UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Mega World Food Holding Company
(Name of small business issuer in our charter)
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Nevada
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2030
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Applied For
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(State or other jurisdiction of
incorporation or organization)
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(Primary Standard
Industrial Classification
Code Number)
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IRS I.D.
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ROOM C1D, 6/F, WING HING
INDUSTRIAL BUILDING, 14 HING YIP
STREET, KWUN TONG, KOWLOON,
HONG KONG.
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(Address of principal executive offices)
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(Zip Code)
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Wiser Associates Limited
Add : Unit C, 9th Floor, Regency Centre, Phase Two, 41-43 Wong Chuk Hang
Road, Hong Kong.
Tel : 852 2143 6510
Fax : 852 2861 0599
(Name, address and telephone number of agent for service)
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Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.
x
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering.
o
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statement number of the earlier effective Registration Statement for the same offering.
o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer
o
Accelerated Filer
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Non-accelerated filer
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Smaller reporting company
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CALCULATION OF REGISTRATION FEE
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Title of each class of
securities to be registered
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Amount to be
registered [1]
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Proposed
maximum
offering
price per
unit
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Proposed
maximum
aggregate
offering price
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Amount of
registration
fee [2] [3]
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Common Stock offered by the Selling Stockholders [4]
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500,000
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$ .10
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$50,000.00
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$3.57
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(1) Estimated in accordance with Rule 457(a) of the Securities Act of 1933 solely for the purpose of computing the amount of the registration fee based on recent prices of private transactions.
(2) Calculated under Section 6(b) of the Securities Act of 1933 as .0000713 of the aggregate offering price.
(3) Represents shares of the registrant’s common stock being registered for resale that have been issued to the selling shareholders named in this registration statement.
We hereby amend this registration statement on such date or dates as may be necessary to delay our effective date until we will file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.
PROSPECTUS – SUBJECT TO COMPLETION DATED DECEMBER 8, 2010
Mega World Food Holding Company
Selling shareholders are offering up to 500,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board and, assuming we secure this qualification, thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.
There are no underwriting commissions involved in this offering. We have agreed to pay all the costs of this offering. Selling shareholders will pay no offering expenses.
Prior to this offering, there has been no market for our securities. Our common stock is not now listed on any national securities exchange, the NASDAQ stock market, or the OTC Bulletin Board. There is no guarantee that our securities will ever trade on the OTC Bulletin Board or other exchange.
This offering is highly speculative and these securities involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 8.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is _________________ , 2010.
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5
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8
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15
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15
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16
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16
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19
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21
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21
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22
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24
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25
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25
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25
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30
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31
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31
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34
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35
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36
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You should carefully read all information in the prospectus, including the financial statements and their explanatory notes, under the Financial Statements prior to making an investment decision.
Organization
Mega World Food Holding Company, or the “Company,” is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by our founder, chairman and director, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to our founder, chairman and director, Mr. Xiaozhong Wu, to acquire 100% ownership of Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for our business.
Our principal executive office is located at ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG.
Tel: 00852-21101865. Our U.S. address is 1995 Bearing Blvd., Sparks, NV 89434.
Business
Through our wholly-owned subsidiary Mega World Food Limited, referred to as Mega World Limited, our business is the sale of frozen vegetables in all areas of the world except China.
We sell the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean.
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is currently the primary supplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
As of the date of this registration statement, we have generated no revenues.
The Offering
As of the date of this prospectus, we had 25,000,000 shares of common stock outstanding.
Selling shareholders are offering up to 500,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will pay all expenses of registering the securities, estimated at approximately $100,000. We will not receive any proceeds of the sale of these securities.
To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. The current absence of a public market for our common stock may make it more difficult for you to sell shares of our common stock that you own.
Financial Summary
Because this is only a financial summary, it does not contain all the financial information that may be important to you. Therefore, you should carefully read all the information in this prospectus, including the financial statements and their explanatory notes before making an investment decision.
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Period
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September 14,
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2010 (Date of
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Inception)
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Year Ended
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Through
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September 30,
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September 30
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2010
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2010
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Revenues:
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-
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-
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COGS:
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-
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-
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Gross Profit
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-
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-
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Operating expenses:
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$
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39,053
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$
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39,053
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Net Loss
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$
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(39,053
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)
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$
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(39,053
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September 30, 2010
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ASSETS
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$
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59,112
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LIABILITIES
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$
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-
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STOCKHOLDERS’ Equity
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$
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59,112
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TOTAL LIABILITIES & EQUITY
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$
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59,112
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In addition to the other information provided in this prospectus, you should carefully consider the following risk factors in evaluating our business before purchasing any of our common stock. All material risks are discussed in this section.
Risks Related to our Business
Our generating no revenues from operations makes it difficult for us to evaluate our future business prospects and make decisions based on those estimates of our future performance.
Although we have taken significant steps to develop our business plan since our inception, as of September 30, 2010, we have no revenues generated. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Because of the related uncertainties, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, revenues or expenses. If we make poor budgetary decisions as a result of unreliable data, we may never become profitable or incur losses, which may result in a decline in our stock price.
There is substantial doubt about our ability to continue as a going concern as a result of our lack of revenues and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Our lack of revenues raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Any decrease in the availability, or increase in the cost, of frozen vegetables we purchase for resale could materially affect our earnings.
Our operations depend heavily on the availability of frozen vegetables we resell. We purchase all of the food products we resell from Lin’an Fengye, an affiliate. However, if Lin’an Fengye is unable or unwilling to provide us with frozen vegetables on terms favorable to us, we may be unable to resell certain products. This could result in a decrease in profit and damage to our reputation in our industry. In the event our costs of acquiring these food products increase, we may not be able to pass these higher costs on to our customers in full or at all. Any increase in the prices for these products could materially increase our costs and therefore lower our earnings.
Our revenue will decrease if there is less demand for frozen vegetable products.
We are subject to the general changes in economic conditions affecting the purchase of frozen vegetable products. Demand for our products is typically affected by a number of economic factors, including, but not limited to,
consumer demand for the type of vegetables we sell and competition with fresh vegetables. If there is a decline in demand for our frozen vegetable products, our revenue will likewise decrease.
We face increasing competition from domestic and foreign companies.
The food industry in throughout the world is fragmented. Our ability to compete against other Chinese and international enterprises is, to a significant extent, dependent on our ability to distinguish our products from those of our competitors by providing large volumes of high quality products that appeal to consumers’ tastes and preferences at reasonable prices. Some of our competitors have been in business longer than we have and are more established. Our competitors may provide products comparable or superior to those we provide or adapt more quickly than we do to evolving industry trends or changing market requirements. Increased competition may result in price reductions, higher supplier prices, reduced margins and loss of market share, any of which could materially adversely affect our profit margins.
Our sales and reputation may be affected by product liability claims, litigation or, product recalls in relation to our products.
The sale of products for human consumption involves an inherent risk of injury to consumers. We face risks associated with product liability claims, litigation, or product recalls, if our products cause injury or become adulterated or misbranded. Our products are subject to product tampering and contamination, such as mold, bacteria, insects, shell fragments and off-flavor contamination, during any of the procurement, production, transportation and storage processes. If any of our products were to be tampered with, or become tainted in any of these respects, and we were unable to detect this, our products could be subject to product liability claims or product recalls. Our ability to sell products could be reduced if certain pesticides, herbicides or other chemicals used by growers have left harmful residues on portions of our raw materials or if our raw materials have been contaminated by other agents.
We have not procured a product liability or general liability insurance policy for our business, as the insurance industry in China is still in an early stage of development. To the extent that we suffer a loss of a type which would normally be covered by product liability or general liability insurance in the United States, we would incur significant expenses in defending any action against us and in paying any claims that result from a settlement or judgment against us. Product liability claims and product recalls could have a material adverse effect on the demand for our products and on our business goodwill and reputation. Adverse publicity could result in a loss of consumer confidence in our products.
General economic conditions could reduce our revenues.
General economic conditions in the world outside of China where we sell have an impact on our business and financial results. The global economy in general remains uncertain. As a result, individuals and companies may delay or reduce expenditures. Weak economic conditions and/or softness in the consumer or business channels could result in lower demand for our products, resulting in lower sales, earnings and cash flows.
A conflict of interest may exist for our Chairman
Xiaozhong Wu
due to his position and interest in us and in
Lin’an Fengye
, our exclusive supplier.
Lin’an Fengye is a Chinese manufacturing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is the exclusive supplier of the products we sell. Although our distribution agreement with Lin’an Fengye provides that the prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or wholesale purchasers as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers, Mr. Wu may face a conflict in calculating the price the products are sold to us and the determining amount of products we purchase. However, because Mr. Wu has a fiduciary duty to us and our shareholders, he has indicated that he will assure strict adherence to this provision of the agreement and has orally agreed that Supplier will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the products.
We depend heavily on key personnel, and turnover of key senior management could harm our business.
Our future business and results of operations depend in significant part upon the continued contributions of our chairman Xiaozhong Wu and our CFO Yaping He. If we lose their services or if they fail to perform in their current positions, or if we are not able to attract and retain skilled employees as needed, our business could suffer. Significant turnover in our senior management could significantly deplete our institutional knowledge held by our existing senior management team. We depend on the skills and abilities of these key employees in managing the product acquisition, marketing and sales aspects of our business, any part of which could be harmed by turnover in the future.
Our management has limited experience in managing the day to day operations of a public company and, as a result, we may incur additional expenses associated with the management of our company.
Our chairman Xiaozhong Wu and our CFO Yaping He are responsible for the operations and reporting of our company. The requirements of operating as a small public company are new to the management team and the employees as a whole. This may require us to obtain outside assistance from legal, accounting, investor relations, or other professionals that could be more costly than planned. We may also be required to hire additional staff to comply with additional SEC reporting requirements. Our failure to comply with reporting requirements and other provisions of securities laws could negatively affect our stock price and adversely affect our results of operations, cash flow and financial condition.
Our officers and directors who are responsible for managing our business will devote less than full time to our business, which may impede our ability to implement our business plan.
Mr. Wu, our chairman and director, will devote approximately 60% of his time, and Ms. He, our CFO and director will devote approximately 100% or her time to our business. As a result, our management may not currently be able to devote the time necessary to our business to assure successful implementation of our business plan.
Risks Related to our Operations in China
Because our supplier’s operations are located in China, the following risks could affect our business of our supplier and thus harm our revenues.
Changes in China’s political or economic situation could harm us and our operating results.
Economic reforms adopted by the Chinese government have had a positive effect on the economic development of the country, but the government could change these economic reforms or any of the legal systems at any time. This could either benefit or damage our operations and profitability. Some of the things that could have this effect are:
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Level of government involvement in the economy;
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Control of foreign exchange;
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Methods of allocating resources;
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Balance of payments position;
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International trade restrictions; and
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International conflict.
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The Chinese economy differs from the economies of most countries belonging to the Organization for Economic cooperation and Development, or OECD, in many ways. For example, state-owned enterprises still constitute a large portion of the Chinese economy, and weak corporate governance traditions and a lack of flexible currency exchange policy continue to persist. As a result of these differences, the business of our suppliers could be adversely affected.
Our business is largely subject to the uncertain legal environment in China and your legal protection could be limited.
The Chinese legal system is a civil law system based on written statutes. Unlike common law systems, it is a system in which precedents set in earlier legal cases are not generally used. The overall effect of legislation enacted over the past 20 years has been to enhance the protections afforded to foreign invested enterprises in China. However, these laws, regulations and legal requirements are relatively recent and are evolving rapidly, and their interpretation and enforcement involve uncertainties. These uncertainties could limit the legal protections available to foreign investors, such as the right of foreign invested enterprises to hold licenses and permits such as requisite business licenses. Further as a result, it could be difficult for investors to effect service of process in the U.S. or to enforce a judgment obtained in the U.S. against our Chinese operations and subsidiaries.
You may have difficulty in enforcing any judgment against any or all of our executive officers and directors as they are residents of China and not of the U.S., and substantially all the assets of these persons are located outside the U.S.
All of our executive officers and our directors are residents of China and not of the U.S., and substantially all the assets of these persons are located outside the U.S. As a result, it could be difficult for investors to effect service of process in the U.S., or to enforce a judgment obtained in the U.S. against our Chinese operations and subsidiaries.
The Chinese government exerts substantial influence over the manner in which we and our suppliers must conduct their business activities.
Only recently has China permitted provincial and local economic autonomy and private economic activities. The Chinese government has exercised and continues to exercise substantial control over virtually every sector of the Chinese economy through regulation and state ownership. Our ability to operate in China may be harmed by changes in its laws and regulations, including those relating to taxation, import and export tariffs, environmental regulations, land use rights, property and other matters. We believe that our operations in China are in material compliance with all applicable legal and regulatory requirements. However, the central or local governments of the jurisdictions in which we operate may impose new, stricter regulations or interpretations of existing regulations that would require additional expenditures and efforts on our part to ensure our compliance with such regulations or interpretations.
Accordingly, government actions in the future, including any decision not to continue to support recent economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof, and could require us to divest ourselves of any interest we then hold in Chinese properties or joint ventures. Any divestiture could reduce our assets or revenues and thus reduce the value of our stock.
The value of our securities will be affected by the foreign exchange rate between U.S. dollars and RMB.
The value of our common stock will be affected by the foreign exchange rate between U.S. dollars and RMB, and between those currencies and other currencies in which our sales may be denominated. Currently, RMB is stronger than U.S. Dollars. Further, China announced its decision on June 19, 2010 to no longer peg the RMB to the U.S. dollar. For example, to the extent that we need to convert U.S. dollars into RMB for our operational needs and should RMB appreciate against the U.S. dollar at that time, our financial position, the business of the Company, and the price of our common stock may be harmed. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of declaring dividends on our common stock or for other business purposes and the U.S. dollar appreciates against RMB, the U.S. dollar equivalent of our earnings from our subsidiaries in China would be reduced.
In the event that the U.S. dollars appreciate against RMB, our costs will increase. If we cannot pass the resulting cost increase on to our customers, our profitability and operating results will suffer. In addition, since our sales to international customers grew rapidly, we are subject to the risk of foreign currency depreciation.
Because we are not a U.S. company, restrictions on the payment of dividends, our ability to pay dividends is limited.
We, from time to time, may be subject to restrictions on our ability to pay dividends to shareholders, including as a result of restrictive covenants in loan agreements, restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. If future dividends are paid in Renminbi, fluctuations in the exchange rate for the conversion of Renminbi into U.S. dollars may adversely affect the amount received by U.S. stockholders upon conversion of the dividend payment into U.S. dollars. We do not presently have any intention to declare or pay dividends in the future. You should not purchase shares of our common stock in anticipation of receiving dividends in future periods.
We may be unable to enforce our rights due to policies regarding the regulation
of foreign investments in China, which could reduce our ability to compete and our revenues.
The PRC's legal system is a civil law system based on written statutes in which decided legal cases have little value as precedents, unlike the common law system prevalent in the United States. The PRC does not have a well-developed, consolidated body of laws governing foreign investment enterprises. As a result, the administration of laws and regulations by government agencies may be subject to considerable discretion and variation, and may be subject to influence by external forces unrelated to the legal merits of a particular matter. China's regulations and policies with respect to foreign investments are evolving. Definitive regulations and policies with respect to such matters as the permissible percentage of foreign investment and permissible rates of equity returns have not yet been published. Statements regarding these evolving policies have been conflicting and any such policies, as administered, are likely to be subject to broad interpretation and discretion and to be modified, perhaps on a case-by-case basis. The uncertainties regarding such regulations and policies present risks which may affect our ability to achieve our business objectives. If we are unable to enforce any legal rights we may have under our contracts or otherwise, our ability to compete with other companies in our industry could be materially and negatively affected and our revenues could be reduced.
It may be difficult for stockholders to enforce any judgment obtained in the
United States against us, which may limit the remedies otherwise available to our stockholders.
We are a non-U.S. company and all of our assets are located outside the United States and all of our current operations are conducted in China. Moreover, all of our directors and officers are nationals or residents of China. All or a substantial portion of the assets of these persons are located outside the United States. As a result, it may be difficult for our stockholders to effect service of process within the United States upon these persons. In addition, there is uncertainty as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities law of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof. Further, China’s treaties do not provide for reciprocal recognition and enforcement of judgments of U.S. courts.
Risks Related to the Market for our Stock
Investors may have difficulty in reselling their shares due to the lack of market or state Blue Sky laws.
Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future.
The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption." This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
We will be subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
The SEC has adopted regulations which generally define so-called “penny stocks” to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. We anticipate that our common stock will become a “penny stock”, and we will become subject to Rule 15g-9 under the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market.
For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
We do not anticipate that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
Sales of our common stock under Rule 144 could reduce the price of our stock.
There are 1,150,000 shares of our common stock held by non- affiliates and 23,850,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.
450,000 of our shares held by non-affiliates and 50,000 shares held by non-management affiliates are being registered in this offering, however the remaining non-affiliate shares as well as all of the remaining affiliates’ shares will still be subject to the resale restrictions of Rule 144. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
Because we do not have an audit or compensation committee, shareholders will have to rely on the entire board of directors, none of which are independent, to perform these functions.
We do not have an audit or compensation committee comprised of independent directors. Indeed, we do not have any audit or compensation committee. These functions are performed by the board of directors as a whole. No members of the board of directors are independent directors. Thus, there is a potential conflict in that board members who are also part of management will participate in discussions concerning management compensation and audit issues that may affect management decisions.
Certain of our stockholders hold a significant percentage of our outstanding voting securities which could reduce the ability of minority shareholders to effect certain corporate actions
.
Our officers, directors and majority shareholders are the beneficial owners of approximately 95.40% of our outstanding voting securities. As a result, they possess significant influence and can elect a majority of our board of directors and authorize or prevent proposed significant corporate transactions. Their ownership and control may also have the effect of delaying or preventing a future change in control, impeding a merger, consolidation, takeover or other business combination or discourage a potential acquirer from making a tender offer.
Special Information Regarding Forward Looking Statements
Some of the statements in this prospectus are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. These factors include, among others, the factors set forth above under “Risk Factors.” The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments. However, the Private Securities Litigation Reform Act of 1995 is not available to us as a non-reporting issuer. Further, Section 27A(b)(2)(D) of the Securities Act and Section 21E(b)(2)(D) of the Securities Exchange Act expressly state that the safe harbor for forward looking statements does not apply to statements made in connection with an initial public offering.
Not applicable. We will not receive any proceeds from the sale of shares offered by the selling shareholders.
Our management has determined the offering price for the selling shareholders' shares. The price of the shares we are offering was arbitrarily determined based upon the prior offering price in our private placement. We have no agreement, written or oral, with our selling shareholders about this price. Based upon oral conversations with our selling shareholders, we believe that none of our selling shareholders disagree with this price. The offering price bears no relationship whatsoever to our assets, earnings, book value or other criteria of value. The factors considered were:
|
·
|
our lack of significant revenues
|
|
·
|
the price we believe a purchaser is willing to pay for our stock
|
The offering price does not bear any relationship to our assets, results of operations, or book value, or to any other generally accepted criteria of valuation. Prior to this offering, there has been no market for our securities.
Not applicable. We are not offering any shares in this registration statement. All shares are being registered on behalf of our selling shareholders.
The selling security holders named below are selling the securities. The table assumes that all of the securities will be sold in this offering. However, any or all of the securities listed below may be retained by any of the selling security holders, and therefore, no accurate forecast can be made as to the number of securities that will be held by the selling security holders upon termination of this offering.
We believe that the selling security holders listed in the table have sole voting and investment powers with respect to the securities indicated. We will not receive any proceeds from the sale of the securities by the selling security holders. None of our selling security holders is or is affiliated with a broker-dealer. All selling security holders may be deemed underwriters.
|
Name of
Shareholders
|
Total
Shares
Owned
|
Shares
Registered
|
Remaining
Shares if
All
Registered
Shares
Sold [1]
|
% Before
Offering
|
% After
Offering
|
Material
Transactions
with Selling
Shareholder
in past 3
years (incl.
nature of
services
provided and
dates
provided)
|
|
Weidong Cheng
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Peiying Bi
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Fengyi Su
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Zhenyou Bi
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Dan Meng
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Ruhua Zang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xuefei Bi
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xirong Liu
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xiaoying Zhou
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Huaping Yu
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Hua Zhang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Yu Sheng
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Huali Zheng
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jiansong Lin
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xiang Gao
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jicheng Yang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Wang’er Chen
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Ping Wang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Wu Dong
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jianbing Chen
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jiajun Fan
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Yueqing Zhu
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jun Wang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Liren Mao
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Fuqing Zhang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Huazheng Ren
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Yonghong Fan
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jiacheng Zhang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Dailong Su
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Zhihua Jiang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Chunyang Chen
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Rongcheng Duan
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Zhimin Xu
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Qiaoge Wei
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jin’e Wang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xin’er Tong
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Xiaozhen Wu
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Wei Huang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Yan Huang
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Aihua Li
|
10,000
|
10,000
|
0
|
0.04%
|
0
|
|
|
Jian Di [2]
|
2,975,000
|
25,000
|
2,975,000
|
11.90%
|
11.70%
|
Business
Consultant
since September 20,
2010 and
c
ontinuing
|
|
Yuan Su [2]
|
2,975,000
|
25,000
|
2,975,000
|
11.90%
|
11.70%
|
|
|
Guoyong Xu
|
500,000
|
25,000
|
475,000
|
2.00
|
1.90%
|
|
|
Michael Williams
|
225,000
|
24,000
|
201,000
|
1.00%
|
0.80%
|
Attorney since
formation and
c
ontinuing
|
|
M. Brandon Williams
|
12,500
|
500
|
12,000
|
0.04%
|
0.04%
|
Affiliate of
Attorney
|
|
Maggie Ensley Williams
|
12,500
|
500
|
12,000
|
0.04%
|
0.04%
|
Affiliate of
Attorney
|
|
Total
|
4,125,000
|
500,000
|
3,625,000
|
|
|
|
[1] Assuming sale of all shares registered hereunder.
[2] Jian Di owns 2,475,000 shares of common stock and Yuan Su, who owns an additional 500,000 shares of common stock, are husband and wife and are thus deemed to beneficially own each other’s shares.
Share Issuances
These selling security holders acquired their shares by purchase exempt from registration under Regulation S of the 1933 Act and under Section 4(2) of the 1933 Act in exempt transactions as follows:
|
·
|
On September 20, 2010, 1,000,000 shares were issued to two non-U.S. shareholders for $.01 cash consideration per share for aggregate consideration of $10,000.
|
|
·
|
On September 20, 2010, 2,725,000 shares were issued to 2 service providers, a non-U.S. business consultant and a U.S. attorney and two affiliates of the attorney. We valued these shares at $.01 per share based upon contemporaneous cash sales for aggregate consideration of $27,250.
|
|
·
|
On September 30, 2010, we sold 400,000 shares to 40 non-affiliated non-U.S. shareholders at $.10 cash consideration per share for aggregate consideration of $40,000.
|
We believed that Section 4(2) of the Securities Act of 1933 was available because:
|
·
|
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.
|
We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.
We believed that Regulation S was available because:
|
·
|
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.
|
In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:
|
·
|
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.
|
Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.
Blue Sky
The holders of our shares of common stock and persons who desire to purchase them in any trading market that might develop in the future should be aware that there may be significant state law restrictions upon the ability of investors to resell our shares. Accordingly, even if we are successful in having the Shares available for trading on the OTCBB, investors should consider any secondary market for the Company's securities to be a limited one. We intend to seek coverage and publication of information regarding the company in an accepted publication which permits a "manual exemption”. This manual exemption permits a security to be distributed in a particular state without being registered if the company issuing the security has a listing for that security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized manual. The listing entry must contain (1) the names of issuers, officers, and directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal year of operations. We may not be able to secure a listing containing all of this information. Furthermore, the manual exemption is a non issuer exemption restricted to secondary trading transactions, making it unavailable for issuers selling newly issued securities. Most of the accepted manuals are those published in Standard and Poor's, Moody's Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota, Tennessee, Vermont and Wisconsin.
We currently do not intend to and may not be able to qualify securities for resale in other states which require shares to be qualified before they can be resold by our shareholders.
Our common stock is currently not quoted on any market. No market may ever develop for our common stock, or if developed, may not be sustained in the future. Accordingly, our shares should be considered totally illiquid, which inhibits investors’ ability to resell their shares.
Selling shareholders are offering up to 500,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices. We will not receive proceeds from the sale of shares from the selling shareholders.
The securities offered by this prospectus will be sold by the selling shareholders. Selling shareholders in this offering may be considered underwriters. We are not aware of any underwriting arrangements that have been entered into by the selling shareholders. The distribution of the securities by the selling shareholders may be effected in one or more transactions that may take place in the over-the-counter market, including broker's transactions or privately negotiated transactions.
The selling shareholders may pledge all or a portion of the securities owned as collateral for margin accounts or in loan transactions, and the securities may be resold pursuant to the terms of such pledges, margin accounts or loan transactions. Upon default by such selling shareholders, the pledge in such loan transaction would have the same rights of sale as the selling shareholders under this prospectus. The selling shareholders may also enter into exchange traded listed option transactions, which require the delivery of the securities listed under this prospectus. After our securities are qualified for quotation on the over the counter bulletin board, the selling shareholders may also transfer securities owned in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer without consideration, and upon any such transfer the transferee would have the same rights of sale as such selling shareholders under this prospectus.
In addition to the above, each of the selling shareholders will be affected by the applicable provisions of the Securities Exchange Act of 1934, including, without limitation, Regulation M, which may limit the timing of purchases and sales of any of the securities by the selling shareholders or any such other person. We have instructed our selling shareholders that they may not purchase any of our securities while they are selling shares under this registration statement.
Upon this registration statement being declared effective, the selling shareholders may offer and sell their shares from time to time until all of the shares registered are sold; however, this offering may not extend beyond two years from the initial effective date of this registration statement.
There can be no assurances that the selling shareholders will sell any or all of the securities. In various states, the securities may not be sold unless these securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
All of the foregoing may affect the marketability of our securities. Pursuant to oral promises we made to the selling shareholders, we will pay all the fees and expenses incident to the registration of the securities.
Should any substantial change occur regarding the status or other matters concerning the selling shareholders or us, we will file a post-effective amendment to this registration statement disclosing such matters.
OTC Bulletin Board Considerations
To be quoted on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our common stock. We anticipate that after this registration statement is declared effective, market makers will enter “piggyback” quotes and our securities will thereafter trade on the OTC Bulletin Board.
The OTC Bulletin Board is separate and distinct from the NASDAQ stock market. NASDAQ has no business relationship with issuers of securities quoted on the OTC Bulletin Board. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC Bulletin Board.
Although the NASDAQ stock market has rigorous listing standards to ensure the high quality of its issuers, and can delist issuers for not meeting those standards, the OTC Bulletin Board has no listing standards. Rather, it is the market maker who chooses to quote a security on the system, files the application, and is obligated to comply with keeping information about the issuer in its files. FINRA cannot deny an application by a market maker to quote the stock of a company. The only requirement for inclusion in the bulletin board is that the issuer be current in its reporting requirements with the SEC.
Although we anticipate listing on the OTC Bulletin board will increase liquidity for our stock, investors may have greater difficulty in getting orders filled because it is anticipated that if our stock trades on a public market, it initially will trade on the OTC Bulletin Board rather than on NASDAQ. Investors’ orders may be filled at a price much different than expected when an order is placed. Trading activity in general is not conducted as efficiently and effectively as with NASDAQ-listed securities.
Investors must contact a broker-dealer to trade OTC Bulletin Board securities. Investors do not have direct access to the bulletin board service. For bulletin board securities, there only has to be one market maker.
Bulletin board transactions are conducted almost entirely manually. Because there are no automated systems for negotiating trades on the bulletin board, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders - an order to buy or sell a specific number of shares at the current market price - it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and getting execution.
Because bulletin board stocks are usually not followed by analysts, there may be lower trading volume than for NASDAQ-listed securities.
We are not aware of any pending or threatened legal proceedings in which we are involved.
The board of directors elects our executive officers annually. A majority vote of the directors who are in office is required to fill vacancies. Each director shall be elected for the term of one year, and until his successor is elected and qualified, or until his earlier resignation or removal. Our director and executive officer is as follows:
|
Name
|
Age
|
Position
|
|
Xiaozhong Wu
|
37
|
Chairman of the Board, Chairman, and CEO
|
|
Yaping He
|
37
|
Chief Financial Officer and Chief Accounting Officer; Director
|
Xiaozhong Wu has held the position of chairman since inception in June 2010. Since June 2006, he has been Chairman of Lin’an Fengye Food Co. Ltd. From May 2000 to May 2006, he was the general manager of Hangzhou Kangdaqing Frozen Food Co., Ltd. He brings his years of experience in vegetable cultivation, processing and sales to the Board. Mr. Wu graduated from animal husbandry and veterinary department of Zhejiang University with a Bachelor degree. He brings many years of experience in the management and operations of a business in our industry as well as his educational background to our Board of Directors.
Yaping He has served as CFO since inception in June 2010. Since February 2006, she has been CFO of Lin’an Fengye Food Co. Ltd. From May 2000 to May 2006, she was the financial director in Hangzhou Kangdaqing Frozen Food Co. Ltd., engaged in financial work and brings her years of financial related education and experience as well as experience related to our industry to the Board. Mrs. He graduated from Zhejiang Radio and TV University in July 1999, the major of accounting.
Mr. Wu, our chairman and director, will devote approximately 60% of his time, and Ms. He, our CFO and director will devote approximately 100% or her time to our business.
Family Relationships
Xiaozhong Wu and Yaping He are husband and wife.
Legal Proceedings
No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
|
|
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.
|
The following tables set forth the ownership, as of the date of this prospectus, of our common stock by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock, our directors, and our executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown. The business address of the shareholders is Maoli Village, Longgang Town,
Lin’an City, Zhejiang Province, 311322,People’s Republic of China.
|
Name
|
Number of
Shares of
Common stock
|
Percentage
|
|
Xiaozhong Wu [1]
|
20,875,000
|
83.50%
|
|
Yaping He [1]
|
20,875,000
|
83.50%
|
|
Jian Di [2]
|
2,975,000
|
11.90%
|
|
Yuan Su[2]
|
2,975,000
|
11.90%
|
|
|
|
|
|
All executive officers and directors as a group [2 persons]
|
23,850,000
|
95.40%
|
[1] Mr. Wu and Mrs. He are husband and wife. The shares are owned of record by our founder, chairman and director, Mr. Xiaozhong Wu. Yaping He disclaims beneficial ownership of these shares.
[2] Mr. Di and Mrs. Su are husband and wife. They are each registering 25,000 shares of common stock for resale in this offering and if all are sold, will beneficially own 2,925,000 shares representing 11.70% ownership.
This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 25,000,000 shares of common stock outstanding as of September 30, 2010.
The following description as a summary of the material terms of the provisions of our Articles of Incorporation and Bylaws is qualified in our entirety. The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
Common Stock
We are authorized to issue 100,000,000 shares of common stock with $.001 par value per share. As of the date of this registration statement, there were 25,000,000 shares of common stock issued and outstanding held by 47 shareholders of the record.
Each share of common stock entitles the holder to one vote, either in person or by proxy, at meetings of shareholders. The holders are not permitted to vote their shares cumulatively. Accordingly, the shareholders of our common stock who hold, in the aggregate, more than fifty percent of the total voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote of the holders of a majority of the issued and outstanding shares of common stock entitled to vote thereon is sufficient to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.
Holders of our common stock have no preemptive rights or other subscription rights, conversion rights, redemption or sinking fund provisions. Upon our liquidation, dissolution or windup , the holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to shareholders after the payment of all of our debts and other liabilities. There are not any provisions in our Articles of Incorporation or our Bylaws that would prevent or delay change in our control.
Preferred Stock
The Company is authorized to issue 10,000,000 shares of preferred stock in series as fixed by the Directors with a par value of $0.001 per share. As of the date of this registration statement, there are no preferred shares outstanding.
Preferred stock may be issued in series with preferences and designations as the Board of Directors may from time to time determine. The board may, without shareholders approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of our common shareholders and may assist management in impeding an unfriendly takeover or attempted changes in control. There are no restrictions on our ability to repurchase or reclaim our preferred shares while there is any arrearage in the payment of dividends on our preferred stock.
The financial statements for the period from inception to September 30, 2010 included in this prospectus have been audited by Enterprise CPAs, Ltd. which are independent certified public accountants, to the extent and for the periods set forth in our report and are incorporated herein in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
The legality of the shares offered under this registration statement is being passed upon by Williams Law Group, P.A., Tampa, Florida. Michael T. Williams, principal of Williams Law Group, P.A., owns 225,000 shares of our common stock, of which 24,000 are being registered in this offering.
Our Bylaws, subject to the provisions of Hong Kong China Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
Organization
Mega World Food Holding Company is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by our founder, chairman and director, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to our founder, chairman and director, Mr. Xiaozhong Wu, to acquire 100% ownership of Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for our business.
General
Through our wholly-owned subsidiary Mega World Food Limited, referred to as Mega World Limited, our business is the sale of frozen vegetables in all areas of the world except China.
We sell the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean.
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is currently the primarysupplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
Customers
We anticipate that we will sell our products to the frozen vegetable wholesalers and other distributors.
Markets
We will sell our products in throughout the world except China.
Marketing
Our products will be sold directly by our officers, directors and employees to customers and potential customers. We will locate these customers primarily by personal contacts or referrals.
Our Competition and Our Market Position
Competition within the frozen vegetables industry is intense. We will compete with both large scale state-owned enterprises and smaller scale private companies. In addition, we also face competition from international frozen vegetables resellers. Many of our competitors have substantially greater financial, marketing, personnel and other resources than we do.
Our major competitors are Yantai Taizi Food Company and Ningbo Haitong Food Company as well as other frozen vegetable distributors. We are small compared to most of our competitors.
We compete with these and other suppliers based upon the quality of our products, low cost management, management’s knowledge of the industry, and professional service.
Research and Development
We have not incurred research and development expenses in the last two fiscal years.
Our Intellectual Property
We have no intellectual property.
Our Employees
Our only employees are our management. We have no collective bargaining agreement with our employees. We consider our relationship with our employees to be excellent.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes, and other financial information included in this Form S-1.
Our Management’s Discussion and Analysis contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national, and local general economic and market conditions; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission.
Although the forward-looking statements in this Registration Statement reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Overview
Mega World Food Holding Company is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by our founder, chairman and director, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to our founder, chairman and director, Mr. Xiaozhong Wu, to acquire 100% ownership of Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for our business.
The principal executive office is located at ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG.
The U.S. address is 1995 Bearing Blvd., Sparks, NV 89434.
Business
Through wholly-owned subsidiary Mega World Food Limited (HK), referred to as Mega World HK, the Company’s business is the sale of frozen vegetables in all areas of the world except China.
The Company sells the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean.
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is currently the primary supplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
From September 14, 2010 through September 30 2010 we did not generate any sales revenue yet.
Results of Operations
For the period ended September 14, 2010 to September 30, 2010:
Revenue
Since our company incorporated on September 14, 2010, there was no revenue generated as of September 30, 2010.
Cost of Revenue
Since our company incorporated on September 14, 2010, there was no cost of goods sold incurred as of September 30, 2010.
Expense
Our expenses consist of selling, general and administrative expenses as follows:
As of September 30, 2010, there was a total of $39,053 operating expenses, which include consulting expense of $30,652.88, rent expense of $445.98, organization cost of $5,453.93, and legal service of $2,500.
|
|
Organization Cost
|
|
$
|
5,453.93
|
|
|
|
Consulting Expense
|
|
|
30,652.88
|
|
|
|
Legal Fee
|
|
|
2,500.00
|
|
|
|
Rent Expense
|
|
|
445.98
|
|
|
Total Operation Expense
|
|
$
|
39,052.79
|
|
For the total consulting expense of $30,653, there was consulting fee of $24,750 by issuing common stocks after the service completed, and the consulting fee of $5,902.88 by cash payment.
We expect selling, general, and administrative expenses to increase in future periods as we initiate a number of marketing and promotional activities.
Income & Operation Taxes
We are subject to income taxes in the U.S., while the China branch was subject to the income tax laws of Hong Kong China.
We paid no income taxes in USA for the year ended September 30, 2010 due to the net operation loss in USA.
We paid no income taxes in China for the year ended September 30, 2010 as the subsidiary was established in June 2010.
Net Loss
We incurred net losses of ($39,053) for the period ended September 30, 2010.
Commitments and Contingencies
Mega World Food Holding Company is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by founder Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to Mr. Xiaozhong Wu to exchange the ownership of the Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company.
On August 1, 2010, Mega World Limited (HK), our subsidiary, signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our Chairman. These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. Lin’an Fengye is currently our primary supplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
Foreign Currency Translation
The Company has determined the United States dollars to be its functional currency for Mega World Food Holding Company, Inc; Hong Kong dollars and RMB of China to be its functional currencies in Mega World Food Limited (HK). Assets and liabilities were translated to U.S. dollars at the period-end exchange rate. Statement of operations amounts were translated to U.S. dollars using the first date of each month during the year. Gains and losses resulting from translating foreign currency financial statements are accumulated in other comprehensive income (loss), a separate component of shareholders’ equity.
|
Liquidity and Capital Resources
|
|
|
|
|
|
|
|
|
|
|
|
At September 30
|
|
|
|
|
2010
|
|
|
|
|
|
|
|
Current Ratio
|
|
|
-
|
|
|
Cash
|
|
$
|
50,750
|
|
|
Working Capital
|
|
$
|
59,112
|
|
|
Total Assets
|
|
$
|
59,112
|
|
|
Total Liabilities
|
|
$
|
0
|
|
|
|
|
|
|
|
|
Total Equity
|
|
$
|
59,112
|
|
|
|
|
|
|
|
|
Total Debt/Equity
|
|
|
0
|
|
*Current Ratio = Current Assets /Current Liabilities
** Total Debt / Equity = Total Liabilities / Total Shareholders Equity.
The Company had cash and cash equivalents of $50,750 at September 30, 2010 and the working capital of $59,112. There were no liabilities or debts as of September 30, 2010.
Our lack of revenues raise substantial doubt about our ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if we are unable to generate significant revenue or secure financing we may be required to cease or curtail our operations.
Our business office address in Hong Kong is ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG.
|
|
·
|
Name of Landlord: HK WINNER INT’L BUSINESS LIMITED
|
|
|
·
|
Monthly Rental: $836/per month
|
|
|
·
|
Number of Square Meter: 50 Square Meters
|
|
|
·
|
Term of Lease: One year from August 1, 2010 to July 31, 2011
|
The property is adequate for our current needs. We do not intend to renovate, improve, or develop properties. We are not subject to competitive conditions for property and currently have no property to insure. We have no policy with respect to investments in real estate or interests in real estate and no policy with respect to investments in real estate mortgages. Further, we have no policy with respect to investments in securities of or interests in persons primarily engaged in real estate activities.
On September 14, 2010, 20,875,000 shares were issued as founder’s shares to our founder, chairman and director, Mr. Xiaozhong Wu. We valued these shares at par value $.001. The 20,875,000 shares were issued as follows:
|
|
Issued common stocks to founder at $0.001 per share
|
|
|
|
|
|
for acquisition of Mega World Food (HK) on 9/14/2010
|
|
|
14,972,120
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to founder at $0.001 per share
|
|
|
|
|
|
|
for consulting expenses paid by cash on 9/14/2010
|
|
|
5,902,880
|
|
We did not generate any sales revenue or incurred any purchases as of September 30, 2010.
On August 1, 2010, Mega World Limited (HK), our subsidiary, signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our Chairman. These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. Lin’an Fengye is currently our primary supplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
Except as set forth above, we have not entered into any material transactions with any director, executive officer, and promoter, beneficial owner of five percent or more of our common stock, or family members of such persons.
Market Information
There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. A shareholder in all likelihood, therefore, will not be able to resell his or her securities should he or she desire to do so when eligible for public resales. Furthermore, it is unlikely that a lending institution will accept our securities as pledged collateral for loans unless a regular trading market develops.
Penny Stock Considerations
Our shares will be "penny stocks", as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Thus, our shares will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt.
In addition, under the penny stock regulations, the broker-dealer is required to:
|
|
·
|
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt;
|
|
|
·
|
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for the securities;
|
|
|
·
|
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer's account, the account's value, and information regarding the limited market in penny stocks; and
|
|
|
·
|
Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction, prior to conducting any penny stock transaction in the customer's account.
|
Because of these regulations, broker-dealers may encounter difficulties in their attempt to sell shares of our Common Stock, which may affect the ability of selling shareholders or other holders to sell their shares in the secondary market, and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our securities, if our securities become publicly traded. In addition, the liquidity for our securities may be decreased, with a corresponding decrease in the price of our securities. Our shares in all probability will be subject to such penny stock rules and our shareholders will, in all likelihood, find it difficult to sell their securities.
OTC Bulletin Board Qualification for Quotation
To have our shares of Common Stock on the OTC Bulletin Board, a market maker must file an application on our behalf in order to make a market for our Common Stock. We have engaged in preliminary discussions with a FINRA Market Maker to file our application on Form 211 with FINRA, but as of the date of this Prospectus, no filing has been made. Based upon our counsel's prior experience, we anticipate that after this registration statement is declared effective, it will take approximately 2 - 8 weeks for FINRA to issue a trading symbol and allow sales of our Common Stock under Rule 144.
Sales of our common stock under Rule 144.
There are 1,150,000 shares of our common stock held by non- affiliates and 23,850,000 shares held by affiliates Rule 144 of the Securities Act of 1933 defines as restricted securities.
450,000 of our shares held by non-affiliates and 50,000 shares held by non-management affiliates are being registered in this offering, however the remaining non-affiliate shares as well as all of the remaining affiliates’ shares will still be subject to the resale restrictions of Rule 144. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
Holders
As of the date of this registration statement, we had 47 shareholders of record of our common stock.
Dividends
We have not declared any cash dividends on our common stock since our inception and do not anticipate paying such dividends in the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future payments of dividends will depend on our earnings and financial position and such other facts, as the Board of Directors deems relevant.
Reports to Shareholders
As a result of this offering and assuming the registration statement is declared effective until before September 30, 2011, as required under Section 15(d) of the Securities Exchange Act of 1934, we will file periodic reports with the Securities and Exchange Commission through September 30, 2011, including a Form 10-K for the year ended September 30, 2011, assuming this registration statement is declared effective before that date. At or prior to September 30, 2011, we intend voluntarily to file a registration statement on Form 8-A which will subject us to all of the reporting requirements of the 1934 Act. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity. We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on September 30, 2011. If we do not file a registration statement on Form 8-A at or prior to September 30, 2011, we will continue as a voluntary reporting company and will not be subject to the proxy statement or other information requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity.
Where You Can Find Additional Information
We have filed with the Securities and Exchange Commission a registration statement on Form S-1. For further information about us and the shares of common stock to be sold in the offering, please refer to the registration statement and the exhibits and schedules thereto. The registration statement and exhibits may be inspected, without charge, and copies may be obtained at prescribed rates, at the SEC's Public Reference Room at 100 F St., N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The registration statement and other information filed with the SEC are also available at the web site maintained by the SEC at http://www.sec.gov.
We have not paid any compensation to our two executive officers and we have no agreements or understandings, written or oral, to pay them compensation.
Board of Directors
Director Compensation
|
Name
|
|
Fees
earned
or paid
in cash
($)
|
|
|
Stock
awards
($)
|
|
|
Option
awards
($)
|
|
|
Non-equity
incentive plan
compensation
($)
|
|
|
Nonqualified
deferred
compensation
earnings
($)
|
|
|
All other
compensation
($)
|
|
|
Total
($)
|
|
|
Xiaozhong Wu
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
Yaping He
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
We have no compensation arrangements (such as fees for retainer, committee service, service as chairman of the board or a committee, and meeting attendance) with directors.
None.
(A Development Stage Enterprise)
Audited Financial Statements
AS OF SEPTEMBER 30, 2010
AND FOR THE PERIOD FROM SEPTEMBER 14, 2010
(DATE OF INCEPTION) TO SEPTEMBER 30, 2010
Table of Contents
Board of Directors and Shareholders of Mega World Food Holding Company.
We have audited the accompanying consolidated balance sheets of Mega World Food Holding Company as of September 30, 2010, and the related statements of operation, shareholders’ equity, and cash flows for the period from September 14, 2010 (date of inception) through September 30, 2010. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mega World Food Holding Company as of September 30, 2010, and the results of its operations and their cash flows for the period from September 14, 2010 (date of inception) through September 30, 2010 in conformity with accounting principles generally accepted in the United States of America.
The Company’s lack of operating history and financial resources raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.
/s/
Enterprise CPAs, Ltd.
Enterprise CPAs, Ltd.
Chicago, IL
December 8, 2010
|
MEGA WORLD FOOD HOLDING COMPANY
|
|
|
|
|
(A Development Stage Enterprise)
|
|
|
|
|
|
|
|
|
|
|
|
September 30
|
|
|
|
|
2010
|
|
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
50,750
|
|
|
Prepaid Rent Deposit, Net
|
|
|
8,362
|
|
|
Total Current Assets
|
|
$
|
59,112
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
59,112
|
|
|
|
|
|
|
|
|
LIABILITIES & EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
Preferred stock, $0.001 par value; 10,000,000 shares
|
|
|
|
|
|
authorized; no shares issued and outstanding.
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value; 100,000,000 shares
|
|
|
|
|
|
authorized; 25,000,000 shares issued and
|
|
|
|
|
|
outstanding at September 30, 2010.
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
Paid-in capital
|
|
|
73,125
|
|
|
Deficit accumulated during the development stage
|
|
|
(39,053
|
)
|
|
Accumulated other comprehensive income (loss)
|
|
|
40
|
|
|
Total stockholders' equity
|
|
$
|
59,112
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES & EQUITY
|
|
$
|
59,112
|
|
|
MEGA WORLD FOOD HOLDING COMPANY
|
|
(A Development Stage Enterprise)
|
|
|
|
|
|
|
|
|
|
Cumulative from
|
|
|
|
|
Year Ended
|
|
|
September 14, 2010
|
|
|
|
|
September 30,
|
|
|
(Date of Inception)
|
|
|
|
|
2010
|
|
|
to September 30, 2010
|
|
|
Revenues:
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cost of Goods Sold
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Gross Profit
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
|
39,053
|
|
|
|
39,053
|
|
|
Total Operating Expenses
|
|
$
|
39,053
|
|
|
$
|
39,053
|
|
|
Operating Loss
|
|
$
|
(39,053
|
)
|
|
$
|
(39,053
|
)
|
|
Interest income, net
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Other Income, net
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest Expense, net
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Loss before taxes
|
|
$
|
(39,053
|
)
|
|
$
|
(39,053
|
)
|
|
Loss tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Net Loss
|
|
$
|
(39,053
|
)
|
|
$
|
(39,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss per common share-Basic
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Net Loss per common share-Diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
40
|
|
|
|
40
|
|
|
Other comprehensive loss
|
|
|
40
|
|
|
$
|
40
|
|
|
Comprehensive Loss
|
|
|
(39,013
|
)
|
|
$
|
(39,013
|
)
|
|
MEGA WORLD FOOD HOLDING COMPANY
|
|
|
|
|
|
|
(A Development Stage Enterprise)
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
During the
|
|
|
Other
|
|
Total
|
|
|
|
|
Common Stock
|
|
|
Paid-in
|
|
|
Development
|
|
|
Comprehensive
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Income (Loss)
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to founder at $0.001 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For organization on 9/14/2010
|
|
|
20,875,000
|
|
|
$
|
20,875
|
|
|
|
|
|
|
|
|
|
|
$
|
20,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to Williams @$0.01 per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
for services rendered on 9/20/2010
|
|
|
250,000
|
|
|
$
|
250
|
|
|
$
|
2,250
|
|
|
|
|
|
|
|
$
|
2,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to Jian Di @$0.01 per share
|
|
|
2,475,000
|
|
|
$
|
2,475
|
|
|
$
|
22,275
|
|
|
|
|
|
|
|
$
|
24,750
|
|
|
for services rendered on 9/20/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to Yuan Su and Guoyong Xu
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
@$0.01 per share for cash on 9/20/2010
|
|
|
1,000,000
|
|
|
$
|
1,000
|
|
|
$
|
9,000
|
|
|
|
|
|
|
|
$
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued common stocks to 40 shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
@$0.1 per share for cash on 9/30/2010
|
|
|
400,000
|
|
|
$
|
400
|
|
|
$
|
39,600
|
|
|
|
|
|
|
|
$
|
40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment for currency rate exchange
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
40
|
|
$
|
40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period ended September 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(39,053
|
)
|
|
|
|
$
|
(39,053
|
)
|
|
Balance, September 30, 2010
|
|
|
25,000,000
|
|
|
$
|
25,000
|
|
|
$
|
73,125
|
|
$
|
(39,053)
|
)
|
$
|
40
|
|
$
|
59,112
|
|
|
MEGA WORLD FOOD HOLDING COMPANY
|
|
|
|
|
(A Development Stage Enterprise)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative from
|
|
|
|
|
|
|
|
September 14,
|
|
|
|
|
|
|
|
2010 (Date of
|
|
|
|
|
|
|
|
Inception)
Through
|
|
|
|
|
|
|
|
September 30,
2010
|
|
|
|
|
|
|
|
|
|
|
Operating Activities:
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(39,053
|
)
|
|
$
|
(39,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash provided
|
|
|
|
|
|
|
|
|
|
by operating activities:
|
|
|
|
|
|
|
|
|
|
Non-cash portion of share based legal fee expense
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
|
Non-cash portion of share based consulting expense
|
|
$
|
24,750
|
|
|
$
|
24,750
|
|
|
Prepaid Deposit
|
|
$
|
(8,362
|
)
|
|
$
|
(8,362
|
)
|
|
Net cash provided by operating activities
|
|
$
|
(20,165
|
)
|
|
$
|
(20,165
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from issuance of common stock
|
|
|
70,875
|
|
|
|
70,875
|
|
|
Net cash provided by financing activities
|
|
$
|
70,875
|
|
|
$
|
70,875
|
|
|
Effect of Exchange Rate on Cash
|
|
$
|
40
|
|
|
$
|
40
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
$
|
50,750
|
|
|
$
|
50,750
|
|
|
Cash and cash equivalents at beginning of the year
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cash and cash equivalents at end of year
|
|
$
|
50,750
|
|
|
$
|
50,750
|
|
MEGA WORLD FOOD HOLDING COMPANY
NOTE A- BUSINESS DESCRIPTION
Organization
Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. At September 14, 2010, the Company acquired 100% ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, owned 100% by founder, chairman and director, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 to founder, chairman and director, Mr. Xiaozhong Wu, to acquire 100% ownership of Mega World Food Limited (HK). Mega World Food Limited (HK) is wholly-owned subsidiary of the Company. The purpose of this transaction was solely to form a U.S. holding company for our business.
The principal executive office is located at ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG.
The U.S. address is 1995 Bearing Blvd., Sparks, NV 89434.
Business
Through wholly-owned subsidiary Mega World Food Limited (HK), referred to as Mega World HK, the Company’s business is the sale of frozen vegetables in all areas of the world except China.
The Company sell the following types of frozen vegetables: frozen bamboo shoots, frozen mulberry, frozen white cauliflower, frozen lotus root, frozen green soy bean, frozen broccoli, frozen rape flower, frozen snow bean and frozen sward bean .
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is currently the primary supplier of the products we sell.
The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers. Supplier has orally agreed that it will not require us to purchase a quantity of products in excess of that which we can reasonably afford or reasonably expect to sell in within two to three months of our purchase of the Products.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
Going Concern and Plan of Operation
The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is in the development stage and has not earned any revenues from operations to date. These conditions raise substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Development Stage Company
The Company is considered to be in the development stage as defined in Statement of Financial Accounting Standards (SFAS) ASC 915, “
Development Stage Entities
”. The Company has devoted substantially all of its efforts to establishing a new business and for which either of the following conditions exists: planned principal operations have not commenced; or the planned principal operations have commenced, but there has been no significant revenue there from. Due to the Company’s primary efforts was on the formation of new company, and there were no sales activities incurred, accordingly, the Company is considered as development stage entity.
Basis of accounting
The financial statements reflect the assets, revenues and expenditures of the Company on the accrued basis of accounting. The Company’s fiscal year end is the last day of September 30.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain amounts reported in the financial statements and disclosures. Accordingly, actual results could differ from those estimates.
Principles of Consolidation
The consolidated financial statements of the Company include the accounts of Mega World Food Holding Company and Mega World Food Limited (HK). All significant intercompany balances and transactions have been eliminated in consolidation
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Cash and Cash Equivalents
The Company considers all highly-liquid investments with an original maturity of three months or less when purchased to be cash equivalents. As of September 30, 2010, the company had cash and cash equivalents of $59,112.
Organization Cost
The Company incurred registration fee, travel expense, and rent expense for setting up Mega World Food Limited in Hong Kong. The total organization cost incurred in Hong Kong prior September 14, 2010, the inception date of Mega World Food Holding Company incorporated in the State of Nevada. The organization cost was fully expensed and listed as follows:
|
Organization Cost
|
|
|
|
|
Bank Service Charges
|
|
|
61.75
|
|
|
Registration Fee
|
|
|
2,947.05
|
|
|
Rent Expense
|
|
|
1,226.44
|
|
|
Travel Expense
|
|
|
1,218.69
|
|
|
Total Organization
|
|
|
5,453.93
|
|
Stock-Based Compensation
The Company accounts for stock issued for services using the fair value method. In accordance with Emerging Issues Task Force (“EITF”) 96-18, the measurement date of shares issued for services is the date at which the counterparty’s performance is complete.
The Company incurred legal fee of $2,500 and consulting fee of $24,750 by issuing common stocks after the service completed.
Basics and Diluted Net Loss Per Common Share
The Company computes per share amounts in accordance with Statement of Financial Accounting Standards (SFAS) ASC 260, Earnings per Share (EPS). ASC 260 requires presentation of basis and diluted EPS. Basic EPS is computed by dividing the income (loss) available to Common Shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding during the periods.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Basics and Diluted Net Loss Per Common Share (Continued)
As of September 30, 2010, the Company only issued one type of shares, i.e., common shares only. There are no other types securities were issued. Accordingly, the diluted and basics net loss per common share are the same.
|
Net Loss September 30, 2010
|
|
|
|
|
|
$
|
(39,053
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(39,053
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dates
|
|
Shares
|
|
|
Fraction of Period
|
|
|
Weighted -
|
|
|
Outstanding
|
|
Outstanding
|
|
|
On Daily Basis
|
|
|
Average Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 14, 2010
|
|
|
20,875,000
|
|
|
|
16/16
|
|
|
|
20,875,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 20, 2010
|
|
|
3,725,000
|
|
|
|
10/16
|
|
|
|
2,328,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2010
|
|
|
400,000
|
|
|
|
1/16
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
|
|
|
|
|
|
|
|
23,228,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic & Diluted Net Loss Per Common Share
|
|
$
|
0.00
|
|
|
|
|
|
|
|
|
|
The equation from computing basic and diluted EPS is:
Income (loss) available to common shareholders/Weighted-average shares.
The weighted average share was 2,328,125 and the net loss per share was $0.00 calculated as follows:
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE B – SIGNIFICANT ACCOUNTING POLICIES (Continued)
Operating Expense
As of September 30, 2010, there was a total of $39,053 operating expenses, which include consulting expense of $30,652.88, rent expense of $445.98, organization cost of $5,453.93, and legal service of $2,500.
|
Operation Expense:
|
|
|
Organization Cost
|
|
$
|
5,453.93
|
|
|
Consulting Expense
|
|
|
30,652.88
|
|
|
Legal Fee
|
|
|
2,500.00
|
|
|
Rent Expense
|
|
|
445.98
|
|
|
Total Operation Expense
|
|
$
|
39,052.79
|
|
For the total consulting expense of $30,653, there was consulting fee of $24,750 by issuing common stocks after the service completed, and the consulting fee of $5,902.88 by cash payment.
Recent Accounting Pronouncements
The following pronouncements have become effective during the period covered by these financial statements or will become effective after the end of the period covered by these financial statements:
|
Pronouncement
|
Issued
|
Title
|
|
|
|
|
|
ASC 855
|
May 2009
|
Subsequent Events
|
|
ASC 105
|
June 2009
|
The
FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162
|
|
ASC 820
|
August 2009
|
Fair Value Measurements and Disclosures – Measuring Liabilities at Fair Value
|
|
ASC 260
|
September 2009
|
Earnings per Share – Amendments to Section 260-10-S99
|
|
ASC 820
|
September 2009
|
Investments in Certain Entities that Calculate Net Asset Value per Share (or Its Equivalent)
|
|
ASC 605
|
October 2009
|
Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements – a consensus of the FASB Emerging Issues Task Force
|
|
ASC 470
|
October 2009
|
Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing – a consensus of the FASB Emerging Issues Task Force
|
|
ASC 860
|
December 2009
|
Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets
|
|
ASC 505
|
January 2010
|
Accounting for Distributions to Shareholders with Components of Stock and Cash – a consensus of the FASB Emerging Issues Task Force
|
|
ASC 810
|
January 2010
|
Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary – a Scope Clarification
|
|
ASC 718
|
January 2010
|
Compensation – Stock Compensation (Topic 718): Escrowed Share Arrangements and the Presumption of Compensation
|
|
ASC 820
|
January 2010
|
Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements
|
|
ASC 810
|
February 2010
|
Consolidation (Topic 810): Amendments for Certain Investment Funds
|
|
ASC 815
|
March 2010
|
Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives
|
|
ASC 310
Receivables (Topic 310): Disclosures about the Credit Quality of
Financing Receivables and the Allowance for Credit Losses
|
July 2010
|
For public entities, the disclosures as of the end of a reporting period are
effective for interim and annual reporting periods ending on or after December 15, 2010. The disclosures about activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December
15, 2010.
For nonpublic entities, the disclosures are effective for annual reporting periods ending on or after December 15, 2011.
|
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
NOTE C – RELATED PARTY TRANSACTIONS
Cost of Goods Sold
These food products are manufactured in China by Lin’an Fengye Food Co., Ltd. (“Lin’an Fengye” or “Supplier”). It was established in 2006 specializing in the growing and processing of frozen vegetables, and is located Maoli Village, Longgang Town, Lin’an City, Zhejiang Province. On August, 1, 2010, Mega World Limited signed a ten year distribution agreement with Lin’an Fengye. Lin’an Fengye is a Chinese vegetable processing company owned 51% by Mr. Xiaozhong Wu, our chairman. Lin’an Fengye is currently the main supplier of the Company. The management believes that the purchase price from Lin’an Fengye will be market price.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE D – SHAREHOLDERS’ EQUITY
Common Stock
Under the Company’s Articles of Incorporation of the Company, the Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.001; and 10,000,000 shares of preferred stocks with par value of $0.001.
Mega World Food Holding Company (the Company) is a Nevada corporation formed on September 14, 2010. On September 14, 2010, the Company acquired 100% of ownership of Mega World Food Limited (HK), a Hong Kong China corporation formed in June 24, 2010, and owned 100% by founder, Mr. Xiaozhong Wu. At September 14, 2010, the Company issued 14,972,120 common shares at par value of $0.001 for the total amount of $14,972.12 to Mr. Xiaozhong Wu to exchange the ownership of the Mega World Food Limited (HK), for the same amount of value of Mega World Food Limited (HK). After the acquisition, Mega World Food Limited (HK) is wholly-owned subsidiary of the Company.
The Company issued shares as listed as follows:
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Common Stock
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Shares
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Issued common stocks to founder at $0.001 per share
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for organization expenses on 9/14/2010
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14,972,120
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Issued common stocks to founder at $0.001 per share
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for consulting expenses paid by cash on 9/14/2010
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5,902,880
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Issued common stocks to Williams @$0.01 per share
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for services rendered on 9/20/2010
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250,000
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Issued common stocks to Jian Di @$0.01 per share
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2,475,000
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for services rendered on 9/20/2010
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Issued common stocks to Yuan Su and Guoyong Xu
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@$0.01 per share for cash on 9/20/2010
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1,000,000
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Issued common stocks to 40 shareholders
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@$0.1 per share for cash on 9/30/2010
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400,000
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Balance, September 30, 2010
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25,000,000
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MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE D – SHAREHOLDERS’ EQUITY (Continued)
On September 30, 2010, the Company issued 25,000,000 shares of its common stock to total 45 shareholders, including restricted shares issued to Founder, Xiaozhong Wu, consultant Jian Di & Yuan Su; and non-affiliated other 42 shareholders, equal to the equity value of $59,112.
The restricted common shares were issued as follows:
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Total Shares
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%
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Xiaozhong Wu, Chairman & CEO
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20,875,000.00
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83.50
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%
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Jian Di*
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2,475,000.00
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9.90
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%
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Yuan Su*
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500,000.00
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2.00
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%
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Total
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23,850,000.00
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95.40
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%
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* Jian Di and Yuan Su are husband and wife.
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The percentage calculation is based on the total outstanding 25,000, 000 shares
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Therefore, as of September 30, 2010, there was total share of 25,000,000 outstanding.
NOTE E – Acquisition of Mega World Food Limited (HK)
On September 14, 2010, the Mega World Food Holding Company (the Company) acquired the 100% ownership of a Hong Kong company, Mega World Food Limited (HK) owned by Mr. Xiaozhong Wu. Mega World Food Limited (HK) was incorporated on June 24, 2010, and incurred setting up, formation or organization activities since June 24, 2010.
Based on the Mega World Food Limited (HK)’s books at September 14, 2010, there was total net asset value of $14,972.12, including bank balance of $710.15, prepaid rent deposit of $8,808.04, and organization cost of $5,453.93. Due to there were no material operation activities for Mega World Food (HK), and no sales or no goodwill recognized, then the management believe that it’s fair value was equal to it’s book value. Accordingly, Mega World Food Holding Company issued 14,972,120 common shares to Mr. Xiaozhong Wu at $14,972.12 for the 100% ownership of Mega World Food (HK).
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE E – Acquisition of Mega World Food Limited (HK) (Continued)
The transaction has been accounted for using the acquisition method of accounting which requires, that most assets acquired and liabilities assumed be recognized at the fair values as of acquisition date. The following table summarizes the amounts recognized for assets acquired and liabilities assumed as of the acquisition date, September 14, 2010.
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As of September 14, 2010:
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Amounts recognized as of Acquisition Date
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HSBC Bank Balance
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$710.15
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Prepaid Rent Deposit
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$8,808.04
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Organization Cost
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$5,453.93
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Property, plant and equipment
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0.00
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Other noncurrent assets
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0.00
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Long-term debt
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0.00
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Other noncurrent liabilities
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0.00
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Total identifiable net assets
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0.00
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Net assets acquired
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$14,972.12
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Total consideration (common shares) transferred
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NOTE F– GOING CONCERN
The Company is currently in the development stage and their activities consist solely of corporate formation, raising capital, and attempting to sell products to generate revenues.
There is no guarantee that the Company will be able to raise enough capital or generate revenues to sustain its operations and carry out its business plan. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The financial statements do not include any adjustments relating to the carrying amounts of recorded assets or the carrying amounts and classification of recorded liabilities that may be required should the Company be unable to continue as a going concern.
The Company’s lack of operating history and financial resources raise substantial doubt about its ability to continue as a going concern. The financial statements do not include adjustments that might result from the outcome of this uncertainty and if the Company is unable to generate significant revenue or secure financing, then the Company may be required to cease or curtail its operations.
MEGA WORLD FOOD HOLDING COMPANY
NOTES TO FINANCIAL STATEMENTS
NOTE G – INCOME TAXES
The Company has incurred net losses since inception. The Company has not reflected any benefit of such net operating loss carry forward in the accompanying financial statements.
The income tax benefit differed from the amount computed by applying the US federal income tax rate of 34% to net loss as a result of the following:
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2010
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Computed expected tax benefit
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(34.00
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) %
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State income tax, net of federal benefit
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(7.30
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)
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Change in federal tax rate apportionment
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19.00
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Change in valuation allowance
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22.30
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Income tax benefit
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-
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%
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The tax effect of temporary differences that give rise to significant portions of the deferred tax assets as of September 30, 2010 is presented below:
Deferred Tax Assets:
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2010
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Organizational start-up costs
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$
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5,453
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Valuation allowance
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(5,453
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)
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Net deferred tax assets
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$
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-
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In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible.
Based upon the lack of historical taxable income and uncertain projections of future taxable income over the periods in which the deferred tax assets are deductible, management believes that it is more likely than not that the Company will not realize the benefits of these deductible differences. Accordingly, the Company has provided a valuation allowance against the net deferred tax assets aggregating $5,453 as of September 30, 2010.
PROSPECTUS – SUBJECT TO COMPLETION DATED
_________, 2010
MEGA WORLD FOOD HOLDING COMPANY
Dated _____________, 2010
Selling shareholders are offering up to 500,000 shares of common stock. The selling shareholders will offer their shares at $0.10 per share until our shares are quoted on the OTC Bulletin Board or Pick Sheet Exchange and thereafter at prevailing market prices or privately negotiated prices.
Our common stock is not now listed on any national securities exchange, the NASDAQ stock market or the OTC Bulletin Board.
Dealer Prospectus Delivery Obligation
Until _________ (90 days from the date of this prospectus) all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
Part II-INFORMATION NOT REQUIRED IN PROSPECTUS
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Our Articles of Incorporation provide that no director or officer of the Company shall be personally liable to the Company or its stockholders for monetary damages for any breach of fiduciary duty by such person as a director or officer, except for the payment of dividends in violation of Hong Kong China law. Our Bylaws provide, in pertinent part, that the Company shall indemnify any person made a party to or involved in any civil, criminal or administrative action, suit or proceeding by reason of the fact that such person is or was a director or officer of the Company, or of any corporation which such person served as such at the request of the Company, against expenses reasonably incurred by, or imposed on, such person in connection with, or resulting from, the exercise of such action, suit, proceeding or appeal thereon, except with respect to matters as to which it is adjudged in such action, suit or proceeding that such person was liable to the Company, or such other corporation, for negligence or misconduct in the performance of such persons duties as a director or officer of the Company. The determination of the rights of such indemnification and the amount thereof may be made, at the option of the person to be indemnified, by (1) order of the Court or administrative body or agency having jurisdiction over the matter for which indemnification is being sought; (2) resolution adopted by a majority of a quorum of our disinterested directors; (3) if there is no such quorum, resolution adopted by a majority of the committee of stockholders and disinterested directors of the Company; (4) resolution adopted by a majority of the quorum of directors entitled to vote at any meeting; or (5) Order of any Court having jurisdiction over the Company. Such right of indemnification is not exclusive of any other right which such director or officer may have, and without limiting the generality of such statement, they are entitled to their respective rights of indemnification under any bylaws, agreement, vote of stockholders, provision of law, or otherwise in addition to their rights under our Bylaws.
With regard to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table is an itemization of all expenses, without consideration to future contingencies, incurred or expected to be incurred by us in connection with the issuance and distribution of the securities being offered by this prospectus. Items marked with an asterisk (*) represent estimated expenses. We have agreed to pay all the costs and expenses of this offering. Selling security holders will pay no offering expenses.
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ITEM
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AMOUNT
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SEC Registration Fee*
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$
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4
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Legal Fees and Expenses
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30,000
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Accounting Fees and Expenses*
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20,000
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Miscellaneous
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10,000
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Total*
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$
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60,004
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* Estimated Figure
RECENT SALES OF UNREGISTERED SECURITIES
These selling security holders acquired their shares by purchase exempt from registration under Regulation S of the 1933 Act and under Section 4(2) of the 1933 Act in exempt transactions as follows: We issued 24,750,000 shares to 44 non-U.S. shareholders, including our management, and 250,000 shares to three U.S. shareholders as follows:
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·
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On September 14, 2010, 20,875,000 shares were issued as founder’s shares to management. We valued these shares at par value $.001. The 20,875, 000 shares were issued as follows:
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Issued common stocks to founder at $0.001 per share
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for acquisition of Mega World Food (HK) on 9/14/2010
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14,972,120
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Issued common stocks to founder at $0.001 per share
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for consulting expenses paid by cash on 9/14/2010
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5,902,880
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·
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On September 20, 2010, 1,000,000 shares were issued to two non-U.S. shareholders for $.01 cash consideration per share for aggregate consideration of $10,000.
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·
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On September 20, 2010, 2,725,000 shares were issued to 2 service providers, a non-U.S. business consultant and a U.S. attorney and two affiliates of the attorney. We valued these shares at $.01 per share based upon contemporaneous cash sales for aggregate consideration of $27,250.
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·
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On September 30, 2010, we sold 400,000 shares to 40 non-affiliated shareholders at $.10 cash consideration per share for aggregate consideration of $40,000.
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The shares were issued to the three U.S. shareholders under Section 4(2) of the Securities Act of 1933 and to the 44 non-U.S. shareholders under Regulation S of the Securities Act of 1933
We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuances to US citizens or residents.
We believed that Section 4(2) of the Securities Act of 1933 was available because:
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·
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None of these issuances involved underwriters, underwriting discounts or commissions.
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·
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Restrictive legends were and will be placed on all certificates issued as described above.
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·
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The distribution did not involve general solicitation or advertising.
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·
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The distributions were made only to investors who were sophisticated enough to evaluate the risks of the investment.
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We relied upon Regulation S of the Securities Act of 1933, as amended for the above issuances to non US citizens or residents.
We believed that Regulation S was available because:
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·
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None of these issuances involved underwriters, underwriting discounts or commissions;
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·
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We placed Regulation S required restrictive legends on all certificates issued;
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·
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No offers or sales of stock under the Regulation S offering were made to persons in the United States;
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·
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No direct selling efforts of the Regulation S offering were made in the United States.
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In connection with the above transactions, although some of the investors may have also been accredited, we provided the following to all investors:
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·
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Access to all our books and records.
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·
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Access to all material contracts and documents relating to our operations.
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·
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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.
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Prospective investors were invited to review at our offices at any reasonable hour, after reasonable advance notice, any materials available to us concerning our business. Prospective Investors were also invited to visit our offices.
EXHIBITS
Item 2
1
Share Exchange Agreement
2
Articles of Share Exchange
Item 3
1 Articles of Incorporation – Mega World Food Holding Company
2 Bylaws - Mega World Food Holding Company
3 Organization Memorandum of Mega World Food Limited
Item 4
1
Form of common stock Certificate of the Mega World Food Holding Company
(1)
Item 5
1
Legal Opinion of Williams Law Group, P.A.
Item 10
1
Agreement with Lin’an Fengye
2
Consulting Agreement with Jian Di
Item 23
1 Consent of Enterprise CPAs, Ltd, CPA.
2 Consent of Williams Law Group, P.A. (included in Exhibit 5.1)
All other Exhibits called for by Rule 601 of Regulation SK are not applicable to this filing.
(1)
Information pertaining to our common stock is contained in our Articles of Incorporation and Bylaws.
UNDERTAKINGS
The undersigned registrant hereby undertakes:
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1.
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To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
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i.
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To include any prospectus required by
section 10(a)(3)
of the Securities Act of 1933;
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ii.
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To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.
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iii.
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To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
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2.
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That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
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3.
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To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
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4. That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by a controlling precedent, submit to a court of appropriate jurisdiction the question of whether such indemnification by us is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on our behalf by the undersigned, thereunto duly authorized, in Hong Kong China on December 8, 2010.
Mega World Food Holding Company
By:
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Title
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Name
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Date
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Signature
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Principal Executive Officer
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Xiaozhong Wu
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December 8, 2010
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/s/ Xiaozhong Wu
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Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
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SIGNATURE
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NAME
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TITLE
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DATE
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/s/ Xiaozhong Wu
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Xiaozhong Wu
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Principal Executive Officer and Director
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December 8, 2010
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/s/ Yaping He
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Yaping He
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Principal Financial Officer and Principal Accounting Officer and Director
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December 8, 2010
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44
Exhibit 2.1
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (the "Agreement") is made and entered into as of the 14
th
day of September, 2010, between Mega World Food Holding Company, a Nevada corporation ("Buyer") and Mega World Food Limited, a Hong Kong China corporation ("Seller").
RECITALS
The Buyer desires to acquire all issued and outstanding shares of common stock of Seller, and the Seller wishes to have all issued and outstanding shares of common stock of Seller acquired by the Buyer solely for the purpose of establishing a U.S. holding company for Seller’s operations in China, on the terms and conditions set forth in this Agreement by way of an exchange of shares (the “Exchange”).
The board of directors of the Buyer and the Seller have determined that it is in the best interest of the parties for the Buyer to acquire all issued and outstanding shares of common stock of the Seller pursuant to a share exchange transaction.
NOW, THEREFORE, in consideration of the terms, conditions, agreements and covenants contained herein (the receipt and sufficiency of which are acknowledged by each party), and in reliance upon the representations and warranties contained in this Agreement, the parties hereto agree as follows:
I. RECITALS; TRUE AND CORRECT; PURPOSE OF TRANSACTION
The above stated recitals are true and correct and are incorporated into this Agreement.
The sole purpose of the transaction contemplated under this Agreement is the establishment of a U.S. Holding Company, i.e., Buyer, by a Hong Kong Chinese operating entity, i.e., Seller.
II. PURCHASE AND SALE
2.1
Share Exchange
. Subject to all the terms and conditions of this Agreement, at the Closing, the Seller agrees to receive from the Buyer, and Buyer agree to issue to the shareholders of the Seller (a “Shareholder”) 14,972,120 Shares of Common Stock of the Buyer (“Buyer Shares”) (the “Share Consideration”) in exchange for the transfer of 10,000 shares of the Common Stock of the Seller (“Seller’s Shares”) to the Buyer. Each Seller’s Share that is issued and outstanding immediately before the Closing shall entitle the holder thereof to receive 1497.212 Buyer Shares, all as set forth in Schedule 2.1 attached hereto.
2.2
Closing
. The parties shall hold the Closing as soon as practical after the execution of this Agreement, or such other time as the parties shall agree (the “Closing” or "Closing Date"), at 11:00 A.M., local time, at the offices of Buyer, or at such other time and place as the parties may agree upon.
2.3
Schedules.
If a Schedule referred to in Article IV or V is not attached to this Agreement, the Seller or Buyer, respectively, is representing that there is no information required to be disclosed on such Schedule.
III. CONDUCT OF BUSINESS PENDING CLOSING
Seller and Buyer covenant that between the date hereof and the date of the Closing:
3.1 Access to Seller. Seller shall (a) give to Buyer and to Buyer's counsel, accountants and other representatives reasonable access, during normal business hours, throughout the period prior to the Closing Date, to all of the books, contracts, commitments and other records of Seller and shall furnish Buyer during such period with all information concerning Seller that Buyer may reasonably request; and (b) afford to Buyer and to Buyer's representatives, agents, employees and independent contractors reasonable access, during normal business hours, to the properties of Seller, in order to conduct inspections at Buyer's expense to determine that Seller is operating in compliance with all applicable federal, state, local and foreign statutes, rules and regulations, and all material building, fire and zoning laws or regulations and that the assets of Seller are substantially in the condition and of the capacities represented and warranted in this Agreement; provided, however, that in every instance described in (a) and (b), Buyer shall make arrangements with Seller reasonably in advance and shall use its best efforts to avoid interruption and to minimize interference with the normal business and operations of Seller. Any such investigation or inspection by Buyer shall not be deemed a waiver of, or otherwise limit, the representations, warranties or covenants of Seller contained herein.
3.2 Conduct of Business. During the period from the date hereof to the Closing Date, Seller shall and shall use reasonable efforts, to the extent such efforts are within Seller's control, to cause its business to be operated in the usual and ordinary course of business and in material compliance with the terms of this Agreement.
3.3 Exclusivity to Buyer. Until either the exchange agreement is terminated or the exchange closed, Seller agrees not to solicit any other inquiries, proposals or offers to purchase or otherwise acquire, in a exchange transaction or another type of transaction, the business of Seller or the shares of capital stock of Seller. Any person inquiring as to the availability of the business or shares of capital stock of Seller or making an offer therefor shall be told that Seller is bound by the provisions of this Agreement. Seller as well as its officers, directors, representatives or agents further agree to advise Buyer promptly of any such inquiry or offer.
3.4 Access to Buyer. Buyer shall (a) give to Seller and to Seller's counsel, accountants and other representatives reasonable access, during normal business hours, throughout the period prior to the Closing Date, to all of the books, contracts, commitments and other records of Buyer and shall furnish Seller during such period with all information concerning Buyer that Seller may reasonably request; and (b) afford to Seller and to Seller's representatives, agents, employees and independent contractors reasonable access, during normal business hours, to the properties of Buyer in order to conduct inspections at Seller's expense to determine that Buyer is operating in compliance with all applicable federal, state, local and foreign statutes, rules and regulations, and all material building, fire and zoning laws or regulations and that the assets of Buyer are substantially in the condition and of the capacities represented and warranted in this Agreement; provided, however, that in every instance described in (a) and (b), Seller shall make arrangements with Buyer reasonably in advance and shall use its best efforts to avoid interruption and to minimize interference with the normal business and operations of Buyer. Any such investigation or inspection by Seller shall not be deemed a waiver of, or otherwise limit, the representations, warranties or covenants of Buyer contained herein.
3.5 Conduct of Business. During the period from the date hereof to the Closing Date, the business of Buyer shall be operated by Buyer in the usual and ordinary course of such business and in material compliance with the terms of this Agreement.
3.6 Approval. As promptly as reasonably practicable following the date of this Agreement, Seller shall take all action reasonably necessary in accordance with the laws of China and its Organizational Documents to secure the required approval and adoption of this Agreement, including all requisite shareholder approval.
3.8 Mutual Cooperation. The initial press release relating to this Agreement shall be a joint press release. Thereafter, each of the Seller and the Buyer agree to provide 24 hour pre-notification to the other party of any news releases or regulatory filings which the party proposes to issue or file and shall agree to consider any reasonable recommendation or suggestion of the other party with respect thereto. Buyer shall be permitted to make announcements of Seller’s newsworthy activities provided the consent of the Seller is obtained, which consent shall not be reasonably withheld. Each party shall also provide the other party with notice a reasonable time in advance of, and shall permit a representative of the other party to review or participate in, any communications, meetings, or correspondence relating to investor relations matters, including matters relating to public offering activities which are expected to take place following Closing.
IV. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, with the knowledge and understanding that Buyer is relying materially upon such representations and warranties:
4.1 Organization and Standing. Seller is a Company duly organized, validly existing and in good standing under the laws of China. Seller has all requisite corporate power to carry on its business as it is now being conducted and is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary under applicable law, except where the failure to qualify (individually or in the aggregate) does not have any material adverse effect on the assets, business or financial condition of Seller, and all states in which Seller is qualified to do business as of the date hereof, are listed in the information in Schedule 4.1. The copies of the Organizational Documents of Seller, as amended to date, delivered to Buyer, are true and complete copies of these documents as now in effect. Except as otherwise set forth in the information Schedule 4.1, Seller does not own any interest in any other corporation, business trust or similar entity. The minute book of Seller contains accurate records of all meetings of its respective Board of Directors and shareholders since its incorporation.
4.2 Capitalization. The issued and outstanding capital stock of Seller is 10,000 shares. All of such shares of capital stock are duly authorized, validly issued and outstanding, fully paid and nonassessable, and were not issued in violation of the preemptive rights of any person. There are no subscriptions, options, warrants, rights or calls or other commitments or agreements to which Seller is a party or by which it is bound, calling for any issuance, transfer, sale or other disposition of any class of securities of Seller, except as set forth in Schedule 4.2. There are no outstanding securities convertible or exchangeable, actually or contingently, into shares of common stock or any other securities of Seller. Seller has no subsidiaries except as set forth in Schedule 4.2.
4.3 Authority. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by Seller in accordance therewith (and assuming due execution and delivery by the other parties hereto), the valid and binding obligation of Seller, enforceable in accordance with their respective terms, subject to general principles of equity and bankruptcy or other laws relating to or affecting the rights of creditors generally.
4.4 Properties. Except as set forth on the information in Schedule 4.4 concerning Seller, Seller has good title to all of the Assets which it purports to own as reflected on the balance sheet included in the Financial Statements (as hereinafter defined), or thereafter acquired. Seller has a valid leasehold interest in all material property of which it is the lessee and each such lease is valid, binding and enforceable against Seller, as the case may be, and, to the knowledge of Seller, the other parties thereto in accordance with its terms. Neither Seller nor the other parties thereto are in material default in the performance of any material provisions thereunder. Neither the whole nor any material portion of the Assets of Seller is subject to any governmental decree or order to be sold or is being condemned, expropriated or otherwise taken by any public authority with or without payment of compensation therefor, nor, to the knowledge of Seller, any such condemnation, expropriation or taking been proposed. None of the assets of Seller is subject to any restriction which would prevent continuation of the use currently made thereof or materially adversely affect the value thereof.
4.5 Contracts Listed; No Default. All contracts, agreements, licenses, leases, easements, permits, rights of way, commitments, and understandings, written or oral, connected with or relating in any respect to present or proposed future operations of Seller (except employment or other agreements terminable at will and other agreements which, in the aggregate, are not material to the business, properties or prospects of Seller and except governmental licenses, permits, authorizations, approvals and other matters referred to in Section 4.17) are listed and described in the information in Schedule 4.5 concerning Seller. Seller is the holder of, or party to, all of the Seller Contracts. To the knowledge of Seller, the Seller Contracts are valid, binding and enforceable by the signatory thereto against the other parties thereto in accordance with their terms. Neither Seller nor any signatory thereto is in default or breach of any material provision of the Seller Contracts. Seller's operation of its business has been, is, and will, between the date hereof and the Closing Date, continue to be, consistent with the material terms and conditions of the Seller Contracts.
4.6 Litigation. Except as disclosed in the information in Schedule 4.6 concerning Seller, there is no claim, action, proceeding or investigation pending or, to the knowledge of Seller, threatened against or affecting Seller before or by any court, arbitrator or governmental agency or authority which, in the reasonable judgment of Seller, could have any materially adverse effect on Seller. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against Seller.
4.7 Taxes. For purposes of this Agreement, (A) "Tax" (and, with correlative meaning, "Taxes") shall mean any federal, state, local or foreign income, alternative or add-on minimum, business, employment, franchise, occupancy, payroll, property, sales, transfer, use, value added, withholding or other tax, levy, impost, fee, imposition, assessment or similar charge, together with any related addition to tax, interest, penalty or fine thereon; and (B) "Returns" shall mean all returns (including, without limitation, information returns and other material information), reports and forms relating to Taxes or to any benefit plans.
Seller has duly filed all Returns required by any law or regulation to be filed by it, except for extensions duly obtained. All such Returns were, when filed, and to the knowledge of Seller are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations in all material respects. Seller has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date, and the assessment of any material amount of additional Taxes in excess of those paid and reported is not reasonably expected.
Seller is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted against Seller that has not been paid. There are no Tax liens upon the assets (other than the lien of property taxes not yet due and payable) of Seller. There is no valid basis, to the knowledge of Seller, except as set forth in Schedule 4.7, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to Seller by any governmental authority.
4.8 Compliance with Laws and Regulations. To its knowledge, Seller is in compliance, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local) applicable to it in all jurisdictions where the business of Seller is currently conducted or to which Seller is currently subject which has a material impact on Seller, including, without limitation, all applicable civil rights and equal opportunity employment laws and regulations, and all state and federal antitrust and fair trade practice laws and the Federal Occupational Health and Safety Act and all similar Canadian laws, rules and regulations. Seller knows of no assertion by any party that Seller is in violation of any such laws, rules, regulations, orders, restrictions or requirements with respect to its current operations, and no notice in that regard has been received by Seller. To the knowledge of Seller, there is not presently pending any proceeding, hearing or investigation with respect to the adoption of amendments or modifications to existing laws, rules, regulations, orders, restrictions or requirements which, if adopted, would materially adversely affect the current operations of Seller.
4.9 Compliance with Laws. (a) To its knowledge, the business, operations, property and assets of Seller (and, to the knowledge of Seller, the business of any sub-tenant or licensee which is occupying or has occupied any space on any premises of Seller and the activities of which could result in any material adverse liability to Seller) (i) conform with and are in compliance in all material respects with all, and are not in material violation of any applicable federal, state and local laws, rules and regulations, including, but not limited to, the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (including the 1986 Amendments thereto and the Superfund Amendments and Reauthorization Act) ("CERCLA"), and the Resource Conservation and Recovery Act ("RCRA"), as well as any other laws, rules or regulations relating to tax, product liability, controlled substances, product registration, environmental protection, hazardous or toxic waste, employment, or occupational safety matters whether US or Canadian; and (ii) have been conducted and operated in a manner such that, to Seller's knowledge, Seller has foreseeable potential liabilities for environmental clean-up under CERCLA, RCRA or under any other law, rule, regulation or common or civil law doctrine or similar laws, rules and regulations in China.
(b) To its knowledge, no predecessor-in-title to any real property now or previously owned or operated by Seller, nor any predecessor operator thereof conducted its business or operated such property in violation of CERCLA and RCRA or any other applicable federal, state and local laws, rules and regulations relating to environmental protection or hazardous or toxic waste matters.
(c) Except as disclosed in the information in Schedule 4.9 concerning Seller, no suit, action, claim, proceeding, nor investigation, review or inquiry by any court or federal, state, county, municipal or local governmental department, commission, board, bureau, agency or instrumentality, including, without limitation, any state or local health department (all of the foregoing collectively referred to as "Governmental Entity") concerning any such possible violations by Seller is pending or, to the knowledge of Seller, threatened, including, but not limited to, matters relating to diagnostic tests and products and product liability, environmental protection, hazardous or toxic waste, controlled substances, employment, occupational safety or tax matters. Seller does not know of any reasonable basis or ground for any such suit, claim, investigation, inquiry or proceeding. For purposes of this Section 4.9, the term "inquiry" includes, without limitation, all pending regulatory issues (whether before federal, state, local or inter-governmental regulatory authorities) concerning any regulated product, including, without limitation, any diagnostic drugs and products.
4.10 Information. Seller has furnished and will continue to furnish Buyer all information and financial statements as Buyer may reasonably request.
4.11 Condition of Assets. The equipment, fixtures and other personal property of Seller, taken as a whole, is in good operating condition and repair (ordinary wear and tear excepted) for the conduct of the business of Seller as is contemplated to be conducted.
4.12 No Breaches. To its knowledge, the making and performance of this Agreement and the other agreements contemplated hereby by Seller will not (i) conflict with or violate the Articles of Incorporation or the Bylaws of Seller; (ii) violate any material laws, ordinances, rules or regulations, or any order, writ, injunction or decree to which Seller is a party or by which Seller or any of its respective assets, businesses, or operations may be bound or affected; or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any asset of Seller under, or create any rights of termination, cancellation or acceleration in any person under, any Seller Contract.
4.13 Employees. None of the employees of Seller is represented by any labor union or collective bargaining unit and, to the knowledge of Seller, no discussions are taking place with respect to such representation.
4.14 Financial Statements. Seller has furnished or will prior to SEC filing deadlines furnish Buyer Sellers’ financial statements (the "Financial Statements") for the period from inception through any necessary SEC filing date. The Financial Statements, when submitted to Buyer for inclusion in the SEC filings, will have been prepared in accordance with Regulation S-X of the SEC and, in particular, Rules 1-02 and 3-05 promulgated thereunder. The Financial Statements present fairly, in all respects, the consolidated financial position and results of operations of Seller as of the dates and periods indicated, prepared in accordance with generally accepted accounting principles consistently applied ("GAAP"). Without limiting the generality of the foregoing, (i) there is no basis for any assertion against Seller as of the date of the Financial Statements of any debt, liability or obligation of any nature not fully reflected or reserved against in the Financial Statements; and (ii) there are no assets of Seller as of the date of the Financial Statements, the value of which is overstated in the Financial Statements. Except as disclosed in the Financial Statements, Seller has no known contingent liabilities (including liabilities for Taxes), forward or long-term commitments or unrealized or anticipated losses from unfavorable commitments other than in the ordinary course of business. Seller is not a party to any contract or agreement for the forward purchase or sale of any foreign currency that is material to Seller taken as a whole.
4.15 Absence of Certain Changes or Events. Since the date of the last financial statement furnished to Buyer, there has not been:
(a) Any material adverse change in the financial condition, properties, assets, liabilities or business of Seller;
(b) Any material damage, destruction or loss of any material properties of Seller, whether or not covered by insurance;
(c) Any material change in the manner in which the business of Seller has been conducted;
(d) Any material change in the treatment and protection of trade secrets or other confidential information of Seller;
(e) Any material change in the business or contractual relationship of Seller with any customer or supplier which might reasonably be expected to materially and adversely affect the business or prospects of Seller;
(f) Any agreement by Seller, whether written or oral, to do any of the foregoing; and
(g) Any occurrence not included in paragraphs (a) through (f) of this Section 4.16 which has resulted, or which Seller has reason to believe, in its reasonable judgment, might be expected to result, in a material adverse change in the business or prospects of Seller.
4.16 Governmental Licenses, Permits, Etc. To its knowledge, Seller has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted ("Licenses and Permits"). The information in Schedule 4.16 concerning Seller includes a list of all Licenses and Permits. All Licenses and Permits are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or threatened.
4.17 Employee Agreements. (a) For purposes of this Agreement, the following definitions apply:
(1) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any regulations promulgated thereunder or similar laws, rules and regulations in China.
(2) "Multi-employer Plan" means a plan, as defined in ERISA Section 3(37) or similar laws, rules and regulations in China, to which Seller contributes or is required to contribute.
(3) "Employee Plan" means any pension, retirement, profit sharing, deferred compensation, vacation, bonus, incentive, medical, vision, dental, disability, life insurance or any other employee benefit plan as defined in Section 3(3) of ERISA other than a Multi-employer Plan or similar laws, rules and regulations in China to which Seller contributes, sponsors, maintains or otherwise is bound to with regard to any benefits on behalf of the employees of Seller.
(4) "Employee Pension Plan" means any Employee Plan for the provision of retirement income to employees or which results in the deferral of income by employees extending to the termination of covered employment or beyond as defined in Section 3(2) of ERISA or similar laws, rules and regulations in China.
(5) "Employee Welfare Plan" means any Employee Plan other than an Employee Pension Plan.
(6) "Compensation Arrangement" means any plan or compensation arrangement other than an Employee Plan, whether written or unwritten, which provides to employees of Seller, former employees, officers, directors or shareholders of Seller any compensation or other benefits, whether deferred or not, in excess of base salary or wages, including, but not limited to, any bonus or incentive plan, stock rights plan, deferred compensation arrangement, life insurance, stock purchase plan, severance pay plan and any other employee fringe benefit plan.
(b) The information in Schedule 4.17 concerning Seller lists, all (1) employment agreements and collective bargaining agreements to which Seller is a party; (2) compensation arrangements of Seller with any officer, director or employee; (3) Employee Welfare Plans; (4) Employee Pension Plans; and (5) consulting agreements under which Seller has or may have any monetary obligations to employees or consultants of Seller or their beneficiaries or legal representatives or under which any such persons may have any rights. Seller has previously made available to Buyer true and complete copies of all of the foregoing employment contracts, collective bargaining agreements, Employee Plans and Compensation Arrangements, including descriptions of any unwritten contracts, agreements, Compensation Arrangements or Employee Plans, as amended to date. In addition, with respect to any Employee Plan which continues after the Closing Date, Seller has previously delivered or made available to Buyer (1) any related trust agreements, master trust agreements, annuity contracts or insurance contracts; (2) certified copies of all Board of Directors' resolutions adopting such plans and trust documents and amendments thereto; (3) current investment management agreements; (4) custodial agreements; (5) fiduciary liability insurance policies; (6) indemnification agreements; (7) the most recent determination letter (and underlying application thereof and correspondence and supplemental material related thereto) issued by the Internal Revenue Service with respect to the qualification of each Employee Plan under the provisions of Section 401(a) of the Code; (8) copies of all "advisory opinion letters," "private letter rulings," "no action letters," and any similar correspondence (and the underlying applications therefor and correspondence and supplemental material related thereto) that was issued by any governmental or quasigovernmental agency with respect to the last plan year; (9) Annual Reports (Form 5500 Series) and Schedules A and B thereto for the last plan year; (10) all actuarial reports prepared for the last plan year; (11) all certified Financial Statements for the last plan year; and (12) all current Summary Plan Descriptions, Summaries of Material Modifications and Summary Annual Reports. All documents delivered by Seller to Buyer as photocopies faithfully reproduce the originals thereof, such originals are authentic and were, to the extent execution was required, duly executed.
(c) Except as otherwise disclosed in the information in Schedule 4.17 concerning Seller:
(1) It is not a party to and has, in effect or to become effective after the date of this Agreement, any bonus, cash or deferred compensation, severance, medical, health or hospitalization, pension, profit sharing or thrift, retirement, stock option, employee stock ownership, life or group insurance, death benefit, welfare, incentive, vacation, sick leave, cafeteria, so-called "golden parachute" payment, disability or trust agreement or arrangement.
4.18 Brokers. Seller has not made any agreement or taken any action with any person or taken any action which would cause any person to be entitled to any agent's, broker's or finder's fee or commission, except as disclosed to the other party, connection with the transactions contemplated by this Agreement.
4.19 Business Locations. Seller does not nor does it own or lease any real or personal property in any location except as set forth on the information in the Schedule 4.19 concerning Seller. Seller does not have a place of business (including, without limitation, Seller’s executive offices or place where Seller’s books and records are kept) except as otherwise set forth on the information in Schedule 4.19 concerning Seller.
4.20 Intellectual Property. The information in Schedule 4.20 concerning Seller lists all of the Intellectual Property (as hereinafter defined) used by Seller which constitutes a material patent, trade name, trademark, service mark or application for any of the foregoing. "Intellectual Property" means all of Seller's right, title and interest in and to all patents, trade names, assumed names, trademarks, service marks, and proprietary names, copyrights (including any registration and pending applications for any such registration for any of them), together with all the goodwill relating thereto and all other intellectual property of Seller. Other than as disclosed in the information in Schedule 4.20 concerning Seller, Seller does not have any licenses granted by or to it or other agreements to which it is a party, relating in whole or in part to any Intellectual Property, whether owned by Seller or otherwise. All of the patents, trademark registrations and copyrights listed in the information in Schedule 4.20 concerning Seller that are owned by Seller are valid and in full force and effect. To the knowledge of Seller, it is not infringing upon, or otherwise violating, the rights of any third party with respect to any Intellectual Property. No proceedings have been instituted against or claims received by Seller, nor to its knowledge are any proceedings threatened alleging any such violation, nor does Seller know of any valid basis for any such proceeding or claim. To the knowledge of Seller, there is no infringement or other adverse claims against any of the Intellectual Property owned or used by Seller. To the knowledge of Seller, its use of software does not violate or otherwise infringe the rights of any third party.
4.21 Warranties. The information in Schedule 4.21 concerning Seller sets forth a true and complete list of the forms of all express warranties and guaranties made by Seller to third parties with respect to any services rendered by Seller.
4.22 Suppliers. Except as set forth in the information in Schedule 4.22 concerning Seller, Seller knows and has no reason to believe that, either as a result of the transactions contemplated hereby or for any other reason (exclusive of expiration of a contract upon the passage of time), any present material supplier of Seller will not continue to conduct business with Seller after the Closing Date in substantially the same manner as it has conducted business prior thereto.
4.23 Accounts Receivable. The accounts receivable reflected on the balance sheets included in the Financial Statements, or thereafter acquired by Seller, consists, in the aggregate in all material respects, of items which are collectible in the ordinary and usual course of business.
4.24 Governmental Approvals. To its knowledge, other than as set forth herein, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by Seller with, any governmental authority, federal, state or local, is required in connection with Seller's execution, delivery and performance of this Agreement.
4.25 No Omissions or Untrue Statements. None of the information relating to Seller supplied or to be supplied in writing by it specifically for inclusion in SEC filings, at the respective times that the filings are made contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
4.26 Information concerning Seller Complete. Seller shall promptly provide to Buyer notice concerning any of the information concerning Seller furnished hereunder if events occur prior to the Closing Date that would have been required to be disclosed had they existed at the time of executing this Agreement. The information provided to Buyer concerning Seller, as supplemented prior to the Closing Date, will contain a true, correct and complete list and description of all items required to be set forth therein. The information provided to Buyer concerning Seller, as supplemented prior to the Closing Date, is expressly incorporated herein by reference. Notwithstanding the foregoing, any such supplement to the information in furnished by Seller following the date hereof shall not in any way affect Buyer’s right not to consummate the transactions contemplated hereby as set forth herein.
V. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows, with the knowledge and understanding that Seller is relying materially on such representations and warranties:
5.1 Organization and Standing of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the state of Nevada, and has the corporate power to carry on its business as now conducted and to own its assets and it not required to qualify to transact business as a foreign corporation in any state or other jurisdiction. The copies of the Articles of Incorporation and Bylaws of Buyer, delivered to Seller, are true and complete copies of those documents as now in effect. Buyer does not own any capital stock in any other corporation, business trust or similar entity, and is not engaged in a partnership, joint venture or similar arrangement with any person or entity. The minute books of Buyer contain accurate records of all meetings of its incorporator, shareholders and Board of Directors since its date of incorporation.
5.2 Buyer's Authority. Buyer's Board of Directors has approved and adopted this Agreement and the Exchange.
5.3 Due Execution. This Agreement constitutes, and all other agreements contemplated hereby will constitute, when executed and delivered by Buyer in accordance herewith (and assuming due execution and delivery by the other parties hereto), the valid and binding obligations of Buyer, enforceable in accordance with their respective terms, subject to general principles of equity and bankruptcy or other laws relating to or affecting the rights of creditors generally.
5.4 No Breaches. To its knowledge, the making and performance of this Agreement (including, without limitation, the issuance of the Buyer Shares and Exchangeable Shares) by Buyer will not (i) conflict with the Articles of Incorporation or the Bylaws of Buyer ; (ii) violate any order, writ, injunction, or decree applicable to Buyer of Sub; or (iii) result in any breach or termination of, or constitute a default under, or constitute an event which, with notice or lapse of time, or both, would become a default under, or result in the creation of any encumbrance upon any asset of Buyer under, or create any rights of termination, cancellation or acceleration in any person under, any agreement, arrangement or commitment, or violate any provisions of any laws, ordinances, rules or regulations or any order, writ, injunction or decree to which Buyer is a party or by which Buyer or any of its assets may be bound.
5.5 Capitalization. The authorized capital stock of Buyer is as set forth in Schedule 5.5. Except for the foregoing and for the shares to be issued under the terms of this Agreement or otherwise referred to in this Agreement, there are no agreements, commitments, obligations, options, warrants or similar rights, oral or written, known to Buyer or its affiliates under which additional shares of Buyer are required to be issued after the Closing. All of the outstanding Buyer Common Stock is duly authorized, validly issued, fully paid and nonassessable, and was not issued in violation of the preemptive rights of any person. The Share Consideration to be issued upon effectiveness of the Exchange, when issued in accordance with the terms of this Agreement shall be duly authorized, validly issued, fully paid and non-assessable.
5.6 Business. Buyer, since its formation, has engaged in no business other than as set forth in a schedule attached by Buyer to this Agreement.
5.7 Governmental Approval; Consents. To its knowledge, no authorization, license, permit, franchise, approval, order or consent of, and no registration, declaration or filing by Buyer with, any governmental authority, federal, state or local, is required in connection with Buyer's execution, delivery and performance of this Agreement. No consents of any other parties are required to be received by or on the part of Buyer to enable Buyer to enter into and carry out this Agreement.
5.8 Financial Statements. To its knowledge, the financial statements of Buyer as set forth in a schedule attached by Buyer to this Agreement (the "Buyer Financial Statements") present fairly, in all material respects, the financial position of Buyer as of the respective dates and the results of its operations for the periods covered in accordance with GAAP applicable to the United States. Without limiting the generality of the foregoing, (i) except as set forth in Schedule 5.13 and as follows, there is no basis for any assertion against Buyer as of the date of said balance sheets of any material debt, liability or obligation of any nature not fully reflected or reserved against in such balance sheets or in the notes thereto; and (ii) there are no assets of Buyer, the value of which (in the reasonable judgment of Buyer) is materially overstated in said balance sheets. Except as disclosed therein, Buyer has no known material contingent liabilities (including liabilities for taxes), unusual forward or long-term commitments or unrealized or anticipated losses from unfavorable commitments. Buyer is not a party to any contract or agreement for the forward purchase or sale of any foreign currency.
5.9 Adverse Developments. Except as expressly provided or set forth in, or required by, this Agreement, or as set forth in the Buyer Financial Statements, since the last date of its financial information in a schedule attached by Buyer to this Agreement, there have been no materially adverse changes in the assets, liabilities, properties, operations or financial condition of Buyer, and no event has occurred other than in the ordinary and usual course of business or as set forth in a schedule attached by Buyer to this Agreement or in the Buyer Financial Statements which could be reasonably expected to have a materially adverse effect upon Buyer, and Buyer does not know of any development or threatened development of a nature that will, or which could be reasonably expected to, have a materially adverse effect upon Buyer's operations or future prospects. The parties recognize that Buyer is essentially dormant, conducts no operations and has no significant assets.
5.10 Contracts Listed. All material contracts, agreements, licenses, leases, easements, permits, rights of way, commitments, and understandings, written or oral, connected with or relating in any respect to the present operations of Buyer are, with the exception of this Agreement, described in a schedule attached by Buyer to this Agreement.
5.11; No Default. All of the contracts, agreements, leases, commitments and understandings, written or oral, and any other contract, agreement, lease, commitment or understanding, written or oral, binding upon Buyer referred to in section 5.10 above, are listed in a schedule attached by Buyer to this Agreement. To the knowledge of Buyer, the Buyer Contracts are valid, binding and enforceable by Buyer against the other parties thereto in accordance with their terms. Neither Buyer nor, to the knowledge of Buyer, any of the other parties thereto is in default or breach of any material provision of the Buyer Contracts. Buyer has furnished Seller with a true and complete copy of each Buyer Contract, as amended.
5.12 Taxes. Buyer has duly filed all Returns required by any law or regulation to be filed by it except for extensions duly obtained. All such Returns were, when filed, and to the best of Buyer's knowledge are, accurate and complete in all material respects and were prepared in conformity with applicable laws and regulations. Buyer has paid or will pay in full or has adequately reserved against all Taxes otherwise assessed against it through the Closing Date, and the assessment of any material amount of additional Taxes in excess of those paid and reported is not reasonably expected.
Buyer is not a party to any pending action or proceeding by any governmental authority for the assessment of any Tax, and no claim for assessment or collection of any Tax has been asserted against Buyer that has not been paid. There are no Tax liens upon the assets of Buyer (other than the lien of personal property taxes not yet due and payable). There is no valid basis, to the best of Buyer's knowledge, except as set forth in the Buyer Disclosure Schedule, for any assessment, deficiency, notice, 30-day letter or similar intention to assess any Tax to be issued to Buyer by any governmental authority.
5.13 Litigation. Except as disclosed in this Agreement, a schedule attached by Buyer to this Agreement or Schedule 5.13, there is no claim, action, proceeding or investigation pending or, to Buyer's knowledge, threatened against or affecting Buyer before or by any court, arbitrator or governmental agency or authority which, in the reasonable judgment of Buyer, could have a materially adverse effect on Buyer. There are no decrees, injunctions or orders of any court, governmental department, agency or arbitration outstanding against Buyer.
5.14 Compliance with Laws and Regulations. To its knowledge, Buyer is in compliance, in all material respects, with all laws, rules, regulations, orders and requirements (federal, state and local) applicable to it in all jurisdictions in which the business of Buyer is currently conducted or to which Buyer is currently subject, which may have a material impact on Buyer, including, without limitation, all applicable civil rights and equal opportunity employment laws and regulations, all state and federal antitrust and fair trade practice laws and the Federal Occupational Health and Safety Act. Buyer does not know of any assertion by any party that Buyer is in violation of any such laws, rules, regulations, orders, restrictions or requirements with respect to its current operations, and no notice in that regard has been received by Buyer. To Buyer's knowledge, there is not presently pending any proceeding, hearing or investigation with respect to the adoption of amendments or modifications of existing laws, rules, regulations, orders, restrictions or requirements which, if adopted, would materially adversely affect the current operations of Buyer.
5.15 Compliance with Laws. (a) To its knowledge, the business operations, property and assets of Buyer (and to the knowledge of Buyer, the business of any sub-tenant or license which is occupying or has occupied any space on any premises of Buyer and the activities of which could result in any material adverse liability to Buyer) (i) conform with and are in compliance in all material respects with all, and are not in material violation of any applicable federal, state and local laws, rules and regulations, including, but not limited to, CERCLA and RCRA, as well as any other laws, rules or regulations relating to tax, product liability, controlled substances, product registration, environmental protection, hazardous or toxic waste, employment, or occupational safety matters; and (ii) have been conducted and operated in a manner such that, to Buyer's knowledge, Buyer has no foreseeable potential liabilities for environmental clean-up under CERCLA, RCRA or under any law, rule, regulation or common or civil law doctrine.
(b) To its knowledge, no predecessor-in-title to any real property now or previously owned or operated by Buyer, nor any predecessor operator thereof conducted its business or operated such property in violation of CERCLA and RCRA or any other applicable, federal, state and local laws, rules and regulations relating to environmental protection or hazardous or toxic waste matters.
(c) Except as disclosed a schedule attached by Buyer to this Agreement, no suit, action, claim, proceeding nor investigation review or inquiry by any Government Entity (as defined in Section 4.9) concerning any such possible violations by Buyer is pending or, to Buyer's knowledge, threatened, including, but not limited to, matters relating to diagnostic tests and products and product liability, environmental protection, hazardous or toxic waste, controlled substances, employment, occupational safety or tax matters. Buyer does not know of any reasonable basis or ground for any such suit, claim, investigation, inquiry or proceeding.
5.16 Governmental Licenses, Permits, Etc. To its knowledge, Buyer has all governmental licenses, permits, authorizations and approvals necessary for the conduct of its business as currently conducted. All such licenses, permits, authorizations and approvals are in full force and effect, and no proceedings for the suspension or cancellation of any thereof is pending or threatened.
5.17 Brokers. Buyer has not made any agreement or taken any action with any person or taken any action which would cause any person to be entitled to any agent's, broker's or finder's fee or commission, except as disclosed to the other party, connection with the transactions contemplated by this Agreement.
5.18 Employee Plans. Except as listed in a schedule attached by Buyer to this Agreement, Buyer has no employees, consultants or agents, and Buyer has no Employee Plans or Compensation Arrangements.
VI. MISCELLANEOUS
6.1 Expenses. The parties will pay for all their own expenses and costs.
6.2 Survival of Representations, Warranties and Covenants. All statements contained in this Agreement or in any certificate delivered by or on behalf of Seller or Buyer pursuant hereto or in connection with the transactions contemplated hereby shall be deemed representations, warranties and covenants by Seller or Buyer, as the case may be, hereunder. All representations, warranties and covenants made by Seller and by Buyer in this Agreement, or pursuant hereto, shall survive through the Closing Date.
6.3 Nondisclosure. Buyer will not at any time after the date of this Agreement, without Seller' consent, divulge, furnish to or make accessible to anyone (other than to its representatives as part of its due diligence or corporate investigation) any knowledge or information with respect to confidential or secret processes, inventions, discoveries, improvements, formulae, plans, material, devices or ideas or know-how, whether patentable or not, with respect to any confidential or secret aspects (including, without limitation, customers or suppliers) ("Confidential Information") of Seller.
Seller will not at any time after the date of this Agreement, without Buyer's consent (except as may be required by law), use, divulge, furnish to or make accessible to anyone any Confidential Information (other than to its representatives as part of its due diligence or corporate investigation) with respect to Buyer. The undertakings set forth in the preceding two paragraphs of this Section 6.3 shall lapse if the Closing takes place as to Buyer and Seller, but shall not lapse as to the officers and directors of Buyer, individually.
Any information, which (i) at or prior to the time of disclosure by either of Seller or Buyer was generally available to the public through no breach of this covenant, (ii) was available to the public on a non-confidential basis prior to its disclosure by either of Seller or Buyer or (iii) was made available to the public from a third party, provided that such third party did not obtain or disseminate such information in breach of any legal obligation to Seller or Buyer, shall not be deemed Confidential Information for purposes hereof, and the undertakings in this covenant with respect to Confidential Information shall not apply thereto.
6.4 Succession and Assignments; Third Party Beneficiaries. This Agreement may not be assigned (either voluntarily or involuntarily) by any party hereto without the express written consent of the other party. Any attempted assignment in violation of this Section shall be void and ineffective for all purposes. In the event of an assignment permitted by this Section, this Agreement shall be binding upon the heirs, successors and assigns of the parties hereto. Except as expressly set forth in this Section, there shall be no third party beneficiaries of this Agreement.
6.5 Notices. All notices, requests, demands or other communications with respect to this Agreement shall be in writing and shall be (i) sent by facsimile transmission, (ii) sent by the federal postal service, registered or certified mail, return receipt requested, or (iii) personally delivered by a nationally recognized express overnight courier service, charges prepaid, to the addresses specified in writing by each party.
Any such notice shall, when sent in accordance with the preceding sentence, be deemed to have been given and received on the earliest of (i) the day delivered to such address or sent by facsimile transmission, (ii) the fifth (5th) business day following the date deposited with the United States Postal Service, or (iii) twenty-four (24) hours after shipment by such courier service.
6.6 Construction. This Agreement shall be construed and enforced in accordance with the internal laws of Nevada without giving effect to the principles of conflicts of law thereof.
6.7 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which shall together constitute one and the same Agreement.
6.8 No Implied Waiver; Remedies. No failure or delay on the part of the parties hereto to exercise any right, power or privilege hereunder or under any instrument executed pursuant hereto shall operate as a waiver, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege. All rights, powers and privileges granted herein shall be in addition to other rights and remedies to which the parties may be entitled at law or in equity.
6.9 Entire Agreement. This Agreement, including the Exhibits and Schedules attached hereto, sets forth the entire understandings of the parties with respect to the subject matter hereof, and it incorporates and merges any and all previous communications, understandings, oral or written, as to the subject matter hereof, and cannot be amended or changed except in writing, signed by the parties.
6.10 Headings. The headings of the Sections of this Agreement, where employed, are for the convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meanings of the parties.
6.11 Severability. To the extent that any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.
6.12 Public Disclosure. From and after the date hereof through the Closing Date, Buyer shall not issue a press release or any other public announcement with respect to the transactions contemplated hereby without the prior consent of Seller, which consent shall not be unreasonably withheld or delayed. It is understood by Seller that Buyer is required under the Exchange Act to make prompt disclosure of any material transaction.
THE PARTIES TO THIS AGREEMENT HAVE READ THIS AGREEMENT, HAVE HAD THE OPPORTUNITY TO CONSULT WITH INDEPENDENT COUNSEL OF THEIR OWN CHOICE, AND UNDERSTAND EACH OF THE PROVISIONS OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written.
Mega World Food Holding Company, a Nevada corporation
By: ____________________________
Xiaozhong Wu, Chairman of Board
Mega World Food Limited, a Hong Kong China corporation
By: ____________________________
Xiaozhong Wu, Chairman of Board
Schedule 2.1
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Name of
Shareholder
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Shares Owned in
HK Company
BEFORE
SHARE
EXCHANGE
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Shares Owned in
US Company
FROM SHARE
EXCHANGE
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Xiaozhong Wu
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10,000
|
14,972,120
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Schedule 5.5
Buyer is authorized to issue 100,000,000 shares of common stock with $.001 par value per share and 10,000,000 shares of preferred stock, $.001 par value. No shares are outstanding as of the date of execution of this Agreement.
Exhibit 10.1
Distribution Agreement
THIS AGREEMENT, made this
first
day of
August, 2010
by and between
Lin’an Fengye Food Co., Ltd.
, a corporation duly organized under the laws of the People’s Republic of China having its principal place of business at
Maoli Village, Longgang Town, Lin’an City, Zhejiang Province, 311322 (hereinafter "SUPPLIER"), and
Mega World Food Limited, a corporation duly organized under the laws of
Hong Kong Special Administration Region of the PRC, with its registered address at
ROOM C1D, 6/F, WING HING INDUSTRIAL BUILDING, 14 HING YIP STREET, KWUN TONG, KOWLOON, HONG KONG
(hereinafter "DISTRIBUTOR").
WHEREAS, SUPPLIER manufactures and markets certain products and desires to increase the sales of such products;
WHEREAS, DISTRIBUTOR has represented that it possesses the necessary expertise and marketing organization to promote and sell such products; and
WHEREAS, SUPPLIER is willing to appoint DISTRIBUTOR and DISTRIBUTOR is willing to accept such appointment as distributor of SUPPLIER'S products in the territory defined herein;
NOW, THEREFORE, In consideration of the mutual premises and covenants hereinafter set forth, the parties agree as follows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following words, terms and phrases, where written with an initial capital letter, shall have the meanings assigned to them in this Article 1 unless the context otherwise requires:
1.1
Products
. "Products" shall mean those products described in Exhibit I hereto as that Exhibit may be amended with both parties’ written consent.
1.2
Territory
. "Territory" shall mean the area specifically described in Exhibit II hereto as that Exhibit may be amended from time to time.
1.3
SUPPLIER Information
. "SUPPLIER Information" shall mean all information, other than information in published form or expressly designated by SUPPLIER as non-confidential, which is directly or indirectly disclosed to DISTRIBUTOR or embodied in Products provided hereunder, regardless of the form in which it is disclosed, relating in any way to SUPPLIER'S markets, customers, products, patents, inventions, procedures, methods, designs, strategies, plans, assets, liabilities, costs, revenues, profits, organization, employees, agents, distributors or business in general.
ARTICLE 2
APPOINTMENT
2.1
Scope
. SUPPLIER hereby appoints DISTRIBUTOR, and DISTRIBUTOR hereby accepts appointment, as SUPPLIER'S exclusive distributor during the term of this Agreement with the right to sell or otherwise distribute Products in the Territory, under SUPPLIER'S name, logotypes, and trademarks, subject to all the terms and conditions of this Agreement. SUPPLIER shall not sell, distribute, rent or lease Products directly or indirectly, or through any other distributors or agents in the Territory.
2.2
Subdistributors
. DISTRIBUTOR shall be entitled, at its sole discretion, to appoint subdistributors or agents to promote and/or distribute Products in the Territory. However, notwithstanding any such appointments, DISTRIBUTOR shall at all times remain fully liable for the performance of its subdistributors and/or agents and DISTRIBUTOR hereby agrees to indemnify and hold harmless SUPPLIER from all damages, losses, costs or expenses arising in any manner from any act or omission on the part of its subdistributors or agents.
2.3
Sales Outside the Territory
. Nothing herein shall be construed as precluding DISTRIBUTOR from selling Products outside the Territory, provided that DISTRIBUTOR shall not actively advertise, promote or solicit customers for Products outside the Territory nor establish any office through which orders are solicited or any depot at which inventories of SUPPLIER Products are stored outside the Territory.
ARTICLE 3
GENERAL OBLIGATIONS OF DISTRIBUTOR
3.1
Marketing
. DISTRIBUTOR shall have the following obligations with respect to the marketing and distribution of SUPPLIER Products:
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(a)
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To use its best efforts to further the promotion, marketing, sale and other distribution of Products in the Territory;
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(b)
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To maintain an adequate and balanced inventory of Products, supplies, and spare parts;
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(c)
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To promptly respond to all inquiries from customers, including complaints, process all orders, and effect all shipments of Products;
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(d)
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To diligently investigate all leads with respect to potential customers referred to it by SUPPLIER;
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(e)
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To permit SUPPLIER to visit DISTRIBUTOR'S customers and to visit DISTRIBUTOR'S place of business and inspect its inventories, service records, and other relevant documents.
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(f)
|
To maintain throughout the Territory an adequate sales force dedicated on a full-time basis to the sale of Products;
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(g)
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To participate actively in sales or merchandising programs prepared by SUPPLIER; to participate in all fairs and exhibitions in the Territory where such participation will, in the judgment of SUPPLIER, promote the Products; and to develop and implement sales programs for the promotion of the Products;
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(h)
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To provide SUPPLIER upon request a report of its activities with respect to the Products in the Territory during such year, which report shall be in such form and in such detail as SUPPLIER may reasonably require.
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3.2
Advertising
. DISTRIBUTOR shall diligently undertake to advertise the Products in the Territory..
3.4
Customer Support
. DISTRIBUTOR agrees to cooperate with SUPPLIER in dealing with any customer complaints concerning the Products and to take any action requested by SUPPLIER to resolve such complaints. DISTRIBUTOR also agrees to assist SUPPLIER in arranging for any customer warranty service. However, any and all expenses incurred hereby shall be borne by SUPPLIER.
3.5
Expenses
. Unless otherwise expressly provided herein, DISTRIBUTOR assumes full responsibility for all costs and expenses which it incurs in carrying out its obligations under this Agreement, including but not limited to all rentals, salaries, commissions, advertising, demonstration, travel and accommodation expenses without the right to reimbursement for any portion thereof from SUPPLIER.
ARTICLE 4
ORDERS FOR PRODUCTS
4.1
Purchase Orders
. DISTRIBUTOR shall submit purchase orders for the Products to SUPPLIER in writing or by telex, telegram or cable which shall set forth, at a minimum:
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(a)
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An identification of the Products ordered, including model numbers,
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(c)
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Requested delivery dates, and
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(d)
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Shipping instructions and shipping address.
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DISTRIBUTOR shall ensure that its purchase orders are received by SUPPLIER at least forty five (45)days prior to the delivery dates requested in the order. DISTRIBUTOR shall not be entitled to order quantities of the Products in any calendar quarter in excess of an amount as mutually agreed by the parties without the specific approval of SUPPLIER pursuant to a writing separate from any acceptance of a purchase order.
4.2
Acceptance of Orders
. All purchase orders from DISTRIBUTOR are subject to acceptance in writing by SUPPLIER which acceptance shall be delivered by mail to a regularly established post office, or by telex, telegram or cable through a regularly established agency of a commercial telex, telegram or cable company. Each purchase order shall be deemed to be an offer by DISTRIBUTOR to purchase the Products pursuant to the terms of this Agreement and, when accepted by SUPPLIER as hereinabove provided, shall give rise to a contract under the terms set forth herein to the exclusion of any additional or contrary terms set forth in the purchase order.
4.3
Delivery Terms
. "Free Carrier" shall be construed in accordance with INCOTERMS 1980 of the International Chamber of Commerce. SUPPLIER shall have no further responsibility for the Products, and all risk of damage to or loss or delay of the Products shall pass to DISTRIBUTOR upon their delivery at the Free Carrier delivery point to (a) a common carrier or (b) an agent or any other person specified by DISTRIBUTOR acting on behalf of DISTRIBUTOR. DISTRIBUTOR shall insure each shipment of Products with a reputable insurer for the full invoice of such shipment. Such insurance shall provide for full coverage from the time the Products are delivered at the Free Carrier point until DISTRIBUTOR shall have paid SUPPLIER for such Products in full. SUPPLIER reserves all rights with respect to delivered Products permitted by law including, without limitation, the rights of rescission, repossession, resale, and stoppage in transit until the full amount due from DISTRIBUTOR in respect of all delivered Products has been paid.
.
4.4
Modification of Orders
. No accepted purchase order shall be modified or cancelled except upon the written agreement of both parties. DISTRIBUTOR'S purchase orders or mutually agreed change orders shall be subject to all provisions of this Agreement, whether or not the purchase order or change order so states.
4.5
Title and Possession of Orders. Distributor
shall take title and possession to all Products ordered hereunder and be responsible for fulfilling all orders. All risks of loss on these Products ordered shall be on Distributor.
ARTICLE 5
PRICES AND PAYMENTS
5.1
Prices
. The prices to be paid by for Products purchased pursuant to the Distribution Agreement shall be
the same price as Supplier charges other non-affiliated third party distributors or other sales made on a wholesale basis as modified from time to time in Supplier’s discretion but only if the same modification is made for other non-affiliated third party distributors or wholesale purchasers.
5.2
Price Increases, Decreases
. SUPPLIER may, at any time during the term of this Agreement, increase its prices for the Products by providing DISTRIBUTOR with at least sixty (60) days prior written notice. Increased prices for all Products shall not apply to purchase orders accepted prior to the effective date of the price increase unless such orders provide for delivery, and delivery is in fact made, more than one-hundred and twenty (120) days after the date of acceptance of the order. Price decreases with respect to all Products shall be effective immediately upon written notice to the DISTRIBUTOR on all such Products not yet delivered.
5.3
Payment Terms
. Until such time as DISTRIBUTOR shall have established a credit history satisfactory to SUPPLIER, payments by DISTRIBUTOR hereunder shall be made by irrevocable, transferrable and divisible letter of credit opened at DISTRIBUTOR'S expense, issued or confirmed by a bank specified by, or acceptable to, SUPPLIER, cash in advance, or such other method of secured payment as SUPPLIER shall prescribe. Thereafter, all payments hereunder shall be due net forty-five (45) days from the date of shipment of the Products, or from the date of invoice for such charges as taxes, duties, interest or like special charges, payable to the bank or banks specified by SUPPLIER in writing from time to time. All payments hereunder shall be made in U.S. dollars or such other currency as may be mutually agreed upon.
5.4
Resale Prices
. DISTRIBUTOR may resell Products at such prices as DISTRIBUTOR, in its sole discretion, shall determine.
5.5
Overdue Payments
. If and for so long as any payment from DISTRIBUTOR to SUPPLIER under this Agreement shall be overdue:
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(a)
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Interest at the rate of one percent ( 1 %) per annum shall automatically become due on all balances outstanding plus a minimum administrative and handling charge of U.S. $
one thousand (1000)
per month or part thereof; and
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(b)
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SUPPLIER shall have the right, in its sole discretion, to require payment for additional shipments of Products either by cash in advance or by an irrevocable transferrable, divisible letter of credit in U.S. dollars confirmed by a U.S. bank specified by SUPPLIER, instead of by open account as provided above.
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ARTICLE 6
ACCEPTANCE AND WARRANTY
6.1
Acceptance of Products
. In the event of any shortage, damage or discrepancy in or to a shipment of Products, DISTRIBUTOR shall promptly report the same to SUPPLIER and furnish such written evidence or other documentation. SUPPLIER shall not be liable for any such shortage, damage or discrepancy unless SUPPLIER has received notice and substantiating evidence thereof from DISTRIBUTOR within thirty (30) days of arrival of the Products at DISTRIBUTOR'S shipping address in the Territory. If the substantiating evidence delivered by DISTRIBUTOR demonstrates to SUPPLIER'S satisfaction that SUPPLIER is responsible for such shortage, damage or discrepancy, SUPPLIER shall promptly deliver additional or substitute Products to DISTRIBUTOR in accordance with the delivery procedures set forth herein and SUPPLIER shall be responsible for all losses and expenses suffered or incurred by DISTRIBUTOR..
ARTICLE 7
REMEDIES
SUPPLIER AND DISTRIBUTOR UNDERSTANDS AND AGREES AS FOLLOWS:
7.1
Delay
. Supplier shall be liable for any loss or damage caused by delay in furnishing products and services or any other performance under or pursuant to this agreement.
ARTICLE 8
CONFIDENTIALITY
DISTRIBUTOR acknowledges and agrees that all SUPPLIER Information is confidential and proprietary to SUPPLIER. DISTRIBUTOR agrees not to use any of such SUPPLIER Information during the term of this Agreement and for a period of five (5) years thereafter for any purpose other than as permitted or required for performance by DISTRIBUTOR hereunder. DISTRIBUTOR further agrees not to disclose or provide any of such SUPPLIER Information to any third party and to take all necessary measures to prevent any such disclosure by its employees, agents, contractors or consultants during the term hereof and for a period of five (5) years thereafter. Nothing herein shall prevent DISTRIBUTOR from using, disclosing or authorizing the disclosure of any SUPPLIER Information which is, or hereafter becomes, part of the public domain.
ARTICLE 9
TRADEMARKS
9.1
Use of Trademarks
. SUPPLIER hereby grants to DISTRIBUTOR a non-exclusive, non-transferable, and royalty-free right and license to use the SUPPLIER trademarks specified in Exhibit V attached hereto, as such Exhibit may be modified from time to time during the term of this Agreement, in connection with the sale or other distribution, promotion, advertising and maintenance of the Products for so long as such trademarks are used by DISTRIBUTOR in accordance with SUPPLIER'S standards, specifications and instructions, but in no event beyond the term of this Agreement. DISTRIBUTOR shall afford SUPPLIER reasonable opportunities during the term hereof to inspect and monitor the activities of DISTRIBUTOR in order to ensure DISTRIBUTOR'S use of the trademarks in accordance with SUPPLIER'S standards and instructions. DISTRIBUTOR shall acquire no right, title or interest in such SUPPLIER trademarks other than the foregoing limited license, and DISTRIBUTOR shall not use any SUPPLIER trademarks as part of DISTRIBUTOR'S corporate or trade name or permit any third party to do so without the prior written consent of SUPPLIER.
9.2
Registration
. SUPPLIER shall use its best efforts to register the SUPPLIER trademarks specified in Exhibit V, as such Exhibit may be modified during the term of this Agreement, in such jurisdictions within the Territory in which SUPPLIER determines that registration is necessary or useful to the successful distribution of the Products. In addition, in the event SUPPLIER believes that it is advisable to effect any filing or obtain any governmental approval or sanction for the use by DISTRIBUTOR of any of SUPPLIER'S trademarks pursuant to this Agreement, the parties shall fully cooperate in order to do so. All expenses relating to the registration of SUPPLIER'S trademarks in the Territory as well as the making of any filing or obtaining any governmental approvals for the use by DISTRIBUTOR of SUPPLIER'S trademarks shall be borne by SUPPLIER.
9.3
Markings
. DISTRIBUTOR shall not, without the prior written consent of SUPPLIER, remove or alter any patent numbers, trade names, trademarks, notices, serial numbers, labels, tags or other identifying marks, symbols or legends affixed to any Products or containers or packages.
9.4
Infringements
. DISTRIBUTOR shall promptly notify SUPPLIER of any use by any third party of SUPPLIER'S trademarks or any use by such third parties of similar marks which may constitute an infringement or passing off of SUPPLIER'S trademarks. SUPPLIER reserves the right in its sole discretion to institute any proceedings against such third party infringers and DISTRIBUTOR shall refrain from doing so. DISTRIBUTOR agrees to cooperate fully with SUPPLIER in any action taken by SUPPLIER against such third parties, provided that all expenses of such action shall be borne by SUPPLIER and all damages which may be awarded or agreed upon in settlement of such action shall accrue to SUPPLIER.
9.5
Termination of Use
. DISTRIBUTOR acknowledges SUPPLIER'S proprietary rights in and to the SUPPLIER trademarks and any trade names regularly applied by SUPPLIER to the Products, and DISTRIBUTOR hereby waives in favor of SUPPLIER all rights to any trademarks, tradenames and logotypes now or hereafter originated by SUPPLIER. DISTRIBUTOR shall not adopt, use or register any words, phrases or symbols which are identical to or confusingly similar to any of SUPPLIER'S trademarks. Upon termination of this Agreement, DISTRIBUTOR shall cease and desist from use of the SUPPLIER trademarks in any manner. In addition, DISTRIBUTOR hereby empowers SUPPLIER and agrees to assist SUPPLIER, if requested, to cancel, revoke or withdraw any governmental registration or authorization permitting DISTRIBUTOR to use SUPPLIER trademarks in the Territory.
ARTICLE 10
TAXES
10.1 DISTRIBUTOR shall be solely responsible for and shall pay, or reimburse SUPPLIER for, all taxes, duties, import deposits, assessments and other governmental charges, however designated, which are now or hereafter imposed under or by any governmental authority or agency, that are (a) associated with the performance by SUPPLIER of its obligations hereunder the payment of any amount by DISTRIBUTOR to SUPPLIER pursuant to this Agreement, (b) based on the Products or their use, or (c) relate to the import of the Products into the Territory in accordance with then prevailing law or regulations.
ARTICLE 11
IMPORT AND EXPORT OF PRODUCTS
11.1
Import Documentation
. DISTRIBUTOR shall be responsible for obtaining all licenses and permits and for satisfying all formalities as may be required to import Products into the Territory in accordance with then prevailing law or regulations. SUPPLIER shall be responsible for furnishing DISTRIBUTOR with necessary documents or information for SUPPLIER to obtain all import licenses or permits.
11.2.
Export Regulations
. SUPPLIER shall be responsible for obtaining all licenses and permits and for satisfying all formalities as may be required to export Products out of the country it is located in accordance with the applicable laws and regulations.
ARTICLE 12
TERM AND TERMINATION
12.1
Term
. This Agreement shall take effect with respect to the Territory as of the date first above written and shall continue in force for the initial period specified in Exhibit III. Thereafter, this Agreement shall be renewed for additional periods of one (1) year each, commencing on January 1 of each year, if each of the parties shall have given the other written notice of its renewal of this Agreement no later than July 1 of the previous year.
12.2
Termination
. Notwithstanding the provisions of Section 13.1 below, this Agreement may be terminated in accordance with the following provisions:
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(a)
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Either party hereto may terminate this Agreement at any time by giving notice in writing to the other party, which notice shall be effective upon dispatch, should the other party file a petition of any type as to its bankruptcy, be declared bankrupt, become insolvent, make an assignment for the benefit of creditors, go into liquidation or receivership, or otherwise lose legal control of its business, or should the other party or a substantial part of its business come under the control of a third party;
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(b)
|
Either party may terminate this Agreement by giving notice in writing to the other party should an event of Force Majeure continue for more than six (6) months as set forth in Section 13.5 below;
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(c)
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Either party may terminate this Agreement by giving notice in writing to the other party in the event the other party is in material breach of this Agreement and shall have failed to cure such breach within thirty (30) days of receipt of written notice thereof from the first party;
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(d)
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SUPPLIER may terminate this Agreement at any time on written notice within sixty (60) days after the end
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of the initial term or any renewal term as set forth in Section 12.1 above if, during such initial term or renewal term, SUPPLIER and DISTRIBUTOR shall have failed to agree at least sixty (60) days prior to the expiration of the initial term or any renewal term.
12.3
Rights and Obligations on Termination
. In the event of termination of this Agreement for any reason, the parties shall have the following rights and obligations;
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(a)
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Termination of this Agreement shall not release either party from the obligation to make payment of all amounts then or thereafter due and payable or to perform all accepted orders or concluded agreements or contracts between the parties of this Agreements;
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(b)
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SUPPLIER shall have the right tore purchase any part of all of DISTRIBUTOR'S inventory of Products in DISTRIBUTOR'S possession as of the termination date at SUPPLIER'S invoiced price to DISTRIBUTOR for such products and all transportation costs incurred thereunder shall be borne by SUPPLIER..
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(c)
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DISTRIBUTOR'S obligations pursuant to Article 9 hereof shall survive termination of this Agreement.
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(d)
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Within thirty (30) days of the effective date of termination of this Agreement, DISTRIBUTOR shall
furnish SUPPLIER with a list of all DISTRIBUTOR'S customers and the place of destination of all Products sold which are still covered by a SUPPLIER warranty. In addition, DISTRIBUTOR agrees to furnish SUPPLIER with complete information as to calls or the status of any negotiations for the sale of the Products.
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12.4
No Compensation
. In the event either party terminates this Agreement for any reason in accordance with the terms hereof, the parties hereby agree that, subject to the provisions of Section 13.4 hereof and without prejudice to any other remedies which either party may have in respect of any breach of this Agreement, neither party shall be entitled to any compensation or like payment from the other as a result of such termination.
ARTICLE 13
FORCE MAJEURE
13.1
Definition
. Force Majeure shall mean any event or condition, not existing as of the date of signature of this Agreement, not reasonably foreseeable as of such date and not reasonably within the control of either party, which prevents in whole or in material part the performance by one of the parties of its obligations hereunder or which renders the performance of such obligations so difficult or costly as to make such performance commercially unreasonable. Without limiting the foregoing, the following shall constitute events or conditions of Force Majeure: acts of State or governmental action, riots, disturbance, war, strikes, lockouts, slowdowns, prolonged shortage of energy supplies, epidemics, fire, flood, hurricane, typhoon, earthquake, lightning and explosion. It is in particular expressly agreed that any refusal or failure of any governmental authority to grant any export license legally required for the fulfillment by SUPPLIER of its obligations hereunder shall constitute an event of Force Majeure.
13.2
Notice
. Upon giving notice to the other party, a party affected by an event of Force Majeure shall be released without any liability on its part from the performance of its obligations under this Agreement, except for the obligation to pay any amounts due and owing hereunder, but only to the extent and only for the period that its performance of such obligations is prevented by the event of Force Majeure. Such notice shall include a description of the nature of the event of Force Majeure, and its cause and possible consequences. The party claiming Force Majeure shall promptly notify the other party of the termination of such event.
13.3
Confirmation
. The party invoking Force Majeure shall provide to the other party confirmation of the existence of the circumstances constituting Force Majeure. Such evidence may consist of a statement or certificate of an appropriate governmental department or agency where available, or a statement describing in detail the facts claimed to constitute Force Majeure.
13.4
Suspension of Performance
. During the period that the performance by one of the parties of its obligations under this Agreement has been suspended by reason of an event of Force Majeure, the other party may likewise suspend the performance of all or part of its obligations hereunder to the extent that such suspension is commercially reasonable.
13.5
Termination
. Should the period of Force Majeure continue for more than six (6) consecutive months, either party may terminate this Agreement without liability to the other party, except for payments due to such date, upon giving written notice to the other party.
ARTICLE 14
ARBITRATION
14.1
Disputes
. Any dispute, controversy or claim arising out of or relating to this Agreement shall be submitted to China International Economic and Trade Arbitration Commission for arbitration which shall be conducted in accordance with the Commission’s arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.
14.2
Governing Law
. This Agreement shall be governed by, and interpreted and construed in accordance with, the laws of the People’s Republic of China.
ARTICLE 15
MISCELLANEOUS
15.1
Relationship
. This Agreement does not make either party the employee, agent or legal representative of the other for any purpose whatsoever. Neither party is granted any right or authority to assume or to create any obligation or responsibility, express or implied, on behalf of or in the name of the other party. In fulfilling its obligations pursuant to this Agreement each party shall be acting as an independent contractor.
15.2
Assignment
. Neither party shall have the right to assign or otherwise transfer its rights and obligations under this Agreement except with the prior written consent of the other party; provided, however, SUPPLIER shall be entitled to assign any or all of its rights and obligations hereunder to any of its subsidiaries, provided that SUPPLIER shall remain fully liable for the performance of all its obligations hereunder; and further provided that a successor in interest by merger, by operation of law, assignment, purchase or otherwise of the entire business of either party shall acquire all rights and obligations of such party hereunder. Any prohibited assignment shall be null and void.
15.3
Notices
. Notices permitted or required to be given hereunder shall be deemed sufficient if given by registered or certified air mail, postage prepaid, return receipt requested, addressed to the respective addresses of the parties as first above written or at such other addresses as the respective parties may designate by like notice from time to time. Notices so given shall be effective upon (a) receipt by the party to which notice is given, or (b) on the fourteenth (l4th) day following the date such notice was posted, whichever occurs first.
15.4
Entire agreement
. This agreement, including exhibits I through vi attached hereto and incorporated as an integral part of this agreement, constitutes the entire agreement of the parties with respect to the subject matter hereof, and supersedes all previous distributorship agreements by and between supplier and distributor as well as all proposals, oral or written, and all negotiations, conversations or discussions heretofore had between the parties related to this agreement. Distributor acknowledges that it has not been induced to enter into this agreement by any representations or statements, oral or written, not expressly contained herein.
15.5
Amendment
. This Agreement shall not be deemed or construed to be modified, amended, rescinded, cancelled or waived, in whole or in part, except by written amendment signed by the parties hereto.
15.6
Publicity
. This Agreement is confidential and no party shall issue press releases or engage in other types of publicity of any nature dealing with the commercial and legal details of this Agreement without the other party's prior written approval, which approval shall not be unreasonably withheld. However, approval of such disclosure shall be deemed to be given to the extent such disclosure is required to comply with governmental rules, regulations or other governmental requirements. In such event, the publishing party shall furnish a copy of such disclosure to the other party.
15.7
Severability
. In the event that any of the terms of this Agreement are in conflict with any rule of law or statutory provision or are otherwise unenforceable under the laws or regulations of any government or subdivision thereof, such terms shall be deemed stricken from this Agreement, but such invalidity or unenforceability shall not invalidate any of the other terms of this Agreement and this Agreement shall continue in force, unless the invalidity or unenforceability of any such provisions hereof does substantial violence to, or where the invalid or unenforceable provisions comprise an integral part of, or are otherwise inseparable from, the remainder of this Agreement.
15.8
Counterparts
. This Agreement shall be executed in two or more counterparts in the English language, and each such counterpart shall be deemed an original hereof. In case of any conflict between the English version and any translated version of this Agreement, the English version shall govern.
15.9
Waiver
. No failure by either party to take any action or assert any right hereunder shall be deemed to be a waiver of such right in the event of the continuation or repetition of the circumstances giving rise to such right.
IN WITNESS WHEREOF, The parties have caused this Agreement to be executed on the date first above written.
Mega World Food Limited, a corporation duly organized under the laws of
Hong Kong Special Administration Region of the PRC
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By
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Xiaozhong Wu, President
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Lin’an Fengye Food Co., Ltd.
, a corporation duly organized under the laws of the People’s Republic of China
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By:
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Xiaozhong Wu, President
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EXHIBIT I
Products
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3.
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Frozen white cauliflower;
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5.
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Frozen green soy bean;
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EXHIBIT II
Territory
All the world ( Not including China ,PRC)
EXHIBIT III
Term of Agreement
Ten years.
EXHIBIT I
V
Reserved
EXHIBIT V
Trademarks
Fengye
EXHIBIT VI
Customers
Customers shall be the sole responsibility of Distributor.
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