The following statement is from Tank Sports CEO Jiang Yong Ji, commenting on the company's third quarter results and discussing the company?s future:
"Although this is the worst quarter in terms of operating results that we have ever had in the company's history, the company has enlarged its product range and customer base through the acquisition of PMI, which would help the company to expand its revenue in the coming year," Ji said.
"What happened in the recreational vehicles market in 2007 is beyond everyone's expectation. Our sales were hit by consumer spending decline together with the general perception of unstable quality of products made in China. To counter the above and differentiate ourselves from competitors, we have acquired new products through acquisition of PMI and increased our parts inventories in the U.S. to provide better after-sales services.
"For the quarter ended Nov. 30, 2007, we recorded 27% revenue growth compared to same quarter last year and share holder's equity increase about 900%. The bigger loss in the quarter was contributed by lower margins on obsolete products sold as a result of keen competition in the industry and higher operating expenses."
"We expect the financial position of the company will turn around in 2008 for the following reasons:
1) The acquisition of Redcat on 1/30/2007 has increased the company's dealer number in the ATV market and brought in the state of the art ERP system in conjunction with national warehouse network to support broader dealership base. It was the first deal that the company ever did to acquire a U.S. competitor. This transaction has enable Tank to enlarge its U.S. dealership base for the introduction of more new products to come.
2) On November 15, 2007, the company completed the acquisition of 100% of People's Motor International Co. Ltd. (PMI). Through this acquisition, Tank has access to the European and U.S. chain store markets which were not previously available, and has a production facility consisting of 300,000 sq. ft. of commercially zoned land and a factory of 80,000 sq. ft. in Shanghai. Furthermore, PMI's Dazon brand product line has increased Tank's product mix with a line from 90cc to 1100cc buggies with owned technology and design patents. The Dazon brand has the highest reputation among Chinese buggy manufacturers and has many loyal customers in U.S. and Europe. This acquisition also helped PMI to continue its co-development of a new buggy with Fuji Heavy Industry (FHI), which is anticipated to be available in the summer of 2008.
3) Tank Guangzhou, an affiliation of Tank Sports in Guangzhou, China, has signed an agreement to purchase manufacturing technology, machinery and equipment from National Motorcycle Company Ltd. (NMC) in Taiwan for RMB 7.5 million. The agreement has made it possible for Tank to acquire new products such as ATVs from its Guangzhou affiliate to further enrich its product mix for U.S. and global distribution.
4) Through all the efforts, we have established a global strategic Tank organization including manufacturing, marketing and distribution, customer support system in conjunction of brand names of TANK, RC, DZ, NA. Our objective is to synergize all the acquired entities and assets to become a market leader in terms of manufacturing and global distribution. We expect the synergy effect would be twice as big, which will lay a solid foundation taking Tank to a high level in sales revenue and profits in the coming year.
"We will have the brand new products lineup in the Indy Show Feb. 15-18, 2008, and this will mark the beginning of a new era for Tank," Ji concluded.