XI’AN, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- Entech Environmental Technologies Inc. (OTC Bulletin Board: EEVT) (“Entech” or “the Company”), a leading processor and manufacturer of concentrated high acidic apple juice, kiwifruit juice and pear juice through its operating company Shaanxi Tianren Organic Food Co., Ltd (“Tianren”), today announced its financial results for the first quarter of 2008.
First Quarter 2008 Highlights
-- Sales increased 69.0% year-over-year to $8.9 million
-- Gross profit was $1.9 million, or 21.0% of sales
-- Operating income was $1.0 million, or 11.8% of sales
-- Net income was $1.1 million, or 0.04 per basic and fully diluted share
-- Completed the share exchange transaction with Pacific Industry Holding
Group Co., Ltd. and became a publicly traded company in February 2008
-- Raised $3.4 million gross proceeds in a private placement financing in
February 2008
First Quarter 2008 Results
For the quarter ended March 31, 2008, total revenue was $8.9 million, a 69.0% increase from $5.2 million posted during the same quarter in 2007. The increase was due to the increased sales volume of the Company’s fruit related products, especially its pear and apple products. In addition, the Company consolidated Huludao Wonder’s operations into it financial results beginning in June 2007.
Gross profit decreased 17.3% to $1.9 million in the first quarter of 2008, compared to $2.2 million in the prior year period. Gross margin was 21.0% as compared to 42.9% during the same period in 2007. In the three months ended March 31, 2008, the general price of raw kiwi increased due to a natural disaster happened in 2007, while the price of kiwi related products remained constant. The gross margin in apple-related products was lower due to a decrease in the average selling price of apple juice in the market during the quarter. These combined factors contributed to the increase in cost of sales and the decrease in gross profit for the three months ended on March 31, 2008 as compared to the corresponding period in 2007.
Selling, general and administrative expenses in the first quarter of 2008 were $815,536, an increase of 194.6% from $276,848 in the first quarter of 2007. Selling expenses increased 44.0% to $241,345 during the quarter ended March 31, 2008. This was mainly due to an increase in freight and transportation as a result of the increase in sales. General and administrative expenses increased 425.8% year-over-year to $574,191. The increase in general and administrative expenses was mainly associated with higher depreciation expenses and expenses associated with being a public company.
Operating income decreased 47.0% to $1.0 million, or 11.8% of revenue, from $2.0 million in the first quarter of 2007, or 37.6% of revenue, in the first quarter of 2008.
Net income decreased to $1.1 million in the first quarter of 2008, or $0.04 per basic and fully diluted share, as compared to net income of $1.5 million during the same period in 2007. Fully diluted shares outstanding increased from 22,006,173 shares in the first quarter of 2007 to 27,528,146 shares in the first quarter of 2008 as a result of the share purchase agreement the Company entered into in February 2008.
Financial Condition
As of March 31, 2008, cash totaled $7.4 million, an increase from the $4.1 million of cash on hand on December 31, 2007. The increase of cash was mainly due to receipt of $3.2 million in net proceeds from private placement transactions in February 2008. As of March 31, 2008, the Company had working capital of $10.0 million with total current assets of $23.4 million and total current liabilities of $13.4 million. Accounts receivable increased by $2.9 million from the balance at December 31, 2007, due primarily to an increase in sales in the first quarter of fiscal 2008. Stockholders’ equity totaled $31.9 million as of March 31, 2008, compared to $26.2 million at the end of 2007.
Net cash provided by operations was $0.8 million for the three months ended March 31, 2008, compared with net cash provided by operations of $1.7 million for the same period in 2007.
Recent Events
-- Appointed Spring Liu as Chief Financial Officer of the Company
-- Appointed Mr. Norman Ko, Mr. Robert B. Fields, and Mr. Wang Guolin as
the Company’s independent directors; established an Audit Committee and
Compensation Committee of the Board of Directors
Business Outlook
“We expect our market to continue expanding in 2008. We will actively seek to increase our sales while enhancing operating margin through more efficient internal management. The addition of Ms. Spring Liu as our Chief Financial Officer and the appointment of three new independent directors will allow us to streamline our financial management and improve corporate governance and oversight,” said Mr. Xue. “We will also pursue potential acquisition targets to expand our business to take advantage of the strong national and international demand for concentrated juice and juice related products.”
About Entech Environmental Technologies Inc.
Safe Harbor Statement
-- Financial Tables Follow --
ENTECH ENVIRONMENTAL TECHONOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME, UNAUDITED
Three Months Ended
March 31, March 31,
2008 2007
(Unaudited) (Unaudited)
Revenue $ 8,850,584 $ 5,237,186
Cost of Sales 6,990,966 2,989,421
Gross Margin 1,859,618 2,247,765
Operating Expenses
General and administrative expenses 574,191 109,205
Selling expense 241,345 167,643
Total operating expenses 815,536 276,848
Income from Operations 1,044,082 1,970,917
Other Income (Expenses)
Interest expenses (59,028) --
Other income (expenses) 245,120 (38,873)
Total other income (expenses) 186,092 (38,873)
Income Before Income Tax 1,230,174 1,932,044
Income Tax Provision 130,520 373,478
Income Before Minority Interest 1,099,654 1,558,566
Minority interest 47,835 78,335
Net Income $ 1,051,819 $ 1,480,231
Earnings Per Share:
Basic earnings per share $ 0.04 $ 0.00
Diluted earnings per share 0.04 0.00
Weighted Average Shares Outstanding
Basic 99,202 --
Diluted 27,528,146 22,006,173
Comprehensive Income
Net income $ 1,051,819 $ 1,480,231
Other comprehensive income 1,420,300 132,169
Comprehensive Income $ 2,472,119 $ 1,612,400
ENTECH ENVIRONMENTAL TECHONOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS, UNAUDITED
March 31, December 31,
2008 2007
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
Cash and equivalents $ 7,443,613 $ 4,094,238
Trade accounts receivable 12,058,954 9,153,687
Other receivables 213,606 55,737
Inventories, net 3,569,665 4,460,149
Prepaid expenses and other current assets 101,489 101,628
Total current assets 23,387,327 17,865,439
RELATED PARTY RECEIVABLE 6,974,253 4,970,427
PROPERTY, PLANT AND EQUIPMENT, Net 17,814,370 17,564,147
LAND USAGE RIGHTS 6,339,247 6,138,297
OTHER ASSETS 75,783 71,818
TOTAL ASSETS $ 54,590,980 $ 46,610,128
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,198,603 $ 2,997,740
Accrued expenses 266,096 339,818
VAT tax payable 165,935 114,909
Other payable 408,029 217,759
Advances from customers 426,412 708,291
Current portion of notes payable 7,843,697 6,406,922
Related party payable 81,693 143,366
Total current liabilities 13,390,465 10,928,805
NOTE PAYABLE, net of current portion 2,139,190 2,053,501
TOTAL LIABILITIES $ 15,529,655 $ 12,982,306
MINORITY INTEREST 818,081 1,073,364
MINORITY INTEREST-V.I.E 6,308,591 6,308,591
SHAREHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 10,000,000
shares authorized 1,000,000 Series A
preferred shares issued and outstanding, 1,000 1,000
3,448,480 Series B preferred shares issued
and outstanding 3,448
Common stock, $0.01 par value; 100,000,000
shares authorized 265,511 shares issued and
outstanding 2,656
Paid-in capital 14,112,380 10,901,817
Accumulated retained earnings 13,510,451 12,458,632
Accumulated other comprehensive income 4,304,718 2,884,418
Total stockholders’ equity 31,934,653 26,245,867
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 54,590,980 $ 46,610,128
ENTECH ENVIRONMENTAL TECHONOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, UNAUDITED
March 31, March 31,
2008 2007
(unaudited) (unaudited)
Cash Flow from Operating Activities
Net income $ 1,051,819 $ 1,480,231
Adjustments to reconcile net income to net
cash flow provided by operating activities
Depreciation and amortization 714,647 276,874
Minority interest 47,835 78,335
Changes in operating assets and liabilities,
net of acquisition effects
Accounts receivables (2,470,381) 658,400
Other receivables (158,285) (6,937)
Prepaid expenses and other current assets 3,340 (429,550)
Inventories 1,054,021 131,874
Accounts payable 1,053,211 537,483
Accrued expenses (86,058) 10,306
Advances from customers (304,904) --
Other payables (153,304) 162,889
VAT tax payable 45,262 (1,180,417)
Net cash provided by operating activities 797,203 1,719,488
Cash Flow from Investing Activities
Loan advanced to related parties (1,758,745) --
Additions to property, plant and equipment (154,458) (928)
Net cash used in investing activities (1,913,203) (928)
Cash Flow from Financing Activities
Proceeds from stock issuance 3,216,667 --
Proceeds from bank loans 1,144,900 --
Repayments of related party loan (66,236) (784,164)
Net cash provided by (used in) financing
activities 4,295,331 (784,164)
Effect of Changes in Exchange Rate 170,044 18,487
NET INCREASE IN CASH 3,349,375 952,883
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 4,094,238 2,135,173
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,443,613 $ 3,008,056
Non Cash Investing and Financing Activities:
Dividend Payable to Minority Interest $ 303,118 --
(Minority interest balance was offset by the
dividend payable)
For more information, please contact:
Entech Environmental Technologies, Inc.
Ms. Spring Liu, Chief Financial Officer
Tel: +1-818-390-1272
Email: springliu@skypeoplejuice.com
CCG Elite Investor Relations
Mr. Crocker Coulson, President
Tel: +1-646-213-1915 (New York)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgir.com
