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
o
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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ITEM 1. BUSINESS
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3
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ITEM 1A. RISK FACTORS
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38
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ITEM 2. FINANCIAL INFORMATION.
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38
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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38
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ITEM 3. PROPERTIES
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54
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ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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56
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ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
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58
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ITEM 6. EXECUTIVE COMPENSATION
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59
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ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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61
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ITEM 8. LEGAL PROCEEDINGS
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63
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ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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63
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ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
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63
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ITEM 11. DESCRIPTION OF REGISTRANTS’ SECURITIES TO BE REGISTERED
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66
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ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
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68
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ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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68
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ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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68
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ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
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68
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Date
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Description of settlements
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DR.
US$
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CR.
US$
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Balance Due
US$
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|||||||
30.11.2008
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Part Payment made for the acquisition
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4,422.736.00 | 3,577,264.00 | ||||||||
As at 31.12.2009
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Due to the seller
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3,577,264.00 | |||||||||
30.07.2010
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Payments effected by issuance of 975,000 shares @ 0.75 each to a third party
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Adjustment of 1,734.00
731,250.00
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2,844,280.00 | ||||||||
31.08.2010
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Payments effected by issuance of 1,625,000 shares @ 0.75 each to a third party
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1,218,750.00 | 1,625,530.00 | ||||||||
30. 09.2010
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Payments effected by issuance of 1,380,000 shares @ 0.75 each to a third party
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1,035,000.00 | 590,530.00 | ||||||||
31.12.2010
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Payments effected by issuance of 790,855 shares @ 0.75 each to a third party
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590,530.00 | 0 |
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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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3.
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Payment of the Balance of the Purchase Price
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3.1
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The balance of the Purchase Price amounting to RMB199,589,000.00 (equivalent to US$30,240,758.00) only (hereinafter called "the Balance Purchase Price”) shall be paid by the Purchaser in the manner set forth hereunder:-
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(a)
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A sum of RMB25,055,000.00 (equivalent to US$3,796,212.50) (hereinafter called “the Further Payment”) in cash shall be paid by the Purchaser to the Vendor by way of 5 equal instalments of RMB5,011,000.00 (equivalent to US$759,242.50) each, on or before the following dates :-
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(1)
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April 30, 2011 ;
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(2)
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June 30, 2011 ;
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(3)
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August 31, 2011 ;
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(4)
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October 31, 2011; and
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(5)
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December 31, 2011.
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(b)
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The remainder of the Balance Purchase Price in the amount of RMB174,534,000.00 (equivalent to US$26,444,545.00) (hereinafter referred to as “the Final Payment”) shall be settled by the Purchaser by way of cash contribution towards part payment of the Land Price.
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3.2
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The parties hereto hereby acknowledge that despite the fact the respective relevant land authorities of the said Lands (hereinafter collectively referred to as “the said Land Authorities”) have verbally agreed to contribute a combined amount of RMB36,974,996.00 towards the payment of the Land Price, either by way of a grant, discount or otherwise (hereinafter called “the said Rebate”), it shall not be deemed a discharge of the Purchaser’s obligation herein towards payment of the Purchase Price or any part thereof.
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3.3
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The Purchaser hereby further acknowledges and covenants that the Purchaser shall procure:-
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(a)
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the said Rebate of the said Land Authorities ; and
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(b)
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the approval by the said Land Authorities of the transfer of the said Land Use Rights of the said Lands to the Vendor and/or the Vendor’s Associated Companies.
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4.
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Completion
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4.1
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The Completion of this Agreement shall take place upon approval of the granting of the said Land Use Rights of the said Lands by the said Land Authorities to the Vendor being obtained (hereinafter referred to as “the Completion Date”), whereupon the Purchaser shall be entitled to all rights thereafter attaching to the Vendor’s Shares or accruing thereon including without limitation, all bonuses, rights, dividends and other distributions declared, paid or made thereof thereafter free from all liens, assignments, pledges, charges and other encumbrances whatsoever Provided that the Purchaser shall have paid the Purchase Price in full in accordance with the terms as prescribed herein.
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4.2
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Notwithstanding anything to the contrary herein, the Vendor shall have the right to claim against the Purchaser for the Balance Purchase Price or any part thereof remaining unpaid by the Purchaser pursuant to the terms and conditions set forth in Clause 3.1 hereof.
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5.
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Debts and Liabilities
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Upon the completion of this Agreement, the Vendor shall not be liable for any indebtedness incurred by ZhongXing as from January 1, 2011, and the Purchaser shall indemnify the Vendor and shall keep the Vendor indemnified against any loss claim or liability resulting therefrom.
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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
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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%
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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%
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Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd.
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75%
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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%
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ZhongXingNongMu Co. Ltd. [Sold in February 2011]
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78%
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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%
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Qinghai Sanjiang A Power Agriculture Co. Ltd (China).
(Operational company)
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45%
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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%
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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)
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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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ultra violet light disinfection chamber;
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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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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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quality control systems to keep the quality of the water and production in check;
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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.
Guaranteed free from chemical and pollution of export standard
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No consistency
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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All land clearing, leveling and fencing at the development site have been completed.
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All soil testing, water quality testing and water in flow rate testing have been done.
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Majority of the plants and equipment have been delivered.
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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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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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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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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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It is estimated that the construction of the Prawn farm will be completed within a period of 6 months counting from date of the Agreement; subsequently business operation of the Prawn farm will be commence, such that the targeted production of operational year (1) is for 250 tons of prawn.
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·
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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 3 species of fish and prawns.
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·
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First Year : Wei Ds Xing shall contribute US$80,000 in cash, whereas Capital Award shall contribute US$20,000 in cash.
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·
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From the second year onward, Capital Award shall have the option to increase its share of equity interest in the SFJVC, and the parties will contribute their share of equity stake (or to increase part of the SFJVC’s registered capital by means of converting the SFJVC’s assets) in accordance with the guidelines as shown in the Table below:
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Parties
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Change of equity
interest up to
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Assets that may be converted
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Maximum % that will
be converted
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||||||
Wei Ds Xing
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75 | % |
Cash
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10 | % | ||||
Plants and equipment
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25 | % | |||||||
Properties
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25 | % | |||||||
Land Use Right
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10 | % | |||||||
Others
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5 | % | |||||||
Total contribution of Wei Ds Xing
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75 | % | |||||||
Capital Award
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25 | % |
Cash
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25 | % |
Parties
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Change of equity
interest up to
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Assets that may be converted
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Maximum % that will
be converted
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||||||
Wei Ds Xing
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25 | % |
Cash
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2.5 | % | ||||
Plants and equipment
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6.25 | % | |||||||
Properties
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6.25 | % | |||||||
Land Use Right
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2.5 | % | |||||||
Others
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1.25 | ||||||||
Total contribution of Wei Ds Xing
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25 | % | |||||||
Capital Award
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75 | % |
Cash
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75 | % |
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1.
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To pay its share of the Registered Capital on a timely manner.
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2.
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To apply to relevant Chinese Authorities in order to obtain the official approval, registration and business license for the incorporation of the SFJVC.
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3.
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To apply to the Land Authorities of China to obtain official approval of the Land Use Right of the project land.
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4.
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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.
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5.
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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.
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6.
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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.
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7.
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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.
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8.
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To assist the SFJVC in recruiting chinese management personnel, technical personnel, workers and other workers needed for its fish farm.
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9.
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To assist foreign workers and staffs of the SFJVC in their applications for entry visas, work permits and other associated local traveling arrangements.
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10.
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To co-ordinate other general necessities requested by the SFJVC from time to time during the development period of the SFJVC.
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1.
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To pay its share of the Registered Capital on a timely manner.
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2.
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To organize and to arrange supplies, purchases, delivery and related matters of all imported plants and equipment needed by the Fish Farm.
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3.
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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.
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4.
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To provide qualified technical supervisors, personnel and inspectors for the installation and commissioning of all plants and equipment of the fish farm.
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5.
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To provide training to the personnel and workers needed for the operation of the fish Farm.
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6.
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Capital Award 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.
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7.
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To assist the SFJVC in other matters related to the Fish Farm Development works as and when requested by the SFJVC.
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Date
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Description of transactions
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Payments
US$
|
Amounts Due
US$
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Balance
US$
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||||||||||
As at 31.07.2007
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Due to Infinity for the contractual 500 units of APM
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2,500,000 | 2,500,000 | |||||||||||
20.12.2007
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Payment made to Infinity under our CR#(08)Infinity20.12.07
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2,500,000 | ||||||||||||
07. 01. 2008
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Due to Infinity for an additional 500 units of APM contracted to one of our clients in 2008
|
2,500,000 | 2,500,000 | |||||||||||
18.09. 2009
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Payments made to Infinity under our CR#001
|
2,500,000 | 0 | |||||||||||
31.12.2010
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0 |
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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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·
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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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·
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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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·
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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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·
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Packaging procedures will then follow.
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·
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They will then be stored and sold through the winter period until next harvest season.
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·
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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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·
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Production and sales of fresh liquid milk;
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·
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Rearing and sales of beef cattle;
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·
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Planting of crops for the purpose of further processing into livestock feed;
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·
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Processing and sales of livestock feed; and
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·
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Processing and sales of fertilizer.
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·
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Breeding of cows and cattle; and
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·
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Veterinary services
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·
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the most up-to-date feed mixing machines and milking equipment;
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·
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efficient housing and supporting facilities that can accommodate up to 3,500 cows;
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·
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in house veterinary facilities and services;
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·
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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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·
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significant feed and forages storages areas to stock up to 25,000 tons of livestock feed;
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·
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a crop plantation on more than 1,000 acres of land; and
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·
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processing factories for the manufacturing of livestock feed and fertilizer.
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ZhongXing also sells part of the livestock feed produced by ZhongXing in Fengning to the farmers in the region. Raw materials such as corn, sunflowers and various other types of cereal seeds and pasture grass are shredded and mixed to the exact nutrients contents desired for the dairy cows or cattle by using our specially designed mixing machines. Excess livestock feed is stored in our storage facilities up to 25,000 tons at a time for use during winter period that normally lasts approximately 5 months of the year.
|
There are many cash crops growers in Fengning that grow corn, sunflowers and various other types of cereal seeds and pasture grass crops. We do source part of such raw materials from these growers for our livestock feed manufacturing operation by requesting the growers / suppliers to cultivate their cropping field with organic fertilizer that may be supplied by us or other suppliers by way of (barter trade in earlier days during 2007 but normal trade from 2008 onward without barter trade ) by supplying to these growers organic fertilizer manufactured by us, to ensure that these raw materials are organically grown at source.
|
Organic Fertilizer
|
|
·
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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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Wang Cheng Xiang (agent of Mengniu Dairy Group), (WCX).
|
|
·
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Jun Heng (agent of Yili Dairy Group), (JH).
|
3.
|
Payment of the Balance of the Purchase Price
|
3.2
|
The balance of the Purchase Price amounting to RMB199,589,000.00 (equivalent to US$30,240,758.00) only (hereinafter called "the Balance Purchase Price”) shall be paid by the Purchaser in the manner set forth hereunder:-
|
(c)
|
A sum of RMB25,055,000.00 (equivalent to US$3,796,212.50) (hereinafter called “the Further Payment”) in cash shall be paid by the Purchaser to the Vendor by way of 5 equal instalments of RMB5,011,000.00 (equivalent to US$759,242.50) each, on or before the following dates :-
|
|
(6)
|
April 30, 2011 ;
|
|
(7)
|
June 30, 2011 ;
|
|
(8)
|
August 31, 2011 ;
|
|
(9)
|
October 31, 2011; and
|
|
(10)
|
December 31, 2011.
|
(d)
|
The remainder of the Balance Purchase Price in the amount of RMB174,534,000.00 (equivalent to US$26,444,545.00) (hereinafter referred to as “the Final Payment”) shall be settled by the Purchaser by way of cash contribution towards part payment of the Land Price.
|
3.2
|
The parties hereto hereby acknowledge that despite the fact the respective relevant land authorities of the said Lands (hereinafter collectively referred to as “the said Land Authorities”) have verbally agreed to contribute a combined amount of RMB36,974,996.00 towards the payment of the Land Price, either by way of a grant, discount or otherwise (hereinafter called “the said Rebate”), it shall not be deemed a discharge of the Purchaser’s obligation herein towards payment of the Purchase Price or any part thereof.
|
3.3
|
The Purchaser hereby further acknowledges and covenants that the Purchaser shall procure:-
|
(c)
|
the said Rebate of the said Land Authorities ; and
|
(d)
|
the approval by the said Land Authorities of the transfer of the said Land Use Rights of the said Lands to the Vendor and/or the Vendor’s Associated Companies.
|
4.
|
Completion
|
4.1
|
The Completion of this Agreement shall take place upon approval of the granting of the said Land Use Rights of the said Lands by the said Land Authorities to the Vendor being obtained (hereinafter referred to as “the Completion Date”), whereupon the Purchaser shall be entitled to all rights thereafter attaching to the Vendor’s Shares or accruing thereon including without limitation, all bonuses, rights, dividends and other distributions declared, paid or made thereof thereafter free from all liens, assignments, pledges, charges and other encumbrances whatsoever Provided that the Purchaser shall have paid the Purchase Price in full in accordance with the terms as prescribed herein.
|
4.2
|
Notwithstanding anything to the contrary herein, the Vendor shall have the right to claim against the Purchaser for the Balance Purchase Price or any part thereof remaining unpaid by the Purchaser pursuant to the terms and conditions set forth in Clause 3.1 hereof.
|
5.
|
Debts and Liabilities
.
Upon the completion of this Agreement, the Vendor shall not be liable for any indebtedness incurred by ZhongXing as from January 1, 2011, and the Purchaser shall indemnify the Vendor and shall keep the Vendor indemnified against any loss claim or liability resulting therefrom.
|
|
·
|
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.
|
|
·
|
using environmental friendly technology to recycle agriculture waste for production of organic fertilizer;
|
|
·
|
using environmental friendly technology and bacteria to produce organic feed; and
|
|
·
|
using environmental friendly technology to increase dairy milk production and quality.
|
|
|
Organic fertilizer project : US$450,000.00
|
|
|
Organic livestock feed: US$950,000.00
|
|
|
Organic farm grass: US$600,000.00
|
|
|
US$630,000.00 capital contribution;
|
|
|
appropriate plots of lands with the related “Land Usage Rights” or convertible old factory suitable for the projects, that is:
|
|
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
|
|
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;
|
|
|
vehicles for use by Sanjiang A Power during pre-development and the implementation stage;
|
|
|
company office and accommodation for personnel from out of town;
|
|
|
the necessary facilities for the projects;
|
|
|
liaison in procuring governmental financial assistance or other incentives for agriculture projects to meet the needs of the projects;
|
|
|
first batch of premium herd of cows and goats for the demonstration farms; and
|
|
|
related plants and equipment and facilities for the production factories and laboratories of Sanjiang A Power.
|
|
|
US$140,000.00 capital contribution;
|
|
|
modern agriculture management system;
|
|
|
liaison in procuring financial assistance to raise development capital;
|
|
|
expertise in the sales and marketing needs of Sanjiang A Power;
|
|
|
international business network;
|
|
|
assistance to resolve any misunderstanding between the Chinese and foreign parties resulting from the difference in laws and regulation between the two concerned countries.
|
|
|
US$630,000.00 capital contribution;
|
|
|
the rights to use the relevant patented technologies and the related trademarks and brands;
|
|
|
the rights to use the patented Bacterial and Bio-organic Fertilizer Manufacturing Technology, the Stock Feed Manufacturing Technology;
|
|
|
the right to use related conversion techniques associated with the Bio-organic Fertilizer and Livestock Feed Manufacturing;
|
|
|
business and sales network and the right to operate and generate financial benefit using the above mentioned technologies, techniques, systems, trademarks and labels; and
|
|
|
knowledge and connections for securing financings for its developments.
|
|
|
Sanjiang A Power suffers severe financial losses and is not able to continue operation as a result;
|
|
|
a party hereto fails to fulfill its obligations herein, and Sanjiang A Power is not able to continue operation as a result;
|
|
|
force majeure; and
|
|
|
Sanjiang A Power fails to achieve its business objectives, and has no prospect of development.
|
|
|
The Name of the company shall be Sanjiang A Power Agriculture Co. Ltd. (translation in English)
|
|
|
Total Investment Capital : U.S.$2 million
|
|
|
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%).
|
|
|
7 members in the Board of Directors consisting of 3 appointees from Qinghai Sanjiang, 1 from Garwor, and 3 from Pretty Mountains.
|
|
|
change its place of business from the City of Xining to the County of Huangyuan;
|
|
|
effect the registration of APWAM as a shareholder of Sanjiang A Power, replacing Pretty Mountains; and
|
|
|
Investigation and feasibility study of the potential project sites;
|
|
|
Investigation and feasibility study of the supplies and production of raw materials;
|
|
|
Investigation and feasibility study of the sales and marketing of the products to be produced by Sanjiang A Power;
|
|
|
Investigation and feasibility study of the related facilities within the locations;
|
|
|
Investigation and feasibility study of applicability of SIAF’s technologies for bio-organic fertilizer and livestock feed under the local conditions; and
|
|
|
Investigation and analysis of potential cooperative activities with the regional government and the farmers;
|
|
|
Establishing trial facilities to test the production of bio-organic fertilizer and livestock feed, using locally sourced raw materials;
|
|
|
Laboratory testing of sample products of fertilizer and livestock feed on their respective standard of qualities; and
|
|
|
Financial feasibility studies of all aspects of the business operations.
|
|
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.
|
|
|
Sanjiang A Power shall register its place of business in the County of Huangyuan within 6 months of the Development Agreement.
|
|
|
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).
|
|
|
Livestock Feed manufacturing
|
|
|
Cattle rearing and fattening stations
|
|
|
Manufacturing of bio-organic fertilizer
|
|
|
Plantation of pastures and crops as the raw materials for livestock feed.
|
|
|
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;
|
|
|
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.
|
|
|
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.
|
|
|
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.
|
|
Tri-way shall contribute US$25,000 in cash.
|
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
[1]
|
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
|
135
|
230
|
146
|
548
|
|
|
The Dairy business, through a combination of Hang Yu Tai Investment Limited and ZhongXingNongMu Co. Ltd. [Sold in February 2011]
|
|
|
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
|
2010
|
2009
|
Difference
|
|||||||||
Fishery
|
$ | 4,163,833 | $ | 726,702 | $ | 3,437,131 | ||||||
Dairy
|
29,632,300 | 18,087,972 | 11,544,328 | |||||||||
Plantation
|
4,774,854 | 2,911,165 | 1,863,689 | |||||||||
Beef
|
1,980,079 | - | 1,980,079 | |||||||||
Totals
|
$ | 40,551,066 | $ | 21,725,839 | $ | 18,825,227 |
Category
|
2010
|
2009
|
Difference
|
|||||||||
Fishery
|
$
|
1,055,089
|
$
|
-
|
$
|
1,055,089
|
||||||
Dairy
|
14,366,437
|
8,579,738
|
5,786,699
|
|||||||||
Plantation
|
1,828,324
|
805,704
|
1,022,620
|
|||||||||
Beef
|
847,791
|
-
|
847,791
|
|||||||||
Totals
|
$
|
18,097,641
|
$
|
9,385,442
|
$
|
8,712,199
|
|
Years-ended December 31,
|
|||||||
Category
|
2010
|
2009
|
||||||
Fishery
|
3,108,744 | 726,702 | ||||||
(75 | )% | (100 | )% | |||||
Dairy
|
15,265,863 | 9,508,234 | ||||||
(52 | )% | (53 | )% | |||||
Plantation
|
2,946,530 | 2,105,461 | ||||||
(62 | )% | (72 | )% | |||||
Beef
|
1,132,288 | - | ||||||
(57 | )% | - |
Category
|
2010
|
2009
|
Difference
|
|||||||||
Office and corporate expenses
|
$ | 1,660,959 | $ | 1,468,377 | $ | (192,582 | ) | |||||
Wages and Salaries
|
$ | 1,403,102 | $ | 1,018,497 | $ | (384,605 | ) | |||||
Traveling and related lodging
|
$ | 124,024 | $ | 76,636 | $ | (47,388 | ) | |||||
Motor vehicles expenses and local transportation
|
$ | 54,697 | $ | 9,540 | $ | (45,157 | ) | |||||
Entertainments and meals
|
$ | 39,090 | $ | 148,971 | $ | 109,881 | ||||||
Others and miscellaneous
|
$ | 25,512 | $ | 28,578 | $ | 3,066 | ||||||
Depreciation and amortization
|
$ | 244,177 | $ | 101,485 | $ | (142,692 | ) | |||||
Sub-total
|
$ | 3,551,561 | $ | 2,852,084 | $ | (699,477 | ) | |||||
Interest expenses
|
354,140 | 470,019 | 115,879 | |||||||||
Total
|
$ | 3,905,701 | $ | 3,322,103 | $ | (583,598 | ) | |||||
(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.
|
2010
|
2009
|
|||||||
$
|
$
|
|||||||
Revenue
|
40,551,066 | 21,725,839 | ||||||
Cost of goods sold
|
18,097,641 | 9,385,442 | ||||||
Gross profit
|
22,453,425 | 12,340,397 | ||||||
General and administrative expenses
|
(3,540,166 | ) | (2,852,084 | ) | ||||
Net income from operations
|
18,913,259 | 9,488,313 | ||||||
Other income (expenses)
|
||||||||
Other income
|
226,586 | 26 | ||||||
Loss on extinguishment of debts
|
(6,088,625 | ) | - | |||||
Interest expense
|
-354,140 | -470,019 | ||||||
Net income (expenses)
|
(6,216,179 | ) | (469,993 | ) | ||||
Net income before income taxes
|
12,697,080 | 9,018,320 | ||||||
Provision for income taxes
|
- | - | ||||||
Net income
|
12,697,080 | 9,018,320 | ||||||
Less: Net income attributable to the non - controlling interest
|
(4,196,258 | ) | (2,210,381 | ) | ||||
Net income attributable to the Sino Agro Food, Inc. and subsidiaries
|
8,500,822 | 6,807,939 | ||||||
Other comprehensive income
|
||||||||
Foreign currency translation gain
|
2,097,324 | 31,118 | ||||||
Comprehensive income
|
10,598,146 | 6,839,057 | ||||||
Less: other comprehensive income attributable to the non - controlling interest
|
(461,411 | ) | (1,359 | ) | ||||
Comprehensive income attributable to Sino Agro Food, Inc. and subsidiaries
|
10,136,735 | 6,837,698 | ||||||
Earnings per share attributable to Sino Agro Food, Inc.and subsidiaries common stockholders:
|
||||||||
Basic
|
$ | 0.16 | $ | 0.13 | ||||
Diluted
|
$ | 0.14 | $ | 0.13 | ||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
54,223,823 | 52,889,473 | ||||||
Diluted
|
61,223,823 | 52,889,473 |
Year
Ended
December
31
|
||||
2009
|
|
|||
Fishery
|
$ | 726,702 | ||
Dairy
|
$ | 18,087,972 | ||
Plantation
|
$ | 2,911,165 | ||
Beef
|
- | |||
Total
|
$ | 21,725,839 | ||
2010
|
||||
Fishery
|
$ | 4,163,833 | ||
Dairy
|
$ | 29,632,300 | ||
Plantation
|
$ | 4,774,854 | ||
Beef
|
$ | 1,980,079 | ||
Total
|
$ | 40,511,066 |
(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.
|
Year
ended
December
31
|
||||
2009
|
||||
Fishery
|
$ | - | ||
Dairy
|
$ | 8,579,738 | ||
Plantation
|
$ | 805,704 | ||
Beef
|
$ | - | ||
Total
|
$ | 9,385,442 | ||
2010
|
||||
Fishery
|
$ | 1,055,089 | ||
Dairy
|
$ | 14,366,437 | ||
Plantation
|
$ | 1,828,324 | ||
Beef
|
$ | 847,791 | ||
Total
|
$ | 18,097,641 |
Year
ended
December
31.
|
||||
2009
|
||||
Fishery
|
$ | 726,702 | ||
Dairy
|
$ | 9,508,234 | ||
Plantation
|
$ | 2,105,461 | ||
Beef
|
$ | - | ||
Total
|
$ | 12,340,397 | ||
2010
|
||||
Fishery
|
$ | 3,108,744 | ||
Dairy
|
$ | 15,265,863 | ||
Plantation
|
$ | 2,946,529 | ||
Beef
|
$ | 1,132,288 | ||
Total
|
$ | 22,453,424 |
Contractual
Obligations
|
Less than
1 year
|
1-3 years
|
3-5
years
|
More
than 5
years
|
Total
|
|||||||||||||||
Long Term Bank Debts
|
$
|
-
|
$
|
3,776,435
|
$
|
-
|
$
|
$
|
3,776,435
|
Name of related party
|
Nature of transactions
|
|
Mr. Rui Xiong He, director of Enping City Juntang Town Hang Sing Tai Agriculture Development Co Ltd, subsidiary of the Company
|
Included in other payables, due to Mr. Rui Xiong He is $nil and $16,985 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Xiang Jun Fang, director of Enping City Juntang Town Hang Sing Tai Agriculture Development Co Ltd, subsidiary of the Company
|
Included in other receivables, due from Mr. Xiang Jun Fang is $nil and $260,101 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in other payables, due to Mr. Xiang Jun Fang is $nil and $150,057 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Mr. Solomon Yip Kun Lee, Chairman
|
Included in due to directors, due to Mr. Solomon Yip Kun Lee is $926,196 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in due from directors, Mr. Solomon Yip Kun Lee is $nil and $73,164 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Michael Bor Hann Chen, director and
company secretary
|
Included in due from directors, due from Mr. Michael Bor Hann Chen is $nil and $38,228 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Qinghai Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included in other payable, due to SJAP is $nil and $2,494 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Mr. Xi Ming Sun, director of
ZhongXingNong Nu Co., Ltd
|
Included in other payable, due to Mr. Xi Ming Sun is $213,223 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
|
Mr. YiLin Zhao, director of Qinghai Sanjiang A Power Agriculture Co., Ltd
|
Included in other payable, due to Mr. YiLin Zhao is $19,661 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
-
|
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 overhead based on normal operation capacity but excluding borrowing costs; and
|
-
|
retail and wholesale merchandise finished goods – purchase cost on a weighted average basis.
|
Milk cows
|
10 years
|
Plant and machinery
|
5 - 10 years
|
Structure and leasehold improvements
|
10 -20 years
|
Mature seed
|
20 years
|
Furniture, fixtures and equipment
|
2.5 - 10 years
|
Motor vehicles
|
5 -10 years
|
|
(i)
|
are not entitled to receive any dividend;
|
|
(ii)
|
vote together with the shares of Common Stock of the Corporation as a single class and, regardless of the number of shares of Series A Preferred Stock outstanding and as long as at least one of such shares of Series A Preferred Stock is outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Preferred Stock.
|
|
(iii)
|
are entitled to rank senior over common stockholders , other class or Series B convertible preferred stockholders on liquidation. The company has authorized 100 shares of Series A preferred stock with 100 and 0 shares issued and outstanding as of December 31, 2010 and December 31, 2009, respectively.
|
|
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.
|
|
22.
|
Location: Guangdong Province, Enping City, Liangxi Town
,
Yane Shang Chong Village, east of the village Namdu village areas (formerly sugar cane farm)
|
|
23.
|
Address: Guangdong Province, Enping City, Liangxi Town
,
Yane Nandu Village (hereinafter called "the Landowner"), east of the village at Tongwali, neigbouring the ponds, Shatiangang, both sides of the road, Chuanyaodeng, Shadu areas (formerly sugar cane farm)
|
|
Number of acres: 280.90 acres
|
|
24.
|
Address: Guangdong Province, Enping City, Liangxi Town
,
Yane Xiaoban Village
|
Shareholders
|
Number of
Common
Shares
|
Percentage
of Common
Stock
|
||||||
Lee Yip Kun Solomon
|
13,500,000
|
24.33
|
%
|
|||||
Tan Poay Teik
|
4,500,000
|
8.11
|
%
|
|||||
Chen Bor Hann
|
900,000
|
1.62
|
%
|
|||||
All officers and directors as a group [3 persons]
|
18,900,000
|
34.06
|
%
|
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
|
%
|
NAME OF
PRINCIPAL
SHAREHOLDER
|
NUMBER OF VOTES
OF COMMON
STOCK
|
NUMBER OF VOTES
OF SERIES A
PREFERRED STOCK
|
COMBINED
NUMBER OF VOTES
|
PERCENTAGE OF
VOTES FOR
COMBINED
OWNERSHIP
|
||||||||||||
Lee Yip Kun Solomon
|
13,500,000 | 30,737,742 | 44,237,742 | 79.74 | % | |||||||||||
Tan Poay Teik
|
4,500,000 | 10,977,765 | 15,477,765 | 27.90 | % | |||||||||||
Chen Bor Hann
|
900,000 | 2,195,553 | 3,095,553 | 5.58 | % | |||||||||||
All officers and directors as a group [3 persons]
|
18,900,000 | 43,911,060 | 62,811,060 | 113.22 | % |
|
·
|
Applicable % is based on 55,474,136 Common shares fully issued as at December 31, 2010.
|
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
|
||||||||||
2010
|
336,000
|
336,000
|
||||||||||||
Mr. Tan Paoy Teik, Chief Marketing Officer
|
2009
|
174,000
|
0
|
174,000
|
||||||||||
2010
|
174,000
|
174,000
|
||||||||||||
Mr. Chen Bor Hann, Secretary
|
2009
|
60,000
|
0
|
60,000
|
||||||||||
2010
|
60,000
|
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
|
672,000
|
967,680
|
||||||||||||||||||||||
Mr. Tan Paoy Teik
|
0
|
0
|
0
|
0
|
0
|
348,000
|
501,120
|
|||||||||||||||||||||
Mr. Chen Bor Hann
|
0
|
0
|
0
|
0
|
0
|
120,000
|
172,800
|
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 $nil and $16,985 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has 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 $nil and $260,101 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in other payables, due to Mr. Xiang Jun Fang is $nil and $150,057 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
Qinghai Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included in other payable, due to SJAP is $nil and $2,494 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
|
|
|
Mr. Solomon Yip Kun Lee, Chairman
|
|
Included in due to directors, due to Mr. Solomon Yip Kun Lee is $926,196 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in due from directors, Mr. Solomon Yip Kun Lee is $nil and $73,164 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has 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 $nil and $38,228 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
Mr. Xi Ming Sun, director of
ZhongXingNong Nu Co., Ltd
|
Included in other payable, due to Mr. Xi Ming Sun is $213,223 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
|
Mr. Yi Lin Zhao, director of Qinghai Sanjiang A Power Agriculture Co., Ltd
|
Included in other payable, due to Mr. Yi Lin Zhao is $19,661 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
Date
|
Name of director account
|
DR
$
|
CR
$
|
Balance
$
|
||||||||||
As of 12/31/2009
|
Due to, Mr. Rui Xiong He,
|
16,985 | -16,985 | |||||||||||
As of 12/31/2010
|
Repayment made to Mr. Rui Xiong He
|
16,985 | 0 | |||||||||||
As of 12/31/2009
|
Due from Mr. Xiang Jun Fang
|
260,101. | 260,101 | |||||||||||
Due to Mr. Xiang Jun Fang
|
150,057 | 110,044 | ||||||||||||
As of 12/31/2010
|
Due from Mr. Xiang Jun Fang
|
0 | 0 | |||||||||||
Due to Mr. Xiang Jun Fang
|
0 | 0 | ||||||||||||
As of 01/31/2011
|
Balance of Mr. Xiang Jun Fang
|
0 | ||||||||||||
As of 12/31/2009
|
Due to Mr. Solomon Lee
|
0 | 0 | |||||||||||
Due from Mr. Solomon Lee
|
73,164 | 73,164 | ||||||||||||
As of 12/31/2010
|
Due to Mr. Solomon Lee
|
926,196 | ||||||||||||
Due from Mr. Solomon Lee
|
||||||||||||||
As of 12/31/2010
|
Balance due to Mr. Solomon Lee
|
-926,196 | ||||||||||||
As of 12/31/2009
|
Due from Mr. Chen Bor Hann
|
38,228 | 38,228 | |||||||||||
As of 12/31/2010
|
Due to Mr. Chen Bor Hann
|
0 | 0 | |||||||||||
As of 12/31/2010
|
Due to Mr. Xi Ming Sun
|
213,223 | -213,223 | |||||||||||
As of 12/31/2010
|
Due to Mr. Yi Lin Zhao
|
19,661 | -19,661 |
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
|
||||
October 1 – December 31, 2010
|
$
|
1.80
|
$
|
1.15
|
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 | ||||||||||||||||
Sept. 5, 2007
|
Issuance of shares for the acquisition of 100% equity in Macau Eiji Company Limitada
|
2,000,000 | 1.939 | 3,878,739 | 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
|
42,000,000 | 42,777,896 |
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 cancelled (from
Solomon Lee share account)
|
-875,000
|
0
|
0
|
0
|
|||||||||||||||||
Total for 2009
|
-260,000
|
215,250
|
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
|
1.24
|
1,664,080
|
7
|
0
|
|||||||||||||
Feb. 10
|
780,000
|
1.20
|
936,000
|
1
|
0
|
|||||||||||||
March 12 to 19
|
2,625,000
|
1.19
|
3,123,750
|
3
|
0
|
|||||||||||||
April 15 to 27
|
1,055,000
|
1.10
|
1,160,500
|
4
|
0
|
|||||||||||||
May 13
|
800,000
|
0.525
|
420,000
|
2
|
0
|
|||||||||||||
May 14
|
350,000
|
0.525
|
183,750
|
2
|
0
|
|||||||||||||
June 10.
|
1,000,000
|
0.48
|
480,000
|
5
|
0
|
|||||||||||||
Total Issuance of shares in settlement of debts
|
7,952,000
|
7,968,080
|
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)
|
(7,000,000)
|
||||||||||||||||
June 26, 2010 issuance of Preference Series A & B
|
7,000,100
|
1.00
|
7,000,100
|
3
|
0
|
|||||||||||||
Balanced issuance of shares for 1st half 2010
|
6,259,157
|
8,465,239
|
||||||||||||||||
(iv) Issuance of shares in settlement of debts accrued under Tri-way Subsidiary
|
||||||||||||||||||
In July 2010
|
975,000
|
0.50
|
487,500
|
|||||||||||||||
In August 2010
|
1,625,000
|
0.57
|
926,250
|
Collectively
|
||||||||||||||
In September 2010
|
1,380,000
|
1.50
|
1,497,300
|
1
|
||||||||||||||
In October 2010
|
790,855
|
1.27
|
1,004,386
|
|||||||||||||||
Total for debt settlements
|
4,770,855
|
3,915,436
|
||||||||||||||||
(v) Issuance of common shares in settlement of debts due to third parties | ||||||||||||||||||
In October 2010
|
566,145
|
1.27
|
719,004
|
1
|
||||||||||||||
In November 2010
|
1,172,000
|
1.50
|
1,758,000
|
1
|
||||||||||||||
Total for settlement of debts
|
1,738,145
|
2,477,004
|
||||||||||||||||
(vi) Issuance of shares for workers’ compensation
|
||||||||||||||||||
In October 2010
|
22,500
|
1.50
|
33,750
|
3
|
||||||||||||||
(vii) Shares being retired
|
||||||||||||||||||
In October 2010
|
3,000,000
|
0
|
0
|
|||||||||||||||
Balance as at December 31, 2010
|
55,474,136
|
50,884,475
|
||||||||||||||||
June 26, 2010 issuance of Pref. Series B shares
|
7,000,000
|
1.00
|
7,000,000
|
3
|
||||||||||||||
June 26, 2010 Issuance of Pref. Series B shares
|
100
|
1.00
|
100
|
|||||||||||||||
Total
|
62,474,236
|
57,884,575
|
136
|
5,123
|
·
|
Total number of common shares issued = 55,474,136
|
·
|
Total number of Preference Series A shares issued = 100
|
|
·
|
Total number of Preference Series B shares issued and outstanding = 7,000,000
|
|
·
|
Total issuance of shares (including preference series A & B) shares = 62,474,236
|
|
·
|
Total consideration received = $57,884,575
|
|
·
|
Total number of non-USA investors = 136
|
|
·
|
Total number of USA investors = 5,123
|
|
·
|
Total number of shareholders = 5,259
|
|
·
|
Basic number of shares issued and outstanding = 55,474,136
|
|
·
|
Fully Diluted number of shares issued and outstanding = 62,474,136
|
|
|
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
|
||||
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
F-1 | |||
CONSOLIDATED BALANCE SHEETS
|
F-2 | |||
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
|
F-3 | |||
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
|
F-4 | |||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
F-5 | |||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-6 |
2010
|
2009
|
|||||||
$ | $ | |||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
3,890,026 | 2,360,587 | ||||||
Inventories
|
8,913,127 | 6,099,411 | ||||||
Deposits and prepaid expenses
|
14,229,711 | 10,189,266 | ||||||
Accounts receivable, net of allowance for doubtful accounts
|
12,803,771 | 6,869,505 | ||||||
Other receivables
|
3,967,680 | 1,885,491 | ||||||
Due from directors
|
- | 112,267 | ||||||
Total current assets
|
43,804,315 | 27,516,527 | ||||||
Property and equipment
|
||||||||
Property and equipment, net of accumulated depreciation
|
17,155,782 | 7,564,664 | ||||||
Construction in progress
|
2,231,475 | 5,995,939 | ||||||
Land use rights, net of accumulated amortization
|
16,829,410 | 13,769,496 | ||||||
Total property and equipment
|
36,216,667 | 27,330,099 | ||||||
Other assets
|
||||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Proprietary technologies, net of accumulated amortization
|
7,287,883 | 7,634,635 | ||||||
Long term accounts receivable
|
8,459,044 | 9,338,477 | ||||||
License rights
|
1 | 1 | ||||||
Investment in unconsolidated corporate joint venture
|
- | 242,669 | ||||||
Total other assets
|
27,746,928 | 29,215,782 | ||||||
Total assets
|
107,767,910 | 84,062,408 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued expenses
|
390,846 | 756,209 | ||||||
Due to a director
|
926,196 | - | ||||||
Dividends payable
|
210,262 | - | ||||||
Other payables
|
1,412,290 | 4,536,128 | ||||||
Short term debt
|
- | 2,435,221 | ||||||
Total current liabilities
|
2,939,594 | 7,727,558 | ||||||
Other liabilities
|
||||||||
Long term debt
|
3,776,435 | 4,401,002 | ||||||
Total liabilities
|
6,716,029 | 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 December 31, 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 December 31, 2010 and December 31, 2009, respectively)
|
||||||||
Series B convertible preferred stock: $0.001 par value)
|
7,000 | - | ||||||
(10,000,000 shares authorized, 7,000,000 and 0 shares issued and outstanding) as of December 31, 2010 and December 31, 2009, respectively)
|
||||||||
Common stock: $0.001 par value
|
55,474 | 52,684 | ||||||
(100,000,000 shares authorized, 55,474,136 and 52,683,579 shares issued and oustanding as of December 31, 2010 and December 31, 2009, respectively)
|
||||||||
Additional paid - in capital
|
58,586,362 | 43,704,723 | ||||||
Retained earnings
|
25,019,971 | 17,086,949 | ||||||
Accumulated other comprehensive income
|
3,804,116 | 2,168,203 | ||||||
Total Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
87,472,923 | 63,012,559 | ||||||
Non - controlling interest
|
13,578,958 | 8,921,289 | ||||||
Total stockholders' equity
|
101,051,881 | 71,933,848 | ||||||
Total liabilities and stockholders' equity
|
107,767,910 | 84,062,408 |
2010
|
2009
|
|||||||
$ | $ | |||||||
Revenue
|
40,551,066 | 21,725,839 | ||||||
Cost of goods sold
|
18,097,641 | 9,385,442 | ||||||
Gross profit
|
22,453,425 | 12,340,397 | ||||||
General and administrative expenses
|
(3,551,561 | ) | (2,852,084 | ) | ||||
Net income from operations
|
18,901,864 | 9,488,313 | ||||||
Other income (expenses)
|
||||||||
Other income
|
226,586 | 26 | ||||||
Loss on extinguishment of debts
|
(6,077,230 | ) | - | |||||
Interest expense
|
(354,140 | ) | (470,019 | ) | ||||
Net income (expenses)
|
(6,204,784 | ) | (469,993 | ) | ||||
Net income before income taxes
|
12,697,080 | 9,018,320 | ||||||
Provision for income taxes
|
- | - | ||||||
Net income
|
12,697,080 | 9,018,320 | ||||||
Less: Net income attributable to the non - controlling interest
|
(4,196,258 | ) | (2,210,381 | ) | ||||
Net income attributable to the Sino Agro Food, Inc. and subsidiaries
|
8,500,822 | 6,807,939 | ||||||
Other comprehensive income
|
||||||||
Foreign currency translation gain
|
2,097,324 | 31,118 | ||||||
Comprehensive income
|
10,598,146 | 6,839,057 | ||||||
Less: other comprehensive income attributable to the non - controlling interest
|
(461,411 | ) | (1,359 | ) | ||||
Comprehensive income attributable to Sino Agro Food, Inc. and subsidiaries
|
10,136,735 | 6,837,698 | ||||||
Earnings per share attributable to Sino Agro Food, Inc.
|
||||||||
and subsidiaries common stockholders:
|
||||||||
Basic
|
$ | 0.16 | $ | 0.13 | ||||
Diluted
|
$ | 0.14 | $ | 0.13 | ||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
54,223,823 | 52,889,473 | ||||||
Diluted
|
61,223,823 | 52,889,473 |
2010
|
2009
|
|||||||
$ | $ | |||||||
Cash flows from operating activities
|
||||||||
Net income for the year
|
12,697,080 | 9,018,320 | ||||||
Adjustments to reconcile net income to net cash from operations:
|
||||||||
Depreciation
|
1,255,551 | 820,193 | ||||||
Amortization
|
956,555 | 865,512 | ||||||
Loss on extinguishment of debts
|
6,077,230 | - | ||||||
Common stock issued for services
|
530,809 | - | ||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in inventories
|
(2,813,716 | ) | (900,170 | ) | ||||
Increase in deposits and prepaid expenses
|
(4,040,445 | ) | - | |||||
Decrease in due from directors
|
112,267 | 723,286 | ||||||
Increase in due to a director
|
3,403,200 | - | ||||||
Decrease in accounts payable and accrued expenses
|
(365,363 | ) | (274,486 | ) | ||||
Increase (decrease) in other payables
|
2,682,364 | (85,551 | ) | |||||
Increase in accounts receivable
|
(5,054,833 | ) | (4,809,241 | ) | ||||
Increase in other receivables
|
(2,082,189 | ) | (687,874 | ) | ||||
Net cash provided by operating activities
|
13,358,510 | 4,669,989 | ||||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
(4,479,880 | ) | (1,414,336 | ) | ||||
Investment in unconsolidated corporate joint venture
|
- | (242,669 | ) | |||||
Acquisition of land use rights
|
(3,223,411 | ) | (858,195 | ) | ||||
Payment for construction in progress
|
(2,984,687 | ) | (1,771,686 | ) | ||||
Net cash used in investing activities
|
(10,687,978 | ) | (4,286,886 | ) | ||||
Cash flows from financing activities
|
||||||||
Series A Preferred stock issued for cash
|
100 | - | ||||||
Common stock issued for cash
|
- | 215,250 | ||||||
Proceeds from debts
|
- | 2,435,221 | ||||||
Dividend paid
|
(357,538 | ) | - | |||||
Repayment of long term and short term debt
|
(3,059,788 | ) | (2,435,221 | ) | ||||
Net cash (used in) provided by financing activities
|
(3,417,226 | ) | 215,250 | |||||
Effects of exchange rate changes on cash
|
2,276,133 | 31,116 | ||||||
Increase in cash and cash equivalents
|
1,529,439 | 629,469 | ||||||
Cash and cash equivalents, beginning of year
|
2,360,587 | 1,731,118 | ||||||
Cash and cash equivalents, end of year
|
3,890,026 | 2,360,587 | ||||||
Supplementary disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
354,140 | 470,019 | ||||||
Cash paid for income taxes
|
- | - | ||||||
Non-cash transactions:
|
||||||||
14,461,000 shares of common stock were issued
|
||||||||
for settlement of debts and proprietary technologies payable
|
14,360,520 | - | ||||||
5,190,002 shares of common stock were cancelled
|
- | - | ||||||
519,559 shares of common stock issued for employee's compensation
|
519,559 | - |
1.
|
CORPORATE INFORMATION
|
|
On September 5, 2007, the Company acquired three existing businesses in the People’s Republic of China (“PRC”):
|
|
a)
|
Hang Yu Tai Investment Limited (“HYT”), a company incorporated in Macau, the owner of a 78% equity interest in ZhongXingNongMu Ltd (“ZX”), a company incorporated in the PRC;
|
|
b)
|
Tri-way Industries Limited (“TRW”), a company incorporated in Hong Kong;
|
|
c)
|
Macau Eiji Company Limited (“MEIJI”), a company incorporated in Macau, 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.
|
|
·
|
Qinghai Province Sanjiang Group Company Limited (English translation) (“Qinghai Sanjiang”), a company owned by the PRC 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.
|
|
·
|
SJAP is engaged in the business of manufacturing bio-organic fertilizer, livestock feed and development of other agriculture projects in the County of Huangyuan, in the vicinity of the Xining City, Qinghai Province, PRC.
|
1.
|
CORPORATE INFORMATION (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
Name of subsidiaries
|
Place of incorporation
|
Percentage of ownership interest
|
Principal activities
|
|||
Capital Award Inc. ("CA")
|
Belize
|
100% (2009: 100%) directly
|
Fishery development and holder of A-Power Technology master license.
|
|||
Capital Stage Inc. ("CS")
|
Belize
|
100% (2009: 100%) indirectly
|
Dormant
|
|||
Capital Hero Inc. ("CH")
|
Belize
|
100% (2009: 100%) indirectly
|
Dormant
|
|||
Tri-way Industries Limited ("TRW")
|
Hong Kong, PRC
|
100% (2009: 100%) directly
|
Investment holding, holder of enzyme technology master license for manufacturing of livestock feed and bio-organic fertilizer and has not commenced its planned business of fish farm operations.
|
|||
Pretty Mountain Holdings Limited ("PMH")
|
Hong Kong, PRC
|
80% (2009: 80%) directly
|
Dormant
|
|||
Macau Eiji Company Limited ("MEIJI")
|
Macau, PRC
|
100% (2009: 100%) directly
|
Investment holding
|
|||
Enping City Juntang Town Hang Sing Tai Agriculture Co. Ltd ("HST")
|
PRC
|
Nil% (2009: 75%) indirectly
|
Hylocereus Undatus Plantation ("HU Plantation")
|
|||
Jiang Men City Heng ShengTai Agriculture Development Co. Ltd ("JHST")
|
PRC
|
75% (2009: 75%) directly
|
Hylocereus Undatus Plantation ("HU Plantation"). The Company has not commenced
|
|||
beef business.
|
||||||
Hang Yu Tai Investment Limited ("HYT")
|
Macau, PRC
|
100% (2009: 100%) directly
|
Investment holding
|
|||
ZhongXingNongMu Co. Ltd ("ZX")
|
PRC
|
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
|
100% (2009: 100%) directly
|
Investment holding
|
Name of variable interest entity/unconsolidated corporate joint venture
|
Place of incorporation
|
Percentage of interest
|
Principal activities
|
|||
Qinghai Sanjiang A Power Agriculture Co., Ltd
|
PRC
|
45% (2009: 45%) indirectly
|
Manufacturing of organic fertilizer,livestock feed, and beef cattle and plantation of crops and pastures
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
·
|
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 overhead based on normal operation capacity but excluding borrowing costs; and
|
|
·
|
retail and wholesale merchandise finished goods – purchase cost on a weighted average basis.
|
Milk cows
|
10 years
|
|
Plant and machinery
|
5 - 10 years
|
|
Structure and leasehold improvements
|
10 -20 years
|
|
Mature seed
|
20 years
|
|
Furniture, fixtures and equipment
|
2.5 - 10 years
|
|
Motor vehicles
|
5 -10 years
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2010
|
2009
|
|||||||
Customer A
|
21.39 | % | 21.20 | % | ||||
Customer B
|
16.80 | % | 22.54 | % | ||||
Customer C
|
12.81 | % | 12.26 | % | ||||
Customer D
|
17.00 | % | 9.62 | % | ||||
Customer E
|
0.33 | % | - | |||||
Customer F
|
- | 9.35 | % | |||||
68.33 | % | 74.97 | % |
2010
|
2009
|
|||||||
Customer A
|
28.37 | % | 35.48 | % | ||||
Customer B
|
16.85 | % | 22.49 | % | ||||
Customer C
|
14.00 | % | 9.17 | % | ||||
Customer D
|
12.55 | % | - | |||||
Customer E
|
7.49 | % | 17.58 | % | ||||
Customer F
|
- | 11.04 | % | |||||
79.26 | % | 95.76 | % |
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
|
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.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
3.
|
SEGMENT INFORMATION
|
2010
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU Plantation Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
others
|
Total
|
|||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||
Revenue
|
4,163,833 | 29,632,300 | 4,774,854 | 1,980,079 | - | 40,551,066 | ||||||||||||||||||
Net income (loss)
|
3,605,581 | 10,233,169 | 2,081,642 | 413,900 | (7,833,470 | ) | 8,500,822 | |||||||||||||||||
Total assets
|
17,685,816 | 51,675,685 | 14,804,908 | 4,359,809 | 19,241,692 | 107,767,910 |
2009
|
||||||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Organic
Fertilizer and
Bread Grass
Division
|
Corporate and
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 | - | 20,602,905 | 84,062,408 |
4.
|
INCOME TAXES
|
5.
|
DIVIDENDS
|
2010
|
2009
|
|||||||
$ | $ | |||||||
Dividends
|
567,800 | - |
6.
|
CASH AND CASH EQUIVALENTS
|
2010
|
2009
|
|||||||
$ | $ | |||||||
Cash and bank balances
|
3,890,026 | 2,360,587 |
7.
|
INVENTORIES
|
2010
$ |
2009
$ |
|||||||
Bread grass
|
54,096 | - | ||||||
Beef cattle
|
3,338,237 | |||||||
Organic fertilizer
|
56,593 | - | ||||||
Raw materials for bread grass and organic fertilizer
|
141,839 | - | ||||||
Raw materials for HU plantation
|
64,353 | - | ||||||
Immature seeds
|
801,596 | 411,594 | ||||||
Harvested HU plantation
|
199,234 | 53 | ||||||
Unharvested HU plantation
|
29,079 | 89,666 | ||||||
Forage for milk cows and consumable
|
4,228,100 | 5,598,098 | ||||||
8,913,127 | 6,099,411 |
8.
|
DEPOSITS AND PREPAID EXPENSES
|
2010
$ |
2009
$ |
|||||||
Deposits for
|
||||||||
acquisition of land use rights
|
4,453,665 | 4,453,666 | ||||||
inventory purchases
|
648,303 | 219,551 | ||||||
lease agreements
|
2,129 | 2,129 | ||||||
materials used for construction in progress
|
251,329 | 79,607 | ||||||
Prepayments for purchases of milk cows, dairy farm and containers
|
8,874,285 | 5,434,313 | ||||||
14,229,711 | 10,189,266 |
9.
|
ACCOUNTS RECEIVABLE
|
2010
$
|
2009
$
|
|||||||
0 - 30 days
|
5,083,928 | 1,530,838 | ||||||
31 - 90 days
|
175,843 | - | ||||||
91 - 120 days
|
1,093,642 | 5,338,667 | ||||||
over 120 days and less than 1 year
|
6,450,358 | - | ||||||
over 1 year
|
8,459,044 | 9,338,477 | ||||||
21,262,815 | 16,207,982 | |||||||
Less: amounts reclassified as long term accounts receivable
|
(8,459,044 | ) | (9,338,477 | ) | ||||
12,803,771 | 6,869,505 |
10.
|
OTHER RECEIVABLES
|
2010
$
|
2009
$
|
|||||||
Advance to service providers
|
- | 12,983 | ||||||
Due from related parties
|
- | 260,101 | ||||||
Due from employees
|
374,622 | 430,552 | ||||||
Due from third parties
|
2,636,966 | 1,181,855 | ||||||
Temporary payments for potential investment
|
956,092 | - | ||||||
3,967,680 | 1,885,491 |
11.
|
PLANT AND EQUIPMENT
|
2010
$
|
2009
$
|
|||||||
Milk cows
|
7,659,263 | 4,953,669 | ||||||
Plant and machinery
|
11,604,975 | 2,948,148 | ||||||
Structure and leasehold improvements
|
110,801 | 783,491 | ||||||
Mature seeds
|
498,824 | 484,436 | ||||||
Furniture and equipment
|
263,981 | 85,506 | ||||||
Motor vehicles
|
47,568 | 83,493 | ||||||
20,185,412 | 9,338,743 | |||||||
Less: Accumulated depreciation
|
(3,029,630 | ) | (1,774,079 | ) | ||||
Net booking value
|
17,155,782 | 7,564,664 |
12.
|
CONSTRUCTION IN PROGRESS
|
2010
$
|
2009
$
|
|||||||
Construction in progress
|
||||||||
- Rangeland for milk cows
|
- | 5,741,168 | ||||||
- Oven room for production of dried flowers
|
479,559 | 254,771 | ||||||
- Organic fertilizer and bread grass production plant
|
1,751,916 | - | ||||||
2,231,475 | 5,995,939 |
13.
|
LAND USE RIGHTS
|
2010
$
|
2009
$
|
|||||||
Cost
|
18,776,139 | 15,107,879 | ||||||
Less: Accumulated impairment losses
|
(1,946,729 | ) | (1,338,383 | ) | ||||
Net book value
|
16,829,410 | 13,769,496 |
14.
|
PROPRIETARY TECHNOLOGIES
|
2010
$
|
2009
$
|
|||||||
Proprietary technologies
|
8,000,000 | 8,000,000 | ||||||
Less: Accumulated amortization
|
(712,117 | ) | (365,365 | ) | ||||
Net carrying amount
|
7,287,883 | 7,634,635 |
15.
|
GOODWILL
|
2010
$
|
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
|
16.
|
INVESTMENT IN UNCONSOLIDATED CORPORATE JOINT VENTURE (CONTINUED)
|
|
·
|
Originally, the board of directors of Sanjiang A Power (SJAP) consisted of 7 members; 3 appointees from Qinghai Sanjiang( one of stockholder), 1 from Garwor (one of stockholder), and 3 from the Company such that the Company did not have majority interest represented in the board of directors of SJAP.
|
|
·
|
On May 7, 2010, Qinghai Sanjiang sold and transferred its equity interest in SJAP to Garwor. The aforesaid sale and transfer was approved by the State Administration for Industry And Commerce of Xining City Government of the People’s Republic of China.
|
16.
|
LICENSE RIGHTS
|
18.
|
OTHER PAYABLES
|
2010
$
|
2009
$
|
|||||||
Proprietary technologies payable
|
- | 3,577,264 | ||||||
Due to third parties
|
1,077,738 | 601,326 | ||||||
Due to related parties
|
223,884 | 169,536 | ||||||
Stamp duty payable
|
- | 4,678 | ||||||
Due to employees and others
|
110,668 | 183,324 | ||||||
1,412,290 | 4,536,128 |
19.
|
SHAREHOLDERS’ EQUITY
.
|
|
(i)
|
are not entitled to receive any dividend;
|
|
(ii)
|
vote together with the shares of Common Stock of the Corporation as a single class and, regardless of the number of shares of Series A Preferred Stock outstanding and as long as at least one of such shares of Series A Preferred Stock is outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Preferred Stock.
|
|
(iii)
|
are entitled to rank senior over common stockholders , other class or Series B convertible preferred stockholders on liquidation. The company has authorized 100 shares of Series A preferred stock with 100 and 0 shares issued and outstanding as of December 31, 2010 and December 31, 2009, respectively.
|
20.
|
BANK BORROWINGS
|
Amount
|
||||||||||||||||
Name of bank
|
Interest rate
|
Term
|
Security
|
2010
$ |
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 |
Amount
|
||||||||||||||||
Name of bank
|
Interest rate
|
Term
|
Security
|
2010
$ |
2009
$ |
|||||||||||
Agricultural Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate guarantee by third party
|
3,776,435 | 4,401,002 |
21.
|
OBLIGATION UNDER OPERATING LEASES
|
2010
$
|
||||
Year ended December 31,2011
|
56,600 | |||
Year ended December 31,2012
|
48,124 | |||
Year ended December 31,2013
|
5,747 | |||
Year ended December 31,2014
|
1,437 | |||
Thereafter
|
- | |||
111,908 |
22.
|
CONTINGENCIES
|
23.
|
STOCK BASED COMPENSATION
|
24.
|
LOSS ON EXTINGUISHMENT OF DEBTS
|
25.
|
RELATED PARTY TRANSACTIONS
|
Name of related party | Nature of transactions | |
Mr. Rui Xiong He, director of Enping City Juntang Town and Hang Sing Tai Agriculture Development Co Ltd, subsidiary of the Company
|
Included in other payables, due to Mr. Rui Xiong He is $nil and $16,985 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Xiang Jun Fang, director of Enping City Juntang Town and Hang Sing Tai Agriculture Development Co Ltd, subsidiary of the Company
|
Included in other receivables, due from Mr. Xiang Jun Fang is $nil and $260,101 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in other payables, due to Mr. Xiang Jun Fang is $nil and $150,057 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Mr. Solomon Yip Kun Lee, Chairman
|
Included in due to directors, due to Mr. Solomon Yip Kun Lee is $926,196 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
Included in due from directors, Mr. Solomon Yip Kun Lee is $nil and $74,039 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Michael Bor Hann Chen, director and
company secretary
|
Included in due from directors, due from Mr. Michael Bor Hann Chen is $nil and $38,228 as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
|
Qinghai Sanjiang A Power Agriculture Co., Ltd (“SJAP”), investee
|
Included in other payable, due to SJAP is $nil and $2,494 as of December, 31, 2010 and December 31, 2009, respectively. The amount is unsecured, interest free and has no fixed term of repayment.
|
Mr. Xi Ming Sun, director of
ZhongXingNong Nu Co., Ltd
|
Included in other payable, due to Mr. Xi Ming Sun is $213,223 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
Mr. Yi Lin Zhao, director of Qinghai Sanjiang A Power Agriculture Co., Ltd
|
Included in other payable, due to Mr. Yi Lin Zhao is $19,661 and $nil as of December, 31, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
26.
|
SUBSEQUENT EVENTS
|
(Restated)
|
||||||||
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
|
- | 112,267 | ||||||
Total current assets
|
32,930,830 | 27,516,527 | ||||||
Property and equipment
|
||||||||
Property and equipment, net of accumulated depreciation
|
13,484,334 | 7,564,664 | ||||||
Construction in progress
|
7,860,795 | 5,995,939 | ||||||
Land use rights, net of accumulated amortization
|
14,765,682 | 13,769,496 | ||||||
Total property and equipment
|
36,110,811 | 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 | ||||||
License rights
|
1 | 1 | ||||||
Investment in unconsolidated corporate joint venture
|
- | 242,669 | ||||||
Total other assets
|
28,711,842 | 29,215,782 | ||||||
Total assets
|
97,753,483 | 84,062,408 | ||||||
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) |
55,922 | 52,684 | ||||||
Additional paid - in capital
|
55,101,898 | 43,704,723 | ||||||
Retained earnings
|
19,631,605 | 17,086,949 | ||||||
Accumulated other comprehensive income
|
3,391,977 | 2,168,203 | ||||||
Total Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
78,188,402 | 63,012,559 | ||||||
Non - controlling interest
|
11,921,620 | 8,921,289 | ||||||
Total stockholders' equity
|
90,110,022 | 71,933,848 | ||||||
Total liabilities and stockholders' equity
|
97,753,483 | 84,062,408 |
(Restated)
|
(Restated)
|
|||||||||||||||
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 | ) | (2,369,757 | ) | (1,891,887 | ) | ||||||||
Net income from operations
|
8,295,016 | 1,802,973 | 12,136,282 | 4,867,132 | ||||||||||||
Other income (expenses)
|
||||||||||||||||
Net gain (loss) of extinguishment of debts
|
73,950 | - | (6,077,230 | ) | - | |||||||||||
Interest expense
|
(50,565 | ) | (117,348 | ) | (291,433 | ) | (353,345 | ) | ||||||||
Net income (expenses)
|
23,385 | (117,348 | ) | (6,368,663 | ) | (353,345 | ) | |||||||||
Net income before income taxes
|
8,318,401 | 1,685,625 | 5,767,619 | 4,513,787 | ||||||||||||
Provision for income taxes
|
- | - | - | - | ||||||||||||
Net income
|
8,318,401 | 1,685,625 | 5,767,619 | 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
|
6,352,179 | 1,199,416 | 3,112,455 | 3,412,242 | ||||||||||||
Other comprehensive income
|
. | . | ||||||||||||||
Foreign currency translation gain
|
858,949 | (585,120 | ) | 1,568,941 | (569,561 | ) | ||||||||||
Comprehensive income
|
7,211,128 | 614,296 | 4,681,396 | 2,842,681 | ||||||||||||
Less: other comprehensive income attributable to the non - controlling interest
|
(184,995 | ) | 125,983 | (345,167 | ) | 125,303 | ||||||||||
Comprehensive income attributable to Sino Agro Food, Inc. and subsidiaries
|
7,026,133 | 740,279 | 4,336,229 | 2,967,984 | ||||||||||||
Earnings per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
|
||||||||||||||||
Basic
|
$ | 0.12 | $ | 0.02 | $ | 0.06 | $ | 0.06 | ||||||||
Diluted
|
$ | 0.11 | $ | 0.02 | $ | 0.05 | $ | 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 |
(Restated)
|
||||||||
Nine months ended
|
Nine months ended
|
|||||||
September 30,2010
|
September 30, 2009
|
|||||||
(Unaudited)
|
(Unaudited)
|
|||||||
$
|
$
|
|||||||
Cash flows from operating activities
|
||||||||
Net income for the period
|
5,767,619 | 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 | - | ||||||
Loss on extinguishment of debts
|
6,077,230 | - | ||||||
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
|
8,348,818 | 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
|
17,501,791 | 9,506,078 | ||||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment, and construction in progress
|
(8,460,013 | ) | (3,912,256 | ) | ||||
Decrease (increase) in investment in unconsolidated corporate joint venture
|
- | (242,669 | ) | |||||
Acquisition of land use rights
|
(1,438,052 | ) | - | |||||
Net cash used in investing activities
|
(9,898,065 | ) | (4,154,925 | ) | ||||
Cash flows from financing activities
|
||||||||
Series A Preferred stock issued for cash
|
100 | - | ||||||
Proceeds from debts
|
- | 2,430,454 | ||||||
Repayment of long term and short term debt
|
(3,104,880 | ) | (2,443,836 | ) | ||||
Net cash used in financing activities
|
(3,104,780 | ) | (13,382 | ) | ||||
Effects on exchange rate changes on cash
|
(2,238,912 | ) | (3,677,810 | ) | ||||
Increase in cash and cash equivalents
|
2,260,034 | 1,659,961 | ||||||
Cash and cash equivalents, beginning of period
|
2,360,587 | 1,731,118 | ||||||
Cash and cash equivalents, end of period
|
4,620,621 | 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:
|
||||||||
11,932,000 shares of common stock were issued for settlement of debts due to third parties
|
10,879,050 | - | ||||||
2,190,000 shares of common stock were cancelled
|
- | - | ||||||
497,059 shares of common stock issued for employee's compensation
|
497,059 | - |
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.
|
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
|
Percentage of interest
|
Principal activities
|
|||
Capital Award Inc. ("CA")
|
Belize
|
100% (2009: 100%) directly
|
Fishery development and holder of A-Power Technology master license
|
|||
Capital Stage Inc. ("CS")
|
Belize
|
100% (2009: 100%) indirectly
|
Dormant
|
|||
Capital Hero Inc. ("CH")
|
Belize
|
100% (2009: 100%) indirectly
|
Dormant
|
|||
Tri-way Industries Limited ("TRW")
|
Hong Kong, PRC
|
100% (2009: 100%) directly
|
Investment holding, holder of enzyme technology master license 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
|
80% (2009: 80%) directly
|
Dormant
|
|||
Macau Eiji Company Limited ("MEIJI")
|
Macau, PRC
|
100% (2009: 100%) directly
|
Investment holding
|
|||
Enping City Juntang Town Hang Sing Tai Agriculture Co. Ltd ("HST")
|
PRC
|
Nil% (2009: 75%) indirectly
|
Hylocereus Undatus Plantation ("HU Plantation")
|
|||
Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd ("JHST")
|
PRC
|
75% (2009: 75%) directly
|
Hylocereus Undatus Plantation ("HU Plantation"). The Company has not commenced beef business.
|
|||
Hang Yu Tai Investment Limited ("HYT")
|
Macau, PRC
|
100% (2009: 100%) directly
|
Investment holding
|
|||
ZhongXingNongMu Co. Ltd ("ZX")
|
PRC
|
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
|
100% (2009: 100%) directly
|
Investment holding
|
|||
Name of variable interest
entity/unconsolidated corporate joint
venture
|
Place of incorporation
|
Percentage of interest
|
Principal activities
|
|||
Qinghai Sanjiang A Power Agriculture Co., Ltd ("SJAP")
|
PRC
|
45% (2009: 45%) indirectly
|
Manufacturing of organic fertilizer,livestock feed, and beef cattle and plantation of crops and pastures. The Company has not commenced beef business.
|
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
|
Milk cows
|
10 years
|
Plant and machinery
|
5 - 10 years
|
Structure and leasehold improvements
|
10 -20 years
|
Mature seeds
|
20 years
|
Furniture and equipment
|
2.5 - 10 years
|
Motor vehicles
|
5 -10 years
|
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 | 3,599,033 | 2,077,703 | 211,535 | (381,253 | ) | 6,352,179 | |||||||||||||||||
Total assets
|
15,711,315 | 44,653,524 | 14,585,276 | 3,269,375 | 19,533,993 | 97,753,483 |
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 | 1,179,615 | 460,491 | - | (437,739 | ) | 1,199,416 | |||||||||||||||||
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 | 6,084,346 | 2,014,175 | 211,535 | (7,340,529 | ) | 3,112,455 | |||||||||||||||||
Total assets
|
15,711,315 | 44,653,524 | 14,585,276 | 3,269,375 | 19,533,993 | 97,753,483 |
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 | 3,359,402 | 462,066 | - | (1,127,076 | ) | 3,412,242 | |||||||||||||||||
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
|
473,833 | 254,771 | ||||||
- Organic fertilizer and bread grass production plant
|
1,332,273 | - | ||||||
7,860,795 | 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.
|
INVESTMENT IN UNCONSOLIDATED CORPORATE JOINT VENTURE (CONTINUED)
|
|
·
|
Originally, the board of directors of Sanjiang A Power (SJAP) consisted of 7 members; 3 appointees from Qinghai Sanjiang( one of stockholder), 1 from Garwor (one of stockholder), and 3 from the Company such that the Company did not have majority interest represented in the board of directors of SJAP.
|
|
·
|
On May 7, 2010, Qinghai Sanjiang sold and transferred its equity interest in SJAP to Garwor. The aforesaid sale and transfer was approved by the State Administration for Industry And Commerce of Xining City Government of the People’s Republic of China.
|
18.
|
LICENSE RIGHTS
|
19.
|
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
|
|
(i)
|
are not entitled to receive any dividend;
|
|
(ii)
|
vote together with the shares of Common Stock of the Corporation as a single class and, regardless of the number of shares of Series A Preferred Stock outstanding and as long as at least one of such shares of Series A Preferred Stock is outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Preferred Stock shall represent its proportionate share of the 80% which is allocated to the outstanding shares of Series A Preferred Stock.
|
|
(iii)
|
are entitled to rank senior over common stockholders , other class or Series B convertible preferred stockholders on liquidation. The company has authorized 100 shares of Series A preferred stock with 100 and 0 shares issued and outstanding as of December 31, 2010 and December 31, 2009, respectively.
|
20.
|
BANK BORROWINGS
|
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 |
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.
|
NET GAIN (LOSS) ON EXTINGUISHMENT OF DEBTS
|
24.
|
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 $74,039 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.
|
|
Mr. Yi Lin Zhao, director of Qinghai Sanjiang A Power Agriculture Co., Ltd
|
Included in other payable, due to Mr. Yi Lin Zhao is $11,3671 and $nil as of September 30, 2010 and December 31, 2009 respectively. The amount is unsecured, interest free and have no fixed term of repayment.
|
25.
|
SUBSEQUENT EVENTS
|
26.
|
RESTATEMENT
|
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
|
112,267 | 835,553 | ||||||
Total current assets
|
27,516,527 | 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
|
||||||||
License rights
|
1 | 1 | ||||||
Investment in unconsolidated corporate joint venture
|
242,669 | - | ||||||
242,670 | 1 | |||||||
Total assets
|
84,062,408 | 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
|
43,704,723 | 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
|
63,012,559 | 55,959,614 | ||||||
Non - controlling interest
|
8,921,289 | 6,709,549 | ||||||
Total stockholders' equity
|
71,933,848 | 62,669,163 | ||||||
Total liabilities and stockholders' equity
|
$ | 84,062,408 | $ | 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 | ) | (3,104,756 | ) | ||||
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)
|
||||||||
Profit of disposal of unconsolidated equity interest
|
- | 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
|
615,000 | 615 | 214,635 | - | - | - | 215,250 | |||||||||||||||||||||
Common stock cancelled
|
(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 | 43,704,723 | 17,086,949 | 2,168,203 | 8,921,289 | 71,933,848 |
(Restated)
|
||||||||
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:
|
||||||||
Depreciation
|
820,193 | 706,912 | ||||||
Impairment loss
|
- | 293,404 | ||||||
Net income from discontinued operation
|
||||||||
- 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 deposits and prepaid expenses
|
- | (2,407,014 | ) | |||||
Decrease (increase) in due from directors
|
723,286 | (826,867 | ) | |||||
Decrease in accounts payable and accruals
|
(274,486 | ) | (2,310,953 | ) | ||||
(Decrease) increase in other payables
|
(85,551 | ) | 33,565 | |||||
(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
|
4,669,989 | 3,421,791 | ||||||
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
|
- | (4,422,736 | ) | |||||
Proceeds from disposal of unconsolidated equity investee
|
- | 4,405,000 | ||||||
Acquisition of land use rights
|
(858,195 | ) | (764,128 | ) | ||||
Payment for construction in progress
|
(1,771,686 | ) | (391,869 | ) | ||||
Net cash used in investing activities
|
(4,286,886 | ) | (3,157,397 | ) | ||||
Cash flows from financing activities
|
||||||||
Common 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
|
215,250 | 447,498 | ||||||
Effects of exchange rate changes on cash
|
31,116 | 660,712 | ||||||
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
|
- | - |
Non cash investing activities
|
||||||||
Acquisition of proprietary technologies through the issuance of promissory notes
|
- | 3,577,264 |
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 operated mining and exploration business before, and 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.
|
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
Tai Agriculture Development
Co. Ltd ("JHST")
|
PRC
|
Issued capital:
$600,000
Paid - in capital:
$180,117
|
75% (2008: 75%) directly
|
The Company has yet commenced its business of Hylocereus Undatus Plantation ("HU Plantation")
|
||||
Hang Yu Tai Investment
Limited ("HYT")
|
Macau, PRC
|
Pataca 25,000
|
100% (2008: 100%) directly
|
Investment holding
|
||||
ZhongXingNongMu Co. Ltd ("ZX")
|
PRC
|
RMB60,000,000
|
78% (2008: 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% (2008: 100%) directly
|
|
Investment holding
|
Name of unconsolidated
corporate joint venture
|
Place of
incorporation
|
Issued and
paid - in capital
|
Percentage of
interest
|
Principal
activity
|
||||
Qinghai Sanjiang A Power
Agriculture Co., Ltd
("SJAP")
|
|
PRC
|
|
Issued capital:
$1,400,000
Paid - in capital:
$242,669
|
|
45% (2008: Nil%) indirectly
|
|
The Company has yet 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 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
|
Milk cows
|
10 years
|
Plant and machinery
|
5 - 10 years
|
Structure and leasehold improvements
|
10 -20 years
|
Mature seed
|
20 years
|
Furniture, fixtures and equipment
|
2.5 - 10 years
|
Motor vehicles
|
5 -10 years
|
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
|
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)
|
2.27
|
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.
|
Leve l3
|
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
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Corporate and
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
Development
Division
|
Dairy
Production
Division
|
HU Plantation
Division
|
Corporate and
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
|
Short term debt
|
|||||||||||||||
Name of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2009
|
2008
|
||||||||||||||
$
|
$
|
||||||||||||||
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
|
|||||||||||
2009 | 2008 | ||||||||||||||
$
|
$
|
||||||||||||||
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 | |||||||||
Agricultural Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate guarantee by 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 $74,039
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)
|
24.
|
RESTATEMENT
|
Madsen & Associates CPAs, Inc.
|
||
684 East Vine Street #3, Murray, UT 84107
|
PHONE: (801) 268-2632 FAX: (801) 268-3978
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
1,731,118 | 358,514 | ||||||
Inventories
|
5,199,241 | 626,801 | ||||||
Deposits and prepaid expenses
|
10,189,266 | 7,782,252 | ||||||
Accounts receivable, net of allowance for doubtful accounts
|
2,073,567 | 19,243,730 | ||||||
Other receivables
|
1,197,617 | 472,167 | ||||||
Due from directors
|
835,553 | 8,686 | ||||||
Total current assets
|
21,226,362 | 28,492,150 | ||||||
Property and equipment, net of accumulated depreciation
|
6,970,522 | 5,330,122 | ||||||
Construction in progress
|
4,224,253 | 3,832,384 | ||||||
Land use rights, net of accumulated amortization
|
13,464,781 | 12,385,369 | ||||||
24,659,556 | 21,547,875 | |||||||
Other assets
|
||||||||
Goodwill
|
12,000,000 | 12,000,000 | ||||||
Proprietary technologies, net of accumulated amortization
|
7,946,667 | - | ||||||
Long term accounts receivable
|
9,325,174 | - | ||||||
Licence rights
|
1 | 1 | ||||||
Investment in unconsolidated equity investee
|
- | 800,559 | ||||||
29,271,842 | 12,800,560 | |||||||
Total assets
|
$ | 75,157,760 | $ | 62,840,585 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accruals
|
1,030,695 | 3,341,648 | ||||||
Other payables
|
4,621,679 | 588,114 | ||||||
Short term debt
|
- | 2,275,812 | ||||||
Total current liabilities
|
5,652,374 | 6,205,574 | ||||||
Other liabilities
|
||||||||
Long term debt
|
6,836,223 | 4,112,913 | ||||||
Total liabilities
|
12,488,597 | 10,318,487 | ||||||
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,52,943,579 shares issued
and outstanding at December 31,2008 and December 31, 2007, respectively)
|
52,944 | 52,944 | ||||||
Additional paid - in capital
|
43,489,213 | 43,489,213 | ||||||
Retained earnings
|
10,279,010 | 3,174,089 | ||||||
Accumulated other comprehensive income
|
2,138,447 | 398,520 | ||||||
Total Sino Agro Food, Inc. and subsidiaries stockholders' equity
|
55,959,614 | 47,114,766 | ||||||
Non - controlling interest
|
6,709,549 | 5,407,332 | ||||||
Total stockholders' equity
|
62,669,163 | 52,522,098 | ||||||
Total liabilities and stockholders' equity
|
$ | 75,157,760 | $ | 62,840,585 |
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Revenue
|
16,189,467 | 16,230,827 | ||||||
Cost of goods sold
|
7,947,659 | 3,956,157 | ||||||
Gross profit
|
8,241,808 | 12,274,670 | ||||||
Selling and marketing expenses
|
- | (89,744 | ) | |||||
General and administrative expenses
|
(2,811,352 | ) | (2,212,805 | ) | ||||
Impairment loss
|
(293,404 | ) | (6,786,942 | ) | ||||
Net income from operations
|
5,137,052 | 3,185,179 | ||||||
Other income (loss)
|
||||||||
Other income
|
62,142 | 199,604 | ||||||
Interest expenses
|
(419,130 | ) | (77,495 | ) | ||||
Total other income (expenses)
|
(356,988 | ) | 122,109 | |||||
Income from unconsolidated corporate joint venture and equity investee
|
191,992 | 54,873 | ||||||
Net income from continuing operations before income taxes
|
4,972,056 | 3,362,161 | ||||||
Provision for income taxes
|
- | (354 | ) | |||||
Net income from continuing operations
|
4,972,056 | 3,361,807 | ||||||
Net income from discontinued operations net of amount attributable to
non - controlling interest (net of income taxes of $0)
|
3,412,449 | - | ||||||
Net income
|
8,384,505 | 3,361,807 | ||||||
Less: Net income attributable to the non - controlling interest
|
(1,279,584 | ) | (219,718 | ) | ||||
Net income attributable to the Sino Agro Food, Inc. and subsidiaries
|
7,104,921 | 3,142,089 | ||||||
Other comprehensive income
|
||||||||
Foreign currency translation gain
|
1,762,560 | 398,520 | ||||||
Comprehensive income
|
8,867,481 | 3,540,609 | ||||||
Less: other comprehensive income attributable to the non - controlling interest
|
(22,633 | ) | - | |||||
Comprehensive income attributable to Sino Agro Food, Inc. and subsidiaries
|
8,844,848 | 3,540,609 | ||||||
Earnings per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
|
||||||||
Basic - From continuing operations
|
0.07 | 0.08 | ||||||
Basic - From discontinued operations
|
0.06 | - | ||||||
0.13 | 0.08 | |||||||
Diluted - From continuing operations
|
0.07 | 0.06 | ||||||
Diluted - From discontinued operations
|
0.06 | - | ||||||
0.13 | 0.06 | |||||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
52,943,579 | 39,893,158 | ||||||
Diluted
|
52,943,579 | 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, 2007
|
32,000,000 | 32,000 | 19,675,157 | 32,000 | - | - | 19,739,157 | |||||||||||||||||||||
July 24, 2007 Issue ordinary shares to existing debenture holders from additional paid-in capital
|
10,804,579 | 10,805 | (10,805 | ) | - | - | - | - | ||||||||||||||||||||
July 24, 2007 Issue ordinary shares to existing public shareholders from additional paid - in capital
|
139,000 | 139 | (139 | ) | - | - | - | |||||||||||||||||||||
September 5, 2007 Issue ordinary shares for acquisition of 100% equity of Macau Eiji Company Limited
|
2,000,000 | 2,000 | 4,673,000 | - | - | - | 4,675,000 | |||||||||||||||||||||
September 5, 2007 Issue ordinary shares for acquisition of 100% equity of Hang Yu Tai Investment Limited
|
7,000,000 | 7,000 | 16,903,000 | - | - | - | 16,910,000 | |||||||||||||||||||||
September 5, 2007 Issue ordinary shares for acquisition of 100% equity of Tri-way Industries Limited
|
1,000,000 | 1,000 | 2,249,000 | - | - | - | 2,250,000 | |||||||||||||||||||||
Capital contribution of non-controlling interest of Enping City Juntang Town Hang Sing Tai Agriculture Co. Limited
|
- | - | - | - | - | 1,984,663 | 1,984,663 | |||||||||||||||||||||
Capital contribution of non-controlling interest of ZhongXingNongMu Co. Limited
|
- | - | - | - | - | 3,202,951 | 3,202,951 | |||||||||||||||||||||
Net income for the year
|
- | - | - | 3,142,089 | - | 219,718 | 3,361,807 | |||||||||||||||||||||
Foreign currency translation gain
|
- | - | - | - | 398,520 | - | 398,520 | |||||||||||||||||||||
Balance at December 31, 2007
|
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 |
(Restated)
|
||||||||
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Cash flows from operating activities
|
||||||||
Net income for the year
|
8,384,505 | 3,361,807 | ||||||
Adjustments to reconcile net income to net cash from operations:
|
||||||||
Impairment loss
|
293,404 | 6,786,942 | ||||||
Depreciation
|
706,912 | 177,642 | ||||||
Net income from discontinued operation
|
||||||||
- Profit from disposal of unconsolidated equity investee
|
(3,412,449 | ) | - | |||||
Income from unconsolidated equity investee
|
(191,992 | ) | (54,873 | ) | ||||
Amortization
|
605,581 | 217,425 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Increase in inventories
|
(4,572,440 | ) | (626,801 | ) | ||||
Increase in construction in progress
|
(391,869 | ) | (3,832,384 | ) | ||||
Increase in deposits and prepaid expenses
|
(2,407,014 | ) | (7,782,252 | ) | ||||
Increase in due from directors
|
(826,867 | ) | (8,686 | ) | ||||
(Decrease) increase in accounts payable and accruals
|
(2,310,953 | ) | 633,763 | |||||
Decrease in sales deposits received
|
- | (50,000 | ) | |||||
Decrease in amount due to directors
|
- | (237,797 | ) | |||||
Increase in other payables
|
33,565 | 588,114 | ||||||
Decrease (increase) in accounts receivables
|
7,844,989 | (7,043,730 | ) | |||||
(Increase) decrease in other receivables
|
(725,450 | ) | 9,773,184 | |||||
Net cash provided by operating activities
|
3,029,922 | 1,902,354 | ||||||
Cash flows from investing activities
|
||||||||
Purchases of property and equipment
|
(1,983,664 | ) | (5,423,477 | ) | ||||
Acquisition of companies, net of cash received
|
- | (18,786,942 | ) | |||||
Acquisition of proprietary technologies
|
(4,422,736 | ) | - | |||||
Proceeds from disposal of unconsolidated equity investee
|
4,405,000 | - | ||||||
Investment in unconsolidated equity investee
|
- | (745,686 | ) | |||||
Acquisition of land use rights
|
(764,128 | ) | (12,602,794 | ) | ||||
Net cash used in investing activities
|
(2,765,528 | ) | (37,558,899 | ) | ||||
Cash flows from financing activities
|
||||||||
Proceeds from issuance of debts
|
2,723,310 | 6,388,725 | ||||||
Additional contribution from non - controlling interest
|
- | 5,187,614 | ||||||
Repayment of debts
|
(2,275,812 | ) | - | |||||
Common stock issued
|
- | 23,835,000 | ||||||
Net cash provided by financing activities
|
447,498 | 35,411,339 | ||||||
Effects on exchange rate changes on cash
|
660,712 | 398,520 | ||||||
Increase in cash and cash equivalents
|
1,372,604 | 153,314 | ||||||
Cash and cash equivalents, beginning of year
|
358,514 | 205,200 | ||||||
Cash and cash equivalents, end of year
|
1,731,118 | 358,514 | ||||||
Supplementary disclosures of cash flow information:
|
||||||||
Cash paid for interest
|
419,130 | 77,495 | ||||||
Cash paid for income taxes
|
- | 1,114 |
1.
|
CORPORATE INFORMATION
|
|
a)
|
Hang Yu Tai Investment Limited (“HYT”), a Macau incorporated company, the owner of 78% equity interest in ZhongXingNongMu Co. Limited (“ZX”);
|
|
b)
|
Tri-way Industries Limited (“TRW”), a Hong Kong incorporated company, the owner of 30% equity interest of TianQuan Science and Technology Limited (“TQST”) 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% (2007: 100%) directly
|
Fishery development and holder of A-Power Technology master licence
|
||||
Capital Stage Inc. ("CS")
|
Belize
|
$50,000
|
100% (2007: 100%) indirectly
|
Dormant
|
||||
Capital Hero Inc. ("CH")
|
Belize
|
$50,000
|
100% (2007: 100%) indirectly
|
Dormant
|
||||
Tri-way Industries Limited ("TRW")
|
Hong Kong, PRC
|
HK$10,000
|
100% (2007: 100%) directly
|
Investment holding, holder of master licence of stock feed manufacturing technology and has yet commenced its business of fish farm operation
|
||||
Pretty Mountain Holdings Limited ("PMH")
|
Hong Kong, PRC
|
HK$10,000
|
80% (2007: Nil%) directly
|
Dormant
|
||||
Macau Eiji Company Limited ("MEIJI")
|
Macau, PRC
|
Pataca 30,000
|
100% (2007: 100%) directly
|
Investment holding
|
||||
Enping City Juntang Town Hang Sing Tai Agriculture Co. Ltd ("HST")
|
PRC
|
RMB100,000
|
75% (2007: 75%) indirectly
|
Hylocereus Undatus Plantation ("HU Plantation")
|
||||
Jiang Men City Juntang Heng ShengTai Agriculture Development Co. Ltd ("JHST")
|
PRC
|
Issued capital:
|
75% (2007: 75%) indirectly
|
The Company has yet commenced its business of Hylocereus Undatus Plantation ("HU Plantation")
|
||||
$600,000
|
||||||||
Paid - in capital:
|
||||||||
$119,975
|
||||||||
Hang Yu Tai Investment
|
Macau, PRC
|
Pataca 25,000
|
100% (2007: 100%) directly
|
Investment holding
|
||||
Limited ("HYT")
|
||||||||
ZhongXingNongMu Co. Ltd ("ZX")
|
PRC
|
RMB60,000,000
|
78% (2007: 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% (2007: 100%) directly
|
Investment holding
|
||||
Name of unconsolidated
|
Place of
|
Issued and
|
Percentage of
|
Principal
|
||||
equity investee
|
incorporation
|
paid - in capital
|
interest
|
activity
|
||||
TianQuan Science and
|
PRC
|
RMB10,000,000
|
Nil (2007: 30%) indirectly
|
Turf farming and agriculture
|
||||
Technology Limited
|
|
|
|
|
technology development
|
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
|
|
2.7
|
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
|
Milk cows
|
10 years
|
Plant and machinery
|
5 - 10 years
|
Structure and leasehold improvements
|
10 -20 years
|
Mature seed
|
20 years
|
Furniture, fixtures and equipment
|
2.5 - 10 years
|
Motor vehicles
|
5 -10 years
|
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
|
EQUITY METHOD INVESTMENTS
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.22
|
INCOME TAXES
|
2.23
|
ECONOMIC AND POLITICAL RISK
|
2.24
|
CONCENTRATION OF CREDIT RISK
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
|
2.24
|
CONCENTRATION OF CREDIT RISK (CONTINUED)
|
2008
|
2007
|
|||||||
Customer A
|
21.86 | % | - | |||||
Customer B
|
18.11 | % | - | |||||
Customer C
|
17.02 | % | 15.00 | % | ||||
Customer D
|
8.07 | % | 1.30 | % | ||||
Customer E
|
4.20 | % | - | |||||
Customer F
|
- | 77.01 | % | |||||
Customer G
|
- | 2.83 | % | |||||
Customer H
|
- | 2.26 | % | |||||
69.26 | % | 98.40 | % |
2008
|
2007
|
|||||||
Customer A
|
50.45 | % | 51.96 | % | ||||
Customer B
|
31.36 | % | 29.10 | % | ||||
Customer C
|
14.68 | % | 14.53 | % | ||||
Customer D
|
2.39 | % | - | |||||
Customer E
|
1.01 | % | - | |||||
Customer F
|
- | 3.56 | % | |||||
Customer G
|
- | 0.53 | % | |||||
99.89 | % | 99.68 | % |
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.
|
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)
|
3.
|
SEGMENT INFORMATION
|
2008
|
||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
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 | |||||||||||||||
2007 | ||||||||||||||||||||
Fishery
Development
Division
|
Dairy
Production
Division
|
HU
Plantation
Division
|
Corporate
and
others
|
Total
|
||||||||||||||||
$
|
$
|
$
|
$
|
$
|
||||||||||||||||
Revenue
|
13,608,000 | 2,622,827 | - | - | 16,230,827 | |||||||||||||||
Net income (loss)
|
9,337,181 | 805,205 | (27,437 | ) | (6,972,860 | ) | 3,142,089 | |||||||||||||
Total assets
|
18,454,484 | 23,666,363 | 7,916,802 | 12,802,936 | 62,840,585 | |||||||||||||||
Capital expenditures
|
138,469 | 14,545,725 | 6,863,681 | - | 21,547,875 |
4.
|
INCOME TAXES
|
5.
|
CASH AND CASH EQUIVALENTS
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Cash and bank balances
|
1,731,118 | 358,514 |
6.
|
INVENTORIES
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Immature seeds
|
397,275 | - | ||||||
Harvested HU plantation
|
16 | - | ||||||
Unharvested HU plantation
|
106,478 | 431,356 | ||||||
Forage for milk cows and consumable
|
4,695,472 | 195,445 | ||||||
5,199,241 | 626,801 |
7.
|
DEPOSITS AND PREPAID EXPENSES
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Deposits for
|
||||||||
acquistion of land use rights
|
4,453,666 | 2,500,000 | ||||||
inventory purchased
|
219,551 | 431,527 | ||||||
tenancy agreement
|
2,129 | 2,129 | ||||||
materials used for construction in progress
|
79,607 | 147,736 | ||||||
Prepayments for purchases of milk cows, dairy farm and milk containers
|
5,434,313 | 4,700,860 | ||||||
10,189,266 | 7,782,252 |
8.
|
ACCOUNTS RECEIVABLE
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
0 - 30 days
|
387,576 | 661,463 | ||||||
31 - 90 days
|
- | 7,809,454 | ||||||
91 – 120 days
|
1,672,767 | 137,505 | ||||||
over 120 days and less than 1 year
|
13,224 | 635,308 | ||||||
over 1 year
|
9,325,174 | 10,000,000 | ||||||
11,398,741 | 19,243,730 | |||||||
Less: amount reclassified as long term accounts receivable
|
(9,325,174 | ) | - | |||||
2,073,567 | 19,243,730 |
9.
|
OTHER RECEIVABLES
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Advance to builders for construction of rangeland
|
307,302 | 63,005 | ||||||
Advance to service providers
|
12,983 | 12,133 | ||||||
Due from construction material suppliers
|
88,020 | 82,258 | ||||||
Due from related parties
|
114,630 | - | ||||||
Due from employees
|
653,168 | 294,666 | ||||||
Due from third parties
|
21,514 | 20,105 | ||||||
1,197,617 | 472,167 |
10.
|
PROPERTY AND EQUIPMENT
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Milk cows
|
3,666,376 | 2,535,634 | ||||||
Plant and machinery
|
2,948,148 | 2,755,163 | ||||||
Structure and leasehold improvements
|
656,448 | 110,801 | ||||||
Mature seeds
|
484,436 | - | ||||||
Furniture and equipment
|
85,506 | 83,942 | ||||||
Motor vehicles
|
83,493 | 81,142 | ||||||
|
7,924,407 | 5,566,682 | ||||||
Less: Accumulated depreciation
|
(953,885 | ) | (236,560 | ) | ||||
Net carrying amount
|
6,970,522 | 5,330,122 |
11.
|
CONSTRUCTION IN PROGRESS
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Construction in progress
|
||||||||
- Rangeland for milk cows
|
4,224,253 | 3,353,624 | ||||||
- Structure for HU Plantation
|
- | 478,760 | ||||||
4,224,253 | 3,832,384 |
12.
|
LAND USE RIGHTS
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Cost
|
14,249,684 | 12,602,794 | ||||||
Less: Accumulated amortization
|
(784,903 | ) | (217,425 | ) | ||||
Net carrying amount
|
13,464,781 | 12,385,369 |
13.
|
PROPRIETARY TECHNOLOGIES
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Proprietary technologies
|
8,000,000 | - | ||||||
Less: Accumulated amortization
|
(53,333 | ) | - | |||||
Net carrying amount
|
7,946,667 | - |
14.
|
GOODWILL
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
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 |
15.
|
INVESTMENT IN UNCONSOLIDATED EQUITY INVESTEE
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Investment at cost
|
- | 745,686 | ||||||
Share of post acquisition profits
|
- | 54,873 | ||||||
- | 800,559 |
16.
|
LICENCE RIGHTS
|
17.
|
OTHER PAYABLES
|
2008
|
2007
|
|||||||
$
|
$
|
|||||||
Proprietary technologies payable
|
3,577,264 | - | ||||||
Due to third parties
|
601,326 | 547,775 | ||||||
Due to related parties
|
415,108 | - | ||||||
Stamp duty payable
|
4,678 | 4,371 | ||||||
Others
|
23,303 | 35,968 | ||||||
4,621,679 | 588,114 |
18.
|
BANK BORROWINGS
|
Short term debt
|
|||||||||||||||
Name of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2008
|
2007
|
||||||||||||||
$
|
$
|
||||||||||||||
Argicultural Development Bank of China
|
6.84 | % |
1/23/2007-1/22/2008
|
Corporate guarantee by third party
|
- | 1,316,132 | |||||||||
Argicultural Development Bank of China
|
6.12 | % |
1/23/2007-1/22/2008
|
Corporate guarantee by third party
|
- | 664,921 | |||||||||
Argicultural Development Bank of China
|
6.12 | % |
1/23/2007-1/22/2008
|
Corporate guarantee by third party
|
- | 294,759 | |||||||||
- | 2,275,812 | ||||||||||||||
Long term debt
|
|||||||||||||||
Name of bank
|
Interest rate
|
Term
|
Security
|
Amount
|
|||||||||||
2008
|
2007
|
||||||||||||||
$
|
$
|
||||||||||||||
Argicultural Development Bank of China
|
6.84 | % |
1/23/2007-7/31/2010
|
Corporate guarantee by third party
|
1,408,321 | - | |||||||||
Argicultural Development Bank of China
|
6.12 | % |
1/23/2007-7/22/2010
|
Corporate guarantee by third party
|
711,495 | - | |||||||||
Argicultural Development Bank of China
|
6.12 | % |
1/23/2007- 8/8/2010
|
Corporate guarantee by third party
|
315,405 | - | |||||||||
Argicultural Development Bank of China
|
6.75 | % |
4/29/2007-4/28/2012
|
Corporate guarantee by third party
|
4,401,002 | 4,112,913 | |||||||||
6,836,223 | 4,112,913 |
19.
|
SHARE CAPITAL
|
(a)
|
The cancellation of shares outstanding of 9,900,000 valued at US$199,800.
|
(b)
|
The issuance of 10,804,579 shares value at US$10,805 to existing debenture holders; and
|
(c)
|
The issuance of 139,000 shares valued at US$139 to existing public shareholders.
|
(d)
|
Reverse merger of 100% equity of Capital Award Inc.
|
(a)
|
Acquisition of 100% equity of Macau Eiji Company Limited
|
(b)
|
Acquisition of 100% equity of Hang Yu Tai Investment Limited
|
(c)
|
Acquisition of 100% equity of Tri-way Industries Limited
|
20.
|
OBLIGATION UNDER OPERATING LEASES
|
2008
|
||||
$
|
||||
Year ended December 31,2009
|
51,772 | |||
Year ended December 31,2010
|
40,534 | |||
Thereafter
|
- | |||
92,306 |
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 $306,620 and $nil as of December 31, 2008 and December 31, 2007 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
|
During the year ended December 31, 2007, Mr. Xiang Jun Fang sold his land use rights to the Company for $1,943,717.
|
|
Included in other receivables, due from Mr. Xiang Jun Fang is $114,630 and $nil as of December 31, 2008 and December 31, 2007 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 $108,488 and $nil as of December 31, 2008 and December 31, 2007 respectively. The amounts are unsecured, interest free and have no fixed term of repayment.
|
||
Mr. Solomon Yip Kun Lee, Chairman
|
Included in due from directors, Mr. Solomon Lee is $798,058 and $8,686 as of December 31, 2008 and December 31, 2007 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 $37,495 and $nil as of December 31, 2008 and December 31, 2007 respectively. The amounts are unsecured, interest free and have no fixed term of repayment.
|
23.
|
SUBSEQUENT EVENTS
|
23.
|
SUBSEQUENT EVENTS (CONTINUED)
|
24.
|
RESTATEMENT
|
NEW ENGLISH TRANSLATION NAME OF SUBSIDIARIES
|
|
( Old English translation name)
|
( New English translation name)
|
Name of subsidiaries
|
Name of subsidiaries
|
Macau Eiji CompanyLimitada ("MEIJI")
|
Macau Eiji Company Limited ("MEIJI")
|
Hang Yu Tai Investmento
|
Hang Yu Tai Investment
|
Limitada ("HYT")
|
Limited ("HYT")
|
ZhongXian Agriculture and
|
ZhongXingNongMu Co. Limited ("ZX")
|
Husbandry Co Limited ("ZX")
|
|
Hang Sing Tai Agriculture
|
Enping City Juntang Town Hang Sing Tai
|
Co Limited ("HST")
|
Agriculture Co. Ltd ("HST")
|
A Power Agro Agriculture Development
|
A Power Agro Agriculture Development
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(Macau) Limited ("APAA")
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(Macau) Limited ("APWAM")
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By:
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/s/ Lee
Yip Kun Solomon
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Lee
Yip Kun Solomon
|
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Chairman and Chief Executive Officer
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Exhibit No.
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Exhibit Description
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2.1
|
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Stock Purchase Agreement and Share Exchange – Volcanic Gold and Capital Award
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2.2
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Acquisition Agreement - Hang Yu Tai Investment Limited
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2.3
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Acquisition Agreement - Macau Eiji Company Limited
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2.4
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Acquisition Agreement - Tri-way Industries Limited
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2.5
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Disposition Agreement - Triway selling equity interest in TianQuan Science
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2.6
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Acquisition Agreement - A Power Agro Agriculture Development (Macau) Limited acquired the Pretty Mountains’ 45% equity interest in Sanjiang A Power
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3.1
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Articles of Incorporation of Volcanic Gold, Inc.
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3.2
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Amendment to Articles of Incorporation – Name Change: Volcanic Gold, Inc. to A Power Agro Agriculture Development, Inc.
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3.3
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Certificate of Correction
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3.4
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Amendment to Articles of Incorporation – Name Change: A Power Agro Agriculture Development, Inc. to Sino Agro Food, Inc.
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3.5
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Bylaws of Volcanic Gold, Inc.
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3.6
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Organizational Documents: Capital Award, Inc.
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3.7
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Organizational Documents: Hang Yu Tai Investment Limited
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3.8
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Organizational Documents: ZhongXingNongMu Co. Ltd.
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3.9
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Organizational Documents: Macau Eiji Company Limited
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3.10
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Organizational Documents: Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd.
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3.11
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Organizational Documents: Tri-way Industries Limited
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3.12
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Organizational Documents: A Power Agro Agriculture Development (Macau) Limited
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4.1
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Form of common stock Certificate of Sino Agro Foods, Inc.
(1)
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|
4.2
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Certificate of Rights and Preferences – Series A Preferred
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4.3
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Certificate of Rights and Preferences – Series B Preferred
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4.4
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Certificate of Rights and Preferences – Series A Preferred *
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4.5
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Certificate of Rights and Preferences – Series B Preferred *
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10.1
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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
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10.2
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Sino Foreign Joint Venture Agreement: Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd.
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10.3
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Sino Foreign Joint Venture Agreement: Qinghai Sanjiang A Power Agriculture Co. Ltd.
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10.4
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Deed of Trust - A Power Agro Agriculture Development (Macau) Limited
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10.5
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Deed of Trust - Macau Eiji Company Limited
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10.6
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Deed of Trust - Hang Yu Tai Investment Limited
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10.7
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Master License from Infinity Environmental Group, a Belize corporation.
|
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10.8
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Capital Award Consulting Service Agreement
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10.9
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Tri-Way Joint Venture Agreement
|
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10.10
|
Share Sale Agreement of ZHONGXINGNONGMU CO. LTD. *
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10.11
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Joint Venture Agreement for Enping City Bi Tao A Power Prawn Culture Development Co., Ltd *
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10.12
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AP Technology Consulting Services Agreement between Capital Award and a Group of China Parties *
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10.13 | Organic Premium Beef Cattle (Fragrant Beef) Breeding and Feed Production Technology Cooperation Agreement * | |
10.14 | Organic Premium Beef Cattle (Fragrant Beef) Breeding and Feed Production Technology Sale and Transfer Agreement * |
Sino Agro Food, Inc.
|
||
/s/ Solomon Lee
|
||
By:
|
||
Solomon Lee
|
||
CEO and Chairman
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By:
|
|
|
Solomon Lee
|
||
Chief Executive Officer and Chairman
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Article 1
|
Upon basis of fairness and mutual benefit,
Wei Da Xing
(“Party A”) and
Capital Award Inc
(“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.
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Article 2
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The Joint Venture Parties
|
(1) Party A :
|
Mr.
Wei Da Xing
of Chinese ID number: IC#42202212196910250434 of No. 02073, Da Yang Village, An Sheng Town , An Sheng Country, Hua Nam Province.
|
(2) Party B :
|
Capital Award Inc.
(a Belize incorporation) with its business address at Rm3711 China Shine Plaza, No.9, Lin He Xi Road, Tianhe District, Guangzhou, 510610 PRC, which shall include its assigns, successor in title or nominee (represented by Mr. Solomon Lee of Australian Passport Number E4010069, a director.
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Article 3
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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 tentatively named as
Enping City Bi Tao A Power Prawn Culture Development Co., Ltd
(“SFJVC”).
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Article 4
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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.
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Article 5
|
The Parties' purpose in establishing the SFJVC is to develop a prawn farm, that will produce high standard of quality fresh prawns and products that will have the competitive edge to develop sustained markets internationally, through the application of modern aquaculture technology and related management systems to gain economic benefit to the Parties as well as to generate social benefits to the communities as a whole.
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Article 6
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Scope of business operation : development and operation of Pawn farms.
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Article 7
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Production Capacity : 2,000 tons of quality fish and prawns per year.
|
|
(1)
|
It is estimated that the construction of the Prawn farm will be completed within a period of 6 months counting from date of the Agreement; subsequently business operation of the Prawn farm will be commence, such that the targeted production of operational year (1) is for 250 tons of prawn.
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(2)
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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 3 species of fish and prawns.
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Article 8
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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.
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Article 9
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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 SFJVC at the time.
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Article 10
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The parties’ respectively capital contribution in the 5 years are as follows :
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First Year :
|
Party A shall contribute US$80,000 in cash, whereas Party B shall contribute US$20,000 in cash.
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Parties
|
Change of equity
interest up to
|
Assets that may be converted
|
Maximum % that will
be converted
|
|||||||
Party A
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75 | % |
Cash
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10 | % | |||||
Plants and equipment
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25 | % | ||||||||
Properties
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25 | % | ||||||||
Land Use Right
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10 | % | ||||||||
Others
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5 | % | ||||||||
Total contribution of Party A
|
75 | % | ||||||||
Party B
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25 | % |
Cash
|
25 | % |
Parties
|
Change of equity
interest up to
|
Assets that may be converted
|
Maximum % that will
be converted
|
|||||||
Party A
|
25 | % |
Cash
|
2.5 | % | |||||
Plants and equipment
|
6.25 | % | ||||||||
Properties
|
6.25 | % | ||||||||
Land Use Right
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2.5 | % | ||||||||
Others
|
1.25 | |||||||||
Total contribution of Party A
|
25 | % | ||||||||
Party B
|
75 | % |
Cash
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75 | % |
Article 11
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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.
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Article 12
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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.
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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.
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To apply to the Land Authorities of China to obtain official approval of the Land Use Right of the project land.
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4.
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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.
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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.
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Article 14
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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.
|
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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.
|
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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.
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Article 15
|
The date of registration of the SFJVC shall be the date whereupon the SFJVC shall officially constitute its Board of Directors.
|
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.
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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;
|
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(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.
|
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(4)
|
Merger of the SFJVC with other business entity.
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Article 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.
|
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.
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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.
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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.
|
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.
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Article 23
|
The general manager of the SFJVC will be responsible to the Board of Directors of the SFJVC 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.
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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.
|
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.
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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.
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Article 27
|
The SFJVC shall pay all taxes in accordance with the China’s taxation law and regulations.
|
|
Article 28
|
The staffs and workers of the SFJVC shall pay all taxes accordance with the income tax law of China.
|
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.
|
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.
|
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.
|
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.
|
Article 33
|
All the insurance coverage of the SFJVC shall be decided by the board of directors.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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.
|
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).
|
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.
|
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.
|
Party A :
|
Mr.
Wei Da Xing
|
Party B:
|
Capital Award Inc
|
(Signed)
|
(Signed)
|
||
(Solomon Lee, Director)
|
|||
________________ | ________________ | ||
February 11, 2011
|
The Employer :
|
A Group of China Parties represented by Mr. Wei Da Xing
|
Location of Project:
|
Exact Location will be determined by the Parties after results of
|
|
testing of inflow water quality and quantity and soil that will be carried out on the various blocks of land in the Enping District that the Parties have the option to acquire.
|
Development Components of the Project:
|
More particularly set out in Item 1 of Information List as attached hereto.
|
|
Development Schedule of the Project:
|
More particularly set out in Item 2 of Information List” attached hereto.
|
“
A.Power Module
”
|
means an engineered, self-contained, water treatment system for the growing of aquatic animals on a commercial scale.
It consists of a Grow-out Basin or multiple of grow-out basins and a Treatment System placed away from the Basin. The Basin holds the water in which the animals are to be grown. The Treatment System is fitted away from the Basin but pumps and treats the water from the grow-out basin.
The Treatment System is made up of: inlet screens, a solid wastes separator, aeration diffusers, Bio-filter (consists of bio-filter media), oxygen distributor, ozone and Ultra Violet coordinator, outlet screens, an un-dissolved solids airlift pump, and a degassing system. The Grow-Out Basin(s) and all Treatment System components are designed and manufactured specifically as per A Power (“AP”") Fish Farms’ designs and specifications.
The combined system assembles of these components away from the Basin(s) treats the water to allow the growing of aquatic animals on a commercial scale is defined as the A.Power Module (APM).
|
|
“
Intellectual Property
”
|
includes but is not limited to the technology, copyrights, processes, know-how, designs, operations manuals, specifications of equipment and descriptions of operating principles and technology or other like rights;
|
|
“
Manufacture
”
|
includes constructs, assemble, produce or otherwise prepare for commercial use or exploitation;
|
|
“
processes
”
|
includes technologies, products, devices, processes or techniques;
|
|
“
product
”
|
means the products and /or processes which incorporate the use of the intellectual Property;
|
|
“User Certificate”
|
means the entitlement of the Purchaser to utilize the intellectual property for the operation of the Project and certifies the performance of the A.Power Modules.
|
2.
|
COMMENCEMENT
|
3.
|
RESPONSIBILITIES OF THE PARTIES
|
5.1
|
Times for completion of the Contractor’s contractual obligations are given as accurately as possible but are not warranted and are subject to extension to allow for delay caused by:
|
(a)
|
If CA incurs any extra costs as a result of any delays arising out of the circumstances defined in clause 5.1 or interruptions or suspension of work due to the Employer's instructions or failure to give instructions, CA shall be entitled to increase the Contract Price by the amount of any such extra costs so caused calculated on a basis as close as possible to that used to arrive at the Contract Price.
|
(b)
|
Should any material supplied by the Employer for use in carrying out the scope of work is defective or unsuitable in any way, the Employer will pay to CA in addition to the Contract Price the costs of all extra work carried out and materials supplied by the CA to overcome such defect.
|
(c)
|
Except as otherwise stated in this Agreement, packing of equipment or part comprising the scope of work shall be suitable for shipment of the same by shipping container from Australia, European countries, Hong Kong or any other countries to the Site and will be effected in accordance with CA’s or its suppliers’ standard practices, the cost of which is included in the Contract price. Insofar as any packing that does not conform to CA's standard practice is required for the purposes of the Contract and the cost of which is in excess of the cost of the CA's standard practices, the excess shall be borne by the Employer.
|
(a)
|
The Employer shall insure for full invoiced value all equipment, parts or materials shipped pursuant to this Agreement against damage or loss in transit. If any of the said equipment, parts or materials are damaged or lost in the course of shipment CA shall be under no liability whatsoever in respect of such damage or loss.
|
(b)
|
The Employer shall take out a public liability policy with a reputable insurer approved by CA in the name of both the Employer and CA providing each of them with indemnity in the amount of $10,000,000.00 in respect of all and any liability, including to each other and any third party, arising out of and/or in connection with that portion of the scope of work which takes place on the Employer's premises including the Site.
|
(c)
|
All equipment, parts and material being constituents of the scope of work delivered to the Site or other premises nominated by the Employer shall be at the risk of the Employer from the time of their dispatch to the Employer from the premises of CA or its suppliers as the case may be.
|
(d)
|
CA shall be under no obligation to insure the equipment, parts or materials being constituents of the scope of work.
|
|
(Solomon Lee)
|
Date: February 11, 2010
|
|
Mr. Wei Da Xing
|
Item #
|
Item names
|
Description
|
||
1
|
The Project
|
“A Power” demonstration fish farm has the equivalent of 16 APMs and Consisting the followings:
|
||
Section A, building of 4000m² to house with equivalent of 16 Large AP Grow-out tanks to produce up to 500 Metric Tons of prawns per year. The Engineering designed Capacity of the Farm is designed based on the practical capacity to produce up to 500 Metric Ton of fresh water fish per year.
|
||||
Section B, including in the building to build to Brood-stock and nursery station capable to produce up to 200 Million fingerling per housing over 200,000 of mother stock at given time.
|
||||
(hereinafter called “the Farm”)
|
||||
2
|
Scope of Work
|
|||
2.1
|
Project and engineering Management
|
Provision of concept designs, engineering analysis, determination of systems, and construction design and drawing for the Demonstration farm. Supervise the Construction and building of all Sections covering installation of water and electrical work, and lay-out of ground pipes etc.
|
||
2.1.1
|
Installation Supervision
|
Supervise the installation of all AP designed and / or the Contractor’s specified plants and equipment. Supervise the Commissioning of all AP modules and related facilities.
|
||
2.1.2
|
Commissioning supervision, Farm Management
|
To provide related management and personnel training service for the demo-farm’s operation, and to supervise the farm’s operation until such time, workers are fully trained to manage the operation of the farm.
|
||
2.2
|
Supply of plants and equipment
|
To supply the plants, equipment, parts and components as detailed in item 3 of this Information List.
|
||
3
|
Project Site
|
The project site of 40 Mu is situated at a location to be mutually agreed by the parties, situated at a district of Enping City, Guangdong Province, China.
|
||
4
|
The Contract Price
|
Total=US$3,500,000
(United State Dollar Three Million and Five Hundred Thousand covering the followings:
|
||
4.1
|
The Project and Engineering designs and consultation
|
US$500,000.00 (United State Dollar Five Hundred thousand)
|
||
4.2
|
Sub-contracting of building of farm buildings and tanks and related infrastructure preparation and work.
|
US$1,500,000.00 (United State Dollar One Million and Five Hundred Thousand)
|
||
4.3
|
Supply of Farm plants and equipment and accessories.
|
US$1,000,000.00 (United State Dollars One Million)
|
4.4
|
Installation and related supervision and work for commissioning and testing.
|
US$250,000.00 (United State Dollar two hundred thousand).
|
||
4.5
|
Farm training for personnel and management
|
US$300,000.00 (United State Dollar Three Hundred Thousand).
|
||
4.6
|
Air fare, accommodation, lodging and out of pocket expenses
|
These items are not included in the above amount and will be paid by the Employer in accordance with their actual expenditure at the time. The air fares will be based on business class air fare from Australia / China.
|
||
4.7
|
Notes to the charges
|
All figures quoted hereof are in round figures for present calculation purpose, and actual figures will be billed in accordance with CA’s invoices, but in any case the actual total charges will be capped within a tolerance +/- 10%.
|
||
4.8
|
Technology Fee
|
CA shall grant the Employer the “Right to use and to operate” the AP Modules hereto under a Certificate namely the “User Certificate” for a period of 55 years at a consideration calculated at US$ 25,000.00 per APM totaling to US$350,000.00 (herein after called the UC fee).
|
||
5
|
Payment terms
|
(a) A deposit payment of US$250,000.00 payable within 30 days from date of invoice commencing from 1st. February 2010.
|
||
5.1
|
For items 4.1,
|
(b) Subsequent payments payable within 30 days from date of invoices issued based on monthly payment of no less than US$25,000 / month.
|
||
5.2
|
For item 4.2
|
Payments to be paid within 30 days from date of invoice and in accordance with the related progressive payment terms of the sub-contractors.
|
||
5.3
|
For Item 4.3
|
Payments to be paid within 30 days from date of invoice and in accordance with the related progressive delivery terms and conditions of the suppliers and sub-contractors.
|
||
5.4
|
For Item 4.4, 4.5 and 4.6
|
Payments to be paid within 30 days from date of invoices.
|
||
5.5
|
For item 4.8
|
Payments to be made commencing 30 days after the farm will be in operation based on equally divided periodical monthly payments over a period of 2 years with invoices to be given by CA that will be payable within 30 days from date of invoices.
|
||
5.6
|
Late payments
|
Any late payments in relation hereto shall be subject to a penalty payment calculated to the rate of 10% per annual payable monthly for a maximum period of 90 days such that any due payment exceeds the said period shall be deemed as default by the Vendor unless CA consents to the extension of the said late payments in writing. In any case should there will be extended period for any corresponding payments CA will specify accordingly in the said corresponding invoices detailing the related period of extension and change of payment terms (if any).
|
6
|
List of Plants and Equipment
|
Quantity
|
Unit price
|
Amounts in US$
|
||||
6.1
|
Water Treatment Compartment
|
|||||||
Solid Wastes Separators
|
16 sets
|
|||||||
Bio-filter treatment sets for treatment of soluble wastes
|
16 sets
|
|||||||
Foam eliminators
|
16 sets
|
|||||||
Air –blowers
|
16 sets
|
|||||||
Aerators
|
16sets
|
|||||||
Oxygen injectors
|
16 sets
|
|||||||
UV-light sets
|
16 sets
|
|||||||
Heating units
|
16 sets
|
|||||||
O3 treatment units
|
16 sets
|
|||||||
Inlet and outlet water pumps
|
32 sets
|
|||||||
All related parts and components
|
||||||||
All related fittings and connections
|
||||||||
6.2
|
Stand-by generator set
|
1 set
|
||||||
6.3
|
Auto-Fish Graders
|
2 sets
|
||||||
6.4
|
All related operation plants and equipment for operation of each tank individually
|
|||||||
6.5
|
All associated filtration materials
|
6 tons
|
7
|
Other conditions of the referred relevant Management
|
|||
7.1
|
Related to the Project and Engineering Management
|
The Employer agrees that CA shall undertake and carry out on behalf of the Employer the following activities:
|
||
7.1.1
|
To approve on the lay-out plan of the project land, all drawings and designs of the buildings and all aspect of engineering and technologies applied for the construction of the sections and farms.
|
|||
7.1.2
|
To evaluate work of the sub-contractors, tradesmen, quotes and tenders and make recommendation to the Employer to allow the Employer to enter into suitable contracts (if necessary).
|
|||
7.1.3
|
To make recommendation tothe Employerfor the dismissal and control over building and supplying agents or individual contractors.
|
|||
7.1.4
|
To procure the services of external experts, consultants to provide technical, design, legal, and other professional and advisory services as may be appropriate in relation to the construction and development of farms and related facilities.
|
|||
7.1.5
|
To make recommendation to the Employer for the dismissal of incompetent advisers, superintendents and engineers.
|
|||
7.2
|
Related to the Farm and Fishery Management
|
The Employer agrees that CA shall be entitled to and empowered to exercise all powers, authorities and discretions in relation to the management of the activities referred below:
|
||
7.2.1
|
All the lay-out plans of the plants and equipment in and of the farm.
|
|||
7.2.2
|
To source for and the use of feed stocks, fingerlings and other materials that will be needed for the operation and fish production of the farm.
|
|||
7.2.3
|
The training of farm operators and staffs of the farm.
|
|||
7.2.4
|
The appointment of maintenance and service contractors for the service and maintenance of plants and equipment of the farm.
|
|||
7.2.5
|
The day to day management of the operation of the farm until such time the farm’s management will be able to operate the farm by them.
|
7.2.6
|
To accept quotes and tenders for on behalf of WD.
|
|||
7.2.7
|
The appointment and dismissal of services from experts, consultants and other professional as may be appropriate in relation to the operation of the farm.
|
|||
7.3.
|
Related to the Technology
|
The Employer agrees to acquire from CA and CA agrees to grant to the Employer an UC for the operation of the farm consisting up to 14 APMs for a period of 55 years under the following additional conditions:
|
||
7.3.1
|
CA shall provide the Employer with the technology, processes, know-how, designs, operation manuals, specification of equipment and description of operation principles and technology.
CA shall provide the Employer with technical support by way of the Employerto appoint CA as the said farm and fishery Management.
The Employer shall permit CA to inspect the AP modules and other related facilities in the farm from time to time to ensure that the related plants and equipment are being serviced and maintained regularly and that the number of APM s are the number of APMs provided by CA.
shall keep confidential all information and technical data disclosed by CA to WD, provided that the Employer shall the right to disclose such information to its employees in so far as it is necessary for them to know the information, and the Employer shall not use any of the CA’s disclosures or other information or technical data except for other purpose apart from the operation of the farm.
The Employer shall be allowed to assign or transfer the UC only after obtaining CA’s approval.
The Employer agrees that all installation works for the APMs in the Farm must be completed by Installation Contractors approved by CA, all plants and equipment for the building of the Farm must be supplied by the suppliers and / or manufacturers approved by CA, and on completion of each and every APM, CA shall inspect and approve the commissioning of the completed APM.
|
7.4
|
Warranty Period
Warranty Period of all Plants and equipment, parts and components and building materials shall be in accordance with the Warranty Periods and Conditions as given by their manufacturers or suppliers with the exception of the items that shall be manufactured directly by the Contractor or its subsidiaries, in which case, their warranty period shall be for a period of 12 months.
|
|
8
|
Schedule of work
Schedule are given by CA to assist the Employer in its planning of work relating to the construction of the Farm and it is given as a guideline only which should not be understood as the final development or work schedule. As such, more accurate development schedules in respect of each stage of the development work will be supplied by CA progressively during the development period of the farm.
|
Item and description of work
|
Commenced Date
|
Completed date
|
||||
8.1
|
Soil and water drilling, analysis and geo-technical testing and site surveying
|
March 2011
|
April 2011
|
|||
8.2
|
Determination of Prawn species
|
March 2010
|
April 2010
|
|||
8.3
|
Land clearing, leveling and infrastructure construction
|
April 2010
|
July 2010
|
|||
8.4
|
Commissioning and formalization of all engineering designs and drawings
|
January 2011
|
March 2011
|
|||
8.5
|
Commissioning and formalization of all local manufactured plants and equipment of the tanks and systems.
|
February 2011
|
April 2011
|
8.6
|
Investigation and determination of supply bases for fingerlings
|
February 2011
|
April 2011
|
|||
8.7
|
Investigation and determination of supply of feed staffs
|
April 2011
|
April 2011
|
|||
8.8
|
Construction of farm buildings
|
March 2011
|
June 2011
|
|||
8.9
|
Construction of tanks
|
April 2011
|
June 2011
|
|||
8.10
|
Construction of external dams and water tanks and connections
|
April 2011
|
June 2011
|
|||
8.11
|
Installation of all farm plants and equipment
|
June 2011
|
June 2011
|
|||
8.12
|
Testing and commissioning of tanks
|
July 2011
|
June 2011
|
|||
8.13
|
Commencement of Stocking of fingerlings
|
August 2011
|
Continuous Processes
|
|||
8.14
|
Training of staffs and workers
|
June 2011
|
Continuous processes
|
|||
8.15
|
Commencement of first harvest of fish
|
October 2011
|
Continuous processes
|
(Signed)
|
(Signed)
|
|
Solomon Lee
|
Mr. Wei Da Xing
|
|
For and behalf of
|
For and on behalf of
|
|
CAPITAL AWARD INC
|
The China Parties
|
Party A :
|
Party B :
|
|
Fang XianJun
|
Liu XueSong
|
|
(Signed)
|
(Signed)
|
|
Party A’s Legal Representative
|
Identity Card No. 220523195808160310
|
|
March 21, 2011
|
March 21, 2011
|
|
1
st
installment :
|
by cash US$450,000 (equivalent to RMB2,902,000) or 300,000 units of the shares of Sino Agro Food, Inc. (“SIAF”), or part cash part shares, on or before July 30, 2011;
|
|
2
nd
installment :
|
by cash US$450,000 (equivalent to RMB2,902,000) or 300,000 units of the shares of SIAF, or part cash part shares, on or before December 31, 2011; and
|
|
3
rd
installment :
|
by cash US$450,000 (equivalent to RMB2,902,000) or 300,000 units of the shares of SIAF, or part cash part shares, on or before March 31, 2012.
|
Party A :
|
Party B :
|
||
Fang XianJun
|
Chen Bor Hann
|
||
(Signed)
|
(Signed)
|
||
Party A’s Legal Representative
|
Party A’s Legal Representative
|
||
March 25, 2011
|
March 25, 2011
|