Sino Agro Food, Inc. - FORM 10-Q

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - Sino Agro Food, Inc.	v409705_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - Sino Agro Food, Inc.	v409705_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - Sino Agro Food, Inc.	v409705_ex31-2.htm
EXCEL - IDEA: XBRL DOCUMENT - Sino Agro Food, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

¨	TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________ to ___________________________

Commission file number: 000-54191

SINO AGRO FOOD, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		33-1219070
(State of Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification Number)

Room 3801, Block A, China Shine Plaza No. 9 Lin He Xi Road Tianhe District, Guangzhou City, P.R.C.		510610
(Address of Principal Executive Offices)		(Zip Code)

(860) 20 22057860

(Registrant’s Telephone Number, Including Area Code)

Copies to:

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32^nd Floor

New York, NY10006

Attn: Marc Ross, Esq.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” "non-accelerated filer" and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of May 12, 2015, there were 18,199,201 shares of our common stock issued and outstanding.

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements	F-1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Plan of Operations	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48

PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	48
SIGNATURES		49

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SINO AGRO FOOD, INC. AND SUBSIDIARIES

QUATERLY FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015

SINO AGRO FOOD, INC. AND SUBSIDIARIES

INDEX TO QUATERLY FINANCIAL STATEMENTS

	PAGES

CONSOLIDATED BALANCE SHEETS	F - 1
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME	F - 2
CONSOLIDATED STATEMENTS OF CASH FLOWS	F - 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	F - 4 - F - 36

SINO AGRO FOOD, INC.

CONSOLIDATED BALANCE SHEETS

		March 31,			December 31,
	Note	2015			2014
		(Unaudited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	6	$	10,932,661		$	3,031,447
Inventories	7		49,227,718			45,967,993
Cost and estimated earnings in excess of billings on uncompleted contracts	19		1,306,885			-
Deposits and prepaid expenses	8		76,791,239			75,951,591
Accounts receivable, net of allowance for doubtful accounts	9		103,774,371			104,503,071
Other receivables	10		60,944,553			52,305,260
Total current assets			302,977,427			281,759,362
Property and equipment
Property and equipment, net of accumulated depreciation	11		64,750,441			64,352,975
Construction in progress	12		87,710,314			69,120,277
Land use rights, net of accumulated amortization	13		62,763,167			63,322,202
Total property and equipment			215,223,922			196,795,454
Other assets
Goodwill	14		724,940			724,940
Proprietary technologies, net of accumulated amortization	15		11,327,787			11,480,298
Long term investment	16		814,067			817,127
Temporary deposits paid to entities for investments in Sino joint ventures companies	17		41,109,708			41,109,708
Total other assets			53,976,502			54,132,073

Total assets		$	572,177,851		$	532,686,889

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses		$	23,127,256		$	22,138,835
Billings in excess of costs and estimated earnings on uncompleted contracts	19		4,034,158			8,060,580
Due to a director			1,008,000			1,172,059
Series F Non-convertible preferred stock redemption payable	20		3,146,063			3,146,063
Other payables	21		11,084,679			11,695,982
Short term bank loan	22		4,394,210			4,410,727
Bonds payable	23		1,725,000			1,725,000
			48,519,366			52,349,246
Non-current liabilities
Other payables	21		4,797,332			-
Long term debts	22		2,297,421			2,306,057
Convertible bond payables	24		16,286,754			15,803,928
			23,381,507			18,109,985

Commitments and contingencies			-			-

Stockholders' equity
Preferred stock: $0.001 par value
(10,000,000 shares authorized, 7,000,100 issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Series A preferred stock: $0.001 par value	25		-			-
(100 shares designated, 100 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Series B convertible preferred stock: $0.001 par value)	25		7,000			7,000
(10,000,000 shares designated, 7,000,000 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Series F Non-convertible preferred stock: $0.001 par value)	25		-			-
(1,000,000 shares designated, 0 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively)
Common stock: $0.001 par value	25		18,069			17,162
(22,727,272 shares authorized 18,069,412 and 17,162,716 shares issued as of March 31, 2015 and December 31, 2014, respectively)
Additional paid - in capital			128,862,006			121,158,996
Retained earnings			297,015,949			273,261,108
Accumulated other comprehensive income			6,436,710			6,452,816
Treasury stock	25		(1,250,000	)		(1,250,000	)
Total Sino Agro Food, Inc. and subsidiaries stockholders' equity			431,089,734			399,647,082
Non - controlling interest			69,187,244			62,580,576
Total stockholders' equity			500,276,978			462,227,658
Total liabilities and stockholders' equity		$	572,177,851		$	532,686,889

F-1

SINO AGRO FOOD, INC.

CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED)

		Three months ended			Three months ended
	Note	March 31, 2015			March 31, 2014

Revenue
- Sale of goods		$	85,572,543		$	78,272,309
- Consulting and service income from development contracts			29,369,839			12,243,202
- Commission and management fee			534,068			412,278
			115,476,450			90,927,789
Cost of goods sold			(63,289,988	)		(55,864,529	)
Cost of services			(16,608,011	)		(6,503,412	)

Gross profit			35,578,451			28,559,848

General and administrative expenses			(4,565,907	)		(2,668,394	)
Net income from operations			31,012,544			25,891,454

Other income (expenses)

Government grant			83,180			113,232

Other income			62,646			3,258

Gain of extinguishment of debts	4		-			43,020

Interest expense			(783,606	)		(109,107	)

Net income (expenses)			(637,780	)		50,403

Net income before income taxes			30,374,764			25,941,857

Provision for income taxes	5		-			-

Net income			30,374,764			25,941,857
Less: Net (income) loss attributable to the non - controlling interest			(6,619,923	)		(5,153,938	)
Net income from continuing operations attributable to the Sino Agro Food, Inc. and subsidiaries			23,754,841			20,787,919
Other comprehensive (loss) income
Foreign currency translation loss			(29,361	)		(707,636	)
Comprehensive income			23,725,480			20,080,283
Less: other comprehensive (income) loss attributable to the non - controlling interest			13,255			113,521
Comprehensive income attributable to the Sino Agro Food, Inc. and subsidiaries		$	23,738,735		$	20,193,804

Earnings (loss) per share attributable to Sino Agro Food, Inc. and subsidiaries common stockholders:
Basic	30	$	1.39		$	1.45
Diluted	30	$	1.33		$	1.38

Weighted average number of shares outstanding:
Basic			17,114,989			14,308,910
Diluted			17,822,059			15,015,980

F-2

SINO AGRO FOOD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014 (UNAUDITED)

	Three months			Three months
	ended			ended
	March 31, 2015			March 31, 2014

Cash flows from operating activities
Net income for the period	$	30,374,764		$	25,941,857
Adjustments to reconcile net income from operations to net cash from operations:
Depreciation		802,338			534,803
Amortization		514,121			509,080
Gain on extinguishment of debts		-			(43,020	)
Common stock issued for services		630,033			33,436
Other amortized cost		809,868			50,000
Changes in operating assets and liabilities:
Increase in inventories		(3,259,725	)		(11,593,523	)
Increase in costs and estimated earnings in excess of billings on uncompleted contacts		(1,306,885	)		(4,528	)
(Increase) decrease in deposits and prepaid expenses		(597,390	)		6,600,205
Increase (decrease) in due to a director		6,340,525			(892,415	)
Increase in accounts payable and accrued expenses		988,421			7,587,849
Increase in other payables		4,186,029			4,967,306
Decrease (increase) in accounts receivable		728,700			(10,700,017	)
(Decrease) increase in billings in excess of costs and estimated earnings on uncompleted contracts		(4,026,422	)		476,053
Increase in other receivables		(8,639,293	)		(2,741,573	)
Net cash provided by operating activities		27,545,084			20,725,513
Cash flows from investing activities
Purchases of property and equipment		(1,451,880	)		(907,666	)
Payment for construction in progress		(18,845,219	)		(5,248,183	)
Net cash used in investing activities		(20,297,099	)		(6,155,849	)
Cash flows from financing activities
Proceeds from long term debts		-			2,438,192
Net cash provided by financing activities		-			2,438,192
Effects on exchange rate changes on cash		653,229			431,747
Increase in cash and cash equivalents		7,901,214			17,439,603
Cash and cash equivalents, beginning of period		3,031,447			1,327,274
Cash and cash equivalents, end of period	$	10,932,661		$	18,766,877
Supplementary disclosures of cash flow information:
Cash paid for interest	$	119,181		$	109,107
Cash paid for income taxes	$	-		$	-
Non - cash transactions
Common stock issued for settlement of debts	$	-		$	5,964,195
Common stock issued	$	7,703,917		$	-
Common stock issued for services and employee compensation	$	-		$	133,744
Transfer to property and equipment from construction in progress	$	-		$	1,784,678

The accompanying notes are an integral part of these consolidated financial statements.

F-3

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

CORPORATE INFORMATION

Sino Agro Food, Inc. (the “ Company ” or “ SIAF ”) (formerly known as Volcanic Gold, Inc. and A Power Agro Agriculture Development, Inc.) was incorporated on October 1, 1974 in the State of Nevada, United States of America.

The Company was engaged in the mining and exploration business but ceased its mining and exploring business on October 14, 2005. On August 24, 2007, the Company entered into a Merger and Acquisition Agreement with Capital Award Inc., a Belize corporation (“ CA ”) and its subsidiaries Capital Stage Inc. (“ CS ”) and Capital Hero Inc. (“ CH ”). Effective the same date, CA completed a reverse merger transaction with SIAF. SIAF acquired all the outstanding common stock of CA from Capital Adventure, a shareholder of CA, for 32,000,000 shares of the Company’s common stock.

On August 24, 2007 the Company changed its name from Volcanic Gold, Inc. to A Power Agro Agriculture Development, Inc. On December 8, 2007, the Company changed its name to Sino Agro Food, Inc.

On September 5, 2007, the Company acquired three existing businesses in the People’s Republic of China (the “P.R.C.” ):

(a)

Hang Yu Tai Investment Limited (“ HYT ”), a company incorporated in Macau, the owner of a 78% equity interest in ZhongXingNongMu Ltd (“ ZX ”), a company incorporated in the P.R.C.;

(b)

Tri-way Industries Limited (“ TRW ”), a company incorporated in Hong Kong;

(c)

Macau Eiji Company Limited (“ MEIJI”), a company incorporated in Macau, the owner of 75% equity interest in Enping City Juntang Town Hang Sing Tai Agriculture Co. Ltd. (“ HST ”), a P.R.C. corporate Sino-Foreign joint venture. HST was dissolved in 2010.

On November 27, 2007, MEIJI and HST established a corporate Sino - Foreign joint venture, Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd. (“ JHST ”), a company incorporated in the P.R.C. with MEIJI owning a 75% interest and HST owning a 25% interest.

On November 26, 2008, SIAF established Pretty Mountain Holdings Limited (“ PMH ”), a company incorporated in Hong Kong with an 80% equity interest. On May 25, 2009, PMH formed a corporate Sino-Foreign joint venture, Qinghai Sanjiang A Power Agriculture Co. Ltd. (“ SJAP ”), incorporated in the P.R.C., of which PMH owns a 45% equity interest. At the time, the remaining 55% equity interest in SJAP was owned by the following entities:

•

Qinghai Province Sanjiang Group Company Limited (English translation) (“ Qinghai Sanjiang ”), a company owned by the P.R.C with major business activities in the agriculture industry; and

•

Guangzhou City Garwor Company Limited (English translation) (“ Garwor ”), a private limited company incorporated in the P.R.C, specializing in sales and marketing.

SJAP is engaged in the business of manufacturing bio-organic fertilizer, livestock feed and development of other agriculture projects in the County of Huangyuan, in the vicinity of the Xining City, Qinghai Province, P.R.C.

In September 2009, the Company carried out an internal reorganization of its corporate structure and business, and formed a 100% owned subsidiary, A Power Agro Agriculture Development (Macau) Limited (“ APWAM ”), which was formed in Macau. APWAM then acquired PMH’s 45% equity interest in SJAP. By virtue of the acquisition, APWAM assumed all obligations and liabilities of PMH under the Sino Foreign Joint Venture Agreement. On May 7, 2010, Qinghai Sanjiang sold and transferred its equity interest in SJAP to Garwor. The State Administration for Industry and Commerce of Xining City Government of the PRC approved the sale and transfer. As a result, APWAM owned 45% of SJAP and Garwor owned the remaining 55%. This remains the case as of the date of this report (the “ Report ”).

On September 9, 2010, an application was submitted by the Company to the Companies Registry of Hong Kong for deregistration of PMH under Section 291AA of the Hong Kong Companies Ordinance. On January 28, 2011, PMH was dissolved.

F-4

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

CORPORATE INFORMATION (CONTINUED)

On February 15, 2011 and March 29, 2011, the Company entered into an agreement and a memorandum of understanding (an “ MOU” ), respectively, to sell 100% equity interest in HYT group (including HYT and ZX) to Mr. Xin Ming Sun, a director of ZhongXingNong Nu Co., Ltd for $45,000,000, with effective date of January 1, 2011.

On February 28, 2011, the Company applied to form Enping City Bi Tao A Power Prawn Culture Development Co Limited (“ EBAPCD ”) , and the Company would indirectly own a 25% equity interest in future Sino Joint Venture Company (pending approval).

On February 28, 2011, TRW applied to form a corporate joint venture, Enping City Bi Tao A Power Fishery Development Co., Limited (“ EBAPFD ”), incorporated in the PRC. TRW owned a 25% equity interest in EBAPFD. On November 17, 2011, TRW formed Jiang Men City A Power Fishery Development Co., Limited (“ JFD ”) in which it acquired a 25% equity interest, while withdrawing its 25% equity interest in EBAPFD. As of December 31, 2011, the Company had invested for total cash consideration of $1,258,607 in JFD. JFD operates an indoor fish farm. On January 1, 2012, the Company acquired an additional 25% equity interest in JFD for total cash consideration of $1,662,365. As of January 1, 2012, the Company had consolidated the assets and operations of JFD. On April 1, 2012, the Company acquired an additional 25% equity interest in JFD for the total cash consideration of $1,702,580. These acquisitions were at our option according the terms of the original development agreement. The Company presently owns a 75% equity interest in JFD, representing majority of voting rights and controls its board of directors.

On April 15, 2011, MEIJI applied to form Enping City A Power Cattle Farm Co., Limited (“ ECF ”), all of which the Company would indirectly own a 25% equity interest in on November 17, 2011. On January 1, 2012, the Company had invested $1,076,489 in ECF and the amount was settled in contra against accounts receivable due from ECF. On September 17, 2012 MEIJI formed Jiang Men City Hang Mei Cattle Farm Development Co., Limited (“ JHMC ”) and acquired additional 50% equity interest for the total cash consideration of $2,944,176 on September 30, 2012 while withdrawing its 25% equity interest in ECF. This acquisition was at our option according to the terms of the original development agreement. The Company presently owns 75% equity interest in JHMC, representing majority of voting right and controls its board of directors. As of September 30, 2012, the Company had consolidated the assets and operations of JHMC. Up to March 31, 2015, MEIJI further invested in JHMC of $400,000 in JHMC.

On July 18, 2011, the Company formed Hunan Shenghua A Power Agriculture Co., Limited (“ HSA ”), in which the Company owns a 26% equity interest, and SJAP owns a 50% equity interest with the Chinese partner owning the remaining 24%. As of March 31, 2015, MEIJI and SJAP total investment in HSA were $857,808 and 629,344, respectively.

On November 12, 2013, the Company acquired a shell company, Goldcup9203 AB, incorporated in Sweden, in which the Company owns a 100% equity interest. Goldcup 9203 AB changed its name to Sino Agro Food Sweden AB (publ) (“ SAFS ”) As of March 31, 2015, the Company invested $77,664 in SAFS.

SJAP formed Qinghai Zhong He Meat Products Co., Limited (“QZH”) , with SJAP would owning 100% equity interest. As of March 31, 2015, the SJAP’s total investment in QZH was $487,805.

The Company’s principal executive office is located at Room 3801, Block A, China Shine Plaza, No. 9 Lin He Xi Road, Tianhe District, Guangzhou City, Guangdong Province, P.R.C, 510610.

The nature of the operations and principal activities of the Company and its subsidiaries are described in Note 2.2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.1

FISCAL YEAR

The Company has adopted December 31 as its fiscal year end.

F-5

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

2.2

REPORTING ENTITIES

Name of subsidiaries	Place of incorporation	Percentage of interest	Principal activities

Capital Award Inc. (“CA”)	Belize	100% (12.31.2014: 100%) directly	Fishery development and holder of A-Power Technology master license.

Capital Stage Inc. (“CS”)	Belize	100% (12.31.2014: 100%) indirectly	Dormant

Capital Hero Inc. (“CH”)	Belize	100% (12.31.2014: 100%) indirectly	Dormant

Sino Agro Food Sweden AB (“SAFS”)	Sweden	100% (12.31.2014: 100%) directly	Dormant

Tri-way Industries Limited (“TRW”)	Hong Kong, P.R.C.	100% (12.31.2014: 100%) directly	Investment holding, holder of enzyme technology master license for manufacturing of livestock feed and bio-organic fertilizer and has not commenced its planned business of fish farm operations.

Macau Eiji Limited (“MEIJI”)	Macau, P.R.C.	100% (12.31.2014: 100%) directly	Investment holding, cattle farm development, beef cattle and beef trading
A Power Agro Agriculture Development (Macau) Limited (“APWAM”)	Macau, P.R.C.	100% (12.31.2014: 100%) directly	Investment holding

Jiang Men City Heng Sheng Tai Agriculture Development Co. Ltd (“JHST”)	P.R.C.	75% (12.31.2014: 75%) indirectly	Hylocereus Undatus Plantation (“HU Plantation”).

Jiang Men City A Power Fishery Development Co., Limited (“JFD”)	P.R.C.	75% (12.31.2014: 75%) indirectly	Fish cultivation

Jiang Men City Hang Mei Cattle Farm Development Co., Limited (“JHMC”)	P.R.C.	75% (12.31.2014: 75%) indirectly	Beef cattle cultivation

Hunan Shenghua A Power Agriculture Co., Limited (“HSA”)	P.R.C.	76% (12.31.2014: 76%) indirectly	Manufacturing of organic fertilizer, livestock feed, and beef cattle and sheep cultivation, and plantation of crops and pastures

Name of variable interest entity	Place of incorporation	Percentage of interest	Principal activities

Qinghai Sanjiang A Power Agriculture Co., Ltd (“SJAP”)	P.R.C.	45% (12.31.2014: 45%) indirectly	Manufacturing of organic fertilizer, livestock feed, and beef cattle and plantation of crops and pastures

Qinghai Zhong He Meat Products Co., Ltd (“QZH”)	P.R.C.	100% (12.31.2014:100%) indirectly	Cattle slaughter

F-6

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.3

BASIS OF PRESENTATION

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“ US GAAP ”).

Reverse stock split and new conversion rate of Series B preferred stock to share of common stock

On December 16, 2014, the Company implemented a 9.9-for-1 reverse stock split. On December 17, 2014, the Company implemented new conversion rate of 9.9 for 1 share of common stock. All share information contained within this report, including consolidated balance sheets, consolidated statements of income and other comprehensive income, and footnotes have been retroactively adjusted for the effects of reverse stock split and new conversion rate of Series B preferred stock to share of common stock.

2.4

BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of the Company, its subsidiaries CA, CS, CH, TRW, MEIJI, JHST, JFD, JHMC, HSA, APWAM, SAFS and its variable interest entity SJAP and QZH. All material inter-company transactions and balances have been eliminated in consolidation.

SIAF, CA, CS, CH, TRW, MEIJI, JHST, JFD, JHMC, HSA, APWAM, SAFS, SJAP and QZH are hereafter referred to as (the “Company”).

2.5

BUSINESS COMBINATION

The Company adopted the accounting pronouncements relating to business combination (primarily contained in ASC Topic 805 “Business Combinations”), including assets acquired and liabilities assumed on arising from contingencies. These pronouncements established principles and requirement for how the acquirer of a business recognizes and measures in its financial statements he identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquisition as well as provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. In addition, these pronouncements eliminate the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria and require an acquirer to develop a systematic and rational basis for subsequently measuring and accounting for acquired contingencies depending on their nature. The Company’s adoption of these pronouncements will have an impact on the manner in which it accounts for any future acquisitions.

2.6

NON - CONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS

The Company adopted the accounting pronouncement on non-controlling interests in consolidated financial statements, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance is primarily contained in ASC Topic “Consolidation.” It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated financial statements. The adoption of this standard has not had material impact on the Company’s consolidated financial statements.

2.7

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with US GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods covered thereby. Actual results could differ from these estimates. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. The following are some of the areas requiring significant judgments and estimates: determinations of the useful lives of assets, estimates of allowances for doubtful accounts, cash flow and valuation assumptions in performing asset impairment tests of long-lived assets, estimates of the realization of deferred tax assets and inventory reserves.

F-7

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.8

REVENUE RECOGNITION

Government grants are recognized when (i) the Company has substantially accomplished what must be done pursuant to the terms of the grant that are established by the local government; and (ii) the Company receives notification from the local government that the Company has satisfied all of the requirements to receive the government grants; and (iii) the amounts are received.

Multiple-Element Arrangements

To qualify as a separate unit of accounting under ASC 605-25 “ Multiple Element Arrangements ”, the delivered item must have value to the customer on a standalone basis. The significant deliverables under the Company’s multiple-element arrangements are consulting and service under development contract, commission and management service.

Revenues from the Company’s consulting and services under development contracts are performed under fixed-price contracts. Revenues under long-term contracts are accounted for under the percentage-of-completion method of accounting in accordance with the Financial Accounting Standards Board (“ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 605, Revenue Recognition (“ASC 605”). Under the percentage-of-completion method, the Company estimates profit as the difference between total estimated revenue and total estimated cost of a contract and recognizes that profit over the contract term. The percentage of costs incurred determines the amount of revenue to be recognized. Payment terms are generally defined by the installation contract and as a result may not match the timing of the costs incurred by the Company and the related recognition of revenue. Such differences are recorded as either costs or estimated earnings in excess of billings on uncompleted contracts or billings in excess of costs and estimated earnings on uncompleted contracts. The Company determines a customer’s credit worthiness at the time an order is accepted. Sudden and unexpected changes in a customer’s financial condition could put recoverability at risk.

The percentage of completion method requires the ability to estimate several factors, including the ability of the customer to meet its obligations under the contract, including the payment of amounts when due. If the Company determines that collectability is not assured, the Company will defer revenue recognition and use methods of accounting for the contract such as the completed contract method until such time as the Company determines that collectability is reasonably assured or through the completion of the project.

For fixed-price contracts, the Company uses the ratio of costs incurred to date on the contract to management’s estimate of the contract’s total costs, to determine the percentage of completion on each contract. This method is used as management considers expended costs to be the best available measure of progression of these contracts. Contract costs include all direct material, subcontract and labor costs and those indirect costs related to contract performance, such as supplies, tool repairs and depreciation. The Company accounts for maintenance and repair services under the guidance of ASC 605 as the services provided relate to construction work. Contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract. Changes in job performance, job conditions, and estimated profitability arising from contract penalty, change orders and final contract settlements may result in revisions to the estimated profit ability during the contract. These changes, which include contracts with estimated costs in excess of estimated revenues, are recognized as contract costs in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. At the point the Company anticipates a loss on a contract, the Company estimates the ultimate loss through completion and recognizes that loss in the period in which the loss was identified.

The Company does not provide warranties to customers on a basis customary to the industry, however, customers can claim warranty directly from product manufacturers for defects in equipment or products. Historically, the Company has experienced no warranty claims.

The Company provides various management services to its customers in the P.R.C. based on a negotiated fixed-price contract. The clients usually pay the fees when the services contract is signed and services are rendered. The Company recognizes these services-based revenues from contracts when (i) management services are rendered; (ii) clients recognize the completion of services; and (iii) collectability is reasonably assured. Fees received in advance are recorded as deferred revenue under current liabilities.

F-8

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.9

COST OF GOODS SOLD AND COST OF SERVICES

Cost of goods sold consists primarily of direct purchase cost of merchandise goods, and related levies. Cost of services consist primarily direct cost and indirect cost incurred to date for development contracts and provision for anticipated losses for development contracts.

2.10

SHIPPING AND HANDLING

Shipping and handling costs related to cost of goods sold are included in general and administrative expenses, which totaled $8,693 and $12,254 for the three months ended March 31, 2015 and 2014, respectively.

2.11

ADVERTISING

Advertising costs are included in general and administrative expenses, which totaled $708,843 and $262 for the three months ended March 31, 2015 and 2014, respectively.

2.12

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are included in general and administrative expenses, which totaled $0 and $0 for the three months ended March 31, 2015 and 2014, respectively.

2.13

FOREIGN CURRENCY TRANSLATION AND OTHER COMPREHENSIVE INCOME

The reporting currency of the Company is the U.S. dollar. The functional currency of the Company is the Chinese Renminbi (RMB).

For those entities whose functional currency is other than the U.S. dollar, all assets and liabilities are translated into U.S. dollars at the exchange rate on the balance sheet date; shareholders’ equity is translated at historical rates and items in the statements of income and of cash flows are translated at the average rate for the period. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported in the statements of cash flows will not necessarily agree with changes in the corresponding balances in the balance sheets. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the statements of shareholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of income and comprehensive income, as incurred.

Accumulated other comprehensive income in the consolidated statement of shareholders’ equity amounted to $6,436,710 as of March 31, 2015 and $6,452,816 as of December 31, 2014. The balance sheet amounts with the exception of equity as of March 31, 2015 and December 31, 2014 were translated using an exchange rate of RMB 6.14 to $1.00 and RMB 6.15 to $1.00, respectively. The average translation rates applied to the statements of income and other comprehensive income and of cash flows for the three months ended March 31, 2015 and 2014 were RMB 6.14 to $1.00 and RMB 6.12 to $1.00, respectively.

2.14

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents kept with financial institutions in the P.R.C. are not insured or otherwise protected. Should any of those institutions holding the Company’s cash become insolvent, or should the Company become unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution.

2.15

ACCOUNTS RECEIVABLE

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Reserves are recorded primarily on a specific identification basis.

The standard credit period for most of the Company’s clients is three months. The collection period over 1 year is classified as long-term accounts receivable. Management evaluates the collectability of the receivables at least quarterly. Provision for doubtful accounts as of March 31, 2015 and December 31, 2014 are $0.

F-9

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.16

INVENTORIES

Inventories are valued at the lower of cost (determined on a weighted average basis) and net realizable value.

Costs incurred in bringing each product to its location and conditions are accounted for as follows:

(a)

raw materials - purchase cost on a weighted average basis;

(b)

manufactured finished goods and work-in-progress - cost of direct materials and labor and a proportion of manufacturing overhead based on normal operation capacity but excluding borrowing costs; and

(c)

retail and wholesale merchandise finished goods - purchase cost on a weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs for completion and the estimated costs necessary to make the sale.

2.17

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the cost of replacing parts that are eligible for capitalization when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognized in the carrying amount of the property and equipment as a replacement only if it is eligible for capitalization. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each financial year end.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.

Plant and machinery	5 - 10 years
Structure and leasehold improvements	10 - 20 years
Mature seeds and herbage cultivation	20 years
Furniture and equipment	2.5 - 10 years
Motor vehicles	5 -10 years

An item of property and equipment is removed from the accounts upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on disposal of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the consolidated statements of income in the period the item is disposed.

2.18

GOODWILL

Goodwill is an asset representing the fair economic benefits arising from other assets acquired in a business combination that are not individually identified or separately recognized. Goodwill is tested for impairment on an annual basis at the end of the Company’s fiscal year, or when impairment indicators arise. The Company uses a fair-value-based approach to test for impairment at the level of each reporting unit. The Company directly acquired MEIJI, which is the holding company of JHST that operates the Hu Plantation. As a result of this acquisition, the Company recorded goodwill in the amount of $724,940. This goodwill represents the fair value of the assets acquired in these acquisitions over the cost of the assets acquired.

2.19

LONG TERM INVESTMENT

On October 29, 2014, the Company invested in Huangyuan County Rural Credit Union (“RCU”), Huangyuan County , Xining City, Qinghai Province, the P.R.C. RCU is engaged in the financing and crediting business to agricultural projects for local farmers. The Company has a 5% stake in RCU. The Company has no representative on the board of directors to oversee corporate operations. The Company accounts for its long term investment at cost.

F-10

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.20

PROPRIETARY TECHNOLOGIES

A master license of stock feed manufacturing technology was acquired and the costs of acquisition are capitalized as proprietary technologies when technological feasibility has been established. Cost of acquisition of stock feed manufacturing technology master license is amortized using the straight-line method over its estimated life of 20 years.

An aromatic cattle-feeding formula was acquired and the costs of acquisition are capitalized as proprietary technologies when technological feasibility has been established. Cost of acquisition on aromatic cattle-feeding formula is amortized using the straight-line method over its estimated life of 25 years.

The cost of sleepy cods breeding technology license is capitalized as proprietary technologies when technological feasibility has been established. Cost of granting sleepy cods breeding technology license is amortized using the straight-line method over its estimated life of 25 years.

Bacterial cellulose technology license and related trade mark are capitalized as proprietary technologies when technological feasibility has been established. Cost of license and related trade mark is amortized using the straight-line method over its estimated life of 20 years.

The Company has determined that technological feasibility is established at the time a working model of products is completed. Proprietary technologies are intangible assets of finite lives. Management evaluates the recoverability of proprietary technologies on an annual basis at the end of the Company’s fiscal year, or when impairment indicators arise. As required by ASC Topic 350 “Intangible - Goodwill and Other”, the Company uses a fair-value-based approach to test for impairment.

2.21

CONSTRUCTION IN PROGRESS

Construction in progress represents direct costs of construction as well as acquisition and design fees incurred. Capitalization of these costs ceases and the construction in progress is transferred to property and equipment when substantially all the activities necessary to prepare the assets for their intended use are completed. No depreciation is provided until construction is completed and the asset is ready for its intended use.

2.22

LAND USE RIGHTS

Land use rights represent acquisition of rights to agricultural land from farmers and are amortized on the straight-line basis over their respective lease periods. The lease period of agricultural land is in the range from 10 to 60 years. Land use rights purchase prices were determined in accordance with the P.R.C. Government’s minimum lease payments on agricultural land and mutually agreed to terms between the Company and the vendors.

2.23

CORPORATE JOINT VENTURE

A corporation formed, owned, and operated by two or more businesses as a separate and discrete business or project (venture) for their mutual benefit is considered to be a corporate joint venture. Investee entities, in which the Company can exercise significant influence, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the Company’s share of the earnings or losses of these companies is included in net income.

A loss in value of an investment that is other than a temporary decline is recognized as a charge to operations. Evidence of a loss in value might include, but would not necessarily be limited to, the absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.

F-11

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.24

VARIABLE INTEREST ENTITY

A variable interest entity (“ VIE ”) is an entity (investee) in which the investor has obtained less than a majority interest, according to the Financial Accounting Standards Board (FASB). A VIE is subject to consolidation if a VIE meets one of the following three criteria as elaborated in ASC Topic 810-10, Consolidation:

(a)

equity-at-risk is not sufficient to support the entity’s activities;

(b)

as a group, the equity-at-risk holders cannot control the entity; or

(c)

the economics do not coincide with the voting interest.

If a firm is the primary beneficiary of a VIE, the holdings must be disclosed on the balance sheet. The primary beneficiary is defined as the person or company with the majority of variable interests. A corporation formed, owned, and operated by two or more businesses (ventures) as a separate and discrete business or project (venture) for their mutual benefit is defined as a joint venture.

2.25

TREASURY STOCK

Treasury stock means shares of a corporation’s own stock that have been issued and subsequently reacquired by the corporation. Converting outstanding shares to treasury shares does not reduce the number of shares issued but does reduce the number of shares outstanding. These shares are not eligible to receive dividends. Accounting for excesses and deficiencies on treasury stock transactions is governed by ASC 505-30-30.

State laws and federal agencies closely regulate transactions involving a company’s own capital stock, so the purchase of outstanding shares must have a legitimate purpose. Some of the most common reasons for purchasing outstanding shares are as follows:

(a)

to meet additional stock needs for various reasons, including newly implemented stock option plans, stock for convertible bonds or convertible preferred stock, or a stock dividend.

(b)

to make more shares available for acquisitions of other entities.

The cost method of accounting for treasury shares has been adopted by the Company. The purchase of outstanding shares and thus converting them into treasury shares is treated as a temporary reduction in shareholders’ equity in view of the expectation to reissue the shares instead of retiring them. When the Company reissues the treasury shares, the temporary account is eliminated. The cost of acquiring outstanding shares for converting into treasury shares is charged to a contra account, in this case a contra equity account that reduces the stockholder equity balance.

2.26

INCOME TAXES

The Company accounts for income taxes under the provisions of ASC Topic 740 “Accounting for Income Taxes.” Under ASC Topic 740, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The provision for income tax is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

ASC Topic 740 also prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or for one expected to be taken, in a tax return. ASC Topic 740 also provides guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to unrecognized tax benefits will be recorded as tax expense.

F-12

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.27

POLITICAL AND BUSINESS RISK

The Company’s operations are carried out in the P.R.C. Accordingly, the political, economic and legal environment in the P.R.C. may influence the Company’s business, financial condition and results of operations by the general state of the P.R.C.’s economy. The Company’s operations in the P.R.C. are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

2.28

CONCENTRATION OF CREDIT RISK

Cash includes cash at banks and demand deposits in accounts maintained with banks within the P.R.C. Total cash in these banks as of March 31, 2015 and December 31, 2014 amounted to $2,814,677 and $10,762,208 respectively, none of which is covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks to its cash in bank accounts.

The Company had 5 major customers (A, B, C, D & E) whose business individually represented the following percentages of the Company’s total revenue for the years indicated:

	Three months			Three months
	ended			ended
	March 31, 2015			March 31, 2014

Customer A		20.65	%		29.54	%
Customer B		18.54	%		10.31	%
Customer C		14.80	%		15.60	%
Customer D		9.74	%		5.12	%
Customer E		8.13	%		-
Customer F		-			9.88	%
		71.86	%		70.45	%

		Percentage of revenue			Amount
Customer A	Fishery development and Corporate and others division		20.65	%	$	23,851,276
Customer B	Fishery division		18.54	%	$	21,404,582
Customer C	Organic Fertilizer division		14.80	%	$	17,091,160

Accounts receivable are derived from revenue earned from customers located primarily in the P.R.C. The Company performs ongoing credit evaluations of customers and has not experienced any material losses to date.

The Company had 5 major customers whose accounts receivable balance individually represented the following percentages of the Company’s total accounts receivable:

	March 31, 2015			December 31, 2014

Customer A		20.17	%		21.21	%
Customer B		11.46	%		13.51	%
Customer C		10.95	%		9.68	%
Customer D		7.17	%		7.12	%
Customer E		6.00	%		10.23	%
		55.75	%		61.75	%

As of March 31, 2015, amounts due from customers A, B and C are $20,930,515, $11,893,849, and $11,362,873, respectively. The Company has not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial difficulties of its major customers.

F-13

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.29

IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS

In accordance with ASC Topic 360, “Property, Plant and Equipment,” long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company reviews the carrying amount of its long-lived assets, including intangibles, for impairment, each reporting period. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is considered not recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. As of March 31, 2015 and December 31, 2014, the Company determined no impairment losses were necessary.

2.30

EARNINGS PER SHARE

As prescribed in ASC Topic 260 “ Earnings per Share, ” Basic Earnings per Share (“ EPS ”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period.

ASC 260-10-55 requires that stock dividends or stock splits be accounted for retroactively if the stock dividends or stock splits occur during the year, or retroactively if the stock dividends or stock splits occur after the end of the period but before the release of the financial statements, by considering it outstanding of the entirety of each period presented. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the year.

For the three months ended March 31, 2015 and 2014, basic earnings per share attributable to Sino Agro Food, Inc. and subsidiaries’ common stockholders amount to $1.39 and $1.45 respectively. For the three months ended March 31, 2015 and 2014, diluted earnings per share attributable to Sino Agro Food, Inc. and its subsidiaries’ common stockholders amounted to $1.33 and $1.38, respectively

2.31

ACCUMULATED OTHER COMPREHENSIVE INCOME

ASC Topic 220 “Comprehensive Income” establishes standards for reporting and displaying comprehensive income and its components in financial statements. Comprehensive income is defined as the change in stockholders’ equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The comprehensive income for all periods presented includes both the reported net income and net change in cumulative translation adjustments.

2.32

RETIREMENT BENEFIT COSTS

P.R.C. state managed retirement benefit programs are defined contribution plans and the payments to the plans are charged as expenses when employees have rendered service entitling them to the contribution made by the employer.

2.33

STOCK-BASED COMPENSATION

The Company has adopted both ASC Topic 718, “Compensation - Stock Compensation” and ASC Topic 505-50, “Equity-Based Payments to Non- Employees” using the fair value method in which an entity issues its equity instruments to acquire goods and services from employees and non-employees. Stock compensation for stock granted to non-employees has been determined in accordance with this accounting standard and the accounting standard regarding accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling goods or services, as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured. This accounting standard allows the “simplified” method to determine the term of employee options when other information is not available. Under ASC Topic 718 and ASC Topic 505-50, stock compensation expenses is measured at the grant date on the value of the option or restricted stock and is recognized as expenses, less expected forfeitures, over the requisite service period, which is generally the vesting period.

F-14

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.34

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value under U.S. GAAP, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

Level 2

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3

Pricing inputs that are generally observable inputs and not corroborated by market data.

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accrued expenses, approximate their fair values because of the short maturity of these instruments. The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value as of March 31, 2015 or December 31, 2014, nor gains or losses are reported in the statements of income and comprehensive income that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the three months ended March 31, 2015 or 2014.

2.35

NEW ACCOUNTING PRONOUNCEMENTS

The Company does not expect any recent accounting pronouncements to have a material effect on the Company’s financial position, results of operations, or cash flows.

In April 2014, the FASB issued ASU 2014-08, “Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity,” which provides a narrower definition of discontinued operations than under existing U.S. GAAP. ASU 2014-08 requires that only a disposal of a component of an entity, or a group of components of an entity, that represents a strategic shift that has, or will have, a major effect on the reporting entity’s operations and financial results should be reported in the consolidated financial statements as discontinued operations. ASU 2014-08 also provides guidance on the consolidated financial statement presentations and disclosures of discontinued operations. The new guidance is effective prospectively for the Company to all new disposals of components and new classification as held for sale beginning April 1, 2015. The Company is evaluating the effects, if any, of the adoption of this guidance will have on the consolidated financial position, results of operations or cash flows.

F-15

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

2.35

NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)

In May 2014, the Financial Accounting Standards Board issued guidance related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard will be effective for us in the first quarter of 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation”. The guidance eliminates the definition of a development stage entity thereby removing the incremental financial reporting requirements from U.S. GAAP for development stage entities, primarily presentation of inception to date financial information. The provisions of the amendments are effective for annual reporting periods beginning after December 15, 2014, and the interim periods therein. However, early adoption is permitted. Accordingly, the Company has adopted this standard as of July 31, 2014.

In August 2014, the FASB issued ASU No. 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern." ASU 2014-15 will explicitly require management to assess an entity's ability to continue as a going concern, and to provide related footnote disclosure in certain circumstances. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and early adoption is permitted. Management is currently evaluating the impact of this pronouncement on our consolidated financial statements.

In November 2014, FASB issued ASU No. 2014-17, (Business Combinations (Topic 805): Pushdown Accounting (a consensus of the FASB Emerging Issues Task Force.) The amendments in this update provide an acquired entity with an option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The adoption of ASU 2014-17 did not have a material impact on the Company’s consolidated financial statements.

In January 2015, FASB issued ASU No. 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items. This Update eliminates from GAAP the concept of extraordinary items. The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. A reporting entity may apply the amendments prospectively. A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have material impact on the Company’s consolidated financial statements.

In February 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis. The new consolidation standard changes the way reporting enterprises evaluate whether (a) they should consolidate limited partnerships and similar entities, (b) fees paid to a decision maker or service provider are variable interests in a variable interest entity ("VIE"), and (c) variable interests in a VIE held by related parties of the reporting enterprise require the reporting enterprise to consolidate the VIE. The guidance is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2015. Early adoption is allowed, including early adoption in an interim period. A reporting entity may apply a modified retrospective approach by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or may apply the amendments retrospectively. The Company is currently assessing the impact of the adoption of this guidance on the consolidated financial statements.

Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

SEGMENT INFORMATION

The Company establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as business segments and major customers in consolidated financial statements. The Company operates in five principal reportable segments: Fishery Development Division, HU Plantation Division, Organic Fertilizer and Bread Grass Division, Cattle Farm Development Division and Corporate and others. No geographic information is required as all revenue and assets are located in the P.R.C.

	For the three months ended March 31, 2015
	Fishery Development Division (1)		HU Plantation Division (2)			Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total

Revenue	$	53,336,774	$	-		$	40,376,589	$	8,289,986	$	13,473,101	$	115,476,450

Net income (loss)	$	17,364,450	$	(588,016	)	$	5,659,105	$	354,180	$	965,122	$	23,754,841

Total assets	$	135,886,166	$	53,485,748		$	278,916,757	$	32,526,979	$	71,362,201	$	572,177,851

F-16

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SEGMENT INFORMATION (CONTINUED)

	For the three months ended March 31, 2014
	Fishery Development Division (1)		HU Plantation Division (2)			Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total

Revenue	$	43,764,265	$	760,052		$	28,975,083	$	7,544,591	$	9,883,798	$	90,927,789

Net income (loss)	$	10,310,638	$	(25,268	)	$	10,018,030	$	266,194	$	218,325	$	20,787,919

Total assets	$	105,593,997	$	49,175,247		$	186,106,742	$	47,176,963	$	19,191,827	$	407,244,776

Note

(1)

Operated by Capital Award, Inc. (“CA”) and Jiangmen City A Power Fishery Development Co., Limited (“JFD”).

(2)

Operated by Jiangmen City Heng Sheng Tai Agriculture Development Co., Limited (“JHST”).

(3)

Operated by Qinghai Sanjiang A Power Agriculture Co., Limited (“SJAP”), Qinghai Zhong He Meat Products Co., Limited (“QZH”), A Power Agro Agriculture Development (Macau) Limited (“APWAM”), and Hunan Shenghua A Power Agriculture Co., Limited (“HSA”).

(4)

Operated by Jiangmen City Hang Mei Cattle Farm Development Co. Limited (“JHMC”) and Macau Eiji Limited (“MEIJI”).

(5)

Operated by Sino Agro Food, Inc. (“SIAF”) and Sino Agro Food Sweden AB (publ) (“SAFS”).

Further analysis of revenue:-

	For the three months ended March 31, 2015
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total
Name of entity
Sale of goods
Capital Award, Inc. (“CA”)	$	27,218,841	$	-	$	-	$	-	$	-	$	27,218,841

Jiang Men City Heng Sheng Tai Agriculture Development Co., Limited (“JHST”)		-		-		-		-		-		-

Hunan Shenghua A Power Agriculture Co., Limited (“HSA”)		-		-		4,182,440		-		-		4,182,440

Qinghai Sanjiang A Power Agriculture Co., Limited (“SJAP”)		-		-		24,038,273		-		-		24,038,273

Qinghai Zhong He Meat Products Co., Limited (“QZH”)		-		-		12,155,876		-		-		12,155,876

Macau Eiji Company Limited (“MEIJI”)		-		-		-		8,289,986		-		8,289,986

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		9,687,127		9,687,127

Consulting and service income for development contracts
Capital Award, Inc. (“CA”)		25,583,865		-		-		-		-		25,583,865

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		3,785,974		3,785,974

Commission and management fee
Capital Award, Inc. (“CA”)		534,068		-		-		-		-		534,068
	$	53,336,774	$	-	$	40,376,589	$	8,289,986	$	13,473,101	$	115,476,450

F-17

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SEGMENT INFORMATION (CONTINUED)

Further analysis of revenue (Continued):-

	For the three months ended March 31, 2014
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total
Name of entity
Sale of goods
Capital Award, Inc. (“CA”)	$	31,108,785	$	-	$	-	$	-	$	-	$	31,108,785

Jiang Men City Heng Sheng Tai Agriculture Development Co., Limited (“JHST”)		-		760,052		-		-		-	$	760,052

Hunan Shenghua A Power Agriculture Co., Limited (“HSA”)		-		-		4,822,180		-		-		4,822,180

Qinghai Sanjiang A Power Agriculture Co., Limited (“SJAP”)		-		-		24,152,903		-		-		24,152,903

Qinghai Zhong He Meat Products Co., Ltd (“QZH”)		-		-		-		-		-		-

Macau Eiji Company Limited (“MEIJI”)		-		-		-		7,544,591		-		7,544,591

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		-		-

Consulting and service income for development contracts
Capital Award, Inc. (“CA”)		12,243,202		-		-		-		-		12,243,202

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		9,883,798		9,883,798

Commission and management fee
Capital Award, Inc. (“CA”)		412,278		-		-		-		-		412,278
	$	43,764,265	$	760,052	$	28,975,083	$	7,544,591	$	9,883,798	$	90,927,789

F-18

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SEGMENT INFORMATION (CONTINUED)

Further analysis of cost of goods sold and cost of services:-

COST OF GOODS SOLD

	For the three months ended March 31, 2015
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total
Name of entity
Sale of goods
Capital Award, Inc. (“CA”)	$	20,101,997	$	-	$	-	$	-	$	-	$	20,101,997
Jiang Men City Heng Sheng Tai Agriculture Development Co., Limited (“JHST”)		-		-		-		-		-		-
Hunan Shenghua A Power Agriculture Co., Limited (“HSA”)		-		-		2,390,598		-		-		2,390,598
Qinghai Sanjiang A Power Agriculture Co., Limited (“SJAP”)		-		-		16,563,831		-		-		16,563,831
Qinghai Zhong He Meat Products Co., Limited (“QZH”)		-		-		8,171,368		-		-		8,171,368
Macau Eiji Company Limited (“MEIJI”)		-		-		-		7,988,119		-		7,988,119
Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		8,074,075		8,074,075
	$	20,101,997	$	-	$	27,125,797	$	7,988,119	$	8,074,075	$	63,289,988

COST OF SERVICES

	For the three months ended March 31, 2015
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total
Name of entity

Consulting and service income for development contracts

Capital Award, Inc. (“CA”)	$	15,203,198	$	-	$	-	$	-	$	-	$	15,203,198

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		1,404,813		1,404,813
	$	15,203,198	$	-	$	-	$	-	$	1,404,813	$	16,608,011

F-19

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

SEGMENT INFORMATION (CONTINUED)

Further analysis of cost of goods sold and cost of services (Continued):-

COST OF GOODS SOLD

	For the three months ended March 31, 2014
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total
Name of entity
Sale of goods
Capital Award, Inc. (“CA”)	$	21,545,566	$	-	$	-	$	-	$	-	$	21,545,566
Jiang Men City Heng Sheng Tai Agriculture Development Co., Limited (“JHST”)		-		245,178		-		-		-		245,178
Hunan Shenghua A Power Agriculture Co., Limited (“HSA”)		-		-		2,727,978		-		-		2,727,978
Qinghai Sanjiang A Power Agriculture Co., Limited (“SJAP”)		-		-		15,529,206		-		-		15,529,206
Qinghai Zhong He Meat Products Co., Limited (“QZH”)		-		-		-		-		-		-
Macau Eiji Company Limited (“MEIJI”)		-		-		-		7,220,836		-		7,220,836
Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		8,595,765		8,595,765
	$	21,545,566	$	245,178	$	18,257,184	$	7,220,836	$	8,595,765	$	55,864,529

COST OF SERVICES

	For the three months ended March 31,2014
	Fishery Development Division (1)		HU Plantation Division (2)		Organic Fertilizer and Bread Grass Division (3)		Cattle Farm Development Division (4)		Corporate and others (5)		Total

Name of entity
Consulting and service income for development contracts

Capital Award, Inc. (“CA”)	$	6,503,412	$	-	$	-	$	-	$	-	$	6,503,412

Sino Agro Food, Inc. (“SIAF”)		-		-		-		-		-		-
	$	6,503,412	$	-	$	-	$	-	$	-	$	6,503,412

F-20

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

GAIN ON EXTINGUISHMENT OF DEBTS

The Company executed several agreements with third parties to settle debts by issuance of the Company’s common stock. The shares issued by the Company were valued at the trading price of the stock on the date the shares were issued. Any excess of the fair value of the shares over the carrying cost of the debt has been reported as a gain on the extinguishment of debts of $0 and $43,020 has been credited to consolidated statements of income as other income for the three months ended March 31, 2015 and 2014, respectively.

	Three months		Three months
	ended		ended
	March 31, 2015		March 31, 2014

Total amounts of debts to be settled	$	-	$	6,019,125
Less: Aggregate market fair value of (3.31.2014: 11,909,999) shares of common stock in exchange of the above debts for debts extinguishment		-		(5,976,105	)
Gain on extinguishment of debts	$	-	$	43,020

INCOME TAXES

United States of America

The Company was incorporated in the State of Nevada, in the United States of America. The Company has no trading operations in United States of America and no US corporate tax has been provided for in the consolidated financial statements of the Company.

Undistributed Earnings of Foreign Subsidiaries

The Company intends to use the remaining accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and accordingly, undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested outside the United States and no provision for U.S. Federal and State income tax or applicable dividend distribution tax has been provided thereon.

The Company appointed US tax professionals to assist in filing income tax returns for the years ended December 31, 2014 and 2013 in compliance with US Treasury Internal Revenue Code and we filed our 2013 Tax returns with the Internal Revenue Service (“ IRS ”) of USA Government on June 2014.

As of March 31, 2015, the Company reviewed its tax position with the assistance US tax professionals and believed that there would be no taxes and no penalties assessed by the IRS in the United States of America.

F-21

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

INCOME TAXES (CONTINUED)

China

Beginning January 1, 2008, the new Enterprise Income Tax (“ EIT ”) law replaced the existing laws for Domestic Enterprises (“ DE’s ”) and Foreign Invested Enterprises (“ FIE’s ”). The new standard EIT rate of 25% replaced the 33% rate currently applicable to both DE’s and FIE’s. The Company is currently evaluating the impact that the new EIT will have on its financial condition. Beginning January 1, 2008, China unified the corporate income tax rule on foreign invested enterprises and domestic enterprises. The unified corporate income tax rate is 25%.

Under new tax legislation in China beginning in January 2008, the agriculture, dairy and fishery sectors are exempt from enterprise income taxes.

No EIT has been provided in the financial statements of SIAF, CA, JHST, JHMC, JFD, HSA, SJAP and QZH since they are exempt from EIT for the three months ended March 31, 2015 and 2014 as they are within the agriculture, dairy and fishery sectors.

Belize

CA, CS and CH are international business companies incorporated in Belize, and are exempt from corporate tax in Belize.

Hong Kong

No Hong Kong profits tax has been provided in the consolidated financial statements of TRW, since these entities did not earn any assessable profits arising in Hong Kong for the three months ended March 31, 2015 and 2014.

Macau

No Macau Corporate income tax has been provided in the consolidated financial statements of APWAM and MEIJI since these entities did not earn any assessable profits for the three months ended March 31, 2015 and 2014.

Sweden

No Sweden Corporate income tax has been provided in the consolidated financial statements of SAFS since SAFS incurred a tax loss for the three months ended March 31, 2015 and 2014.

No deferred tax assets and liabilities are of March 31, 2015 and December 31, 2014 since there was no difference between the financial statements carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the period in which the differences are expected to reverse.

Provision for income taxes is as follows:

		Three months ended March 31, 2015		Three months ended March 31, 2014

SIAF	$	-	$	-
SAFS		-		-
TRW		-		-
MEIJI and APWAM		-		-
JHST, JFD, JHMC, SJAP , QZH and HSA		-		-
	$	-	$	-

The Company did not recognize any interest or penalties related to unrecognized tax benefits in the three months ended March 31, 2015 and 2014. The Company had no uncertain positions that would necessitate recording of tax related liability. The Company is subject to examination by the respective tax authorities.

F-22

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

CASH AND CASH EQUIVALENTS

	March 31, 2015		December 31, 2014

Cash and bank balances	$	10,932,661	$	3,031,447

INVENTORIES

As of March 31, 2015, inventories are as follows:

	March 31,		December 31,
	2015		2014

Sleepy cods, prawns, eels and marble goby	$	3,547,158	$	3,051,606
Beef and mutton		5,101,402		2,908,886
Bread grass		1,302,969		2,336,308
Beef cattle		7,361,889		8,362,763
Organic fertilizer		6,075,642		7,292,389
Forage for cattle and consumable		9,238,819		6,547,333
Raw materials for bread grass and organic fertilizer		15,351,389		14,223,407
Immature seeds		1,248,450		1,245,301
	$	49,227,718	$	45,967,993

DEPOSITS AND PREPAYMENTS

	March 31,		December 31,
	2015		2014

Deposits for
- purchases of equipment	$	4,668,784	$	4,668,784
- acquisition of land use rights		3,373,110		3,373,110
- inventories purchases		12,889,155		14,221,199
- aquaculture contracts		14,219,514		20,467,603
- building materials		877,598		877,598
- consulting service providers and others		11,032,481		5,188,473
- construction in progress		20,467,357		20,467,357
Prepayments - debts discounts and others		3,544,120		3,827,401
Shares issued for employee compensation and overseas professional and bond interest		5,719,120		2,860,066
	$	76,791,239	$	75,951,591

ACCOUNTS RECEIVABLE

The Company has performed an analysis on all of its accounts receivable and determined that all amounts are collectible by the Company. As such, all accounts receivable are reflected as a current asset and no allowance for bad debt has been recorded as of March 31, 2015 and December 31, 2014. Bad debts written off for the three months ended March 31, 2015 and 2014 are $0.

Aging analysis of accounts receivable is as follows:

	March 31,		December 31,
	2015		2014

0 - 30 days	$	29,443,363	$	21,663,061
31 - 90 days		33,126,585		38,324,554
91 - 120 days		9,368,839		21,138,383
over 120 days and less than 1 year		31,835,584		23,377,073
over 1 year		-		-
	$	103,774,371	$	104,503,071

F-23

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

10.

OTHER RECEIVABLES

	March 31,		December 31,
	2015		2014

Advanced to employees	$	658,741	$	476,630
Advanced to suppliers		11,253,654		9,910,682
Advanced to customers		21,032,158		13,947,946
Advanced to developers		28,000,000		28,000,000
	$	60,944,553	$	52,305,260

Advanced to employees, suppliers, customers and developers are unsecured, interest free and with no fixed terms of repayment.

The Company entered friendly loan agreements with suppliers, customers and developers to assist them to procure project loans.

11.

PLANT AND EQUIPMENT

	March 31,			December 31,
	2015			2014

Plant and machinery	$	5,573,254		$	5,507,571
Structure and leasehold improvements		51,650,906			51,650,906
Mature seeds		11,928,410			10,794,289
Furniture and equipment		629,055			629,055
Motor vehicles		765,858			765,858
		70,547,483			69,347,679

Less: Accumulated depreciation		(5,797,042	)		(4,994,704	)
Net booking value		64,750,441			64,352,975

Depreciation expense was $802,338 and $534,803 for the three months ended March 31, 2015 and 2014, respectively.

12.

CONSTRUCTION IN PROGRESS

	March 31,		December 31,
	2015		2014

Construction in progress
- Office, warehouse and organic fertilizer plant in HSA	$	28,185,939	$	20,205,123
- Oven room, road for production of dried flowers		1,587,594		539,304
- Organic fertilizer and bread grass production plant and office building		13,734,314		12,325,685
- Rangeland for beef cattle and office building		41,996,899		35,074,556
- Fish pond		2,205,568		975,609
	$	87,710,314	$	69,120,277

13.

LAND USE RIGHTS

Private ownership of agricultural land is not permitted in the P.R.C. Instead, the Company has leased seven lots of land. The cost of the first lot of land use rights acquired in 2007 in Guangdong Province, the P.R.C. was $6,408,289 and consists of 180.23 acres with the lease expiring in 2067. The cost of the second lot of land use rights acquired in 2008 in Guangdong Province, the P.R.C. was $764,128, which consists of 31.84 acres with the lease expiring in 2068. The cost of the third lot of land use rights acquired in 2011 was $12,040,571, which consists of 79.48 acres in Guangdong Province, the P.R.C. with the lease expires in 2037. The cost of the fourth lot of land use rights acquired in 2011 was $35,405,750 which consisted of 287.21 acres in the Hunan Province, the P.R.C. and the leases expire in 2051, 2054 and 2071. The cost of the fifth lot of land use rights acquired in 2012 was $528,240 which consisted of 21.09 acres in Qinghai Province, P.R.C. and the lease expires in 2051. The cost of the sixth lot of land use rights acquired in 2013 was $489,904 which consisted of 6.27 acres in Guangdong Province, the P.R.C. and the lease expires in 2023. The cost of the seventh lot of land use rights acquired in 2014 was $4,453,665 which consisted of 33.28 acres in Guangdong Province, the P.R.C. and the lease expires in 2044.

F-24

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

13.

LAND USE RIGHTS (CONTINUED)

	March 31,			December 31,
	2015			2014


Cost	$	69,204,948		$	69,428,143
Less: Accumulated amortization		(6,441,781	)		(6,105,941	)
Net carrying amount	$	62,763,167		$	63,322,202

	Expiry date	Description	Amount

Balance @1.1.2014			$	65,192,615
Additions
2013	2044	Zhongshan City, Guangdong Province, P.R.C.		4,453,665
Exchange difference				(218,137)
Balance @12.31.2014				69,428,143
Exchange difference				(223,195	)
Balance @3.31.2015			$	69,204,948

Land use rights are amortized on the straight-line basis over their respective lease periods. The lease period of agriculture land is 30 to 60 years. Amortization of land use rights was $335,840 and $362,524 for the three months ended March 31, 2015 and 2014, respectively.

14.

GOODWILL

Goodwill represents the fair value of the assets acquired the acquisitions over the cost of the assets acquired. It is stated at cost less accumulated impairment losses. Management tests goodwill for impairment on an annual basis or when impairment indicators arise. In these instances, the Company recognizes an impairment loss when it is probable that the estimated cash flows are less than the carrying value of the assets. To date, no such impairment loss has been recorded.

	March 31,		December 31,
	2015		2014

Goodwill from acquisition	$	724,940	$	724,940
Less: Accumulated impairment losses		-		-
Net carrying amount	$	724,940	$	724,940

15.

PROPRIETARY TECHNOLOGIES

By an agreement dated November 12, 2008, TRW acquired an enzyme technology master license, registered under a Chinese patent, for the manufacturing of livestock feed and bioorganic fertilizer and its related labels for $8,000,000. On March 6, 2012, MEIJI acquired an aromatic-feed formula technology for the production of aromatic cattle for $1,500,000. On October 1, 2013, SIAF was granted a license to exploit sleepy cods breeding technology to grow out of sleepy cods for $2,270,968 for 50 years. SJAP booked bacterial cellulose technology license and related trademark for $2,119,075 and amortized expenditures for 20 years starting from January 1, 2014.

	March 31,			December 31,
	2015			2014

Cost	$	13,911,868		$	13,886,098
Less: Accumulated amortization		(2,584,081	)		(2,405,800	)
Net carrying amount	$	11,327,787		$	11,480,298

Amortization of proprietary technologies was $178,281 and $146,556 for the three months ended March 31, 2015 and 2014, respectively. No impairments of proprietary technologies have been identified for the three months ended March 31, 2015 and 2014.

F-25

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

16.

LONG TERM INVESTMENTS

	March 31,		December 31,
	2015		2014

Investment in Huangyuan County Rural Credit Union	$	814,067	$	817,127
Less: Accumulated impairment losses		-		-
	$	814,067	$	817,127

17.

TEMPORARY DEPOSITS PAID TO ENTITIES FOR EQUITY INVESTMENTS IN FUTURE SINO JOINT VENTURE COMPANIES

Intended
unincorporated	Projects		March 31,		December 31,
investee	engaged		2015		2014
A	Trade center	*	$	4,086,941	$	4,086,941
A	Seafood center	*		1,032,914		1,032,914
B	Fish Farm 2 Gao Qiqiang Aquaculture	*		6,000,000		6,000,000
C	Prawn farm 1	*		14,554,578		14,554,578
D	Prawn farm 2	*		9,877,218		9,877,218
E	Cattle farm 2	*		5,558,057		5,558,057
			$	41,109,708	$	41,109,708

The Company made temporary deposits paid to entities for equity investments in future Sino Joint Venture companies (“SJVCs”) engaged in projects development of trade and seafood centers, fish, prawns and cattle farms. Such temporary deposits represented as deposits of the respective consideration required for the purchase of equity stakes of respective future SJVCs. The amounts were classified as temporary because legal procedures of formation of SJVCs have not yet been completed. As of March 31, 2015, the percentages of equity stakes of SFJVCs A (trade and seafood centers), B ( fish farm 2 GaoQiqiang Aquaculture Farm ), C (prawn farm 1), D (pawn farm 2) and E (cattle farm 2) are 31%, 23%, 56%, 29% and 35% respectively.

* The above amounts were subject to conversion to an additional equity investment in the investees upon the completion of legal procedures of formation of SJVCs.

18.

VARIABLE INTEREST ENTITY

On September 28, 2009, APWAM acquired the PMH’s 45% equity interest in the Sino-Foreign joint venture company, Qinghai Sanjiang A Power Agriculture Co. Limited (“ SJAP ”), which was incorporated in the P.R.C. As of March 31, 2015, the Company has invested $2,251,359 in this joint venture. SJAP is engaged in its business of the manufacturing of organic fertilizer, livestock feed, and beef cattle and plantation of crops and pastures.

Continuous assessment of the VIE relationship with SJAP

The Company may also have a controlling financial interest in an entity through an arrangement that does not involve voting interests, such as a VIE. The Company evaluates entities deemed to be VIE’s using a risk and reward model to determine whether to consolidate. A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately fewer voting rights.

F-26

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

18.

VARIABLE INTEREST ENTITY (CONTINUED)

The Company also quantitatively and qualitatively examined if SJAP is considered a VIE. Qualitative analyses considered the extent to which the nature of its variable interest exposed the Company to losses. For quantitative analyses, the Company also used internal cash flow models to determine if SJAP was a VIE and, if so, whether the Company was the primary beneficiary. The projection of these cash flows and probabilities thereof requires significant managerial judgment because of the inherent limitations that relate to the use of historical data for the projection of future events. On March 31, 2015, the Company evaluated the above VIE testing results and concluded that the Company is the primary beneficiary of SJAP’s expected losses or residual returns and that SJAP qualifies as a VIE of the Company. As result, the Company has consolidated SJAP as a VIE.

The reasons for the changes are as follows:

• Originally, the board of directors of SJAP consisted of 7 members; 3 appointees from Qinghai Sanjiang (one stockholder), 1 from Garwor (one stockholder), and 3 from the Company, such that the Company did not have majority interest represented on the board of directors of SJAP.

• On May 7, 2010, Qinghai Sanjiang sold and transferred its equity interest in SJAP to Garwor. The State Administration for Industry and Commerce of Xining City Government of the P.R.C. approved the sale and transfer.

Consequently Garwor and the Company agreed that the new board of directors of SJAP would consist of 3 members; 1 appointee from Garwor and 2 appointees from the Company, such that the Company now had a majority interest in the board of directors of SJAP. Also, and in accordance with the Company’s Sino Joint Venture Agreement, the Company’s management appointed the chief financial officer of SJAP. As a result, the financial statements of SJAP were included in the consolidated financial statements of the Company.

Continuous assessment of the VIE relationship with QZH

The Company also quantitatively and qualitatively examined if QZH is considered a VIE. Qualitative analyses considered the extent to which the nature of its variable interest exposed the Company to losses. For quantitative analyses, the Company also used internal cash flow models to determine if QZH was a VIE and, if so, whether the Company was the primary beneficiary. The projection of these cash flows and probabilities thereof requires significant managerial judgment because of the inherent limitations that relate to the use of historical data for the projection of future events. On March 31, 2015, the Company evaluated the above VIE testing results and concluded that the Company is the primary beneficiary of QZH’s expected losses or residual returns and that QZH qualifies as a VIE of the Company. As result, the Company has consolidated QZH as a VIE.

SJAP is sole stockholder of QZH and SJAP appointed sole director of QZH. Consequently, the Company indirectly control directorship of QZH, such that the Company now had a majority interest in the directorship of QZH. Also, and in accordance with the Company’s Sino Joint Venture Agreement, the Company’s management appointed the chief financial officer of QZH. As a result, the financial statements of QZH were included in the consolidated financial statements of the Company.

F-27

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

19.

CONSTRUCTION CONTRACT

(i)

Costs and estimated earnings in excess of billings on uncompleted contracts

	March 31,			December 31,
	2015			2014

Cost	$	6,487,032		$	3,755,046
Estimated earnings		10,995,534			8,307,452
Less: Billings		(16,175,681	)		(9,725,618	)
Costs and estimated earnings in excess of billings on uncompleted contract	$	1,306,885		$	2,336,880

(ii)

Billings in excess of costs and estimated earnings on uncompleted contracts

	March 31,			December 31,
	2015			2014

Billings	$	110,060,524		$	102,199,674
Less: Costs		(56,769,967	)		(46,648,988	)
Estimated earnings		(49,256,399	)		(47,490,106	)
Billing in excess of costs and estimated earnings on uncompleted contract	$	4,034,158		$	8,060,580

(iii)

Overall

	March 31,			December 31,
	2015			2014

Billings	$	126,236,205		$	102,199,674
Less: Costs		(63,256,999	)		(46,648,988	)
Estimated earnings		(60,251,933	)		(47,490,106	)
Billing in excess of costs and estimated earnings on uncompleted contract	$	2,727,273		$	8,060,580

20.

SERIES F SHARES MANDATORY REDEMPTION PAYABLE

On August 13, 2014, the Company filed a Certificate of the Designations, Powers, Preferences and Rights of the Series F Non-Convertible Preferred Stock (the “Certificate”) to its Articles of Incorporation, with the Secretary of State of the State of Nevada, setting forth the terms of its Preferred Stock. On June 10, 2014, the Company amended and restated the Certificate to (i) postpone the payment date of the dividend there under to May 30, 2015, (ii) to delete a reference to the redemption or declaration of any cash dividend or distribution on any Junior Securities, and (iii) make certain minor corrections to the Certificate. No share of Series F Non-Convertible Preferred Stock was ever issued. The Company believes it to be in the best interests of its shareholders to delay the cash payment until such time as its financial position would enable it to make the payment without harming its ability to develop its business in accordance with management’s plans.

21.

OTHER PAYABLES

	March 31,			December 31,
	2015			2014

Due to third parties	$	12,891,558		$	8,176,469
Promissory notes issued to third parties		600,000			1,100,000
Due to local government		2,419,513			2,419,513
		15,882,011			11,695,982
Less: The current portion classified as non-current liabilities Due to third parties		(4,797,332	)		-
Amount classified as current as current liabilities	$	11,084,679		$	11,695,982

Due to third parties are unsecured, interest free and have no fixed terms of repayment.

F-28

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

22.

BORROWINGS

There are no provisions in the Company’s bank borrowings and long term debts that would accelerate repayment of debt as a result of a change in credit ratings or a material adverse change in the Company’s business. Under certain agreements, the Company has the option to retire debt prior to maturity, either at par or at a premium over par.

Short term debts			March 31,			December 31,
Name of lender	Interest rate	Term	2015			2014
Agricultural Development Bank of China	6.4%	January 3, 2014 - December 17, 2018	$	323,875	^*	$	325,092	^*
Huangyuan County Branch, Xining City, Qinghai Province, the P.R.C.

Agricultural Development Bank of China	6.18%	October 21, 2014 - October 20, 2015		4,070,335	^*		4,085,635	^*
Huangyuan County Branch,				-
Xining City, Qinghai Province, the P.R.C.
			$	4,394,210		$	4,410,727

Long term debts			March 31,			December 31,
Name of lender	Interest rate	Term	2015			2014

GanGuo Village Committee	12.22%	June 2012 - June 2017	$	179,095		$	179,768
Bo Huang Town
Huangyuan County,
Xining City, Qinghai Province, the P.R.C.

Agricultural Development Bank of China	6.4%	January 3, 2014 - December 17, 2018		2,442,201	^*#		2,451,381	^*#
Huangyuan County Branch,
Xining City, Qinghai Province, the P.R.C.
Less: The current portion reclassified as short term debts				(323,875	)		(325,092	)
			$	2,297,421		$	2,306,057

The above note agreements contained regular provisions requiring timely repayment of principals and accrued interests, payment of default interest in the event of default, and without specific financial covenants. Management of the Company believes the Company is in material compliance with the terms of the loan agreements.

	^	personal and corporate guaranteed by third parties.
	*	secured by land use rights with net carrying amount of $494,604 (2014: $499,856).
	#	repayable $323,875, $650,184, $650,184 and $817,958 in 2015, 2016, 2017 and 2018, respectively.

F-29

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

23.

BONDS PAYABLE

On July 1, 2013 , the Company offered a maximum of $21,000,000 of units (“ Units ”) for an aggregate of 840 Units; each Unit consisting of a $25,000 principal amount promissory note made by the Subscription Agreement and Confidential Private Placement Memorandum with maturity date two years from the Initial Closing Date of the Offering September 30, 2013. The interest rate of 5% is paid annually. Commission, issue cost and discounts are amortized over 2 years from October 1, 2013.

Terms of the bonds are as follows:

Issue size:		$16,800,000
Number of units offered:		840 units
Number of units issued:		69 units
Principal value per unit:		$25,000 per unit
Net payable value /bond:		$20,000 per unit
Discounted value/bond:		$5,000 paid to bond holder
Maturity date:		2 years (September 30, 2015)
Participating interest:		5% per annum
Effective yield:		11.80% per annum

	March 31,		December 31,
	2015		2014

Bonds payable	$	1,725,000	$	1,725,000

The Company calculated professional service compensation of $400,000 in respect of bond issue, and recognized $200,000 for the year ended December 31, 2014. As of December 31, 2014, the deferred compensation balance was $100,000 and the deferred compensation balance of $100,000 was to be amortized over 6 months beginning on January 1, 2015.

The Company calculated professional service compensation of $400,000 in respect of bond issue, and recognized $50,000 and $50,000 for the three months ended March 31, 2015 and 2014. As of March 31, 2015, the deferred compensation balance was $50,000 and the deferred compensation balance of $50,000 was to be amortized over 3 months beginning on April 1, 2015.

F-30

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

24.

CONVERTIBLE BOND TE PAYABLES

On August 29, 2014, the Company completed the closing of a private placement financing transaction with an accredited investor, which purchased a 10.5% Convertible Note (the “Note”) in the aggregate principal amount of up to $33,300,000. The Company received the total advance of $11,632,450. The Company shall offer investor a discount equal to 25% of the amount of the principal advanced by the investor.

Interest on the note shall accrue on the outstanding principal balance of this Note from August 29, 2014. Interest shall be payable quarterly on the last day of each of March, June, September and December commencing September 30, 2014 provided, however, that note holder may elect to require the Company to issue to the note holder a promissory note in lieu of cash in satisfaction of any interest due and payable at such time. Any interest payment note shall be subject to the same terms as the note. The note has a maturity date of February 28, 2020.

The note is convertible, at the discretion of the note holder, into shares of the Company’s common stock (i) at any time following an Event of Default, or (ii) for a period of thirty (30) calendar days following October 31, 2015 and each anniversary thereof, at an initial conversion price per share of $1.00, subject to adjustment for stock splits, reverse stock splits, stock dividends and other similar transactions and subject to the terms of the note. As long as the note is outstanding, the investor shall have a right of first refusal, exercisable for thirty (30) calendar days after notice to the note holder, to purchase securities proposed to be offered and sold by the Company.

	March 31,		December 31,
	2015		2014

10.50% convertible note of maturity date February 20, 2020	$	16,286,754	$	15,803,928

The Company calculated the fair value of the convertible note and the beneficial conversion feature utilizing the Discounted Cash Flows model at the date of the issuance of convertible note. The relative fair values were allocated to the liability and equity components of the debt. Accordingly, a discount was created on the debt and this discount will be amortized to interest expense over the life of the debt. Debt premium amortization as of March 31, 2015 was $3,891.

As of March 31, 2015, there was $15,803,928 (December 31, 2014: $15,509,933) principal outstanding and accrued interest in the amount of $482,826 (December 31, 2014: 293,995) that was owed under the terms of the convertible note.

The above note agreement contained regular provisions requiring timely repayment of principals and accrued interests, payment of default interest in the event of default, default and optional conversion and without specific financial covenants. Management of the Company believes the Company is in material compliance with the terms of the convertible note agreement.

The Company calculated professional service compensation of $1,500,000 in respect of convertible note issue, and recognized $125,000 and $0 for the three months ended March 31, 2015 and 2014. As of March 31, 2015, the deferred compensation balance of $1,375,000 was to be amortized over 9 months beginning on April 1, 2015.

F-31

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

25.

SHAREHOLDERS’ EQUITY

The Group’s share capital as of March 31, 2015 and December 31, 2014 shown on the consolidated balance sheet represents the aggregate nominal value of the share capital of the Company as of that date.

On March 22, 2010, the Company designated 100 shares of Series A preferred stock at a par value per share of $0.001. As of the same date, 100 shares of Series A preferred stock were issued at $1 per share for cash in the amount of $100.

The Series A preferred stock:

(i)

does not pay a dividend;

(ii)

votes together with the shares of Common Stock of the Corporation as a single class and, regardless of the number of shares of Series A Preferred Stock outstanding and as long as at least one of such shares of Series A Preferred Stock is outstanding, shall represent eighty percent (80%) of all votes entitled to be voted at any annual or special meeting of shareholders of the Corporation or action by written consent of shareholders. Each outstanding share of the Series A Preferred Stock shall represent its proportionate share of the 80%, which is allocated to the outstanding shares of Series A Preferred Stock; and

(ii)

ranks senior to common stockholders, holders of Series B convertible preferred stockholders and any other stockholders on liquidation.

The Company has designated 100 shares of Series A preferred stock with 100 shares issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

F-32

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

25.

SHAREHOLDERS’ EQUITY (CONTINUED)

The Series B convertible preferred stock:

On March 22, 2010, the Company designated 7,000,000 shares of Series B convertible preferred stock at a par value per share of $0.001. The Series B convertible preferred stock is redeemable, the stockholders are not entitled to receive any dividend and voting rights but rank senior over common stockholders on liquidation, and can convert to common stock on a one for one basis at any time. On June 26, 2010, 7,000,000 shares of common stock were surrendered for cancellation and the Company issued 7,000,000 shares of Series B convertible preferred stock at $9.90 per share. Pursuant to share exchange agreement made as of December 22, 2012, between the Company and a stockholder, Capital Adventure Inc., a holder of 3,000,000 shares of common shares, with the consent of Board of Directors, to exchange for 3,000,000 shares of Series B convertible preferred stock on a one-for-one basis. As of December 23, 2012, 3,000,000 shares of Series B convertible preferred stock were issued to Capital Adventure Inc., for the exchange of its holding of 3,000,000 shares of common stocks. As of December 31, 2012, 3,000,000 shares of common stocks were still not returned to the Company. On March 27, 2013, 3,000,000 Series B convertible preferred stock were cancelled. On December 17, 2014, the Company approved an amendment to certificate designation in respect of Series B preferred stock. Pursuant to the above new amendment, each holder of Series B preferred stock shall have the rights, at any time or from time to time, to convert each 9.9 shares of Series B preferred to one fully paid and non assessable share of common stock of par value $0.001 per share.

There were 7,000,000 shares of Series B convertible preferred stock issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

The Series F Non-Convertible Preferred Stock:

(i)

is not redeemable subject to (iv);

(ii)

except for (iv), with respect to dividend rights, rights on liquidation, winding up and dissolution, rank junior and subordinate to ( a) all classes of Common Stock,(b) all other classes of Preferred Stock and (c) any class or series of capital securities of the Company.

(iii)

shall not entitled to receive any further dividend; and

(iv)

on May 30, 2014, the holders of shares of Series F Non-Convertible Preferred Stock with coupon shall be entitled to a coupon payment directly from the Company at the redemption rate of $3.40 per share. Upon redemption, the Holder shall no longer own any shares of Series F with coupon that have been redeemed, and all such redeemed shares shall disappear and no longer exist on the books and records of the Company; redeemed shares of Series F which no longer exist upon redemption shall thereafter be counted toward the authorized but unissued “blank check” preferred stock of the Company.

On August 22, 2012, the Company’s Board of Directors declared that the Company’s stockholders were entitled to receive one share of restricted Series F Non-convertible Preferred Stock for every 100 shares of Common Stock owned by the stockholders as of September 28, 2012, with lesser or greater amounts being rounded up to the nearest 100 shares of Common Stock for purpose of the computing the dividend. The holders of record of shares of Series F Non-Convertible Preferred Stock shall be entitled to a coupon payment directly from the Company at the redemption rate of $3.40 per share and be payable on May 30, 2014. However, the Company was unable to issue the Series F Non-convertible Preferred Stock as originally contemplated. Consequently, The Company’s transfer agent was instructed to note in its record date rather than actual issue the Preferred F shares. On June 14, 2014, the Company announced the delay in payment of the coupon until May 30, 2015. The company reserved the excess over the nominal amount of the Series F Non-convertible Preferred Stock of $3,124,737 as Series F Non-convertible Preferred Stock redemption payable.

As a result, total issued and outstanding of Series F Non-Convertible Preferred Stock as of March 31, 2015 and December 31, 2014 are 0 shares and grand total issued and outstanding preferred stock as of March 31, 2015 and December 31, 2014 are 7,000,100 shares.

F-33

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

25.

SHAREHOLDERS’ EQUITY (CONTINUED)

Common Stock:

On November 10, 2014, the Company approved an amendment to the Corporation’s Articles of Incorporation to effectuate a reverse stock split (the “Reverse Split”) of the Corporation’s common stock, par value $0.001 per share (the “Common Stock”) affecting both the authorized and issued and outstanding number of such shares by a ratio of 9.9 for 1. The Reverse Split became effective in the State of Nevada on December 16, 2014. Subsequent to the balance sheet date, the Board of directors and the holders of a majority of the voting power of our stockholders of the company have approved an amendment to articles of incorporation to increase its authorized shares of Common Stock from 17,171,717 to 22,727,272.

During the year ended December 31. 2014, the Company issued (i) 2,734,625 shares of common stock for $13,006,373 at values ranging from $3.96 to $10.40 per share to settle debts due to third parties. The Company executed several agreements with third parties to settle debts by issuance of the Company’s common stock. The shares issued by the Company were valued at the trading price of the stock on the date the shares were issued. Any excess of the fair value of the shares over the carrying cost of the debt has been reported as a gain on the extinguishment of debts of $270,586 and $1,318,947 has been credited to consolidated statements of income as other income for the year ended December 31, 2014 and 2013, respectively; (ii) 130,568 shares of common stock valued to employees at fair value of $4.26 per share for $555,827 for employee compensation. The fair value of the common stock issued was determined by using the trading price of the Company’s common stock on the date of issuance of $4.26 per share; (iii) 400,008 shares of common stock valued to professionals at fair value ranging from $3.96 to $7.43 per share for $2,763,618 for service compensation. The fair value of the common stock issued was determined by using the trading price of the Company’s common stock on the date of issuance ranging from $3.96 to $9.90 per share; and (iv) 1,681 piecemeal shares of common stock valued at fair value of $9.49 per share for $15,951 for cancellation. The fair value of the common stock issued was determined by using the trading price of the Company’s common stock on the date of cancellation of $9.49 per share.

During the three months ended March 31, 2015, the Company executed several agreements with third parties to raise debts loan by issuance of the Company’s common stock. The Company issued 755,304 shares of common stock ranging from $6.96 to $8.96 as collateral to secure debts loan of $4,797,332 from third party. The shares issued by the Company were valued at the trading price of the stock on the date the shares were issued. The Company issued 153,392 shares at $11.13 to decimal stockholder to round up its shares holding. Any excess of the fair value of the shares over the carrying cost of the debt has been reported as a gain on the extinguishment of debts of $0 and $43,020 has been credited to consolidated statements of income as other income for the three months ended March 31, 2015 and 2014, respectively.

The Company has 18,069,412 and 17,162,716 shares of common stock issued and outstanding as of March 31, 2015 and December 31, 2014, respectively.

F-34

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

26.

OBLIGATION UNDER OPERATING LEASES

The Company leases (i) 2,178 square feet of agriculture space used for offices for a monthly rent of $634 in Enping City, Guangdong Province, P.R.C., its lease expiring on March 31, 2017; (ii) 5,081 square feet of office space in Guangzhou City, Guangdong Province, P.R.C. for a monthly rent of $12,733, its lease expiring on July 8, 2016; and (iii) 1,555 square feet of staff quarters in Linli District, Hunan Province, P.R.C. for a monthly rent of $163, its lease expiring on May 1, 2016.

Lease expense was $40,591 and $37,527 for the three months ended March 31, 2015 and 2014, respectively.

The future minimum lease payments as of March 31, 2015, are as follows:

Year ended December 31, 2015	$	121,773
Thereafter		86,561
	$	208,334

27.

STOCK BASED COMPENSATION

On April 25, 2014, the Company issued employees a total of 130,567 shares of common stock valued at fair value of $4.26 per share for services rendered to the Company. The fair values of the common stock issued were determined by using the trading price of the Company’s common stock on the date of issuance of $4.26 per share.

On June 16, 2014, the Company issued professionals a total of 117,248 shares of common stock valued at fair value of $3.96 per share for services rendered to the Company. The fair values of the common stock issued were determined by using the trading price of the Company’s common stock on the date of issuance of $3.96 per share.

On September 16, 2014, the Company issued professionals a total of 202,020 shares of common stock valued at fair value of $7.43 per share for services rendered to the Company. The fair values of the common stock issued were determined by using the trading price of the Company’s common stock on the date of issuance of $7.43 per share.

On December 15, 2014, the Company issued professionals a total of 80,739 shares of common stock valued at agreed price of $9.90 per share for services rendered to the Company. The agreed prices of the common stock issued were determined by both parties and greater than the trading price of the Company’s common stock on the date of issuance of $7.73 per share.

The Company calculated stock based compensation of $2,760,066 and $ 405,544, and recognized $630,033 and $33,436 for the three months ended March 31, 2015 and March 31, 2014. As of March 31, 2015, the deferred compensation balance for staff was $1,880,033 and the deferred compensation balances of (i) $255,033; (ii) $500,000, (iii) $1,125,000 were to be amortized over 3, 6 and 9 months respectively beginning on April 1, 2015.

28.

CONTINGENCIES

As of March 31, 2015 and December 31, 2014, the Company did not have any pending claims, charges, or litigation that it expects would have a material adverse effect on its consolidated balance sheets, consolidated statements of income and other comprehensive income or consolidated statements of cash flows.

29.

RELATED PARTY TRANSACTIONS

In addition to the transactions and balances as disclosed elsewhere in these consolidated financial statements, during the three months ended March 31, 2015 and 2014, the Company had the following significant related party transactions:-

Name of related party		Nature of transactions

Mr. Solomon Yip Kun Lee, Chairman		Included in due to a director, due to Mr. Solomon Yip Kun Lee is $1,008,000 and $1,172,059 as of March 31, 2015 and December 31, 2014, respectively. The amounts are unsecured, interest free and have no fixed terms of repayment.

F-35

SINO AGRO FOOD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 31, 2015 AND 2014

30.

EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings per share reflects the potential dilution of securities by including other potential common stock, including convertible preferred stock, stock options and warrants, in the weighted average number of common shares outstanding for the year, if dilutive. The numerators and denominators used in the computations of basic and dilutive earnings per share are presented in the following table:

	Three months ended March 31,		Three months ended March 31,
	2015		2014
BASIC
Numerator for basic earnings per share attributable to the Company’s common stockholders:
Net income used in computing basic earnings per share	$	23,754,841	$	20,787,919
Basic earnings per share	$	1.39	$	1.45

Basic weighted average shares outstanding		17,114,989		14,308,910

		Three months ended March 31,		Three months ended March 31,
	2015		2014

DILUTED
Numerator for basic earnings per share attributable to the Company’s common stockholders:
Net income used in computing basic earnings per share	$	23,754,841	$	20,787,919
Add back interest on convertible notes		-		-
Net income used in computing diluted earnings per share	$	23,754,841	$	20,789,919
Diluted earnings per share	$	1.33	$	1.38

Basic weighted average shares outstanding		17,114,989		14,308,910
Add: weight average of common stock converted from Series B Convertible preferred shares outstanding		707,070		707,070
Diluted weighted average shares outstanding		17,822,059		15,015,980

For the three months ended March 31, 2015 and 2014, full dilution effect of convertible note of $16,286,754 (3.31.2014: $0), was not taken into account for calculation of the diluted earnings per share because convertible note holder is restricted to exercise shares before October 1, 2015 under terms of convertible note agreement.

F-36

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q (the “Form 10-Q”) contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Forward-looking statements can be identified by the use of forward-looking terminology, such as “estimates,” “projects,” “plans,” “believes,” “expects,” “anticipates,” “intends,” or the negative thereof or other variations thereon, or by discussions of strategy that involve risks and uncertainties These statements reflect management’s current beliefs and are based on information now available to it. Accordingly, these statements are subject to certain risks, uncertainties and contingencies that could cause the Company’s actual results, performance or achievements in 2015 and beyond to differ materially from those expressed in, or implied by, such statements. Such statements, include, but are not limited to, statements contained in this Form 10-Q relating to the Company’s business, financial performance, business strategy, recently announced transactions and capital outlook. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: a continued decline in general economic conditions nationally and internationally; decreased demand for our products and services; market acceptance of our products; the impact of any litigation or infringement actions brought against us; competition from other providers and products; the inability to raise capital to fund continuing operations; changes in government regulation; the ability to complete customer transactions, and other factors relating to our industry, our operations and results of operations and any businesses that may be acquired by us. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned. Readers of this Form 10-Q should not place undue reliance on any forward-looking statements. Except as required by federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events or uncertainties.

You should read the following discussion and analysis of the financial condition and results of operations of the Company together with the financial statements and the related notes presented in Item 1 of this Form 10-Q.

Description and interpretation and clarification of business category on the consolidated results of operations

The Company’s strategy is to manage and operate its businesses under six (6) business divisions or units on a standalone basis, namely:

Fishery Division;

Plantation Division;

Beef Division;

Cattle Farm Division;

Organic Fertilizer Division; and

Corporate & Others Division

A summary of each business division is described below:

Fishery Division

The Fishery Division refers to the operations of Capital Award Inc. (sometimes referred to as “CA”) covering the Company’s engineering, technology and consulting service management of fishery farms and seafood sales operations and marketing. Capital Award generates revenue as being the sole marketing, sales and distribution agent of the fishery farms (covering both of the fish, prawns and eel farms) developed by Capital Award in China as follows:

(A). Engineering and Technology Services via Consulting and Service Contracts (“CSC’s”) for the development, construction, and supply of plant and equipment, and management of fishery (and prawn or shrimp) farms and related business operations.

(B). Seafood Sales

Capital Award generates revenue as the sole marketing, sales and distribution agent for the fish and prawn farms developed by Capital Award in China as follows:

(1) Sales to Sino Foreign Joint Venture Companies (“SFJVC”) and sales derived from the SFJVC (currently, only the JFD subsidiary is a SFJVC) are being consolidated into Tri-way Industries Ltd. (Hong Kong) (“TRW”) as one entity.

(2) Sales to and sales derived from un-incorporated companies (covering EBAPCD and ZSAPP) are accounted for independently as follows:

CA and EBAPCD: (a) CA purchases prawn fingerling and feed stocks from third party suppliers and resells them to EBAPCD at variable small profit margins and (b) CA purchases matured prawns from EBAPCD and sells them to third parties (wholesale markets)

CA and ZSAPP: (a) CA earns commission from the sale of prawn fingerlings that are sold by ZSAPP to third parties, and in this respect ZSAPP produces its own prawn fingerlings as compared to CA purchasing them for EBAPCD, as described above, and (b) CA purchases matured prawns from ZSAPP and sells to third parties (wholesale markets)

Plantation Division refers to the operations of Jiangmen City Heng Sheng Tai Agriculture Development Co. Ltd. (“JHST”) in the HU Plantation business where dragon fruit flowers (dried and fresh) and immortal vegetables are sold to wholesale and retail markets. JHST’s financial statements are consolidated into the financial statements of Macau EIJI Company Ltd. (“MEIJI”) as one entity.

Cattle Farm Division refers to the operations of Cattle farm (1) under Jiangmen City Hang Mei Cattle Farm Development Co. Ltd (“JHMC”) where Cattle are sold live to third party live-stock wholesalers who are selling them mainly in Guangzhou and Beijing live-stock wholesale markets. The financial statements of JHMC are consolidated into MEIJI’s own operations in the consulting and service for development of other cattle farms (i.e. Cattle Farm 2) or related projects.

Organic Fertilizer Division refers to (i) the operation of SJAP in manufacturing and sales of organic fertilizer, bulk livestock feed, concentrated livestock feed, and the sales of live cattle inclusive (a): Cattle that are not being slaughtered in our own slaughterhouse operated by Qinghai Zhong He Meat Products Co., Limited (“QZH”) are sold live to third party live-stock wholesalers and (b): Cattle that are sold to QZH and being slaughtered and deboned and packed by QZH; and the sale of red meat deboned and packed by QZH that are sold to various meat distributors, wholesalers and super market chains and our own retail butcher stores. (ii) The operation of Hunan Shenghua A Power Agriculture Co. Ltd. (“HSA”) in manufacturing and sales of organic fertilizer. Also, since QZH is a fully owned subsidiary of SJAP the financial statements of these three companies (SJAP, QZH and HSA) are being consolidated into APWAM as one entity.

Corporate &Others Division refers to the business operations of Sino Agro Food, Inc., including import/export business and consulting and service operations provided to projects that are not included in the above categories, and not limited to corporate affairs.

CONSOLIDATED RESULTS OF OPERATIONS

Part A. Unaudited Income Statements of Consolidated Results of Operations for the three months ended March 31, 2015 compared to the three months ended March 31, 2014.

A (1) Income Statements (Unaudited)

In $	Three months ended			Three months ended			Difference			Note
	March 31,2015			March 31,2014

Revenue		115,476,450			90,927,789			24,548,661		1
Consulting, services, commission and management fee		29,903,907			12,655,480			17,248,427
Sale of goods		85,572,543			78,272,309			7,300,234
Cost of goods sold and services		79,897,999			62,367,941			17,530,058		2
Consulting, services, commission and management fee		16,608,011			6,503,412			10,104,599
Sale of goods		63,289,988			55,864,529			7,425,459
Gross Profit		35,578,451			28,559,848			7,018,603		3
Consulting, services, commission and management fee		13,295,896			6,152,068			7,143,828
Sale of goods		22,282,555			22,407,780			(125,225	)
Other income (expenses)		(637,781	)		50,403			(688,184	)
General and administrative expenses		(4,565,907	)		(2,668,394	)		(1,897,513	)	4
Net income		30,374,763			25,941,857			4,432,906

EBITDA		32,474,829			27,094,847			5,379,982
Depreciation and amortization (D&A)		(1,316,459	)		(1,043,883	)		(272,576	)	5
EBIT		31,158,370			26,050,964			5,107,406
Net Interest		(783,606	)		(109,107	)		(674,499	)
Tax		-			-			-
Net Income		30,374,764			25,941,857			4,432,907
Non - controlling interest		6,619,923			(5,153,938	)		11,773,861		7
Net income to SIAF Inc. and subsidiaries		23,754,841			20,787,919			2,966,922
Weighted average number of shares outstanding
- Basic		17,114,989			14,308,910			2,806,079
- Diluted		17,822,059			15,015,980			2,806,079
Earnings Per Share (EPS)										8
- Basic		1.39			1.45			-0.06
- Diluted		1.33			1.38			-0.05

This remainder of this section (Part A) discusses and analyzes certain items (annotated) that we believe assists stakeholders in obtaining a better understanding of the Company’s operations and financial condition:

Note (1, 2 & 3) Sales, cost of sales and gross profit information and analysis:

The Company’s revenues were generated from (1) Sale of Goods and (2) Consulting and Services provided in project and business developments covering engineering, construction, supervision, training, managements and technology etc.

Table (A.1)) below shows the items, quantities, average selling price and average unit cost of goods sold for three months ended March 31, 2015 (Q1 2015) compared to the three months ended March 31, 2014 (Q1 2014).

	Description of items								Notes
	Cattle Operation		2015Q1		2014Q1		Difference
	Production and Sales of live cattle	Heads		5,032		3,715		1,317
	Average Unit sales price	US$/head		3,393		4,410		-1,017	A.1.1
	Unit cost prices	US$/head		2,503		3,050		-547
	Production and sales of feedstock							-	A.1.2
	Bulk Livestock feed	MT		12,465		8,000		4,465
	Average Unit sales price	US$/MT		167		168		-1
	Unit cost prices	US$/MT		82		87		-5
	Concentrated livestock feed	MT		9,836		7,880		1,956
	Average Unit sales price	US$/MT		437		441		-4
	Unit cost prices	US$/MT		262		258		4
	Production and sales of fertilizer	MT		3,257		15,991		-12,734
	Average Unit sales price	US$/MT		181		184		-3	A.1.3
	Unit cost prices	US$/MT		111		92		19
* QZH	(Slaughter & De-boning operation)
	Slaughter operation								A.1.A.
	Slaughter of cattle	Heads		500
	Service fee	US$/Head		8
	Sales of associated products	Mixed		530
	Average Unit sales price	US$/Mixed		351
	Unit cost prices	US$/Mixed		178
	De-boning & Packaging activities
	From Cattle supplied locally
	De-boned Meats	MT		190
	Average Unit sales price	US$/MT		13,589
	Unit cost prices	US$/MT		8,704
	From imported beef	MT		1,037
	Average Unit sales price	US$/MT		9,049
	Unit cost prices	US$/MT		6,194
	From imported lamb	MT		-
	Average of sales price	US$/MT		-
	Average of cost prices	US$/MT		-
HSA	Fertilizer and Cattle operation							-
	Organic Fertilizer	MT		2,811		3,852		-1,041
	Average Unit sales price	US$/MT		261		256		5
	Unit cost prices	US$/MT		190		187		3
	Organic Mixed Fertilizer	MT		7,532		8,500		-968	A.1.4
	Average Unit sales price	US$/MT		453		451		2
	Unit cost prices	US$/MT		245		256		-11
	Retailing packed fertilizer (For super marlet sales)	MT		39				39
	Average Unit sales price	US$/MT		930				930
	Unit cost prices	US$/MT		357				357
JHST	Plantation of HU Flowers and Immortal vegetables
	Fresh HU Flowers	Pieces						-
	Average Unit sales price	US$/Pieces						-
	Unit cost prices	US$/Pieces						-
	Dried HU Flowers	MT						-
	Average Unit sales price	US$/MT						-
	Unit cost prices	US$/MT						-
	Dried Immortal vegetables	MT						-
	Average Unit sales price	US$/MT						-
	Unit cost prices	US$/MT						-
	Other Value added products	Pieces				5.00
	Average Unit sales price	US$/Pieces				152,010
	Unit cost prices	US$/Pieces				49,036

	Description of items
			2015Q1		2014Q1		Difference
CA	Production and sale (Inclusive contrated farms) of live								A.1.5 & A.1.6
	Fish (Sleepy cods)	MT		76		99		-23
	Average Unit sales price	US$/MT		15,361		16,018		-657
	Unit cost prices	US$/MT		12,654		12,739		-85
	Eels	MT		633		956		-323
	Average Unit sales price	US$/MT		23,384		26,016		-2,632
	Unit cost prices	US$/MT		15,479		16,653		-1,174
	Prawns	MT		671		374		297
	Average Unit sales price	US$/MT		16,761		12,462		4,299
	Unit cost prices	US$/MT		13,920		11,685		2,235
MEIJI	Production and sale of Live cattle (Aromatic)	Heads		2,935		2,672		263
	Average Unit sales price	US$/head		2,825		2,824		1
	Unit cost prices	US$/head		2,722		2,702		20
SIAF	Seafood trading from imports
	Mixed seafoods	MT		392		772		-380	A.1.8
	Average of sales price	US$/MT		15,941		12,805		3,136
	Average of cost prices	US$/MT		14,170		11,134		3,036
	Beef & Lambs trading from imports	MT		398		-
	Average of sales price	US$/MT		8,639
	Average of cost prices	US$/MT		6,331

Notes to Table (A.1)

A.1.1: Comparing between Q1 2015 to 2014, there were 1,317 more cattle being sold in Q1 2015 versus Q1 2014 at a rate $1,017 / head less than 2014 whereas in Q1 2015 average sales rate was $3,393 / head compared to Q1 2014’s $4,410/ head). The main reason for such change is due to the lighter weighing cattle being sold in Q1 2015 (averaged at 671 kg / head compared to 797 kg / head in Q1 2014) that may vary from Quarter to Quarter due to the fact that they were weaned at the time when they were brought in (i.e. from 4 months old to 8 months old) and when they are fattened (i.e. starting from 17 months old to 20 months old). However, the average wholesale prices of live cattle between the two quarters (Q12015 and 2014) remained steady in Q1 2015 at RMB31/ kg versus Q1 2014 RMB 32 / Kg.

1.1.2: The increase in quantity of sales of Bulk Stock feed by 4,465 MT in Q1 2015 from the same quarter in 2014 is due mainly to the increase of cattle being fattened in Q1 2015 and the stronger demand of bulk feed by the regional farmers (including our cooperative farmers) in Q1 2015. On average, a head of cattle requires up to 16.5 Kg / day of bulk stock feed (equivalent up to 1,476 Kg / 3 months) during its fattening period. Over 60% of bulk feed in Q1 2015 was consumed by fattening cattle on-site, and the balance of 40% was sold to regional farmers.

The reasons for increased sales quantities of “Concentrated livestock feed” are similar to the “Bulk Livestock Feed”, however, on average, a head of cattle requires only up to 6.5 Kg / head / day (equivalent to 585 kg / 3 months) during its fattening period, thus only about 32% was used in the fattening process with the balance of 68% sold to regional farmers (including cooperative farmers).

A.1.3: The decrease in Fertilizer sales between Q1 2015 and Q1 2014 is primarily due to lack of sales made to HSA compared to Q1 2014.

A.1.4: The decrease of sales of Organic Mixed Fertilizer from HSA in Q1 2015 by 968 MT as compared to same quarter of 2014 is mainly due to variations in seasonal demands by lake fishermen and produce growers.

A.1.A: SJAP’s abattoir has slaughtered about 500 head of cattle in Q1 2015, a figure far below earlier estimates at 2,000 head per quarter. However, this has been offset by imported beef quarters, accelerating the pace of the deboning activity to over (190 + 1,037 = 1,227 MT) of meat, equivalent to 3,665 heads of cattle being slaughtered for the quarter (equivalent to a rate of over 14,660 head of cattle per year), is far more than the earlier estimate (at about 10,000 head of cattle per year). The cost difference between average wholesale prices of domestic deboned meats and ~~the~~ imported deboned meats is around RMB20 /kg (i.e. domestic at RMB60 / Kg compared to Imports at RMB40 / kg) due primarily to the higher quality of domestic meats from grain fed cattle (90 to 100 days grain fed) and mainly sold freshly chilled, whereas the imported deboned meats were from pasture fed cattle sold frozen.

A.1.5 & 1.1.6: The figures of sales and costs shown in table above were general figures calculated from various components to simplify the overall analysis procedure.

However, the chapters/ tables below reflect those various components in detail:

(a). CA’s sales revenues are generated from three sales components;

(a.1). Sales with no realized profits (i.e. sales of fingerling, stocks ready for final stage grow-out, feed staffs and supplementary etc. to FF(1), PF(1) and PF(2)which are sold to said farms at cost ).

(a.2) Sales of live seafood brought from FF(1), PF(1), PF(2) and FF(2) and its sub-contracted growers.

(a.3).Commissions earned from PF(2)’s fingerling sales.

(b). Wherein, the sales component of FF(1), PF(1), PF(2)and FF(2) consist of the following:

(b.1). FF(1)has two sales components:

(b.1.1.). Sales of fish, prawns & eels grown by its APM farm (that has 16 APM tanks)

(b.1.2). Sales of fish, prawns & eels grown in its leasehold farm (of some 170 Mu) with open RAS dams & non-RAS open dams.

* Below Tables show some grow-out statistics between the APM farm, RAS open dams and non-RAS open dams of FF(1) recorded in 2014 and respective sales in Q1 2015:

Table (b.i): Grow-out statistic records of 2014

Table (b.ii) Component of sales of FF(1) between APM farm and open dams 2014

Table (b.1.i)Grow-out stastic records of 2014

Grow-out by APM farm

General information (1)	Cost of APM farms															Feed Conversion	Prices of feed		Weight gain average
	Baby stocks			Feed Stocks			Mortality			Total cost			G.P.			Rate	RMB/Kg		m=month
Sleepy cods		55	%		21	%		5	%		81	%		19	%	1.25(F) / 1(Lwt)		16	350g & up	500g & up	600g & up
																			50/60 g / m	55/65g / m	65g & up / m

Flow Pattern Eels		32	%		18	%		6	%		56	%		49	%	1.8(F) / 1 (LWT)		10	900g & up	1500g & up	2000g & up
																			55/65g/month	65/70g / m	70g & up / m

Big Giant Prawns		9	%		16	%		15	%		40	%		60	%	0.9 (F) to 1 (LWt)		7.50	3 Wks to 6 Wks	6 Wks to 9 Wks	9Wks to 12 Wks
																			8g to 10 g / piece	12.5 g / piece	16/17 g / piece
																				0.12 g / day	0.19 g / day

Grow-out by RAS open dams

General information (2)	Cost RAS open dams															Feed Conversion	Prices of feed		Weight gain / day
	Baby stocks			Feed Stocks			Mortality			Total cost			G.P.			Rate	RMB/Kg
Mexican White		6	%		18	%		45	%		69	%		28	%	1.5(F) / 1(Lwt)		7.50	2 Wk to 5 Wks	5 Wks to 8 Wks	8Wks to 10 Wks
																			7/8 g / piece	10/11 g / piece	13/14 g / piece

Big Giant Prawns		9	%		21	%		45	%		75	%		25	%	1.8 to 1.9 (F) / 1 (LWT)		7.50	3 Wks to 6 Wks	6 Wks to 9 Wks	9Wks to 12 Wks
																			10 g / piece	12/13g / piece	15/16 g / piece

Grow-out by Non-RAS open dams

General information (3)	Cost RAS open dams															Feed Conversion	Prices of feed		Weight gain average
	Baby stocks			Feed Stocks			Mortality			Total cost			G.P.			Rate	RMB/Kg
Mexican White		6	%		25	%		55	%		86	%		14	%	1.8 to 1.9 (F) / 1(Lwt)		7.50	2 Wk to 5 Wks	5 Wks to 8 Wks	8Wks to 10 Wks
																			7/8 g / piece	10/11 g / piece	13/14 g / piece

Big Giant Prawns		9	%		25	%		55	%		89	%		11	%	2. to 2.1(F) / 1 (LWT)		7.50	3 Wks to 6 Wks	6 Wks to 9 Wks	9Wks to 12 Wks
																			10 g / piece	12/13g / piece	15/16 g / piece
																				0.10 g / day	0.16 g / day

Table (b.1.ii) Component of sales of FF(1) between APM farm and open dams 2014

FF(1)'s sales items	2014 sales component of FF(1)						Averaged sales prices
	APM farm			Open Dams			FF(1) sold to CA		CA's ales prices
	% of total sales			% of total sales			RMB/Kg		RMB/kg

Sleepy cods		75	%		25	%		76		96

Flow Pattern Eels		23	%		67	%		116		136

Big Giant Prawns (or Mexican White prawns)		33	%		57	%		116		136

Other fish (for trading activities)		0	%		100	%		14		16

FF(1)'s sales items	2014 sales component of FF(1)						Averaged sales prices
	APM farm			Open Dams			FF(1) sold to CA		CA's ales prices
	% of total sales			% of total sales			RMB/Kg		RMB/kg

Sleepy cods		45	%		55	%		75		95

Flow Pattern Eels		38	%		62	%		123		143

Big Giant Prawns (or Mexican White prawns)		66	%		34	%		83		103

Other fish (for trading activities)		0	%		100	%		14		16

Note: The change in prawn prices between 2014's average of RMB136 / Kg to 2015's RMB 103 / kg doesn't mean the prawn prices have dropped, but it was because the frequencies of prawn grading has been increased in FF(1) such that higher portions of smaller sized prawns have been graded and sold reducing the overall averaged unit sales prices of prawns.

In fact averaged sales prices of prawns in Q1 2015 are as follows:

	RMB/Kg
60/70 pieces / Kg		80
80/100 pieces		40
30/40 pieces		110
10/20 pieces /Kg		140

(b.2). PF(1)has two sales components:

(b.2.1.). Sales of fish, prawns & eels grown by its APM farm (that has 4 APM tanks in 2014 & newly built additional 10 APM tanks in 2015)

(b.2.2). Sales of fish, prawns & eels grown in its leasehold farm (of some 210 Mu) with open RAS dams & non-RAS open dams.

CA bought all PF(1)’s seafood and resold it to wholesale markets.

Table (b.ii) below shows Component of sales of PF(1) between APM farm and open dams Q1 2014& Q1 2015

2. Att. (b.2.)

Note:

PF(1) Has only 4 APMs starting production in Q1 2014 whereas its extension to build an additional 10 APMs were completed in Q1 2015 aiming to start production from Q2 2015

At the same time PF(1) has other contracted growers and a leased on an additional 210 Mu open dams that were developed into RAS open dams in 2014 with production started in late Q4 2014.

As PF(1) is newly developed with its 14 APMs starting production from Q2 2015,its 210 Mu RAS open dams starting production from late Q4 2014 and some of its contracted growers' stocks in 2014 were not big enough to reach the market's required sizes, therefore it is expecting that, PF(1)'s ferformances in 2015 and 2016 will reach up to 70% and 100% of FF(1)'s performances respectively.

PF(1)'s sales items

2014 sales component of PF(1)

Averaged sales prices

APM farm

Open Dams

FF(1) sold to CA

CA's ales prices

% of total sales

RMB/Kg

RMB/kg

Big Giant Prawns

PF(1)'s sales items	Q1 2015 sales component of PF(1)						Averaged sales prices
	APM farm			Open Dams			FF(1) sold to CA		CA's ales prices
	% of total sales			% of total sales			RMB/Kg		RMB/kg

Big Giant Prawns		7	%		93	%		83		103

Flower pattern eels
20 cm (or 300g / piece)		1	%					35		45
up to 1.25 Kg / piece					99	%		145		165

Other fish		0	%		100	%		13		15

Note:

The difference in GP margin between FF(1) and PF(1) in 2014 is that PF(1)'s sales are 100% on prawns that yielded higher profit margins whereas FF(1) has mixed sales (in Sleepy cods, eels and prawns)that yielded lower profit margin in comparison.

(b.3). PF(2)has two sales components:

(b.3.1.). Sales of prawn fingerling (where CA earned a commission)

(b.3.2). Sales of fish, prawns & eels grown in its leasehold farm (of some 210 Mu); with open RAS dams & non-RAS open dams; wherein CA bought all of their products and resold them to the wholesale markets.

Table (b.3) shows Component of sales of PF(2) between APM farm and open dams Q1 2015

Att. (C.1) PF(2) Q1 2015

Production and sales of Flies	Pieces of flies		Average / Day		Sales Prices				Total sales PF (2)		Commission or margins (Incomes) for CA
					RMB/10,000		US$/10,000		US$		RMB/10K		US$/10K		Total Income CA
															RMB		US$
																	-
Mexican White																	-
		30,000,000		1,000,000		280		46		136,585.37		30		4.88		184,500.00	30,000

Big Giant Prawns
		20,000,000		666,667		650		106		211,382.11		50		8.13		100,000.00	16,260
		20,000,000		666,667		650		106		211,382.11		50		8.13		99,999.00	16,260
		120,000,000		4,000,000		700		114		1,365,853.66		70		11.38		840,000.00	136,585
		160,000,000								1,788,617.89

Grass Prawns
		10,000,000		333,333		500		81		81,300.81		50		8.13		50,000.00	8,130
		10,000,000		333,333		500		81		81,300.81		50		8.13		50,000.00	8,130
		20,000,000		666,667		500		81		162,601.63		50		8.13		100,000.00	16,260
		40,000,000								325,203.25

										2,250,406.50
Q1 2015 Incomes derived from Prawn Farm 2's commissions																1,424,499.00	231,626
																	10%

ATT. (C.2). Grow-out of Prawns Q1 2015 at PF(2)'s own 265 Mu RAS open dams

Production of Prawns (Grow-out to market sizes)				Sales prices to CA				Total Revenues				CA's sales prces to Markets				CA's Revenue
(Sales to CA)	Pieces		Average sizes	RMB / Kg		US$/ Kg		RMB		US$		RMB		US$		US$		CA's G.P.
Mexican White
22.01.2015		65,530	65 pieces / Kg		79		13		79,644		12,950		99		16		16,229		3,279
18.02.2015		92,550	70 Pieces / Kg		77		13		101,805		16,554		97		16		20,853		4,300
05.03.2015		61,170	55 Pieces / Kg		85		14		94,535		15,372		105		17		18,988		3,617

Big Giant Prawns
22.01.2015		55,780	60 pieces / Kg		75		12		69,725		11,337		95		15		14,360.70		3,023.31
18.02.2015		67,220	50 pieces / Kg		82		13		40,988		6,665		102		17		22,297.37		4,372.03
05.03.2015		41,270	50 pieces / kg		82		13		67,683		11,005		102		17		13,689.56		2,684.23

Mixed fish			Kg
22.01.2015		30,227	1.50		15		2.44		680,108		110,587		17		2.76		125,331.46		90,681.00
18.02.2015		35,528	2.77		18		2.93		1,771,426		288,037		20		3.25		320,040.85		196,825.12
05.03.2015		19,882	1.18		14		2.28		328,451		53,407		16		2.60		375,372.16		46,921.52




Total Q1 2015		469,157							3,234,364		525,913						927,163		355,702
																			38	%

(b.4.). FF(2) has over 1,000 Mu of open dams, out of which, 350 Mu are RAS open dams and 650 Mu are non-RAS open dams, and it generates income from:

(b.4.1). Sub-contracting to grow fish and eels for CA to certain sizes before CA sells them to FF(1), PF(1) & PF(2) for final grow-outs with excessive sea-foods being sold by CA to the wholesale markets or regional growers.

(b.4.2) Growing other fish and eels for other people with CA buying some of the seafood for trading purposes.

A.1.8: The imported seafood sales were made up by a variety of seafood imported from various countries such that the whole sum is a mixture of multiple variables that changes from quarter to quarter due to seasonal availabilities of seafood from different countries. The primary reason of lower imported sea-food sales in Q1 2015 compared to Q1 2014 is because of lower supplies from Madagascar this season.

Chart (B) shows CA’s components of sales Q1 2015.

CA's sales 2015Q1
		Quantity		Unit price		amount
1. CA Fishery sector's sales derived from sales to		pieces		RMB/pieces		RMB		US$
1 Fish Farm (1)
Fingerling & Baby fish
Sleepy cods			180,000		35		6,300,000		1,024,390
Eels			30,000		114		3,431,250		557,927
Prawns			22,000,000		0.07		1,430,000		232,520
Feed staffs	(kg)		236,109		8		1,945,937		316,413
2 Fish Farm (2)
(No sales to FF(2) by CA but by the R&D Station that didn't go into CA's sale)
3 Prawn Farm (1)
Prawns
Eels
Fingerling (Prawns & fish)			9,000,000		0.07		585,006		95,123
Feed staffs	(kg)		160,746		8		1,232,325		200,378
4 Prawn farm (2)
Commission earned from Fingerling sales							2,354,509		382,847
Sub (1) On sales to above entities							17,279,027		2,809,598

2. CA Fishery sector's sales derived from sales	Quantity		Unit price		amount
that the fish, eels & prawns were purchased from	Kg		RMB/Kg		RMB		US$

1 Fish Farm (1)
Fish (Sleepy cods)		31,821		75		2,386,601		388,065
Eels		188,816		145		27,378,314		4,451,758
Prawns		499,712		88		44,188,089		7,185,055
CA's profit (From Marked up on top of above cost)								2,748,870

2 Fish Farm (2)
Fish (Sleepy cods)
Eels		359,699		105		37,800,751		6,146,464
CA's profit (From Marked up on top of above cost)

3 Prawn Farm (1)
Prawns		164,484		68		14,599,374		2,373,882
CA's profit (From Marked up on top of above cost)								449,605

4 Prawn farm (2)
Prawns		32,810		75		2,469,379		401,525
Eels		97,142		116		11,268,472		2,369,311
Feed staffs		353,548		8		2,678,340		435,502
CA's profit (From Marked up on top of above cost)								1,572,358

Sub (2) CA's sales to above entities with marked up profits						142,769,320		4,770,833

Total Sales of CA (Sub. 1 + Sub. 2)								23,751,563

Table (A.2) below shows the sale of goods, cost of sales and gross profit for the three months ended March 31, 2015 (Q1 2015) and the three months ended March 31, 2014 (Q1 2014).

	In US$	Sales of goods				Cost of Goods sold				Sales of Goods' Gross profit
		2015Q1		2014Q1		2015Q1		2014Q1		2015Q1		2014Q1

SJAP	Sales of live cattle		17,071,207		16,384,494		12,597,387		11,332,306		4,473,819		5,052,188
	Sales of feedstock
	Bulk Livestock feed		2,080,669		1,342,988		1,025,257		697,252		1,055,412		645,736
	Concentrate livestock feed		4,296,880		3,477,413		2,580,188		2,029,979		1,716,693		1,447,434
	Sales of fertilizer		589,517		2,948,008		360,999		1,469,669		228,518		1,478,339
	SJAP Total		24,038,273		24,152,903		16,563,831		15,529,206		7,474,442		8,623,697
	* QZH's (Slaughter & Deboning operation)		189,916				94,468
	** QZH's (Deboning operation)
	on cattle & Lamb locally supplied		2,581,866		-		1,653,671		-		928,195		-
	on imported beef and mutton		9,384,094		-		6,423,229		-		2,960,865		-
	QZH Total		12,155,876		-		8,171,368		-		3,984,508		-
HSA	Sales of Organic fertilizer		771,320		987,593		548,028		719,522		223,291		268,071
	Sales of Organic Mixed Fertilizer		3,411,120		3,834,587		1,842,570		2,008,456		1,568,550		1,826,131
	HSA Total		4,182,440		4,822,180		2,390,598		2,727,978		1,791,841		2,094,202
	SJAP's & HS.A./Organic fertilizer total		40,376,589		28,975,083		27,125,797		18,257,184		13,250,791		10,717,899
JHST	Sales of Fresh HU Flowers		-				-				-		-
	Sales of Dried HU Flowers		-				-				-		-
	Sales of Dried Immortal vegetables		-		760,052		-		245,178		-		514,874
	Sales of Other Value added products		-				-				-		-
	JHST/Plantation Total		-		760,052		-		245,178		-		514,874
CA	Sales of
	Fish (Sleepy cods)		1,168,456		1,585,812		962,550		1,261,184		205,906		324,628
	Eels		14,803,660		24,862,185		9,798,909		15,914,258		5,004,751		8,947,927
	Prawns		11,246,726		4,660,788		9,340,538		4,370,124		1,906,188		290,664
	CA/ Fishery total		27,218,842		31,108,785		20,101,997		21,545,566		7,116,845		9,563,219
MEIJI
	Sale of Live cattle (Aromatic)		8,289,986		7,544,591		7,988,119		7,220,836		301,867		323,755
	MEIJI / Cattle farm Total		8,289,986		7,544,591		7,988,119		7,220,836		301,867		323,755
SIAF
	Sales of goods through trading/import/export activities
	on seafood		6,248,780		9,883,798		5,554,472		8,595,765		694,308		1,288,033
	on imported beef and mutton		3,438,347		-		2,519,603		-		918,744		-
	SIAF/ Others & Corporate total		9,687,127		9,883,798		8,074,075		8,595,765		1,613,052		1,288,033

Group Total			85,572,543		78,272,309		63,289,988		55,864,529		22,282,555		22,407,780

Table (A.3) below shows the percentage of gross profit for the three months ended March 31, 2015 and the three months ended March 31, 2014.

Gross Profit in % of sale of goods			2015Q1			2014Q1			Difference
Fishery
	CA
		Fish (Sleepy cods)		18	%		20	%		-3	%
		Eels		34	%		36	%		-2	%
		Prawns		17	%		6	%		11	%
		CA and Fishery Gross Profit		26	%		31	%		-5	%
Planation
	JHST
		Fresh HU Flowers
		Dried HU Flowers
		Dried Immortal vegetables					68	%
		Other Value added products
		JHST and Plantation Gross Profit					68	%
Beef
	SJAP
		Live cattle		26	%		31	%		-5	%

	QZH
		** QZH's (Deboning operation)
		on cattle & Lamb locally supplied		36	%
		on imported beef and mutton		32	%
		Beef Gross Profit		29	%		31	%		-2	%
Organic fertilizer
	SJAP
		Feedstock
		Bulk livestock feed		51	%		48	%		3	%
		Concentrated livestock feed		40	%		42	%		-2	%
		Fertilizer		39	%		50	%		-11	%

	HSA
		Fertilizer		29	%		27	%		2	%
		Organic mixed fertilizer		46	%		48	%		-2	%

		Organic fertilizer Gross Profit		48	%		45	%		3	%
Cattle farm
	MEIJI
		Sale of live cattle (Aromatic)		4	%		4	%		0	%
		MEIJI and Cattle farm Gross Profit		4	%		4	%		0	%
Corporate
	SIAF
		Sales of goods through trading/import/export activities
		on seafood		11	%		13	%		-2	%
		on imported beef and mutton		27	%
		Corporate and SIAF Gross Profit		17	%		13	%		4	%

Group Total Gross Profit on sale of goods (excluding C,S,C &C))				26	%		29	%		-3	%

Table (A.4) below shows the revenue, cost of services and gross profit generated from Consulting, services, commission and management fee for the three months ended March 31, 2015 (Q1 2015) and the three months ended March 31, 2014 (Q1 2014).

	2015Q1		2014Q1		Difference		Description of work	Notes
Sales Revenues (Consulting and Services)

CA		26,117,933		12,655,480		13,462,453	Working in progress of PF(1), PF(2)& Zhongshan New Prawn Project.
SIAF		3,785,974		-		3,785,974	Work in progress of WHX
Group Total Revenues		29,903,907		12,655,480		17,248,427		D6
Cost of sales
CA		15,203,198		6,503,412		8,699,786
SIAF		1,404,813		-		1,404,813
Group Total Cost of sales		16,608,011		6,503,412		10,104,599
Gross Profit
CA		10,380,667		6,152,068		4,228,599
SIAF		2,381,161		-		2,381,161
Group Total Gross Profit		12,761,828		6,152,068		6,609,760

Note: D6. During the Fiscal year 2012 and 2014, total consulting and service work of $261 million was contracted (i.e. contracts obtained prior to December 2014 for $102 million (“old contracts”) and contracts obtained from December 2014 onward for $159 million (“new contracts”)). As of December 31, 2014, there had been $101 million of work performed under the Old contracts (inclusive of $9 million of work being carried over from fiscal year 2011, thus, under the Old contracts there is $10 million of work to be carried over to fiscal year 2015; and there are $153 million of work remaining on the new contracts that will be carried over to the fiscal year 2015 having done $6 million of new contract work in fiscal year 2014.

Revenues: (consulting, service, commission and management fee)

Revenues increased by $17,248,427 or 136% from $12,655,480 for Q1 2014 to $29,903,907 for Q1 2015. The increase was primarily due to a increase in revenue from work in progress on the Zhongshan New Prawn Project’s development..

Fishery: Consulting Service Revenue from fishery related development works (generated by CA) increased by $13,462,453 or 106% from $12,655,480 for Q1 2014 to $26,117,933 for Q1 2015. The increase was due to a higher volume of work done by CA on the Zhongshan New Prawn Project.

Corporate: Consulting Service Revenue from other development work generated by the corporate sector (billed by SIAF) increased by $3,785,974 from $0 for Q1 2014 to $3,785,974 for Q1 2015.

Tables(A5) below highlights general information of ongoing Consulting Services provided by Capital Award, MEIJI and SIAF, respectively in Fiscal Year 2015:

Name of the
developments

Location of
development

Designed capacity per
year

Land area or
Built up area

Current Phase
& Stage

Commencement date of
development

(Estimated)
development's
completion date on
or before

Contractual
amount

% of completion as
of 30.04.2014

Fish Farm (1)

Enping City

1,200 MT

9,900 m2

fully operational

July 2010

June 2011

$5.3 million

Fully operational

Prawn Farm (1)

Enping City

2013=400MT 2014=800MT 2015=1200 MT

23,100 m2

2 phases and road work

2 phases and road work and Phase 3 extension of grow-out farm & Phase 4 demonstrated hydroponic farm

Phase 1 on June 2011 Phase (2.1) Phase (2.2) Road work Started Aug. 2012

Phase (1) on December 2012 Phase (2) completed Q1 2013

Phase (1) $11.6 million Phase (2) 6.39 million Road work $2.94 million, Phase 3 US$5.2 million & Phase 4 US$1.6 million

Fish Farm (2) "The Fish & Eel Farm

Xin Hui District, Jiang Men.

2014=800 MT 2015= 1600 MT 2016=2000MT

165,000 m2

3 Phases

Phase 1 January 15, 2012 Bridge & Road Oct. 2012 Phase (3) 2013 & (4)2014

Phase 1 June 2014 Bridge & Road Dec. 2013 Phase (3) & (4) 2015

Phase (1) $8.73 million Bridge & Road $2.48 Phase (3) $4.38 M Phase (4) $10.63 Million

Phase (1) & Bridge and Road completed Jan. 2013 Phase (3) completed and Phase (4) not started.

Prawn Farm (2) The Hatchery & Nusery & Grow-out prawn farm

San Jiao Town, Zhong San City,

2013=1.6 Billion Fingerling and 400MT of prawns increasing yearly and by 2015 = 3.2 billion fingerling and 1200 MT of Prawns

120,000 m2

2 phases

Phase (1) and Phase (2) May 2012 Phase (3) 2014

Phase (1) Dec. 2012 and Phase (2) December 2013.Phase (3) Dec. 2014

Phase (1) $9.26 m and Phase (2) 8.42 Million Phase (3) 11.5 Million

Phase (1) fully operational and Phase (2) in operation and Phase (3) has started

Cattle Farm (1)

LiangXi Town, Enping City

165,013 m2

1,500 Heads

2 phases

April 2011

December 2011

$3.0 million +$1.17 Million

Fully Operational

Cattle Fram (2)

LiangXi Town, Enping City

230,300 m2

2,500 heads

2 Phases

February 2012

March. 2014

$10.6 million

completed

Cattle Farm (1) external road work

LiangXi Town, Enping City

4.5 Km road

One Phase

September 2012

March. 2013

$4.32 million

Completed

Cattle Farm (2) External Road work.

LiangXi Town, Enping City

5.5 Km Road

One Phase

September 2012

March. 2013

$5.28 Million

Completed

WHX Restaurants etc.

Guangzhou City

5,500 seatings in total

Phase (1) Stage (1)

June 2012

December 2015

$17.5 million

Work in progress

NaWei wholesale Center

Guangzhou City

5,000 m2

One Phase

July 2012

March. 2014

$ 9 million

Completed

Shanghai City

6,000 m2

One Phase

May. 2014

End April 2015

$5 million

Completed as at April 30 2015.

Note (4) Other Income

Table (Note 4.1) below shows the Gain / Loss on extinguishment of debts (or Debt Settlement) representing recent sales of unregistered securities and the issuance of shares for Q1 2015

Date	Shares issued/Bought back		Market Price when issuance		Par value		Additional paid in capital		Consideration received		Income from issuance of shares		Note
As at 01.01.2015		17,162,716
2/2/2015		173,304		6.96		173		1,205,867		1,206,040		-	Collaterailed shares to secure loan debts
3/10/2015		290,000		7.61		290		2,205,960		2,206,250		-	Collaterailed shares to secure loan debts
3/19/2015		290,000		8.91		290		2,584,085		2,584,375		-	Collaterailed shares to secure loan debts
3/31/2015		153,392		11.13		153		1,707,100		1,707,253		-	Part of reversed split conversion

As of 03.31.2015		18,069,412				907		7,703,011		7,703,918		-

The Company did not enter into any additional agreements with third parties to settle debt by issuance of the Company’s common stock during this Quarter.

During the Quarter, The Company entered into two loan agreements with two third parties for collective net loan amounts up to $25 million that will be secured by the Company’s common stock, transacted in tranches. As of March 31, 2015, the Company obtained net loan amounts of $4,797,232 (loan principal) that were secured by 753,304 newly issued shares of the Company at face value of $5,996,540 (collectively and calculated from market prices of shares shown in the table above). At maturity and after the Company will have paid back said loan principal plus all interest payments, the aforementioned 753,304 shares will be returned to the Company, however in the interim, they will be counted in the total issued and outstanding shares (covering both basic and diluted counts) of the Company, but they will not affect the proceeds from EPS of the Company because any dividend paid and earnings derived from these shares in the interim will revert to the Company, and not the third parties.

The shares issued by the Company were valued at the trading price of the stock on the date the shares were issued. For the three months ended March 31, 2015, the Company issued an aggregate of 906,696 shares of Common Stock (inclusive both of the 753,304 shares as security and 153,392 shares issued to shareholders who hadn’t converted their shares as at 31 December 2014, but converted during this quarter) in consideration for the aggregate amount of $7,703,918, reporting a gain in income of $0 from the issuance.

The other income for the three months ended March 31, 2015 amounted to $(637,780) and derived from the combination of (1) Gain on extinguishment of debt $0 (Note 4), Government Grant $83,180 and other incomes $62,646 less interest expenses of $783,606. Whereas, the other income for the three months ended March 31, 2014, had been derived from the combination of (1) Gain on extinguishment of debt $43,020 (Note 4), Government Grants $ 113,232 and other incomes $3,258 less interest expenses of $109,107.

Gain (loss) of extinguishment of debts

Any deficit (excess) of the fair value of the shares over the carrying cost of the debt has been reported as a gain (loss) on the extinguishment of debt of $ 0 and $43,020 has been credited (charged) to operations for the three months ended March 31, 2015 and 2014, respectively.

Note (5 )General and Administrative Expenses and Interest Expenses

General and administrative and interest expenses (including depreciation and amortization) increased by $2,572,012 or 93% from $2,777,501 for Q1 2014 to $5,349,513 for Q1 2015. The increase was primarily due to increase in the office and corporate expenses of $1,254,708 from $758,221 for Q1 2014 to $2,012,929 for Q1 2015, other and miscellaneous expenses related to the corporate work of $501,576 from $228,255 in Q1 2014 to $729,831 in Q1 2015 and interest expenses of $674,499 from $109,107 in Q1 2014 to $783,606 in Q1 2015. This is a sharp increase in corporate expenses that the Company is paying attention to.

Table (to Note 5)

Category	2015Q1		2014Q1		$ Difference

Office and corporate expenses	$	2,012,929	$	758,221	$	1,254,708

Wages and Salaries	$	668,688	$	592,275	$	76,413

Traveling and related lodging	$	82,893	$	75,592	$	7,301

Motor vehicles expenses and local transportation	$	40,900	$	35,795	$	5,104

Entertainments and meals	$	50,313	$	30,289	$	20,024

Others and miscellaneous	$	729,830	$	228,255	$	501,576

Depreciation and amortization	$	980,354	$	947,967	$	1,865,126

Sub-total	$	4,565,907	$	2,668,394	$	1,897,513

Interest expenses	$	783,606	$	109,107	$	674,499

Total	$	5,349,513	$	2,777,501	$	2,572,012

Note (6) Depreciation and Amortization

Depreciation and amortization increased by $272,575 or 26% to $1,316,459 for Q1 2015 from $1,043,883 for Q1 2014. The increase was primarily due to the increase of depreciation by $267,535 to $802,338 for Q1 2015 from depreciation of $534,803 for Q1 2014 whereas the increase of amortization by $5,041 to $514,121for Q1 2015 from amortization of $509,080 for Q1 2014.

In this respect, total depreciation and amortization amounted to $1,316,459 for Q1 2015, out of which amount, $980,354 was reported under general and administration expenses and $336,105 was reported under cost of goods sold; whereas total depreciation and amortization was at $1,043,883 for Q1 2014 and out of which amount $947,967 was reported under General and Administration expenses and $95,916 was reported under cost of goods sold.

Note (7). Non-controlling interests

Table (F) below shows the derivation of non-controlling interest:

Names of intermediate holdco. subsidiaries	Capital Award Inc. (Belize)			Macau EIJI Company Ltd. (Macau)									A Power Agro Agriculture Development (Macau) Ltd.			Triway Industries Ltd.(HK)			Total
Abbreviated names	CA			(MEIJI)									(APWAM)			(TRW)
% of equity holding on below subsidiaries (in China)		n.a.			75	%		75	%		26	%		45	%		75	%
Name of China subsidiaries		None			Jiangmen City Heng Sheng Tai Agriculture Development Co. Ltd.(China)			Jiangmen City Hang Mei Cattle Farm Development Co. Ltd.(China)						Quinghai Sangjiang A Power Agrivulture Co. Ltd. (China)			Jiangmen City A Power Fishery Development Co. Ltd. (China)
Abbreviated names					(JHST)			(JHMC)			(HSA)			(SJAP)			(JFD)
											Hunan Shanghua A Power Agriculture Co. Ltd (China			50	%

Net income of the P.R.C. subsidiaries for the period ended 31. March 2015 in $		0		$	(588,016	)	$	175,939		$	931,039		$	11,021,294		$	1,751,127

Equity % of non-controlling interest		0	%		25	%		25	%		24.0	%		55	%		25	%

Non-controlling interest's shares of Net incomes in $		0		$	(147,004	)	$	43,985		$	223,449		$	6,061,711		$	437,782		$	6,619,923

The Net Income attributed to non-controlling interest is $6,619,923 shared by (JHST, JHMC, HSA, SJAP and JFD collectively) for Q1 2015 as shown in Table (F) above.

Note (8) Earnings per shares (EPS)

Earnings per share has no change (basic) and minimal changes (diluted), from EPS of $1.45 (basic) and $1.38 (diluted) Q1 2014 to EPS of $1.39 (basic) and $1.33 (diluted) for Q1 2015.

Part B. MD & A on Unaudited Consolidated Balance Sheet of Continued Operations for the three months ended March 31, 2015 (Q1 2015) compared to the three months ended March 31, 2014 (Q1 2014)

Consolidated Balance sheets	March 31, 2015			December 31,2014			Difference			Note
	$			$			$
ASSETS
Current assets
Cash and cash equivalents		10,932,661			3,031,447			7,901,214			B
Inventories		49,227,718			45,967,993			3,259,725			9
Costs and estimated earnings in excess of billings on uncompleted contracts		1,306,885			-			1,306,885
Deposits and prepaid expenses		76,791,239			75,951,591			839,648			10
Accounts receivable		103,774,371			104,503,071			(728,700	)		11
Other receivables		60,944,553			52,305,260			8,639,293			11.a
Total current assests		302,977,427			281,759,362			21,218,065
Property and equipment								0
Property and equipment, net of accumulated depreciation		64,750,441			64,352,975			397,466			12
Construction in progress		87,710,314			69,120,277			18,590,037			13
Land use rights, net of accumulated amortization		62,763,167			63,322,202			(559,035	)		14
Total property and equipment		215,223,922			196,795,454			18,428,468
Other assets								0
Goodwill		724,940			724,940			0
Proprietary technologies, net of accumulated amortization		11,327,787			11,480,298			(152,511	)
Investment in unconsolidated corporate joint venture		814,067			817,127			(3,060	)
Tempoary deposits paid to entities for investments in future		41,109,708			41,109,708			0
Total other assets		53,976,502			54,132,073			(155,571	)
Total assets		572,177,851			532,686,889			39,490,962
Current liabilities											16
Accounts payable and accrued expenses		23,127,256			22,138,835			988,421
Billings in excess of costs and estimated earnings on uncompleted contracts		4,034,158			8,060,580			(4,026,422	)
Due to a director		1,008,000			1,172,059			(164,059	)
Series F Non-converible preferred stock redemption payable		3,146,063			3,146,063			-
Other payables		11,084,679			11,695,982			(611,303	)
Short term bank loan		4,394,210			4,410,727			(16,517	)
Convertible bond payable		1,725,000			1,725,000			0
Total current liabilities		48,519,366			52,349,246			(3,829,880	)
Non-current liabilities
Other payables		4,797,332			-			4,797,332
Bonds payable		16,286,754			15,803,928			482,826
Long term debts		2,297,421			2,306,057			(8,636	)
Total non-current liabilities		23,381,507			18,109,985			5,271,522
Stockholders equity
Preferred stock
Series A preferred stock
Series B convertible preferred stock		7,000			7,000			-
Series F Non-convertible preferred stock											17
Common stock		18,069			17,163			906
Additional paid-in capital		128,862,007			121,158,996			7,703,011
Retained earnings		297,015,949			273,261,108			23,754,841
Accumulated other comprehensive income		6,436,710			6,260,131			176,579
Treasury stock		(1,250,000	)		(1,250,000	)		-
Total SIAF Inc. and subsidaries' equity		431,089,735			399,454,398			31,635,337
Non-controlling interest		69,187,243			45,373,880			23,813,363
Total stockholders' equity		500,276,978			444,828,278			55,448,700
Total liabilities and stockholders' equity		572,177,851			515,287,509			56,890,342

This Part B discusses and analyzes certain items (marked with notes) that we believe would assist stakeholders in obtaining a better understanding on the Company’s results of operations and financial condition:

Note (B) Cash and Cash Equivalent

The change in cash and cash equivalent of $7,901,214 derived from cash and cash equivalent of $10,932,661 and $3,031,447 as at March 31, 2015 and 31 December 2014 respectively. The significant difference in cash and cash equivalent between these two quarters is mainly due to the following reasons:

As at December 31, 2014 our cash and cash equivalent balance was low as our suppliers billed for all work done up to December 31 with Chinese New Year approaching and we paid in full;

However as at March 31, 2015 our cash and cash equivalent is higher as our collection of our receivables were positive and our suppliers billings were not billed within in full this quarter. Hence we expect the suppliers billings in full next quarter will mean our cash balance may decline accordingly.

Note (9) Break down on inventories

	Mar 31,2015
	$
Sleepy cods, prawns, eels and marble goby		3,547,158
Bread grass		1,302,969
Beef cattle		7,361,889
Organic fertilizer		6,075,642
Forage for cattle and consumable		9,238,819
Raw materials for bread grass and organic fertilizer		15,351,389
Beef and mutton		5,101,401
Immature seeds		1,248,450
		49,227,718

Note (10) Breakdown of Deposits and Prepaid Expenses

	Mar 31,2015		Note
	$
Deposits for
- purchases of equipment		4,668,784
- acquisition of land use rights		3,373,110		10.1
- inventories purchases		12,889,155		10.3
- aquaculture contracts		14,219,514
- building materials		877,598
- consulting service providers and others		11,032,481
- construction in progress		20,467,357
Prepayments - debts discounts and others		3,544,120
Shares issued for employee compensation and overseas professional and bond interest		5,719,120		10.2
		76,791,239

Note (10.1) Breakdown of Deposit for- acquisition of Land Use Right:

As of March 31, 2015, we have $3,373,110 for a deposit paid for the acquisition of a Land Use Right derived from the following transactions:

$3,182,180 (or RMB20,000,000) was full payment made on June 6, 2012 for Land Use Right by HSA comprising a block of land measuring 150 Mu (or 25 acres of prime agriculture land) located at Linli District of Hunan Province within 10 Km of HSA’s complex. The process of application to register the said “Land Use Right” is in progress, and, as such, this payment is recorded as Deposit and Prepaid Expenses pending final authority estimated to be granted on or before September 30, 2015, as the new local ordinances on agriculture land delayed the processing of our application.

•

$190,930 (or RMB1,200,000) was paid by SJAP as deposit for the acquisition of “Land Use Right” on a block of land measuring 15 Mu (or 2.475 acres) located at Huangyuan district next to SJAP’s complex on October 15, 2012. The process of rezoning this piece of land to residential (at present, agriculture) continues, and once completed will be transferred from the Local Government (Huangyuan County) to SJAP to build new staff quarters.

Note (10.2) Information of “Temporary deposit and pre-payments for investments in future assets and in future Sino Foreign Joint Venture companies”:

Under account								Deposit & prepayments		Land Bank
of Subsidiary	Segment of		Project name	Estimated total Asset value	Estimated time of Acquisition		Current status of Project	made as of 31. March 2015		or Built Up area		% equivalent to equity paid
				$					$		m2
SIAF		Corporate	Trade Center	3.5 million		own development	30% completed		4,086,941		5,000		31	%

			Seafood Center						1,032,914

CA		Fishery	Fish Farm (1)	26.22 Million		2016	2 out 4 phases completed		6,000,000		23,100		23	%
			Prawn Farm (1)	20.93 Million		2014	in operation		14,554,578		165,000		56	%
			Prawn Farm (2)	29.18 Million		2014	Part operational Part work in progress		9,877,218		120,000 developed 96,000 m2 undeveloped		29	%

MEIJI		Cattle	Cattle Farm (2)	15.88 Million		2014	95% completed		5,558,057		230,300		35	%
									41,109,708

Note (11) Breakdown of Accounts receivable:

	March 31,2015
		Accounts receivable		0-30 days	31-90 days	91-120 days	over 120 days and less than 1 year	Notes
		$		$	$	$	$
Consulting and Service totaling								1
CA		20,397,350		-	12,953,478	-	7,443,872	1.b.
SIAF		2,873,833		2,272,622	-	601,211	-
MEIJI		9,101,588					9,101,588	1.a.

Sales of Live Fish, eels and prawns (from Farms) (CA)		9,052,831		9,052,831		-	-	2

Sales of imported seafood & Beef (SIAF)		4,080,616		3,280,319	-	800,297	-	3

Sales of Cattle and Beef Meats (from Enping Farm) (MEIJI)		103,340		103,340	-	-	-	4

Sales of HU Flowers (Fresh & Dried) (JHST)		9,573,476		-	-	-	9,573,476	5

Sales Fertilizer, Bulk Stock feed and Cattle by (SJAP)		31,098,090		8,210,889	15,793,501	5,874,828	1,218,872	6

Sales Fertilizer from (HSA)		10,024,872		1,420,037	2,759,679	1,470,022	4,375,134	7
				-	-	-	-
Sales of Beef (QZH)		7,468,375		5,103,326	1,619,927	622,481	122,642	8

Total		103,774,371		29,443,363	33,126,585	9,368,839	31,835,585
Percentage of total population		100	%

Note 1,3,4,6 and 8: As evidenced in above table that account receivables in Consulting & Services (C&S), import sales of both seafood and beef and sales of fertilizer of SJAP are all within comfortable trading terms, especially the C&S of CA that includes services charges billed to Zhongshan New Prawn Projects that were paid within its trading term of 60 to 90 days.

Note 1.a: The $9,101,588 is MEIJI’s receivable derived from (C&S) of Cattle Farm (2), and usually we would have during 2014 and 2015 redeemed part of this amount as deposits and prepayments for consideration paid for the equity in its future “Sino Foreign Joint Venture Company” (SFJVC) that will be formed. However we did not do that in 2014 and Q1 2015, as such, as of March 31, 2015 said receivable remains outstanding shown beyond over 120 days & less than one year, however this situation will be rectified within Q2 2015.

Note 1.b: The $7,443,872 was due by our main sub-construction contractor who we have advanced funds to purchase many building materials, building parts and component, and other associated materials needed for the construction of the Zhongshan New Prawn Farm Development Project, and, as such, these will eventually be charged as work in progress over a period of time.

Note 2: CA’s fish sales receivable has $7,443,832 that are over 120 days primarily due to some bigger sized fish and eels requiring longer times to sell, which is usual and consistent within the normal trade of live seafood.

Note 5: It is our usual trading terms with major wholesalers who purchase our dried HU products that they are to buy all of our dried products produced in each season such that we don’t have to keep any inventory and they are to pay progressively during the period and in full before each new subsequent season, which means that the outstanding balance of $9,573,476 due from them will be fully paid on or before June 30, 2015.

Note 7: Sales of Fertilizer HSA normally have longer credit terms (6 months to 12 months) since the bulk of sales are to the lake fishermen and crop farmers who normally pay for their fertilizer after each harvest that may take between 6 months to 12 months (i.e. Fish and fruits may take up to 12 months while vegetables and cash crops may be within 6 months, etc.)

Information on trading terms and provision for diminution in value of accounts receivable:

Our accounts receivable aging is less than 12 months old. Receivables from revenue derived from consulting and services billed for work completed are within our normal trading terms of 180 days (maximum term) and therefore no diminution in value is required, as the credit quality of receivable is not in doubt.

Fish Sales: Most farmed fish are sold to wholesalers at prevailing daily market prices and aging is within 90 days trading terms with a small portion at 180 days (for oversized fish, as the sale of oversized fish takes time to sell). We sold US$27 million in live fish, eels and prawns (live seafood) to wholesalers for the period ending March 31, 2015 and as of March 31, 2015, accounts receivable of $7,443,872 were over 120 days. These debtors represent credit quality receivables as they are well established wholesalers, profitable and viable businesses with a good track record and therefore provision of diminution in value is not required as collection is not in doubt.

Sales of fertilizer and bulk livestock feed (SJAP): These comprise sales made to regional farmers contracted by us to grow crops and pastures using and purchasing our fertilizer. We in turn agree to buy their cattle that are fed with our bulk and concentrated cattle feed purchased from us. Under this term of arrangements our accounts receivable are normally carried forward until such time they can be offset against our account payables due to these contracted farmers (that is, the amount owed for the amount of crops and pastures is ultimately offset against the amount of cattle that we have purchased from them, respectively). As these debtors are our contract farmers and operate a profitable and viable business with us and have a good track record we consider their credit quality is good and collection from them is not in doubt, thus no diminution in value is required.

Information on Concentration of credit risk of account receivables:

We have 4 major long term customers (referring to Customer A, B, C and D mentioned in the Financial Statement of this report under Note), only who have accounted for 63.73% of our consolidated revenues for Q1 2015 as shown in the table below:

	three months ended March 31, 2015
	% of total Revenue			$	Customer's Total Revenue
Customer A		20.65	%			23,851,276
Customer B		18.54	%			21,404,582
Customer C		14.80	%			17,091,160
Customer D		9.74	%			11,246,726

		63.73	%			73,593,744

Customer A is WSC 1, which is owned and operated by Guangzhou City A Power NaWei Trading Co. Ltd (“APNW”). CA was the consulting engineer responsible for the construction of WSC 1and development of its business operation via a Consulting and Service Contract granted by APNW. APNW is now one of our main wholesalers to whom we bill our sales of seafood (including live and frozen seafood). APNW distributes the seafood to other wholesalers in various cities in China. WSC 1 is ideally situated at the center of all interprovincial logistic services. At the same time, APNW has obtained all relevant Import Quotas and Permits by September 30, 2014. As such, SIAF relies on APNW’s import permits for its import and export trades to be carried out in China. Sales effected through WSC 1 contributes 20.65% of our total consolidated revenue (equivalent to $23,851,276 out of our total revenue of $115,476,450) derived collectively from the following segments of activities:

Customer A with					three months ended March 31, 2015
Name of company	Segments		Operation Division	Abbreviation name	% of total consolidated			Amount in
						Revenue			$

CA		Fishery	Sales of fish (from Fish Farm 1)	Wholesale Center (1)		4.39	%		5,065,793
			Sales of fish / eels from Contract Growers			7.88	%		9,098,356

SIAF		Corporate	Trading sales of seafood			8.39	%		9,687,127
						20.65	%		23,851,276

Furthermore, so far, APWA has a good performance record with their payments to the Company such that as at March 31, 2015, there is no receivable from APWA beyond 90 days.

Customer B is one of our main agents, namely Mr. Xian Zhiming (Legal representative of “Zhongshan City A Power Agriculture Development Co. Limited”, (ZSAPAD), the SFJVC of the Zhongshan new prawn farm); and in our account, ZSAPAD’s legal representative is the person responsible for its company affair, such that we quote Customer B in the name of Xian Zhiming instead of ZSAPAD. As of March 31, 2015, all of its receivables to the Company are within trading terms of 60 to 90 days although we have agreed to extend trading terms between 120 days to 180 days in the interim until such time as we assist them to procure a project loan of up to $60 million targeting on or before September 30, 2015.

Customer C is one of our main agents, namely Mr. Li Hongzhen who distributes SJAP’s organic fertilizer, bulk livestock feed and concentrated livestock feed to our cooperative farmers and other regional farmers. During Q1 2015, Mr. Li had transacted 14.80% of our total consolidated revenue (equivalent to $17,091,160 out of our total revenue of $115,476,450) derived from the sale of SJAP’s organic fertile, bulk livestock feed and concentrated livestock feed under the segment of Organic Fertilizer and Bread Grass.

Customer D is WangJianWha, owner of Guangzhou Wholesale market (Store 17) who distributes our live prawns to over 30 other wholesalers at the same Guangzhou Wholesale Fish Markets, therefore although we sell our live prawns to one wholesaler (Mr. WangJianWha) that does not mean that our live prawns were sold by one wholesaler but by over 30 wholesalers. The purpose of using one main wholesaler as our main distributor is to have just one person responsible for payments to us such that we shall not need to collect sales proceeds from the 30 or more wholesalers. During Q1 2015, we sold to Mr. WangJianWha 9.74% of our total consolidated revenue (equivalent to $11,246,726 out of our total revenue of $115,476,450 ) derived from the sales of CA’s live prawns under the segment of Fishery.

The Company had 4 major customers whose accounts receivable balance individually represented the following percentages of the Company’s accounts receivable:

	March 31, 2015			December 31, 2014

Customer A		20.17	%		21.21	%
Customer B		11.46	%		13.51	%
Customer C		10.95	%		9.68	%
Customer D		7.17	%		7.12	%
		49.75	%		51.52	%

Customer A is same as Customer C above namely Mr. L Hongzhen,

Customer B is same as Customer B above namely Mr. Xian Zhiming,

Customer C is the same as Customer A above namely APNW, and

Customer D is “Eleven Metallurgical Construction Ltd” our main sub-construction contractor who we have advanced funds to purchase many building materials, building parts and component, and other associated materials needed for the construction of the Zhongshan New Prawn Farm Development Project, as such these will eventually be charged as work in progress over a period of time.

Note (11.b). Other Receivables

	As at March 31, 2015
	Total		Break down		Note

Advance to Employees		658,741
Advance to Customers		21,032,158
SIAF				10,506,287	1
CA				6,586,146
SJAP				2,252,211	3
Others				1,687,514
Advance to Suppliers		11,253,654
SIAF				6,883,235	2
CA				3,251,654
SJAP				423,551
Others				695,214
Loan to unicorporateed companies		28,000,000
CA				17,000,000	4
SIAF				11,000,000	5
		60,944,553

Note 1 & 4: SIAF imports all of its seafood (from Madagascar) and beef and lamb (from Australia) using APNW’s import permits and licenses, such that, from time to time, we used APNW as the importer for part of these imported orders to give them a trading track record, and gave loan advances to APNW for such imports that in general would be offset by sales invoices upon the arrivals of corresponding shipments. At the same time, APNW is one of our major distributors and sales agents that we helped to establish aiming eventually to acquire its operation within our own marketing and distribution network, therefore, from time to time, we provide them with working capital to help them to leverage some of their trading terms extended to their customers, etc.

Note 3: At SJAP it is a common practice to make cash advances to our cooperative growers (presently standing at 100 members) who are our suppliers, to carry them through respective growing periods (for cropping or pasturing or cattle growing purposes) before final harvests of produce or sale of their cattle. On average, it works out at less than $82,747 per member that in the management’s opinion is a normal season to season process deemed fair and equitable. In this respect, as the said average increases it means that the average cooperative farmer is increasing his productivity (whether in the growing of crops or cattle), and in simple terms, it represents good progress indicating that SJAP’s revenue is also increasing.

Note 4&5: Instead of recording these advances as deposits and prepayments made in the past for the acquisition of the future Sino joint venture companies, they are now recorded as advances due to the projects of the un-incorporated companies are still in progress such that their respective SFJVC(s) cannot be formed yet as of March 31 2015.

Note (12) Property and equipment, net of accumulation depreciation

	As at March 31, 2015
	$
Plant and machinery		5,573,254
Structure and lease hold improvements		51,650,960
Mature seeds and herbage cultivation		11,928,410
Furniture and equipment		629,055
Motor vehicles		765,858
		70,547,483

Less: Accumulated depreciation		-5,797,042
Net carrying amount		64,750,441

Note (13) Construction in progress

	As at March 31, 2015
	$
Construction in progress
- Oven room、road for production of dried flowers		1,587,594
- Office, warehouse and organic fertilizer plant in HSA.		28,185,939
- Organic fertilizer and bread grass production plant and office building		13,734,314
- Rangeland for beef cattle and office building		41,996,899
- Fish pond		2,205,568

		87,710,314

Note (14) Land Use Rights, net of accumulated amortization:

Item	Owner	Location	Acres		Date Acquired	Tenure		Expiry dates	Cost $		Monthly amortization $		2015.03.31 Balance $		Nature of ownership	Nature of project
Hunan lot1	HS.A	Ouchi Village, Fenghuo Town, Linli County		31.92	2011/04/05		43	2054/04/04		242,703		470		220,126	Lease	Fertilizer production
Hunan lot2	HS.A	Ouchi Village, Fenghuo Town, Linli County		247.05	2011/07/01		60	2071/06/30		36,666,141		50,925		34,374,507	Management Right	Pasture growing
Hunan lot3	HS.A	Ouchi Village, Fenghuo Town, Linli County		8.24	2011/05/24		40	2051/05/23		378,489		789		341,429	Land Use Rights	Fertilizer production
Guangdong lot 1	JHST	Yane Village, Liangxi Town, Enping City		8.23	2007/08/10		60	2067/08/09		1,064,501		1,478		928,481	Management Right	HU Plantation
Guangdong lot 2	JHST	Nandu Village of Yane Village, Liangxi Town, Enping City		27.78	2007/03/14		60	2067/03/13		1,037,273		1,441		897,530	Management Right	HU Plantation
Guangdong lot 3	JHST	Nandu Village of Yane Village, Liangxi Town, Enping City		60.72	2007/03/14		60	2067/03/13		2,267,363		3,149		1,961,899	Management Right	HU Plantation
Guangdong lot 4	JHST	Nandu Village of Yane Village, Liangxi Town, Enping City		54.68	2007/09/12		60	2067/09/11		2,041,949		2,836		1,783,870	Management Right	HU Plantation
Guangdong lot 5	JHST	Jishilu Village of Dawan Village,Juntang Town, Enping City		28.82	2007/09/12		60	2067/09/11		960,416		1,334		839,030	Management Right	HU Plantation
Guangdong lot 6	JHST	Liankai Village of Niujiang Town, Enping City		31.84	2008/01/01		60	2068/12/31		821,445		1,141		722,187	Management Right	Fish Farm
Guangdong lot 7	JHST	Nandu Village of Yane Village, Liangxi Town, Enping City		41.18	2011/01/01		26	2037/12/31		5,716,764		18,323		4,782,293	Management Right	HU Plantation
Guangdong lot 8	JHST	Shangchong Village of Yane Village, Liangxi Town, Enping City		11.28	2011/01/01		26	2037/12/31		1,566,393		5,020		1,310,348	Management Right	HU Plantation
Guangdong lot 9	MEIJI	Xiaoban Village of Yane Village, Liangxi Town, Enping City		41.18	2011/04/01		20	2031/03/31		5,082,136		21,176		4,065,709	Management Right	Cattle Farm
Qinghai lot 1	SJAP	No. 498, Bei Da Road, Chengguan Town of Huangyuan County,Xining City, Qinghai Province		21.09	2011/11/01		40	2051/10/30		527,234		1,098		482,200	Land Use Right & Building ownership	Cattle farm, fertilizer and livestock feed production
Guangdong lot 10	JHST	Niu Jiang Town, Liangxi Town, Enping City		6.27	2013/03/04		10	2023/03/03		489,904		4,083		387,841	Management Right	Processing factory
Guangdong lot 11	PF2	Da San Dui Wei ,You Nan Village, Conghua District of Guangzhou City		33.28	2014/10/28		30	2044/10/27		4,453,665		12,371		4,379,438	Management Right	Agriculture
	JHST	Land improvement cost incurred			2013/12/01					3,914,275		6,155		3,815,803
Exchange difference										2,004,295				1,470,478

				654						69,234,948		131,789		62,763,167

Note (16) Current Liabilities:

	As at March 31, 2015		Note
Current liabilities
Accounts payable and accruals		23,127,256		16.A
Billings in excess of cost and estimated earnings on uncompleted contracts		4,034,158
Series F shares mandatory redemption payable		3,146,063		16 B
Due to a director		1,008,000
Other payables		15,882,011		16.C
Short term bank loan		4,070,335
		51,267,823

Note 16A: Accounts payables and accrued expenses clarification:

Our current trading environment is limited to a number of suppliers who offer prolonged credit terms means that most purchases are paid for in cash or short credit terms (7 to 10 days), and in a way this allows us better bargaining ability to obtain cash discounts resulting in the low trade account payables and accruals balance of $23 million, about 20% of total sales of $115 million for the reasons stated below:

Our main Account Payables during Q1 2015 were generated from the following activities:

We supply the following cost elements: our own staff, engineering and technology that enhanced our profit margins and reduced the overall cost of sales. Consulting and services (“C&S”) since inception is the major contributor of income to date and cost of goods sold averaging 58% and 37% for CA and SIAF, respectively.

Implementation, supervision, training and associated management work and most of the building sub-contractors worked at fixed costs; consequently, profit margins are contained providing ample opportunity for expanded credit terms. For contracts related to the construction of farms we use plants, equipment, parts and components that were specially manufactured and made as per our own design and engineering by local manufacturers and suppliers (who carry a high amount of initial development costs and inventories for us based on the understanding that we would pay for the deliveries of goods sold within shorter trading terms such that they could afford to carry such costs). We pay promptly in this respect and believe that, as time has passed, our track record has earned excellent credibility with all of our suppliers and sub-contractors.

Fish sales started gradually in late 2011, and the cost of sales was averaged at 74% for Q1 2015, respectively (the bulk of the cost came from the supplies of baby fingerlings and the live-bait as the main fish feed), and customary trading terms of Chinese suppliers is on a cash on delivery basis, and suppliers who provide short credit terms presently is limited to no more than a select few.

Cattle sales at SJAP’s own cattle stations and from its cooperative farmers started in 2011 at lower profit margins compared to the sales of fish with cost of goods averaging 74% for Q1 2015. It is also customary in China to pay for the young live cattle by cash on delivery. The Enping cattle farm started to buy young cattle in 2011 and started sales of mature cattle in 2012; cost of sales is averaged at 96% for Q1 2015. Most of the young cattle supplies were from small primary producers (local small farmers) who did not have great financial resources; as such we paid for these supplies of young cattle in cash on delivery or short credit term after delivery.

In SJAP, the bulk of our fertilizers were sold to farmers who are growing pastures and crops for us such that their fertilizer sales were kept as book entries that would be offset with the pastures and crops that we would buy back from them. In the case of HSA, which is a developing stage company in fertilizer manufacturing, prolonged credit term facilities have not been established for its purchase of raw materials.

Bulk livestock feed are produced by regional cooperative growers under contract to us and they use our supply of fertilizer and seeds that represented the main cost components enhancing cost of sales, which average is at 57% for Q1 2015. Again, sale of fertilizer is held on credit against crops and pasture grass purchased from them, as well as bulk livestock feed sold to them for cattle rearing, and reconciled once cattle are purchased from them.

Note (16.B): Series F Non-convertible preferred stock

On August 22, 2012, the Company’s Board of Directors declared that the Company’s stockholders were entitled to receive one share of restricted Series F Non-convertible Preferred Stock for every 100 shares of Common Stock owned by the stockholders as of September 28, 2012, with lesser or greater amounts being rounded up to the nearest 100 shares of Common Stock for purpose of the computing the dividend. The holders of record of shares of Series F Non - Convertible Preferred Stock shall be entitled to a coupon payment directly from the Company at the redemption rate of $3.40 per share and be payable on May 30, 2015. During Q1 2014, the transfer agent of the Company recorded 924,180 shares of Series F Non-Convertible preferred stock on the account. But, the Company did not issue physical shares and only issued coupons to notify respective shareholders on that date. These F shares of 924,180 shares, were based on numbers of shares of Common Stock as of September 28, 2012 of 91,931,287 shares, calculated at one share of Series F Non-Convertible preferred stock for every 100 shares of Common Stock with decimal number of shares being rounded up to one. Once payment of $3.40 per share is made the F shares will be voided and will be withdrawn in full. The Company on December 22, 2014 informed that it will pay out the F Series shares with retroactive 10% interest as scheduled on May 30, 2015 amounting to $3,456,433.

Note (16C): Analysis of Other Payables:

As of March 31 2015, other payables totaling $15,882,011 consisted of the following:

During Q1 2015, the Company issued Promissory notes amounting to $0 to unrelated third parties for advances granted by third parties collectively to the Company (and/or to its subsidiaries) that are personally guaranteed by a director, repayable within two (2) years at interest free term. Promissory notes could be repaid either by cash or in shares of the Company or a combination thereof. If debt accounts are settled with shares, both parties will determine the respective share conversion rates at the time of settlement. During Q1 2015 we redeemed $ 0 of Promissory Notes for advances granted by third parties in fiscal year 2012 as well as in the early months of 2014 by the issuance of shares leaving a balance of $600,000 of Promissory Notes still due and outstanding as of March 31, 2015.

A grant of $2,410,453 was received from the Chinese government to SJAP for the development of a certain project; however if SJAP will not be able to complete the project, it will have to repay the grant to the Government. As of March 31, 2015, as work is in progress on the said project but it is not yet completed, the grant is recorded as other payables.

For the three months ended March 31, 2015, other advances had been provided by other unrelated third parties collectively to our subsidiaries with no fixed term of repayment and interest free without promissory notes or agreements but instead, verbal understandings. These sums amount to $8,074,226 unpaid and outstanding as of March 31, 2015. (Note. 10.3): Also there is the security (in common stock) provided for the two loans amounting to $4,797,332 titled as “Due to Security” recorded in Other Payable of Q1 2015.

Income Taxes

Undistributed Earnings of Foreign Subsidiaries

The Company failed to file US tax returns for the years ended December 31, 2007 through December 31, 2012 in compliance with US Treasury Internal Revenue Service Code. The Company has reviewed its tax position with the assistance US tax professional and believes that there will be no taxes and no penalties assessed by the Internal Revenue Service in the United States of America. The Company has appointed a US tax professional to assist in filing these income tax returns.

No EIT has been provided in the financial statements of SIAF, CA, JHST, JHMC, JFD, HSA and SJAP since they are exempt from EIT for the three months ended March 31, 2015 and 2014 as they are within the agriculture, dairy and fishery sectors.

CA, CS and CH are international business companies incorporated in Belize, and are exempt from corporate tax in Belize.

No Hong Kong profits tax has been provided in the consolidated financial statements, since TRW did not earn any assessable profits arising in Hong Kong for the three months ended March 31, 2015 and 2014.

No Macau Corporate income tax has been provided in the consolidated financial statements, since APWAM and MEIJI did not earn any assessable profits for the three months ended March 31, 2015 and 2014.

No Sweden Corporate income tax has been provided in the consolidated financial statements, since SIAFS incurred a tax loss for the three months ended March 31, 2015.

No deferred tax assets and liabilities have been assessed as of March 31, 2015 and December 31, 2014 since there was no difference between the financial statements carrying amounts and the tax basis of assets and liabilities utilizing the enacted tax rates in effect for the period in which the differences are expected to reverse.

Off Balance Sheet Arrangements:

None.

Liquidity and Capital Resources

As of March 31 2015, unrestricted cash and cash equivalents amounted to $10,932,661 (see notes to the consolidated account), and our working capital as of March 31, 2015 was $254,458,061.

As of March 31 2015, our total long-term debts are as follows:

Contractual Obligations	Less than 1 year	1-3years	3-5 years	More than 5 years	Total
Short Term Bank Loan	4,394,210				4,394,210
Bonds payable	1,725,000	16,286,754			18,011,754
Long Term Debts	2,297,421				2,297,421
Promissory Notes	600,000				600,000
Other payables		4797332			4,797,332

Cash provided by operating activities amounted to $27,545,084 for Q1 2015. This compares with cash provided by operating activities totaling $20,725,313 for Q1 2014. The increase in cash flows from operations primarily resulted from the increase of inventory of $(3,259,725) for Q1 2015 from $(11,593,523) for Q1 2014.

Cash used in investing activities totaled $(20,297,099) for Q1 2015. This compares with cash used in investing activities totaling $(6,155,849) for Q1 2014. The increase in cash flows used in investing activities primarily resulted from payment for construction of $(18,845,219) in Q1 2015 from $(5,248,183) in Q1 2014.

Cash used provided by financing activities totaled $0 for Q1 2015. This compares with cash from financing activities totaling $(2,438,192) for Q1 2014. The decrease cash used provided by financing activities due to proceeds from long term loans of $(2,438,192) Q1 2014 to $0 Q1 2015.

Acquisition of SFJVC’s and further acquisition plan:

An SFJVC agreement typically contains an option clause for further investment. Initially, the China Developer of project companies invites us to invest in their venture. If management feels compelled it carries out an in-depth study of the target company including legal due diligence, business plan, budget and projected financial information. The final decision is made through the resolution of the Company’s Board of Directors. If the decision is made to proceed with an investment, there is first formed an SFJVC, within which the Company acquires further equity interest. The acquisition price of such interest is determined in accordance to the book value of the SFJVC as of the acquisition date. Consideration generally consists in part of cash and in part of contract against trade debts owed by the China Developer due to Consulting & Services fees charged to the China Developer by the Company in accordance with the Consulting & Services agreement. Project companies record development cost as construction in progress and treat the amount due to us as partial investment in new SFJVC.

The Company’s expenditures as the consulting and service provider providing turnkey services to the China Developer for the development of the project include (i) administrative and operational expenses provided for and incurred in the project (charged and recorded under general and administrative operation expenses), billable to the China Developer, (ii) other development expenditures (inclusive of subcontractors’ and sub-suppliers’ costs plus mark-up) billable to the Developer, as well. Consulting & Services fees are exclusively billed to the third party China Developer, and not to the future SFJVC companies.

Acquisition
by which
subsidiary

Estimated
time of
SFJVC
being formed

Estimated time
of completion of
acquisition

Estimated Total
consideration

Deposit paid
up to date

Deposit paid
is equivalent
to % of equity

Estimated time of
progress
payments

Enping Prawn PF1

June 2014

August 2014

20.94m

11.68 m

56%

Q1 to Q2 2014

Zhongshan Prawn PF2

Phase 3 Work still in progress, targeting completion Q3 2014

August 2015

26.20 m

8.63 m

Q4 2014 & all year round 2015

Fish & eel Farm 2

Phase 3 & 4 work are in progress targeting completion Q4 2015

August. 2016

26.22 m

6.0 m

Q4 2014 & all year round 2014 & 2015

Cattle Farm 2

MEIJI

Final work is still in progress

August 2014

15.88 m

5.56 m

On or before June 30 2014

WXC businesses

SIAF

Work is in progress until end 2015

Not yet determined

Not fully determined

1.67 m

Not yet know

Partially in 2014.

NaWei wholesale centers

SIAF

Work is in progress until end 2015

Phase (1) March 2014, new Phases are pending

Not fully determined

1.03 m

Not yet know

Partially in 2014.

We plan to acquire further SFJVC’s at the time they will be formed officially after their approval by relevant China

Authorities with details shown in the Table below:

In accordance with our contract, prior to the official formation of the SFJVC’s the Company will pay an initial deposit and additional deposits as pre-payments to the developer (or owner) of the project as consideration toward future acquisition of the SFJVC upon its official formation.

The total consideration for each purchase of SFJVC is based on its book value at that time of official formation having injected all of the related project’s development assets and liabilities into the SFJVC.

As such, the required acquisition cost is funded partly by cash and partly by the offset of receivables due on the consulting and service fee.

Part C. Pro-forma on records of historical performances reflecting the Company’s “Free Cash Flow “derivation: (Inclusive of SIAF and subsidiaries in segments containing Non-GAAP derivation)

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		31		88		209		323		85		651
Consulting income		21		51		52		81		30		205

Cost of goods sold		17		51		139		231		63		438
Cost of service		10		18		21		44		17		93

EBITDA		22		66		98		119		32		304

Depreciation & amortization		1		2		3		5		1		10

Non - controlling interest		5		6		20		22		7		59

Net income attributable to SIAF & subsidiaries		16		57		74		92		24		239

Total Assets		153		242		368		532		572

Total liabilities		16		26		36		70		72

Total stockholders equity		137		216		332		462		500

Total Capex		14		34		71		35		19		154
1. property and equipment		-		18		22		21		1		61
2. construction in progress		2		13		41		10		18		66
3. land use right		12		3		4		4		-		23
4. proprietary technologies		-		-		4		-		-		4
		-		-		-		-		-		-
Total increase of wc		18		47		43		112		20		240
1. increase in inventories		3		17		-6		38		3		55
2. increase in receivable or decrease in payable etc.		15		30		49		74		17		185
												-
Total capex and increase of wc		32		81		114		147		39		374

Free Cash Flow (FCF)		-10		-15		-16		-28		-7		-70

Net Debt		-1		-2		-5		-20		-23

	In round figure of million shares
Total authorized common stocks		10		13		17		23		23

Weighted average of total issue & outstanding common stocks
Basic		6		8		12		16		17
Diluted		7		9		13		17		18

	In US$ / share
Earning per share (or EPS)
Basic		2.57		6.93		6.14		5.79		1.39
Diluted		2.28		6.14		5.76		5.55		1.33

C.1 APWAM (holding company of SJAP)

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		15		21		62		102		36		236

Cost of goods sold		7		15		38		68		25		153

EBITDA		8		7		27		28		11.20		82

Depreciation & amortization		-		-		-		1		0.20		1

Non - controlling interest		4		4		15		18		6.00		47

Net income attributable to SIAF & subsidiaries		4		3		12		13		5.00		37

Total Assets		17		43		88		134		122

Total liabilities		2		11		15		28		5

Total stockholders equity		15		32		73		106		117

Total Capex		2		14		38		20		8		82
1. property and equipment		-		9		12		6		1		28
2. construction in progress		2		4		24		14		7		51
3. land use right		-		1		-		-				1
4. proprietary technologies		-		-		2		-				2

Total increase of wc		7		-6		-12		12		10		11
1. increase in inventories		3		11		-6		24		2		34
2. increase in receivable or decrease in payable etc.		4		-17		-6		-12		8		-23

Total capex and increase of wc		9		8		26		32		18		93

Free Cash Flow (FCF)		-1		-1		1		-4		-7		-12

Net Debt		-1		-2		-5		-7		-7

C.2 SIAF’s Corporate Operational division

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		-		2		22		51		10		85
Consulting income		-		3		9		5		4		21

Cost of goods sold		-		1		19		45		8		73
Cost of service		-		1		3		5		2		11

EBITDA		-		2		6		6		2		16

Depreciation & amortization		-		-		-		0		-

Non - controlling interest		-		-		-		-

Net income attributable to SIAF & subsidiaries		-		2		6		6		1		15

Total Assets		3		10		19		50		76

Total liabilities		1		7		8		21		38

Total stockholders equity		2		3		11		29		38

Total Capex		-		-		2		1		-		3
1. property and equipment		-		-		-		-				-
2. construction in progress		-		-		-		1				1
3. land use right		-		-		-		-				-
4. proprietary technologies		-		-		2		-				2

Total increase of wc		45		18		25		34		11		133
1. increase in inventories				-		0		-				-
2. increase in receivable or decrease in payable etc.		45		18		25		34		11		133

Total capex and increase of wc		45		18		27		35		11		136

Free Cash Flow (FCF)		-45		-16		-21		-29		-9		-120

Net Debt		-		-		-		-13		-16

C.3 CA (Fishery Development Division)

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		10		28		47		54		15		154
Consulting income		17		37		36		76		26		192

Cost of goods sold		8		14		33		31		10		96
Cost of service		8		14		13		39		15		89

EBITDA		8		35		37		60		16		157

Depreciation & amortization		-		-		-		-		-

Non - controlling interest		-		-		-		-

Net income attributable to SIAF & subsidiaries		8		35		37		55		16		151

Total Assets		40		60		81		131		146

Total liabilities		4		4		7		2		1

Total stockholders equity		36		56		74		129		145

Total Capex		-		-		3		4		-		7
1. property and equipment		-		-		-		-				-
2. construction in progress		-		-		3		-				3
3. land use right		-		-		-		4				4
4. proprietary technologies		-		-		-		-				-

Total increase of wc		12		37		25		51		-5		120
1. increase in inventories
2. increase in receivable or decrease in payable etc .		12		37		25		51		-5		120

Total capex and increase of wc		12		37		28		55		-5		127

Free Cash Flow (FCF)		-4		-2		9		5		21		30

Net Debt		-		-		-		-		-

C.4 Tri-way (the holding company of Fish Farm (1)

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		-		16		25		52		12		105

Cost of goods sold		-		10		19		41		10		80

EBITDA		-		5		6		10		1.70		23

Depreciation & amortization		-		0		0		1		-		2

Non - controlling interest				1		1		2		0.40		4

Net income attributable to SIAF & subsidiaries		-		4		5		8		1.30		18

Total Assets		8		12		19		41		33

Total liabilities		-		-		-		10		1

Total stockholders equity		8		12		19		31		32

Total Capex		-		6		2		1		2		11
1. property and equipment		-		6		-		2				8
2. construction in progress		-		-		2		-1		2		3
3. land use right		-		-		-		-				-
4. proprietary technologies

Total increase of wc		-		6		5		9		1		21
1. increase in inventories		-		5		-		1		1		7
2. increase in receivable or decrease in payable etc.		-		1		5		8		-		14

Total capex and increase of wc		-		12		7		10		3		32

Free Cash Flow (FCF)		-		-7		-1		-		-1		-9

Net Debt		-		-		-		-

C.5 MEIJI and Cattle Farm (Development and holding company of CF (1))

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		-		6		18		33		8		65
Consulting income		4		11		7		-				22

Cost of goods sold		-		4		13		31		8		56
Cost of service		2		3		5		-				10

EBITDA		1		9		5		2		0.44		18

Depreciation & amortization		-		0		0		0		-		1

Non - controlling interest		-		-		-		-		0.04

Net income attributable to SIAF & subsidiaries		1		9		5		1		0.40		17

Total Assets		7		20		33		38		33

Total liabilities		-		-		2		5		-

Total stockholders equity		7		20		31		33		33

Total Capex		5		2		-		-				7
1. property and equipment		-		-		-		-				-
2. construction in progress		-		-		-		-				-
3. land use right		5		2		-		-				7
4. proprietary technologies

Total increase of wc		-3		1		5		3				6
1. increase in inventories		-		1		-		1				2
2. increase in receivable or decrease in payable etc.		-3		-		5		2				4

Total capex and increase of wc		2		3		5		3		-		13

Free Cash Flow (FCF)		-1		6		-		-1		0		5

Net Debt

C.6 MEIJI and JHST plantation division

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		6		12		23		11		-		52

Cost of goods sold		2		5		10		4		-		21

EBITDA		4		6		11		6		-0.30		28

Depreciation & amortization		0		-		1		1		0.30		3

Non - controlling interest		1		1		3		1		-0.10		6

Net income attributable to SIAF & subsidiaries		3		5		7		4		-0.50		19

Total Assets		28		37		49		53		53

Total liabilities		-		-		-		-		-

Total stockholders equity		28		37		49		53		53

Total Capex		-		3		10		1		1		15
1. property and equipment		-		3		6		1				10
2. construction in progress		-		-		-		-		1		1
3. land use right		-		-		4		-				4
4. proprietary technologies		-		-		-		-				-

Total increase of wc		-3		1		6		5		-		9
1. increase in inventories		-		-		-		-		-		-
2. increase in receivable or decrease in payable etc.				1		6		5		-		9

Total capex and increase of wc		-3		4		16		6		1		24

Free Cash Flow (FCF)		7		2		-5		-		-1		4

Net Debt

C.7 HSA (the Hunan fertilizer Operation)

	2011		2012		2013		2014		2015Q1		Total
	In rounded figures of $ million
Sale of goods		-		3		12		20		4		39

Cost of goods sold		-		2		7		11		2		22

EBITDA		-		0		4		7		1.10		13

Depreciation & amortization		0.40		1		1		1		0.20		4

Non - controlling interest						1		1		0.20		2

Net income attributable to SIAF & subsidiaries		-		-1		2		5		0.70		7

Total Assets		50		60		79		85		109

Total liabilities		9		4		4		4		27

Total stockholders equity		41		56		75		81		82

Total Capex		7		9		16		8		8		48
1. property and equipment		-		-		4		12				16
2. construction in progress		-		9		12		-4		8		25
3. land use right		7		-		-		-				7
4. proprietary technologies		-		-		-		-				-

Total increase of wc		-40		-10		-11		-2		3		-60
1. increase in inventories		-		-		-		12		-		12
2. increase in receivable or decrease in payable etc.		-40		-10		-11		-14		3		-72

Total capex and increase of wc		-33		-1		5		6		11		-12

Free Cash Flow (FCF)		33		1		-1		1		-10		25

Net Debt

CRITICAL ACCOUNTING POLICIES

BASIS OF PRESENTATION

The unaudited consolidated financial statements for the three months ended March 31 2015 are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

The unaudited quarterly financials for the three months ended March 31 2015 results are for the months and do not necessarily indicate the results for a full year. The information included in this interim report should be read in conjunction with the information included in the Company’s annual report on Form 10-Q for the Quarter ended March 31 2015.

REVERSE STOCK SPLIT

Reverse stock split and new conversion rate of Series B preferred stock to share of common stock:

On December 16, 2014, the Company implemented a 9.9-for-1 reverse stock split. On December 17, 2014, the Company implemented the new conversion rate of 9.9 for 1 share of common stock. All share information contained within this report, including consolidated balance sheets, consolidated statements of income and other comprehensive income, and footnotes have been retroactively adjusted for the effects of the reverse stock split and new conversion rate of Series B preferred stock to shares of common stock.

BASIS OF CONSOLIDATION

The consolidated financial statements include the financial statements of SIAF, its subsidiaries Capital Award, CS, CH, TRW, MEIJI, JHST, JFD, JHMC, HSA, APWAM, SAFS and its variable interest entities SJAP and QZH. All material inter-company transactions and balances have been eliminated in consolidation. The results of companies acquired or disposed of during the year are included in the consolidated Financial Statements from the effective date of acquisition.

BUSINESS COMBINATIONS

The Company adopted the accounting pronouncements relating to business combinations (primarily contained in ASC Topic 805 “Business Combinations”), including assets acquired and liabilities assumed arising from contingencies. These pronouncements established principles and requirements for how the acquirer of a business recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquire as well as provides guidance for recognizing and measuring the goodwill acquired in the business combination and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. In addition, these pronouncements eliminate the distinction between contractual and non-contractual contingencies, including the initial recognition and measurement criteria and require an acquirer to develop a systematic and rational basis for subsequently measuring and accounting for acquired contingencies depending on their nature. Our adoption of these pronouncements will have an impact on the manner in which we account for any future acquisitions.

NON - CONTROLLING INTEREST IN CONSOLIDATED FINANCIAL STATEMENTS

The Company adopted the accounting pronouncement on non-controlling interests in consolidated financial statements, which establishes accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This guidance is primarily contained in ASC Topic “Consolidation”. It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated financial statements. The adoption of this standard has not had material impact on our consolidated financial statements.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods covered thereby. Actual results could differ from these estimates. Judgments and estimates of uncertainties are required in applying the Company’s accounting policies in certain areas. The following are some of the areas requiring significant judgments and estimates: determinations of the useful lives of assets, estimates of allowances for doubtful accounts, cash flow and valuation assumptions in performing asset impairment tests of long-lived assets, estimates of the reliability of deferred tax assets and inventory reserves.

REVENUE RECOGNITION

The Company’s revenue recognition policies are in compliance with ASC 605. Sales revenue is recognized when all of the following have occurred: (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been rendered, (iii) the price is fixed or determinable, and (iv) the ability to collect is reasonably assured. These criteria are generally satisfied at the time of shipment when risk of loss and title passes to the customer. Service revenue is recognized when services have been rendered to a buyer by reference to the stage of completion. License fee income is recognized on the accrual basis in accordance with the underlying agreements.

Government grants are recognized upon (i) the Company has substantially accomplished what we must be done pursuant to the terms of the policies and terms of the grant that are established by the local government; and (ii) the Company receives notification from the local government that the Company has satisfied all of the requirements to receive the government grants; and or (iii) the amounts are received.

Multiple-Element Arrangements

To qualify as a separate unit of accounting under ASC 605-25“Multiple Element Arrangements”, the delivered item must have value to the customer on a standalone basis. The significant deliverables under the Company’s multiple-element arrangements are consulting and service under development contract, commission and management service.

Revenues from the Company's fishery development services contract are performed under fixed-price contracts. Revenues under long-term contracts are accounted for under the percentage-of-completion method of accounting in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition (“ASC 605”). Under the percentage-of-completion method, the Company estimates profit as the difference between total estimated revenue and total estimated cost of a contract and recognized that profit over the contract term. The percentage of costs incurred determines the amount of revenue to be recognized. Payment terms are generally defined by the installation contract and as a result may not match the timing of the costs incurred by the Company and the related recognition of revenue. Such differences are recorded as either costs or estimated earnings in excess of billings on uncompleted contracts or billings in excess of costs and estimated earnings on uncompleted contracts.

The Company determines a customer’s credit worthiness at the time an order is accepted. Sudden and unexpected changes in a customer’s financial condition could put recoverability at risk.

The percentage of completion method requires the ability to estimate several factors, including the ability of the customer to meet its obligations under the contract, including the payment of amounts when due. If the Company determines that collectability is not assured, we will defer revenue recognition and use methods of accounting for the contract such as the completed contract method until such time as the Company determines that collectability is reasonably assured or through the completion of the project.

For fixed-price contracts, the Company uses the ratio of costs incurred to date on the contract (excluding uninstalled direct materials) to management's estimate of the contract's total costs, to determine the percentage of completion on each contract. This method is used as management considers expended costs to be the best available measure of progression of these contracts. Contract costs included all direct material, subcontract and labor costs and those indirect costs related to contract performance, such as supplies, tool repairs and depreciation. The Company accounts for maintenance and repair services under the guidance of ASC 605 as the services provided relate to construction work. Contract costs incurred to date and expected total contract costs are continuously monitored during the term of the contract. Changes in job performance, job conditions, and estimated profitability arising from contract penalty, change orders and final contract settlements may result in revisions to the estimated profitability during the contract. These changes, which include contracts with estimated costs in excess of estimated revenues, are recognized as contract costs in the period in which the revisions are determined. Profit incentives are included in revenues when their realization is reasonably assured. At the point the Company anticipates a loss on a contract, the Company estimates the ultimate loss through completion and recognizes that loss in the period in which the possible loss was identified.

The Company does not provide warranties to customers on a basis customary to the industry; however, the customers can claim warranty directly from product manufacturers for defects in equipment or products. Historically, the Company has experienced no warranty claims.

The Company’s fishery development consultancy services revenues are recognized when the relevant services are rendered, and are subject to a Chinese business tax at a rate of 0% of the gross fishery development contract service income approved by the Chinese local government.

COST OF GOODS SOLD AND SERVICES

Cost of goods sold consists primarily of direct purchase cost of merchandise goods, and related levies. Cost of services consists primarily of direct cost and indirect cost incurred to date for development contracts and provision for anticipated losses on development contracts.

SHIPPING AND HANDLING

ADVERTISING

Advertising costs are included in general and administrative expenses, which totaled $708,843 and $262 for the three months ended March 31, 2015 and 2014, respectively.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development expenses are included in general and administrative expenses, which totaled $0 and $0 for the three months ended March 31, 2015 and 2014, respectively.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid securities with original maturities of three months or less when acquired to be cash equivalents. Cash and cash equivalents kept with financial institutions in People’s Republic of China (“P.R.C.”) are not insured or otherwise protected. Should any of those institutions holding the Company’s cash become insolvent, or the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit on that institution.

ACCOUNTS RECEIVABLE

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Terms of the sales vary. Reserves are recorded primarily on a specific identification basis.

The standard credit period of the Company’s most of customers is three months. Any amount that has an extended settlement date of over one year is classified as a long term receivable. Management evaluates the collectability of the receivables at least quarterly. There were no bad debts written off for the three months ended March 31, 2015 and 2014.

INVENTORIES

Inventories are valued at the lower of cost (determined on a weighted average basis) and net realizable value. Costs incurred in bringing each product to its location and conditions are accounted for as follows:

•	raw materials - purchase cost on a weighted average basis;
•	manufactured finished goods and work-in-progress - cost of direct materials and labor and a proportion of manufacturing overhead based on normal operation capacity but excluding borrowing costs; and
•	retail and wholesale merchandise finished goods - purchase cost on a weighted average basis.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the cost of replacing parts that are eligible for capitalization when the cost of replacing the parts is incurred. The assets’ residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at the end of each year.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets.

Milk cows		10 years
Plant and machinery		5 - 10 years
Structure and leasehold improvements		10 -20 years
Mature seed and herbage cultivation		20 years
Furniture, fixtures and equipment		2.5 - 10 years
Motor vehicles		5 -10 years

GOODWILL

Goodwill is an asset representing the fair economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Goodwill is tested for impairment on an annual basis at the end of the company’s fiscal year, or when impairment indicators arise. The Company uses a fair-value-based approach to test for impairment at the level of each reporting unit. The Company directly acquired MEIJI, which is engaged in Hu Plantation. As a result of this acquisition, the Company recorded goodwill in the amount of $724,940. This goodwill represents the fair value of the assets acquired in these acquisitions over the cost of the assets acquired.

PROPRIETARY TECHNOLOGIES

The Company has determined that technological feasibility is established at the time a working model of products is completed. Master license of stock feed manufacturing technology was acquired and the costs of acquisition were capitalized as proprietary technologies when technological feasibility had been established. Proprietary technologies are intangible assets of finite lives. Proprietary technologies are amortized using the straight-line method over their estimated lives of 25 years.

The cost of sleepy cod breeding technology license is capitalized as proprietary technologies when technological feasibility has been established. Cost of granting sleepy cod breeding technology license is amortized using the straight-line method over its entitled life of 25 years.

Bacterial cellulose technology license and related trademark are capitalized as proprietary technologies when technological feasibility has been established. Cost of license and related trademark is amortized using the straight-line method over its estimated life of 20 years.

Management evaluates the recoverability of proprietary technologies on an annual basis of the end of the company’s fiscal year, or when impairment indicators arise. As required by ASC Topic 350 “Intangible - Goodwill and Other”, the Company uses a fair-value-based approach to test for impairment.

CONSTRUCTION IN PROGRESS

LAND USE RIGHTS

Land use rights represent acquisition of land use right rights of agriculture land from farmers and are amortized on the straight-line basis over the respective lease periods. The lease period of agriculture land is in the range from 10 years to 60 years. Land use rights purchase prices were determined in accordance with the P.R.C Government’s minimum lease payments of agriculture land and mutually agreed between the company and the vendors. No independent professional appraiser performed a valuation of land use rights at the balance sheet dates.

CORPORATE JOINT VENTURE

A corporation formed, owned, and operated by two or more businesses (ventures) as a separate and discrete business or project (venture) for their mutual benefit is considered to be a corporate joint venture. Investee entities, in which the company can exercise significant influence, but not control, are accounted for under the equity method of accounting. Under the equity method of accounting, the company’s share of the earnings or losses of these companies is included in net income.

A loss in value of an investment that is other than a temporary decline is recognized as a charge to operations. Evidence of a loss in value might include, but would not necessarily be limited to absence of an ability to recover the carrying amount of the investment or inability of the investee to sustain an earnings capacity that would justify the carrying amount of the investment.

VARIABLE INTEREST ENTITY

An entity (investee) in which the investor has obtained less than a majority-owned interest, according to the Financial Accounting Standards Board (FASB). A variable interest entity (VIE) is subject to consolidation if a VIE is an entity meeting one of the following three criteria as elaborated in ASC Topic 810-10, Consolidation.

(a) the equity-at-risk is not sufficient to support the entity's activities

(b) as a group, the equity-at-risk holders cannot control the entity; or

TREASURY STOCK

Treasury stock consists of a Company’s own stock which has been issued, but is subsequently reacquired by the Company. Treasury stock does not reduce the number of shares issued but does reduce the number of shares outstanding. These shares are not eligible to receive cash dividends. Accounting for excesses and deficiencies on treasury stock transactions is governed by ASC 505-30-30.

State laws and federal agencies closely regulate transactions involving a company’s own capital stock, so the purchase of outstanding shares and converting them into treasury shares must have a legitimate purpose. Some of the most common reasons for purchasing outstanding shares are as follows:

(i) to meet additional stock needs for various reasons, including newly implemented stock option plans, the issuance stock for convertible bonds or convertible preferred stock, or a stock dividend;

(ii) to eliminate the ownership interests of a stockholder;

(iii) to increase the market price of the stock that returns capital to shareholders; and

(iv) to potentially increase earnings per share of the stock by decreasing the shares outstanding on the same earnings.

The Company has adopted the cost method of accounting for treasury stock shares. The purchase of outstanding shares is treated as a temporary reduction in shareholders’ equity in view of the expectation to reissue the shares instead of retiring them. When the Company reissues the treasury shares, the temporary account is eliminated. The cost of treasury stock shares reacquired is charged to a contra account, in this case a contra equity account that reduces the stockholder equity balance.

INCOME TAXES

The Company accounts for income taxes under the provisions of ASC 740 “Accounting for Income Taxes”. Under ASC 740, deferred tax assets and liabilities are determined based on the difference between the financial statement carrying amounts and the tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

The provision for income tax is based on the results for the year as adjusted for items, which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred taxes area accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis used in the computation of assessable tax profit. In principle, deferred tax liabilities are recognized for all taxable temporary differences, and deferred tax assets are recognized to the extent that it is probable that taxable profit will be available against which deductible temporary differences can be utilized.

Deferred income taxes are calculated at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also adjusted in the equity accounts. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis. ASC 740 also prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. ASC 740 also provides guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related to unrecognized tax benefits will be recorded in tax expense.

POLITICAL AND BUSINESS RISK

The Company's operations are carried out in the P.R.C. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environment in the P.R.C., and by the general state of the P.R.C.'s economy. The Company's operations in the P.R.C. are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. The Company's results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS

In accordance with ASC 360, “Property, Plant and Equipment”, long-lived assets to be held and used are analyzed for impairment whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable. The Company reviews the carrying amount of its long-lived assets, including intangibles, for impairment, at the end of each fiscal year. An asset is considered impaired when estimated future cash flows are less than the carrying amount of the asset. In the event the carrying amount of such asset is considered not recoverable, the asset is adjusted to its fair value. Fair value is generally determined based on discounted future cash flow. As of March 31, 2015 and 2014, the Company determined no impairment losses were necessary.

EARNINGS PER SHARE

As prescribed in ASC Topic 260 “Earning per Share,” Basic Earnings per Share (“EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year. Diluted EPS is computed by dividing net income available to common stockholders by the weighted-average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants. The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company’s common stock at the average market price during the period.

For the three months ended March 2015 and 2014, basic earnings per share attributable to Sino Agro Food, Inc. and subsidiaries’ common stockholders amount to $1.45 and $1.39, respectively. For the three months ended March 31, 2015 and 2014, diluted earnings per share attributable to Sino Agro Food, Inc. and its subsidiaries’ common stockholders amounted to $1.39 and $1.33, respectively.

FOREIGN CURRENCY TRANSLATION

The reporting currency of the Company is the U.S. dollars. The functional currency of the Company is the Chinese Renminbi (RMB). For those entities whose functional currency is other than the U.S. dollars, all assets and liabilities are translated into U.S. dollars at the exchange rate on the balance sheet date; shareholder equity is translated at historical rates and items in the statements of income and of cash flows are translated at the average rate for the period.

Because cash flows are translated based on the weighted average translation rate, amounts related to assets and liabilities reported in the statements of cash flows will not necessarily agree with changes in the corresponding balances in the balance sheets. Translation adjustments resulting from this process are included in accumulated other comprehensive income in the consolidated statements of equity.

For the three months ended March 31, 2015

Translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of income and comprehensive income as incurred. The balance sheet amounts with the exception of equity as of March 31, 2015 and December 31, 2014 were translated at RMB6.14 to $1.00 and RMB6.15 to $1.00, respectively. The average translation rates applied to the consolidated statements of income and comprehensive income and of cash flows for the three months ended March 31, 2015 and March 31, 2014 were RMB6.14 to $1.00 and RMB6.12 to $1.00, respectively.

For the three months ended March 31, 2014

Translation gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the statements of income and comprehensive income as incurred. The balance sheet amounts with the exception of equity as of March 31 2014 and December 31, 2013 were translated at RMB6.15 to $1.00 and RMB6.10 to $1.00, respectively. The average translation rates applied to the consolidated statements of income and comprehensive income and of cash flows for the three months ended March 31, 2014 and March 31, 2013 were RMB6.12 to $1.00 and RMB6.28to $1.00, respectively.

ACCUMULATED OTHER COMPREHENSIVE INCOME

RETIREMENT BENEFIT COSTS

STOCK-BASED COMPENSATION

The Company adopts both ASC Topic 718, “Compensation - Stock Compensation” and ASC Topic 505-50,”Equity-Based Payments to Non-Employees” using the fair value method in which an entity issues its equity instruments to acquire goods and services from employees and non-employees. Stock compensation for stock granted to non-employees has been determined in accordance with this accounting standard and the accounting standard regarding accounting for equity instruments that are issued to other than employees for acquiring, or in conjunction with selling goods or services, as the fair value of the consideration received or the fair value of equity instruments issued, whichever is more reliably measured. This accounting standard allows the “simplified” method to determine the term of employee options when other information is not available. Under ASC Topic 718 and ASC Topic 505-50, stock compensation expenses is measured at the grant date on the value of the option or restricted stock and is recognized as expenses, less expected forfeitures, over the requisite service period, which is generally the vesting period.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

NEW ACCOUNTING PRONOUNCEMENTS

The Company does not expect any recent accounting pronouncements to have a material effect on the Company’s financial position, results of operations, or cash flows.

PROGRESS REPORTS AND SUBSEQUENT EVENTS

This section shows the progress reports and subsequent events on operational affairs of each subsidiary as of March 31 2015, onward:

The number of subsequent events listed in the 2015 Q1 report might appear shorter than the list of events from other reporting periods, but consideration should be given to the abbreviated period of time that has elapsed since the 2014 10K filing, i.e. less than two (2) months.

* SJAP has been recommended by the Xining Government to participate in the acquisition of two subsidiaries of Sanjiang Group whereas Sanjiang Group is one of the largest agriculture conglomerates in China, operating since 1958 with total assets exceeding US$15 billion. The two subsidiaries in focus would provide synergy with SJAP in terms of meat production and cattle and plantation farming. Each subsidiary carries long term supply contracts with the Government, and reflects notable profits throughout their respective years of operation. SJAP is honored that it has attained the confidence and stature to be offered this unique opportunity by the Government, and has joined forces with Burnham Securities to explore this opportunity.

The Company will keep our shareholders informed as developments occur.

* The Company has engaged KPMG to perform the following financial due diligence and consulting work:

(1) A Financial DD to be performed on SIAF carried out by KPMG Norway & KPMG China.

(2) KPMG China will carry out Financial DD on the Merger and Acquisition of the aforementioned two Sanjiang Group owned subsidiaries.

(3). KPMG will act as consultant to SJAP with the aim to be appointed as SJAP’s official auditor in 2016.

(4). KPMG will be the official auditor by October 2015 of “Zhongshan City A Power Agriculture Development Co. Ltd” China, the Sino Foreign Joint Venture Company, and the developer and owner of the Zhongshan New Prawn Farm Project.

* Mr. Peter Rosta of Sweden has been appointed Director and Board Chairman for our subsidiary, “A Power Agriculture Development Co, Ltd (Macau)” the holding company of SJAP. Mr. Peter Rosta is a Swedish businessman who has been active in the international arena for the past three decades, having relocated to Beijing 1995 to establish and develop the business in China & Hong Kong for the British ESAB Group. Later, Peter became one of the first members in the China Resource Group, an informal organization recognized as a predecessor to the current Swedish Chamber of Commerce in China. He later joined the Swedish Trade Council as Commercial Counsellor and Trade Commissioner to China & Hong Kong. Peter finished off his diplomatic career as acting Trade Commissioner to South Korea in 2006. Thereafter, Peter became co-founder and CEO of Foundation Asia Pacific Ltd. and currently he is engaged as chairman, CEO, partner and/or advisor in several Swedish and Chinese companies; Euro China Capital, Asia BRL Ltd, NeuroVive Pharmaceutical Asia Ltd, Smart Unicorn Capital Partners, Ellen Asia Ltd, to mention a few.

* The Shanghai distribution started operation on May 5, 2015 reporting that after having invited 30 well know wholesalers and distributors for its opening day, was pleasantly surprised to see over 80 wholesalers attending. Also, its small wholesale shop situated at the Shanghai meat wholesale market of PoDong District, opening that same day, sold one full 40” container of grain fed Angus beef meats (equivalent to 25 MT) within 2 days. It is targeting to sell first 40’ container of Quarter Cut Beef imported from Australia as fresh chilled meat, made possible by its modern Static Electricity refrigerator constructed within its distribution complex.

* Arctic Securities has been working diligently on all preparation work to prepare the Company to satisfy all requirements necessary for listing on the Oslo Exchange, including legal due diligence work, etc. Arctic Securities is to be commended for their professionalism and dedication to this undertaking.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not Applicable

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

We have also evaluated our internal controls for financial reporting, and there has been no change in our internal control over financial reporting that occurred during the three months ended March 31, 2015 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting

Limitations on the Effectiveness of Controls

Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None

ITEM 1A.

RISK FACTORS

Not applicable

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5.

OTHER INFORMATION

None

ITEM 6.

EXHIBITS

Exhibit No.		Description of Exhibits

31.1		Section 302 Certification of Principal Executive Officer+
31.2		Section 302 Certification of Principal Financial Officer+
32.1		Section 906 Certification of Principal Executive Officer and Principal Financial Officer *
101.INS		XBRL Instance Document +
101.SCH		XBRL Taxonomy Extension Schema Document +
101.CAL		XBRL Taxonomy Calculation Linkbase Document +
101.LAB		XBRL Taxonomy Labels Linkbase Document +
101.PRE		XBRL Taxonomy Presentation Linkbase Document +
101.DEF		XBRL Definition Linkbase Document +

+filed herewith

* submitted herewith

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

		SINO AGRO FOOD, INC.

May 15, 2015	By:	/s/ LEE YIP KUN SOLOMON
		Lee Yip Kun Solomon
		Chief Executive Officer
		(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

May 15, 2015	By:	/s/ LEE YIP KUN SOLOMON
		Lee Yip Kun Solomon
		Chief Executive Officer, Director
		(Principal Executive Officer)

May 15, 2015	By:	/s/ Bertil Tiusanen
		Bertil Tiusanen
		Chief Financial Officer
		(Principal Financial Officer)

May 15, 2015	By:	/s/ TAN POAY TEIK
		Tan Poay Teik
		Chief Marketing Officer and Director

May 15, 2015	By:	/s/ CHEN BOR HANN
		Chen Bor Hann
		Corporate Secretary and Director

May 15, 2015	By:	/s/ YAP KOI MING
		Yap Koi Ming
		Director

May 15, 2015	By:	/s/ NILS ERIK SANDBERG
		Nils Erik Sandberg
		Director

May 15, 2015	By:	/s/ DANIEL RITCHEY
		Daniel Ritchey
		Director

May 15, 2015	By:	/s/ SOH LIM CHANG
		Soh Lim Chang
		Director

Attached files

Sino Agro Food, Inc. Reports

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