China Fruits Corporation Reports Unaudited FY2014 Second Quarter Results

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Aug 15, 2014, 03:12 ET

BEIJING, AUG. 15, 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 second quarter of 2014.

Second Quarter 2014 Highlights

Revenues for the six months ended June 30, 2014 were $10,551,692, a 562% increase from the corresponding period in 2013.
Operating income for the second quarter of 2014 was $430,249, compared to operating loss of $150,212 in the same period in 2013.
Gross margin was 29.80% in the second quarter of 2014, a 60% increase from the corresponding period in 2013.
Net income attributable to China Fruits' shareholders was $315,656, a 1515% increase from the corresponding period in 2013. Fully diluted earnings per share were $0.01, compared to earnings per share of $0.0004 in the same period in 2013.

"We are very delighted to see that the company is continuously achieving organic growth in 2014. The number of our franchise retail stores is expanding to 19, and there will be more stores through direct setups and acquisitions. The profit margin is improving as we are managed to control costs and expenses efficiently," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "and we are excited about the future of our fruit e-commerce business, because we believe that our retail stores can give us competitive edge of our unique O2O business model."

Second Quarter 2014 Results

Revenues

China Fruits reported total revenue of $2,535,831 and $10,551,692 for the three and six months ended June 30, 2014, respectively, representing an increase of 197% and 562% from the corresponding period in 2013, primarily driven by the Company's continuous efforts in developing overseas markets and in increasing franchise stores.

During the six months ended June 30, 2014, the revenues from Thailand were approximately $5,650,000, or 54% of total revenues, which were $0 during the same period in 2013, and the revenues from Dubai and other markets were approximately $620,000, or 6% of total revenues, which were $0 during the same period in 2013.

Revenues from franchise retail stores increased to approximately $2,280,000 for the six months ended June 30, 2014, primarily due to the increasing number of franchise stores. The Company had 19 franchise stores as of June 30, 2014.

Cost of Goods Sold

Cost of goods sold was $1,780,278 for the second quarter of 2014, an increase of 156% from $695,213 for the corresponding period in 2013.

Gross margin was 29.80% for the second quarter of 2014, compared to 18.64% for the corresponding period in 2013. The increased gross margin was contributed by strengthening the Company's cost control procedure and efforts in collaboration with non-related suppliers.

Operating Expenses

Operating expenses for the second quarter of 2014 were $325,304, increased by 5%, compared to $309,552 from the corresponding period in 2013. The increase in operating expenses was due primarily to the increase in selling expenses.

Operating Income

Operating income for the second quarter of 2014 was $430,249, compared to operating loss of $150,212 in the same period in 2013.

Net Income and EPS

Net income attributable to China Fruits' shareholders was $315,656, a 1515% increase from the corresponding period in 2013. Fully diluted earnings per share were $0.01, compared to earnings per share of $0.0004 in the same period in 2013. The net income during the second quarter of 2014 was due primarily to the increase in revenues. The Company also received a grant from the government in amount of $32,777, which was to encourage the Company's contribution in modern agriculture.

Cash

As of June, 2014, China Fruits had cash and cash equivalents of $200,576, compared to $40,217 as of December 31, 2013. Cash flows used in operating activities were $275,469 for the second quarter of 2014. Cash flows used in investing activities were $177,380. Net cash provided by financing activities was $624,040.

Financial Guidance

The Company preliminarily plans to invest approximately $160,000 to develop its e-commerce business, as they believe e-commerce market will share the same significance as traditional markets in the near future.

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, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved to setup a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of British Virgin Islands, of which China Fruits has 99.99% ownership. The article of incorporation of US-China Fruits was filed on June 16, 2014 but the company had no activities as of June 30, 2014. The Company believes the new subsidiary will facilitate the process and increase the efficiency when they develop overseas markets.

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 nineteen 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 June 30, 2014 and December 31, 2013 Unaudited (Stated in US Dollars)
							(Audited)
ASSETS					6/30/2014		12/31/2013
	Current Assets
		Cash & cash equivalents		$	200,576	$	40,217
		Accounts receivable, Net			1,768,795		4,075,765
		Other receivable, Net			763,911		141,363
		Advance to supplies			3,364,911		2,162,844
		Inventories			78,790		1,566,556
		Prepaid expense			154,947		67,862
		Refundable tax			94,065		266,719
		Related party receivable			162,464		-
			TOTAL CURRENT ASSETS		6,588,459		8,321,326

	Noncurrent Assets
	Investment				162,464
	Property, plant & equipment, bet				3,236,423		3,370,148
	Construction in progress				1,137		1,146
	Intangible assets, net				318,354		331,697
	Other long-term asset and deposits				24,370		24,548
	Long term amortization				2,779		4,479
	TOTAL NON-CURRENT ASSETS				3,745,527		3,732,018

	TOTAL ASSETS			$	10,333,986	$	12,053,344



	CURRENT LIABILITIES
	Accounts payable and Accrued Expenses			$	913,825	$	4,238,843
		Short-term loans			2,713,153		2,479,379
		Customer Deposit			1,530,277		493,164
		Taxes Payable			312,552		261,286
		Other Payables			92,829		657,952
		Due to Related Parties			1,446,251		1,074,031
		Accrued liabilities and Payroll Tax Liabilities			428,007		354,489
		TOTAL CURRENT LIABILITIES			7,436,894		9,559,144

	TOTAL LIABILITIES			$	7,436,894	$	9,559,144

STOCKHOLDERS' EQUITY

Common stock, par value $.001, 100,000,000 shares authorized, 49,951,223 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively				$	49,941	$	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 June 30, 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 June 30, 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
Accumulated deficits					(1,572,728)		(2,003,096)
Accumulated other comprehensive income					446,942		474,419
TOTAL STOCKHOLDERS' EQUITY					2,897,092		2,494,201

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY				$	10,333,986	$	12,053,344

China Fruits Corporation Consolidated Statements of Income For the three-month and six-month periods ended June 30, 2014 and 2013 Unaudited (Stated in US Dollars)
		Three Months Ended				Six Months Ended
REVENUES:		6/30/2014		6/30/2013		6/30/2014		6/30/2013
Sales	$	2,535,831	$	854,553	$	10,551,692	$	1,593,775
Cost of goods sold		(1,780,278)		695,213		(8,879,022)		1,319,288
GROSS PROFIT		755,553		159,340		1,672,670		274,487

OPERATING EXPENSES:
Selling expenses		96,438		100,701		692,908		262,348
General and administrative expenses		228,866		208,851		556,576		453,535
TOTAL OPERATING EXPENSES		325,304		309,552		1,249,484		715,883

INCOME (LOSS) FROM CONTINUING OPERATIONS		430,249		(150,212)		423,186		(441,396)

OTHER INCOME (EXPENSE):
Other income		14,224		(220)		28,532		5,606
Other expense		-		-		-		-
Interest income		-		-		59		-
Interest expense		(63,187)		(27,496)		(114,296)		(59,322)
Government grants		32,777		197,478		271,909		252,916
TOTAL OTHER INCOME (LOSS) & EXPENSE		(16,186)		169,762		186,204		199,200

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		414,063		19,550		609,390		(242,196)

Income tax expense		98,407		-		179,022		-
NET INCOME (LOSS)	$	315,656	$	19,550	$	430,368	$	(242,196)

Other compressive income
-Foreign currency translation gain (Loss)		3,717		34,945		(27,477)		41,194

COMPREHENSIVE INCOME (LOSS)		319,373		(54,495)		402,891		(201,002)
(Loss) per common share:
Basic and fully diluted	$	0.01		**	$	0.01		**

Weighted average number of common shares outstanding – Basic and fully diluted		49,951,223		49,951,223		49,951,223		49,951,223

China Fruits Corporation Consolidated Statements of Stockholders' Equity As of June 30, 2014 and December 31, 2013 Unaudited (Stated in US Dollars)
	Common Stock (Shares)	Series "A" Preferred (Shares)	Series "B" Preferred (Shares)	Common Stock (Amount)	Series "A" Preferred (Amount)	Series "B" Preferred (Amount)	Additional paid in capital	Statutory Reserve	Accumulated other Comprehensive Income (Loss)	Accumulated Deficit	Total
Balance at January 1, 2013	49,951,223	13,150	12,100,000	$ 49,951	$ 13	$ 12,100	$ 3,789,864	$ 129,636	$ 389,607	$ (2,128,404)	$ 2,242,693
Net income	-	-	-	-	-	-	-	-	-	166,622	166,622
Appropriations to statutory reserves	-	-	-	-	-	-	-	41,314	-	(41,314)	-
Foreign currency translation adjustment	-	-	-	-	-	-	-	-	84,886	-	84,886
Balance at December 31, 2013	49,951,223	13,150	12,100,000	$ 49,951	$ 13	$ 12,100	$ 3,789,864	$ 170,950	$ 474,419	$ (2,003,096)	$ 2,494,201


Balance at January 1, 2014	49,951,223	13,150	12,100,000	$ 49,951	$ 13	$ 12,100	$ 3,789,864	$ 170,950	$ 474,419	$ (2,003,096)	$ 2,494,201
Net income										430,368	430,368
Foreign currency translation adjustment									(27,477)		(27,477)
Balance at June 30, 2014	49,951,223	13,150	12,100,000	$ 49,951	$ 13	$ 12,100	$ 3,789,864	$ 170,950	$ 446,942	$ (1,572,728)	$ 2,897,092

China Fruits Corporation Consolidated Statements of Cash Flows For the six-month period ended June 30, 2014 and 2013 Unaudited (Stated in US Dollars)
		For the six-month period ended
Cash Flows from Operating Activities			6/30/2014		6/30/2013
Net Income/(loss)		$	430,368	$	(242,196)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization		128,703		133,487
(Increase) decrease in operating assets:
	Accounts receivable		2,307,270		323,103
	Inventories		1,487,766		(77,261)
	Prepaid expenses and other current assets		(1,738,868)		857,894
	Related party receivable		(162,464)		-
Increase (decrease) in operating activities:
	Accounts payable		(3,325,018)		309,669
	Other payables and accrued liabilities		(491,605)		(27,047)
	Tax payable		51,266		813
	Customer deposit		1,037,113		-
Net cash (used in) provided by operating activities		$	(275,469)	$	1,278,462

Cash Flows from Investing Activities
	Purchase of property and equipment	$	(14,916)	$	(22,760)
	Investment		(162,464)
Net cash provided (used in) by investing activities		$	(177,380)	$	(22,760)

Cash Flows from Financing Activities
	Proceeds from short-term loans	$	251,820	$	-
	Advance from (to) a third party		3,653,821		(355,514)
	Repayment of advance from (to) a third party		(3,366,259)		-
	Proceeds from /(Payments on) Notes Payable				(945,345)
	Due to stockholders		84,658		86,164
	Net cash provided by (used in) Financing Activities	$	624,040	$	(1,214,695)

Foreign currency translation adjustment			(10,832)		1,056

Net increase/(decrease) in cash & cash equivalents for the periods			160,359		42,063

Cash & cash equivalents:
Beginning of period		$	40,217	$	47,399
End of period		$	200,576	$	89,462

Supplementary disclosures of cash flows information:
	Interest received	$	793	$	-
	Interest paid	$	87,797	$	58,261
	Income taxes paid	$	13,030	$	-