CALISTOGA, Calif. & DALIAN, China--(BUSINESS WIRE)--China Organic Agriculture, Inc. (OTCBB:CNOA), a company headquartered in Liaoning Province in China engaged in the trading and distribution of agricultural products, announced today its financial results for the first quarter ended March 31, 2010.
2010 First Quarter Key Financial Items
Revenue for the first quarter of 2010 was $32.4 million, representing a decrease from the $36.7 million of revenue recorded in the same period of 2009. This decrease reflects fewer orders in the first quarter of 2010 compared to prior period. The Company attributes this decrease to the uncertainty of the economic environment as having had a negative impact on its trading activity. As the Company acquired Changbai Eco-Beverage Co., Ltd., its new blueberry product segment, on March 23, 2010, its contribution to the Company’s first quarter revenues was limited.
Gross profit for the first quarter of 2010 was $8.2 million, a slight decrease compared to $8.4 million in the same period of 2009. The gross profit margin for the first quarter of 2010 was 25.4% compared to 22.8% in the same period of 2009. This improvement in the gross profit margin largely offset the decline in revenue and was in part attributed to the Company’s decision to more actively trade in beans and soybeans, which have better margins.
Selling, general and administrative expense for the first quarter of 2010 totaled $372,638, compared to $364,736 in the same period of 2009. In addition, based on its review of its receivables as of March 31, 2010, the Company recorded a bad debt provision of $433,584. The Company reports that enhanced collection efforts have resulted in an improvement in its collections subsequent to March 31, 2010.
Other income in the first quarter of 2009 was $614,553, largely due to a $500,000 licensing fee that the Company received relating to the use of its wine trademark, a fee that did not recur in the first quarter of 2010, when other income was $40,502.
Interest expense increased in the three month period ended March 31, 2010 as compared to the same period in 2009 due to higher bank borrowings.
As the Company owns 60% of its Dalian Huiming subsidiary, 40% of total net income from Dalian Huiming was recorded as income attributed to noncontrolling interest. Noncontrolling interest decreased from $2.5 million for the first quarter of 2009 to $2.2 million in the first quarter of 2010, reflecting reduced net income from the trading operations conducted by Dalian Huiming.
Net income attributable to CNOA shareholders was $3.0 million for the first quarter of 2010, representing a decrease compared to net income attributable to CNOA shareholders in the same period of 2009 of $3.9 million. This decrease was largely due to the impact of the bad debt provision, the increase in interest expense and the non-recurrence of the licensing fee received in the first quarter of 2009. Net income was only marginally benefited by the new blueberry segment which recorded net income of approximately $54,000 in the last week of March.
Earnings per share decreased to $0.04 per diluted share compared to $0.05 per diluted share in the first quarter of 2009.
Financial Condition
As of March 31, 2010, China Organic Agriculture had cash and cash equivalents of $25.1 million, up from $18.5 million as of December 31, 2009, excluding restricted cash. Working capital as of March 31, 2010 was $62.7 million as compared to $47.5 million as of March 31, 2009.
About China Organic Agriculture
China Organic Agriculture is based in China and is primarily engaged in the acquisition, trading and distribution of agricultural products. For more information, please visit:
| China Organic Agriculture, Inc. | ||||||||
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THREE MONTHS ENDED
MARCH 31, |
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2010
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2009
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| Net cash provided by operating activities | $ | 16.2 | $ | 0.2 | ||||
| Net cash used in investing activities | (9.9 | ) | - | |||||
| Net cash provided (used) by financing activities | 0.3 | (0.8 | ) | |||||
| Effects of exchange rates on cash | - | - | ||||||
| Net change in cash and cash equivalents | $ | 6.6 | $ | (0.6 | ) | |||
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NOTE: The above numbers may not equal the total due to rounding.
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China Organic Agriculture, Inc.
Hans Shen, 707-709-2321
IR@cnoainc.com
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