iFresh, Inc. Reports Fiscal 2018 Second Quarter Financial Results

NEW YORK, Nov. 15, 2017 (GLOBE NEWSWIRE) — iFresh, Inc. (“iFresh” or “the Company”) (Nasdaq:IFMK), a leading Asian American grocery supermarket chain and online grocer in the United States, today reported unaudited financial results for the fiscal 2018 second quarter ended September 30, 2017.

Fiscal 2018 Second Quarter Highlights:

  • Total net sales increase of 5% to $33.3 million, compared to $31.9 million in the second quarter of fiscal 2017
  • Retail segment net sales increase of 3% to $26.8 million, compared to $26 million in the second quarter of fiscal 2017
  • Total wholesale segment net sales increase of 12% to $6.6 million, compared to $5.9 million in the second quarter of fiscal 2017
  • Gross profit for the second quarter ended September 30, 2017 increased by 5%, to $6.7 million compared to $6.4 million in the prior year period

Mr. Long Deng, Chairman of the board of directors and CEO of iFresh, commented, “We are pleased to report an increase in total net sales and double-digit wholesale segment growth in the quarter ended September 30, 2017. We report decreased net income in the quarter due to the increase of selling, general and administrative expenses, and higher interest expenses. 

For the remainder of calendar year 2017, we remain committed to driving sales within existing stores and actively pursuing expansion opportunities in strategic geographies. The Orlando store we acquired in July 2017 has contributed $0.8 million revenue to net retail sales. The operation of our recently acquired stores in North Miami Beach and Milford will be reflected in our financial statement for the quarter ended December 31, 2017. We are also in the process of standardizing the presentation of our storefronts and improving our brand image and recognition.

We are ready to capture the opportunities in our growing market in the coming holiday season and expect to improve our bottom-line performance in the next quarter. We look forward to updating you on our performance in the near future,” concluded Mr. Deng.

Second Quarter 2018 Results

Net Sales

For the three months ended September 30, 2017, net sales were $33.3 million, an increase of $1.5 million, or 5%, from $31.9 million for the three months ended September 30, 2016. This was driven by a retail segment net sales increase of 3%, to $26.8 million, from $26 million in the second quarter of fiscal 2017, and a wholesale segment net sales increase of $0.7 million, to $6.6 million, from $5.9 million for the three months ended September 30, 2016.

Gross Profit

Gross profit for the second quarter ended September 30, 2017 increased by 5%, to $6.7 million, compared to $6.4 million in the prior year period. Gross margin was 20.2% and 20.0% for the quarter ended September 30, 2017 and 2016, respectively.

Selling, General and Administrative Expenses

SG&A expense was $7.5 million in the three months ended September 30, 2017, compared to $6.1 million in the same period of the last fiscal year, which was mainly attributable to increased payroll expenses and the additional expenses related to two stores newly acquired on July 13, 2017.

Net Income

Net income was $25,234 for the three months ended September 30, 2017, a decrease of $0.23 million, or 90%, from $0.26 million of net income for the three months ended September 30, 2016, mainly attributable to the increase in selling, general and administrative expenses and higher interest expenses.

Cash, Liquidity and Financial Position

As of September 30, 2017, the Company had cash and cash equivalents of $1.0 million, compared to $2.5 million as of March 31, 2017. Working capital was $15.7 million as of September 30, 2017 compared to $13.4 million as of March 31, 2017. As of September 30, 2017, the Company had $1.2 million of bank loans due within one year.

For the six months ended September 30, 2017, net cash used in operating activities was $1.0 million. Net cash used in investing activities was $3.2 million. Net cash provided by financing activities was $2.7 million.

About iFresh, Inc.

iFresh Inc., headquartered in New York, New York, is a leading Asian American grocery supermarket chain and online grocer. With nine retail supermarkets along the US eastern seaboard and two in-house wholesale businesses strategically located in cities with a highly concentrated Asian population, the Company aims to satisfy the increasing demands of Asian Americans, whose purchasing power has been growing rapidly, for fresh and culturally unique produce, seafood and other groceries that are not found in mainstream supermarkets. With an in-house proprietary delivery network, online sales channel and strong relations with farms that produce Chinese specialty vegetables and fruits, iFresh is able to offer fresh, high-quality specialty perishables at competitive prices to a growing base of customers. For more information, please visit: http://www.ifreshmarket.com/.

Forward-Looking Statements

This announcement contains forward-looking statements. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words or phrases such as “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “will” or similar words or phrases, or the negatives of those words or phrases, may identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward-looking. Examples of forward-looking statements in this announcement include, but are not limited to, statements regarding our disclosure concerning the Company’s operations, cash flows, financial position and dividend policy.

 
iFRESH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
             
    September 30,     March 31,  
    2017     2017  
ASSETS            
Current assets:            
Cash and cash equivalents   $ 1,016,352     $ 2,508,362  
Accounts receivable, net     3,345,880       2,272,011  
Inventories, net     11,322,782       9,796,984  
Prepaid expenses and other current assets     1,874,874       981,017  
Advances to related parties     16,665,703       14,852,083  
Total current assets     34,225,591       30,410,457  
Property and equipment, net     10,008,894       9,290,674  
Intangible assets, net     1,233,335       1,300,001  
Security deposits     1,089,777       912,346  
Deferred income taxes     350,373       86,799  
Total assets   $ 46,907,970     $ 42,000,277  
                 
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable   $ 14,101,997       12,364,071  
Deferred revenue     201,470       206,737  
Borrowings against term loan -current, net     1,167,764       1,144,568  
Notes payable, current     241,434       262,578  
Capital lease obligations, current     48,581       51,376  
Accrued expenses     802,993       730,392  
Taxes payable     1,507,106       1,769,398  
Other payables, current     481,653       501,213  
Total current liabilities     18,552,998       17,030,333  
Borrowings against lines of credit & term loan-non-current, net     15,745,693       12,779,838  
Notes payable, non-current     380,784       379,376  
Capital lease obligations, non-current     82,013       59,907  
Deferred rent     5,893,684       5,424,134  
Other payables, non-current     67,800       34,800  
Total liabilities     40,722,972       35,708,388  
                 
Commitments and contingencies                
                 
Shareholders’ equity                
Preferred shares, $.0001 par value, 1,000,000 shares authorized; none issued.            
Common stock, $0.0001 par value; 100,000,000 shares authorized, 14,173,033 and 14,103,033 shares issued and outstanding as of September 30, 2017 and March 31, 2017, respectively     1,417       1,410  
Additional paid-in capital     9,211,426       9,075,025  
Accumulated deficit     (3,027,845 )     (2,784,546 )
Total shareholders’ equity     6,184,998       6,291,889  
Total liabilities and shareholders’ equity   $ 46,907,970       42,000,277  

 
iFRESH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
    For the three months ended    
    September 30,     September 30,    
    2017     2016    
Net sales   $ 30,764,800     $ 29,862,331    
Net sales-related parties     2,575,092       2,024,569    
Total net sales     33,339,892       31,886,900    
Cost of sales     22,765,456       22,376,055    
Cost of sales-related parties     1,960,566       1,354,187    
Occupancy costs     1,893,762       1,765,386    
Gross profit     6,720,108       6,391,272    
                   
Selling, general and administrative expenses     7,476,204       6,130,117    
Income (Loss) from operations     (756,096 )     261,155    
Interest expense, net     (208,844 )     (46,718 )  
Other income     1,017,510       263,203    
Income(Loss) before income taxes     52,570       477,640    
Income tax provision (benefit)     27,336       219,279    
Net income (Loss)   $ 25,234     $ 258,361    
                   
Net income (loss) per share:                  
Basic   $ 0.002     $ 0.02    
Diluted   $ 0.002     $ 0.02    
Weighted average shares outstanding:                  
Basic     14,166,440       12,000,000    
Diluted     14,166,440       12,000,000    

 
iFRESH INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
    For the Six months ended  
    September 30,     September 30,  
    2017     2016  
Cash flows from operating activities            
Net income (loss)   $ (243,299 )   $ 436,106  
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Depreciation expense     832,667       778,508  
Amortization expense     157,916       66,666  
Share based compensation     267,400        
Inventory provision           14,339  
                 
Deferred income tax expense (benefit)     (263,574 )     130,396  
                 
Changes in operating assets and liabilities:                
Accounts receivable     (1,073,869 )     (170,849 )
Inventories     (1,525,798 )     (546,362 )
Prepaid expenses and other current assets     (893,856 )     (103,643 )
Security deposits     (98,013 )     168,695  
Accounts payable     1,737,926       1,809,871  
Deferred revenue     (5,268 )     66,424  
Accrued expenses     72,601       24,108  
Taxes payable     (262,292 )     (93,126 )
Deferred rent     290,653       296,116  
Other liabilities     13,439       40,199  
Net cash provided by (used in) operating activities     (993,367 )     2,917,448  
Cash flows from investing activities                
Advances made to related parties     (1,943,197 )     (2,445,980 )
Acquisition of property and equipment     (1,241,261 )     (607,533 )
Cash proceeds received from acquisition of Glen Cove     5,631        
Net cash used in investing activities     (3,178,827 )     (3,053,513 )
Cash flows from financing activities                
Proceeds from borrowings against lines of credit     2,500,000       200,000  
Proceeds from borrowings against term loan     1,050,000        
Repayments on lines of credit borrowings     (652,199 )     (82,000 )
Proceeds from borrowings on notes payable           288,129  
Repayments on notes payable     (187,401 )     (116,857 )
Payments on capital lease obligations     (30,216 )     (26,345 )
Net cash provided by financing activities     2,680,184       262,927  
Net increase (decrease) in cash and cash equivalents     (1,492,010 )     126,862  
Cash and cash equivalents at beginning of the period     2,508,362       551,782  
Cash and cash equivalents at the end of the period   $ 1,016,352     $ 678,644  
Supplemental disclosure of cash flow information                
Cash paid for interest   $ 327,900     $ 90,649  
Cash paid for income taxes   $ 296,067     $ 592,325  
Supplemental disclosure of non-cash investing and financing activities                
Capital expenditures funded by capital lease obligations and notes payable   $ 217,193     $ 288,129  
Stock issued for Glen Cove Acquisition   $ 645,500     $  
 

Contact:

Dragon Gate Investment Partners LLC

Tel: +1(646)-801-2803

Email: ifmk@dgipl.com