invest in Skystar » Only U.S.-listed China-based veterinary medicine supply company » Compelling and growing market opportunity driven by China’s developing economy » Aggressive growth strategy in place » Unparalleled sales and distribution network across all 29 farm producing provinces in China
Slide 9: Growing Industry
Growing Industry Consolidation of family owned/operated farms and improved technology are driving demand and growth in the veterinary industry ——
Slide 10: Growing Industry
Growing Industry » China is the world’s largest producer of poultry and livestock >» Government supports rapid development of modernization >» New market opportunities include Company estimated $150 million aquaculture market (fish farming) “USDA - Economic Research Services - 2006 Skystar BABS Bio
Slide 11: Growing Industry
Growing Industry >» GMP certification required by PRC government for all veterinary pharmaceutical and vaccine manufacturers » Higher living standards spur demand for improving animal husbandry » Industry evolving to large-scale farms and meat processing plants » Growing pet ownership arch Services
Slide 12: Broad Portfolio of Products
Broad Portfolio of Products Skystar product lines address all key farming industry segments allowing the company to capture more market share product Mix » YTD revenues: $22.8M Revenues YTD » 170+ product portfolio » 42 new products approved in 2009 » Targeting 30 product introductions in 2010
Slide 13: Veterinary Medications
Veterinary Medications 9 Months Ended Sept. 30, 2009 As a Percentage of Total Veterinary Medications $14,999,173 66% $6,060,403 51% Total $ 22,844,099 100% $11,831,427 100% 140+ products » 26 new products introduced in 2009 » Focus on higher margin products 8
Slide 14: Micro-organism
Micro-organism [ Proguct| Revenue | GrossMargin—_| 9 Months Ended Sept. 30, 2009 As a Percentage of Total Micro-organisms $5,815,280 25% 4.254.692 36% Total $ 22,844,099 100% $11,831,427 100% 16 products » In house production of microbial strain significantly reduced production costs in 2008 » Compl
Slide 15: Feed Additives
Feed Additives P Products| Revenue | Gross Margin | 9 Months Ended Sept. 30, 2009 As a Percentage of Total Feed Additives $1,003,628 4% $599,279 5% Total $22,844,099 100% $11,831,427 100% 10 products » Increase yield » Improve health of livestock
Slide 16: Veterinary Vaccines
Veterinary Vaccines Product) Revenie Crossan 9 Months Ended Sept. 30, 2009 As a Percentage of Total Veterinary Vaccines $ 1,026,018 5% $917,053 8% Total $ 22,844,099 100% $11,831,427 100% 10 products (active and inactive) » Constructing new production facility, targeting completion in 1H 2010 » Plan
Slide 17: Effective R&D Capabilities
Effective R&D Capabilties Xi’an R&D Facilities feestes GE Bo Prinmcmunea. co.ur0 7 ? =
Slide 18: Effective R&D Capabilities
Effective R&D Capabilties Shanghai R&D Fa
Slide 19: Bringing Products to Market
Bringing Products to Market Launched several products targeting porcine reproductive and respiratory syndrome (PRRS), aka Blue Ear Disease » April, 2007: launched Chinese Goldthread (Huanglian) Detoxification Powder ("CGDP") » July, 2007: launched First Aid Kit for Swine High Fever Syndrome » Cures
Slide 20: Customers and Distribution
Customers and Distribution
Slide 21: Skystar's Competitive Advantages
Skystar’s Competitive Advantages Beestan BE Bo Pranmaceurca.co..7a
Slide 22: Skystar's Competitive Advantages
Skystar’s Competitive Advantages
Slide 23: Growth Strategy
Growth Strategy
Slide 24: Growth Strategy
Growth Strategy Expand Manufacturing Capabilities SkysTaR UB o Penmacmurca.co.uTo
Slide 25: Growth Strategy
Growth Strategy
Slide 26: Annual Revenue Growth
Annual Revenue Growth 9 Months 2009
Slide 27: YTD Revenue Growth
YTD Revenue Growth $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 + $2280 $17.20 $10.20 © Months 9 Months @ Months 2007 2008 2009 Revenue (SMM) for the 8 Months Ended September 30 Risser Bo Pravmacmure:
Slide 28: Third Quarter Revenue Growth
Third Quarter Revenue Growth SY408 31278 $12.00 $10.05 $10.00 $8.00 36.00 35.45 $4.00 | $200 so00 + 3007 3008 3200 BRevenus (SMM) For the 3 Months Ended September 30 SkusTaR Bo Paanmaceunca.co,.r0 28
Slide 29: Annual Gross Margin Expansion
Annual Gross Margin Expansion % 518% ar $1278 911.80 $8.94 $440 2006 2007 2008 eMtonths 2008 se Gross Margin (St) + Gross Margin (1%) Skustar 1B Bo Praanmacmunca.co.uro 40.0% 200% 100% 0.0%
Slide 30: YTD Gross Margin Expansion
YTD Gross Margin Expansion 80.0% $16.00 a 51.8% | soo $14.00 $11.80 $12.00 40.0% $10.00 $880 $8.00 a 6.80 $0.00 = 20.0% $4.00 10.0% $2.00 $0.00 + + 0.0% Months 9 Months ‘9 Months: 2007 2008 2009 HEBGross Margin (SMM) for the 9 Months Ended September 30 Gross Margin (%) SkusTar Bo Pranmacmuncal.co.L7
Slide 31: Third Quarter Gross Margin Expansion
Third Quarter Gross Margin Expansion al ig ee “ $8.00 §2.2% 50.0% $7.00 $6.67 $6.00 40.0% $5.19 $5.00 30.0% $4.00 $3.18 $3.00 20.0% $2.00 10.0% $1.00 $0.00 + + 0.0% 3007 3008 3Q09 TmmGross Margin (SMM) —+-Gross Margin (%) SkusTaR BS Bo Paanmacmumca.co..ro
Slide 32: Annual Adjusted Net Income Growth
Annual Adjusted Net Income Growth 20.1% 38.00 2 $7.00 Ao $6.70 36.64 Bus $6.00 $5.00 $4.20 34.00 18.0% 33.00 pe $2.00 $1.00 & 5.0% 2006 2007 2008 ‘Months 2008 EBNNst Income (54M) + ProftMrsin SkusTaR BE Bo Pranmacmureca.co...70
Slide 33: YTD Adjusted Net Income Growth
YTD Adjusted Net Income Growth $9.00 31.0% $8.00 a ia 20.1% 29.0% $7.00 Sil 27.0% $6.00 $6.20 25.0% $5.00 23.0% $400 21.0% si $2.88 gr 190% 31.00 17.0% $0.00 + | 18.0% Months © Months 9 Months 2007 2008 2009 maet income (SMM) —Profthargin SkysTar Bo PaannuceuncaL.co..ra
Slide 34: Annual Adjusted Net Income
Annual Adjusted Net Income Net income (loss) Non recurring non-cash charges: Amortization of deferred financing Amortization of discount on debentures Amort of deferred compensation Inducement costs for debentures converted Inducement costs for warrants exercised Change in fair value of warrants Inc
Slide 35: High Margin Products
High Margin Products 9 Months Ended 9/30/09 Veterinary Medications Micro-organism Feed Additives Vaccines Total Revenues |Gross Margin] GM % $14,999,173 $6,060,403 40% 5,815,280 4,254,692 73% 1,003,628 599,279 60% 1,026,018 917,053 89% $22,844,059 $11,831,427 52% SkysTar Bo Prannucaureca. co.r0 35
Slide 36: Select Balance Sheet Data
Select Balance Sheet Data Cash $14.8M $411,000 Current Assets $36.2M $17.6M Current Liabilities $3.8M $6.36M SkysTaR 1B Bo Pranmacmunca.co..ro 38
Slide 37: Weibing Lu - Chairman and CEO
Weibing Lu - Chairman and CEO ay » Founded Xian Tianxing Bio- Pharmaceutical Co., Ltd. (our operating company in China) in 1997 » BS from Wuhan University in 1985 and MBA from Xi'an Jiaotong University in 1999 » Awarded Outstanding Entrepreneur of Xi'an Feed Industry in 2002 » Appointed as a Directo
Slide 38: Wei Wen - Director and Vice General Manager
Wei Wen - Director and Vice General Manager » Secretary of the Board and Vice GM since founding of the Company » Graduated from Xi’an University of Science and Industry in 1986 » Manager and Vice GM at the Sales Department of two companies before joining Skystar
Slide 39: Bennet P. Tchaikovsky, CPA, Esq. - CFO
Bennet P. Tchaikovsky, CPA, Esq. - CFO » Part-time CFO of China Jo-Jo Drugstores, Inc. (OTCBB: CJJD.OB) » Former CFO of Innovative Card Technologies, Inc. (OTCBB: INVC) » Graduate of Southwestern University School of Law » Licensed as a CPA in California
Slide 40: Erna Gao - VP Finance & Administration
Erna Gao - VP Finance & Administration » Served as our Chief Financial Officer from March 2004 through May 2008 » Former Chief Accountant at Dongda Petroleum Company » Graduated from Xi'an TB University with a degree in Accounting 40
Slide 41: Scott Cramer, Director & US Spokesperson
Scott Cramer, Director & US Spokesperson rif | » Former CEO, CFO of The Cyber Group » Founder and President of Cramer & Rauchegger, Inc., a firm specializing in retirement management, estate planning and investments » Registered Representative - Series 7, 63, 65 Psesten TBH Bo Pranmaceunca.co.tro “
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