Exhibit 99.1

 

Fuling Global Inc. Reports Second Quarter 2017 Financial Results

 

Revenues Grew by 24.2% to $30.5 Million, with Sales Volume and Blended ASP Increasing by 13.8% and 9.2%, Respectively

 

ALLENTOWN, Pa., August 11, 2017 /PRNewswire/ -- Fuling Global Inc. (NASDAQ: FORK) (“Fuling Global” or the “Company”), a specialized producer and distributor of plastic serviceware, with precision manufacturing facilities in both the U.S. and China, today announced its financial results for the three and six months ended June 30, 2017.

 

Mr. Xinfu Hu, Chief Executive Officer of Fuling Global, commented, “We are pleased to report solid second quarter results that highlighted continued strength in our business. Total revenues increased by 24.2% to $30.5 million in the second quarter with sales volume and blended average selling price (“ASP”) grew 13.8% and 9.2%, respectively. However, our margins and profitability decreased as a result of increases in operating expenses and unit cost of material (particularly Polypropylene), which we were not able to fully pass over to our customers, as well as decrease in subsidy income from local government this year. With a robust order book and significant increase in production capacity with the opening of the new factory, we look forward to continuing momentum in our business revenues for the remainder of year and beyond.”

 

Ms. Guilan Jiang, Chairwoman of Fuling Global, added, “We completed the construction and launched the commercial production of the new state-of-the-art factory in Wenling (Phase I) during the second quarter, allowing us to increase production capacity by at least 30% this year. We also launched Phase II expansion of the new factory earlier this month which is expected to be completed by the end of 2018 with the addition of new production lines, an office building and two dormitory buildings. As we continue to make significant progress in executing our carefully planned strategic plan, we firmly believe our best years are yet to come.”

 

Second Quarter 2017 Highlights

 

   For the Three Months Ended June 30,
($ millions, except per share data)  2017   2016   % Change
Revenues  $30.5   $24.6   24.2%
Gross profit  $6.3   $7.3   -14.3%
Gross margin   20.6%   29.8%  -9.2 percentage points
Operating income  $1.9   $3.7   -47.9%
Operating margin   6.3%   15.1%  -8.8 percentage points
Net income attributable to Fuling Global  $1.5   $4.7   -68.0%
Diluted earnings per share  $0.10   $0.30   -68.0%

 

  Revenues increased by 24.2% to $30.5 million for the second quarter of 2017 from $24.6 million for the same period of last year, as a result of the combined effect of increases both sales volume and blended ASP.

 

  Total sales volume increased by 13.8% to 12,185 tons for the second quarter of 2017 from 10,709 tons for the same period of last year. The increase in sales volume was mainly related to straws, cups and plates, and other products. Blended ASP also increased by 9.2% to $2.51 per kilogram for the second quarter of 2017 from $2.30 per kilogram for the same period of last year, as ASPs for cutlery, straws and others increased while ASP for cups and plates decreased.

 

  Net income attributable to Fuling Global decreased by 68.0% to $1.5 million, or $0.10 per basic and diluted share, for the second quarter of 2017 from $4.7 million, or $0.30 per basic and diluted share, for the same period of last year. The decreases in net income and earnings per share were primarily due to lower gross profit and subsidy income received from local government as well as higher operating expenses this year.

 

 

 

  Gross profit decreased by 14.3% to $6.3 million for the second quarter of 2017 from $7.3 million for the same period of last year. Gross margin decreased by 9.2 percentage points to 20.6% from 29.8% for the same period of last year. The decrease in gross margin was primarily due to increase in the price of raw material, particularly Polypropylene.

 

  The company announced the opening of the new manufacturing facility (the “New Factory”) in Wenling City in June, 2017. Phase I of the New Factory was completed in April 2017 that would allow the Company to increase annual production capacity by more than 30% this year. Phase II expansion of the New Factory, which includes the construction of new production lines, an office building and tow dormitory buildings with total capex budget of approximately $11.1 million, started this month and is expected to complete by the end of 2018.

 

Second Quarter 2017 Financial Results

 

Revenues

 

For the second quarter of 2017, total revenues increased by $6.0 million, or 24.2%, to $30.5 million from $24.6 million for the same period of last year. The increase in total revenues was a combined result of increases in both sales volume and blended ASP.

 

Overall sales volume increased by 1,476 tons, or 13.8%, to 12,185 tons for the second quarter of 2017 from 10,709 tons for the same period of last year. The increase in overall sales volume was mainly related to cups and plates as well as straws. Blended ASP increased by $0.21 per kilogram, or 9.2%, to $2.51 per kilogram for the second quarter of 2017 from $2.30 per kilogram for the same period of last year. The increase in blended ASP was mainly related to straws and other products and partially offset by decrease in ASP for cups and plates and cutlery.

 

Revenues from cutlery sales were essentially unchanged at $14.7 million for the second quarter of 2017. Revenues from straws sales increased by $3.0 million, or 124.4%, to $5.4 million for the second quarter of 2017 from $2.4 million for the same period of last year. Revenues from cups and plates sales increased by $2.5 million, or 43.4%, to $8.3 million for the second quarter of 2017 from $5.8 million for the same period of last year. Revenues from other products sales increased by $0.4 million, or 26.8%, to $2.1 million for the second quarter of 2017 from $1.6 million for the same period of last year. Cutlery, straws, cups and plates, and other products accounted for 48.0%, 17.8%, 27.3%, and 6.8% of total revenues for the second quarter of 2017, compared to 59.8%, 9.9%, 23.6%, and 6.7% for the same period of last year, respectively.

 

   For the Three Months Ended June 30, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
Cutlery  $14,678    48.1%  $14,711    59.8%  $(33)   -0.2%
Straws   5,449    17.8%   2,428    9.9%   3,021    124.4%
Cups and plates   8,335    27.3%   5,811    23.6%   2,524    43.4%
Others   2,085    6.8%   1,644    6.7%   440    26.8%
Total  $30,547    100.0%  $24,594    100.0%  $5,953    24.2%

 

On a geographical basis, sales in the U.S., Fuling Global’s largest market, increased by $3.7 million, or 16.5%, to $26.2 million for the second quarter of 2017 from $22.5 million for the same period of last year. Sales in Europe also increased by $0.4 million, or 37.1%, to $1.4 million for the second quarter of 2017 from $1.0 million for the same period of last year. Sales in China, our second largest market, were the strongest and increased by $1.4 million, or 326.1%, to $1.8 million for the second quarter of 2017 from $0.4 million for the same period of last year. Sales in other regions increased by $0.4 million, or 119.2%, to $0.7 million for the second quarter of 2017 from $0.3 million for the same period of last year.

 

   For the Three Months Ended June 30, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
U.S.  $26,242    85.9%  $22,529    91.6%  $3,713    16.5%
Europe   1,392    4.6%   1,015    4.1%   377    37.1%
China   1,847    6.0%   433    1.8%   1,414    326.1%
Canada   347    1.1%   289    1.2%   58    20.1%
Others   719    2.4%   328    1.3%   391    119.2%
Total  $30,547    100.0%  $24,594    100.0%  $5,953    24.2%

 

 2 

 

 

Gross profit

 

Total cost of goods sold increased by $7.0 million, or 40.6%, to $24.3 million for the second quarter of 2017 from $17.3 million for the same period of last year. The increase was mainly due to increased sale volume as well as higher unit price of raw materials, particularly Polypropylene. Gross profit decreased by $1.0 million, or 14.3%, to $6.3 million for the second quarter of 2017 from $7.3 million for the same period of last year. Gross margin was 20.6% the second quarter of 2017, compared to 29.8% for the same period of last year. The decline in gross margin percentage was primarily due to increase in raw material cost partially offset by increase in ASP. It usually takes one to two quarters to successfully implement price increases to customers after increase in material prices.

 

Operating income

 

Selling expenses increased by $0.5 million, or 34.0%, to $1.9 million for the second quarter of 2017 from $1.5 million for the same period of last year. As a percentage of sales, selling expenses were 6.4% in the second quarter of 2017, compared to 5.9% in the same period of last year. General and administrative expenses increased by $0.3 million, or 17.0%, to $1.7 million for the second quarter of 2017 from $1.5 million for the same period of last year. As a percentage of sales, general and administrative expenses were 5.7% in the second quarter of 2017, compared to 6.0% in the same period of last year. Research and development expenses were essentially unchanged at $0.7 million for the second quarter of 2017. We expect R&D expense to stay at current levels as we continued to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop biodegradable materials and reduce reliance on fossil-based raw materials. 

 

As a result, total operating expenses increased by $0.7 million, or 20.4%, to $4.3 million for the second quarter of 2017 from $3.6 million for the same period of last year.

 

Operating income decreased by $1.8 million, or 47.9%, to $1.9 million for the second quarter of 2017 from $3.7 million for the same period of last year. Operating margin was 6.3% for the second quarter of 2017, compared to 15.1% for the same period of last year. The decrease in operating margin was due to increase in operating expenses as a percentage of sales as well as decrease in gross margin.

 

 3 

 

 

Income before income taxes

 

Total net other expense, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.1 million for the second quarter of 2017, compared to total net other income of $1.7 million for the same period of last year.

 

Income before income taxes decreased by $3.6 million, or 65.9%, to $1.9 million for the second quarter of 2017 from $5.5 million for the same period of last year. The decrease was primarily due to lower gross margin, higher operating expenses and lower subsidy income received from local government this year.

 

Provision for income taxes was $0.3 million for the second quarter of 2017, compared to $0.6 million for the same period of last year.

 

Net income

 

Net income decreased by $3.3 million, or 68.7%, to $1.5 million for the second quarter of 2017 from $4.8 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global decreased by $3.2 million, or 68.0%, to $1.5 million for the second quarter of 2017 from $4.7 million for the same period of last year.

 

Basic and diluted earnings per share were $0.10 for the second quarter of 2017, compared to $0.30 for the same period of last year. The decrease in earnings per share was mainly due to a decrease in net income as a result of lower gross margin, higher operating expenses and lower subsidy income in 2017.

 

First Half 2017 Financial Results

 

   For the Six Months Ended June 30,
($ millions, except per share data)  2017   2016   % Change
Revenues  $56.9   $45.2   25.9%
Gross profit  $11.4   $12.5   -9.3%
Gross margin   20.0%   27.8%  -7.8 percentage points
Operating income  $3.4   $4.8   -28.8%
Operating margin   6.0%   10.6%  -4.6 percentage points
Net income attributable to Fuling Global  $2.9   $5.4   -46.6%
Diluted earnings per share  $0.18   $0.34   -46.6%

 

Revenues

 

For the first half of 2017, total revenues increased by $11.7 million, or 25.9%, to $56.9 million from $45.2 million for the same period of last year. The increase in total revenues was a combined result of increases in both sales volume and blended ASP.

 

Overall sales volume increased by 3,596 tons, or 19.6%, to 21,934 tons for the first half of 2017 from 18,338 tons for the same period of last year. The increase in overall sales volume was across the board, particularly related to cups and plates as well as straws. Blended ASP increased by $0.13 per kilogram, or 5.3%, to $2.59 per kilogram for the first half of 2017 from $2.46 per kilogram for the same period of last year. The increase in blended ASP was mainly related to straws and other products and partially offset by decrease in ASP for cups and plates.

 

Revenues from cutlery sales increased by $1.0 million, or 3.6%, to $27.3 million for the first half of 2017 from $26.4 million for the same period of last year. Revenues from straws sales increased by $4.5 million, or 100.4%, to $9.1 million for the first half of 2017 from $4.5 million for the same period of last year. Revenues from cups and plates sales increased by $4.4 million, or 38.8%, to $15.7 million for the first half of 2017 from $11.3 million for the same period of last year. Revenues from other products sales increased by $1.8 million, or 62.3%, to $4.8 million for the first half of 2017 from $2.9 million for the same period of last year. Cutlery, straws, cups and plates, and other products accounted for 48.1%, 15.9%, 27.6%, and 8.4% of total revenues for the first half of 2017, compared to 58.4%, 10.0%, 25.0%, and 6.5% for the same period of last year, respectively.

 

 4 

 

 

   For the Six Months Ended June 30, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
Cutlery  $27,341    48.1%  $26,391    58.4%  $950    3.6%
Straws   9,064    15.9%   4,522    10.0%   4,542    100.4%
Cups and plates   15,702    27.6%   11,315    25.0%   4,386    38.8%
Others   4,778    8.4%   2,943    6.5%   1,835    62.3%
Total  $56,885    100.0%  $45,172    100.0%  $11,713    25.9%

 

On a geographical basis, sales in the U.S., Fuling Global’s largest market, increased by $7.6 million, or 168.1%, to $49.6 million for the first half of 2017 from $42.0 million for the same period of last year. Sales in Europe increased by $0.6 million, or 41.2%, to $2.0 million for the first half of 2017 from $1.5 million for the same period of last year. Sales in China, our second largest market, were the strongest and increased by $2.8 million, or 358.8%, to $3.6 million for the first half of 2017 from $0.8 million for the same period of last year. Sales in other regions increased by $0.6 million, or 133.4%, to $1.0 million for the first half of 2017 from $0.4 million for the same period of last year.

 

   For the Six Months Ended June 30, 
   2017   2016   Y/Y Change 
   Revenues ($’000)   % of Total   Revenues ($’000)   % of Total   Amount ($’000)   % 
U.S.  $49,626    87.2%  $42,004    93.0%  $7,622    18.1%
Europe   2,047    3.6%   1,450    3.2%   597    41.2%
China   3,571    6.3%   778    1.7%   2,793    358.8%
Canada   599    1.1%   493    1.1%   105    21.3%
Others   1,043    1.8%   447    1.0%   596    133.4%
Total  $56,885    100.0%  $45,172    100.0%  $11,713    25.9%

 

Gross profit

 

Total cost of goods sold increased by $12.9 million, or 39.5%, to $45.5 million for the first half of 2017 from $32.6 million for the same period of last year. The increase was mainly due to increased sale volume as well as higher unit price of raw material, particularly Polypropylene. Gross profit decreased by $1.2 million, or 9.3%, to $11.4 million for the first half of 2017 from $12.5 million for the same period of last year. Gross margin was 20.0% the first half of 2017, compared to 27.8% for the same period of last year.

 

Operating income

 

Selling expenses was $3.1 million for the first half of 2017, essentially unchanged from the same period of last year. As a percentage of sales, selling expenses were 5.5% in the first half of 2017, compared to 6.8% in the same period of last year. General and administrative expenses increased by $0.1 million, or 3.7%, to $3.7 million for first half of 2017 from $3.5 million for the same period of last year. As a percentage of sales, general and administrative expenses were 6.5% in the first half of 2017, compared to 7.9% in the same period of last year. Research and development expenses were essentially unchanged at $1.1 million for the second quarter of 2017. We expect R&D expense to stay at current levels as we continued to conduct research and development activities, especially seeking to increase the use of environmentally-friendly materials, develop biodegradable materials and reduce reliance on fossil-based raw materials. 

 

 5 

 

 

As a result, total operating expenses increased by $0.2 million, or 2.9%, to $7.9 million for the first half of 2017 from $7.7 million for the same period of last year.

 

Operating income decreased by $1.4 million, or 28.8%, to $3.4 million for the first half of 2017 from $4.8 million for the same period of last year. Operating margin was 6.0% for the first half of 2017, compared to 10.6% for the same period of last year. The decrease in operating margin was due to decrease in gross margin.

 

Income before income taxes

 

Total net other income, which includes interest income and expenses, subsidy income and other non-operating income and expenses, was $0.2 million for the first half of 2017, compared to $1.7 million for the same period of last year.

 

Income before income taxes decreased by $2.9 million, or 44.7%, to $3.6 million for the first half of 2017 from $6.5 million for the same period of last year. The decrease was primarily due to lower gross profit and lower subsidy income received from local government this year.

 

Provision for income taxes was $0.6 million for the first half of 2017, compared to $0.9 million for the same period of last year.

 

Net income

 

Net income decreased by $2.6 million, or 47.0%, to $2.9 million for the first half of 2017 from $5.6 million for the same period of last year. After deduction of non-controlling interest, net income attributable to Fuling Global decreased by $2.5 million, or 46.6%, to $2.9 million for the first half of 2017 from $5.4 million for the same period of last year.

 

Basic and diluted earnings per share were $0.18 for the first half of 2017, compared to $0.34 for the same period of last year. The decrease in earnings per share was mainly due to decrease in net income as a result of lower gross profit and subsidy income in 2017.

 

Financial Condition

 

As of June 30, 2017, the Company had cash and cash equivalents, restricted cash, and certificates of deposits of $2.0 million, $2.7 million, and $2.3 million, respectively, compared to $4.0 million, $2.3 million, and $1.5 million, respectively, at the end of 2016. Short-term borrowing and bank notes payable were $16.8 million and $3.3 million, respectively, as of June 30, 2017, compared to $17.8 million and $2.6 million, respectively, at the end of 2016. Long-term borrowing was $1.4 million as of June 30, 2017, compared to $0.8 million at the end of 2016.

 

Net cash provided by operating activities was $1.5 million for the first half of 2017, compared to net cash used in operating activities of $3.7 million for the same period of last year. Net cash used in investing activities was $4.7 million for the first half of 2017, compared to $9.9 million for the same period of last year. Net cash provided by financing activities was $1.2 million for the first half of 2017, compared to $1.5 million for the same period of last year.

 

 6 

 

 

About Fuling Global Inc.

 

Fuling Global Inc. (“Fuling Global”) is a specialized producer and distributor of plastic serviceware, with precision manufacturing facilities in both the U.S. and China. The Company’s plastic serviceware products include disposable cutlery, drinking straws, cups, plates and other plastic products and are used by more than one hundred customers primarily from the U.S. and Europe, including Subway, Wendy’s, Burger King, Taco Bell, KFC (China only), Walmart, and McKesson. More information about the Company can be found at: http://ir.fulingglobal.com/.

 

Forward-Looking Statements

 

This press release contains information about Fuling Global’s view of its future expectations, plans and prospects that constitute forward-looking statements. Actual results may differ materially from historical results or those indicated by these forward-looking statements as a result of a variety of factors including, but not limited to, risks and uncertainties associated with its application of IPO proceeds, its ability to raise additional funding, its ability to maintain and grow its business, variability of operating results, its ability to maintain and enhance its brand, its development and introduction of new products and services, the successful integration of acquired companies, technologies and assets into its portfolio of software and services, marketing and other business development initiatives, competition in the industry, general government regulation, economic conditions, dependence on key personnel, the ability to attract, hire and retain personnel who possess the technical skills and experience necessary to meet the requirements of its clients, and its ability to protect its intellectual property. Fuling Global encourages you to review other factors that may affect its future results in Fuling Global’s registration statement and in its other filings with the Securities and Exchange Commission.

 

For more information, please contact:

 

At the Company:
Gilbert Lee, CFO
Email: ir@fulingplasticusa.com
Phone: +1-610-366-8070 x1835
Web: http://ir.fulingglobal.com/

 

Investor Relations:
Tony Tian, CFA
Weitian Group LLC
Email: tony.tian@weitian-ir.com
Phone: +1-732-910-9692

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

 

   For the Three Months Ended
June 30,
   For the Six Months Ended
June 30,
 
   2017   2016   2017   2016 
                 
Revenues  $30,546,699   $24,594,372   $56,884,747   $45,172,191 
Cost of goods sold   24,262,138    17,262,250    45,512,711    32,635,246 
Gross Profit   6,284,561    7,332,122    11,372,036    12,536,945 
                     
Operating Expenses                    
Selling expenses   1,945,472    1,452,267    3,126,131    3,083,800 
General and administrative expenses   1,735,972    1,484,156    3,680,503    3,548,715 
Research and development expenses   666,205    675,957    1,142,701    1,094,313 
Total operating expenses   4,347,649    3,612,380    7,949,335    7,726,828 
                     
Income from Operations   1,936,912    3,719,742    3,422,701    4,810,117 
                     
Other Income (Expense):                    
Interest income   6,759    10,966    12,739    17,579 
Interest expense   (230,768)   (226,691)   (473,429)   (428,375)
Subsidy income   237,667    1,817,120    604,185    1,857,989 
Foreign currency transaction gain (loss)   (64,548)   362,738    (112,943)   422,527 
Other expense, net   (26,865)   (230,647)   133,027    (192,995)
Total other income, net   (77,755)   1,733,486    163,579    1,676,725 
                     
Income Before Income Taxes   1,859,157    5,453,228    3,586,280    6,486,842 
                     
Provision for Income Taxes   345,297    615,519    642,800    928,543 
                     
Net Income  $1,513,860   $4,837,709   $2,943,480   $5,558,299 
                     
Less: net income (loss) attributable to noncontrolling interest   16,679    164,945    46,118    135,836 
                     
Net income attributable to Fuling Global Inc.   1,497,181    4,672,764   $2,897,362   $5,422,463 
                     
Other Comprehensive Income                    
Foreign currency translation income   726,340    (815,224)   879,540    (581,492)
Comprehensive income attributable to Fuling Global Inc.  $2,223,521   $3,857,540   $3,776,902   $4,840,971 
                     
Earnings per share                    
Basic and diluted  $0.10   $0.30   $0.18   $0.34 
                     
Weighted average number of shares                    
Basic and diluted   15,756,500    15,732,795    15,756,500    15,732,795 

 

 8 

 

 

FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30,   December 31, 
   2017   2016 
   (UNAUDITED)     
ASSETS        
Current Assets:        
Cash and cash equivalents  $2,046,627   $4,009,784 
Restricted cash   2,706,322    2,333,607 
Certificates of deposit   2,335,869    1,539,082 
Accounts receivable, net   20,169,905    20,915,134 
Advances to supplier, net   994,546    639,947 
Inventories, net   15,301,741    16,731,704 
Prepaid expenses and other current assets   2,678,577    1,660,978 
Total Current Assets   46,233,587    47,830,236 
           
Property, plant and equipment, net   39,445,350    33,802,047 
Intangible assets, net   9,578,453    9,447,486 
Prepayments for construction and equipment purchases   990,871    2,192,236 
Security deposit for sale leaseback   1,263,017    723,206 
Other non-current assets   270,687    269,329 
Total Assets  $97,781,965   $94,264,540 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
Current Liabilities:          
Short term borrowings  $16,756,909   $17,790,962 
Bank notes payable   3,316,112    2,556,768 
Advances from customers   473,775    604,873 
Accounts payable   14,509,935    16,333,445 
Accrued and other liabilities   1,808,582    2,195,853 
Other payable - sale leaseback   2,907,360    1,931,076 
Taxes payable   628,673    164,571 
Deferred gains   129,957    650,343 
Due to Related party   -    53,082 
Total Current Liabilities   40,531,303    42,280,973 
           
Long term payable - sale leaseback   2,508,017    1,675,314 
Long term borrowings   1,424,138    836,471 
Total Liabilities   44,463,458    44,792,758 
           
Commitments and contingencies          
           
Shareholders’ Equity          
Common stock: $0.001 par value, 70,000,000 shares authorized, 15,756,500 and 15,756,500 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively   15,757    15,757 
Additional paid in capital   29,869,147    29,845,442 
Statutory reserve   4,346,060    4,017,957 
Retained earnings   19,545,392    16,976,133 
Accumulated other comprehensive loss   (641,210)   (1,520,750)
Total Fuling Global Inc.’s equity   53,135,146    49,334,539 
           
Noncontrolling interest   183,361    137,243 
Total Shareholders’ Equity   53,318,507    49,471,782 
           
Total Liabilities and Shareholders’ Equity  $97,781,965   $94,264,540 

 

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FULING GLOBAL INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

   For the Six Months Ended
June 30,
 
   2017   2016 
CASH FLOWS FROM OPERATING ACTIVITIES        
Net income  $2,943,480   $5,558,299 
Adjustments to reconcile net income to net cash provided by operating activities:          
Stock based compensation   23,705    69,262 
Deferred tax loss   -    (132,093)
Depreciation and amortization   1,687,155    1,306,613 
Bad debt provisions   34,174    108,750 
Unrealized losses(gains)   10,006    (5,646)
Inventory reserve   36,309    - 
Gain on disposal of fixed assets   70,027    (12,896)
Changes in operating assets:          
Accounts receivable   961,264    (2,337,456)
Advances to suppliers   (342,192)   (3,992,991)
Inventories   1,567,315    (492,975)
Other assets   198,146    (2,025,962)
Security deposit for sale leaseback   (514,917)   - 
Changes in operating liabilities:          
Accounts payable   (3,104,839)   (1,809,818)
Advance from customers   (141,695)   189,737 
Deferred loss   (1,228,802)   - 
Taxes payable   (320,375)   (116,650)
Accrued and other liabilities   (412,896)   (56,140)
Net cash used in operating activities   1,465,865    (3,749,966)
           
CASH FLOWS FROM INVESTING ACTIVITIES          
Additions to property and equipment   (544,086)   (399,389)
Additions to construction in progress   (4,145,718)   - 
Cash receipts from disposal property and equipment   13,125    19,614 
Cash decrease from certificates of deposit   (748,697)   1,228,224 
Prepayments for construction and equipment purchase   730,815    (2,342,419)
Purchase of intangible assets   -    (8,434,613)
Net cash used in investing activities   (4,694,561)   (9,928,583)
           
CASH FLOWS FROM FINANCING ACTIVITIES          
Proceeds from short-term borrowings   10,059,805    11,264,393 
Repayments of short-term borrowings   (11,484,507)   (9,818,828)
Proceeds from long-term borrowings   587,667    - 
Proceeds from bank notes payable   3,270,048    3,600,629 
Repayments of bank notes payable   (2,582,752)   (2,885,578)
Repayment of third party borrowing   -    (183,588)
Repayments of loans from related parties   (53,621)   - 
Proceeds from other payable - sales lease back   2,790,345    - 
Repayments of other payable - sales lease back   (1,093,236)   - 
Change of restricted cash   (313,034)   (502,722)
Net cash provided by financing activities   1,180,715    1,474,306 
           
EFFECT OF EXCHANGE RATES CHANGES ON CASH AND CASH EQUIVALENTS   84,824    (19,074)
           
NET DECREASE IN CASH AND CASH EQUIVALENTS   (1,963,157)   (12,223,317)
           
CASH AND CASH EQUIVALENTS, BEGINNING OF THE PERIOD   4,009,784    15,573,554 
           
CASH AND CASH EQUIVALENTS, ENDING OF THE PERIOD  $2,046,627   $3,350,237 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
Interest paid  $425,543   $400,152 
Income tax paid  $754,331   $1,161,623 
Non-cash investing activities:          
Transfer from construction in progress to fixed assets  $15,289,807   $634,190 
Transfer from accounts payable to fixed assets  $912,059   $- 
Transfer from advance payments to fixed assets  $504,644   $- 

 

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