Grain Wealth (0001470701)

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All | Auditor trail | Financials | Liquidity Requirements | Reverse Merger Activity

Tuesday, February 8, 2011

Reverse Merger Activity

On January 28, 2011 Grain Wealth became a public entity via a reverse merger transaction 

Simultaneously with the acquisition, the Company completed a USD $3,782,393 private placement of its securities to four investors at $3.5769 per share.

Company Snapshot:

Our goal is to become a worldwide supplier of instant-frozen foods and agricultural products.

Industry Snapshot:

  • The frozen food industry has been rapidly growing in China. The rapid growth can be attributed to governmental support and an increase in demand. Sales of frozen foods in China have steadily increased since 2006. Specifically, within the domestic frozen food industry, there has been an increase in demand for frozen dumplings, wontons, and glue pudding. These products are popular in the Chinese diet, as well as being affordable and easy to cook. We expect consumption of frozen foods in China to continue to increase. When compared to other regions of the world, the per capita consumption of frozen foods in China is relatively low. Therefore, we believe there is a very large room for growth in this industry in China.
  • Of the large instant-frozen food producers, approximately 20 are known nationally, four of which have captured the majority of the market share. The top four leading producers are San Quan, Si Nian, Long Feng, and Wan Zai Ma Tou, collectively capturing approximately 60% of the market share.

Post Merger Share Calculation:

  • 1,000,000: Pre reverse merger outstanding shares 
  •   700,000: Shares cancelled as part of the Share Exchange
  • 9,200,000: Newly issued shares of Common Stock
  • 1,057,450: Shares associated with private placement 
  •    105,745: Share from issued to financial institutions (Agents)

GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions:  11,614,903

Financial Snapshot: June Year End

2010 vs. 2009

  • Revenues: $25.1 million vs. $18.7 million 
  • Net Income: $6.7 million vs. $4.4 million 

Three Months Fiscal 2011 vs 2010 (September)

  • Revenues: $7.5 million vs. $3.8 million 
  • Net Income: $1.5 million vs. $1.0 million 

Pro Forma Valuation: using private placement price of $3.58 and new share count

  • Trailing EPS: $0.62
  • Trailing P/E:  $5.77
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Financials
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
   
For the three months Ended
              
   
September 30,
              
   
2010
    
2009
    
Variance
    
%
  
                         
                         
NET REVENUES
   $ 7,523,433     $ 3,829,380     $ 3,694,053       96 %
COST OF REVENUES
     5,447,965       2,377,195       3,070,770       129 %
GROSS PROFIT
     2,075,468       1,452,185       623,283       43 %
      -                          
OPERATING EXPENSES:
     -                          
     Selling and marketing expenses
     245,660       204,507                  
     General and administrative expenses
     212,456       164,027       48,429       30 %
        Total Operating Expenses
     458,116       368,534       89,582       24 %
      -                          
INCOME FROM OPERATIONS
     1,617,352       1,083,651       533,701       49 %
                                 
OTHER (EXPENSE) INCOME:
                                
     Interest income
     -       -                  
     Interest expense
     (96,814 )     (80,336 )                
     Non-operational income
     14,749       20,359                  
        Total Other (Expense) Income
     (82,065 )     (59,977 )                
      -                          
INCOME BEFORE INCOME TAXES
     1,535,287       1,023,674       511,613       50 %
INCOME TAXES
     -       -                  
NET INCOME
   $ 1,535,287     $ 1,023,674       511,613       50 %
                                 
COMPREHENSIVE INCOME:
                                
      Net Income
   $ 1,535,287     $ 1,023,674       511,613       50 %
      Other Comprehensive Income:
                                
          Foreign currency translation gain
     265,884       10,144       255,740       2521 %
TOTAL COMPREHENSIVE INCOME
   $ 1,801,171     $ 1,033,818       767,353       74 %
                                 
BASIC AND DILUTED INCOME PER COMMON SHARE
   $ 153.53     $ 102.37     $ 51.16       50 %
                                 
BASIC AND DILUTED WEIGHTED AVERAGE COMMON
                          
SHARES OUTSTANDING
     10,000       10,000              

GRAIN WEALTH LIMITED AND SUBSIDIARIES		  
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
  
                         
   
For the Years Ended
              
   
June 30,
              
   
2010
    
2009
    
Variance
    
%
  
                         
NET REVENUES
   $ 25,098,672     $ 18,734,371     $ 6,364,301       34 %
COST OF REVENUES
     15,978,235       12,083,734       3,894,501       32 %
GROSS PROFIT
     9,120,437       6,650,637       2,469,800       37 %
                                 
OPERATING EXPENSES:
                                
     Selling and marketing expenses
     1,239,766       1,125,819                  
     General and administrative expenses
     967,548       761,331       206,217       27 %
        Total Operating Expenses
     2,207,314       1,887,150       320,164       17 %
                                 
INCOME FROM OPERATIONS
     6,913,123       4,763,487       2,149,636       45 %
                                 
OTHER (EXPENSE) INCOME:
                                
     Interest income
     5,334       5,604                  
     Interest expense
     (397,272 )     (463,397 )                
     Non-operational income
     166,935       85,414                  
        Total Other (Expense) Income
     (225,003 )     (372,379 )                
                                 
INCOME BEFORE INCOME TAXES
     6,688,120       4,391,108       2,297,012       52 %
INCOME TAXES
     -       -                  
NET INCOME
   $ 6,688,120     $ 4,391,108       2,297,012       52 %
                                 
COMPREHENSIVE INCOME:
                                
      Net Income
   $ 6,688,120     $ 4,391,108       2,297,012       52 %
      Other Comprehensive Income:
                                
          Foreign currency translation gain
     39,961       20,810       19,151       92 %
TOTAL COMPREHENSIVE INCOME
   $ 6,728,081     $ 4,411,918       2,316,163       52 %
                                 
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Auditor trail
On January 28, 2011, our board of directors dismissed Patrizio & Zhao, LLC as our independent registered public accounting firm, and engaged a new independent registered public accounting firm, Friedman, LLP, Certified Public Accountants, to serve as the Company’s independent auditor.
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Liquidity Requirements
The Company currently generates its cash flow through operations which it believes will be sufficient to sustain current level operations for at least the next twelve months.
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