WEB NEWS Comments & Business Outlook
OTHER COMPREHENSIVE INCOME (LOSS)
Three Months Ended March 31,
2012
2011
(unaudited)
(unaudited)
Revenue
$ 1,080,966 $ 1,024,677
Cost of revenue
752,342 479,217
Gross profit
328,624 545,460
Operating expenses
Selling expenses
501,628 683,897
General and administrative expenses
818,609 516,610
Total operating expenses
1,320,237 1,200,507
Loss from operations
(991,613 ) (655,047 )
Non-operating income (expense):
Other income (expense)
(612 ) (229 )
Interest income
20,376 48,067
Interest expense
(11,311 ) (34,150 )
Total non-operating income
8,453 13,688
Net loss
(983,160 ) (641,359 )
Other comprehensive loss
Foreign currency translation gain
210,955 222,439
Unrealized gain (loss) on marketable equity security
2,392,029 (4,743,687 )
Total other comprehensive income (loss) 2,602,984 (4,521,248 )
Comprehensive income (loss)
$ 1,619,824 $ (5,162,607 )
Weighted average shares outstanding :
Basic
21,510,250 21,510,250
Diluted
21,510,250 21,510,250
Loss per share:
Basic
$ (0.05 ) $ (0.03 )
Diluted
$ (0.05 ) $ (0.03 )
Comments & Business Outlook
Year Ended December 31, 2011 as Compared to Year Ended December 31, 2010
Years Ended
December 31,
Change
2011
2010
$
%
Revenue
$ 7,684,778 $ 6,595,178 $ 1,089,600 16.5
Cost of revenue
5,608,858 5,741,812 (132,954 ) (2.3 )
Gross profit
2,075,920 853,366 1,222,554 143.3
Operating expenses
Selling expenses
844,903 439,184 405,719 92.4
General and administrative expenses
3,491,847 4,558,294 (1,066,447 ) (23.4 )
Total operating expenses
4,336,750 4,997,478 (660,728 ) (13.2 )
Loss from operations
(2,260,830 ) (4,144,112 ) 1,883,282 (45.4 )
Non-oparating income (expense):
Other income (expense)
(111,757 ) (5,641 ) (106,116 ) 1,881.2
Interest income
207,962 72,216 135,746 188.0
Interest expense
(145,747 ) (92,856 ) (52,891 ) 57.0
Total non-operating income(expense)
(49,542 ) (26,281 ) (23,261 ) 88.5
Net loss
$ (2,310,372 ) $ (4,170,393 ) $ 1,860,021 (44.6 )
Liquidity Requirements
Cash balance decreased to $948,137 as of September 30, 2011 as compared with $3,675,209 as of December 31, 2010 due to raw material costs increased significantly during the year, for the purposes of cost reduction, the Company has implemented a policy to build up a higher reserve of raw materials inventory through careful procurements. This has a negative impact on the cash balance. On November 17, 2011, the chairman issued an undertaking that the chairman will give his every endeavor and best effort to obtain necessary and adequate fundings to meet the Company’s financial obligations as and when they are required thereby warranting that the manufacturing operations of the Company will not be affected.
Comments & Business Outlook
Nine Months Ended September 30,
2011
2010
2011
2010
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Revenue
$ 1,781,006 $ 2,209,724 $ 4,222,293 $ 5,661,715
Cost of revenue
1,378,949 1,559,565 2,417,093 4,224,164
Gross profit
402,057 650,159 1,805,200 1,437,551
Operating expenses
Selling expenses
87,935 25,835 802,109 372,021
General and administrative expenses
1,127,763 956,675 2,176,280 2,418,410
Total operating expenses
1,215,698 982,510 2,978,389 2,790,431
Loss from operations
(813,641 ) (332,351 ) (1,173,189 ) (1,352,880 )
Non-operating income (expense):
Other income (expense)
(349 ) (61,531 ) (2,858 ) (81,372 )
Interest income
61,181 5,826 167,907 13,712
Interest expense
(39,798 ) (40,438 ) (111,390 ) (61,561 )
Loss on disposal of property and equipment
- (10,297 ) - (10,297 )
Total non-operating income
21,034 (106,440 ) 53,659 (139,518 )
Net loss
(792,607 ) (438,791 ) (1,119,530 ) (1,492,398 )
Other comprehensive income (loss)
Foreign currency translation gain (loss)
379,542 653,271 1,050,200 821,389
Unrealized gain (loss) on marketable equity security
(1,029,481 ) 201,859 (7,771,572 ) 1,312,083
Comprehensive income (loss)
$ (1,442,546 ) $ 416,339 $ (7,840,902 ) $ 641,074
Weighted average shares outstanding :
Basic
21,510,250 18,710,250 21,510,250 18,710,250
Diluted
21,510,250 18,710,250 21,510,250 18,710,250
Loss per share:
Basic
$ (0.04 ) $ (0.02 ) $ (0.05 ) $ (0.08 )
Diluted
$ (0.04 ) $ (0.02 ) $ (0.05 ) $ (0.08
The decrease in revenue is primarily attributable to a raise in commodity prices, the purchasing power of farmers declining, coupled with excessive rainfall in the summer months that led to flooding in some regions resulting in a reduced demand for crop production and fertilizer.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND
OTHER COMPREHENSIVE INCOME (LOSS)
Three Months Ended June 30,
Six Months Ended June 30,
2011
2010
2011
2010
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Net revenue
$ 1,416,610 $ 1,913,649 $ 2,441,287 $ 3,451,991
Cost of revenue
558,927 1,854,716 1,038,144 2,664,599
Gross profit
857,683 58,933 1,403,143 787,392
Operating expenses
Selling expenses
30,277 204,772 714,174 346,186
General and administrative expenses
531,907 713,751 1,048,517 1,461,735
Total operating expenses
562,184 918,523 1,762,691 1,807,921
Income (loss) from operations
295,499 (859,590 ) (359,548 ) (1,020,529 )
Non-operating income (expense):
Other income (expense)
(2,280 ) (19,227 ) (2,509 ) (19,841 )
Interest income
58,659 4,718 106,726 7,886
Interest expense
(37,442 ) (20,463 ) (71,592 ) (21,123 )
Total non-operating income
18,937 (34,972 ) 32,625 (33,078 )
Net income (loss)
314,436 (894,562 ) (326,923 ) (1,053,607 )
Other comprehensive income (loss)
Foreign currency translation gain (loss)
448,219 168,197 670,658 168,118
Unrealized gain (loss) on marketable equity security
(1,998,404 ) 2,240,634 (6,742,091 ) 1,110,224
Comprehensive income (loss)
$ (1,235,749 ) $ 1,514,269 $ (6,398,356 ) $ 224,735
Weighted average shares outstanding :
Basic
21,510,250 18,710,250 21,510,250 18,710,250
Diluted
21,510,250 18,710,250 21,510,250 18,710,250
Earnings (loss) per share:
Basic
$ 0.01 $ (0.05 ) $ (0.02 ) $ (0.06 )
Diluted
$ 0.01 $ (0.05 ) $ (0.02 ) $ (0.06 )
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND
OTHER COMPREHENSIVE INCOME (LOSS)
2010
2009
(as restated)
Net revenue
$ 6,595,178 $ 5,217,277
Cost of revenue
5,741,812 3,857,921
Gross profit
853,366 1,359,356
Operating expenses
Selling expenses
439,184 151,756
General and administrative expenses
4,558,294 2,060,553
Writedown of assets
- 104,283
Total operating expenses
4,997,478 2,316,592
Loss from operations
(4,144,112 ) (957,236 )
Non-operating income (expense):
Other income (expense)
(5,461 ) (2,178 )
Interest income
72,216 3,275
Interest expense
(92,956 ) (336 )
Gain on sale of investment, net
- 842,145
Equity income in investment
- 484,794
Total non-operating income (expense)
(26,201 ) 1,327,700
Income (loss) before provision for income taxes
(4,170,313 ) 370,464
Provision (benefit) for income taxes
- -
Net income (loss)
(4,170,313 ) 370,464
Other comprehensive income
Foreign currency translation gain
1,146,420 10,745
Unrealized gain on marketable equity security
605,577 2,021,600
Comprehensive income (loss)
$ (2,418,316 ) $ 2,402,809
Weighted average shares outstanding :
Basic
18,825,318 18,710,250
Diluted
18,825,318 18,710,250
Earnings per share:
Basic
$ (0.22 ) $ 0.02
Diluted
$ (0.22 ) $ 0.02
Comments & Business Outlook
Nine Months Ended September 30,
2010
2009
2010
2009
(unaudited)
(unaudited)
(unaudited)
(unaudited)
(as restated)
(as restated)
Net revenue
$ 2,209,724 $ 56,090 $ 5,661,715 $ 3,246,456
Cost of revenue
1,559,565 503,530 4,224,164 2,720,245
Gross profit (loss)
650,159 (447,440 ) 1,437,551 526,211
Operating expenses
Selling expenses
25,835 15,816 372,021 42,934
General and administrative expenses
956,675 494,744 2,418,410 794,886
Writedown of assets
- - 104,254
Total operating expenses
982,510 510,560 2,790,431 942,074
Loss from operations
(332,351 ) (958,000 ) (1,352,880 ) (415,863 )
Non-operating income (expense):
Other income (expense)
(61,531 ) (503 ) (81,372 ) (1,787 )
Interest income
5,826 82 13,712 396
Interest expense
(40,438 ) (60 ) (61,561 ) (208 )
Loss on disposal of property and equipment
(10,297 ) - (10,297 ) -
Loss on the sale of investment
- (29 ) - (211,639 )
Equity income in investment
- 177,826 - 484,728
Total non-operating income (expense)
(106,440 ) 177,316 (139,518 ) 271,490
Loss before provision for income taxes
(438,791 ) (780,684 ) (1,492,398 ) (144,373 )
Provision (benefit) for income taxes
- - -
Net loss
(438,791 ) (780,684 ) (1,492,398 ) (144,373 )
Other comprehensive income (loss)
Foreign currency translation gain
653,271 55,167 821,389 259
Unrealized gain (loss) on marketable equity security
201,859 (7,161,275 ) 1,312,083 (2,270,145 )
Comprehensive loss
$ 416,339 $ (7,886,792 ) $ 641,074 $ (2,414,259 )
Weighted average shares outstanding :
Basic
18,710,250 18,710,250 18,710,250 18,710,250
Diluted
18,710,250 18,710,250 18,710,250 18,710,250
Loss per share:
Basic
$ (0.02 ) $ (0.04 ) $ (0.08 ) $ (0.01 )
Diluted
$ (0.02 ) $ (0.04 ) $ (0.08 ) $ (0.01 )
Investor Alert
The Company changed its revenue recognition policy to the cost recovery method as the Company does not believe that collection is reasonably assured. Under the cost recovery method, no profit is recognized until cash payments exceed the cost of the goods sold and the Company records deferred revenue which is the gross profit that has not been realized. As a result of the change in the revenue recognition policy, the Company is filing an
amendment to the Form 10-Q that was originally filed with the Securities and Exchange Commission on May 14, 2010.
Research
Seems to be involved in litigation issues that may have affected credibility. Also 2007 results have been below 2006 due to : "abnormally cold spring time in Shaanxi and the massive flooding we experienced in August".
