Filed
Pursuant to Rule 424(b)(5)
Registration No. 333-167246
PROSPECTUS
SUPPLEMENT
(to
Prospectus dated June 23, 2010)
3,600,000
Shares
Yuhe
International, Inc.
Common
Stock
Yuhe
International, Inc. is offering 3,600,000 shares of our common stock
at a price of $7.00 per share.
Our
common stock is listed on the NASDAQ Capital Market under the symbol “YUII.” The
last reported closing sale price of our common stock on October 19, 2010 was
$7.17 per share.
The
information contained or incorporated in this prospectus supplement is accurate
only as of its respective date, regardless of the time of delivery of this
prospectus supplement or any sale of our securities.
Investing
in our securities involves a high degree of risk. See “Risk Factors” beginning
on page S-6 of this prospectus supplement.
|
|
Per Share
|
|
|
Total
|
|
Public
Offering Price
|
|
$
|
7.00
|
|
|
$
|
25,200,000
|
|
Underwriting
Discounts and Commissions
|
|
$
|
0.35
|
|
|
$
|
1,260,000
|
|
Proceeds
to Us, Before Expenses
|
|
$
|
6.65
|
|
|
$
|
23,940,000
|
|
We have
granted the underwriters a 30-day option to purchase up to an
additional 540,000 shares of our common stock to cover over-allotments, if
any. If the underwriters exercise this option in full, the total underwriting
discounts and commissions will be $1,449,000, and our total proceeds, before
expenses, will be $27,531,000.
We
expect to deliver the
shares of our common stock on or about October 25, 2010.
Neither
the Securities and Exchange Commission nor any other regulatory body has
approved or disapproved these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Sole
Book-Running Manager
Roth
Capital Partners
Rodman
& Renshaw, LLC
|
Brean
Murray, Carret & Co.
|
Global
Hunter Securities
|
The date of this prospectus
supplement is October 20
, 2010.
Table
of Contents
|
Page
|
Prospectus
Supplement
|
|
About
This Prospectus Supplement
|
S-1
|
Prospectus
Supplement Summary
|
S-2
|
Risk
Factors
|
S-6
|
Use
of Proceeds
|
S-17
|
Price
Range of Common Stock
|
S-17
|
Dividend
Policy
|
S-17
|
Capitalization
|
S-18
|
Underwriting
|
S-19
|
Legal
Matters
|
S-21
|
Experts
|
S-21
|
Where
You Can Find More Information
|
S-21
|
Incorporation
of Certain Documents by Reference
|
S-22
|
|
|
Prospectus
|
|
About
This Prospectus
|
|
Cautionary
Statement Regarding Forward-Looking Statements
|
|
About
Yuhe International, Inc.
|
|
Risk
Factors
|
|
Use
of Proceeds
|
|
Description
of Common Stock
|
|
Anti-Takeover
Effects of Nevada Law
|
|
Plan
of Distribution
|
|
Legal
Matters
|
|
Experts
|
|
Where
You Can Find More Information
|
|
Incorporation
of Certain Documents by Reference
|
|
ABOUT
THIS PROSPECTUS SUPPLEMENT
On June
2, 2010, we filed a registration statement on Form S-3 (File No. 333-167246)
with the Securities and Exchange Commission, or SEC, utilizing a shelf
registration process, relating to the securities described in the accompanying
prospectus, which registration statement was declared effective on June 23,
2010. Under this shelf registration process, we may, from time to time, sell up
to $40 million of our common stock.
This
document is in two parts. The first part is this prospectus supplement, which
describes the specific terms of this common stock offering and also adds to and
updates information contained in the accompanying prospectus and the documents
incorporated by reference into the accompanying prospectus. The second part, the
accompanying prospectus, gives more general information, some of which does not
apply to this offering.
If the
description of the offering varies between this prospectus supplement and the
accompanying prospectus, you should rely on the information contained in this
prospectus supplement. However, if any statement in one of these documents is
inconsistent with a statement in another document having a later date — for
example, a document incorporated by reference in this prospectus supplement and
the accompanying prospectus — the statement in the document having the later
date modifies or supersedes the earlier statement.
We note
that the representations, warranties and covenants made by us in any agreement
that is filed as an exhibit to any document that is incorporated by reference in
this prospectus supplement and the accompanying prospectus were made solely for
the benefit of the parties to such agreement, including, in some cases, for the
purpose of allocating risk among the parties to such agreements, and should not
be deemed to be a representation, warranty or covenant to you. Moreover, such
representations, warranties or covenants were accurate only as of the date when
made. Accordingly, such representations, warranties and covenants should not be
relied on as accurately representing the current state of our
affairs.
You
should rely only on the information provided or incorporated by reference in
this prospectus supplement and the accompanying prospectus. We and the
underwriters have not authorized anyone else to provide you with additional or
different information. We are offering to sell, and seeking offers to buy,
common stock only in jurisdictions where offers and sales are permitted. You
should not assume that the information in this prospectus supplement or the
accompanying prospectus is accurate as of any date other than the date on the
front of those documents or that any document incorporated by reference is
accurate as of any date other than its filing date.
No
action is being taken in any jurisdiction outside the United States to permit a
public offering of the common stock or possession or distribution of this
prospectus supplement or the accompanying prospectus in that jurisdiction.
Persons who come into
possession of this prospectus supplement or the accompanying prospectus in
jurisdictions outside the United States are required to inform themselves about
and to observe any restrictions as to this offering and the distribution of this
prospectus supplement and the accompanying prospectus applicable to that
jurisdiction.
The terms
“Yuhe,” “Company,” “we,” “our” or “us” in this prospectus supplement refer to
Yuhe International, Inc. and its predecessors and subsidiaries, unless the
context suggests otherwise. Additionally, unless we indicate otherwise,
references in this prospectus supplement to:
|
·
|
“China”
and the “PRC” are to the People’s Republic of China, excluding, for the
purposes of this prospectus supplement, Taiwan and the special
administrative regions of Hong Kong and
Macau;
|
|
·
|
“RMB”
and “Renminbi” are to the legal currency of China;
and
|
|
·
|
“$,”
“U.S.$” and “U.S. dollars” are to the legal currency of the United
States.
|
PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary highlights selected information contained elsewhere in this
prospectus supplement, the accompanying prospectus and the documents
incorporated herein by reference. This summary does not contain all of the
information you should consider before investing in our common stock. Before
deciding to invest in shares of our common stock, you should read this entire
prospectus supplement, the accompanying prospectus and the documents
incorporated herein and therein, including the discussion of “Risk Factors” and
our consolidated financial statements and the related notes. The information
contained in this prospectus supplement, the accompanying prospectus and the
documents incorporated herein by reference includes “forward-looking
statements,” which are based on current expectations and beliefs concerning
future developments and their potential effects on us. There can be no assurance
that such future developments will actually occur or that their effects will be
as anticipated. Please see page 1 of the accompanying prospectus for cautionary
information regarding forward-looking statements.
We are a
supplier of day-old chicken raised for meat production, or broilers, in China.
We purchase parent breeding stock from breeder farms, raise them to produce
hatching eggs, and hatch the eggs to day-old broilers. Currently, we have 33
breeder farms with 20 in operation and three hatcheries with a total annual
capacity of 2.2 million sets of breeders and 156 hatchers through our
wholly-owned subsidiary, Weifang Yuhe Poultry Co. Ltd., or PRC Yuhe. The
remaining 13 breeder farms (including eight purchased in December 2009 and five
purchased in July 2010) are undergoing renovations and they are expected to be
in full operation by the first quarter of 2011. Our day-old broilers are
primarily purchased by broiler farms and integrated chicken companies for the
purpose of raising them to market-weight broilers. Our customers are located in
Shandong province and ten other provinces and special municipalities around
Shandong province, including Jiangsu, Anhui, Henan, Hebei, Jilin, Liaoning,
Heilongjiang, Tianjin, Beijing and Shanghai. In connection with our day-old
broiler business, we also operate a feed stock business through a subsidiary
company named Weifang Taihong Feed Co. Ltd., or Taihong, whose primary business
is to supply feed stock to our breeders. Our operations are conducted
exclusively by PRC Yuhe and Taihong in China.
Recent
Developments
On
October 11, 2010, Mr. Kunio Yamamoto, the previous beneficial owner of 7,654,817
shares of our common stock, entered into an agreement, or the Agreement, for the
transfer of 7,222,290 shares of common stock, or the Transfer Shares, to Mr. Gao
Zhentao, our chief executive officer, pursuant to a general, verbal and informal
understanding between Mr. Kunio Yamamoto and Mr. Gao Zhentao at the time of
execution of a share transfer agreement between Bright Stand International Co.,
Ltd., or Bright Stand, and all the then existing shareholders of PRC Yuhe on
October 18, 2007. Based on that understanding, all or part of the shares issued
to Mr. Kunio Yamamoto would be transferred to Mr. Gao Zhentao in consideration
of Mr. Gao Zhentao’s commitment to management of our business operations and
future achievement of the financial targets as set forth in a Make Good
Agreement dated March 12, 2008. Consequently, on October 11, 2010, Mr. Kunio
Yamamoto agreed to transfer the Transfer Shares, representing approximately
44.8% of our issued and outstanding common stock, to Mr. Gao Zhentao in a
private transaction intended to be exempt from registration under the Securities
Act of 1933, as amended, or the Securities Act. On the same day, Mr. Kunio
Yamamoto also transferred an aggregate of 432,527 shares of our common stock to
six individuals who had issued personal loans to him as well as to designees of
these lenders, pursuant to the exercise by these lenders of warrants for our
common stock. Mr. Kunio Yamamoto issued the warrants to these lenders at the
time of such loans in December 2007. The transfers were completed on October 13,
2010.
On July
14, 2010, PRC Yuhe entered into an asset purchase agreement with Liaoning
Haicheng Songsen Stock Farming and Feed Co., Ltd., or Haicheng Songsen, and Mr.
Jiang Zhaolin, the controlling shareholder of Haicheng Songsen. Pursuant to the
asset purchase agreement, the sellers agreed to sell to PRC Yuhe certain assets
of Haicheng Songsen, including five breeder farms with a total area of
approximately 52 acres and total building coverage of approximately 680,000
square feet in Haicheng, Liaoning province, China, for a purchase price of
approximately RMB 21.3 million. The purchase was closed in August
2010.
Concurrently,
PRC Yuhe entered into a service agreement with Mr. Jiang Zhaolin. Pursuant to
the service agreement, Mr. Jiang Zhaolin has agreed to provide PRC Yuhe with
certain services related to completion and closing of the asset purchase in
consideration for a certain number of restricted shares of our common stock
calculated at a price of $10 per share with total consideration equal to
approximately RMB 20 million. Based on such calculation, Mr. Jiang Zhaolin
received approximately 300,000 restricted shares at the closing.
The
Offering
Issuer
|
|
Yuhe
International, Inc.
|
|
|
|
Common
stock offered by us
|
|
3,600,000
shares
|
|
|
|
Over-allotment
option
|
|
We
have granted the underwriters an option to purchase up to 540,000
additional shares of common stock to cover over-allotments, if any, within
30 days of the date of this prospectus supplement.
|
|
|
|
Common
stock to be outstanding immediately after this offering
|
|
19,709,563
shares
|
|
|
|
Offering
price
|
|
$7.00
per share
|
|
|
|
Exchange
listing
|
|
Our
common stock is listed on the NASDAQ Capital Market under the symbol
“YUII.”
|
|
|
|
Use
of proceeds
|
|
We
intend to use the net proceeds from this offering for future acquisitions,
capital expenditures and general corporate and working capital
purposes.
|
|
|
|
Transfer
agent
|
|
Interwest
Transfer Company, Inc.
|
|
|
|
Risk
factors
|
|
Investing
in our common stock involves risk. See “Risk Factors” beginning on page
S-6 of this prospectus supplement for a discussion of factors that you
should carefully consider before deciding to invest in shares of our
common stock.
|
The
number of shares of our common stock outstanding after this offering is based on
16,109,563 shares of common stock outstanding as of September 30,
2010.
Unless
otherwise stated, all information contained in the prospectus supplement assumes
no exercise of the over-allotment option granted to the
underwriters.
See
“Description of Common Stock” and “Anti-Takeover Effects of Nevada Law” in the
accompanying prospectus for information regarding our common stock, our articles
of incorporation and related Nevada law matters.
Summary
Consolidated Financial Data
The
following table sets forth our summary consolidated financial data as of the
dates and for the periods indicated. You should read this information together
with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” contained in our Annual Report on Form 10-K for the year ended
December 31, 2009 and our Quarterly Report on Form 10-Q for the six months ended
June 30, 2010 and the financial statements and related notes incorporated by
reference into this prospectus supplement. Historical financial information may
not be indicative of our future performance and the results for the six months
ended June 30, 2010 are not necessarily indicative of the results that may be
expected for the full fiscal year.
|
|
Six months ended
June 30,
|
|
|
Year ended
December 31,
|
|
Consolidated Income Statement Data
|
|
2010
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
US$
(except share data)
|
|
Net
revenue
|
|
$
|
24,235,548
|
|
|
$
|
20,748,763
|
|
|
$
|
47,245,758
|
|
|
$
|
34,626,2822
|
|
Cost
of revenue
|
|
|
(16,212,105
|
)
|
|
|
(13,883,779
|
)
|
|
|
(30,504,187
|
)
|
|
|
(21,572,722
|
)
|
Gross
profit
|
|
|
8,023,443
|
|
|
|
6,864,984
|
|
|
|
16,741,571
|
|
|
|
13,053,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
|
(312,515
|
)
|
|
|
(201,596
|
)
|
|
|
(434,056
|
)
|
|
|
(425,460
|
)
|
General
and administrative expenses
|
|
|
(1,631,139
|
)
|
|
|
(1,379,237
|
)
|
|
|
(2,963,536
|
)
|
|
|
(1,725,590
|
)
|
Total
operating expenses
|
|
|
(1,943,654
|
)
|
|
|
(1,580,833
|
)
|
|
|
(3,397,592
|
)
|
|
|
(2,151,050
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
|
6,079,789
|
|
|
|
5,284,151
|
|
|
|
13,343,979
|
|
|
|
10,902,510
|
|
Non-operating
income (expenses):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
139
|
|
|
|
141
|
|
|
|
237
|
|
|
|
249,738
|
|
Other
income (expenses)
|
|
|
8,084
|
|
|
|
4,661
|
|
|
|
849
|
|
|
|
(21,704
|
)
|
(Loss)
gain on disposal of fixed assets
|
|
|
(176
|
)
|
|
|
27,778
|
|
|
|
24,567
|
|
|
|
84,663
|
|
Investment
income
|
|
|
15,615
|
|
|
|
15,509
|
|
|
|
15,522
|
|
|
|
12,251
|
|
Interest
expenses
|
|
|
(115,138
|
)
|
|
|
(325,427
|
)
|
|
|
(608,789
|
)
|
|
|
(702,573
|
)
|
Total
other income (expenses)
|
|
|
(91,476
|
)
|
|
|
(277,338
|
)
|
|
|
(567,614
|
)
|
|
|
(377,625
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income before income taxes
|
|
|
5,988,312
|
|
|
|
5,006,813
|
|
|
|
12,776,365
|
|
|
|
10,524,885
|
|
Income
tax benefits
|
|
|
(5,930
|
)
|
|
|
-
|
|
|
|
17,756
|
|
|
|
—
|
|
Net
income
|
|
|
5,982,383
|
|
|
|
5,006,813
|
|
|
|
12,794,121
|
|
|
|
10,524,885
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
264,409
|
|
|
|
52,078
|
|
|
|
106,520
|
|
|
|
1,139,508
|
|
Comprehensive
income
|
|
$
|
6,246,792
|
|
|
$
|
5,058,891
|
|
|
$
|
12,900,641
|
|
|
$
|
11,664,393
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.38
|
|
|
$
|
0.32
|
|
|
$
|
0.81
|
|
|
$
|
0.74
|
|
Diluted
|
|
$
|
0.37
|
|
|
$
|
0.32
|
|
|
$
|
0.81
|
|
|
$
|
0.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
15,772,872
|
|
|
|
15,722,180
|
|
|
|
15,722,180
|
|
|
|
14,233,268
|
|
Diluted
|
|
|
16,041,393
|
|
|
|
15,722,180
|
|
|
|
15,792,540
|
|
|
|
14,476,504
|
|
|
|
As
of
|
|
|
As
of
|
|
|
|
June
30,
|
|
|
December
31,
|
|
|
|
2010
|
|
|
2009
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
US$
|
|
Consolidated
Balance Sheet Data:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
19,633,056
|
|
|
|
14,047,147
|
|
Total
assets
|
|
|
84,926,598
|
|
|
|
76,763,036
|
|
Total
liabilities
|
|
|
23,067,026
|
|
|
|
21,511,643
|
|
Total
stockholders’ equity
|
|
|
61,859,572
|
|
|
|
55,251,393
|
|
RISK
FACTORS
An
investment in our common stock involves a high degree of risk. In addition to
the following risk factors, you should carefully consider the risks,
uncertainties and assumptions discussed herein, and in other documents that we
subsequently file with the SEC that update, supplement or supersede such
information for which documents are incorporated by reference into this
prospectus supplement. See “Where You Can Find More Information.” Additional
risks not presently known to us or which we consider immaterial based on
information currently available to us may also materially adversely affect us.
If any of the events anticipated by the risks described herein occur, our
business, cash flow, results of operations and financial condition could be
adversely affected, which could result in a decline in the market price of our
common stock, causing you to lose all or part of your investment.
RISKS
RELATED TO OUR BUSINESS AND INDUSTRY
Outbreaks
of poultry disease, such as avian influenza, or the perception that outbreaks
may occur, can significantly restrict our ability to conduct our
operations.
Events
beyond our control, such as the outbreak of avian influenza in 2006, may
restrict our ability to conduct our operations and sales. An outbreak of disease
may result in governmental restrictions on the import and export of products
from our customers, or require us to destroy one or more of our flocks. This may
result in the cancellation of orders by our customers and create adverse
publicity that may have a material adverse effect on our business, reputation
and prospects. In 2006, PRC Yuhe suffered an operating loss of $2,597,285 after
the general decline in consumer demand for poultry products in late 2005 and
early 2006 following the outbreak of avian influenza.
Worldwide
fears about avian diseases, such as avian influenza, have depressed and may
continue to adversely impact our sales. Avian influenza is a respiratory disease
of birds. The milder forms occur occasionally around the world. A highly
pathogenic strain of avian influenza, known as H5N1, has affected Asia since
2002. It is widely believed that H5N1 is spread by migratory birds, such as
ducks and geese. There have also been some cases where H5N1 is believed to have
passed from birds to humans as humans came into contact with live birds that
were infected with the disease. Our flocks have never been infected with the
H5N1 virus. Although there are vaccines available for H5N1 and other forms of
avian influenza, and we vaccinate our breeding stock against avian influenza in
accordance with PRC government mandates, there is no guarantee that the disease
can be completely prevented as the virus continues to mutate.
We
do not typically have long-term purchase contracts with our customers and our
customers have in the past, and may at any time in the future, reduce or cease
purchasing products from us, which may adversely affect our business and results
of operations.
We
typically do not have long-term volume purchase contracts with our customers,
and they are not obligated to purchase products from us. Accordingly, our
customers may at any time reduce their purchases from us or cease purchasing our
products altogether. In addition, any decline in demand for our products and any
other negative development affecting our major customers or the poultry industry
in general may adversely affect our results of operations. For example, if any
of our customers experience serious financial difficulties, it may lead to a
decline in sales of our products to such customers and our operating results may
be adversely affected through, among other things, decreased sales volumes and
write-offs of accounts receivable related to sales to such
customers.
Our
failure to compete with other poultry companies, especially companies with
greater resources, may adversely affect our business, financial condition and
results of operations.
The
Chinese poultry industry is highly competitive. In general, competitive factors
in the Chinese broiler, or chicken, industry include price, product quality,
brand identification, breadth of product line and customer service. Our success
depends in part on our ability to manage costs and be efficient in the highly
competitive poultry industry. Some of our competitors have greater financial and
marketing resources. As a result, we may not be able to successfully increase
our market penetration or our overall share in the poultry market.
Increased
competition may result in price reductions, increased sales incentive offerings,
lower gross margins, sales expenses, marketing programs and expenditures to
expand channels to market. Our competitors may offer products with better market
acceptance, better price or better quality. Our business may be adversely
affected if we are unable to maintain current product cost reductions, or
achieve future product cost reductions.
If we
fail to address these competitive challenges, there may be a material adverse
effect upon our business, consolidated results of operations and financial
condition.
As
a public company, we are required to comply with the requirements of the
Sarbanes-Oxley Act of 2002 with respect to our internal control over financial
reporting. If we fail to comply with the requirements of the Sarbanes-Oxley Act
or if we fail to maintain adequate internal control over financial reporting,
our business, results of operations and financial condition and the market price
of our common stock may be adversely affected.
As a
public company, we are required under applicable law and regulations to design
and implement internal controls over financial reporting, and evaluate our
existing internal controls with respect to the standards adopted by the Public
Company Accounting Oversight Board. Our management concluded that a material
weakness existed as of December 31, 2009 with respect to our compliance with
Section 402 of the Sarbanes-Oxley Act of 2002, as certain related party loans
between us and Shandong Yuhe Food Group Co., Ltd. constituted prohibited
transactions under Section 402 of the Sarbanes-Oxley Act. All such related party
loans were repaid by the end of February 2010. In addition, there were certain
audit adjustments identified by our former independent auditors related to our
financial statements for the year ended December 31, 2009 indicating a material
weakness in our internal control over financial reporting. The adjustments were
mainly related to transferring amounts from work-in-progress to fixed assets,
separating the current portion of long-term debt from long-term debt, and
verifying the nature of capital leases and operating leases.
Although
we have implemented measures to address the material weaknesses, we cannot
assure you that we will not identify control deficiencies that may constitute
significant deficiencies or material weaknesses in our internal controls in the
future. As a result, we may be required to implement further remedial measures
and to design enhanced processes and controls to address issues identified
through future reviews. This could result in significant delays and costs to us
and require us to divert substantial resources, including management time, from
other activities.
If we do
not fully remediate the material weaknesses identified by management or fail to
maintain the adequacy of our internal controls in the future, we may not be able
to ensure that we can conclude on an ongoing basis that we have effective
internal control over financial reporting in accordance with the Sarbanes-Oxley
Act. Moreover, effective internal controls are necessary for us to produce
reliable financial reports and are important to help prevent fraud. As a result,
any failure to satisfy the requirements of the Sarbanes-Oxley Act with respect
to internal control over financial reporting on a timely basis could result in
the loss of investor confidence in the reliability of our financial statements,
which in turn could harm our business and negatively impact the trading price of
our common stock.
We
use company-controlled personal bank accounts of certain of our employees for
transit purposes to transact a substantial amount of our business and we
transact a significant amount of our business in cash without using bank
accounts.
We use
company-controlled personal bank accounts of certain of our employees for
transit purposes to transact a substantial portion of our business instead of
our own bank accounts. As an industry practice in the rural areas of northern
China, where our operations are primarily conducted, personal bank accounts of
employees are commonly used for transit purposes for a company’s business.
Individual suppliers and customers in the rural areas of China prefer these
transactions as a more secure replacement for physical cash transactions due to
the underdevelopment of the banking system in such areas. In addition, since
banks in China do not accept corporate transactions on weekends, we cannot use
corporate bank accounts to process transactions on weekends. We believe that the
use of company-controlled personal bank accounts of our employees provides us
with greater convenience and stronger control of asset management safety
compared to physical cash transactions in these areas and under these
circumstances.
We have
established certain systematic controls over these personal bank accounts and
have implemented a set of management procedures to monitor the use of these
accounts. The procedures we have established for monitoring these accounts
include the mandatory use of physical cards for access control, our management
of the passcodes to these accounts and our requirement that the holders of these
accounts enter into agreements with us with respect to the use of these
accounts. However, since we do not own these personal bank accounts, potential
disputes may arise with respect to the control of such accounts. In addition, if
we fail to properly manage and control the personal bank accounts, we could be
subject to compliance risks and potential loss of our assets.
Cash
transactions account for less than one-third of our revenue and expenditures. We
receive 20% to 30% of our revenue in the form of cash, and approximately 30% of
expenditures are made through cash payments, the majority of which are directly
drawn from the cash income received. Cash income is mainly received from
livestock farmers for their purchases of our products, and cash expenditures are
primarily made to the farmers for their provision of corn, our feed ingredient.
These farmers do not accept payments in the form of bank transfers, but use cash
transactions instead. It is a standard industry practice in China to conduct
business with local farming communities on cash basis, and currently it is also
the only viable means of payment to local farmers. We are not aware of any
Chinese companies within our industry that have completely eliminated cash
transactions when dealing with local farmers. We reserve an adequate amount of
cash on hand to meet our payment obligations and do not deposit all cash income
into banks, as may be the practice in other industries, because Chinese banks
place restrictions on the number and size of cash withdrawals. The nature of our
business requires a large amount of cash for transaction purposes, and we have
implemented a series of management measures on cash control, including a cap on
the amount of cash transactions and requirements relating to the maintenance of
daily inventory, daily updates to the cash account record and the submission of
supporting documents along with each receipt. To date, we have not experienced
any cash losses, and we are gradually reducing the cash portion of our income
and expenditures. However, if we fail to properly manage and control such cash
transactions in the future, we may be exposed to potential compliance risks and
loss of our cash, which may have an adverse effect on our business, financial
condition and results of operations.
We
conduct substantially all of our operations through our subsidiaries, and our
performance will depend upon the performance of our subsidiaries.
We have
no operations independent of those of Bright Stand, and its PRC subsidiaries,
PRC Yuhe and Taihong. As a result, we are dependent upon the performance of
Bright Stand and its subsidiaries and our performance will be subject to the
financial, business and other factors affecting such subsidiaries as well as
general economic and financial conditions. In addition, we are dependent on the
cash flow of our subsidiaries to meet our obligations.
Because
virtually all of our assets are held by our operating subsidiaries, the claims
of our shareholders will be structurally subordinate to all existing and future
liabilities and obligations, as well as trade payables of such subsidiaries. In
the event of bankruptcy, liquidation or reorganization of us, our assets and
those of our subsidiaries will be available to satisfy the rights of our
shareholders only after all of Bright Stand and its subsidiaries’ liabilities
and obligations have been paid in full.
Our
sales revenue may be adversely affected by various factors, including demand for
our products, sales price and general market conditions.
Demand
for our products is affected by a number of factors, including the general
demand for the products in the end markets that we serve and the sales prices of
our products. A vast majority of our sales is derived directly or indirectly
from customers who are broiler raisers and large integrated chicken companies
whose day-old broiler production is not sufficient for their own use. Any
significant decrease in the demand for day-old broilers may result in a decrease
in our revenues and earnings. A variety of factors, including economic, health
and regulatory factors and political and social instability, may contribute to a
slowdown in the demand for day-old broilers.
Industry
cyclicality, especially fluctuations in commodity prices of feed ingredients and
breeding stock, may affect our earnings.
Currently,
all our raw materials are procured in China. Profitability in the poultry
industry is materially affected by the supply of parent breeding stocks and the
commodity prices of feed ingredients, including corn, soybean cake, and other
nutrition ingredients from numerous sources, mainly from wholesalers who collect
the feed ingredients directly from farmers. As a result, the poultry industry is
subject to wide fluctuations and cycles. These commodity prices are determined
by supply and demand. We cannot eliminate the risk of increased operating costs
from commodity price increases, and it is very difficult to predict when the
feed price spiral cycles will occur.
Various
factors can affect the supply of corn and soybean meal, which are the primary
ingredients of the feed we use for parent breeding stocks. In particular,
weather patterns, the level of supply inventories and demand for feed
ingredients, and the agricultural policies of the Chinese government affect the
supply of feed ingredients. Weather patterns often change agricultural
conditions in an unpredictable manner. A sudden and significant change in
weather patterns may affect supplies of feed ingredients, as well as both the
industry’s and our ability to obtain feed ingredients, grow chickens or deliver
products. Increases in the prices of feed ingredients may result in increases in
raw material costs and operating costs.
The
supply of parent breeding stocks is also cyclical. We purchase parent breeding
stocks from multiple suppliers. If we fail to maintain adequate breeding stock,
our business, financial condition and results of operations may be adversely
affected.
The
cessation of tax exemptions by the Chinese government may affect our
profitability.
As a
leading agricultural enterprise jointly recognized by eight national authorities
in China, we enjoyed income tax exemption status from January 2004 until
November 2007. In connection with our restructuring in 2008, we were converted
into a foreign investment enterprise, or FIE, wholly owned by Bright Stand and
became subject to PRC income tax. Under the current PRC tax laws, FIEs such as
ours are subject to income tax at a rate of 25%, while in practice tax
reductions or exemptions in various forms are granted by local governments to
FIEs.
On March
16, 2007, the National People’s Congress of China enacted a new enterprise
income tax law, or the New Tax Law, whereby both FIEs and domestic companies
will be subject to a uniform income tax rate of 25%. On December 6, 2007, the
State Council of China promulgated the Implementation Rules of the New Tax Law,
or the Implementation Rules. Effective on January 1, 2008, both the New Tax Law
and the Implementation Rules provide tax exemption or reduction treatment for
enterprises engaged in agricultural industries, such as farming, foresting,
fishing and animal husbandry. As an enterprise engaged in the farming industry,
we are eligible for exemption and are not required to pay company income tax. If
we lose the tax exemption treatment as of result of any future changes to the
New Tax Law and Implementation Rules, our business, results of operations and
financial condition may be materially and adversely affected.
Our
business may be adversely affected due to inaccuracy in our sales
forecasts.
We
procure raw materials and produce our day-old broilers based on our sales
forecasts. If we fail to accurately forecast demand for our products, we may
produce excessive breeding stock, which may result in lower prices in order to
sell our inventory and adversely affect our business, financial condition and
results of operations.
Our
products may contain undetected defects that are not discovered until after
shipping.
Our
products may contain undetected defects, which may result in a loss or delay in
market acceptance of our products and thus harm our reputation and results of
operations.
We
have sustained losses in the past and cannot guarantee profitability in the
future.
We
sustained losses in 2006 and there is no assurance that we will continue to be
profitable in the future. In addition, our business was impacted in 2006 due to
the outbreak of avian influenza. A variety of factors may cause our operating
results to decline and our financial condition to worsen,
including:
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competitors
offering comparable products at lower
prices;
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continuing
downward pressure on the average selling prices of our products caused by
intense competition in our industry and general market
conditions;
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superior
product innovations by
competitors;
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rising
raw material costs;
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changes
to management and key personnel;
and
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increased
operating expenses relating to research and development, sales and
marketing efforts and general and administrative expenses as we seek to
grow our business.
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As a
result, we may fail to achieve our revenue expectation or experience
higher-than-expected operating expenses, which may materially and adversely
affect our business, results of operations and financial condition.
Our
limited operating history may not serve as an adequate basis to judge our future
prospects and operating results.
We have a
limited operating history with respect to our current business, which may not
provide a sufficient basis on which to evaluate our business or future
prospects. Although our sales have grown rapidly in recent years, we cannot
assure you that we will maintain profitability or that we will not incur net
losses in the future. We expect that our operating expenses will increase as we
expand, a failure to realize anticipated sales growth may result in significant
operating losses. We will continue to encounter risks and difficulties
frequently experienced by companies at a similar stage of development, including
our potential failure to:
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implement
our business model and strategy and adapt and modify them as
needed;
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maintain
our current, and develop new, relationships with
customers;
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manage
our expanding operations and product offerings, including the integration
of any future acquisitions;
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maintain
adequate control of expenses;
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attract,
retain and motivate qualified
personnel;
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protect
our reputation and enhance customer loyalty;
and
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anticipate
and adapt to changing conditions in the poultry industry as well as the
impact of any changes in government regulation, mergers and acquisitions
involving our competitors, technological developments and other
significant competitive and market
factors.
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If we are
not successful in addressing any or all of these risks, our business may be
materially and adversely affected.
The
loss of key personnel or the failure to attract or retain specialized technical
and management personnel may impair our ability to grow our
business.
We rely
heavily on the services of our key employees, including Gao Zhentao, our Chief
Executive Officer, Han Chengxiang, our Chief Production Officer, and Gang Hu,
our Chief Financial Officer. In addition, our engineers and other key technical
personnel constitute our significant assets and are the source of our
technological and product innovations. We depend substantially on the leadership
of a small number of farm directors and technicians who are devoted to research
and development. However, we do not maintain “key person” life insurance for any
of our senior management or other key employees. Additionally, approximately 90%
of our products are sold through third-party distributors. Most of them are
exclusive distributors and we expect them to be our future main sales force. We
believe our future success will depend upon our ability to retain these key
employees, engineers and technical personnel, and sales distributors. If we fail
to attract and retain sufficient numbers of technical personnel to support our
anticipated growth, if our current key employees and distributors decide not to
continue to work with us, or if we are not able to obtain the services of
additional personnel necessary for our growth, it may have an adverse effect on
our ability to sell our products, as well as on our overall growth.
In
addition, if any members of our senior management or any of our other key
personnel join a competitor or form a competing company, we may lose customers,
business partners, key professionals and staff members, which may materially and
adversely affect our business, financial condition and results of
operations.
We
do not have any registered patents or other registered intellectual property on
our production processes and we may not be able to maintain the confidentiality
of our processes.
We have
no patents or registered intellectual property covering our production processes
and we rely on the confidentiality of our processes in producing a competitive
product. The confidentiality of our know-how may not be maintained and we may
lose any meaningful competitive advantage that might arise from our proprietary
processes.
We
may not be able to collect receivables incurred by customers.
Although
we currently sell our products on a cash payment basis, our ability to receive
payment for our products depends on the continued creditworthiness of our
customers. In order to pay our expansion costs, we may be required to make sales
to customers who are less creditworthy than our historical customers. Our
customer base may change if our sales increase because of our expanded capacity.
If we are not able to collect our receivables, our revenues and profitability
will be adversely affected.
We
do not have insurance coverage for our properties or assets.
We and
our subsidiaries are not covered by any insurance. As a result, any material
loss or damage to our properties or other assets, or personal injuries arising
from our operations, may have a material adverse effect on our financial
condition and operations.
Increased
water, energy and gas costs would increase our expenses and reduce our
profitability.
We
require a substantial amount, and as we expand our business we will require
additional amounts, of water, electricity and natural gas to produce and process
our broiler products. The prices of water, electricity and natural gas fluctuate
significantly over time. We may not be able to pass on increased costs of
production to our customers. As a result, increases in the cost of water,
electricity or natural gas may substantially affect our business and results of
operations.
Increased
costs of transportation would negatively affect our profitability.
Our
transportation costs are a material portion of the cost of our products. We
primarily ship our products and receive our inputs via truck and rely on
third-party transportation companies for the delivery of most of our products
and inputs. The costs associated with the transportation of our products and
inputs fluctuate with the price of fuel, the costs to our transportation
providers of labor and the capacity of our transportation sources. Increases in
costs of transportation have adversely affected, and may in the future adversely
affect, our profitability.
RISKS
RELATED TO DOING BUSINESS IN CHINA
Changes
in China’s political or economic situation may adversely affect our operational
results.
Economic
reforms adopted by the Chinese government have had a positive effect on the
economic development of the country, but the Chinese government may change these
economic reforms or the Chinese legal system at any time. This could have an
adverse effect on our operations and profitability. Some of the factors that may
have such an effect are:
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Level
of the government involvement in the
economy;
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Control
of foreign exchange;
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Methods
of allocating resources;
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Balance
of payments position;
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International
trade restrictions; and
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International
conflict.
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The
Chinese economy differs from the economies of most countries belonging to the
Organization for Economic Cooperation and Development, or OECD, in many ways. As
a result of these differences, we may not develop in the same way or at the same
rate as might be expected if the Chinese economy were similar to those of the
OECD member countries.
Our
business is largely subject to the uncertain legal environment in China and your
ability to legally protect your investment may be limited.
The
Chinese legal system is a civil law system based on written
statutes. Unlike common law systems, precedents set in earlier legal cases
are not generally used in the Chinese legal system. The overall effect of
legislation enacted over the past 20 years has been to enhance the protections
afforded to foreign invested enterprises in China. However, these laws,
regulations and legal requirements are relatively recent and are evolving
rapidly, and their interpretation and enforcement involve
uncertainties. These uncertainties may limit the legal protections
available to foreign investors, such as the right of foreign invested
enterprises to hold licenses and permits such as requisite business
licenses. In addition, most of our executive officers and directors are
residents of China and not of the United States, and substantially all the
assets of these persons are located outside the United States. As a result,
it may be difficult, if not impossible, for investors to effect service of
process in the United States, or to enforce a judgment obtained in the United
States against us or any of these persons.
The
Chinese government exerts substantial influence over the manner in which we must
conduct our business activities.
China has
only recently permitted provincial and local economic autonomy and private
economic activities. The Chinese government has exercised and continues to
exercise substantial control over virtually every sector of the Chinese economy
through regulation and state ownership. Our ability to operate in China may
be harmed by changes in its economic policies and regulations, including those
relating to taxation, import and export tariffs, environmental regulations, land
use rights, property and other matters. We believe that our operations in
China are in material compliance with all applicable legal and regulatory
requirements. However, the central or local governments of these
jurisdictions may impose new, stricter regulations or interpretations of
existing regulations that would require additional expenditures and efforts on
our part to ensure compliance with such regulations or
interpretations.
Accordingly,
government actions in the future, including any decision not to continue to
support recent economic reforms and to return to a more centrally planned
economy or regional or local variations in the implementation of economic
policies, may have a significant effect on economic conditions in China or
particular regions thereof.
Future
inflation in China may inhibit our activity to conduct business in
China.
In recent
years, the Chinese economy has experienced periods of rapid expansion and widely
fluctuating rates of inflation. These factors have led to the
adoption by Chinese government, from time to time, of various austerity measures
designed to restrict the availability of credit or regulate growth and constrain
inflation. High inflation may in the future cause the Chinese
government to impose controls on credit and/or prices, or to take other action,
which may inhibit economic activity in China, and thereby harm the market for
our products.
Restrictions
on currency exchange may limit our ability to receive and use our revenues
effectively.
The
majority of our revenues is denominated in Renminbi, and any future restrictions
on currency exchange may limit our ability to use revenue generated in Renminbi
to fund any future business activities outside China or to make other payments
in U.S. dollars. Although the Chinese government introduced regulations in
1996 to allow greater convertibility of the Renminbi for current account
transactions, significant restrictions still remain, including primarily the
restriction that foreign invested enterprises may only buy, sell or remit
foreign currencies after providing valid commercial documents at those banks in
China authorized to conduct foreign exchange business. In addition,
conversion of Renminbi for capital account items, including direct investment
and loans, is subject to governmental approval in China, and companies are
required to open and maintain separate foreign exchange accounts for
capital account items. In addition, conversion of Renminbi for
capital account items, including direct investment and loans, is subject to
governmental approval in China, and companies are required to open and maintain
separate foreign exchange accounts for capital account items. On August 29,
2008, the SAFE promulgated Circular 142, a notice regulating the conversion by
a foreign-invested enterprise, or an FIE, of foreign currency in its capital
account into Renminbi by restricting how the converted Renminbi may be used.
Circular 142 prohibits the use of Renminbi converted from foreign capital to
purchase equity interests in PRC companies, unless the equity investment is
within the approved business scope of the FIE and has been approved by SAFE. In
addition, SAFE increased its oversight of the flow and use of the registered
capital of an FIE settled in Renminbi converted from foreign currencies. The use
of such Renminbi capital may not be changed without the SAFE's approval and may
not in any case be used to repay Renminbi loans if the proceeds of such loans
have not been used. Violations of Circular 142 will result in severe penalties,
including fines. Therefore, our business expansions in China may be adversely
affected if we cannot obtain such SAFE approvals.
The value
of
our common stock
may be affected by the foreign exchange rates between other currencies and
Renminbi.
The value
of our common stock may be affected by the foreign exchange rate between U.S.
dollars and Renminbi. For example, to the extent that we need to convert
U.S. dollars into Renminbi for our operational needs and should the Renminbi
appreciate against the U.S. dollar at that time, our financial position, our
business and the price of our common stock may be harmed. Conversely,
if we decide to convert our Renminbi into U.S. dollars for the purpose of
declaring dividends on our common stock or for other business purposes and the
U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of our
earnings from our subsidiaries in China would be reduced.
Our
business is regulated by the PRC farming authorities and we need production
permits and immunization certificates from the farming authorities to carry out
our business. Any suspension, discontinuation or revocation of our current
production permits or immunization certificates may materially and adversely
impact our business.
The
Farming Bureau of Shandong Province and its local counterpart in Weifang City
are the primary governmental regulators and supervisors of both PRC Yuhe and
Taihong’s current businesses. Under relevant laws and regulations, both PRC Yuhe
and Taihong must obtain production permits from the Farming Bureau of Shandong
Province and the Ministry of Agriculture to carry out their current businesses.
In addition, PRC Yuhe, as a company engaging in the breeder business, must
obtain an immunization certificate from the local Farming Bureau in Weifang
City.
Although
relevant PRC laws require the Additive Premix Feed Production License to be
inspected by the local government authority on an annual basis, the local
government authority has not set up the procedures for us to proceed with such
annual inspection for Taihong. The local government authority has no
requirement for Taihong to operate with such annual inspection
records. However, we cannot assure you that such practice will not
change or that we will pass future annual inspections, if required by the
relevant local government authority.
The
Farming Bureau authorities have been strengthening their supervision over the
breeder and feed businesses in the past years, and new PRC laws, rules and
regulations may be introduced to impose additional requirements for relevant
production permits or immunization certificates. We cannot assure you that our
current production permits and immunization certificates will remain in effect
in the future. Any suspension, discontinuation or revocation of our current
production permits or immunization certificates may result in a material and
adverse impact on our business, financial performance and
prospects.
We
may in the future be subject to claims and liabilities under environmental,
health, safety and other laws and regulations, which could be
significant.
Our
operations are subject to various laws and regulations, including those
governing wastewater discharges and the use, storage, treatment and disposal of
hazardous materials. The applicable requirements under these laws are subject to
amendment, the imposition of new or additional requirements and changing
interpretations by governmental agencies or courts. In addition, we anticipate
increased regulation by various governmental agencies concerning food safety,
use of medication in feed formulations, the disposal of animal by-products and
wastewater discharges. Furthermore, business operations currently conducted by
us or previously conducted by others at real property owned or operated by us,
business operations of others at real property formerly owned or operated by us
and the disposal of waste at third-party sites expose us to the risk of claims
under environmental, health and safety laws and regulations. We may incur
material costs or liabilities in connection with claims related to any of the
foregoing. The discovery of presently unknown environmental conditions, changes
in environmental, health, safety and other laws and regulations, enforcement of
existing or new laws and regulations and other unanticipated events may give
rise to expenditures and liabilities, including fines or penalties, that may
have a material adverse effect on our business, operating results and financial
condition.
Failure
to comply with PRC regulations relating to corporate restructurings by PRC
residents may have an adverse effect on our business, results of operations
and financial condition.
Six
Chinese ministries jointly promulgated the Rules on Mergers with and
Acquisitions of PRC Domestic Companies by Foreign Investors, or the M&A
Rules, on August 8, 2006. The M&A Rules became effective on September 8,
2006 and were amended on June 22, 2009. The M&A Rules subject acquisitions
of domestic companies by offshore SPVs controlled by PRC residents, who at the
same time are controlling shareholders of the domestic companies, or an
Affiliated Acquisition, to the approval of Ministry of Commerce. There are also
various stringent requirements applicable to foreign acquisition of domestic
companies through SPVs under the M&A Rules.
We
undertook a corporate restructuring in 2007 under which Bright Stand, a company
owned by Mr. Kunio Yamamoto, acquired control of PRC Yuhe and Taihong from
certain PRC resident shareholders, including Mr. Gao Zhentao. At that
time Mr. Yamamoto, the sole shareholder of Bright Stand, and Mr. Gao
Zhentao, our chief executive officer, had a general, verbal and informal
understanding pursuant to which all or part of our shares of common stock issued
to Mr. Kunio Yamamoto would be transferred to Mr. Gao Zhentao in the future in
consideration of Mr. Gao Zhentao’s commitment to management of our business
operations and future achievement of the financial targets as set forth in the
Make Good Agreement dated March 12, 2008.
The
general, verbal and informal understanding, together with our corporate
restructuring in 2007, may be deemed to have been an acquisition of domestic
companies by an offshore SPV controlled by a PRC resident depending on the
interpretation and implementation by the relevant Chinese regulatory agencies.
If so interpreted, the general, verbal and informal understanding, together
with our corporate restructuring in 2007, may be considered to have been a
failure to comply fully with the M&A Rules, as it could be deemed to be an
Affiliated Acquisition without approval under the M&A Rules. In such
case, the Chinese regulatory authorities could invalidate our corporate
restructuring conducted in 2007, impose fines and sanctions on our
operations in China, limit our operating privileges in China, delay or restrict
the repatriation of the proceeds from any public offerings into China, restrict
or prohibit payment or remittance of dividends by our PRC subsidiaries to us or
take other actions that could have a material and adverse effect on our
business, financial condition or results of operations, as well as
on the trading price of our common stock.
Failure
to comply with the recent PRC foreign exchange regulations relating to the
establishment of offshore special purpose companies by PRC residents, mergers
with and acquisitions of PRC domestic companies by foreign investors, and
relevant approval and registration requirements may subject our PRC resident
beneficial owners to personal liability, limit our ability to inject capital
into our PRC subsidiaries, limit our subsidiaries’ ability to increase their
registered capital or distribute profits to us, or otherwise adversely affect
us.
The PRC
State Administration of Foreign Exchange, or SAFE, issued a public notice in
October 2005, generally referred to as Circular 75, requiring PRC residents to
register with the local SAFE branch before establishing or acquiring control
over any offshore special purpose company, or SPV, for the purpose of capital
financing with assets or equities of PRC companies originally owned or
controlled by such PRC residents. PRC residents who are shareholders of offshore
SPVs and have completed such round-trip investments but did not carry out
foreign exchange registrations for overseas investments before November 1, 2005
were retroactively required to register with the local SAFE branch before March
31, 2006. PRC resident shareholders are also required to amend their
registrations with the local SAFE branch in connection with any increase or
decrease of capital, transfer of shares, merger, division, equity investment or
creation of any security interest.
We have
requested that our current shareholders and/or beneficial owners disclose
whether they or their shareholders or beneficial owners fall within the
ambit of the SAFE notice and urge those who are PRC residents to register
with the local SAFE branch as required under the SAFE notice. However, we
cannot assure you that all of our shareholders and beneficial owners who are PRC
residents will comply with our request to make, obtain or update any
applicable registrations or comply with other requirements required by the
SAFE notice or other related rules. In case of any
non-compliance by any of our PRC resident shareholders or
beneficial owners, our PRC subsidiaries and such shareholders and
beneficial owners may be subject to fines and other legal sanctions,
including restrictions on our ability to contribute additional capital to our
PRC subsidiaries and our PRC subsidiaries’ ability to distribute dividends
to our offshore holding companies, which would adversely affect our
business, financial condition and results of operations.
Our
construction projects may be challenged by the relevant government
agencies.
We have
not obtained relevant government approvals and permits, including the planning
permit, construction permit and the environmental permit, with respect to two of
our projects involving the construction of breeder farm and feed stock
production. The constructions of these two projects may be challenged
by relevant governmental authorities and our business operations may be
interrupted or suspended.
Further
approvals are required for the land that we lease from village
committees.
We have
entered into several land lease agreements respectively with certain local
village committees in Weifang city for use of certain land owned by such
villages.
According to relevant
PRC law, prior to entering into the lease agreements with us, the village
committees must obtain the consent of at least two-thirds of the members of the
respective village as well as the approval of the relevant people’s government.
However, these village committees have not completed the required consent and
approval procedures. Although we have not received any notice from any
governmental authorities challenging the validity of these lease agreements, we
cannot assure you that our use of the leased land will not be challenged in the
future, which may adversely affect our business, results of operations and
financial condition.
We
may have to make up the unpaid social insurance and housing funds for our
employees.
We have
made the required pension payments for our employees who have employment
contracts with PRC Yuhe or Taihong. However, we have not made the
other compulsory social welfare payments for our employees, including payments
with respect to housing funds and other social insurance. We may be required to
make up the unpaid compulsory social insurance and housing fund payments, and we
may also be subject to administrative penalties with respect to these amounts,
as may be determined by the government authorities. If we are required to pay
such amounts, our business, results of operations and financial condition may be
adversely affected
.
RISKS
RELATED TO THIS OFFERING AND THE MARKET FOR OUR COMMON STOCK
Our
quarterly results may be volatile.
Our
operating results have varied on a quarterly basis during our operating history
and are likely to fluctuate significantly in the future. Many factors could
cause our revenues and operating results to vary significantly in the future,
including factors that are outside of our control. Accordingly, we believe that
quarter-to-quarter comparisons of our operating results are not necessarily
meaningful. Investors should not rely on the results of one quarter as an
indication of our future performance. If our results of operations in any
quarter do not meet analysts’ expectations, our stock price may materially
decrease.
Past
incomplete disclosures may cause certain investors to rescind their past
investment in us.
We filed
a Form 10-K/A (Amendment No.1) on October 15, 2010 to amend our previous SEC
filings to supplement certain disclosures with respect to a general, verbal
and informal understanding between Mr. Gao Zhentao and Mr. Kunio Yamamoto at the
time of a share transfer agreement dated October 18, 2007. Pursuant to such
understanding, all or part of the shares of our common stock issued to Mr. Kunio
Yamamoto would be transferred to Mr. Gao Zhentao in the future in consideration
of Mr. Gao Zhentao’s commitment to management of our business operations and
future achievement of the financial targets set forth in a Make Good Agreement
on March 12, 2008. The general, verbal and informal understanding may result in
invalidation of our corporate restructuring in 2007 as described in more details
in the risk factor entitled “Failure to comply with PRC regulations relating to
corporate restructurings by PRC residents may have an adverse effect on our
business, results of operations and financial condition.” Such past incomplete
disclosure may cause investors who purchased our shares pursuant to the
Registration Statement on Form S-1 filed with the SEC on May 12, 2008, as
amended, to rescind their purchase of our shares based on the Registration
Statement on Form S-1, in which case we may be required to purchase from such
investors their shares at their initial purchase price. This may have an adverse
effect on our business, financial condition or results of operations, as well as
on the trading price of our common stock.
We
may issue additional shares of our capital stock to raise capital or complete
acquisitions, which would reduce the equity interest of our
stockholders.
Our
articles of incorporation authorize the issuance of up to 500,000,000 shares of
common stock and 1,000,000 shares of preferred stock, par value $0.001 per
share. As of September 30, 2010, there were approximately 483,890,437 authorized
and unissued shares of our common stock that have not been reserved and are
available for future issuance. Other than the approximately 300,000 restricted
shares of common stock expected to be issued to Mr. Jiang Zhaolin as disclosed
in the section entitled “Prospectus Supplement Summary – Recent Developments,”
we have no other commitments as of this date to issue any of our securities in
connection with an acquisition. However, we may issue a substantial number of
additional shares of our common stock in the future to complete a business
combination or to raise capital. The issuance of additional shares of our common
stock:
|
·
|
may significantly reduce the equity interest of
our existing stockholders;
and
|
|
·
|
may adversely affect prevailing market prices for
our common stock.
|
We
have not paid dividends in the past and do not expect to pay dividends in the
future. Any return on investment may be limited to the value of our common
stock.
Other
than the dividend of $3.088 per share that we paid to our shareholders in
November 2007 as required by a stock purchase agreement between us and Halter
Financial Investments, L.P., we have not declared dividends or paid cash
dividends on our common stock and do not anticipate doing so in the foreseeable
future. The payment of dividends on our common stock will depend on our
earnings, financial condition and other business and economic factors affecting
us at such time as the board of directors may consider relevant. If we do not
pay dividends, our common stock may be less valuable because a return on your
investment will only occur when our stock price appreciates.
Capital
outflow policies in China may hamper our ability to declare and pay dividends to
our stockholders.
China has
adopted currency and capital transfer regulations. These regulations may require
us to comply with complex regulations for the movement of capital. Although our
management believes that we will be in compliance with these regulations, should
these regulations or the interpretation of them by courts or regulatory agencies
change, we may not be able to pay dividends to our stockholders outside of
China. In addition, under current Chinese law, we must retain a reserve equal to
10% of net income after taxes, not to exceed 50% of the registered capital.
Accordingly, this reserve will not be available to be distributed as dividends
to our stockholders. We presently do not intend to pay dividends for the
foreseeable future. Our board of directors intends to follow a policy of
retaining all of our earnings to finance the development and execution of our
strategy and the expansion of our business.
Our
management has broad discretion as to the use of the net proceeds from this
offering of our common stock and may allocate the net proceeds of this offering
in ways that you or other stockholders may not approve.
We have
not determined the specific amounts we plan to spend on any of the uses of the
proceeds from this offering of our common stock as described in “Use of
Proceeds” or the timing of these expenditures. Failure by our management to
apply these funds effectively may adversely affect our ability to maintain and
expand our business. In the event that management does not apply these funds
effectively, your investment in our common stock may not result in a favorable
return.
One
stockholder controls approximately 44.8% of the voting power of our common stock
and, as a result, he may exercise voting control and be able to take actions
that may be adverse to your interests.
Mr. Gao
Zhentao beneficially owned approximately 44.8% of our issued and outstanding
common stock as of the date of this prospectus supplement. This concentration of
share ownership may adversely affect the trading price of our common stock
because investors often perceive a disadvantage in owning shares in a company
with one significant stockholder. Mr. Gao Zhentao has the ability to
significantly influence the outcome of all matters requiring stockholder
approval, including the election of directors and approval of significant
corporate transactions, such as mergers, consolidations or the sale of
substantially all of our assets. This concentration of ownership may have the
effect of delaying or preventing a change of control, including a merger,
consolidation or other business combination involving us, or discouraging a
potential acquirer from making a tender offer or otherwise attempting to obtain
control.
Our
common stock may be affected by limited trading volume and may fluctuate
significantly.
Our
common stock is traded on the Nasdaq Capital Market. Although an active trading
market has developed for our common stock, there can be no assurance that an
active trading market for our common stock will be sustained. Failure to
maintain an active trading market for our common stock may adversely affect our
stockholders’ ability to sell our common stock in short time periods, or at all.
In addition, sales of substantial amounts of our common stock in the public
market could harm the market price of our common stock. Our common stock has
experienced, and may experience in the future, significant price and volume
fluctuations, which could adversely affect the market price of our common
stock.
USE
OF PROCEEDS
We expect
to receive net proceeds of approximately $23.2 million from this offering, or
$26.8 million if the underwriters exercise their over-allotment option in full,
after deducting the estimated expenses related to this offering and the
underwriting discounts and commissions payable by us.
We intend
to use the net proceeds from this offering for future acquisitions, capital
expenditures and general corporate and working capital purposes.
PRICE
RANGE OF COMMON STOCK
Prior to
October 30, 2009, our common stock was quoted on the NASDAQ’s Over-the-Counter
Bulletin Board under the symbol “YUII.OB.” The following table sets forth the
range of the high and low closing bid prices of our common stock for the periods
indicated.
|
|
High
|
|
|
Low
|
|
Fiscal
2008
|
|
|
|
|
|
|
Second
Quarter (from April 7, 2008)
|
|
$
|
6.13
|
|
|
$
|
6.13
|
|
Third
Quarter
|
|
|
8.00
|
|
|
|
6.13
|
|
Fourth
Quarter
|
|
|
6.50
|
|
|
|
4.00
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2009
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
4.00
|
|
|
|
0.75
|
|
Second
Quarter
|
|
|
4.10
|
|
|
|
2.00
|
|
Third
Quarter
|
|
|
6.14
|
|
|
|
3.48
|
|
Fourth
Quarter (though October 29, 2009)
|
|
|
6.55
|
|
|
|
5.80
|
|
On
October 30, 2009, our common stock commenced trading on the NASDAQ Capital
Market under the symbol “YUII.” The following table sets forth the range of the
high and low closing sale prices of our common stock on the NASDAQ Capital
Market for the periods indicated.
|
|
High
|
|
|
Low
|
|
Fiscal
2009
|
|
|
|
|
|
|
Fourth
Quarter (from October 30, 2009)
|
|
$
|
9.45
|
|
|
$
|
5.71
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2010
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
12.28
|
|
|
|
8.88
|
|
Second
Quarter
|
|
|
10.10
|
|
|
|
7.16
|
|
Third
Quarter (through October 18, 2010)
|
|
|
9.50
|
|
|
|
6.12
|
|
DIVIDEND
POLICY
Other
than the dividend of $3.088 per share that we paid to our shareholders in
November 2007 as required by a stock purchase agreement between us and Halter
Financial Investments, L.P., we have never declared dividends or paid cash
dividends. Any future determination as to the declaration and payment of
dividends on our common stock will be made at the discretion of our board of
directors out of funds legally available for such purpose. We are under no
contractual obligations or restrictions to declare or pay dividends on its
common stock. In addition, we currently have no plans to pay such dividends.
Even if we wish to pay dividends, because our cash flow depends on dividend
distributions from our affiliated entities in China, we may be restricted from
distributing dividends to our holders of common stock in the future if at the
time we are unable to obtain sufficient dividend distributions from PRC Yuhe or
Taihong. Our board of directors currently intends to retain all earnings for use
in the business for the foreseeable future.
CAPITALIZATION
The
following table sets forth our cash and cash equivalents and capitalization as
of June 30, 2010:
|
·
|
on an actual basis;
and
|
|
·
|
on
an as-adjusted basis after giving effect to this offering and after
deducting underwriting commissions and estimated offering expenses paid or
payable by us.
|
This
table should be read in conjunction with our financial statements and the
related notes, which are incorporated by reference in this prospectus supplement
and the accompanying prospectus.
|
|
As of
|
|
|
|
June 30, 2010
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
19,633,056
|
|
|
$
|
42,833,056
|
(1)
|
|
|
|
|
|
|
|
|
|
Long-term
loans
|
|
$
|
8,518,638
|
|
|
$
|
8,518,638
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
Common
stock, par value $0.001 per share; authorized 500,000,000 shares, issued
and outstanding 15,809,563 shares
|
|
|
15,809
|
|
|
|
19,409
|
|
Additional
paid-in capital
|
|
|
31,034,149
|
|
|
|
54,230,549
|
(1)
|
Retained
earnings
|
|
|
29,299,177
|
|
|
|
29,299,177
|
|
Accumulated
other comprehensive income
|
|
|
1,510,437
|
|
|
|
1,510,437
|
|
Total
stockholders’ equity
|
|
$
|
61,859,572
|
|
|
$
|
85,059,572
|
|
Total
capitalization
|
|
$
|
70,378,210
|
|
|
$
|
93,578,210
|
|
(1)
|
After the deduction of the underwriting discounts and commissions, as well as the deduction of approximately $740,000 of
estimated total expenses payable by the Company with respect to this offering.
|
UNDERWRITING
Under the
terms and subject to the conditions contained in an underwriting agreement, we
have agreed to sell to the underwriters named below, for whom Roth Capital
Partners, LLC is acting as representative, and the underwriters have agreed to
purchase from us, the number of shares of common stock set forth
opposite their names below:
|
|
Number of
|
|
Underwriter
|
|
Shares
|
|
Roth
Capital Partners, LLC
|
|
|
2,520,000
|
|
Rodman
& Renshaw, LLC
|
|
|
720,000
|
|
Brean
Murray, Carret & Co., LLC
|
|
|
180,000
|
|
Global
Hunter Securities
|
|
|
180,000
|
|
Total
|
|
|
3,600,000
|
|
The
underwriting agreement provides that the obligation of the underwriters to
purchase the shares offered hereby is subject to certain conditions and that the
underwriters are obligated to purchase all of the shares of common stock offered
hereby if any of the shares are purchased.
If the
underwriters sell more shares than the above number, the underwriters have an
option for 30 days to buy up to an aggregate of 540,000 additional shares
from us at the public offering price less the underwriting commissions and
discounts to cover these sales.
The
underwriters propose to offer to the public the shares of common stock purchased
pursuant to the underwriting agreement at the public offering price on the cover
page of this prospectus supplement. After the shares are released for sale to
the public, the underwriters may change the offering price and other selling
terms at various times. In connection with the sale of the shares of common
stock to be purchased by the underwriters, the underwriters will be deemed to
have received compensation in the form of underwriting commissions and
discounts.
The
following table summarizes the underwriting discounts and commissions we will
pay to the underwriters.
|
|
Per Share
|
|
|
Total
|
|
|
|
Without
|
|
|
With
|
|
|
Without
|
|
|
With
|
|
|
|
Over-allotment
|
|
|
Over-allotment
|
|
|
Over-allotment
|
|
|
Over-allotment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
discounts and commissions payable by us to the
underwriters
|
|
$
|
0.35
|
|
|
$
|
0.35
|
|
|
$
|
1,260,000
|
|
|
$
|
1,449,000
|
|
We have
agreed to pay to the underwriters a fee equal to 5% of the gross proceeds
received from the sale of the shares, which payment shall be made by means of a
discount to the underwriters from the public offering price.
In
addition, upon successful completion of the offering, we have agreed to
reimburse the representative upon request for its reasonable out-of-pocket
expenses, not to exceed $150,000, incurred in connection with its services under
the underwriting agreement, including the fees and disbursements of the
representative’s legal counsel.
We
estimate that total expenses payable by us with respect to this offering,
excluding underwriting discounts and commissions, will be approximately
$740,000.
We have
agreed, subject to certain exceptions, not to offer, sell, contract to sell or
otherwise issue any shares of common stock or securities exchangeable or
convertible into common stock, without the prior written consent of Roth Capital
Partners, LLC, for a period of 60 days, subject to an 18-day extension under
certain circumstances, following the date of the underwriting agreement. In
addition, Mr. Gao Zhentao, our chief executive officer and controlling
shareholder, has agreed not to offer, sell, contract to sell or otherwise issue
any shares of our common stock or securities exchangeable or convertible into
common stock, subject to certain exceptions, without the prior written consent
of Roth Capital Partners, LLC, for a period of 180 days, subject to an 18-day
extension under certain circumstances, following the date of the underwriting
agreement.
Pursuant
to the underwriting agreement, we have agreed to indemnify the underwriters
against certain liabilities, including liabilities under the Securities Act, or
to contribute to payments which the underwriters may be required to make in
respect of any such liabilities.
Our
common stock is traded on the NASDAQ Capital Market under the symbol
“YUII.”
The
underwriters and their affiliates have provided, and may in the future
provide, various investment banking, commercial banking and other financial
services for us for which services they have received, and may receive in the
future, customary fees.
In
connection with the offering, the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions and
penalty bids in accordance with Regulation M under the Exchange
Act.
|
·
|
Stabilizing
transactions permit bids to purchase the underlying security so long as
the stabilizing bids do not exceed a specified
maximum.
|
|
·
|
Over-allotment
transactions involve sales by the underwriters of shares in excess of the
number of shares the underwriters are obligated to purchase, which
create a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is
not greater than the number of shares that they may purchase in the
over-allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any covered short position by
exercising their over-allotment option and/or purchasing shares in the
open market.
|
|
·
|
Syndicate
covering transactions involve purchases of the common stock in the open
market after the distribution has been completed in order to cover
syndicate short positions. In determining the source of shares to close
out the short position, the underwriters will consider, among other
things, the price of shares available for purchase in the open market as
compared to the price at which they may purchase shares through the
over-allotment option. If the underwriters sell more shares than could be
covered by the over-allotment option (a naked short position) the position
can only be closed out by buying shares in the open market. A naked short
position is more likely to be created if the underwriters are
concerned that there could be downward pressure on the price of the shares
in the open market after pricing that could adversely affect investors who
purchase in the offering.
|
|
·
|
Penalty
bids permit the underwriters to reclaim a selling concession from a
syndicate member when the common stock originally sold by the syndicate
member is purchased in a stabilizing or syndicate covering transaction to
cover syndicate short positions.
|
These
stabilizing transactions, syndicate covering transactions and penalty bids may
have the effect of raising or maintaining the market price of our common stock
or preventing or retarding a decline in the market price of the common stock. As
a result, the price of our common stock may be higher than the price that might
otherwise exist in the open market. These transactions may be discontinued at
any time.
This
prospectus supplement and the accompanying prospectus may be made available in
electronic format on the Internet sites or through other online services
maintained by the underwriters or their affiliates. In those cases,
prospective investors may view offering terms online and prospective investors
may be allowed to place orders online. Other than the prospectus supplement and
the accompanying prospectus in electronic format, the information on the
underwriters’ websites and any information contained in any other website
maintained by the underwriters are not part of the prospectus supplement,
the accompanying prospectus or the registration statement of which this
prospectus supplement and the accompanying prospectus form a part, has not been
approved and/or endorsed by us or the underwriters in their capacity as
underwriters and should not be relied upon by investors.
LEGAL
MATTERS
The
validity of the shares of our common stock offered in this prospectus supplement
has been passed upon for us by Holland & Hart LLP, Reno, Nevada. Certain
legal matters as to U.S. federal securities and New York law have been passed
upon for us by Winston & Strawn LLP, New York, New York. Certain matters as
to the laws of the People’s Republic of China have been passed upon for us by
Shandong Haode Law Firm. Loeb & Loeb, New York, New York, has
acted as counsel for the underwriters in connection with this
offering. Han Kun Law Firm has acted as PRC counsel for the
underwriters in connection with this offering.
EXPERTS
The
consolidated financial statements of us and our subsidiaries as of December 31,
2009 and 2008, and for each of the years in the three-year period ended December
31, 2009, incorporated by reference in this prospectus supplement and the
accompanying prospectus, have been so incorporated in reliance upon the reports
of Child, Van Wagoner & Bradshaw, PLLC, an independent registered public
accounting firm, given on the authority of such firm as experts in accounting
and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed a registration statement with the SEC under the Securities Act, with
respect to the shares of our common stock offered by this prospectus supplement.
This prospectus supplement is part of that registration statement and does not
contain all the information included in the registration statement.
For
further information with respect to our common stock and us, you should refer to
the registration statement, its exhibits and the material incorporated by
reference therein. Statements made in this prospectus supplement, the
accompanying prospectus and the documents incorporated herein by reference as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. In each instance, we refer you to the copy of the
contract, agreement or other document filed as an exhibit to the registration
statement, and these statements are hereby qualified in their entirety by
reference to the contract, agreement or document.
The
registration statement may be inspected and copied at the Public Reference Room
maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549 and the
Regional Offices of the SEC located at 175 West Jackson Boulevard, Suite 900,
Chicago, Illinois 60604, and at 3 World Financial Center, Suite 400, New York,
New York 10281. Copies of those filings can be obtained from the SEC’s Public
Reference Room, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates
and may also be obtained from the web site that the SEC maintains at
http://
www.sec.gov
.
You may also call the SEC
at 1-800-SEC-0330 for more information. We file annual, quarterly and current
reports and other information with the SEC. You may read and copy any reports,
statements or other information on file at the SEC’s public reference room in
Washington, D.C. You can request copies of those documents upon payment of a
duplicating fee by writing to the SEC.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC
allows us to “incorporate by reference” into this prospectus supplement and the
accompanying prospectus the information that we file with it, which means that
we can disclose important information to you by referring you to those
documents. The information incorporated by reference is considered to be part of
this prospectus supplement and the accompanying prospectus, and information that
we file subsequently with the SEC will automatically update and supersede this
information. The following documents were filed with the SEC pursuant to the
Exchange Act and are incorporated by reference and made a part of this
prospectus supplement:
·
|
our
Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the SEC on March 31, 2010, as amended by Amendment No.1 to our Form
10-K for the year ended December 31, 2009, filed with the SEC on October
15, 2010;
|
·
|
our
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31,
2010 and June 30, 2010, filed with the SEC on May 14, 2010 and August 13,
2010, respectively;
|
·
|
our
Current Reports on Form 8-K filed with the SEC on May 17, July 19 and
October 15, 2010, respectively;
|
·
|
the
description of our common stock contained in our Registration Statement on
Form 8-A filed on October 29, 2009 (File No. 000-83125), including any
amendment or report filed for the purpose of updating such description;
and
|
·
|
all
reports and other documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus supplement and prior to the termination of this
offering.
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We will
provide without charge to each person to whom this prospectus supplement and the
accompanying prospectus are delivered, upon oral or written request, at no cost
to the requestor, a copy of any or all of the foregoing documents incorporated
herein by reference (other than exhibits to such documents unless such exhibits
are specifically incorporated by reference into the information that this
prospectus supplement and the accompanying prospectus incorporate). Written or
telephone requests should be directed to: Yuhe International, Inc., 301 Hailong
Street, Hanting District, Weifang, Shandong province, the People’s Republic of
China. Our telephone number is (86) 536 736 3688, and our website is located at
www.yuhepoultry.com
.
PROSPECTUS
$40,000,000
Yuhe
International, Inc.
Common
Stock
We may
from time to time, in one or more offerings at prices and on terms that we will
determine at the time of each offering, sell shares of our common stock for an
aggregate initial offering price of up to $40,000,000. This prospectus describes
the general manner in which shares of our common stock may be offered using this
prospectus. Each time we offer and sell shares of our common stock, we will
provide you with a prospectus supplement that will contain specific information
about the terms of that offering. Any prospectus supplement may also add,
update or change information contained in this prospectus. You should carefully
read this prospectus and the applicable prospectus supplement as well as the
documents incorporated or deemed to be incorporated by reference in this
prospectus before you purchase any of common stock offered hereby.
This
prospectus may not be used to offer and sell securities unless accompanied by a
prospectus supplement.
Our
common stock is quoted on the NASDAQ Capital Market under the symbol “YUII.” On
June 1, 2010, the last reported sale price of our common stock
was $9.03 per share. We will apply to list any shares of our common
stock sold by us under this prospectus and any prospectus supplement on the
NASDAQ Capital Market. The prospectus supplement will contain information, where
applicable, as to any other listing of the securities on the NASDAQ Capital
Market or any other securities market or exchange covered by the prospectus
supplement.
The
aggregate market value of our outstanding common stock held by non-affiliates
was approximately $73.6 million based on 15,809,563 shares of outstanding common
stock, of which 8,154,746 shares are held by non-affiliates, and a per share
price of $9.03 based on the closing sale price of our common stock on June
1, 2010. We have not offered any securities pursuant to General Instruction
I.B.6. of Form S-3 during the prior 12 calendar month period that ends on and
includes the date of this prospectus.
Investing
in our common stock involves substantial risks. You should review carefully
the risks and uncertainties described under the heading “Risk Factors” on page 2
of this prospectus and those contained in the applicable prospectus supplement
that we have authorized for use in connection with a specific offering and in
our Securities and Exchange Commission filings that are incorporated by
reference into this prospectus.
Neither the Securities and Exchange
Commission nor any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
We may
offer securities directly or through agents or to or through underwriters or
dealers. If any agents or underwriters are involved in the sale of shares of our
common stock offered by this prospectus, their names, and any applicable
purchase price, fee, commission or discount arrangement between or among them,
will be set forth, or will be calculable from the information set forth, in the
applicable prospectus supplement. We can sell shares of our common stock through
agents, underwriters or dealers only with delivery of a prospectus supplement
describing the method and terms of the offering of such securities. See “Plan of
Distribution” in this prospectus and the applicable prospectus
supplement.
This
prospectus is dated June 23, 2010
Table
of Contents
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Page
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ABOUT
THIS PROSPECTUS
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1
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
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1
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ABOUT
YUHE INTERNATIONAL, INC.
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2
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RISK
FACTORS
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2
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USE
OF PROCEEDS
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3
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DESCRIPTION
OF COMMON STOCK
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3
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ANTI-TAKEOVER
EFFECTS OF NEVADA LAW
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3
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PLAN
OF DISTRIBUTION
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5
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LEGAL
MATTERS
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7
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EXPERTS
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7
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WHERE
YOU CAN FIND MORE INFORMATION
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7
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INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
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7
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You
should rely only on the information contained or incorporated by reference in
this prospectus or any prospectus supplement. We have not authorized anyone
to provide you with information different from that contained in or incorporated
by reference into this prospectus. If any person does provide you with
information that differs from what is contained or incorporated by reference in
this prospectus, you should not rely on it. No dealer, salesperson or other
person is authorized to give any information or to represent anything not
contained in this prospectus. You should assume that the information contained
in this prospectus or any prospectus supplement is accurate only as of the date
on the front of the document and that any information contained in any document
we have incorporated by reference is accurate only as of the date of the
document incorporated by reference, regardless of the time of delivery of this
prospectus or any prospectus supplement or any sale of common stock. These
documents are not an offer to sell or a solicitation of an offer to buy common
stock in any circumstances under which the offer or solicitation is
unlawful.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities
and Exchange Commission, or SEC, using a “shelf” registration process. Under
this shelf registration process, we may sell common stock described in this
prospectus in one of more offerings up to a maximum aggregate offering price of
$40,000,000. This prospectus describes the general manner in which shares of our
common stock may be offered by this prospectus. Each time we sell shares of our
common stock, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus or in documents
incorporated by reference in this prospectus. To the extent that any statement
that we make in a prospectus supplement is inconsistent with statements made in
this prospectus or in documents incorporated by reference in this prospectus,
you should rely on the information in the prospectus supplement. You should
carefully read both this prospectus and any prospectus supplement together with
the additional information described under “Where You Can Find More Information”
before buying any shares of our common stock.
In this
prospectus, references to the “company,” “we,” “us” and “our” refer to Yuhe
International, Inc. and our predecessors and subsidiaries, unless the context
otherwise requires. Additionally, unless we indicate otherwise,
references in this prospectus to:
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“China”
and the “PRC” are to the People’s Republic of China, excluding, for the
purposes of this prospectus only, Taiwan and the special administrative
regions of Hong Kong and Macau;
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“RMB”
and “Renminbi” are to the legal currency of China;
and
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“$,”
“US$” and “U.S. dollars” are to the legal currency of the United
States.
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CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The
information in this prospectus contains forward-looking statements which involve
risks and uncertainties, including statements regarding our capital needs,
business strategy and expectations. Any statements contained in this prospectus
that are not statements of historical fact may be deemed to be forward-looking
statements. In some cases, you can identify forward-looking statements by
terminology such as “may,” “should,” “will,” “expect,” “plan,”
“intend,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “forecast,” “project” or “continue,” the negative of such terms or
other comparable terminology.
You
should not rely on forward-looking statements as predictions of future events or
results. Any or all of our forward-looking statements may turn out to be wrong.
They can be affected by inaccurate assumptions, risks and uncertainties and
other factors which could cause actual events or results to be materially
different from those expressed or implied in the forward-looking
statements.
In
evaluating these statements, you should consider various factors, including the
risks described in this prospectus under “Risk Factors” and elsewhere. These
factors may cause our actual results to differ materially from any
forward-looking statement. In addition, new factors emerge from time to time and
it is not possible for us to predict all factors that may cause actual results
to differ materially from those contained in any forward-looking statements. We
disclaim any obligation to publicly update any forward-looking statements to
reflect events or circumstances after the date of this prospectus, except as
required by applicable law.
ABOUT
YUHE INTERNATIONAL, INC.
The
SEC allows us to “incorporate by reference” certain information that we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update, supplement and/or supersede the
information in this prospectus. Any statement contained in a document
incorporated or deemed to be incorporated by reference into this prospectus
shall be deemed to be modified or superseded for purposes of this prospectus to
the extent that a statement contained in this prospectus or in any other
document which also is or is deemed to be incorporated by reference into this
prospectus modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus. You should read this section together with
the more detailed information regarding our company, our common stock and our
financial statements and notes to those statements incorporated herein by
reference.
We are a
supplier of day-old chicken raised for meat production, or broilers, in China.
We purchase parent breeding stock from breeder farms, raise them to produce
hatching eggs, and hatch the eggs to day-old broilers. Currently, we have 28
breeder farms with 15 in operation and two hatcheries with a total annual
capacity of 1.8 million sets of breeders and 116 hatchers through our
wholly-owned subsidiary, Weifang Yuhe Poultry Co. Ltd., or PRC Yuhe. The
remaining 13 breeder farms were purchased in December 2009 and are undergoing
renovations. They are expected to be in full operation by the third quarter of
2010. Our day-old broilers are primarily purchased by broiler farms and
integrated chicken companies for the purpose of raising them to market-weight
broilers. Our customers are located in Shandong province and other ten provinces
and special municipalities around Shandong province, including Jiangsu,
Anhui, Henan, Hebei, Jilin, Liaoning, Heilongjiang, Tianjin, Beijing and
Shanghai. In connection with our day-old broiler business, we also operate a
feed stock business through a subsidiary company named Weifang Taihong Feed Co.
Ltd., or Taihong, whose primary business is to supply feed stock to our
breeders. Our operations are conducted exclusively by PRC Yuhe and Taihong in
China. As of April 30, 2010, PRC Yuhe and Taihong had 1,025 full-time employees,
among which, 109 employees, who were key technical and operational personnel,
directly signed employment contracts with us.
Our
principal executive office is located at 301 Hailong Street, Hanting District,
Weifang, Shandong province, the People’s Republic of China. Our internet address
is
http://www.yuhepoultry.com
,
and our telephone number is (86) 536 736 3688.
Effective
on April 4, 2008, we amended our articles of incorporation to effect a
1-for-14.70596492 reverse stock split of our common stock. All references
in this prospectus to shares of our common stock are on a post-split
basis.
RISK FACTORS
Investing
in our common stock involves substantial risks. Please see the risk factors
described under the heading “Risk Factors” in our Annual Report on Form 10-K for
the year ended December 31, 2009 as filed with the SEC on March 31, 2010, which
is incorporated by reference in this prospectus and in any applicable prospectus
supplement. The prospectus supplement relating to a particular offering will
contain a discussion of risks applicable to an investment in common stock
offered in such particular offering. Potential investors are urged to read and
consider the risk factors and other disclosures relating to an investment in our
common stock described in any applicable prospectus supplement and other reports
and documents we file with the SEC after the date of this prospectus and that
are incorporated by reference herein. You should consider carefully those risks
as well as other information contained in this prospectus, any applicable
prospectus supplement, and the documents incorporated by reference herein or
therein, before deciding whether to purchase any shares of our common stock.
Each of the risk factors could adversely affect our business, results of
operations and financial condition, as well as the value of an investment in our
common stock, and, as a result, you may lose all or part of your
investment.
USE
OF PROCEEDS
Unless
otherwise indicated in a prospectus supplement, we intend to use the net
proceeds from the sale of shares of our common stock under this prospectus for
capital expenditures, possible future acquisitions, and general corporate and
working capital purposes. We have no current plans, commitments or
agreements with respect to any acquisitions as of the date of this
prospectus.
DESCRIPTION
OF COMMON STOCK
We are
authorized to issue 500,000,000 shares of our common stock, par value
$0.001 per share. As of June 1, 2010, there were 15,809,563 shares of our
common stock outstanding. The following summary of certain provisions of our
common stock does not purport to be complete and is subject to and qualified in
its entirety by the Nevada Revised Statutes, our articles of incorporation, as
amended, and our bylaws.
General
Subject
to preferences that may apply to shares of preferred stock outstanding at the
time, the holders of outstanding shares of our common stock are entitled to
receive dividends out of assets legally available therefor at times and in
amounts as our board of directors may determine. Each shareholder is entitled to
one vote for each share of our common stock held on all matters submitted
to a vote of the shareholders. Cumulative voting is not provided for in our
amended articles of incorporation, which means that the majority of the shares
voted can elect all of the directors that stand for election. The common stock
is not entitled to preemptive rights and is not subject to conversion or
redemption. Upon the occurrence of a liquidation, dissolution or winding-up, the
holders of shares of our common stock are entitled to share ratably in all
assets remaining after payment of liabilities and satisfaction of preferential
rights of any outstanding preferred stock. There are no sinking fund provisions
applicable to common stock. The outstanding shares of our common stock are fully
paid and non-assessable.
Anti-Takeover
Provisions
Our
articles of incorporation and bylaws contain certain provisions that are
intended to enhance the likelihood of continuity and stability in the
composition of our board and in the policies formulated by our board and to
discourage certain types of transactions which may involve an actual or
threatened change in control of our company. Our board is authorized to adopt,
alter, amend and repeal our bylaws or to adopt new bylaws. In addition, our
board has the authority, without further action by our stockholders, to issue up
to one million shares of our preferred stock in one or more series and to fix
the rights, preferences, privileges and restrictions thereof. The issuance of
our preferred stock or additional shares of our common stock could adversely
affect the voting power of the holders of our common stock and could have the
effect of delaying, deferring or preventing a change in control.
Dividends
We do not
intend to pay dividends on our capital stock for the foreseeable
future.
Transfer
Agent and Registrar
Interwest
Transfer Company Inc. is the transfer agent and registrar for our common
stock.
Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol
“YUII.”
ANTI-TAKEOVER
EFFECTS OF NEVADA LAW
We are
subject to the “business combination” provisions of Sections 78.411 to 78.444 of
Nevada’s Combinations with Interested Stockholders statute. In general,
such provisions prohibit a Nevada corporation with at least 200 stockholders of
record from engaging in various “combination” transactions with any interested
stockholder:
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for
a period of three years after the date of the transaction in which the
person became an interested stockholder, unless the transaction is
approved by the board of directors prior to the date the interested
stockholder obtained such status;
or
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after
the expiration of the three-year period,
unless:
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the
transaction is approved by the board of directors or a majority of the
voting power held by disinterested stockholders,
or
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if
the consideration to be paid by the interested stockholder is at least
equal to the highest of: (a) the highest price per share paid by the
interested stockholder within the three years immediately preceding the
date of the announcement of the combination or in the transaction in which
it became an interested stockholder, whichever is higher, (b) the market
value per share of common stock on the date of announcement of the
combination and the date the interested stockholder acquired the shares,
whichever is higher, or (c) for holders of preferred stock, the highest
liquidation value of the preferred stock, if it is
higher.
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A
“combination” is defined to include mergers or consolidations or any sale, lease
exchange, mortgage, pledge, transfer or other disposition, in one transaction or
a series of transactions, with an “interested stockholder” having: (a) an
aggregate market value equal to 5% or more of the aggregate market value of the
assets of the corporation, (b) an aggregate market value equal to 5% or more of
the aggregate market value of all outstanding shares of the corporation, or (c)
10% or more of the earning power or net income of the corporation.
In
general, an “interested stockholder” is a person who, together with affiliates
and associates, owns (or within three years, did own) 10% or more of a
corporation’s voting stock. The statute could prohibit or delay mergers or other
takeover or change in control attempts and, accordingly, may discourage attempts
to acquire our company even though such a transaction may offer our stockholders
the opportunity to sell their stock at a price above the prevailing market
price.
Nevada’s
Acquisition of Controlling Interest statute (NRS Sections 78.378-78.3793)
applies only to Nevada corporations that conduct business directly or indirectly
in Nevada and have at least 200 stockholders of record, including at least 100
stockholders of record who have addresses in Nevada appearing on the
corporation’s stock ledger. As of the date of this prospectus, we do not believe
we have 100 stockholders of record who are residents of Nevada, although there
can be no assurance that in the future the Acquisition of Controlling Interest
statute will not apply to us.
The
Acquisition of Controlling Interest statute prohibits an acquirer, under certain
circumstances, from voting its shares of a target corporation’s stock after
crossing certain ownership threshold percentages, unless the acquirer obtains
approval of the target corporation’s disinterested stockholders. The statute
specifies three thresholds: one-fifth or more but less than one-third, one-third
but less than a majority, and a majority or more, of the outstanding voting
power. Once an acquirer crosses one of the above thresholds, those shares in an
offer or acquisition and acquired within 90 days thereof become “control shares”
and such Control Shares are deprived of the right to vote until disinterested
stockholders restore the right. The Acquisition of Controlling Interest
statute also provides that if control shares are accorded full voting rights and
the acquiring person has acquired a majority or more of all voting power, all
other stockholders who do not vote in favor of authorizing voting rights to the
control shares are entitled to demand payment for the fair value of their shares
in accordance with statutory procedures established for dissenters’
rights.
PLAN
OF DISTRIBUTION
We may
sell shares of our common stock offered through this prospectus (i) to or
through underwriters or dealers, (ii) directly to purchasers, including our
affiliates, (iii) through agents, (iv) in “at the market offerings,” within
the meaning of Rule 415(a)(4) under the Securities Act of 1933, as amended, or
the Securities Act, to or through a market maker or into an existing trading
market, on an exchange or otherwise, (v) through a combination of any these
methods or (vi) through any other methods described in a prospectus supplement.
Shares of our common stock may be distributed at a fixed price or prices, which
may be changed, market prices prevailing at the time of sale, prices related to
the prevailing market prices, or negotiated prices. The prospectus supplement
will include the following information:
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the
terms of the offering;
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the
names of any underwriters or agents;
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the
name or names of any managing underwriter or underwriters;
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the
purchase price of common stock;
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any
over-allotment options under which underwriters may purchase additional
shares of our common stock from us;
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the
net proceeds from the sale of shares of our common stock;
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any
delayed delivery arrangements;
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any
underwriting discounts, commissions and other items constituting
underwriters’ compensation;
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any
discounts or concessions allowed or reallowed or paid to
dealers;
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any
commissions paid to agents; and
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any
securities exchange or market on which the securities may be
listed.
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Sale
Through Underwriters or Dealers
Only
underwriters named in a particular prospectus supplement are underwriters of the
shares of our common stock offered by the prospectus supplement.
If
underwriters are used in the sale, the underwriters will acquire the shares of
our common stock for their own account, including through underwriting,
purchase, security lending or repurchase agreements with us. The underwriters
may resell the shares of our common stock from time to time in one or more
transactions, including negotiated transactions. Underwriters may sell the
shares of our common stock in order to facilitate transactions in any of our
other securities (described in this prospectus or otherwise), including other
public or private transactions and short sales. Underwriters may offer shares of
our common stock to the public either through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
firms acting as underwriters. Unless otherwise indicated in the applicable
prospectus supplement, the obligations of the underwriters to purchase the
shares of our common stock will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered shares of our common
stock if they purchase any of them. The underwriters may change from time to
time any initial public offering price and any discounts or concessions allowed
or reallowed or paid to dealers.
In
compliance with FINRA guidelines, the aggregate maximum fees or other items of
value to be received by any FINRA member or independent broker-dealer will not
exceed 8% of the gross proceeds of any offering pursuant to this prospectus and
any applicable prospectus supplement or pricing supplement, as the case may
be.
If
dealers are used in the sale of shares of our common stock offered through this
prospectus, we will sell the shares of our common stock to them as principals.
They may then resell such common stock to the public at varying prices
determined by the dealers at the time of resale. The prospectus supplement will
include the names of the dealers and the terms of the transaction.
Direct
Sales and Sales Through Agents
We may
sell shares of our common stock offered through this prospectus directly. In
this case, no underwriters or agents would be involved. Such shares of our
common stock may also be sold through agents designated from time to time. The
prospectus supplement will name any agent involved in the offer or sale of the
offered shares of our common stock and will describe any commissions payable to
the agent. Unless otherwise indicated in the prospectus supplement, any agent
will agree to use its reasonable best efforts to solicit purchases for the
period of its appointment.
We may
sell shares of our common stock directly to institutional investors or others
who may be deemed to be underwriters within the meaning of the Securities Act
with respect to any sale of such shares of our common stock. The terms of any
such sales will be described in the prospectus supplement.
Delayed
Delivery Contracts
If the
prospectus supplement indicates, we may authorize agents, underwriters or
dealers to solicit offers from certain types of institutions to purchase the
shares of our common stock at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those conditions
described in the prospectus supplement. The applicable prospectus supplement
will describe the commission payable for solicitation of those
contracts.
Market
Making, Stabilization and Other Transactions
Any
underwriter may engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 under the Securities
Exchange Act of 1934, as amended, or the Exchange Act. Stabilizing transactions
involve bids to purchase the shares of our common stock in the open market for
the purpose of pegging, fixing or maintaining the price of the shares of our
common stock. Syndicate covering transactions involve purchases of shares of our
common stock in the open market after the distribution has been completed in
order to cover syndicate short positions.
In
connection with an offering, an underwriter may purchase and sell shares of our
common stock in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the underwriters of a greater number of
shares of our common stock than they are required to purchase in the offering.
“Covered” short sales are sales made in an amount not greater than the
underwriters’ option to purchase additional shares of our common stock, if any,
from us in the offering. If the underwriters have an over-allotment option to
purchase additional shares of our common stock from us, the underwriters may
close out any covered short position by either exercising their over-allotment
option or purchasing shares of our common stock in the open market. In
determining the source of common stock to close out the covered short position,
the underwriters may consider, among other things, the price of the shares of
our common stock available for purchase in the open market as compared to the
price at which they may purchase shares of our common stock through the
over-allotment option. “Naked” short sales are any sales in excess of such
option or where the underwriters do not have an over-allotment option. The
underwriters must close out any naked short position by purchasing shares of our
common stock in the open market. A naked short position is more likely to be
created if the underwriters are concerned that there may be downward pressure on
the price of the shares of our common stock in the open market after pricing
that could adversely affect investors who purchase in the offering.
Penalty
bids permit the underwriters to reclaim a selling concession from a syndicate
member when the shares of our common stock originally sold by the syndicate
member are purchased in a syndicate covering transaction to cover syndicate
short positions. Stabilizing transactions, syndicate covering transactions and
penalty bids may cause the price of the shares of our common stock to be higher
than it would be in the absence of the transactions. The underwriters may, if
they commence these transactions, discontinue them at any time.
General
Information
Agents,
underwriters, and dealers may be entitled, under agreements entered into with
us, to indemnification by us against certain liabilities, including liabilities
under the Securities Act. Our agents, underwriters, and dealers, or their
affiliates, may be customers of, engage in transactions with or perform services
for us, in the ordinary course of business.
LEGAL
MATTERS
Certain
matters with respect to the common stock offered hereby will be passed upon
by Holland & Hart LLP, Reno, Nevada.
EXPERTS
The consolidated financial statements
of Yuhe International, Inc. and its subsidiaries as of December 31, 2009 and
2008, and for each of the years in the three-year period ended December 31,
2009, incorporated by reference in this prospectus, have been so incorporated in
reliance upon the reports of Child, Van Wagoner & Bradshaw, PLLC, an
independent registered public accounting firm, given on the authority of such
firm as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We have
filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to our common stock offered by this prospectus. This
prospectus does not contain all of the information set forth in the registration
statement and the exhibits to the registration statement. For further
information regarding us and our common stock offered hereby, please refer to
the registration statement and the exhibits filed as part of the registration
statement.
In
addition, we file periodic reports with the SEC, including quarterly reports and
annual reports which include our unaudited quarterly and audited annual
financial statements. This registration statement, including exhibits thereto,
and all of our periodic reports may be inspected without charge at the Public
Reference Room maintained by the SEC at 100 F Street, NE, Washington, D.C.
20549. You may obtain copies of the registration statement, including the
exhibits thereto, and all of our periodic reports after payment of the fees
prescribed by the SEC. For additional information regarding the operation of the
Public Reference Room, you may call the SEC at 1-800-SEC-0330. The SEC also
maintains a website which provides on-line access to reports and other
information regarding registrants that file electronically with the SEC at the
address: http://www.sec.gov.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
This
prospectus is part of a registration statement filed with the SEC. The SEC
allows us to “incorporate by reference” into this prospectus the information
that we file with them, which means that we can disclose important information
to you by referring you to those documents. The information incorporated
by reference is considered to be part of this prospectus, and information that
we file subsequently with the SEC will automatically update and supersede this
information. The following documents were filed with the SEC pursuant to
the Exchange Act and are incorporated by reference and made a part of this
prospectus:
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our
Annual Report on Form 10-K for the year ended December 31, 2009, filed
with the SEC on March 31, 2010;
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our
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2010, filed with the SEC on May 14,
2010;
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our
Current Report on Form 8-K filed with the SEC on May 17,
2010;
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the
description of our common stock contained in our Registration Statement on
Form 8-A filed on October 29, 2009 (File No. 000-83125), including any
amendment or report filed for the purpose of updating such description;
and
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·
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all
reports and other documents subsequently filed by us pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of this
offering.
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In
addition, all documents subsequently filed by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act, including those filed after the date of
the initial registration statement and prior to effectiveness of the
registration statement, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing of
such documents. However, any documents or portions thereof, whether specifically
listed above or filed in the future, that are not deemed “filed” with the SEC,
including without limitation any information furnished pursuant to
Item 2.02 or 7.01 of Form 8-K or certain exhibits furnished pursuant to
Item 9.01 of Form 8-K, shall not be deemed to be incorporated by reference
in this prospectus.
Any
statement contained herein or made in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein,
or in any other subsequently filed document which also is incorporated or deemed
to be incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
We will provide without charge to each
person to whom this prospectus is delivered, upon oral or written request, at no
cost to the requestor, a copy of any or all of the foregoing documents
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into the information
that this prospectus incorporates). Written or telephone requests should be
directed to: Yuhe International, Inc., 301 Hailong Street, Hanting
District, Weifang, Shandong province, the People’s Republic of China. Our
telephone number is (86) 536 736 3688, and our website is located at
www.yuhepoultry.com
. The information on our website is not
incorporated by reference in this prospectus or any prospectus supplement, and
you should not consider it to be a part of this prospectus or any prospectus
supplement.
You
should rely only on the information contained or incorporated by reference in
this prospectus or any prospectus supplement. We have not authorized anyone
else to provide you with different or additional information. We will not
make an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or
any supplement is accurate as of any date other than the date of those
documents.
Yuhe
International, Inc.
Common
Stock
PROSPECTUS
SUPPLEMENT
Roth
Capital Partners
Rodman
& Renshaw, LLC Brean Murray, Carret &
Co. Global Hunter Securities
The date of this prospectus
supplement is October 20
, 2010
Yuhe (CE) (USOTC:YUII)
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