Rongfu Aquaculture (RNFU) research, news, and more from GeoInvesting

Company description

Wed, 07 Apr 2010 04:00:00 GMT

Rongfu Aquaculture, Inc. is engaged in commercial freshwater aquaculture in the PRC. Aquaculture is the cultivation of fish under controlled conditions (as contrasted with the harvesting of fish in the wild). The Company cultivates its fish in fresh water (not marine (salt water) or brackish environments), sells fish and fish fry (juvenile fish) and also acts as a dealer of freshwater fish (generating trading profits from the purchase of fish from third party farmers and the immediate re-sale of such fish to wholesalers and processors).

According to China Agriculture Magazine, the Company is currently the largest seller of tilapia fry in the PRC and the Company believes that it is also one of the three largest sellers of adult tilapia in the PRC.

Types of Farms:

Man-made ponds dug to a depth of approximately 2 meters with a surface area of 10-20 mu. A pond can be dug in two days and is filled with fresh filtered water from local sources. Each pond is outfitted with one or more oxygen aeration machines which float on the surface and one or more feeding machines which provide food to the fish twice per day. The aeration machines provide oxygen to the fish and enable the natural removal of fish wastes so that the water does not become toxic for the fish.
Comprised of a single lake created by damming a river. Oxygen aeration equipment is not needed since the lakes have a much larger area than the ponds dug by the Company. The land on which the farms are located is leased by the Company from the village under leases for terms of 4 to 30 years.

In addition to its adult fish breeding farms, the Company operates a breeding farm in Wenchang, Hainan Province in which tilapia fry are produced from brood stock. (The warm climate in Hainan is more conducive to the breeding of tilapia fry than the climate in Guangdong Province.) The tilapia fry breeding farm in Wenchang covers an area of approximately 1,800 mu. The Company breeds snakehead and crucian carp fry at its facility in Nanhai.

Auditor trail

Fri, 01 Apr 2011 04:00:00 GMT

On March 23, 2011, the Board of Directors of Rongfu Aquaculture, Inc. approved the termination of Aquavella, Chiarelli, Shuster, Berkower & Co., LLP (“ACSB”), as the Company’s independent certified public accounting firm. Concurrent with this action, our Board of Directors appointed Sherb & Co., LLP (“Sherb”) as our new independent certified public accounting firm. Sherb is located at 805 Third Avenue, New York, New York 10022 and has offices in Beijing and Shanghai, China.

Comments & Business Outlook

Wed, 22 Dec 2010 05:00:00 GMT

RONGFU AQUACULTURE, INC.

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(UNAUDITED)

	Nine Months Ended September 30,						Three Months Ended September 30,
	2010			2009			2010			2009

Revenue, net	$	35,369,699		$	21,731,927		$	12,816,275		$	4,763,650
Cost of goods sold		23,576,353			13,323,764			9,129,968			3,135,757
Gross profit		11,793,346			8,408,163			3,686,307			1,627,893

Operating expenses:
Selling expenses		1,299,046			491,112			457,315			201,031
General and administrative expenses		1,956,142			1,336,945			1,016,378			261,875
Research and development cost		104,255			56,437			65,612			21,295
Total operating expenses		3,359,443			1,884,494			1,539,305			484,201

Net income from operations		8,433,903			6,523,669			2,147,002			1,143,692

Other income (expenses)
Loss on Fair value of derivative liability		(6,251,254	)		-			(943,266	)		-
Interest income		10,584			35,510			3,970			14,670
Interest expense		(35,678	)		(87,436	)		(837	)		(86,986	)

Total other (expenses) income		(6,276,348	)		(51,926	)		(940,133	)		(72,316	)

Net income before income taxes		2,157,555			6,471,743			1,206,869			1,071,376

Income taxes		790,416			446,572			301,832			67,667

Net income		1,367,139			6,025,171			905,037			1,003,709
Deemed dividend from beneficial conversion feature of
Series A preferred stock		(4,374,579	)		-			-			-
Dividends paid or declared		(838,577	)		-			(78,477	)		-
Net income (loss) available to common shareholders	$	(3,846,017	)	$	6,025,171		$	826,560		$	1,003,709

Net income for common share
Earnings per share – Basic	$	(0.19	)	$	0.31		$	0.04		$	0.05
Earnings per share – Diluted	$	(0.19	)	$	0.31		$	0.04		$	0.05
Weighted average common shares outstanding
Basic		20,756,854			19,623,889			21,286,789			19,623,889
Diluted		20,756,854			19,623,889			21,286,789			19,623,889

GeoTeam® Note: 2010 third quarter EPS still would have been $0.04 after adding back one Loss on Fair value of derivative liability.

Reverse Merger Activity

Wed, 07 Apr 2010 04:00:00 GMT

Goes public On March 29, 2010 via a reverse merger.

Business Snapshot:

Rongfu Aquaculture, Inc. is engaged in commercial freshwater aquaculture in the PRC

Industry Snapshot:

According to a recent study by the World Food and Agriculture Organization (“FAO”), in 2006 China contributed approximately 67% of the total quantity and 49% of the total value of worldwide aquaculture production.
In China, approximately 90% of fish production comes from aquaculture.
China’s aquatic production for 2009 is forecast to have reached 49.5 metric tons (“MMT”), an increase of approximately two percent from the estimated 48.6 MMT of production in 2008.
China remains the world’s largest aquaculture producer.
In 2005, according to the American Tilapia Association (“ATA”), tilapia production worldwide was second in volume to carp, and it is projected by the ATA that tilapia will become the most important aquaculture crop in the 21st century.
Tilapias are also among the easiest and most profitable fish to farm. This is due to their omnivorous diet, mode of reproduction (the fry do not pass through a planktonic phase), tolerance of high stocking density, and rapid growth.

Post Merger Share Calculation:

2,350,000: Pre reverse merger outstanding shares
2,350,000: Shares cancelled as part of the Share Exchange
666,666: Warrants
18,623,889: Newly issued shares of Common Stock
2,768,721: Shares from Convertible preferred stock associated with a private placement
1,730,451: Warrants with $3.47 exercise price associated with private placement.
1,730,451: Warrants with $4.17 exercise price associated with private placement.

GeoTeam® best effort calculation of total post reverse merger outstanding shares assuming full conversions: 25,520,178

Financials

Wed, 07 Apr 2010 04:00:00 GMT

Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2009			2008			2009			2008

Sales, net	$	4,763,650		$	4,178,923		$	21,731,927		$	19,254,317

Cost of sales		3,135,757			2,388,759			13,323,764			10,205,979

Gross profit		1,627,893			1,790,164			8,408,163			9,048,338

Selling, general and administrative expenses		529,896			465,498			1,836,400			2,024,744

Income from operations		1,097,997			1,324,666			6,571,763			7,023,594

Other Income (Expense)
Interest income		14,670			19,647			35,510			53,066
Interest expense		(86,652	)		(14,021	)		(86,652	)		(14,021	)
Other expense		(334	)		(13,537	)		(784	)		-

Total other Income (Expense)		(72,316	)		(7,911	)		(51,926	)		39,045

Income before income taxes		1,025,681			1,316,755			6,519,837			7,062,639

Provision for income taxes		67,667			34,774			446,572			272,436
Net income	$	958,014		$	1,281,981		$	6,073,265		$	6,790,203

Net income per common share
Basic	$	0.86		$	1,15		$	5.43		$	6.07

Weighted average common shares outstanding

Basic		1,118,672			1,118,672			1,118,672			1,118,672

Financial Target Agreements

Wed, 07 Apr 2010 04:00:00 GMT

Kelvin Chan, President and Chief Executive Officer, placed 2,768,721 Make Good shares in escrow that will be released, using a formula, to certain investors if net income targets are not achieved:

	2008 Reported	% Change	2009 Target	% Change	2010 Target
Net Income	$11.9 M	9.3%	$13.0 M	13.9%	$14.8 M
EPS	n/a	n/a	$0.54	14.9%	$0.62

Source: SEC 8K Filing (March 29, 2010).

We also located the following the verbiage in it's 8K filing.

Pursuant to certain Call Option Agreements between Mr. Chan and the following persons, each of the following persons has been granted an option, subject to the satisfaction of certain conditions, to purchase from Mr. Chan over the course of approximately three years for $.001 per share, the total number of shares of our Common Stock held by Mr. Chan set forth after the name of the person: Chen Zhi Sheng - 9,000,000; Pan Haicheng – 2,700,000; Zhao Ping – 1,800,000; and Zheng Songkui – 900,000. The conditions and the percentage of the total number of shares subject to the option that would vest upon satisfaction of the condition are as follows:

Entry by the person and the Company into a binding employment agreement for a term of not less than five years for the person to serve as an officer of the Company – 50%
The Company and its subsidiaries achieving not less than $1,000,000 in after-tax net income, as determined under United States Generally Accepted Accounting Principles consistently applied (“US GAAP”) for the fiscal year ending December 31, 2010;
The Company and its subsidiaries achieving not less than $1,500,000 in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2011;
The Company and its subsidiaries achieving not less than $2,000,000 in after-tax profits, as determined under US GAAP, for the fiscal year ending December 31, 2012.