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 June 30, 2002.
[ ] 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.)
710 W. 24th St., Kansas City, MO 64108
-----------------------------------------------
(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 June 30, 2002 was 9,395,788.
1
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. FINANCIAL STATEMENTS....................................... 3
ITEM 2. PLAN OF OPERATION.......................................... 4
PART II
ITEM 1. LEGAL PROCEEDINGS.......................................... 5
ITEM 2. CHANGES IN SECURITIES...................................... 5
ITEM 3. DEFAULTS UPON SENIOR SECURITIES............................ 5
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS................... 5
ITEM 5. OTHER...................................................... 5
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................... 5
SIGNATURES................................................. 6
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
principle 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,
2001. 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, 2002. Accordingly, consolidated unaudited interim financial
statements, including a balance sheet for the Company as of the fiscal quarter
ended June 30, 2002, 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-5 and are incorporated herein by this reference.
3
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2002 and December 31, 2001
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
------
June 30, December 31,
2002 2001
----------- -----------
(Unaudited)
CURRENT ASSETS
Cash $ 13,729 $ 21,133
Note receivable-related party 20,496 1,100
Exchange credits 39,089 438,816
----------- -----------
Prepaid salaries 167,213 --
----------- -----------
Total Current Assets 240,527 461,049
----------- -----------
PROPERTY AND FIXED ASSETS
Equipment 2,149 2,149
Accumulated depreciation (1,361) (1,146)
----------- -----------
Total Fixed Assets 788 1,003
----------- -----------
OTHER ASSETS
Prepaid salaries, long-term portion 75,000 --
----------- -----------
TOTAL ASSETS $ 316,315 $ 462,052
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable 94,666 70,247
----------- -----------
Total Current Liabilities 94,666 70,247
----------- -----------
Total Liabilities 94,666 70,247
----------- -----------
STOCKHOLDERS' EQUITY
Common stock; 100,000,000 shares authorized of $0.001
par value, 9,395,788 shares issued and outstanding,
respectively 9,396 9,396
Additional paid-in capital 2,110,779 2,079,464
Retained earnings accumulated prior to the development
stage 633,605 633,605
Deficit accumulated during the development stage (2,532,131) (2,330,660)
----------- -----------
Total Stockholders' Equity 221,649 391,805
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 316,315 $ 462,052
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-1
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception of
Development
Stage on
For the Six Months Ended For the Three Months Ended January 1,
June 30, June 30, 2000 Through
---------------------------- ---------------------------- June 30,
2002 2001 2002 2001 2002
------------ ------------ ------------ ------------ -------------
NET SALES $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ -------------
COSTS AND EXPENSES
General and administrative 200,916 171,290 70,131 100,868 786,128
------------ ------------ ------------ ------------ -------------
Total Costs and Expenses 200,916 171,290 70,131 100,868 786,128
------------ ------------ ------------ ------------ -------------
LOSS BEFORE OTHER EXPENSE (200,916) (171,290) (70,131) (100,868) (786,128)
------------ ------------ ------------ ------------ -------------
OTHER INCOME (EXPENSE)
Refund tax penalties -- -- -- -- 16,237
Interest expense (805) -- (805) -- (16,568)
Interest income 250 2,541 114 673 7,479
------------ ------------ ------------ ------------ -------------
Total Other Income (Expense) (555) 2,541 (691) 673 7,148
------------ ------------ ------------ ------------ -------------
LOSS BEFORE TAX, EXTRAORDINARY
ITEM, AND DISCONTINUED
OPERATIONS (201,471) (168,749) (70,822) (100,195) (778,980)
INCOME TAX EXPENSE -- -- -- -- --
------------ ------------ ------------ ------------ -------------
LOSS BEFORE EXTRAORDINARY ITEM (201,471) (168,749) (70,822) (100,195) (778,980)
GAIN FROM FORGIVENESS OF DEBT -- -- -- -- 237,163
------------ ------------ ------------ ------------ -------------
LOSS BEFORE DISCONTINUED
OPERATIONS (201,471) (168,749) (70,822) (100,195) (541,817)
LOSS ON DISCONTINUED
OPERATIONS -- -- -- -- (1,990,314)
------------ ------------ ------------ ------------ -------------
NET LOSS $ (201,471) $ (168,749) $ (70,822) $ (100,195) $ (2,532,131)
============ ============ ============ ============ =============
BASIC LOSS PER SHARE $ 0.01) $ (0.02) $ (0.01) $ (0.01)
============ ============ ============ =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 9,395,788 11,178,227 9,395,788 11,178,227
============ ============ ============ =============
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity
Additional Other Retained
Common Stock Paid-In Comprehensive Earnings
Shares Amount Capital Income (Deficit)
----------- ----------- ----------- ----------- -----------
Balance, January 1, 2000 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 -- -- -- -- (2,039,898)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2000 10,996,505 10,997 2,027,864 -- (1,406,293)
Canceled shares (717) (1) -- -- --
Common stock issued for cash
at $0.10 per share 500,000 500 49,500 -- --
Canceled shares (2,100,000) (2,100) 2,100 -- --
Net loss for the year ended
December 31, 2001 -- -- -- -- (290,762)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 9,395,788 9,396 2,079,464 -- (1,697,055)
Fair value of warrants granted
(unaudited) -- -- 31,315 -- --
Net loss for the six months ended
June 30, 2002 (unaudited) -- -- -- -- (201,471)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 2002 (unaudited) 9,395,788 $ 9,396 $ 2,110,779 $ -- $(1,898,526)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
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 Six Months Ended January 1,
June 30 2000 Through
---------------------------------- June 30,
2002 2001 2002
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (201,471) $ (168,749) $(2,532,131)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation and amortization 215 215 1,361
Discontinued operations -- -- 1,990,314
Gain on settlement of debt -- -- (237,163)
Fair value warrants granted 31,315 -- 31,315
Changes in assets and liabilities:
Decrease (increase) in accounts receivable-related party (19,396) -- (20,496)
Decrease (increase) in exchange credits (253) -- 505
Increase (decrease) in accounts payable and accrued
expenses 24,419 (482,170)
Increase in prepaid expenses (242,213) (75,000) (242,213)
Decrease in related party payable -- -- (4,077)
Increase in customer prepayments -- (1,950) --
----------- ----------- -----------
Net Cash (Used) by Operating Activities (407,384) (286,443) (1,494,755)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
Proceeds from sale of exchange credits 399,980 -- 399,980
Increase in note receivable -- (80,000) (80,000)
Receipt of payment on note receivable -- -- 80,000
----------- ----------- -----------
Net Cash Provided (Used) by Investing Activities 399,980 (80,000) 399,980
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loss of cash from discontinued operations -- -- (424,757)
Common stock issued for cash -- 50,000 1,200,000
Proceeds from issuance of note payable -- -- 100,000
Payments on notes payable -- -- (323,011)
----------- ----------- -----------
Net Cash Provided by Financing Activities -- 50,000 552,232
----------- ----------- -----------
NET DECREASE IN CASH (7,404) (316,443) (542,543)
CASH AT BEGINNING OF PERIOD 21,133 762,855 556,272
----------- ----------- -----------
CASH AT END OF PERIOD $ 13,729 $ 446,412 $ 13,729
=========== =========== ===========
SUPPLEMENTAL SCHEDULE OF
CASH FLOW ACTIVITIES:
Cash Paid For:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2002 and December 31, 2001
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 June 30, 2002 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, 2001 audited consolidated financial statements. The results of
operations for periods ended June 30, 2002 and 2001 are not
necessarily indicative of the operating results for the full
years.
NOTE 2 - 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.
NOTE 3 - NEGOTIATIONS WITH TRITRADEX, INC.
The Company had advanced $80,000 to Tritradex as an interest free
loan as part of prior negotiations. In September 2001, Tritradex
paid back the $80,000. Negotiations for the acquisition of
Tritradex have been discontinued.
NOTE 4 - 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.
NOTE 5 - RELATED PARTY TRANSACTION - SALE OF BARTER EXCHANGE CREDITS
During the first and second quarters of 2002 the Company sold
399,980 of its barter exchange credits for $399,980. These credits
were purchased by a major shareholder of the Company.
F-5
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 2001, filed on March 27, 2002, 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 occupies office space, free of charge at 710
W. 24th St., Kansas City, MO 64108.
Business of Issuer
- ------------------
Since the disposition of Anhui Brewery (Please see year ended 2001
10- KSB, Item 1. Management's Discussion and Analysis, filed on March 27, 2002),
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.
The negotiations for the acquisition of Tritradex, Inc. have been
discontinued.
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 June 30, 2002, there were no issuances of
the Company's common stock.
Results of Operations
- ---------------------
For the three month period ended June 30, 2002, the Company
sustained a loss of ($70,822), or ($0.01) per share (basic and diluted) on
revenue of $0.00. The loss in the second quarter of 2002 can be contributed to
the fact the Company had no revenue producing operations. For the comparable
period of 2001, the Company sustained a loss of ($100,195), or ($0.02) per share
on revenue of $0.00. The stockholder's equity for the quarter ended June 30,
2002 was $316,315.
4
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended June 30, 2002, there were no changes in
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the quarter ended June 30, 2002, there were no defaults
upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 13, 2002 the company had their annual shareholder's
meeting. The shareholders voted to nominate current board members for one year.
The shareholders voted to nominate Gordon Wilson as the third member of the
board of directors. In addition, the shareholders did not renew the directorship
of Li, Lin Hu.
As the final matter of business, the shareholders voted to renew
the appointment of HJ & Associates, LLC, as the Company's auditors for yet
another year.
ITEM 5. OTHER
During the quarter ended June 30, 2002, there were no material
events to report that have not been previously disclosed herein.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
During the quarter ended June 30, 2002, there were no reports on
form 8-K.
5
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 19th day of August, 2002.
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 Officer August 19, 2002
- ---------------- President, Treasurer and Director
James Tilton
/s/Jane Zheng Secretary and Director August 19, 2002
- -----------------
Jane Zheng
6