References for “CMFO and Xianghe” article
This post is meant to serve as reference material for some of the discussion points in my post “CMFO and Xianghe: A Dubious Acquisition”.
I’m going to provide the primary source material behind various statements that I make in “CMFO and Xianghe: A Dubious Acquisition”. Most of the source material is from the Amended 8K that CMFO filed on March 16, 2010.
I will list the statement in italics, and then the supporting language from the SEC filing on which I base that statement.
Statement:
Xianghe’s product actually originated in January 2009, when Qiu Shang Jing paid Yellow Sea Fisheries Research Institute (YSFRI) $8,776 for “know-how” regarding the development of an algae-based drink.
Support from 8K dated 3/16/10:
“In January 2009, Mr. Qiu paid on behalf of [Xianghe] an amount of $8,776 (equivalent to RMB 60,000) to Yellow Sea Fisheries Research Institute (YSFRI), Chinese Academy of Fishery Sciences for the development of the algae-based drink know-how.”
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Statement:
In April 2009, Mr. Qiu leased office space from CMFO (CMFO waived the rent beginning in July) to set up his new Algae-drink company.
Support from 8K dated 3/16/10:
“In April 2009, the director and sole owner of the Company, Mr. Qiu leased an office space under an operating lease with Shishi Huabao Jixiang Water Products Co., Ltd (“Jixiang”) for a term of 3 years with fixed monthly rental, expiring in April 2012. According to a release letter signed between Jixiang and the Company, [Xianghe] was released from paying any rental for the period from July 28, 2009 (Inception) to December 31, 2009.”
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Statement:
On July 28, 2009, Mr. Qiu established Xianghe as a legal entity with $43,979 (that’s forty three thousand, nine hundred and seventy-nine dollars). On October 2009, Mr. Qiu contributed an additional $689,504 for a total registered capital of $733,483.
Support from 8k dated 3/16/10:
At the date of inception on July 28, 2009, the registered capital of the Company was $43,979 (RMB300,000), which was fully paid-up by Mr. Qiu.
On October 8, 2009, the Company approved to increase its registered capital from $43,979 to $733,483 (equivalent to RMB5,000,000) by additional cash contribution.
As of December 31, 2009, the registered and paid-in capital totaled $733,483.
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Statement:
Equally absurd is the fact that the “know-how” which Mr. Qiu purchased for $9k is now listed on CMFO’s balance sheet as $23.5mm.
Support from 10Q from 3/31/10:
The “know-how” is valued at $23,471,410
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Statement:
Content of section titled “More Dubious Financial Statements”
Support from 8K:
From the audited financial statements of Xianghe provided in the 8K
