China Fruits Corporation Reports FY 2013 Financial Results

NANFENG, China, April 2, 2014 /PRNewswire-FirstCall/ -- China Fruits Corporation (CHFR) ("China Fruits" or "the Company"), a producer and distributor of fresh tangerine and other fresh fruits in the People's Republic of China, today released its financial results of fiscal year ended December 31, 2013.

Fiscal Year 2013 Highlights

• Gross revenues were $9,369,901, which increased 163.89% year-over-year, comparing to gross revenues of $3,550,674 in FY2012.
• Gross profits were $2,083,717, which increased 329.08% year-over-year, comparing to the corresponding period in FY2012
• Accordingly, gross margin was 22.2%, comparing to gross margin of 13.7% in FY 2012
• Net income was $166,622, comparing to net loss of $88,016 in FY2012

"We are pleased to see that the Company's profitability is improving with strong growth in revenues and efficient management of cost," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation. "We recorded operating loss of $30,708 in Fiscal Year 2013, which was a notable improvement from last year's operating loss of $1,030,806. Our gross profit margin also grew to 22.2% from 13.7% in FY 2012.

"The increasing traffic in our retail stores has been laying a solid foundation for a sustained growth of our revenues, which increased by 163.89%, comparing to our revenues in Fiscal Year 2012," added Mr. Quanlong Chen. "As a strategic focus on our development in 2014, we expect to expand our retail stores network via acquisitions of sixty four franchise stores within the year."

Fiscal Year 2013 Results

Revenues

Gross revenues were $9,369,901 and $3,550,674 for the years ended December 31, 2013 and 2012, respectively. The Company generated revenues from sales of fresh fruits and related products, including its signature tangerine. The revenues are recognized when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. The Company's sales arrangements are not subject to warranty. The Company did not record any product returns during the year ended December 31, 2013.

The increase in revenues by $5,819,227 during the year ended December 31, 2013 was due primarily to increasing traffic in its retail stores. After its efforts on marketing and brand recognition over years, more and more local customers know about its stores and turn into its regular customers. The sales in retail stores increased approximately 28% in 2013. In addition, the fund from shareholders gave us sufficient cash flow to develop international markets, including Thailand, Dubai, Malaysia and so on. The revenues generated from these three countries in 2013 were approximately $6,000,000, $236,540 and $36,736, or approximately 68%, 2.5% and 0.4% of total revenues, respectively.

Retail Stores Network

As of December 31, 2013, the Company had seven franchise retail stores in Beijing area, of which two stores are wholly owned by the Company under direct management, and five stores are managed by the franchisees. In 2014, the company will continue to evaluate the operation in the existing stores and replace those in poor performance with new stores.

After several years' experience in operating franchise retail stores, the Company believes 2014 is the right timing to expand its retail stores network. The Company expects the total number of franchise stores to be increased to sixty four via acquisitions by the end of 2014.

Net Income

The Company had net income of $166,622 for the year ended December 31, 2013, compared to net loss of $88,016 in the year of 2012. The net income during the year of 2013 was also due to the grants received from the local government in amount of $409,160, which was to encourage the Company's efforts on modern agricultural development. Without the government grant, the Company suffered loss of $143,124 from operations.

Expenses

Operating expenses for the years ended December 31, 2013 and 2012 were $2,114,426 and $1,516,430, respectively. The increase in operating expenses in 2013 was attributable to the increase in selling and marketing expenses, such as advertising, shipping and handling, and exhibition expenses, etc.

Cost of Goods Sold

Cost of goods sold included expenses directly related to the manufacturing and selling its products. Product delivery and direct labor would be examples of cost of goods sold items. During the year ended December 31, 2013, the Company had $7,286,184 in cost of goods sold, or 77.8% of sales revenues. During the year ended December 31, 2012, the Company had $3,065,050 in cost of goods sold, or 86.3% of sales revenues. The gross margin of fresh fruits products typically ranges between 5-10%.

Liquidity and Capital Resource

As of December 31, 2013, China Fruits had $40,217 in cash and cash equivalents. Cash flows used in operating activities were $599,157 for the year ended December 31, 2013, compared to cash flows of $865,680 provided by operating activities for the year ended December 31, 2012. Negative cash flows from operations in 2013 were due primarily to the increase in accounts receivable, inventories, prepaid expenses and advance to suppliers in the amount of $3,589,453, $1,455,726, $156,215 and $597,458, respectively, partially offset by the net income of $166,622, plus the increase in accounts payable and other payables and accrued liabilities in amount of $4,151,415 and $479,903, respectively.

Business Outlook

In 2014, the Company expects sales to increase as its moves toward implementing its business plan, including the increase in franchise retail stores, the increase in marketing budgets. The Company will evaluate the operation in the existing stores and replace those in poor performance with new stores. After several years' experience in operating franchise retail stores, the Company believes 2014 is the right timing to expand its retail stores network and expects the total number of franchise stores to be increased to sixty four via acquisitions by the end of 2014. The Company anticipates that it will need an additional $1,000,000 for the year of 2014.

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 consists of a total land area of 755,228 square feet, including manufacturing plants of 340,570 square feet and office buildings of 19,267 square feet 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 an approximately 26,700-square-foot distribution center and seven 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 its 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 http://www.taina.cn.

Safe Harbor Statement

Certain of the statements made in this press release are "forward-looking statements" within the meaning and protections of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause the actual results, performance, capital, ownership or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as "may," "will," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "estimate," "continue," "plan," "point to," "project," "could," "intend," "target" and other similar words and expressions of the future.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this cautionary notice, including, without limitation, those risks and uncertainties described in our annual report on Form 10-K for the year ended December 31, 2012 and otherwise in our SEC reports and filings, including the final prospectus for our offering. Such reports are available upon request from the Company, or from the Securities and Exchange Commission, including through the SEC's Internet website at http://www.sec.gov. The company has no obligation and do not undertake to update, revise or correct any of the forward-looking statements after the date hereof, or after the respective dates on which any such statements otherwise are made.

For More Information
Investor Relations
Zhengyang (Fred) Hong
Dragon Gate Investment Partners
Tel: +1 (917) 679-8528
Email: zhengyang.hong@dgipl.com
Website: http://www.dgipl.com

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