SOURCE: China Agritech, Inc.

October 04, 2005 09:12 ET

China Agritech, Inc. Executes Significant Distribution Agreements

Expansion Into Southern China Projected to Double Sales and Income

BEIJING, CHINA -- (MARKET WIRE) -- October 4, 2005 -- China Agritech, Inc. (OTC BB: CAGC), China's leading developer, manufacturer and distributor of liquid organic compound fertilizers announced today that it has recently executed five agreements with organizations that have well established distribution capabilities for agricultural products in southern and central China.

These five organizations have agreed to assist China Agritech with preliminary planning of additional regional production facilities, obtaining favorable tax treatment from local governments as well as distribution of its products. The Company intends to build several regional production facilities that produce customized products for local climates and soil conditions to ensure adequate capacity to meet the anticipated increased demand, minimize time to market and reduce shipping costs.

The Company's sales currently come primarily from the Northern Provinces of China. However, the Company is responding to growing demand for its proprietary compounds by undertaking a strategic expansion into additional, underserved markets throughout China.

On August 22, 2005, management reported that sales increased 104% to $10.2 million for the quarter ended June 30, 2005 from $4.98 million during the first quarter of 2005 and grew 85% as compared to sales of $5.5 million reported in the second quarter of 2004.

Given the size of the new markets now accessible to the Company and the longer growing seasons in these regions the Company projects Sales and Net Income could double from recently reported levels if its new distributors achieve committed sales volumes by the end of 2006 and the Company is able to meet its targets for sales growth from other sources.

Mr. Chang Yu, Chief Executive Officer of China Agritech, explained, "Since the Company was founded twelve years ago, our sales have come primarily from northern China. Through these recently executed agreements, we are extending our capabilities to serve customers in central and southern China. We anticipate that this geographical expansion will contribute substantially to further increased sales and profits as well as reduce the seasonality of our sales because of longer growing seasons in the central and southern regions. The Company will continue to actively pursue additional distribution agreements in these areas. We will also work diligently to broaden our market-leading position in China and will explore opportunities to capture market share throughout Asia in the future."

About China Agritech, Inc.

China Agritech, Inc. and its wholly owned direct subsidiary, China Tailong Holdings Company Limited ("Tailong"), and Tailong's 90% owned subsidiary, Pacific Dragon Fertilizer Co., Ltd. ("Pacific Dragon") develops, produces and markets various organic liquid compound fertilizers which are made from a combination of organic elements such as humic acid and amino acid, inorganic elements such as nitrogen, phosphorus and potassium, microelements such as boron, iron, zinc, manganese and molybdenum, and other active and stimulative agents. Since its establishment, Pacific Dragon has developed, tested, and produced various types of organic liquid compound fertilizers, all of which obtained the formal Registration issued by the PRC Ministry of Agriculture in 2002. Pacific Dragon's products are proven to be innocuous, harmless, and residue and hormone free by the Report issued by Heilongjiang Quarantine Station in China, and can be effectively used in green agricultural production.

The information in this news release includes certain forward-looking statements that are based upon assumptions that in the future may prove not to have been accurate and are subject to significant risks and uncertainties, including statements to the future financial performance of the Company. Although the Company believes that the expectations reflected in its forward-looking statements are reasonable, it can give no assurance that such expectations or any of its forward-looking statements will prove to be correct. Factors that could cause results to differ include, but are not limited to, successful performance of internal plans, product development and acceptance, the impact of competitive services and pricing, or general economic risks and uncertainties.

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