MIRA INFORM REPORT

Report Date :

06.05.2011

IDENTIFICATION DETAILS

Name :	DALIAN OCEAN STONE (ZF GROUP) FOODS CO., LTD.
Registered Office :	Room 701, China Life Insurance Mansion, No. 26 Renmin Road, Zhongshan District, Dalian City, Liaoning Province, 116100 Pr
Country :	China
Financials (as on) :	31.12.2010
Date of Incorporation :	27.02.2003
Com. Reg. No.:	210213000006434
Legal Form :	Limited Liabilities Co.
Line of Business :	processing and selling aquatic products

RATING & COMMENTS

MIRA’s Rating :

B

RATING		STATUS	PROPOSED CREDIT LINE
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small

Maximum Credit Limit :	USD 125,000
Status :	Moderate
Payment Behaviour :	No Complaints
Litigation :	Clear

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

ECGC Country Risk Classification List – December 31, 2010

Country Name	Previous Rating (30.09.2010)	Current Rating (31.12.2010)
China	a2	a2

Risk Category	ECGC Classification
Insignificant	A1
Low	A2
Moderate	B1
High	B2
Very High	C1
Restricted	C2
Off-credit	D

Company name & address

DALIAN OCEAN STONE (ZF GROUP) FOOD CO., LTD.

ROOM 701, CHINA LIFE INSURANCE MANSION, NO. 26 RENMIN ROAD, ZHONGSHAN DISTRICT, DALIAN CITY, LIAONING PROVINCE, 116100 PR CHINA

TEL: 86 (0) 411-82733381 FAX: 86 (0) 411-82691800

EXECUTIVE SUMMARY

INCORPORATION DATE : FEB. 27, 2003

REGISTRATION NO. : 210213000006434

REGISTERED LEGAL FORM : LIMITED LIABILITIES CO.

CHIEF EXECUTIVE : MR. ZHAO SHIMING (CHAIRMAN)

STAFF STRENGTH : 400

REGISTERED CAPITAL : CNY 20,400,000

BUSINESS LINE : PROCESSING AND TRADING

TURNOVER : CNY 138,620,000 (AS OF DEC. 31, 2010)

EQUITIES : CNY 33,910,000 (AS OF DEC. 31, 2010)

PAYMENT : AVERAGE

RECOMM. CREDIT RANGE : UP TO USD 125,000 (PERIODICAL REVIEW)

MARKET CONDITION : AVERAGE

FINANCIAL CONDITION : FAIR

OPERATIONAL TREND : FAIRLY STEADY

GENERAL REPUTATION : AVERAGE

EXCHANGE RATE : CNY 6.49620=USD 1

Adopted abbreviations

ANS - amount not stated

NS - not stated

SC - subject company (the company inquired by you)

NA - not available

CNY – China Yuan Ren Min Bi

SC was registered as a limited liabilities co. at local Administration for Industry & Commerce (AIC-The official body of issuing and renewing business license) on Feb. 27, 2003.

Company Status: Limited Liabilities Co.

This form of business in PR China is defined as a legal person. No more than fifty shareholders contribute its registered capital jointly. Shareholders bear limited liability to the extent of shareholding, and the co. is liable for its debts only to extent of its total assets. The characteristics of this form of co. are as follows:

Upon the establishment of the co., an investment certificate is issued to the each of shareholders.

The board of directors is comprised of three to thirteen members.

The minimum registered capital for a co. is CNY 30,000.

Shareholders may take their capital contributions in cash or by means of tangible assets or intangible assets such as industrial property and non-patented technology.

Cash contributed by all shareholders must account for at least 30% of the registered capital.

Existing shareholders have pre-exemption right to purchase shares of the co. offered for sale by the other shareholders and to subscribe for the newly increased registered capital of the co.

SC’s registered business scope includes processing aquatic products; importing and exporting goods and technology; trade agent; purchasing aquatic products; selling subsidiary agricultural products, hardware, electronic products, building material, metal material and groceries.

SC is mainly engaged in processing and selling aquatic products.

Mr. Zhao Shiming has been legal representative, chairman and general manager of SC since 2003.

SC is known to have approx. 400 employees at present.

SC is currently operating at the above stated address, and this address houses its operating office in the commercial zone of Dalian. Detailed information of the premise is unknown.

Note: SC is known to have a factory, but the detail is not available.

http://www.oceanstone.com.cn/ The design is professional and the content is well organized. At present it is in English version.

Email: info@oceanstone.com.cn

No significant events or changes were found during our checks with the local AIC.

MAIN SHAREHOLDERS:

Name % of shareholdings

Dalian Zhangzidao Fishery Group Co., Ltd. 73.99

Liu Jiatong ID# 210221660929005 21.01

Chen Benzhou ID# 210202196301136914 5

Dalian Zhangzidao Fishery Group Co., Ltd.

================================

Zhangzidao Fishery Group, in possession of over 70,000 hectares “A” level seawater area, is the largest company of bottom-cultured precious seafood in China, with its businesses covering hatching, farming, processing, and trading. The company got listed in Shenzhen Stock Exchange (002069) and “Zhangzidao” was certified as the first China Well-known Trademark of seafood in 2006. Awarded the “Top 10 Best Employer” and elected as “Member of the Community of Global Growth Companies” in 2007, it set up the US Corp & HK Company in 2008.

Establishment Date: Sep. 21, 1992

Chief Executive: Wu Hougang

Registered Capital: CNY 711,112,000

Add: 17F&18F, China Life Insurance Mansion, No. 26 Renmin Road, Zhongshan District, Dalian

Tel: 0086-411-82659666-8101

Fax: 0086-411-82592985

Website: http://www.zhangzidao.com/

Email: intl@zhangzidao.com

l Legal Representative, Chairman and General Manager:

Mr. Zhao Shiming , born in 1961 with university education, he is currently responsible for the overall management of SC.

Working Experience(s):

From 2003 to present Working in SC as legal representative, chairman and general manager.

Also working in Dalian Tongyuan Foodstuffs Co., Ltd. and Dalian Zhangzidao Ocean Stone International Trade Co., Ltd. (Literal Translation) as legal representative, in Dalian Zhangzidao Fishery Group Co., Ltd. as vice general manager.

SC is mainly engaged in processing and selling aquatic products.

SC’s products mainly include: cod, pollock, salmon, flounder, snow crab, scallop, squid, red fish fillet, and etc.

SC sources its materials 100% from overseas markets, mainly America. SC sells 10% of its products in domestic market, and 90% to overseas market, mainly America.

The buying terms of SC include Check, L/C, T/T and Credit of 30-60 days. The payment terms of SC include Check, L/C, T/T, and Credit of 30-60 days.

*Major Customer:

=============

Frosta

Note: SC’s employee refused to release its major suppliers.

SC is known to invest in the following companies:

Dalian Tongyuan Foodstuffs Co., Ltd.

Dalian Zhangzidao Ocean Stone International Trade Co., Ltd. (Literal Translation)

Overall payment appraisal:

( ) Excellent ( ) Good (X) Average ( ) Fair ( ) Poor ( ) Not yet determined

The appraisal serves as a reference to reveal SC's payments habits and ability to pay. It is based on the 3 weighed factors: Trade payment experience (through current enquiry with SC's suppliers), our delinquent payment and our debt collection record concerning SC.

Trade payment experience: SC did not provide any name of trade/service suppliers and we have no other sources to conduct the enquiry at present.

Delinquent payment record: None in our database.

Debt collection record: No overdue amount owed by SC was placed to us for collection within the last 6 years.

SC’s management declined to release whether it has account in China Everbright Bank.

Balance Sheet

Unit: CNY’000

	As of Dec. 31, 2010
Cash & bank	3,530
Inventory	63,900
Accounts receivable	14,080
Advances to suppliers	0
Other accounts receivable	52,400
Other current assets	0
	------------------
Current assets	133,910
Fixed assets net value	19,440
Long-term deferred expenses	510
Long term investment	15,330
Intangible and other assets	590
	------------------
Total assets	169,780
	=============
Short loans	31,480
Notes payable	0
Accounts payable	10,410
Advances from clients	4,580
Accrued payroll	1,230
Taxes payable	-820
Interest payable	150
Other accounts payable	88,840
Other current liabilities	0
	------------------
Current liabilities	135,870
Long-term liabilities	0
	------------------
Total liabilities	135,870
Equities	33,910
	------------------
Total liabilities & equities	169,780
	=============

Income Statement

Unit: CNY’000

	As of Dec. 31, 2010
Turnover	138,620
Cost of goods sold	133,310
Sales expense	2,010
Management expense	2,870
Finance expense	1,820
Asset impairment loss	-50
Non-operating income	80
Non-operating expense	290
Profit before tax	-1,550
Less: profit tax	-160
Profits	-1,390

Important Ratios

=============

	As of Dec. 31, 2010
*Current ratio	0.99
*Quick ratio	0.52
*Liabilities to assets	0.80
*Net profit margin (%)	-1.00
*Return on total assets (%)	-0.82
*Inventory /Turnover ×365	169 days
*Accounts receivable/Turnover ×365	38 days
*Turnover/Total assets	0.82
* Cost of goods sold/Turnover	0.96

PROFITABILITY: FAIR

l The turnover of SC appears fairly good in its line.

l SC’s net profit margin appears fair.

l SC’s return on total assets appears fair.

l SC’s cost of goods sold is high, comparing with its turnover.

LIQUIDITY: FAIR

l The current ratio of SC is maintained in a fair level.

l SC’s quick ratio is maintained in a fair level.

l The inventory of SC appears large in 2010.

l The accounts receivable of SC appears average in 2010.

l The short-term loan of SC appears fairly large in 2010.

l SC’s turnover is in a fair level, comparing with the size of its total assets.

LEVERAGE: FAIR

l The debt ratio of SC is fairly high.

l The risk for SC to go bankrupt is average.

Overall financial condition of the SC: Fair

SC is considered medium-sized in its line with fair financial conditions. The large amount of inventory and short loans could be a threat to SC’s financial condition. A credit line at the above amount appears to be within SC’s capacities upon a periodical review basis.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.57
UK Pound	1	Rs.73.58
Euro	1	Rs.66.23

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
----	NB	New Business	----

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.