China Fruits Q1 revenues from franchised stores increase by 78%
The decrease in revenues during the first quarter of 2015 was due primarily to the decrease in revenues from overseas markets.
During the first quarter of 2015, the revenues from franchised stores were approximately $4 million, an increase of 78% compared to the same period in 2014.
The company also had revenues from e-commerce in amount of approximately $1 million, which were zero during the same period in 2014. However, the revenues increased in domestic market and e-commerce failed to completely offset the revenues decreased in oversea markets, resulting in the decrease by approximately 27% in total.
The company had $5,293,100 in cost of goods sold, or approximately 90% of revenues, during the three months ended March 31, 2015. Comparatively, the company had $7,098,744 in cost of goods sold, or approximately 89% of revenues, during the three months ended March 31, 2014.
The company expects to reduce the cost of goods sold through collaboration with more non-related suppliers, which could also help the company to reduce the risk of concentration.
Operating expenses for the three months ended March 31, 2015 were $1,385,855, an increase of $461,675, or 50%, compared to $924,180 for the same period in 2014.
The increase in operating expenses during the first quarter of 2015 was due primarily to the increase in general and administrative expenses, which were $742,910 in the first quarter of 2015, compared to $327,710 in 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.
As of March 31, 2015, China Fruits had cash and cash equivalents of $37,080, compared to $1,586,253 as of March 31, 2014. Cash flow used in operating activities was $355,911 for the three months ended of 2015. Cash flow used in investing activities was $3,511. Net cash provided by financing activities was $1,147,692.
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.
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. ■