Financial Results for the Six Months Ended December 31st, 2011
Revenue for the six months ended December 31st, 2011 totaled $5.22 million, an increase of 801% as compared to $579,711 for the same period prior year. Through September 2010, our revenue arose from the resale of Tibetan pharmaceutical and health products manufactured by Shandong Jinzanghuang. During the first quarter of fiscal year 2011 we sold health products for $26,673. At the end of that quarter, however, we suspended our resale operations and initiated the sauna store program that now provides our revenue. At the end of December 31, 2011, the company has 158 sauna stores in total. Our revenue from the sauna stores program for the first two quarters of fiscal 2012 was $$2,564,583 and 2,659,182, respectively, totaling $5,223,765 for the six months ended December 31, 2011.

Gross profit for the six months ended December 31, 2011 totaled $4.27 million, an increase of 778% compared to $486,540 for the six months ended December 31, 2010. The change in our business model to the sauna store program has resulted in a marked improvement in our gross margin. Because we have no cost of goods sold, our cost of sales is primarily direct labor and taxes. As a result, during the six months ended December 31, 2010, we realized a gross margin of 84% (which included the minor product resale transactions in the first quarter of that year). Our revenue during the six months ended December 31, 2011 yielded a gross margin of 82%.

Operating expenses for the six months ended December 31, 2011 totaled $187,153, compared to $98,737 for the six months ended December 31, 2010, representing an increase of $88,416, or 90%. Operating expenses primarily consist of employee salaries and office expenses.

Net income for the six months ended December 31, 2011 totaled $3.22 million, an increase of 1020% compared to $287,743 for the six months ended December 31, 2010. Based on the 40.66 million shares outstanding, the earnings per share was $0.08 for the 2012 fiscal second quarter.

Liquidities and Capital Resources
We had $5,249,023 in cash at December 31, 2011 as well as working capital totaling $5,954,372, an increase of $3,341,475 since our last fiscal year ended on June 30, 2011. So our capital resources are more than sufficient to fund our operations for the coming year as they are currently structured. During the six months ended December 31, 2011, our operating activities provided $2,968,764 in net cash, compared to $201,257 in net cash during the six months ended December 31, 2010, an increase of $2,767,507 or 1,375%. The net cash provided in the recent period was slightly lower than our net income for these six months due to the increase in accounts receivable.
Certain Information about Jinzanghuang Tibet Pharmaceuticals
Jinzanghuang Tibet Pharmaceuticals, Inc. (JZHG.OB) is a pharmaceutical sales company that professionally distributes Tibet pharmaceutical and healthcare products manufactured by Shandong Jinzanghuang (Tibet) Pharmaceutical Co., Ltd (Shandong JZH), and provides training services for many sauna stores about how to use products of Shandong Jinzanghuang to provide sauna services. For more information, please visit http://www.usjzh.com.
Cautionary Statement Regarding Forward Looking Information
Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our 8K/A dated March 31, 2011, and other recent filings. These filings are available at http://www.sec.gov/. We may now and then make additional written or oral forward looking statements, including the filings contained in SEC and the statements in shareholder reports. We are not responsible for the upgrade of any forward looking statements that may represent our benefits.
This press release does not constitute sales offer or the recruiting of any stock purchase, and shall not constitute any stock offer in any jurisdiction, where the stock offer, recruiting or selling are illegal before registered or under security regulations in such jurisdiction.