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Jade Art Group Announces Second Quarter 2008 Financial Results

August 14, 2008

Jade Art Group Inc. (OTCBB: JADA) (the “Company”), a seller and distributor of raw jade sourced from the SheTai Jade mine in China, today announced its operating results for the second quarter ended June 30, 2008.

Revenue from the sale of raw jade was $6.7 million during the second quarter ending June 30, 2008. Since Jade Art Group transitioned its business from woodcarving to the sale of raw jade in the first quarter of 2008, there are no comparable sales during 2007. Net income for the quarter ending June 30, 2008 was $3.0 million, or $0.04 per diluted share.

“The revenue of $6.7 million in the second quarter is respectable considering the transportation issues the company faced in June resulting from an earthquake in Inner Mongolia, China,” said Hua-Cai Song, CEO of Jade Art Group. “We hope to attain higher sales levels once roads leading to our facilities are repaired. Guidance will be revised shortly. Year to date, Jade Art Group has entered into six sales agreements for SheTai Jade, representing a total contractual sales value equivalent to approximately $42 million. We believe that this is a good indication of the market’s positive response to SheTai jade and supports our expectation of continuing solid revenue performance.”

Second Quarter and First Six Months Highlights

Revenue from the sale of raw jade was $6.7 million during the second quarter ending June 30, 2008, compared to $10.7 million for the quarter ending March 31, 2008. The decrease in revenue is primarily attributed to an earthquake that struck Inner Mongolia, China in June 2008. The road to the mine was destroyed, leaving customers unable to transport jade material from the mine. This has affected revenue to a large extent. The government has recently increased the safety standards for roads and other transportation routes in the area, thus affecting the amount of time required to properly repair the damage. The road is expected to be completely repaired and back at full operational capacity within two or three months, contingent upon government approval.

The reported cost of sales was $1.2 million during the three months ended June 30, 2008, compared to $1.6 million during the three months ended March 31, 2008, which resulted from the purchase of raw jade materials from SheTai mine and the amortization of the intangible assets pertaining to the exclusive distribution rights of the SheTai mine’s jade. Under the Exclusive Distribution Agreement signed with XiKai Mining, the purchase price for raw jade is RMB 2,000 per metric ton, which is equivalent to approximately $290.

The resulting gross profit for the three months ended June 30, 2008 was $5.5 million, which represented around 88% of the revenue, compared to $9.1 million for the three months ended March 31, 2008, which represented around 85% of revenue.

Selling, general and administrative expenses (SG&A) were $0.8 million for the three months ended June 30, 2008, compared to $0.7 million for the three months ended March 31, 2008. The increase in SG&A was primarily due to options and warrants in the second quarter.

The income tax expense pertaining to continuing operations for the three months ended June 30, 2008 was $1.5 million, compared to $2.3 million for the three months ended March 31, 2008. The company’s effective tax rate of approximately 28% was higher than the statutory rate of 25% due to certain expense not being deductible for PRC purposes.

The Net income for the three months ended June 30, 2008 was $3.0 million or 44% of revenue, compared to $61.4 million or 576% of revenue for the three months ended March 31, 2008. The primary reason for the large spike in net income in the first quarter was due to net income recorded from discontinued operations of approximately $55.4 million.

Taking out discontinued operations, Jade Art Group’s net income from continuing operations was $3.0 million during the second quarter of 2008, compared to net income from continuing operations of $6.0 million during the first quarter of 2008. The decrease in net income from continuing operations was mainly due to the earthquake that occurred in Inner Mongolia, China, where the mine is located.

Recent Events

On January 17, 2008, Jade Art Group signed an Exclusive Distribution Right Agreement with XiKai Mining enabling the Jade Art Group to acquire 90% of the raw jade produced from XiKai Mining’s SheTai Jade mine for a period of 50 years. In exchange for this exclusive right, Jade Art Group transferred its wholly-owned woodcarving business to XiKai Mining and agreed to pay XiKai Mining RMB 60 million (approximately $8.7 million) by March 2009.

On April 16, Richard E. Khaleel was appointed an independent member of the Board of Directors of the Jade Art Group. Mr. Khaleel is an experienced senior marketing executive, having served as the Chief Marketing Officer for the Bank of New York, the Chief Creative Marketing Officer at Alliance Bernstein, and Vice President of Marketing at CNBC.

On May 15, the Company underwent a one-for-three reverse stock split of its outstanding common stock. The reverse split reduced the number of outstanding shares from 239,940,000 shares to 79,980,000 shares.

Mr. Song concluded, “We are quite excited about the opportunity to be a leading seller and distributor of raw jade in China. The increasing popularity of SheTai Jade and our favorable long term agreement enabling us to obtain high quality SheTai jade in significant quantities suggests further opportunities to generate increasing value to our shareholders.”

About Jade Art Group Inc.

Jade Art Group Inc., through its wholly owned subsidiary, Jiangxi SheTai Jade Industrial Co., Ltd., sells and distributes raw jade sourced from the SheTai Jade mine throughout China, with uses ranging from decorative construction material to high-end jewelry. This mine’s operating capacity is estimated to reach 40,000 tons and it contains one of the largest jade reserves in China. The mine is owned by XiKai Mining, with which Jade Art Group signed an agreement to acquire exclusive distribution rights to sell 90% of the SheTai Jade produced from the mine for the next 50 years. According to a survey report issued by the Inner Mongolia Geological Institution, the mine has proven and probable reserves of approximately 6 million tons, or approximately $16 billion worth of jade at current market rates of $2,750 per ton. Several national jade experts have noted the high quality of SheTai Jade as compared to the other existing varieties of Chinese jade.

For more information, please visit: www.jadeartgroupinc.com

FORWARD-LOOKING STATEMENTS: This document includes forward-looking statements. Forward-looking statements include, but are not limited to, statements concerning estimates of, and increases in, production, projected volume of customer orders, performance by customers, including timely payment, under existing and future agreements, cash flows and values, statements relating to the continued advancement of Jade Art Group’s projects and other statements which are not historical facts. When used in this document, the words such as “could,”"plan,”"estimate,”"expect,”"intend,”"may,” and similar expressions are forward-looking statements. Although Jade Art Group believes that its expectations reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Important factors that could cause actual results to differ from these forward-looking statements include, but are not limited to, those set forth in our reports filed with the Securities and Exchange Commission, together with the risks discussed in our press releases and other communications to shareholders issued by us from time to time, such as our ability to raise capital as and when required, the availability of raw products and other supplies, competition, the costs of goods, government regulations, and political and economic factors in the People’s Republic of China in which our subsidiaries operate.

 Jade Art Group Inc. and Subsidiaries  Selected Consolidated Statements of Operations (in millions, except per share amounts) ----------------------------------------------------------------------  (unaudited) Three      (unaudited) months     Six months ended        ended June 30      June 30 -----------  ----------- 2008   2007  2008   2007  Sales                                        $  6.7 $   - $ 17.4 $   - Cost of sales                                   1.2     -    2.8     - Selling, general and admin expenses             0.8     -    1.6     - -----  ----  -----  ---- Income from operations                          4.7     -   13.0     - Interest expense                                0.2     -    0.2     -  Income tax expense                              1.5     -    3.8     - -----  ----  -----  ---- Net income from continued operations            3.0     -    9.0     - Net income from discontinued operations           -   2.1   55.4   4.0  Net income                                   $  3.0 $ 2.1 $ 64.4 $ 4.0 =====  ====  =====  ====  Basic and diluted earnings per share Income from continuing operations          $ 0.04 $   - $ 0.11 $   - Income from discontinued operations             -  0.03   0.69  0.05 -----  ----  -----  ---- Total basic and diluted earnings per share     0.04  0.03   0.80  0.05 =====  ====  =====  ====  Weighted average number of shares Basic                                          80.0  75.0   80.0  75.0 Diluted                                        81.0  75.0   80.9  75.0 =====  ====  =====  ==== 

NOTE: The above numbers may not total correctly due to rounding.

 Jade Art Group, Inc. and Subsidiaries   Selected Consolidated Balance Sheet Items (in millions) ----------------------------------------------------------------------  (unaudited) June 30, 2008 ---------------------  Cash                                                   $           0.5 Accounts receivable                                                0.7 Notes receivable                                                  14.2 Dividends payable                                                 14.3 Accounts payable and accrued expenses                              0.9 Taxes payable                                                      1.5 Total stockholders' equity                             $          56.0 

NOTE: The above numbers may not total correctly due to rounding.

 Selected Consolidated Cash Flow Items (in millions) ----------------------------------------------------------------------  (unaudited) Six months ended June 30 -------------------- 2008      2007  Net cash provided by operating activities         $     12.6  $  (0.1) Purchases of property and equipment                        -         - Notes receivable                                      (14.2)         - Proceeds from loans (including loan from related party)                                                 10.0         - Net increase in cash                              $      0.2  $      - 

NOTE: The above numbers may not total correctly due to rounding.




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