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 Tracking 1247 U.S. listed China Stocks and Counting...
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 Agfeed Industries (PINK:FEED)

Thursday, March 13, 2014
Auditor trail

Item 4.01. Changes in Registrant’s Certifying Accountant.

On March 7, 2014, AgFeed Industries, Inc. (the “Company”) received a letter from McGladrey LLP (“McGladrey”), confirming that the client-auditor relationship between the Company and McGladrey has ceased.

On January 31, 2012, the Company announced that its special committee of the board of directors had completed its investigation into certain accounting issues in the Company’s animal nutrition and legacy farm hog operations in China. In connection with that investigation, the Company previously disclosed that investors and others should not rely on the Company’s (1) audited financial statements for the year ended December 31, 2010, which were audited by McGladrey, (2) audited financial statements for the years ended December 31, 2009, 2008 and 2007, which were audited by another registered accounting firm and not McGladrey, and (3) unaudited financial statements for all quarters within those years and the first two quarters of 2011.

The Company has not completed, and is not working on, its financial statements for the years ended 2013, 2012 or 2011, or its restated financial statements for the year ended December 31, 2010. Accordingly, (a) McGladrey has not issued any report on those financial statements and (b) in each of the years ended December 31, 2013 and December 31, 2012 and through March 7, 2014, there were no (i) disagreements, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K, with McGladrey on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement would have caused it to make reference to the subject matter of the disagreement in its report on the Company’s financial statements; or (ii) reportable events, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

A copy of a letter from McGladrey to the Securities and Exchange Commission (“SEC”) stating that it agrees with the statements regarding McGladrey in this report is filed as Exhibit 16 to this Current Report on Form 8-K.


Investor Alert

Item 8.01. Other Events.

On March 11, 2014, the U.S. Securities and Exchange Commission (the “Commission”) filed a civil complaint against AgFeed Industries, Inc. (the “Company”) and six of its former officers in the U.S. District Court for the Middle District of Tennessee, alleging that they violated antifraud, books and records, reporting, deceit of auditors, internal controls and incentive compensation disgorgement provisions of the federal securities laws. The Commission also announced settlements with two other former officers of the Company under which each officer consented to an order instituting public administrative and cease-and-desist proceedings, making findings, and imposing remedial sanctions and cease-and-desist orders and penalties. The complaint and the settlements relate to the Commission’s investigation into issues arising out of accounting errors and irregularities in the Company’s feed mill and legacy farms businesses in China, which resulted in errors and misstatements in the Company’s financial statements from 2007 through the second quarter of 2011. The Company is engaged in settlement discussions with the staff of the Commission, but cannot predict with any certainty the results of those discussions or of the U.S. District Court proceedings arising from the complaint.

Separately, the Company has consented to the entry of an administrative order by the Commission pursuant to Section 12(j) of the Securities Exchange Act of 1934 (the “Exchange Act”) under which the Company’s registration under the Exchange Act would be revoked. Upon the effectiveness of this order, among other things, the Company’s obligation to file periodic reports under the Exchange Act would terminate, and no member of a national securities exchange, broker, or dealer may make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, the Company’s securities. The Company has filed a motion with the United States Bankruptcy Court for the District of Delaware, which is overseeing the Company’s Chapter 11 bankruptcy proceedings, requesting that the court approve the administrative order.


Friday, November 29, 2013
Deal Flow

Item 1.01.              Entry Into a Material Definitive Agreement.

As previously reported, on September 13, 2013, AgFeed Industries, Inc. (the “Company”) entered into an Agreement for the Sale and Purchase of Shares (the “Agreement”) with Ningbo Tech-Bank Co., Ltd (“NTB”) and its subsidiary Good Charm International Development Ltd. (together, the “Purchasers”), whereby the Company would sell to the Purchasers, and the Purchasers would purchase and acquire from the Company, all of the outstanding capital stock of AgFeed Industries, Inc. (British Virgin Islands), a direct wholly-owned subsidiary of the Company and the parent company of the Company’s Chinese subsidiaries (the “China Transaction”). Following the execution of the Agreement on September 13, 2013, the Purchasers have made certain claims for which they asserted rights under the Agreement. On November 25, 2013, the Company and the Purchasers entered into a First Amendment to the Agreement (the “Amendment”), which provides for a reduction in the purchase price of $3.45 million and resolves all outstanding disputes and issues. The Company expects to receive, under the Agreement, as amended, total cash proceeds of approximately $45 million, after adjustments and estimated fees and expenses. The Amendment also provides that the closing of the China Transaction will occur on or before December 6, 2013.

The foregoing description of the Amendment is a summary only and is qualified in its entirety by the copy of the Amendment filed as Exhibit 2.1 to this Current Report on Form 8-K and incorporated herein by reference.


Thursday, August 8, 2013
Restructuring Activity
Item 8.01. Other Events.

 

 

 

On August 1, 2013, the United States Bankruptcy Court for the District of Delaware (the “Court”) entered an order approving certain bid procedures and key dates regarding the ongoing bankruptcy proceedings under Chapter 11 of the U.S. Bankruptcy Code with respect to AgFeed Industries, Inc. (the “Company”), AgFeed USA, LLC (“AgFeed USA”), a direct wholly owned subsidiary of the Company, and substantially all of AgFeed USA’s direct and indirect subsidiaries (the “Sellers”), previously disclosed in the Company’s Current Report on Form 8-K filed on July 15, 2013 (the “Prior Form 8-K”). The Court’s order approved, among other things, that bids to purchase the assets of the Sellers be filed with the Court by August 21, 2013, with, pending receipt of Qualified Bids as defined in the Bid Procedures, an auction of those assets to occur on August 26, 2013, followed by a sale hearing before the Court on August 29, 2013.

 

As previously disclosed in the Prior Form 8-K, on July 15, 2013, the Sellers entered into an asset purchase agreement (the “Maschhoffs Agreement”) with The Maschhoffs, LLC (the “Maschhoffs”), whereby the Sellers would sell to the Maschhoffs, and the Maschhoffs would purchase and acquire from the Sellers, substantially all of the assets of the Sellers, excluding the Sellers’ operations in Oklahoma, for a cash purchase price of $79 million, subject to reduction for changes in working capital measured from March 31, 2013, plus the assumption of certain liabilities. Based on the Sellers’ expected levels of activity before closing and other assumptions, the Sellers currently expect that they will receive net cash proceeds under the Maschhoffs Agreement, after reduction for changes in working capital, of approximately $66.6 million and have cash on hand of an additional $7.1 million. As of July 31, 2013, the Sellers had $69.0 million of outstanding prepetition indebtedness under their secured credit agreements with Farm Credit Services of America, FLCA (“FCS FLCA”) and Farm Credit Services of America, PCA (together with FCS FLCA, “Farm Credit”).

 

In its order, the Court required that any Qualified Bid for the Sellers’ assets equal or exceed the sum of (1) the purchase price payable to the Sellers under the Maschhoffs Agreement, (2) a break-up fee payable to the Maschhoffs in an amount equal to $2,370,000, (3) reimbursement of the Maschhoffs for its reasonable and documented actual out-of-pocket expenses up to $790,000, plus (4) $250,000. The order also requires that each Qualified Bid, including the Maschhoffs’ bid, provide an aggregate cash purchase deposit that is not less than $7.9 million. In addition, each bid must be accompanied by an asset purchase agreement that contains substantially the same terms as, or terms more favorable to the Company and the Sellers and their estates than, those in the Maschhoffs Agreement together with a marked copy that reflects any variations from the Maschhoffs Agreement.

 

The Company and AgFeed USA, with the assistance of their financial advisers, Business Development Asia LLC and BDA Advisors Inc., are continuing to actively pursue competing offers for the Sellers’ assets in connection with the Chapter 11 bankruptcy proceedings, as well as sales of the Company’s Chinese subsidiaries and assets. The Company, AgFeed USA and their advisors cannot at this time predict the amount of proceeds from any transaction or transactions that might result from that pursuit.

 

The Company’s shareholders are cautioned that trading in shares of the Company’s equity securities during the pendency of its Chapter 11 bankruptcy proceedings is highly speculative and poses substantial risks. Trading prices for the Company’s equity securities may bear little or no relationship to the actual recovery, if any, by holders in our Chapter 11 bankruptcy proceedings. Accordingly, the Company urges extreme caution with respect to existing and future investments in its equity securities.


Friday, May 17, 2013
Investor Alert
  Item 8.01. Other Events.

AgFeed Industries, Inc. (the “Company”) today disclosed that it is unable to file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2013 (the “Form 10-Q”) within the prescribed time period without unreasonable effort or expense. As previously disclosed, on January 31, 2012, the Company announced that its special committee of the board of directors had completed its investigation into certain accounting issues in the Company’s animal nutrition and legacy farm hog operations in China. Also, as previously disclosed, the Company has been in the process of restating its unaudited financial statements for the quarters ended March 31, and June 30, 2011, its audited financial statements for the years ended December 31, 2010, 2009, 2008 and 2007 and its unaudited financial statements for all quarters within those years.

The audits of the Company’s restated financial statements for the year ended December 31, 2010 and its financial statements for the years ended December 31, 2011 and 2012 (the “Annual Financial Statements”) must be completed before the Company can file the Form 10-Q or any of its prior delinquent annual reports on Form 10-K or quarterly reports on Form 10-Q. Because of the previously disclosed liquidity constraints that the Company faces, the Company has stopped work on the audits of the Annual Financial Statements. As a result, the Company believes it is unlikely that it will be able to file (1) the Form 10-Q, (2) its other delinquent annual reports on Form 10-K or quarterly reports on Form 10-Q, or (3) any annual reports on Form 10-K or quarterly reports on Form 10-Q that become due in the future. As previously disclosed, the Company is evaluating its strategic options, which may include the sale of all or substantially all of the Company’s assets.


Monday, September 17, 2012
Comments & Business Outlook

NEW YORK, September 15, 2012 /PRNewswire/ -- AgFeed Industries, Inc. (PINK SHEETS: FEED, NYSE Alternext: ALHOG), an international agribusiness company with hog production operations in the U.S. and one of the largest independent hog producers and manufacturers of animal nutrients in China, today provided an update on its business.

The Company reported unaudited total revenue for the six months ended June 30, 2012 of $177.4 million, comprised as follows for its four reporting segments (in thousands):

Animal nutrition

$ 30,599

Hog production - United States

114,434

Hog production - China

29,089

Western-style hog farms

3,310

Total

$177,432

The Company also estimates that it incurred a net loss for the first half of 2012 in the range of $2.0 million - $3.5 million, which included $2.9 million (after tax) of legal and other expenses associated with the previously announced investigation by the Special Committee of the Board and the resulting professional fees and expenses related to the restatement of the Company's financial statements. Cash and cash equivalents totaled $8.6 million at June 30, 2012. All figures are unaudited. The above first half 2012 amounts do not include the potential effects, if any, of the Company's ongoing restatement process described below.

As reported on January 31, 2012, the Special Committee of the Board completed its investigation into certain accounting issues in the animal nutrition and legacy farm hog operations in China. During the investigation by the Special Committee and subsequent further evaluation by management, accounting irregularities were uncovered in both of those segments. The Board and management continue to work closely with McGladrey & Pullen, LLP, the Company's independent public accountants, and the Company's predecessor accounting firm on restating the Company's financial statements for the 2008 fiscal year and subsequent periods through the first two quarters of 2011. The auditors are currently conducting their fieldwork in connection with the audit of the restated financial statements. The Company believes that the effect of the restatements will be non-cash items and will not affect current liquidity.

"Our U.S. operations and our animal nutrition business demonstrated stable operating performance in the first half of 2012," said K. Ivan F. Gothner, chairman and chief executive officer. "We commenced breeding at our second western-style facility in China during the second quarter and this business segment has begun to generate meaningful revenue.

"First half results were affected by a difficult operating environment in China. Hog prices in China declined in the second quarter and hog production volume was also down as we rationalized underperforming Chinese farms and reduced the overall herd. We believe these actions will improve the efficiency of our Chinese operations and position us well for the future. Ongoing high prices for corn and soybean affected our China hog margin in the first half of 2012 and we expect high input prices and lower margins to continue. Despite these cyclical trends, we continue to receive a favorable reaction to the quality, reliability and pricing of our western-style hog production in the Chinese market.

"We believe we have adequate liquidity under current market conditions to fund our operations for the remainder of 2012. We look forward to filing restated financial statements and returning to a regular reporting schedule later this year."


Tuesday, September 4, 2012
Deal Flow
On August 30, 2012, AgFeed USA, LLC (formerly known as M2 P2, LLC) (“AgFeed USA”), the U.S. hog production subsidiary of AgFeed Industries, Inc., various subsidiaries of AgFeed USA and its lenders, Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA, agreed to extend the maturity date, and expiration date, of AgFeed USA’s existing $64.7 million credit facility from September 1, 2012 to February 1, 2013.

Sunday, June 10, 2012
Investor Alert
On June 1, 2012, AgFeed USA, LLC (formerly known as M2 P2, LLC) (“AgFeed USA”), the U.S. hog production subsidiary of AgFeed Industries, Inc., various subsidiaries of AgFeed USA and its lender, Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA, agreed to extend the maturity date, and expiration date, of AgFeed USA’s existing $64.7 million credit facility from June 1, 2012 to September 1, 2012.

Thursday, June 7, 2012
Deal Flow
Item 8.01 Other Events.

On June 1, 2012, AgFeed USA, LLC (formerly known as M2 P2, LLC) (“AgFeed USA”), the U.S. hog production subsidiary of AgFeed Industries, Inc., various subsidiaries of AgFeed USA and its lender, Farm Credit Services of America, FLCA and Farm Credit Services of America, PCA, agreed to extend the maturity date, and expiration date, of AgFeed USA’s existing $64.7 million credit facility from June 1, 2012 to September 1, 2012.


Thursday, April 19, 2012
Comments & Business Outlook

The Company reported unaudited total revenue for the six months ended December 31, 2011 of $196.4 million, comprised as follows for its four reporting segments (in thousands):

Animal feed nutrition

$ 34,608

Hog production - United States

131,976

Hog production - China

29,175

Western-style hog farms

651

Total

$196,410

The Company also estimates that it incurred a net loss for the second half of 2011 in the range of $3.0 million - $5.0 million, which included $4.8 million (after tax) of legal and other expenses associated with the previously announced investigation by the Special Committee of the Board. Cash and cash equivalents totaled $12.8 million at December 31, 2011. All figures are unaudited. The above second half 2011 amounts do not include the potential effects, if any, of the Company's ongoing restatement process described below.

As reported on January 31, 2012, the Special Committee of the Board completed its investigation into certain accounting issues in the animal nutrition and legacy farm hog operations in China. During the investigation by the Special Committee and subsequent further evaluation by management, accounting irregularities were uncovered in both of those segments. The Board and management are working closely with McGladrey & Pullen, LLP, the Company's independent public accountants, and the predecessor accounting firm on restating the Company's financial statements for the 2008 fiscal year and subsequent periods through the first two quarters of 2011. The Company expects to file restated financial statements and return to a regular reporting schedule as soon as practicable. The Company believes that the effect of the restatements will be non-cash items and will not affect current liquidity.

Over the past few months, AgFeed has taken actions to improve operations in the U.S. and China. These actions include:

  • Reduced corporate overhead by approximately $2.5 million on an annualized pre-tax basis. Additional expense reductions were achieved in U.S. hog operations.
  • Continued to restructure and strengthen the Company's financial management and reporting in the U.S. and China. These restructuring actions are ongoing and are expected to be substantially completed in the second half of 2012.
  • Streamlined hog production operations in China and commenced the organizational restructuring of the animal nutrition business.
  • Named K. Ivan F. Gothner as chief executive officer. Mr. Gothner has been serving as interim CEO since December 2011. Mr. Gothner also serves as chairman of the board of directors.
  • Appointed two new board members, H. David Sherman and Todd Zelek, each of whom bring extensive business and financial expertise to the Company's board.
  • Appointed Thomas Zhi Yang, Esq. as China country manager, responsible for coordinating all aspects of the Company's business in China.
  • Appointed Joseph Barban as managing director of AgFeed USA and head of the Company's U.S. hog production business.
  • Changed the name of the U.S. hog production operations to AgFeed USA (from the legacy name M2P2) to better reflect the integrated U.S. and China nature of the Company's business.

"Our results in the second half of 2011 were buoyed by strong market demand and record hog prices in China," said K. Ivan F. Gothner, chairman and chief executive officer. "We continued to deploy more efficient and disciplined production methods to our legacy hog production system in China and in the fourth quarter of 2011 also began selling hogs from the first of our two western-style facilities in China. We are pleased that we are getting a favorable reaction to the quality, reliability and pricing of our western-style hog production in that market.

"The transformation of AgFeed is well underway," Mr. Gothner continued. "We have strengthened our executive team, reduced overhead and expect to return to a normalized financial reporting schedule in the third quarter of this year. We believe we have adequate liquidity under current market conditions to fund our operations for the remainder of 2012 and to complete the construction of our second western-style facility in China, which is scheduled to enter production in June with the first animals available for sale in December of this year. We look forward to providing a further update when 2012 first quarter results are available."


Monday, March 12, 2012
Resolution of Legal Issues
On March 2, 2012, AgFeed Industries, Inc. (the “Company”) entered into a standstill agreement (the “Standstill Agreement”) with AF Sellco, LLC (“Sellco”), the holder of the Amended and Restated Promissory Note dated November 12, 2010 (the “Note”) issued by the Company to Sellco in connection with the acquisition of M2 P2, LLC by the Company in September 2010, related to disputes previously reported by the Company in its Current Report on Form 8-K filed on February 10, 2012. Under the Standstill Agreement, Sellco has agreed to forbear from exercising any of the rights and remedies which Sellco may have as a result of previous written notices by Sellco related to the Note, if successfully alleged and pursued, during the Standstill Period (as defined below). As a condition precedent to the Standstill Agreement, the Company paid to Sellco a prepayment of principal in the amount of $1.0 million on the Note.

Monday, February 13, 2012
Investor Alert
On February 6, 2012, AF Sellco, LLC (the “Lender”), the holder of the Amended and Restated Promissory Note dated November 12, 2010 (the “Note”) issued by AgFeed Industries, Inc. (the “Company”) to the Lender, delivered written notice (the “Notice”) to the Company claiming that an event of default under the Note had occurred and was continuing. Pursuant to the terms and conditions of a Pledge Agreement, dated as of September 13, 2010 (the “Pledge Agreement”), by and between the Lender and the Company, the Company pledged to the Lender all of the outstanding equity interests of M2 P2, LLC (“M2P2”) as collateral security for the Company’s obligations under the Note. The Notice alleges (i) that the Company materially breached its material covenants or agreements contained in the Membership Purchase Agreement, dated as of September 13, 2010 (the “Purchase Agreement”), by and between the Lender and the Company by reporting in its Current Reports on Form 8-K filed on January 31, 2012 and December 19, 2011 that certain financial statements of the Company should no longer be relied upon (collectively, the “Notices of Non-Reliance”) and (ii) that such breaches constitute events of default under the terms of the Note. The Company and the Lender have been, and continue to be, in discussions regarding these issues since this issue was first raised by the Lender on December 22, 2011.

Tuesday, January 31, 2012
Investor Alert
On January 31, 2012, AgFeed Industries, Inc. (the “Company”) announced today that it has notified The Nasdaq Stock Market LLC (“Nasdaq”) of its intent to voluntarily delist its common stock from The Nasdaq Global Select Market. The Company currently anticipates that it will file with the Securities and Exchange Commission (the “Commission”) and Nasdaq a Form 25 relating to the delisting of its common stock on or about February 10, 2012, on which day there will be no trading in its common stock. The Company anticipates that the delisting of its common stock becoming effective on or about February 20, 2012, ten days after the filing of the Form 25. The Company expects to continue to be under a trading halt on Nasdaq until the delisting of its common stock becomes effective.

Wednesday, January 25, 2012
Investor Alert
On January 13, 2012, Glenn McClelland resigned as Chief Operating Officer of AgFeed Industries, Inc. (the “Company”). Additionally, on January 16, 2012, Raymond M. Cesca resigned as President of the Company. Mr. Cesca, who had been primarily involved in developing the Company’s global market initiative, will be transitioning to a consultant relationship with the Company and will continue to focus on its global market and sourcing plans.

Monday, December 19, 2011
Investor Alert

 
Item 4.02
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
After discussing the facts learned in the Investigation to date with management, the Company’s audit committee concluded on December 16, 2011 that the Company’s previously issued unaudited financial statements for the quarters ended March 31 and June 30, 2011, as well as its audited financial statements for the years ended December 31, 2010 and 2009, should be restated.  As a result, the Company’s consolidated balance sheets as of March 31 and June 30, 2011 and December 31, 2010 and 2009, the Company’s consolidated statements of operations and other comprehensive income (loss) for the quarters ended March 31 and June 30, 2011 and the years ended December 31, 2010 and 2009, the Company’s consolidated statements of cash flows for the quarters ended March 31 and June 30, 2011 and the years ended December 31, 2010 and 2009 and the footnotes thereto should no longer be relied upon.  Management discussed these matters with the Company’s independent registered public accounting firms for the applicable periods.  These restatements are in addition to those previously reported by the Company in its Current Report on Form 8-K filed with the Commission on November 10, 2011.
 
 

CFO Trail
On December 16, 2011, John Stadler resigned as Chairman of the Board and Interim Chief Executive Officer and as a director of the Company for personal reasons. His resignation was not the result of any disagreement with the Company relating to its operations, policies or practices.

Friday, November 25, 2011
Investor Alert

NEW YORK, November 24, 2011 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG), announced today that it has received notice from The NASDAQ Stock Market ("Nasdaq") that, because the Company has not yet filed its Quarterly Report on Form 10-Q for the period ended September 30, 2011 (the "10-Q") with the Securities and Exchange Commission (the "Commission"), the Company no longer complies with the continued listing requirements under Nasdaq Marketplace Rule 5250(c)(1).

As previously reported by the Company in its Notification of Late Filing on Form 12b-25, filed with the Commission on November 10, 2011, the Company was unable to file the 10-Q within the prescribed period due to the ongoing investigation of the special committee of the board of directors (the "Special Committee"). As previously disclosed, on September 29, 2011, the Company announced that its board of directors appointed the Special Committee to investigate the accounting relating to certain of the Chinese farm assets (acquired during 2007 and 2008) used in the Company's Chinese hog production business, the validity and collectability of certain of the Company's accounts receivable relating to its Chinese animal nutrition business, and any other issues that may arise during the course of its investigation (the "Investigation"). The Special Committee engaged the law firm of Latham & Watkins ("L&W") to serve as its independent counsel in connection with the Investigation, and L&W retained the forensic accounting firm of FTI Consulting to serve as its forensic accounting advisor. The Special Committee has not completed the Investigation or arrived at any final conclusions. The Special Committee is continuing its investigation, and no assurance can be provided as to when the Investigation will be completed.


Thursday, October 20, 2011
Investor Alert
On October 14, 2011, AgFeed Industries, Inc. (the “Company”) received notice from The NASDAQ Stock Market (“Nasdaq”) that, because the closing bid price for the Company's common stock has fallen below $1.00 per share for 30 consecutive business days, the Company no longer complies with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market, set forth in Nasdaq Marketplace Rule 5450(a)(1).

Friday, September 30, 2011
Special Situations

NEW YORK, September 30, 2011 /PRNewswire-Asia/ -- AgFeed Industries, Inc. (Nasdaq: FEED, NYSE Alternext: ALHOG) ("AgFeed" or the "Company") announced today that its Board of Directors has established a special committee to investigate the accounting relating to certain of the Company's Chinese farm assets (acquired during 2007 and 2008) used in its hog production business, as well as the validity and collectability of certain of the Company's accounts receivables relating to its animal nutrition business in China and any other issues that may arise during the course of the investigation.

The special committee is comprised of directors Milton P. Webster, III and Bruce Ginn, a newly appointed director, as described further below. The special committee is authorized to retain experts and advisers to carry out its investigation and has engaged Latham & Watkins LLP to serve as its independent counsel in connection with the investigation.

The Company does not intend to provide further comment regarding the matters under investigation until after the special committee concludes its investigation.


Wednesday, August 10, 2011
Comments & Business Outlook
AGFEED INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
 
   
Three Months Ended June 30,
   
Six Months Ended June 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(unaudited)
   
(unaudited)
   
(unaudited)
   
(unaudited)
 
                         
Revenues
 
$
85,397,972
   
$
33,760,376
   
$
178,385,171
   
$
80,250,232
 
                                 
Cost of goods sold
   
77,311,556
     
30,223,994
     
162,418,653
     
70,841,813
 
                                 
Gross profit
   
8,086,416
     
3,536,382
     
15,966,518
     
9,408,419
 
                                 
Operating expenses
                               
Selling expenses
   
1,086,305
     
975,823
     
2,072,968
     
1,993,987
 
General and administrative expenses
   
6,187,232
     
3,642,078
     
11,343,437
     
7,085,249
 
Receivable credit and collection losses
   
14,265,222
     
-
     
15,484,448
     
-
 
Total operating expenses
   
21,538,759
     
4,617,901
     
28,900,853
     
9,079,236
 
                                 
Income (loss) from operations
   
(13,452,343
)
   
(1,081,519
)
   
(12,934,335
)
   
329,183
 
                                 
Non-operating income (expense):
                               
Other income (expense)
   
(38,522
)
   
177,453
     
(41,238
)
   
252,611
 
Interest income
   
7,671
     
36,951 
     
22,393
     
84,284
 
Interest and financing costs
   
(995,837
)
   
(139,930
)
   
(1,910,796
)
   
(264,841
)
Foreign currency transaction loss
   
(4,467
)
   
(34,364
)
   
(14,595
)
   
(20,561
)
                                 
Total non-operating income (expense)
   
(1,031,155
)
   
40,110
     
(1,944,236
)
   
51,493
 
                                 
Loss from operations before income taxes
   
(14,483,498
)
   
(1,041,409
)
   
(14,878,571
)
   
380,676
 
                                 
Income tax expense (benefit)
   
(304,244
)
   
641,139
     
234,495
     
1,094,719
 
                                 
Loss from continuing operations
   
(14,179,254
)
   
(1,682,548
)
   
(15,113,066
)
   
(714,043
)
                                 
Discontinued operations:
                               
Income (loss) from discontinued operations (including loss
                               
  on disposal of $830,200 in 2011)
   
(1,744,242
)
   
(1,382,165
)
   
(2,425,287
)
   
(1,339,446
)
                                 
Net loss
   
(15,923,496
)
   
(3,064,713
)
   
(17,538,353
)
   
(2,053,489
)
                                 
Less: Net loss attributed to noncontrolling interest
   
(48,466
)
   
(109,961
)
   
(112,499
)
   
(166,155
)
                                 
Net loss attributed to AgFeed
 
$
(15,875,030
)
 
$
(2,954,752
)
 
$
(17,425,854
)
 
$
(1,887,334
)
                                 
                                 
                                 
Comprehensive loss
                               
     Net loss
 
$
(15,923,496
)
 
$
(3,064,713
)
 
$
(17,538,353
)
 
$
(2,053,489
)
     Foreign currency translation gain
   
1,462,945
     
298,682
     
2,241,388
     
299,446
 
                                 
Comprehensive loss
 
$
(14,460,551
)
 
$
(2,766,031
)
 
$
(15,296,965
)
 
$
(1,754,043
)
                                 
Weighted average shares outstanding :
                               
Basic
   
60,500,355
     
45,015,351
     
56,964,030
     
44,942,821
 
Diluted
   
60,500,355
     
45,015,351
     
56,964,030
     
44,942,821
 
                                 
Basic loss per share attributed to AgFeed common stockholders:
                               
Continuing operations
 
$
(0.23
)
 
$
(0.03
)
 
$
(0.27
)
 
$
(0.01
)
Discontinued operations
   
(0.03
)
 
$
(0.03
)
   
(0.04
)
 
$
(0.03
)
   
$
(0.26
)
 
$
(0.07
)
 
$
(0.31
)
 
$
(0.04
)
                                 
Diluted loss per share attributed to AgFeed common stockholders:
                               
Continuing operations
 
$
(0.23
)
 
$
(0.03
)
 
$
(0.27
)
 
$
(0.01
)
Discontinued operations
   
(0.03
)
 
$
(0.03
)
   
(0.04
)
 
$
(0.03
)
   
$
(0.26
)
 
$
(0.07
)
 
$
(0.31
)
 
$
(0.04
)

Liquidity Requirements
To conduct our operations related to Animal feed nutrition, Hog Production—China and Hog Production-United States, we intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment, purchase of raw materials, and the expansion of our business, through cash flow provided by these operations. You should note that our Hog Production—United States utilizes a line of credit for its working capital needs. This line of credit is due to expire June 1, 2012 with a lender that we have a long history with and understands our business model.

Friday, May 13, 2011
Analyst Reports

Rodman and Renshaw on FEED                                 5/13/2011

FEED: 1Q11 Update

FEED reported 1Q11 revenue, GAAP net loss and diluted EPS of $93.0 million, ($1.6) million and ($0.03) versus our estimates of $96.5 million, ($3.2 million) and ($0.06), respectively. Top line grew by 75.9% YoY from $52.9 million in 1Q11, but declined 6.5% sequentially from $99.5 million in 4Q10 on higher than expected contribution from the company’s U.S. operations offset by disappointing performance of animal nutrition and China hog operation segments. Gross profit of $7.8 million represented a 24.7% YoY increase and an 8.5% gross margin, compared to $6.3 million or 12.0% margin in 1Q10 and $1.5 million or 1.5% margin in 4Q10. SG&A expenses were up 56.8% YoY from $4.7 million in 1Q10 to $7.4 million, accounting for 7.9% of the total revenues compared to 8.9% in 1Q11. The company reported a net loss of ($1.6) million or ($0.03) per share compared to a net income of $1.1 million or $0.02 per share in 1Q11. We expect the company to return to profitability in 2H11 and reiterate our Market Outperform/Speculative Risk rating. We are, however, reducing our price target from $4.00 to $3.50 on higher share count. Our 12-month price target is based on the shares attaining a P/E level of 8x our FY12 EPS estimate of $0.43.

Discussion

  • M2P2 Saves the Day: M2P2, a U.S.- based hog production company and a key supplier to Hormel (HRL, Not Rated), was acquired in September 2010. The subsidiary contributed $57.9 million and $4.4 million towards the company’s revenues and gross profit in 1Q11, equivalent to 62.3% and 55.6% of the total revenues and gross profit, respectively. During 1Q11, M2P2 sold 334,000 hogs versus 84,275 hogs sold by AgFeed in China, earning an average gross profit of $13 per hog (~7.6% gross margin). These results significantly exceeded our 1Q11 revenue and gross profit estimates of $50.0 million and $2.3 million (~4.5% gross margin). We are consequently increasing our full year projections for the U.S. hog segment to $219.9 million in revenues and $13.7 million in gross profit from the previous forecasts of $200.0 million and $9.5 million, respectively.
  • Weak Quarter for the Animal Nutrition Segment: Animal nutrition segment revenues increased by less than 1% YoY to $28.2 million (inclusive of $4.0 million in intercompany sales). Sequentially, revenues declined 17.3% QoQ on lower volume and selling prices. During 1Q11, the company sold 43,926 MT of feed versus 49,614 MT sold in the previous quarter. Average selling prices declined by 3.0% YoY and 6.5% QoQ to $643/MT despite higher input costs. Overall feed segment gross margin declined from 15.9% in 1Q10 and 13.4% in 4Q10 to 8.6% in 1Q11 as the company struggled to absorb higher corn costs without losing its market share.


    Notice Regarding Privacy and Confidentiality:


    This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

    Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

    Rodman & Renshaw, LLC may make a market in the securities being discussed.

    Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

    Member FINRA.
    Member SIPC.

Wednesday, May 11, 2011
Comments & Business Outlook

First Quarter Results:

  • AgFeed reports revenue of $93 million and an operating profit of $0.5 million.  Revenues for the company's U.S. hog production unit reached $57.9 million with an operating profit of $3.6 million.  In China, significant progress was made in restructuring hog production and containing operating issues in this business segment with revenue reported at $10.9 million and an operating loss of $139,000.  In its Chinese based animal nutrition segment, the Company reports first quarter revenue of $24.2 million and an operating loss of $835,000.  These results do not reflect the loss attributable to discontinued operations within the Company's legacy Chinese hog production unit.

John A. Stadler, AgFeed's Chairman & Interim Chief Executive Officer stated, "Our team of hog production professionals that were deployed in the past months to focus on turning around our legacy Chinese hog production system has made significant strides in closing and liquidating facilities that could not meet our standard production metrics while at the same time moving rapidly to bring appropriate operating discipline to the remaining legacy assets.  This work is not yet complete.  However, we expect that we can return the legacy system to profitability later this year.  The performance of our animal nutrition unit was disappointing.  The size of the nation-wide Chinese hog herd is down which has impacted demand for our nutrition products.  More importantly we were unable to pass along the rapidly increasing cost of grains in real time."

In conclusion Mr. Stadler added, "During the coming weeks we plan to provide 'guidance' to the investment community regarding our annual performance." He also reiterated, "The base of hog production excellence and human capital which AgFeed can deliver from its U.S. operations at M2P2 coupled with our burgeoning Chinese presence and its showcase western-style hog production facility at Da Hua demonstrate a model of aligning resources from disparate global locations in order to delivery high quality, safe food to a global market."


Friday, May 6, 2011
Analyst Reports

Rodman and Renshaw on FEED                 5/6/2011

Farm Closures to Dent FY11 Production, Lowering PT to $4.

AgFeed Industries, Inc (FEED) 4Q10 and FY10 financial results came in below our expectations. For the 4Q10 the company reported revenues of $99.5 million and GAAP net loss of ($20.2) million or ($0.42) per fully diluted share. The variance from our revenue and net income estimates of $88.2 million and $1.4 million or $0.03 per fully diluted share, respectively, was largely a result of higher than expected contribution from AgFeed’s U.S. operations offset by poor performance of Jiangxi farms and persistently high feed costs. In addition, the company recorded a non-cash non-recurring $4.8 million goodwill impairment charge and $9.0 million fixed asset write down relating to the closure of eight underperforming farms, as well as certain non-cash audit adjustments. For the full year, the company reported revenues of $243.6 million and GAAP net loss of ($42.7) million or ($0.90) per fully diluted share.

While the closure of eight legacy farms is necessary to improve the overall profitability of AgFeed’s hog operations in China and is likely to have a negative impact on the company’s production numbers and financial performance in the 1H11, we continue to believe that AgFeed remains one of the most attractive long-term stories in the agriculture space. Consequently, we are maintaining our Market Outperform rating albeit with a lowered price target of $4.

Discussion

  • Hog Segment in China Continues to Face Headwinds Revenues from China-based hog operations declined 34.6% YoY from $110.3 million in FY09 to $72.2 in FY10. Hog production has been negatively impacted by persistently high feed costs, summer floods resulting in a loss of 16,000 market pigs, the spread of disease causing pre-mature marketing of hogs at lower weights (average 82.5 kg. compared to 87.8 kg. in 2009) and the halting of hog purchases from outside the company’s production system for finishing to market weight. The impact of floods, destruction of infrastructure and subsequent disease was particularly severe at Jiangxi and Guangxi production pods, leading to the management’s decision to close those farms and resulting in goodwill and asset impairments totaling $30.6 million in the 2H10.





    Notice Regarding Privacy and Confidentiality:


    This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

    Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

    Rodman & Renshaw, LLC may make a market in the securities being discussed.

    Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

    Member FINRA.
    Member SIPC.

Monday, March 21, 2011
Liquidity Requirements
We intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment, purchase of raw materials, and the expansion of our business, through cash flow provided by operations and funds raised through our Equity Purchase Agreement.

Thursday, March 17, 2011
Comments & Business Outlook

Fourth Quarter Highlights:

AgFeed reported a fourth quarter 2010 loss of $20.2 million, or $(0.42) per fully diluted share, on revenues of $99.5 million.

AgFeed's loss for 2010 is attributable to operating losses in its legacy Chinese hog production system of $14.9 million of which $8.9 million was attributable to eight legacy farms being closed and non-cash, non-recurring, write downs and reserves related to the restructuring of this business unit of $30.6 million.  This $30.6 million in asset write downs is comprised of $16.8 million of goodwill written off during the third quarter of 2010, $4.8 million of goodwill written off during the fourth quarter of 2010 and fixed asset written down during the fourth quarter of 2010 of $9.0 million.

John A. Stadler, AgFeed's Chairman and Interim President and Chief Executive Officer stated, "While we are pleased with the continued operating excellence demonstrated by the performance of both our animal nutrition business and our U.S. hog production business, the performance of our legacy Chinese hog production system is unacceptable. The team at M2P2 has demonstrated great success in executing our U.S. business plan and has positioned us to pursue growth opportunities that present themselves domestically.  This team is now fully engaged in leading the restructuring and execution of operational changes to return our legacy Chinese hog production system to profitability.  Our plan is to add to our team international professionals to firmly establish AgFeed as a global agribusiness."


Tuesday, February 15, 2011
Analyst Reports

Rodman and Renshaw on FEED                                02/15/2011

AgFeed Appoints New Chairman and Interim President and CEO.

 

Agfeed announced yesterday that its Board of Directors appointed John Stadler, formerly an independent director of AgFeed, as the new Chairman and interim President and CEO of AgFeed Industries, Inc. Mr. Stadler takes over from Mr. Songyan Li and Mr. Junhong Xiong, two of the five original founders of Agfeed. Mr. Song, who served as the Chairman of AgFeed since July 2004, will remain with the company as Vice Chairman of AgFeed’s hog production business. Mr. Xiong stepped down as President and CEO of AgFeed to focus on his role as the Chairman of AgFeed Animal Nutrition, Inc. (AANI), Agfeed’s animal feed business. We remind that AANI has filed an F-1 registration statement with the SEC and is currently awaiting SEC approval for an initial public offering. In addition to the above-mentioned management changes, Mr. Edward Pazdro, AgFeed’s interim CFO since November 2010 was confirmed as the permanent CFO of the company. 

We believe the transition from founders-managers to professional management with international experience, substantial industry expertise and financial savvy is an important step in building a sustainable and profitable business and increasing shareholder value. Moreover, we believe Mr. Stadler’s substantial senior management experience in hog production in the U.S. will be highly beneficial to AgFeed as it executes on its growth and operating strategy. Notably, Mr. Stadler’s past experience includes working as the President of Premium Standard Foods, a subsidiary of Premium Standard Farms, acquired by Smithfield (SFD, Not Rated), Chairman of the Board and CEO of Pine Ridge Farms, LLC (Private), a fully integrated pork producer located in Iowa, U.S., and board membership of BMI Ag Services, LLC., a U.S. agriculture consulting company. He is also one of the founders of Mariah Foods and a founder and former Chairman of M2P2, a U.S. based pork production company acquired by AgFeed in September 2010.

Reiterating Market Outperform rating and $6 price target 

AgFeed is currently trading at 5x our FY11 fully diluted EPS estimate of $0.49. Given the company’s efficiency initiatives, pending completion of western style farms, improving pricing environment for hogs, and the positive impact of M2P2 acquisition, we believe the company’s shares warrant higher valuation. We reiterate our Market Outperform/Speculative Risk rating and a price target of $6 based on the shares attaining a P/E level of 12x our FY11 fully diluted EPS estimate. Our current price target does not include the impact of western-style farms under construction in Xinyu and Dahua that will more than double the number of hogs available for sale in China by FY12. isks 

(1) High feed costs (2) Persistently low hog prices (3) Weak consumer demand for pork (4) Swine disease (5) Execution risk (6) Regulatory risk (7) Commodity hedging (8) Client concentration (9) Nonrenewal of M2P2 long-term hog procurement agreements.


Notice Regarding Privacy and Confidentiality: 

This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

Rodman & Renshaw, LLC may make a market in the securities being discussed.

Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

Member FINRA.
Member SIPC.


Monday, November 29, 2010
Investor Presentations
On November 29, 2010, members of management of AgFeed Industries, Inc. will make a presentation to the Hong Kong Stock Exchange.

Wednesday, November 10, 2010
Analyst Reports

Rodman & Renshaw on FEED

AgFeed posted a 3Q10 miss versus our estimates, primarily due to a $16.8 million (non-cash) impairment charge, a one-time tax charge of $1.3 million relating to the corporate reorganization taken to facilitate the planned animal nutrition carve-out, one-time professional fees and expenses of $1.1 million relating to the M2P2 acquisition, a 13% increase in corn prices compared to 3Q09 and weaker hog sales volume offset by strong feed segment performance and contribution from the M2P2 acquisition. We are reducing our 4Q10 forecasts due to the potentially lingering effects from the summer floods and heat that had negatively impacted hog inventory. While the quarterly results were below our expectations, we believe the company is taking the right strategic steps that will ensure long-term growth and profitability. We are maintaining our revenue and net income FY11 outlook. We are reducing our price target from $7 to $6 based on higher share count. Our 12-month price target is based on the shares attaining a P/E level of 12x our FY11 EPS estimate of $0.50. With over 100% upside from current price levels, we suggest that long-term investors take advantage of the pullback to accumulate positions. 

Discussion 

  • 3Q10 Results The company reported revenues of $53.6 million (~up 18.8% YoY) considerably above our forecast of $37.4 million. The variance from our estimate was a result of $10.3 million contribution to the quarterly results from the M2P2 that we assumed would not contribute significantly to this quarter’s results and higher than estimated revenues from the hog segment. The company reported a gross profit of $4.3 million translating into 8.1% gross profit margin compared to $7.6 million gross profit and 16.8% gross margin in the 3Q09. The decrease was attributable primarily to 13.0% increase in corn costs and lower hog selling prices during the quarter compared to the same period last year. The company reported GAAP net loss of $20.6 million or ($0.43) per share. Excluding the effect of a non-cash impairment charge (~ ($0.35) per share) and non-recurring charges amounting to a total of $2.4 million, the company lost ($0.03) per share. 
  • Impairment Charge and Other Non-recurring Charges A review of the legacy farms in China for goodwill impairment has revealed that while the farms can be operated profitably, they cannot sustain a high enough level of profitability to support the original acquisition values and resulting goodwill. Consequently, the management decided that an intangible asset write down of $16.8 million was necessary. We remind that most of the farms were acquired in 2008 when hog prices were at the historically high levels. Additionally, the company booked two significant non-recurring charges totaling $2.4 million relating to the planned animal nutrition carve-out and professional and consulting fees associated with the acquisition of M2P2.

    Notice Regarding Privacy and Confidentiality:

    This material has been prepared for informational purposes only. While it is based on information generally available to the public from sources we believe to be reliable, no representation is made that the subject information is accurate or complete. Past performance is not a guarantee nor does it necessarily serve as an indicator of future results. Price and availability are subject to change without notice. Additional information is available upon request.

    Since Rodman & Renshaw, LLC is not a tax advisor, transactions requiring tax consideration should be reviewed carefully with your tax advisor. Similarly, Rodman & Renshaw, LLC is not a law firm and provides no legal opinions or legal advice.

    Rodman & Renshaw, LLC may make a market in the securities being discussed.

    Rodman & Renshaw, LLC and/or its officers or employees may have positions in any of the securities of this (these) issuer(s).

    Member FINRA.
    Member SIPC.

Tuesday, November 9, 2010
Comments & Business Outlook

Third Quarter 2010

  • Revenues increased $8.5 million to $53.6 million, benefitting from the acquisition of M2P2 ($10.3 million from the date of its acquisition), an increase of $10.1 million from our animal feed nutrition business offset by the decline in revenues from our China hogs production business of $11.9 million. Since M2P2 was newly acquired, no revenues existed for the 2009 comparative period.
  • Net income decreased to $20.6 million.
  • EPS was a loss of ($0.43). vs $0.07.

AgFeed reports continued record results in its animal nutrition business segment with revenue and operating income increasing 59% and 37% respectively for the first three quarters of 2010 as compared to the same period in 2009 and achieving new record levels.  AgFeed's U.S. hog production system, which commenced through its acquisition of M2P2 late in the third quarter generated results in line with the Company's plans.  The performance of AgFeed's Chinese hog farms, acquired during 2007 and 2008, showed revenue declines and an operating loss.

AgFeed's Board of Directors, recognizing the weak performance of the Company's existing Chinese hog production system and the extreme operating conditions that the Company has experienced during 2010 has conducted a full review of its established Chinese hog production system, the farms acquired during 2007 and 2008, in connection with the preparation of its financial statements for the period ending September 30, 2010.  This review has resulted in a number of actions regarding the management and organization of the business and has caused the board to reach the conclusion that while this existing production system can be operated profitably it cannot sustain a high enough level of profitability to support the original acquisition values of these assets and the resulting goodwill.  As a result a determination has been made to write down the value of the intangible assets related to this production system by approximately $16.8 million.


Tuesday, September 14, 2010
Investor Presentations
On September 13, 2010, members of management of AgFeed Industries, Inc. made a presentation at the Rodman & Renshaw Annual Global Investment Conference

Monday, August 9, 2010
Comments & Business Outlook

2010 Second Quarter Highlights:

  • Revenues decreased 2.2% to $37.7 million.
  • Non-GAAP net income was a loss of $1.48 million vs. $1.67 million in the prior year second quarter.
  • Non-GAAP EPS was -$0.03 vs. $.04  in the prior year second quarter.

"The decrease in revenues was due to a 58.8% decrease in hog production revenue offset by a 136.8% increase in animal feed. Hog sales of 95,000 for three months ended June 30, 2010 which was a decrease from total hog sales of 184,000 hogs for the three months ended June 30, 2009. Animal feed sales volume for three months ended June 30, 2010 exceeded 41,315 metric tons representing a 77% increase in volume over the comparative period of 2009. However, the increase in revenue described above was offset by lower hog sales prices and increases in ingredient costs."

"The challenges of the market are evident in the results produced by our hog segment. Hog production shows a revenue decline of $15 million reflecting a decline of $3.4 million due to the rapid decline of market prices for hogs and $11.6 million due to our marketing 89,000 less hogs in 2010 versus 2009. The price component is indicative of the bringing to market an excessive number of hogs as a carryover from the Chinese New Year’s festival, response to increased costs and the impact of flooding in the regions we conduct business, including Jiangxi province and Guangxi province. The result is the revenue per hog declined to $131 versus $150 in 2009. In terms of volume, during the three months ended June 30, 2009, we followed a program of purchasing hogs from outside our system for finishing to market weights to take advantage of profitable market prices. In 2010, we did not purchase hogs under this program and in combination with vastly reduced revenue per hog and the reduction of our herd of over 19,000 animals due to flooding and its effects (over 16,000) and planned culling of 3,000 sows. Our hog volumes were 89,000 lower in the three months ended June 30, 2010 compared to the same period in 2009."


Liquidity Requirements
Our principal demands for liquidity are to increase capacity, purchase raw materials, distribute our products, consolidate our existing farm operations and make strategic acquisitions or investments in our industry as opportunities present themselves, as well as general corporate purposes.   We may seek additional funds from the capital markets to further support our genetics program to increase hog production and profitability.  We expect our genetics program to be accretive to earnings in the near future.
 
We intend to meet our liquidity requirements, including capital expenditures related to the purchase of equipment, purchase of raw materials, and the expansion of our business, through cash flow provided by operations and funds raised through cash investments.