The activities that the Company has engaged in include the following:
The Company established China Agricultural Commodity Trading Center ("CACTC"), a new company that has been formed to standardize and digitize agricultural products based on e-finance technology and market trading technology. CACTC will also develop an open platform pricing mechanism utilizing a fair market auction process to process market transactions. In addition, it is planned that various financial products will be developed to transact medium to long term commodities contracts of agricultural bulk products.
The Company, through its subsidiaries Hedetang Foods (China) Co. Ltd. ("Hedetang China") and Hedetang Farm Products Trading Market (Mei County) Co. Ltd., ("Hedetang Farm"), entered into an agreement with Xi'an Taizhan Financial Management Co., Ltd. ("Taizhan") to jointly establish a new company currently named China Agricultural Commodity Trading Market Co., Ltd. (the "China Agricultural Commodity Trading Center") in Mei County, Shaanxi Province, China. The trading center's name is to be approved by China's National General Administration for Industry and Commerce.
Pursuant to the agreement, the total registered capital for the China Agricultural Commodity Trading Center will be RMB 50 million (approximately $7.35 million). Hedetang China has agreed to contribute RMB 17.50 million (approximately $2.57 million), Hedetang Farm has agreed to contribute RMB 15 million (approximately $2.21 million) and Taizhan has agreed to contribute RMB 17.50 million (approximately $2.57 million) to the China Agricultural Commodity Trading Center. The agreement stipulates that each shareholder will split both the profits and the losses of the new entity on a pro rata basis.
The business scope of the China Agricultural Commodity Trading Market will include market management of pan-resource commodity contract transactions and transaction capital settlements; commodity transaction market management services; relevant consultation services of the above-mentioned businesses; RMB settlement services for commodity cross-border transactions; and, supervision services for logistics storage. Once established, the China Agricultural Commodity Trading Center will become an innovative platform that promotes agricultural e-commerce trading, industrial integration and modernization, and financial innovation.
It is planned that the China Agricultural Commodity Trading Center will focus on the trading of agricultural products and will expand its capabilities to include financial derivatives based on market trends and investors' needs. The China Agricultural Commodity Trading Center will be designed to rely on advanced financial and trading technology to standardize the prices of agricultural products and will offer an open, fair and market-based pricing mechanism. It is also planned that trading center will offer a call auction market and tradeable derivatives to meet customers' investing and financing needs.
The Company intends to position the China Agricultural Commodity Trading Center as (1) a big data and analytics service provider; (2) a platform utilizing technology to boost efficiency and productivity; (3) a platform leveraging technology to provide a unique and efficient shopping experience; (4) a fully-integrated solution that benefits each party in the supply chain and boosts customer sales; (5) a sophisticated financial management system that enables efficient access for large enterprises as well as small agriculture businesses to access capital to meet ongoing growth needs; and, (6) a technology platform that solves three key issues for agricultural businesses: improving revenue, reducing risk, and enabling the successful closing out or exiting of a transaction.