China Fruits Corporation (OTC:CHFR)

First Quarter 2015 Financial Results

• The Company reported that total gross revenue were $5,850,335 for the three months ended March 31, 2015, compared to gross revenues of $8,015,860 for the same period ended March 31, 2014.
• The Company had a net loss of $802,846 for the three months ended March 31, 2015, compared to net income of $114,711 for the three months ended March 31, 2014.The net loss during the first quarter of 2015 was due to insufficient gross profit to cover a number of relatively fixed operating expenses.

"After the expansion in our network of franchise retail stores, we switched our focus from the overseas markets to the domestic market. In 2015, we will focus on developing our markets in Nanchang and Hangzhou to expand our franchise retail stores. The 2015 target number of retail stores throughout China is expected to grow to 135 in 2015" said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "We believe we will be able to expand our market share during 2015 through an effective and efficient franchise retail network. We were pleased to see immediate profitability in our e-commerce operations during 2014 and expect that to continue to strengthen. Our long term goal is to combine e-commerce with a network of retail stores network to increase the Company's brand recognition in fruit e-commerce business."

Financial Guidance

China Fruits continues to develop e-commerce business, as the Company believes the goal is to combine its e-commerce operations with a growing retail stores network to introduce an "online to offline" business model for their clients. Such integration will increase the Company's brand recognition and market share in the fruit e-commerce business.

The Company also expects the total number of franchise stores to be increase to around 135 by the end of 2015. The expansion will be accomplished via acquisitions, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of the British Virgin Islands, of which China Fruits has a 99.99% ownership. The articles of incorporation of US-China Fruits was filed on June 16, 2014 but the Company had no activities as of March 31, 2015. The Company believes the new subsidiary will increase operating efficiencies when they develop any overseas markets in the future.

ITEM 5.02 DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF PRINCIPAL OFFICERS

On May 13, 2015, 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.

Mr. Li is a certified public accountant in China, member of the Association of Chartered Certified Accountants. From July of 1990 through May of 2015, Mr. Li worked in North China Petroleum Administration Bureau; Hua Jian Certified Public Accountants Co.; Beijing Huarong Culture Investment Company and Beijing Meiying Huada Investment Advisory Co., Ltd. at the positions as Accounting Manager, Project Manager, Chief Financial Officer and General Manager in Investment Department. Mr. Li has more than ten years experiences in Financial Management, has worked in the position as Chief Financial Officer for more than five years, and has worked in the CPA firm as an auditor for more than three years. Mr. Li is experienced in establishing accounting system and accounting policy, managing capital and auditing. He is also experienced in merger and acquisition of the companies, has more than 5 years experiences in fundraising and capital management.

Mr. Li received his MBA from Beijing Technology University.

Mr. Li worked as Chief Financial Officer of the Registrant from August 2010 through August 2011, other than which, the Registrant discloses that there are no transactions during the last two years, or proposed transactions, to which the Registrant was or is a party, in which Mr. Li had or is to have a direct or indirect material interest.

On May 13, 2015, Mr. Li, Ze resigned as Chief Financial Officer of the Registrant as approved by the Board of Directors, and effective immediately.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunder duly authorized.

BEIJING, April 16, 2015 /PRNewswire/ -- China Fruits Corporation (CHFR) ("China Fruits" or "the Company"), a producer and distributor of fresh tangerine and other fresh fruits in the People's Republic of China, today released its financial results of fiscal year ended December 31, 2014.

Fiscal Year 2014 Highlights

• Total revenues in fiscal year 2014 were $32,635,446, a 248.30% increase from the corresponding period in 2013.
• Fully diluted earnings per share were $0.03, compared to $0.0033 per share over the same period in 2013. 

"2014 was a year of remarkable accomplishment for China Fruits. Our franchise retail stores reached 64, increasing by approximately 814% compared to 7 stores in 2013. We also reached a new high of 16 million dollars revenues on exporting Nanfeng Tangerines," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "China Fruits is at a high-speed developing phase. We will continue to focus on expanding the network of our franchise retail stores in 2015, expecting to own 135 franchise retail stores. Simultaneously, we are devoted into developing e-commerce, which is also part of our long-term strategic plan. We expect the Company's total number of shares of Common Stock issued and outstanding to be 2,089,016 shares and earnings per share to be $0.74 when the DEC 14C form filed on SEC on April 7^th, 2015 becomes effective."   

Financial Guidance

China Fruits continues to develop e-commerce business, as the company believes the goal is to combine e-commerce with growing retail stores network to introduce an "online to offline" business model for their clients. Such integration will increase the company's brand recognition and market shares in fruit e-commerce business.

The Company also expects the total number of franchise stores to be increased to around 135 by the end of 2015. The expansion will be accomplished via acquisitions, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved to setup a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of British Virgin Islands, of which China Fruits has 99.99% ownership. The articles of incorporation of US-China Fruits was filed on June 16, 2014. The switch from current exporting system to new system involving US-China Fruits was not completed; thus, there were no activities in US-China Fruits as of December 31, 2014. The Company believes the new subsidiary will facilitate the process and increase the efficiency when they develop overseas markets.

BEIJING, Feb. 10, 2015 /PRNewswire/ --- China Fruits Corporation (OTC: CHFR) ("China Fruits" or "the Company"), a retailor, wholesaler, exporter, and producer of fresh tangerine and other fresh fruits in the People's Republic of China, recently summarized the company's achievements in 2014.

By the end of 2014, the number of China Fruits franchise retail stores reached 64, increasing by approximately 914% compared to 7 stores in 2013, reaching the goal in 2014 successfully; China Fruits generated approximately 16 million dollars revenue from exporting Nanfeng tangerines, increasing by approximately 698% compared to 6.36 million dollars in the same period of 2013. The revenue reached new record high with respect to exporting Nanfeng tangerines due to the development of new oversea markets and the increase in market shares. Taina Fruits e-commerce section, which is a subordinate brand of China Fruits, also made a great progress last year. It cooperated with more than ten well-known e-commerce platforms, including Tmall, JingDong mall, Taobao, yhd.com, Gome.com.cn, and also built up its own official website for online sales. In 2014, Taina Fruits e-commerce generated approximately 1 million dollars revenue, representing an outstanding performance of 100% growth rate every month. It has been rated number one in online sales of fresh fruit in Beijing area since its launch in August 2014. For example, the sales of winter jujube reached 218 tons within only 39 days, which was number one in fruit industry e-commerce in China.

The Company has become the largest customer of SF Express, the largest logistics company in the area, in fruit e-commerce in Beijing area. "We plan to devote into developing e-commerce in 2015, which is going to be a significant component of our business expanding strategies. Being a leading company of fruit e-commerce in China is always our goal and direction." said by Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation.

Third Quarter 2014 Financial Results

• Revenue increased by 495% to $13,414,155 in the nine months ended September 30, 2014, compared to $2,255,669 in the same period of 2013.
• Fully diluted earnings per share were $0.01, compared to net loss of $0.01 per share in the same period in 2013.

"495% is a very significant sales growth rate for the nine months ended September 30, 2014, compared to the same period in 2013. It indicates that our China fruits corporation is in a quick development phase with steady and sturdy paces. Meanwhile, the number of our franchise retail store is expanding to 35," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "and we are excited about the future of our fruit e-commerce business, because we believe that our retail stores can give us competitive edge of our unique O2O business model."

Financial Guidance

The company preliminary plans to invest approximately $160,000 to develop its e-commerce business, as they believe e-commerce market will share the same significance as traditional market in the near future.

The Company also expects the total number of franchise stores to be increased to around 64 by the end of 2014. The expansion will be accomplished via acquisitions, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved to setup a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of British Virgin Islands, of which China Fruits has 99.99% ownership. The article of incorporation of US-China Fruits was filed on June 16, 2014 but the company had no activities as of September 30, 2014. The Company believes the new subsidiary will facilitate the process and increase the efficiency when they develop overseas markets.

China Fruits Corporation

Consolidated Statements of Income

For the three-month and nine-month periods ended September 30, 2014 and 2013

Unaudited

(Stated in US Dollars)

 

										Three Months Ended								Nine Months Ended
REVENUES:						Note				9/30/2014				9/30/2013				9/30/2014				9/30/2013
Sales							2(d)			$	2,862,463			$	555,014			$	13,414,155			$2,255,669
Cost of goods sold							2(e)				(2,191,743	)			(441,996	)			(11,070,765	)		(1,812,733)
GROSS PROFIT											670,720				113,018				2,343,390			442,936
OPERATING EXPENSES:
Selling expenses											96,946				100,132				789,854			371,299
General and administrative expenses											310,795				244,077				867,371			675,429
TOTAL OPERATING EXPENSES											407,741				344,209				1,657,225			1,046,728
INCOME (LOSS) FROM CONTINUING OPERATIONS											262,979				(231,191	)			686,165			(603,792)
OTHER INCOME (EXPENSE):
Other income											14,193				—				42,725			11,321
Other expense											(515	)			(43	)			(515	)
Interest income											81				—				140
Interest expense											(51,570	)			(35,796	)			(165,866	)		(88,486)
Government grants											2,989				316,370				274,898			376,778
TOTAL OTHER INCOME (LOSS) & EXPENSE											(34,822	)			280,531				151,382			299,613
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES											228,157				49,340				837,547			(304,179)
Income tax expense							2(k)				(17,054	)			—				(161,968	)		—
NET INCOME (LOSS)										$	245,211			$	49,340			$	675,579			$(304,179)
Other compressive income
-Foreign currency translation gain (Loss)							2(m)				1,322				(6,513	)			(26,155	)		(47,985)
COMPREHENSIVE INCOME (LOSS)											246,533				42,827				649,424			(352,164)
Income/(Loss) per common share:
Basic and fully diluted										$	**				**			$	0.01			(0.01)
Weighted average number of common shares outstanding – Basic and fully diluted											49,951,223				49,951,223				49,951,223			49,951,223

Management Discussion and Analysis

Revenues

Gross revenues were $2,862,463 and $13,414,155 for the three and nine months ended September 30, 2014, respectively, increased by $2,307,449, or 416%, and $11,158,486, or 495%, compared to gross revenues of $555,014 and $2,255,669 for the three and nine months ended September 30, 2013, respectively. The increase during the nine months ended September 30, 2014 was due primarily to our efforts in developing oversea markets, including Thailand, Dubai and Indonesia. We started to develop the Thai market in 2011, which is becoming our significant oversea market as the result of consistent marketing. Our signature tangerines are popular in the market due to their good quality and reasonable price. During the nine months ended September 30, 2014, the revenues from Thailand were approximately $5,650,000, or 42% of total revenues, which were $0 during the same period in 2013, and the revenues from Dubai and other markets were approximately $1,100,000, or 8% of total revenues, which were $0 during the same period in 2013.

Our revenues generated from franchise retail stores increased to approximately $4,730,000 in 2014, or 35% of total revenue, from $2,200,000 in the same period ended September 30, 2013. Such increase was the direct result from the increase in our franchise stores, which totaled 35 stores as of September 30, 2014, compared to 6 stores in the same period in 2013.

In addition, due to our continuing efforts on market development, our domestic sales of tangerines increased to approximately $1,930,000 in 2014, or 14% of total revenue, from $70,000 in the same period ended September 30, 2013.

We generate our revenues from sales of fresh fruits and related products, including our signature tangerine. The revenues are recognized when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to a warranty. We did not record any product returns during three and nine months ended September 30, 2014.

We expect our sales to increase during 2014 as we move toward implementing our business plan, including the increase in franchise retail stores, and an increase in our marketing budgets. We currently have 35 franchise retail stores in the Beijing area, of which 2 stores are wholly owned by us under direct management, and 33 stores are managed by franchisees. After the close of acquisition transaction with Baojia, there will be 3 more stores added into our system. In 2014, we will evaluate the operations in the existing stores and replace those in poor performance with new stores. After several years’ experience in operating franchise retail stores, we believe 2014 is the right time for us to expand our retail stores network. We expect the total number of franchise stores to be increased to around sixty four by the end of 2014. Such expansion will be accomplished via acquisitions, franchise sales or direct setups.

Net Income / (Loss)

We had net income of $245,211 and $675,579 for the three and nine months ended September 30, 2014, respectively, compared to net income of $49,340 and net loss of $304,179 for the three and nine months ended September 30, 2013, respectively. The net income during the three and nine months ended September 30, 2014 was due primarily to the increase in revenues, which generated sufficient gross profit to cover operating expenses. We also received a grant from the government in amount of $2,989 and $274,898 during the three and nine months ended September 30, 2014, respectively, which was to encourage our contribution in modern agriculture.

There can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future.

Second Quarter 2014 Financial Results

• Revenues for the six months ended June 30, 2014 were $10,551,692, a 562% increase from the corresponding period in 2013.
• Fully diluted earnings per share were $0.01, compared to earnings per share of $0.0004 in the same period in 2013.

"We are very delighted to see that the company is continuously achieving organic growth in 2014. The number of our franchise retail stores is expanding to 19, and there will be more stores through direct setups and acquisitions. The profit margin is improving as we are managed to control costs and expenses efficiently," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "and we are excited about the future of our fruit e-commerce business, because we believe that our retail stores can give us competitive edge of our unique O2O business model."

Financial Guidance

The Company preliminarily plans to invest approximately $160,000 to develop its e-commerce business, as they believe e-commerce market will share the same significance as traditional markets in the near future.

The Company also expects the total number of franchise stores to be increased to around 64 by the end of 2014. The expansion will be accomplished via acquisitions, franchise sales and/or direct setups.

In June of 2014, the board of directors of the Company authorized and approved to setup a new subsidiary called US-China Fruits Company Limited ("US-China Fruits") under the laws of British Virgin Islands, of which China Fruits has 99.99% ownership. The article of incorporation of US-China Fruits was filed on June 16, 2014 but the company had no activities as of June 30, 2014. The Company believes the new subsidiary will facilitate the process and increase the efficiency when they develop overseas markets.

BEIJING, July 1, 2014 /PRNewswire-FirstCall/ -- China Fruits Corporation (OTC: CHFR) ("China Fruits" or "the Company"), a distributor and producer of fresh tangerine and other fresh fruits in People's Republic of China, decides to open its flagship store in Tmall, a leading third-party platform for brands and retailers. This would be a significant step entering the Chinese domestic fruit e-commerce.

"The huge traffic and high user trust of Tmall could enable the Company to make a major breakthrough into the domestic fruit e-commerce," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "through Tmall's mature technical platform and high quality customer service, we are now establishing basis for future branding and official website traffic attracting."

Developing e-commerce with Alibaba's platform is one of the most critical strategies for the Company, which provides a powerful access to the non-China markets. By standing on the solid soil of the great reputation earned at Alibaba.com for years, China Fruits has achieved a successful business overseas.

The flagship store in preparatory stage in Tmall gives a signal of the upcoming battle to the Chinese fruit e-commerce. According to strategic plans, the Company will further expand its fruit e-commerce business to leading business-to-consumer platforms like JD.com, Yhd.com, and major group-buying websites, to establish core competencies of high quality, wide range of variety and efficient delivery. While developing and consolidating the fruit e-commerce industrial chain, China Fruits will work in conjunction with increasing fruit retail franchise stores to introduce a "online to offline" business model for its fruit e-commerce business. The total number of franchise stores is expected to reach around 64 by the end of 2014, and it would continue to rise rapidly in the future.

In addition, China Fruits plans to develop an "Online Distribution and Franchise" system in order to build a comprehensive vertical fruit e-commerce platform with major fruit participants, operators and industry bodies, which would add muscle in paving the way to future success of the Company's fruit e-commerce chain brand.

First Quarter 2014 Financial Results

• Revenue for the first quarter of 2014 was $8,015,860, a 984% increase from the corresponding period in 2013.
• Fully diluted earnings per share were $0.0023, compared to negative earnings per share in the same period in 2013.

"The company's business development is line with our strategic plans. The fast growth rate of revenues is attributed to our efforts in developing overseas market and to increase of franchise stores," said Mr. Quanlong Chen, Chairman and Chief Executive Officer of China Fruits Corporation, "and we launched "Taina� Miss Fruit" Beauty Contest on March 5^th, 2014. We hope selected fruit beauties can deliver healthy lifestyles to customers and to increase our brand's recognition."

Financial Guidance

The Company expects sales to increase during 2014 as the Company is moving toward implementing its business plan, including the increase in franchise retail stores, development of overseas market, and e-commence business expansion.

The Company also expects the total number of franchise stores to be increased to around 64 by the end of 2014. The expansion will be accomplished via acquisitions, franchises sales and/or direct setups.

In April 2014, the Company launched "Taina� Miss Fruit" Beauty Contest, and selected 10 fruit beauties. The Company expects selected fruit beauties to increase China Fruits' brand awareness and to lead new trend of healthy lifestyles.

China Fruits Corporation
Consolidated Statements of Income
For the years ended December 31, 2013 and 2012
(Stated in US Dollars)
						Twelve Months Ended
		Note				Dec 31, 2013				Dec 31, 20132
REVENUES:
Sales						$	9,369,901			$	3,550,674
Cost of Goods Sold							7,286,184				3,065,050
GROSS PROFIT							2,083,717				485,623
OPERATING EXPENSES:
Selling Expenses							1,262,369				545,988
General and Administrative							852,056				970,442
TOTAL OPERATING EXPENSES							2,114,426				1,516,430
Operating Income/(Loss)							(30,708	)			(1,030,806	)
OTHER INCOME (EXPENSE):
Other Income							18,780				22,064
Other Expense							—				(156,910	)
Interest Income							120				305
Interest Expense							(131,316	)			(143,589	)
Government Grants			14				409,160				1,220,920
TOTAL OTHER INCOME (LOSS) & EXPENSE							296,744				942,790
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES							266,036				(88,016	)
Income Tax Expense							99,414				—
NET Income/(loss)							166,622				(88,016	)
Other compressive income
-Foreign currency translation gain/(loss)							84,886				(74	)
COMPREHENSIVE (LOSS)							251,508				(88,090	)
(Loss) per common share:			15
Basic and fully diluted							$             **				$             **
Weighted Average Number of Common Shares Outstanding – Basic and Fully Diluted							49,951,223				49,951,223

Management Discussion and Analysis

RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2013 AND 2012

Revenues

Gross revenues were $9,369,901 and $3,550,674 for the years ended December 31, 2013 and 2012, respectively. We generate our revenues from sales of fresh fruits and related products, including our signature tangerine. The revenues are recognized when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to warranty. We did not record any product returns during the year ended December 31, 2013.

The increase in revenues by $5,819,227 during the year ended December 31, 2013 was due primarily to increasing traffic in our retail stores. After our efforts on marketing and brand recognition over years, more and more local customers know about our stores and turn into our regular customers. The sales in retail stores increased approximately 28% in 2013. In addition, the fund from shareholders gave us sufficient cash flow to develop internatonal markets, including Thailand, Dubai, Malaysia and so on. The revenues generated from these three countries in 2013 were approximately $6,000,000, $236,540 and $36,736, or approximately 68%, 2.5% and 0.4% of total revenues, respectively.

We expect our sales to increase during in 2014 as our moves toward implementing our business plan, including the increase in franchise retail stores, the increase in marketing budgets. As of December 31, 2013, we had seven franchise retail stores in Beijing area, of which two stores are wholly owned by us under direct management, and five stores are managed by the franchisees. In 2014, we will evaluate the operation in the existing stores and replace those in poor performance with new stores. After several years experience in operating franchise retail stores, we believe 2014 is the right timing for us to expand our retail stores network. We expect the total number of franchise stores to be increased to sixty four via acquisitions by the end of 2014.
 

Income / Loss

We had net income of $166,622 for the year ended December 31, 2013, compared to net loss of $88,016 in the year of 2012. The net income during the year of 2013 was also due to the grants received from the local government in amount of $409,160, which was to encourage our efforts on modern agricultural development. Without the government grant, we suffered loss of $143,124 from operations.

There can be no assurance that we will achieve or maintain profitability, or that any revenue growth will take place in the future.

BEIJING, March 11, 2014 /PRNewswire/ -- China Fruits Corporation (OTC: CHFR) ("China Fruits" or "the Company"), a producer, distributor, and retailer of fresh tangerine and other fresh fruits in the People's Republic of China, launches its "Taina� Miss Fruit" Beauty Contest, the first national fruit-themed beauty contest in China that aims to advocate the underemphasized fruit culture and healthy lifestyle to China's growing urban population.

As the latest step to enhance its retail fruit store brand name, Taina�, in domestic urban fruit market, the beauty contest also sets a stage for the company to present its operational improvements in fruit planting, distributing, and retailing.

"The fruit consumption per capita is expected to reach 60 kilograms in China by 2020, and more fruit consumers are weighing quality over price, especially among the younger generations," said Mr. Quanlong Chen, chairman and CEO of China Fruits Corporation. "We are riding the trend by providing consumers with hand-picked fruits from orchards via our nationwide distribution network, patented storage technology, and expanding retail presence."

"What we have done and are now working on is to keep our production and distribution capacity abreast with the increasing market size and changing consumer preference," added Mr. Quanlong Chen.

A special requirement of the beauty contest is English language proficiency. As a U.S. public company, China Fruits is selecting its brand ambassador not only for its Chinese consumers but for its growing overseas shareholder base.

The finale is scheduled on April 25, 2014, with Miss Fruit and other top three winners being crowned and seven other beauties being honored with individual awards. Miss Fruit is expected to receive a cash reward, brand ambassador appointment, and lifetime free fruit supply from Taina's diversified fruit portfolio.

China Fruits Corporation And Subsidiaries
Condensed Consolidated Statements of Operations
For The Three and Nine Months Ended June 30, 2013 and 2012
(Unaudited)
		For the three months ended								For the nine months ended
		September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012
REVENUES:
Sales		$	661,894			$	555,014			$	2,255,669			$	2,182,480
Cost of goods sold			493,445				441,996				1,812,733				1,850,027
GROSS PROFIT			168,449				113,018				442,936				332,453
OPERATING EXPENSES:
Selling and marketing			108,951				100,132				371,299				406,522
Professional and legal expenses			25,227				17,050				59,891				51,150
General and administrative			196,667				227,027				615,538				606,394
TOTAL OPERATING EXPENSES			330,845				344,209				1,046,728				1,064,066
(LOSS) FROM CONTINUING OPERATIONS			(162,396	)			(231,191	)			(603,792	)			(731,613	)
OTHER INCOME (EXPENSE):
Interest expenses			(29,164	)			(35,796	)			(88,486	)			(112,244	)
Government & other grant			123,862				316,370				376,778				614,423
Other			5,715				(43	)			11,321				30,127
TOTAL OTHER INCOME (EXPENSES)			100,413				280,531				299,613				532,306
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		$	(61,983	)		$	49,340			$	(304,179	)		$	(199,307	)
Income tax expense			—				—				—				—
NET (LOSS)		$	(61,983	)		$	49,340			$	(304,179	)		$	(199,307	)
Other comprehensive income
- Foreign currency translation gain (loss)		$	6,791				(6,513	)		$	47,985				(15,695	)
COMPREHENSIVE (LOSS)		$	(55,192	)		$	42,827			$	(256,194	)		$	(215,002	)
(Loss) per common share:
Basic			**				**			$	(0.01	)			**
Weighted average number of common shares outstanding
Basic			49,951,223				49,951,223				49,951,223				49,951,223
** Less than $0.01			**
The accompanying notes are an integral part of these consolidated financial statements

 

 

Departure of Independent Accountant

On October 27, 2013, Lake & Associates, CPA’s LLC (“Lake”) notified the Company that effective as of that date, the firm was not going to stand for re-election as its independent auditor. Lake did not provide information as to the reason they would not stand for re-election as the Company’s independent auditor for the fiscal year ended December 31, 2013. The Company has subsequently obtained information that effective August 13, 2013 the Public Company Accounting Oversight Board (“PCAOB”) revoked the registration of Lake. The Company’s management and Board, along with its newly appointed independent auditor, are currently determining whether Lake’s PCAOB registration revocation will have any impact on its previously issued financial statements, most recently for the fiscal years ended December 31, 2012 and 2011.

Lake issued its auditor’s report on the Company's financial statements for the years ended December 31, 2012 and 2011, which included an explanatory paragraph as to the Company’s ability to continue as a going concern.

Other than the going concern uncertainty described above, Lake’s audit report on the Company’s financial statements for the years ended December 31, 2012 and 2011 did not contain an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles. Lake also reviewed Forms 10Q for the periods ended March 31, 2013 and June 30, 2013.

During the years ended December 31, 2012 and 2011 and any subsequent interim period through October 27, 2013, the date of resignation of Lake, there were no disagreements with Lake on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to Lake’s satisfaction, would have caused Lake to make reference to the subject matter of the disagreements in connection with their report on the Company’s consolidated financial statements for such years; and there were no reportable events, as listed in Item 304(a)(l)(v) of Regulation S-K.

We have engaged WWC, P.C. to re-audit our financial statements for the year ended December 31, 2012, which will be included in our annual report on Form 10-K for the year ended December 31, 2013.

The Company provided Lake with a copy of the disclosure contained herein and requested in writing that Lake furnish the Company with a letter addressed to the Securities and Exchange Commission stating whether or not they agree with such disclosures. The Company has included Lake’s letter as Exhibit 16 to this filing.

 
New Independent Registered Public Accounting Firm

On October 27, 2013, the Board approved the engagement of WWC P.C. (“WWC”), as the Company’s new independent registered public accounting firm.

During the fiscal years ended December 31, 2012 and 2011, and the subsequent interim period prior to the engagement of WWC, the Company has not consulted WWC regarding (i) the application of accounting principles to any specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and either a written report was provided to the registrant or oral advice was provided that the new accountant concluded was an important factor considered by the registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(v)) or a reportable event.

China Fruits Corporation And Subsidiaries
Condensed Consolidated Statements of Operations
For The Three and Six Months Ended June 30, 2013 and 2012
(Unaudited)
		For the three months ended								For the six months ended
		June 30, 2013				June 30, 2012				June 30, 2013				June 30, 2012
REVENUES
Sales		$	854,553			$	598,827			$	1,593,775			$	1,627,466
Cost of goods sold			695,213				489,204				1,319,288				1,408,031
GROSS PROFIT			159,340				109,623				274,487				219,435
OPERATING EXPENSES:
Selling and marketing			100,701				70,056				262,348				306,390
Professional and legal expenses			17,050				17,050				34,664				34,100
General and administrative			191,801				193,503				418,871				379,367
TOTAL OPERATING EXPENSES			309,552				280,609				715,883				719,857
(LOSS) FROM CONTINUING OPERATIONS			(150,212	)			(170,986	)			(441,396	)			(500,422	)
OTHER INCOME (EXPENSE):
Interest expenses			(27,496	)			(37,936	)			(59,322	)			(76,448	)
Government & other grant			197,478				41,248				252,916				298,053
Other			(220	)			(524	)			5,606				30,170
TOTAL OTHER INCOME (EXPENSES)			169,762				2,788				199,200				251,775
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		$	19,550			$	(168,198	)		$	(242,196	)		$	(248,647	)
Income tax expense			—				—				—				—
NET (LOSS)		$	19,550			$	(168,198	)		$	(242,196	)		$	(248,647	)
Other comprehensive income
- Foreign currency translation gain (loss)		$	34,945			$	(11,730	)		$	41,194			$	(9,182	)
COMPREHENSIVE (LOSS)		$	54,495			$	(179,928	)		$	(201,002	)		$	(257,829	)
(Loss) per common share:
Basic			**				**				**				**
Weighted average number of common shares outstanding
Basic			49,951,223				49,951,223				49,951,223				49,951,223
**Less than $0.01

The accompanying notes are an integral part of these consolidated financial statements

Comments:

We expect our sales to increase during the second half of 2013 as our moves toward implementing our business plan, including the increase in franchise retail stores, the increase in marketing budgets. We currently have six franchise retail stores in Beijing area, of which four stores are wholly owned by us under direct management, and two stores are managed by the franchisees. In 2013, we will evaluate the operation in the existing stores and replace those in poor performance with new stores. We expect the total number of franchise stores to be increased to seven by the end of 2013.

Liquidity:

Cash flows used in financing activities were $1,214,695 and $1,233,537 during the six months ended June 30, 2013 and 2012, respectively. Negative cash flows from financing activities in the first half of 2013 were due primarily to the advance to a third party in an amount of $355,514, plus the payments of $945,345 on notes payable. Negative cash flows from financing activities in the six months ended June 30, 2012 were due primarily to the advance to a third party in an amount of $880,684, the payments on notes payable in total amount of $439,153, of which $153,783 was to related parties loan.

We project that we will need additional capital to fund operations over the next 12 months. We anticipate we will need an additional $1,000,000 for the year of 2013.

Overall, we have funded our cash needs from inception through June 30, 2013 with a series of debt and equity transactions, primarily with related parties. If we are unable to receive additional cash from our related parties, we may need to rely on financing from outside sources through debt or equity transactions. Our related parties are under no legal obligation to provide us with capital infusions. Failure to obtain such financing could have a material adverse effect on operations and financial condition.

Item 1.01 Entry into a Material Definitive Agreement.

On July 15, 2013 China Fruit Corporation (the “Company” or “Registrant”) and Dragon Gate Investment Partners (“Dragon Gate”) entered into an Investor Relations Service Agreement (the “Agreement”). Pursuant to the terms of the Agreement, Dragon Gate will serve as the Company’s Investor Relations Representative to support the Company’s communications with U.S. investment communities. The services provided by Dragon Gate will primarily consist of developing an integrated IR plan with a brand-new focus on multimedia IR services based on CorpOnline IR platform, redesigning the Company’s IR and other communication channels, delivering corporate information packages, handling shareholder enquiries, and managing the communications with brokers, analysts, and investors. The Agreement will expire on July 15, 2014.

The Company believes the engagement with Dragon Gate will give the Company the ability to effectively release its information to more prospective investors.

Disclosure: GeoInvesting is providing this information for your edification and in no way has any affiliation with any promoters and/or newsletters disseminating information on CHFR, nor is GeoInvesting being paid to post this information. At times, the GeoTeam may trade P&D's on a long or short basis, depending on how we feel the momentum of the stocks will be affected by the efforts of stock promoters and any ensuing dumps.

For the years ended
		12/31/2012				12/31/2011
REVENUES:
Sales		$	3,709,101			$	3,476,158
Cost of goods sold			3,053,873				2,943,600
GROSS PROFIT			655,228				532,558
OPERATING EXPENSES:
Selling and marketing			545,456				446,961
Professional and legal expenses			94,700				95,264
General and administrative			838,597				532,394
TOTAL OPERATING EXPENSES			1,478,753				1,074,619
(LOSS) FROM CONTINUING OPERATIONS			(823,525	)			(542,061	)
OTHER INCOME (EXPENSE):
Interest income			—				—
Interest expenses			(143,936	)			(121,343	)
Government & other grant			1,219,731				297,761
Loss from disposal of fixed assets			(143,806	)			—
Other			19,957				(10,359	)
TOTAL OTHER INCOME (EXPENSES)			951,946				166,059
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		$	128,421			$	(376,002	)
Income tax expense			—				—
NET (LOSS)		$	128,421			$	(376,002	)
Other comprehensive income
- Foreign currency translation gain (loss)		$	32,201				131,817
COMPREHENSIVE (LOSS)		$	160,622			$	(244,185	)
(Loss) per common share:
Basic			**			$	(0.01	)
Weighted average number of common shares outstanding
Basic			49,951,223				44,365,456
**Less than $0.01

We expect our sales to increase during 2013 as our moves toward implementing our business plan, including the increase in franchise retail stores, the increase in marketing budgets. We currently have six franchise retail stores in Beijing area, of which four stores are wholly owned by us under direct management, and two stores are managed by the franchisees. In 2013, we will evaluate the operation in the existing stores and replace those in poor performance with new stores. We expect the total number of franchise stores to be increased to seven by the end of 2013.

		For the three months ended
		3/31/2012				3/31/2011
REVENUES
Sales		$	1,028,639			$	673,976
Cost of goods sold			918,827				625,771
GROSS PROFIT			109,812				48,205
OPERATING EXPENSES:
Selling and marketing			236,334				119,779
Professional and legal expenses			17,050				20,550
General and administrative			185,864				120,732
TOTAL OPERATING EXPENSES			439,248				261,061
(LOSS) FROM CONTINUING OPERATIONS			(329,436	)			(212,856	)
OTHER INCOME (EXPENSE):
Interest income			—				—
Interest expenses			(38,512	)			(26,313	)
Government & other grant			256,805				15,188
Other			30,694				(6,221	)
TOTAL OTHER INCOME (EXPENSES)			248,987				(17,346	)
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		$	(80,449	)		$	(230,202	)
Income tax expense			—				—
NET (LOSS) FROM CONTINUING OPERATIONS		$	(80,449	)			(230,202	)
NET INCOME FROM DISCONTINUED OPERATIONS		$	—			$	—
NET (LOSS)		$	(80,449	)		$	(230,202	)
Other comprehensive income
- Foreign currency translation gain			2,548			$	26,632
COMPREHENSIVE (LOSS)		$	(77,901	)		$	(203,570	)
(LOSS) per common share:
Basic			**				**
Weighted average number of common shares outstanding during the year - basic			49,951,223				38,779,689
**Less than $0.01

Gross revenues were $1,028,639 and $673,976 for the three months ended March 31, 2012 and 2011, respectively, due primarily to sales of fresh fruits and related products, including our signature tangerine. We recognize revenue when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to warranty. We did not record any product returns for the both three-month periods ended March 31, 2011 and 2010. The significant increase in gross revenues by $354,663 during the first quarter of 2012 was due primarily to the increasing traffic in our retail stores. After our efforts on marketing and brand recognition over years, more and more local customers know about our stores and turn into our regular customers. The revenue increased in 2012 was also due to the development in international markets. We had revenues of approximately $209,830, or 20.4% of total revenues, generated from Thailand, and approximately $283,694, or 7.2% of total revenues, from Indonesia.

We expect our sales will continue to increase to approximately $4,200,000 during 2012 as our moves toward implementing our business plan, including the increase in franchise retail stores, the increase in marketing budgets and development in international markets. . We currently have four franchise retail stores in Beijing area, of which 2 stores are wholly owned by us under direct management, and 2 stores are managed by the franchisees. In 2012, we will evaluate the operation in the existing stores and replace those in poor performance with new stores. The total number of franchise stores will be increased to six.

Since the reverse merger was consummated, we have continued operations of Tai Na, a company which is principally engaged in manufacturing, trading and distributing fresh tangerine and other fresh fruits in the PRC. Tai Na is located in Nan Feng County, Jiang Xi Province, the well known agricultural area for tangerine in China. The geographic advantage benefits us with respect to the control of manufacturing cost and product quality. We have self-owned property in Nan Feng County with a total area of 742,901 square feet, including manufacturing plants of 238,609 square feet and office building of 70,350 square feet. In order to effectively maintain the quality of tangerine, we have a set of temperature and humidity auto-control equipments with capacity of 1,500 tons. We also have two automatic product lines to select fruits, the hourly process capacity of which is 10 ton/hour and 15 ton/hour, respectively. During the year of 2011, our total production was 3,781 tons, better than the expectation of 3,000 tons. We expect the production capacity will reach 4,500 tons in 2012 due to the improvement of production efficiency.

Since 2007, we have expanded our sales network by setting up the franchise retail stores for fresh fruits and related products. We also relocated our headquarters to Beijing, which we believe will have a positive effect on our corporate image and marketing strategy. In order to create our brand identity efficiently, we plan to acquire or form joint venture with the existing profitable and middle-size retail stores. We provide the stores with our standard management systems, supplies, as well as remodeling to unify store display, color and sign pursuant to the franchise requirements. We currently have four franchise retail stores in Beijing area, of which 2 stores are wholly owned by us under direct management, and 2 stores are managed by the franchisees. In 2012, we will evaluate the operation in the existing stores and replace those in poor performance with new stores. The total number of franchise stores will be increased to six.

The franchise retail stores build up the direct channel between the end users and us, which facilitates the process from our manufacturing plants to the markets, benefits us in adjusting our business strategies when market changes. In addition to our own products, we also work with our strategic partners to diversify the fruits in our store and ensure the prompt delivery. We believe we can expand our market shares through an effective and efficient franchise retail network. We expect more market shares via brand recognition in the near future.

In addition, we believe a sound warehouse and logistics center will help us to improve efficiency and reduce operating expenses. Especially for fresh fruits, the prompt handling and delivery is significant to reduce loss from spoilage. Therefore, we focus on establishing a systematic logistics center to support the expanding retail network. On March 3, 2012, we entered into a five-year lease agreement for warehouse and logistic space of approximately 26,700 square feet to store, select, pack and deliver fresh fruits. After the full operation of the logistics center, we believe both operating expenses and cost of goods sold will be reduced due to large-scale purchases and delivery.

2011 10K filed on:

	For the year ended
	12/31/2011			12/31/2010
REVENUES:
Sales	$	3,476,158		$	1,807,471
Cost of goods sold		2,943,600			1,485,643
GROSS PROFIT		532,558			321,828
OPERATING EXPENSES:
Selling and marketing		446,961			327,756
Professional and legal expenses		95,264			101,419
General and administrative		532,394			451,783
TOTAL OPERATING EXPENSES		1,074,619			880,958
(LOSS) FROM CONTINUING OPERATIONS		(542,061	)		(559,130	)
OTHER INCOME (EXPENSE):
Interest income		-			-
Interest expenses		(121,343	)		(28,749	)
Government & other grant		297,761			253,212
Other		(10,359	)		(5,760	)
TOTAL OTHER INCOME (EXPENSES)		166,059			218,703
INCOME(LOSS) FROM CONTINUING OPERATIONS BEFOR INCOME TAXES	$	(376,002	)	$	(340,427	)
Income tax expense		-			6,814
NET (LOSS) FROM CONTINUING OPERATIONS	$	(376,002	)		(347,241	)
NET INCOME FROM DISCONTINUED OPERATIONS	$	-		$	-
NET (LOSS)	$	(376,002	)	$	(347,241	)
Other comprehensive income
- Foreign currency translation gain	$	131,817		$	83,936
COMPREHENSIVE (LOSS)	$	(244,185	)	$	(263,305	)
(LOSS) per common share:
Basic		**			**
Weighted average number of common shares outstanding during the year - basic		44,365,456			38,750,010
**Less than $0.01

Gross revenues were $3,476,158 and $1,807,471 for the years ended December 31, 2011 and 2010, respectively, due primarily to sales of fresh fruits and related products, including our signature tangerine. We recognize revenue when persuasive evidence of a sale exists, transfer of title has occurred, the selling price is fixed or determinable and collectability is reasonably assured. Our sales arrangements are not subject to warranty. We did not record any product returns for the year ended December 31, 2011. The significant increase in gross revenues by $1,668,687 in 2011 was due primarily to the increasing traffic in our retail stores. After our efforts on marketing and brand recognition over years, more and more local customers know about our stores and turn into our regular customers. The revenue increased in 2011 was also due to the development in international markets. We had revenues of approximately $1,310,000, or 37.7% of total revenues, generated from international markets, including approximately $100,000 from Dubai, approximately $10,000 from France, approximately $500,000 from Thailand, and approximately $700,000 from Indonesia. On the other hand, we suffered historical low tangerine output in 2010 due to severe weather.

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