UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 2001.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from _____________
to_____________.
Commission file number: 0-11734
-------
CHINA FOOD AND BEVERAGE COMPANY
-------------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 87-0548148
- ------------------------------- --------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
82-66 Austin St., Kew Gardens, New York 11415
-----------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(877) 667-9377
-------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No[ ]
The number of shares outstanding of Registrant's common stock ($0.001 par value)
as of the quarter ended September 30, 2001 was 9,395,788 shares, with 386
shareholders of record.
1
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. FINANCIAL STATEMENTS........................................ 3 - 12
ITEM 2. PLAN OF OPERATION............................................... 13
PART II
ITEM 1. LEGAL PROCEEDINGS............................................... 14
ITEM 2. CHANGES IN SECURITIES........................................... 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES................................. 14
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS........................ 14
ITEM 5. OTHER........................................................... 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................ 15
SIGNATURES...................................................... 15
2
PART I
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" refers to China Food and
Beverage Company and its subsidiaries and predecessors. The accompanying
consolidated unaudited condensed financial statements have been prepared by
management in accordance with the instructions in Form 10-QSB and, therefore, so
not include all information and footnotes required by generally accepted
accounting principles and should, therefore, be read in conjunction with
Company's Annual Report to Shareholders on Form 10-KSB for the fiscal year ended
December 31, 2000. These statements do include all the normal recurring
adjustments which the Company believes is necessary and affords a fair
presentation. The interim results are not necessarily indicative of the results
for the full year ending December 31, 2001. Accordingly, consolidated audited
interim financial statements, including a balance sheet for the Company as of
the fiscal quarter ended September 30, 2001, and, statements of operations and
statements of cash flows for the interim period up to the date of such balance
sheet and the comparable period of the preceding fiscal year are attached hereto
as Pages F-1 through F-9 and are incorporated herein by this reference.
3
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2001 and December 31, 2000
4
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
September 30, December 31,
2001 2000
------------------ -----------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalent $ 489,518 $ 762,855
Note receivable - related 1,100 -
Prepaid expense 37,500 -
------------------ -----------------
Total Current Assets 528,118 762,855
------------------ -----------------
PROPERTY AND FIXED ASSETS
Equipment 2,149 2,149
Accumulated depreciation (1,039) (716)
------------------ -----------------
Total Fixed Assets 1,110 1,433
------------------ -----------------
OTHER ASSETS
Deposits 1,950 -
------------------ -----------------
Total Other Assets 1,950 -
------------------ -----------------
TOTAL ASSETS $ 531,178 $ 764,288
================== =================
The accompanying notes are an integral part of these consolidated
financial statements.
5
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
September 30, December 31,
2001 2000
------------------ -----------------
(Unaudited)
Accounts payable $ 66,666 $ 66,706
Related party payable - 4,077
Accrued expenses - 70,088
------------------ -----------------
Total Current Liabilities 66,666 140,871
------------------ -----------------
Total Liabilities 66,666 140,871
------------------ -----------------
STOCKHOLDERS' EQUITY
Common stock; 100,000,000 shares authorized of $0.001
par value, 9,395,788 and10,996,505 shares issued
and outstanding, respectively 9,396 10,997
Additional paid-in capital 2,079,465 2,027,864
Retained earnings accumulated prior to the development
stage 633,605 633,605
Deficit accumulated during the development stage (2,257,954) (2,049,049)
------------------ -----------------
Total Stockholders' Equity 464,512 623,417
------------------ -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 531,178 $ 764,288
================== =================
The accompanying notes are an integral part of these consolidated
financial statements.
6
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception of
Development
Stage on
For the Nine Months Ended For the Three Months Ended January 1,
September 30, September 30, 2000 Through
--------------------------------- --------------------------------- September 30,
2001 2000 2001 2000 2001
---------------- --------------- --------------- ---------------- ---------------
NET SALES $ - $ - $ - $ - $ -
---------------- --------------- --------------- ---------------- ---------------
COSTS AND EXPENSES
General and administrative 212,242 417,621 40,952 216,404 498,770
---------------- --------------- --------------- ---------------- ---------------
Total Costs and Expenses 212,242 417,621 40,952 216,404 498,770
---------------- --------------- --------------- ---------------- ---------------
LOSS BEFORE OTHER EXPENSE (212,242) (417,621) (40,952) (216,404) (498,770)
---------------- --------------- --------------- ---------------- ---------------
OTHER INCOME (EXPENSE)
Interest expense - (31,200) - - (13,018)
Interest income 3,337 1,886 796 1,126 6,985
---------------- --------------- --------------- ---------------- ---------------
Total Other Income (Expense) 3,337 (29,314) 796 1,126 (6,033)
---------------- --------------- --------------- ---------------- ---------------
LOSS BEFORE TAX, EXTRAORDINARY
ITEM, MINORITY INTEREST AND
DISCONTINUED OPERATIONS (208,905) (446,935) (40,156) (215,278) (504,803)
INCOME TAX EXPENSE - - - - -
---------------- --------------- --------------- ---------------- ---------------
LOSS BEFORE EXTRAORDINARY ITEM (208,905) (446,935) (40,156) (215,278) (504,803)
GAIN FROM FORGIVENESS OF DEBT - 255,640 - - 237,163
---------------- --------------- --------------- ---------------- ---------------
LOSS BEFORE MINORITY INTEREST
AND DISCONTINUED OPERATIONS (208,905) (191,295) (40,156) (215,278) (267,640)
LOSS ON DISCONTINUED
OPERATIONS - (1,990,314) - - (1,990,314)
---------------- --------------- --------------- ---------------- ---------------
NET LOSS $ (208,905) $ (2,181,609) $ (40,156) $ (215,278) $ (2,257,954)
================ =============== =============== ================ ===============
BASIC LOSS PER SHARE $ (0.02) $ (0.36) $ (0.00) $ (0.03)
================ =============== =============== ================
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 9,182,905 6,096,140 9,182,905 6,906,395
================ =============== =============== ================
The accompanying notes are an integral part of these consolidated
financial statements.
7
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
Common Stock Additional Other Retained
---------------------------------- Paid-In Comprehensive Earnings
Shares Amount Capital Income (Deficit)
--------------- ----------------- --------------- --------------- ---------------
Balance, December 31, 1999 5,546,505 $ 5,547 $ 872,070 $ 8,421 $ 633,605
Common stock issued for cash
at $1.00 per share 50,000 50 49,950 - -
Common stock issued for cash
at $1.00 per share 200,000 200 199,800 - -
Common stock issued for cash
at $0.50 per share 200,000 200 99,800 - -
Common stock issued for cash
at $0.25 per share 400,000 400 99,600 - -
Common stock issued for cash
at $0.25 per share 800,000 800 199,200 - -
Common stock issued for cash
at $0.25 per share 800,000 800 199,200 - -
Common stock issued for cash
at $0.10 per share 2,000,000 2,000 198,000 - -
Common stock issued for cash
at $0.10 per share 1,000,000 1,000 99,000 - -
Related party forgiveness of
interest - - 11,244 - -
Change in currency translation - - - (8,421) -
Net loss for the year ended
December 31, 2000 - - - - (2,049,049)
--------------- ----------------- --------------- --------------- ---------------
Balance, December 31, 2000 10,996,505 10,997 2,027,864 - (1,415,444)
Cancellation of shares (unaudited) (717) (1) - - -
Common stock issued for cash
at $0.10 per share (unaudited) 500,000 500 49,500 - -
Cancellation of shares (unaudited) (2,100,000) (2,100) 2,100 - -
Net loss for the nine months ended
September 30, 2001 (unaudited) - - - - (208,905)
--------------- ----------------- --------------- --------------- ---------------
Balance, September 30, 2001
(unaudited) 9,395,788 $ 9,396 $ 2,079,464 $ - $ (1,624,349)
=============== ================= =============== =============== ===============
The accompanying notes are an integral part of these consolidated
financial statements.
8
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception of
Development
Stage on
For the Nine Months Ended January 1,
September 30, 2000 Through
-------------------------------------- September 30,
2001 2000 2001
------------------ ------------------ -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (208,905) (2,181,609) $ (2,257,954)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation and amortization 321 609 1,037
Common stock issued for services
Discontinued operations - 1,990,314 1,990,314
Gain on settlement of debt - (255,640) (237,163)
Changes in assets and liabilities:
(Increase) in note receivable - related party (1,100) - (1,100)
(Increase) in prepaid expense (37,500) - (37,500)
(Increase) in construction in progress - (143,183) -
(Decrease) in accounts payable and accrued expenses (74,203) - (514,244)
(Increase) in customer prepayments (1,950) - (1,950)
Increase in payroll taxes payable - 38,643 -
------------------ ------------------ -----------------
Net Cash (Used) by Operating Activities (323,337) (550,866) (1,058,560)
------------------ ------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
------------------ ------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Loss of cash from discontinued operations - (424,757) (424,757)
Common stock issued for cash 50,000 650,000 1,200,000
Proceeds from notes payable - - -
Payments on notes payable - (163,720) (223,011)
----------------- ------------------ -----------------
Net Cash Provided by Financing Activities 50,000 61,523 552,232
------------------ ------------------ -----------------
NET (DECREASE) IN CASH (273,337) (489,343) (506,328)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 762,855 995,846 995,846
------------------ ------------------ -----------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 489,518 $ 506,503 $ 489,518
================== ================== =================
SUPPLEMENTAL SCHEDULE OF
CASH FLOW ACTIVITY
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
The accompanying notes are an integral part of these consolidated
financial statements.
9
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September, 2001 and December 31, 2000
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations an cash flows at September 30, 2001 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. It is suggested that these condensed consolidated
financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December
31, 2000 audited consolidated financial statements. The results of
operations for periods ended September 30, 2001 and 2000 are not
necessarily indicative of the operating results for the full
years.
NOTE 2 - LOSS OF SUBSIDIARY
The loss in the first quarter of 2000 from discontinued operating
results from a dispute with the Anhui Liu An Beer Company Ltd.
("sellers") who represent a minority interest in the entity that
operates the Company's brewery in the Peoples' Republic of China.
In December 1998, the Company acquired a 55% interest in a Chinese
brewery for which it issued 8% convertible debentures in the total
principal amount of $21 million. The debentures had a $5.00
conversion price. Pursuant to the terms of the debentures, the
Company had the right to require conversion of the debentures. The
Company required said conversion and issued 4.2 million shares of
its common stock, also in December 1998. The sellers, from whom
the Company purchased its interest in the brewery, hold a 45%
equity interest in the brewery and agreed to maintain
responsibility for the day-to-day operations of the brewery.
The Company's Chinese asset, which is the brewery, is subject to
liens which resulted in the borrowing of approximately $6 million,
and the brewery had tax liabilities to the People's Republic of
china in excess of $4 million.
In May 2000, the sellers claimed that the Company was in default
of its obligations to repurchase or cause to be repurchased from
the sellers, a significant majority of the shares of the common
stock issued upon conversion of the debentures or, to provide
additional capital. As a result of the alleged default, they
refused to provide the Company with any financial information
concerning the operations of the brewery and assumed control of
the brewery.
The Company believes that the claims made by the sellers are
without merit. However, as the assets of the brewery are in the
Peoples' Republic of China and the Company has no effective
control over the business or the financial concerns of the
brewery, the Company has fully reserved against all of its assets
allocated in China. All operations have been classified as
discontinued as they relate to the brewery.
10
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 2 - LOSS OF SUBSIDIARY (Continued)
It is possible that, in addition to taking control of the assets,
the sellers may commence an action against the Company alleging,
among other claims, breach of contract. Conversely, the Company is
exploring its options, including but not limited to, initiating
legal action of its own to recover what it believes to be a
wrongful conversion of its assets by the sellers.
Unless the Company is able to resolve this dispute and because it
does not presently have the financial ability to continue in
operation, it may be obligated to secure additional debt or equity
financing to enable it to continue as an on-going entity.
NOTE 3 - LITIGATION
Securities and Exchange Commission v. China Food & Beverage, James
C. Tilton, et al. - On July 14, 1999, the Securities and Exchange
Commission ("SEC") in the United States District Court, Southern
District of Florida, Civil Action No. 99-1968-CIV-GOLD, filed a
Complaint for Injunctive and Other Equitable Relief, as well as a
Temporary Restraining Order against, et al, the Company and James
C. Tilton ("Tilton") individually who is the Company's chief
executive officer. On April 15, 1999, the Company entered into a
Consulting Agreement with The Globus Group, Inc. ("Globus"), a
Nevada corporation, whereby Globus was to act as a "...marketing
consultant/promoter..." of the Company. The complaint alleges that
the Company, knowingly or unknowingly disseminated material to the
public based on globus' false representations to the Company. The
complaint further alleges that when informed that Globus was
engaging in this and other improper activities that might result
in creating false impressions with the public, Tilton did not take
appropriate corrective action quickly enough.
As soon as the Company became aware of the SEC's complaint, the
Company took steps to investigate the allegations against Globus.
After numerous attempts to contact Globus, without success, the
Company's Officers and Board of Directors felt it was in the
Company's best interest to formally terminate the aforementioned
Consulting Agreement with Globus.
On June 18, 2001 the offer made by the company was accepted by the
SEC. The SEC ordered that the company and Tilton cease and desist
from committing any securities violations in the futures.
NOTE 4 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company
does not have significant cash or other material assets, nor does
it have an established source of revenues sufficient to cover its
operating costs and to allow it to continue as a going concern. It
is the intent of the Company to seek a merger with an existing,
operating company. Until that time, the stockholders have
committed to covering the operating costs of the Company.
11
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2001 and December 31, 2000
NOTE 5 - NEGOTIATIONS WITH TRITRADEX, INC.
The Company is in negotiations to acquire Tritradex, Inc. (a New
York corporation), the parent company of Shanghai Tritradex
Machinery, Inc., a manufacturer and distributor of gasoline
dispensing pumps in the Peoples' Republic of China. As part of the
negotiations, the Company has advanced $80,000 to Tritradex as an
interest free loan. In September 2001, Tritradex paid back the
$80,000. Although the loan was paid in full, negotiations for the
acquisition of Tritradex are ongoing.
NOTE 6 - DISSOLUTION OF SUBSIDIARY
In September 2001, the Company's wholly owned subsidiary, Victoria
Beverage, was dissolved. The only asset of the subsidiary was
6,000,000 shares of Gourmet's Choice Coffee Company. These shares
were transferred to the Company. The Company will carry the shares
at Victoria's cost of $0.00. Gourmet's Choice is a related entity.
12
ITEM 2. PLAN OF OPERATION
The following discussion and analysis should be read in
conjunction with the Company financial statements and notes thereto included
elsewhere in this Form 10-QSB. Except for the historical information contained
herein, the discussion in this Form 10-QSB contains certain forward looking
statements that involve risks and uncertainties, such as statements of the
Company plans, objectives, expectations and intentions. The cautionary
statements made in this Form 10-QSB should be read as being applicable to all
related forward statements wherever they appear in this Form 10-QSB. The Company
actual results could differ materially from those discussed here.
Other than what has been disclosed herein and in the year end
report for year 2000, filed on April 13, 2001, the Company is not aware of any
immediate circumstances or trends which would have a negative impact upon future
sales or earnings. There have been no material fluctuations in the standard
seasonal variations of the Company business. The accompanying financial
statements include all adjustments, which in the opinion of management are
necessary in order to make the financial statements not misleading.
The Company
- -----------
The Company presently offices at 82-66 Austin St., Kew Gardens,
New York 11415.
Business of Issuer
- ------------------
Since the disposition of Anhui Brewery (Please see year ended 2000
10-KSB, Item 1. Management's Discussion and Analysis, filed on April 13, 2001),
the Company will continue to seek to acquire businesses both in China and other
countries. The Company intends to locate its target investment opportunities
through contacts which management has in China and Southeast Asia. The Company
has no full or part time employees, aside from its officers and directors. If
the Company requires additional personnel to carry out its business objectives,
it will retain outside consultants. In the past, the Company has been successful
in retaining consultants through the issuance of its Common Stock and the
Company intends to continue this practice in an attempt to avoid expending
valuable cash flows.
On March 4, 2001, the Company entered into an investment agreement
with Tritradex, Inc., a US based parent corporation of Shanghai Tritradex
Machinery, Inc., a manufacturer and distributor of gasoline assemblies in the
People's Republic of China, under license from the Wayne Division of
Houston-based Dresser, Inc.
Tritradex was incorporated in the state of New York in 1994 and
established a Sino- foreign venture in Pudong, Shanghai, the People's Republic
of China, named Shanghai Tritradex Machinery, Inc. ("STM"). The main business of
STM is designing manufacturing and selling electronic fuel dispensing pumps and
related products for use in gasoline stations in China. In 1995 STM entered into
a license and technical agreement with Wayne Division of Dresser Industries,
Inc. The agreement allowed STM to manufacture, assemble, sell and service
Wayne's products in China.
Wayne is the technological leader in the manufacture and supply of
retail petrol fuel dispensers; dispenser control systems, credit/debit card
processing terminals and point- of-sale systems for petroleum markets worldwide.
They are also the industry leader in developing new technologies. Over 75
countries use their products.
The Company is continuing to explore the possibility of further
investment or a business combination with Tritradex, Inc.
Since the Company does not have significant liquid assets, the
Company intends to acquire business opportunities through the issuance of its
equity securities. This will likely result in future dilution of the ownership
interest enjoyed by the Company's current shareholders. The Company has had some
past experience in acquiring subsidiaries in this manner. However, the Company
can provide no assurance that it will be able to continue such acquisitions in
the future. It is also likely that any future acquisitions by the Company will
require the Company to make capital contributions to the acquired businesses.
Capital Resources and Liquidity
- -------------------------------
During the quarter ended September 30, 2001, the Company did not
issue any shares of its Common Stock for cash or services.
Results of Operations
13
For the three month ended September 30, 2001, the Company
sustained a loss of $40,156 or $0.00 per share (basic and diluted). The loss in
the second quarter of 2001 can be attributed to a lack of revenues. For the
comparable period of 2000, the Company sustained a loss of $215,278 or $0.03 per
share (basic and diluted). As a result of a reserve the Company had a deficiency
of stockholder's equity of $464,512 at September 30, 2001.
PART II
ITEM 1. LEGAL PROCEEDINGS
Securities and Exchange Commission v. China Food & Beverage, James
C. Tilton, et al. - On July 14, 1999, the Securities and Exchange Commission
("SEC") in the United States District Court, Southern District of Florida, Civil
Action No. 99-1968-CIV-GOLD, filed a Complaint for Injunctive and Other
Equitable Relief, as well as a Temporary Restraining Order against, et al, the
Company and James C. Tilton ("Tilton") individually, who is the Company's chief
executive officer. On April 15, 1999, the Company entered into a Consulting
Agreement with The Globus Group, Inc. ("Globus"), a Nevada corporation, whereby
Globus was to act as a "...marketing consultant/promoter..." of the Company. The
complaint alleges that the Company knowingly or unknowingly disseminated
material to the public based on Globus' false representations to the Company.
The complaint further alleges that when informed that Globus was engaging in
this and other improper activities that might result in creating false
impressions with the public, Tilton did not take appropriate corrective action
quickly enough.
As soon as the Company became aware of the SEC's complaint, the
Company took immediate steps to investigate the allegations against Globus.
After numerous attempts to contact Globus, without success, the Company's
Officers and Board of Directors felt it was in the Company's best interest to
formally terminate the aforementioned Consulting Agreement with Globus.
The company announced that effective as of September 18, 2001,
China Food & Beverage Co. entered into a cease-and-desist Order ("the Order"),
along with its principal executive officer, with the Securities and Exchange
Commission pursuant to section 21C of the Securities and Exchange Act of 1934.
The Order instituting the cease-and-desist was entered by consent.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended September 30, 2001, there were no changes
in securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the quarter ended September 30, 2001, there were no
defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 2001, there were no matters
submitted to a vote of the Company's shareholders.
ITEM 5. OTHER EVENTS
Through a reverse merger recapitalization by which the Company
acquired 100% of Victoria Beverage Company, Ltd., for 4,200,000 shares of the
Company's common stock, resulted in the Company owning 55% of Anhui Hao Dun
Brewery Co., Ltd., situated in the People's Republic of China.
In May 2000, the sellers of Anhui Hao Dun Brewery Co., Ltd.
claimed that the Company was in default of its obligations to repurchase or
cause to be repurchased from the sellers, a significant majority of the shares
of the common stock issued upon conversion of the debentures or, to provide
additional capital. As a result of the alleged default, they refused to provide
the Company with any financial information concerning the operations of the
brewery and assumed control of the brewery.
The Company believes that the claims made by the sellers are without
merit. However, as the assets of the brewery are in the Peoples' Republic of
China and the Company has no effective control over the business or the
financial concerns of the brewery, the Company has fully reserved against all of
its assets located in China.
14
Accordingly, the Company cancelled 2,100,000 shares of the
4,200,000 shares previously issued. The Company has placed a stop-transfer on
the remaining 2,100,000 pending resolution of this issue between the sellers of
Anhui Hao Dun Brewery and the Company.
September 2001, the Company's wholly owned subsidiary, Victoria
Beverage, was dissolved. The only asset of the subsidiary was 6,000,000 shares
of Gourmet's Choice Coffee Company. These shares were transferred to the
Company. The Company will carry the shares at Victoria's cost of $0.00.
Gourmet's Choice is a related entity.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized this 12th day of November, 2001.
CHINA FOOD AND BEVERAGE
/s/ James Tilton
----------------
James Tilton, President
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/James Tilton Chief Executive November 12, 2001
- --------------- Officer, President,
James Tilton Treasurer and
Director
/s/ Jane Zheng Secretary and November 12, 2001
- -------------- Director
Jane Zheng
/s/ Lin Hu Li Director November 12, 2001
- -------------
Lin Hu Li,
15