SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
[x][X] Filed by a Party other than the Registrant
[ ][_] Check the appropriate box:
[ ][_] Preliminary Proxy Statement
[ ][_] Soliciting Material Under Rule [_] Confidential,
forFor Use of the 14a-12 Commission Only (as permitted by Rule 14a-6(e)(2))
[X][X] Definitive Proxy Statement
[ ][_] Definitive Additional Materials
[ ]
Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
China Resources Development, Inc.
(Name- -------------------------------------------------------------------------------- (Name of Registrant as Specified In Its Charter)
notNot applicable
(Name- -------------------------------------------------------------------------------- (Name of Person(s) Filing Proxy Statement, ifother thanOther Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x][X] No fee required.
[ ][_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1)1) Title of each class of securities to which transaction applies:
(2)________________________________________________________________________________ 2) Aggregate number of securities to which transaction applies:
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________________________________________________________________________________
CHINA RESOURCES DEVELOPMENT, INC. [COMPANY LOGO] NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
NOVEMBER 12, 2002
DECEMBER 18, 2003 To the Stockholders of China Resources Development, Inc.:
NOTICE IS HEREBY GIVEN that an Annual Meeting of Stockholders (the
“Annual Meeting”"Annual Meeting") of China Resources Development, Inc., a Nevada corporation (the“Company”"Company"), will be held at 2:30 p.m., Hong Kong time, onNovember 12, 2002December 18, 2003 at26/F, Securities Building, 5020 BinheRoom 2105, West Tower, Shun Tak Centre, 200 Connaught RoadFu Tian District, Shenzhen Province, People’s Republic of China,C., Sheung Wan, Hong Kong, for the following purposes:
1.
To elect two Class
IIII members to theCompany’s BoardCompany's board ofDirectorsdirectors to hold office until theCompany’sCompany's annual meeting of stockholders to be held in20052006 and until their successors are duly elected and qualified;
2.
To approve and adopt the Company's 2003 Equity Compensation Plan; 3. To ratify the appointment of Horwath Gelfond Hochstadt Pangburn, P.C. as independent auditors of the Company for the fiscal year ending December 31,
2002;2003; and
3.4. To transact such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof.
All stockholders are cordially invited to attend; however, only stockholders of record at the close of business on
October 8, 2002November 14, 2003 are entitled to notice of and to vote at the Annual Meeting or any adjournments thereof.
The Board of Directors recommends that you voteTHE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FORthe Board’s nominees to serve as Class III directors, andTHE BOARD'S NOMINEES TO SERVE AS CLASS I DIRECTORS, AND FORProposal Two.
PROPOSALS TWO AND THREE. By Order of the Board of Directors
/s/ Wong
WaWah On--------------------- Corporate Secretary
Hong Kong
October 8, 2002
November 19, 2003 WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. STOCKHOLDERS WHO EXECUTE A PROXY CARD MAY NEVERTHELESS ATTEND THE MEETING, REVOKE THEIR PROXY AND VOTE THEIR SHARES IN PERSON.
CHINA RESOURCES DEVELOPMENT, INC.
RoomROOM 2105
West Tower, Shun Tak CentreWEST TOWER, SHUN TAK CENTRE 200
Connaught RoadCONNAUGHT ROAD C.
Sheung Wan, Hong Kong
SHEUNG WAN, HONG KONG ____________________________________ PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
NOVEMBER 12, 2002
DECEMBER 18, 2003 ____________________________________ INTRODUCTION
The accompanying proxy is solicited by the
Boardboard ofDirectors (the “Board”)directors of China Resources Development, Inc.(the “Company,” “we”,“us” and similar terms)to be voted at the Annual Meeting of Stockholders to be held onTuesday, November 12, 2002Thursday, December 18, 2003 (the“Annual Meeting”"Annual Meeting"), and any adjournments thereof. When such proxy is properly executed and returned, the shares it represents will be voted at the meeting as directed. If no specifications are indicated, the shares will be voted in accordance with the recommendation of theBoardboard with respect to each matter submitted tothe Company’sour stockholders for approval. Abstentions and broker non-votes will not be voted, but will be counted for determining the presence of a quorum.
The cost of preparing and mailing the enclosed proxy materials,
which isestimated to be approximately $25,000, will be borne bythe Company. The Companyus. We may use the services ofitsour officers and employees (who will receive no additional compensation) to solicit proxies. In addition to the use of the mails, proxies may be solicited by telephone, Mailgram, facsimile, telegraph, cable and personal interview.The Company intendsWe intend to request banks and brokers holding shares ofthe Company’s Common Stockour common stock to forward copies of the proxy materials to those persons for whom they hold shares and to request authority for the execution of proxies.The CompanyWe will reimburse banks and brokers for their out-of-pocket expenses.The CompanyWe may also retain the services of a solicitation firm to aid in the solicitation of proxies. If it does so,the Companywe will pay the fees and expenses of such firm.
This Proxy Statement and the accompanying form of proxy are first being sent to our stockholders on or about November 19, 2003. A list of stockholders entitled to vote at the Annual Meeting will be available for examination by any stockholder for a proper purpose during normal business hours at
theour officesof the Companyfor a period of at least ten days preceding the Annual Meeting.VOTING AT THE ANNUAL MEETING
The shares entitled to vote at the Annual Meeting consist of shares of
the Company’s Common Stockour common stock and Series BPreferred Stock,preferred stock, with each share of each class entitling the holder to one vote. At the close of business onOctober 8, 2002,November 14, 2003, the record date for the Annual Meeting, there wereissued and outstanding 837,8231,143,823 shares ofthe Company’s Common Stockour common stock and 320,000 shares ofthe Company’sour Series BPreferred Stock. This Proxy Statementpreferred stock issued andthe accompanying form of proxy are first being sent to stockholders on or about October 10, 2002.
outstanding.
Each proxy that is properly signed and received prior to the Annual Meeting will, unless revoked, be voted in accordance with the instructions on such proxy. If no instruction is indicated, the shares will be voted FOR the election of the nominees for director listed in this proxy statement, FOR approval and adoption of the 2003 Equity Compensation Plan, FOR ratification of the appointment of Horwath Gelfond Hochstadt Pangburn, P.C., and FOR the approval of such other business that may properly come before the Annual Meeting or any postponement or adjournment thereof. A stockholder who has given a proxy may revoke such proxy at any time before it is voted at the Annual Meeting by delivering a written notice of revocation or duly executed proxy bearing a later date to theour Corporate Secretaryof the Companyor by attending the meeting and voting in person.
A quorum of stockholders is necessary to take action at the Annual Meeting. A majority of the outstanding shares of
the Company’s Common Stockour common stock andPreferred Stock,preferred stock, counted together, represented in person or by proxy, will constitute a quorum. Votes castby proxy or in personat the Annual Meeting, in person or by proxy, will be tabulated by the inspector ofelection appointed for the Annual Meeting. The inspector of election will determine whether or not a quorum is present at the Annual Meeting.election. The inspector of election will treat abstentions as shares ofCommon Stockcommon stock orPreferred Stockpreferred stock that are present and entitled to vote for purposes of determining the presence of a quorum.
The two nominees for director who receive the greatest number of votes cast in person or by proxy at the Annual Meeting shall be elected as Class
III directors of the Company.I directors. The vote required for adoption of the other proposalshereinis the affirmative vote of a majority of the shares ofCommon Stockcommon stock andPreferred Stock,preferred stock, counted together, present in person or represented by proxy at the Annual Meeting; and, for purposes of determining stockholder approval of such proposals, abstentions will be treated as shares ofCommon Stockcommon stock orPreferred Stockpreferred stock voted against adoption of such proposals.
2
CONVENTIONS
Unless otherwise specified, all references in this proxy statement to "U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or "RMB" or "Yuan" are to Renminbi Yuan, which is the lawful currency of the People's Republic of China ("China" or "PRC").
The Company and Billion LuckWe maintaintheirour accounts in U.S. Dollars and Hong Kong Dollars, respectively.HARC and itsThe accounts of our subsidiariesmaintain their accountsare maintained in either Hong Kong Dollars or Renminbi.TheOur consolidated financial statementsof the Company and its subsidiariesare prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars are for thecon venienceconvenience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange as quoted by the People's Bank of China (the "PBOC Rate") on December 31,2001,2002 and September 30, 2003, which was approximately U.S.$1.00 = Rmb 8.28. Translations from Hong Kong Dollars to U.S. Dollars have been made at the single rate of exchange as quoted by theHongkongHong Kong and Shanghai Banking Corporation Limited on December 31,2001,2002 and September 30, 2003, which was approximately US$1.00 = HK$7.80. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. No representation is made that the Renminbi or U.S. Dollaramo untsamounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all.
2
References to "Billion Luck" are to Billion Luck Company Ltd., a British Virgin Islands company, which is a wholly-owned subsidiary of the Company.
our wholly owned subsidiary. References to
"Company""China Resources", "we", "us", "our" and"Registrant"the like are to China Resources Development, Inc., and include, unless the context requires otherwise, the operations ofitsour subsidiaries.
References to the "Farming Bureau" are to the Hainan Agricultural Reclamation General Company, a division of the Ministry of Agriculture, the PRC government agency responsible for matters relating to agriculture. References to "Guilinyang Farm" are to Hainan Province Guilinyang State Farm, a PRC entity owned and controlled by the Farming Bureau. References to "HARC" are to Hainan Cihui Industrial Company Limited (formerly known as Hainan Zhongwei Agricultural Resources Company Limited), a company organized in the PRC, and
aour wholly ownedsubsidiarysubsidiary. References to "Hainan Weilin" are to Hainan Weilin Timber Limited Liability Company, a limited liability company organized in the PRC, whose capital was owned 58% by HARC. On April 30, 2001, HARC disposed of its 58% interest in Hainan Weilin to theCompany.
Farming Bureau. References to the "PRC" or "China" include all territory claimed by or under the control of the Central Government, except Hong Kong, Macau, and Taiwan.
References to "Xilian Mill" are to Xilian Timber Mill, a PRC entity whose capital was owned 12.64% by HARC. On April 30, 2001, HARC disposed of its interest in Xilian Mill to the Farming Bureau. 3
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information known to
the Company regardingus concerning the beneficial ownership of shares ofCommon Stockour common stock and Series BVoting Preferred Stockpreferred stock as ofSeptember 30, 2002 by (i)November 14, 2003 by: o each person known bythe Companyus to be the owner of more than 5% oftheour outstanding shares ofCommon Stockcommon stock andPreferred Stock combined, (ii)preferred stock combined; o each ofthe Company'sour directors(iii)and director nominees; o each ofthe Company'sour executiveofficers,officers; and(iv)o all executive officers and directors as a group. Unless otherwise indicated, each person has sole investment and voting power with respect to all shares shown as beneficially owned.
Unless otherwise indicated the address of each beneficial owner is Room 2105, West Tower, Shun Tak Centre, 200 Connaught Road C., Sheung Wan, Hong Kong.
Amount and Nature of
Beneficial Ownership(5)
Percent
Name and Address of
Common Stock
Preferred Stock
of
Beneficial Owner
# of Shares
% of Class
# of Shares
% of Class
Vote
Ching Lung Po
73,480(1)
8.4%
320,000(1)
100%
32.9%
Tam Cheuk Ho
284,897(2)
32.5%
─
─
23.8%
Wong Wah On
289,217(3)
33.0%
─
─
24.2%
Wan Yin Ling
─
─
─
─
─
Ng Kin Sing
─
─
─
─
─
Lo Kin Cheung
─
─
─
─
─
Worlder International
Company Limited
48,600(4)
5.8%
─
─
4.2%
21/F Great Eagle Centre
23 Harbour Road
Hong Kong
Anka Capital Limited
244,897
29.2%
─
─
21.2%
Winsland Capital Limited
33,480
4.0%
320,000
100%
30.5%
TurstNet Chambers
P.O. Box 3444, Road Town
Tortola, British Virgin Islands
Executive Officers and
Directors as a group
(of 6 persons)
402,697(1)(2)(3)
42.0%
320,000
100%
56.6%
__________
Shares registered to Winsland Capital Limited, a company beneficially
owned by Mr. Ching.
Also includes an option granted to Mr. Ching to purchase 40,000 shares of Common Stock.
(2)
Includes 244,897144,897 shares registered to Anka Capital Limited, a company
owned 50% by Mr. Tam. Mr. Tam disclaims beneficial ownership of the
shares owned by Anka Capital Limited, except to the extent of his
pecuniary interest in the shares.
Also includes an option granted to Mr. Tam to purchase 40,000 shares of Common Stock.
(3)
Includes 244,897144,897 shares registered to Anka Capital Limited, a company
owned 50% by Mr. Wong. Mr. Wong disclaims beneficial ownership of the
shares owned by Anka Capital Limited, except to the extent of his
pecuniary interest in the shares.
Also includes 4,320 shares registered to Brender Services Limited, a company beneficially owned by Mr. Wong and an option granted to Mr. Wong to purchase 40,000 shares of Common Stock.
(4)
Includes 13,500 shares registered to Silverich Limited, a wholly-owned subsidiary of Worlder International Company Limited.
(5)
The inclusion herein of any shares as deemed beneficially owned does not
constitute an admission of beneficial ownership of said shares.
by the named stockholder. 4
Proposal 1
ELECTION OF
Nominees And Directors
Article VIII AND EXECUTIVE OFFICERS
The following table identifies our directors and executive officers as
of the Company’s Articlesdate of Incorporation permitsthis proxy statement, as well as their ages and the positions in
which they serve:
Age Position
--- --------
Ching Lung Po 57 Chairman of the Board of Directors,
to fix the number of directors at not less than three nor more than 25. At the annual meeting of stockholders held in 1996, an amendment to the Articles of Incorporation was approved, dividing the directors into three classes. Pursuant to the amendment, one class of directors is elected each year, to serve a three-year term.
Two Class III directors will be elected at the Annual Meeting. The nominees for Class III directors, if elected, will serve until the annual meeting of stockholders to be held in 2005President and until his successor is duly electedChief Executive Officer
Tam Cheuk Ho 41 Director and qualified. Wan Ying LinChief Financial Officer
Wong Wah On 40 Director, Secretary and Financial Controller
Lam Kwan Sing 34 Director
Ng Kin Sing 41 Director
Lo Kin Cheung both currently serve39 Director
Mr. Ching Lung Po has served as Class III directors.
Both nominees have consented to being named hereina director of China Resources since
February 4, 1998. He was appointed Chairman of the board of directors on January
25, 1999, Chief Executive Officer and have indicated their intention to serve as Class III directorsPresident of the Company if elected. Unless authority to do so is withheld,on February 1,
1999 and June 1, 1999, respectively. Mr. Ching has also been the persons named as proxies will vote the shares represented by such proxies for the electionChairman of the
named nominees. In case anyboard of directors and President of OVM International Holding Corp. (Pink
Sheets: OVMI.pk) since September 1996. Mr. Ching has been involved for more than
20 years in the management of production and technology for industrial
enterprises in PRC. He worked in Heilongjiang Suihua Electronic Factory as an
engineer from 1969 to 1976 and was the Head of the nominees become unavailableHeilongjiang Suihua
Industrial Science & Technology Research Institute from 1975 to 1976. Mr. Ching
joined the Heilongjiang Qingan Factory in 1976 and has been the General Manager
since 1976. In 1988, Mr. Ching started his own business and established the
Shenzhen Hongda Science & Technology Company Limited in Shenzhen, which
manufactures electronic products. Mr. Ching graduated from the Harbin Military
and Engineering Institute and holds the title of Senior Engineer.
Mr. Tam Cheuk Ho has been a director and the Chief Financial Officer of
China Resources since December 2, 1994. Prior to joining us, from July 1984
through January 1992, he worked as Audit Manager at Ernst & Young, Hong Kong,
and from February 1992 through September 1992, as Financial Controller at Tack
Hsin Holdings Limited, a listed company in Hong Kong, where he was responsible
for election toaccounting and financial functions. From October 1992, through December
1994, Mr. Tam was Finance Director of Hong Wah (Holdings) Limited. He is a
fellow of both the BoardHong Kong Society of Directors,Accountants and the Chartered
Association of Certified Accountants. He is also a certified public accountant
in Hong Kong. He holds a Bachelor's degree in Business Administration from the
Chinese University of Hong Kong. Mr. Tam is also a director of Anka Capital
Limited, a privately held corporation, through which he is not anticipated, the persons named as proxies shall have full discretion and authority to vote or refrain from voting for any other nominees in accordance with their judgment. Vacancies on the Board may be filled by the remaining director or directors, even though less than a quorum, for the unexpired termone of such vacant position.
The following persons have been nominated for election to the Board of Directors:
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Business Experience
our principal
stockholders.
Mr. Wan Ying LinWong Wah On has been a director of China Resources since December
30, 1997. Mr. Wong is also our Financial Controller and Secretary. He is
responsible for assisting our Chief Financial Officer with our treasury,
accounting and secretarial functions. From October 1992 through December 1994,
Mr. Wong was the Deputy Finance Director of Hong Wah (Holdings) Limited. From
July 1988 through October 1992, he was an audit supervisor at Ernst & Young,
Hong Kong. Mr. Wong is also a director of Anka Capital Limited, a privately held
5
February 4, 1998,March
20, 2003, and also serves as a member of our audit committee. From 2002 to
present, Mr. Lam has been the Audit committee.executive director of Pacific Challenge Holdings
Limited, a Hong Kong listed company, where he is responsible for the overall
corporate finance and accounting operations. From 2000 to 2002, Mr. Wan graduated fromLam was the
Guangxi Liuzhou Institutebusiness development manager of Medical Specialty specializing in administration and management.China Development Corporation Limited, a Hong
Kong listed company. From January 1986 through December 1987,1997 to 2000, he was the business development manager
of Chung Hwa Development Holdings Limited, a Hong Kong listed company. From 1995
to 1997, Mr. Lam Ko Mould Companywas the assistant manager (Intermediaries supervision) of Hong
Kong Securities and Futures Commission. Mr. Lam holds a Bachelor's degree in
chargeAccountancy from the City University of the China marketing and development division in Hong Kong.
Then,Mr. Ng Kin Sing has been a director of China Resources since February
1, 1999, and also serves as a member of our audit committee. From April 1998 to
the present, Mr. Ng has been the managing director of Action Plan Limited, a
securities investment company. From November 1995 until March 1998, Mr. Ng was
sales and dealing director for NatWest Markets (Asia) Limited; and from May 1985
until October 1996, he was the dealing director of BZW Asia Limited, an
international securities brokerage house. Mr. Ng holds a Bachelor's degree in
January 1988 through February 1993, he worked asBusiness Administration from the marketing managerChinese University of Wai Tong Trading Company in Hong Kong.
In 1993, he joined the Hong Kong Prestressing Concrete Engineering Company Limited, where he serves as manager.
Mr. Lo Kin Cheung has been a director of the CompanyChina Resources since May 30,
2000, and also serves as a member of the Audit Committee.our audit committee. From September 2001 to
present, Mr. Lo has been the chief financial officer of Lee Fung - Asco Printers
Holdings Limited, a Hong Kong listed company, where he is responsible for the
overall corporate financial operations. From March 1998 to August 2001, Mr. Lo
was the executive director of Wiltec Holdings Limited, a Hong Kong listed
company, where he was responsible for corporate development and day-to-day
operations. From July 1986 until March 1998, Mr. Lo was the principal at Ernst &
Young, Hong Kong. He is a fellow of both the Hong Kong Society of Accountants
and the Chartered Association of Certified Accountants. He holds a Bachelor’sBachelor's
degree of Science from the University of Hong Kong.
5
At our annual meeting of stockholders held on November 12, 2002,
Messrs. Wan Ying Lin and Lo Kin Cheung were elected to serve as Class III
directors until the annual meeting to be held in 2005 and until their successors
have been duly elected and qualified. Messrs. Ching Lung Po and Ng Kin Sing
serve as Class II directors until the annual meeting to be held in 2004 and
until their successors have been duly elected and qualified. Messrs. Tam Cheuk
Ho and Wong Wah On, who have been nominated for reelection at the Annual Meeting
that is the subject of this proxy statement, currently serve as Class I
directors. Mr. Wan Ying Lin resigned as a director effective March 1, 2003, and
on March 20, 2003, Mr. Lam Kwan Sing was appointed to fill the vacancy created
by the resignation of Mr. Wan.
Our officers are elected annually at the first board of directors
meeting following the annual meeting of stockholders, and hold office until
their respective successors are duly elected and qualified, unless sooner
displaced.
6
- ---------------------------------------------
During the year ended December 31, 2001 the Company’s Board2002, our board of Directorsdirectors held
6four meetings. Each member of the Boardboard participated in each actionmeeting of the
Board.
board. Committees of the Board of Directors
The Audit Committee,
- ------------------------------------
Our audit committee, which currently consists of Ng Kin Sing, Wan Ying LinLam Kwan
Sing and Lo Kin Cheung, reviews the professional services provided by our
independent auditors, the independence of our auditors from our management, our
annual financial statements and our system of internal accounting controls. The
Audit Committeeaudit committee also reviews other matters with respect to our accounting,
auditing and financial reporting practices and procedures as it may find
appropriate or may be brought to its attention.
The Company’s Board7
Directorsdirectors has adopted a written Charteraudit committee charter, a
copy of which is attached to this proxy statement as Appendix A. Each member of
our audit committee is an "independent director" within the Audit Committee. The membersmeaning of the Audit Committee are all independent, as defined inRule
4200(a)(14) of the National Association of Securities Dealers’ listing standards.Dealers, Inc. Marketplace
Rules. The Audit Committeeaudit committee met on 4four occasions during the year ended December
31, 2001.
The Company does2002.
We do not have a formal compensation committee. The Boardboard of Directors,directors,
acting as a compensation committee, periodically meets to discuss and deliberate
on issues surrounding the terms and conditions of executive officer
compensation, including base salaries, bonuses, awards of stock options and
reimbursement of certain business related costs and expenses.
The Company does
We do not have a formal nominating committee. The Boardboard of Directors,directors,
acting as a nominating committee, recommends candidates who will be nominated as
management’smanagement's slate of directors at each annual meeting of stockholders. The
Boardboard of Directorsdirectors will also consider candidates for directors nominated by
stockholders. A stockholder who wishes to submit a candidate for consideration
at the annual meeting of stockholders to be held in 2003,2004 must notify theour
Corporate Secretary, of the Company, in writing, no later than June 12, 2003.30, 2004. The written notice
must include information about each proposed nominee, including name, age,
business address, principal occupation, shares beneficially owned and other
information required to be included in proxy solicitations. The nomination
notice must also include the nominating stockho lder’sstockholder's name and address, the
number of shares beneficially owned and a statement that such stockholder
intends to nominate his candidate. A statement from the candidate must also be
furnished, indicating the candidate’scandidate's desire and ability to serve as a director.
Adherence to these procedures is a prerequisite to a stockholder’sstockholder's right to
nominate a candidate for director at the annual meeting.
Audit Committee Report
- ----------------------
The following statement made by the Audit Committee,our audit committee, shall not be
deemed incorporated by reference into any filing under the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and shall not otherwise be deemed filed under
either of suchthose Acts.
The Audit Committee
Our audit committee reviews our financial reporting process on behalf
of the Boardboard of Directors.directors. Management has the primary responsibility for the
financial statements and the reporting process including the system of internal
controls.
Management represented to the committee that the Company'sour consolidated financial
statements were prepared in accordance with generally accepted accounting
principles, and the committee has reviewed and discussed the consolidated
financial statements with management and the independent auditors. The committee
discussed with the independent auditors matters required to be discussed by
auditing standards generally accepted in the United States.
In addition, the committee has discussed with the independent auditors
the auditor's independence from the CompanyChina Resources and itsour management, including the matters inand has
received the written disclosures and letter required by the Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees).
6
The audit committee has also discussed with the independent auditors the matters
required to be discussed by SAS 61.
The committee also discussed with our independent auditors the overall
scope and plans for their respective audit. The committee meets with the
independent auditors with and without management present, to discuss the results
of their examinations, the evaluations of the Company'sour internal controls, and the overall
quality of our financial reporting.
8
Boardboard of Directors,directors, and the board has approved,
that theour audited consolidated financial statements be included in the Company’sour Annual
Report on Form 10-K10-KSB for the year ended December 31, 2001,2002, for filing with the
Securities and Exchange Commission.
Submitted by the Audit Committee
of the Board of Directors:
/s/
/s/ Ng Kin Sing
/s/ Wan Ying Lin
/s/
/s/ Lam Kwan Sing
/s/ Lo Kin Cheung
Report of the Board of Directors on Executive Compensation
- ----------------------------------------------------------
The following statement made by the Boardboard of Directors,directors, sitting as a
Compensation Committee,compensation committee, shall not be deemed incorporated by reference into any
filing under the Securities Act or the Exchange Act, and shall not otherwise be
deemed filed under either of suchthose Acts.
The Company does
We do not have a formal compensation committee. The Boardboard of Directors,directors,
acting as a compensation committee, periodically meets to discuss and deliberate
on issues surrounding the terms and conditions of executive officer
compensation, including base salaries, bonuses, awards of stock options and
reimbursement of certain business related costs and expenses.
In determining the compensation of the Company'sour executive officers, the Boardboard of
Directorsdirectors takes into account all factors which it considers relevant, including
business conditions, in general, and in the Company'sour line of business during the year in
light of such conditions, the market compensation for executives of similar
background and experience, theour performance, of the Company, in general, and the performance of
the specific executive officer under consideration, including the business area
of the Company for which such executive officer is responsible. In light of these factors, the
Boardboard of Directorsdirectors determined that the payment of discretionary bonuses to
executive officers was not appropriate for the fiscal year ended December 31,
2001.
2002.
The Boardboard of Directorsdirectors also believes that granting stock optionsequity-based awards
provides an additional incentive to our executive officers to continue in
the service of the Companyproviding their services and gives themprovides an interest similar toaligned with stockholders in
the success of the Company.our success. In the future, the Boardboard of Directorsdirectors intends to make use of
stock options,equity-based compensation, along with other traditional salary and bonus
components of executive compensation packages, to provide incentives to attract
and maintain qualified executive officers.
Submitted by the Board of Directors,
Sitting as a Compensation Committee:
/s/
/s/ Ching Lung Po
/s/
/s/ Tam Cheuk Ho
/s/
/s/ Wong Wah On
/s/ Wan Ying Lin
/s/
/s/ Lam Kwan Sing
/s/ Ng Kin Sing
/s/
/s/ Lo Kin Cheung
7
9
- -----------------------------------------------------------
The current Boardboard of Directorsdirectors includes Ching Lung Po, Tam Cheuk Ho and
Wong Wah On, each of whom also serves as an executive officer of the Company.officer. As a result,
these directors discuss and participate in deliberations of the Boardboard of
Directorsdirectors on matters relating to the terms of executive compensation. In this
regard, a director whose executive compensation is voted upon by the Boardboard of
Directorsdirectors must abstain from such vote.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Based solely upon a review of Forms 3, 4, and 5, and amendments
thereto, and reports, furnished to the Companyus for the fiscal year ended December 31,
2001,2002, none of the Company’sour directors, officers, or shareholdersstockholders beneficially owning more
than 10% of any class of our equity securities of the Company, failed to file any forms necessary underrequired
by Section 16(a) of the Securities Exchange Act of 1934 during the most recent
fiscal year.
10
---------------------- Summary Compensation Table
- --------------------------
The following table shows, for each of the three years ended December
31, 2001,2002, the cash and other compensation paid by the Companyus to itsour President and Chief
Executive Officer, and each other executive officer whose annual compensation
was $100,000 or more.
Annual Compensation | Long Term Compensation | |||||
Name and Principal Position | Year | Salary (US$) | Bonus (US$) | Other Annual Compensation (US$) | Securities Underlying Options (1) | All Other Compensation (US$) |
Ching Lung Po, President and Chief Executive Officer | 2001 | 276,923 | -0- | -0- | 40,000 | -0- |
2000 | 276,923 | -0- | -0- | -0- | -0- | |
1999 | 253,846 | -0- | -0- | -0- | -0- | |
Tam Cheuk Ho, Director and Chief Financial Officer | 2001 | 230,769 | -0- | -0- | 40,000 | -0- |
2000 | 230,769 | -0- | -0- | 60 | -0- | |
1999 | 212,538 | -0- | -0- | 60 | -0- | |
Wong Wah On, Director, Secretary and Financial Controller | 2001 | 153,846 | -0- | -0- | 40,000 | -0- |
2000 | 153,846 | -0- | -0- | 60 | -0- | |
1999 | 141,026 | -0- | -0- | 60 | -0- |
__________
(1)
As of December 31, 2001, none of the stock options held by Mr. Ching, Mr. Tam and Mr. Wong were exercisable. None of such options was “in-the-money” at such date, as the fair market value (as defined in the Company stock option plan and adjusted as a result of the one-for-ten reverse stock split) of the Common Stock on December 31, 2001, was US$2.78 per share.
8
The following table sets forth information with respect to the grant of
options to purchase shares of Common Stockcommon stock during the fiscal year ended December
31, 20012002 to each person named in the Summary Compensation Table.
Potential Realiz-
able Value At
Assumed Rates
Number
% Of
Of Stock Price
Of Shares
Total Options
Appreciation For
Underlying
Granted To
Exercise Or
Option Term
Options
Employees In
Base Price
Expiration
Name
Granted (1)
Fiscal Year (1)
$/Share (2)
Date
5%($) 10%($)
Ching Lung Po
40,000
24.54%
$2.95
6/15/04
$18,600
$39,058
Tam Cheuk Ho
40,000
24.54%
$2.95
6/15/04
$18,600
$39,058
Wong Wah On
40,000
24.54%
$2.95
6/15/04
$18,600
$39,058
__________
(1)
The Company has granted no Stock Appreciation Rights ("SARs"). For information regarding stock options issued pursuant to the Company's Stock Option Plan, see "Stock Options," hereinbelow.
(2)
As of December 31, 2001, none of the stock options held by Mr. Ching, Mr.Tam and Mr. Wong were exercisable. None of such options was "in-the-money" at such date, as the fair market value (as defined in the Company stock option plan) of the common stock on December 31, 2001, was US$2.78 per share.
- ------------------------------------------------------------------
The following table sets forth information with respect to the exercise
of options to purchase shares of Common Stockcommon stock during the fiscal year ended
December 31, 20012002 by each person named in the Summary Compensation Table.
Number of Shares
Values of Unexercised
Shares
($)
Underlying Unexercised
In the Money Options
Acquired on
Value
Options At Year End
Name
Exercise
Realized
Exercisable/Unexercisable
Exercisable/Unexercisable
Ching Lung Po
─
─
40,000/40,000
-0- / -0-
Tam Cheuk Ho
─
─
40,000/40,000
-0- / -0-
Wong Wah On
─
─
40,000/40,000
-0- / -0-
__________
(1)
Value based on the difference between the closing price of the Company's Common Stockour common
stock on the OTC Bulletin Board of $2.78$1.50 per share on December 31,
2001,2002, and the exercise price of the options.
9
(2) These options were exercised subsequent to December 31, 2002. Securities Authorized for Issuance Under Equity Compensation Plans - ------------------------------------------------------------------ The following table sets forth information relating to our outstanding stock option plans as of December 31, 2002:
The Company
- -----------------
We have adopted a Stock Option Plan (the "Plan""1995 Plan") as of March 31,
1995. The 1995 Plan allows the Boardboard of Directors,directors, or a committee thereof at the
Board'sboard's discretion, to grant stock options to our officers, directors, key
employees, consultants and affiliates of the Company.affiliates. Initially, 24,000 shares of common stock
could be issued and sold pursuant to options granted under the 1995 Plan.
"Incentive Stock Options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), may be granted to employees,
including officers, whether or not they are members of the Boardboard of Directors,directors,
and nonqualified stock options may be granted to any such employee or officer
and to directors, consultants, and affiliates who perform substantial services
for or on our behalf or for or on behalf of the Company or itsour subsidiaries.
The Boardboard of Directors,directors, or a committee appointed by the Boardboard (the
"Committee"), is vested with authority to (i)(a) select persons to participate in
the Plan; (ii)(b) determine the form and substance of grants made under the 1995
Plan to each participant, and the conditions and restrictions, if any, subject
12
(iii)(c) interpret the Plan; and (iv)(d) adopt, amend, or
rescind such rules and regulations for carrying out the 1995 Plan as it may deem
appropriate. The Boardboard of Directorsdirectors has the power to modify or terminate the
1995 Plan and from time to time may suspend, and if suspended may reinstate, any
or all of the provisions of the 1995 Plan except that (i) no modification,
suspension, or termination of the 1995 Plan may, without the consent of the
grantee affected, alter or impair any grant previously made under the 1995 Plan;
and (ii) no modification shall become effective without prior consent of the shareholders of the Companyour
stockholders that would (a) increase the maximum number of shares reserved for
issuance under the 1995 Plan, except for certain adjustments allowed by the 1995
Plan; or (b) change the classes of employees eligible to participate in the 1995
Plan.
The 1995 Plan provides that the price per share deliverable upon the
exercise of each Incentive Stock Option shall not be less than 100% of the fair
market value of the shares on the date the option is granted, as the Committee
determines. In the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total combined
voting power of all classes of our stock or the stock of the Company or any of itsour
subsidiaries, such price per share, if required by the Code at the time of
grant, shall not be less than 110% of the fair market value of the shares on the
date the option is granted. The price per share deliverable upon the exercise of
each nonqualified stock option shall not be less than 80% of the fair market
value of the shares on the date the option is granted, as the Committee
determines.
Options may be exercised in whole or in part upon payment of the
exercise price of the shares to be acquired. Payment shall be made in cash or,
in the discretion of the Committee, in shares previously acquired by the
participant or in a combination of cash and shares of Common Stock.common stock. The fair
market value of shares of Common Stockcommon stock tendered on exercise of options shall be
determined on the date of exercise.
As of July 1, 1995, pursuant to the recommendation of a committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan, the board of directors granted options to certain officers, directors, employees and consultant to purchase 24,000 shares of the Company's Common Stock: All of the stock options were issued in accordance with the terms of the Plan at an exercise price of US$378 (the fair market value of the Common Stock as of July 1, 1995) and would have been exercisable beginning on July 1, 1996, and until July 1, 2005.
10
As of May 20, 1996, the board of directors, in accordance with the recommendation, with respect to stock options granted to directors and officers, of a committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan, reduced the exercise prices of all of the outstanding options to US$42 (the fair market value of the Common Stock as of May 20, 1996). By virtue of this action, the outstanding options would have been exercisable beginning on May 20, 1997, and until May 20, 2006.
On December 30, 1996, the shareholders of the Companyour stockholders adopted an amendment to the 1995
Plan (a) to change the number of shares of Common Stockcommon stock subject to the 1995 Plan
to that number of shares which would, in the aggregate and if deemed
outstanding, constitute 20% of the Company'sour then-outstanding shares of Common Stock,common stock, as
determined at the time of granting stock options, and (b) to allow Nonqualified
Stock Options, as defined in the 1995 Plan, to be exercisable in less than one
year.
As of June 15, 2001, the board of directors adopted the recommendations of the committee of disinterested persons appointed by the board of directors in accordance with the terms of the Plan and granted stockDecember 31, 2002, options to purchase 163,000 shares ofhad been
granted under the Company's Common Stock to1995 Plan. During the following officers, directorsfiscal year ended December 31, 2002, no
options were granted under the 1995 Plan and employees: Ching Lung Po - 40,000 shares, Tam Cheuk Ho - 40,000 shares, Wong Wah On - 40,000 shares, Ma Sin Ling - 30,000 shares, Tse Chi Kai - 10,000 shares, Fu Yang Guang - 1,000 shares, Lin Jia Ping - 1,000 shares, Yu Jing Song - 1,000 shares. On the same date, all stockno options previously granted were cancelled.
exercised. Report on Repricing of Options
- ------------------------------
No options were repriced during the year ended December 31, 2001.
2002. Director Compensation
- ---------------------
During the fiscal years ended December 31, 2002 and 2001, and 2000,our directors of the Company
did not receive compensation for their services as such.
Employment and Consulting Agreements
- ------------------------------------
On February 1, 1999, the Companywe entered into a Service Agreement with Ching
Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching has beenis employed by the Company as anour
Chief Executive Officer and to perform such duties as the Boardboard of Directorsdirectors
shall from time to time determine. Mr. Ching shall receivereceives a base salary of
HK$2,160,000 (US$276,923) annually, which is adjusted on each anniversary of the
Service Agreement to reflect a change in the applicable consumer price index or
13
befrom time to time determine. Mr. Tam receives a base salary of
HK$1,800,000 (US$230,769) annually, which is adjusted on each anniversary of the
Employment Agreement to reflect a change in the applicable consumer price index
or such greater amount as the Company's Boardour board of Directorsdirectors may determine. The Employment
Agreement has a term of two years and shall beis automatically renewed unless earlier
terminated as provided therein.
On February 1, 1999, the Companywe entered into an Employment Agreement with Tam Cheuk Ho.Wong
Wah On. In accordance with the terms of the Employment Agreement, Mr. Tam has beenWong is employed by the Company as the Chiefour
Financial OfficerController and Corporate Secretary and to perform such duties as the
Boardboard of Directorsdirectors shall from time to time determine. Mr. Tam shall receiveWong receives a base
salary of HK$1,800,0001,200,000 (US$230,769)153,846) annually, which base salary shall beis adjusted on each
anniversary of the Employment Agreement to reflect a change in the applicable
consumer price index or such greater amount as the Company's Boardour board of Directorsdirectors may
determine. The Employment Agreement has a term of two years and shall beis automatically
renewed unless earlier terminated as provided therein.
11
On February 1, 1999, the Company entered into an Employment Agreement with Wong Wah On. In accordance with the terms of the Employment Agreement, Mr. Wong has been employed by the Company as the Financial Controller and Corporate Secretary and to perform such duties as the Board of Directors shall from time to time determine. Mr. Wong shall receive a base salary of HK$1,200,000 (US$153,846) annually, which base salary shall be adjusted on each anniversary of the Employment Agreement to reflect a change in the applicable consumer price index or such greater amount as the Company's Board of Directors may determine. The Employment Agreement has a term of two years and shall be automatically renewed unless earlier terminated as provided therein.
Except for the foregoing, the Company haswe have no employment contracts with any of
itsour officers or directors and maintainswe maintain no retirement, fringe benefit or
similar plans for the benefit of its officers or directors. The CompanyWe may, however,
enter into employment contracts with its officers and key employees, adopt various
benefit plans and begin paying compensation to its officers and directors as it deemswe deem
appropriate to attract and retain the services of such persons.
The Company does
We do not pay fees to directors for their attendance at meetings of the
Boardboard of Directorsdirectors or of committees; however, the Companywe may adopt a policy of making
such payments in the future. The Company willWe reimburse out-of-pocket expenses incurred by
directors in attending Boardboard and committee meetings.
During
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
On January 31, 1994, the fiscal yearFarming Bureau, Guilinyang Farm, and Billion
Luck entered into a Contract On Investment For The Setting Up Of Hainan
Agricultural Resources Company Ltd. pursuant to which such parties agreed to
establish HARC as a limited liability joint stock company under the Rules for
Standardized Incorporated Companies in the PRC and the regulations of Hainan
Province. The agreement provided that HARC's total initial capitalization of
Rmb100 million (US$12 million) in assets and cash was to be contributed as
follows: the Farming Bureau (39%), Guilinyang Farm (5%) and Billion Luck (56%).
On July 15, 1994, the Farming Bureau and HARC entered into a Rental
Agreement for the rental of 532 square meters of a building located in Haikou
City, PRC, in which HARC's corporate headquarters are located. Such rental
agreement is for a period of 10 years at an annual rental of Rmb170,240
(US$20,560) payable in equal semi-annual installments. On July 1, 2001, pursuant
to mutual agreement, both parties agreed to terminate the rental agreement. For
each of the two years ended December 31, 2001 no holderand 2002, HARC paid rental of
stock options exercised such options. All stock options grantedRmb85,000 (US$10,266) and nil, respectively, to the Farming Bureau.
14
Julyan equal basis between the two parties. The lease was for a period
of 2 years from September 1, 1995 either lapsed due2000 to termination of employment or were cancelled,August 31, 2002 and all options granted on June 15, 2001 remained outstanding. Also during such fiscal year, no long-term incentive plans or pension plans werewas renewed for another
two years from September 1, 2002. The office sharing agreement also provides
that China Resources and Anka shall share certain costs and expenses in
effectconnection with respect to anyits use of the Company's officers, directors or employees.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As disclosed above under Stock Optionsoffice. For the Company has adopted a Stock Option Planyears ended December 31, 2001 and
2002, we paid rental expenses to grant stock optionAnka Consultants Limited amounted to officers, directors, key employees, consultantsHK$288,000
(US$37,000) and affiliatesHK$268,000 (US$34,000), respectively.
On April 30, 2001, Billion Luck, through its nominees, acquired 39%
minority equity interest in HARC from the Farming Bureau, for total
consideration of Rmb129,405,000 (US$15,629,000). Concurrent with the
Company.
As disclosed above under Executive Compensation Ching Lung Po, Tam Cheuk Ho and Wong Wah On are parties to employmentacquisition, HARC entered into several agreements with the Company.
Farming Bureau to dispose of certain assets, including 24,877,008 shares of Hainan Sundiro Motorcycle Co. Ltd., for consideration of Rmb70 million (US$8,454,000), a 12.64% equity interest in Xilian Mill for consideration of Rmb5 million (US$603,865) and 58% interest in Hainan Weilin for consideration of Rmb3.8 million (US$459,000). THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ELECTION OF THE DIRECTOR NOMINEES.
12
Proposal
15
APPROVAL AND ADOPTION OF THE 2003 EQUITY COMPENSATION PLAN
At the Annual Meeting, stockholders will be requested to approve and
adopt our 2003 Equity Compensation Plan (the "2003 Plan"). In 1995, our board of
directors and stockholders adopted the 1995 Plan as a method of providing
incentives to continued performance by our officers, directors and employees.
Since adoption of the 1995 plan, we rewarded deserving participants through the
grant of options from time-to-time. The number of shares available for issuance
under the 1995 plan has now been depleted.
On October 9, 2003, the board of directors adopted the 2003 Equity
Compensation Plan (the "2003 Plan"). The 2003 Plan is more flexible than the
1995 Stock Option Plan by, among other things, enabling the board to grant
various incentive equity awards not limited to stock options. The board of
directors believes that it is in our best interests to approve and adopt the
2003 Plan and recommends a vote "FOR" the 2003 Plan. A description of the 2003
Plan follows and a complete copy of the 2003 Plan is attached as Appendix B to
this Proxy Statement. Stockholders are urged to review the entire 2003 Plan
prior to determining whether to vote for its approval.
We have reserved a number of shares of common stock equal to 20% of our
issued and outstanding common stock, from time-to-time, for issuance pursuant to
options granted ("Plan Options") or for restricted stock awarded ("Stock
Grants") under the 2003 Plan. Stock Appreciation Rights may be granted as a
means of allowing participants to pay the exercise price of Plan Options. Stock
Grants may be made upon such terms and conditions as the board or committee
designated by the board determines. Stock Grants may include deferred stock
awards under which receipt of Stock Grants is deferred, with vesting to occur
upon such terms and conditions as the board or committee determines.
The purpose of the 2003 Plan is to increase our employees', advisors',
consultants' and non-employee directors' proprietary interest in our company,
and to align more closely their interests with the interests of our
stockholders, as well as to enable us to attract and retain the services of
experienced and highly qualified employees and non-employee directors. The Plan
will be administered by our board of directors or a committee designated by the
board. The board or committee will determine, from time to time, those of our
officers, directors, employees and consultants to whom Stock Grants and Plan
Options will be granted, the terms and provisions of the respective Stock Grants
and Plan Options, the dates such Plan Options will become exercisable, the
number of shares subject to each Plan Option, the purchase price of such shares
and the form of payment of such purchase price. Plan Options and Stock Grants
will be awarded based upon the fair market value of our common stock at the time
of the award All questions relating to the administration of the 2003 Plan, and
the interpretation of the provisions thereof are to be resolved at the sole
discretion of the board or committee.
Plan Options granted under the Plan may either be options qualifying as
incentive stock options ("Incentive Options") under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or options that do not so qualify
("Non-Qualified Options"). In addition, the Plan also allows for the inclusion
of a reload option provision ("Reload Option"), which permits an eligible person
to pay the exercise price of the Plan Option with shares of common stock owned
by the eligible person and to receive a new Plan Option to purchase shares of
common stock equal in number to the tendered shares. Any Incentive Option
granted under the 2003 Plan must provide for an exercise price of not less than
100% of the fair market value of the underlying shares on the date of such
grant, but the exercise price of any Incentive Option granted to an eligible
employee owning more than 10% of our common stock must be at least 110% of such
fair market value as determined on the date of the grant.
16
TO RATIFY3
RATIFICATION OF THE APPOINTMENT OF HORWATH GELFOND HOCHSTADT
PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY
At
The appointment of Horwath Gelfond Hochstadt Pangburn, P.C. as our
independent auditors for the Annual Meeting, stockholdersfiscal year ending December 31, 2003 will be
requestedsubmitted for ratification by our stockholders.
Fees to ratifyHorwath Gelfond Hochstadt Pangburn, P.C.
- ------------------------------------------------
The following table shows the Boardfees that we paid or accrued for the
audit and other services provided by Horwath Gelfond Hochstadt Pangburn, P.C.
for the 2002 fiscal year and by Ernst & Young for the 2001 fiscal year.
Fiscal 2002 Fiscal 2001
----------- -----------
Audit Fees $49,940 $69,872
Audit-Related Fees -- --
Tax Fees 6,800 7,051
All Other Fees -- --
------- -------
Total $56,740 $76,923
======= =======
Audit Fees -- This category includes the audit of Directors’ engagementour annual financial
statements, review of financial statements included in our Form 10-QSB Quarterly
Reports and services that are normally provided by the independent auditors in
connection with engagements for those fiscal years. This category also includes
advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.
Audit-Related Fees -- This category consists of assurance and related
services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under "Audit Fees." The services for the fees disclosed under
this category include consultation regarding our correspondence with the SEC and
other accounting consulting.
Tax Fees -- This category consists of professional services rendered by
Horwath Gelfond Hochstadt Pangburn, P.C. for tax compliance and tax advice. The
services for the fees disclosed under this category include tax return
preparation and technical tax advice.
All Other Fees -- This category consists of fees for other
miscellaneous items.
Although the board of directors is submitting the appointment of
Horwath Gelfond Hochstadt Pangburn, P.C. for stockholder approval, it reserves
the fiscal year ending December 31, 2002.
The Company’s auditor for the fiscal year ended December 31, 2001 was Ernst & Young. Ernst & Young was dismissed as the Company’s principal accountant on April 30, 2002. Ernst & Young’s reports on the financial statements for the last two fiscal years did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. The decisionright to change accountants has been approved by the Company’s Boardselection of Directors. The Company had no disagreements with Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to Ernst & Young’s satisfaction, would have caused it to make reference to the subject matter of the disagreement in connection with its report. During the two most recent fiscal years ended December 31, 2001, and the subsequent period through the date hereof, we did not consult with Horwath Gelfond Hochstadt Pangburn, P.C. regardingas
auditors, at any oftime during the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-B.
Fees to Auditors
Audit Fees: The aggregate fees, including expenses, billed by Ernst & Young in connection with the audit of the Company’s consolidated financial statements for the most recent fiscal year, and for the review of the Company’s financial information includedif it deems such change to be in
its Annual Report on Form 10-K and its quarterly reports on Form 10-Q during the year 2001 was HK $545,000 (US $69,872).
All Other Fees: The aggregate fees, including expenses, billed for all other services rendered to the Company by Ernst & Young during year 2001 was HK $55,000 (US $7,051). These non-audit fees relate to corporate compliance, tax services, SEC consulting services and registration filing services performed for the Company.
General
It is not expected that representatives of either Ernst & Young or Horwath Gelfond Hochstadt Pangburn, P.C. will be present at the Annual Meeting.
The approval of Proposal 2 by the stockholders requires that the votes cast favoring Proposal 2 exceed the votes cast opposing Proposal 2.
our best interests, even after stockholder approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF HORWATH GELFOND
HOCHSTADT PANGBURN, P.C. AS INDEPENDENT AUDITORS OF THE COMPANY.
13
COMPANY FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2003.
18
Proposals of stockholders of the Company whichthat are intended to be presented by such
stockholders at the annual meeting of stockholders to be held in 20032004 must be
received by the Companyus no later than June 12, 2003,30, 2004, in order to have them included in
the proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
Management is not aware of any other matters to be presented for action at the Annual Meeting. However, if any other matter is properly presented, it is the intention of the persons named in the enclosed form of proxy to vote in accordance with their best judgment on such matters.
ACCOMPANYING REPORTS
The Company’s
ADDITIONAL INFORMATION
Our Annual Report on Form 10-K10-KSB (without exhibits), including audited
consolidated financial statements as at and for the years ended December 31,
2002 and 2001, 2000 and 1999, and the Company’sour Quarterly Report on Form 10-QSB, including unaudited
consolidated financial statements as at and for the three and sixnine months ended
JuneSeptember 30, 2002,2003, accompany this proxy statement.
19
AUDIT COMMITTEE CHARTER
ORGANIZATION
This charter governs the operations of the audit committee (the "committee") of
China Resources Development, Inc. (the "Company"). The committee shall review
and reassess the charter at least annually
Members of the committee shall be appointed by the board of directors and may be
replaced by the board of directors. The board of directors shall designate one
member of the committee as its chairperson.
MEMBERSHIP
The committee shall consist of at least three directors. Each member of the
committee shall meet the independence and experience requirements of (a) Section
10A(m)(3) or successor provision of the Securities Exchange Act of 1934 (the
"Exchange Act"), and all rules and regulations promulgated by the SEC and (b)
the rules, regulations and standards imposed by Nasdaq or other marketplace on
which the Company's securities may be listed, from time to time (the
"Independence Requirements").
Each member of the committee shall be financially literate, as determined by the
Company's board of directors in the exercise of its reasonable business
judgment, or must become financially literate within a reasonable period of time
after his or her appointment to the committee. In addition, at least one member
of the committee shall have employment experience in finance or accounting,
requisite professional certification in accounting, or any other comparable
experience or background which results in the individual's financial
sophistication, including being or having been a chief executive officer, chief
financial officer or other senior officer with financial oversight. At least one
member of the committee shall be an "audit committee financial expert," within
the meaning of Item 401(e) of Regulation S-B or other rule of similar
applicability to which the Company is subject.
A-1
November 12, 2002
December 18, 2003 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
CHINA RESOURCES DEVELOPMENT, INC.
The undersigned hereby appoints Ching Lung Po proxy with power of
substitution and hereby authorizes him to represent and to vote, as designated
below, all of the shares of common stock of China Resources Development, Inc.
held of record by the undersigned on October 8, 2002November 14, 2003 at the Annual Meeting of
Stockholders to be held at 26/F, Securities Building, 5020 BinheRoom 2105, West Tower, Shun Tak Centre, 200 Connaught
Road Fu Tian District, Shenzhen Province, People’s Republic of China,C., Sheung Wan, Hong Kong, on Tuesday, November 12, 2002Thursday, December 18, 2003 at 2:30 p.m.,
Hong Kong time, and at all adjournments thereof, with all powers the undersigned
would possess if personally present. In his or her discretion, the Proxy is
authorized to vote upon such other business as may properly come before the
meeting.
1.
Election of Directors
Nominees:
Wan Ying LinTam Cheuk Ho and Lo Kin Cheung.
Wong Wah On. [ ] FOR all nominees
[ ] WITHHOLD AUTHORITY
[ ] FOR all nominees,
except as noted below:
Nominee exception(s)
exception ---------------------- 2.
Proposal to authorize and adopt the Company's 2003 Equity Compensation
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Horwath Gelfond Hochstadt
Pangburn, P.C. independent auditors of the Company for the fiscal year
ending December 31, 20022003 to serve at the pleasure of the Board of
Directors.
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED STOCKHOLDER.UNDERSIGNEDSTOCKHOLDER. IF NO DIRECTION IS MADE THIS PROXY WILL BE VOTED “FOR”"FOR"
PROPOSALS 1, 2 AND 2.
3.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF 20022003 ANNUAL MEETING
AND PROXY STATEMENT FURNISHED IN CONNECTION THEREWITH.
DATED:
--------------------------------- (Signature)
(Signature
---------------------------------
(Signature if jointly held)
(Printed
---------------------------------
(Printed name(s))
Please sign exactly as name appears herein. When shares are held by Joint Tenants, both should sign, and for signing as attorney, as executor, as administrator, trustee or guardian, please give full title as such. If held by a corporation, please sign in the full corporate name by the president or other authorized officer. If held by a partnership, please sign in the partnership name by an authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
IN THE ENCLOSED ENVELOPE. THANK YOU.