Net Income Up 27% to $1.3 Million, Despite Slight Decline in Revenue
Due to Severe Weather and Earthquake in China
NEW YORK, April 3 /PRNewswire-Asia-FirstCall/ -- China Agri-Business, Inc. (OTC Bulletin Board: CHBU) a manufacturer of biochemical agricultural application products through its operating company in China, announced its financial results for the year ended December 31,2008.
Revenue for the year ended December 31, 2008 totaled $2,922,385, a decrease of 3.8% as compared to $3,037,414 for the year ended December 31, 2007. The Company’s operations were adversely affected by natural and weather related disasters that occurred in China in 2008, specifically severe winter weather conditions in January and February, a major earth quake on May 12 epicentered in Sichuan province, and widespread flooding in the central and southern regions in May and June, including the Hunan and Hubei provinces. Sales in each of these areas declined significantly.
Gross Profit for the year ended December 31, 2008 was $2,104,913, an increase of 1.6% as compared to $2,072,453 for the year ended December 31, 2007. Gross profit margin rate for the year ended December 31, 2008 was 72.03%, as compared to 68.23% for the year ended December 31, 2007. The improvement in gross margin is primarily attributable to a 5-10% increase in the prices of the Company’s products.
The Company reported net income of $1,345,339, or $0.10 per share for 2008, as compared to $1,058,882, or $0.09 per share, respectively, for 2007. These increases are primarily attributed to the higher gross profit margin rate, lower professional fees, and lower general and administrative expenses in 2008 relative to 2007.
Liping Deng, President and CEO of China Agri-Business, stated, "We are pleased that we were able to maintain our sales despite weather and natural disasters beyond our control. Despite these setbacks, we remain focused on growth through new product development and expansion of our sales and marketing efforts in China."
Mr. Deng went on to say, "During 2008 we launched a new sales and marketing initiative called the "New Agriculture-Generator" designed to expand our distribution network in China. One component of this initiative involves establishing relationships with farmers through agricultural cooperatives. Another component is the "Super Chain Sales Partner" campaign, whereby the Company agrees to provide a $3,000 advance payment to participating retailers in exchange for their commitment to purchase and sell approximately $14,000 worth of the Company’s products per year on an exclusive basis. We believe this program provides an opportunity to establish a direct connection with our primary consumers, the farmers, that will supplement our traditional sales network."
China Agri-Business, Inc.
Financial Highlights
December 31, December 31,
2008 2007
Current Assets
Cash and cash equivalents $8,312,636 $5,984,448
Accounts receivable, net 45,165 65,118
Inventory 47,113 60,582
Other current assets 29,674 12,590
Total Current Assets 8,434,588 6,122,738
Property, plant and equipment, net 231,278 276,000
Investment in Tienwe Technology 879,420 822,540
Deferred financing costs, net 178,879 --
Intangible assets, net 59,495 73,554
Total Assets $9,783,660 $7,294,832
Current Liabilities
Accounts payable and accrued liabilities $234,007 $166,200
Long Term Liabilities
Convertible notes, net 327,020 --
Stockholders’ Equity
Common stock par value $.001 per
share; authorized 100,000,000
shares; issued and outstanding
12,958,574 and 12,958,574 shares,
respectively 12,959 12,959
Additional paid-in capital 4,369,786 4,150,636
Retained earnings 3,654,212 2,308,873
Accumulated other comprehensive income 1,185,676 656,164
Total stockholders’ equity 9,222,633 7,128,632
Total Liabilities and Stockholders’
Equity $9,783,660 $7,294,832
Results of Operations Years Ended
December, 31
2008 2007
Sales of products $2,922,385 $3,037,414
Cost of goods sold 817,472 964,961
Gross profit 2,104,913 2,072,453
Selling, general and administrative
expenses 729,278 1,029,230
Income from operations 1,375,635 1,043,223
Interest (expense) income (30,296) 15,659
Net income $1,345,339 $1,058,882*
Earnings per common share:
Basic $0.10 $0.09*
* Not included deemed dividend relating to beneficial conversion feature
of Series A preferred stock
ABOUT CHINA AGRI-BUSINESS, INC.
China Agri-Business, Inc., through its operating company in China, Shaanxi Xin Sheng Centennial Agriculture and Technology Co., Ltd. manufactures and sells non-toxic fertilizer, bactericide and fungicide products used for farming in China. Crops grown with Xinsheng’s products are eligible to qualify for the "AA Green Food" rating administered by the China Green Food Development Center, an agency under the jurisdiction of the Ministry of Agriculture of the People’s Republic of China (However, our products themselves do not bear the "AA green food" designation). The green food rating system, which consist of an "A" rating and a more stringent "AA" rating. The "AA" rating indicates that the crops contain minimal chemical residue from fertilizers.
The Company’s two primary product groups are organic fungicides(Xinsheng Luyuan brand) and bactericides (Xinsheng Lufeng brand). The Company has a total of five brands and produces more than 50 different proprietary applications, including products designed to stimulate plant growth, condition soil, and prevent and cure plant diseases and parasites. The Company has products for a variety of crops, including potatoes, vegetables, cotton and fruit plants, and orchard trees. The products can be used either alone or to supplement other products. The Company Xinsheng’s manufacturing facilities are located in Xian, Shaanxi Province, China.
Cautionary Note Regarding Forward-Looking Statements
This document contains forward-looking information about the Company’s operating results and business prospects that involve substantial risks and uncertainties. Statements that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. These statements include, but are not limited to, statements about the Company’s plans, objectives, expectations, strategies, intentions or other characterizations of future events or circumstances and are generally identified by the words "may," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "could," "would," and similar expressions. Because these forward-looking statements are subject to a number of risks and uncertainties, the Company’s actual results could differ materially from those expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed under the heading "Risk Factors" in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2008, filed with the United States Securities and Exchange Commission and available at www.sec.gov. The Company assumes no obligation to update any such forward-looking statements.
