China Marine Food Group Ltd. Completes Acquisition of Shishi Xianghe Food Science and Technology Co., Ltd.

The acquisition plan included the transfer of an initial loan of $26.4 million, which was owed by Xianghe to China Marine, to be the purchase consideration for the Shares of Xianghe and a final payment of $1.4 million to the former sole shareholder of Xianghe.

7 Jan 2010 --- China Marine Food Group Ltd., a China-based manufacturer of seafood-based snack foods and distributor of fresh and frozen marine catch, announced the closing of its acquisition of Shishi Xianghe Food Science and Technology Co., Ltd., a Fujian-based manufacturer of the branded "Hi-Power" algae-based soft drinks. China Marine purchased 80% of the registered capital stock (the "Shares") of Xianghe for $27.8 million on January 1, 2010.

China Marine's acquisition of Xianghe was finalized after management's due diligence through December 2009. As detailed in the Company's press release on December 2, 2009, the acquisition plan included the transfer of an initial loan of $26.4 million, which was owed by Xianghe to China Marine, to be the purchase consideration for the Shares of Xianghe and a final payment of $1.4 million to the former sole shareholder of Xianghe within 30 days after completion of the audit report of Xianghe for the year ended December 31, 2009.

Xianghe's flagship product, "Hi-Power" algae-based soft drink, was developed by the Yellow Sea Fisheries Research Institute of Chinese Academy of Fishery Science in coordination with Xianghe's founder, Mr. Qiu Shang Jing. Hi-Power is marketed as a high-protein content drink, low in calories and fat, which provides the consumers a combination of immune system benefits, improved digestion and reductions in hyperglycemia and hypertension. Hi-Power's target market focuses on health-conscious consumers in China's fast-growing beverage market.

Similar to China Marine, Xianghe has developed a network of distributors with exclusive territories in Fujian, Zhejiang, Guangdong and Hunan provinces, which sell Hi-Power to retail food stores, restaurant food supply dealers and the hospitality industry. 2010 estimates of revenues from Xianghe are $20 plus million with net profit margins anticipated at 20%. Through integrating the product into China Marine's distribution network and expanding distribution to untapped provinces in China, management expects revenues for 2011 to grow over 60% year over year with a trend toward normalized long-term net profit margins of 25%.

As part of the acquisition, the management team of Xianghe and all associated sales and marketing staff will join the China Marine team. Collectively, the team plans to meet the strategic goals of Hi-Power's marketing strategy and also collaborate with China Marine's Mingxiang-branded seafood-based snack food sales team to leverage China Marine's current distribution in seven provinces and future distribution throughout China.

"We are very pleased to announce the closing of the acquisition of Xianghe Food," began Pengfei Liu, Chairman and CEO of China Marine. "In addition to the earnings contribution from this newly acquired product line, there are a number of synergies, including our customer base, brand identity and distribution methodology that meet our acquisition criteria. Xianghe's location in our home province of Fujian is very near to our Shishi-based headquarters which leads to their quick assimilation into our business operations and corporate culture. We are equally pleased that we have added a product line in beverages which is one of the fast growing categories in China's retail food and drink markets. The final consideration was that the company's use of algae as the base raw material in Hi-Power is consistent with healthy, marine-based food sources we currently use ourselves. We are equally confident that our investors will find similar value in our decision, expansion of our product portfolio and anticipated of payback for this investment within four years," Liu concluded.

Revised 2010 Guidance

Based on the revenue and net income projections from Xianghe for 2010, China Marine will increase its previously stated guidance of $80.0 million in revenues and $18.0 million in net income to $100.0 million in revenues and $21.5 million in net income for the year ending December 31, 2010.