Entech Environmental Technologies, Inc. Announces First Quarter Results
Friday May 16, 8:00 am ET
XI'AN, China, May 16 /Xinhua-PRNewswire-FirstCall/ -- Entech Environmental Technologies Inc. (OTC Bulletin Board: EEVT - News; ''Entech'' or ''the Company''), a leading processor and manufacturer of concentrated high acidic apple juice, kiwifruit juice and pear juice through its operating company Shaanxi Tianren Organic Food Co., Ltd (''Tianren''), today announced its financial results for the first quarter of 2008.
First Quarter 2008 Highlights
-- Sales increased 69.0% year-over-year to $8.9 million
-- Gross profit was $1.9 million, or 21.0% of sales
-- Operating income was $1.0 million, or 11.8% of sales
-- Net income was $1.1 million, or 0.04 per basic and fully diluted share
-- Completed the share exchange transaction with Pacific Industry Holding
Group Co., Ltd. and became a publicly traded company in February 2008
-- Raised $3.4 million gross proceeds in a private placement financing in
February 2008
''In the first quarter of 2008, our sales increased significantly from the same period in 2007 as a result of growing demand for our products. Through the share exchange transaction, we have successfully become quoted on the OTC Bulletin Board. Our board of directors and the holders of a majority of our voting stock have approved a change in our Company's name to 'Sky People Fruit Juice Inc.' as well as a 1-for-328.72898 reverse stock split of our outstanding common stock. We have disseminated an information statement regarding these matters and both are expected to become effective during the last week of May 2008," said Yongke Xue, Chief Executive Officer of Tianren. Mr. Xue further stated ''The sharp increase of raw material prices and the general and administrative expenses during the past quarter resulted in the lower gross profit and net income compared with the same period in 2007. We are still in the early stages as public company, and are still expanding our business. We believe that the increase in our revenue will compensate for the increase in our operating expenses in the long run.''
First Quarter 2008 Results
For the quarter ended March 31, 2008, total revenue was $8.9 million, a 69.0% increase from $5.2 million posted during the same quarter in 2007. The increase was due to the increased sales volume of the Company's fruit related products, especially its pear and apple products. In addition, the Company consolidated Huludao Wonder's operations into it financial results beginning in June 2007.
Gross profit decreased 17.3% to $1.9 million in the first quarter of 2008, compared to $2.2 million in the prior year period. Gross margin was 21.0% as compared to 42.9% during the same period in 2007. In the three months ended March 31, 2008, the general price of raw kiwi increased due to a natural disaster happened in 2007, while the price of kiwi related products remained constant. The gross margin in apple-related products was lower due to a decrease in the average selling price of apple juice in the market during the quarter. These combined factors contributed to the increase in cost of sales and the decrease in gross profit for the three months ended on March 31, 2008 as compared to the corresponding period in 2007.
Selling, general and administrative expenses in the first quarter of 2008 were $815,536, an increase of 194.6% from $276,848 in the first quarter of 2007. Selling expenses increased 44.0% to $241,345 during the quarter ended March 31, 2008. This was mainly due to an increase in freight and transportation as a result of the increase in sales. General and administrative expenses increased 425.8% year-over-year to $574,191. The increase in general and administrative expenses was mainly associated with higher depreciation expenses and expenses associated with being a public company.
Operating income decreased 47.0% to $1.0 million, or 11.8% of revenue, from $2.0 million in the first quarter of 2007, or 37.6% of revenue, in the first quarter of 2008.
Net income decreased to $1.1 million in the first quarter of 2008, or $0.04 per basic and fully diluted share, as compared to net income of $1.5 million during the same period in 2007. Fully diluted shares outstanding increased from 22,006,173 shares in the first quarter of 2007 to 27,528,146 shares in the first quarter of 2008 as a result of the share purchase agreement the Company entered into in February 2008.
Financial Condition
As of March 31, 2008, cash totaled $7.4 million, an increase from the $4.1 million of cash on hand on December 31, 2007. The increase of cash was mainly due to receipt of $3.2 million in net proceeds from private placement transactions in February 2008. As of March 31, 2008, the Company had working capital of $10.0 million with total current assets of $23.4 million and total current liabilities of $13.4 million. Accounts receivable increased by $2.9 million from the balance at December 31, 2007, due primarily to an increase in sales in the first quarter of fiscal 2008. Stockholders' equity totaled $31.9 million as of March 31, 2008, compared to $26.2 million at the end of 2007.
Net cash provided by operations was $0.8 million for the three months ended March 31, 2008, compared with net cash provided by operations of $1.7 million for the same period in 2007.
Recent Events
-- Appointed Spring Liu as Chief Financial Officer of the Company
-- Appointed Mr. Norman Ko, Mr. Robert B. Fields, and Mr. Wang Guolin as
the Company's independent directors; established an Audit Committee and
Compensation Committee of the Board of Directors
Business Outlook
''We expect our market to continue expanding in 2008. We will actively seek to increase our sales while enhancing operating margin through more efficient internal management. The addition of Ms. Spring Liu as our Chief Financial Officer and the appointment of three new independent directors will allow us to streamline our financial management and improve corporate governance and oversight,'' said Mr. Xue. ''We will also pursue potential acquisition targets to expand our business to take advantage of the strong national and international demand for concentrated juice and juice related products.''
About Entech Environmental Technologies Inc.
Entech Environmental Technologies Inc. is a holding company for Shaanxi Tianren Organic Food Co., Ltd. (''Tianren''). The Company expects change its name to ''SkyPeople Fruit Juice, Inc''. by the end of May 2008. Tianren is a company incorporated under the laws of the People's Republic of China. The Company is engaged in the business of research and development, production and sales of special concentrated fruit juices, fast-frozen and freeze-dried fruits and vegetables and fruit juice drinks. Tianren's main products are concentrated high acid apple juice, kiwifruit juice and pear juice for domestic and international consumers. Its brand, Hedetang is positioned as a high quality, healthy and nutritious juice concentrate and clear juice product used both as an ingredient component in other products and an end use juice concentrate product. Tianren owns the largest kiwifruit plantation in Asia and is a leading worldwide producer of kiwifruit concentrate.
Safe Harbor Statement
Under the Private Securities Litigation Reform Act of 1995, this press release contains certain "forward-looking statements," as defined in the United States Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial condition to differ materially from what is included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to grow its business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. Potential risks and uncertainties include, among others, currently unknown and unforeseeable constraints on the Company's ability to continue operations, domestic or global economic conditions -- especially those relating to China, activities of competitors and the presence of new or additional competition, and changes in United States Federal or State laws, restrictions and regulations on doing business in a foreign country, in particular China, and conditions in equity markets. More information about the potential factors that could affect the Company's business and financial results is included in the Company's filings, available via the United States Securities and Exchange Commission. There is no obligation undertaken to update forward looking statements to reflect subsequent events, changed circumstances, or the occurrence of unanticipated events.
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