0001176256-12-000508.txt : 20120720 0001176256-12-000508.hdr.sgml : 20120720 20120719185527 ACCESSION NUMBER: 0001176256-12-000508 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20120630 FILED AS OF DATE: 20120720 DATE AS OF CHANGE: 20120719 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHAI NA TA CORP CENTRAL INDEX KEY: 0000889329 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE PRODUCTION - CROPS [0100] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20386 FILM NUMBER: 12970710 BUSINESS ADDRESS: STREET 1: UNIT 100 STREET 2: 12051 HORSESHOE WAY CITY: RICHMOND STATE: A1 ZIP: V7A 4V4 BUSINESS PHONE: 6042724118 MAIL ADDRESS: STREET 1: UNIT 100 STREET 2: 12051 HORSESHOE WAY CITY: RICHMOND STATE: A1 ZIP: V7A 4V4 FORMER COMPANY: FORMER CONFORMED NAME: CHAI NA TA GINSENG PRODUCTS LTD DATE OF NAME CHANGE: 19960826 6-K 1 chainata6kq2120630.htm REPORT OF FOREIGN ISSUER FOR JULY 2012 Filed by e3 Filing, Computershare 1-800-973-3274 - Chai-Na-Ta Corp. - Form 6-K


FORM 6-K

SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Report of Foreign Issuer

Pursuant to Rule 13a – 16 or 15d – 16 of
The Securities Exchange Act of 1934

For July 2012

CHAI-NA-TA CORP.
Unit 100 – 12051 Horseshoe Way
Richmond, BC V7A 4V4

Attachments:

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F – [ X ] Form 40-F – [   ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes – [   ] No – [ X ]

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-___________





SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHAI-NA-TA CORP.
SIGNED “WILMAN WONG”
Date: July 19, 2012  
Wilman Wong
Chief Executive Officer

 



EX-99.1 2 exhibit99-1.htm NEWS RELEASE DATED JULY 19 2012 - CHAI-NA-TA REPORTS 2012 SECOND QUARTER RESULTS Exhibit 99.1

Exhibit 99.1
 
Unit 100 - 12051 Horseshoe Way
Richmond, BC V7A 4V4
Canada  
Toll Free in Canada & USA:
1-800-406-ROOT (7668)
Telephone: (604) 272-4118
Facsimile: (604) 272-4113
OTCBB: “CCCFF”
Web: www.chainata.com

 

FOR IMMEDIATE RELEASE

Chai-Na-Ta Corp. Reports 2012 Second Quarter Results

RICHMOND, BRITISH COLUMBIA – July 19, 2012 – Chai-Na-Ta Corp. (OTCBB: “CCCFF”) today announced a second quarter 2012 net loss of $160,000 or less than $0.01 per basic share, compared to net earnings of $1.5 million in 2011, or $0.04 per basic share.

Revenue decreased to $2.2 million in the second quarter of 2012 from $3.8 million in the prior year period. The Company has a gross loss of 1% of sales in the second quarter of 2012 compared to a gross profit of 47% in the same period last year.

In the six months ended June 30, 2012, revenue decreased to $5.0 million from $7.3 million in the first half of 2011. Net loss in the first half of 2012 was $453,000 or $0.01 per basic share, compared to net earnings of $2.7 million or $0.08 per basic share in the same period last year.

“The Company has obtained a Certificate of Intent to Dissolve from Corporations Canada dated July 9, 2012,” said Derek Zen, Chairman of the Company, “and have begun the process of liquidating the Company and will make the distribution to the shareholders in August after the final payments to the Company’s creditors.”

The net assets in liquidation as at June 30, 2012 was $10.2 million compared to net assets of $11.0 million as at December 31, 2011.

Chai-Na-Ta Corp., based in Richmond, British Columbia, farmed, processed and distributed North American ginseng as bulk root.

This news release contains forward-looking statements that reflect the Company’s expectations regarding future events. These forward-looking statements involve risks and uncertainties, and actual events could differ materially from those projected. Such risks and uncertainties include, but are not limited to, general business conditions and

Page 1 of 2




other risks as outlined in the Company’s periodic filings, Annual Financial Statements and Form 20-F.

- 30 -

FOR FURTHER INFORMATION PLEASE CONTACT:

Chai-Na-Ta Corp.
Wilman Wong
Chief Executive Officer/Corporate Secretary
(604) 272-4118 or (Toll Free) 1-800-406-7668
(604) 272-4113 (FAX)
E-mail:
info@chainata.com
Website: www.chainata.com

Page 2 of 2


EX-99.2 3 exhibit99-2.htm INTERIM FINANCIAL STATEMENTS THREE AND SIX MONTHS ENDED JUNE 30, 2012 Exhibit 99.2

Exhibit 99.2


CHAI-NA-TA CORP.

Interim Condensed Consolidated Financial Statements
Three and six months ended June 30, 2012 and June 30, 2011 (See Note 1)

(Unaudited)




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012

CHAI-NA-TA CORP.
Interim Condensed Consolidated Statement of Net Assets in Liquidation as at
June 30, 2012 and December 31, 2011 (See Note 1)
(Unaudited)

In thousands of     June 30     December 31  
Canadian dollars Note   2012     2011  
 
ASSETS            

Current assets

           

Cash

  $ 10,299 $ 4,494  

Accounts receivable

    4   164  

Inventory

    -   4,974  

Prepaid expenses

    3   57  

Assets held for sale

4   -     1,850  
Total assets   $ 10,306   $ 11,539  
 
LIABILITIES            
Current liabilities            

Accounts payable and accrued liabilities

  $ 11 $ 558  

Reserve for estimated costs during liquidation

3   130     -  
Total liabilities     141     558  
 
NET ASSETS            

Share capital

5       38,226  

Additional paid in capital

        9,436  

Accumulated other comprehensive income

        873  

Accumulated deficit

          (37,554 )

Total net assets

          10,981  
Total liabilities and net assets         $ 11,539  
 
NET ASSETS IN LIQUIDATION   $ 10,165        

Approved by the Board:

  /s/ DEREK ZEN /s/ WILMAN WONG  
Derek Zen Wilman Wong
Chairman Chief Executive Officer

 




Chai-Na-Ta Corp.
Second Quarter Report
For the periods ended June 30, 2012

CHAI-NA-TA CORP.
Interim Condensed Consolidated Statements of (Loss) Earnings from Operations for the Three and Six
Months Ended June 30, 2012 and June 30, 2011 (See Note 1)
(Unaudited)

      Three months ended     Six months ended  
in thousands of Canadian dollars     June 30     June 30     June 30     June 30  
(except per share and share amounts) Note   2012     2011     2012     2011  
 
Revenue   $ 2,215   $ 3,795   $ 4,965   $ 7,320  
 
Cost of goods sold                          

Cost of inventory sold

    2,223     1,998     4,974     3,828  

Shipping and handling fees

    8     4     25     8  
Total cost of goods sold     2,231     2,002     4,999     3,836  
 
Gross (loss) margin     (16 )   1,793     (34 )   3,484  
 
Selling, general and administrative expenses 6   200     273     488     749  
 
Operating (loss) income     (216 )   1,520     (522 )   2,735  
 
Interest income     16     4     39     6  
Interest expense on long-term debt     -     -     -     (9 )
Other income (loss) 7   40     (11 )   30     (57 )
 
NET (LOSS) EARNINGS FROM OPERATIONS   $ (160 ) $ 1,513   $ (453 ) $ 2,675  
 
Basic and diluted (loss) earnings per share   $ (0.00 ) $ 0.04   $ (0.01 ) $ 0.08  
 
Weighted average number of shares used to calculate basic and diluted (loss) earnings per share (in thousands)     34,698     34,698     34,698     34,698  

 




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012

CHAI-NA-TA CORP.
Interim Condensed Consolidated Statements of Changes in Net Assets in Liquidation for the
Six Months Ended June 30, 2012 and June 30, 2011 (see Note 1)
(Unaudited)

    Common   Total  
in thousands of Canadian dollars   Shares   Net  
(except number of shares in thousands) Note Outstanding   Assets  
 
Balance - January 1, 2011   34,698 $ 8,010  
Net earnings from operations   -   2,675  
Cumulative translation adjustment   -   60  
Balance - June 30, 2011   34,698 $ 10,745  
 
Balance - January 1, 2012   34,698 $ 10,981  
Net loss from operations   -   (453 )
Cumulative translation adjustment   -   (7 )
Adjustment to the liquidation basis of accounting 3 -   (356 )
Balance - June 30, 2012   34,698 $ 10,165  

 




Chai-Na-Ta Corp.
Second Quarter Report
For the periods ended June 30, 2012

CHAI-NA-TA CORP.
Interim Condensed Consolidated Statements of Cash Flow for the Three and Six Months Ended
June 30, 2012 and June 30, 2011 (See Note 1)
(Unaudited)

    Three months ended     Six months ended  
in thousands of   June 30     June 30     June 30     June 30  
Canadian dollars   2012     2011     2012     2011  
 
Operating Activities                        

Net (loss) earnings from operations

$ (160 ) $ 1,513   $ (453 ) $ 2,675  

Items included in net (loss) earnings not affecting cash:

                       

Cost of inventory sold

  2,223     1,991     4,974     3,809  

Depreciation and amortization

  -     1     -     3  

Non-cash foreign exchange (gains) losses

  (42 )   12     (7 )   (1 )

Changes in non-cash operating assets and liabilities:

                       

Accounts receivable

  258     34     159     (2 )

Inventory

  -     (6 )   -     (2 )

Prepaid expenses

  26     (10 )   54     24  

Accounts payable and accrued liabilities

  (552 )   (163 )   (546 )   36  

Customer deposits

  (124 )   309     -     (876 )

Ginseng crop expenditures

  -     (527 )   -     (730 )

Liquidation costs

  (226 )   -     (226 )   -  
    1,403     3,154     3,955     4,936  
 
Financing Activities                        

Repayment of long-term debt

  -     -     -     (2,950 )
    -     -     -     (2,950 )
 
Investing Activities                        

Purchase of property, plant and equipment

  -     (22 )   -     (22 )

Proceeds from disposition of property, plant and equipment

  -     -     1,850     -  
    -     (22 )   1,850     (22 )
 

Effect of exchange rates changes on cash and cash equivalents

  -     -     -     (1 )
 
NET INCREASE IN CASH $ 1,403   $ 3,132   $ 5,805   $ 1,963  
 
CASH, BEGINNING OF THE PERIOD   8,896     1,490     4,494     2,659  
 
CASH, END OF THE PERIOD $ 10,299   $ 4,622   $ 10,299   $ 4,622  

 




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012
CHAI-NA-TA CORP.
Notes to the Interim Condensed Consolidated Financial Statements as at and for the Three and
Six Months Ended June 30, 2012 and as at December 31, 2011 and for the Three and Six Months
Ended June 30, 2011 (See Note 1)
(Unaudited)
 

1. Nature of operations

The Company operated North American ginseng farms in Ontario, Canada, on which ginseng root was planted, cultivated and harvested. The Company sold ginseng in its primary markets of Hong Kong and China, and to a lesser extent Canada and the United States of America, through its wholly-owned subsidiaries. All of the Company's ginseng crops have been harvested and all of its inventory sold as at June 30, 2012.

The Company is publicly traded with no single shareholder holding a majority of the Company’s common shares. The largest shareholder of the Company is Wai Kee Holdings Limited (“Wai Kee”), a publicly traded Hong Kong based company, which owns 46% of the shares of the Company.

Historically, the annual and interim consolidated financial statements and notes of the Company were prepared on a going-concern basis in accordance with United States generally accepted accounting principles ("US GAAP"). On May 11, 2012 ("Liquidation Approval Date"), a special resolution was approved by the shareholders of the Company for the voluntary liquidation of the Company pursuant to section 211 of the Canada Business Corporation Act, through the distribution of its remaining assets to its shareholders, after providing for outstanding liabilities, contingencies and costs of the liquidation; the appointment of a liquidator if and when deemed appropriate by the board of directors of the Company; and the ultimate dissolution of the Company in the future once all of the liquidation steps have been completed. Accordingly, the Company adopted the liquidation basis of accounting as of May 11, 2012 (see Note 3) since the liquidation and dissolution of the Company was imminent as of that date.

Since the Liquidation Approval Date, the Company's activities have now been limited to: fulfilling the orders for its remaining inventory; realizing the value of its remaining assets; settling obligations with creditors; making tax and regulatory filings; winding down its business operations; and distributing the Company's remaining assets to its shareholders.

All amounts included in these interim consolidated financial statements are expressed in Canadian dollars ("CAD") unless otherwise noted.

2. Plan of dissolution

As a result of the shareholders approval on May 11, 2012 of the voluntary liquidation of the Company pursuant to Section 211 of the Canada Business Corporations Act, the Company will seek to: (i) realize its remaining non-cash assets; (ii) pay, and establish a reserve to pay, all of the Company’s anticipated and unanticipated liabilities; and (iii) make a liquidating distribution to the shareholders. The Company has appointed its stock transfer agent, Computershare Investor Services Inc. (“Computershare”), to act as its agent in connection with the final liquidating distribution. The Company will deliver the full amount of the final liquidating distribution to Computershare on or before August 31, 2012, to be paid by Computershare to the Company’s shareholders. Computershare will send a letter of transmittal to the Company’s shareholders requesting that they surrender their share certificates in the Company in exchange for their proportionate share of the final liquidating distribution.




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012
CHAI-NA-TA CORP.
Notes to the Interim Condensed Consolidated Financial Statements as at and for the Three and
Six Months Ended June 30, 2012 and as at December 31, 2011 and for the Three and Six Months
Ended June 30, 2011 (See Note 1)
(Unaudited)
 

Thereafter, the Company will file Articles of Dissolution under the Canada Business Corporations Act in order to dissolve the Company. The Company will also file the appropriate forms or letters with Canadian securities regulators to cease to be a reporting issuer and with the United States Securities Exchange Commission to terminate the Company’s Section 12(g) registration and Section 13(a) reporting obligations under the Securities Exchange Act of 1934.

3. Summary of significant accounting policies

Liquidation basis of accounting

As a result of the shareholder approval of the dissolution, the Company commenced using the liquidation basis of accounting on the Liquidation Approval Date (May 11, 2012). This basis of accounting is considered appropriate when liquidation is imminent. Therefore, the interim consolidated financial statements of the Company as of and for the three and six months ended June 30, 2012 have been prepared on a liquidation basis subsequent to the Liquidation Approval Date and on a going concern basis prior to that date. Accordingly, assets have been valued at estimated net realizable value and liabilities include estimated costs associated with carrying out the plan of liquidation.

In converting from the going-concern (historical cost) basis to the liquidation basis of accounting, the Company was required to make a net adjustment by recording a decrease in net assets of $356,000 which is included in the changes in net assets for the six months ended June 30, 2012 and is summarized as follows:

in thousands of      
Canadian dollars      
 
Accounting, Board, legal and other professional fees $ 117  
Share distribution costs   93  
Salaries and employment costs   89  
Insurance   60  
Office, storage and other costs   30  
Interest income   (33 )
Net decrease in net assets $ 356  

The decrease in net assets of $356,000 was based on liquidation costs incurred as at June 30, 2012, prior history, known future events, contractual obligations, quotes received for future services required, and the estimated time to complete the liquidation. The Company has incurred or pre-emptively paid $226,000 in liquidation costs and has accrued an additional $130,000 as at June 30, 2012.




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012
CHAI-NA-TA CORP.
Notes to the Interim Condensed Consolidated Financial Statements as at and for the Three and
Six Months Ended June 30, 2012 and as at December 31, 2011 and for the Three and Six Months
Ended June 30, 2011 (See Note 1)
(Unaudited)
 

Going-concern basis of accounting

Prior to the Liquidation Approval Date, these interim consolidated financial statements and notes have been prepared in accordance with US GAAP on a going-concern (historical cost) basis for interim reporting periods and should be read in conjunction with the Company’s annual consolidated financial statements and notes for the year ended December 31, 2011.

4. Assets held for sale

The Company entered into an agreement for the sale of certain assets and real property used in connection with the farming operations in Ontario for total cash consideration of $1,850,000 in accordance with the terms and conditions of an asset purchase agreement (the “Agreement”) dated September 14, 2011 with a closing date of January 16, 2012. The closing of the transaction was approved by the Company’s shareholders at a special meeting on October 28, 2011. The transaction was concluded on the scheduled closing date with the full proceeds of the sale being received by the Company in accordance with the Agreement. There was no gain or loss upon the sale of the assets as they were recorded at their net realizable value.

5. Share capital

  Number of Shares
In thousands Authorized Outstanding
 
Common Shares - without par value    
Balance as at December 31, 2011 and June 30, 2012 Unlimited 34,698

6. Selling, general and administrative expenses

    Three months ended   Six months ended  
in thousands of   June 30   June 30   June 30   June 30
Canadian dollars   2012   2011   2012   2011  
 
Retention bonuses $ 34 $ 63 $ 83 $ 126
Other selling, general and administrative expenses   166   210   405   623  
  $ 200 $ 273 $ 488 $ 749  

During 2010, the Company agreed to pay retention bonuses totalling $485,000 to corporate and farm management and staff to ensure the stability of the operation through the expected final harvest in 2011 and the sale of the Company’s assets in 2012. All of the retention bonuses were paid as of June 30, 2012.




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012
CHAI-NA-TA CORP.
Notes to the Interim Condensed Consolidated Financial Statements as at and for the Three and
Six Months Ended June 30, 2012 and as at December 31, 2011 and for the Three and Six Months
Ended June 30, 2011 (See Note 1)
(Unaudited)
 

7. Other income (loss)

    Three months ended     Six months ended  
in thousands of   June 30   June 30     June 30   June 30  
Canadian dollars   2012   2011     2012   2011  
 
Foreign exchange gains (losses) $ 39 $ (11 ) $ 5 $ (57 )
Government supplements   -   -     23   -  
Other non-operating income   1   -     2   -  
  $ 40 $ (11 ) $ 30 $ (57 )

Foreign exchange gains (losses) for the six months ended June 30, 2011 include a $36,000 loss on foreign exchange forward contracts. There were no foreign exchange contracts outstanding during the three and six months ended June 30, 2012 nor during the three months ended June 30, 2011.

Government supplements for the six months ended June 30, 2012 are funds received from Agriculture Canada and are based on sales made in the 2010 program year.

8. Segmented information

The Company operates in one operating segment and two geographic regions. The geographic region that the external revenue is derived from is determined by the residency of the customer. Intersegment revenue is determined by the residency of the subsidiary selling the product. Information by geographic region is summarized as follows:

    Three months ended     Six months ended  
in thousands of   June 30     June 30     June 30     June 30  
Canadian dollars   2012     2011     2012     2011  
External revenue from operations located in:                        

Canada

$ 1,399   $ 2,803   $ 3,707   $ 5,289  

Hong Kong and People's Republic of China

  816     992     1,258     2,031  
  $ 2,215   $ 3,795   $ 4,965   $ 7,320  
Intersegment revenue from operations located in:                        

Canada

$ 816   $ 1,807   $ 1,258   $ 2,807  

Hong Kong and People's Republic of China

  -     -     -     -  
  $ 816   $ 1,807   $ 1,258   $ 2,807  
Net (loss) earnings from operations located in:                        

Canada

$ (187 ) $ 1,523   $ (433 ) $ 2,723  

Hong Kong and People's Republic of China

  27     (10 )   (20 )   (48 )
  $ (160 ) $ 1,513   $ (453 ) $ 2,675  

 




Chai-Na-Ta Corp.
Second Quarter Report
For the period ended June 30, 2012
CHAI-NA-TA CORP.
Notes to the Interim Condensed Consolidated Financial Statements as at and for the Three and
Six Months Ended June 30, 2012 and as at December 31, 2011 and for the Three and Six Months
Ended June 30, 2011 (See Note 1)
(Unaudited)
 

The Company had no long-lived assets, which comprise of all assets not classified as current, as at June 30, 2012. All of the Company's long-lived assets were in the Canadian geographic region as at June 30, 2011.

Major customers

Major customers include all customers with whom the Company has derived revenue greater than 10% of its total revenue within the reporting period.

For the three months ended June 30, 2012, revenue included sales to two customers from the Canadian geographic region which accounted for $1,119,000 and $281,000, respectively, and one customer from the Hong Kong and People's Republic of China geographic region which accounted for $705,000 (June 30, 2011 - two customers from the Canadian geographic region which accounted for 1,514,000 and $1,153,000, respectively, and one customer from the Hong Kong and People's Republic of China geographic region which accounted for $642,000).

For the six months ended June 30, 2012, revenue included sales to one major customer which accounted for $3,347,000 from the Canadian geographic region one major customer which accounted for $1,147,000 from the Hong Kong and People's Republic of China geographic region (June 30, 2011 two major customers from the Canadian geographic region which accounted for $3,890,000 and $1,191,000, respectively, and two major customers from the Hong Kong and People's Republic of China geographic region which accounted for $1,283,000 and $748,000, respectively).

9. Related party transactions

In the normal course of business, the Company pays management fees to Wai Kee for performing sales, accounting and administrative services for CNT Trading (Hong Kong) Limited, a subsidiary of the Company. For the three and six month periods ended June 30, 2012, the Company paid management fees of $12,000 and $23,000 (June 30, 2011 - $14,000 and $28,000), respectively. This transaction is measured at the fair value.



EX-99.3 4 exhibit99-3.htm MANAGEMENT'S DISCUSSION AND ANALYSIS Exhibit 99.3
Exhibit 99.3

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATING RESULTS

For the three and six month periods ended June 30, 2012

The following discussion and analysis reviews the operating results, financial position and liquidity, risks and industry trends affecting the financial results of Chai-Na-Ta Corp. Additional comments relate to changes made to operations since the year-end and their expected financial impact.

This commentary has been prepared as of July 18, 2012 and should be read in conjunction with the unaudited interim consolidated financial statements as at June 30, 2012 and for the three and six month periods ended June 30, 2012 and 2011 and their accompanying notes. The discussion and analysis should also be read in conjunction with the 2011 annual audited financial statements which can be found on the Company’s website. Amounts are expressed in Canadian dollars, unless otherwise specified.

A special resolution was approved by the shareholders of the Company on May 11, 2012 ("Liquidation Approval Date"), for the voluntary liquidation of the Company pursuant to section 211 of the Canada Business Corporation Act, through the distribution of its remaining assets to its shareholders, after providing for outstanding liabilities, contingencies and costs of the liquidation; the appointment of a liquidator if and when deemed appropriate by the board of directors of the Company; and the ultimate dissolution of the Company in the future once all of the liquidation steps have been completed.

Historically, the interim and annual consolidated financial statements and notes have been prepared in accordance with United States generally accepted accounting principles (“US GAAP”). As a result of the shareholder approval of the dissolution, the Company commenced using the liquidation basis of accounting on the Liquidation Approval Date (May 11, 2012). Therefore, the interim consolidated financial statements and notes of the Company as of and for the three and six months ended June 30, 2012 have been prepared on a liquidation basis starting from May 11, 2012. Accordingly, as at June 30, 2012, assets have been valued at estimated net realizable value and liabilities include estimated costs associated with carrying out the plan of liquidation.

Some of the statements made in this analysis are forward-looking statements, such as estimates and statements that describe the Company’s future plans, objectives, or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions by their very nature, they involve inherent risks and uncertainties. The forecasts and projections that make up the forward-looking information are based on assumptions, which include, but are not limited to, no significant operational disruptions or environmental liability as a result of a catastrophic event or environmental upset; interest rates; and exchange rates. Actual results in each case could differ materially from those currently anticipated in such statements.

1




OVERVIEW

The Company operated North American ginseng farms in Ontario, Canada, on which ginseng root was planted, cultivated and harvested. The Company sold ginseng in its primary markets of Hong Kong and China, and to a lesser extent Canada and the United States of America, through its wholly-owned subsidiaries. All of the Company's ginseng crops have been harvested and all of its inventory sold as at June 30, 2012. The Company is currently in the process of liquidating with the ultimate intention of making a liquidating distribution to its shareholders.

The Company completed the sales of its inventory from the 2011 harvest in the second quarter of 2012 and recorded a gross loss of $16,000 on revenue of $2,215,000 for the three month period ended June 30, 2012 compared to a gross margin of $1,793,000 on revenue of $3,795,000 for the three month period ended June 30, 2011. The decrease in revenue and gross margin was due to a 29% decrease in average selling price. This also resulted in the Company recording a net loss of $160,000 for the three month period ended June 30, 2012 compared to net earnings of $1,513,000 for the same period in the prior year.

RESULTS OF OPERATIONS

Revenue decreased to $2,215,000 in the second quarter of 2012 from $3,795,000 in the second quarter of the previous year and decreased to $4,965,000 for the six months ended June 30, 2012 compared to $7,320,000 in the prior year period. The Company sold 355,000 pounds of root for an average price of $13.99 per pound in the first six months of 2012 compared to 373,000 pounds of root sold for an average price of $19.64 per pound in the first six months of 2011. The lower average sales price was due to a decrease in customer demand and due to a smaller proportion of the higher quality five-year-old root being harvested by the Company during the 2011 harvest season.

Cost of goods sold was 101% of sales revenue in the second quarter of 2012, compared to 53% in the previous year period and was 101% of sales revenue for the six months ended June 30, 2012 compared to 52% for the six months ended June 30, 2011. The Company had a gross loss of 1% of sales in the second quarter of 2012 compared to gross margin of 47% of sales in the second quarter of 2011. Gross loss was 1% of sales for the six months ended June 30, 2012 compared to a gross margin of 48% for the six months ended June 30, 2011. The minimal gross loss in the current period is due to the Company’s inventory being written-down to its estimated net realizable value as at December 31, 2011. The gross margin achieved for the 2010 harvest inventory sold in 2011 was due to a higher quality of product and an increase in overall market demand.

For the three months ended June 30, 2012, selling, general and administrative expenses decreased to $200,000 compared to $273,000 for the three months ended June 30, 2011. For the six months ended June 30, 2012, selling, general and administrative expenses decreased to $488,000 compared to $749,000 for the six months ended June 30, 2011.

2




For the three and six month periods ended June 30, 2012, this amount included $34,000 and $83,000, respectively, in retention bonuses compared to $63,000 and $126,000 for the three and six month periods ended June 30, 2011, respectively. The selling, general and administrative expenses for the six month period ended June 30, 2011 also includes a performance bonus of $225,000 to the management and farm staff.

For the three and six month periods ended June 30, 2012, the Company incurred operating losses of $216,000 and $522,000, respectively, compared to operating income of $1,520,000 and $2,735,000, respectively for the three and six month periods ended June 30, 2011. The decrease in operating income was primarily due to the lower sales prices earned on sales from the 2011 harvest in the current period.

The Company had other non-operating income of $40,000 for the three month period ended June 30, 2012 compared to other non-operating loss of $11,000 for the three month period ended June 30, 2011. The other non-operating loss in the current period is primarily due to $39,000 in foreign exchange gains compared to foreign exchange losses of $11,000 for the same period in the prior year. The Company had other non-operating income for the six month period ended June 30, 2012 of $30,000, which consisted primarily of $23,000 in government supplement income, compared to $57,000 in foreign exchange losses included in other non-operating income during the prior year period.

For the three month period ended June 30, 2012, the Company incurred a net loss of $160,000, or less than $0.01 per basic share, compared to net earnings of $1,513,000, or $0.04 per basic share, for the three month period ended June 30, 2011. For the six month period ended June 30, 2012, the Company incurred a net loss of $453,000, or $0.01 per basic share, compared to net earnings of $2,675,000, or $0.08 per basic share, for the six month period ended June 30, 2011. The net earnings decreased primarily due to the lower sales prices earned on sales from the 2011 harvest in the current period.

The Company did not declare any dividends on any class of shares during the three month period ended June 30, 2012 or for any period in the previous three fiscal years ended December 31, 2011.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth unaudited quarterly information for each of the eight quarters ended September 30, 2010 through June 30, 2012. This information has been derived from unaudited interim consolidated financial statements prepared in accordance with United States general accepted accounting principles that, in the opinion of the Company’s management, have been prepared on a basis consistent with the audited annual consolidated financial statements up to May 11, 2012. On that date, the Company began reporting using the liquidation basis of accounting.

3




(Stated in Thousands                  
of Canadian Dollars   2012 2011 2010
except per share amounts)   Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Total revenue $ 2,215 2,750 416 1,739 3,795 3,525 3,254 2,892
Write-downs   - - (200) - - - - -
Operating income (loss)   (216) (306) (424) 582 1,520 1,215 852 404
Net earnings (loss)   (160) (293) (447) 787 1,513 1,162 970 498
Net earnings (loss) per share:                

Basic and diluted

$ (0.00) (0.01) (0.01) 0.02 0.04 0.04 0.03 0.01


Ginseng crops are harvested in the fall of every year. Revenue and earnings tend to be higher in first two quarters of the following year as the harvested roots are usually sold. However, this was not the case in 2010 as the majority of the Company’s 2009 harvest inventory was shipped to customers in the third and fourth quarters of 2010. Significant fluctuations in revenue and earnings in any period are impacted by the quantity and quality of root sold, the selling price of such root, and the relative strength of the Canadian dollar to the currencies used by customers.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operations for the three and six month periods ended June 30, 2012 was $1,403,000 and $3,955,000, respectively, compared with $3,154,000 and $4,936,000 for the same period in 2011. Cash provided by operations decreased during the current period primarily due to a decrease in the amount of proceeds received from customers from the sale of inventory compared to the prior year. The Company had cash expenditures of $226,000 related to liquidation activities during the three and six month period ended June 30, 2012. The Company expects an additional $130,000 in expenditures subsequent to the reporting period.

The Company received $1,850,000 in proceeds upon the disposition of its farm operating assets during the six month period ended June 30, 2012.

The Company’s cash as at June 30, 2012 was $10,299,000 compared to a balance of $4,494,000 million at December 31, 2011, a net increase of $5,805,000. The net assets in liquidation of the Company as at June 30, 2012 was $10,165,000 compared to net assets of 10,981,000 at December 31, 2011. The decrease was primarily due to cash outlays for selling, general and administrative expenses and for costs incurred as part of the liquidation process.

The Company has entered into an operating lease for its corporate head office in Richmond, British Columbia at a cost of $3,000 per month through July 31, 2012. The Company has no other contractual obligations.

4




RELATED PARTY TRANSACTIONS

The Company pays management fees to Wai Kee Holdings Limited (“Wai Kee”) for performing sales, accounting and administrative services for CNT Trading (Hong Kong) Limited, a subsidiary of the Company. Wai Kee is a Hong Kong based publicly traded company which owns 46% of the shares of the Company and has a director in common with the Company. For the three and six month periods ended June 30, 2012, the Company paid management fees of $12,000 and $23,000 (June 30, 2011 - $14,000 and $28,000), respectively. This transaction is measured at the fair value.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and other disclosures as at the end of or during the reporting periods. Actual results may differ from these estimates and from judgments made under different assumptions or conditions.

On May 11, 2012 the Company commenced using the liquidation basis of accounting and accordingly, assets have been valued at estimated net realizable value and liabilities include estimated costs associated with carrying out the plan of liquidation. Although management believes that the reserve for estimated costs during liquidation is sufficient, future events may result in additional unexpected costs which would reduce the net assets in liquidation.

RISKS AND UNCERTAINTIES

The Company has sold its entire inventory and has minimal assets other than cash. Therefore the Company no longer has any risks associated with the world price of ginseng root or a concentration of customers.

The Company has dissolved all of its foreign subsidiaries and thus is no longer exposed to risk associated with operating in foreign markets or the risks associated with dealing in foreign currencies.

The process of liquidation involves various legal, tax and regulatory considerations and thus the timeliness and cost of the liquidation process is subject to some uncertainty.

FINANCIAL INSTRUMENTS

Financial instruments of the Company are represented by cash, accounts receivable and accounts payable and accrued liabilities. The carrying value of these instruments approximates their fair value due to the short-term maturity of such items.

5




OUTLOOK

As a result of the shareholders approval on May 11, 2012 of the voluntary liquidation of the Company pursuant to Section 211 of the Canada Business Corporations Act, the Company will seek to: (i) realize its remaining non-cash assets; (ii) pay, and establish a reserve to pay, all of the Company’s anticipated and unanticipated liabilities; and (iii) make a liquidating distribution to the shareholders. The Company has appointed its stock transfer agent, Computershare Investor Services Inc. (“Computershare”), to act as its agent in connection with the final liquidating distribution. The Company will deliver the full amount of the final liquidating distribution to Computershare on or before August 31, 2012, to be paid by Computershare to the Company’s shareholders. Computershare will send a letter of transmittal to the Company’s shareholders requesting that they surrender their share certificates in the Company in exchange for their proportionate share of the final liquidating distribution.

Thereafter, the Company will file Articles of Dissolution under the Canada Business Corporations Act in order to dissolve the Company. The Company will also file the appropriate forms or letters with Canadian securities regulators to cease to be a reporting issuer and with the United States Securities Exchange Commission to terminate the Company’s Section 12(g) registration and Section 13(a) reporting obligations under the Securities Exchange Act of 1934.

6


EX-99.4 5 exhibit99-4.htm CERTIFICATION OF INTERIM FILINGS - CEO Exhibit 99.4
Exhibit 99.4

Form 52-109FV2 - Certification of Interim Filings
Venture Issuer Basic Certificate

I, Wilman Wong, Chief Executive Officer of Chai-Na-Ta Corp., certify the following:

1.     

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Chai-Na-Ta Corp., (the issuer) for the interim period ended June 30, 2012.

2.     

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.

3.     

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: July 19, 2012

“Wilman Wong”

 
Wilman Wong
Chief Executive Officer

 

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

     
  i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specific in securities legislation; and
  ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
 

The issuer’s certifying officers are responsible for ensuring that process are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
 

 



EX-99.5 6 exhibit99-5.htm CERTIFICATION OF INTERIM FILINGS - CFO Exhibit 99.5
Exhibit 99.5

Form 52-109FV2 - Certification of Interim Filings
Venture Issuer Basic Certificate

I, Terry Luck, Chief Financial Officer of Chai-Na-Ta Corp., certify the following:

1.     

Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Chai-Na-Ta Corp., (the issuer) for the interim period ended June 30, 2012.

2.     

No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the interim filings.

3.     

Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

Date: July 19, 2012

“Terry Luck”

 
Terry Luck
Chief Financial Officer

 

NOTE TO READER

In contrast to the certificate required for non-venture issuers under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (NI 52-109), this Venture Issuer Basic Certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as defined in NI 52-109. In particular, the certifying officers filing this certificate are not making any representations relating to the establishment and maintenance of

     
  i) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specific in securities legislation; and
  ii) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.
 

The issuer’s certifying officers are responsible for ensuring that process are in place to provide them with sufficient knowledge to support the representations they are making in this certificate. Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement on a cost effective basis DC&P and ICFR as defined in NI 52-109 may result in additional risks to the quality, reliability, transparency and timeliness of interim and annual filings and other reports provided under securities legislation.
 

 



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