Feb 23 2011
China Forestry Industry Group, Inc., ("China Forestry", Pink Sheets: CNFI) formerly known as Phoenix Energy Resource Corp, today announced that on November 1, 2010, it completed a reverse acquisition transaction with China Bingwu Forestry Group Limited ("Bingwu" or the "Company"), a Hong Kong company, to acquire 100% of Bingwu's issued and outstanding stock.
As a result of the transaction, China Forestry has terminated its prior business and is now engaged through Bingwu's subsidiaries in China solely in the business of producing and selling floor materials and related products to residential and commercial customers in China. Bingwu's product lines include laminate flooring and industrial fiber boards. Through these subsidiaries, Bingwu sells flooring products under the "Silvan Touch" brand throughout China.
"We operate an environmentally sound and low carbon footprint business. Instead of reducing natural forests for wood, our flooring products use primarily by-products such as branches and other wood scraps for raw material," said Mr. Yulu Bai, CEO of the combined company. "We are pleased with this transaction as it provides us with an enhanced platform to execute on our growth strategy."
Bingwu also obtains material from approximately 2,250 hectares of its own rapid growth eucalyptus forest in China's Guizhou Province. The manufacturing facility in Qianxinan, Guizhou Province has annual production capacity of six million square meters of laminate flooring and 75,000 cubic meters of industrial fiber boards. The Company is currently constructing a new manufacturing facility that it expects will increase its overall capacity to 12 million square meters of laminate floor and 200,000 cubic meters of fiber boards. It expects to complete this new facility by mid-2012.
Bingwu markets its products at five branch offices and eight flagship stores, and through over 500 contracted flooring specialty retail stores that carry and sell its products. It also expects to enter into agreements with large home supply stores to market its products.
For the fiscal year ended December 31, 2009, the Company's revenues were $13.3 million. For the nine months ended September 30, 2010 revenues were $25.7 million, representing a 168.3% increase over the same period of 2009.
Summary of Bingwu's Financial Results for the First Nine Months of 2010
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Revenues increased to $25.7 million for the nine months ended September 30, 2010 from $9.6 million in the same period in 2009, representing a 168% increase period-over-period.
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Gross profit increased $6.5 million, or 309%, to $8.6 million in the nine months ended September 30, 2010 from $2.1 million in the same period in 2009.
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For the nine months ended September 30, 2010, the Company generated net income of $7.2 million, an increase of $5.7 million, or 393%, from $1.5 million in the same period in 2009.
Financial Condition
As of September 30, 2010, the Company had cash and cash equivalents of $3.4 million, primarily consisting of cash on hand and demand deposits. To date, the Company has financed its operations primarily through cash flows from operations, augmented by short-term bank borrowings and equity contributions by its stockholders.
Net cash provided by operating activities was $4.4 million for the nine months ended September 30, 2010, as compared to $1.6 million used in operating activities for the same period in 2009. The increase in net cash provided in operating activities was primarily due to an increase in net income and a decrease in inventories due to our efforts to minimize our inventory balance. Net cash provided by operating activities was $2.2 million for the year ended December 31, 2009, as compared to $1.3 million for 2008.