News

Aoxin Tianli Group, Inc. Reports Fourth Quarter and Fiscal Year 2015 Financial Results
Author:Aoxin Tianli Date:Mar/15/2016

                    Aoxin Tianli Group, Inc. Reports Fourth Quarter and Fiscal Year 2015 Financial Results

                    Company to Host Earnings Conference Call on Tuesday, March 15, 2016 at 8:00 a.m. ET

 

WUHAN CITY, China, March 14, 2016 /PRNewswire/ -- Aoxin Tianli Group, Inc. (NASDAQ:ABAC) ("Aoxin Tianli" or the "Company"), a  leading producer of breeder hogs, market hogs and black hogs, as well as specialty processed black hog pork products sold through retail and the internet, today announced its financial results for the fourth quarter and fiscal year ended December 31, 2015.

 

Ms. Hanying Li, Chairwoman and Chief Executive Officer of Aoxin Tianli Group, Inc., commented, "Our fourth quarter financial results continued to be negatively impacted by weakening macro conditions as both the number of hogs sold and average selling prices decreased on a year-over-year basis and led to a 20.8% decrease in revenues for our hog farming business. While we are disappointed with the declines in revenues in recent quarters, we are taking steps to manage our costs and expenses including headcount reduction and stringent cost controls. As a result, both our margins and net profit increased in the fourth quarter."

 

Ms. Li continued, "As we are re-focusing our business on hog farming and taking steps to sell our specialty black hog pork products through retail channels and the internet, we sold our security and protection business and initiated steps to sell the underperforming servo business during the fourth quarter. Looking ahead, with continuing macro headwinds and challenges facing the hog industry, we remain cautious for the near term while actively seeking new growth opportunities along the hog farming/ pork value chain."

 

Three Months Ended December 31, 2015 Financial Results

Revenues

 

For the Three Months Ended December 31,

($ thousands, except per share data)

2015

 

2014

 

% Change

Revenues

$                8,752

 

$              11,203

 

-21.9%

Hog farming

8,399

 

10,747

 

-21.8%

Retail

352

 

456

 

-22.8%

Gross margin

25.9%

 

16.3%

 

9.5%

Operating margin

13.0%

 

8.1%

 

4.9%

Net income

2,871

 

2,019

 

42.2%

Net income from continuing operations

1,275

 

1,044

 

22.1%

Gain (loss) from operations and disposal of discontinued component

1,596

 

975

 

63.8%

Net income for common shareholders

2,935

 

1,950

 

50.5%

Earnings per share

0.09

 

0.07

 

35.2%

Continuing operations

0.04

 

0.04

 

7.8%

Discontinued components

0.05

 

0.03

 

66.8%

Revenues for the three months ended December 31, 2015 decreased by $2.45 million, or 21.9%, to $8.75 million from $11.20 million for the same period of last year. The reduction in revenues reflects the impact from the sale of two hog farms in the third quarter of 2015 and the closure of another farm in 2014.

 

Revenues from hog farming, which includes sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $2.35 million, or 21.8%, to $8.40 million for the three months ended December 31, 2015 from $10.75 million for the same period of last year. The Company sold a total of 38,000 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $221 per hog during the three months ended December 31, 2015, compared to 46,587 hogs sold and a blended average selling price of $231 per hog for the same period of last year.

 

 

For the Three Months Ended December 31,

 

2015

 

2014

 

No. of Hogs
Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

 

No. of Hogs
Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

Breeder hogs- regular hogs

5,897

 

$              255

 

$            1,505

 

7,101

 

$               267

 

$            1,893

Market hogs- regular hogs

17,854

 

209

 

3,734

 

20,203

 

208

 

4,200

Market hogs- black hogs

14,249

 

222

 

3,160

 

19,283

 

241

 

4,654

Total Hog Farming

38,000

 

221

 

8,399

 

46,587

 

231

 

10,747

                       
       
 

Kilogram

 

Average
Price/kg ($)

 

Sales
($ thousands)

 

Kilogram

 

Average
Price/kg ($)

 

Sales
($ thousands)

Retail- specialty black hog pork products

51,872

 

$                  7

 

$             352

 

131,312

 

$                   3

 

$              456

 

Revenues for the three months ended December 31, 2015 from regular breeder hog sales decreased by 20.5% to $1.51 million with the number of regular breeder hogs sold decreasing by 17.0% to 5,897 hogs and the average selling price of regular breeder hogs decreasing by 4.5% to $255 per hog. Revenues for the three months ended December 31, 2015 from regular market hog sales decreased by 11.1% to $3.73 million as the number of regular market hogs sold decreased by 11.6% to 17,854 hogs while the average selling price of regular market hogs increased by 0.5% to $209 per hog. Revenues for the three months ended December 31, 2015 from black market hogs decreased by 32.1% to $3.16 million with the number of black hogs sold decreasing by 26.1% to 14,249 hogs and the average selling price of black hogs decreasing by 7.9% to $222 per hog.

 

We sold 51,872 kilograms of specialty black hog pork products through retail at approximately $7 per kilogram, generating revenues of $0.35 million for the three months ended December 31, 2015. This compared to 131,312 kilograms sold at approximately $3 per kilogram and revenues of $0.46 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $3.51 million in revenues from our black hog program for the three months ended December 31, 2015, compared to $5.11 million for the same period of last year.

 

The results of operations of Hang-ao and OV Orange and their wholly owned subsidiaries, were reclassified as discontinued operations in the Company's financial statements for the three months ended December 31, 2015 and 2014 based on the Company's decision to focus on the hog industry and sell both subsidiaries and relevant businesses in the near future. OV Orange was sold on December 29, 2015. We had not yet found a buyer for Hang-ao as of today.

 

Gross profit

Cost of goods sold decreased by $2.89 million, or 30.8%, to $6.49 million for the three months ended December 31, 2015 from $9.37 million for the same period of last year. Cost of goods sold for hog farming decreased by $2.73 million, or 30.5%, to $6.24 million for the three months ended December 31, 2015 from $8.97 million for the same period of last year, benefitting from a reduction in the purchase prices for our feeds and the sale of 2 of our farms. Cost of goods sold for retail decreased by $0.15 million, or 37.9%, to $0.25 million for the three months ended December 31, 2015 from $0.40 million for the same period of last year.

 

Overall gross profit increased by $0.44 million, or 23.8%, to $2.27 million for the three months ended December 31, 2015 from $1.83 million for the same period of last year, mainly due to a decrease in cost of goods sold for hog farming as aforementioned.

 

Gross profits for hog farming and retail were $2.16 million and $0.10 million, respectively, for the three months ended December 31, 2015, compared to $1.78 million and $0.05 million, respectively, for the same period of last year.

 

Overall gross margin was 25.9%, with gross margins for hog farming and retail of 25.8% and 29.0%, respectively, for the three months ended December 31, 2015. This compared to overall gross margin of 16.3%, and gross margins for hog farming and retail of 16.5% and 11.7%, respectively, for the same period of last year.

 

Operating income

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $0.21 million, or 22.4%, to $1.12 million for the three months ended December 31, 2015 from $0.92 million for the same period of last year.

 

Operating income for the three months ended December 31, 2015 increased by $0.23 million, or 25.2%, to $1.14 million from $0.91 million for the same period of last year. Operating margin for the three months ended December 31, 2015 was 13.0%, compared to 8.1% for the same period of last year.

 

Net income

Net income increased by $0.85 million, or 42.2%, to $2.87 million for the three months ended December 31, 2015 from $2.02 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail segments, increased by $0.23 million. The operating results of our discontinued operations, Hang-ao and OV Orange, decreased significantly from net income of $0.97 million for the fourth quarter of 2014 to net loss of $0.55 million for the same period of 2015, which is partially offset by a gain of $2.14 million from the disposal of OV Orange during the fourth quarter of 2015. After the deduction of non-controlling interests, net income attributable to common shareholders for the three months ended December 31, 2015 was $2.94 million, or $0.09 per diluted share. This compared to net income attributable to common shareholders of $1.95 million, $0.07 per diluted share, for the same period of last year.

 

Fiscal Year 2015 Financial Results

 

For the Twelve Months Ended December 31,

($ thousands, except per share data)

2015

 

2014

 

% Change

Revenues

$37,368

 

$  38,533

 

-3.0%

Hog farming

35,904

 

37,203

 

-3.5%

Retail

1,464

 

1,331

 

10.0%

Gross margin

23.3%

 

14.6%

 

8.7%

Operating margin

9.7%

 

4.8%

 

4.9%

Net income

4,436

 

4,715

 

-5.9%

Net income from continuing operations

2,982

 

2,653

 

12.4%

Gain (loss) from operations and disposal of discontinued component

1,454

 

2,062

 

-29.5%

Net income for common shareholders

4,490

 

4,683

 

-4.1%

Earnings per share

0.14

 

0.21

 

-36.8%

Continuing operations

0.09

 

0.12

 

-25.0%

Discontinued components

0.04

 

0.09

 

-55.6%

Revenues

Revenues for the twelve months ended December 31, 2015 decreased by $1.17 million, or 3.0%, to $37.37 million from $38.53 million for the same period of last year. This decrease in revenues was mainly due to fewer regular hogs sold during 2015 and partially offset by an increase in average selling prices of regular hogs and an increase in sales from retail. The decrease in regular hogs sold in 2015 reflected the impact from the sale of 2 hog farms in the third quarter of 2015 and the closure of another farm in 2014.

 

 

For the Twelve Months Ended December 31,

 

2015

 

2014

 

No. of Hogs
Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

 

No. of Hogs
Sold

 

Average
Price/Hog ($)

 

Sales
($ thousands)

Breeder hogs- regular hogs

26,349

 

$              266

 

$            7,019

 

28,234

 

$               264

 

$            7,468

Market hogs- regular hogs

76,683

 

209

 

16,048

 

83,695

 

196

 

16,428

Market hogs- black hogs

57,819

 

222

 

12,837

 

58,463

 

228

 

13,308

Total Hog Farming

160,851

 

223

 

35,904

 

170,392

 

218

 

37,203

                       
       
 

Kilogram

 

Average
Price/kg ($)

 

Sales
($ thousands)

 

Kilograms

 

Average
Price/kg ($)

 

Sales
($ thousands)

Retail- specialty black hog pork products

290,154

 

$                  5

 

$          1,464

 

313,114

 

$                   4

 

$          1,331

 

Revenues for the twelve months ended December 31, 2015 from hog farming, which include sales of regular breeder hogs, regular market hogs, and black hogs, decreased by $1.30 million, or 3.5%, to $35.90 million from $37.20 million for the same period of last year. The Company sold a total of 160,851 regular breeder hogs, regular market hogs and black hogs with a blended average selling price of $223 per hog for the twelve months ended December 31, 2015, compared to 170,392 hogs sold and a blended average selling price of $218 per hog for the same period of last year.

 

Revenues for the twelve months ended December 31, 2015 from regular breeder hog sales decreased by 6.0% to $7.02 million with the number of regular breeder hogs sold decreasing by 6.7% to 26,349 hogs and the average selling price of regular breeder hogs increasing by 0.8% to $266 per hog. Revenues for the twelve months ended December 31, 2015 from regular market hog sales decreased by 2.3% to $16.05 million as the number of regular market hogs sold decreased by 8.4% to 76,683 hogs while the average selling price of regular market hogs increased by 6.6% to $209 per hog. Revenues for the twelve months ended December 31, 2015 from black market hogs decreased by 3.5% to $12.84 million with the number of black hogs sold decreasing by 1.1% to 57,819 hogs and the average selling price of black hogs decreasing by 2.6% to $222 per hog.

 

We sold 290,154 kilograms of specialty black hog pork products through retail at approximately $5 per kilogram, generating revenues of $1.46 million for the twelve months ended December 31, 2015. This compared to 313,114 kilograms sold at approximately $4 per kilogram and revenues of $1.33 million for the same period of last year. These revenues, combined with the sales of black market hogs, led to $14.30 million in revenues from our black hog program for the twelve months ended December 31, 2015, compared to $14.64 million for the same period of last year.

 

The results of operations of Hang-ao and OV Orange and their wholly owned subsidiaries, were reclassified as discontinued operations in the Company's financial statements for the year ended December 31, 2015 and 2014 based on the Company's decision to focus on the hog industry and sell both subsidiaries and relevant businesses in the near future. OV Orange was sold on December 29, 2015. We had not yet found a buyer for Hang-ao as of today.

 

Gross profit

Cost of goods sold decreased by $4.26 million, or 12.9%, to $28.67 million for the twelve months ended December 31, 2015 from $32.93 million for the same period of last year. Cost of goods sold for hog farming decreased by $4.31 million, or 13.5%, to $27.59 million for the twelve months ended December 31, 2015 from $31.89 million for the same period of last year, benefitting from a reduction in the purchase prices for our feeds and the sale of 2 of our farms. Cost of goods sold for retail increased by $0.05 million, or 4.9%, to $1.08 million for the twelve months ended December 31, 2015 from $1.03 million for the same period of last year.

 

Overall gross profit increased by $3.09 million, or 55.1%, to $8.69 million for the twelve months ended December 31, 2015 from $5.61 million for the same period of last year, mainly due to a decrease in cost of goods sold for hog farming as aforementioned.

 

Gross profits for hog farming and retail were $8.32 million and $0.38 million, respectively, for the twelve months ended December 31, 2015, compared to $5.31 million and $0.30 million, respectively, for the same period of last year.

 

Overall gross margin was 23.3%, with gross margins for hog farming and retail of 23% and 26%, respectively, for the twelve months ended December 31, 2015. This compared to overall gross margin of 14.6%, and gross margins for hog farming and retail of 14% and 22%, respectively, for the same period of last year.

 

Operating income

Total operating expenses, including general and administrative expenses and selling and marketing expenses, increased by $1.30 million, or 34.5%, to $5.06 million for the twelve months ended December 31, 2015 from $3.76 million for the same period of last year. The increase was primarily the result of a grant of stock to key employees which generated non-cash compensation expense of approximately $0.80 million, as well as increases of bad debt expense, guarantee service fees related to issuance of our bank acceptance notes, and payroll expenses of $0.18 million, $0.13 million, and $0.18 million, respectively.

 

Operating income for the twelve months ended December 31, 2015 increased by $1.79 million, or 97.2%, to $3.63 million from $1.84 million for the same period of last year. Operating margin for the twelve months ended December 31, 2015 was 9.7%, compared to 4.8% for the same period of last year.

 

Net income

Net income decreased by $0.28 million, or 5.9%, to $4.44 million for the twelve months ended December 31, 2015 from $4.71 million for the same period of last year. Our net income from continuing operations, including both hog farming and retail segments, increased by $0.33 million. The operating results of our discontinued operations, Hang-ao and OV Orange, decreased significantly from net income of $2.22 million for 2014 to net loss of $0.69 million for 2015, which is partially offset by a gain of $2.14 million from the disposal of OV Orange during the year ended December 31, 2015. After the deduction of non-controlling interests, net income attributable to common shareholders for the twelve months ended December 31, 2015 was $4.49 million, or $0.14 per diluted share. This compared to net income attributable to common shareholders of $4.68 million, $0.21 per diluted share, for the same period of last year.

 

Financial Condition

As of December 31, 2015, the Company had cash and cash equivalents of $49.66 million, compared to $39.12 million at the end of 2014. Working capital as of December 31, 2015 was $63.98 million as compared to $59.24 million at December 31, 2014. Net cash provided by operating activities in the twelve months ended December 31, 2015 was $21.25 million for the twelve months ended December 31, 2015, compared to $12.00 million for the same period of last year. Net cash provided by investing activities was $3.98 million for the twelve months ended December 31, 2015, compared to net cash used in investing activities of $11.82 million for the same period of last year. Net cash used in financing activities was $11.98 million for the twelve months ended December 31, 2015, compared to net cash provided by financing activities of $28.77 million for the same period of last year.

 

Company Update

On December 29, 2015, the Company announced that it executed an equity transfer agreement (the "Equity Transfer Agreement") and sold the its 95% equity interest in Wuhan Optical Valley Orange Technology Co., Ltd. ("OV Orange") to a group of third party investors (collectively, the "Transferees") for a total consideration of RMB 47.5 million (approximately $7.3 million).

 

On December 3, 2015, The Company signed a strategic cooperation framework agreement with Beijing Huinongfeng Biological Technology Co., Ltd., a Beijing-based production-to-consumer ("P2C") e-commerce company, for the construction of a new pork production facility and a food processing plant and the sale of the Company's pork products through Huinongfeng's online portal www.inongfeng.com .  

 

On November 13, 2015, the Company's wholly foreign-owned subsidiary, Wuhan Aoxin Tianli Enterprise Investment Management Co., Ltd. ("WFOE"), entered into an agreement (the "Agreement") to sell its 88% equity interest in Hubei Hang-ao Servo-valve Manufacturing Technology Co., Ltd. ("Hang-ao") for a purchase price of RMB 48.4 million (or approximately $7.5 million). The Agreement was terminated on December 25, 2015 due to the inability to obtain proper land use permits and deeds for Hang-ao's properties.  

 

Earnings Conference Call

Aoxin Tianli will host an earnings conference call and live webcast covering its fourth quarter and fiscal year 2015 financial results at 8:00 a.m. ET on March 15, 2016, which is 8:00 p.m. in Beijing on March 15, 2016. To attend the call, please use the information below for either dial-in access or webcast access. When prompted on dial-in, ask for "AoxinTianli / ABAC".

Conference Call

 

Date:

Tuesday, March 15, 2016

Time:

8:00 am ET, U.S.

U.S. Dial-in:

+1 877-317-6789

International Dial-in:

+1 412-317-6789

Conference ID:

Aoxin Tianli / ABAC

Webcast Link:

http://mms.prnasia.com/ABAC/20160315/default.aspx

For those unable to participate, an audio replay of the call will be available beginning approximately one hour after the end of the live call through March 22, 2016. The audio replay can be accessed by dialing +1-877-344-7529 within the United States or +1-412-317-0088 internationally, and entering access ID No. 10082543.

 

About Aoxin Tianli Group, Inc.

Aoxin Tianli Group, Inc. (the "Company"), previously known as Tianli Agritech, Inc., is in the business of breeding, raising and selling breeder and market hogs in China. The Company also sells specialty processed black hog pork products through supermarkets and other retail outlets, as well as the internet. The Company also owns an 88% equity interest in Hubei Hang-ao Servo-valve Manufacturing Technology Co., Ltd. ("Hang-ao"), which the Company acquired in July 2014 and currently is seeking to sell.

 

Forward-Looking Statements

This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, product and service demand and acceptance, changes in technology, economic conditions, the impact of competition and pricing, government regulations, and other risks contained in reports filed by the company with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by this cautionary statement and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.

 

For more information, please contact:

Tina Xiao
Weitian Group LLC
Phone: +1-917-609-0333
Email: tina.xiao@weitian-ir.com  

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

         
   

December 31,

   

2015

 

2014

         

ASSETS

       

Current Assets:

       

Cash and cash equivalents

$

49,656,897

$

39,123,869

Accounts receivable, net

 

292,684

 

102,162

Inventories

 

5,656,165

 

8,827,016

Advances to suppliers, net

 

7,823,138

 

635,930

Prepaid expenses

 

816,646

 

238,875

Other receivables, net

 

312,161

 

131,414

Due from related party

 

-

 

78,195

Restricted cash

 

9,242,571

 

-

Assets from discontinued operations

 

7,926,437

 

18,232,659

Total Current Assets

 

81,726,699

 

67,370,120

         

Long-term prepaid expenses, net

 

1,389,144

 

1,584,048

Plant and equipment, net

 

23,410,803

 

29,302,856

Construction in progress

 

-

 

50,664

Biological assets, net

 

1,580,847

 

2,036,823

Intangible assets, net

 

2,802,948

 

3,209,013

         

Total Assets

$

110,910,441

$

103,553,524

         

LIABILITIES AND STOCKHOLDERS' EQUITY

       
         

Current Liabilities:

       

Short-term loans

$

-

$

2,411,012

Bank acceptance notes payable

 

12,323,428

 

-

Accounts payable and accrued payables

 

19,655

 

3,528

Advances from customers

 

-

 

45,159

Other payables

 

3,041,085

 

2,972,674

Due to related party

 

-

 

48,926

Due to related party

 

2,359,696

 

2,647,515

Total Current Liabilities

 

17,743,864

 

8,128,814

         

Stockholders' Equity:

       

Common stock ($0.001 par value, 100,000,000 shares authorized, 33,203,000 shares issued and 33,183,000 shares outstanding as of December 31, 2015 and 32,373,000 shares issued and outstanding as of December 31, 2014)

 

33,183

 

32,373

Additional paid in capital

 

61,743,410

 

63,022,184

Statutory surplus reserves

 

2,457,180

 

2,532,813

Retained earnings

 

28,595,306

 

24,105,472

Accumulated other comprehensive income

 

(1,018,861)

 

4,079,896

Stockholders' Equity - Aoxin Tianli Group Inc. and Subsidiaries

 

91,810,218

 

93,772,738

Noncontrolling interest

 

1,356,359

 

1,651,972

Total Stockholders' Equity

 

93,166,577

 

95,424,710

Total Liabilities and Stockholders' Equity

$

110,910,441

$

103,553,524

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

 
         
   

For the Year Ended December 31,

   

2015

 

2014

         
         

Revenues

$

37,367,956

$

38,533,474

Cost of goods sold

 

28,670,968

 

32,926,459

Gross profit

 

8,696,988

 

5,607,015

         

Operating expenses:

       

General and administrative expenses

 

4,385,741

 

2,995,675

Selling expenses

 

677,195

 

768,420

Total operating expenses

 

5,062,936

 

3,764,095

         

Income (loss) from operations

 

3,634,052

 

1,842,920

         

Other income (expense):

       

Interest income (expense)

 

103,228

 

(459,987)

Subsidy income

 

3,532

 

52,578

Relocation compensation from farm shutdown

 

-

 

987,459

Loss from disposal of hog farms

 

(779,337)

 

-

Gain from disposal of construction in progress

 

4,254

 

-

Other income (expense), net

 

16,363

 

229,773

Total other expenses

 

(651,960)

 

809,823

         

Income (loss) before income taxes

 

2,982,092

 

2,652,743

         

Income taxes

 

-

 

-

Net income (loss) from continuing operations

 

2,982,092

 

2,652,743

         

Discontinued operations:

       

Gain (loss) from operations of discontinued component, net of taxes

 

(690,385)

 

2,061,860

Gain from disposal of discontinued component, net of taxes

 

2,144,226

 

-

         

Net income

 

4,435,933

 

4,714,603

Net loss (income) attributable to noncontrolling interest

 

53,901

 

(31,472)

Net income (loss) attributable to Aoxin Tianli Group Inc. common stockholders

 

4,489,834

 

4,683,131

         

Other comprehensive income (loss):

       

Unrealized foreign currency translation adjustment

 

(5,553,102)

 

13,625

         

Comprehensive income (loss)

$

(1,063,268)

$

4,696,756

         

Earnings (losses) per share attributable to Aoxin Tianli Group Inc. common stockholders - basic and diluted:

       

Weighted-average shares outstanding, basic and diluted

 

33,115,500

 

21,828,292

         

Continuing operations - Basic & diluted

$

0.09

$

0.12

Discontinued operations - Basic & diluted

$

0.04

$

0.09

 

 

AOXIN TIANLI GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
         
   

For the Year Ended December 31,

   

2015

 

2014

         
         

CASH FLOWS FROM OPERATING ACTIVITIES

       

Net income from continuing operations

$

2,982,092

$

2,496,333

Adjustments to reconcile net income to net cash

       

  provided by operating activities:

       

Depreciation and amortization

 

2,693,265

 

3,298,038

Amortization of prepaid expenses

 

288,857

 

397,321

Amortization of long-term prepaid expenses

 

113,308

 

114,887

Bad debt expense (Recovery gain from bad debt expense)

 

113,944

 

(65,061)

Stock-based compensation

 

822,022

 

18,700

Recovery gain from inventory valuation

 

(84,279)

 

-

Loss from farm shutdown

 

11,838

 

-

Loss from disposal of farms

 

779,337

 

-

Gain from disposal of construction in progress

 

(4,254)

 

-

Loss from disposal of fixed assets

 

-

 

9,977

Loss from disposal of biological assets

 

264,227

 

82,034

Changes in operating assets and liabilities:

       

Accounts receivable

 

(198,705)

 

157,546

Inventories

 

7,578,664

 

2,603,206

Advances to suppliers

 

506,633

 

968,440

Prepaid expenses

 

(269,289)

 

(348,734)

Other receivables

 

(195,345)

 

1,104,126

Long-term prepaid expenses

 

-

 

(100,111)

Accounts payable and accrued payables

 

17,274

 

(45,110)

Advances from customers

 

(44,504)

 

45,125

Other payables

 

613,000

 

(36,846)

Total adjustments

 

13,005,993

 

8,203,538

Net cash provided by operating activities from continuing operations

 

15,988,085

 

10,699,871

Net cash provided by operating activities from discontinued operations

 

5,257,949

 

1,302,525

Net cash provided by operating activities   

 

21,246,034

 

12,002,396

         

CASH FLOWS FROM INVESTING ACTIVITIES

       

Cash paid for purchase of noncontrolling interest

 

-

 

(1,083,100)

Proceeds from disposal of fixed assets

 

-

 

7,814

Proceeds from disposal of construction in progress

 

4,254

 

-

Proceeds from disposal of farms

 

1,204,084

 

-

Purchase of plant and equipment

 

(2,741)

 

(8,524,889)

Net cash provided by (used in) investing activities from continuing operations

 

1,205,597

 

(9,600,175)

Net cash provided by (used in) investing activities from discontinued operations

 

2,769,826

 

(2,215,691)

Net cash provided by (used in) investing activities

 

3,975,423

 

(11,815,866)

         

CASH FLOWS FROM FINANCING ACTIVITIES

       

Increase at restricted cash

 

(9,632,674)

 

-

Proceeds from capital contribution

 

-

 

33,800,000

Due to (from) related party

 

29,036

 

(168,076)

Repayment of short-term loans

 

(2,376,060)

 

(6,348,483)

Proceeds from short-term loans

 

-

 

2,409,168

Net cash provided by (used in) financing activities from continuing operations   

 

(11,979,698)

 

29,692,609

Net cash used in financing activities  from discontinued operations

 

-

 

(924,744)

Net cash provided by (used in) financing activities     

 

(11,979,698)

 

28,767,865

         

EFFECT OF EXCHANGE RATE CHANGES ON CASH

 

(2,708,731)

 

81,780

         

NET INCREASE IN CASH

 

10,533,028

 

29,036,175

         

CASH, BEGINNING OF PERIOD

 

39,123,869

 

10,087,694

         

CASH, END OF PERIOD

$

49,656,897

$

39,123,869

         

SUPPLEMENTAL DISCLOSURES:

       

Cash paid during the period for:

       

Interest paid

$

50,043

$

599,815

Income tax paid

$

-

$

-

         

NON-CASH TRANSACTIONS OF INVESTING AND FINANCING ACTIVITIES

   

Acquisition payments made through issuances of shares

$

-

$

9,909,742

Prepayments for raw material purchases made with bank acceptance notes

$

12,843,565

$

-

Shares issued to employees

$

1,433,700

$

-

Receivables used to offset the selling price in OV Orange disposal transaction

$

1,105,174

$

-