UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A(1)*
(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, 2003.
[ ] 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 (I.R.S. Employer
of Incorporation or Organization) Identification)
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 September 30, 2003 was 8,870,788.
*Filing resubmitted to include updated certification form.
TABLE OF CONTENTS
PART I
Page
----
ITEM 1. FINANCIAL STATEMENTS............................................. 1
ITEM 2. PLAN OF OPERATION................................................ 1
PART II
ITEM 1. LEGAL PROCEEDINGS................................................ 3
ITEM 2. CHANGES IN SECURITIES............................................ 3
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................. 3
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS......................... 3
ITEM 5. OTHER............................................................ 3
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................. 3
SIGNATURES....................................................... 4
PART I
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" or "we", 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, 2002. 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, 2003. Accordingly, consolidated unaudited
interim financial statements, including a balance sheet for the Company as of
the fiscal quarter ended September 30, 2003, 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.
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's 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 2002, filed on April 14, 2003, we are 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's Address
- ---------------------
We presently occupy office space, free of charge at 710 W. 24th St.,
Kansas City, MO 64108.
1
Business of Issuer
- ------------------
Since the disposition of Annu Hui Brewery, we have continued to seek to
acquire businesses both in China and other countries.
We intend to locate its target investment opportunities through
contacts which management has in China and Southeast Asia. We have 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 we intend to
continue this practice in an attempt to avoid expending valuable cash flows.
Since we do not have significant liquid assets, we intend to acquire
business opportunities through the issuance of its equity securities. This will
likely result in future dilution of the ownership interest enjoyed by our
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, 2003, there were no issuances of
the Company's common stock.
Results of Operations
- ---------------------
For the three month period ended September 30, 2003, the Company
sustained a loss of ($45,420), or ($0.00) per share (basic and diluted) on
revenue of $0.00. The loss in the second quarter of 2003 can be contributed to
the fact the Company had no revenue producing operations yet still had
administrative expenses. For the comparable period of 2002, the Company
sustained a loss of ($48,736), or ($0.01) per share on revenue of $0.00. The
stockholder's equity for the quarter ended September 30, 2003 was ($4,895).
Controls and Procedures
- -----------------------
Within 90 days prior to the date of filing of this report, we carried
out an evaluation, under the supervision and with the participation of our
management, including the Chief Executive Officer and the Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures. Based on this evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective in causing material information to be recorded,
processed, summarized, and reported by our management on a timely basis and to
2
ensure that the quality and timeliness of our public disclosures complies with
SEC disclosure obligations. There were no significant changes in our internal
controls or in other factors that could significantly affect these internal
controls after the date of our most recent evaluation.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
During the quarter ended September 30, 2003, there were no changes in
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the quarter ended September 30, 2003, there were no defaults
upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended September 30, 2003, there were no submission
of matters to a vote of security holders.
ITEM 5. OTHER
During the quarter ended September 30, 2003, 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 September 30, 2003, there were no reports on
form 8-K.
Exhibit 31.1 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
Exhibit 32.1 - CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS
ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003
3
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2003 and December 31, 2002
F-1
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
September 30, December 31,
2003 2002
------------- ------------
(Unaudited)
CURRENT ASSETS
Cash $ 4,363 $ 3,268
Exchange credits -- 19,819
Note receivable - related party 20,000 20,000
Interest receivable - related party 3,403 1,602
Prepaid expenses 54,291 172,441
--------- ---------
Total Current Assets 82,057 217,130
--------- ---------
PROPERTY AND FIXED ASSETS
Equipment 2,149 2,149
Accumulated depreciation (1,898) (1,576)
--------- ---------
Total Fixed Assets 251 573
--------- ---------
TOTAL ASSETS $ 82,308 $ 217,703
========= =========
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 Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
September 30, December 31,
2003 2002
----------- -----------
(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 71,784 $ 66,879
Notes payable - related party 15,419 --
----------- -----------
Total Current Liabilities 87,203 66,879
----------- -----------
Total Liabilities 87,203 66,879
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 100,000,000 shares at $0.001 par
value, 8,870,788 and 9,395,788 shares issued and
outstanding, respectively 8,871 9,396
Additional paid-in capital 2,108,058 2,110,779
Retained earnings accumulated prior to the
development stage 633,605 633,605
Deficit accumulated during the development stage (2,755,429) (2,602,956)
----------- -----------
Total Stockholders' Equity (Deficit) (4,895) 150,824
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 82,308 $ 217,703
=========== ===========
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 Operations
(Unaudited)
From
Inception of
Development
Stage on
January 1,
For the Three Months Ended For the Nine Months Ended 2000 Through
September 30, September 30, September 30
-------------------------- -------------------------- -----------
2003 2002 2003 2002 2003
----------- ----------- ----------- ----------- -----------
NET SALES $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
Payroll Expense 37,500 37,500 112,500 112,500 262,500
General and administrative 8,520 12,660 42,243 138,576 751,492
----------- ----------- ----------- ----------- -----------
Total Costs and Expenses 46,020 50,160 154,743 251,076 1,013,992
----------- ----------- ----------- ----------- -----------
LOSS BEFORE OTHER EXPENSE (46,020) (50,160) (154,743) (251,076) (1,013,992)
----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Refund tax penalties -- -- -- -- 16,237
Interest expense -- -- -- (805) (16,296)
Interest income 600 1,424 2,270 1,674 11,773
----------- ----------- ----------- ----------- -----------
Total Other Income (Expense) 600 1,424 2,270 869 11,714
----------- ----------- ----------- ----------- -----------
LOSS BEFORE TAX, EXTRAORDINARY
ITEM, AND DISCONTINUED
OPERATIONS (45,420) (48,736) (152,473) (250,207) (1,002,278)
INCOME TAX EXPENSE -- -- -- -- --
----------- ----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (45,420) (48,736) (152,473) (250,207) (1,002,278)
GAIN ON DISPOSITION OF DEBT -- -- -- -- 237,163
----------- ----------- ----------- ----------- -----------
LOSS BEFORE DISCONTINUED
OPERATIONS (45,420) (48,736) (152,473) (250,207) (765,115)
LOSS ON DISCONTINUED
OPERATIONS -- -- -- -- (1,990,314)
----------- ----------- ----------- ----------- -----------
NET LOSS $ (45,420) $ (48,736) $ (152,473) $ (250,207) $(2,755,429)
=========== =========== =========== =========== ===========
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.02) $ (0.03) --
=========== =========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 8,870,788 9,395,788 9,072,711 9,395,788 --
=========== =========== =========== =========== ===========
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)
Consolidated Statement of Stockholders' Equity (Deficit)
(Split Table)
Common Stock Additional Other Retained
-------------------------- 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)
----------- ----------- ----------- ----------- -----------
The accompanying notes are an integral part
of these consolidated financial statements.
F-5
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit) (Continued)
Common Stock Additional Other Retained
-------------------------- Paid-In Comprehensive Earnings
Shares Amount Capital Income (Deficit)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2001 9,395,788 $ 9,396 $ 2,079,464 -- $(1,697,055)
Fair value of warrants granted -- -- 31,315 -- --
Net loss for the year ended
December 31, 2002 -- -- -- -- (272,296)
----------- ----------- ----------- -----------
Balance, December 31, 2002 9,395,788 9,396 2,110,779 -- (1,969,351)
Repurchased and cancelled
525,000 shares of common
stock (unaudited) (525,000) (525) (2,721) -- --
Net loss for the nine months
ended September 30, 2003
(unaudited) -- -- -- -- (152,473)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 2003
(unaudited) 8,870,788 $ 8,871 $ 2,108,058 $ -- $(2,121,824)
=========== =========== =========== =========== ===========
Retained earnings accumulated prior to the development stage $ 633,605
Deficit accumulated during the development stage (2,755,429)
-----------
$(2,121,824)
===========
The accompanying notes are an integral part
of these consolidated financial statements.
F-6
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
Inception of
Development
Stage on
January 1,
For the Nine Months Ended 2000 Through
September 30 September 30,
----------- ----------- -----------
2003 2002 2003
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (152,473) $ (250,207) $(2,755,429)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation and amortization 322 322 1,898
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:
(Increase) in interest receivable-related party (1,801) -- (3,403)
(Increase) in exchange credits (842) 8,027 (1,067)
Increase (decrease) in accounts payable and
accrued expenses 4,905 24,516 (505,053)
(Increase) decrease in prepaid expenses 118,150 (201,844) (54,291)
(Decrease) in related party payable -- -- (4,077)
----------- ----------- -----------
Net Cash (Used) by Operating Activities (31,739) (387,871) (1,536,956)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of exchange credits 20,661 399,980 440,641
Issuance of note receivable -- (20,000) (100,000)
Receipt of payment on note receivable -- -- 80,000
----------- ----------- -----------
Net Cash Provided (Used) by Investing Activities 20,661 379,980 420,641
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loss of cash from discontinued operations -- -- (424,757)
Common stock issued for cash -- -- 1,200,000
Common stock repurchased for cash (3,246) -- (3,246)
Proceeds from issuance of note payable - related party 15,419 -- 115,419
Payments on notes payable - related party -- -- (323,010)
----------- ----------- -----------
Net Cash Provided (Used) by Financing Activities 12,173 -- 564,406
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 1,095 (7,891) (551,909)
CASH AT BEGINNING OF PERIOD 3,268 21,133 556,272
----------- ----------- -----------
CASH AT END OF PERIOD $ 4,363 $ 13,242 $ 4,363
=========== =========== ===========
Cash Paid For:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
The accompanying notes are an integral part
of these consolidated financial statements.
F-7
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2003 and December 31, 2002
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying 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, 2003 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's
December 31, 2002 audited financial statements. The results of
operations for period ended September 30, 2003 are not necessarily
indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting
principles generally accepted in the United Stated of America
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 - COMMON STOCK TRANSACTIONS
Repurchased Cancellation of Common Stock
On April 15, 2003, the Company repurchased and cancelled 525,000
shares of common stock from a shareholder in exchange for $3,246.
Issuance of Warrant
On March 5, 2002, the Company issued a warrant to a non-employee.
The warrant allows the holder to purchase 550,000 shares of common
stock at an exercise price of $0.06 per share, and will expire
five years from the date of issuance.
F-8
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
September 30, 2003 and December 31, 2002
NOTE 3 - COMMON STOCK TRANSACTIONS (Continued)
Issuance of Warrant (Continued)
The Company applies SFAS No. 123 for warrants issued, which
requires the Company to estimate the fair value of each warrant
issued at the grant date by using the Black-Scholes pricing model
with the following assumptions:
Risk-free interest rate 3.50%
Expected life 3 Years
Expected volatility 1.71
Dividend yield 0.0
As a result of applying SFAS No. 123, the Company recorded an
expense of $31,315 during the year ended December 31, 2002. The
expense is included in general and administrative expense in the
statement of operations.
As of September 30, 2003, this is the only warrant issued and
outstanding.
NOTE 4 - RELATED PARTY TRANSACTIONS
Note Receivable
On April 17, 2002, the Company advanced $20,000 to the president
and CEO of the Company. The advance is payable on demand and
accrues interest at 12% per annum. As of September 30, 2003, the
Company has recognized $3,403 of interest income related to the
note since its inception.
Prepaid Expenses
During the first quarter of 2002, the Company prepaid two years of
salaries to two employees and officers of the Company. As of
December 31, 2002, one half of the prepayment, representing one
year of salaries and payroll taxes, had been fully expensed. The
remaining prepaid salaries and taxes, of $157,532, is being
expensed evenly over the year ending December 31, 2003.
Note Payable
During the nine months ended September 30, 2003, a significant
shareholder has advanced the Company $15,419 in cash. The advances
are short-term in nature, non-interest bearing, and have been used
for the ongoing operating expenses of the Company.
F-9
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this quarterly report to be signed on its behalf by the
undersigned, thereunto duly authorized this 13th day of November, 2003.
CHINA FOOD AND BEVERAGE
/s/ James Tilton
- ----------------
James Tilton, President
In accordance with the Exchange Act, this quarterly 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, President, November 13, 2003
- ----------------- Treasurer and Director
James Tilton
/s/Jane Zheng Secretary and Director November 13, 2003
- -----------------
Jane Zheng
/s/Gordon Wilson Director November 13, 2003
- -----------------
Gordon Wilson
4