Capital Award: aerial view of mega farm
Capital Award, Inc.

Capital Award, Inc. (CA) is a wholly owned subsidiary of Sino Agro Food, Inc. (SIAF). Currently engaged in modern fishery project management and consultancy services, CA provides consulting and management services to fish farms that are adopting the A Power Recirculating Aquaculture Systems (APRAS) technology and for the development of fish farms using APRAS technology. Capital Award commenced engaging in the marketing and sale of fish and seafood in 2011.

A Power Recirculating Aquaculture Systems

APRAS, now in its 11th generation, is an engineered, self-contained water treatment and re-circulating aquaculture system for the growing of aquatic animals on a commercial scale. It mainly consists of the A Power Grow Out Basin and the A Power Treatment Stack equipment, and operating techniques and procedures, which Capital Award has established as essential or desirable for the establishment, development, and operation of the A Power Recirculating Aquaculture System.

In an APRAS designed fish growing system; fish produced are free from diseases commonly associated with outdoor aquaculture methods. The system is fully integrated, automated and climate-controlled, and with strict water quality management, the APRAS fish growing system creates a stress-free environment for the fish. These ideal growing conditions enable improved productivity, offer mortality rates of less than 8% and a feed-to-fish conversion ratio of 1:1 for pellet feed and 2:1 for non-pellet feed.

The system is housed on land in an enclosed environment under fully controlled conditions, and by avoiding contact with any outdoor contamination and using treated water; APRAS produces healthy farmed fish guaranteed free of antibiotics and other pollutants.

Our environmentally friendly system recycles all water used in the farm. It enables the consistent year round production and supply of fish in the vicinity of urban areas. Less evolved recirculating aquaculture systems have been commercially applied in Europe and Australia for the past 30 years and earlier versions of the technology have been commercially developed and used in Australia since 1998. However APRAS is relatively new to Asian countries, including China.

Zhongshan Prawn Project: In March of 2014, the Company announced that Capital Award has entered a long term 1,300 Acre Prawn and Hydroponic Venture. CA will provide construction and development, as well as management, supervision, and training. In addition, CA expects to be the designated marketer and distributor of the project's end products. An FAQ about the project is available, as well as a presentation of the project plans in English. A version of the Zhongshan Prawn Project Information Brochure is also available in Chinese: 中山新虾场方.

Business Activities

Capital Award is the sole marketing, sales and distribution agent of APRAS for fishery and prawn farms, and purchases all marketable fish and prawns (or shrimp) from SIAF's farms, in turn selling them to wholesale markets. CA also supplies the farms with fingerling, baby or adult fish or prawns and stock feed.

Presently, our APRAS farms do not produce enough fish or prawns to warrant the establishment and sales of value added processing products or facilities given that the Chinese markets pay the best prices for live fish and prawns. Thus, CA sells only live fish and prawns. CA generates revenue from the sale of seafood bought from farms that are either subsidiaries of the Company or unincorporated project companies and from contracted growers in the manner described below:

Fish Farm 1: JFD is the owner and operator of Fish Farm 1; the Company presently owns a 75% equity interest in JFD.

Prawn Farm 1: EBAPCD is the proposed name of the future Sino-Foreign Joint Venture ("SFJV") company (subject to approval by relevant Chinese authorities under our application for SFJV status), established to own and operate Prawn Farm 1. EBAPCD generated revenue starting during the third quarter of 2013. Capital Award recognizes income from purchases of prawns from Prawn Farm 1 and selling them to the wholesale markets.

Prawn Farm 2: ZSAPP is the intended name of the future SFJV (subject to approval by relevant Chinese authorities under our application for SFJV status), established to own and operate Prawn Farm 2. ZSAPP has been generating revenues since May 2012. ZSAPP’s financial statements will not be consolidated with ours until approval of this SFJV is obtained, and one of our subsidiaries acquires a majority equity interest therein. However, during the interim period, Capital Award acts as its sole marketing agent and recognizes income from the following: (1) commissions earned from ZSAPP’s sales of prawn fingerling to regional growers, (2) sales of marketable sized prawns bought from ZSAPP and (3) management fees.

Fishery Research and Development

Fish sales generated from purchases with other open-dam growers contracted by Capital Award: Capital Award has contracted with local aquaculture farms to grow sleepy cod since 2012 based on a fixed production cost, with eel growing contracts commencing in the first quarter of 2013.

 

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