WEB NEWS Deal Flow
On December 1, 2011,
we entered into a
Fifth Loan Extension Agreement (“Extension”) with UTA Capital and other investors (collectively the “Investors” or “Purchasers” and together with the Company the “Parties”), pursuant to which, among other things, the maturity date of the Notes with principal amount outstanding of
$2,552,000 was further extended to July 1, 2012 (the “Extended Maturity Date”). Under the Extension the Company agreed to make the following principal reduction payments (each, a “Principal Reduction Payment”): (a) on December 30, 2011 a payment of $200,000, (b) on January 31, 2012 a payment of $651,000, (c) on March 1, 2012 a payment of $150,000, (d) on March 15, 2012 a payment of $150,000, (e) on April 1, 2012 a payment of $551,000, (f) on May 15, 2012 a payment of $300,000 and (g) on July 1, 2012 a payment of $550,000. In addition, the Company and the Purchasers agreed that from and after December 1, 2011, interest shall continue to accrue under the Notes at an Interest Rate of eight percent (8%) per annum.
Comments & Business Outlook
Third Quarter 2011 Results
Revenue for the three months ended September 30, 2011 was flat at $13,540,053, compared to $13,504,890 for the three months ended September 30, 2010
Net income for the three months ended September 30, 2011 reached $1,746,736, compared to $1,912,286 for the three months ended September 30, 2010
Earnings per share for the three months ended September 30, 2011 reached $0.23 ($0.22 on a fully diluted basis), compared to $0.31 ($0.29 on a fully diluted basis) for the three months ended September 30, 2010
GeoTeam ® Note : Third Quarter 2011 vs. 2010 Adjusted EPS was $0.54 vs. $0.38.
"Our third quarter 2011 results demonstrate the continued robust demand for our products in both of our two core business units," stated Marius Silvasan, ONE's CEO. "The new products we launched during 2010 helped boost our gross margin to 45% from 38% for the nine months ended September 2011 compared to the same period a year ago. The significant increase in gross margin validates our business model and the strategy we adopted in 2010. Part of our net income gains for 2011 were off-set by $1.4 million in net income adjustments for the nine months ended September 30, 2011. Notwithstanding these adjustments, our net income for YTD 2011 ended September 30 is 4.4% higher than the same period a year ago."
Deal Flow
(i) On July 8, 2011 with an effective date of June 1, 2011, we entered into a
Fourth Loan Extension Agreement (“Extension”) with UTA Capital and other investors (collectively the “Investors” or “Purchasers” and together with the Company the “Parties”), pursuant to which, among other things, on or before July 29, 2011, the Company shall make a principal reduction payment to the Purchasers in respect of the loan evidenced by an aggregate of $2,900,000 of Promissory Notes executed by the Company and each of the Purchasers on August 12, 2010 and as amended, modified and extended through the date of the Extension (each, a “Note” and, collectively, the “Notes”) in the aggregate amount of $348,000 (the “Principal Reduction Payment”). After giving effect to the payment of the Principal Reduction Payment, the outstanding principal amount of the Notes shall be reduced by $348,000 to $2,552,000 (the “Outstanding Principal Amount”). The Maturity Date of the Notes was further extended to December 1, 2011 (the “Extended Maturity Date”).
Comments & Business Outlook
MIAMI, FL--(Marketwire - Jun 1, 2011 ) - ONE Bio, Corp. ("ONE" or the "Company") (OTCBB: ONBI ), an innovative company utilizing green process manufacturing to produce raw chemicals and herbal extracts, natural and health supplements and organic products, today announced it has made its State Administration of Taxation ("SAT") filings available to investors.
The SAT is a ministerial-level department within the government of the People's Republic of China that is responsible for the collection of taxes. ONE's operating subsidiaries in China, Sanming Huajian Bioengineering Co., Ltd., Jian'ou Lujian Foodstuff Co., Ltd., Fuijian Green Planet Bio-engineering Co., Ltd., and Fuijian Green United Bamboo Technology Co., Ltd., each report individually to the SAT. Various differences between Chinese GAAP, as required by the SAT, and U.S. GAAP, as required by the SEC, require reconciliation of the filings for comparison purposes. Tax filings made with the SAT are based on audited financial data.
The Company's SAT filings, including corresponding U.S. GAAP reconciliation documents prepared by the Company and reviewed by its accounting firm, through 2009, are available at the following link:
http://redchip.com/visibility/investor.asp?symbol=ONBI
The Company also intends to make its 2010 SAT filings public in the near future.
Marius Silvasan, ONE's CEO, stated, "We understand the market's concern over the veracity of filings for companies with operations in China. We are pleased to address these concerns by making our historical SAT filings, which are materially in line with our SEC filings, available for the investment community to review. We have also included reconciliation information for the first nine months of 2010 and will make available our 2010 SAT filings as soon as they are completed in the coming weeks."
Comments & Business Outlook
MIAMI, FL--(Marketwire - Apr 21, 2011 ) - ONE Bio, Corp. ("ONE" or the "Company") (OTCBB: ONBI), an innovative company utilizing green process manufacturing to produce raw chemicals and herbal extracts, natural and health supplements and organic products, today announced that year-to-date sales of its organic food products in Japan have increased by 50% as compared to the same period a year ago.
The sales growth was directly attributable to an increased demand for food, specifically high-quality organic food products, following the recent earthquakes and tsunami experienced by Japan. In response to the rising demand, the Company has increased its production capacity for its precooked organic bamboo and vegetable products.
The Japanese market for organic food and drinks is the largest in the Asia-Pacific region, and Japan is currently the Company's strongest export market, accounting for 30% of ONE's organic product sales. During the fourth quarter of 2010, the Company added new distributors in Japan and expanded its lineup of organic bamboo and vegetable products for Kobe Bussan Supermarkets, one of Japan's biggest supermarket chains. More recently, the Company signed distribution agreements with Toyo Food Trading Company Ltd. and Sanyo Trading Company Ltd., two major Japanese trading companies. ONE expects its organic product sales to Japan to increase to $5.3 million for the fiscal year ending December 31, 2011, an increase of 50% compared to $3.5 million in 2010.
"We have seen a significant increase in our organic product sales to Japan since the earthquakes and tsunami. We have advised our Japanese retailers and distributors that we have increased our manufacturing capacity to accommodate their needs and fulfill all their orders," stated Marius Silvasan, ONE's CEO. "Japanese consumers are very conscientious of the quality of their food, and our products fill that need."
Comments & Business Outlook
2010 Fourth Quarter:
Revenue for the three months ended December 31, 2010 reached $14.9 million, an increase of 11% compared to $13.4 million for the three months ended December 31, 2009.
Net income for the three months ended December 31, 2010 reached $2.8 million, an increase of 2.9% compared to $2.7 million for the three months ended December 31, 2009.
Earnings per share for the three months ended December 31, 2010 reached $0.45 ($0.43 on a fully diluted basis), compared to $0.51 ($0.50 on a fully diluted basis) for the three months ended December 31, 2009.
2010 Full year:
Revenue for the fiscal year ended December 31, 2010 reached $52.3 million, an increase of 137% compared to $22.1 million for the same period last year.
Net income for the fiscal year ended December 31, 2010 reached $8.7 million, an increase of 82% compared to $4.8 million for the same period last year.
Earnings per share for the fiscal year ended December 31, 2010 reached $1.43 ($1.35 on a fully diluted basis) compared to $0.95 ($0.93 on a fully diluted basis) for the same period last year.
"Our fiscal 2010 results met our expectations. Asia's robust economic growth continues to fuel demand for our products, and we successfully added several new distributors in the Asian market during the fiscal year. Our strong organic growth, coupled with the impacts of two key acquisitions we completed in the third quarter of 2009, enabled us to deliver record results for fiscal 2010," stated Marius Silvasan, ONE's CEO. "In 2011, we remain focused on the continued execution of our business strategy, which calls for continued robust organic growth to be supplemented by key strategic acquisitions."
Liquidity Requirements
Based on our current plans for the next 12 months , we anticipate that additional revenues earned from our expanded product line and broadened distribution channels will be the primary organic source of funds for future operating activities in 2011. However, to fund continued expansion of our product line and extend our reach to broader markets, including international markets, and to acquire additional subsidiaries, we may rely on bank borrowings, if available as well as capital raises.
Investor Alert
Effective as of January 31, 2011, we
entered into a Third Loan Extension Agreement with UTA Capital and other investors (collectively the “Investors” or “Purchasers” and together with the Company the “Parties”), pursuant to which, among other things, the Maturity Dates of the Amended Notes we issued to the Investors were extended to: (a) April 1, 2011; (b) May 1, 2011, upon notice from us given not later than March 21, 2011; and (c) June 1, 2011, upon notice from us given not later than April 21, 2011 (each such date being the “Amended Maturity Date” to the extent we have elected to extend the Maturity Date to such date), provided as to each such extension that no Event of Default has occurred and is continuing under the Amended Notes. Pursuant to the Third Loan Extension Agreement, the Investors agreed to replace with June 30, 2011, the Amended Maturity Date in Sections 3 and 4 of the New Warrants issuable to each of the Purchasers pursuant to the terms August Modification Agreement. The Purchasers also agreed that we will no longer have any obligation to pay the Cancellation Premium to the Purchasers pursuant to Section 5 of the August Modification Agreement (except that we are obligated to pay the Cancellation Premium to one former Investor).
Deal Flow
On January 25, 2011 ONE Bio, Corp. filed with the Securities and Exchange Commission a request to withdraw its registration statement (“Registration Statement”) regarding a proposed offering of shares of its common stock as the Company does not intend to pursue the contemplated public offering at this time and believes the withdrawal to be consistent with the public interest and the protection of investors.
Deal Flow
On December 20, 2010, we entered into a Loan Extension Agreement (the “ModificationAgreement”) with an effective date as of December 10, 2010, with UTA Capital and other investors (collectively the “Investors” and together with the Company the “Parties”), which agreed to extend and modify the Securities Purchase and Registration Rights Agreement, by and between the Company and the Investors, dated as of January 8, 2010, and as amended effective as of August 12, 2010.
Pursuant to the Modification Agreement, among other matters, the Maturity Date as defined in the Amended Notes (as amended effective as of August 12, 2010) was extended to January 31, 2011. In exchange for the Investors’ agreement to extend the Maturity Date of the Amended Notes, the Company agreed amongst other things to issue to the Investors on January 1, 2011 warrants (the “Extension Warrants”), that shall be immediately exercisable for a period of five (5) years following the date of issuance and which shall entitle the Purchasers to purchase up to an aggregate of 60,000 shares of Common Stock at an initial exercise price of $3.75 per share , for cash or on a cashless exercise basis.
Deal Flow
We are offering 4,545,455 shares of our common stock. Prior to this offering our stock has been quoted on the OTC Bulletin Board under the symbol “ONBI”, but the market for our shares has been inactive and illiquid and accordingly such transactions are not representative of an actual trading market for our shares. We anticipate that the public offering price will be between $5.00 and $6.00 per share.
Liquidity Requirements
One Bio strategy :
As discussed elsewhere in this document, the Company has implemented a two pronged strategy, which is:
to encourage and support organic expansion within the enterprises it acquires and utilize synergies and economies of scale between the entities; and
to identify and acquire accretive acquisition targets.
To be successful, each strategy requires adequate funding from available liquidity resources . Accordingly, ONE has determined that its organic expansion strategy is first supported through organically generated cash flow and supplemented by available borrowing capacity depending on the requirements of the anticipated expansion project. Any liquidity organically generated in excess of reinvestment needs will be channeled to the accretive acquisition strategy or retained for future expansion projects. our growth strategy, which is initially focused on accretive acquisitions and organically expanding our product lines will require substantial capital which we may not be able to satisfy solely through our operations.
we may rely on bank borrowing, if available as well as capital raises .
GeoSpecial Notes
Added to the GeoSpecial list on November 12, 2009 @ $6.35.Catalyst: Is in a hot sector; We were excited about the proposed acquisition strategy to propel growth. Peak performance: Reached a high of $6.55 on November 23, 2009Current Price : $6.10 Current road block : Dilution may hinder near term EPS growth despite sharp rise in revenue; Still no acquisition; Richly valued when compared to the ChinaHybrid space.
Comments & Business Outlook
"We are very pleased with our first quarter results . These results reflect strong organic growth and the contribution of our recently completed acquisitions. Asia's robust economic growth continues to fuel demand for our products. We are focused on highly sought-after organic products, herbal and chemical extracts and natural and health supplements. We have put in place a solid foundation for strong organic growth and continue to seek strategic acquisitions," stated Marius Silvasan, ONE's CEO.
"The increase in our ownership position in one of our key subsidiary, which occurred April 19, 2010, will result in a decrease in the non-controlling interest in future periods further improving our net income and earnings per share. Historically the first quarter is the weakest quarter of the year. We anticipate even stronger results for the remaining three quarters of 2010," added Silvasan .
Special Situations
In our quest to identify promising Chinese firms, the GeoTeam discovered a few agriculture and organic products companies, such as China Green Agriculture (NYSE AMEX:CGA ) and China Agritech Inc (NASDAQ:CAGC ), that have provided us with handsome rewards.
We have stumbled upon another firm in this space - One Bio Technologies, Inc. (OTC BB:ONBI). The Company’s Introduction into the U.S. capital markets was the result of a reverse merger transaction in June of 2009. One Bio’s goal is to create a vertically integrated company by acquiring Chinese firms operating in the “green” industry, one of the fastest growing sectors in Asia. The Company is targeting China because of the country’s favorable economic growth profile.
Understanding One Bio
The Company embarked on its business model by acquiring two Chinese firms that supply customers with raw material for use in the production of fertilizer, supplements and organic food.
The Company’s Chemical and Herbal Extracts (CHE) unit was established through the acquisition of an 83 % interest in Green Planet Bioengineering, Co., Ltd. Green Planet, in existence since April 2004, consists of two divisions that produce chemical and herbal extracts for use in a wide range of health & wellness and organic fertilizer products.
For example, One Bio produces chemical extracts, from the tobacco leaf, used by its customers to make Coenzyme Q10. The Company is very excited about the Coenzyme Q10 line which is speculated to have benefits when dealing with issues of cardiac arrest, blood pressure, migraine headaches and longevity of life.
One Bio’s Organic Products (OP) unit was established through the acquisition of an 84% interest in Jianou Lujian Foodstuff Co., Ltd. (“UGTI”). UGTI, in existence since September 2002, develops products and extracts derived from bamboo that are used by its customers to produce food, health and agriculture products. One Voice currently holds over 16,000 acres of organically certified bamboo land and 6,000 acres of vegetable land. UGTI is the third largest bamboo producer in China.
The company has a third operating unit which acts as an internal finance arm ready, able and dedicated to fund and facilitate the growth of One Voice’s core bioengineering business.
One Bio feels that it is poised for further internal and external growth, especially if it is able to raise capital that will be used for specific expansion goals:
The Company intends to upgrade its facilities in order to increase raw material production. The CHE subsidiary could then purchase more tobacco leaves and produce more extract. For example, its OP subsidiary is currently operating at 100% capacity, but is only utilizing a portion of its 16,000 acres available for bamboo.
The Company would like to become less of a wholesaler and create propriety products, through both of its subsidiaries, to sell directly to the end user. To accomplish this task, One Bio must establish manufacturing capabilities. This is expected to have an eventual positive effect on sales and margins.
The addition of production and manufacturing facilities will enable One Voice to purchase more land and pump out more products.
One Bio plans to add to its customer base by developing an extensive distribution network.
The ultimate goals are to develop and add more product lines as well expand geographically.
One Bio intends to partly accomplish its tasks through a vertical acquisition strategy that it hopes to implement by mid 2010. In the meantime the Company feels it can continue to grow EPS at a respectable 20% rate. Finding attractive acquisition targets should be achievable in a market that is fragmented, filled with entrepreneurs operating profitable businesses with limited financial resources.
Financial Snap Shot:
Proforma Income Statement Highlights:
2008 Actual 2009 June YTD 2009 Forecast
GAAP Revenue
$34.8 million
$16.5 million
$41.3 million
Income Before Income Tax
$10.4 million
$5.0 million
$12.5 million
Net Income
$7.1 million
$3.5 million
$8.7 million
Notes: No Long Term Debt, $6.8 million Short-Term Note/Loans, $9.7 in Working Capital, Cash Flow positive
We will have more information on Company financials after the filing of third quarter results. The GeoTeam ® is excited to follow the One Bio story. It is targeting markets that are in their infancy and supported by government “green” initiatives. Its vertical integration strategy should enable the company to expand its product depth and margins, as well as its geographic presence outside the 15 provinces it reaches domestically in China and other Asian and European markets it now covers.
We are also excited that the Company has United States head quarters with an American influenced management team.
Given One Bio’s low valuation we are coding it as a GeoSpecial. With a forward implied EPS of $0.33 (based on Company net income guidance), the Company is trading at a P/E ratio of 15 with a PEG ratio of 0.68. We are also placing the stock on the GeoBargain on the radar list in anticipation of the execution of its 2010 strategy after which time we would be more comfortable speculating that consistent 30% EPS growth is achievable.
The Company’s industry counterparts are comparables such as China Green Agriculture (NYSE AMEX:CGA ), American Oriental Bioengineering (NYSE:AOB ) China-Biotics Inc (NASDAQ:CHBT ) and China Sky One Medical (NASDAQ:CSKI )
Risks Considerations:
8% of the Company’s revenue comes from two customers
Future EPS growth is dependent on the completion of acquisitions with favorable financing terms.
Access to capital could be limited.
Dilution is always a risk that can accompany an acquisition strategy, although One Voice seems very keen on maximizing shareholder value and earnings accretion.
We have posed the following questions to management:
Q - What are the terms of your 2,287,917.00 loan receivable amount?
A - These are third party client loans we made to facilitate the trade of our products and fund expansion. These are being paid within 45 to 60 days on average. It is similar to accounts receivable but since it is funded through our internal financing arm classified as loans receivable.
Q - Are you satisfied with a 98 DSO account receivables position?
A - Chinese payment terms are traditionally longer than the 30 to 60 days terms offered in North America. Our relationships are long term in nature and to date bad debt has not been an issue. We are comfortable with our AR collection cycle at this time.
Q - What is your cash flow from operations thus far in 2009?
A - Will defer the answer for a few days until our Q3 numbers come out.
Q - Can you please outline your return on capital goals as it pertains to pre-tax income? (i.e. $1.00 of capital spent = how much of desired income.)
A - We work with a 14 months rate of return for acquisitions on the cash deployed and an 18 months rate of return on cash deployed for organic growth.
Q - Can you please define the desired characteristics of acquisition targets?
A - Target companies must have the following criteria:
Fast growing, cash flow positive leaders in industries where existing management has a history of profitable operating experience in the region complimented by a clear plan for growth;
Bioengineering companies with proprietary technology;
Repeatable and sustainable revenue streams;
High barriers to entry; and
Synergies with ONE Bio’s current operating units, including but not limited to:
Increased product diversification;
Ability to further vertically integrate our current offering (from ray material cultivation, extraction to the delivery of over the counter end user products);
Increased production capacity; and
Extended distribution network.
Q - Can you provide ProForma annual sales and EPS numbers for 2007?
A - Will have in a few days
Q - Can you provide past and expected growth rates for your industry?
A - We operate in a niche where competitors are small particularly in the Asia pacific, China market. There are various opportunities to consolidate our industry and gain scale. Our historical growth rate has ranged between 20 to 30% per annum. We anticipate said growth rate to accelerate as we execute on our acquisition and organic growth strategy. Our growth rate exceeds our industry growth rate but may not be a relevant comparison when the industry is controlled by larger players in the western world.
Q - What is the current significance of your 6,000 acres of vegetable land?
A - The combination of our Bamboo land and vegetable land allows us to deliver a wider variety of organic products thus increases our competitive advantage. We are currently the 3rd largest producer of organic foods based on bamboo in China and the only one in China to have gained food safety certifications from China (HACCP), Japan (JAS) and Europe (ESFA).
Q - How much of your 16k bamboo acres are you utilizing?
A - 60%
Q - Do you outsource all of your production/manufacturing?
A - All or production and/or manufacturing is done in house with facilities owned by ONE and its operating subsidiaries.
