Attached files
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| 8-K - FORM 8-K - Rodobo International Inc | rodo_8k.htm |
Exhibit 99.1
Rodobo International, Inc. Reports Third Quarter 2011 Results
HARBIN, China, August 15, 2011 /PRNewswire-Asia-FirstCall/ -- Rodobo International, Inc. (the "Company" or "Rodobo") (OTC Bulletin Board: RDBO.OB), a fast growing dairy company in China, reported financial results for the third quarter ended June 30, 2011.
“The third quarter was an unusual quarter for Rodobo. During the quarter, we were made aware of an incident where a third party distributor sold products that we marked as “obsolete” and as a result we pulled from the shelves. These actions were in violation of our explicit instructions and certain food safety standards. As a result, while we recently were issued a production license from the General Administration of Quality Supervision, Inspection and Quarantine of the PRC (“AQSIQ”), the AQSIQ nonetheless decided to delay its online publicity of our new license. Because of this, we realized a significant reduction in sales orders and decided to temporarily ceased production in June.” stated Mr. Yanbin Wang, Chairman and Chief Executive Officer. “After an investigation conducted by the local police into the actions of this third party, both the local police and and AQSIQ determined that there was no direct link between our Company and this third party’s illegal activities, and that our products are safe. As a result of our continuous efforts in communicating with the AQSIQ and other related governmental departments over the past month, we are extremely pleased to now report that we have received this online publicity from the AQSIQ on August 11, 2011. Thus, as we anticipated, Rododo’s product quality has now been officially recognized by the Chinese food safety authority. We will gradually recover our sales channels and are now looking forward to rebuilding our brand image in the fourth quarter of 2011 through a series of promotional activities. We believe that this adverse impact will be temporary and we will continue to provide Rodobo’s high quality and nutritious milk powder products to our customers.”
Third Quarter 2011 Financial Results
Net sales for the third quarter of 2011 were $12.7 million, a decrease of $6.5 million or 33.8%, compared to $19.1 million for the third quarter of 2010. The decrease in net sales was primarily due to the delay of AQSIQ’s online publicity of the new production license which our Company received in March 2011. As a result, we temporarily ceased production in June 2011.
In the third quarter of 2011, sales generated from infant formula, middle-aged and elderly formula and whole milk powder accounted for 51.3%, 13.2% and 35.5% of total sales, respectively. In the same period of 2010, sales generated from infant formula, middle-aged and elderly formula and whole milk powder accounted for 43.4%, 16.1% and 40.5% of total sales, respectively.
Gross profit was $4.8 million for the third quarter of 2011, a decrease $2.6 million or 35.1%, compared to $7.3 million for the third quarter of 2010. The overall gross profit margin decreased slightly from 38.3% for the third quarter of 2010 to 37.6% for the third quarter of 2011.
Operating expenses were $11.8 million for the third quarter of 2011, an increase of $7.2 million or 156.5% compared to $4.6 million for the same period of 2010. Operating expenses as a percentage of net sales increased from 24.1% in the third quarter of 2010 to 93.5% in the third quarter of 2011. The increase of the operating expenses as a percentage of net sales was primarily due to an increase of $2.6 million in distribution expenses, $1.0 million of loss on sale of biological assets, and $3.2 million of impairment loss on biological assets during the third quarter of 2011 compared to the same period of last fiscal year.
Distribution expenses were $6.0 million, an increase of $2.6 million or 74.9% for the third quarter of 2011, compared to $3.4 million for the third quarter of 2010. The increase was mainly due to a $3.0 million of market support fees paid to distributors in order to maintain distribution channels during the interruption period of productions, offset by a decrease of $0.5 million in distribution expense reimbursements as a result of a decrease in sales.
General and administrative expenses were $1.7 million, an increase of $0.5 million or 41.1% for the third quarter of 2011, compared to $1.2 million for the third quarter of 2010. The increase is primarily attributable to additional stock compensation expenses of $0.2 million related to the shares awarded to certain employees and independent directors on May 3, 2011.
During the third quarter of 2011, we disposed of 642 cows at our company-owned dairy farm with a loss of approximately $1.0 million. We reviewed the carrying value of the remaining biological assets and recorded an impairment loss of $3.2 million during the third quarter of 2011. The amount of the impairment loss was determined based on the loss of the sale of the remaining biological assets in July and August 2011.
Overall, due to the decrease in net sales and the increase in operating expenses, we incurred $7.1 million operating loss for the third quarter of 2011, compared to operating income of $2.7 million in the same period of 2010.
We incurred $6.9 million of net loss for the third quarter of 2011, compared with $2.7 million of net income for the third quarter of 2010. This is primarily due to the decrease in net sales and the increase in operating expenses. Fully-diluted loss per share for the third quarter of 2011 was $0.25, compared to fully-diluted earnings per share of $0.10 in the third quarter of 2010.
Nine Month Results
For the nine months ended June 30, 2011, net sales increased to $63.9 million, up 43.4% from $44.5 million in the nine months ended June 30, 2010. Gross profit increased 30.4% in the nine months ended June 30, 2011 to $24.3 million from $18.6 million in the comparable period in 2010. Gross margin was 38.0% in the nine months ended June 30, 2011, compared to 41.8% in the comparable period in 2010. Net income for the nine months ended June 30, 2011 was $1.0 million or $0.04 per fully diluted share, down 88.3% from $8.8 million, or $0.41 per fully diluted share, in the comparable period in 2010.
Financial Condition
As of June 30, 2011, Rodobo had $2.0 million in cash and cash equivalents, $4.5 million in current liabilities and no long-term debt. Shareholders’ equity was $65.5 million as of June 30, 2011, up from $61.0 million as of September 30, 2010. Net cash from operating activities during the nine months ended June 30, 2011 was $4.5 million, compared with $8.6 million in the nine months ended June 30, 2010.
About Rodobo International, Inc.
Rodobo International, Inc. is a producer and distributor of powdered milk formula products in the People’s Republic of China (“PRC” or “China”). Our target consumers include infants, children, the middle-aged and the elderly in China. Our products for infants and children are currently sold under the brand names of “Rodobo” and “Peer”, and its products for middle-aged and elderly consumers are currently sold under the brand name of “Healif”.
Safe Harbor Statement
This press release and the statements of representatives of Rodobo International, Inc., and its consolidated subsidiaries (collectively, the "Company") related thereto contain, or may contain, among other things, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included herein are "forward-looking statements," including statements regarding: the impact of the recent acquisitions on the business and operations of the Company; the ability of the Company to achieve its commercial objectives including increased growth, revenues, earnings, and production capacity; the business strategy, plans and objectives of the Company; and any other statements of non-historical information. These forward-looking statements are subject to significant known and unknown risks and uncertainties and are often identified by the use of forward-looking terminology such as "projects," "may," "could," "would," "should," "believes," "expects," "anticipates," "estimates," "intends," "plans" or similar expressions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the periodic reports that are filed with the Securities and Exchange Commission and available on its website (http://www.sec.gov). All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. The Company undertakes no duty to update these forward-looking statements except as required by law.
For additional information, please contact:
Xiuzhen Qiao
Rodobo International Inc
Tel: +86-10-6216-6032
Email: qiaozhen1973@163.com
Stephen Tong
Rodobo International, Inc.
Tel: +86-10-6216-6396
Email: tongzijian@gmail.com
RODOBO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
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June 30,
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September 30,
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|||||||
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2011
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2010
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|||||||
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ASSETS
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||||||||
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Current assets:
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||||||||
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Cash and cash equivalents
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$ | 2,014,976 | $ | 5,163,789 | ||||
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Accounts receivable, net
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7,775,763 | 8,085,248 | ||||||
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Other receivable
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3,249,049 | - | ||||||
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Inventories
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1,239,547 | 1,523,422 | ||||||
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Prepaid expenses
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423,597 | 114,215 | ||||||
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Advances to suppliers
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714,043 | 969,369 | ||||||
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Total current assets
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15,416,975 | 15,856,043 | ||||||
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Property, plant and equipment:
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||||||||
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Fixed assets, net of accumulated depreciation
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32,655,401 | 19,575,890 | ||||||
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Construction in progress
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16,407,696 | 22,701,594 | ||||||
| Total property, plant and equipment, net | 49,063,097 | 42,277,484 | ||||||
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Biological assets, net
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590,765 | 3,295,508 | ||||||
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Other assets:
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||||||||
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Deposits on land
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77,358 | 74,726 | ||||||
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Intangible assets, net
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9,291,069 | 10,440,131 | ||||||
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Total other assets
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9,368,427 | 10,514,857 | ||||||
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Total Assets
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$ | 74,439,264 | $ | 71,943,892 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
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Current liabilities:
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||||||||
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Short-term loans
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$ | 1,740,562 | $ | 1,218,025 | ||||
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Accounts payable
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907,063 | 1,457,624 | ||||||
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Other payable
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142,553 | 723,015 | ||||||
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Accrued expenses
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447,144 | 588,010 | ||||||
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Advance from customers
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35,894 | - | ||||||
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Due to related parties
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1,185,062 | 1,491,616 | ||||||
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Total current liabilities
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4,458,278 | 5,478,290 | ||||||
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Warrant liability
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412,387 | 1,414,316 | ||||||
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Series A preferred stock, $0.0001 par value, 30,000,000 shares authorized, 2,000,000
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||||||||
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shares issued and outstanding as of June 30, 2011 and September 30, 2010
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4,100,000 | 4,100,000 | ||||||
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Stockholders' equity
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||||||||
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Common stock, $0.0001 par value, 200,000,000 shares authorized, 28,273,266 and 28,003,726 shares
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||||||||
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issued and outstanding as of June 30, 2011 and September 30, 2010, respectively
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2,827 | 2,800 | ||||||
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Additional paid in capital
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31,499,758 | 30,344,724 | ||||||
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Additional paid in capital - warrants
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971,788 | 971,788 | ||||||
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Subscription receivable
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(50,000 | ) | (50,000 | ) | ||||
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Retained earnings
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28,621,907 | 27,588,952 | ||||||
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Accumulated other comprehensive income
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4,422,319 | 2,093,022 | ||||||
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Total stockholders' equity
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65,468,599 | 60,951,286 | ||||||
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Total Liabilities and Stockholders' Equity
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$ | 74,439,264 | $ | 71,943,892 | ||||
RODOBO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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For The Three Months Ended June 30,
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For The Nine Months Ended June 30,
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||||||||||||||||
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2011
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2010
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2011
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2010
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||||||||||||||
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Net sales
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$ | 12,666,982 | $ | 19,135,845 | $ | 63,876,806 | $ | 44,541,870 | |||||||||
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Cost of goods sold
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7,908,238 | 11,808,989 | 39,593,760 | 25,913,565 | |||||||||||||
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Gross profit
|
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4,758,744 | 7,326,856 | 24,283,046 | 18,628,306 | ||||||||||||
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Operating expenses:
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|||||||||||||||||
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Distribution expenses
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6,007,603 | 3,435,678 | 16,520,792 | 8,868,794 | |||||||||||||
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General and administrative expenses
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1,664,589 | 1,180,040 | 3,383,187 | 2,883,025 | |||||||||||||
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Loss on sale of biological assets
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1,018,443 | - | 1,018,443 | - | |||||||||||||
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Impairment loss on biological assets
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3,150,920 | - | 3,150,920 | - | |||||||||||||
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Total operating expenses
|
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11,841,554 | 4,615,717 | 24,073,341 | 11,751,819 | ||||||||||||
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Operating (loss) income
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(7,082,811 | ) | 2,711,139 | 209,705 | 6,876,487 | ||||||||||||
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Subsidy income
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- | - | - | 273,897 | |||||||||||||
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Gain on bargain purchase
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- | - | - | 1,677,020 | |||||||||||||
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Interest expenses
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(57,645 | ) | (45,876 | ) | (273,483 | ) | (71,439 | ) | |||||||||
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Change in fair value of warrants
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225,788 | 24,759 | 1,001,929 | 24,759 | |||||||||||||
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Other income
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22,035 | 25,906 | 94,804 | 48,796 | |||||||||||||
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(Loss) Income before income taxes
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(6,892,633 | ) | 2,715,928 | 1,032,955 | 8,829,519 | ||||||||||||
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Provision for income taxes
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- | - | - | - | |||||||||||||
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Net (loss) income
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$ | (6,892,633 | ) | $ | 2,715,928 | $ | 1,032,955 | $ | 8,829,519 | ||||||||
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Other comprehensive (loss) income:
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|||||||||||||||||
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Foreign currency translation adjustment
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851,918 | 365,575 | 2,329,297 | 372,621 | |||||||||||||
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Comprehensive (loss) income
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$ | (6,040,715 | ) | $ | 3,081,503 | $ | 3,362,252 | $ | 9,202,140 | ||||||||
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(Loss) Earnings per share
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|||||||||||||||||
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Basic
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$ | (0.25 | ) | $ | 0.10 | $ | 0.04 | $ | 0.43 | ||||||||
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Diluted
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$ | (0.25 | ) | $ | 0.10 | $ | 0.04 | $ | 0.41 | ||||||||
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Weighted average shares outstanding
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|||||||||||||||||
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Basic
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27,394,541 | 26,031,344 | 27,352,258 | 20,741,227 | |||||||||||||
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Diluted
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27,394,541 | 27,014,897 | 27,924,880 | 21,711,354 | |||||||||||||
RODOBO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
|
For The Nine Months Ended June 30,
|
||||||||
|
2011
|
2010
|
|||||||
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Cash flows from operating activities
|
||||||||
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Net income
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$ | 1,032,954 | $ | 8,829,519 | ||||
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Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
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Depreciation and amortization
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2,707,107 | 2,115,885 | ||||||
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Allowance for doubtful accounts
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225,487 | - | ||||||
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Stock-based compensation
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1,155,061 | 1,013,676 | ||||||
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Gain on bargain purchase
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- | (1,677,020 | ) | |||||
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Change in fair value of warrants
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(1,001,929 | ) | (24,759 | ) | ||||
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Loss on sale of biological assets
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1,018,443 | - | ||||||
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Impairment loss on biological assets
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3,150,920 | - | ||||||
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Changes in assets and liabilities:
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||||||||
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(Increase) decrease in -
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||||||||
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Accounts receivable and other receivables, net
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(2,781,099 | ) | (1,919,183 | ) | ||||
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Inventories
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332,725 | 2,190,028 | ||||||
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Prepaid expenses
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(357,836 | ) | (23,483 | ) | ||||
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Advances to suppliers
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284,420 | 1,894,683 | ||||||
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Increase (decrease) in -
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||||||||
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Accounts payable and other payable
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(1,223,086 | ) | (929,324 | ) | ||||
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Accrued expenses
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(102,775 | ) | (498,796 | ) | ||||
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Advance from customers
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35,266 | (2,393,891 | ) | |||||
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Net cash provided by operating activities
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4,475,658 | 8,577,335 | ||||||
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Cash flows from investing activities
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||||||||
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Purchase of property, plant and equipment
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(6,269,014 | ) | (3,010,502 | ) | ||||
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Purchase of mature biological assets
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(2,047,168 | ) | - | |||||
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Proceeds from sale of biological assets
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405,567 | - | ||||||
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Cash acquired in acquisitions, net of cash paid
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- | 1,056,291 | ||||||
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Collection of loan to others
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- | 1,560,340 | ||||||
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Collection of loan to shareholders
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- | 1,744,895 | ||||||
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Net cash (used in) provided by investing activities
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(7,910,615 | ) | 1,351,024 | |||||
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Cash flows from financing activities
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||||||||
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Net proceeds from issuance of common stock
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- | 2,652,386 | ||||||
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Proceeds from short-term loans
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1,140,086 | 549,411 | ||||||
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Repayment of short-term loans
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(668,851 | ) | (131,859 | ) | ||||
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Repayment of related party loans
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(311,806 | ) | (1,934,278 | ) | ||||
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Net cash provided by financing activities
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159,429 | 1,135,660 | ||||||
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Effect of exchange rate changes on cash and cash equivalents
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126,716 | 66,886 | ||||||
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Net (decrease) increase in cash and cash equivalents
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(3,148,813 | ) | 11,130,905 | |||||
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Cash and cash equivalents, beginning of period
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5,163,789 | 1,640,258 | ||||||
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Cash and cash equivalents, end of period
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$ | 2,014,976 | $ | 12,771,163 | ||||
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Supplemental disclosures of cash flow information:
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||||||||
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Interest paid
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$ | 39,831 | $ | 34,969 | ||||
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Income taxes paid
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$ | - | $ | - | ||||
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Non-cash investing and financing activities:
|
||||||||
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Common stock issued for business acquisition
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$ | - | $ | 23,850,000 | ||||
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Preferred stock issued for business acquisition
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$ | - | $ | 4,100,000 | ||||