China Fruits Corporation Reports FY2015 First Quarter Results

May 21, 2015, 15:00 ET from China Fruits Corporation

BEIJING, May 21, 2015 /PRNewswire/ -- 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, released its financial results for the quarter ended March 31, 2015.

First Quarter 2015 Highlights

  • Revenues from franchise stores were approximately $4.0 million, an increase of 78% compared to the same period in 2014.
  • Revenues from e-commerce were approximately $1.0 million, which were zero during the same period in 2014.

"After the expansion in our network of franchise retail stores, we switched our focus from the overseas markets to the domestic market. In 2015, we will focus on developing our markets in Nanchang and Hangzhou to expand our franchise retail stores. The 2015 target number of retail stores throughout China is expected to grow to 135 in 2015" said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "We believe we will be able to expand our market share during 2015 through an effective and efficient franchise retail network. We were pleased to see immediate profitability in our e-commerce operations during 2014 and expect that to continue to strengthen. Our long term goal is to combine e-commerce with a network of retail stores network to increase the Company's brand recognition in fruit e-commerce business."

First Quarter 2015 Results

  • Revenue

The Company reported that total gross revenue were $5,850,335 for the three months ended March 31, 2015, compared to gross revenues of $8,015,860 for the same period ended March 31, 2014.The decrease in revenues during the first quarter of 2015 was due primarily to the decrease in revenues from overseas markets.

During the first quarter of 2015, the revenues from franchised stores were approximately $4.0 million, an increase of 78% compared to the same period in 2014. The Company also had revenues from e-commerce in amount of approximately $1.0 million, which were zero during the same period in 2014. However, the revenues increased in domestic market and e-commerce failed to completely offset the revenues decreased in oversea markets, resulting in the decrease by approximately 27% in total.

  • Cost of Goods Sold

The Company had $5,293,100 in cost of goods sold, or approximately 90% of revenues, during the three months ended March 31, 2015. Comparatively, the Company had $7,098,744 in cost of goods sold, or approximately 89% of revenues, during the three months ended March 31, 2014. The Company expects to reduce the cost of goods sold through collaboration with more non-related suppliers, which could also help the Company to reduce the risk of concentration.

  • Operating Expense

Operating expenses for the three months ended March 31, 2015 were $1,385,855, an increase of $461,675, or 50%, compared to $924,180 for the same period in 2014. The increase in operating expenses during the first quarter of 2015 was due primarily to the increase in general and administrative expenses, which were $742,910 in the first quarter of 2015, compared to $327,710 in the same period ended March 31, 2014.

  • Net Income

The Company had a net loss of $802,846 for the three months ended March 31, 2015, compared to net income of $114,711 for the three months ended March 31, 2014.The net loss during the first quarter of 2015 was due to insufficient gross profit to cover a number of relatively fixed operating expenses.

  • Cash and Cash Equivalents

As of March 31, 2015, China Fruits had cash and cash equivalents of $37,080, compared to $1,586,253 as of March 31, 2014. Cash flow used in operating activities was $355,911 for the three months ended of 2015. Cash flow used in investing activities was $3,511. Net cash provided by financing activities was $1,147,692.

Financial Guidance

China Fruits continues to develop e-commerce business, as the Company believes the goal is to combine its e-commerce operations with a growing retail stores network to introduce an "online to offline" business model for their clients. Such integration will increase the Company's brand recognition and market share in the fruit e-commerce business.

The Company also expects the total number of franchise stores to be increase to around 135 by the end of 2015. The expansion will be accomplished via acquisitions, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of the British Virgin Islands, of which China Fruits has a 99.99% ownership. The articles of incorporation of US-China Fruits was filed on June 16, 2014 but the Company had no activities as of March 31, 2015. The Company believes the new subsidiary will increase operating efficiencies when they develop any overseas markets in the future.

About China Fruits

China Fruits Corporation (OTC: CHFR) is a U.S.-listed holding company, engaged in manufacturing, trading and distributing fresh tangerine and other fresh fruits in the People's Republic of China. The Company wholly owns three subsidiaries: Taina International Fruits (Beijing) Co., Ltd., which builds and operates franchise retail stores, Jiangxi Taina Nanfeng Orange Co., Ltd., which engages in the fresh fruits manufacturing, and US-China Fruits Company Limited, which plans to do the business of import and export. The Company owns a 782,765-square-foot manufacturing base, with air-adjusted and fresh-keeping warehouse, and advanced photoelectric fruit sorter. The Company owns 64 franchise retail stores, one distribution center and one express export zone in Nanfeng. 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", "China's Fast-Growing Company", 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. The reader in encouraged to read any and all press releases in conjunction with filing made with the Securities and Exchange Commission which are publicly available at www.sec.gov.

For More Information

Investor Relations
Dragon Gate Investment Partners LLC
Email: taina@dgipl.com
Tel: +1(646)-801-2803
Website: http://www.taina.cn

 

China Fruits Corporation

Consolidated Balance Sheets

As of March 31, 2015 and December 31, 2014

Unaudited

(Stated in US Dollars)



3/31/2015



Audited 12/31/2014

ASSETS






Current Assets






Cash & Cash Equivalents

$

37,080


$

801,356

Accounts Receivable, Net


34,757,522



41,433,191

Other Receivable, Net


757,612



585,520

Advance to Supplies


4,112,748



5,857,017

Inventories


3,134,891



1,859,173

Prepaid Expense


142,739



89,558

Refundable Tax


2,347,120



1,779,485

Due From The Related Party




1,114,279

TOTAL CURRENT ASSETS


45,289,712



53,519,579







Noncurrent Assets






Investment


163,690



162,906

Property, Plant & Equipment, Net


3,668,320



3,366,085

Construction in Progress


3,044



356,793

Intangible Assets, Net


301,063



307,614

Other Long-term Asset Deposit


55,592



55,326

Long-term amortization


280



1,115

TOTAL NON-CURRENT ASSETS


4,191,989



4,249,839







TOTAL ASSETS

$

49,481,701


$

57,769,418







LIABILITIES & STOCKHOLDERS' EQUITY












CURRENT LIABILITIES






Accounts payable and accrued expenses

$

33,854,910


$

40,583,792

Short-term loans


2,807,287



4,936,059

Customer deposit


757,457



767,396

Taxes payable


1,783,383



1,360,123

Other payables


1,647,621



841,156

Due to related parties


2,178,390



1,941,527

Accrued liabilities and payroll tax liabilities


362,837



1,262,399

Long-term bank loan, current portion


379,761



377,942

TOTAL CURRENT LIABILITIES


43,771,646



52,070,394













LONG-TERM LIABILITIES






Long term bank loan


756,249



342,103

TOTAL LONG TERM LIABILITIES


756,249



342,103







TOTAL LIABILITIES

$

44,527,895


$

52,412,497


















Audited 



3/31/2015



12/31/2014

STOCKHOLDERS' EQUITY












Common stock, par value $.001, 100,000,000 shares authorized, 2,089,016 and 1,998,049 shares issued 

$

2,089


$

1,998

and outstanding as of March 31, 2015 and December 31, 2014, respectively






Preferred stock, 200,000,000 shares authorized, designated as Series A and Series B. 


13



13

Series A: par value $.001; 2,000,000 shares authorized, 13,150 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively 






Series B; par value $0.001, voting; 50,000,000 shares authorized, 12,100,000 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively 


12,100



12,100

Additional paid in capital


4,208,272



3,837,817

Statutory reserve


170,950



170,950

Retained earnings


71,078



873,924

Accumulated other comprehensive income


489,304



460,119

TOTAL STOCKHOLDERS' EQUITY


4,953,806



5,356,921







TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

49,481,701


$

57,769,418














China Fruits Corporation

Consolidated Statements of Income

For the three months ended March 31, 2015 and 2014

Unaudited

(Stated in US Dollars)








Three Months Ended

REVENUES:


3/31/2015



3/31/2014

Sales

$

5,850,335


$

8,015,860

Cost of goods sold


(5,293,100)



(7,098,744)

GROSS PROFIT


557,235



917,116







OPERATING EXPENSES:






Selling expenses


642,945



596,470

General and administrative expenses


742,910



327,710

TOTAL OPERATING EXPENSES


1,385,855



924,180







INCOME (LOSS) FROM CONTINUING OPERATIONS


(828,620)



(7,064)







OTHER INCOME (EXPENSE):






Other income




14,308

Other expense


(1,710)



Interest income


62



60

Interest expense


(85,239)



(51,109)

Government grants


155,988



239,132

TOTAL OTHER INCOME (LOSS) & EXPENSE


69,101



202,391







INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES


(759,519)



195,327







Income tax expense


43,327



80,615

NET INCOME (LOSS)


(802,846)


$

114,712







Other compressive income






-Foreign currency translation gain (Loss)


29,185



(31,194)







COMPREHENSIVE INCOME / (LOSS)


(773,661)



83,518

Income/(Loss) per common share:






-Basic


(0.39)



0.06

-Fully diluted


(0.15)



0.06

Weighted average number of common shares outstanding:






-Basic


2,065,564



1,998,049

-Fully diluted


5,439,447



1,998,049














China Fruits Corporation

Consolidated Statements of Cash Flows

For the three months ended March 31, 2015 and 2014

Unaudited

(Stated in US Dollars)




For the three months ended



3/31/2015



3/31/2014

Net Income/(loss)

$

(802,846)


$

114,711

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:






Depreciation and amortization


87,925



59,425

Bad debt expense


395,005




(Increase)/decrease in operating assets:






Accounts receivable


6,283,260



(884,262

Inventories


(1,275,717)



1,035,267

Other receivable


(172,092)



Prepaid expenses and other current assets


1,123,187



326,376

Related party receivable


1,114,279



Increase/(decrease) in operating activities:






Accounts payable


(6,728,883)



(2,689,030

Other payables and accrued liabilities


(81,527)



(509,719

Tax payable


423,259



164,677

Customer deposit


(9,939)



Net cash (used in) provided by operating activities

$

355,911


$

(2,382,555







Cash Flows from Investing Activities






(Increase)/decrease in Construction in Progress

$

355,466


$

Purchase of property and equipment


(358,977)



(10,225

Net cash provided (used in) by investing activities

$

(3,511)


$

(10,225







Cash Flows from Financing Activities






Repayments of short-term loans

$

(2,152,527)




Advanced from related party


572,916



3,699,006

Repayments of advanced from related party






Proceeds from notes payable – related party




251,546

Due to stockholders


19,420



Proceeds from long-term loan


412,499



Net cash provided by (used in) Financing Activities

$

(1,147,692)


$

3,950,552







Foreign currency translation adjustment


31,016



(11,736







Net increase/(decrease) in cash & cash equivalents for the periods


(764,276)



1,546,036







Cash & cash equivalents:






Beginning of period

$

801,356


$

40,217

End of period

$

37,080


$

1,586,253







Supplementary disclosures of cash flows information:






Interest received

$

149


$

Interest paid

$

71,147


$

41,091

Income taxes paid

$

259,829


$

164







Supplementary disclosure of non-cash financing activity:






Conversion of debt and accrued interests to equity

$

358,978


$

SOURCE China Fruits Corporation



RELATED LINKS

http://www.taina.cn