Skystar Bio-Pharmaceutical Company
Skystar Bio-Pharmaceutical — Investor Presentation (March 2010)
34 slides from Skystar Bio-Pharmaceutical's investor presentation, Mar 8, 2010
Slide 1: Skystar Bio-Pharmaceutical Co., Ltd.
Dard SKYSTAR pnd Bio-PHARMACEUTICAL CO.,LTD. SKYSTAR Weibing Lu, CEO Bennet Tchaikovsky, CFO
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 producer and distributor of veterinary vaccines, medicines, microorganisms and feed additives -GMP production facilities and processes Headquartered in Xi'an, Shaanxi Province, China -Over 200 employees -Only U.S. listed veterinary supply in China
Slide 4: 2009 Key Achievements
2009 Key Achievements July: Completed public offering for 3.22M shares of common stock for gross proceeds of ~$21.0M June: Began trading on NASDAQ under the symbol “SKBI November: Completed forward 2-for-1 stock split December: Initiated build-out of new manufacturing lines for aquaculture products
Slide 5: Skystar Snapshot
Skystar Snapshot pase Stock Price (March 3, 2010) $8.93 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 = Adi it i i of warrants. o.L70.
Slide 6: 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 7: Growing Industry
Growing Industry Consolidation of family owned/operated farms and improved technology are driving demand and growth in the veterinary industry » China is the world’s largest producer of poultry and livestock » Company-estimated $150 million underserved aquaculture market opportunity in China » Gover
Slide 8: 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 Veter
Slide 9: Veterinary Medications
Veterinary Medications | Product | Revenue | Gross Margin _| 9 Months Ended Sept. 30, 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 SkusTaR
Slide 10: Micro-organism
Micro-organism Products| Revenue | Gross Margin | 9 Months Ended Sept. 30, 2009 As a Perc ge 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 Completed co
Slide 11: Feed Additives
Feed Additives Feed Additives $ 1,003,628 Total 4% $599,279 $ 22,844,099 5% 100% $11,831,427 100% 10 products > Increase yield > Improve health of livestock SkysTaR WES} Bo Pranmaceurca.co.Lr,
Slide 12: Veterinary Vaccines
Veterinary Vaccines Product Revenue Gross Margi 9M is Ended Sept. 31 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 » Plans to i
Slide 13: Effective R&D Capabilities
Effective R&D Capabilties Xi’an R&D Facilities Wer 25 researchers responsible fi ‘ : _developit nedicines and vaccines in response to epidemics, pandemics and diseases Two Labs: ‘Veterinary Medicine Lab and Microorganism Lab 1 Quality Inspection Center Shanghai R&D Facilities 5 researchers from the
Slide 14: 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 15: Customers and Distribution
Customers and Distribution rm )
Slide 16: Skystar's Competitive Advantages
Skystar’s Competitive Advantages Only U.S. listed veterinary supply company in China Majority of competitors only offer 1-2 product lines Largest competitors are state-owned enterprises High barriers of entry for international Established over 350 franchise stores in 20 08 competitors
Slide 17: Growth Strategy
Growth Strategy Targeting 2010 organic revenue of $44,0-$46M; gross margins of 48%-54% Introduce New |pabederuataterens * Covers all four product lines + Leverage R&D capabilities to continue to add to portfolio. Products and increase market share Expand : + Micro-organism facility to add 49% to cap
Slide 18: Annual Revenue Growth
Annual Revenue Growth $30.00 $25.00 $22.80 $20.00 $15.10 $15.00 9.80, $10.00 2 ~ LI $- -__, 2006 2007 ar Monte Revenue (SMM) SkusTaR WES) Bo Pranmaceurea.co.L10.
Slide 19: YTD Revenue Growth
YTD Revenue Growth $25.00 $80 $20.00 $17.20 $15.00 $10.20 $10.00 $5.00 $0.00 8 Months 9 Months 9 Months 2007 2008 2009 Revenue (SMM) for the 9 Months Ended September 30
Slide 20: Third Quarter Revenue Growth
Third Quarter Revenue Growth $14.00 $12.00 $10.00 $8.00 $6.00 $4.00 $2.00 $0.00 3007 3008 3a0¢ For the 3 Months Ended 30
Slide 21: Annual Gross Margin Expansion
Annual Gross Margin Expansion $8.34 2006 2007 2008 teEGioss Margin (Su) + GrossMargin (6) a. AS eee 518% | so.0% Ta7% + 40.0% + 30.0% 20.0% + 10.0% | 0% ‘2 Months 2008 SkysTaR WES) Bo Prasmaceurea.co.L10.
Slide 22: YTD Gross Margin Expansion
YTD Gross Margin Expansion 60.0% 50.0% 40.0% 20.0% 20.0% 9 Months. 9 Months 9 Months 2007 2008 2009 in ($MM) for the @ Months Ended ber 30 Gross Margin (%) SkusTaR Af Bo Prasmaceurea.co.L70.
Slide 23: Third Quarter Gross Margin Expansion
Third Quarter Gross Margin Expansion 3007 3008 3009 EEGioss Nagin GMM) —>-Grose Margin G®) | SkusTaR WES! Bo Pranmaceurea.co.L10.
Slide 24: Annual Adjusted Net Income Growth
Annual Adjusted Net Income Growth 25.0% 15.0% 5.0% 2006 2007 2008 Months 2008 EENet Income (Si) Profit iargin SkyusTaR WES) Bo Pranmaceurea.co.L10.
Slide 25: YTD Adjusted Net Income Growth
YTD Adjusted Net Income Growth $9.00 $8.00 $7.00 $6.00 $6.00 $4.00 $3.00 $2.00 $1.00 $0.00 9 Months 9 Months 9 Months 2007 2008 2009 BNetincome (SM) == Profit Margin = SkusTaR Bo PrarmaceureaL c0.L70.
Slide 26: Annual Adjusted Net Income
Annual Adjusted Net Income Net income (loss) 12 Months Ended 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
Slide 27: High Margin Products
High Margin Products Veterinary Medications Micro-organism Feed Additives Vaccines Total 9 Months Ended 9/30/09 $22,844,059 $11,831,427 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% 52%
Slide 28: Select Balance Sheet Data
Select Balance Sheet Data As of: | Sept. 30, 2009 June 30, 2009 Cash $14.8M $411,000 Current Assets $36.2M $17.6M Current Liabilities $3.8M $6.36M SkusTaR WSN Bo Pranmaceurca.co.L1,
Slide 29: Weibing Lu - Chairman and CEO
Weibing Lu - Chairman and CEO Ty 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 Director of X
Slide 30: 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 31: 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 = Bettman “
Slide 32: 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 = esc:
Slide 33: Scott Cramer, Director & US Spokesperson
Scott Cramer, Director & US Spokesperson » Former CEO, CFO of The Cyber Group » Founder and President of Cramer & Rauchegger, Inc., a firm a specializing in retirement management, estate planning and investments » Registered Representative - Series 7, 63, 65
Slide 34: Thank You
bard SKYSTAR 284 Bio PHARMACEUTICAL CO.,LTD. SKYSTAR Thank-you
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