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Share Name | Share Symbol | Market | Type |
---|---|---|---|
China Marine Food Group Limited (CE) | USOTC:CMFO | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0002 | 1,000 | 01:00:00 |
NEVADA
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87-0640467
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(State or other jurisdiction of
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(IRS Employer Identification No.)
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Incorporation or organization)
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4
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27
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41
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41
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43
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43
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44
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45
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45
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64
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F-1 – F-26
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65
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65
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66
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67
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71
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75
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76
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77
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78
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82
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Products
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Products / Species
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Main Markets
in the PRC
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Foreign Markets
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Processed Seafood Products
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Roasted file fish
Jingdu roasted fish
Barbecued squid
Roasted prawn
Barbecued baby squid
Sliced shredded squid
Sliced octopus
Sliced squid
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Fujian Province
Zhejiang Province
Shandong Province
Guangdong Province
Greater Shanghai Region till April 2011
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N/A
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Marine Catch
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Squid (Loligo bleekeri)
Horse mackerel
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Fujian Province
Shandong Province
Lianoing Province
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The Philippines
|
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“Hi-Power” Algae-Based Beverage Products
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Fujian Province
Zhejiang Province
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N/A
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Squids are commonly found in the seas of the Taiwan Strait and Pacific Ocean. Squid contains many nutrients such as proteins, fats, carbohydrate, calcium and phosphorus. Its fine taste and springy texture makes the squid a popular food with consumers.
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“Hi Power” drink is high in protein and low in calories and fat, which provides the consumers a combination of immune system benefits, improved digestion and reductions in hyperglycemia and hypertension.
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1.
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Receiving and storing raw and packaging materials.
All raw materials undergo visual inspection to ensure freshness and firmness before they are accepted and stored. Inspection is carried out by way of random sampling.
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2.
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Ice-packing.
To maintain the freshness of our raw materials, a portion of the raw materials is packed in ice and transported directly to our production facilities for processing, whereas the remaining raw materials are packed in ice and transported to our cold storage facilities for storage at minus two to two degrees Celsius in less than 24 hours from purchase. The raw materials will remain frozen in our cold storage facilities until they must be delivered to the production facilities for processing.
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3.
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Cleaning.
At the production facilities, the raw materials are cleaned by removing unwanted portions such as heads, innards and shells.
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4.
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Slicing.
The raw materials are then sliced on stainless steel tables.
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5.
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Washing and draining.
The raw materials are then sent to the washing pool for washing so as to remove oil, blood stains, remnant innards and other stains. After washing, the raw materials are drained to remove excess water content.
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6.
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Marinating and adding flavoring.
Other ingredients such as salt, sugar and spices are then added in the required amounts according to our recipes, left to marinate for a set period and mixed at stipulated intervals.
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7.
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Steam-drying / Roasting.
The raw materials are arranged on wire mesh trays, which are stacked in trolleys and rolled into a heating machine. Roasting takes place under controlled temperatures via a roasting conveyor belt, where moisture levels are monitored. Depending on the product, we will slice or shred the raw materials after roasting.
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8.
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Weighing, packaging and metal detection.
The dried processed seafood products are then packed into their respective packaging materials and sealed. After a calibrated metal detector to ensure that the products do not contain any traces of metal particles. Metal contamination might have been inherent in the raw materials or caused by production process of which some stages are automated.
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9.
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Packing and delivery.
The packets of dried processed seafood products are then packed into boxes, which are then stored in our warehouse. Our products are delivered to customers on a “first in, first out” basis.
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1.
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Procurement of raw materials.
Choose and buy natural algaes as raw materials from unpolluted sea areas.
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2.
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Cleaning.
The algaes are cleaned to remove sediment and impurities.
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3.
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Stewing.
The algaes are stewed in water at ratio of 30:70 at 80°C for 3 to 5 hours.
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4.
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Enzymolysis.
Adding a certain amount of enzyme into stewed algae juice for enzymolysis at 50-60°C for 1 to 2 hours.
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5.
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Filtration and decolorization
. After enzymolysis, the stewed algae juice is filtered in the ultrafiltration machine. The filtered algae juice will become clear, transparent and free from impurities. The transparent algae juice will then be pumped into the resin tank for process of decolorization.
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6.
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Blending.
The processed algae juice is blended with the extract of bamboo leaves, licorice and other auxiliary materials in accordance with a pre-defined formula.
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7.
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Heating and homogenizing.
Using the tubular heater to heat the blended algae juice at 80-90°C for 5-10 seconds and then put it into the homogenizer at 20Mpa.
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8.
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Filtration.
Put
the drinks into 1μ filter for filtration.
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9.
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Canning.
Washing the can, before canning and sealing by using the automated canning machine.
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10.
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Sterilization.
Sterilizing the canned drinks with a sterilizing pot. Temperature should be controlled at 125°C for 15 minutes.
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11.
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Cooling.
Cooling the drinks by using the spray cooling method at 30-40°C. Tune the production date and shelf life. Regular check on coding and ensure the accuracy of coding position. Packaging should refer to the specification of daily order requests.
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12.
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Delivery.
The drinks can be sold and delivered.
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Year
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Subsidiary
|
Award
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Period
|
Awarding Body
|
Significance
|
|||||
September,
2011
|
Mingxiang
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Fujian Province Famous Brand
|
September 2011 - September 2014
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Fujian Province Branded Products Authentication Committee
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Recognition of our brand and our branding efforts
|
|||||
May 17, 2010
|
Mingxiang
|
Green Food - roasted file fish
|
May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
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Mingxiang
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Green Food - dried shredded squid
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May 2010 - May 2013
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China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
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Mingxiang
|
Green Food - frozen fish
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May 2010 - May 2013
|
China Green Food Development Centre
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Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Mingxiang
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Green Food - roasted king prawn
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May 2010 - May 2013
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China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Rixiang
|
Green Food - roasted file fish
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May 2010 - May 2013
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China Green Food Development Centre
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Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Rixiang
|
Green Food - dried shredded squid
|
May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
May 17, 2010
|
Rixiang
|
Green Food - roasted yellow croaker
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May 2010 - May 2013
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China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
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Rixiang
|
Green Food - roasted prawn
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May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
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Rixiang
|
Green Food - roasted shredded squid
|
May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Rixiang
|
Green Food - roasted fish bones
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May 2010 - May 2013
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China Green Food Development Centre
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Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Rixiang
|
Green Food - roasted squid
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May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
|
Rixiang
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Green Food - squid slices
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May 2010 - May 2013
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China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
May 17, 2010
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Rixiang
|
Green Food - roasted searobin fillet
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May 2010 - May 2013
|
China Green Food Development Centre
|
Recognition of environmental awareness, non-pollution in our production chain
|
|||||
September, 2008
|
Mingxiang
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Key Leading Enterprise (Province level)
|
2008 - 2009
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Fujian Province Agriculture Industrialization Leading Group
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Recognition of our efforts and contribution in the development of processed agricultural products
|
|||||
December , 2006
|
Mingxiang
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A-Grade Tax Payer Credit Enterprise
|
2004 - 2005
|
Quanzhou National Tax Bureau, Quanzhou District Tax Bureau
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Recognition of our tax creditworthiness
|
|||||
December, 2004
|
Mingxiang
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National Foodstuff Industry Excellent Leading Enterprise
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2003 - 2004
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China Foodstuff Industry Association
|
Recognition of quality of our products
|
|||||
January, 2004
|
Mingxiang
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Civilized and Creditworthy Enterprise
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2002 -2003
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Shishi City Government Civilization Bureau, Shishi City Economic Bureau, Shishi National Tax Bureau, Shishi District Tax Bureau
|
Recognition of our regard for integrity in our operations, our creditworthiness and contribution to the economy
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Province
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No. of Distributors
|
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Fujian
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8
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Guangdong
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1
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Shandong
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1
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Zhejiang
|
6
|
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Other
|
2
|
|
Total
|
18
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a.
|
Strong Financial Background
. We require the distributor to provide us with its most recent audited financial statements so we may verify whether its financial status is strong and healthy. We further require the distributor to settle the bills in cash, without offering any credit terms, in the first year of doing business with us.
|
b.
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Strong Distribution Network
. The distributor should have a strong, well-established marketing and distribution network in the corresponding region.
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c.
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Good Reputation and Track Record
. We only select those distributors with good reputations in the industry in regard to their business background, marketing experience and distribution network. In particular, the distributor should have a track record in developing and maintaining the brand images of the products it distributes.
|
d.
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Marketing Strategy
. We require the distributor to implement our overall marketing strategy for our products and to supplement it by designing its own marketing plans specifically for the respective region. The distributor should be able to assist us in building our brand image and achieving a significant market share in a said period of time.
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Business
|
Principal Competitors
|
|
Dried and Frozen Processed Seafood Products
|
(1) China Aquatic Zhoushan Marine Fisheries Corporation; and
(2) Liaoning Dalian Seafood Industry Group Co., Ltd.
Both in terms of their size and operations.
|
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Marine Catch
|
(1) Fujian Seafood Industry Co., Ltd; and
(2) Fujian Huayang Aquatic Products Group Co., Ltd.
Both in terms of their geographical proximity to our customer base.
|
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“Hi-Power” Algae-Based Beverage Products
|
No direct competitor.
|
1.
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We have a wide distribution network
|
2.
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We have an established brand name and track record
|
3.
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We develop high quality products
|
4.
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We have a strong leadership as well as a dedicated and experienced management and procurement team
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5.
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We have established strong relationships with our customers / distributors
|
6.
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We are strategically located
|
7.
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We have strong research and development capabilities
|
8.
|
We are a designated National Marine Products Quality Assurance Testing Base
|
As a Percentage of Our Purchases (%)
|
||||||||
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Dalian Rich Seafood Co., Ltd.
|
43.0 | - | ||||||
Shishi City Fugui Seafood Products Trading Proprietor
|
17.5 | 11.0 | ||||||
Shishi City Dongfan Seafood Products Trading Proprietor
|
15.8 | 14.4 | ||||||
Jinjiang City Shenhu Town Hongyuan Seafood Products Trading Proprietor
|
10.3 | - | ||||||
Shishi City Shishi City Huali Seafood Products Trading Proprietor
|
9.1 | - | ||||||
Dalian Ocean Fishery Group of Corporations
|
- | 38.2 | ||||||
Dalian Kangwei Trading Company Limited
|
- | 17.2 | ||||||
Shishi City Tianwang Seafood Products Trading Proprietor
|
- | 7.2 | ||||||
TOTAL
|
95.7 | 88.0 |
As a Percentage of Our Sales (%)
|
|||||||||
Year Ended December 31,
|
|||||||||
Products
|
2012
|
2011
|
|||||||
Dalian Jiyang Import and Export Co., Ltd.
(1)
|
Marine catch
|
23.5 | 25.3 | ||||||
Qingdao Haizhan Seafood Co., Ltd.
(2)
|
Dried processed seafood products
|
12.3 | - | (6) | |||||
Fuzhou Xinxutai Trading Ltd.
(3)
|
Dried processed seafood and beverage products
|
11.2 | 6.6 | ||||||
Xiamen Wansong Commercial and Trading Ltd.
(4)
|
Dried processed seafood and beverage products
|
10.8 | 6.1 | ||||||
Zhejiang Haoye Trading Ltd.
(5)
|
Dried processed seafood and beverage products
|
7.9 | - | (6) | |||||
Qingdao Xinqinghua Seafood Products Company
(2)
|
Marine catch
|
- | (6) | 9.2 | |||||
TOTAL
|
65.7 | 47.2 |
(1)
|
Dalian Jiyang Import and Export Co., Ltd. is a trader of goods and import of technology in China, and has, to the best of our knowledge, a distribution network of about 19 retailers and a sales workforce of about 8 people. It has been our customer since 2008.
|
(2)
|
Qingdao Xinqinghua Seafood Products Company is a trader of fresh seafood in Qingdao City, Shandong Province. It sources and purchases supplies for Korean fishery companies and has been our customer since
1996
. Besides, the company owns 100% of
Qingdao Haizhan Seafood Co., Ltd., another major customer. Qingdao Haizhan Seafood Co., Ltd. deals in dried and frozen seafood products and, to the best of our knowledge, has a distribution network of over 1,108 retailers and a sales workforce of about 92 people. It has been our customer since 1996, but in 2011 accounted for less than five percent of our sales. Our sales to Qingdao Haizhan Seafood Co., Ltd. have increased as it expanded its sales network to include supermarkets, which have resulted in increased orders from them. We believe that we will be less reliant on Qingdao Haizhan Seafood Co., Ltd. and Qingdao Xinqinghua Seafood Products Company for our sales in future, as we enter new markets and increase market penetration of existing markets.
|
(3)
|
Fuzhou Xinxutai Trading Ltd. is a distributor of dried seafood and drinks, and has, to the best of our knowledge, a distribution network of about 311 retailers and a sales workforce of about 86 people. It has been our customer since 2010. Our sales to Fuzhou Xinxutai Trading Ltd. have increased as it expanded its sales network to meet growing market demand.
|
(4)
|
Xiamen Wansong Commercial and Trading Ltd. is a distributor of drinks, and has, to the best of our knowledge, a distribution network of about 163 retailers and a sales workforce of about 93 people. It has been our customer since 2010. Our sales to Xiamen Wansong Commercial and Trading Ltd. have increased as it expanded its sales network to meet growing market demand.
|
(5)
|
Zhejiang Haoye Trading Ltd.
is a distributor of drinks, and has, to the best of our knowledge, a distribution network of about 1,325 retailers and a sales workforce of about 103 people. It has been our customer since 2010. Our sales to
Zhejiang Haoye Trading Ltd.
have increased as it expanded its sales network to meet growing market demand.
|
(6)
|
Accounting for less than 5.0% of our sales of processed seafood products, marine catch and algae-based beverage products.
|
Trademark
|
Class
|
Place of
Registration
|
Status / Validity
Period
|
|||
(1)
|
Class 29 covering fish products, frozen fruits, seaweed, algae, edible jellies, fungus, edible albumen, pork products and vegetables soups
|
PRC
|
Registered / August 28, 2010 to August 27, 2020
|
|||
(1)
|
Class 40 covering processed seafood products, agricultural by-products, processed tea leaves, processed medicinal materials, processed chemical reagents, processed textile, processed oil, w
ater purification
|
PRC
|
Registered / January 28, 2003 to January 27, 2013
(2)
|
|||
|
Class 29 covering pork products, crustaceans (not live), fish (not live), shellfish (not live), fish products, shrimp (not live), sea cucumber (not live), canned seafood, seaweed and algae
|
PRC
|
Registered / July 21, 2012 to July 20, 2022
|
|||
|
Class 30 covering coffee, tea, sugar, cereal-based snack foods, cereal products, flour products, lobster chips, ice-creams and seasoning
|
PRC
|
Registered / March 7, 2012 to March 6, 2022
|
|||
|
Class 32 covering water (beverages), mineral water, fruit juices (beverages), non-alcoholic drinks; fruit tea (alcohol-free), tea with milk (non-milk based), vegetable beverages, ginger beverages and materials for beverage production
|
PRC
|
Registered / March 7, 2012 to March 6, 2022
|
|||
HI - Power |
Class 32 covering materials for beverage production
|
PRC
|
Registered / May 7, 2012 to May 6, 2022
|
(1)
|
The above “Mingxiang” trademark was originally registered under the name of “Fujian Province Shishi City Huabao Mingxiang Foods Development Co.” on January 14, 1997. In a Confirmation of Approval to Trademark Transfer dated June 14, 2001, the PRC Trademark Bureau approved the transfer of this trademark to Mingxiang and the trademark is now registered in Mingxiang’s name.
|
(2)
|
Pending for government’s approval of renewal.
|
Subsidiary
|
Name of Certificate
|
Description of License/Permit
|
Issuing Authority
|
Period of Validity
|
||||
Mingxiang
|
National Industrial Product Manufacturing License
|
Permit to process seafood (dried)
|
Fujian Province Quality Technology Supervisory Bureau
|
November 1, 2011 to October 31, 2014
|
||||
Rixiang
|
National Industrial Product Manufacturing License
|
Permit to process seafood (dried)
|
Fujian Province Quality Technology Supervisory Bureau
|
June 1, 2010 to April 15, 2013
(1)
|
||||
Rixiang
|
Customs Registration Certificate
|
Permit to file import-export documents with China Customs
|
China Customs
|
December 7, 2012 to December 14, 2015
|
||||
Mingxiang
|
Certificate of Approval for Enterprises with Foreign Trade Rights in the People’s Republic of China
|
To import-export company’s products and technologies, raw materials, facilities, equipment
|
Fujian Foreign Trade Economic Cooperation Department
|
September 4, 2000; no expiration date
|
||||
Rixiang
|
EU Export Registration
|
Approval for Rixiang to export marine products to EU
|
European Commission
|
October 6, 2006; no expiration date
|
1.
|
To improve our products in the areas of safety and quality (of taste, texture, hygiene and packaging);
|
2.
|
To develop new products;
|
3.
|
To achieve full customer satisfaction;
|
4.
|
To reduce costs and create value; and
|
5.
|
To develop products for low-value fish types and to increase the value of processing by-products.
|
Subsidiary
|
Award/Certification
|
Awarding/Certification Body
|
Validity Period
|
|||
Rixiang
|
Validation of conformity with HACCP standards for the export of marine products to the US
(1)
|
CNCA & CIQ
|
June 18, 2012 to June 17, 2013
(5)
|
|||
Rixiang
|
EUexport registration for export of our marine products to the EU
(2)
|
European Commission
|
No validity period
|
|||
Mingxiang
|
ISO9001:2008 quality management system certification
(3)
|
CNAB & CQC Quality Certification Centre
|
November 9, 2012 to November 8, 2015
|
|||
Mingxiang
|
ISO14001:2004
environmental management system certification in respect of the processing of fish and prawn-type marine food products and the relevant environmental management
(4)
|
CNAB & CQC Conformity Assessment Services Co, Ltd.
|
November 21, 2011 to November 20, 2014
|
1.
|
Under the PRC’s Regulations on Administration of Certification of Hazard Analysis and Critical Control Point System (HACCP), applicants for the HACCP certification have to apply to CNCA-recognized certification and accreditation entities and comply with domestic and international sanitary criteria set out in various legislation including the PRC Sanitary Requirements for Export Food Manufacturing Enterprises and the HACCP System and Guidelines for its Application by the Codex Alimentarius Commission. CIQ, a HACCP-certification authority, will verify an exporter’s HACCP certification if (a) the product to be exported falls within one of the following categories, namely (1) canned food, (2) marine food products (excluding live, fresh, dry and marinated products), (3) meat and meat products, (4) frozen vegetables, (5) fruit or vegetable juice, (6) instant frozen food containing meat or marine food products; or (b) where such verification is required by authorities in the destination country. We believe that the HACCP certification enables our products to be more widely accepted by our domestic and international customers and aid to increase the export of our products.
|
2.
|
The EU certification process ensures that the product conforms to the appropriate provisions and relevant legislation which implements certain European Directives. In the case of marine food products, the applicable European Directives include 91/493/EEC and 94/356/EC.
|
3.
|
ISO9001:2008 is an international standard for quality management developed by the International Organization for Standardization. It sets requirements as to how an organization should manage its processes that influence product quality, and evaluates an organization’s resource management, process management and evaluation process that ensure its products conform to customer and applicable regulatory requirements.
|
4.
|
ISO14001:2004 is an internationally recognized standard for environment management systems, including energy management, waste management and process improvement.
|
5.
|
Pending for government’s approval of renewal.
|
As at December 31,
|
||||||||
Functions
|
2012
|
2011
|
||||||
Sales and Marketing
|
118 | (1) | 173 | |||||
Finance and Administration
|
86 | 81 | ||||||
Procurement
|
4 | 4 | ||||||
Production, Research & Development and Quality Control
|
309 | (1) | 590 | |||||
TOTAL
|
517 | 848 |
(1)
|
The decrease in the number of employees mainly resulted from the reduction of the sales team of our processed seafood products due to consumers’ perception of food safety in relation to the nuclear radiation leaks in Japan in 2011.
|
As at December 31,
|
||||||||
Products
|
2012
|
2011
|
||||||
(%)
|
(%)
|
|||||||
Processed seafood products
|
32.7 | 41.0 | ||||||
Marine catch
|
37.9 | 38.4 | ||||||
Algae-based beverage products
|
29.4 | 20.6 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(%)
|
(%)
|
|||||||
RMB
|
98.2 | 99.9 | ||||||
US$
|
1.8 | 0.1 |
l
|
slower consumer spending may result in reduced demand for our products, reduced orders from customers for our products, order cancellations, lower revenues, increased inventories, and lower gross margins;
|
l
|
continued volatility in the global markets and fluctuations in exchange rates for foreign currencies and contracts in foreign currencies could negatively impact our reported financial results and condition;
|
l
|
continued volatility in the prices for commodities and raw materials we use in our products could have a material adverse effect on our costs, gross margins, and ultimately our profitability;
|
l
|
if our customers experience declining revenues, or experience difficulty obtaining financing in the capital and credit markets to purchase our products, this could result in reduced orders for our products, order cancellations, inability of customers to timely meet their payment obligations to us, extended payment terms, higher accounts receivable, reduced cash flows, greater expense associated with collection efforts and increased bad debt expense;
|
l
|
a severe financial difficulty experienced by our customers may cause them to become insolvent or cease business operations, which could reduce the availability of our products to consumers; and
|
l
|
any difficulty or inability on the part of manufacturers of our products or other participants in our supply chain in obtaining sufficient financing to purchase raw materials or to finance general working capital needs may result in delays or non-delivery of shipments of our products.
|
l
|
Level of government involvement in the economy;
|
l
|
Control of foreign exchange;
|
l
|
Methods of allocating resources;
|
l
|
Balance of payments position;
|
l
|
International trade restrictions; and
|
l
|
International conflict.
|
l
|
Variations in our operating results;
|
l
|
Success or failure of our management team in implementing business and growth strategies;
|
l
|
Gain or loss of an important business relationship or adverse financial performance by a significant customer or group of customers;
|
l
|
Changes in securities analysts’ recommendations, perceptions or estimates of our financial performance;
|
l
|
Changes in conditions affecting the seafood packaging and processing industry, the general economic conditions or stock market sentiments or other events or factors in the PRC;
|
l
|
Changes or developments in laws, regulations or taxes in the seafood processing and packaging industry in the PRC;
|
l
|
The temporary or permanent loss of our seafood processing and packaging facilities due to casualty, weather or any extended or extraordinary maintenance or inspection that may be required;
|
l
|
Changes in market valuations and share prices of companies with similar businesses that may be listed in the U.S. or anywhere else in the world;
|
l
|
Additions or departures of key personnel;
|
l
|
Fluctuations in stock market prices and volume; or
|
l
|
Involvement in litigation.
|
UNRESOLVED STAFF COMMENTS
|
PROPERTIES
|
Certificate
Reference No.
|
|
Location
|
|
Use
|
|
Date of Expiration
of Tenure
|
|
Land Area
(square meters)
|
|
Encumbrance
|
Shi Xiang Guo Yong
|
Dabao Industrial
|
Industrial
|
December 31, 2052
|
3,374.05
|
Pledged
(1)
|
|||||
(2006) No. 0005
|
Zone, Xiangzhi
|
|||||||||
Town, Shishi City,
|
||||||||||
Fujian Province
|
||||||||||
Shi Di Xiang Guo Yong
|
Plot II,
|
Industrial
|
December 31, 2052
|
3,638.25
|
Pledged
(1)
|
|||||
(2007) No. 0004
|
Dabao Industrial
|
|||||||||
Zone, Xiangzhi
|
||||||||||
Town, Shishi City,
|
||||||||||
Fujian Province
|
||||||||||
Shi Di Xiang Guo Yong
|
Plot III,
|
Industrial
|
December 31, 2052
|
3,955.84
|
Pledged
(1)
|
|||||
(2007) No. 0003
|
Dabao Industrial
|
|||||||||
Zone, Xiangzhi
|
||||||||||
Town, Shishi City,
|
||||||||||
Fujian Province
|
||||||||||
Shi Di Xiang Guo Yong
|
Dabao Industrial
|
Industrial
|
December 31, 2052
|
6,721.40
|
Pledged
(2)
|
|||||
(2007) No. 0002
|
Zone, Xiangzhi
|
|||||||||
Town, Shishi City,
|
||||||||||
Fujian Province
|
||||||||||
Shi Di Xiang Guo Yong
|
Central Fishing Port
|
Commercial
|
January 6, 2050
|
8,691.40
|
N/A
|
|||||
(2012) No. 00026
|
Xiangzhi Town,
|
|||||||||
Shishi City,
|
||||||||||
Fujian Province
|
(1)
|
These land use rights were pledged as securities in connection with Mingxiang’s short-term bank loans in the amount of $2,570,980 from the Agricultural Bank of China as of December 31, 2012 and 2011.
|
(2)
|
As of December 31, 2012, this land use right was pledged as securities in connection with Mingxiang’s short-term bank loans in the amount of $6,189,395 from the China Construction Bank.
|
Reference No.
|
|
Location
|
|
Use
|
|
Date of
Expiry
of Tenure
|
|
Land/Floor Area
(square meters)
|
|
Encumbrance
|
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00109
|
Block A at Plot II
Dabao Industrial
Zone, Xiangzhi Town,
Shishi City,
|
Production and
packaging
facilities
|
June 5, 2051
|
705.60/1,489.60
|
N/A
|
|||||
Fujian Province
|
||||||||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00110
|
Block B at Plot II
Dabao Industrial
Zone, Xiangzhi Town,
Shishi City,
|
Boiler facilities
|
June 5, 2051
|
145.38/145.38
|
N/A
|
|||||
Fujian Province
|
||||||||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00111
|
Block C at Plot II
Dabao Industrial
Zone, Xiangzhi Town,
Shishi City,
Fujian Province
|
Production and
cutting/slicing
facilities
|
June 5, 2051
|
934.46/1,991.29
|
N/A
|
|||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00112
|
Cold storage facility at
Plot III
Dabao Industrial
Zone, Xiangzhi Town,
Shishi City,
Fujian Province
|
Cold Storage
|
June 5, 2051
|
1,224.84/1,214.16
|
N/A
|
|||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00114
|
Block A at
Daobao Industrial
Zone, Xiangzhi Town,
Shishi City, Fujian
Province
|
Staff dormitory
|
June 5, 2051
|
1,561.17/3,413.79
|
Pledged
(3)
|
|||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 00115
|
Block B at
Daobao Industrial
Zone, Xiangzhi Town,
Shishi City, Fujian
Province
|
Office
|
September 28, 2052
|
942.19/3,268.41
|
Pledged
(3)
|
|||||
Issuance of Property Ownership
Certificate is now
under process
|
Additional floor of
Block A at
Daobao Industrial
Zone, Xiangzhi Town,
Shishi City, Fujian
Province
|
Staff dormitory
|
June 5, 2051
|
1,561.17/About 1,670.00
|
N/A
|
|||||
Shi Jian Fang
Quan Zheng
Xiang Zhi Zi
No. 010577
|
Central Fishing Port
Xiangzhi Town,
Shishi City,
Fujian Province
|
Cold Storage
|
January 6, 2050
|
8,691.40/
21,095.11
|
N/A
|
(3)
|
As of December 31, 2012, these buildings were pledged as securities in connection with Mingxiang’s short-term bank loans in the amount of $6,189,395 from the China Construction Bank.
|
LEGAL PROCEEDINGS
|
MINE SAFETY DISCLOSURE
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
|
High ($)
|
Low ($)
|
|||||||
Year Ended December 31, 2012
|
||||||||
First Quarter
|
1.66
|
1.03
|
||||||
Second Quarter
|
1.17
|
0.73
|
||||||
Third Quarter
|
1.13
|
0.76
|
||||||
Fourth Quarter
|
1.12
|
0.77
|
||||||
Year Ended December 31, 2011
|
||||||||
First Quarter
|
5.21
|
3.50
|
||||||
Second Quarter
|
4.10
|
2.42
|
||||||
Third Quarter
|
3.55
|
1.64
|
||||||
Fourth Quarter
|
1.85
|
1.18
|
SELECTED FINANCIAL DATA
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
|
●
|
The level of sales is dependent on the supply of raw materials on a timely basis. Raw material costs accounted for approximately 73.9% and 72.9% of our total cost of revenue of processed seafood products in 2012 and 2011, respectively. The availability of these raw materials could be affected by a large number of factors, including,
inter alia
, the availability of fish stock, weather conditions, water contamination, government policies and regulations where such fishing is carried out, the stability of supplies from fishermen and pressure from environmental or animal rights groups.
|
●
|
Specifically, fishing activities in waters around the PRC are restricted in June and July each year to ensure sustainable aquatic resources. As such, some of our suppliers such as fishermen are restricted from fishing during this period due to the restrictions against fishing along the Taiwan Strait imposed by the PRC’s Ministry of Agriculture. There is no assurance that the PRC government may not impose more stringent fishing regulations, including but not limited to longer or more frequent periods that restrict fishing.
|
●
|
Any shortage or contamination in the supply of or increase in the prices of the raw materials for our processed seafood and algae-based beverage products will adversely affect our sales and profit margins.
|
●
|
In March 2011, the northern region of Japan experienced a severe earthquake followed by a tsunami. The earthquake and tsunami caused extensive and severe structural damage in Japan, including heavy damage to roads and railways as well as fires in many areas, and a dam collapse and damage to several nuclear reactors. Although to date the damage caused by the earthquake and tsunami have not damaged our access to raw materials, there can be no assurance that such access may not be affected. Even though government officials and health experts in Japan and China stated the doses of nuclear radiation leaks are low and not a threat to human health unless the tainted products are consumed in abnormally excessive quantities, concern of seafood contamination adversely affected our sales of seafood and algae-based beverage products as a result of consumers’ perception of food safety in relation to the nuclear radiation leaks in Japan.
|
●
|
In May 2011, inspectors of the government of Taiwan detected dangerous levels of industrial plasticizers in sports drinks and soft drinks, used to substitute for palm oil as clouding agents in drinks, with levels far in excess of the daily allowed intake. One plasticizer, known as DEHP, is a possible carcinogen, and thought capable of wreaking havoc with children’s reproductive organs. Since then, the plasticizers have been found in a range of foods and drinks. China, Hong Kong, South Korea and the Philippines have recalled beverage bottles suspected of contamination imported from Taiwan. The beverage products sector in the East Asia region was adversely affected by the food scandal, and new legislation with higher food safety standard of beverage products may be implemented in the PRC. The DEHP crisis may affect our beverage products business as a result of any failure to comply with the new standard or adverse changes in the beverage products sector.
|
●
|
Our ability to maintain existing accreditations such as HACCP, ISO9001:2008, ISO14001:2004 and the EU Export Certification accreditations will affect our ability to maintain our presence in our existing market and to expand into new market territories.
|
●
|
Our ability to price our products competitively against existing competitors and new market entrants by achieving economies of scale.
|
●
|
Our ability to build on our established track record and reputation as a supplier of high quality processed seafood products and capability to deliver products in a timely manner.
|
●
|
Our ability to maintain existing business relationships and to secure new customers, which may be affected by the general economic or political conditions in our local and overseas markets.
|
●
|
Our ability to introduce new products to capture a wider group of consumers and to cater to different and changing consumers’ preferences.
|
●
|
Our ability to expand our drink business through marketing campaigns and penetration into new areas.
|
●
|
Our ability to respond successfully to changes in the highly competitive beverage marketplace domestically and internationally.
|
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Processed seafood products
|
51,441 | 32.7 | 58,967 | 41.0 | ||||||||||||
Marine catch
|
59,657 | 37.9 | 55,304 | 38.4 | ||||||||||||
Algae-based beverage products
|
46,219 | 29.4 | 29,677 | 20.6 | ||||||||||||
Total
|
157,317 | 100.0 | 143,948 | 100.0 |
Year Ended December 31, 2012
|
||||||||||||||||||||||||||||||||
Processed seafood products
|
Marine catch
|
Algae-based beverage products
|
Total
|
|||||||||||||||||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||||||||||||||
PRC
|
||||||||||||||||||||||||||||||||
Shandong
|
4,581 | 8.9 | 14,842 | 24.9 | - | - | 19,423 | 12.3 | ||||||||||||||||||||||||
Zhejiang
|
17,161 | 33.4 | - | - | 12,379 | 26.8 | 29,540 | 18.8 | ||||||||||||||||||||||||
Fujian
|
27,329 | 53.1 | 5,133 | 8.6 | 33,840 | 73.2 | 66,302 | 42.1 | ||||||||||||||||||||||||
Guangdong/ Shenzhen
|
2,370 | 4.6 | - | - | - | - | 2,370 | 1.5 | ||||||||||||||||||||||||
Jiangsu/ Shanghai
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Others (1)
|
- | - | 36,896 | 61.8 | - | - | 36,896 | 23.5 | ||||||||||||||||||||||||
Total PRC
|
51,441 | 100.0 | 56,871 | 95.3 | 46,219 | 100.0 | 154,531 | 98.2 | ||||||||||||||||||||||||
Asia (2)
|
- | - | 2,786 | 4.7 | - | - | 2,786 | 1.8 | ||||||||||||||||||||||||
Total
|
51,441 | 100.0 | 59,657 | 100.0 | 46,219 | 100.0 | 157,317 | 100.0 |
Year Ended December 31, 2011
|
||||||||||||||||||||||||||||||||
Processed seafood products
|
Marine catch
|
Algae-based beverage products
|
Total
|
|||||||||||||||||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||||||||||||||
PRC
|
||||||||||||||||||||||||||||||||
Shandong
|
5,223 | 8.9 | 13,027 | 23.6 | - | - | 18,250 | 12.7 | ||||||||||||||||||||||||
Zhejiang
|
24,699 | 41.9 | - | - | 4,178 | 14.1 | 28,877 | 20.1 | ||||||||||||||||||||||||
Fujian
|
25,085 | 42.5 | 5,779 | 10.4 | 25,499 | 85.9 | 56,363 | 39.1 | ||||||||||||||||||||||||
Guangdong/ Shenzhen
|
2,866 | 4.9 | - | - | - | - | 2,866 | 2.0 | ||||||||||||||||||||||||
Jiangsu/ Shanghai
|
1,090 | 1.8 | - | - | - | - | 1,090 | 0.8 | ||||||||||||||||||||||||
Others (1)
|
4 | 0.0 | 36,353 | 65.7 | - | - | 36,357 | 25.2 | ||||||||||||||||||||||||
Total PRC
|
58,967 | 100.0 | 55,159 | 99.7 | 29,677 | 100.0 | 143,803 | 99.9 | ||||||||||||||||||||||||
Asia (2)
|
- | - | 145 | 0.3 | - | - | 145 | 0.1 | ||||||||||||||||||||||||
Total
|
58,967 | 100.0 | 55,304 | 100.0 | 29,677 | 100.0 | 143,948 | 100.0 |
(1)
|
Sales to PRC Others mainly relate to the trading of marine catch transacted in Liaoning province.
|
(2)
|
Sales to Asia relate to exports to the Philippines.
|
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Processed seafood products
|
36,377 | 29.9 | 41,412 | 36.9 | ||||||||||||
Marine catch
|
56,674 | 46.6 | 53,058 | 47.3 | ||||||||||||
Algae-based beverage products
|
28,437 | 23.4 | 17,754 | 15.8 | ||||||||||||
Total
|
121,488 | 100.0 | 112,224 | 100.0 |
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Raw materials
|
26,872 | 73.9 | 30,181 | 72.9 | ||||||||||||
Packaging materials
|
4,033 | 11.1 | 4,977 | 12.0 | ||||||||||||
Direct labor
|
2,370 | 6.5 | 2,928 | 7.1 | ||||||||||||
Manufacturing overhead
|
3,102 | 8.5 | 3,326 | 8.0 | ||||||||||||
Total
|
36,377 | 100.0 | 41,412 | 100.0 |
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Raw materials
|
55,959 | 98.7 | 52,785 | 99.5 | ||||||||||||
Other expenses
|
715 | 1.3 | 273 | 0.5 | ||||||||||||
Total
|
56,674 | 100.0 | 53,058 | 100.0 |
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Raw materials
|
4,153 | 14.6 | 2,517 | 14.2 | ||||||||||||
Packaging materials
|
19,285 | 67.8 | 12,134 | 68.3 | ||||||||||||
Manufacturing overhead
|
4,999 | 17.6 | 3,103 | 17.5 | ||||||||||||
Total
|
28,437 | 100.0 | 17,754 | 100.0 |
Year Ended December 31,
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
US$’000
|
%
|
US$’000
|
%
|
|||||||||||||
Processed seafood products
|
15,064 | 42.0 | 17,555 | 55.3 | ||||||||||||
Marine catch
|
2,983 | 8.3 | 2,246 | 7.1 | ||||||||||||
Algae-based beverage products
|
17,782 | 49.7 | 11,923 | 37.6 | ||||||||||||
Total
|
35,829 | 100.0 | 31,724 | 100.0 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
%
|
%
|
|||||||
Processed seafood products
|
29.3 | 29.8 | ||||||
Marine catch
|
5.0 | 4.1 | ||||||
Algae-based beverage products
|
38.5 | 40.2 | ||||||
Total
|
22.8 | 22.0 |
Year Ended December 31,
|
||||||||
US$’000
|
2012
|
2011
|
||||||
Net cash used in operating activities
|
(4,238 | ) | (8,431 | ) | ||||
Net cash used in investing activities
|
(2,306 | ) | (11,005 | ) | ||||
Net cash provided by financing activities
|
6,129 | 2,339 | ||||||
Net change in cash and cash equivalents
|
(415 | ) | (17,097 | ) | ||||
Foreign currency translation adjustment
|
708 | 2,217 | ||||||
Cash and cash equivalents at the beginning of the year
|
587 | 15,557 | ||||||
Cash and cash equivalents at the end of the year
|
880 | 587 |
Year Ended December 31,
|
||||||||
US$’000
|
2012
|
2011
|
||||||
Land use rights
|
- | - | ||||||
Buildings
|
- | 609 | ||||||
Plant and machinery
|
2,300 | 10,376 | ||||||
Office equipment
|
7 | 20 | ||||||
Motor vehicles
|
- | - | ||||||
2,307 | 11,005 |
l
|
Use of estimates
|
l
|
Accounts receivable and allowance for doubtful accounts
|
l
|
Inventories
|
l
|
Goodwill and intangible assets
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 2,553,757 | $ | 2,460,971 | ||||
Less: Goodwill impairment
|
(2,571,488 | ) | - | |||||
Effect of foreign currency translation
|
17,731 | 92,786 | ||||||
Ending balance
|
$ | - | $ | 2,553,757 |
-
|
The financial projections were prepared by the management with due care and consideration reflecting the reasonable estimate of future relevant events.
|
-
|
All information provided by the management is true, accurate and complete.
|
-
|
There will be no major changes in the existing political, legal, fiscal and economic conditions in China in which the Company will carry on its business.
|
-
|
Future exchange rates and interest rates will not differ materially from those prevailing market expectations.
|
-
|
There will be no major changes in the current taxation law in China.
|
-
|
The availability of finance will not be a constraint on the future growth of the Company’s operation.
|
-
|
The Company will retain and have competent management, key personnel, and technical staff to support its ongoing operation.
|
-
|
Industry trends and market conditions for related industries will not deviate significantly from economic forecasts.
|
-
|
The forecasted growth rate of revenue is 39% in 2013 and reflects the following assumptions:
|
l
|
Market penetration into a new area;
|
l
|
Further market penetration of the existing territories; and
|
l
|
Continuous recovery of consumers’ demand and confidence in the beverage industry since the instance of plasticizer contamination in 2011.
|
-
|
The forecasted growth rate of revenue is 25% from 2014 to 2020 and reflects the following assumptions:
|
l
|
Market penetration into six provinces; and
|
l
|
Increased demand in China for health related drinks.
|
-
|
Cost of goods sold increasing in line with revenues, resulting in a consistent gross profit margin of 38%.
|
-
|
Selling expenses remain flat in 2013 and then increase along with the revenues on a yearly basis, but pace of increase will be slower than that of revenue growth.
|
-
|
The discount rate applied to the cash flows is based on the weighted average cost of capital (“WACC”) of the Company. WACC is the weighted average of the estimated rate of return required by equity and debt holders for an investment of this type. The independent valuation expert concluded that a discount rate of 21% is considered appropriate for valuing the drink business.
|
-
|
Publicly available information regarding our market capitalization was also considered in assessing the reasonableness of the cumulative fair values of our reporting units estimated using the excess earnings method.
|
December 31, | ||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 20,225,220 | $ | 21,926,593 | ||||
Less: Accumulated amortization
|
(2,547,711 | ) | (2,488,205 | ) | ||||
Less: Intangible assets impairment
|
(2,223,879 | ) | - | |||||
Effect of foreign currency translation
|
162,629 | 786,832 | ||||||
Ending balance
|
$ | 15,616,259 | $ | 20,225,220 |
l
|
Impairment of long-lived assets
|
l
|
Revenue recognition
|
l
|
Fair value measurement
|
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
%
|
%
|
|||||||
Net foreign exchange gains (losses) (US$’000)
|
9.1 | (3 | ) | |||||
As a percentage of income before tax (%)
|
1.38 | 0.03 |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
|
Page
|
||||
Report of Independent Registered Public Accounting Firm, BDO China Dahua CPA Co., Ltd.
|
F-2 | |||
Audited Consolidated Balance Sheets as of December 31, 2012 and 2011
|
F-3 | |||
Audited Consolidated Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2012 and 2011
|
F-4 | |||
Audited Consolidated Statements of Cash Flows for the Years Ended December 31, 2012 and 2011
|
F-5 | |||
Audited Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2012 and 2011
|
F-6 | |||
Notes to Consolidated Financial Statements as of December 31, 2012 and 2011
|
F-7 - F-26 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 880,259 | $ | 586,914 | ||||
Accounts receivable, net
|
54,045,852 | 68,643,678 | ||||||
Inventories
|
36,415,013 | 8,886,234 | ||||||
Prepaid expenses and other current assets
|
400,664 | 849,419 | ||||||
Total current assets
|
91,741,788 | 78,966,245 | ||||||
Property, plant and equipment, net
|
35,737,296 | 11,199,244 | ||||||
Land use rights, net
|
2,966,805 | 3,023,569 | ||||||
Construction in progress
|
158,702 | 22,923,143 | ||||||
Intangible assets, net
|
15,616,259 | 20,225,220 | ||||||
Goodwill
|
- | 2,553,757 | ||||||
TOTAL ASSETS
|
$ | 146,220,850 | $ | 138,891,178 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Short-term borrowings
|
$ | 8,760,375 | $ | 2,550,257 | ||||
Accounts payable, trade
|
4,227,177 | 2,583,549 | ||||||
Amount due to a shareholder
|
- | 50,361 | ||||||
Income tax payable
|
321,306 | 174,525 | ||||||
Accrued liabilities and other payables
|
6,217,260 | 3,424,288 | ||||||
Total current liabilities
|
19,526,118 | 8,782,980 | ||||||
Commitments and contingencies (see Note 20)
|
||||||||
Shareholders’ equity:
|
||||||||
Preferred stock, $0.001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding as of December 31, 2012 and 2011
|
- | - | ||||||
Common stock, $0.001 par value; 100,000,000 shares authorized; 29,722,976 and 29,697,976 shares issued and outstanding as of December 31, 2012 and 2011
|
29,723 | 29,698 | ||||||
Additional paid-in capital
|
50,097,677 | 50,074,952 | ||||||
Statutory reserve
|
9,696,177 | 9,696,177 | ||||||
Accumulated other comprehensive income
|
12,946,218 | 11,897,382 | ||||||
Retained earnings
|
53,568,622 | 58,053,435 | ||||||
Total China Marine Food Group Limited shareholders’ equity
|
126,338,417 | 129,751,644 | ||||||
Non-controlling interests
|
356,315 | 356,554 | ||||||
Total shareholders’ equity
|
126,694,732 | 130,108,198 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$ | 146,220,850 | $ | 138,891,178 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
REVENUE, NET
|
||||||||
Processed seafood products
|
$ | 51,441,395 | $ | 58,967,200 | ||||
Marine catch
|
59,657,283 | 55,304,114 | ||||||
Algae-based beverage products
|
46,218,669 | 29,676,358 | ||||||
157,317,347 | 143,947,672 | |||||||
COST OF REVENUE (INCLUSIVE OF DEPRECIATION AND AMORTIZATION)
|
||||||||
Processed seafood products
|
(36,376,898 | ) | (41,411,881 | ) | ||||
Marine catch
|
(56,673,983 | ) | (53,057,915 | ) | ||||
Algae-based beverage products
|
(28,436,881 | ) | (17,753,909 | ) | ||||
(121,487,762 | ) | (112,223,705 | ) | |||||
GROSS PROFIT
|
35,829,585 | 31,723,967 | ||||||
OPERATING EXPENSES:
|
||||||||
Depreciation and amortization
|
(2,782,333 | ) | (2,714,603 | ) | ||||
Sales and marketing
|
(26,968,313 | ) | (14,045,894 | ) | ||||
General and administrative
|
(3,864,245 | ) | (2,576,019 | ) | ||||
Stock-based compensation
|
(667,246 | ) | (2,034,197 | ) | ||||
Goodwill impairment
|
(2,571,488 | ) | - | |||||
Intangible assets impairment
|
(2,223,879 | ) | - | |||||
TOTAL OPERATING EXPENSES
|
(39,077,504 | ) | (21,370,713 | ) | ||||
(LOSS) INCOME FROM OPERATIONS
|
(3,247,919 | ) | 10,353,254 | |||||
OTHER INCOME (EXPENSES):
|
||||||||
Subsidy income
|
15,866 | 14,719 | ||||||
Rental income
|
198,940 | 101,326 | ||||||
Interest income
|
86,517 | 154,515 | ||||||
Interest expense
|
(439,848 | ) | (11,483 | ) | ||||
(LOSS) INCOME BEFORE INCOME TAXES
|
(3,386,444 | ) | 10,612,331 | |||||
INCOME TAX EXPENSE
|
(1,098,608 | ) | (2,048,956 | ) | ||||
NET (LOSS) INCOME
|
(4,485,052 | ) | 8,563,375 | |||||
Less: net loss attributable to non-controlling interests
|
239 | 240 | ||||||
NET (LOSS) INCOME ATTRIBUTABLE TO CHINA MARINE FOOD GROUP LIMITED
|
$ | (4,484,813 | ) | $ | 8,563,615 | |||
Other comprehensive income:
|
||||||||
-
Foreign currency translation gain
|
1,048,836 | 4,494,800 | ||||||
COMPREHENSIVE (LOSS) INCOME
|
$ | (3,435,977 | ) | $ | 13,058,415 | |||
Net (loss) income per share attributable to China Marine Food Group Limited
|
||||||||
-
Basic
|
$ | (0.15 | ) | $ | 0.29 | |||
-
Diluted
|
$ | (0.15 | ) | $ | 0.29 | |||
Weighted average shares outstanding
|
||||||||
-
Basic
|
29,708,768 | 29,514,744 | ||||||
-
Diluted
|
29,708,768 | 29,514,744 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net (loss) income
|
$ | (4,485,052 | ) | $ | 8,563,375 | |||
Adjustments to reconcile net income to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
3,327,840 | 3,014,783 | ||||||
Stock issued for service
|
22,750 | 51,800 | ||||||
(Reversal of) Allowance for doubtful accounts
|
(73,356 | ) | 101,071 | |||||
Loss on disposal of property, plant and equipment
|
- | 22,045 | ||||||
Compensatory stock awards
|
- | 2,646,000 | ||||||
Goodwill impairment
|
2,571,488 | - | ||||||
Intangible assets impairment
|
2,223,879 | - | ||||||
Changes in operating assets and liabilities:
|
||||||||
Account receivable
|
14,671,182 | (20,214,210 | ) | |||||
Inventories
|
(27,528,779 | ) | 1,106,636 | |||||
Prepaid expenses and other current assets
|
448,755 | (743,779 | ) | |||||
Accounts payable, trade
|
1,643,628 | (1,181,173 | ) | |||||
Income tax payable
|
146,781 | (363,226 | ) | |||||
Accrued liabilities and other payables
|
2,792,972 | (1,434,406 | ) | |||||
Net cash used in operating activities
|
(4,237,912 | ) | (8,431,094 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property, plant and equipment
|
(172,991 | ) | (36,717 | ) | ||||
Cash paid to construction in progress
|
(2,133,528 | ) | (10,968,232 | ) | ||||
Net cash used in investing activities
|
(2,306,519 | ) | (11,004,949 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES:
|
||||||||
Repayment of amount due to a shareholder
|
(50,361 | ) | (211,428 | ) | ||||
Proceeds from short-term borrowings
|
8,750,099 | 2,550,257 | ||||||
Repayment on short-term borrowings
|
(2,570,327 | ) | - | |||||
Net cash provided by financing activities
|
6,129,411 | 2,338,829 | ||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(415,020 | ) | (17,097,204 | ) | ||||
Effect of exchange rate changes in cash and cash equivalents
|
708,365 | 2,127,346 | ||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
586,914 | 15,556,772 | ||||||
CASH AND CASH EQUIVALENTS, END OF YEAR
|
$ | 880,259 | $ | 586,914 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
||||||||
Cash paid for income taxes
|
$ | 951,827 | $ | 2,412,182 | ||||
Cash paid for interest
|
$ | 439,848 | $ | 11,483 | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS
|
||||||||
Transfer from construction in progress to property, plant and equipment
|
$ | 24,897,969 | $ | 1,812,921 | ||||
Accrual of property, plant and equipment
|
$ | 737,798 | $ | - |
China Marine Food Group Limited shareholders’ equity | ||||||||||||||||||||||||||||||||
Common stock |
Additional
paid-in
|
Statutory |
Accumulated
other
comprehensive
|
Retained
|
Non-
controlling
|
Total
shareholders’
|
||||||||||||||||||||||||||
No. of shares | Amount | capital | reserve | income | earnings | interests | equity | |||||||||||||||||||||||||
Balance as of December 31, 2010
|
28,977,976 | $ | 28,978 | $ | 47,377,872 | $ | 9,263,241 | $ | 7,402,582 | $ | 49,922,756 | $ | 356,794 | $ | 114,352,223 | |||||||||||||||||
Compensatory stock awards
|
700,000 | 700 | 2,645,300 | - | - | - | - | 2,646,000 | ||||||||||||||||||||||||
Stock issued for service
|
20,000 | 20 | 51,780 | - | - | - | - | 51,800 | ||||||||||||||||||||||||
Net income / (loss) for the year
|
- | - | - | - | - | 8,563,615 | (240 | ) | 8,563,375 | |||||||||||||||||||||||
Appropriation to statutory reserve
|
- | - | - | 432,936 | - | (432,936 | ) | - | - | |||||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | 4,494,800 | - | - | 4,494,800 | ||||||||||||||||||||||||
Balance as of December 31, 2011
|
29,697,976 | $ | 29,698 | $ | 50,074,952 | $ | 9,696,177 | $ | 11,897,382 | $ | 58,053,435 | $ | 356,554 | $ | 130,108,198 | |||||||||||||||||
Stock issued for service
|
25,000 | 25 | 22,725 | - | - | - | - | 22,750 | ||||||||||||||||||||||||
Net loss for the year
|
- | - | - | - | - | (4,484,813 | ) | (239 | ) | (4,485,052 | ) | |||||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | 1,048,836 | - | - | 1,048,836 | ||||||||||||||||||||||||
Balance as of December 31, 2012
|
29,722,976 | $ | 29,723 | $ | 50,097,677 | $ | 9,696,177 | $ | 12,946,218 | $ | 53,568,622 | $ | 356,315 | $ | 126,694,732 |
1.
|
ORGANIZATION AND BUSINESS BACKGROUND
|
Name
|
Place of incorporation
and kind of
legal entity
|
Principal activities
and place of operation
|
Particulars of issued/
registered share
capital
|
Effective interest
Held
|
||||
Ocean Technology (China) Company Limited (“Ocean Technology”)
|
Hong Kong, a limited liability company
|
Investment holding in Hong Kong
|
10,000 issued shares of HK$1 each
|
100%
|
||||
Shishi Rixiang Marine Foods Co., Ltd.
(“Rixiang”)
|
The PRC, a limited liability company
|
Trading and distribution of marine products in the PRC and overseas
|
$33,000,000
|
100%
|
||||
Shishi Huabao Mingxiang Foods Co., Ltd (“Mingxiang”)
|
The PRC, a limited liability company
|
Trading and distribution of marine products in the PRC and overseas; Sales and distribution of algae-based beverage products
|
RMB50,000,000
|
100%
|
||||
Shishi Huabao Jixiang Water Products Co., Ltd (“Jixiang”)
|
The PRC, a limited liability company
|
Property holding
|
RMB4,500,000
|
100%
|
Name
|
Place of incorporation
and kind of
legal entity
|
Principal activities
and place of operation
|
Particulars of issued/
registered share
capital
|
Effective interest
Held
|
||||
Shishi Xianghe Food Science and Technology Co., Ltd. (“Xianghe”)
|
The PRC, a limited liability company
|
Sale and distribution of algae-based beverage products
|
RMB5,000,000
|
80%
|
||||
Shishi Xianglin Trading Co., Ltd. (“Xianglin”)
|
The PRC, a limited liability company
|
Dormant
|
RMB800,000
|
100%
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
l
|
Basis of consolidation
|
l
|
Non-controlling interest
|
l
|
Use of estimates
|
l
|
Cash and cash equivalents
|
l
|
Accounts receivable and allowance for doubtful accounts
|
l
|
Inventories
|
l
|
Property, plant and equipment
|
Depreciable life
|
Residual value
|
||||
Buildings
|
30-50 years
|
10 | % | ||
Plant and machinery
|
5-30 years
|
10 | % | ||
Motor vehicles
|
8-10 years
|
10 | % | ||
Office equipments
|
5 years
|
10 | % |
l
|
Construction in progress
|
l
|
Land use rights
|
l
|
Goodwill and intangible assets
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 2,553,757 | $ | 2,460,971 | ||||
Less: Goodwill impairment
|
(2,571,488 | ) | - | |||||
Effect of foreign currency translation
|
17,731 | 92,786 | ||||||
Ending balance
|
$ | - | $ | 2,553,757 |
-
|
The financial projections were prepared by the management with due care and consideration reflecting the reasonable estimate of future relevant events.
|
-
|
All information provided by the management is true, accurate and complete.
|
-
|
There will be no major changes in the existing political, legal, fiscal and economic conditions in China in which the Company will carry on its business.
|
-
|
Future exchange rates and interest rates will not differ materially from those prevailing market expectations.
|
-
|
There will be no major changes in the current taxation law in China.
|
-
|
The availability of finance will not be a constraint on the future growth of the Company’s operation.
|
-
|
The Company will retain and have competent management, key personnel, and technical staff to support its ongoing operation.
|
-
|
Industry trends and market conditions for related industries will not deviate significantly from economic forecasts.
|
-
|
The forecasted growth rate of revenue is 39% in 2013 and reflects the following assumptions:
|
●
|
Market penetration into a new area;
|
●
|
Further market penetration of the existing territories; and
|
●
|
Continuous recovery of consumers’ demand and confidence in the beverage industry since the instance of plasticizer contamination in 2011.
|
-
|
The forecasted growth rate of revenue is 25% from 2014 to 2020 and reflects the following assumptions:
|
●
|
Market penetration into six provinces; and
|
●
|
Increased demand in China for health related drinks.
|
-
|
Cost of goods sold increasing in line with revenues, resulting in a consistent gross profit margin of 38%.
|
-
|
Selling expenses remain flat in 2013 and then increase along with the revenues on a yearly basis, but pace of increase will be slower than that of revenue growth.
|
-
|
The discount rate applied to the cash flows is based on the weighted average cost of capital (“WACC”) of the Company. WACC is the weighted average of the estimated rate of return required by equity and debt holders for an investment of this type. The independent valuation expert concluded that a discount rate of 21% is considered appropriate for valuing the drink business.
|
-
|
Publicly available information regarding our market capitalization was also considered in assessing the reasonableness of the cumulative fair values of our reporting units estimated using the excess earnings method.
|
December 31, | ||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 20,225,220 | $ | 21,926,593 | ||||
Less: Accumulated amortization
|
(2,547,711 | ) | (2,488,205 | ) | ||||
Less: Intangible assets impairment
|
(2,223,879 | ) | - | |||||
Effect of foreign currency translation
|
162,629 | 786,832 | ||||||
Ending balance
|
$ | 15,616,259 | $ | 20,225,220 |
l
|
Impairment of long-lived assets
|
l
|
Revenue recognition
|
l
|
Advertising costs
|
l
|
Comprehensive income or loss
|
l
|
Income taxes
|
l
|
Earnings per share
|
l
|
Foreign currencies translation
|
2012
|
2011
|
|||||||
Year-end exchange rates RMB:US$1
|
6.3011 | 6.3523 | ||||||
Average yearly exchange rates RMB:US$1
|
6.3034 | 6.4544 |
l
|
Stock-based compensation
|
l
|
Segment reporting
|
l
|
Fair value measurement
|
l
|
Related parties
|
l
|
Recent accounting pronouncements
|
3.
|
ACCOUNTS RECEIVABLE, NET
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Account receivable, at cost
|
$ | 54,317,439 | $ | 68,988,621 | ||||
Less: allowance for doubtful accounts
|
(271,587 | ) | (344,943 | ) | ||||
Account receivable, net
|
$ | 54,045,852 | $ | 68,643,678 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Beginning balance
|
$ | 344,943 | $ | 243,872 | ||||
(Reversal of) Provision for doubtful accounts
|
(73,356 | ) | 101,071 | |||||
Amounts written off
|
- | - | ||||||
Ending balance
|
$ | 271,587 | $ | 344,943 |
4.
|
INVENTORIES
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Raw materials
|
$ | 33,337,600 | $ | 3,982,617 | ||||
Work-in-process
|
2,646,855 | 3,941,723 | ||||||
Finished goods
|
269,440 | 804,880 | ||||||
Packaging materials
|
161,118 | 157,014 | ||||||
Total
|
$ | 36,415,013 | $ | 8,886,234 |
5.
|
PROPERTY, PLANT AND EQUIPMENT
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Buildings
|
34,383,956 | 9,335,450 | ||||||
Plant and machinery
|
4,191,670 | 3,992,725 | ||||||
Office equipments
|
134,945 | 127,048 | ||||||
Motor vehicles
|
719,123 | 713,327 | ||||||
39,429,694 | 14,168,550 | |||||||
Less: accumulated depreciation
|
(3,692,398 | ) | (2,969,306 | ) | ||||
Property, plant and equipment, net
|
$ | 35,737,296 | $ | 11,199,244 |
6.
|
LAND USE RIGHTS
|
December 31,
|
||||||||
2012
|
2011
|
|||||||
Land use rights, at cost
|
$ | 3,417,598 | $ | 3,390,052 | ||||
Less: accumulated amortization
|
(450,793 | ) | (366,483 | ) | ||||
Land use rights, net
|
$ | 2,966,805 | $ | 3,023,569 |
Years ending December 31,
|
||||
2013
|
$ | 81,303 | ||
2014
|
81,303 | |||
2015
|
81,303 | |||
2016
|
81,303 | |||
2017
|
81,303 | |||
Thereafter
|
2,560,290 | |||
Total
|
$ | 2,966,805 |
7.
|
CONSTRUCTION IN PROGRESS
|
8.
|
INTANGIBLE ASSETS
|
December 31, | ||||||||
2012
|
2011
|
|||||||
Intangible assets, at cost
|
$ | 25,487,217 | $ | 25,281,788 | ||||
Less: accumulated amortization
|
(7,646,267 | ) | (5,056,568 | ) | ||||
Less: intangible assets impairment
|
(2,223,879 | ) | - | |||||
Effect of foreign currency translation
|
(812 | ) | - | |||||
Intangible assets, net
|
$ | 15,616,259 | $ | 20,225,220 |
9.
|
SHORT-TERM BORROWINGS
|
10.
|
AMOUNT DUE TO A STOCKHOLDER
|
11.
|
ACCRUED LIABILITIES AND OTHER PAYABLES
|
December 31, | ||||||||
2012
|
2011
|
|||||||
Accrued operating expenses
|
$ | 3,246,518 | $ | 1,209,821 | ||||
Accrued payroll and benefits
|
1,678,575 | 967,450 | ||||||
Accrued construction costs
|
737,798 | - | ||||||
Accrued professional expenses
|
553,603 | 295,833 | ||||||
Value-added tax payable
|
766 | 948,107 | ||||||
Other payables
|
- | 3,077 | ||||||
$ | 6,217,260 | $ | 3,424,288 |
12.
|
SHAREHOLDERS’ EQUITY
|
13.
|
NON-CONTROLLING INTERESTS
|
December 31, 2012
|
||||
20% share of equity interest in Xianghe
|
$ | 509,049 | ||
Less: advance to a non-controlling shareholder of a subsidiary
|
(152,734 | ) | ||
Net amount
|
$ | 356,315 |
14.
|
INCOME TAXES
|
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Tax jurisdiction from:
|
||||||||
– Local
|
$ | (4,601 | ) | $ | (4,021 | ) | ||
– Foreign
|
(3,381,843 | ) | 10,616,352 | |||||
(Loss) Income before income taxes
|
$ | (3,386,444 | ) | $ | 10,612,331 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
Current:
|
||||||||
– Local
|
$ | - | $ | - | ||||
– Foreign
|
1,098,608 | 2,048,956 | ||||||
Deferred:
|
||||||||
– Local
|
- | - | ||||||
– Foreign
|
- | - | ||||||
Income tax expense
|
$ | 1,098,608 | $ | 2,048,956 |
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(Loss) Income before income taxes from PRC subsidiaries
|
$ | (3,231,117 | ) | $ | 10,762,969 | |||
Statutory income tax rate
|
25 | % | 25 | % | ||||
Income tax expense at statutory tax rate
|
(807,779 | ) | 2,690,742 | |||||
Tax effect from Tax Holiday
|
- | (1,319,986 | ) | |||||
Tax effect on net operating losses from PRC subsidiaries
|
1,722 | 2,081 | ||||||
Tax effect on non-taxable income
|
21,903 | 18,438 | ||||||
Tax effect on non-deductible expenses
|
1,882,762 | 657,681 | ||||||
Income taxes at effective rate
|
$ | 1,098,608 | $ | 2,048,956 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Deferred tax assets:
|
||||||||
Net operating loss carryforwards from
|
||||||||
– Local
|
$ | 9,131 | $ | 7,543 | ||||
– Hong Kong
|
139,684 | 114,571 | ||||||
– PRC
|
31,738 | 29,932 | ||||||
180,553 | 152,046 | |||||||
Less: valuation allowance
|
(180,553 | ) | (152,046 | ) | ||||
Deferred tax assets
|
$ | - | $ | - |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Amount of tax holiday effect
|
$ | - | $ | 1,319,986 | ||||
Tax holiday effect on basic earnings per share
|
$ | - | $ | 0.04 | ||||
Tax holiday effect on diluted earnings per share
|
$ | - | $ | 0.04 |
15.
|
CHINA CONTRIBUTION PLAN
|
16.
|
EARNINGS PER SHARES
|
Year Ended December 31,
|
||||||||
2012
|
2011
|
|||||||
(Losses) Earnings for the years
|
$ | (4,484,813 | ) | $ | 8,563,615 | |||
Determination of shares:
|
||||||||
Basic weighted average common shares outstanding
|
29,708,768 | 29,514,744 | ||||||
Diluted weighted average common shares outstanding
|
29,708,768 | 29,514,744 | ||||||
Basic (losses) earnings per share
|
$ | (0.15 | ) | $ | 0.29 | |||
Diluted (losses) earnings per share
|
$ | (0.15 | ) | $ | 0.29 |
17.
|
STATUTORY RESERVE
|
18.
|
SEGMENT REPORTING, GEOGRAPHICAL INFORMATION
|
Year Ended December 31, 2012
|
||||||||||||||||
Processed seafood products
|
Marine catch
|
Algae-based beverage products
|
Total
|
|||||||||||||
Revenue, net
|
$ | 51,441,395 | $ | 59,657,283 | $ | 46,218,669 | $ | 157,317,347 | ||||||||
Cost of revenue
|
(36,376,898 | ) | (56,673,983 | ) | (28,436,881 | ) | (121,487,762 | ) | ||||||||
Gross profit
|
$ | 15,064,497 | $ | 2,983,300 | $ | 17,781,788 | $ | 35,829,585 | ||||||||
Expenditure for long-lived assets
|
$ | 172,991 | $ | 2,133,528 | $ | - | $ | 2,306,519 |
Year Ended December 31, 2011
|
||||||||||||||||
Processed seafood products
|
Marine catch
|
Algae-based beverage products
|
Total
|
|||||||||||||
Revenue, net
|
$ | 58,967,200 | $ | 55,304,114 | $ | 29,676,358 | $ | 143,947,672 | ||||||||
Cost of revenue
|
(41,411,880 | ) | (53,057,915 | ) | (17,753,910 | ) | (112,223,705 | ) | ||||||||
Gross profit
|
$ | 17,555,320 | $ | 2,246,199 | $ | 11,922,448 | $ | 31,723,967 | ||||||||
Expenditure for long-lived assets
|
$ | 36,717 | $ | 10,968,232 | $ | - | $ | 11,004,949 |
December 31,
|
||||||||
2012
|
2011
|
|||||||
Revenue, net:
|
||||||||
The PRC
|
$ | 154,528,844 | $ | 143,801,671 | ||||
Asia
|
2,788,503 | 146,001 | ||||||
Total revenue, net
|
$ | 157,317,347 | $ | 143,947,672 |
19.
|
CONCENTRATIONS OF RISK
|
Year Ended December 31, 2012
|
||||||||||||||||
Customer
|
Revenue
|
Percentage
of total revenue
|
Accounts receivable, net
|
Percentage of total accounts receivable, net
|
||||||||||||
Customer A
|
$ | 36,896,387 | 24 | % | $ | 15,720,122 | 29 | % | ||||||||
Customer B
|
19,421,552 | 12 | % | 1,359,281 | 3 | % | ||||||||||
Customer C
|
17,569,071 | 11 | % | 10,118,671 | 19 | % | ||||||||||
Customer D
|
16,931,830 | 11 | % | 7,230,223 | 13 | % | ||||||||||
Total
|
$ | 90,818,840 | 58 | % | $ | 34,428,297 | 64 | % |
Year Ended December 31, 2011
|
||||||||||||||||
Customer
|
Revenue
|
Percentage
of total revenue
|
Accounts receivable, net
|
Percentage of total accounts receivable, net
|
||||||||||||
Customer A
|
$ | 36,353,325 | 25 | % | $ | 32,468,863 | 47 | % | ||||||||
Total
|
$ | 36,353,325 | 25 | % | $ | 32,468,863 | 47 | % |
Year Ended December 31, 2012
|
||||||||||||||||
Vendor
|
Purchases
|
Percentage
of total purchases
|
Accounts payable, trade
|
Percentage of total accounts payable, trade
|
||||||||||||
Vendor A
|
$ | 49,336,884 | 43 | % | $ | - | - | |||||||||
Vendor B
|
20,123,990 | 18 | % | 101,438 | 2 | % | ||||||||||
Vendor C
|
18,122,969 | 16 | % | 88,847 | 2 | % | ||||||||||
Vendor D
|
11,770,195 | 10 | % | 32,185 | 1 | % | ||||||||||
Total
|
$ | 99,354,038 | 87 | % | $ | 222,470 | 5 | % |
Year Ended December 31, 2011
|
||||||||||||||||
Vendor
|
Purchases
|
Percentage
of total purchases
|
Accounts payable, trade
|
Percentage of total accounts payable, trade
|
||||||||||||
Vendor E
|
$ | 32,753,228 | 38 | % | $ | - | - | |||||||||
Vendor F
|
14,771,657 | 17 | % | - | - | |||||||||||
Vendor C
|
12,291,558 | 14 | % | 29,989 | 1 | % | ||||||||||
Vendor B
|
9,447,849 | 11 | % | 16,800 | 1 | % | ||||||||||
Total
|
$ | 69,264,292 | 80 | % | $ | 46,789 | 2 | % |
20.
|
COMMITMENTS AND CONTINGENCIES
|
21.
|
SUBSEQUENT EVENT
|
Name
|
Age
|
Position held
|
||
Pengfei LIU
|
57 |
CEO, Secretary and Director
|
||
Marco Hon Wai KU
|
39 |
Chief Financial Officer
|
||
Weipeng LIU
|
36 |
Director
|
||
Xiaochuan LI
|
68 |
Independent Director
|
||
Changhu XUE
|
48 |
Independent Director
|
||
Honkau WAN
|
39 |
Independent Director
|
l
|
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 bankruptcy or within two years prior to that time; or
|
l
|
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); or
|
l
|
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; or
|
l
|
Being found by a court of competent jurisdiction (in a civil violation), the SEC or the Commodity Future Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; or
|
l
|
Being the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: any Federal or State securities or commodities law or regulation; or any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity. This violation does not apply to any settlement of a civil proceeding among private litigants; or
|
l
|
Being the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
l
|
Act with honesty and integrity, avoiding actual or apparent conflicts of interest in their personal and professional relationships.
|
l
|
Provide shareholders with information that is accurate, complete, objective, fair, relevant, timely, and understandable, including information in our filings with and other submissions to the U.S. Securities and Exchange Commission and other public bodies.
|
l
|
Comply with rules and regulations of federal, state, provincial and local governments, and of other appropriate private and public regulatory agencies.
|
l
|
Action in good faith, responsibly, with due care, competence, and diligence, without misrepresenting material facts or allowing one’s independent judgment to be subordinated.
|
l
|
Respect the confidentiality of information acquired in the course of one’s work except when authorized or otherwise legally obligated to disclose.
|
l
|
Not use confidential information acquired in the course of one’s work for personal advantage.
|
l
|
Share knowledge and maintain professional skills importance and relevancy to shareholders’ needs.
|
l
|
Proactively promote and be an example of ethical behavior as a responsible individual among peers, in the working environment and the community.
|
l
|
Exercise responsible use, control, and stewardship over all China Marine assets and resources that are employed by or entrusted to us.
|
l
|
Not coerce, manipulate, mislead, or unduly influence any authorized audit or interfere with any auditor engaged in the performance of an internal or independent audit of China Marine’s system of internal controls, financial statements, or accounting books and records.
|
Name and
Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity
Incentive Plan
Compensation ($)
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
All Other
Compensation ($)
|
Total ($)
|
|||||||||||||||||||||||||
Pengfei Liu, CEO
|
2011
|
149,000 | - | 491,400 | - | - | - | - | 640,400 | |||||||||||||||||||||||||
2012
|
152,000 | 430,000 | - | - | - | - | - | 582,000 | ||||||||||||||||||||||||||
Marco Hon Wai Ku, CFO
|
2011
|
149,000 | - | 189,000 | - | - | - | - | 338,000 | |||||||||||||||||||||||||
2012
|
152,000 | 70,000 | - | - | - | - | - | 222,000 | ||||||||||||||||||||||||||
Weipeng Liu, Director
|
2011
|
47,000 | - | 378,000 | - | - | - | - | 425,000 | |||||||||||||||||||||||||
2012
|
48,000 | 280,000 | - | - | - | - | - | 328,000 |
Name
|
Fees Earned or paid in Cash
|
Stock Awards
|
Total
|
|||||||||
Xiaochuan LI
|
$ | 12,692 | (1) | $ | - | $ | 12,692 | |||||
Changhu XUE
|
$ | 9,519 | (1) | $ | - | $ | 9,519 | |||||
Honkau WAN
|
$ | 7,692 | (2) | $ | - | $ | 7,692 | |||||
Total
|
$ | 29,903 |
Title of Class
|
Name & Address of
Beneficial Owner
|
Office, If
Applicable
|
Amount and
Nature of Beneficial
Ownership
|
Percent of Class
|
||||||||
Common Stock $0.001 par value
|
Pengfei Liu
Dabao Industrial Zone
Shishi City, Fujian
Province, China
|
CEO
|
12,182,037 | 41.0 | % | |||||||
Common Stock $0.001 par value
|
Marco Hon Wai Ku
Dabao Industrial Zone
Shishi City, Fujian
Province, China
|
CFO
|
134,000 | 0.5 | % | |||||||
Common Stock $0.001 par value
|
Weipeng Liu
Dabao Industrial Zone
Shishi City, Fujian
Province, China
|
Director
|
100,000 | 0.3 | % | |||||||
Common Stock $0.001 par value
|
Jayhawk Private Equity Fund, LP
5410 West 61st Place
Suite 100
Mission, KS 66205
|
2,434,868 | (1) | 8.2 | % | |||||||
Common Stock $0.001 par value
|
Prescott Group Capital Management LLC
1924 South Utica Ave., Suite 1120, Tulsa, Oklahoma 74104
|
1,886,290 | (2) | 6.3 | % | |||||||
Common Stock $0.001 par value
|
All officers and directors as a group
|
12,416,037 | 41.8 | % |
(1)
|
Jayhawk Private Equity GP, L.P. is the general partner of Jayhawk Private Equity Co-Invest Fund, L.P. Jayhawk Private Equity Co-Invest Fund, L.P. directly and indirectly owns the shares identified by this footnote in Table.
|
(2)
|
Prescott Group Capital Management, L.L.C., as the general partner of Prescott Group Aggressive Small Cap, L.P., Prescott Group Aggressive Small Cap II, L.P., and Prescott Group Aggressive Small Cap Master Fund, G.P., directly and indirectly owns the shares identified by this footnote in Table.
|
a)
|
None of our directors, executive officers or controlling shareholder or their affiliates has had any interest, direct or indirect, in any material transaction to which we are a party.
|
b)
|
None of our directors, executive officers or controlling shareholder or their affiliates has had any interest, direct or indirect, in any company that carries the same business or similar trade which competes materially and directly with our existing business.
|
c)
|
None of our directors, executive officers or controlling shareholder or their affiliates has had any interest, direct or indirect, in any enterprise or company that is our major customer or supplier of goods or services.
|
d)
|
None of our directors, executive officers or controlling shareholder or their affiliates has had any interest, direct or indirect, in any material transaction we have undertaken within the last three years.
|
Services (US$’000)
|
2012
|
2011
|
||||||
Audit Fees
|
$ | 277 | $ | 234 | ||||
Tax Fees
|
5 | 4 | ||||||
All Other Fees
|
- | - | ||||||
Total
|
$ | 282 | $ | 238 |
(a)
|
Financial Statements
|
(b)
|
Exhibits
|
2.1
|
Share Exchange Agreement, dated November 17, 2007 by and among the Registrant, Ocean Technology (formerly known as Nice Enterprise Trading H.K. Co., Ltd.) and its stockholders. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 2.1)
|
3.1
|
Amended Articles of Incorporation of the Registrant as filed with the Secretary of State of Nevada, as amended to date. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 3.1)
|
3.2
|
Amended and Restated Bylaws of the Registrant. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 3.2)
|
4.1
|
Form of Registration Rights Agreement dated November 17, 2007. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 4.1)
|
4.2
|
Form of Common Stock Purchase Warrant issued to Investors dated November 17, 2007. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 4.2)
|
4.3
|
Form of Common Stock Purchase Warrant issued to Sterne Agee & Leach, Inc. and its designee. (Filed with the Commission on Form 8-K/A dated November 30, 2007 as Exhibit 4.3)
|
4.4
|
Form of Common Stock Purchase Warrant issued to Yorkshire Capital Limited and its designee. (Filed with the Commission on Form 8-K/A dated November 30, 2007 as Exhibit 4.4)
|
4.5
|
China Marine Food Group Limited 2010 Stock Award Plan. (Filed with the Commission on Form S-8 dated December 14, 2010 as Exhibit 4.1)
|
4.6
|
Form of Stock Award Agreement dated April 1, 2011. (Filed with the Commission on Form 8-K dated April 5, 2011)
|
10.1
|
Form of Securities Purchase Agreement dated November 17, 2007. (Filed with the Commission on Form 8-K/A on November 30, 2007 as Exhibit 10.1)
|
10.2
|
Closing Escrow Agreement dated November 17, 2007, by and among the Registrant, Sterne Agee & Leach, Inc. and Thelen Reid Brown Raysman & Steiner, LLP. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.3)
|
10.3
|
Service Agreement dated November 17, 2007 between the Registrant and Pengfei Liu. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.5)
|
10.4
|
Employment Contract dated November 17, 2007, between the Registrant and Shaobin Yang. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.7)
|
10.5
|
Service Agreement dated November 17, 2007, between the Registrant and Weipeng Liu. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.6)
|
10.6
|
Service Agreement dated July 26, 2007, between Ocean Technology (formerly known as Nice Enterprise Trading H.K. Co., Ltd.) and Marco Hon Wai Ku. (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.8)
|
10.7
|
Consulting Agreement dated January 1, 2007 between Yorkshire Capital Ltd. and Ocean Technology (China) Company Limited. (formerly known as Nice Enterprise Trading H.K. Co., Ltd.) (Filed with the Commission on Form 8-K dated November 23, 2007 as Exhibit 10.9)
|
14.2
|
Financial Code of Conduct. (Filed with the Commission on Form 8-K dated January 24, 2008 as Exhibit 14.2 and Form 8-K dated August 17, 2009 as Exhibit 5.05.2)
|
14.3
|
Amendments to the By-Laws. (Filed with the Commission on Form 8-K dated August 17, 2009 as Exhibit 5.03)
|
14.4
|
Charter for the Audit Committee. (Filed with the Commission on Form 8-K dated August 17, 2009 as Exhibit 5.05.1)
|
14.5
|
Charter for the Corporate Governance and Nominating Committee. (Filed with the Commission on Form 8-K dated August 17, 2009 as Exhibit 5.05.2)
|
14.6
|
Charter for the Compensation Committee. (Filed with the Commission on Form 8-K dated August 17, 2009 as Exhibit 5.05.3)
|
16.1
|
Letter from ZYCPA. (Filed with the Commission on Form 8-K dated October 29, 2010 as Exhibit 16.1)
|
16.2
|
Letter from Coddovano and Honeck LLP. (Filed with the Commission on Form 8-K dated January 27, 2009 as Exhibit 16.1)
|
21.1
|
Subsidiaries List. (Filed with the Commission on Form 10-K dated March 23, 2009 as Exhibit 21)
|
24.1
|
Power of Attorney. (Filed with the Commission on Form 10-K dated March 23, 2009 as Exhibit 24)
|
31.1
|
Certification of Chief Executive Officer pursuant to 13a-14 and 15d-14 of the Exchange Act. (Filed herewith)
|
31.2
|
Certification of Chief Financial Officer pursuant to 13a-14 and 15d-14 of the Exchange Act. (Filed herewith)
|
32.1
|
Certificate pursuant to 18 U.S.C. ss. 1350 for Pengfei Liu, Chief Executive Officer. (Filed herewith)
|
32.2
|
Certificate pursuant to 18 U.S.C. ss. 1350 for Marco Hon Wai Ku , Chief Financial Officer. (Filed herewith)
|
99.1
|
Press release dated January 20, 2010 by the Company. (Filed with the Commission on Form 8-K dated January 20, 2010)
|
101.INS† | XBRL Instance Document. |
101.SCH† | XBRL Taxonomy Extension Schema Document. |
101.CAL† | XBRL Taxonomy Extension Calculation Linkbase Document. |
101.DEF† | XBRL Taxonomy Extension Definition Linkbase Document. |
101.LAB† | XBRL Taxonomy Extension Label Linkbase Document. |
101.PRE† | XBRL Taxonomy Extension Presentation Linkbase Document. |
CHINA MARINE FOOD GROUP LIMITED
|
|||
/s/ Pengfei Liu
|
|||
Dated: March 26, 2013
|
Pengfei Liu, Chief Executive Officer
|
||
(Principal executive officer)
|
|||
/s/ Marco Hon Wai Ku
|
|||
Marco Hon Wai Ku, Chief Financial Officer
|
|||
Dated: March 26, 2013
|
(Principal financial officer and principal accounting officer)
|
1 Year China Marine Food (CE) Chart |
1 Month China Marine Food (CE) Chart |
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