Company Reports $40 Million Revenue, $4.5 Million Net Income and EPS of $0.06 for Q3 2009

SHENZHEN, China, Nov. 17 /PRNewswire-Asia-FirstCall/ -- China Organic Agriculture, Inc. (OTC Bulletin Board: CNOA) ("China Organic Agriculture" or the "Company"), a global diversified food products company engaged in the trading and distribution of agricultural products headquartered in the Liaoning province in China, today announced its financial results for the three and nine months ended September 30, 2009.

    Financial Highlights
    1) Sales revenue and gross profit for the third quarter, inclusive of the
       portions attributable to the minority interest in its subsidiary,
       Dalian Huiming, were $39.7 million and $11.1 million. Although sales
       decreased 15% as compared to the prior year, gross profit was
       approximately equal to that of last year's comparable period,
       reflecting the Company's focus on higher margin trading opportunities.
    2) Sales revenue and gross profit for the nine months, inclusive of the
       portions attributable to the minority interest in its subsidiary,
       Dalian Huiming, were $106.4 million and $26.4 million, a year-over-year
       increase of 97.4% and 103.8% respectively.
    3) Selling, general and administrative expenses declined by 9.5% for the
       first nine months as compared to the same period a year ago in spite of
       the near doubling of revenues.
    4) Earnings per share from continuing operations attributable to the
       Company for the quarter was $0.06, a substantial decrease from the
       $0.15 from continuing operations recorded in the comparable period last
       year.

Sales for the nine months ending September 30, 2009 totaled $106.4 million compared to $53.9 million for the same period last year. This increase of $52.5 million is attributable to the Company's acquisition of 60% of the equity of Dalian Huiming Industry Ltd. ("Dalian Huiming") in October 2008, which accounted for the substantial revenue growth for the nine-month period.

Although the sales during the three months ended September 30th were lower than same period last year, because the Company achieved improved gross and operating margins its gross profit for the third quarter of 2009 was comparable to the third quarter of 2008. The increase in gross profit for the nine-month period resulted from the increased revenue was attributable to Dalian Huiming.

Net income attributable to CNOA shareholders was $4.5 million for the third quarter of 2009, compared to net income of $8.5 million for the same period last year, excluding discontinued operations in 2008. Net income attributable to CNOA shareholders was $10.9 million for the nine months ended September 30, 2009, compared to net income of $8.5 million for the same period in 2008, again excluding discontinued operations. These results reflect the Company's ownership of 60% of Dalian Huiming. Because the Company owns only 60% of Dalian Huiming, 40% of Dalian Huiming's net income is recorded as income attributed to non-controlling interest.

The basic and diluted earnings per share for the third quarter attributable to CNOA's shareholders were $0.06, compared to last year's third quarter results of $0.15 per share, and the basic and diluted earnings per share for the nine months ended on September 30, 2009 attributable to CNOA's shareholders were $0.15 as compared to $0.16 per share in the comparable prior year period. The 2008 quarter and nine months results exclude $0.02 and $0.03 per share, respectively, from discontinued operations. A former operating subsidiary of the Company, ErMaPao, was sold effective September 30, 2008 and its results are now classified as discontinued operations in the attached schedules.

Financial Conditions

On September 30, 2009, the Company's cash and cash equivalents totaled $17.3 million compared to $1.6 million as of September 30, 2008. As of September 30, 2009, current assets totaled $90 million and current liabilities were $30 million.

During the nine months ended September 30, 2009, the Company used 5.0 million in its operating activities, reflecting the increase in the Company's accounts receivable due to the increased sales for the nine-month period. The Company also recorded $5.2 million of investments and $9.8 million of cash inflows from financing activities during this period.

Business Developments

On February 29, 2008, the Company acquired the California based Bellisimo Vineyard, for $14.8 million. This vineyard produces Chardonnay, Merlot and Cabernet Sauvignon wine grapes. On September 30, 2008, the Company sold its subsidiary, ErMaPao for a non-interest bearing note receivable of $8.7 million which has been paid in full.

In October 2008, the Company acquired 60% of the outstanding shares of Dalian Huiming for $10.6 million, Dalian Huiming is a top-tier agricultural trading company focused on soybeans, corn, and cereal crops, all major agricultural products in China.

About China Organic Agriculture

China Organic Agriculture is based in China and is primarily engaged in the acquisition, trading and distribution of agricultural products. For more information, please visit: http://www.chinaorganicagriculture.com .

FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future acquisitions, estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of China Organic Agriculture's products and other statements which are not historical facts. When used in this document, words such as "could," "plan," "estimate," "expect," "intend," "may," and similar expressions denote forward-looking statements. Although China Organic Agriculture Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, those set forth in our reports filed with the Securities and Exchange Commission, together with the risks discussed in our press releases and other communications to shareholders issued by us from time to time, such as our ability to raise capital as and when required, the availability of raw products and other supplies, competition, the costs of goods, government regulations, and political and economic factors in the People's Republic of China in which our subsidiaries operate.

    For more information, please contact:

    China Organic Agriculture, Inc.
     Hans Shen
     Tel:   +1-707-709-2321
     Email: IR@cnoainc.com



    Financial Statements

                          China Organic Agriculture, Inc.
                       Consolidated Statement of Operations
       For Three and Nine Months Ended September 30, 2009 and 2008 (Unaudited)

                           THREE MONTHS ENDED           NINE MONTHS ENDED
                              SEPTEMBER 30,                SEPTEMBER 30,
                           2009           2008           2009          2008
    Sales              $39,656,537    $46,454,286   $106,402,273   $53,913,511
    Cost of sales      (28,547,725)   (35,326,386)   (79,978,832)  (40,946,593)
    Gross profit        11,108,812     11,127,900     26,423,441    12,966,918

    Selling, general
     and administrative
     expenses             (587,239)      (416,651)   (1,429,388)    (1,579,854)
    Income from
     operations         10,521,573     10,711,249    24,994,053     11,387,064

    Gain on debt
     conversion                 --        432,169            --        432,169
    Other income, net      154,774        180,964       837,841        269,014
    Interest
     expense, net         (108,578)       (79,570)     (674,152)      (380,422)

    Income from
     Continuing
     operations
     before income
     taxes              10,567,769     11,244,812    25,157,742     11,707,825

    Provision for
     income taxes       (2,753,400)    (2,773,251)   (6,477,642)    (3,222,007)

    Net income
     from Continuing
     operations          7,814,369      8,471,561    18,680,100      8,485,818
    Discontinued
     operations:                --      1,028,074            --      1,868,231

    Net Income           7,814,369      9,499,635    18,680,100     10,354,049
    Less Income
     attributed to
     noncontrolling
     interest           (3,304,176)            --    (7,763,626)            --
    Net Income
     attributable
     to CNOA            $4,510,193     $9,499,635   $10,916,474    $10,354,049
    Basic and Diluted
     weighted average
     shares             73,157,232     57,655,514    73,157,232     53,599,214
    Basic and Diluted
     Earnings per
     Share
      Income from
       Continuing
       operations            $0.06          $0.15         $0.15          $0.16
       attributable
       to CNOA
       shareholders
      Income from
       Discontinued
       operations
       attributable
       to CNOA
       shareholders             --           0.02            --           0.03
    Total Basic
     Earnings Per
     Share                   $0.06          $0.17         $0.15          $0.19



                         China Organic Agriculture, Inc.
                           Consolidated Balance Sheets
                    As of September 30, 2009 (unaudited) and
                      December 31, 2008 (audited/restated)

                  Assets                      09/30/2009          12/31/2008
                                              (Unaudited)  (Audited/Restated)
    Current Assets
    Cash and cash equivalents                $17,306,954          $7,338,817
    Restricted cash                            8,786,059                  --
    Accounts receivable, net                  44,169,190          26,448,294
    Inventory                                  6,399,469           4,492,892
    Other current assets                      13,202,303          16,122,796
      Total Current Assets                    89,863,975          54,402,799
    Goodwill                                   1,602,134           1,602,134
    Property, plant & equipment, net          14,366,609          14,521,452
    Other long term assets                     1,062,163           1,199,788
      Total Assets                          $106,894,881         $71,726,173

       Liabilities and Stockholders' Equity
    Current Liabilities
    Mortgage payable - current                  $210,636            $198,854
    Notes payable -                            8,786,059                  --
    Short term loans                          14,637,217           1,170,515
    Accounts payable and accrued
     expenses                                  2,600,963           5,048,054
    Due to related party                         939,894           3,630,842
    Taxes payable                              2,753,710           3,335,751
      Total Current Liabilities               29,928,479          13,384,016

    Mortgage payable - long term               8,002,222           8,161,705

      Total Liabilities                       37,930,701          21,545,721
    Stockholders' Equity
    CNOA Stockholders' Equity                 56,506,480          45,496,017
    Noncontrolling interest                   12,457,700           4,684,435
    Total Stockholders' Equity                68,964,180          50,180,452

    Total Liabilities and Stockholders'
     Equity                                 $106,894,881         $71,726,173



                           China Organic Agriculture, Inc.
                  Consolidated Statements of Cash Flows (Unaudited)

                                               NINE MONTHS ENDED SEPTEMBER 30,
                                                  2009               2008
      Cash flows used by operating
       activities                             $(5,035,988)      $(11,452,162)
      Cash flows used by investing
       activities                               5,219,324        (16,235,929)
      Cash flows from financing activities      9,775,025         18,603,785
      Exchange rate effect                          9,776            948,627
    Net change in cash and cash
     equivalents                                9,968,137         (8,135,679)
    Cash and cash equivalents, beginning
     balance                                    7,338,817          9,697,793
    Cash and cash equivalents, ending
     balance                                  $17,306,954         $1,562,114

SOURCE China Organic Agriculture, Inc.

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http://www.chinaorganicagriculture.com