BEIJING and CLAREMONT, Calif., Aug. 12 /Xinhua-PRNewswire/ -- Kiwa Bio-Tech Products Group Corporation (OTC Bulletin Board: KWBT) announced revenues for the second quarter of 2008 ended June 30 were $3,027,497 an increase of 61.7% above revenues of $1,872,647 for the second quarter of 2007. Revenues for the first six months were $5,211,768 an increase of 60% from the previous year.
The significant revenue improvement during the second quarter was due to a 61.3% increase in the bio-feed business and a doubling of the bio-fertilizer business from the same period of the previous year. Kiwa has previously announced that significant contracts for delivery of fertilizer products were signed at the end of the end of the quarter for delivery during the second half of 2008 and early 2009.
The loss from continuing operations for the three-month period ended June 30, 2008 was $631,021 (including non-cash expenses of $237,104), compared to $892,384 for the three months ended June 30, 2007. The 29.3% decrease in the net loss was partially the result of a decrease in gross profits due to increased raw material costs, a decrease in operating expenses, a decrease in interest expenses and an increase in minority interest in a subsidiary. Please refer to documents filed today with the Securities and Exchange Commission for additional information on the results for the second quarter of 2008.
Mr. Wei Li, CEO and Chairman of the Company, stated, “Kiwa reached a number of milestones during the last four months that set the path for significant rapid growth in the second half of 2008.”
Highlights of the Second Quarter:
-- In May Kiwa announced that based on results of testing the Beijing Lv
Fu Long Vegetable Company would start placing orders for Kiwa
Shandong’s bio-fertilizer products. Kiwa’s “Di Fu Kang” fertilizer
was found to control Gray Mould Blight of cucumber fruits, increase the
number of cucumber seeds per fruit, and increases production - by more
than 20%. Kiwa’s fertilizer was used by the farms supplying the
Olympic games.
-- Also in May, Kiwa announced discussions with Beijing Hai Xin Science
and Technology Co., Ltd. regarding joint product development and
marketing efforts. Hai Xin is a high technology enterprise that
specializes in mineral resource development of nonmetallic clays and
earths in order to enhance the natural functions of the materials. By
combining these earths with organic materials, improved bio-feeds and
bio-fertilizers can be manufactured for farming operations.
-- In June, Kiwa and Jiangsu Zhongdong Fertilizer Group agreed to develop
new compound bio-fertilizers to address the growing Chinese market for
compound bio-fertilizers as an alternative to chemical fertilizers.
Sales volume is expected to be $10,000,000 in next six months.
-- Also in June Kiwa received approval documents from the Ministry of
Commerce of the People’s Republic of China, ratifying Kiwa Shandong to
wholesale other companies’ fertilizer products, including chemical
fertilizers, complex fertilizers and compound fertilizers. Based on
applicable tax laws in China, Kiwa Shandong’s new business items will
be exempt from value-added tax.
-- Kiwa Shandong has recently adjusted its product mix in cooperation
with Jiangsu Zhongdong Fertilizer Group with a focus on developing new
compound bio-fertilizers. Kiwa Shandong is also continuing to develop
new organic fertilizers to meet customer demand and is expected to
introduce new bio-fertilizer products for sale in the Chinese
fertilizer markets by the end of 2008.
-- In July Kiwa signed fertilizer sales contracts totaling RMB 150
million (over US$21 million) with Jilin Tianma Science & Technology of
Agriculture Co., Ltd. and other distributors. Delivery of products
under these contracts will be carried out from August 2008 through
March 2009.
-- Also in July, Kiwa Shandong received an Organic Products Certificate
from the China Organic Food Certification Center the specialized agency
under the Chinese Ministry of Agriculture to propel the development of
organic agriculture and to be engaged in authentication and management
of organic food and the organic food industry. Kiwa Shandong is the
second fertilizer manufacturing enterprise in Shandong Province of
China, that has acquired Organic Products Certification.
-- Kiwa entered into a joint venture with Hebei Huaxing Pharmaceuticals
Co., Ltd to produce Kiwa’s AF-01 anti-viral preventative for avian flu
in May. The new firm, Hebei Kiwa Huaxing Bio-Pharmaceuticals Co., Ltd.,
will be 70% owned by Kiwa. Kiwa will now be able to aggressively pursue
commercial development of AF-01 and veterinary pharmaceuticals as the
third segment of its business. In May 2006 Kiwa, acquired AF-01 Anti-
viral Aerosol technology for veterinary medicine applications including
the exclusive production right and other related rights to produce an
anti-viral aerosol drug for use with animals from Jinan Kelongboao Bio-
Tech Co., Ltd., which is affiliated with Chinese Academy of Medical
Sciences. The AF-01 aerosol technology is a broad-spectrum anti-viral
agent with potent inhibitory and/or viricidal effects on a variety of
RNA viruses found in animals and fowls such as bird flu. Kiwa’s hope
is to develop a commercialized product in the form of a spray for
applying in fowl houses and other animal holding facilities to prevent
and cure virus-caused diseases, for example, avian flu and foot-and-
mouth disease. To see an English language video related to Kiwa’s AF-
01 anti- viral preventative for avian flu:
video.google.com/videoplay?docid=-7160666649865130385 or
www.youtube.com/watch?v=WF_9TTX_fSA ;
www.youtube.com/watch?v=XG0gl9okjic .
ABOUT KIWA BIO-TECH PRODUCTS GROUP CORPORATION
The Company develops, manufactures, distributes and markets innovative, cost-effective, and environmentally safe bio-technological products for agricultural and natural resources and environmental conservation. The Company’s products are designed to enhance the quality of human life by increasing the value, quality and productivity of crops and decreasing the negative environmental impact of chemicals and other wastes. For more information about the Company, please review documents filed with the SEC (www.sec.gov) or visit the Company’s website at http://www.kiwabiotech.com .
This press release contains information that constitutes forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve risk and uncertainties that could cause actual results to differ materially from any future results described by the forward-looking statements. Risk factors that could contribute to such differences include those matters more fully disclosed in the Company’s reports filed with the Securities and Exchange Commission. The forward-looking information provided herein represents the Company’s estimates as of the date of the press release, and subsequent events and developments may cause the Company’s estimates to change. The Company specifically disclaims any obligation to update the forward-looking information in the future. Therefore, this forward-looking information should not be relied upon as representing the Company’s estimates of its future financial performance as of any date subsequent to the date of this press release.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
Three Months Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
Net sales $ 3,027,497 $ 1,872,647 $ 5,211,768 $ 3,256,740
Cost of
sales 2,960,296 1,798,905 5,081,862 3,044,675
Gross profit 67,201 73,742 129,906 212,065
Operating expenses
Consulting
and
professional
fees 70,310 267,678 188,777 457,139
Officers’
compensation 59,431 89,427 118,463 154,469
General
and
administrative 229,147 196,499 474,517 375,523
Selling
expenses 66,127 63,642 114,581 207,267
Research
and
development 55,415 43,495 101,132 92,799
Depreciation
and
amortization 26,641 29,591 52,818 60,864
Allowance
and provision (2,439) 398 (58) 664
Total operating
expenses 504,632 690,730 1,050,230 1,348,725
Operating loss (437,431) (616,988) (920,324) (1,136,660)
Interest
expenses (203,313) (276,146) (422,860) (401,904)
Loss before
minority
interest in a
subsidiary’s
deficit (640,744) (893,134) (1,343,184) (1,538,564)
Minority
interest in a
subsidiary’s
deficit 9,723 750 25,968 6,921
Loss from
continuing
operations (631,021) (892,384) (1,317,216) (1,531,643)
Loss on
discontinued
operations:
Discontinued
urea entrepot
trade -
Commission
paid to a
related party -- (414,509) -- (414,509)
Net loss $ (631,021) $ (1,306,893) $ (1,317,216) $ (1,946,152)
Other
comprehensive
loss
Translation
adjustment (20,271) (37,337) (36,241) (161,131)
Comprehensive $ $
loss (651,292) $ (1,344,230) (1,353,457) $ (2,107,283)
Net (loss)
from
continuing
operations per
common share -
basic and
diluted $ (0.007) $ (0.012) $ (0.015) $ (0.021)
Net loss on
discontinued
operations per
common share -
basic and
diluted $ -- $ (0.0056) $ -- $ (0.0057)
Weighted
average number
of common
shares
outstanding-
basic and
diluted 88,211,903 74,157,432 85,651,240 72,971,896
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, 2008 December 31, 2007
(UNAUDITED) (AUDITED)
ASSETS
Current assets
Cash and cash equivalents $ 19,932 $ 61,073
Accounts
receivable, net of
allowance for
doubtful accounts of
$295,141 and $277,140,
respectively 689,102 470,298
Inventories 914,948 818,329
Prepaid expenses 20,897 70,460
Other current assets 136,640 67,372
Total current assets 1,781,519 1,487,532
Property, Plant and Equipment
Buildings 1,237,537 1,162,060
Machinery and equipment 703,157 660,273
Automobiles 81,100 76,154
Office equipment 107,489 93,231
Computer software 10,519 9,877
Property, plant and
equipment - total 2,139,802 2,001,595
Less: accumulated depreciation (525,626) (433,690)
Property, plant and equipment - net 1,614,176 1,567,905
Construction in progress 71,631 67,262
Intangible asset - net 281,386 296,245
Deferred financing costs 88,793 129,793
Deposit to purchase proprietary
technology 126,443 126,443
Total assets $ 3,963,948 $ 3,675,180
LIABILITIES AND SHAREHOLDERS’
EQUITY (DEFICIENCY)
Current liabilities
Accounts payable $ 2,193,949 $ 1,805,043
Construction costs payable 315,616 316,902
Due to related parties - trade 233,267 177,970
Due to related parties - non-trade 555,842 551,654
Current portion of long-term
liabilities 547,535 2,889
Total current liabilities 3,846,209 2,854,458
Long-term liabilities, less
current portion
Unsecured loans payable 1,676,604 1,574,350
Bank notes payable 13,420 17,988
Long-term convertible notes payable 1,519,439 2,058,625
Less:
discount relating to
long-term convertible notes
payable (609,325) (856,308)
Long-term convertible notes
payable - net 910,114 1,202,317
Total long-term liabilities 2,600,138 2,794,655
Minority interest in a subsidiary 91,382 110,838
Shareholders’ equity (deficiency)
Common stock - $0.001 par value
Authorized 200,000,000 shares.
Issued and outstanding
88,788,245 and
81,519,676 shares at June 30, 2008
and December 31, 2007 88,788 81,520
Preferred stock - $0.001 par value
Authorized 20,000,000 shares,
none issued -- --
Additional paid-in capital 9,992,766 9,217,876
Stock-based compensation reserve (224,764) (307,053)
Deficit accumulated (12,391,738) (11,074,522)
Accumulated other comprehensive
income (38,833) (2,592)
Total shareholders’
equity (deficiency) (2,573,781) (2,084,771)
Total liabilities and
stockholders’ equity $ 3,963,948 $ 3,675,180
