Emerald Dairy Reports Fiscal First Quarter 2008 Financial Results

RESTON, Va., May 20 /Xinhua-PRNewswire-FirstCall/ -- Emerald Dairy, Inc.
(OTC Bulletin Board: EMDY), today announced first quarter 2008 financial
results. The Company plans to file its first quarter 2008 Form 10Q today.
Key Highlights from the first quarter 2008 include:
-- Revenue increased 77.4% year over year to $10.4 million from
$5.9 million in 1Q07

-- Gross profit increased 86.0% year over year to $4.4 million, gross
margin of 42.4%

-- Income from operations was $79,026, reflecting up-front costs of
approximately $1.6 million, or $0.05 per diluted share, in investment
in advertising and promotion activities

Mr. Yang Yong Shan, Chief Executive Officer of Emerald Dairy, stated, "We
are pleased to present our investors with today's results. During the first
quarter, we continued to demonstrate strong top line growth with 77.4%
increase in revenue. Our operating results included significant up-front
costs in advertising and promotion activities. We are confident that this
investment will bring long-term benefits as we continue to penetrate tier-2
and tier-3 cities."
Revenue for the first quarter of 2008 was $10.4 million, up 77.4% from
$5.9 million in the first quarter of 2007. The revenue increase was primarily
attributable to the launch of the new product series and increased popularity
of the Company's products as a result of its new television advertising
campaign. Gross profit increased 86.0% to $4.4 million from $2.4 million in
the first quarter of 2007. Gross margin increased to 42.4% in the first
quarter of 2008 from 40.4% in the prior year's period, primarily reflecting
the increase in the average selling price during the first quarter of 2008 and
partially offset by the increase of the price of raw materials.
Income from operations was $79,026, compared with $665,676 in the first
quarter of 2007. The decrease was the result of an increase in operating
expenses to $4.3 million from $1.7 million in the first quarter of 2008.
Selling expenses increased 142.3% to $3.7 million and reflected continued
spending in advertising, promotion and distribution activities. In the first
quarter of 2008, the Company incurred a significant year-over-year increase of
$1.5 million to $1.6 million, or $0.05 per diluted share, in up-front costs
related to its investment in advertising and promotion activities. The
Company believes for the full year 2008, investment in advertising and
promotion activities will stay constant at approximately 8% to 10% of total
revenue.
Administrative expenses increased 270.4% to $598,004 during the first
quarter of 2008 from $161,430 in the prior year's period, as a result of costs
associated with becoming a public company during the fourth quarter of 2007 as
well as continued increases in office expenses and staff salaries related to
the Company's expansion.
Income taxes were $80,580, compared to $24,302 in the first quarter of
2007. The increase was primarily attributable to a change in the tax
exemption status of the Company's subsidiary, Heilongjiang Xing An Ling Dairy,
from 100% of the prevailing tax rate in China to 50%. As a result, effective
tax rate for the first quarter of 2008 was 12.5%. The Company expects the
subsidiary's tax exemption status will continue through 2010.
Net income was $2,818, or $0.00 per diluted share in the first quarter of
2008, down from $638,786, or $0.03 per diluted share in the first quarter of
2007.
Balance Sheet
As of March 31, 2008, the Company had $7.7 million of cash, compared to
$6.6 million at December 31, 2007 and $3.8 million at September 30, 2007.
Emerald Dairy had working capital of approximately $13.7 million at March 31,
2008. The Company had no long term debt.
Financial Outlook
For the fiscal year of 2008, the Company continues to expect revenue and
net income growth of approximately 30%, based on an increased production
capacity to 9,000 tons per year by the end of 2008.
About Emerald Dairy Inc.:
Through its wholly-owned operating subsidiaries, Emerald Dairy Inc. is a
producer and distributor of infant and children's formula, milk powder and
soybean products in the People's Republic of China. The Company's products
are sold under two brand names -- "Xing An Ling" and "Yi Bai."
Certain statements in this release and other written or oral statements
made by or on behalf of the Company are "forward looking statements" within
the meaning of the federal securities laws. Statements regarding future
events and developments and our future performance, as well as management's
expectations, beliefs, plans, estimates or projections relating to the future
are forward-looking statements within the meaning of these laws. The forward
looking statements are subject to a number of risks and uncertainties
including market acceptance of the Company's services and projects and the
Company's continued access to capital and other risks and uncertainties. The
actual results the Company achieves may differ materially from any forward-
looking statements due to such risks and uncertainties. These statements are
based on our current expectations and speak only as of the date of such
statements.

Emerald Dairy Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Three Months Ended March 31, 2008 and 2007
(Unaudited)

2008 2007

Sales $10,434,459 $5,882,614

Cost of Goods Sold 6,011,234 3,503,571

Gross Profit 4,423,225 2,379,043

Operating Expenses
Selling expenses 3,731,334 1,540,078
Administrative 598,004 161,430
Depreciation and amortization 14,861 11,859
Total operating expenses 4,344,199 1,713,367

Other Income (Expense)
Interest income 5,628 830
Interest expense (1,256) (3,418)
Total other income (expense) 4,372 (2,588)

Net Income Before Provision for Income Tax 83,398 663,088

Provision for Income Taxes
Current 80,580 24,302
Deferred -- --
80,580 24,302

Net Income $2,818 $638,786

Basic Earnings Per Share $0.00 $0.03

Basic Weighted Average Shares Outstanding 29,296,832 20,416,658

Diluted Earnings Per Share $0.00 $0.03

Diluted Weighted Average Shares Outstanding 29,513,646 20,416,658

The Components of Other Comprehensive Income
Net Income $2,818 $638,786
Foreign currency translation adjustment 616,833 284,270

Comprehensive Income $619,651 $923,056

Emerald Dairy Inc. and Subsidiaries
Condensed Consolidated Balance Sheet
March 31, 2008 and December 31, 2007

ASSETS
2008 2007
(Unaudited) (Audited)
Current Assets
Cash and cash equivalents $7,668,051 $6,560,931
Trade accounts receivable 5,875,125 5,096,828
Inventory 1,595,085 1,000,427
Advance to suppliers and other
receivables 477,447 761,409
Deposits 2,652,336 3,175,342
Total current assets 18,268,044 16,594,937

Property, plant and equipment, net 3,389,455 3,320,081

Intangible assets, net 116,045 115,228

$21,773,544 $20,030,246

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
Accounts payable and accrued expenses $3,832,405 $2,395,190
Advances from employees 241,728 301,644
Taxes payable 325,582 313,333
Notes payable 0 273,973
Loan from shareholder 204,598 196,526
Total current liabilities 4,604,313 3,480,666

Put/Call Liability 3,169,444 3,169,444
7,773,757 6,650,110

Stockholders' Equity
Preferred stock ($0.001 par value,
10,000,000 shares authorized, none
issued and outstanding at March
31, 2008 and December 31, 2007) -- --
Common stock ($0.001 par value,
100,000,000 shares authorized,
31,241,276 issued and outstanding
at March 31, 2008 and
December 31, 2007) 31,241 31,241
Treasury Stock (1,944,444 shares at
March 31, 2008 and December 31, 2007) (1,944) (1,944)
Additional paid-in capital 4,666,244 4,666,244
Retained earnings 7,794,713 7,791,895
Accumulated other comprehensive income 1,509,533 892,700
Total stockholders' equity 13,999,787 13,380,136

$21,773,544 $20,030,246

For more information, please contact:

In the U.S.:
Ashley Ammon MacFarlane or Wei-Jung Yang
ICR, Inc.
Tel: 203-682-8200

SOURCE Emerald Dairy Inc.

Ashley Ammon MacFarlane or Wei-Jung Yang of ICR, Inc. +1-203-682-8200