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Yongye Biotechnology International Announces Second Quarter Results

BEIJING, Aug. 18 /Xinhua-PRNewswire-FirstCall/ -- Yongye Biotechnology International, Inc. (OTC Bulletin Board: YGYB) ("Yongye" or the "Company"), a leading developer, producer and distributor of nutrients for plants and animals in the People's Republic of China, today announced its financial results for the quarter ended June 30, 2008.

Second Quarter 2008 Highlights

-- Revenue was $17.6 million, an increase of 136.6% from the second

quarter of 2007, and an increase of 87.0% from the first quarter of


-- Gross profit was $9.6 million, a 171.8% increase from the second

quarter of 2007, with a gross margin of 54.5%

-- Net income was $7.2 million, an increase of 116.2% from the second

quarter of 2007, or $0.41 per diluted share

-- Completed a share exchange transaction to become a publicly traded

company in April 2008

-- Raised $10.0 million gross proceeds through a private placement

financing in April 2008

Second Quarter 2008 Financial Results

"The second quarter of the year is typically our strongest quarter for sales of plant and animal nutrient products, and this year's second quarter had exceptionally good results, with both revenue and earnings more than doubling from the prior year period," said Mr. Zishen Wu, Chief Executive Officer of Yongye. "We attribute this to the very strong benefits our customers are able to gain from the use of our technologically advanced products and the rapid expansion of our distribution network to cover new geographic regions and build strong brand recognition for our products."

Second Quarter 2008 Results

Revenue was $17.6 million in the second quarter of 2008, an increase of 136.6% from $7.4 million in the second quarter of 2007. This significant revenue increase was due mainly to the rapid expansion of the Company's sales network. An additional 425 branded stores were added to the distribution n Total Adjustments (15,346,837) (8,020,417)

Net Cash Used in Operating Activities (7,604,652) (4,661,989)


Acquisition of Property and

Equipment (639,519) (22,380)

Additions to Intangible Assets (122,899) --

Net Cash Used in Investing Activities (762,418) (22,380)


Proceeds from Short-term Bank Loans -- 4,269,087

Proceeds from Share Capital 10,100,651 --

Proceeds from Shareholder Loans -- 1,413,004

Repayment of Long-term Loans -- (6,500)

Payment for Stock Issuance Costs (806,159) --

Net Cash From Financing Activities 9,294,492 5,675,591


TRANSLATION ON CASH 414,771 21,787


EQUIVALENTS 1,342,193 1,013,009


BEGINNING 8,137 89,023

CASH AND CASH EQUIVALENTS - ENDING $1,350,330 $1,102,032


Cash Paid for Income Taxes 417,744 --

Cash Paid for Interest Expense

Payment -- 50,920

For more information, please contact:

Yongye Biotechnology International, Inc.

Mr. Larry Gilmore, VP of Corporate Strategy

Tel: +86-10-8231-8626


CCG Investor Relations, Inc.

Mr. Crocker Coulson, President

Tel: +1-646-213-1915 (New York)



etwork in the second quarter of 2008, bringing the total number of such stores through which the Company distributes its products to 775 by the end of the quarter. The Company had 200 stores at the end of 2007. The Company and its local distributor approach existing agricultural product store owners to contract with them and bring them into the Yongye branded store network.

Gross profit was $9.6 million in the second quarter of 2008, an increase of 171.8% from $3.5 million in the second quarter of 2007. Gross margin rose to 54.6% from 47.5% in the second quarter of 2007. Gross margin increased because of cost efficiencies resulting from increased production and more stable product prices.

Selling expenses were $777,012 in the second quarter of 2008, compared to $62,135 in the second quarter of 2007. Selling expenses increased because of rapidly adding new sales people and a proportionate increase in expenses associated with a dramatic increase in sales volume. General and administrative expenses were $454,697 in the second quarter of 2008, compared to $108,350 in the second quarter of 2007. General and administrative expenses grew because of adding new executive staff and new expenses associated with becoming a public company.

Operating income was $8.4 million in the second quarter of 2008, with operating margin of 47.6%, compared to $3.4 million in the second quarter of 2007, with operating margin 45.2%.

Net income was $7.2 million in the second quarter of 2008, or $0.41 per diluted share, compared to net income of $3.3 million, or $0.29 per diluted share, in the second quarter of 2007.

The diluted weighted average number of shares outstanding increased from 11,444,775 in the second quarter of 2007 to 17,435,896 in the second quarter of 2008 because additional shares were issued in the private placement which took place in April 2008.

Six Months 2008 Results

Net revenue was $27.0 million in the six months ended June 30, 2008, up 232.0% from $8.1 million in the six months ended June 30, 2007. Gross profit was $14.6 million with a gross margin of 54.0%, compared to $3.8 million with a gross margin of 46.5% in the six months ended June 30, 2007. Operating income was $9.8 million with an operating margin of 36.2%, compared to $3.6 million with an operating margin of 43.7% in the six months ended June 30, 2007. Net income was $7.7 million, or $0.54 per diluted share, compared to $3.4 million, or $0.29 per diluted share, in the six months ended June 30, 2007.

Financial Condition

On June 30, 2008, cash totaled $1.4 million, compared to $376,002 as of December 31, 2007. Accounts receivable were $20.6 million as of June 30, 2008, compared to $1.6 million as of December 31, 2007. The Company made substantial investments to increase its inventory and expand its distribution network throughout the first half of 2008, which significantly offset the Company's cash balance as of June 30, 2008. It is also customary in China's agriculture industry to extend credit terms which allow distributors to pay over a longer period of time than what may be customary in other industries. Consequently, the Company has every reason to believe that its accounts receivable will be paid under the terms extended to its customers. As of June 30, 2008, the Company had total assets of $28.1 million, compared to $23.1 million as of December 31, 2007. Working capital was $17.8 million, total current liabilities were $9.6 million and the Company did not have any short term bank loans or long term liabilities as of June 30, 2008. Stockholders' equity totaled $17.3 million as of June 30, 2008, compared to $12.9 million at the end of 2007.

Recent Events

On April 17, 2008, Yongye Biotechnology International Inc. entered into a share exchange agreement with Fullmax Pacific Limited, British Virgin Islands. All the historical financial statements prior to January 1, 2008 are solely those of the predecessor, Inner Mongolia Yongye Biotechnology Company, Ltd

On April 17, 2008, Yongye Biotechnology International Inc. signed a private financing agreement to raise $10.0 million gross proceeds. The transaction closed in May 2008.

In June, the Company signed construction contracts to begin construction of a new facility at its current location with processing capacity of 8,000 TPA. The value of these contracts is approximately RMB 25,000,000 (approximately $3.6 million). This additional facility will increase total production capacity to 10,000 TPA and is critical for the Company to be able to keep up with anticipated demand. As of July 2008, the new facility was forecast to be operational by the end of September 2008.

In June, Yongye engaged MSPC Certified Public Accountants and Advisors, P.C. as the Company's independent auditor.

Business Outlook

"As food production in China continues to increase, we believe demand will continue to increase for our plant and animal nutrients. We plan to sustain our business growth by expanding our distribution and sales network, and broadening our geographic market coverage. We also plan to provide more technical assistance to our customers and help them achieve the best possible consistent results by using our products," stated Mr. Wu.

Conference Call

The Company will host a conference call at 08:00 a.m. Eastern time on Monday, August 18, 2008 to discuss its second quarter 2008 results.

To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1-888- 339-2688. International callers should dial +1-617-847-3007. The conference pass code is 899 273 89.

For those who are unable to participate in the conference call at the time of the call, a replay will be available for fourteen days after the call is held. To access the replay, please dial 1-888-286-8010. International callers should dial +1-617-801-6888. The replay pass code is 522 821 17.

About Yongye Biotechnology International, Inc.

Yongye Biotechnology International, Inc., headquartered in Beijing, is engaged in the development, distribution and sales of fulvic acid based nutrients for plants and animals. The Company's patent pending processes and proprietary formulas allow it to create products which increase crop yields and improve the health of livestock. Its sole operating subsidiary, Yongye Nongfeng Biotechnology Company, Ltd., is located in Inner Mongolia. The Company sells its products through distributors and directly to farmers located in ten provinces throughout China.

Forward Looking Statements

Certain statements set forth in this press release constitute "Forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and may contain the words "estimate," "project," "intend," "forecast," "anticipate," "plan," "planning," "expect," "believe," "will," "will likely," "should," "could," "would," "may" or words or expressions of similar meaning. All such forward-looking statements involve risks and uncertainties, including, but not limited to: statements regarding the Company's products; marketing and sales; patents and regulatory approvals; the effect of competition and proprietary rights of third parties; the need for and availability of additional financing and access to capital; the seeking of joint development, licensing or distribution and collaboration and marketing arrangements with other companies. There can be no assurance that such forward-looking statements will prove to be accurate and Yongye undertakes no obligation to update any forward-looking statements or to announce revisions to any of the forward-looking statements.

- Financial Tables Follow -



Yongye The Yongye The

Biotechnology predecessor Biotechnology predecessor

International Inner International Inner

Inc. and Mongolia Inc. and Mongolia

Subsidiaries Yongye Subsidiaries Yongye

For Three For Three For Six For Six

Months Months Months Months

Ended Ended Ended Ended

June 30, June 30, June 30, June 30,

2008 2007 2008 2007

(Unaudited) (Unaudited) (Unaudited) (Unaudited)

Sales $17,598,671 $7,441,212 $26,986,639 $8,127,718

Cost 7,996,521 3,908,020 12,419,020 4,346,761

Gross Profit 9,602,150 3,533,192 14,567,619 3,780,957

Selling Expenses 777,012 62,135 3,997,477 71,193

General and Administrative

Expenses 454,697 108,350 812,125 154,986

Income from Operations 8,370,441 3,362,707 9,758,017 3,554,778

Other Income (Expense)

Interest Income 789 1,278 778 1,291

Other Income (387,198) (51,191) (386,840) (197,641)

Total Other Income

(Expenses) (386,409) (49,913) (386,062) (196,350)

Income Before Provision

for Income Taxes and

Minority Interest 7,984,032 3,312,794 9,371,955 3,358,428

Provision for Income Taxes 219,983 -- 594,765 --

Net Income before Minority

Interest 7,764,049 3,312,794 8,777,190 3,358,428

Provision for Minority

Interest 603,194 -- 1,035,005 --

Net Income 7,160,855 3,312,794 7,742,185 3,358,428

Foreign Currency

Translation Adjustment 277,101 127,723 414,771 174,195

Comprehensive Income $7,437,956 $3,440,517 $8,156,956 $3,532,623

Net Income Per Share

Basic $ 0.43 $ 0.29 $ 0.55 $ 0.29

Diluted $ 0.41 $ 0.29 $ 0.54 $ 0.29

Weighted Average Shares

Basic 16,847,741 11,444,775 14,146,258 11,444,775

Diluted 17,435,896 11,444,775 14,265,199 11,444,775



Yongye Biotechnology

International, Inc. The predecessor Inner

and Mongolia

Subsidiaries Yongye

June 30, 2008 December 31, 2007



Cash and Cash Equivalents $1,350,330 $376,002

Accounts Receivable 20,613,347 1,630,609

Inventory 5,196,266 9,851,788

Advance Payments 65,453 --

Due from Affiliates -- 978,384

Other Receivables 216,795 27,038

Total Current Assets 27,442,191 12,863,821


INTANGIBLE ASSETS, NET 117,610 3,665,584


TOTAL ASSETS $28,111,346 $23,131,656


Accounts Payable and

Accrued Expenses 1,882,643 1,271,852

Accounts Payable 4,889,694 --

Short-term Bank Loan -- 5,484,000

Due to Shareholders -- 2,507,371

Due to Related Parties 2,411,105 --

Tax Payables 406,530 893,892

Other Payables 40,424 50,916

Total Current Liabilities 9,630,396 10,208,031


Minority Interest 1,135,005 --


Capital Stock: 20,000,374

shares authorized and issued

par value $.001 as of June 30, 2008 20,000 --

Capital Contribution -- 7,260,000

Additional Paid-in Capital 9,200,092 --

Retained Earnings 6,939,975 4,024,111

Statutary Reserve 771,107 480,629

Accumulated other

Comprehensive Income 414,771 1,146,732

Total Stockholders' Equity $17,345,945 $12,911,472


STOCKHOLDERS' EQUITY $28,111,346 $23,131,656




Biotechnology The predecessor

International, Inc. Inner

and Subsidiaries Mongolia Yongye

For Six Months For Six Months

Ended June Ended June

30, 2008 30, 2007

(Unaudited) (Unaudited)


Net Income $7,742,185 $3,358,428

Adjustments to Reconcile Net

Income to Net Cash Used in Operating


Depreciation and Amortization 93,263 10,644

Loss on Disposal of Fixed Assets -- 146,714

Provision for Minority Interest 1,035,005 --

Changes in Assets and Liabilities:

Accounts Receivable, net (20,613,347) (6,557,611)

Inventories (5,196,266) (319,604)

Other Receivables, net (216,795) (1,063,081)

Advances to Suppliers (65,453) 352,866

Prepaid Expense -- (7,271)

Accounts Payable and Accrued

Expenses 6,772,337 288,578

Tax Payable 406,530 49,894

Due to Related Parties 2,397,465 838,369

Other Payables 40,424 (1,759,915)


SOURCE Yongye Biotechnology International, Inc.
Copyright©2008 PR Newswire.
All rights reserved

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