China Kangtai Cactus Announces Technology Agreement With Shandong Tobacco Company

Source from:  Business Wire 12/07/2010

China Kangtai Cactus Biotech Inc. (OTCBB:CKGT), a vertically integrated grower, developer, manufacturer and marketer of a variety of cactus-based products in China, announced today that the company has signed a technology agreement with Shandong Yishui Ruibosi Tobacco Ltd. (Ruibosi), a subsidiary of China Tobacco Shandong Industrial Co. Ltd. China Kangtai Cactus's cigarette brand Sheng Cao is already widely accepted by Chinese consumers. To increase the quality and taste of the Sheng Cao cigarettes, the company has introduced a paper process technology that is broadly used internationally. The process produces a reconstituted tobacco sheet that is mixed with cactus and Chinese herbal medicine. The Sheng Cao cigarette ingredients include tobacco, cactus, honeysuckle, ginkgo and tea leaves producing a high quality cactus-based cigarette with a very special flavor. The process not only improves the taste, it also reduces the amount of nicotine, tar and carbon monoxide in the final product. With a strong supply of cactus reconstituted tobacco, the company has the capacity to produce cigarettes in its own plant in Macau as well as sell its ingredients to other tobacco companies. China Kangtai Cactus is the first company to cooperate with the tobacco industry to produce a cactus based tobacco product. Shandong Yishui Ruibosi Tobacco Ltd., which was established in 2002 under the authorization of State Tobacco Monopoly Bureau, is a subsidiary of China Tobacco Shandong Industrial Co. Ltd. Ruibosi is one of the four tobacco manufacturers designated by the State Tobacco Monopoly Bureau to develop reconstituted tobacco using the paper process technology. The technology is the most advanced worldwide with both environmental and cost saving advantages. Mr. Changsen Xue the VP of Ruibosi said, "China Kangtai Cactus is an outstanding company that has shown remarkable growth in the cactus business. We have great confidence in the future sales of Sheng Cao cigarettes, which we believe will have very promising market prospects and growth potential. We have no doubt that consumers will like the taste very much." China Kangtai CEO Jinjiang Wang said, "The reconstituted tobacco paper process is extensively used in the industry. We have successfully produced samples and plan to begin full production in May of 2011. Sheng Cao is already a popular brand and we believe this new technology will provide a further boost for our company's long-term development while it also will be accretive to earnings and will significantly broaden future sales." Cigarette sales are the company's fastest growing business segment. For the first nine months of 2010, China Kangtai Cactus reported cigarette sales of $1.7 million versus sales of $42,000 in the first nine months of 2009. The company reported total sales of $23.7 million in the first nine months of 2010, a gain of 32% from $18.0 million in sales in the first nine months of 2009. Enditem