RODOBO INTL INC (GREY:RDBO)

Third Quarter 2011 Financial Results

• Net sales for the third quarter of 2011 were $12.7 million, a decrease of $6.5 million or 33.8%, compared to $19.1 million for the third quarter of 2010. The decrease in net sales was primarily due to the delay of AQSIQ's online publicity of the new production license which our Company received in March 2011. As a result, we temporarily ceased production in June 2011.
• We incurred $6.9 million of net loss for the third quarter of 2011, compared with $2.7 million of net income for the third quarter of 2010. This is primarily due to the decrease in net sales and the increase in operating expenses.
• Fully-diluted loss per share for the third quarter of 2011 was $0.25, compared to fully-diluted earnings per share of $0.10 in the third quarter of 2010.

"The third quarter was an unusual quarter for Rodobo. During the quarter, we were made aware of an incident where a third party distributor sold products that we marked as "obsolete" and as a result we pulled from the shelves. These actions were in violation of our explicit instructions and certain food safety standards. As a result, while we recently were issued a production license from the General Administration of Quality Supervision, Inspection and Quarantine of the PRC ("AQSIQ"), the AQSIQ nonetheless decided to delay its online publicity of our new license. Because of this, we realized a significant reduction in sales orders and decided to temporarily cease production in June," stated Mr. Yanbin Wang, Chairman and Chief Executive Officer. "After an investigation conducted by the local police into the actions of this third party, both the local police and AQSIQ determined that there was no direct link between our Company and this third party's illegal activities, and that our products are safe. As a result of our continuous efforts in communicating with the AQSIQ and other related governmental departments over the past month, we are extremely pleased to now report that we have received this online publicity from the AQSIQ on August 11, 2011. Thus, as we anticipated, Rododo's product quality has now been officially recognized by the Chinese food safety authority. We will gradually recover our sales channels and are now looking forward to rebuilding our brand image in the fourth quarter of 2011 through a series of promotional activities. We believe that this adverse impact will be temporary and we will continue to provide Rodobo's high quality and nutritious milk powder products to our customers."

HARBIN, China, June 14, 2011 /PRNewswire-Asia/--Rodobo International, Inc. ("Rodobo", or the "Company") (OTC Bulletin Board: RDBO), a fast growing producer and distributor of high-quality formula milk powder for infants, children, the middle aged and the elderly, today announced that it has adjusted its third quarter 2011 guidance previously announced on May 16, 2011 by reducing the

• sales revenue from the range of $23 - $26 million to the range of $12 - $14 million,
• net income from the range of $3.5 - $3.8 to net loss in the range of $2 - $4 million, due to a delay of the online publicity of the new production license which the Company received in March, 2011.　

As previously announced, on March 15, 2011, the Company received a new production license for its operating subsidiary in China, Harbin Rodobo Dairy Co., Ltd ("Harbin Rodobo"), issued by the General Administration of Quality Supervision, Inspection and Quarantine of the PRC ("AQSIQ"). Generally, as soon as the formal production license is issued, the Heilongjiang Bureau of Quality and Technical Supervision ("HBQTS"), the provincial subsidiary of AQSIQ, also issues an online publicity ("Publicity) announcing the new production license on AQSIQ's official website. However, in our instance HBQTS informed us that it delayed the Publicity due to technical problem.  

Coincidently, during the period between the receipt of new production license and the Publicity, we were notified of an incident where a third party distributor apparently sold our products in violation of our express instructions and food safety standards.  While most of our products have an average shelf life of 18 to 24 months, we find that consumers are reluctant to buy products that have only 2 to 3 months of their remaining shelf life.  As a result, we often pull these products from the shelves, mark them as "obsolete", and in accordance with standard industry practice, sell these products marked as "obsolete" to manufacturers of feedstuff for animals.  In accordance with this practice, in May of 2010 we entered into a sales agreement with Harbin Longxin Feedstuff Co., Ltd ("Longxin") to sell 38 tons of our infant formula milk powder that had been marked as "obsolete".  In the sales agreement, Longxin expressly guaranteed that our obsolete milk powder would only be used as feedstuff for animals.  All products sold to Longxin were marked "obsolete" by Rodobo, in accordance with our standard procedures.  We have been advised that despite our express instructions and the requirements of the sales agreement, Longxin resold our obsolete products to a third party manufacturer, Inner Mongolia Jiahaili Co., Ltd. ("Jiahaili"), who illegally used the obsolete milk powder to produce food products for human consumption.  A food safety authority reviewed this matter and reported it to the local police for further investigation.  After investigating, the local police determined that there is no direct link between our company and Jiahaili's illegal activities.  While we were unaware at the time that our obsolete products were resold in this manner, we have actively assisted the local police and will continue to do so while the police continue to investigate Jiahaili's activities until the matter is resolved.  We intend to continue to vigorously investigate this situation and take any and all actions we deem appropriate to defend and protect Rodobo and its subsidiaries with respect to the circumstances and illegal usage of our products.

AQSIQ has been made aware of this matter and has conservatively decided to delay our Publicity until the police investigation is closed. This delay in Publicity does not prevent us from utilizing our production license. While we have explained to our customers and distributors that we have received and can utilize our production license, this delay in Publicity has significantly impacted our sales.  As a result of this, our production was impacted due to reduction of sales orders.

"The quality of our products and the safety of our consumers is our top priority.  Currently, in order to enhance consumers and distributor's confidence in our products, we are actively communicating with AQSIQ and other relevant government departments to complete the Publicity as soon as possible. We anticipate that we will receive this Publicity within a month," stated Mr. Yanbin Wang, Chairman and Chief Executive Officer, "It is management's obligation to notify our investors of this anticipated adverse impact. According to our preliminary estimates, we have decided to adjust our third quarter 2011 guidance previously announced on May 16, 2011 by reducing the sales revenue from the range of $23 - $26 million to the range of $12 - $14 million, and net income from the range of $3.5 - $3.8 to net loss in the range of $2 - $4 million. We will continue to monitor this situation and when necessary or advisable provide updated information relating to this event and its impact on our financial performance to our shareholders and consumers in a timely manner. We believe that this adverse impact will be temporary and we remain confident in our high-quality, nutritious and fresh milk powder products. "

Second Quarter 2011 Highlights:

• Revenue was $25.6 million, up 67.1% from $15.3 million in 2Q10, close to the upper range of the Company's 2Q11 guidance $23 - $26 million
• Gross profit was $9.7 million, up 62.1% from $6.0 million in 2Q10
• Net income was $3.8 million, up 77.0% from non-GAAP net income of $2.2 million in 2Q10, outperforming 2Q11 guidance range of $3.3 - $3.6 million
• Earnings per diluted share was $0.14, up from non-GAAP earnings per share of $0.10 in 2Q10

"We are pleased to report another quarter of record revenue and strong profitability. It is our sixth consecutive top line growth quarter," stated Mr. Yanbin Wang, Chairman and Chief Executive Officer. "During the quarter, we focused on enhancing product quality by refurnishing the testing laboratory and production facilities with more advanced testing instruments and production equipment in compliance with the new regulations promulgated by the Chinese government in November 2010, consequently, we received the production license renewal in March. We believe that the license renewal was an important milestone for Rodobo as it demonstrates that our consistent efforts on quality control have been well recognized by the Chinese government even with the government's increasing scrutiny of the infant milk powder industry. We will continue to focus on preserving the trust of the government and our customers in the future by continuing to provide Rodobo's high quality and nutritious milk powder products to our customers."

Third Quarter 2011 Guidance:

Management feels confident to give its guidance for the third quarter of 2011 for

• revenue to be in the range of $23 - $26 million 
• net income to be in the range of $3.5 - $3.8 million.

HARBIN, China, Feb. 28, 2011 /PRNewswire-Asia-FirstCall/ -- Rodobo International, Inc. ("Rodobo", or the "Company") (OTC Bulletin Board: RDBO), has been orally informed that its operating subsidiary in PRC, Harbin Rodobo Dairy Co., Ltd ("Harbin Rodobo"), has passed its on-the-spot inspection performed by the Heilongjiang Bureau of Quality and Technical Supervision ("HBQTS") and will obtain the new production license for its infant formula powder products in March 2011.

Fourth Quarter 2010 Highlights:

• Revenue was $25.3 million, up 172.6% from $9.3 million in 4Q09, outperformed 4Q10 guidance range of $20 - $24 million
• Gross profit was $9.4 million, up 87.5% from $5.0 million in 4Q09
• Net income was $3.6 million, up 112.4% from $1.7 million in 4Q09, outperformed 4Q10 guidance range of $3.0 - $3.2 million
• Earnings per diluted share was $0.13, up from $0.10 in 4Q09

Full Year 2010 Highlights:

• Revenue was $69.8 million, up 101.2% from $34.7 million in 2009
• Gross profit was $28.0 million, up 59.0% from $ 17.6 million in 2009
• Net income was $12.4 million, up 82.5% from $6.8 million in 2009  
• Earnings per diluted share was up to $0.53 from $0.42 in 2009

First Quarter 2011 Guidance:

Management feels confident to give its guidance for the first quarter of 2011 for

• revenue to be in the range of $24 - $26 million
• net income to be in the range of $3.2 - $3.5 million.

"Rodobo closed its fiscal year 2010 with strong fourth quarter results and it is our fourth consecutive top line growth quarter. Our strong revenue and net income growths demonstrated the strong market demand for Rodobo's high quality, fresh and nutritious milk powder products, the effectiveness of our strategy of expanding our production capacity, and our ability in marketing execution" stated Mr. Yanbin Wang, the Chairman and Chief Executive Officer of Rodobo. "Overall, 2010 was an extraordinary and successful year for Rodobo. The acquisition of the Beixue Group is a key groundwork of our growth strategy. As we move into 2011, we will continue to consolidate our acquisition, realign our product lines and improve our capacity utilization as we continue to expand our distribution network and further penetrate into our existing market in both formulated dairy and raw milk powder products."

Third Quarter 2010 Highlights:

• Revenue was $19.1 million, up 86.5% from $10.3 million in 3Q09.
  
• Gross profit was $7.3 million, up 25.6% from $5.8 million in 3Q09.
  
• Net income was $2.7 million, up 32.8% from $2 million in 3Q09.
  
• Earnings per diluted share was down to $0.10 from $0.13 in 3Q09.
  
• Closed with certain accredited institutional investors the private placement for net proceeds totaling approximately $2.64 million. 

 "We are pleased to report very strong financial results, exceptional revenue growth and strong profitability for the third quarter of 2010. Rodobo has a strong operating history, achieving a very strong and consistent revenue and net income growth over the last four years," stated Mr. Yanbin Wang, the Chairman and Chief Executive Officer of Rodobo. "In addition to these results, we are very pleased with the acquisition and early results of the Beixue Group. Our formula milk products sales expanded to two new provinces, Jiangsu and Anhui and continue to penetrate into other seven provinces."

Business Outlook:

Over the next twelve months, Rodobo intends to pursue its primary objective of increasing its market share in China's diary industry. The Company is also evaluating acquisition and consolidation opportunities in China's fragmented dairy industry. Rodobo's management believes it has sufficient working capital to operate its existing business for the next twelve months by using its cash generated from its operating activities as well as part of the net proceeds from the private placement which closed on June 23, 2010.

"Our markets remain robust as the Chinese government continues to support the modernization of the dairy industry as well as support improved hygiene and food safety standards. We have established a successful vertically integrated business model and remain dedicated to continue building a nationally-recognized leading brand for our premium dairy products and create value for our shareholders," concluded Mr. Wang.

Fourth Quarter 2010 Guidance:

 Management feels confident to give its guidance for the fourth quarter of 2010 for:

• Revenue to be in the range of $20 - $24 million
  
• Net income to be in the range of $3.0 - $3.2 million.

Dutch, in respone to your message…We took a look at the RDBO transaction and without input from the company we can’t really see how this will help shareholders in the short run.

It looks like RDBO bought three companies:

EWENKEQI BEIXUE DAIRY CO., LTD
HULUNBEIER BEIXUE DAIRY CO., LTD.
HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY

The CEO had 51% interest in Ewenkeqi BEIXUE DAIRY CO., LTD and Hulunbeier Dairy.

EWENKEQI BEIXUE DAIRY CO., LTD

Purchased for $73,236 and 800,000 shares of stock

Established on April 27, 2005 is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

HULUNBEIER BEIXUE DAIRY CO., LTD.

Purchased for $146,473 and 1,000,000 shares in stock

Established on March 26, 2007, is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY

Purchased for $87,884 and 8,800,000 shares in stock

Established on February 4, 2002, is engaged in the production, processing, distribution and development of powdered milk products in the PRC.

In addition to the shares issued above:

"In connection with the Acquisitions, on February 5, 2010, the Company entered into Securities Purchase Agreements with three British Virgin Islands companies: August Glory Limited, Fame Ever Limited, and Fortune Fame International Limited, which, as designees of the former shareholders of Ewenkeqi Beixue, Hulunbeier Beixue and Hulunbeier Hailaer Beixue, would be issued 1,250,000 shares of Common Stock, 3,050,000 shares of Common Stock, and 6,300,000 shares of Common Stock and 2,000,000 shares of Series A Preferred Stock, respectively, as consideration for the Acquisitions."

We are not sure what the relationship these firms have to each other. We noticed that all of EWENKEQI BEIXUE DAIRY revenues went to HULUNBEIER BEIXUE DAIRY. Both have minimal revenues and profits with none in the fourth quarter of 2009. Why are you diluting 11% (800 K + 1 M shares) for two firms that essentially have no operations?

Also, regarding Ewenkeqi:

“The Company has ceased production since March 2009”

HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY seems like the meet and potatoes of the transaction. Interestingly, its 2009 revenues only grew 16% while net income grew 25%. RDBO 2009 net income was $6.8 M. So, basically RDBO increased its share count by over 60% for a 30% bump in net income. Furthermore, margins of Hunlunbeier are much less than RDBO 2009 figure of 20%. What we see is a related party transaction that put money in the CEO�s pocket, albeit a possible exaggeration since the company has really not communicated on this transaction in a press release. We do know that HUNLUNBEIER HAILAER BEIXUE DAIRY FACTORY is in 20 provinces. So, maybe this acquisition increases province coverage for RDBO’s current product line.

RDBO finally sifted through its dilution issues from its original reverse merger transaction and now has to deal with it again. The company has to increase earnings by at least 60% to attain just zero EPS growth. This is a bit disparaging being that the company's first quarter EPS growth was already flat when compared to the well-performing ChinaHybrid stocks.

We need more clarification on how these acquisitions will increase the company's growth rate. Maybe they addressed it in their recent investor road show presentations, hinting that and growth will take off? We are also curious if the company is going to raise more capital to support the CEO ‘pet” projects of Ewenkeqi and Hulunbeier Dairy.

The GeoTeam is speculating that RDBO is taking moves to up list its stock from the Bulletin Board"

Rodobo announced the election of Mr. Zhiqiang E to the Company's board of directors. Mr. E is the first independent director of the Company.

Mr. E's extensive experience in China's dairy business will add great value to our board and demonstrate our continued effort to improve our corporate governance," stated Mr. Wang.

Source: PR Newswire (November 17, 2009)