Emerald Dairy Reports Net Income for 2nd Quarter 2009 Rose to a Record $1.26 Million

RESTON, Va., Aug. 14 /PRNewswire-Asia-FirstCall/ -- Emerald Dairy, Inc. (OTC Bulletin Board: EMDY.OB), a leading producer and distributor of infant and children's formula, milk powder and soybean products in China, today announced record revenues for the second fiscal quarter and first six months ended June 30, 2009.

Net income for the three-month period ended June 30, 3009 rose to $1,263,136, up from $698,350 for the same period in 2008. For the six-month period ended June 30, 2009, net income rose to $2,815,842 from $701,168 for the same period in 2008. The increases were due to increases in gross profit, achieved largely by substantial reductions in cost of goods sold.

Cost of goods sold decreased by $1,641,853, or 22.5%, from $7,281,163 in the three months ended June 30, 2008, to $5,639,310 for the same period in 2009. For the six-month period, cost of goods sold decreased by $1,804,412, or 13.6%, from $13,292,397 in 2008 to $11,487,985 in 2009.

Gross Profit was $4,607,625, or 45.0% of sales, for the three months ended June 30, 2009, as compared to gross profit of $3,623,615, or 33.2% of sales, for the same period in 2008. For the six-month period in 2009, gross profit was $9,615,502, or 45.6% of sales, compared to gross profit of $8,046,840, or 37.7%, for the same period in 2008.

Shu Kaneko, Chief Financial Officer of Emerald Dairy, said: "We are very pleased with the results we achieved in the second quarter of 2009. Sales revenues declined slightly as we shifted to produce more of our higher margin product line and increase our sales prices, but we were able to curb our costs sharply through reductions in the price of raw materials and by reducing subcontracting work. Our reputation for high quality continues to drive product demand even in the face of slower economic growth, and our careful management of resources has supported our healthy bottom line."

Mr. Kaneko added, "The continued strong growth opportunities available to us in our target markets support our plans to triple our production capacity and revenues in the next three years, beginning with the completion of our new processing plant in Hailun City later this year. We are especially pleased with the positive response we are receiving from the investment community to our exciting growth potential."

    Financial Highlights for the Second Quarter and Six Months:

    -- Net income rose to a record quarter of $1,263,136;
    -- Gross profit for the quarter rose by nearly $1 million, to a record
       $4,607,625.
    -- Net income for the six-month period rose from $701,168 in2008 to
       $2,815,842 in 2009.
    -- Gross profit for the six months rose nearly $1.6 million to a record
       $9,615,502

Rapidly Growing Industry

The dairy market today in China is over $13 billion and is expected to grow at a rate of 15% per year for the foreseeable future. The Chinese government has recognized that the dairy industry is not only crucial to reforming the structure of agriculture in the country and increasing the income of farmers, it is also essential to improving the diet, health, and overall welfare of the Chinese people. In recent years, milk and dairy products have gradually become an accepted daily necessity in the life of Chinese people. As a result, the dairy market is one of the fasted growing markets in China.

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," designed for low-end customers, and "Yi Bai," designed for middle and high-end customers. They are distributed throughout 20 provinces in mainland China and sold in over 5,800 retail outlets.

# # #

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 Income
            For the Three and Six Months Ended June 30, 2009 and 2008
                                   (Unaudited)

                               Three months ended         Six months ended
                             June 30,     June 30,     June 30,     June 30,
                               2009         2008         2009         2008

    Sales                  $10,246,935  $10,904,778  $21,103,487  $21,339,237

    Cost of Goods Sold       5,639,310    7,281,163   11,487,985   13,292,397

    Gross Profit             4,607,625    3,623,615    9,615,502    8,046,840

    Operating Expenses
    Selling expenses and
     administrative
     expenses                3,073,694    2,634,812    6,100,398    6,964,150
    Depreciation and
     amortization               43,274       15,570       86,512       30,431
    Total operating
     expenses                3,116,968    2,650,382    6,186,910    6,994,581

    Other Income (Expense)
    Interest income              2,191        3,978        3,144        9,606
    Interest expense            48,352      (42,150)          --      (43,406)
    Total other income
     (expense)                  50,543      (38,172)       3,144      (33,800)

    Net Income Before
     Provision for Income
     Tax                     1,541,200      935,061    3,431,736    1,018,459

    Provision for Income
     Taxes
    Current                    278,064      236,711      615,894      317,291
                               278,064      236,711      615,894      317,291

    Net Income              $1,263,136     $698,350   $2,815,842     $701,168

    Basic Earnings Per
     Share                       $0.04        $0.02        $0.10        $0.02

    Basic Weighted Average
     Shares Outstanding     29,658,726   29,299,332   29,537,604   29,299,332

    Diluted Earnings Per
     Share                       $0.04        $0.02        $0.09        $0.02

    Diluted Weighted
     Average Shares
     Outstanding            30,105,880   29,563,708   29,648,643   29,563,708


    The Components of
     Other Comprehensive
     Income
    Net Income              $1,263,136     $698,350   $2,815,842     $701,168
    Foreign currency
     translation
     adjustment                 16,406      440,717      (39,420)   1,375,312
    Income tax related to
     other comprehensive
     income                     (5,578)    (149,844)      13,403     (467,606)

    Comprehensive Income    $1,273,964     $989,223   $2,789,825   $1,608,874


    For more information, please contact:

    Stanley Wunderlich
     Consulting for Strategic Growth 1
     Tel:   +1-800-625-2236
     Fax:   +1-646-205-7771
     Email: swunderlich@cfsg1.com

SOURCE Emerald Dairy, Inc.