China Green Agriculture, Inc. Announces Second Quarter Fiscal Year 2008 Results

XI'AN, China, Feb. 14 Xinhua-PRNewswire-FirstCall — China Green Agriculture, Inc. (OTC Bulletin Board: CGAG) (" China Green Agriculture" or "the Company"), a leading producer and distributor of humic acid ("HA") based liquid compound fertilizer through its wholly owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., today announced its financial results for the second quarter of fiscal year 2008 ended on December 31, 2007.

Second Quarter 2008 Highlights — Net revenues totaled $3.8 million, up 80.5% year-over-year — Gross profit was $2.1 million, up 81.2% year-over-year — Net income was $0.7 million, down 10.5% year-over-year Recent Highlights — Completed share exchange to become public company — Raised $20.5 million in private placement financing

"We achieved double-digit growth in revenues in the second quarter of fiscal year 2008 due in large part to our focus on launching new fertilizer products and through growth in sales from our extended distribution networks. The agricultural industry in China is experiencing significant expansion which has resulted in a dramatic increase in demand for Grade AA green fertilizers like those produced by our Company," said Mr. Tao Li , Chairman and CEO of China Green Agriculture. "We are particularly pleased that we were able to maintain our gross margins for the most recent quarter which reached 57%," he added.

Second Quarter of 2008 Results

Net revenues for the second quarter of fiscal 2008 totaled $3.8 million, up 80.5% from $2.1 million in the same quarter of fiscal year 2007. The increase in revenues was primarily due to increase in sales volume due to expansion of the Company's sales network, the launch of new products and the addition of the Company's newly acquired greenhouse facility which contributed approximately $1,012,578 of sales over the same period.

Gross profit for the second quarter of fiscal year 2008 totaled $2.1 million, an increase of 81.2% from $1.2 million in the same quarter of 2006. Gross profit margin was 56.8% for the second quarter of fiscal year 2008, remaining relatively unchanged from 56.6% a year earlier.

Operating expenses for the second quarter of 2008 were $1.3 million, up from $0.2 million in the same quarter of 2006. This significant increase was primarily due to higher general and administrative expenses associated with becoming a public company. Selling expenses also increased in support of the Company's growth. Operating expenses were 35.8% of net revenues in the second quarter of fiscal year 2008, up from 10.7% of net revenues in the corresponding quarter of fiscal year 2007.

Operating income for the second quarter of fiscal year 2008 was $0.8 million, down from $1.0 million in the second quarter of fiscal year 2007. Operating margin was 21.1%, compared to 45.9% in the same quarter of 2007.

Net income for the second quarter of fiscal year 2008 was $0.7 million, down 10.5% from net income of $0.8 million in the second quarter of fiscal year 2007.

Six Month Results

In the six months ended December 31, 2007, net revenues were $10.9 million, up 58% from $6.9 million in the same period of the prior year. Gross profit was $6.6 million, up 57.1% from $4.2 million in the same period of the prior year. Gross margin was 59.9%, down from 60.9% in the year ago period. Operating income rose 38.8% to $4.9 million, and operating margin was 44.8%, compared to 51.5% during the same period a year ago. Net income increased 53.3% to $4.8 million compared to $3.1 million a year ago.

Financial Condition

As of December 31, 2007, the Company had $9.7 million in cash and cash equivalents, as well as $4.3 million in restricted cash, working capital of $10.1 million and a current ratio of 2.1:1. The Company has $28.4 million in shareholders' equity compared to $8.8 million in the last quarter. The Company generated $5.3 million in cash flows from operating activities in the six months ended December 31, 2007.

In December 2007, the Company completed a private placement financing generating $18.6 million in net proceeds which will be used to upgrade R&D facilities, buy capital equipment, and expand the production line in order to enlarge the Company's market share and distribution network.

Business Outlook

China Green Agriculture is positioning itself to be a leading developer, manufacturer and distributor of humic acid based liquid compound fertilizer and related agricultural products in China in connection with the rapidly rising awareness of green food consumption in China. The Company plans to increase its production capacity from 10,000 tons per year to 50,000 tons per year using proceeds raised from its private placement. Furthermore, China Green Agriculture will increase its distribution network to increase its market share in various provinces across China, as well as to launch new products to the agriculture industry based on market trends and demands.

"We are pleased to have completed our transition to become a public company and are now focusing our attention on our growth strategy. In the coming year, we plan to capitalize on our modern research and development facility to continue producing and launching more new fertilizer products to the market," said Mr. Li . "Given our extensive experience manufacturing humic acid organic compound fertilizer, our state-of-the-art production and R&D facilities, we believe we are well positioned to succeed in China's rapidly developing fertilizer industry."

About China Green Agriculture, Inc.

China Green Agriculture, Inc. produces and distributes humic acid ("HA") based liquid compound fertilizer through its wholly owned subsidiary, Shaanxi TechTeam Jinong Humic Acid Product Co., Ltd., ("TechTeam"). TechTeam produces and sells approximately 10,000 metric tons of over 100 different kinds of fertilizer products per year. All of TechTeam's fertilizer products are certified by the PRC government as green products and suitable for growing Grade AA "green" foods, also known as green products that contain little or no chemical materials, as stated by the China Green Food Research Center. TechTeam's fertilizers are highly concentrated liquids which require an application of approximately 120 ml per mu per application. Its average customer has approximately four mu of land (one mu = .165 acres).

China Green Agriculture currently markets its fertilizer products to private wholesalers and retailers of agricultural farm products in 27 provinces in the PRC. The leading five provinces by revenue for the fiscal year ended June 30, 2007 include Heilongjiang (9.99%), Guangdong (7.81%), Xinjiang (6.59%), Shandong (5.81%), and Henan (5.80%).

Cautionary Statement

This press release contains forward-looking statements concerning the Company's business, products and financial results. The Company's actual results may differ materially from those anticipated in the forward-looking statements depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Green Agriculture undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.

— Financial tables follow — CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENTS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2007 AND 2006 (UNAUDITED) Six Months Ended December 31, 2007 2006 Net sales $10,947,163 $6,872,356 Cost of goods sold 4,394,981 2,684,381 Gross profit 6,552,182 4,187,976 Operating expenses Selling expenses 471,838 372,680 Operating and administrative expenses 1,173,962 279,353 Total operating expenses 1,645,800 652,033 Income from operations 4,906,382 3,535,943 Other income (expense) Other income 38,992 (2,971) Interest income 15,526 20,437 Interest expense (197,600) (180,361) Bank charges (1,504) (362) Total other income (expense) (144,585) (163,257) Income before income taxes 4,761,797 3,372,685 Provision for income taxes — 266,006 Net income 4,761,797 3,106,680 Other comprehensive income Foreign currency translation gain 553,997 10,576 Comprehensive income $5,315,794 $3,117,256 Basic and diluted weighted average shares outstanding 10,201,325 10,770,669 Basic and diluted net earnings per share $0.47 $0.29 Three Months Ended December 31, 2007 2006 Net sales $3,756,142 $2,081,043 Cost of goods sold 1,621,220 903,090 Gross profit 2,134,923 1,177,954 Operating expenses Selling expenses 320,133 162,999 Operating and administrative expenses 1,023,345 60,228 Total operating expenses 1,343,478 223,227 Income from operations 791,445 954,727 Other income (expense) Other income 29,691 (4,273) Interest income 15,402 20,437 Interest expense (105,031) (88,992) Bank charges (1,482) (268) Total other income (expense) (61,420) (73,096) Income before income taxes 730,025 881,631 Provision for income taxes — 66,126 Net income 730,025 815,505 Other comprehensive income Foreign currency translation gain 379,536 (24,690) Comprehensive income $1,109,561 $790,815 Basic and diluted weighted average shares outstanding 9,625,724 10,770,669 Basic and diluted net earnings per share $0.08 $0.08 CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 AND 2006 (UNAUDITED) 2007 2006 Cash flows from operating activities Net income $4,761,797 $3,106,680 Adjustments to reconcile net income to net cash provided by operating activities Share capital contribution - rental and interest paid by shareholders 32,177 31,222 Depreciation 402,782 68,033 Amortization 48,909 42,556 Decrease / (Increase) in current assets — Accounts receivable 766,758 1,138,280 Inventories (1,718,529) 783,829 Advances to suppliers 131,916 106,674 Other assets (731,007) 137,565 (Decrease) / Increase in current liabilities Accounts payable 74,928 (214,100) Unearned revenue 174,534 (15,493) Tax payables 1,067,900 685,413 Advances from unrelated parties 762,443 — Accrued expenses and other payables (456,671) (75,566) Net cash provided by operating activities 5,317,938 5,795,094 Cash flows from investing activities Acquisation of plant, property, and equipment (247) (965) Advances for construction in progress (5,178,555) — Additions to construction in progress (20,352) (9,634,028) Cash to be paid to china operation's ex-shareholders (4,096,100) — Net cash used in investing activities (9,295,255) (9,634,994) Cash flows from financing activities Repayment of loan (133,411) (189,527) Proceeds from private placement 18,602,720 — Restricted cash put in escrow (4,250,000) — (Payments)/proceeds to/from related parties (632,926) 4,022,875 Net cash provided by financing activities 13,586,384 3,833,348 Effect of exchange rate change on cash and cash equivalents 34,411 10,576 Net increase in cash and cash equivalents 9,643,478 4,025 Cash and cash equivalents, beginning balance 81,716 45,623 Cash and cash equivalents, ending balance $9,725,194 $49,648 Supplement disclosure of cash flow information Interest expense paid $(178,095) $(202,714) Income taxes paid $ $ — CHINA GREEN AGRICULTURE INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2007 (UNAUDITED) ASSETS Current Assets Cash and cash equivalents $9,725,194 Restricted cash 4,250,000 Accounts receivable, net 1,134,238 Inventories 3,616,871 Other assets 89,556 Due from related parties 663,327 Advances to suppliers 176,843 Total Current Assets 19,656,029 Plant, Property and Equipment, net 11,855,864 Advances for construction In Progress 5,225,969 Construction In Progress 65,479 Intangible Assets, net 1,163,424 Total Assets $37,966,765 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable $372,849 Unearned revenue 275,262 Accrued expenses and other payables 372,960 Advances from other unrelated companies 762,443 Amount due to related parties 1,300 Taxes payable 3,473,108 Short term loans 4,290,845 Total Current Liabilities 9,548,767 Commitment — Stockholders' Equity Preferred Stock, $.001 par value, 20,000,000 shares authorized, Zero shares issued and outstanding — Common stock, $.001 par value, 780,000,000 shares authorized, 18,314,017 shares issued and outstanding 18,314 Additional paid-in capital 17,160,211 Subscription receivable (188,388) Retained earning 10,630,146 Accumulated other comprehensive income 797,715 Total Stockholders' Equity 28,417,998 Total Liabilities and Stockholders' Equity $37,966,765 For more information, please contact: Company Contact: Mr. Tao Li Chief Executive Officer China Green Agriculture, Inc. Tel: +86-29-88266386 Email: kingtone@techteam.com.cn Investor Relations Contact: Mr. Crocker Coulson President CCG Elite Investor Relations Tel: +1-646-213-1915 (NY Office) Email: crocker.coulson@ccgir.com

SOURCE China Green Agriculture, Inc.

---

Add this page to your favorite Social Bookmarking websites