Capital Award, Inc. (“CA”) is a wholly owned subsidiary of Sino Agro Food, Inc. (SIAF). Currently engaged in modern fishery project management and consultancy services, CA provides consulting, engineering, and construction services to fish farms adopting the A Power Recirculating Aquaculture Systems (“APRAS”) technology for the development of fish farms. From 2009 to 2016, CA developed four land-based aquaculture farms which were operated as joint ventures.
In 2011, Capital Award commenced engaging in the marketing and sale of fish and seafood for the joint ventures, which continued until SIAF completed an aquaculture carve-out spin-off (COSO). After ownership of these farms was restructured in late 2016, all the aquafarms were transferred to Tri-way Industries Ltd. (“TW”), a Hong Kong corporation. SIAF retained a 36.6% equity interest in Tri-way who now operates the fish farms and derives revenue from the sale of goods previously reported under CA.
Thus, after the-carve-out transaction, SIAF records recurring income in three ways:
The sale of seafood by Tri-Way as “Share of Income from Unconsolidated Equity Investee” based on the Company’s 36.6% holding in TW;
Continuing project development as the turnkey provider for TW (but not limited to TW nor necessarily within China); and
Turnkey engineering and technology fees, coupled with licensing fees for the APRAS technology. Capital Award will receive license fees from any future farms (i.e., Aqua-farms 6, 7 and so on) that TW develops in China.