Nevada
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33-1219070
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State
or Other Jurisdiction of
Incorporation
or Organization)
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(I.R.S.
Employer
Identification
Nos.)
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Large accelerated filer
¨
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Accelerated filer
¨
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Non-accelerated filer
¨
(Do not check if a smaller reporting company)
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Smaller reporting company
x
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Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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31
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Item
2.
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Financial
Information
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31
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Item
3.
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Properties
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46
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Item
4.
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Security
Ownership of Certain Beneficial Owners and
Management
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48
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Item
5.
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Directors
and Executive Officers
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50
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Item
6.
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Executive
Compensation
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51
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Item
7.
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Certain
Relationships and Related Transactions, and Director
Independence
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52
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Item
8.
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Legal
Proceedings
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53
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Item
9.
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Market
Price of and Dividends on the Registrant’s Common Equity and Related
Stockholder Matters
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53
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Item
10.
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Recent
Sales of Unregistered Securities
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54
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Item
11.
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Description
of Registrant’s Securities to be Registered
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56
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Item
12.
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Indemnification
of Directors and Officers
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56
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Item
13.
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Financial
Statements and Supplementary Data
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57
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Item
14.
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Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
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57
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Item
15.
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Financial
Statements and Exhibits
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57
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·
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Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry; and
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·
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Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
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Company
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Shareholding
by the group
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Immediate subsidiary
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Equity
Ownership
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Revenues generating activities
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||||||||
Sino
Agro Food, Inc.
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The
Ultimate
Holding Company |
Service
fees will be charged to its operational subsidiaries in China starting in
its fiscal year ending June 30, 2011.
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||||||||||
Capital
Award Inc.
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100 | % |
Fishery
development including consulting service fees, technology fees, supply of
plants and equipment and other related services and management fees, since
2004
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|||||||||
Macau
Eiji Company Limited
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100 | % |
Jiang
Men City Heng Sheng Tai Agriculture Development Co.
Ltd.
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75 | % |
Growing
and processing of HU Plants including sales of fresh and dried HU flowers
and value added processed HU Flowers.
Revenues
generated since 2008.
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||||||
Hang
Yu Tai Investment Limited
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100 | % |
ZhongXingNongMu
Co. Ltd.
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78 | % |
Dairy
Farm operation, including sales of fresh liquid milk, dairy products,
fertilizer, livestock feed and cattle since 2006. Revenues generated
since 2006.
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||||||
A
Power Agro Agriculture Development (Macau) Limited
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100 | % |
Qinghai
Sanjiang A Power Agriculture Co. Ltd (China).
(Operational
company)
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45 | % |
Manufacturing
and beef cattle farming, including the sales of bio-organic fertilizer,
livestock feed and beef cattle. It is anticipated that revenue and sales
will be generated starting from this fiscal year ending June 30,
2011.
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||||||
Tri-way
Industries Limited
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100 | % |
A
newly formed Sino-Foreign Joint Venture Company at Enping County,
Guangdong
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From
20%
(as
provided in the
joint venture agreement) |
Fish
Farm operation including the sales of farmed fish and it is anticipated
that revenues will be generated from July
2011.
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·
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solid
waste filter and separator;
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·
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micro-bio
filter for the treatment of soluble
wastes;
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·
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oxygen
injector;
steam
generated heating compartment (optional, depending on the species of fish
to be grown);
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·
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ultra
violet light disinfection chamber;
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·
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air
blower configuration;
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·
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designs
of the grow-out tanks;
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·
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designs
of the quarantine station;
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·
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designs
of the nursery station;
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·
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designs
of the farm’s fish storage tanks;
and
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·
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designs
of stock feed processing lay-out
plans.
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·
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systems
for rotational stocking of fish and rotational harvesting of fish,
designed to stock the growing fish tanks with certain variety of fish of
certain sizes and age group at pre-determined intervals, to provide
constant production of multiple varieties all year round or as and when
the markets require;
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·
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quality
control systems to keep the quality of the water and production in
check;
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·
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diseases
control and prevention system to enhance better production cycles of the
farms;
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·
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maintenance
programs to ensure the smooth running of the farms’ equipment;
and
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·
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training
programs for the workers on standard operating
procedures.
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Items of comparison
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APT farms
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Conventional farms
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||
Surface
area measured for productivity
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25
tons per year per 72 mІ
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0.5
tons per year per 660mІ
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Water
capacity measured for productivity
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25
tons per year per 100 mі
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0.5
tons per year per 1320mі
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Labor
content
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One
worker per 50 tons per year
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One
worker per 6 tons per year
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Water
usage
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Minimal
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100%
Changed every year
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Energy
requirement
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2.5%
cost of production
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No
specified records
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Quality
standard
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Can
be organic or non-organic.
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No
consistency
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Guaranteed
free from chemical and pollution of export standard
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Not
of export quality
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Harvesting
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All
year round
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Once
or twice annually
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Subjecting
to seasonal variation
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No
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Yes
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Subjecting
to external predators and diseases
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No
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Yes
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Usage
of antibiotics and chemicals
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No
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Yes
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Environmentally
friendly
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Yes
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No
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Live
span of major plants & equipment
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25
years or more
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Two
years
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Average
Gross profit
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minimum
60% of sales value, depending on the species of fish grown
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No
accurate calculation
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Averaged
mortality rate for the Grow-out
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8%
or less
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Above
25%
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Average
of feed to fish conversion rate
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2
to 1
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4.5
to 1
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·
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All
land clearing, leveling and fencing at the development site have been
completed.
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·
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All
soil testing, water quality testing and water in flow rate testing have
been done.
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·
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Majority
of the plants and equipment have been
delivered.
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·
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Construction
of the farm buildings has been in progress and within schedule
(subsequently the construction of the fish farm was completed on November
26, 2010).
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·
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Construction
of all 16 fish tanks were constructed, fully installed and fitted on
December 5, 2010, and since the end of December 2010, the farm underwent a
nurturing period to nurture and to grow filtration bacteria needed in
the tanks for consumption of bio-mass, and as such we expect that the
tanks will be ready for stocking up fingerling to grow-out into marketable
size fish on or before the mid-February 2011. We target the
first sale of fish to start by July
2011.
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·
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Contracts
on the provision of related services and consultancies needed for the
operation of the farm have been organized By December 26, 2010, a new
management team for the operation of the farm has been recruited
consisting at present of 10 personnel including the farm manager,
supervisors, skilled and non-skilled
workers.
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·
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300,000
fingerlings have been ordered for delivery from September 2010 through
November 2010. On our last inspection at the supplier’s farm on
August 18 2010, the fingerlings were at an average size of 60 mm and
growing healthily. In anticipation of a possible colder early
winter, we subsequently at the end of November 2010 helped our supplier to
install heating systems to cover their outdoor farms where our fingerling
were being kept to ensure that our fingerlings would not suffer from any
adverse effect arising from severe winter weather. The
aforesaid measure was effective and timely as the Southern China is
experiencing one of its coldest winter in the early weeks of January
2011,
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·
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As
at December 31, 2010 the Chinese Businessmen have funded just under US$3.9
Million for the development of the
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§
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Standby
diesel powered generator capable of providing electricity during
outages;
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§
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All
underground and surface drainage, water works and electrical
connections;
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§
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Heating
provided by boiler driven heat exchangers capable of heating each tanks
water 6° C in 30 minutes
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§
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Dry
storage of approximately 9,000 m²;
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§
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Guard
house, office and staff quarters to handle up to 15
personnel;
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§
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Farm
building measuring over 4,000 m² housing16 grow-out tanks each with the
capacity to hold up to 120,000 liter of water with built-in solid waste
and soluble waste filters, ultraviolet and O³ disinfectors, and aerators
that will have the capacity to grow-out an average of 25 tons of fish per
tank per year;
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§
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A
nursery facility that has the capacity to grow-out 2 million fingerlings
per year from 25mm per piece to 100mm per
piece;
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§
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Freezing
and cool room facilities;
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§
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Feed
processing facilities and feed preparation
rooms;
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§
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Landscaping
areas covering more than 15,000 m² and all boundary fences of the complex;
and
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§
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External
water holding tanks with total holding capacity of more than 3 million
liters of water at any given time,
supplied
by 4 underground bores of various depth measuring from 80m to
150m.
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·
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Subsequently
the Chinese Businessmen will need to provide a further sum estimated up to
US$1.3 million as working capital to cover the followings within and up to
the next 8 months before incomes will be generated from the sales of
fish:
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§
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Up
to a period of 2 months for trials and testing of plants and equipment and
water, nurturing of bacteria, trial growing and recording of sample
species of fish to be grown in the farm,
etc.;
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§
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Training
of staffs and workers;
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§
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Purchases
of operational, feed preparation and office plants and equipment and
laboratory instruments, etc.
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§
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Up
to 8 months of daily administration and operation
expenses;
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§
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Stocking
of spare parts and components and feed staffs etc.;
and
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§
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Gradually
and rotationally stocking of fingerlings in the farm from February to
March 2011 in order to achieve the targeted sales of grown fish from
July 2011 onwards.
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·
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harvesting
the green flowers from the HU Plants before they mature into fruits and
sell them as vegetables;
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·
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drying
the green flowers harvested and selling them as dried vegetables for human
consumption; and
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·
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processing
and packaging the dried and fresh flowers into salted, pickled and in
brine vegetables.
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·
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Year
1 plants yield only about 10% of green flowers, as compared to the matured
plants.
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·
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Year
2 plants yield about 50% of green flowers, as compared to the matured
plants.
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·
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Year
3 fully matured plants yield an average of 120,000 green flowers per year
per mu over the next 25 years, the average production life span of a HU
plant.
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All
harvested green flowers will be stored and kept cool in the cool room
while waiting to be processed.
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They
will then be steamed in batches at boiling temperature for less than 15
minutes. The naturally dried flowers will require washing and
grading. Flavored dried flowers will be aromatically cured after
steaming.
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Thereafter,
they will be transferred to the drier to be dried at 140Celsius for about
3 hours and at gradually decreasing temperature for another 5
hours.
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Packaging
procedures will then follow.
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They
will then be stored and sold through the winter period until next harvest
season.
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easy
access to affordable pool of labor in the Enping region, and at the same
time creating job opportunities for the local people
.
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·
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our
experience in the industry dictates that these traditional systems and
methods produce the end products of such quality much preferred by the
local markets.
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·
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These
facilities located in the agriculture districts are regarded as temporary
agriculture facilities, and as such prior approval of the regional council
is not required, as long as the village committee of the County has been
duly informed accordingly. In this respect, we have the consent of the
village committee for the erection of the
facilities.
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Production
and sales of fresh liquid milk;
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Rearing
and sales of beef cattle;
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Planting
of crops for the purpose of further processing into livestock
feed;
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Processing
and sales of livestock feed; and
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Processing
and sales of fertilizer.
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Breeding
of cows and cattle; and
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Veterinary
services
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the
most up-to-date feed mixing machines and milking
equipment;
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efficient
housing and supporting facilities that can accommodate up to 3,500
cows;
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in
house veterinary facilities and
services;
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a
modern and well equipped quarantine station that has the capacity to
handle up to 2,000 cows;
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significant
feed and forages storages areas to stock up to 25,000 tons of livestock
feed;
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a
crop plantation on more than 1,000 acres of land;
and
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processing
factories for the manufacturing of livestock feed and
fertilizer.
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·
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Zhang
Zheng Xi (agent of TianJin Mu Dairy Co. Ltd.),
(ZZX).
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·
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Siao
Shu Dong (agent of Chengde Huang Yuan Dairy Co. Ltd.)
,(SSD).
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·
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Wang
Cheng Xiang (agent of Mengniu Dairy Group),
(WCX).
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·
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Jun
Heng (agent of Yili Dairy Group),
(JH).
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·
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Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry; and
|
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·
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(Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
|
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·
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using
environmental friendly technology to recycle agriculture waste for
production of organic fertilizer;
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·
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using
environmental friendly technology and bacteria to produce organic feed;
and
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·
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using
environmental friendly technology to increase dairy milk production and
quality.
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·
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Organic
fertilizer project :
US$450,000.00
|
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·
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Organic
livestock
feed: US$950,000.00
|
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·
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Organic
farm
grass: US$600,000.00
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·
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US$630,000.00
capital contribution;
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·
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appropriate
plots of lands with the related “Land Usage Rights” or convertible old
factory suitable for the projects, that
is:
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·
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land and buildings
measuring up to 1,800 mu (about 297 acres) and 9,000 mІ
of built-up
areas for the development of the demonstration farms for the rearing of
cattle and sheep; and
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·
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land
and buildings measuring up to 480 mu (about 79.2 acres) and 155,040
mІ of built-up area for the development of the manufacturing
plants for bio-organic f
ertilizer;
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·
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vehicles
for use by Sanjiang A Power during pre-development and the implementation
stage;
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·
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company
office and accommodation for personnel from out of
town;
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·
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the
necessary facilities for the
projects;
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·
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liaison
in procuring governmental financial assistance or other incentives for
agriculture projects to meet the needs of the
projects;
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·
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first
batch of premium herd of cows and goats for the demonstration farms;
and
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·
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related
plants and equipment and facilities for the production factories and
laboratories of Sanjiang A Power.
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·
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US$140,000.00
capital contribution;
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·
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modern
agriculture management system;
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·
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liaison
in procuring financial assistance to raise development
capital;
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·
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expertise
in the sales and marketing needs of Sanjiang A
Power;
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·
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international
business network;
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·
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assistance
to resolve any misunderstanding between the Chinese and foreign parties
resulting from the difference in laws and regulation between the two
concerned countries.
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US$630,000.00
capital contribution;
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·
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the
rights to use the relevant patented technologies and the related
trademarks and brands;
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·
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the
rights to use the patented Bacterial and Bio-organic Fertilizer
Manufacturing Technology, the Stock Feed Manufacturing
Technology;
|
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·
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the
right to use related conversion techniques associated with the Bio-organic
Fertilizer and Livestock Feed
Manufacturing;
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·
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business
and sales network and the right to operate and generate financial benefit
using the above mentioned technologies, techniques, systems, trademarks
and labels; and
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knowledge
and connections for securing financings for its
developments.
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·
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Sanjiang
A Power suffers severe financial losses and is not able to continue
operation as a result;
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·
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a
party hereto fails to fulfill its obligations herein, and Sanjiang A Power
is not able to continue operation as a
result;
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·
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force
majeure; and
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·
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Sanjiang
A Power fails to achieve its business objectives, and has no prospect of
development.
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·
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The
Name of the company shall be Sanjiang A Power Agriculture Co. Ltd.
(translation in English)
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·
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Total
Investment Capital : U.S.$2 million
|
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·
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Registered
Capital: U.S. $1.4 million, out of which US$630,000.00 to be contributed
by Qinghai Sanjiang (45%), US$140,000.00 by Garwor (10%) and US$630,000.00
by Pretty Mountains (45%).
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·
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7
members in the Board of Directors consisting of 3 appointees from Qinghai
Sanjiang, 1 from Garwor, and 3 from Pretty
Mountains.
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·
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change
its place of business from the City of Xining to the County of
Huangyuan;
|
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·
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effect
the registration of APWAM as a shareholder of Sanjiang A Power, replacing
Pretty Mountains; and
|
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·
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Investigation
and feasibility study of the potential project
sites;
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·
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Investigation
and feasibility study of the supplies and production of raw
materials;
|
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·
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Investigation
and feasibility study of the sales and marketing of the products to be
produced by Sanjiang A Power;
|
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·
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Investigation
and feasibility study of the related facilities within the
locations;
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·
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Investigation
and feasibility study of applicability of SIAF’s technologies for
bio-organic fertilizer and livestock feed under the local conditions;
and
|
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·
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Investigation
and analysis of potential cooperative activities with the regional
government and the farmers;
|
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·
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Establishing
trial facilities to test the production of bio-organic fertilizer and
livestock feed, using locally sourced raw
materials;
|
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·
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Laboratory
testing of sample products of fertilizer and livestock feed on their
respective standard of qualities;
and
|
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·
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Financial
feasibility studies of all aspects of the business
operations.
|
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·
|
The
Huangyuan Government agreed to allocate the site of the old army goods and
materials transfer terminal, consisting over 150 mu of land and over
20,000 mІ of built up area (39 buildings, each of approximately 538 mІ)
(“Project Site”) to Sanjiang A Pow
er for the purpose
of the projects.
|
|
·
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Sanjiang
A Power shall register its place of business in the County of Huangyuan
within 6 months of the Development
Agreement.
|
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·
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Sanjiang
A Power’s total investment and development capital for the projects shall
be RMB96.2 million (equivalent to about U.S.$14.15 million), of which the
fixed assets should amount to RMB50.20 million (equivalent to U.S.$7.382
million, based on the exchange rate of U.S.$1 =
RMB6.80).
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Livestock
Feed manufacturing
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·
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Cattle
rearing and fattening stations
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Manufacturing
of bio-organic fertilizer
|
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·
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Plantation
of pastures and crops as the raw materials for livestock
feed.
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·
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Renovation
and building work on staff quarters, capable to house up to 70 workers at
a time, and subsequently these were completed before end of March
2010;
|
|
·
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Renovation
and installation of facilities for six beef cattle fattening demonstration
yards and buildings, with the capacity to house up to 120 heads of cattle
per house, (Subsequently these were completed by November 17, 2010 as such
by December 5 2010, two of these cattle houses are housing 240 heads of 6
months old cattle brought by SJAP);
|
|
·
|
Construction
of a factory with the capacity to produce up to 20,000 tons of bio-organic
fertilizer per year was completed last week of June 2010, and is now in
operation producing up to 600 tons per day to fill its first order of
2,500 tons sold regionally, (subsequently by December 15, 2010 SJAP has
sold more than 2500 Tons of fertilizer regionally with good responds from
the buyers);
|
·
|
Construction
of a new four storey height headquarter office building consisting of
2,500mІ was commenced on June 12, 2010 (subsequently as at the end of
December 2010, all four floors have been constructed waiting on final
installations and fittings s
uch that we are
expecting full completion within April Month 2011 as during winter months
now it is difficult to carry out construction
works);
|
|
·
|
Invention
of a new enzyme (“the Enzyme”) that is capable of allowing fermentation
and germination processes in our manufacturing of livestock feed to take
place at 4Celsius within 7 days, which is suitable in the colder northern
China climates since it will save much additional heating costs to
initiate the fermentation and germination process of the livestock feed,
as compared to the old enzyme performing at 15Celsius within 21 days,
(subsequently from July 2010 we used this Enzyme to produce our fertilizer
and livestock feed successfully);
|
|
·
|
Additional
weight gained average per beef cattle was recorded at one extra kilogram
per day over their normal weight
gains.
|
|
·
|
Additional
fresh milk produced per cow was recorded at one and half kilograms of milk
per day over and above their normal daily
production.
|
|
·
|
All
feeds were much easier to digest resulting in much cleaner environment in
the cattle yards and houses.
|
|
·
|
No
sickness during the period was recorded through the cause of consumption
of our feeds, but there was one cow had an early
abortion.
|
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·
|
All
cattle preferred to eat our feeds and reluctant to revert back to the
consumption of their old feed after they had consumed our feed during the
period.
|
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·
|
Manufacturing
of livestock feed to achieve 20,000 tons, to be sold to the regional
farmers and 10,000 tons to be consumed by our own cattle on the Project
Site; subsequently we manufactured over 5,000 tons of livestock by
the end of September 2010 and out of which we sold 2,000 tons to the local
farmers and kept the other 3,000 Tons to be used for our own cattle that
will be reared in our own cattle
facilities.
|
|
·
|
Manufacturing
of bio-organic fertilizer to reach 10,000 tons; subsequently we sold 2,500
tons of fertilizer by month of November 2010 with production rate running
at 60 tons per day currently and we are producing right through the winter
months made possible by our developed
Enzyme.
|
|
·
|
Rearing
and fattening of beef cattle to reach a minimum of 1,000 heads
subsequently as at January 3, 2011 we bought more than 500 heads of young
cattle housing in four of our 7 newly constructed cattle houses and
expecting to increase the number of cattle to 2,500 heads within
2011.
|
|
·
|
eliminating
toxic fat in the soil;
|
|
·
|
eliminating
the adversity caused through frequent application of chemicals and
antibiotics;
|
|
·
|
increase
growth of micro organism in the soil to purify water
toxicity;
|
|
·
|
improve
the disease resistant ability of the root systems of
plants;
|
|
·
|
neutralize
the bad affect caused by the toxic
mineral;
|
|
·
|
increase
soil resistant to salinity ;
|
|
·
|
increase
nutrient to the soil;
|
|
·
|
procure
nutrient absorbing ability of the
soil;
|
|
·
|
increase
diseases resistant ability of the growing
plants;
|
|
·
|
reduce
plant diseases and the developments of
insects;
|
|
·
|
multiply
the growth of micro-organism and natural bacterial;
and
|
|
·
|
reduce
the usage of chemical fertilizer and improves the economic benefit of the
chemical fertilizer. (In this respect, it is because of the use of
bio-organic fertilizer will improve the soil’s overall ability to the
absorb nutrients more consistently and easily, such that within a period
of six months after the application of the bio-organic fertilizer,
the soil in general will start to show the benefit and in the position to
use less chemical fertilizer, the exact reduced usage quantity of chemical
fertilizer is usually subject to how poorly the soil have been demanded by
the pro-long usage of chemical fertilizer in the past, however it is
evidenced frequently that the saving could be measured anyway from 30% up
to 60% within a year cycle after the application of bio-organic
fertilizer.)
|
|
·
|
Our
cattle houses (22 of them) will be leased out to the regional farmers who
will have the option to lease up to 4 houses at a time, such that they
will supply their own young cattle for fattening and they will manage
their respective operations.
|
|
·
|
We
will provide all associated in-house facilities and services (i.e.
veterinary service, utilities, laboratory analysis, ration and nutrient
formulated mixing machines, etc.), supply the livestock feed, and
marketing of their grown up beef cattle (“the Farmers’
cost”).
|
|
·
|
The
breeders will grant us the first option to buy all grown up cattle stocks
from them and in the event that they decide to sell to other buyers, such
sales will be conducted through our account so that the Farmers’ cost will
be deducted from the proceeds of
sales.
|
|
·
|
The
regional farmers planting wild wheat, wild peas and wild pastures can now
increase their yearly yield from 1.25 tons per mu to 4.5 tons per mu by
using our organic fertilizer.
|
|
·
|
The
regional dairy farmers who were used to get an average of about 1.5 tons
(or 1500 kg) of fresh milk from one head of cow per year based on maximum
milking day of 180 days per year (due to long winter spell in Qinghai
Province) can now get an extra 450 kg of milk per year using our livestock
feed to feed right through the winter to maximize the milking days to 300
days per year.
|
|
·
|
1st
tranche of U.S.$1,000,000 on or before December 31, 2009, which was paid
on December 28, 2009;
|
|
·
|
2nd
tranche of U.S.$1,000,000 on or before December 31, 2010;
and
|
|
·
|
3rd
tranche of U.S.$1,500,000 on or before November 11,
2012.
|
|
·
|
Engineering
designs of the livestock feed manufacturing
factories;
|
|
·
|
Engineering
designs of the factories’ plants and
equipment;
|
|
·
|
Designs
of various lay-out plans for the said factories and
equipment;
|
|
·
|
Management
of the related operation; and
|
|
·
|
Training
of personnel of the related
operation.
|
|
·
|
Field-cropped
grass, corns, or other similar materials are cut and sun cured in the
fields;
|
|
·
|
Raw
materials are then transported to processing locations for further
processing
|
|
·
|
Raw
materials are finely cut and mixed together then stored in open concrete
yards; or
|
|
·
|
Raw
materials are compacted into various sharps and forms such as pellets,
cubes, or square blocks, and then
stored.
|
|
·
|
Unsafe
for consumption due to high count of bad
bacteria;
|
|
·
|
Poor
to taste due to high content of bad bacterial and rough to
feel;
|
|
·
|
Non-uniform
quality and generally low in nutrient, low in protein and vitamins with
high fiber;
|
|
·
|
Poor
digestibility usually evidenced by animal
dropping.
|
|
·
|
Type
One is a more general application type of livestock feed suitable for beef
cattle and sheep; and
|
|
·
|
Type
Two is special ration designed for dairy cows that consists of various
grades adaptable to various stages in the life of dairy cows from the time
of pregnancy, carrying period with calves to three months old,
weaning of the calves to they are six months old, and continued milking
period of the calves until they
reproduce.
|
|
·
|
reduce
sickness in animal;
|
|
·
|
increase
milking life span of cows;
|
|
·
|
reduce
mortality rate of animals;
|
|
·
|
increase
birth rate of cattle and sheep;
|
|
·
|
increase
milk productivity of the cows;
|
|
·
|
increase
weight gain in cattle and sheep;
and
|
|
·
|
improve
quality of the milk produced by
cows.
|
|
·
|
The
parties thereto shall share the indebtedness, risks and losses of the
SFJVC as well its profit in accordance with their respective equity
interest ratio in the SFJVC.
|
|
·
|
The
tenure of the SFJVC shall be for a period of 50 years. The
SFJVC’s Board of Directors may decide to extend the tenure of the SFJVC by
applying to the China Business Registration Department (or its related
authorized approving authority) within 6 months from day of expiry
thereof.
|
|
·
|
The
total investment capital of the SFJVC shall be US$5 million to be invested
over a period of 5 years, whereas the Registered Capital of the SFJVC
shall be US$100,000 for the first year and be increased gradually to US$5
million by the fifth year subject to the decision made by the Board of
Directors of the SJVC at the time.
|
|
·
|
The
parties’ respectively registered capital contribution in the 5 years are
as follows :
|
First Year :
|
The
Chinese Businessmen shall contribute US$75,000 in cash. However they will
be allowed to convert some of the assets of the fish farm they have funded
to equity.
|
Parties
|
|
Change of equity
interest up to
|
|
Assets that may be converted
|
|
Maximum % that will
be converted
|
Chinese
Businessmen
|
75%
|
Cash
|
10%
|
|||
Plants
and equipment
|
25%
|
|||||
Properties
|
25%
|
|||||
Land
Use Right
|
10%
|
|||||
Others
|
5%
|
|||||
Total
contribution of Chinese Businessmen
|
75%
|
|||||
Tri-way
|
|
25%
|
|
Cash
|
25%
|
Parties
|
Change of equity
interest up to
|
Assets that may be converted
|
Maximum % that will
be converted
|
|||
Chinese
Businessmen
|
25%
|
Cash
|
2.5%
|
|||
Plants
and equipment
|
6.25%
|
|||||
Properties
|
6.25%
|
|||||
Land
Use Right
|
2.5%
|
|||||
Others
|
1.25
|
|||||
Total
contribution of Chinese Businessmen
|
25%
|
|||||
Tri-way
|
|
75%
|
|
Cash
|
|
75%
|
|
·
|
The
responsibilities of the Chinese
Businessmen:
|
|
1.
|
To
pay their share of the Registered Capital on a timely
manner.
|
|
2.
|
To
apply to relevant Chinese Authorities in order to obtain the official
approval, registration and business license for the incorporation of the
SFJVC.
|
|
3.
|
To
apply to the Land Authorities of China to obtain official approval of the
Land Use Right of the project land.
|
|
4.
|
To
introduce and to organize all local sub-contractors and contractors to
carry out construction work relating to the scopes of civil engineering,
designs, building and all other related matters for the SFJVC for the
purpose of developing the fish
farm.
|
|
5.
|
To
introduce to and to organize all local suppliers and manufacturers for the
SFJVC such that the SFJVC will be able to obtain supplies and
manufacturing of plants and equipment for the fish
farm.
|
|
6.
|
To
apply to the customs authorities and to obtain import clearance for all
imported plants and equipment of the fish farm and to arrange local
transportation for the delivery of the imported plants and equipment to
the project site.
|
|
7.
|
To
introduce to and to organize all local contractors and sub-contractors for
the SFJVC such that the SFJVC will be able to construct and to connect all
basic infrastructure and utility services needed at the project site of
the fish farm.
|
|
8.
|
To
assist the SFJVC in recruiting Chinese management personnel, technical
personnel, workers and other workers needed for its fish
farm.
|
|
9.
|
To
assist foreign workers and staffs of the SFJVC in their applications for
entry visas, work permits and other associated local traveling
arrangements.
|
|
10.
|
To
co-ordinate other general necessities requested by the SFJVC from time to
time during the development period of the
SFJVC.
|
|
·
|
The
responsibilities of Tri-way:
|
|
1.
|
To
pay its share of the Registered Capital on a timely
manner.
|
|
2.
|
To
organize and to arrange supplies, purchases, delivery and related matters
of all imported plants and equipment needed by the Fish
Farm.
|
|
3.
|
To
organize and to arrange all transportation and related logistics needed
for the importation of imported plants and equipment for delivery to the
appropriate sea port in China.
|
|
4.
|
To
provide qualified technical supervisors, personnel and inspectors for the
installation and commissioning of all plants and equipment of the fish
farm.
|
|
5.
|
To
provide training to the personnel and workers needed for the operation of
the fish Farm.
|
|
6.
|
Being
the Master license holder of the AP Technology, Tri-way shall ensure that
the performance of the Fish Farm (including but not limiting to the
productivity and durability of the Fish Farm) will be reached within the
targeted schedule.
|
|
7.
|
To
assist the SFJVC in other matters related to the Fish Farm Development
works as and when requested by the
SFJVC.
|
|
·
|
The
Board of directors shall consist of 3 members; 1 appointee from Chinese
Businessmen and 2 from Tri-way. The director appointed by
Chinese Businessmen shall be made the Chairperson, whereas 1 director
appointed by Tri-way shall be made the Deputy Chairperson. The
tenure of the Chairperson and the Deputy Chairperson shall be 3 years,
renewable at the discretion of the appointing
party.
|
|
·
|
To
produce uniform and high standard of quality “Organic Food” in efficient
and economically manner, supported by sustainable markets to meet the
middle income population of China as well as other Asian
countries.
|
|
·
|
To
bring the farmed produce and products directly from farms to the end
consumer’s markets, thus providing more efficient services and cost saving
benefits to the end consumers as a
whole.
|
|
·
|
To
bring better economic benefits to the farmers and growers, thus improving
their living standard and bringing economic benefits to the communities as
a whole.
|
|
·
|
No
income tax
|
|
·
|
No
value added tax, subsidizes in transportation within the
country
|
|
·
|
No
import tax on imported plants and
equipment
|
|
·
|
Rebate
of development capital calculated up to 33% of development
assets
|
|
·
|
Advantageous
loans with no interest or fixed terms of
repayment
|
|
·
|
“Land
Usage Rights” being accepted as collateral that can be pledged against
bank borrowings
|
|
·
|
Environmental
|
|
·
|
Business
Registration
|
|
·
|
Foreign
Investment and Trade
|
|
·
|
Foreign
Exchange Control
|
|
·
|
Finance
|
|
·
|
Commerce
and Business
|
|
·
|
Statistic
and Records
|
|
·
|
Customs
|
|
·
|
Land
|
|
·
|
Taxation
|
|
·
|
Town
Planning
|
|
·
|
Business
and Commerce
|
|
·
|
Land
Development
|
|
·
|
Health
|
SIAF China
office and
Capital
Award
|
Intermediate
holding
companies
|
HST
|
ZhongXing
|
SanJiang A
Power
|
Total
|
||||||||
Full
Time
|
|||||||||||||
Administration
|
|||||||||||||
Management
|
8
|
2
|
3
|
8
|
8
|
29
|
|||||||
Clerical
|
3
|
2
|
2
|
12
|
7
|
26
|
|||||||
Sales
|
5
|
0
|
2
|
3
|
5
|
15
|
|||||||
Non-Skilled
|
2
|
0
|
3
|
6
|
10
|
21
|
|||||||
Operation
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Management
|
3
|
0
|
2
|
6
|
5
|
16
|
|||||||
Clerical
|
3
|
0
|
3
|
3
|
3
|
12
|
|||||||
Skilled
|
6
|
0
|
3
|
80
|
35
|
124
|
|||||||
Non-skilled
|
3
|
0
|
5
|
20
|
25
|
53
|
|||||||
Part
Time
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Operation
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||
Skilled
harvesting
|
0
|
0
|
100
|
80
|
40
|
220
|
|||||||
Non-skilled
|
0
|
0
|
12
|
12
|
8
|
32
|
|||||||
Total
|
33
|
4
|
137
|
230
|
146
|
548
|
|
·
|
The
Dairy business, through a combination of Hang Yu Tai Investment Limited
and ZhongXingNongMu Co. Ltd.
|
|
·
|
The
Plantation business, through a combination of Macau Eiji Company Limited
and Jiang Men City Heng Sheng Tai Agriculture Development Co.
Ltd.
|
|
·
|
The
Fishery business, through a combination of Capital Award Inc. and
SIAF.
|
|
·
|
The
Beef business , through a combination of Jiang Men City Heng Sheng Tai
Agriculture Development Co. Ltd. and Qinghai Sanjiang A Power Agriculture
Co. Ltd.
|
Category
|
2009
|
2008
|
Difference
|
|||||||||
Fishery
|
$
|
726,702
|
$
|
562,497
|
$
|
164,205
|
||||||
Dairy
|
18,084,046
|
14,388,014
|
3,696,032
|
|||||||||
Plantation
|
2,915,091
|
1,238,956
|
1,676,135
|
|||||||||
Beef
|
0
|
0
|
0
|
|||||||||
Totals
|
$
|
21,725,839
|
$
|
16,189,467
|
$
|
5,536,372
|
Category
|
2009
|
2008
|
Difference
|
|||||||||
Fishery
|
$
|
0
|
$
|
0
|
$
|
0
|
||||||
Dairy
|
8,578,652
|
7,553,003
|
1,025,649
|
|||||||||
Plantation
|
806,790
|
394,656
|
412,134
|
|||||||||
Beef
|
0
|
0
|
0
|
|||||||||
Totals
|
$
|
9,385,442
|
$
|
7,947,659
|
$
|
1,437,783
|
Category
|
2009
|
2008
|
Difference
|
|||||||||
Office
and corporate expenses
|
$
|
405,123
|
$
|
540,472
|
$
|
(135,349
|
)
|
|||||
Wages
and Salaries
|
$
|
568,757
|
$
|
758,487
|
$
|
(189,730
|
)
|
|||||
Office
Rentals
|
$
|
69,936
|
$
|
63,320
|
$
|
6,616
|
||||||
Traveling
and related lodging
|
$
|
62,827
|
$
|
69,122
|
$
|
(6,295
|
)
|
|||||
Motor
vehicles expenses and local transportation
|
$
|
20,646
|
$
|
20,160
|
$
|
486
|
||||||
Entertainments
and meals
|
$
|
39,090
|
$
|
47,298
|
$
|
(8,208
|
)
|
|||||
Sub-total
|
$
|
1,166,379
|
$
|
1,498,859
|
$
|
(332,480
|
)
|
|||||
Depreciation
and amortization
|
$
|
1,685,705
|
$
|
1,312,493
|
$
|
373,212
|
||||||
Total
|
$
|
2,852,084
|
$
|
2,811,352
|
$
|
40,732
|
(1)
|
Building
costs and imported costs of plants and equipment were at their highest in
China during 2008 and the early months of
2009.
|
(2)
|
It
was not until after the first six months of 2009 that we finalized our
investigations and tests to enable the manufacture of parts and components
for our fishery plants and equipment. By waiting, we were able to
experience substantial cost savings while obtaining durable quality
standard components as compared to the
imports.
|
(3)
|
It
was not until recently that we were able to develop a management system
that will provide enough security in our farm operation to protect our
technology from being
pirated.
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|||||||||||||
|
ended
|
ended
|
ended
|
ended
|
||||||||||||
|
September 30,
|
September 30,
|
September 30,
|
September 30,
|
||||||||||||
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
||||||||||||
Revenue
|
$
|
15,183,169
|
$
|
4,616,991
|
$
|
24,565,757
|
$
|
12,653,149
|
||||||||
Cost
of goods sold
|
6,182,708
|
2,202,211
|
10,059,718
|
5,894,130
|
||||||||||||
Gross
profit
|
9,000,461
|
2,414,780
|
14,506,039
|
6,759,019
|
||||||||||||
General
and administrative expenses
|
(705,445
|
)
|
(611,807
|
)
|
(2,369,756
|
)
|
(1,891,887
|
)
|
||||||||
Net
income from operations
|
8,295,016
|
1,802,973
|
12,136,283
|
4,867,132
|
||||||||||||
Other
income (expenses)
|
||||||||||||||||
Reversal
of impairment loss
|
303,791
|
-
|
303,791
|
-
|
||||||||||||
Interest
expense
|
(50,565
|
)
|
(117,3
48
|
)
|
(291,433
|
)
|
(353,345
|
)
|
||||||||
Net
income (expenses)
|
(50,565
|
)
|
(117,348
|
)
|
(291,433
|
)
|
(353,345
|
)
|
||||||||
Net
income before income taxes
|
8,244,451
|
1,685,625
|
11,844,850
|
4,513,787
|
||||||||||||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Net
income
|
8,244,451
|
1,685,625
|
11,844,850
|
4,513,787
|
||||||||||||
Less:
Net income attributable to the non - controlling
interest
|
(1,966,222
|
)
|
(486,209
|
)
|
(2,655,164
|
)
|
(1,101,545
|
)
|
||||||||
Net
income attributable to the Sino Agro Food, Inc. and
subsidiaries
|
6,278,229
|
1,199,416
|
9,189,686
|
3,412,242
|
||||||||||||
Other
comprehensive income
|
.
|
.
|
||||||||||||||
Foreign
currency translation gain
|
858,949
|
(585,120
|
)
|
1,568,799
|
(569,5
61
|
)
|
||||||||||
Comprehensive
income
|
7,137,178
|
614,296
|
10,758,485
|
2,842,681
|
||||||||||||
Less:
other comprehensive income attributable to the non - controlling
interest
|
(184,995
|
)
|
125,983
|
(345,136
|
)
|
125,303
|
||||||||||
Comprehensive
income attributable to Sino Agro Food, Inc. and
subsidiaries
|
6,952,183
|
740,279
|
10,413,349
|
2,967,984
|
||||||||||||
Dividends
|
567,800
|
-
|
567,800
|
-
|
||||||||||||
Earnings
per share attributable to Sino Agro Food, Inc. and subsidiaries common
stockholders:
|
||||||||||||||||
Basic
|
$
|
0.12
|
$
|
0.02
|
$
|
0.18
|
$
|
0.06
|
||||||||
Diluted
|
$
|
0.11
|
$
|
0.02
|
$
|
0.17
|
$
|
0.06
|
||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
53,134,303
|
52,94
3,579
|
54,223,823
|
52,943,579
|
||||||||||||
Diluted
|
60,134,303
|
52,943,579
|
56,685,361
|
52,943,579
|
Three months ended September 30, 2010
|
||||||||||||||||||||||||
|
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Revenue
|
1,320,223
|
9,669,582
|
3,509,397
|
683,967
|
-
|
15,183,169
|
||||||||||||||||||
Net
income (loss)
|
845,161
|
4,614,145
|
2,770,2
71
|
470,077
|
(151,412
|
)
|
8,548,242
|
|||||||||||||||||
Total
assets
|
15,711,315
|
44,653,524
|
14,585,276
|
3,269,375
|
19,837,784
|
98,057,274
|
Three months ended September 30, 2009
|
||||||||||||||||||||||||
|
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
||||||||||||||||||
|
$
|
$
|
$
|
$
|
$
|
$
|
||||||||||||||||||
Revenue
|
-
|
3,685,058
|
931,933
|
-
|
-
|
4,616,991
|
||||||||||||||||||
Net
income (loss)
|
(2,951
|
)
|
1,512,327
|
613,988
|
-
|
(4
37,739
|
)
|
1,685,625
|
||||||||||||||||
Total
assets
|
13,711,470
|
39,760,522
|
10,201,312
|
-
|
4,157,852
|
67,831,156
|
Nine months
Ended
September
30
|
||||
2009
|
||||
Fishery
|
$
|
726,702
|
||
Dairy
|
$
|
10,842,977
|
||
Plantation
|
$
|
1,083,470
|
||
Beef
|
||||
Total
|
$
|
12,653,149
|
2010
|
||||
Fishery
|
$
|
2,015,754
|
||
Dairy
|
$
|
18,356,639
|
||
Plantation
|
$
|
3,509,397
|
||
Beef
|
$
|
683,967
|
||
Total
|
$
|
24,565,757
|
9 months
ended
September
30
|
||||
2009
|
||||
Fishery
|
||||
Dairy
|
$
|
5,546,198
|
||
Plantation
|
$
|
347,932
|
||
Beef
|
||||
Total
|
$
|
5,894,130
|
||
2010
|
||||
Fishery
|
$
|
472,112
|
||
Dairy
|
$
|
8,375,683
|
||
Plantation
|
$
|
999,954
|
||
Beef
|
$
|
211,969
|
||
Total
|
|
$
|
10,059,718
|
Nine
months
ended
Sept.
30.
|
||||
2009
|
||||
Fishery
|
$
|
726,702
|
||
Dairy
|
$
|
5,296,779
|
||
Plantation
|
$
|
735,538
|
||
Beef
|
||||
Total
|
$
|
6,759,019
|
||
2010
|
||||
Fishery
|
$
|
1,543,642
|
||
Dairy
|
$
|
9,980,956
|
||
Plantation
|
$
|
2,509,443
|
||
Beef
|
$
|
471,998
|
||
Total
|
$
|
14,506,039
|
Nine
months
ended
Sept. 30
|
||||
2009
|
||||
Office
and corporate operation expenses
|
||||
Wages
and salaries
|
$
|
786,039
|
||
Travel
and lodging
|
$
|
57,644
|
||
Motor
vehicle and transports
|
$
|
7,175
|
||
Meals
and entertainment
|
$
|
114,099
|
||
Others
and Miscellaneous
|
$
|
176
|
||
Financial
charges
|
$
|
353,345
|
||
Depreciation
and amortization (D&A)
|
$
|
573,409
|
||
Total
|
$
|
1,891,887
|
2010
|
||||
Office
and corporate operation expenses
|
$
|
623,906
|
||
Wages
and salaries
|
$
|
1,010,680
|
||
Travel
and lodging
|
$
|
44,115
|
||
Motor
vehicle and transports
|
$
|
10,316
|
||
Meals
and entertainment
|
$
|
33,646
|
||
Others
and miscellaneous
|
$
|
84,427
|
||
Financial
charges
|
$
|
292,613
|
||
Depreciation
and amortization (D&A)
|
$
|
270,053
|
||
Total
|
$
|
2,369,756
|
Contractual
Obligations
|
Less than
1 year
|
1-3 years
|
3-5
years
|
More
than 5
years
|
Total
|
|||||||||||||||
Long
Term Bank Debts
|
$
|
-
|
$
|
3,731,343-
|
$
|
-
|
$
|
$
|
3,731,343
|
Name
of related party
|
Nature
of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other payables, due to Mr. Rui Xiong He is $16,985 as of December 31,
2009. The amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 as of
December 31, 2009. The amounts are unsecured, interest free and have no
fixed term of repayment.
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 as of December
31, 2009. The amounts are unsecured, interest free and have no fixed term
of repayment.
|
|
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payables, due to SJAP is $2,494 as of December 31, 2009. The
amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Yip Kun Lee, Chairman
|
Included
in due to a director, due to Mr. SolomonYip Kun Lee is $964,766 as
of September 30, 2010. The amount is unsecured, interest free
and have no fixed term of repayment.
Included
in due from directors, due from Mr. SolomonYip Kun Lee is $73,164 as of
, December 31, 2009. The amount is unsecured, interest free and
have no fixed term of repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, due from Mr. Michael Bor Hann Chen is $38,228 as of
December 31, 2009. The amount is unsecured, interest free and have no
fixed term of repayment.
|
|
1.
|
Address:
Guangzhou City, Guangdong Province, P.R.
China
|
|
2.
|
Address:
Huangyuan Town, Qinghai Province, P.R.
China
|
|
3.
|
Address:
Enping City, Guangzhou
|
|
1.
|
Address:
Ba Langgou Village, Hebei Province
|
|
2.
|
Address:
Seventeen Channels Village, Hebei
Province
|
|
3.
|
Address:
Seventeen Channels Village, Hebei
Province
|
|
4.
|
Address:
Langwo Channels Village, Hebei
Province
|
|
5.
|
Address:
Langwo Channels Village, Hebei
Province
|
|
6.
|
Address:
ZhangMutou,YanE Village, LiangXi Town, Guangdong
Province
|
|
7.
|
Address:
DongGongPingTang,YanE Village, LiangXi Town, Guangdong
Province
|
|
8.
|
Address:
Western to ChuLuo,YanE Village, LiangXi Town, Guangdong
Province
|
|
9.
|
Address:
North to SaoYiMing, YanE Village, LiangXi Town, Guangdong
Province
|
10.
|
Address:
South to PaiZi and ChunZi, YanE Village, LiangXi Town, Guangdong
Province
|
11.
|
Address:
ZhangMutou, Enping City, Guangdong
Province
|
12.
|
Address:
DongChuLu, Enping City, Guangdong
Province
|
13.
|
Address:
Western to SaoYi Lang, Enping City, Guangdong
Province
|
14.
|
Address:
South to XiangZiZhi Zi, Enping City, Guangdong
Province
|
15.
|
Address:
YanE Village LiangXi Town, Guangdong
Province
|
16.
|
Address:
Shanxiang School YanE Village, LiangXi Town, Guangdong
Province
|
17.
|
Address:
NiuyantanDaiwan Village, JunTang Town, Guangdong
Province
|
18.
|
Address:
Yi Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
19.
|
Address:
Er Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
20.
|
Address:
San Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
21.
|
Address:
Lian Dui Sheng Feng Kuang, Huang Bi District, Niu Jiang Town, Guangdong
Province.
|
Shareholders
|
Number of
Common
Shares
|
Percentage
of Common
Stock
|
||||||
Lee
Yip Kun Solomon
|
13,500,000
|
26
|
%
|
|||||
Tan
Poay Teik
|
4,500,000
|
8.66
|
%
|
|||||
Chen
Bor Hann
|
900,000
|
1.73
|
%
|
|||||
All
officers and directors as a group [3 persons]
|
18,900,000
|
36.39
|
%
|
Shareholders
|
# of
Preference
Series A
Shares
|
Percentage
of Series A
Preferred
Stock
|
||||||
Lee
Yip Kun Solomon
|
70
|
70
|
%
|
|||||
Tan
Poay Teik
|
25
|
25
|
%
|
|||||
Chen
Bor Hann
|
5
|
5
|
%
|
|||||
All
officers and directors as a group [3 persons]
|
100
|
100
|
%
|
Shareholders
|
# of
Preference
Series B
Shares
|
Percentage
of Series B
Preferred
Stock
|
||||||
Lee
Yip Kun Solomon
|
4,900,000
|
70
|
%
|
|||||
Tan
Poay Teik
|
1,750,000
|
25
|
%
|
|||||
Chen
Bor Hann
|
350,000
|
5
|
%
|
|||||
All
officers and directors as a group [3 persons] Held under a company namely
Capital Adventure Inc.
|
7,000,000
|
100
|
%
|
Name
|
Age
|
Position
|
||
Lee
Yip Kun Solomon
|
61
|
C.E.O.
and Director
|
||
Tan
Poay Teik
|
52
|
C.E.O.
Marketing
|
||
Chen
Bor Hann
|
|
46
|
|
Company
Secretary
|
|
·
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time,
|
|
·
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses),
|
|
·
|
Being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking
activities,
|
|
·
|
Being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or
vacated.
|
|
·
|
Having
any government agency, administrative agency, or administrative court
impose an administrative finding, order, decree, or sanction against them
as a result of their involvement in any type of business, securities, or
banking activity.
|
|
·
|
Being
the subject of a pending administrative proceeding related to their
involvement in any type of business, securities, or banking
activity.
|
|
·
|
Having
any administrative proceeding been threatened against you related to their
involvement in any type of business, securities, or banking
activity.
|
Name and Principal Position
|
Fiscal
Year
Ended
|
Salary($)
|
Option
Awards
($)
|
Total
($)
|
|||||||||
Mr.
Lee Yip Kun Solomon, Chief Executive Officer
|
2009
|
336,000
|
0
|
336,000
|
|||||||||
2008
|
336,000
|
0
|
336,000
|
||||||||||
Mr.
Tan Paoy Teik, Chief Marketing Officer
|
2009
|
174,000
|
0
|
174,000
|
|||||||||
2008
|
174,000
|
0
|
174,000
|
||||||||||
Mr.
Chen Bor Hann, Secretary
|
2009
|
60,000
|
0
|
60,000
|
|||||||||
2008
|
60,000
|
0
|
60,000
|
Name
|
Number of
securities
underlying
unexercised
options
(#) Exercisable
|
Number of
securities
underlying
unexercised
unearned
options(#)
|
Equity
incentive plan
awards:
Number of
securities
underlying
unexercised
unearned
options (#)
|
Option
exercise
price ($)
|
Option
expiration
date
|
Number of
shares or
units of stock
that have not
vested (#)
|
Market value of
shares or units
of
stock that have
not vested ($)
|
|||||||||||||||||||||
Mr.
Lee Solomon Yip Kun
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Mr.
Tan Paoy Teik
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||||||||
Mr.
Chen Bor Hann
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
Name and Principal Position
|
Salary($)
|
|||
Mr.
Lee Yip Kun Solomon, Chief Executive Officer and
Chairman
|
336,000
|
|||
Mr.
Tan Paoy Teik, Chief Marketing Officer, Director
|
174,000
|
|||
Mr.
Chen Bor Hann, Secretary, Director
|
60,000
|
|
•
|
any
outstanding option or other equity-based award repriced or otherwise
materially modified (such as by extension of exercise periods, the change
of vesting or forfeiture conditions, the change or elimination of
applicable performance criteria, or the change of the bases upon which
returns are determined;
|
|
•
|
any
waiver or modification of any specified performance target, goal or
condition to payout with respect to any amount included in non-stock
incentive plan compensation or
payouts;
|
|
•
|
any
option or equity grant;
|
|
•
|
any
non-equity incentive plan award made to a named executive
officer
|
|
•
|
any
nonqualified deferred compensation plans including nonqualified defined
contribution plans; or
|
|
•
|
any
payment for any item to be included under All Other Compensation in the
Summary Compensation Table.
|
Name
|
Year end
|
Fees or cash
paid ($)
|
Stock
awards
|
Total
|
||||||||||
Mr.
Lee Yip Kun Solomon
|
Dec.
31, 2009
|
0
|
0
|
0
|
||||||||||
Mr.
Tan Paoy Teik
|
Dec.
31, 2009
|
0
|
0
|
0
|
||||||||||
Mr.
Chen Bor Hann
|
Dec.
31, 2009
|
0
|
0
|
0
|
Name
of related party
|
Nature
of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other payables, due to Mr. Rui Xiong He is $16,985 as of December 31,
2009. The amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 as of
December 31, 2009. The amounts are unsecured, interest free and have no
fixed term of repayment.
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 as of December
31, 2009. The amounts are unsecured, interest free and have no fixed term
of repayment.
|
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payables, due to SJAP is $2,494 as of December 31, 2009. The
amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Yip Kun Lee, Chairman
|
Included
in due to a director, due to Mr. SolomonYip Kun Lee is $964,766 as
of September 30, 2010. The amount is unsecured, interest free
and have no fixed term of repayment.
Included
in due from directors, due from Mr. SolomonYip Kun Lee is $73,164 as of
, December 31, 2009. The amount is unsecured, interest free and
have no fixed term of repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, due from Mr. Michael Bor Hann Chen is $38,228 as of
December 31, 2009. The amount is unsecured, interest free and have no
fixed term of repayment.
|
High
|
Low
|
|||||||
October 1 –
December 31, 2008
|
$
|
0.64
|
$
|
0.01
|
||||
January
1 – March 31, 2009
|
$
|
0.16
|
$
|
0.01
|
||||
April
1 – June 30, 2009
|
$
|
0.75
|
$
|
0.1
|
||||
July
1 – September 30, 2009
|
$
|
1.01
|
$
|
0.5
|
||||
October 1 –
December 31, 2009
|
$
|
1.27
|
$
|
0.59
|
||||
January
1 – March 31, 2010
|
$
|
1.88
|
$
|
1.07
|
||||
April
1 – June 30, 2010
|
$
|
1.31
|
$
|
0.44
|
||||
July
1 - September 30, 2010
|
$
|
1.44
|
$
|
0.47
|
Date
|
Events
|
Shares
issued
|
Price /
share
|
Consideration
received
|
# of
Non-USA
Investors
|
# of USA
Investors
|
||||||||||||||||
July
24, 2007
|
Issuance
of shares for the Merger of CA and VOLG
|
32,000,000
|
0.617
|
19,739,157
|
62
|
0
|
||||||||||||||||
July
24, 2007
|
Issuance
of shares to VOLG’s existing debenture holders
|
10,804,579
|
0.001
|
0
|
4
|
1
|
||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in Macau Eiji Company
Limitada
|
2,000,000
|
2.338
|
4,675,000
|
3
|
0
|
||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in HangYuTai Investmento
Limitada
|
7,000,000
|
2.416
|
16,910,000
|
3
|
0
|
||||||||||||||||
Sept.
5, 2007
|
Issuance
of shares for the acquisition of 100% equity in
Triway
Industries Limited
|
1,000,000
|
2.25
|
2,250,000
|
8
|
0
|
||||||||||||||||
Total
for 2007
|
52,804,579
|
43,574,157
|
Date
|
Events
|
Shares
issued
|
Price /
share
|
Consideration
received
|
# of
Non-USA
Investors
|
# of USA
Investors
|
||||||||||||||||
Oct.
1, 2009
|
Shares
sold
|
150,000
|
0.35
|
52,500
|
0
|
1
|
||||||||||||||||
Nov.
25. 2009
|
Shares
sold
|
150,000
|
0.35
|
52,500
|
0
|
1
|
||||||||||||||||
Dec.
11 & 22 2009
|
Shares
sold
|
315,000
|
0.35
|
110,250
|
0
|
1
|
||||||||||||||||
Dec.
23, 2009
|
Common
shares retired, (from Solomon
Lee
share account)
|
-875,000
|
0.001
|
-875
|
0
|
0
|
||||||||||||||||
Total
for 2009
|
-260,000
|
214,375
|
Date
2010
|
Events
|
Shares
issued
|
Price /
share
|
Consideration
received
|
# of
Non-USA
Investors
|
# of USA
Investors
|
|||||||||||||||
(i) Issuance
of shares in settlement of debts accrued under Promissory
Notes
|
|||||||||||||||||||||
Jan.1
to 27
|
1,342,000
|
0.20
|
268,400
|
7
|
0
|
||||||||||||||||
Feb.
10
|
780,000
|
0.30
|
234,000
|
1
|
0
|
||||||||||||||||
March
12 to 19
|
2,625,000
|
0.25
|
656,250
|
3
|
0
|
||||||||||||||||
April
15 to 27
|
1,055,000
|
0.15
|
158,250
|
4
|
0
|
||||||||||||||||
May
13
|
800,000
|
0.20
|
160,000
|
2
|
0
|
||||||||||||||||
May
14
|
350,000
|
0.40
|
140,000
|
2
|
0
|
||||||||||||||||
June
10.
|
1,000,000
|
0.20
|
200,000
|
5
|
0
|
||||||||||||||||
Total
Issuance of shares in settlement of debts
|
7,952,000
|
1,816,900
|
24
|
0
|
|||||||||||||||||
(ii)
Issuance of shares for employees’ compensation
|
|||||||||||||||||||||
May
4.
|
497,059
|
1.00
|
497,059
|
30
|
0
|
||||||||||||||||
(iii)
Shares being retired or voided [1]
|
|||||||||||||||||||||
Jan.
11, 2010 (Voided)
|
-150,002
|
0
|
0
|
-2
|
0
|
||||||||||||||||
March
23, 2010 (Retired)
|
-2,000,000
|
0
|
0
|
-1
|
0
|
||||||||||||||||
May
17, 2010 (Voided)
|
-40,000
|
0
|
0
|
-2
|
0
|
||||||||||||||||
June
26, 2010 (Retired & transferred to Preference Series B
shares)
|
-7,000,000
|
1.00
|
-7,000,000
|
-2
|
0
|
||||||||||||||||
Total
shares being retired or voided
|
-9,190,002
|
||||||||||||||||||||
June
26, 2010 issuance of Preference Series A & B
|
7,000,100
|
1.00
|
7,000,100
|
3
|
0
|
||||||||||||||||
Total
for 1
st
half 2010
|
6,259,157
|
2,314,059
|
|||||||||||||||||||
Issuance
of shares of debts accrued under promissory
notes
|
|||||||||||||||||||||
In
July 2010
|
975,000
|
0.75
|
731,250
|
1
|
|||||||||||||||||
In
August 2010
|
1,625,000
|
0.75
|
1,218,750
|
1
|
|||||||||||||||||
In
September 2010
|
1,380,000
|
0.75
|
1,035,000
|
1
|
|||||||||||||||||
Total
for 3 Qs 2010
|
19,014,157
|
3,339,059
|
|
¨
|
None
of these issuances involved underwriters, underwriting discounts or
commissions.
|
|
¨
|
Restrictive
legends were and will be placed on all certificates issued as described
above.
|
|
¨
|
The
distribution did not involve general solicitation or
advertising.
|
|
¨
|
The
distributions were made only to investors who were sophisticated enough to
evaluate the risks of the
investment.
|
|
¨
|
None
of these issuances involved underwriters, underwriting discounts or
commissions;
|
|
¨
|
We
placed Regulation S required restrictive legends on all certificates
issued;
|
|
¨
|
No
offers or sales of stock under the Regulation S offering were made to
persons in the United States;
|
|
¨
|
No
direct selling efforts of the Regulation S offering were made in the
United States.
|
|
¨
|
Access
to all our books and records.
|
|
¨
|
Access
to all material contracts and documents relating to our
operations.
|
|
¨
|
The
opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given
access.
|
PAGE
|
|
CONSOLIDATED
BALANCE SHEETS
|
2
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
3
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
4
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
5 -
29
|
September 30 ,2010
|
December 31 ,2009
|
|||||||
(Unaudited)
|
(Audited)
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
2,534,168 | 2,360,587 | ||||||
Inventories
|
9,050,220 | 6,099,411 | ||||||
Deposits
and prepaid expenses
|
12,398,272 | 10,189,266 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
7,719,843 | 6,869,505 | ||||||
Other
receivables
|
1,228,327 | 1,885,491 | ||||||
Due
from directors
|
- | 111,392 | ||||||
Total
current assets
|
32,930,830 | 27,515,652 | ||||||
Property
and equipment
|
||||||||
Property
and equipment, net of accumulated depreciation
|
13,484,334 | 7,564,664 | ||||||
Construction
in progress
|
8,164,586 | 5,995,939 | ||||||
Land
use rights, net of accumulated amortization
|
14,765,682 | 13,769,496 | ||||||
Total
property and equipment
|
36,414,602 | 27,330,099 | ||||||
Other
assets
|
||||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Proprietary
technologies, net of accumulated amortization
|
7,386,667 | 7,634,635 | ||||||
Long
term accounts receivable
|
9,325,174 | 9,338,477 | ||||||
Licence
rights
|
1 | 1 | ||||||
Investment
in unconsolidated corporate joint venture
|
- | 242,669 | ||||||
Total
other assets
|
28,711,842 | 29,215,782 | ||||||
Total
assets
|
$ | 98,057,274 | $ | 84,061,533 | ||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accrued expenses
|
373,736 | 756,209 | ||||||
Due
to a director
|
964,766 | - | ||||||
Dividends
payable
|
567,800 | - | ||||||
Other
payables
|
2,005,816 | 4,536,128 | ||||||
Short
term debt
|
- | 2,435,221 | ||||||
Total
current liabilities
|
3,912,118 | 7,727,558 | ||||||
Other
liabilities
|
||||||||
Long
term debt
|
3,731,343 | 4,401,002 | ||||||
Total
liabilities
|
7,643,461 | 12,128,560 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Preferred
stock: $0.001 par value
|
||||||||
(10,000,000
shares authorized, 0 share issued and outstanding)
|
||||||||
as
of September 30, 2010 and December 31, 2009,
respectively
|
- | - | ||||||
Series
A preferred stock: $0.001 par value
|
||||||||
(100
shares authorized, 100 and 0 shares issued and outstanding
|
||||||||
as
of September 30, 2010 and December 31, 2009, respectively)
|
- | - | ||||||
Series
B convertible preferred stock: $0.001 par
value)
|
||||||||
(10,000,000
shares authorized, 7,000,000 and 0 shares issued
|
||||||||
and
outstanding as of September 30, 2010 and December 31, 2009,
respectively)
|
7,000 | - | ||||||
Common
stock: $0.001 par value
|
||||||||
(100,000,000
shares authorized, 55,922,636 and 52,683,579 shares issued
|
||||||||
and
outstanding as of September 30, 2010 and December 31, 2009,
respectively)
|
55,923 | 52,684 | ||||||
Additional
paid - in capital
|
49,024,809 | 43,703,848 | ||||||
Retained
earnings
|
26,012,626 | 17,086,949 | ||||||
Accumulated
other comprehensive income
|
3,737,002 | 2,168,203 | ||||||
Total
Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
78,837,360 | 63,011,684 | ||||||
Non
- controlling interest
|
11,576,453 | 8,921,289 | ||||||
Total
stockholders' equity
|
90,413,813 | 71,932,973 | ||||||
Total
liabilities and stockholders' equity
|
98,057,274 | 84,061,533 |
Three months
|
Three months
|
Nine months
|
Nine months
|
|||||||||||||
ended
|
ended
|
ended
|
ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
(Unaudited)
|
|||||||||||||
Revenue
|
$ | 15,183,169 | $ | 4,616,991 | $ | 24,565,757 | $ | 12,653,149 | ||||||||
Cost
of goods sold
|
6,182,708 | 2,202,211 | 10,059,718 | 5,894,130 | ||||||||||||
Gross
profit
|
9,000,461 | 2,414,780 | 14,506,039 | 6,759,019 | ||||||||||||
General
and administrative expenses
|
(705,445 | ) | (611,807 | ) | (2,369,756 | ) | (1,891,887 | ) | ||||||||
Net
income from operations
|
8,295,016 | 1,802,973 | 12,136,283 | 4,867,132 | ||||||||||||
Other
income (expenses)
|
||||||||||||||||
Reversal
of impairment loss
|
303,791 | - | 303,791 | - | ||||||||||||
Interest
expense
|
(50,565 | ) | (117,348 | ) | (291,433 | ) | (353,345 | ) | ||||||||
|
||||||||||||||||
Net
income (expenses)
|
(50,565 | ) | (117,348 | ) | (291,433 | ) | (353,345 | ) | ||||||||
Net
income before income taxes
|
8,244,451 | 1,685,625 | 11,844,850 | 4,513,787 | ||||||||||||
Provision
for income taxes
|
- | - | - | - | ||||||||||||
Net
income
|
8,244,451 | 1,685,625 | 11,844,850 | 4,513,787 | ||||||||||||
Less:
Net income attributable to the non - controlling interest
|
(1,966,222 | ) | (486,209 | ) | (2,655,164 | ) | (1,101,545 | ) | ||||||||
Net
income attributable to the Sino Agro Food, Inc. and
subsidiaries
|
6,278,229 | 1,199,416 | 9,189,686 | 3,412,242 | ||||||||||||
Other
comprehensive income
|
. | . | ||||||||||||||
Foreign
currency translation gain
|
858,949 | (585,120 | ) | 1,568,799 | (569,561 | ) | ||||||||||
Comprehensive
income
|
7,137,178 | 614,296 | 10,758,485 | 2,842,681 | ||||||||||||
Less:
other comprehensive income attributable to the non - controlling
interest
|
(184,995 | ) | 125,983 | (345,136 | ) | 125,303 | ||||||||||
Comprehensive
income attributable to Sino Agro Food, Inc. and
subsidiaries
|
6,952,183 | 740,279 | 10,413,349 | 2,967,984 | ||||||||||||
Dividends
|
567,800 | - | 567,800 | - | ||||||||||||
Earnings
per share attributable to Sino Agro Food, Inc.
|
||||||||||||||||
and
subsidiaries common stockholders:
|
||||||||||||||||
Basic
|
$ | 0.12 | $ | 0.02 | $ | 0.18 | $ | 0.06 | ||||||||
Diluted
|
$ | 0.11 | $ | 0.02 | $ | 0.17 | $ | 0.06 | ||||||||
Weighted
average number of shares outstanding:
|
||||||||||||||||
Basic
|
53,134,303 | 52,943,579 | 54,223,823 | 52,943,579 | ||||||||||||
Diluted
|
60,134,303 | 52,943,579 | 56,685,361 | 52,943,579 |
Nine months
|
Nine months
|
|||||||
ended
|
ended
|
|||||||
September 30,
|
September 30,
|
|||||||
2010
|
2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income for the period
|
12,148,641 | 4,513,787 | ||||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Depreciation
|
1,102,290 | 1,054,398 | ||||||
Impairment
losses
|
(303,791 | ) | - | |||||
Amortization
|
658,567 | 651,221 | ||||||
Common
stock issued for services
|
497,059 | - | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Increase
in inventories
|
(2,950,809 | ) | (3,716,531 | ) | ||||
(Increase)
decrease in deposits and prepaid expenses
|
(2,209,006 | ) | 4,690,038 | |||||
Decrease
in due from directors
|
111,392 | 424,959 | ||||||
Increase
in due to a director
|
964,766 | - | ||||||
(Decrease)
increase in accounts payable and accrued
expenses
|
(382,473 | ) | 5,095 | |||||
(Decrease)
increase in other payables
|
(2,530,312 | ) | 116,218 | |||||
(Increase)
decrease in accounts receivable
|
(837,035 | ) | 543,818 | |||||
Decrease
in other receivables
|
657,164 | 1,223,075 | ||||||
Net
cash provided by operating activities
|
6,926,453 | 9,506,078 | ||||||
Cash
flows from investing activities
|
||||||||
Purchases
of property and equipment
|
(7,021,961 | ) | (3,666,553 | ) | ||||
Decrease
(increase) in investment in unconsolidated corporate joint
venture
|
242,669 | (242,669 | ) | |||||
Payment
for construction in progress
|
(2,168,647 | ) | (245,703 | ) | ||||
Acquisition
of land use rights
|
(1,438,052 | ) | - | |||||
Net
cash used in investing activities
|
(10,385,991 | ) | (4,154,925 | ) | ||||
Cash
flows from financing activities
|
||||||||
Common
stock issued at stated value
|
4,801,900 | - | ||||||
Proceeds
from debts
|
- | 2,430,454 | ||||||
Repayment
of debt
|
(3,104,880 | ) | (2,443,836 | ) | ||||
Net
cash provided by (used in) financing activities
|
1,697,020 | (13,382 | ) | |||||
Effects
on exchange rate changes on cash
|
1,936,099 | (3,677,810 | ) | |||||
Increase
in cash and cash equivalents
|
173,581 | 1,659,961 | ||||||
Cash
and cash equivalents, beginning of period
|
2,360,587 | 1,731,118 | ||||||
Cash
and cash equivalents, end of period
|
2,534,168 | 3,391,079 | ||||||
Supplementary
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
291,433 | 235,998 | ||||||
Cash
paid for income taxes
|
- | - | ||||||
Non-cash
transactions:
|
||||||||
7,000,000
shares of Series B convertible preferred stock converted
|
7,000,000 | - | ||||||
7,000,000
shares of common stock retired
|
(7,000,000 | ) | - | |||||
100
shares of Series A preferred stock issued from due to a
director
|
100 | - | ||||||
2,190,002
shares of common stock were retired
|
- | - | ||||||
7,952,000
shares of common stock were issued
|
||||||||
for
settlement of debts due to third parties
|
1,816,900 | - |
1.
|
CORPORATE
INFORMATION
|
|
Sino
Agro Food, Inc. (“the Company”) (formerly known as Volcanic Gold, Inc. and
A Power Agro Agriculture Development, Inc.) is an International Business
Corporation incorporated on October 1, 1974 in the State of Nevada, United
States of America. The shares are quoted on the Pink Sheet, OTC under the
ticker symbol of “SIAF”.
|
|
The
Company was engaged in the mining and exploration business but
ceased its mining and exploring business after October 14,
2005. On August 24, 2007, the Company entered into a Merger and
Acquisition Agreement between the Company and Capital Award Inc. (“CA”)
and its subsidiaries Capital Stage Inc. (“CS”) and Capital Hero
Inc. (“CH”). Effective the same date, CA, a Belize
Corporation, completed a reverse merger transaction with SIAF; a public
shell into which CA merger pursuant to which SIAF acquired all the
outstanding common stock of CA from Capital Adventure, a shareholder of CA
for 32,000,000 shares of the company’s common
stock.
|
|
On
August 24, 2007 the Company changed its name from Volcanic Gold, Inc. to A
Power Agro Agriculture Development, Inc. On December 8, 2007,
the Company officially changed its name to Sino Agro Food,
Inc.
|
|
On
September 5, 2007, the Company made further acquisitions by acquiring
three existing businesses in the People’s Republic of China (“PRC”) by
acquiring of:
|
|
a)
|
Hang
Yu Tai Investment Limited (“HYT”), a Macau incorporated
company, the owner of 78% equity interest in ZhongXingNongMu Co. Ltd
(“ZX”), a PRC incorporated company;
|
|
b)
|
Tri-way
Industries Limited (“TRW”), a Hong Kong incorporated company;
and
|
|
c)
|
Macau
Eiji Company Limited (“MEIJI”), a Macau incorporated company, the owner of
75% equity interest in Enping City Juntang Town Hang Sing Tai Agriculture
Co. Ltd. (“HST”), a PRC corporate Sino-Foreign joint
venture.
|
1.
|
CORPORATE
INFORMATION (CONTINUED)
|
|
•
|
Qinghai
Province Sanjiang Group Company Limited (English translation) (“Qinghai
Sanjiang”), a PRC government owned company with major business activities
in the agriculture industry; and
|
|
•
|
Guangzhou
City Garwor Company Limited (English translation) (“Garwor”), a private
limited company incorporated in the PRC, specializing in sales and
marketing.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
2.1
|
FISCAL
YEAR
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.2
|
REPORTING
ENTITY
|
Name of subsidiaries
|
Place of incorporation
|
Issued and paid - in
capital
|
Percentage of interest
|
Principal activities
|
||||
Capital
Award Inc. ("CA")
|
Belize
|
$50,000
|
100%
(2009: 100%) directly
|
Fishery
development and holder of A-Power Technology master
licence
|
||||
Capital
Stage Inc. ("CS")
|
Belize
|
$50,000
|
100%
(2009: 100%) indirectly
|
Dormant
|
||||
Capital
Hero Inc. ("CH")
|
Belize
|
$50,000
|
100%
(2009: 100%) indirectly
|
Dormant
|
||||
Tri-way
Industries Limited ("TRW")
|
Hong
Kong, PRC
|
HK$10,000
|
100%
(2009: 100%) directly
|
Investment
holding, holder of enzyme technology master licence for manufacturing of
livestock feed and bio-organic fertilizer and has not commenced
its business of fish farm operation
|
||||
Pretty
Mountain Holdings Limited ("PMH")
|
Hong
Kong, PRC
|
HK$10,000
|
80%
(2009: 80%) directly
|
Dormant
|
||||
Macau
Eiji Company Limited ("MEIJI")
|
Macau,
PRC
|
Pataca
30,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Enping
City Juntang Town Hang Sing Tai Agriculture Co. Ltd
("HST")
|
PRC
|
RMB100,000
|
75%
(2009: 75%) indirectly
|
Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Jiang
Men City Heng Sheng
|
PRC
|
$600,000
|
100%
(2009: 100%) directly
|
The
Company has not commenced its business of Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Tai
Agriculture Development
|
||||||||
Co.
Ltd ("JHST")
|
||||||||
Hang
Yu Tai Investment
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Limited
("HYT")
|
||||||||
ZhongXingNongMu
Co. Ltd ("ZX")
|
PRC
|
RMB60,000,000
|
78%
(2009: 78%) indirectly
|
Dairy
production and manufacturing of organic fertilizer,livestock
feed, and beef cattle and plantation of crops and
pasture
|
||||
A
Power Agro Agriculture Development (Macau) Limited
("APWAM")
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2009: 100%) directly
|
Investment
holding
|
||||
Name
of variable interest
entity/unconsolidated
corporate joint
venture
|
Place
of incorporation
|
Issued
and paid - in
capital
|
Percentage
of interest
|
Principal
activities
|
||||
Qinghai
Sanjiang A Power
Agriculture
Co., Ltd
("SJAP")
|
PRC
|
Issued
capital:
$1,400,000
Paid
- in capital:
$843,202
|
45%
(2009: 45%) indirectly
|
The
Company has not commenced its business of manufacturing of organic
fertilizer,livestock feed, and beef cattle and plantation of crops and
pastures
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.3
|
BASIS
OF PRESENTATION
|
2.4
|
BASIS
OF CONSOLIDATION
|
2.5
|
BUSINESS
COMBINATION
|
2.6
|
NON
-
CONTROLLING INTEREST IN
CONSOLIDATED FINANCIAL
STATEMENTS
|
2.7
|
USE OF
ESTIMATES
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.8
|
REVENUE
RECOGNITION
|
2.9
|
COST
OF GOODS SOLD
|
2.10
|
SHIPPING AND
HANDLING
|
2.11
|
ADVERTISING
|
2.12
|
FOREIGN
CURRENCY TRANSLATION AND OTHER COMPREHENSIVE
INCOME
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.13
|
CASH
AND CASH EQUIVALENTS
|
2.14
|
ACCOUNTS
RECEIVABLE
|
2.15
|
INVENTORIES
|
-
|
raw
materials – purchase cost on a weighted average
basis;
|
-
|
manufactured
finished goods and work-in-progress – cost of direct materials and labor
and a proportion of manufacturing overheads based on normal operation
capacity but excluding borrowing costs;
and
|
-
|
retail
and wholesale merchandise finished goods – purchase cost on a weighted
average basis.
|
2.16
|
PROPERTY
AND EQUIPMENT
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.16
|
PROPERTY
AND EQUIPMENT (CONTINUED)
|
2.17
|
GOODWILL
|
2.18
|
PROPRIETARY
TECHNOLOGIES
|
2.19
|
CONSTRUCTION
IN PROGRESS
|
2.20
|
LAND USE
RIGHTS
|
2.21
|
CORPORATE
JOINT VENTURE
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.21
|
CORPORATE
JOINT VENTURE (CONTINUED)
|
2.22
|
INCOME
TAXES
|
2.23
|
POLITICAL
AND BUSINESS RISK
|
2.
|
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
(CONTINUED)
|
2.24
|
CONCENTRATION OF CREDIT
RISK
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|||||||||||||
ended
|
ended
|
ended
|
ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
Customer
A
|
23.55 | % | - | 12.34 | % | - | ||||||||||
Customer
B
|
16.02 | % | 25.82 | % | 24.74 | % | 28.39 | % | ||||||||
Customer
C
|
14.55 | % | 24.27 | % | 20.02 | % | 30.89 | % | ||||||||
Customer
D
|
11.93 | % | 27.19 | % | 13.17 | % | 30.42 | % | ||||||||
Customer
E
|
10.42 | % | 5.22 | % | 5.46 | % | 2.13 | % | ||||||||
Customer
F
|
- | 6.36 | % | - | - | |||||||||||
Customer
G
|
- | - | - | 2.71 | % | |||||||||||
76.47 | % | 88.86 | % | 75.73 | % | 94.54 | % |
September
30, 2010
|
December
31, 2009
|
|||||||
Customer
A
|
37.45 | % | 35.48 | % | ||||
Customer
B
|
17.30 | % | 22.49 | % | ||||
Customer
C
|
9.21 | % | 9.17 | % | ||||
Customer
D
|
7.47 | % | - | |||||
Customer
E
|
6.68 | % | 11.04 | % | ||||
Customer
F
|
- | 17.58 | % | |||||
78.11 | % | 95.76 | % |
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.25
|
IMPAIRMENT
OF LONG-LIVED ASSETS AND INTANGIBLE
ASSETS
|
2.26
|
EARNINGS
PER SHARE
|
2.27
|
ACCUMULATED
OTHER COMPREHENSIVE INCOME
|
2.28
|
RETIREMENT
BENEFIT COSTS
|
2.29
|
STOCK-BASED
COMPENSATION
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.30
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
Level
1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting
date.
|
Level
2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
Level
3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
3.
|
SEGMENT
INFORMATION
|
Three months ended September 30, 2010
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Revenue
|
1,320,223 | 9,669,582 | 3,509,397 | 683,967 | - | 15,183,169 | ||||||||||||||||||
Net
income (loss)
|
845,161 | 4,614,145 | 2,770,271 | 470,077 | (151,412 | ) | 8,548,242 | |||||||||||||||||
Total
assets
|
15,711,315 | 44,653,524 | 14,585,276 | 3,269,375 | 19,837,784 | 98,057,274 | ||||||||||||||||||
Three months ended September 30, 2009
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Revenue
|
- | 3,685,058 | 931,933 | - | - | 4,616,991 | ||||||||||||||||||
Net
income (loss)
|
(2,951 | ) | 1,512,327 | 613,988 | - | (437,739 | ) | 1,685,625 | ||||||||||||||||
Total
assets
|
13,711,470 | 39,760,522 | 10,201,312 | - | 4,157,852 | 67,831,156 |
3.
|
SEGMENT
INFORMATION (CONTINUED)
|
Nine months ended September 30, 2010
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Revenue
|
2,015,754 | 18,356,639 | 3,509,397 | 683,967 | - | 24,565,757 | ||||||||||||||||||
Net
income (loss)
|
2,142,928 | 7,800,444 | 2,685,567 | 470,077 | (950,375 | ) | 12,148,641 | |||||||||||||||||
Total
assets
|
15,711,315 | 44,653,524 | 14,585,276 | 3,269,375 | 19,837,784 | 98,057,274 | ||||||||||||||||||
Nine months ended September 30, 2009
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
|||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||
Revenue
|
726,702 | 10,842,977 | 1,083,470 | - | - | 12,653,149 | ||||||||||||||||||
Net
income (loss)
|
717,850 | 4,306,926 | 616,087 | - | (1,127,076 | ) | 4,513,787 | |||||||||||||||||
Total
assets
|
13,711,470 | 39,760,522 | 10,201,312 | - | 4,157,852 | 67,831,156 |
4.
|
INCOME
TAXES
|
4.
|
INCOME
TAXES (CONTINUED)
|
5.
|
DIVIDEND
|
Three months
|
Three months
|
Nine months
|
Nine months
|
|||||||||||||
ended
|
ended
|
ended
|
ended
|
|||||||||||||
September 30,
|
September 30,
|
September 30,
|
September 30,
|
|||||||||||||
2010
|
2009
|
2010
|
2009
|
|||||||||||||
$
|
$
|
$
|
$
|
|||||||||||||
56,780,043
outstanding shares of $0.01
|
567,800 | - | 567,800 | - |
6.
|
CASH
AND CASH EQUIVALENTS
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Cash
and bank balances
|
2,534,168 | 2,360,587 |
7.
|
INVENTORIES
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Bread
grass
|
328,358 | - | ||||||
Organic
fertilizer
|
12,228 | - | ||||||
Raw
materials for bread grass and organic fertilizer
|
290,212 | - | ||||||
Immature
seeds
|
788,383 | 411,594 | ||||||
Harvested
HU plantation
|
- | 53 | ||||||
Unharvested
HU plantation
|
55,298 | 89,666 | ||||||
Forage
for milk cows and consumable
|
7,575,741 | 5,598,098 | ||||||
9,050,220 | 6,099,411 |
8.
|
DEPOSITS
AND PREPAID EXPENSES
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Deposits for | ||||||||
acquisition
of land use rights
|
4,453,666 | 4,453,666 | ||||||
inventory
purchased
|
649,388 | 219,551 | ||||||
tenancy
agreement
|
2,129 | 2,129 | ||||||
materials
used for construction in progress
|
95,074 | 79,607 | ||||||
Prepayments
for purchases of milk cows, dairy
farm and containers
|
7,198,015 | 5,434,313 | ||||||
12,398,272 | 10,189,266 |
9.
|
ACCOUNTS
RECEIVABLE
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
0 -
30 days
|
175,844 | 1,530,838 | ||||||
31
- 90 days
|
1,093,642 | - | ||||||
91
- 120 days
|
3,337,755 | 5,338,667 | ||||||
over
120 days and less than 1 year
|
3,112,602 | - | ||||||
over
1 year
|
9,325,174 | 9,338,477 | ||||||
17,045,017 | 16,207,982 | |||||||
Less:
amounts reclassified as long term accounts receivable
|
(9,325,174 | ) | (9,338,477 | ) | ||||
7,719,843 | 6,869,505 |
10
.
|
OTHER
RECEIVABLES
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Advance
to service providers
|
- | 12,983 | ||||||
Due
from related parties
|
- | 260,101 | ||||||
Due
from employees
|
327,560 | 430,552 | ||||||
Due
from third parties
|
900,767 | 1,181,855 | ||||||
1,228,327 | 1,885,491 |
11.
|
PROPERTY
AND EQUIPMENT
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Milk
cows
|
10,476,330 | 4,953,669 | ||||||
Plant
and machinery
|
3,686,668 | 2,948,148 | ||||||
Structure
and leasehold improvements
|
1,285,133 | 783,491 | ||||||
Mature
seeds
|
492,868 | 484,436 | ||||||
Furniture
and equipment
|
372,136 | 85,506 | ||||||
Motor
vehicles
|
47,568 | 83,493 | ||||||
16,360,703 | 9,338,743 | |||||||
Less:
Accumulated depreciation
|
(2,876,369 | ) | (1,774,079 | ) | ||||
Net
carrying amount
|
13,484,334 | 7,564,664 |
12.
|
CONSTRUCTION
IN PROGRESS
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Construction
in progress
|
||||||||
-
Rangeland for milk cows
|
6,054,689 | 5,741,168 | ||||||
-
Oven room for production of dried flowers
|
777,624 | 254,771 | ||||||
-
Organic fertilizer and bread grass production plant
|
1,332,273 | - | ||||||
8,164,586 | 5,995,939 |
13.
|
LAND
USE RIGHTS
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Cost
|
16,545,931 | 15,107,879 | ||||||
Less:
Accumulated impairment losses
|
(1,780,249 | ) | (1,338,383 | ) | ||||
Net
carrying amount
|
14,765,682 | 13,769,496 |
14.
|
PROPRIETARY
TECHNOLOGIES
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies
|
8,000,000 | 8,000,000 | ||||||
Less:
Accumulated amortisation
|
(613,333 | ) | (365,365 | ) | ||||
Net
carrying amount
|
7,386,667 | 7,634,635 |
15.
|
GOODWILL
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Goodwill
from acquisition
|
38,444,099 | 38,444,099 | ||||||
Less:
Accumulated impairment losses
|
(26,444,099 | ) | (26,444,099 | ) | ||||
Net
carrying amount
|
12,000,000 | 12,000,000 |
16.
|
INVESTMENT
IN UNCONSOLIDATED CORPORATE JOINT
VENTURE
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Investment
in unconsolidated joint venture
|
- | 242,669 |
17.
|
LICENCE
RIGHTS
|
18.
|
OTHER
PAYABLES
|
September 30, 2010
|
December 31, 2009
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies payable
|
- | 3,577,264 | ||||||
Due
to third parties
|
1,994,449 | 601,326 | ||||||
Due
to related parties
|
11,367 | 169,536 | ||||||
Stamp
duty payable
|
- | 4,678 | ||||||
Others
|
- | 183,324 | ||||||
2,005,816 | 4,536,128 |
19.
|
SHAREHOLDERS’
EQUITY
|
20.
|
BANK
BORROWINGS
|
Short
term debt
|
|||||||||||||||
Name
of bank
|
Interest
rate
|
Term
|
Security
|
Amount
|
|||||||||||
September
30, 2010
|
December
31, 2009
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
Corporate
guarantee by third party
|
- | 1,408,321 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
Corporate
guarantee by third party
|
- | 711,495 | |||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
Corporate
guarantee by third party
|
- | 315,405 | |||||||||
- | 2,435,221 | ||||||||||||||
Long
term debt
|
|||||||||||||||
Name
of bank
|
Interest
rate
|
Term
|
Security
|
Amount
|
|||||||||||
September
30, 2010
|
December
31, 2009
|
||||||||||||||
$
|
$
|
||||||||||||||
Agricultural
Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate
guarantee by third party
|
3,731,343 | 4,401,002 | |||||||||
3,731,343 | 4,401,002 |
21.
|
OBLIGATION
UNDER OPERATING LEASES
|
September 30, 2010
|
||||
$
|
||||
Year
ended December 31,2010
|
14,091 | |||
Year
ended December 31,2011
|
56,364 | |||
Year
ended December 31,2012
|
56,364 | |||
Year
ended December 31,2013
|
5,160 | |||
Year
ended December 31,2014
|
5,160 | |||
Thereafter
|
- | |||
137,139 |
22.
|
CONTINGENCIES
|
23.
|
RELATED
PARTY TRANSACTIONS
|
Name
of related party
|
Nature
of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other payables, due to Mr. Rui Xiong He is $16,985 as of December 31,
2009. The amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 as of
December 31, 2009. The amounts are unsecured, interest free and have no
fixed term of repayment.
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 as of December
31, 2009. The amounts are unsecured, interest free and have no fixed term
of repayment.
|
|
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payables, due to SJAP is $2,494 as of December 31, 2009. The
amounts are unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Solomon Yip Kun Lee, Chairman
|
Included
in due to a director, due to Mr. SolomonYip Kun Lee is $964,766 as
of September 30, 2010. The amount is unsecured, interest free and
have no fixed term of repayment.
Included
in due from directors, due from Mr. SolomonYip Kun Lee is $73,164 as of
, December 31, 2009. The amount is unsecured, interest free and have
no fixed term of repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, due from Mr. Michael Bor Hann Chen is $38,228 as of
December 31, 2009. The amount is unsecured, interest free and have no
fixed term of
repayment.
|
24.
|
SUBSEQUENT
EVENTS
|
PAGE
|
||
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
1
|
|
CONSOLIDATED
BALANCE SHEETS
|
2
|
|
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
3
|
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS’ EQUITY
|
4
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
5
|
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
6 -
29
|
Madsen
& Associates CPAs, Inc.
|
|
684
East Vine Street #3, Murray, UT 84107
|
PHONE:
(801) 268-2632 FAX: (801)
268-3978
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
2,360,587 | 1,731,118 | ||||||
Inventories
|
6,099,411 | 5,199,241 | ||||||
Deposits
and prepaid expenses
|
10,189,266 | 10,189,266 | ||||||
Accounts
receivable, net of allowance for doubtful accounts
|
6,869,505 | 2,073,567 | ||||||
Other
receivables
|
1,885,491 | 1,197,617 | ||||||
Due
from directors
|
111,392 | 835,553 | ||||||
Total
current assets
|
27,515,652 | 21,226,362 | ||||||
Property
and equipment, net of accumulated depreciation
|
7,564,664 | 6,970,522 | ||||||
Construction
in progress
|
5,995,939 | 4,224,253 | ||||||
Land
use rights, net of accumulated amortization
|
13,769,496 | 13,464,781 | ||||||
Proprietary
technologies, net of accumulated amortization
|
7,634,635 | 7,946,667 | ||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Long
term accounts receivable
|
9,338,477 | 9,325,174 | ||||||
56,303,211
|
53,931,397
|
|||||||
Other
assets
|
||||||||
Licence
rights
|
1 | 1 | ||||||
Investment
in unconsolidated corporate joint venture
|
242,669 | - | ||||||
242,670 | 1 | |||||||
Total
assets
|
$ | 84,061,533 | $ | 75,157,760 | ||||
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable and accruals
|
756,209 | 1,030,695 | ||||||
Other
payables
|
4,536,128 | 4,621,679 | ||||||
Short
term debt
|
2,435,221 | - | ||||||
Total
current liabilities
|
7,727,558 | 5,652,374 | ||||||
Other
liabilities
|
||||||||
Long
term debt
|
4,401,002 | 6,836,223 | ||||||
Total
liabilities
|
12,128,560 | 12,488,597 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Stockholders'
equity
|
||||||||
Preferred
stock: $0.001 par value
|
||||||||
(10,000,000
shares authorized, 0 shares issued and outstanding)
|
||||||||
Common
stock: $0.001 par value
|
||||||||
(100,000,000
shares authorized,52,683,579 and 52,943,579 shares issued
|
||||||||
and
outstanding at December 31,2009 and 2008 respectively)
|
52,684
|
52,944
|
||||||
Additional
paid- in capital
|
43,703,848 | 43,489,213 | ||||||
Retained
earnings
|
17,086,949 | 10,279,010 | ||||||
Accumulated
other comprehensive income
|
2,168,203 | 2,138,447 | ||||||
Total
Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
63,011,684 | 55,959,614 | ||||||
Non
- controlling interest
|
8,921,289 | 6,709,549 | ||||||
Total
stockholders' equity
|
71,932,973 | 62,669,163 | ||||||
Total
liabilities and stockholders' equity
|
$ | 84,061,533 | $ | 75,157,760 |
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Revenue
|
21,725,839 | 16,189,467 | ||||||
Cost
of goods sold
|
9,385,442 | 7,947,659 | ||||||
Gross
profit
|
12,340,397 | 8,241,808 | ||||||
General
and administrative expenses
|
(2,852,084 | ) | (2,811,352 | ) | ||||
Impairment
loss
|
- | (293,404 | ) | |||||
Net
income from operations
|
9,488,313 | 5,137,052 | ||||||
Other
income (loss)
|
||||||||
Other
income
|
26 | 62,142 | ||||||
Interest
expenses
|
(470,019 | ) | (419,130 | ) | ||||
Total
other income (expenses)
|
(469,993 | ) | (356,988 | ) | ||||
Income
from unconsolidated corporate joint venture and equity
investee
|
- | 191,992 | ||||||
Net
income from continuing operations before income
taxes
|
9,018,320 | 4,972,056 | ||||||
Provision
for income taxes
|
- | - | ||||||
Net
income from continuing operations
|
9,018,320 | 4,972,056 | ||||||
Net
income from discontinued operations net of amount attributable
to
|
||||||||
non
- controlling interest (net of income taxes of $0)
|
- | 3,412,449 | ||||||
Net
income
|
9,018,320 | 8,384,505 | ||||||
Less:
Net income attributable to the non - controlling interest
|
(2,210,381 | ) | (1,279,584 | ) | ||||
Net
income attributable to the Sino Agro Food, Inc. and
subsidiaries
|
6,807,939 | 7,104,921 | ||||||
Other
comprehensive income
|
||||||||
Foreign
currency translation gain
|
31,118 | 1,762,560 | ||||||
Comprehensive
income
|
6,839,057 | 8,867,481 | ||||||
Less:
other comprehensive income attributable to the non - controlling
interest
|
(1,359 | ) | (22,633 | ) | ||||
Comprehensive
income attributable to Sino Agro Food, Inc. and
subsidiaries
|
6,837,698 | 8,844,848 | ||||||
Earnings
per share attributable to Sino Agro Food, Inc. and subsidiaries common
stockholders:
|
||||||||
Basic
- From continuing operations
|
0.13 | 0.07 | ||||||
Basic
- From discontinued operations
|
- | 0.06 | ||||||
0.13 | 0.13 | |||||||
Diluted
- From continuing operations
|
0.13 | 0.07 | ||||||
Diluted
- From discontinued operations
|
- | 0.06 | ||||||
0.13 | 0.13 | |||||||
Weighted
average number of shares outstanding:
|
||||||||
Basic
|
52,889,473 | 52,943,579 | ||||||
Diluted
|
52,889,473 | 52,943,579 |
Common stock
|
Accumulated
|
|||||||||||||||||||||||||||
Par value $0.001
|
Additional
|
other
|
||||||||||||||||||||||||||
Nominal
|
paid - in
|
Retained
|
comprehensive
|
Non - controlling
|
||||||||||||||||||||||||
Number
of shares
|
amount
|
capital
|
earnings
|
income
|
interest
|
Total
|
||||||||||||||||||||||
$
|
$
|
$
|
$
|
$
|
$
|
|||||||||||||||||||||||
Balance
at January 1, 2008
|
52,943,579 | 52,944 | 43,489,213 | 3,174,089 | 398,520 | 5,407,332 | 52,522,098 | |||||||||||||||||||||
Net
income for the year
|
- | - | - | 7,104,921 | - | 1,279,584 | 8,384,505 | |||||||||||||||||||||
Foreign
currency translation gain
|
- | - | - | - | 1,739,927 | 22,633 | 1,762,560 | |||||||||||||||||||||
Balance
at December 31, 2008
|
52,943,579 | 52,944 | 43,489,213 | 10,279,010 | 2,138,447 | 6,709,549 | 62,669,163 | |||||||||||||||||||||
Issue
of common stock at stated
value
|
615,000 | 615 | 214,635 | - | - | - | 215,250 | |||||||||||||||||||||
Common
stock redeemed at par value
|
(875,000 | ) | (875 | ) | - | - | - | - | (875 | ) | ||||||||||||||||||
Net
income for the year
|
- | - | - | 6,807,939 | - | 2,210,381 | 9,018,320 | |||||||||||||||||||||
Foreign
currency translation gain
|
- | - | - | - | 29,756 | 1,359 | 31,115 | |||||||||||||||||||||
Balance
at December 31, 2009
|
52,683,579 | 52,684 | 43,703,848 | 17,086,949 | 2,168,203 | 8,921,289 | 71,932,973 |
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cash
flows from operating activities
|
||||||||
Net
income for the year
|
9,018,320 | 8,384,505 | ||||||
Adjustments
to reconcile net income to net cash from operations:
|
||||||||
Impairment
loss
|
- | 293,404 | ||||||
Depreciation
|
820,193 | 706,912 | ||||||
Profit
from disposal of unconsolidated equity investee
|
- | (3,412,449 | ) | |||||
Income
from unconsolidated equity investee
|
- | (191,992 | ) | |||||
Amortization
|
865,512 | 605,581 | ||||||
Changes
in operating assets and liabilities:
|
||||||||
Increase
in inventories
|
(900,170 | ) | (4,572,440 | ) | ||||
Increase
in construction in progress
|
(1,771,686 | ) | (391,869 | ) | ||||
Increase
in deposits and prepaid expenses
|
- | (2,407,014 | ) | |||||
Decrease
(increase) in due from directors
|
724,161 | (826,867 | ) | |||||
Decrease
in accounts payable and accruals
|
(274,486 | ) | (2,310,953 | ) | ||||
(Decrease)
increase in other payables
|
(85,551 | ) | 4,033,565 | |||||
(Increase)
decrease in accounts receivable
|
(4,809,241 | ) | 7,844,989 | |||||
Increase in
other receivables
|
(687,874 | ) | (725,450 | ) | ||||
Net
cash provided by operating activities
|
2,899,178 | 7,029,922 | ||||||
Cash
flows from investing activities
|
||||||||
Purchases
of property and equipment
|
(1,414,336 | ) | (1,983,664 | ) | ||||
Investment
in unconsolidated corporate joint venture
|
(242,669 | ) | - | |||||
Acquisition
of proprietary technologies
|
- | (8,000,000 | ) | |||||
Proceeds
from disposal of unconsolidated equity investee
|
- | 4,405,000 | ||||||
Acquisition
of land use rights
|
(858,195 | ) | (764,128 | ) | ||||
Net
cash used in investing activities
|
(2,515,200 | ) | (6,342,792 | ) | ||||
Cash
flows from financing activities
|
||||||||
Common
stock redeemded at par value
|
(875 | ) | - | |||||
Comon
stock issued at stated value
|
215,250 | - | ||||||
Repayment
of debts
|
(2,435,221 | ) | (2,275,812 | ) | ||||
Proceeds
from issuance of debts
|
2,435,221 | 2,723,310 | ||||||
Net
cash provided by financing activities
|
214,375 | 447,498 | ||||||
Effects
on exchange rate changes on cash
|
31,116 | 237,976 | ||||||
Increase
in cash and cash equivalents
|
629,469 | 1,372,604 | ||||||
Cash
and cash equivalents, beginning of year
|
1,731,118 | 358,514 | ||||||
Cash
and cash equivalents, end of year
|
2,360,587 | 1,731,118 | ||||||
Supplementary
disclosures of cash flow information:
|
||||||||
Cash
paid for interest
|
470,019 | 419,130 | ||||||
Cash
paid for income taxes
|
- | - |
1.
|
CORPORATE
INFORMATION
|
|
a)
|
Hang
Yu Tai Investment Limited (“HYT”), a Macau incorporated company, the owner
of 78% equity interest in ZhongXingNongMu Co. Ltd (“ZX”), a PRC
incorporated company;
|
|
b)
|
Tri-way
Industries Limited (“TRW”), a Hong Kong incorporated company;
and
|
|
c)
|
Macau
Eiji Company Limited (“MEIJI”), a Macau incorporated company, the owner of
75% equity interest in Enping City Juntang Town Hang Sing Tai Agriculture
Co. Ltd. (“HST”), a PRC corporate Sino-Foreign joint
venture.
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
2.1
|
FISCAL
YEAR
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.2
|
REPORTING
ENTITY
|
Place
of
|
Issued
and
|
Percentage
of
|
Principal
|
|||||
Name
of subsidiaries
|
incorporation
|
paid
- in capital
|
interest
|
activity
|
||||
Capital
Award Inc. ("CA")
|
Belize
|
$50,000
|
100%
(2008: 100%) directly
|
Fishery
development and holder of A-Power Technology master
licence
|
||||
Capital
Stage Inc. ("CS")
|
Belize
|
$50,000
|
100%
(2008: 100%) indirectly
|
Dormant
|
||||
Capital
Hero Inc. ("CH")
|
Belize
|
$50,000
|
100%
(2008: 100%) indirectly
|
Dormant
|
||||
Tri-way
Industries Limited ("TRW")
|
Hong
Kong, PRC
|
HK$10,000
|
100%
(2008: 100%) directly
|
Investment
holding, holder of enzyme technology master licence for manufacturing of
livestock feed and bio-organic fertilizer and has yet commenced
its business of fish farm operation
|
||||
Pretty
Mountain Holdings Limited ("PMH")
|
Hong
Kong, PRC
|
HK$10,000
|
80%
(2008: 80%) directly
|
Dormant
|
||||
Macau
Eiji Company Limited ("MEIJI")
|
Macau,
PRC
|
Pataca
30,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
Enping
City Juntang Town Hang Sing Tai Agriculture Co. Ltd
("HST")
|
PRC
|
RMB100,000
|
75%
(2008: 75%) indirectly
|
Hylocereus
Undatus Plantation ("HU Plantation")
|
||||
Jiang
Men City Heng Sheng
|
PRC
|
Issued
capital:
|
100%
(2008: 100%) directly
|
The
Company has yet
|
||||
Tai
Agriculture Development
|
$600,000
|
commenced
its business of
|
||||||
Co.
Ltd ("JHST")
|
Paid
- in capital:
|
Hylocereus
Undatus Plantation ("HU Plantation")
|
||||||
$180,117
|
||||||||
Hang
Yu Tai Investment
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
Limited
("HYT")
|
||||||||
ZhongXingNongMu
Co. Ltd
|
PRC
|
RMB60,000,000
|
78%
(2008: 78%) indirectly
|
Dairy
production and
|
||||
("ZX")
|
manufacturing
of organic
|
|||||||
fertilizer,livestock
feed, and beef
|
||||||||
cattle
and plantation of crops and
|
||||||||
pasture
|
||||||||
A
Power Agro Agriculture
|
Macau,
PRC
|
Pataca
25,000
|
100%
(2008: 100%) directly
|
Investment
holding
|
||||
Development
(Macau) Limited
|
||||||||
("APWAM")
|
||||||||
Name
of unconsolidated
|
Place
of
|
Issued
and
|
Percentage
of
|
Principal
|
||||
corporate
joint venture
|
incorporation
|
paid
- in capital
|
interest
|
activity
|
||||
Qinghai
Sanjiang A Power
|
PRC
|
Issued
capital:
|
45%
(2008: Nil%)
|
The
Company has yet
|
||||
Agriculture
Co., Ltd
|
$1,400,000
|
indirectly
|
commenced
its business of
|
|||||
("SJAP")
|
Paid
- in capital:
|
manufacturing
of organic
|
||||||
$242,669
|
fertilizer,livestock
feed, and beef
|
|||||||
cattle
and plantation of crops and
|
||||||||
|
|
|
|
pastures
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.3
|
BASIS
OF PRESENTATION
|
2.4
|
BASIS
OF CONSOLIDATION
|
2.5
|
BUSINESS
COMBINATIONS
|
2.6
|
NON - CONTROLLING INTEREST IN
CONSOLIDATED FINANCIAL
STATEMENTS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
|
2.7
|
USE
OF ESTIMATES
|
2.8
|
REVENUE
RECOGNITION
|
|
2.9
|
COST
OF GOODS SOLD
|
2.10
|
SHIPPING
AND HANDLING
|
2.11
|
ADVERTISING
|
2.12
|
FOREIGN CURRENCY TRANSLATION AND
OTHER COMPREHENSIVE INCOME
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.13
|
CASH
AND CASH EQUIVALENTS
|
2.14
|
ACCOUNTS
RECEIVABLE
|
2.15
|
INVENTORIES
|
-
|
raw
materials – purchase cost on a weighted average
basis;
|
-
|
manufactured
finished goods and work-in-progress – cost of direct materials and labor
and a proportion of manufacturing overheads based on normal operation
capacity but excluding borrowing costs;
and
|
-
|
retail
and wholesale merchandise finished goods – purchase cost on a weighted
average basis.
|
2.16
|
PROPERTY AND
EQUIPMENT
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.16
|
PROPERTY
AND EQUIPMENT (CONTINUED)
|
2.17
|
GOODWILL
|
2.18
|
PROPRIETARY
TECHNOLOGIES
|
2.19
|
CONSTRUCTION
IN PROGRESS
|
2.20
|
LAND
USE RIGHTS
|
2.21
|
CORPORATE
JOINT VENTURE
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.21
|
CORPORATE
JOINT VENTURE (CONTINUED)
|
2.22
|
INCOME
TAXES
|
2.23
|
POLITICAL
AND BUSINESS RISK
|
2.24
|
CONCENTRATION
OF CREDIT RISK
|
SINO
AGRO FOOD, INC. AND SUBSIDIARIES
|
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
|
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND DECEMBER 31,
2008
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.24
|
CONCENTRATION OF CREDIT RISK
(CONTINUED)
|
2009
|
2008
|
|||||||
Customer
A
|
22.54 | % | 21.86 | % | ||||
Customer
B
|
21.20 | % | 18.11 | % | ||||
Customer
C
|
12.26 | % | 17.02 | % | ||||
Customer
D
|
9.62 | % | 4.20 | % | ||||
Customer
E
|
9.35 | % | 8.07 | % | ||||
74.97 | % | 69.26 | % |
2009
|
2008
|
|||||||
Customer
A
|
35.48 | % | 50.45 | % | ||||
Customer
B
|
22.49 | % | 31.36 | % | ||||
Customer
C
|
17.58 | % | 14.68 | % | ||||
Customer
D
|
11.04 | % | 1.01 | % | ||||
Customer
E
|
9.17 | % | - | |||||
Customer
F
|
- | 2.39 | % | |||||
95.76 | % | 99.89 | % |
2.25
|
IMPAIRMENT
OF LONG-LIVED ASSETS AND INTANGIBLE
ASSETS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.26
|
EARNINGS
PER SHARE
|
2.27
|
ACCUMULATED
OTHER COMPREHENSIVE INCOME
|
2.28
|
RETIREMENT
BENEFIT COSTS
|
2.29
|
STOCK-BASED
COMPENSATION
|
2.30
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
|
Level
1
|
Quoted
market prices available in active markets for identical assets or
liabilities as of the reporting
date.
|
Level
2
|
Pricing
inputs other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting
date.
|
Level
3
|
Pricing
inputs that are generally observable inputs and not corroborated by market
data.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.30
|
FAIR
VALUE OF FINANCIAL INSTRUMENTS
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
2.31
|
NEW
ACCOUNTING PRONOUNCEMENTS
(CONTINUED)
|
3.
|
SEGMENT
INFORMATION
|
2009
|
||||||||||||||||||||
Fishery
|
Dairy
|
|||||||||||||||||||
Development
|
Production
|
HU
Plantation
|
Corporate and
|
|||||||||||||||||
Division
|
Division
|
Division
|
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
726,702 | 18,084,046 | 2,915,091 | - | 21,725,839 | |||||||||||||||
Net
income (loss)
|
672,583 | 6,108,967 | 1,460,553 | (1,434,164 | ) | 6,807,939 | ||||||||||||||
Total
assets
|
13,817,585 | 38,660,534 | 10,981,384 | 20,602,030 | 84,061,533 | |||||||||||||||
Capital
expenditures
|
36,615 | 18,623,474 | 8,641,647 | 7,662,998 | 34,964,734 |
2008
|
||||||||||||||||||||
Fishery
|
Dairy
|
|||||||||||||||||||
Development
|
Production
|
HU
Plantation
|
Corporate and
|
|||||||||||||||||
Division
|
Division
|
Division
|
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
562,497 | 14,388,014 | 1,238,956 | - | 16,189,467 | |||||||||||||||
Net
income
|
495,718 | 4,221,500 | 284,420 | 2,103,283 | 7,104,921 | |||||||||||||||
Total
assets
|
14,832,962 | 30,823,721 | 9,390,175 | 20,110,902 | 75,157,760 | |||||||||||||||
Capital
expenditures
|
48,734 | 16,118,887 | 8,444,959 | 7,993,643 | 32,606,223 |
4.
|
INCOME
TAXES
|
5.
|
CASH
AND CASH EQUIVALENTS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cash
and bank balances
|
2,360,587 | 1,731,118 |
6.
|
INVENTORIES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Immature
seeds
|
411,594 | 397,275 | ||||||
Harvested
HU plantation
|
53 | 16 | ||||||
Unharvested
HU plantation
|
89,666 | 106,478 | ||||||
Forage
for milk cows and consumable
|
5,598,098 | 4,695,472 | ||||||
6,099,411 | 5,199,241 |
7.
|
DEPOSITS
AND PREPAID EXPENSES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Deposits
for
|
||||||||
acquisition
of land use rights
|
4,453,666 | 4,453,666 | ||||||
inventory
purchased
|
219,551 | 219,551 | ||||||
tenancy
agreement
|
2,129 | 2,129 | ||||||
materials
used for construction in progress
|
79,607 | 79,607 | ||||||
Prepayments
for purchases of milk cows, dairy farm and containers
|
5,434,313 | 5,434,313 | ||||||
10,189,266 | 10,189,266 |
8.
|
ACCOUNTS
RECEIVABLE
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
0 -
30 days
|
1,530,838 | 387,576 | ||||||
31
- 90 days
|
- | - | ||||||
91
- 120 days
|
5,338,667 | 1,672,767 | ||||||
over
120 days and less than 1 year
|
- | 13,224 | ||||||
over
1 year
|
9,338,477 | 9,325,174 | ||||||
16,207,982 | 11,398,741 | |||||||
Less:
amounts reclassified as long term accounts receivable
|
(9,338,477 | ) | (9,325,174 | ) | ||||
6,869,505 | 2,073,567 |
9.
|
OTHER
RECEIVABLES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Advance
to builders for construction of rangeland
|
- | 307,302 | ||||||
Advance
to service providers
|
12,983 | 12,983 | ||||||
Due
from construction material suppliers
|
- | 88,020 | ||||||
Due
from related parties
|
260,101 | 114,630 | ||||||
Due
from employees
|
430,552 | 653,168 | ||||||
Due
from third parties
|
1,181,855 | 21,514 | ||||||
1,885,491 | 1,197,617 |
10.
|
PROPERTY
AND EQUIPMENT
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Milk
cows
|
4,953,669 | 3,666,376 | ||||||
Plant
and machinery
|
2,948,148 | 2,948,148 | ||||||
Structure
and leasehold improvements
|
783,491 | 656,448 | ||||||
Mature
seeds
|
484,436 | 484,436 | ||||||
Furniture
and equipment
|
85,506 | 85,506 | ||||||
Motor
vehicles
|
83,493 | 83,493 | ||||||
9,338,743 | 7,924,407 | |||||||
Less:
Accumulated depreciation
|
(1,774,079 | ) | (953,885 | ) | ||||
Net
carrying amount
|
7,564,664 | 6,970,522 |
11.
|
CONSTRUCTION
IN PROGRESS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Construction
in progress
|
||||||||
-
Rangeland for milk cows
|
5,741,168 | 4,224,253 | ||||||
-
Oven room for production of dried flowers
|
254,771 | - | ||||||
5,995,939 | 4,224,253 |
12.
|
LAND
USE RIGHTS
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Cost
|
15,107,879 | 14,249,684 | ||||||
Less:
Accumulated amortisation
|
(1,338,383 | ) | (784,903 | ) | ||||
Net
carrying amount
|
13,769,496 | 13,464,781 |
13.
|
PROPRIETARY
TECHNOLOGIES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies
|
8,000,000 | 8,000,000 | ||||||
Less:
Accumulated amortisation
|
(365,365 | ) | (53,333 | ) | ||||
Net
carrying amount
|
7,634,635 | 7,946,667 |
14.
|
GOODWILL
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Goodwill
from acquisition
|
38,444,099 | 38,444,099 | ||||||
Less:
Accumulated impairment losses
|
(26,444,099 | ) | (26,444,099 | ) | ||||
12,000,000 | 12,000,000 |
15.
|
INVESTMENT IN UNCONSOLIDATED
CORPORATE JOINT VENTURE
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Capital
contribution
|
242,669 | - |
15.
|
INVESTMENT
IN UNCONSOLIDATED CORPORATE JOINT VENTURE
(CONTINUED)
|
16.
|
LICENCE
RIGHTS
|
17.
|
OTHER
PAYABLES
|
2009
|
2008
|
|||||||
$
|
$
|
|||||||
Proprietary
technologies payable
|
3,577,264 | 3,577,264 | ||||||
Due
to third parties
|
601,326 | 601,326 | ||||||
Due
to related parties
|
169,536 | 415,108 | ||||||
Stamp
duty payable
|
4,678 | 4,678 | ||||||
Others
|
183,324 | 23,303 | ||||||
4,536,128 | 4,621,679 |
18.
|
SHARE
CAPITAL
|
19.
|
BANK
BORROWINGS
|
Name of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2009
|
2008
|
||||||||||||||
$
|
$
|
||||||||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
third
party
|
1,408,321 | - | |||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
third
party
|
711,495 | - | |||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
third
party
|
315,405 | - | |||||||||
2,435,221 | - |
Name of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2009
|
2008
|
||||||||||||||
$
|
$
|
||||||||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.84 | % |
1/23/2007-
7/31/2010
|
third
party
|
- | 1,408,321 | |||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-7/22/2010
|
third
party
|
- | 711,495 | |||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.12 | % |
1/23/2008-8/8/2010
|
third
party
|
- | 315,405 | |||||||||
Corporate
guarantee by
|
|||||||||||||||
Agricultural
Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
third
party
|
4,401,002 | 4,401,002 | |||||||||
4,401,002 | 6,836,223 |
20.
|
OBLIGATION
UNDER OPERATING LEASES
|
2009
|
||||
$
|
||||
Year
ended December 31,2010
|
45,692 | |||
Year
ended December 31,2011
|
5,158 | |||
Year
ended December 31,2012
|
5,158 | |||
Year
ended December 31,2013
|
5,158 | |||
Year
ended December 31,2014
|
1,289 | |||
Thereafter
|
- | |||
62,455 |
21.
|
CONTINGENCIES
|
22.
|
RELATED
PARTY TRANSACTIONS
|
Name of related party
|
Nature of transactions
|
|
Mr.
Rui Xiong He , director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
During
the year ended December 31, 2008, Mr. Rui Xiong He sold his land use
rights to the Company for $764,128.
|
|
Included
in other payables, due to Mr. Rui Xiong He is $16,985 and $306,620 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
||
Mr.
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai
Agriculture Co. Ltd, subsidiary of the Company
|
Included
in other receivables, due from Mr. Xiang Jun Fang is $260,101 and $114,630
at December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Included
in other payables, due to Mr. Xiang Jun Fang is $150,057 and $108,488 at
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
||
Mr.
Solomon Lee, Chairman
|
Included
in due from directors, Mr. Solomon Lee is $73,164 and $798,058 as of
December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Mr.
Michael Bor Hann Chen, director and company secretary
|
Included
in due from directors, Mr. Michael Bor Hann Chen is $38,228 and $37,495 as
of December, 31, 2009 and December 31, 2008 respectively. The amounts are
unsecured, interest free and have no fixed term of
repayment.
|
|
Qinghai
Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included
in other payable, SJAP is $2,494 and $nil as of December, 31, 2009 and
December 31, 2008 respectively. The amounts are unsecured, interest free
and have no fixed term of
repayment.
|
23.
|
SUBSEQUENT
EVENTS
|
23.
|
SUBSEQUENT
EVENTS (CONTINUED)
|
By:
|
/s/ Lee
Yip Kun Solomon
|
Lee
Yip Kun
Solomon
|
|
Chairman
and Chief Executive Officer
|
Exhibit No.
|
|
Exhibit Description
|
2.1
|
|
Stock
Purchase Agreement and Share Exchange – Volcanic Gold and Capital
Award
|
2.2
|
Acquisition
Agreement - Hang Yu Tai Investment Limited
|
|
2.3
|
Acquisition
Agreement - Macau Eiji Company Limited
|
|
2.4
|
Acquisition
Agreement - Tri-way Industries Limited
|
|
2.5
|
Disposition
Agreement - Triway selling equity interest in TianQuan
Science
|
|
2.6
|
Acquisition
Agreement - A Power Agro Agriculture Development (Macau) Limited acquired
the Pretty Mountains’ 45% equity interest in Sanjiang A
Power
|
|
3.1
|
Articles
of Incorporation of Volcanic Gold, Inc.
|
|
3.2
|
Amendment
to Articles of Incorporation – Name Change: Volcanic Gold, Inc.
to A Power Agro Agriculture Development, Inc.
|
|
3.3
|
Certificate
of Correction
|
|
3.4
|
Amendment
to Articles of Incorporation – Name Change: A Power Agro
Agriculture Development, Inc. to Sino Agro Food, Inc.
|
|
3.5
|
Bylaws
of Volcanic Gold, Inc.
|
|
3.6
|
Organizational
Documents: Capital Award, Inc.
|
|
3.7
|
Organizational
Documents: Hang Yu Tai Investment Limited
|
|
3.8
|
Organizational
Documents: ZhongXingNongMu Co. Ltd.
|
|
3.9
|
Organizational
Documents: Macau Eiji Company Limited
|
|
3.10
|
Organizational
Documents: Jiang Men City Heng Sheng Tai Agriculture
Development Co. Ltd.
|
|
3.11
|
Organizational
Documents: Tri-way Industries Limited
|
|
3.12
|
Organizational
Documents: A Power Agro Agriculture Development (Macau)
Limited
|
|
4.1
|
Form
of common stock Certificate of Sino Agro Foods, Inc.
(1)
|
|
4.2
|
Certificate
of Rights and Preferences – Series A
Preferred
|
4.3
|
Certificate
of Rights and Preferences – Series B Preferred
|
|
10.1
|
Patented
“Intellectual Property” namely “Zhi Wu Jei Gan Si Liao Chan Ye Hua Chan
Pin Ji Qi Zhi Bei Fang Fa” registered under the Patent Number
“ZL2005 10063039.9” and Certificate number “329722” of
China
|
|
10.2
|
Sino
Foreign Joint Venture Agreement: Jiang Men City Heng Sheng Tai
Agriculture Development Co. Ltd.
|
|
10.3
|
Sino
Foreign Joint Venture Agreement: Qinghai Sanjiang A Power
Agriculture Co. Ltd.
|
|
10.4
|
Deed
of Trust - A Power Agro Agriculture Development (Macau)
Limited
|
|
10.5
|
Deed
of Trust - Macau Eiji Company Limited
|
|
10.6
|
Deed
of Trust - Hang Yu Tai Investment Limited
|
|
10.7
|
Master
License from Infinity Environmental Group, a Belize
corporation.
|
|
10.8
|
Capital
Award Consulting Service Agreement
|
|
10.9
|
Tri-Way
Joint Venture Agreement
|
第一条
.
|
潘世芳与邓洁敏(以下简称甲方)及瑞祺實業有限公司(以下简称乙方),根据《中华人民共和国中外合作经营企业法》及其它有关法规的规定,在平等互利的原则基础上,同意签订本合作合同。
|
Article
1
|
Upon
basis of fairness and mutual benefit,
PAN SHI FANG and DEND JIE
MIN
(“Party A”), and TRI-WAY INDUSTIRDES LIMITED (“Party B”) hereby
agree to enter into this joint venture agreement, in accordance with the
laws of Sino Foreign Joint Venture Enterprises of the People’s Republic of
China and other relevant
regulations.
|
第二条.
|
合作股东各方
|
甲方:
|
(一)
潘世芳
|
中国籍
|
|
身份证号码
:
#422823197603070420
|
|
地址:
湖北省巴东县溪丘湾石碾村3组8号
|
(二)
邓洁敏
|
中国籍
|
|
身份证号码
:
#44010719790224034X
|
|
地址:
广州市越秀区人民北路570号地下
|
乙方:
|
瑞祺實業有限公司
|
注册国家:中国.
香港
|
Article
2
|
The
Joint Venture Parties
|
Party
A :
|
(1)
|
Ms.
PAN SHI
FANG
|
(2)
|
Ms.
DENG JIE
MIN
|
Party
B :
|
TRI-WAY INDUSTIRDES
LIMITED
, a private limited company incorporated in Hong Kong with
its registered address at Room 1613 16/F Tai Yau Bldg 181 Johnston Road,
Wanchai Hong Kong
|
第三条
.
|
甲乙双方在平等互利条件下,同意相互合作,在中华人民共和国广东省恩平市君堂镇江州圩江君路江州水闸办公大楼首层1-5号兴办中外合作经营企业,名称为:恩平市壁涛一力渔业发展有限公司(暂定名)(以下简称合营公司),经营及管理在广东省恩平市建造的示范渔场。
|
Article
3
|
For
mutual benefit, the parties hereto agree to incorporate a sino foreign
joint venture company at No. 1-5, 1
st
Floor, Jiangzhou Shui Zha Office Building, No 19, Jiang Jun road
Jiangzhou, Juntang Town, Enping City, Guangdong Province of the People’s
Republic of China, to be named as
Enping City Bi Tao A Power
Fishery Development Co., Ltd
(tentatively named) (“SFJVC”) for the
operation and management of a fish farm to be constructed at a site in
Enping District, Guangdong
Province.
|
第四条
.
|
甲乙股东双方以各自出资额占注册资本的比例
,
分享合营公司的利润和分担合营公司的债务、风险及亏损。
|
Article
4
|
The
parties hereto shall share the indebtedness, risks and losses of the SFJVC
as well its profit in accordance with their respective equity interest
ratio in the SFJVC.
|
第五条.
|
合营目的:加强经济合作和技术交流,采用先进而适用的技术和科学的经营管理方法,发展具有国际、国内市场上竞争能力的渔业水产品使投资各方获得满意收益,
并为整个社区带来利益。
|
Article
5
|
The
Purpose of Joint Venture: to strengthen economic cooperation
and technological exchanges, and to use appropriate advanced technology
and scientific management methods, for the development of fishery aquatic
products of high competitiveness for the international and domestic
markets, so as to enable the parties to gain economic benefits as well as
to generate social benefits to the communities as a
whole.
|
第六条.
|
生产经营范围:
开发和经营鱼场。
|
Article
6
|
Scope
of business operation : development and operation of fish
farms.
|
第七条.
|
生产规模:
年产值量
2000
吨鱼和虾
|
Article
7
|
Production
Capacity : 2,000 tons of quality fish and prawns per
year.
|
|
(1)
|
SFJVC
shall produce 200 tons of freshwater fish and prawns within its first year
of operation.
|
|
(2)
|
From
the second year of operation to the fifth year of operation, the
production will be increased gradually to its final annual productivity of
2,000 tons per year, including the development of more than 10 species of
fish and prawns.
|
第八条.
|
合营公司的期限为50年。合营公司成立日为合营公司营业执照签发之日。
经一方提议,董事会一致通过,可以在合营期满六个月前向中国商务部(或其委托的审批机构)申请延长合营期限。
|
Article
8
|
The
tenure of the SFJVC shall be for a period of 50 years. The
SFJVC’s Board of Directors may decide to extend the tenure of the SFJVC by
applying to the China Business Registration Department (or its related
authorized approving authority) within 6 months from day of expiry
thereof.
|
第九条.
|
合营公司五年内投资总额为500万美元,注册资本为
第一年10万美元, 并依据合营公司的董事会当时之决定逐步增加至第五年的500万美元。
|
Article
9
|
The
total investment capital of the SFJVC shall be US$5 million to be invested
over a period of 5 years, whereas the Registered Capital of the SFJVC
shall be US$100,000 for the first year and be increased gradually to US$5
million by the fifth year subject to the decision made by the Board of
Directors of the SJVC at the time.
|
Article
10
|
The
parties’ respectively capital contribution in the 5 years are as follows
:
|
股东
Parties
|
股权变更到至
Change of equity
interest up to
|
可被转换的资产
Assets that may be
converted
|
最高可被转换
的数额
Maximum % that
will be converted
|
||||||||
甲方
Party
A
|
75 | % |
现金
Cash
|
10 | % | ||||||
机械设备
Plants
and equipment
|
25 | % | |||||||||
厂房
Properties
|
25 | % | |||||||||
土地使用权
Land
Use Right
|
10 | % | |||||||||
其他
Others
|
5 | % | |||||||||
甲方出资总额
Total
contribution of Party A
|
75 | % | |||||||||
乙方
Party
B
|
25 | % |
现金
Cash
|
25 | % |
股东
Parties
|
股权变更至
Change of equity
interest up to
|
可被转换的资产
Assets that may be
converted
|
最高可被转换
的数额
Maximum % that
will be converted
|
||||||||
甲方
Party
A
|
25 | % |
现金
Cash
|
2.5 | % | ||||||
机械设备
Plants
and equipment
|
6.25 | % | |||||||||
厂房
Properties
|
6.25 | % | |||||||||
土地使用权
Land
Use Right
|
2.5 | % | |||||||||
其他
Others
|
1.25 | ||||||||||
甲方出资总额
Total
contribution of Party A
|
25 | % | |||||||||
乙方
Party
B
|
75 | % |
现金
Cash
|
75 | % |
第十一条.
|
甲、乙双方出资期限:
甲乙双方自合营公司营业执照签发之日起六个月内按各自所占注册资本比例一次全部缴清第一年10万美元注册资本。从第二年起,甲乙双方按照合营公司董事会在必要时设定的时间表,并依据上述股权变更方法,出资增加合营公司的注册资本。
|
Article
11
|
Schedule
of Payment by the Parties of the Registered Capital : In
the first year, the Parties hereto shall pay for the US$100,000 Registered
Capital of the SFJVC in accordance with their respective share of equity
interest in the SFJVC within 6 months from date of issuance of the
business license of the SFJVC. From the second year onward, the
Parties shall pay their respective share of contribution of the Registered
capital in the manner as mentioned above and in accordance with the time
schedule as set forth by the Board of Directors of the SFJVC as and when
it shall be necessary.
|
第十二条
.
|
甲、乙任何一方如向本合同以外第三人转让其全部或部分出资额,须经另一方同意,另一方在同等条件下有优先购买权
|
Article
12
|
If
either of the Parties hereto shall decide to sell all or part of its
equity in the SFJVC to any third party, the selling party hereto shall
obtain the prior consent of the other party hereto before such sale, and
shall grant the first right of refusal to the other party hereto on the
like terms for the intended sale.
|
|
1.
|
按时足额缴纳注册资本;
|
|
2
.
|
办理为设立合营公司向中国有关主管部门申请批准、登记注册、领取营业执照等事宜:
|
|
3
.
|
向土地主管部门办理完善取得土地使用权的手续;
|
|
4
.
|
组织合营公司厂房和其他工程设施的设计、施工;
|
|
5
.
|
协助合营公司在中国境内购置或租赁设备、材料、原料、办公用具、交通工具、通讯设施等;
|
|
6
.
|
办理进口机械设备报关手续和在中国境内的运输;
|
|
7
.
|
协助合营公司联系落实水、电、交通等基础设施;
|
|
8
.
|
协助合营公司招聘当地的中国籍的经营管理人员、技术人员、工人和所需的其他人员;
|
|
9
.
|
协助外籍工作人员办理所需的入境签证、工作许可证和旅行手续等;
|
|
10
.
|
负责办理合营公司委托的其他事宜。
|
Article
13
|
The
responsibilities of Party A:
|
|
1.
|
To
pay its share of the Registered Capital on a timely
manner.
|
|
2.
|
To
apply to relevant Chinese Authorities in order to obtain the official
approval, registration and business license for the incorporation of the
SFJVC.
|
|
3.
|
To
apply to the Land Authorities of China to obtain official approval of the
Land Use Right of the project land.
|
|
4.
|
To
introduce and to organize all local sub-contractors and contractors to
carry out construction work relating to the scopes of civil engineering,
designs, building and all other related matters for the SFJVC for the
purpose of developing the fish
farm.
|
|
5.
|
To
introduce to and to organize all local suppliers and manufacturers for the
SFJVC such that the SFJVC will be able to obtain supplies and
manufacturing of plants and equipment for the fish
farm.
|
|
6.
|
To
apply to the customs authorities and to obtain import clearance for all
imported plants and equipment of the fish farm and to arrange local
transportation for the delivery of the imported plants and equipment to
the project site.
|
|
7.
|
To
introduce to and to organize all local contractors and sub-contractors for
the SFJVC such that the SFJVC will be able to construct and to connect all
basic infrastructure and utility services needed at the project site of
the fish farm.
|
|
8.
|
To
assist the SFJVC in recruiting chinese management personnel, technical
personnel, workers and other workers needed for its fish
farm.
|
|
9.
|
To
assist foreign workers and staffs of the SFJVC in their applications for
entry visas, work permits and other associated local traveling
arrangements.
|
|
10.
|
To
co-ordinate other general necessities requested by the SFJVC from time to
time during the development period of the
SFJVC.
|
|
1
.
|
按时足额缴纳注册资本;
|
2.
|
办理合营公司委托在中国境外选购机械设备、材料等有关事宜;;
|
|
3.
|
将机械设备等实物运至中国港口;
|
|
4.
|
提供设备安装、调试以及试生产技术人员、检验人员;
|
|
5.
|
培训合营公司的技术人员和工人;
|
|
6.
|
乙方同时是技术转让方,负责合营公司在规定期限内按设计能力稳定生产合格产品;
|
|
7.
|
负责办理合营公司委托的其他事宜。
|
Article
14
|
The
responsibilities of Party B
|
|
1.
|
To
pay its share of the Registered Capital on a timely
manner.
|
|
2.
|
To
organize and to arrange supplies, purchases, delivery and related matters
of all imported plants and equipment needed by the Fish
Farm.
|
|
3.
|
To
organize and to arrange all transportation and related logistics needed
for the importation of imported plants and equipment for delivery to the
appropriate sea port in China.
|
|
4.
|
To
provide qualified technical supervisors, personnel and inspectors for the
installation and commissioning of all plants and equipment of the fish
farm.
|
|
5.
|
To
provide training to the personnel and workers needed for the operation of
the fish Farm.
|
|
6.
|
Party
B shall ensure that the performance of the Fish Farm (including but not
limiting to the productivity and durability of the Fish Farm) will be
reached within the targeted
schedule.
|
|
7.
|
To
assist the SFJVC in other matters related to the Fish Farm Development
works as and when requested by the
SFJVC.
|
第十五条
.
|
合营公司注册登记之日,为合营公司董事会成立之日。
|
Article
15
|
The
date of registration of the SFJVC shall be the date whereupon the SFJVC
shall officially constitute its Board of
Directors.
|
第十六条
.
|
董事会由3名董事组成;
甲方委派1名,乙方委派2名。董事长由甲方委派,副董事长由乙方委派。董事长和副董事长任期三年,经委派方继续委派可以连任。
|
Article
16
|
The
Board of directors shall consist of 3 members; 1 appointee from Party A
and 2 from Party B. The director appointed by Party A shall be
made the Chairperson, whereas 1 director appointed by Party B shall be
made the Deputy Chairperson. The tenure of the Chairperson and
the Deputy Chairperson shall be 3 years, renewable at the discretion of
the appointing party.
|
第十七条
.
|
董事会是合营公司最高权力机构,决定合营公司一切重大事宜。下列重大事项须由董事会全体董事100%
通过方可作出决议:
|
Article
17
|
The
highest authority of the SFJVC company shall be its Board of Directors.
The following matters shall require unanimous approval of the Board of
Directors:
|
|
(1)
|
Amendments
made to the Articles of Association of the
SFJVC;
|
|
(2)
|
The
termination and dissolution of the
SFJVC;
|
|
(3)
|
Any
Changes made to the Registered Capital of the SFJVC and the assignment or
sales of the equity stakes in the SFJVC by any one of the
parties.
|
|
(4)
|
Merger
of the SFJVC with other business
entity.
|
第十八条
.
|
除第十七条以外的其他事项应由出席董事会会议的一半以上董事同意,方可作出决定。出席董事会的董事不足董事会成员的三分之二时,其通过的决议无效。
|
A
rticle
18
|
Save
and except for the matters as stated in Article 17, all other matters of
the SFJVC shall only require the majority decision of the Board of
Directors. The quorum for any meeting shall be two third of the members of
the board.
|
第十九条
.
|
董事长是合营公司法定代表人。董事长因故不能行其职责时,可临时授权副董事长或其他董事为代表。
|
Article
19
|
The
Chairperson of the board is the legal representative of the
SFJVC. If the Chairperson for any reason is not able to carry
out his duties, the Deputy Chairperson or any other director may be
empowered to represent the SFJVC.
|
第二十条
.
|
董事会会议每年至少召开二次,由董事长召集并主持会议。董事长因故不能召集时,由董事长委托其他董事负责召开并主持董事会会议。经三分之一
以上的董事提议,董事长可召开董事会临时会议。会议记录应归档保存。
|
Article
20
|
The
Board of Directors shall convene at least twice every year, and meetings
shall be called by the Chairperson of the Board of Directors or such other
director as directed by the Chairperson. The Chairperson may
convene short notice meeting upon his receipt of such requisition from one
third or more of the directors. All corresponding minutes of
the board meetings shall be recorded on file of the
SFJVC.
|
第二十一条
.
|
利润按各方的出资额在注册资本中的比例进行分配,同时双方依此比例承担合营公司的亏损,并以注册资本为承担亏损的限度。
|
Article
21
|
Each
Party hereto shall share the profit or loss derived from the operation of
the SFJVC in accordance with percentage of their respective equity held in
the SFJVC.
|
第二十二条
.
|
合营公司设经营管理机构,负责公司日常经营管理工作。经营管理机构设总经理一人,由甲方委派;副总经理
1
人,由乙方委派。总经理、副总经理由董事会聘任方可担任,任期3年,可以连聘连任。
|
Article
22
|
The
management of the SFJVC shall be responsible for the day to day
administration and operation of the company. The management
shall consist of 1 General Manager to be nominated by Party A, 1 Deputy
General Manager to be nominated by Party B, the employment of same shall
be decided by the board of directors, for a tenure of 3 years renewable if
the board of directors shall so
decide.
|
第二十三条
.
|
总经理的职责是:执行董事会决议,组织领导公司日常经营管理工作。副总经理协助总经理工作,当总经理不在时,代理行使总经理的职责。合营公司的其他高级职员和部门经理由总经理聘任。
|
Article
23
|
The
general manager of the SFJVC will be responsible to the Board of Directors
of the SJVC and to manage all daily affairs of the SFJVC; the Deputy
General Manager will assist the General Manager in managing the daily
affairs of the SFJVC, and be the acting General Manager in the absence of
the General Manager. All other management personnel and workers will be
appointed by the General
Manger.
|
第二十四条
.
|
若总经理或副总经理故意、疏忽或有严重过失,而损害公司利益的,经董事会决议可随时撤换。
|
Article
24
|
The
Board of Directors of the SFJVC shall have the right to terminate the
appointment of the General Manager and / or the Deputy General Manager in
the event if either or both of them shall act intentionally or negligently
causing the SFJVC to suffer loss or
damage.
|
第二十五条
.
|
合营公司设监事会,成员3名,甲方委派2名,乙方委派1名,监事会主席由乙方委派,任期三年,可连派连任。
|
Article
25
|
The
SFJVC shall have an Audit Committee consists of 3 members, of whom Party A
shall nominate 2 persons and Party B shall nominate one person. One of the
members nominated by Party A shall be made the Chairperson of the Audit
Committee. Members of the Audit Committee shall be formally
appointed by the Board of Directors of the SFJVC for a minimum term of 3
years.
|
第二十六条
.
|
合营公司职工的招收、招聘、辞退、工资、劳动保险、残疾人基金、防洪基金、生活福利和奖惩等事项,一律按照《中华人民共和国劳动法》及相关劳动法规及其实施办法,经董事会研究制定方案,由合营公司与合营公司的工会组织或个人订立劳动合同加以规定。劳动合同订立后,报当地劳动管理部门备案。
|
Article
26
|
All
matters of the SFJVC concerning recruitment, dismissal, wages, workers’
insurance, Disabled Fund, Flood Control Fund, welfare of workers and
rewards and penalties shall be implemented in accordance with the
Regulations of the People s Republic of China on Labor Management and its
Implementing Rules, and the policies thereof formulated by the Board of
Directors of the SFJVC, and incorporated into the employment
contracts.
|
第二十七条
.
|
合营公司按照中国法律法规纳税。
|
Article
27
|
The
SFJVC shall pay all taxes in accordance with the China’s taxation law and
regulations.
|
第二十八条
.
|
合营公司职工依中国税法缴纳税。
|
Article
28
|
The
staffs and workers of the SFJVC shall pay all taxes accordance with the
income tax law of China.
|
第二十九条
.
|
合营公司按照《中华人民共和国中外合资经营企业法》的规定提取储备基金、企业发展基金及职工福利奖励基金,每年提取的比例由董事会根据公司经营情况讨论决定。
|
Article
29
|
The
SFJVC shall make provision in Reserved Fund, Expansion Fund and Employees’
Welfare Fund in accordance with the provisions of the Sino Foreign Joint
Venture Law of China, the quantum of which shall be decided by the board
of directors of the SFJVC according to the prevailing financial capacity
of the SFJVC from time to time.
|
第三十条
.
|
合营公司的会计年度从公历每年7月1日起至6月30日止,一切记账凭证、单据、报表、账簿,用中文书写,也可同时用英文写。
|
Article
30
|
The
fiscal year of the SFJVC shall be from July 1 of the year to June 30 of
the subsequent year. All the accounting vouchers, accounting books and
records shall be written in Chinese and in
English.
|
第三十一条
.
|
合营企业的财务审计聘请中国注册会计师审查、稽核,并将结果报告董事会和总经理。
|
Article
31
|
The
SFJVC shall engage a Chinese auditor for auditing of accounts, and
such audited accounts shall be submitted to the board of
directors and the General Manager.
|
第三十二条
.
|
每一营业年度初始三个月,由总经理组织编制上一年度的资产负债表、损益表和利润分配方案,提交董事会审查通过。
|
Article
32
|
The
General Manager of the SFJVC shall submit the annual financial report for
the preceding fiscal year to its Board of Directors within first three
months of each fiscal year.
|
第三十三条
.
|
合营公司的各项保险由合营公司董事会讨论决定。
|
Article
33
|
All
the insurance coverage of the SFJVC shall be decided by the board of
directors.
|
第三十四条
.
|
合营期满或提前终止合营,合营公司应依法进行清算,清算后的财产,根据甲乙各方投资比例进行分配。
|
Article
34
|
Upon
expiration or early termination of the SFJVC, the SFJVC shall be
liquidated in accordance with the relevant laws of China and the assets of
the SFJVC shall be distributed to the parties hereto proportionately
according to the percentage of each party’s equity interest in the
SFJVC.
|
第三十五条
.
|
对本合同及其附件的修改,必须经甲、乙双方签署书面协议,并报原审批机构批准,才能生效。
|
Article
35
|
Any
amendment to this Agreement and its appendices shall require written
consent of both parties, and be subject to approval of the relevant
authority before taking effect.
|
第三十六条
.
|
由于不可抗力,使致合同无法履行,或是由于合营公司连年亏损,无力继续经营,经董事会一致通过,并报原审批机构批准,可以提前终止合营期限和解除合同。
|
Article
36
|
If
this Agreement cannot be implemented due to Force Majeure, or the SFJVC
suffers severe financial losses and is not able to continue its operation
as a result, then the SFJVC may be dissolved upon the unanimous decision
of the Board of Directors and the approval of the relevant approving
authority.
|
第三十七条
.
|
由于一方不履行合同、章程规定的义务,或严重违反合同、章程规定,造成合营公司无法经营或无法达到本合同规定的经营目的,视作该方违约。守约方除有权向违约方索赔外,并有权按合同规定报原审批机构批准终止合同。双方都违约的,按过错大小承担责任。双方对过错大小不能达成共识的,任何一方有权提交中国国际经济贸易仲裁委员会深圳分会仲裁认定。如甲乙双方同意继续经营,违约方应赔偿合营公司的经济损失。
|
Article
37
|
Should
the joint venture company be unable to continue its operation or achieve
its business purpose due to the fact that one of the contracting parties
fails to fulfill the obligations prescribed by the contract and articles
of association, that party shall be deemed to have unilaterally terminated
the contract. The other party shall have the right to terminate the
contract in accordance with the provisions of the contract after approval
by the original approving authority, and to claim damages from the
defaulting party. Should it be the fault of both parties, the
parties shall bear their liabilities according to the gravity of fault
committed by the parties. If both parties cannot agree on the quantum of
liabilities, either party shall have the right to refer the dispute to the
Shenzhen branch of the China International Economic and Trade Arbitration
Commission for arbitration. If both parties agree to
continue operation of the SFJVC, the defaulting party shall compensate the
SFJVC its financial losses.
|
第三十八条
.
|
由于地震、台风、水灾、火灾、战争以及及合同双方均认可的其它不能预见并且对其发生后果不能防止或避免的不可抗力,致使直接影响合同的履行或者不能按约定的条件履行时,遇有上述不可抗力的一方,应立即通知另一方,并应在15天内,提供不可抗力详情及合同不能履行、或者部分不能履行、或者需要延期履行的理由的有效证明文件,此项证明文件应由不可抗力发生地区的公证机构出具。按其对履行合同影响的程度,由双方协商决定是否解除合同,或者部分免除履行合同的责任,或者延期履行合同。
|
Article
38
|
Should
either of the parties hereto be prevented from executing the contract by
force majeure, such as earthquake, typhoon, flood, fire, war or other
unforeseen events, and their occurrence and consequences are unpreventable
and unavoidable, the prevented party shall notify the other party by
telegram without any delay, and within 15 days thereafter provide detailed
information of the events and a valid evidential document issued by the
relevant public notary organization explaining the reason of its inability
to execute or delay the execution of all or part of the contract. Both
parties shall, through consultations, decide whether to terminate the
contract or to exempt part of the obligations for implementation of the
contract or whether to delay the execution of the contract according to
the effects of the events on the performance of the
contract.
|
第三十九条
.
|
甲、乙任何一方未按本合同规定按期如数出资时,从逾期第一个月算起,每逾期一个月,违约一方应缴付出资额的10%的违约金给守约的一方。如逾期三个月仍未提交,违约方除累计缴付应缴出资额的30%的违约金外,守约方有权提前终止合同,并要求违约方赔偿其他损失。
|
Article
39
|
Should
either Party hereto fail to pay on schedule its agreed capital
contribution in accordance with the provisions herein, the defaulting
party shall pay to the other party hereto liquidated damages equivalent to
10% of its agreed capital contribution every month starting from the date
of occurrence of such breach. Should the defaulting party fail to pay
after 3 months, liquidated damages equivalent to 30% of its capital
contribution shall be paid to the other party, who shall have the right to
terminate the contract and to claim damages from the defaulting
party.
|
第四十条
.
|
本合同的订立、效力、解释、履行和争议的解决均适用中华人民共和国实体法、程序法。
|
Article
40
|
The
formation, validity, interpretation, execution and settlement of disputes
in respect of, this contract shall be governed by the relevant laws of the
People s Republic of China.
|
第四十一条
.
|
凡因履行本合同所发生的一切争议,双方友好协商解决不成,应提交中国国际经济贸易仲裁委员会深圳分会,根据该会的仲裁规则仲裁。仲裁裁决是终局的,对双方都有约束力。
|
Article
41
|
In
the event any dispute arising in the course of carrying into effect this
Agreement cannot be settled through friendly consultations between the
parties hereto, such dispute shall be referred to the Shenzhen branch of
China International Economic and Trade Arbitration Commission for
arbitration in accordance with its rules. The arbitral award is
final and binding upon all parties.
|
第四十二条
.
|
在仲裁过程中,除双方有争议的且正在进行仲裁的部分外,本合同其他条款应继续履行。
|
Article
42
|
In
the arbitration process, the terms of this Agreement, other than the part
which is the subject matter of the arbitration, shall remain
operational.
|
第四十三条
.
|
本合同及其附件,均须经中华人民共和国商务部(或其委托的审批机构)批准,自批准之日起生效。
|
Article
43
|
This
Agreement shall take effect upon the approval thereof by the Ministry of
Commerce and Trade of China (or its related authorized approving
authority).
|
第四十四条
.
|
甲、乙双方相互通信手段,包括但不限于电报、电话、邮寄、传真、电子邮件、MSN、QQ、电传等双方认可的有效手段,凡涉及各方权利、义务的,应随之以书面信件通知。合同中所列甲、乙双方的法定地址即为甲、乙双方的通讯地址。
|
Article
44
|
The
parties hereto may communicate with each other by, but not limited to, the
telegraph, telephone, mail, fax, e-mail, MSN, QQ, telex and other
effective means agreed by both parties, but any matter concerning the
rights and obligations of the parties hereto should be conveyed to the
other party in writing. The addresses of Party A and Party B as
stated in this Agreement shall be the postal addresses of the parties
hereto.
|
第四十五条
.
|
本合同各种文字版本不一致的,以中文本为准,由股东各方代表签字后生效。一式6份,甲、乙双方各执
2
份,主管及审批机关各执
1
份,有同等效力。
|
Article
45
|
This
Agreement shall be in the Chinese Language and printed in 6 copies, of
which each party shall have 2 copies each, and the relevant approving
authorities each shall have 1 copy. All copies shall have the
same legal force.
|
甲方:
(一)
潘世芳
|
Ms.
PAN SHI
FANG
|
(二)
|
邓洁敏
|
Ms.
DENG JIE
MIN
|