China Pediatric Pharmaceuticals, Inc. Announces Fiscal Year 2009 Results

China Pediatric Pharmaceuticals, Inc. (OTC Bulletin Board: CPDU) ("China Pediatric Pharmaceuticals" or the "Company"), today announced its financial results for fiscal year ended December 31, 2009. The Company's annual report on Form 10-K was filed with the U.S. Securities Exchange Commission on March 31, 2010.

Fiscal Year 2009 Highlights

• Total net sales increased to 16,738,459 from 14,668,879 in fiscal 2008, an increase of $2,069,580 or approximately 14% compared to the same period in 2008.
• Cost of sales increased to $6,999,152 from $5,083,552 in fiscal 2008, an increase of approximately 38% compared to the same period in 2008.
• Gross profit decreased slightly to 9,739,307 from 9,585,327 in fiscal 2008, an increase of approximately 2% compared to the same period in 2008.
• Selling, general and administrative expenses decreased in absolute dollars by $28,624, or approximately 0.4%, and as a percentage of total net sales by about 6%.
• Operating income increased from $3,041,062 to $3,223,666 in fiscal 2008, an increase of approximately 6%compared to the same period in 2008.
• Net income was $2,531,663 compared to $2,591,770 in fiscal 2008, a decrease of 2% due to a one time expense of $657,812 for issuance of warrant and issuance of common stock to the employees in 2009.
• In October 2009, the Company changed its corporate name from Lid Hair Studios International, Inc. to "China Pediatric Pharmaceuticals, Inc." and its stock symbol from "LHSI" to "CPDU."

Mr. Jun Xia, Chairman and Chief Executive Officer of China Pediatric Pharmaceuticals, commented, “Despite a challenging economic environment, which impacted our results for 2009, we were able to maintain our solid footing and position ourselves for increased producing capacity in 2010 to take advantage of the excellent long-term prospects for our industry. Our results for fiscal 2009 reflect our continued effort to reduce our costs and maximize value for our shareholders. ”

Net sales

Total net sales for the years ended December 31, 2009 increased by $2,069,580 or approximately 14% compared to the same period of 2008. This was mainly due to an increase in sales of the "Cooer" Series by 57% in 2009, as a result of the intensive promotion in 2008.

Cost of sales

Compared to the fiscal year ended December 31, 2008, cost of sales increased $1,915,800 or approximately 38% in the year ended December 31, 2009. This was primarily due to the increase in product net sales. The increase in average unit costs was mainly caused by the general increase in costs of raw material in China in the year 2009 and increase in wages of workers due to statutory minimum wage increases.

Gross profit

Gross profit decreased slightly to 9,739,307 from 9,585,327 in fiscal 2008, an increase of approximately 2%, which is primarily due to the increase in cost of sales in the year 2009. Meanwhile, the sales price for finished goods remained constant. The Company keeps the sales price of finished goods constant in order to maintain market share among competitors.

Selling, general and administrative expenses

In 2009, selling, general and administrative expenses decreased in absolute dollars by $28,624 or about 0.4% and as a percentage of total net sales by about 6%. These decreases were primarily due to the decrease in promotional and advertising expenditures of approximately $1.2 million. Other items contributing to the decrease in selling, general and administrative expenses for the year ended 2009 included a decrease in operating expenses like office supplies and telecommunication expenses. Under this circumstance, the selling, general and administrative expenses decreased approximately 0.4%.

During the fiscal 2009 period, the Company reported other income of $2,609 compared with $113 for fiscal 2008. Interest expense, which represents interest on outstanding loans, for the fiscal year ended December 31, 2009 was $22,073. This was primarily due to the inception of new bank loans of $438,540 and subscription received of $13.

Net income for the fiscal year ended December 31, 2009 was $2,531,663, or $0.29 per share, compared to $2,591,770, or $0.31 per share, in fiscal 2008. This decrease is primarily due to the $641,725 for issuance of warrants and $16,087 for issuance common stock to certain employees, which is a one time non-cash, non-reoccurring expense totally of $657,812. Excluding these one time non-cash, non-reoccurring expenses net income for the fiscal year ended December 31, 2009 was $3,189,475, or $0.37 per share.

As of December 31, 2009, the Company had $905,874 in cash and equivalents, approximately $467,334 in working capital, and $438,540 in bank loans. Shareholders’ equity at the end of fiscal year 2009 stood at $12.2 million, compared to $9.02 million recorded at the end of 2008.

The Company generated $498,180 in net cash flow from operating activities for the fiscal year ended December 31, 2009, versus $241,454 in fiscal 2008.

About China Pediatric Pharmaceuticals, Inc.

China Pediatric Pharmaceuticals, Inc. has its headquarters in Xi’an, Shaanxi Province, China. The Company identifies, discovers, develops manufactures and distributes both prescription and over-the counter, including both conventional and Traditional Chinese Medicines (“TCMs”), pharmaceutical products for the treatment of some of the most common ailments and diseases, with pediatric medicine as its focus. China Pediatric Pharmaceuticals, Inc.’s manufacturing facility located in Baoji City, Shaanxi Province. The Company distributes its high value, branded medicines, both prescription and OTC, through exclusive territory agents who sell our products directly to local pharmacies who in turn sell them to their retail customers.

Safe Harbor Statement

This announcement contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact in this announcement are forward-looking statements, including but not limited to, the company's ability to raise additional capital to finance the company's activities; the effectiveness, profitability, and the marketability of its products; legal and regulatory risks associated with the share exchange; the future trading of the common stock of the company; the ability of the company to operate as a public company; the period of time for which its current liquidity will enable the company to fund its operations; the company's ability to protect its proprietary information; general economic and business conditions; the volatility of the company's operating results and financial condition; the company's ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed in the company's filings with the Securities and Exchange Commission and available on its website at http://www.sec.gov. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the companies and the industry. The company undertakes no obligation to update forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although the company believes that the expectations expressed in these forward looking statements are reasonable, they cannot assure you that their expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results.