China Fruits (OTC BB:CHFR)

China Fruits Corpration And Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
For The Three and Nine Months Ended September 30, 2011 and 2010
(Expresed in US Dollars, except for number of shares)
		For the Three Months Ended								For the Nine Months Ended
		September 30, 2011				September 30, 2010				September 30, 2011				September 30, 2010
REVENUES:
Sales		$	426,266			$	284,935			$	1,592,960			$	1,212,127
Cost of goods sold			347,353				242,229				1,393,967				1,100,000
GROSS PROFIT			78,913				42,706				198,993				112,127
OPERATING EXPENSES:
Selling and marketing			89,836				101,391				309,883				201,291
Professional and legal expenses			20,550				20,550				62,214				62,419
General and administrative			138,156				173,935				386,969				405,431
TOTAL OPERATING EXPENSES			248,542				295,876				759,066				669,141
(LOSS) FROM CONTINUING OPERATIONS			(169,629	)			(253,170	)			(560,073	)			(557,014	)
OTHER INCOME (EXPENSE):
Interest income			317				56				359				610
Interest expenses			(28,929	)			(2,299	)			(84,220	)			(15,280	)
Gain on disposal(PPE)			—				—				—				1,659
Government & other grant			1,429				192				224,247				73,451
Other			(3,113	)			22				(9,013	)			8,159
TOTAL OTHER INCOME (EXPENSES)			(30,296	)			(2,029	)			131,373				68,599
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFOR INCOME TAXES		$	(199,925	)		$	(255,199	)		$	(428,700	)		$	(488,415	)
Income tax expense			—				—				—				6,777
NET (LOSS) FROM CONTINUING OPERATIONS		$	(199,925	)		$	(255,199	)		$	(428,700	)		$	(495,192	)
NET (LOSS)		$	(199,925	)		$	(255,199	)		$	(428,700	)		$	(495,192	)
Other comprehensive income
- Foreign currency translation gain			44,755			$	32,975				106,220			$	47,819
COMPREHENSIVE (LOSS)		$	(155,170	)		$	(222,224	)		$	(322,480	)		$	(447,373	)
(LOSS) per common share:
Basic		$	(0.00	)		$	(0.01	)		$	(0.01	)		$	(0.01	)
Weighted average number of common shares outstanding during the year - basic			49,951,223				38,779,689				42,503,534				38,743,022

We expect sales to increase during 2011 as our moves toward implementing our business plan, including the increase in franchise retail stores, the increase in marketing budgets. We currently have four wholly-owned franchise retail stores in Beijing area, including the one opened in November of 2011 located at Feng Tai District, Beijing. We expect to open total 6 franchise retail stores in 2011 and expect to boost our revenues due to the increasing traffic.

As of June 30, 2011, the Registrant entered into a Settlement Agreement and Release (the “Agreement”) with Mei Tan, LingHua Chen, ChunFeng Huang, CunXing Xi, Bin Feng, GuiFen Chen and WenMing Cui, individual citizens of People’s Republic of China (collectively as “Creditors”), pursuant to which Creditors desired to settle the amount of $335,146 advanced as of December 31, 2009 in exchange for total 11,171,534 shares of Common Stock issued by the Registrant at the market price of $0.03 per share. The parties desired in exchange for the releases and promised delivery designated herein to release and discharge any and all claims that exist between the parties hereto arising from the amount of $335,146 advanced by the Creditors. On September 30, 2011, the total 11,171,534 shares of Common Stock were issued to the Creditors pro rata equal to their portion in the amount advanced to the Registrant as of December 31, 2009.

We project that we will need additional capital to fund operations over the next 12 months. We anticipate we will need an additional $700,000 for the year of 2011.

 

China Fruits Corpration And Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
For The Three and Six Months Ended June 30, 2011 and 2010
(Expresed in US Dollars, except for number of shares)
		For the Three Months Ended								For the Six Months Ended
		June 30, 2011				June 30, 2010				June 30, 2011				June 30, 2010
REVENUES:
Sales		$	492,718			$	147,951			$	1,166,694			$	927,192
Cost of goods sold			420,843				133,036				1,046,614				857,771
GROSS PROFIT			71,875				14,915				120,080				69,421
OPERATING EXPENSES:
Selling and marketing			100,268				43,445				220,047				99,900
Professional and legal expenses			21,114				21,319				41,664				41,869
General and administrative			128,081				120,055				248,813				231,496
TOTAL OPERATING EXPENSES			249,463				184,819				510,524				373,265
(LOSS) FROM CONTINUING OPERATIONS			(177,588	)			(169,904	)			(390,444	)			(303,844	)
OTHER INCOME (EXPENSE):
Interest income			42				329				42				554
Interest expenses			(28,978	)			(6,564	)			(55,291	)			(12,981	)
Gain on disposal(PPE)			-				1,654				-				1,654
Government & other grant			207,630				30,780				222,818				73,259
Other			321				588				(5,900	)			8,137
TOTAL OTHER INCOME (EXPENSES)			179,015				26,787				161,669				70,623
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFOR INCOME TAXES		$	1,427			$	(143,117	)		$	(228,775	)		$	(233,221	)
Income tax expense			—				6,759				—				6,759
NET (LOSS) FROM CONTINUING OPERATIONS		$	1,427			$	(149,876	)		$	(228,775	)		$	(239,980	)
NET (LOSS)		$	1,427			$	(149,876	)		$	(228,775	)		$	(239,980	)
Other comprehensive income
- Foreign currency translation gain			34,833			$	14,420				61,465			$	14,831
COMPREHENSIVE (LOSS)		$	36,260			$	(135,456	)		$	(167,310	)		$	(225,149	)
(LOSS) per common share:
Basic			**				**			$	(0.01	)		$	(0.01	)
Weighted average number of common shares outstanding during the year - basic			38,779,689				38,779,689				38,779,689				38,724,689
**Less than $0.01

			Three months ended								Nine months ended
			9/30/2010				9/30/2009				9/30/2010				9/30/2009
REVENUES:
Sales			$	284,935			$	186,667			$	1,212,127			$	1,037,651
Cost of goods sold				(242,229	)			(112,725	)			(1,100,000	)			(686,712	)
Cost of goods sold - related party				-				-				-				-
Total Cost of Revenues				(242,229	)			(112,725	)			(1,100,000	)			(686,712	)
GROSS PROFIT				42,706				73,942				112,127				350,939
OPERATING EXPENSES:
Selling and marketing				101,391				33,973				201,291				149,463
Professional and legal expenses				20,550				23,050				62,419				64,514
General and administrative				173,935				140,627				405,431				382,395
TOTAL OPERATING EXPENSES				295,876				197,650				669,141				596,372
INCOME(LOSS) FROM CONTINUING OPERATIONS				(253,170	)			(123,708	)			(557,014	)			(245,433	)
OTHER INCOME (EXPENSE):
Interest income				56				158				610				436
Interest expenses				(2,299	)			(5,232	)			(15,280	)			(13,062	)
Gain on disposal(PPE)				-				4,909				1,659				4,909
Government & other grant				192				10,985				73,451				104,783
Other				22				12,409				8,159				12,409
TOTAL OTHER INCOME (EXPENSES)				(2,029	)			23,229				68,599				109,475
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFOR INCOME TAXES			$	(255,199	)		$	(100,479	)		$	(488,415	)		$	(135,958	)
Income tax expense				-				88				6,777				6,580
NET INCOME(LOSS) FROM CONTINUING OPERATIONS				(255,199	)			(100,567	)		$	(495,192	)		$	(142,538	)
NET INCOME(LOSS) FROM DISCONTINUED OPERATIONS			$	-			$	(15,182	)		$	-			$	(13,600	)
NET INCOME			$	(255,199	)		$	(115,749	)		$	(495,192	)		$	(156,138	)
Other comprehensive income
- Foreign currency translation gain			$	32,975				1,004				47,819				1,979
COMPREHENSIVE (LOSS) INCOME			$	(222,224	)		$	(114,745	)		$	(447,373	)		$	(154,159	)
Earnings(loss) per common share:
Continuing opeartions - basic & diluted				**				**				**				**
Discontinued operations- basic & diluted				**				**				**				**
Weighted average number of shares outstanding during the period - basic & diluted				38,779,689				36,129,689				38,743,022				36,129,689

We expect to be profitable in the year of 2011 due to the upward trend of current economy, the implementation of our business plan, including the increase in franchise retail stores, and the increase in marketing budgets. However, there can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future.

HOW MANY TIMES IS MANAGEMENT GOING TO MAKE THIS STATEMENT!!!!!!

On a long-term basis, liquidity is dependent on continuation and expansion of operations, receipt of revenues, and additional infusions of capital and debt financing. Our current capital and revenues are insufficient to fund such expansion. If we choose to launch such an expansion campaign, we will require substantially more capital. The funds raised from this offering will also be used to market our products and services as well as expand operations and contribute to working capital. However, there can be no assurance that we will be able to obtain additional equity or debt financing in the future, if at all. If we are unable to raise additional capital, our growth potential will be adversely affected and we will have to significantly modify our plans

On August 31, 2010, the Registrant announced the appointment of Mr. Li, Lin Feng to the position of Chief Financial Officer of the Registrant as approved by the Board of Directors, and effective immediately.

China Fruits still unable to post a profit..

• We had sales of $147,951 and $927,192 for the three and six months ended June 30, 2010, respectively, compared to sales of $294,887 and $850,984 for the comparative periods ended June 30, 2009, respectively.  The sales decreased by $146,936, or approximately 50% during the three months ended June 30, 2010, compared to the same period ended June 30, 2009, due primarily to the traffic to our store slowing down since we only have one franchise retail store left located at Panjia Garden, Beijing.
  
• We had net loss of $149,876 and $239,980 from continuing operations for the three and six months ended June 30, 2010, respectively, compared to the net loss from continuing operations of $137,054 and $41,971 for the three and six months ended June 30, 2009, respectively. The increases in net loss during the three and six months ended June 30, 2010 were due primarily to the significant increase in cost of goods sold, resulting in insufficient gross profit to cover our expenses during the period.

But the company is predicting profitability:

"We expect to be profitable during the second half of fiscal year 2010 due to the recovery of current economy, the implementation of our business plan, including the increase in franchise retail stores, and the increase in marketing budgets. However, there can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future."

GeoTeam Note®: Investors need to take this commentary with a grain of salt.  The company has made similar comments in the past that did not come to fruition.

CHFR reported 2009 year end results,

	Full Year 2009	Full Year 2008	Period Change
GAAP Revenue	$1.91 million	$1.66 million	15.1%
GAAP EPS	-$0.01	$0.01	n/a
Fully Diluted Shares	36 million	36 million	0.00

The fourth quarter was still nothing to right home about.