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 third quarter ended September 30, 2010.

2010 Third Quarter Key Financial Items

  • Revenue of $42.6 million represents an increase from $39.7 million in the third quarter of 2009.
  • Gross profit was $8.8 million, compared to $11.1 million in the third quarter of 2009.
  • Net income attributable to CNOA shareholders in the third quarter of 2010 was $1.9 million.
  • Fully diluted earnings per share in the third quarter of 2010 were $0.03 as compared to $0.06 in the third quarter of 2009.
  • Changbai Eco-Beverage Co., Ltd. has maintained consistent sales and profit since its acquisition in the first quarter of 2010.

Sales for the three months ended September 30, 2010 totaled $42.6 million compared to $39.7 million for the three months ended September 30, 2009, a slight increase of 7.5%. This increase was attributed to a stabilized higher market price for agriculture products.

The Company's gross profit for the third quarter of 2010 was $8.8 million (approximately 21% of revenue) compared to $11.1 million (approximately 28% of revenue) for the third quarter of 2009. This decrease in gross profit was due to increasing prices of the agricultural products we trade. Our cost of goods sold rose by approximately 18.5% compared to the same period last year.

Selling, general and administrative expense for the three and nine months ended September 30, 2010 reflected increases of $2,289,178 and $3,241,697, respectively from the comparable 2009 periods. These increases are largely due to higher storage expenses in 2010 which is in line with increasing inventory balances, as well as higher professional fees and expenses for corporate activities in 2010 for US and China as well as the increase in maintenance and upkeep fees of Bellisimo Vineyard for the year to date.

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 $3.3 million in the third quarter of 2009 to $1.9 million in the third quarter of 2010, reflecting decreased net income from the trading operations conducted by Dalian Huiming.

Net income attributable to CNOA shareholders was $1.9 million for the third quarter of 2010, representing a decrease of 57.7% compared to net income attributable to CNOA shareholders in the same period of 2009 of $4.5 million.

Earnings per share decreased to $0.03 per diluted share compared to $0.06 per diluted share in the third quarter of 2009. Meanwhile, for the nine month period, earnings per share dropped from $0.15 to $0.10.

CEO Qi Qian: ?The management seeks to continue to attain growth and maximize our shareholders' value through focusing on attractive agricultural businesses as targets that fit our business model.?

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: http://www.chinaorganicagriculture.com.

FORWARD-LOOKING STATEMENTS: Except for historical information, this press release contains forward-looking statements which reflect China Organic Agriculture's current expectations regarding future events. These forward-looking statements involve risks and uncertainties, which if they occur, may cause actual results to differ materially from those contained in forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning future acquisitions, estimates of, and increases in, production, cash flows and values, statements relating to the continued advancement of China Organic Agriculture's products and other statements which are not historical facts. When used in this document, words such as "could," "plan," "estimate," "expect," "intend," "may," and similar expressions denote forward-looking statements. Although China Organic Agriculture Inc. believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. The risks and uncertainties which could cause actual results to differ from those contained in our forward looking statements include, but are not limited to, changing market conditions, our ability to raise capital as and when required, the availability of raw products and other supplies, competition, the costs of goods, government regulations, and political and economic factors in the People's Republic of China in which our subsidiaries operate and other risks detailed from time to time in China Organic Agriculture's ongoing quarterly filings and annual reports. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking events in this press release might not occur.

China Organic Agriculture, Inc.
Condensed Consolidated Statements of Operations
(in millions, except per share amounts)
(Unaudited)
             
THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
2010       20092010       2009
 
Sales $ 42.6 $ 40.0 $ 106.3 $ 106.4
Cost of sales (33.8 ) (28.5 ) (81.0 ) (80.0 )
Gross profit 8.8 11.1 25.3 26.4
 
Selling, general and administrative expenses (2.9 )   (0.6 )     (4.7 )       (1.4 )
Income from operations 6.0 10.5 20.6 25.0
Other income 0.1 0.2 0.2 0.8
Interest expense, net (0.8 ) (0.1 ) (1.4 ) (0.6 )
Income before income taxes 5.3 10.6 19.4 25.2
 
Provision for income taxes (1.5 )   (2.8 )     (5.1 )       (6.5 )
Net income 3.8 7.8 14.3 18.7
Income attributed to noncontrolling interest (1.9 ) (3.3 ) (6.7 ) (7.8 )
Net Income attributable to CNOA $ 1.9 $ 4.5 $ 7.6 $ 10.9
Basic and diluted weighted average shares 73.2   73.2   73.2   73.2  
Total Basic and Diluted Earning Per Share $ 0.03   $ 0.06   $ 0.10   $ 0.15  
 
NOTE: The above numbers may not equal the total due to rounding.
 
 
China Organic Agriculture, Inc.
Condensed Consolidated Balance Sheets
(in millions)
           

Assets

September 30,
2010

December 31,
2009

(Unaudited) (Audited)
Current Assets
Cash and cash equivalents $ 25.1 $ 18.5
Restricted cash 7.5 7.3
Accounts receivable, net 64.0 40.7
Inventory 52.7 14.7
Other current assets 3.6 10.0
Total Current Assets 152.9 91.2
Property, plant & equipment, net 13.3 12.5
Other long term assets 15.6 3.1
Total Assets $ 181.8 $ 106.8
Liabilities and Stockholders' Equity
Current Liabilities
Mortgages payable – current $ 0.3 $ 0.2
Short term loans 10.5 14.6
Notes payable 7.5 7.3
Accounts payable and accrued expenses 57.9 2.0
Other current liabilities 2.8 2.7
Total Current Liabilities 79.0 26.8
Mortgages payable – long term 7.8 8.0
Total Liabilities 86.8 34.8
Stockholders' Equity
CNOA Stockholders' Equity 66.2 57.0
Noncontrolling Interests 28.8 15.0
Total Stockholders' Equity 95.0 72.1
Total Liabilities and Stockholders' Equity $ 181.8 $ 106.8
 
NOTE: The above numbers may not equal the total due to rounding.
 
 

 

China Organic Agriculture, Inc.

 

Condensed Consolidated Cash Flow Items

 
(in millions)
(Unaudited)
             

Nine months ended
June 30, 2010

Nine months ended
June 30, 2009

Net cash provided (used) by operating activities $ 20.3 $ (5.0)
Net cash used by investing activities (11.1) 5.2
Net cash (used)/provided by financing activities (3.3) 9.8
Effects of exchange rates on cash 0.7 0.0
Net change in cash and cash equivalents $ 6.6 $ 10.0
 
NOTE: The above numbers may not equal the total due to rounding.

China Organic Agriculture, Inc.
Angela Huang, 707-709-2321
angela@cnoainc.com