Nevada
|
2011
|
87-0420774
|
||
(State
or Other Jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
||
Incorporation
or Organization)
|
Classification
Number)
|
Identification
No.)
|
No.
9, Xin Yi Street, Ganjingzi District
Dalian
City, Liaoning province, PRC 116039
Telephone:
+86 411 867 166 96
(Address,
Including Zip Code and Telephone Number,
Including
Area Code, of Registrant’s Principal
Executive
Offices)
|
The
Corporation Trust Company of Nevada
6100
Neil Road, Suite 800
Reno,
Nevada 89511
(775)
688-3061
(Name,
Address, Including Zip Code and Telephone Number,
Including
Area Code, of Agent for Service)
|
Edgar
D. Park and Kevin K. Leung
|
Richardson
& Patel LLP
|
10900
Wilshire Blvd. Suite 500
|
Los
Angeles, California 90024
|
(310)
208-1182
|
Large
Accelerated Filer o
|
Accelerated
Filer o
|
|
|
Non-Accelerated
Filer o
|
Smaller
Reporting Company x
|
(do
not check if a smaller reporting company)
|
|
Title of Each Class of
Securities to be Registered
|
Amount to be
Registered
|
Proposed
Maximum Per
Share Offering Price
|
Proposed Maximum
Aggregate
Offering Price (1)
|
Amount of
Registration Fee
|
|||||||||
Common
Stock
|
8,140,487
|
$
|
5.00
|
(2)
|
$
|
40,702,435
|
$
|
1,599.61
|
(3)
|
(1)
|
Estimated
solely for the purpose of computing the amount of the registration
fee
pursuant to Rule 457(o) under the Securities Act.
|
(2)
|
Estimated
solely for the purpose of calculating the amount of the registration
fee
pursuant to Rule 457(c) of the Securities Act of 1933, the price
per share
and aggregate offering price are based upon the last reported per
share
price of the common stock of the Registrant on the OTC Bulletin
Board.
|
(3)
|
The
amount of $2,277.61
was previously
paid.
|
|
Page
|
|||
|
|
|||
Prospectus
Summary
|
1
|
|||
Summary
Consolidated Financial Data
|
7
|
|||
Supplementary
Financial Information
|
8
|
|||
Risk
Factors
|
9
|
|||
Business
|
26
|
|||
Special
Note Regarding Forward-Looking Statements
|
49
|
|||
Use
of Proceeds
|
49
|
|||
Plan
of Distribution
|
49
|
|||
Selling
Shareholders
|
51
|
|||
Selected
Consolidated Financial Data
|
55
|
|||
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
56
|
|||
Legal
Proceedings
|
73
|
|||
Management
|
74
|
|||
Security
Ownership of Certain Beneficial Holders and Management
|
81
|
|||
Certain
Relationships and Related Party Transactions
|
82
|
|||
Description
of Securities
|
84
|
|||
Dividends
|
86
|
|||
Shares
Eligible for Future Sale
|
86
|
|||
Changes
In and Disagreements with Accountants on Accounting and Financial
Disclosure
|
87
|
|||
Legal
Matters
|
87
|
|||
Experts
|
87
|
|||
Disclosure
of Commission Position on Indemnification
|
88
|
|||
Additional
Information
|
88
|
|||
Index
to Consolidated Financial Information
|
F-1
|
|
1.
|
Dalian
Chuming Slaughter and Packaging Pork Company Ltd., whose primary
business
activity is acquiring, slaughtering and packaging of pork and
cattle;
|
|
2.
|
Dalian
Chuming Processed Foods Company Ltd., whose primary business activity
is
the processing of raw and cooked meat products;
and
|
|
3.
|
Dalian
Chuming Sales Company Ltd., which is responsible for our sales, marketing
and distribution activities.
|
|
·
|
Fresh
meat - pork that is processed in a controlled environmental chamber
with
closely monitored temperatures to ensure quality and safety standards
during processing right up to the time of delivery to the
consumer.
|
|
·
|
Frozen
fresh meat - butchered pigs that are processed and immediately frozen,
which includes such products as smoked pork, ham and
roasts.
|
|
·
|
Frozen
fresh byproducts - pork byproducts including pig’s liver, stomach,
intestine, head and hoof.
|
|
·
|
our
ability to timely and accurately complete orders for our
products;
|
|
·
|
our
dependence on a limited number of major
customers;
|
|
·
|
political
and economic conditions within the
PRC;
|
|
·
|
our
ability to expand and grow our distribution
channels;
|
|
·
|
general
economic conditions which affect consumer demand for our
products;
|
|
·
|
the
effect of terrorist acts, or the threat thereof, on consumer confidence
and spending;
|
|
·
|
acceptance
in the marketplace of our new products and changes in consumer
preferences;
|
|
·
|
foreign
currency exchange rate
fluctuations;
|
|
·
|
our
ability to identify and successfully execute cost control
initiatives;
|
|
·
|
other
risks outlined above and in our other public
filings.
|
(US
dollars in thousands)
|
|||||||||||||||||||
Three
Months Ended March 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||||
|
2008
(unaudited)
|
2007
(audited)
|
2006
(audited)
|
2005
(audited)
|
2004
(audited)
|
2003
(unaudited)
|
|||||||||||||
Consolidated
Statements of Operations Data:
|
|
|
|
|
|
||||||||||||||
Sales
|
43,507
|
124,696
|
70,396
|
54,119
|
654
|
||||||||||||||
Cost
of Sales
|
(36,474
|
)
|
(104,379
|
)
|
(57,794
|
)
|
(45,284
|
)
|
(711
|
)
|
-
|
||||||||
Gross
Profit
|
7,033
|
20,317
|
12,601
|
8,835
|
(56
|
)
|
-
|
||||||||||||
Operating
Expenses
|
(2,318
|
)
|
(6,246
|
)
|
(2,891
|
)
|
(1,647
|
)
|
(402
|
)
|
-
|
||||||||
Income
from Operations
|
4,714
|
14,071
|
9,709
|
7,188
|
(459
|
)
|
-
|
||||||||||||
Other
Income (Expense), net
|
(307
|
)
|
(1,476
|
)
|
(1,583
|
)
|
(1,008
|
)
|
5,164
|
-
|
|||||||||
Income
Before Taxes
|
4,408
|
12,620
|
8,126
|
6,180
|
4,705
|
-
|
|||||||||||||
Income
Taxes
|
166
|
968
|
1.6
|
191
|
66
|
||||||||||||||
Net
Income
|
4,241
|
11,652
|
8,128
|
,988
|
4,772
|
-
|
|||||||||||||
Foreign
Currency Translation
|
3,682
|
2,064
|
285
|
0.7
|
-
|
-
|
|||||||||||||
Comprehensive
Income
|
7,923
|
13,716
|
8,739
|
6,274
|
0.7
|
-
|
|||||||||||||
Basic
Net Income Per Share (in US$)
|
0.25
|
0.87
|
0.61
|
0.45
|
0.36
|
-
|
|||||||||||||
Diluted
Net Income Per Share (in US$)
|
0.20
|
0.67
|
0.47
|
0.35
|
0.28
|
-
|
|||||||||||||
Basic
Weighted Average Number of Shares Outstanding
|
17,272,756
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
-
|
|||||||||||||
Diluted
Weighted Average Number of Shares Outstanding
|
21,182,756
|
17,272,756
|
17,272,756
|
7,272,756
|
17,272,756
|
-
|
(US
dollars in thousands)
|
|||||||||||||||||||
At
|
At
December 31,
|
||||||||||||||||||
|
March
31,
2008
(unaudited)
|
2007
(audited)
|
2006
(audited)
|
2005
(audited)
|
2004
(audited)
|
2003
(unaudited)
|
|||||||||||||
Balance
Sheet Data:
|
|||||||||||||||||||
Total
Assets
|
$
|
82,647
|
$
|
66,620
|
$
|
56,846
|
$
|
50,993
|
$
|
29,957
|
$
|
-
|
|||||||
Current
Liabilities
|
25,786
|
17,682
|
16,764
|
18,979
|
2,358
|
-
|
|||||||||||||
Long
Term Liabilities
|
-
|
-
|
17,909
|
18,580
|
19,309
|
-
|
|||||||||||||
Stockholders
Equity
|
56,861
|
48,938
|
22,174
|
13,434
|
8,290
|
-
|
First
Quarter |
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
2008
|
|
|
|
|
|
|||||||||||
Sales
|
$
|
43,507,098
|
|
-
|
|
-
|
|
-
|
$
|
43,507,098
|
||||||
Gross
Profit
|
7,032,674
|
-
|
-
|
-
|
7,032,674
|
|||||||||||
Net
Income
|
4,241,217
|
-
|
-
|
-
|
4,241,217
|
|||||||||||
Basic
Earnings Per Share
|
$
|
0.25
|
|
-
|
|
-
|
|
-
|
$
|
0.25
|
||||||
Diluted
EarningsPer Share
|
$
|
0.20
|
|
-
|
|
-
|
|
-
|
$
|
0.20
|
||||||
Basic
Weighted Average Shares
|
17,272,756
|
-
|
-
|
-
|
17,272,756
|
|||||||||||
Diluted
Weighted Average Shares
|
21,182,756
|
-
|
-
|
-
|
21,182,756
|
2007
|
|
|
|
|
|
|||||||||||
Sales
|
$
|
23,187,994
|
$
|
31,370,321
|
$
|
35,160,526
|
$
|
34,977,195
|
$
|
124,696,036
|
||||||
Gross
Profit
|
4,162,362
|
4,859,655
|
5,730,373
|
5,564,737
|
20,317,127
|
|||||||||||
Net
Income
|
3,009,384
|
2,784,233
|
2,504,970
|
3,353,560
|
11,652,147
|
|||||||||||
Basic
Earnings Per Share
|
$
|
0.22
|
$
|
0.21
|
$
|
0.19
|
$
|
0.25
|
$
|
0.87
|
||||||
Diluted
EarningsPer Share
|
$
|
0.17
|
$
|
0.16
|
$
|
0.15
|
$
|
0.19
|
$
|
0.67
|
||||||
Basic
Weighted Average Shares
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
|||||||||||
Diluted
Weighted Average Shares
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
2006
|
||||||||||||||||
Sales
|
$
|
15,481,846
|
$
|
16,964,150
|
$
|
17,854,359
|
$
|
20,096,084
|
$
|
70,396,439
|
||||||
Gross
Profit
|
2,579,552
|
3,633,282
|
2,357,829
|
4,030,924
|
12,601,586
|
|||||||||||
Net
Income
|
1,573,801
|
2,551,750
|
1,291,919
|
2,710,902
|
8,128,371
|
|||||||||||
Basic
Earnings Per Share
|
$
|
0.12
|
$
|
0.19
|
$
|
0.10
|
$
|
0.20
|
$
|
0.61
|
||||||
Diluted
EarningsPer Share
|
$
|
0.09
|
$
|
0.15
|
$
|
0.07
|
$
|
0.16
|
$
|
0.47
|
||||||
Weighted
Average Shares
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
|||||||||||
Diluted
Weighted Average Shares
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
|||||||||||
2005
|
||||||||||||||||
Sales
|
$
|
9,501,321
|
$
|
12,639,443
|
$
|
15,833,533
|
$
|
16,145,689
|
$
|
54,119,985
|
||||||
Gross
Profit
|
2,064,317
|
2,126,989
|
2,191,282
|
2,453,122
|
8,835,709
|
|||||||||||
Net
Income
|
1,530,539
|
1,601,519
|
1,526,686
|
1,330,028
|
5,988,772
|
|||||||||||
Basic
Earnings Per Share
|
$
|
0.11
|
$
|
0.12
|
$
|
0.11
|
$
|
0.10
|
$
|
0.45
|
||||||
Diluted
EarningsPer Share
|
$
|
0.09
|
$
|
0.09
|
$
|
0.09
|
$
|
0.08
|
$
|
0.35
|
||||||
Weighted
Average Shares
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
|||||||||||
Diluted
Weighted Average Shares
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
17,272,756
|
·
|
maintain
our market position in the meat business in
China;
|
·
|
offer
new and innovative products to attract and retain a larger customer
base;
|
·
|
attract
additional customers and increase spending per
customer;
|
·
|
increase
awareness of our brand and continue to develop user and customer
loyalty;
|
·
|
respond
to competitive market conditions;
|
·
|
respond
to changes in our regulatory
environment;
|
·
|
manage
risks associated with intellectual property
rights;
|
·
|
maintain
effective control of our costs and
expenses;
|
·
|
raise
sufficient capital to sustain and expand our
business;
|
·
|
attract,
retain and motivate qualified personnel;
and
|
·
|
upgrade
our technology to support additional research and
development.
|
|
·
|
limit
our ability to pay dividends or require us to seek consent for
the payment
of dividends;
|
|
·
|
increase
our vulnerability to general adverse economic and industry
conditions;
|
|
·
|
require
us to dedicate a portion of our cash flow from operations to payments
on
our debt, thereby reducing the availability of our cash flow to
fund
capital expenditures, working capital and other general corporate
purposes; and
|
|
·
|
limit
our flexibility in planning for, or reacting to, changes in our
business
and our industry.
|
Structure.
Agriculture still plays an important role in Chinese economy and
employment. Agriculture still represents around 50% of the employment,
which is substantially higher than most developed countries.
|
·
|
Capital
re-investment.
Compared with more highly developed nations, there may be less
availability to Chinese firms of all types of investment capital
within
China.
|
·
|
Government
involvement.
China is still transitioning from a centrally planned economic
model to
that of a free market. As a result, the Chinese government has
traditionally had a greater degree of regulatory involvement in
the
economic affairs and conduct of firms in China, as compared with
firms in
more advanced market-based economies.
|
·
|
Allocation
of resources.
Related to the above point, the Chinese government may have greater
ability to influence the allocation of capital, labor, materials,
and
other resources than governments of other advanced market-based
economies.
|
·
|
Level
of development.
Although China’s economy has been rapidly growing in recent years, certain
aspects such as public infrastructure, poverty rate, and other
measurements of development still lag behind highly developed nations,
and
this affects how companies must conduct business in China.
|
·
|
Control
of foreign exchange.
China still maintains strict foreign exchange controls which
has been in
place since 1979, although steps have been taken to increase
the
exchangeability of the Chinese RMB with other currencies.
|
·
|
Growth
rate.
For several years, China’s economy has achieved consistent double digit
growth rates, and this may put strain on infrastructure, availability
on
raw materials, and ability of firms to manage growth.
|
·
|
Rate
of inflation.
According to the Consumer Price Index (CPI) compiled by the National
Statistics Bureau of China, the overall rate of inflation (CPI)
in August
2007 is 6.5% and the rate of inflation for food in August 2007
was 18.2%,
which are substantially higher than most of the developed countries,
and
these factors affect the local market environment in which Chinese
firms
must operate.
|
|
·
|
new
laws and regulations and the interpretation of those laws and
regulations;
|
|
·
|
the
introduction of measures to control inflation or stimulate
growth;
|
|
·
|
changes
in the rate or method of taxation;
|
|
·
|
the
imposition of additional restrictions on currency conversion and
remittances abroad; or
|
|
·
|
any
actions which limit our ability to develop, produce, import or
sell our
products in China, or to finance and operate our business in
China.
|
|
·
|
actual
or anticipated fluctuations in our quarterly operating
results;
|
|
·
|
changes
in financial estimates by securities research analysts;
|
|
·
|
conditions
in agricultural markets;
|
|
·
|
changes
in the economic performance or market valuations of other meat
processing
companies;
|
|
·
|
announcements
by us or our competitors of new products, acquisitions, strategic
partnerships, joint ventures or capital commitments;
|
|
·
|
addition
or departure of key personnel;
|
|
·
|
fluctuations
of exchange rates between RMB and the U.S. dollar;
|
|
·
|
intellectual
property litigation;
|
|
·
|
general
economic or political conditions in
China.
|
1.
|
Dalian
Chuming Slaughter and Packaging Pork Company Ltd. (the “Meat Company”),
whose primary business activity is acquiring, slaughtering and packaging
of pork and cattle;
|
|
2.
|
Dalian
Chuming Processed Foods Company Ltd. (the “Food Company”), whose primary
business activity is the processing of raw and cooked meat products;
and
|
|
3.
|
Dalian
Chuming Sales Company Ltd. (the “Sales Company”), which is responsible for
our sales, marketing and distribution
activities.
|
|
·
|
Fresh
meat - pork that is processed in a controlled environmental chamber
with
closely monitored temperatures to ensure quality and safety standards
during processing right up to the time of delivery to the
consumer.
|
|
·
|
Frozen
fresh meat - butchered pigs that are processed and immediately frozen,
which includes such products as smoked pork, ham and
roasts.
|
|
·
|
Frozen
fresh byproducts - pork byproducts including pig’s liver, stomach,
intestine, head and hoof.
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
November
|
|||||||||||||
China
|
45,186
|
47,016
|
50,106
|
51,972
|
47,000
|
48,000
|
|||||||||||||
EU-27
|
21,712
|
21,753
|
21,676
|
21,677
|
22,040
|
21,910
|
|||||||||||||
United
States
|
9,056
|
9,312
|
9,392
|
9,559
|
9,877
|
10,108
|
|||||||||||||
Brazil
|
2,560
|
2,600
|
2,710
|
2,830
|
2,980
|
3,095
|
|||||||||||||
Russian
Federation
|
1,710
|
1,725
|
1,735
|
1,805
|
1,880
|
2,000
|
|||||||||||||
Canada
|
1,882
|
1,936
|
1,920
|
1,898
|
1,850
|
1,790
|
|||||||||||||
Japan
|
1,260
|
1,272
|
1,245
|
1,247
|
1,260
|
1,255
|
|||||||||||||
Mexico
|
1,100
|
1,150
|
1,195
|
1,200
|
1,200
|
1,250
|
|||||||||||||
Korea,
Republic of
|
1,149
|
1,100
|
1,036
|
1,000
|
1,065
|
1,095
|
|||||||||||||
Taiwan
|
893
|
898
|
911
|
905
|
910
|
910
|
|||||||||||||
Ukraine
|
630
|
558
|
493
|
485
|
530
|
540
|
|||||||||||||
3,350
|
3,481
|
3,720
|
3,926
|
4,086
|
1,039
|
||||||||||||||
Total
|
90,488
|
92,801
|
96,136
|
98,504
|
94,678
|
92,992
|
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
November
|
|||||||||||||
China
|
45,054
|
46,648
|
49,703
|
51,467
|
46,690
|
47,700
|
|||||||||||||
EU-27
|
20,683
|
20,528
|
20,632
|
20,518
|
20,790
|
20,800
|
|||||||||||||
United
States
|
8,816
|
8,817
|
8,670
|
8,640
|
8,939
|
9,129
|
|||||||||||||
Russian
Federation
|
2,417
|
2,338
|
2,486
|
2,639
|
2,734
|
2,874
|
|||||||||||||
Japan
|
2,331
|
2,529
|
2,482
|
2,458
|
2,500
|
2,490
|
|||||||||||||
Brazil
|
1,957
|
1,979
|
1,949
|
2,191
|
2,265
|
2,320
|
|||||||||||||
Mexico
|
1,423
|
1,556
|
1,556
|
1,580
|
1,565
|
1,580
|
|||||||||||||
Korea,
Republic of
|
1,286
|
1,336
|
1,311
|
1,420
|
1,518
|
1,550
|
|||||||||||||
Canada
|
1,003
|
1,068
|
967
|
971
|
970
|
930
|
|||||||||||||
Taiwan
|
934
|
948
|
944
|
928
|
927
|
928
|
|||||||||||||
Ukraine
|
623
|
606
|
544
|
544
|
609
|
619
|
|||||||||||||
Others
|
3,621
|
3,697
|
3,906
|
4,158
|
4,332
|
1,249
|
|||||||||||||
|
90,148
|
92,050
|
95,150
|
97,514
|
93,839
|
92,169
|
|
Kg Per Person
|
Relative %
|
|||||
Beef
|
5.6
|
11
|
%
|
||||
Broiler
Meat
|
7.9
|
15
|
%
|
||||
Pork
|
39.4
|
74
|
%
|
||||
Total:
|
52.9
|
100
|
%
|
|
·
|
Transitioning
from “wet-market” to “dry-market”
|
|
·
|
Government
quality control
|
|
·
|
Government’s
strong support of meat processing industry
|
|
·
|
National
retailers provide platform for growth
|
|
·
|
Industry
consolidation benefits scaled players
|
|
·
|
Incomes
in urban China increased by 10% in the first nine months of 2006.
China’s
middle class - citizens making at least 50,000 Yuan (US$6,250) -
are
expected to double by 2010 to 25% of the country’s population, fueling
domestic consumption.
|
|
·
|
While
overall income grew rapidly, urban per capita disposable income grew
even
faster at 39.6% between 2002 and 2005, compared to 34.7% for per
capita
rural income during the same period. Urban per capita consumption
of meat
is twice that of the national average.
|
|
·
|
Due
to the increasing rural migration to urban cities, China expects
to double
its major cities by 2010 creating new waves of Chinese urban meat
consumers. The number of Chinese cities with over 1 million people
is
projected to reach 125 by 2010 according to the Chinese Academy of
Sciences, and cities with over 2 million people are projected to
reach 300
by 2020.
|
|
·
|
Domestic
demand for meat products in China is expected to grow to a projected
100
million metric tons in 2010 from an actual 72.4 million metric tons
in
2004 according to Access Asia, an independent research firm. Total
production value of meat products are expected to increase to a projected
US$120 billion from an actual US$84 billion and per capita meat
consumption is expected to increase from an actual 49 kg to a projected
75
kg during the same period. Pork represents the bulk of meat products
consumed in China.
|
|
·
|
Currently
less than an estimated 10% of the meat consumed in China is processed.
Meat consumption out of the home has surpassed in-home meat consumption
in
11 Chinese provinces, especially in more economically developed regional
markets such as Shanghai, Beijing, and Shenzhen, according to the
National
Bureau of Statistics.
|
|
·
|
Chinese
consumers have become more conscious of food safety and quality,
fueling
demand for branded foods. This has become more evident after the
occurrence of a series of disease outbreaks across Asia including
SARS and
the avian flu. With changing lifestyles and food quality awareness,
Chinese consumers are seeking more name brands to ensure the quality
in
processed meat that they purchase.
|
|
·
|
The
new health-conscious consumer group has become more educated and
concerned
with the freshness and nutritional value of various meat products.
For
example, LTMP (low temperature meat product) pork has become more
popular
recently as urban consumers become aware that LTMP has better nutritional
value and fresher taste than the longer-shelf-life HTMP (high temperature
meat product) pork products.
|
|
·
|
Chuming
Cumin Ham
|
|
·
|
Cooked
Ham
|
|
·
|
Roast
Ham
|
|
·
|
Premium
Ham
|
|
·
|
Sandwich
Ham
|
|
·
|
Square
Ham
|
|
·
|
Chunky
Ham
|
|
·
|
Baby
Ham
|
|
·
|
Salted
Loin
|
|
·
|
Smoked
Ham
|
|
·
|
Diary
Sausage
|
|
·
|
Garlic
Sausage
|
|
·
|
Spicy
Sausage
|
|
·
|
Chinese
Sausage
|
|
·
|
Taiwan
Sausage
|
|
·
|
Baby
Sausage
|
|
·
|
Baked
Fish Sausage
|
|
·
|
Barbequed
Prawn Sausage
|
|
·
|
Crab
Sausage
|
|
·
|
Scallop
Sausage
|
|
·
|
Squid
Sausage
|
Dalian
|
74
|
%
|
||
Shenyang
|
18
|
%
|
||
East
Liaoning
|
3
|
%
|
||
North
Liaoning
|
2
|
%
|
||
West
Liaoning
|
2
|
%
|
||
Others
|
1
|
%
|
Name
|
Market
share
|
|||
Chuming
|
50
|
%
|
||
Bangchui
Island
|
18
|
%
|
||
Nine
Stars
|
12
|
%
|
||
Taifu
|
8
|
%
|
||
Tianxin
|
6
|
%
|
||
Yurun
|
6
|
%
|
Name
|
Market
share
|
|||
Chuming
|
20
|
%
|
||
Chengxin
|
20
|
%
|
||
Chuhe
|
17
|
%
|
||
Jin
Baiwei
|
15
|
%
|
||
Shineway
|
15
|
%
|
||
Yurun
|
8
|
%
|
||
Others
|
5
|
%
|
R&D and
Engineering
|
Production
|
General and
Administrative
|
Sales and
Marketing
|
Quality
Control
|
Total
|
||||||||||||||
Meat
Company
|
10
|
153
|
25
|
10
|
8
|
206
|
|||||||||||||
Food
Company
|
15
|
165
|
15
|
18
|
10
|
211
|
|||||||||||||
Sales
Company
|
0
|
0
|
25
|
135
|
0
|
160
|
|||||||||||||
Total
|
25
|
318
|
65
|
163
|
18
|
589
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits Investors;
|
|
·
|
block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
|
|
·
|
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
|
·
|
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
|
·
|
privately
negotiated transactions;
|
|
·
|
to
cover short sales made after the date that this registration statement
is
declared effective by the Securities and Exchange
Commission;
|
|
·
|
broker-dealers
may agree with the selling shareholders to sell a specified number
of such
shares at a stipulated price per
share;
|
|
·
|
a
combination of any such methods of sale;
and
|
|
·
|
any
other method permitted pursuant to applicable
law.
|
Name
|
|
Shares Owned
|
|
Shares Offered
|
|
Shares Held
After Offering
|
|
% Ownership
After Offering
|
|
||||
Pinnacle
China Fund, L.P.
4965
Preston Park Blvd, Suite 240
Plano,
TX 75093 (1)
|
|
|
1,022,727
|
|
|
1,022,727
|
|
|
0
|
|
|
0
|
%
|
The
Pinnacle Fund, L.P.
4965
Preston Park Blvd, Suite 240
Plano,
TX 75093 (1)
|
|
|
1,022,727
|
|
|
1,022,727
|
|
|
0
|
|
|
0
|
%
|
Westpark
Capital, L.P.
4965
Preston Park Blvd, Suite 240
Plano,
TX 75093 (2)
|
|
|
409,091
|
|
|
409,091
|
|
|
0
|
|
|
0
|
%
|
Atlas
Allocation Fund, L.P.
100
Crescent Court #880,
Dallas,
TX 75201
c/o
Atlas Capital Management (3)
|
|
|
409,091
|
|
|
409,091
|
|
|
0
|
|
|
0
|
%
|
Southwell
Partners, L.P.
1901
North Akerd Street
Dallas,
TX 75201 (4)
|
|
|
409,091
|
|
|
409,091
|
|
|
0
|
|
|
0
|
%
|
Centaur
Value Fund
1460
Main St., Suite 234
Southlake,
TX 76092 (5)
|
|
|
62,500
|
|
|
62,500
|
|
|
0
|
|
|
0
|
%
|
United
Centaur Master Fund
1460
Main St., Suite 234
Southlake,
TX 76092 (5)
|
|
|
62,500
|
|
|
62,600
|
|
|
0
|
|
|
0
|
%
|
Sandor
Capital Master Fund, L.P.
2828
Routh Street, Suite 500
Dallas,
TX 75201 (6)
|
|
|
113,636
|
|
|
113,636
|
|
|
0
|
|
|
0
|
%
|
Precept
Capital Master Fund, G.P.
200
Crescent Court, Suite 1450
Dallas,
TX 75201 (7)
|
|
|
113,636
|
|
|
113,636
|
|
|
0
|
|
|
0
|
%
|
Roth
Capital Partners, LLC
24
Corporate Plaza
Newport
Beach, CA 92660 (8)
|
|
|
90,910
|
|
|
90,910
|
|
|
0
|
|
|
0
|
%
|
Cooper
Family Trust
24
Corporate Plaza
Newport
Beach, CA 92660
c/o
Roth Capital Partners (9)
|
|
|
11,364
|
|
|
11,364
|
|
|
0
|
|
|
0
|
%
|
Aaron
M. Gurewitz
Trustee
of AMG Trust
30
Twilight Bluff
Newport
Coast, CA 92657 (10)
|
|
|
5,681
|
|
|
5,681
|
|
|
0
|
|
|
0
|
%
|
Gordon
Roth
189
Monarch Bay
Dana
Point, CA 92629
|
|
|
5,681
|
|
|
5,681
|
|
|
0
|
|
|
0
|
%
|
Glacier
Partners, L.P.
812
Anacapa St, Suite B
Santa
Barbara, CA 93101 (11)
|
|
|
90,909
|
|
|
90,909
|
|
|
0
|
|
|
0
|
%
|
Matthew
Hayden
7582
Windermere Ct.
Lake
Worth, FL 33467
|
|
|
34,091
|
|
|
34,091
|
|
|
0
|
|
|
0
|
%
|
Shine
Gold Holdings Limited
Palm
Grove House, P.O. Box 438
Road Town,
Tortola,
British
Virgin Islands (12)
|
|
|
10,690,668
|
|
|
3,863,636
|
|
|
6,827,032
|
|
|
32.3
|
%
|
Halter
Financial Investments, LP
12890
Hill Top Road
Argyle,
TX 76226 (13)
|
347,827
|
347,827
|
0
|
0
|
%
|
||||||||
Jenson
Services, Inc.
4685
S. Highland Drive, Suite 202
Salt
Lake City, UT 84117 (14)
|
65,389
|
65,389
|
0
|
0
|
%
|
||||||||
TOTAL
|
|
|
14,967,519
|
|
|
8,140,487
|
|
|
6,827,032
|
|
|
32.3
|
%
|
|
(1)
|
Barry
Kitt has dispositive and voting power over the shares and may be
deemed to
be the beneficial owner of the shares of common stock beneficially
owned
by each of Pinnacle China Fund, L.P. and The Pinnacle Fund, L.P. Mr.
Kitt disclaims beneficial ownership of the shares to the extent of
his
direct or indirect pecuniary interest.
|
|
(2)
|
Mr.
Patrick J. Brosnahan has voting and dispositive control over securities
held by Westpark Capital, L.P.
|
|
(3)
|
Mr.
Robert H. Alpert has voting and dispositive control over securities
held
by Atlas Allocation Fund, L.P.
|
|
(4)
|
Mr.
Wilson S. Jaeggli has voting and dispositive control over securities
held
by Southwell Partners, L.P.
|
|
(5)
|
Mr.
Zeke Aston has voting and dispositive control over securities held
by
Centaur Value Fund and United Centaur Master Fund.
|
|
(6)
|
Mr.
John S. Lemak has voting and dispositive control over securities
held by
Sandor Capital Master Fund, L.P.
|
|
(7)
|
Mr.
D. Blair Baker has voting and dispositive control over securities
held by
Precept Capital Master Fund, G.P.
|
|
(8)
|
Mr.
Gordon Roth has voting and dispositive control over securities held
by
Roth Capital Partners, LLC.
|
|
(9)
|
Mr.
Chad Cooper has voting and dispositive control over securities held
by the
Cooper Family Trust.
|
|
(10)
|
Mr.
Aaron M. Gurewitz has voting and dispositive control over securities
held
by the Aaron M. Gurewitz, Trustee of AMG
Trust.
|
|
(11)
|
Mr.
Peter Castellanos has voting and dispositive control over securities
held
by Glacier Partners, L.P.
|
|
(12)
|
Shine
Gold Holdings Limited is a company organized under the laws of the
British
Virgin Islands. The registered address for Shine Gold Holdings
is Palm Grove House, P.O. Box 438, Road Town, Tortola, British
Virgin Islands. Mr. Shi Huashan and certain of his relatives (the
“Shi
Family”) have entered into a trust agreements with a non-PRC individual,
under which the non-PRC individual holds the shares of Shine Gold
Holdings
as a trustee for the benefit of Mr. Shi and his family. The natural
persons with voting power and investment power on behalf of Shine
Gold
Holdings is Chong Shun. As beneficiaries of the trust arrangement,
members of the Shi family have only economic rights with respect to
the shares held by Shine Gold Holdings. Mr. Shi Huashan and the Shi
family
hereby disclaim beneficial ownership except to the extent of their
pecuniary interest in the Energroup shares held by Shine Gold
Holdings.
|
(13)
|
Mr.
Timothy Halter has voting and dispositive control over securities
held by
Halter Financial Investments, LP.
|
|
(14)
|
Mr.
Travis Jenson has voting and dispositive control over securities
held by
Jenson Services, Inc.
|
(US dollars in thousands) | |||||||||||||||||||
Three
Months Ended March 31,
|
Twelve Months Ended
December 31,
|
||||||||||||||||||
|
2008
(unaudited)
|
2007
(audited)
|
2006
(audited)
|
2005
(audited)
|
2004
(audited)
|
2003
(unaudited)
|
|||||||||||||
Consolidated
Statements of Operations Data:
|
|
|
|
|
|
||||||||||||||
Sales
|
43,507
|
124,696
|
70,396
|
54,119
|
654
|
||||||||||||||
Cost
of Sales
|
(36,474
|
)
|
(104,379
|
)
|
(57,794
|
)
|
(45,284
|
)
|
(711
|
)
|
-
|
||||||||
Gross
Profit
|
7,033
|
20,317
|
12,601
|
8,835
|
(56
|
)
|
-
|
||||||||||||
Operating
Expenses
|
(2,318
|
)
|
(6,246
|
)
|
(2,891
|
)
|
(1,647
|
)
|
(402
|
)
|
-
|
||||||||
Income
from Operations
|
4,714
|
14,071
|
9,709
|
7,188
|
(459
|
)
|
-
|
||||||||||||
Other
Income (Expense), net
|
(307
|
)
|
(1,476
|
)
|
(1,583
|
)
|
(1,008
|
)
|
5,164
|
-
|
|||||||||
Income
Before Taxes
|
4,408
|
12,620
|
8,126
|
6,180
|
4,705
|
-
|
|||||||||||||
Income
Taxes
|
166
|
968
|
1.6
|
191
|
66
|
||||||||||||||
Net
Income
|
4,241
|
11,652
|
8,128
|
,988
|
4,772
|
-
|
|||||||||||||
Foreign
Currency Translation
|
3,682
|
2,064
|
285
|
0.7
|
-
|
-
|
|||||||||||||
Comprehensive
Income
|
7,923
|
13,716
|
8,739
|
6,274
|
0.7
|
-
|
|||||||||||||
Basic
Net Income Per Share (in US$)
|
0.25
|
0.87
|
0.61
|
0.45
|
0.36
|
-
|
|||||||||||||
Diluted
Net Income Per Share (in US$)
|
0.20
|
0.67
|
0.47
|
0.35
|
0.28
|
-
|
|||||||||||||
Basic
Weighted Average Number of Shares Outstanding
|
17,272,756
|
13,409,120
|
13,409,120
|
13,409,120
|
13,409,120
|
-
|
|||||||||||||
Diluted
Weighted Average Number of Shares Outstanding
|
21,182,756
|
17,272,756
|
17,272,756
|
7,272,756
|
17,272,756
|
-
|
(US dollars in thousands) | |||||||||||||||||||
At
|
At
December 31,
|
||||||||||||||||||
|
March
31,
2008
|
2007
(audited)
|
2006
(audited)
|
2005
(audited)
|
2004
(audited)
|
2003
(unaudited)
|
|||||||||||||
Balance
Sheet Data:
|
|||||||||||||||||||
Total
Assets
|
$
|
82,647
|
$
|
66,620
|
$
|
56,846
|
$
|
50,993
|
$
|
29,957
|
$
|
-
|
|||||||
Current
Liabilities
|
25,786
|
17,682
|
16,764
|
18,979
|
2,358
|
-
|
|||||||||||||
Long
Term Liabilities
|
-
|
-
|
17,909
|
18,580
|
19,309
|
-
|
|||||||||||||
Stockholders
Equity
|
56,861
|
48,938
|
22,174
|
13,434
|
8,290
|
-
|
|
1.
|
Dalian
Chuming Slaughter and Packaging Pork Company Ltd. (also referred
to in
this report as “Meat Company”), whose primary business activity is
acquiring, slaughtering and packaging of pork and
cattle;
|
|
|
|
|
2.
|
Dalian
Chuming Processed Foods Company Ltd. (also referred to in this report
as
“Food Company”), whose primary business activity is the processing of raw
and cooked meat products; and
|
|
|
|
|
3.
|
Dalian
Chuming Sales Company Ltd. (also referred to in this report as “Sales
Company”), which is responsible for Chuming’s sales, marketing and
distribution operations.
|
Name of Company
|
Place of
Incorporation
|
|
Attributable
Equity
Interest
|
|
Registered Capital
|
|||||
Precious
Sheen Investments Limited
|
BVI
|
100
|
%
|
USD
10,000
|
||||||
|
||||||||||
Dalian
Chuming Precious Sheen Investment Consulting Co., Ltd.
|
PRC
|
100
|
%
|
RMB
29,400,682
|
||||||
|
||||||||||
Dalian
Chuming Slaughtering & Pork Packaging Co. Ltd.
|
PRC
|
100
|
%
|
RMB
10,000,000
|
||||||
|
||||||||||
Dalian
Chuming Processed Foods Co. Ltd.
|
PRC
|
100
|
%
|
RMB
5,000,000
|
||||||
|
||||||||||
Dalian
Chuming Sales Co. Ltd.
|
PRC
|
100
|
%
|
RMB
5,000,000
|
Fixed
Asset Classification
|
|
Useful
Life
|
Land
Improvements
|
|
10
years
|
Buildings
|
|
20
years
|
Building
Improvements
|
|
10
years
|
Manufacturing
Machinery & Equipment
|
|
10
years
|
Office
Equipment
|
|
5
years
|
Furniture
& Fixtures
|
|
5
years
|
Vehicles
|
|
5
years
|
|
|
Quarter Ending
|
|
|
|
Quarter Ending
|
|
|
|
||||
|
|
March 31,
|
|
% of
|
|
March 31,
|
|
% of
|
|
||||
|
|
2008
|
|
Sales
|
|
2007
|
|
Sales
|
|
||||
Sales
|
$
|
43,507,098
|
100.00
|
%
|
$
|
23,187,994
|
100.00
|
%
|
|||||
Cost
of Sales
|
(36,474,424
|
)
|
83.84
|
%
|
(19,025,632
|
)
|
82.05
|
%
|
|||||
Gross
Profit
|
7,032,674
|
16.16
|
%
|
4,162,362
|
17.95
|
%
|
|||||||
Selling
Expenses
|
1,825,277
|
4.20
|
%
|
229,419
|
0.99
|
%
|
|||||||
General
& Administrative Expenses
|
492,973
|
1.13
|
%
|
305,136
|
1.32
|
%
|
|||||||
Total
Operating Expense
|
2,318,250
|
5.33
|
%
|
534,555
|
2.31
|
%
|
|||||||
Operating
Income / (Loss)
|
4,714,423
|
10.84
|
%
|
3,627,807
|
15.65
|
%
|
|||||||
Other
Income (Expense)
|
(306,465
|
)
|
0.70
|
%
|
(618,423
|
)
|
2.67
|
%
|
|||||
Earnings
Before Tax
|
4,407,562
|
10.13
|
%
|
3,009,384
|
12.98
|
%
|
|||||||
(Income
Tax Expense) / Deferred Tax Benefit
|
(166,345
|
)
|
0.38
|
%
|
-
|
0.72
|
%
|
||||||
Net
Income
|
$
|
4,241,217
|
9.75
|
%
|
$
|
3,009,384
|
12.98
|
%
|
|||||
Earnings
Per Share
|
|
|
|||||||||||
Basic
|
0.25 | 0.22 | |||||||||||
Diluted
|
0.20 | 0.17 | |||||||||||
Weighted
Average Shares Outstanding
|
|
|
|||||||||||
Basic
|
17,272,756
|
13,409,120 | |||||||||||
Diluted
|
21,182,756 |
17,272,756
|
Sales
by product category, in
dollars:
|
First Quarter
2008 (amount)
|
% of
Total
Sales
|
First Quarter
2007
|
% of
Total
Sales
|
% of increase
from
2007 to 2008
|
||||||||||||
Fresh Pork
|
$
|
36,384,986
|
83.63
|
%
|
$
|
17,653,019
|
76.13
|
%
|
106.11
|
%
|
|||||||
Frozen
Pork
|
2,358,085
|
5.42
|
%
|
1,595,334
|
6.88
|
%
|
47.81
|
%
|
|||||||||
Processed
Food Products
|
4,764,027
|
10.95
|
%
|
3,939,640
|
16.99
|
%
|
20.92
|
%
|
|||||||||
Total
Sales
|
$
|
43,507,098
|
100
|
%
|
$
|
23,187,994
|
100
|
%
|
87.63
|
%
|
Sales
by product category, by weight of
product (metric tons):
|
First Quarter
2008
(Weight in tons)
|
% of
Total
Sales
|
First Quarter
2007
(Weight in tons)
|
% of
Total
Sales
|
% of change
from
2007 to 2008
|
||||||||||||
Fresh Pork
|
13,997 | 79.92 | % | 10,306 | 73.75 | % | 35.81 | % | |||||||||
Frozen
Pork
|
1,086 | 6.20 | % | 878 | 6.28 | % | 23.69 | % | |||||||||
Processed
Food Products
|
2,430 | 13.88 | % | 2,791 | 19.97 | % | -12.93 | % | |||||||||
Total
Sales
|
17,513 | 100 | % |
$
|
13,975
|
100 | % | 25.32 | % |
Average
Per-Kilogram Price to Customers (in $US)
|
|||||||||||||
First
Quarter of 2008
|
First
Quarter of
2007
|
%
change
|
Change
in
Price
|
||||||||||
Fresh
Pork
|
$
|
2.59
|
$
|
1.68
|
54
|
%
|
$
|
0.91
|
|||||
Frozen
Pork
|
$
|
2.17
|
$
|
1.82
|
19
|
%
|
$
|
0.35
|
|||||
Processed
Food Products
|
$
|
1.96
|
$
|
1.41
|
39
|
%
|
$
|
0.55
|
Sales
Channels
|
||||||||||
As
of March 31,
|
Franchise
Stores
|
Supermarkets
|
Restaurants and
Canteens
|
|||||||
2007
|
436
|
93
|
2,482
|
|||||||
2008
|
635
|
122
|
3,191
|
Increase
in Sales from First Quarter of 2007 to First Quarter
of
2008
|
|||||
By
Product Group and Sales Channel ($)
|
|||||
Franchise
Operators
|
Sales
Agents
|
Super
Markets
|
Restaurants
and
Canteens
|
Total
Increase ($)
|
|
Fresh
Pork
|
5,449,458
|
4,791,484
|
7,939,765
|
562,512
|
18,743,219
|
Frozen
Pork
|
n/a1
|
70,271
|
n/a1
|
687,895
|
758,166
|
Processed
Food Products
|
63,020
|
368,571
|
185,508
|
200,619
|
817,718
|
|
|||||
Total
Increase in Sales
|
5,512,478
|
5,230,326
|
8,125,273
|
1,451,026
|
20,319,103
|
|
First Quarter
|
% of
Total
Cost
of
|
First Quarter
|
% of
Total
Cost
of
|
% of increase
from
|
|||||||||||
Cost of Sales:
|
2008
|
Sales
|
2007
|
Sales
|
2007 to 2008
|
|||||||||||
Fresh Pork
|
$
|
31,371,652
|
86.01 | % |
$
|
15,079,715
|
79.26 | % | 108.03 | % | ||||||
Frozen
Pork
|
1,794,542 | 4.92 | % | 1,253,789 | 6.59 | % | 43.13 | % | ||||||||
Processed
Food Products
|
3,308,230 | 9.07 | % | 2,692,127 | 14.15 | % | 22.89 | % | ||||||||
Total
Cost of Sales
|
$
|
36,474,424
|
100 | % |
$
|
19,025,632
|
100 | % | 91.71 | % |
First
Quarter
|
% of
Product
|
First
Quarter
|
% of
Product
|
||||||||||
Cost
of Sales:
|
of
2008
|
Group
Sales
|
of
2007
|
Group
Sales
|
|||||||||
Fresh
Pork
|
$
|
31,371,652
|
86.22
|
%
|
$ | 15,079,715 | 85.42 | % | |||||
Frozen
Pork
|
1,794,542
|
76.10
|
%
|
1,253,789 | 78.59 | % | |||||||
Processed
Food Products
|
3,308,230
|
69.44
|
%
|
2,692,127 | 68.33 | % | |||||||
Total
Cost of Sales
|
$
|
36,474,424
|
83.84
|
%
|
$ | 19,025,632 | 82.05 | % |
Gross Profit |
First
Quarter
of
2008
|
Gross
Profit
Margin
by
Product
Group
|
First
Quarter
of
2007
|
Gross
Profit
Margin
by
Product
Group
|
% of
increase from First Quarter of 2007 to First
Quarter
of 2008
|
||||||||||||
Fresh
Pork
|
$
|
5,036,292
|
13.84
|
%
|
$
|
2,582,018
|
14.63
|
%
|
95.05
|
%
|
|||||||
Frozen
Pork
|
556,052
|
23.58
|
%
|
339,350
|
21.27
|
%
|
63.86
|
%
|
|||||||||
Processed
Food Products
|
1,440,330
|
30.23
|
%
|
1,240,994
|
31.50
|
%
|
16.06
|
%
|
|||||||||
Total
Sales
|
$
|
7,032,674
|
16.16
|
%
|
$
|
4,162,362
|
17.95
|
%
|
68.96
|
%
|
Year Ended
|
|
|
|
Year Ended
|
|
|
|
||||||
|
|
December 31,
|
|
% of
|
|
December 31,
|
|
% of
|
|
||||
|
|
2007
|
|
Sales
|
|
2006
|
|
Sales
|
|||||
Sales
|
$
|
124,696,035
|
100.00
|
%
|
$
|
70,396,439
|
100.00
|
%
|
|||||
Cost
of Sales
|
104,333,172
|
83.67
|
%
|
57,794,853
|
82.10
|
%
|
|||||||
Gross
Profit
|
20,362,863
|
16.33
|
%
|
12,601,586
|
17.90
|
%
|
|||||||
Selling
Expenses
|
4,672,829
|
3.75
|
%
|
1,556,805
|
2.21
|
%
|
|||||||
General
& Administrative Expenses
|
1,572,836
|
1.26
|
%
|
1,334,866
|
1.90
|
%
|
|||||||
Total
operating Expense
|
6,245,665
|
5.01
|
%
|
2,891,671
|
4.11
|
%
|
|||||||
Operating
Income / (Loss)
|
14,117,199
|
11.32
|
%
|
9,709,915
|
13.79
|
%
|
|||||||
Other
Income (Expense)
|
(1,451,742
|
)
|
(1.16)
|
%
|
(1,583,155
|
)
|
(2.25)
|
%
|
|||||
Earnings
Before Tax
|
12,665,457
|
10.16
|
%
|
8,126,760
|
11.54
|
%
|
|||||||
(Income
Tax Expense) / Deferred Tax Benefit
|
(967,539
|
)
|
(0.78)
|
%
|
(1,609
|
)
|
0.00
|
%
|
|||||
Net
Income
|
$
|
11,697,917
|
9.38
|
%
|
$
|
8,128,369
|
11.55
|
%
|
|||||
Basic
Net Income Per Share
|
0.87
|
0.61
|
|||||||||||
Diluted Net Income Per Share |
0.67
|
0.47
|
|||||||||||
Basic
Weighted Average Number of Shares Outstanding
|
13,409,120
|
13,409,120
|
|||||||||||
Diluted Weighted
Average Number of Shares Outstanding
|
17,272,756
|
17,272,756
|
2007
|
% of
|
2006
|
% of
|
% of
increase from
|
||||||||||||
Sales:
|
(amount)
|
Sales
|
(amount)
|
Sales
|
2006
to 2007
|
|||||||||||
Fresh
Pork
|
$
|
97,680,266
|
78.33
|
%
|
$
|
60,553,081
|
86.02
|
%
|
61.31
|
%
|
||||||
Frozen
Pork
|
8,800,263
|
7.06
|
%
|
2,507,519
|
3.56
|
%
|
250.96
|
%
|
||||||||
Processed
Food Products
|
18,215,506
|
14.61
|
%
|
7,335,840
|
10.42
|
%
|
148.31
|
%
|
||||||||
Total
Sales
|
$
|
124,696,035
|
100.00
|
%
|
$
|
70,396,439
|
100.00
|
%
|
77.13
|
%
|
Increase
in Sales from 2006 to 2007
By
Product Group and Sales Channel ($)
|
||||||||||||||||
Franchise
Operators
|
Sales
Agents
|
Super
Markets
|
Restaurants
and
Canteens
|
Total
Increase
($)
|
||||||||||||
Fresh
Pork
|
$ |
12,227,597
|
7,289,142
|
17,610,447
|
n/a
|
37,127,186
|
||||||||||
Frozen
Pork
|
n/a
|
3,127,876
|
n/a
|
3,164,860
|
6,292,744
|
|||||||||||
Processed
Food Products
|
3,871,255
|
2,096,233
|
4,662,942
|
249,237
|
10,879,666
|
|||||||||||
Total
Increase in Sales (2006-2007)
|
$ |
16,098,852
|
12,513,251
|
22,273,389
|
3,414,097
|
54,299,596
|
Average
Per-Kilogram Price to Consumers
|
|||||||||||||
2007
|
2006
|
%
change
|
Change
in
Price ($)
|
||||||||||
Fresh
Pork
|
$
|
1.71
|
$
|
1.03
|
65.73
|
%
|
0.679
|
||||||
Frozen
Pork
|
$
|
1.85
|
$
|
1.09
|
69.08
|
%
|
0.755
|
||||||
Processed
Food Products
|
$
|
1.38
|
$
|
1.21
|
14.00
|
%
|
0.169
|
|
|
% of
Total
Cost of
|
|
% of
Total
Cost
of
|
|||||||||
Cost
of Sales:
|
2007
|
Sales
|
2006
|
Sales
|
|||||||||
Fresh
Pork
|
$
|
84,622,181
|
81.11
|
%
|
$
|
36,015,632
|
62.32
|
%
|
|||||
Frozen
Pork
|
7,058,215
|
6.76
|
%
|
4,855,542
|
8.40
|
%
|
|||||||
Processed
Food Products
|
12,652,776
|
12.13
|
%
|
16,923,679
|
29.28
|
%
|
|||||||
Total
Cost of Sales
|
$
|
104,333,172
|
100
|
%
|
$
|
57,794,853
|
100
|
%
|
|
% of
Product
|
|
% of
Product
|
% of
increase from
|
||||||||||||
Cost
of Sales:
|
2007
|
Group
Sales
|
2006
|
Group
Sales
|
2006
to 2007
|
|||||||||||
Fresh
Pork
|
$
|
84,622,181
|
86.63
|
%
|
$
|
50,820,879
|
83.92
|
%
|
66.51
|
%
|
||||||
Frozen
Pork
|
7,058,215
|
80.20
|
%
|
1,878,410
|
74.91
|
%
|
275.75
|
%
|
||||||||
Processed
Food Products
|
12,652,776
|
69.46
|
%
|
5,095,563
|
69.46
|
%
|
148.31
|
%
|
||||||||
Total
Cost of Sales
|
$
|
104,333,172
|
83.67
|
%
|
$
|
57,794,853
|
82.10
|
%
|
80.52
|
%
|
Average Price
Per Kilogram in
2007 ($)
|
Average Price
Per Kilogram in
2006 ($)
|
Price
Increase from 2006 to
2007 ($)
|
%
Increase from 2006 to
2007
|
||||||||||
First
Quarter
|
1.0579
|
0.9165
|
0.1414
|
15.43
|
%
|
||||||||
Second
Quarter
|
1.3535
|
0.8367
|
0.5168
|
61.77
|
%
|
||||||||
Third
Quarter
|
1.8104
|
0.8989
|
0.9115
|
101.40
|
%
|
||||||||
Fourth
Quarter
|
1.8656
|
0.9288
|
0.9368
|
100.86
|
%
|
||||||||
Average
for Year
|
1.5219
|
0.8952
|
0.6267
|
70.01
|
%
|
2007
|
Gross
Profit Margin by Product
|
2006
|
Gross
Profit Margin by Product
|
%
of increase from
|
||||||||||||
Gross
Profit
|
($
amount)
|
|
Group
|
($
amount)
|
|
Group
|
2006
to 2007
|
|||||||||
Fresh
Pork
|
$
|
13,012,351
|
13.32
|
%
|
$
|
9,732,201
|
16.07
|
%
|
33.70
|
%
|
||||||
Frozen
Pork
|
1,742,047
|
19.80
|
%
|
629,109
|
25.09
|
%
|
176.91
|
%
|
||||||||
Processed
Food Products
|
5,562,729
|
30.54
|
%
|
2,240,276
|
30.54
|
%
|
148.31
|
%
|
||||||||
Total
Sales
|
$
|
20,317,127
|
16.29
|
%
|
$
|
12,601,586
|
17.90
|
%
|
61.23
|
%
|
Year Ended
|
|
Year Ended
|
|
||||||||||
|
December 31,
|
% of
|
December 31,
|
% of
|
|||||||||
|
2006
|
Sales
|
2005
|
Sales
|
|||||||||
Sales
|
$
|
70,396,439
|
100.00
|
%
|
$
|
54,119,895
|
100.00
|
%
|
|||||
Gross
Profit
|
12,601,586
|
17.90
|
%
|
8,835,709
|
83.67
|
%
|
|||||||
Selling
Expenses
|
1,556,805
|
2.21
|
%
|
711,226
|
16.33
|
%
|
|||||||
General
& Administrative Expenses
|
1,334,866
|
1.90
|
%
|
936,179
|
1.31
|
%
|
|||||||
Total
operating Expense
|
2,891,671
|
4.11
|
%
|
1,647,405
|
1.73
|
%
|
|||||||
Operating
Income / (Loss)
|
9,709,915
|
13.79
|
%
|
7,188,304
|
3.04
|
%
|
|||||||
Other
Income (Expense)
|
(1,583,155
|
)
|
-2.25
|
%
|
(1,008,248
|
)
|
13.28
|
%
|
|||||
Earnings
Before Tax
|
8,126,760
|
11.54
|
%
|
6,180,056
|
-1.86
|
%
|
|||||||
(Income
Tax Expense) / Deferred Tax Benefit
|
(1,609
|
)
|
0.00
|
%
|
(191,284
|
)
|
11.42
|
%
|
|||||
Net
Income
|
$
|
8,128,369
|
11.55
|
%
|
$
|
5,988,772
|
-0.35
|
%
|
|||||
Basic
Net Income Per Share
|
0.61
|
0.45
|
|||||||||||
Diluted
Net Income Per Share
|
0.47
|
0.35
|
|||||||||||
Basic
Weighted Average Shares Outstanding
|
13,409,120
|
13,409,120
|
|||||||||||
Diluted
Weighted Average Shares Outstanding
|
17,272,756
|
17,272,756
|
|
% of
Total
Cost of
|
|
% of
Total
Cost of
|
||||||||||
Cost
of Sales:
|
2006
|
Sales
|
2005
|
Sales
|
|||||||||
Fresh
Pork
|
$
|
36,015,632
|
62.32
|
%
|
$
|
29,609,886
|
65.39
|
%
|
|||||
Frozen
Pork
|
4,855,542
|
8.40
|
%
|
3,779,626
|
8.34
|
%
|
|||||||
Processed
Food Products
|
16,923,679
|
29.28
|
%
|
11,894,674
|
26.27
|
%
|
|||||||
Total
Cost of Sales
|
$
|
57,794,853
|
100.00
|
%
|
$
|
45,284,186
|
100.00
|
%
|
|
% of
Product
|
|
% of
Product
|
% of
increase from
|
||||||||||||
Cost
of Sales:
|
2006
|
Group
Sales
|
2005
|
Group
Sales
|
2006
to 2007
|
|||||||||||
Fresh
Pork
|
$
|
36,015,632
|
83.92
|
%
|
$
|
29,609,886
|
80.72
|
%
|
21.63
|
%
|
||||||
Frozen
Pork
|
4,855,542
|
74.91
|
%
|
3,779,626
|
71.18
|
%
|
28.47
|
%
|
||||||||
Processed
Food Products
|
16,923,679
|
69.46
|
%
|
11,894,674
|
98.09
|
%
|
42.28
|
%
|
||||||||
Total
Cost of Sales
|
$
|
57,794,853
|
82.10
|
%
|
$
|
45,284,186
|
83.67
|
%
|
27.63
|
%
|
|
Payments
Due by Period
|
|||||||||||||||
|
Total
|
Less than 1
year
|
1-3 Years
|
3-5 Years
|
5 Years +
|
|||||||||||
|
|
|
|
|
|
|||||||||||
Contractual
Obligations:
|
||||||||||||||||
Bank
Indebtedness
|
$
|
14,881,376
|
$
|
14,881,376
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Other
Indebtedness
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Capital
Lease Obligations
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Operating
Leases
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||
Purchase
Obligations
|
$
|
416,951,159
|
$
|
102,572,116
|
$
|
314,379,043
|
$
|
-
|
$
|
-
|
||||||
Total
Contractual Obligations:
|
$
|
431,832,535
|
$
|
117,453,492
|
$
|
314,379,043
|
$
|
-
|
-
|
Name
|
|
Age
|
|
Position
|
Shi
Huashan *
|
|
49
|
|
President,
Chief Executive Officer and Chairman of the Board
|
Wang
Shu *
|
|
33
|
|
Chief
Financial Officer and Director
|
Chen
Fuyuan *
|
|
43
|
|
Chief
Operating Officer
|
Yan
Jinglu
|
|
42
|
|
Marketing
Director and General Manager of Sales Company
|
Chen
Shujie
|
|
41
|
|
Vice
General Manager - Sales Company
|
Cui
Zhiqiang
|
|
38
|
|
General
Manager - Food Company
|
Ma
Yongjun
|
|
42
|
|
General
Manager - Meat Company
|
Sun
Qiuye
|
|
33
|
|
Vice
General Manager - Meat Company
|
Wang
Suping
|
|
32
|
|
General
Manager - Food Company
|
Song
Deqi
|
|
32
|
|
Vice
General Manager - Food Company
|
Ma
Fengqin
|
|
45
|
|
Vice
President and Director
|
Wang
Shuying
|
|
57
|
|
Director
|
Matthew
Dillon
|
|
47
|
|
Director
|
Nestor
Gounaris
|
|
36
|
|
Director
|
James
Boyle
|
47
|
Director
|
|
|
|
|
Annual
Compensation (2)
|
|
||||||||
Name
and Principal
Position
|
|
Fiscal
Year
|
|
Salary
(1)
($)
|
|
All Other
Compensation (3)
($)
|
|
Total
($)
|
|
||||
Shi
Huashan
|
|
|
2007
|
|
$
|
40,000
|
|
|
20,000
|
|
|
60,000
|
|
Chief
Executive Officer, President
|
|
|
2006
|
|
|
50,000
|
|
|
-
|
|
|
50,000
|
|
Wang
Shu
|
|
|
2007
|
|
$
|
20,000
|
|
|
10,000
|
|
|
30,000
|
|
Chief
Financial Officer
|
|
|
2006
|
|
|
15,000
|
|
|
5,000
|
|
|
-
|
|
Chen
Fuyuan
|
2007
|
20,000
|
10,000
|
30,000
|
|||||||||
Chief
Operating Officer
|
2006
|
-
|
-
|
-
|
|||||||||
Wang
Shuying
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Director
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Matthew
Dillion
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Director
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Ma
Fengqin
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Director
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Nestor
Gounaris
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Director
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
James
Boyle
|
|
|
2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Director
|
|
|
2006
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1)
|
Expressed
in U.S. Dollars based on the interbank exchange rate of 7.61 RMB for
each 1.00 U.S. Dollar for the year ended December 31,
2007.
|
|
(2)
|
In
2007, compensation paid to our officers and directors included no
bonuses,
stock or option awards, non-equity incentive plan awards, or non-qualified
deferred compensation, and accordingly, these columns have been omitted
from this table.
|
|
(3)
|
All
Other Compensation includes allowances for transportation, housing,
communications, training, personal service perquisites, and utility
expenses. In 2007, “other compensation” to Mr. Shi Huashan included a
transportation allowance ($6,000), housing allowance ($5,000),
mobile
phone and communications allowance ($4,000), training expenses
($4,000),
personal service perquisites ($600), and utility expense reimbursement
($400). For Ms. Wang Shu and Chen Fuyuan, “other compensation” in 2007
included a transportation allowance ($3,000), housing allowance
($2,500),
mobile phone and communications allowance ($2,000), training expenses
($2,000), personal service perquisites ($300), and utility expense
reimbursement ($200).
|
|
Annual
Compensation
|
|
||||||||
Name
and Principal Position
|
|
Salary
|
|
Bonus
(1)
|
|
Other annual
compensation
|
||||
Shi
Huashan
President,
Chief Executive Officer
|
$
|
100,000
|
—
|
—
|
||||||
|
||||||||||
Wang
Shu
Chief
Financial Officer
|
$
|
100,000
|
—
|
—
|
||||||
|
||||||||||
Chen
Fuyuan
Chief
Operating Officer
|
$
|
100,000
|
—
|
—
|
|
·
|
each
of our directors and each of the named executive officers in the
“Management” section of this
prospectus;
|
|
·
|
all
directors and named executive officers as a group;
and
|
|
·
|
each
person who is known by us to own beneficially five percent or more
of our
common stock.
|
Common Stock Beneficially Owned
|
||||||||||
Named
executive officers and directors:
|
Number
of shares beneficially owned
|
|
Percentage of
class beneficially owned
|
|||||||
Shi
Huashan
|
14,688,948
|
(1)
|
|
69.5
|
%
|
|||||
Wang
Shu
|
0
|
0
|
%
|
|||||||
Chen
Fuyuan
|
0
|
0
|
%
|
|||||||
Ma
Fengqin
|
0
|
0
|
%
|
|||||||
Nestor
Gounaris
|
0
|
0
|
%
|
|||||||
Matthew
Dillon
|
0
|
0
|
%
|
|||||||
Wang
Shuying
|
0
|
0
|
%
|
|||||||
All
directors and executive officers as a group (7 persons)
|
14,688,948
|
69.5
|
%
|
5%
Shareholders:
|
|
|
||||||||
Shine
Gold Holdings Limited
|
10,690,668
|
(1)
|
|
50.6
|
%
|
|||||
Shiny
Snow Holdings Limited
|
1,948,890
|
(1)
|
|
9.2
|
%
|
|||||
Smart
Beat Limited
|
2,049,390
|
(1)
|
|
9.7
|
%
|
|||||
Barry
Kitt
|
2,045,455
|
(2)
|
|
9.7
|
%
|
|
(1)
|
Shine
Gold Holdings Limited, Shiny Snow Holding Limited, and Smart Beat
Limited,
are each companies organized under the laws of the British Virgin
Islands
(collectively, the “Shi Family Companies”). The registered address
for the Shi Family Companies is Palm Grove House, P.O. Box 438,
Road Town, Tortola, British Virgin Islands. Mr. Shi Huashan and
certain of his relatives (the “Shi Family”) have entered into trust
agreements with three non-PRC individuals, under which the non-PRC
individuals shall hold the shares of the Shi Family Companies as
trustees for the benefit of the Shi Family. The natural persons with
voting power and investment power on behalf of the Shi Family
Companies are (i) Chong Shun, (ii) Kuo Ching Wan Amy, and (iii) Wey
Meirong, respectively (collectively, the “Trustees”).
As beneficiaries of the trust arrangements, members of the Shi Family
have only economic rights with respect to the shares held by the
Shi Family Companies. Mr. Shi Huashan and the Shi Family hereby
disclaim beneficial ownership except to the extent of their pecuniary
interest in the Company shares held by the Shi Family
Companies.
|
|
|
|
|
(2)
|
Barry
Kitt exercises investment discretion and control over the shares
of common
stock of the Company held by The Pinnacle Fund, L.P., a Texas limited
partnership (“Pinnacle”) and Pinnacle China Fund, L.P., a Texas limited
partnership (“Pinnacle China”). Pinnacle Advisers, L.P. (“Advisers”) is
the general partner of Pinnacle. Pinnacle Fund Management, LLC
(“Management”) is the general partner of Advisers. Mr. Kitt is the sole
member of Management. Pinnacle China Advisers, L.P. (“China Advisers”) is
the general partner of Pinnacle China. Pinnacle China Management,
LLC
(“China Management”) is the general partner of China Advisers. Kitt China
Management, LLC (“China Manager”) is the manager of China Management. Mr.
Kitt is the manager of China Manager. As of December 31, 2007, Pinnacle
and Pinnacle China were the beneficial owners of 2,045,454 shares
of
Common Stock. Mr. Kitt may be deemed to be the beneficial owner of
the shares of Common Stock beneficially owned by Pinnacle and Pinnacle
China. Mr. Kitt expressly disclaims beneficial ownership of all
shares of Common Stock beneficially owned by Pinnacle and Pinnacle
China.
|
Bank
|
Interest
Rate
|
Due
Date
|
Amount
|
|||||||
Bank
of China
|
8.02
|
%
|
11/17/2008
|
$
|
1,914,111
|
|||||
Shanghai
Pudong Development Bank
|
7.65
|
%
|
7/1/2008
|
5,468,984
|
||||||
$
|
7,383,095
|
|
Low
|
High
|
|||||
2008
(1)
|
|||||||
Quarter ended March 31, 2008 | $ | 5.00 | $ | 53.00 |
2007
(1)
|
|||||||
Quarter ended December 31, 2007 |
$
|
53.00 |
$
|
53.00 | |||
Quarter
ended September 30, 2007
|
$
|
4.65
|
$
|
4.65
|
|||
Quarter
ended June 30, 2007
|
$
|
4.65
|
$
|
4.65
|
|||
Quarter
ended March 31, 2007
|
$
|
4.65
|
$
|
4.65
|
2006
|
|
|
|||||
Quarter
ended December 31, 2006
|
$
|
0.30
|
$
|
0.30
|
|||
Quarter
ended September 30, 2006
|
$
|
0.30
|
$
|
0.30
|
|||
Quarter
ended June 30, 2006
|
$
|
0.30
|
$
|
1.01
|
|||
Quarter
ended March 31, 2006
|
$
|
0.30
|
$
|
1.01
|
2005
|
|
|
|||||
Quarter
ended December 31, 2005
|
$
|
0.50
|
$
|
0.50
|
|||
Quarter
ended September 30, 2005
|
$
|
0.25
|
$
|
0.50
|
|||
Quarter
ended June 30, 2005
|
$
|
0.05
|
$
|
0.025
|
|||
Quarter
ended March 31, 2005
|
n/a
|
n/a
|
(1) |
Adjusted
for reverse stock split effective on December 14,
2007.
|
Contents |
Pages
|
Consolidated
Balance Sheets as of March 31, 2008 (Unaudited) and December
31,
2007
|
F-2
|
|
|
Consolidated
Statements of Operations for the Three Months Ended March
31, 2008 and
March 31, 2007 (Unaudited)
|
F-4
|
|
|
Consolidated
Statements of Shareholders' Equity as of March 31, 2008 and
December 31,
2007
|
F-5
|
|
|
Consolidated
Statements of Cash Flows for the Three Months Ended March
31, 2008 and
March 31, 2007 (Unaudited)
|
F-6
|
|
|
Notes
to Consolidated Financial Statements - March 31, 2008
(Unaudited)
|
F-8
|
Report
of Registered Public Accounting Firm dated March 8, 2008
|
F-28
|
|
Consolidated
Balance Sheets at December 31, 2007, 2006 and 2005
|
F-29
|
|
Consolidated
Statements of Operations for the years ended December 31, 2007,
2006 and
2005
|
F-31
|
|
Consolidated
Statements of Changes in Stockholders’ Equity for the years ended December
31, 2007, 2006 and 2005
|
F-32
|
|
Consolidated
Statements of Cash Flows for the years ended Decemebr 31, 2007,
2006 and
2005
|
F-33
|
|
Reconciliation
of Net Income to Cash Provided/(Used) in Operating
Activities for the years ended December 31, 2007, 2006 and
2005
|
F-34
|
|
Notes
to Consolidated Financial Statements as at and for the years
ended
December 31, 2007, 2006 and 2005
|
F-35
|
Note
|
||||||||||
3/31/2008
|
12/31/07
|
|||||||||
ASSETS
|
||||||||||
Cash
|
$
|
7,039,089
|
$
|
14,031,851
|
||||||
Restricted
Cash
|
3
|
2,157,831
|
4,250,000
|
|||||||
Accounts
Receivable
|
4
|
3,004,163
|
622,433
|
|||||||
Other
Receivable
|
1,638,132
|
1,068,939
|
||||||||
Related
Party Receivable
|
6
|
15,506,766
|
3,964,357
|
|||||||
Inventory
|
5
|
4,466,012
|
2,916,016
|
|||||||
Purchase
Deposit
|
7,824,478
|
267,807
|
||||||||
Prepaid
Expenses
|
134,450
|
46,401
|
||||||||
Prepaid
Taxes
|
156,787
|
185,319
|
||||||||
Deferred
Tax Asset
|
639,360
|
613,844
|
||||||||
Total
current assets
|
42,567,071
|
27,966,967
|
||||||||
Property,
Plant & Equipment, net
|
7
|
25,724,989
|
24,836,496
|
|||||||
Land
Use Rights, net
|
8
|
13,326,162
|
12,855,980
|
|||||||
Construction
in Progress
|
994,917
|
927,866
|
||||||||
Other
Assets
|
33,975
|
32,619
|
||||||||
TOTAL
ASSETS
|
$
|
82,647,114
|
$
|
66,619,928
|
||||||
LIABILITIES
|
||||||||||
Bank
Loans & Notes
|
9
|
$
|
14,881,376
|
$
|
7,383,095
|
|||||
Accounts
Payable
|
3,659,840
|
3,779,274
|
||||||||
Accrued
Liabilities
|
3,605,852
|
3,347,013
|
||||||||
Taxes
Payable
|
2,097,757
|
1,677,194
|
||||||||
Other
Payable
|
1,458,926
|
1,471,381
|
||||||||
Customer
Deposits
|
82,042
|
24,161
|
||||||||
Total
current liabilities
|
25,785,792
|
17,682,118
|
||||||||
TOTAL
LIABILITIES
|
$
|
25,785,792
|
$
|
17,682,118
|
Note
|
3/31/2008
|
|
12/31/07
|
|||||||
STOCKHOLDERS'
EQUITY
|
||||||||||
Preferred
Stock - $0.001 par value 10,000,000 shares authorized; 0
shares issued
& outstanding at March 31, 2008 and December 31, 2007,
respectively.
Common
Stock $0.001 par value 21,739,130 shares authorized; 21,136,392
shares
issued & outstanding at March 31, 2008 and December 31, 2007,
respectively.
|
$
|
21,136
|
$
|
21,136
|
||||||
Additional
Paid in Capital
|
10
|
15,440,043
|
15,440,043
|
|||||||
Statutory
Reserve
|
1,692,660
|
751,444
|
||||||||
Retained
Earnings
|
33,064,237
|
29,764,236
|
||||||||
Accumulated
Other Comprehensive Income
|
6,643,246
|
2,960,951
|
||||||||
TOTAL
STOCKHOLDERS' EQUITY
|
56,861,322
|
48,937,810
|
||||||||
TOTAL
LIABILITIES AND
|
||||||||||
STOCKHOLDERS'
EQUITY
|
$
|
82,647,114
|
$
|
66,619,928
|
Note
|
||||||||||
|
3/31/2008
|
|
|
3/31/2007
|
||||||
Revenue
|
||||||||||
Sales
|
$
|
43,507,098
|
$
|
23,187,994
|
||||||
Cost
of Sales
|
(36,474,424
|
)
|
(19,025,632
|
)
|
||||||
Gross
Profit
|
7,032,674
|
4,162,362
|
||||||||
Operating
Expenses
|
||||||||||
Selling
Expenses
|
1,825,277
|
229,419
|
||||||||
General
& Administrative Expenses
|
492,973
|
305,136
|
||||||||
Total
Operating Expense
|
2,318,250
|
534,555
|
||||||||
Operating
Income/(Loss)
|
4,714,423
|
3,627,807
|
||||||||
Other
Income (Expenses)
|
||||||||||
Other
Income
|
24,269
|
2,728
|
||||||||
Interest
Income
|
3,985
|
-
|
||||||||
Other
Expenses
|
(28,650
|
)
|
(28,173
|
)
|
||||||
Interest
Expense
|
(306,465
|
)
|
(592,978
|
)
|
||||||
Total
Other Income (Loss) and Expense
|
(306,861
|
)
|
(618,423
|
)
|
||||||
Earnings
before Tax
|
4,407,562
|
3,009,384
|
||||||||
Income
Tax/Deferred Tax Benefit
|
(166,345
|
)
|
-
|
|||||||
Net
Income
|
$
|
4,241,217
|
$
|
3,009,384
|
||||||
Earnings
Per Share
|
||||||||||
Basic
|
$
|
0.25
|
$
|
0.22
|
||||||
Diluted
|
0.20
|
0.17
|
||||||||
Weighted
Average Shares Outstanding
|
||||||||||
Basic
|
17,272,756
|
13,409,120
|
||||||||
Diluted
|
21,182,756
|
17,272,756
|
|
Common
|
||||||||||||||||||||||
Stock
|
Accumulated
|
|||||||||||||||||||||
Common Stock
|
Additional
|
Other
|
||||||||||||||||||||
Shares
|
Paid in
|
Statutory
|
Retained
|
Comprehensive
|
||||||||||||||||||
Outstanding
|
Amount
|
Capital
|
Reserve
|
Earnings
|
Income
|
Total
|
||||||||||||||||
Balance,
January 1, 2007
|
17,272,756
|
17,273
|
2,396,079
|
751,444
|
18,112,089
|
896,679
|
22,173,563
|
|||||||||||||||
Issuance
of Common Stock & Warrants
|
3,863,636
|
3,863
|
13,043,964
|
13,047,828
|
||||||||||||||||||
Net
Income
|
11,652,147
|
11,652,147
|
||||||||||||||||||||
Appropriations
of Retained Earnings
|
-
|
-
|
-
|
|||||||||||||||||||
Foreign
Currency Translation Adjustment
|
2,064,272
|
2,064,272
|
||||||||||||||||||||
Balance,
December 31, 2007
|
21,136,392
|
21,136
|
15,440,043
|
751,444
|
29,764,236
|
2,960,951
|
48,937,810
|
|||||||||||||||
Balance,
January 1, 2008
|
21,136,392
|
21,136
|
15,440,043
|
751,444
|
29,764,236
|
2,960,951
|
48,937,810
|
|||||||||||||||
Issuance
of Common Stock & Warrants
|
-
|
|||||||||||||||||||||
Net
Income
|
4,241,217
|
4,241,217
|
||||||||||||||||||||
Appropriations
of Retained Earnings
|
941,216
|
(941,216
|
)
|
-
|
||||||||||||||||||
Foreign
Currency Translation Adjustment
|
3,682,295
|
3,682,285
|
||||||||||||||||||||
Balance,
March 31, 2008
|
21,136,392
|
21,136
|
15,440,043
|
1,692,660
|
33,064,237
|
6,643,246
|
56,861,312
|
|||||||||||||||
|
Accumulated
Comprehensive Income
|
|||||||||||||||||||||
|
12/31/2007
|
3/31/2008
|
Total
|
|||||||||||||||||||
Comprehensive
Income
|
||||||||||||||||||||||
Net
Income
|
11,652,147
|
4,241,217
|
15,893,364
|
|||||||||||||||||||
Comprehensive
Other Income
|
||||||||||||||||||||||
Foreign
Currency Translation Adjustment
|
2,064,272
|
3,682,295
|
5,746,557
|
|||||||||||||||||||
13,716,419
|
7,923,512
|
21,639,921
|
|
3/31/2008
|
3/31/2007
|
||||||
Cash
Flow from Operating Activities
|
|||||||
Cash
Received from Customers
|
$
|
29,072,645
|
$
|
23,498,395
|
|||
Cash
Paid to Suppliers & Employees
|
(47,912,070
|
)
|
(17,639,438
|
)
|
|||
Interest
Received
|
3,985
|
-
|
|||||
Interest
Paid (net of amount capitalized)
|
(1,075,461
|
)
|
413,282
|
||||
Income
Tax Paid
|
(191,861
|
)
|
-
|
||||
Miscellaneous
Receipts
|
24,269
|
2,728
|
|||||
Cash
Sourced/(Used) in Operating Activities
|
(20,079,493
|
)
|
5,448,403
|
||||
Cash
Flows from Investing Activities
|
|||||||
Escrowed
Funds from Private Placement Placed in Restricted Cash
|
2,092,169
|
-
|
|||||
Payments
for Purchases of Plant & Equipment
|
(1,623,365
|
)
|
(126,241
|
)
|
|||
Payments
for Purchases of Land Use Rights
|
(261,294
|
)
|
643,388
|
||||
Payments
for Deposits
|
(1,356
|
)
|
-
|
||||
Cash
Used/(Sourced) in Investing Activities
|
206,155
|
(769,629
|
)
|
||||
Cash
Flows from Financing Activities
|
|||||||
Proceeds
Allocated to Accrued Liabilities for Liquidated Damages from
Issuance of
Stock & Warrants
|
1,700,000
|
-
|
|||||
Proceeds
from Bank Borrowings
|
14,881,376
|
-
|
|||||
Repayment
of Bank Loans
|
(7,383,095
|
)
|
(1,286,776
|
)
|
|||
Cash
Sourced/(Used) in Financing Activities
|
9,198,281
|
(1,286,776
|
)
|
||||
Net
Increase/(Decrease) in Cash & Cash Equivalents for the
Year
|
(10,675,047
|
)
|
3,391,998
|
||||
Effect
of Currency Translation
|
3,682,285
|
43,783
|
|||||
Cash
& Cash Equivalents at Beginning of Year
|
14,031,851
|
3,075,787
|
|||||
Cash
& Cash Equivalents at End of Year
|
$
|
7,039,089
|
$
|
6,511,568
|
|
3/31/2008
|
3/31/2007
|
||||||
Net
Income
|
$
|
4,241,217
|
$
|
3,009,384
|
|||
Adjustments
to Reconcile Net Income to
|
|||||||
Net
Cash Provided by Cash Activities:
|
|||||||
Liquidated
Damages Included in Accrued Liabilities
|
(1,700,000
|
)
|
-
|
||||
Amortization
|
(208,889
|
)
|
43,429
|
||||
Depreciation
|
667,821
|
434,629
|
|||||
Provision
for Bad Debt
|
3,522
|
-
|
|||||
Decrease/(Increase)
in Accounts Receivable
|
(2,385,252
|
)
|
1,307,287
|
||||
Decrease/(Increase)
in Other Receivable
|
(569,194
|
)
|
(220,811
|
)
|
|||
Decrease/(Increase)
in Related Party Receivable
|
(11,542,409
|
)
|
262,229
|
||||
Decrease/(Increase)
in Inventory
|
(1,549,996
|
)
|
589,689
|
||||
Decrease/(Increase)
in Advance to Suppliers
|
(7,556,671
|
)
|
916,407
|
||||
Decrease/(Increase)
in Prepaid Taxes
|
28,530
|
-
|
|||||
Decrease/(Increase)
in Prepaid Expenses
|
(88,049
|
)
|
(51,843
|
)
|
|||
Decrease/(Increase)
in Deferred Tax Benefit
|
(25,516
|
)
|
-
|
||||
Increase/(Decrease)
in Accounts Payable
|
(119,434
|
)
|
(709,758
|
)
|
|||
Increase/(Decrease)
in Taxes Payable
|
420,563
|
509,418
|
|||||
Increase/(Decrease)
in Other Payable
|
(12,455
|
)
|
(294,428
|
)
|
|||
Increase/(Decrease)
in Related Party Payable
|
-
|
694,075
|
|||||
Increase/(Decrease)
in Accrued Liabilities
|
258,839
|
(1,038,304
|
)
|
||||
Increase/(Decrease)
in Customer Advances
|
57,880
|
-
|
|||||
Total
of all adjustments
|
(24,320,710
|
)
|
2,439,019
|
||||
Net
Cash Provided by/(Used in) Operating Activities
|
$
|
(20,079,493
|
)
|
$
|
5,448,403
|
2. |
Summary
of Significant Accounting
Policies
|
(A)
|
Method
of Accounting
|
(B)
|
Principles
of Consolidation
|
Name of Company
|
Place of
Incorporation
|
Attributable
Equity
Interest
|
Registered
Capital
|
|||||||
Precious
Sheen Investments Limited
|
BVI
|
100
|
%
|
USD
|
10,000
|
|||||
Dalian
Chuming Precious Sheen Investment Consulting Co., Ltd.
|
PRC
|
100
|
%
|
RMB
|
29,400,682
|
|||||
Dalian
Chuming Slaughtering & Pork Packaging Co. Ltd.
|
PRC
|
100
|
%
|
RMB
|
10,000,000
|
|||||
Dalian
Chuming Processed Foods Co. Ltd.
|
PRC
|
100
|
%
|
RMB
|
5,000,000
|
|||||
Dalian
Chuming Sales Co. Ltd.
|
PRC
|
100
|
%
|
RMB
|
5,000,000
|
(C)
|
Use
of Estimates
|
(D)
|
Cash
Equivalents
|
(E) |
Accounts
Receivable
|
(F)
|
Inventory
Carrying Value
|
(G)
|
Advances
to Suppliers
|
(H)
|
Property,
Plant, and Equipment
|
Fixed
Asset Classification
|
Useful Life
|
|
Land
Improvements
|
10
years
|
|
Buildings
|
20
years
|
|
Building
Improvements
|
10
years
|
|
Manufacturing
Machinery & Equipment
|
10
years
|
|
Office
Equipment
|
5
years
|
|
Furniture
& Fixtures
|
5
years
|
|
Vehicles
|
5
years
|
(I)
|
Land
Use Rights
|
(J)
|
Construction
in Progress
|
(J) |
Accounting
for Impairment
of Assets
|
The
Company reviews the recoverability of its long-lived assets,
such as
property and equipment, when events or changes in circumstances
occur that
indicate the carrying value of the asset group may not be
recoverable. The
assessment of possible impairment is based on the Company’s ability to
recover the carrying value of the asset from the expected
future cash
flows, undiscounted and without interest charges, of the
related
operations. If these cash flows are less than the carrying
value of such
assets, an impairment loss is recognized for the difference
between
estimated fair value and carrying value. The measurement
of impairment
requires management to estimate future cash flows and the
fair value of
long-lived assets.
|
(K) |
Customer
Deposits
|
(L) |
Statutory
Reserve
|
(M) |
Other
Comprehensive Income
|
(N)
|
Recognition
of Revenue
|
(O)
|
Cost
of Sales
|
(P)
|
Selling
Expense
|
(Q)
|
General
& Administrative
|
(R)
|
Shipping
and handling
|
(S) |
Advertising
Expense
|
(T) |
Retirement
Benefits
|
(U)
|
Income
Taxes
|
(V) |
Economic
and Political Risks
|
(W)
|
Foreign
Currency Translation
|
Exchange
Rates
|
Quarter
Ending
3/31/2008
|
Year
Ending
12/31/2007
|
Quarter
Ending
3/31/2007
|
||||||
RMB
: US$ exchange rate (at period ending)
|
7.0222
|
7.3141
|
7.7409
|
||||||
Average
RMB : US$ exchange rate
|
7.1757
|
7.6172
|
7.8753
|
(X) |
Earnings
Per Share
|
(Y)
|
Recent
Accounting
Pronouncements
|
3. |
Restricted
Cash
|
4. |
Accounts
Receivable
|
3/31/2008
|
12/31/2007
|
||||||
Accounts
Receivable – Trade
|
$
|
3,092,407
|
$
|
707,156
|
|||
Less:
Allowance for Doubtful Accounts
|
(88,244
|
)
|
(84,723
|
)
|
|||
Net
Accounts Receivable
|
$
|
3,004,163
|
$
|
622,433
|
Allowance
for Bad Debts
|
3/31/2008
|
12/31/2007
|
|||||
Beginning
Balance
|
$
|
84,723
|
$
|
79,267
|
|||
Allowance
Provided
|
3,521
|
5,456
|
|||||
Charged
Against Allowance
|
-
|
||||||
Ending
Balance
|
$
|
88,244
|
$
|
84,723
|
5. |
Inventory
|
3/31/2008
|
12/31/2007
|
||||||
Raw
Materials
|
$
|
1,591,950
|
$
|
1,039,440
|
|||
Work
in Progress
|
839,117
|
547,889
|
|||||
Finished
Goods
|
2,034,946
|
1,328,688
|
|||||
$
|
4,466,012
|
$
|
2,916,016
|
6. |
Related
Party Receivable
|
3/31/2008
|
||||
Related
Party Receivable
|
$
|
61,863,588
|
||
Related
Party Payable
|
(46,356,821
|
)
|
||
Related
Party Receivable, net
|
$
|
15,506,766
|
7. |
Property,
Plant &
Equipment
|
March
31, 2008
|
Accumulated
|
|||||||||
Cost
|
Depreciation
|
Net
|
||||||||
Land
Improvements
|
$
|
516,717
|
$
|
93,066
|
$
|
423,651
|
||||
Building
Improvements
|
80,873
|
17,938
|
62,935
|
|||||||
Buildings
|
20,352,594
|
2,750,551
|
17,602,044
|
|||||||
Manufacturing
Equipment
|
9,540,457
|
2,316,345
|
7,224,111
|
|||||||
Office
Equipment
|
128,502
|
68,409
|
60,092
|
|||||||
Vehicles
|
686,293
|
364,338
|
321,955
|
|||||||
Furniture
& Fixture
|
51,774
|
21,573
|
30,201
|
|||||||
$
|
31,357,209
|
$
|
5,632,220
|
$
|
25,724,989
|
December
31, 2007
|
Accumulated
|
|||||||||
Cost
|
Depreciation
|
Net
|
||||||||
Land
Improvements
|
$
|
491,071
|
$
|
82,031
|
$
|
409,040
|
||||
Building
Improvements
|
76,859
|
15,811
|
61,048
|
|||||||
Buildings
|
19,342,461
|
2,424,415
|
16,918,046
|
|||||||
Manufacturing
Equipment
|
9,066,948
|
2,041,694
|
7,025,254
|
|||||||
Office
Equipment
|
122,124
|
60,298
|
61,826
|
|||||||
Vehicles
|
652,231
|
321,138
|
331,093
|
|||||||
Furniture
& Fixture
|
49,204
|
19,015
|
30,189
|
|||||||
$
|
29,800,898
|
$
|
4,964,402
|
$
|
24,836,496
|
8. |
Land
Use Right
|
3/31/2008
|
12/31/2007
|
||||||
Land
Use Rights, at Cost
|
$
|
13,762,873
|
$
|
13,501,580
|
|||
less:
Accumulated Amortization
|
(
436,711
|
)
|
(645,600
|
)
|
|||
$
|
13,326,162
|
$
|
12,855,980
|
9. |
Bank
Loans
|
(A) |
Short
Term Bank Loans
|
Bank
|
Interest
Rate
|
Due
Date
|
Amount
|
|||||||
Bank
of China
|
8.217
|
%
|
12/11/2008
|
$
|
2,919,313
|
|||||
Bank
of China
|
8.217
|
%
|
11/27/2008
|
$
|
4,272,165
|
|||||
Bank
of China
|
8.019
|
%
|
1/18/2009
|
$
|
1,993,677
|
|||||
Shanghai
Pudong Development Bank
|
7.182
|
%
|
7/23/2008
|
$
|
5,696,220
|
|||||
$
|
14,881,376
|
(B) |
Bank
Loan through Group
|
10. |
Capitalization
|
Name
of Shareholder
|
Number of
Shares
|
Common
Stock
Capital
|
Additional
Paid in
Capital
|
Equity
%
|
|||||||||
Operating
Companies Founders
|
14,688,948
|
$
|
14,689
|
$
|
2,396,079
|
69.50
|
%
|
||||||
PRE-RTO
Shell Shareholders
|
422,756
|
423
|
-
|
2.00
|
%
|
||||||||
Advisors
& Consultants
|
2,161,052
|
2,161
|
-
|
10.22
|
%
|
||||||||
Private
Investors
|
3,863,636
|
3,863
|
13,043,964
|
18.28
|
%
|
||||||||
21,136,392
|
$
|
21,136
|
$
|
15,440,043
|
100.00
|
%
|
11 |
Commitments
of Statutory Reserve
|
3/31/2008
|
12/31/2007
|
||||||
PRC
Registered Capital
|
$
|
3,643,866
|
$
|
3,642,866
|
|||
-
Statutory Reserve Ceiling
|
|||||||
based on 50% of
|
|||||||
Registered Capital
|
1,821,433
|
1,821,433
|
|||||
Less:
- Retained Earnings
|
|||||||
appropriated
to
|
|||||||
Statutory
Reserve
|
1,692,660
|
751,444
|
|||||
Reserve
Commitment
|
|||||||
Outstanding
|
$
|
128,773
|
$
|
1,069,989
|
12. |
Advertising
Costs
|
13. |
Income
Taxes
|
March
31, 2008
|
Tax
expense
|
$
|
166,344
|
|||||||
ii.
|
March
31, 2007
|
Tax
expense
|
$
|
0
|
14.
|
Commitments
|
Year
|
Hogs
|
Price
Per Hog
|
Amount
|
|||||||
2008
|
630,000
|
$
|
162.81
|
$
|
102,572,116
|
|||||
2009
|
800,000
|
$
|
187.13
|
$
|
149,704,306
|
|||||
2010
|
800,000
|
$
|
205.84
|
$
|
164,674,737
|
|||||
$
|
416,951,159
|
15.
|
Operating
Segments
|
Meat
Company
|
Food
Company
|
Sales
Company
|
Chuming
WFOE,
PSI
& Eliminations
|
Total
|
||||||||||||
Sales
|
$
|
41,207,696
|
$
|
4,744,501
|
$
|
8,259,335
|
($10,704,434
|
)
|
$
|
43,507,098
|
||||||
Cost
of Sales
|
(35,775,600
|
)
|
(3,311,045
|
)
|
(8,092,214
|
)
|
10,704,434
|
(36,474,424
|
)
|
|||||||
Gross
Profit
|
5,432,096
|
1,433,456
|
167,121
|
-
|
7,032,674
|
|||||||||||
Operating
expense
|
(1,239,863
|
)
|
(588,696
|
)
|
(434,210
|
)
|
(55,481
|
)
|
(2,318,250
|
)
|
||||||
Operating
(Loss)/Profit
|
4,192,233
|
844,760
|
(267,089
|
)
|
(55,481
|
)
|
4,714,424
|
|||||||||
Other
Income (Expenses)
|
(112,149
|
)
|
(179,382
|
)
|
(17,845
|
)
|
2,515
|
(306,862
|
)
|
|||||||
Earnings
before Tax
|
4,080,084
|
665,378
|
(284,934
|
)
|
(52,966
|
)
|
4,407,562
|
|||||||||
Tax
|
-
|
(166,345
|
)
|
-
|
-
|
(166,345
|
)
|
|||||||||
Net
Income
|
$
|
4,080,084
|
$
|
499,033
|
($284,934
|
)
|
($52,966
|
)
|
$
|
4,241,217
|
Eliminated
Intercompany Sales of Products Sold
|
|||||||
Sold
From:
|
Sold
To:
|
Amount
|
|||||
Food
Company
|
Sales
Company
|
$
|
1,330,545
|
||||
Meat
Company
|
Sales
Company
|
$
|
6,663,303
|
||||
Meat
Company
|
Food
Company
|
$
|
2,710,586
|
||||
$
|
10,704,434
|
Meat
Company
|
Food
Company
|
Sales
Company
|
Chuming
WFOE, PSI,
&
Eliminations
|
Total
|
||||||||||||
Current
Assets
|
$
|
44,418,357
|
$
|
25,858,080
|
$
|
33,619,195
|
$
|
(61,328,561
|
)
|
$
|
42,567,071
|
|||||
Non
Current Assets
|
23,094,927
|
16,824,494
|
160,622
|
-
|
40,080,043
|
|||||||||||
Total
Assets
|
$
|
67,513,284
|
$
|
42,682,574
|
$
|
33,779,817
|
$
|
(61,328,561
|
)
|
$
|
82,647,114
|
Current
Liabilities
|
27,144,022
|
37,812,880
|
34,965,778
|
(74,136,888
|
)
|
25,785,792
|
||||||||||
Total
Liabilities
|
$
|
27,144,022
|
$
|
37,812,880
|
$
|
34,965,778
|
$
|
(74,136,888
|
)
|
$
|
25,785,792
|
|||||
Net
Assets
|
40,369,262
|
4,869,694
|
(1,185,961
|
)
|
12,808,327
|
56,861,322
|
||||||||||
Total
Liabilities &
Net Assets
|
$
|
67,513,284
|
$
|
42,682,574
|
$
|
33,779,817
|
$
|
(61,328,561
|
)
|
$
|
82,647,114
|
16. |
Earnings
Per Share
|
|
|
|
Three
Months
Ended
|
||||
|
3/31/2008
|
3/31/2007
|
|||||
Net
Income
|
$
|
4,241,217
|
$
|
3,009,384
|
|||
Original
Shares
|
13,409,120
|
13,409,120
|
|||||
Addition
to Common Stock from Offering on December 31, 2007
|
3,863,636
|
-
|
|||||
Basic
Weighted Average Shares Outstanding
|
17,272,756
|
13,409,120
|
|||||
Addition
to Common Stock if Contingent Shares Held in Escrow Were
Released
|
3,863,636
|
3,863,636
|
|||||
Addition
to Common Stock if Warrants Were Exercised
|
46,364
|
-
|
|||||
Diluted
Weighted Average Shares Outstanding
|
21,182,756
|
17,272,756
|
|||||
Earnings
Per Share
|
|||||||
Basic
|
$
|
0.25
|
$
|
0.22
|
|||
Diluted
|
$
|
0.20
|
$
|
0.17
|
|||
Weighted
Average Shares Outstanding
|
|||||||
Basic
|
17,272,756
|
13,409,120
|
|||||
Diluted
|
21,182,756
|
17,272,756
|
17 |
Concentration
of Risk
|
(A) |
Demand
Risk
|
(B) |
Supply
Risk
|
18. |
Financing
Transaction
|
i.
|
Common
shares outstanding prior to offering of securities
|
17,272,756
|
|||||
ii.
|
Common
shares issued under securities purchase agreement
|
3,863,635
|
|||||
iii.
|
Common
shares issuable upon exercise of placement agent warrants
|
386,364
|
|||||
21,522,755
|
South San Francisco, California | Samuel H. Wong & Co., LLP | ||
March 8, 2008 | Certified Public Accountants |
Note
|
|||||||||||||
ASSETS
|
2007
|
2006
|
2005
|
||||||||||
Current
Assets
|
|||||||||||||
Cash
|
2(D)
|
|
$
|
14,031,851
|
$
|
3,075,787
|
$
|
10,179,414
|
|||||
Restricted
Cash
|
3
|
4,250,000
|
-
|
-
|
|||||||||
Accounts
Receivable
|
2(E),4
|
622,433
|
1,798,397
|
3,247,304
|
|||||||||
Other
Receivable
|
1,068,939
|
679,019
|
1,006,541
|
||||||||||
Related
Party Receivable
|
6
|
3,964,357
|
13,148,788
|
-
|
|||||||||
Inventory
|
2(F),5
|
2,916,016
|
2,385,447
|
2,850,213
|
|||||||||
Advance
to Suppliers
|
2(G)
|
267,807
|
1,110,449
|
704,706
|
|||||||||
Prepaid
Expenses
|
46,401
|
90,913
|
48,191
|
||||||||||
Prepaid
Taxes
|
185,319
|
-
|
-
|
||||||||||
Deferred
Tax Asset
|
2(Q)
|
613,844
|
574,316
|
158,992
|
|||||||||
Total
Current Assets
|
27,966,967
|
22,863,116
|
18,195,361
|
||||||||||
Non-Current
Assets
|
|||||||||||||
Property,
Plant & Equipment, net
|
2(H),7
|
24,836,496
|
20,875,462
|
21,093,489
|
|||||||||
Land
Use Rights, net
|
2(I),8
|
12,855,980
|
8,911,119
|
8,525,125
|
|||||||||
Construction
in Progress
|
2(J)
|
|
927,866
|
4,165,407
|
3,149,690
|
||||||||
Other
Assets
|
32,619
|
30,519
|
29,553
|
||||||||||
Total
Assets
|
$
|
66,619,928
|
$
|
56,845,623
|
$
|
50,993,218
|
|||||||
LIABILITIES
& STOCKHOLDERS' EQUITY
|
|||||||||||||
Current
Liabilities
|
|||||||||||||
Bank
Loans
|
9(A)
|
|
$
|
7,383,095
|
$
|
6,971,538
|
$
|
3,777,838
|
|||||
Accounts
Payable
|
3,779,274
|
4,207,992
|
7,645,595
|
||||||||||
Taxes
Payable
|
1,677,194
|
2,259,465
|
831,699
|
||||||||||
Other
Payable
|
1,471,381
|
1,362,607
|
842,806
|
||||||||||
Accrued
Liabilities
|
3,347,013
|
912,707
|
988,851
|
||||||||||
Customer
Deposits
|
2(L)
|
|
24,161
|
1,049,212
|
437,472
|
||||||||
Related
Party Payable
|
-
|
-
|
4,454,927
|
||||||||||
Total
Current Liabilities
|
17,682,118
|
16,763,521
|
18,979,188
|
||||||||||
Long
Term Liabilities
|
|||||||||||||
Bank
Loans
|
9(B)
|
-
|
17,908,539
|
18,579,533
|
|||||||||
Total
Liabilities
|
$
|
17,682,118
|
$
|
34,672,060
|
$
|
37,558,721
|
Note
|
|||||||||||||
Stockholders'
Equity
|
2007
|
2006
|
2005
|
||||||||||
Preferred
Stock - $0.001 Par Value 10,000,000
Shares Authorized; 0
Shares Issued & Outstanding at December 31, 2007, 2006, and 2005,
respectively.
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||||
Common
Stock - $0.001 Par Value 21,739,130 Shares Authorized; 21,136,392
Shares
Issued & Outstanding at December 31, 2007, and 17,273,756 Shares
Issued & Outstanding at December 31, 2006, and 2005.
|
10
|
21,136
|
17,273
|
17,273
|
|||||||||
Additional
Paid in Capital
|
15,440,043
|
2,396,079
|
2,396,079
|
||||||||||
Statutory
Reserve
|
2(M),11
|
751,444
|
751,444
|
72,508
|
|||||||||
Retained
Earnings
|
29,764,236
|
18,112,089
|
10,662,654
|
||||||||||
Accumulated
Other Comprehensive Income
|
2(N)
|
|
2,960,951
|
896,679
|
285,983
|
||||||||
|
|||||||||||||
Total
Stockholders' Equity
|
48,937,810
|
22,173,564
|
13,434,497
|
||||||||||
|
|||||||||||||
Total
Liabilities & Stockholders' Equity
|
$
|
66,619,928
|
$
|
56,845,623
|
$
|
50,993,218
|
|
Note
|
|||||||||||||
Revenue
|
2007
|
2006
|
2005
|
||||||||||
Sales
|
2(O)
|
|
$
|
124,696,036
|
$
|
70,396,439
|
$
|
54,119,895
|
|||||
Cost
of Sales
|
2(P)
|
|
104,378,909
|
57,794,853
|
45,284,186
|
||||||||
Gross
Profit
|
20,317,127
|
12,601,586
|
8,835,709
|
||||||||||
Operating
Expenses
|
|||||||||||||
Selling
Expenses
|
2(Q)
|
|
4,672,862
|
1,556,805
|
711,226
|
||||||||
General
& Administrative Expenses
|
2(R)
|
1,572,836
|
1,334,866
|
936,179
|
|||||||||
Total
Operating Expense
|
6,245,698
|
2,891,671
|
1,647,405
|
||||||||||
Operating
Income/(Loss)
|
14,071,429
|
9,709,915
|
7,188,304
|
||||||||||
Other
Income (Expenses)
|
|||||||||||||
Other
Income
|
114,496
|
-
|
-
|
||||||||||
Interest
Income
|
-
|
147
|
1,040
|
||||||||||
Other
Expenses
|
(90,508
|
)
|
(126,098
|
)
|
(38,905
|
)
|
|||||||
Interest
Expense
|
(1,475,730
|
)
|
(1,457,204
|
)
|
(970,383
|
)
|
|||||||
Total
Other Income (Loss) and Expense
|
(1,451,742
|
)
|
(1,583,155
|
)
|
(1,008,248
|
)
|
|||||||
Earnings
before Tax
|
12,619,687
|
8,126,760
|
6,180,056
|
||||||||||
(Income
Tax Expense)/Deferred Tax Benefit
|
2(V),13
|
(967,540
|
)
|
1,611
|
(191,284
|
)
|
|||||||
Net
Income
|
$
|
11,652,147
|
$
|
8,128,371
|
$
|
5,988,772
|
|||||||
Earnings
Per Share
|
2(Z),16
|
||||||||||||
- Basic
|
$
|
0.87
|
$
|
0.61
|
$
|
0.45
|
|||||||
- Diluted
|
$
|
0.67
|
$
|
0.47
|
$
|
0.35
|
|||||||
Weighted
Average Shares Outstanding
|
|||||||||||||
- Basic
|
13,409,120
|
13,409,120
|
13,409,120
|
||||||||||
- Diluted
|
17,272,756
|
17,272,756
|
17,272,756
|
Accumulated
|
||||||||||||||||||||||
Common
|
Additional
|
|
|
Comprehensive
|
||||||||||||||||||
Shares
|
Paid
in
|
Statutory
|
Retained
|
Other
|
||||||||||||||||||
Outstanding
|
Amount
|
Capital
|
Reserve
|
Earnings
|
|
Income
|
|
Total
|
||||||||||||||
Balance,
January 1, 2005
|
17,272,756
|
$
|
17,273
|
$
|
2,396,079
|
$
|
-
|
$
|
4,746,390
|
$
|
631
|
$
|
7,160,373
|
|||||||||
Net
Income
|
5,988,772
|
5,988,772
|
||||||||||||||||||||
Appropriations
of Retained Earnings
|
72,508
|
(72,508
|
)
|
-
|
||||||||||||||||||
Foreign
Currency Translation Adjustment
|
285,352
|
285,352
|
||||||||||||||||||||
Balance,
December 31, 2005
|
17,272,756
|
$
|
17,273
|
$
|
2,396,079
|
$
|
72,508
|
$
|
10,662,654
|
$
|
285,983
|
$
|
13,434,497
|
|||||||||
Balance,
January 1, 2006
|
17,272,756
|
$
|
17,273
|
$
|
2,396,079
|
$
|
72,508
|
$
|
10,662,654
|
$
|
285,983
|
$
|
13,434,497
|
|||||||||
Net
Income
|
8,128,371
|
8,128,371
|
||||||||||||||||||||
Appropriations
of Retained Earnings
|
678,936
|
(678,936
|
)
|
-
|
||||||||||||||||||
Foreign
Currency Translation Adjustment
|
610,696
|
610,696
|
||||||||||||||||||||
Balance,
December 31, 2006
|
17,272,756
|
$
|
17,273
|
$
|
2,396,079
|
$
|
751,444
|
$
|
18,112,089
|
$
|
896,679
|
$
|
22,173,564
|
|||||||||
Balance,
January 1, 2007
|
17,272,756
|
$
|
17,273
|
$
|
2,396,079
|
$
|
751,444
|
$
|
18,112,089
|
$
|
896,679
|
$
|
22,173,564
|
|||||||||
Issuance
of Common Stock & Warrants
|
3,863,636
|
3,863
|
13,043,964
|
13,047,827
|
||||||||||||||||||
Net
Income
|
11,652,147
|
11,652,147
|
||||||||||||||||||||
Appropriations
of Retained Earnings
|
-
|
-
|
-
|
|||||||||||||||||||
Foreign
Currency Translation Adjustment
|
2,064,272
|
2,064,272
|
||||||||||||||||||||
Balance,
December 31, 2007
|
21,136,392
|
$
|
21,136
|
$
|
15,440,043
|
$
|
751,444
|
$
|
29,764,236
|
$
|
2,960,951
|
$
|
48,937,810
|
Comprehensive
Income
2005
|
Comprehensive
Income
2006
|
Comprehensive
Income
2007
|
Accumulated
Totals
|
||||||||||
Prior
Period Adjustment
|
-
|
-
|
|||||||||||
Net
Income
|
$
|
5,988,772
|
$
|
8,128,371
|
$
|
11,652,147
|
$
|
25,769,290
|
|||||
Foreign
Currency Translation Adjustment
|
285,352
|
610,696
|
2,064,272
|
2,960,320
|
|||||||||
$
|
6,274,124
|
$
|
8,739,067
|
$
|
13,716,419
|
$
|
28,729,610
|
|
2007
|
2006
|
2005
|
|||||||
Cash
Flow from Operating Activities
|
||||||||||
Cash
Received from Customers
|
$
|
112,741,680
|
$
|
59,979,793
|
$
|
50,354,793
|
||||
Cash
Paid to Suppliers & Employees
|
(108,527,656
|
)
|
(65,116,627
|
)
|
(30,159,011
|
)
|
||||
Interest
Received
|
-
|
147
|
1,040
|
|||||||
Interest
Paid (net of amount capitalized)
|
(1,247,575
|
)
|
(1,580,310
|
)
|
(987,223
|
)
|
||||
Income
Tax Paid
|
(1,007,067
|
)
|
(400,065
|
)
|
(280,676
|
)
|
||||
Miscellaneous
Receipts
|
9,182
|
-
|
-
|
|||||||
Cash
Sourced/(Used) in Operating Activities
|
1,968,564
|
(7,117,062
|
)
|
18,928,923
|
||||||
Cash
Flows from Investing Activities
|
||||||||||
Escrowed
Funds from Private Placement Placed in Restricted Cash
|
(4,250,000
|
)
|
-
|
-
|
||||||
Payments
for Purchases of Equipment & Construction of Plant
|
(2,882,433
|
)
|
(1,655,077
|
)
|
(11,430,320
|
)
|
||||
Payments
for Purchases of Land Use Rights
|
(4,198,178
|
)
|
(265,509
|
)
|
(23,161
|
)
|
||||
Payments
for Deposits
|
(2,100
|
)
|
-
|
-
|
||||||
Cash
Sourced/(Used) in Investing Activities
|
(11,333,712
|
)
|
(1,920,586
|
)
|
(11,453,481
|
)
|
||||
Cash
Flows from Financing Activities
|
||||||||||
Financing
Transaction - Proceeds Allocated to
|
||||||||||
Accrued
Liabilities for Liquidated Damages
|
1,700,000
|
-
|
-
|
|||||||
Financing
Transaction - Proceeds of Issuance of
|
||||||||||
Common
Stock & Warrants
|
13,047,828
|
-
|
-
|
|||||||
Proceeds
from Bank Borrowings
|
5,725,377
|
1,753,971
|
2,496,786
|
|||||||
Repayment
of Bank Loans
|
(2,217,265
|
)
|
-
|
-
|
||||||
Cash
Sourced/(Used) in Financing Activities
|
18,255,939
|
1,753,971
|
2,496,786
|
|||||||
Net
Increase/(Decrease) in Cash & Cash Equivalents for
the Year
|
8,891,791
|
(7,283,677
|
)
|
9,972,228
|
||||||
Effect
of Currency Translation
|
2,064,273
|
180,050
|
161,641
|
|||||||
Cash
& Cash Equivalents at Beginning of Year
|
3,075,787
|
10,179,414
|
45,545
|
|||||||
Cash
& Cash Equivalents at End of Year
|
$
|
14,031,851
|
$
|
3,075,787
|
$
|
10,179,414
|
||||
Non-Cash
Financing Activity:
|
||||||||||
Extinguishment
of Debt by Setoff Against Related Party
Receivables
|
$
|
21,005,094
|
-
|
-
|
|
2007
|
2006
|
2005
|
|||||||
Net
Income
|
$
|
11,652,147
|
$
|
8,128,371
|
$
|
5,988,772
|
||||
Adjustments
to Reconcile Net Income to Net Cash Provided by Cash
Activities:
|
||||||||||
Extinguishment
of Debt by Netting Against Related Party Receivable
|
21,005,094
|
-
|
-
|
|||||||
Liquidated
Damages Included in Accrued Liabilities
|
(1,700,000
|
)
|
-
|
-
|
||||||
Amortization
|
253,317
|
160,782
|
156,442
|
|||||||
Depreciation
|
2,158,940
|
1,651,055
|
1,059,292
|
|||||||
Provision
for Bad Debt on Note Receivable
|
5,456
|
-
|
75,539
|
|||||||
Decrease/(Increase)
in Accounts Receivable
|
1,170,508
|
1,523,176
|
(3,195,887
|
)
|
||||||
Decrease/(Increase)
in Other Receivable
|
(389,920
|
)
|
353,046
|
(990,603
|
)
|
|||||
Decrease/(Increase)
in Related Party Receivable
|
9,184,432
|
(12,877,984
|
)
|
-
|
||||||
Decrease/(Increase)
in Inventory
|
(530,569
|
)
|
546,573
|
(2,400,613
|
)
|
|||||
Decrease/(Increase)
in Advance to Suppliers
|
842,641
|
(374,793
|
)
|
5,756,820
|
||||||
Decrease/(Increase)
in Prepaid VAT Taxes
|
(185,317
|
)
|
-
|
110,180
|
||||||
Decrease/(Increase)
in Prepaid Expenses
|
44,512
|
(40,297
|
)
|
(47,352
|
)
|
|||||
Decrease/(Increase)
in Deferred Tax Benefit
|
(39,528
|
)
|
(401,674
|
)
|
(89,392
|
)
|
||||
Increase/(Decrease)
in Accounts Payable
|
(428,718
|
)
|
(3,611,921
|
)
|
6,360,359
|
|||||
Increase/(Decrease)
in Taxes Payable
|
(582,271
|
)
|
1,371,696
|
818,340
|
||||||
Increase/(Decrease)
in Other Payable
|
108,773
|
482,075
|
729,493
|
|||||||
Increase/(Decrease)
in Related Party Payable
|
-
|
(4,506,002
|
)
|
3,933,551
|
||||||
Increase/(Decrease)
in Accrued Liabilities
|
(767,589
|
)
|
(106,278
|
)
|
318,134
|
|||||
Increase/(Decrease)
in Customer Advances
|
(1,025,051
|
)
|
585,113
|
421,387
|
||||||
Total
of all adjustments
|
11,321,510
|
(15,245,431
|
)
|
12,940,151
|
||||||
Net
Cash Provided by/(Used in) Operating Activities
|
$
|
22,973,657
|
$
|
(7,117,062
|
)
|
$
|
18,928,923
|
(A) |
Method
of Accounting
|
(B) |
Principles
of Consolidation
|
Name
of Company
|
Place
of Incorporation
|
Attributable
Equity Interest
|
Registered
Capital
|
|||||||
Precious
Sheen Investments Limited
|
BVI
|
100%
|
|
USD
10,000
|
||||||
Dalian
Chuming Precious Sheen Investment Consulting Co., Ltd.
|
PRC
|
100%
|
|
RMB
29,400,682
|
||||||
Dalian
Chuming Slaughtering & Pork Packaging Co. Ltd.
|
PRC
|
100%
|
|
RMB
10,000,000
|
||||||
Dalian
Chuming Processed Foods Co. Ltd.
|
PRC
|
100%
|
|
RMB
5,000,000
|
||||||
Dalian
Chuming Sales Co. Ltd.
|
PRC
|
100%
|
|
RMB
5,000,000
|
(C) |
Use
of Estimates
|
(D) |
Cash
Equivalents
|
(E) |
Accounts
Receivable
|
(F) |
Inventory
Carrying Value
|
(G) |
Advances
to Suppliers
|
(H) |
Property,
Plant, and Equipment
|
Fixed
Asset Classification
|
Useful
Life
|
|
Land
Improvements
|
10
years
|
|
Buildings
|
20
years
|
|
Building
Improvements
|
10
years
|
|
Manufacturing
Machinery & Equipment
|
10
years
|
|
Office
Equipment
|
5
years
|
|
Furniture
& Fixtures
|
5
years
|
|
Vehicles
|
5
years
|
(I) |
Land
Use Rights
|
(J) |
Construction
in Progress
|
(K) |
Accounting
for Impairment
of Assets
|
(L) |
Customer
Deposits
|
(M) |
Statutory
Reserve
|
(N) |
Other
Comprehensive Income
|
(O) |
Recognition
of Revenue
|
(P) |
Cost
of Sales
|
(Q) |
Selling
Expense
|
(R) |
General
& Administrative
|
(S) |
Shipping
and handling
|
(T) |
Advertising
Expense
|
(U) |
Retirement
Benefits
|
(V) |
Income
Taxes
|
(W) |
Economic
and Political Risks
|
(X) |
Foreign
Currency Translation
|
Exchange
Rates
|
2007
|
2006
|
2005
|
|||
Year
end RMB : US$ exchange rate
|
7.3141
|
7.81750
|
8.0734
|
|||
Average
yearly RMB : US$ exchange rate
|
7.6172
|
7.98189
|
8.20329
|
(Y) |
Segment
Reporting
|
(Z) |
Earnings
Per Share
|
(AA) |
Recent
Accounting Pronouncements
|
2007
|
2006
|
2005
|
||||||||
Accounts
Receivable - Trade
|
$
|
707,156
|
$
|
1,877,664
|
$
|
3,324,058
|
||||
Less:
Allowance for Doubtful Accounts
|
(84,723
|
)
|
(79,267
|
)
|
(76,754
|
)
|
||||
Net
Accounts Receivable
|
$
|
622,433
|
$
|
1,798,397
|
$
|
3,247,304
|
Allowance
for Bad Debts
|
2007
|
2006
|
2005
|
|||||||
Beginning
Balance
|
79,267
|
76,754
|
-
|
|||||||
Allowance
Provided
|
5,456
|
2,513
|
76,754
|
|||||||
Charged
Against Allowance
|
-
|
-
|
-
|
|||||||
Ending
Balance
|
84,723
|
79,267
|
76,754
|
2007
|
2006
|
2005
|
||||||||
Raw
Materials
|
1,039,440
|
875,223
|
719,804
|
|||||||
Work
in Progress
|
547,889
|
365,961
|
101,932
|
|||||||
Finished
Goods
|
1,328,688
|
1,144,263
|
2,028,477
|
|||||||
$
|
2,916,016
|
$
|
2,385,447
|
$
|
2,850,213
|
Subsidiary
Due to:
|
Nature
of Balance
|
Related
Party
|
Balance
|
|||||||
Chuming
(WFOE)
|
Loan
Receivable from
|
Dalian
Chuming Group Co., Ltd.
|
80,987
|
|||||||
Food
|
Loan
Receivable from
|
Dalian
Chuming Fodder Co., Ltd.
|
82,033
|
|||||||
Food
|
Loan
Receivable from
|
Dalian
Chuming Group Co., Ltd.
|
9,830,328
|
|||||||
Food
|
Loan
Receivable from
|
Dalian
Chuming Industrial Development Co., Ltd.
|
5,653,658
|
|||||||
Food
|
Loan
Receivable from
|
Dalian
Mingxing Livestock Product Co. Ltd.
|
2,076,955
|
|||||||
Food
|
Sale
of Products resulting in Receivable from
|
Dalian
Mingxing Livestock Product Co. Ltd.
|
401,102
|
|||||||
Meat
|
Loan
Receivable from
|
Dalian
Chuming Group Co., Ltd.
|
1,315
|
|||||||
Meat
|
Loan
Receivable from
|
Dalian
Chuming Stockbreeding Combo Development Co., Ltd.
|
60,642
|
|||||||
Meat
|
Sale
of Products resulting in Receivable from
|
Dalian
Mingxing Livestock Product Co. Ltd.
|
2,244,351
|
|||||||
Sales
|
Loan
Receivable from
|
Dalian
Chuming Fodder Co., Ltd.
|
2,978,044
|
|||||||
Sales
|
Loan
Receivable from
|
Dalian
Chuming Group Co., Ltd.
|
13,945,873
|
|||||||
Sales
|
Loan
Receivable from
|
Dalian
Chuming Industrial Development Co., Ltd.
|
474,669
|
|||||||
Sales
|
Loan
Receivable from
|
Dalian
Huayu Seafood Food Co., Ltd
|
2,214,194
|
|||||||
|
Total:
|
40,044,153
|
Subsidiary
Due from:
|
Nature
of Balance
|
Related
Party
|
Balance
|
|||||||
Food
|
Loan
Payable to
|
Dalian
Chuming Group Co., Ltd.
|
9,891,178
|
|||||||
Food
|
Loan
Payable to
|
Dalian
Chuming Group Co., Ltd.
|
697,283
|
|||||||
Food
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Chuming Trading Co., Ltd
|
4,102
|
|||||||
Food
|
Loan
Payable to
|
Dalian
City Breeding Center
|
88,869
|
|||||||
Food
|
Loan
Payable to
|
Dalian
Huayu Seafood Food Co., Ltd
|
142,298
|
|||||||
Food
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Huayu Seafood Food Co., Ltd
|
120,554
|
|||||||
Food
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Huayu Seafood Food Co., Ltd
|
13,783
|
|||||||
Food
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Huayu Seafood Food Co., Ltd
|
3,415,148
|
|||||||
Food
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Mingxing Livestock Product Co. Ltd.
|
149,141
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Chuming Fodder Co., Ltd.
|
722,493
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Chuming Group Co., Ltd.
|
29,028
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Chuming Group Co., Ltd.
|
1,394,567
|
|||||||
Meat
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Chuming Group Co., Ltd.
|
5,576,407
|
|||||||
Meat
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Chuming Group Co., Ltd.
|
2,116,005
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Chuming Industrial Development Co., Ltd.
|
6,070
|
|||||||
Meat
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Chuming Stockbreeding Combo Development Co., Ltd.
|
6,741,829
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Chuming Trading Co., Ltd
|
69,079
|
|||||||
Meat
|
Loan
Payable to
|
Dalian
Huayu Seafood Food Co., Ltd
|
2,411,780
|
|||||||
Sales
|
Loan
Payable to
|
Dalian
Chuming Group Co., Ltd.
|
697,283
|
|||||||
Sales
|
Purchase
of Raw Materials resulting in Payables to
|
Dalian
Mingxing Livestock Product Co. Ltd.,
|
1,792,898
|
|||||||
|
|
36,079,796
|
||||||||
|
||||||||||
Setoff
Related Party Receivable
(Receivables have been setoff against payables)
|
$
|
3,964,357
|
December
31, 2007
|
Accumulated
|
|||||||||
Cost
|
Depreciation
|
Net
|
||||||||
Land
Improvements
|
491,071
|
82,031
|
409,040
|
|||||||
Building
Improvements
|
76,859
|
15,811
|
61,048
|
|||||||
Buildings
|
19,342,461
|
2,424,415
|
16,918,046
|
|||||||
Manufacturing
Equipment
|
9,066,948
|
2,041,694
|
7,025,254
|
|||||||
Office
Equipment
|
122,124
|
60,298
|
61,826
|
|||||||
Vehicles
|
652,231
|
321,138
|
331,093
|
|||||||
Furniture
& Fixture
|
49,204
|
19,015
|
30,189
|
|||||||
29,800,898
|
4,964,402
|
24,836,496
|
December
31, 2006
|
Accumulated
|
|||||||||
Cost
|
Depreciation
|
Net
|
||||||||
Land
Improvements
|
441,484
|
59,789
|
381,695
|
|||||||
Building
Improvements
|
54,291
|
9,406
|
44,885
|
|||||||
Buildings
|
14,167,331
|
1,104,854
|
13,062,477
|
|||||||
Manufacturing
Equipment
|
8,346,776
|
1,403,176
|
6,943,600
|
|||||||
Office
Equipment
|
68,198
|
14,165
|
54,033
|
|||||||
Vehicles
|
572,290
|
203,600
|
368,690
|
|||||||
Furniture
& Fixture
|
30,550
|
10,468
|
20,081
|
|||||||
$
|
23,680,920
|
$
|
2,805,458
|
$
|
20,875,462
|
December
31, 2005
|
Accumulated
|
|||||||||
Cost
|
Depreciation
|
Net
|
||||||||
Land
Improvements
|
316,013
|
20,672
|
295,341
|
|||||||
Building
Improvements
|
52,570
|
4,114
|
48,456
|
|||||||
Buildings
|
13,580,630
|
399,299
|
13,181,331
|
|||||||
Manufacturing
Equipment
|
7,630,412
|
554,540
|
7,075,872
|
|||||||
Office
Equipment
|
60,367
|
10,757
|
49,610
|
|||||||
Vehicles
|
523,854
|
93,269
|
430,585
|
|||||||
Furniture
& Fixture
|
13,838
|
1,544
|
12,294
|
|||||||
$
|
22,177,684
|
$
|
1,084,195
|
$
|
21,093,489
|
2007
|
2006
|
2005
|
||||||||
Land
Use Rights, at Cost
|
13,501,580
|
9,303,402
|
8,746,015
|
|||||||
less:
Accumulated Amortization
|
(645,600
|
)
|
(392,283
|
)
|
(220,890
|
)
|
||||
$
|
12,855,980
|
$
|
8,911,119
|
$
|
8,525,125
|
(A) |
Short
Term Bank Loans
|
Bank
|
Interest
Rate
|
Due
Date
|
Amount
|
|||||||
Bank
of China
|
8.02
|
%
|
11/17/2008
|
$
|
1,914,111
|
|||||
Shanghai
Pudong Development Bank
|
7.65
|
%
|
7/1/2008
|
5,468,984
|
||||||
$
|
7,383,095
|
(B) |
Bank
Loan through Group
|
Name
of Shareholder
|
Number
of Shares
|
Common
Stock Capital
|
Additional
Paid in Capital
|
Equity
%
|
|||||||||
Operating
Companies Founders
|
14,688,948
|
$
|
14,689
|
$
|
2,396,079
|
69.50
|
%
|
||||||
PRE-RTO
Shell Shareholders
|
422,756
|
423
|
-
|
2.00
|
%
|
||||||||
Advisors
& Consultants
|
2,161,052
|
2,161
|
-
|
10.22
|
%
|
||||||||
Private
Investors
|
3,863,636
|
3,864
|
13,043,964
|
18.28
|
%
|
||||||||
21,136,392
|
$
|
21,137
|
$
|
15,440,043
|
100.00
|
%
|
2007
|
2006
|
2005
|
||||||||
PRC
Registered Capital
|
3,642,866
|
2,413,352
|
2,413,352
|
|||||||
-
Statutory Reserve Ceiling
|
||||||||||
based
on 50% of
|
||||||||||
Registered
Capital
|
1,821,433
|
1,206,676
|
1,206,676
|
|||||||
Less:
- Retained Earnings
|
||||||||||
appropriated
to
|
||||||||||
Statutory
Reserve
|
751,444
|
751,444
|
73,250
|
|||||||
Reserve
Commitment
|
||||||||||
Outstanding
|
$
|
1,069,989
|
$
|
455,232
|
$
|
1,133,426
|
i.
|
2007 | Tax benefit | (967,539) |
ii.
|
2006 | Tax expense | 1,609 |
iii.
|
2005 | Tax benefit | (191,284) |
It
is company policy to develop plant facilities based on availability
of
cash resources without incurring capital commitments. Therefore,
the
Company did not have any capital commitments existing at December
31,
2007.
|
There
were no severance packages to any key management personnel that
have
resigned their positions. The Company has the right to terminate
employment for cause at any
time.
|
On
December 19, 2007, the Company entered into a hog purchase agreement
whereby the Dalian Chuming Group Co., Ltd. will provide at fair
market
price a minimum number of hogs to the Company. At December 31,
2007, the
Company expects minimum quantities of hogs detailed in the following
table:
|
Year
|
Hogs
|
Price
Per Hog
|
Amount
|
|||||||
2008
|
750,000
|
$
|
162.81
|
$
|
122,109,662
|
|||||
2009
|
800,000
|
$
|
187.13
|
$
|
149,704,306
|
|||||
2010
|
800,000
|
$
|
205.84
|
$
|
164,674,737
|
|||||
$
|
436,488,705
|
The
Company believes that the fair market price of the hogs will increase
by
10% each year. The assumption of 10% reflects that Company expectations
in
regards to inflation, and the rising costs of inputs in breeding
livestock.
|
Meat
Company
|
Food
Company
|
Sales
Company
|
Chuming
WFOE,
PSI,
& Eliminations
|
Total
|
||||||||||||
Sales
|
$
|
113,777,514
|
$
|
18,224,294
|
$
|
26,110,284
|
$
|
(33,416,057
|
)
|
$
|
124,696,035
|
|||||
Cost
of Sales
|
99,779,158
|
12,672,576
|
25,343,231
|
(33,416,057
|
)
|
104,378,908
|
||||||||||
Gross
Profit
|
13,998,356
|
5,551,718
|
767,053
|
-
|
20,317,127
|
|||||||||||
Operating
(Loss)/Profit
|
10,842,549
|
3,624,143
|
(368,002
|
)
|
(27,261
|
)
|
14,071,429
|
|||||||||
Other
Income (Expenses)
|
(691,006
|
)
|
(712,807
|
)
|
(47,929
|
)
|
-
|
(1,451,742
|
)
|
|||||||
Earnings
before Tax
|
10,151,543
|
2,911,336
|
(415,931
|
)
|
(27,261
|
)
|
12,619,687
|
|||||||||
Tax
|
-
|
967,539
|
-
|
-
|
967,539
|
|||||||||||
Net
Income
|
$
|
10,151,543
|
$
|
1,943,797
|
$
|
(415,931
|
)
|
$
|
(27,261
|
)
|
$
|
11,652,147
|
Eliminated
Intercompany Sales of Products Sold
|
|||||||
Sold
From:
|
Sold
To:
|
Amount
|
|||||
Food
Company
|
Sales Company |
$
|
4,221,813
|
||||
Meat
Company
|
Sales Company |
20,435,143
|
|||||
Meat
Company
|
Food Company |
8,759,101
|
|||||
$
|
33,416,057
|
Meat
Company
|
Food
Company
|
Sales
Company
|
Chuming
WFOE,
PSI,
& Eliminations
|
Total
|
||||||||||||
Current
Assets
|
$
|
36,387,010
|
$
|
19,361,784
|
$
|
24,500,857
|
$
|
(52,282,684
|
)
|
$
|
27,966,967
|
|||||
Non
Current Assets
|
22,256,798
|
16,228,202
|
167,961
|
-
|
38,652,961
|
|||||||||||
Total
Assets
|
$
|
58,643,808
|
$
|
35,589,986
|
$
|
24,668,818
|
$
|
(52,282,684
|
)
|
$
|
66,619,928
|
|||||
Current
Liabilities
|
$
|
25,289,655
|
$
|
31,425,683
|
$
|
25,664,664
|
$
|
(64,697,884
|
)
|
$
|
17,682,118
|
|||||
Total
Liabilities
|
25,289,655
|
31,425,683
|
25,664,664
|
(64,697,884
|
)
|
17,682,118
|
||||||||||
Net
Assets
|
33,354,152
|
4,164,303
|
(995,846
|
)
|
12,415,200
|
48,937,810
|
||||||||||
Total
Liabilities
&
Net Assets
|
$
|
58,643,808
|
$
|
35,589,986
|
$
|
24,668,818
|
$
|
(52,282,684
|
)
|
$
|
66,619,928
|
12
months ended December 31, 2007
|
12
months ended December 31, 2006
|
12
months ended December 31, 2005
|
||||||||
Net
Income (A)
|
$
|
11,652,147
|
$
|
8,128,371
|
$
|
5,988,772
|
||||
Basic
Weighted Average Shares Outstanding (B)
|
13,409,120
|
13,409,120
|
13,409,120
|
|||||||
Dilutive
Shares:
|
||||||||||
- Addition
to Common Stock from Exercise of Placement Warrants
|
-
|
-
|
-
|
|||||||
- Addition
to Common Stock from Contingent Shares Held in Escrow (Please refer
to
Note 18)
|
3,863,636
|
3,863,636
|
3,863,636
|
|||||||
Diluted
Weighted Average Shares Outstanding: (C)
|
17,272,756
|
17,272,756
|
17,272,756
|
|||||||
Earnings
Per Share
|
||||||||||
- Basic
(A)/(B)
|
$
|
.87
|
$
|
0.61
|
$
|
0.45
|
||||
- Diluted
(A)/(C)
|
$
|
.67
|
$
|
0.47
|
$
|
0.35
|
||||
Weighted
Average Shares Outstanding
|
||||||||||
- Basic
|
13,409,120
|
13,409,120
|
13,409,120
|
|||||||
- Diluted
|
17,272,756
|
17,272,756
|
17,272,756
|
(A)
|
Demand
Risk
|
(B)
|
Supply
Risk
|
i.
|
Common
shares outstanding prior to offering of securities
|
17,272,756
|
|||||
ii.
|
Common
shares issued under securities purchase agreement
|
3,863,636
|
|||||
iii.
|
Common
shares issuable upon exercise of placement agent warrants
|
386,364
|
|||||
21,522,756
|
$
|
2,278
|
|||
Printing
and engraving expenses
|
$
|
3,000
|
||
Blue
Sky fees and expenses
|
$
|
5,000
|
||
Legal
fees and expenses
|
$
|
45,000
|
||
Accounting
fees and expenses
|
$
|
30,000
|
||
Miscellaneous
|
$
|
10,000
|
||
|
||||
Total
|
$
|
95,278
|
1. |
For
purposes of determining any liability under the Securities Act,
the
information omitted from the form of prospectus filed as part
of this
registration statement in reliance upon Rule 430A and contained
in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or
497(h) under the Securities Act shall be deemed to be part of
this
registration statement as of the time it was declared effective,
and
|
2. |
For
the purpose of determining any liability under the Securities Act,
each
post-effective amendment that contains a form of prospectus shall
be
deemed to be a new registration statement relating to the securities
offered therein, and this offering of these securities at that
time shall
be deemed to be the initial bona fide offering
thereof.
|
ENERGROUP HOLDINGS CORPORATION | ||
|
|
|
By: | /s/ Shi Huashan | |
Shi Huashan
Chairman and Chief Executive Officer
(Principal
Executive Officer)
|
By: | /s/ Wang Shu | |
Wang Shu
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|
||
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ Shi Huashan
|
|
President,
Chief Executive Officer,
|
|
May
27, 2008
|
Shi
Huashan
|
|
and
Chairman of the Board
|
|
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
|
|
/s/ Wang Shu
|
|
Chief
Financial Officer and Director
|
|
May
27, 2008
|
Wang
Shu
|
|
(Principal
Financial Officer)
|
|
|
|
|
|
|
|
/s/ Chen Fuyuan
|
|
Chief
Operating Officer
|
|
May
27, 2008
|
Chen
Fuyuan
|
|
|
|
|
|
|
|
|
|
/s/ Ma Fengqin
|
|
Vice
President and Director
|
|
May
27, 2008
|
Ma
Fengqin
|
|
|
|
|
|
|
|
|
|
/s/ Wang Shuying
|
|
Director
|
|
May
27, 2008
|
Wang
Shuying
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
May
27, 2008
|
Matthew
Dillon
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
May
27, 2008
|
|
|
|
|
|
|
|
Director
|
|
May
27, 2008
|
James
Boyle
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
2.1
|
|
Share
Exchange Agreement by and among the Company, PSI and PSI Shareholders
dated December 2007 (1)
|
|
|
|
2.2
|
|
Articles
and Plan of Merger (change in domicile from Utah to Nevada)
(2)
|
3.1
|
|
Articles
of Incorporation of Energroup Holdings Corporation
(4)
|
|
|
|
3.2
|
|
Bylaws
of Energroup Holdings Corporation (4)
|
|
|
|
3.3
|
|
Articles
of Amendment to Articles of Incorporation of Energroup Holdings
Corporation (4)
|
3.4
|
|
Articles
of Amendment to Articles of Incorporation of Energroup Technologies,
Inc.
(Reverse Split) (2)
|
|
|
|
3.5
|
|
Articles
of Incorporation of Energroup Holdings Corporation (2)
|
|
|
|
3.6
|
|
Certificate
of Amendment to Articles of Incorporation of Energroup Holdings
Corporation (Reverse Split) (3)
|
|
|
|
4.1
|
|
Registration
Rights Agreement dated December 2007 among Energroup and the investors
signatory thereto (1)
|
|
|
|
4.2
|
|
Form
of Common Stock Purchase Warrant issued to Placement Agent (December
2007)
(1)
|
5.1
|
|
Opinion
of Richardson & Patel LLP (4)
|
10.1
|
|
Lockup
Agreement dated December 2007 among Energroup and the Shareholders
signatory thereto (1)
|
|
|
|
10.2
|
|
Executive
Employment Agreement dated December 2007 between Energroup and Mr.
Shi
Huashan (1)
|
|
|
|
10.3
|
|
Executive
Employment Agreement dated December 2007 between Energroup and Ms.
Wang
Shu (1)
|
|
|
|
10.4
|
|
Executive
Employment Agreement dated December 2007 between Energroup and Mr.
Chen
Fuyuan (1)
|
|
|
|
10.5
|
|
Long-Term
Hog Procurement Agreement dated December 17,2007 between Dalian Chuming
Group Co., Ltd. and Dalian Chuming Slaughter and Packaging Pork Company,
Ltd. (1)
|
10.6
|
|
Trademark
License Contract (Chuming) dated December 2007 (English translation)
(1)
|
|
|
|
10.7
|
|
Trademark
License Contract (Huayu) dated December 2007 (English translation)
(1)
|
|
|
|
10.8
|
|
Securities
Purchase Agreement dated December 2007 among Energroup, PSI, Chuming,
and
the investors signatory thereto (1)
|
|
|
|
10.9
|
|
Make
Good Escrow Agreement dated December 2007 among Energroup, Make Good
Pledgor, Escrow Agent and the investors signatory thereto
(1)
|
|
|
|
10.10
|
|
Holdback
Escrow Agreement dated December 2007 among Energroup, Escrow Agent
and the
investors signatory thereto (1)
|
|
|
|
17.1
|
|
Letter
of Resignation from Mr. Timothy Halter to the board of directors
(1)
|
21.1
|
|
List
of Subsidiaries (4)
|
23.1
|
|
Consent
of Samuel H. Wong & Co., LLP, Certified Public
Accountants*
|
24.1
|
|
Power
of Attorney (included as part of the signature pages to this registration
statement)
|