China Fruits Corporation Reports FY2014 1st Quarter Results

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May 21, 2014, 10:27 ET

NANFENG, China, May 21, 2014 /PRNewswire-FirstCall/ -- China Fruits Corporation (OTC: CHFR) ("China Fruits" or "the Company"), a distributor and producer of fresh tangerine and other fresh fruits in the People's Republic of China, today announces financial results for the first quarter of 2014.

First Quarter 2014 Highlights

Revenue for the first quarter of 2014 was $8,015,860, a 984% increase from the corresponding period in 2013.
Operating loss for the first quarter of 2014 was $7,064, narrowing 98% from the corresponding period in 2013.
Net income attributable to China Fruits' shareholders was $114,711, compared to a net loss of $261,746 in the same period in 2013. Fully diluted earnings per share were $0.0023, compared to negative earnings per share in the same period in 2013.

"The company's business development is line with our strategic plans. The fast growth rate of revenues is attributed to our efforts in developing overseas market and to increase of franchise stores," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "and we launched "Taina® Miss Fruit" Beauty Contest on March 5^th, 2014. We hope selected fruit beauties can deliver healthy lifestyles to customers and to increase our brand's recognition."

First Quarter 2014 Results

- Revenues

China Fruits reported total revenue of $8,015,860 for the first quarter of 2014, representing an increase of 984% from the corresponding period in 2013, primarily driven by the Company's efforts in developing overseas markets and in increasing franchises stores.

Revenues from overseas sales were approximately $5,102,085, of which $4,432,187 was from Thailand, $127,302 was from Dubai and $63,025 was from Indonesia. The Company had 10 franchise retail stores in the Beijing area as of March 31, 2014, compared to 4 stores in the same period in 2013.

- Cost of Goods Sold

Cost of revenue was $7,098,744 for the first quarter of 2014, an increase of 1037% from $624,075 for the corresponding period in 2013.

Gross margin was 11.44% for the first quarter of 2014, compared to 15.58% for the corresponding period in 2013. The gross margin of fresh fruits products typically ranges between 10% and 15%. The reduction of gross margin was primarily due to promotion activities of low price and price increase from some suppliers. The Company expected to reduce the cost of goods sold through collaboration with more non-related suppliers, which would also help us to reduce the risk of concentration.

- Operating Expenses

Operating expenses were $924,179 for the first quarter of 2014, an increase of 127% from $406,331 for the corresponding period in 2013.

Selling expenses were $596,470 for the first quarter of 2014, an increase of 269% from $161,647 for the corresponding period in 2013.

General and administrative expenses were $327,710 for the first quarter of 2014, an increase of 34% from $244,684 for the corresponding period in 2013.

- Operating Loss

Operating loss was $7,064 for the first quarter of 2014, narrowing 98% from the corresponding period in 2013.

- Net Income and EPS

Net income attributable to China Fruits shareholders was $ 114,711 for the first quarter of 2014, compared to a net loss of $261,746 in the same period in 2013. Fully diluted earnings per share were $0.0023, compared to negative earnings per share in the same period in 2013. The net income during first quarter of 2014 was also due to the grants received from the local government in amount of $239,132, which was to encourage the Company's efforts on modern agricultural development. Without the government grant, the Company would have suffered loss of $36,741.

- Cash

As of March 31, 2014, China Fruits had cash and cash equivalents of $1,586,253, compared to $40,217 as of December 31, 2013. Cash flows used in operating activities were $2,382,555 for the first quarter of 2014. Cash flows used in investing activities were $10,225. Net cash provided by financing activities was $3,950,552.

Financial Guidance

The Company expects sales to increase during 2014 as the Company is moving toward implementing its business plan, including the increase in franchise retail stores, development of overseas market, and e-commence business expansion.

The Company also expects the total number of franchise stores to be increased to around 64 by the end of 2014. The expansion will be accomplished via acquisitions, franchises sales and/or direct setups.

In April 2014, the Company launched "Taina® Miss Fruit" Beauty Contest, and selected 10 fruit beauties. The Company expects selected fruit beauties to increase China Fruits' brand awareness and to lead new trend of healthy lifestyles.

About China Fruits Corporation

China Fruits Corporation (OTC: CHFR) is a U.S.-listed holding company, engaging in manufacturing, trading and distributing fresh tangerine and other fresh fruits in the People's Republic of China. The Company wholly owns two subsidiaries: Taina International Fruits (Beijing) Co., Ltd., which is building and operating franchise retail stores, and Jiangxi Taina Nanfeng Orange Co., Ltd., which is operating a 782,765-square-foot manufacturing base in Jiangxi Province's Nanfeng County. The Company owns a 98,505-square-foot Express Export Zone in Nanfeng, with air-adjusted and fresh-keeping warehouse, and advanced photoelectric fruit sorter. In Beijing, the Company possesses a 26,700-square-foot distribution center and six franchise retail stores across the city. With the support from the international capital markets, the company is strengthening the branded franchise fruit retail stores and digging deeply in this niche. From the very beginning of its business, the Company has been awarded with "National Leading Enterprise of Agriculture Industrialization", "China's Most Influential Fruit Brand", "Leading Fruit Enterprise", and "Top Ten Most Trustable Enterprise" among other rewards. For more information, please visit the Company's corporate website: www.taina.cn.

Forward Looking Statement

This press release contains "forward-looking information", which may include, but is not limited to, statements with respect to the future financial or operating performance of the Company and its projects. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or believes" or variations (including negative variations) of such words and phrases, or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of China Fruits Corporation to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements contained herein are made as of the date of this press release and China Fruits Corporation disclaim, other than as required by law, any obligation to update any forward-looking statements whether as a result of new information, results, future events, circumstances, or if management's estimates or opinions should change, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, the reader is cautioned not to place undue reliance on forward-looking statements

For More Information
Investor Relations
Dragon Gate Investment Partners
Email: [email protected]
Tel: +1 (646) 801-2803
Website: http://www.dgipl.com

China Fruits Corporation Consolidated Balance Sheets As of March 31, 2014 and December 31, 2013 Unaudited (Stated in US Dollars)
ASSETS	3/31/2014		12/31/2013
Current Assets
Cash & Cash Equivalents	$ 1,586,253		$ 40,217
Accounts Receivable, Net	4,960,027		4,075,765
Other Receivable, Net	261,301		141,363
Advance to Supplies	1,886,946		2,162,844
Inventories	531,289		1,566,556
Prepaid Expense	61,484		67,862
Refundable Tax	102,886		266,719
TOTAL CURRENT ASSETS	9,390,186		8,321,326

Noncurrent Assets
Property, Plant & Equipment, Net	3,290,772			3,370,148
Construction in Progress	1,136			1,146
Intangible Assets, Net	322,574			331,697
Other Long-term Asset Deposit	24,343			24,548
Organization Cost/ L/T Amortization	3,609			4,479
TOTAL NON-CURRENT ASSETS	3,642,434			3,732,018

TOTAL ASSETS	13,032,620			12,053,344

CURRENT LIABILITIES
Accounts payable and Accrued Expenses	1,549,813			4,238,843
Notes Payable – Current Portion	2,710,203			2,479,379
Customer Deposit	389,698			493,164
Taxes Payable	425,963			261,286
Other Payables	91,464			657,952
Due to Related Parties	4,773,037			1,074,031
Accrued liabilities and Payroll Tax Liabilities	514,724			354,489
TOTAL CURRENT LIABILITIES	10,454,902			9,559,144

LONG-TERM LIABILITIES
Note Payable-Longterm	-			-
TOTAL LONG TERM LIABILITIES	-			-

TOTAL LIABILITIES	10,454,902			9,559,144
STOCKHOLDERS' EQUITY

Common stock, par value $.001, 100,000,000 shares authorized, 49,951,223 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively		49,951		49,951
Preferred stock, 200,000,000 shares authorized, designated as Series A and Series B. Series A: par value $.001; 2,000,000 shares authorized, 13,150 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively		13		13
Series B; par value $0.001, voting; 50,000,000 shares authorized, 12,100,000 shares issued and outstanding as of March 31, 2014 and December 31, 2013, respectively		12,100		12,100
Additional Paid in Capital		3,789,864		3,789,864
Statutory Reserve		170,950		170,950
Retained Earnings		(1,888,385)		(2,003,096)
Accumulated Other Comprehensive Income		443,225		474,419
TOTAL STOCKHOLDERS' EQUITY		2,577,718		2,494,201

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		13,032,620		12,053,344

China Fruits Corporation Consolidated Statements of Income For the three months ended March 31, 2014 and 2013 Unaudited (Stated in US Dollars)
		Three Months Ended
REVENUES:		3/31/2014	3/31/2013
Sales		$ 8,015,860	$ 739,222
Cost of Goods Sold		7,098,744	624,075
GROSS PROFIT		917,115	115,147

OPERATING EXPENSES:
Selling Expenses		596,470	161,647
General and Administrative		327,710	244,684
TOTAL OPERATING EXPENSES		924,179	406,331
Operating Income/(Loss)		(7,064)	(291,184)

OTHER INCOME (EXPENSE):
Other Income	14,308		5,826
Other Expense	-		-
Interest Income	60		-
Interest Expense	(51,109)		(31,826)
Government Grants		239,132	55,438
TOTAL OTHER INCOME (LOSS) & EXPENSE		202,391	29,438

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		195,326	(261,746)
Income Tax Expense		80,615	-
NET Income (Loss)		114,711	(261,746)

Other compressive income
-Foreign currency translation gain (Loss)		(31,194)	6,249

COMPREHENSIVE (LOSS)		83,517	(255,497)
(Loss) per common share:
Basic and fully diluted		**	(0.01)
Weighted Average Number of Common Shares Outstanding – Basic and Fully Diluted
		49,951,223	49,951,223
** Less than $0.01

China Fruits Corporation Consolidated Statements of Cash Flows For the three months ended March 31, 2014 and 2013 Unaudited (Stated in US Dollars)
		Three Months Ended
Cash Flows from Operating Activities		3/31/2014	3/31/2013
Net Income/(loss)		$ 114,711	$ (261,746)
Adjustments to reconcile net loss to net
Cash provided by (used in) operating activities:			-
	Depreciation and Amortization	59,425	66,718
	(Increase) decrease in operating assets:		-
	Accounts receivable	(884,262)	321,286
	Inventories	1,035,267	(42,371)
	Prepaid expenses and other current assets	326,376	79,878
Increase (decrease) in operating activities:			-
	Accounts payable	(2,689,030)	26,723
	Other payables and accrued liabilities	(509,719)	21,119
	Tax payable	164,677	69
	Deferred income	-	-
Net cash (used in) provided by Operating Activities		(2,382,555)	211,676

Cash Flows from Investing Activities
	Purchase of property and equipment	(10,225)	(20,249)
	Purchase of intangible assets
	Proceed from disposal of property and equipment
Net cash provided (Used in) by Investing Activities		(10,225)	(20,249)

Cash Flows from Financing Activities
	Advance from (to) a third party	3,699,006	(40,172)
	Proceeds from /(Payments on) Notes Payable	251,546	(152,655)
	Payments on Notes Payable
	Proceeds from Note Payable –related party
	Due to stockholders		57,664
	Net cash provided by (used in) Financing Activities	3,950,552	(135,163)

Foreign currency translation adjustment		(11,736)	181

Net increase/(decrease) in cash & cash equivalents for the periods		1,546,036	56,445

Cash & cash equivalents:
Beginning of period		40,217	47,399
End of period		1,586,253	103,844

Supplementary disclosures of cash flows information:
	Cash paid for interest	41,091	31,334
	Cash paid for income taxes	164	-