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, 2004.
[ ] 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, 2004 was 9,896,679.
TABLE OF CONTENTS
PART I
Page
ITEM 1. FINANCIAL STATEMENTS............................................. 3
ITEM 2. PLAN OF OPERATION................................................ 5
PART II
ITEM 1. LEGAL PROCEEDINGS................................................ 6
ITEM 2. CHANGES IN SECURITIES............................................ 6
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................. 6
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS......................... 6
ITEM 5. OTHER............................................................ 6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................. 6
SIGNATURES....................................................... 7
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
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,
2003. 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, 2004. Accordingly, unaudited interim financial statements,
including a balance sheet for the Company as of the fiscal quarter ended June
30, 2004, 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-6 and are
incorporated herein by this reference.
3
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2004 and December 31, 2003
F-1
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Balance Sheets
ASSETS
June 30, December 31,
2004 2003
----------- -----------
Unaudited)
CURRENT ASSETS
Cash $ 931 $ 3,789
Prepaid expenses 5,737 11,473
----------- -----------
Total Current Assets 6,668 15,262
----------- -----------
PROPERTY AND FIXED ASSETS
Equipment 2,149 2,149
Accumulated depreciation (2,149) (2,006)
----------- -----------
Total Fixed Assets -- 143
----------- -----------
OTHER ASSETS
Accounts receivable-related party 24,804 24,194
----------- -----------
Total Other Assets 24,804 24,194
----------- -----------
TOTAL ASSETS $ 31,472 $ 39,599
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 148,485 $ 70,071
Accounts payable - related party 46,505 29,474
----------- -----------
Total Current Liabilities 194,990 99,545
----------- -----------
Total Liabilities 194,990 99,545
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 100,000,000 shares authorized at $0.001
par value, 9,896,679 shares issued and outstanding 9,897 9,897
Additional paid-in capital 2,110,278 2,110,278
Retained earnings accumulated prior to the
development stage 633,605 633,605
Deficit accumulated during the development stage (2,917,298) (2,813,726)
----------- -----------
Total Stockholders' Equity (Deficit) (163,518) (59,946)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT) $ 31,472 $ 39,599
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-2
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Statement of Operations
From
Inception of
Development
Stage on
January 1,
2000
For the Three Months Ended For the Six Months Ended Through
June 30, June 30, June 30,
-------------------------- -------------------------- -----------
2004 2003 2004 2003 2004
----------- ----------- ----------- ----------- -----------
NET SALES $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
COSTS AND EXPENSES
General and administrative 53,714 65,635 104,182 108,723 1,176,262
----------- ----------- ----------- ----------- -----------
Total Costs and Expenses 53,714 65,635 104,182 108,723 1,176,262
----------- ----------- ----------- ----------- -----------
LOSS BEFORE OTHER EXPENSE (53,714) (65,635) (104,182) (108,723) (1,176,262)
----------- ----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE)
Refund tax penalties -- -- -- -- 16,237
Interest expense -- -- -- (805) (16,296)
Interest income 307 600 610 1,670 12,174
----------- ----------- ----------- ----------- -----------
Total Other Income (Expense) 307 600 610 1,670 12,115
----------- ----------- ----------- ----------- -----------
LOSS BEFORE TAX, EXTRAORDINARY
ITEM, AND DISCONTINUED
OPERATIONS (53,407) (65,035) (103,572) (107,053) (1,164,147)
INCOME TAX EXPENSE -- -- -- -- --
----------- ----------- ----------- ----------- -----------
LOSS BEFORE EXTRAORDINARY ITEM (53,407) (65,035) (103,572) (107,053) (1,164,147)
GAIN ON DISPOSITION OF DEBT -- -- -- -- 237,163
----------- ----------- ----------- ----------- -----------
LOSS BEFORE DISCONTINUED
OPERATIONS (53,407) (65,035) (103,572) (107,053) (926,984)
LOSS ON DISCONTINUED
OPERATIONS -- -- -- -- (1,990,314)
----------- ----------- ----------- ----------- -----------
NET LOSS $ (53,407) $ (65,035) $ (103,572) $ (107,053) $(2,917,298)
=========== =========== =========== =========== ===========
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.01)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 9,896,679 8,957,326 9,896,679 9,175,346
=========== =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
F-3
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
Common Stock Additional Other
------------------------- Paid-In Comprehensive Retained
Shares Amount Capital Income (Deficit)
----------- ----------- ----------- ------------- -----------
Balance, December 31, 2001 9,395,788 $ 9,396 $ 2,079,464 -- $(1,697,055)
----------- ----------- ----------- ------------- -----------
Warrants granted at fair market value -- -- 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)
November 5, 2003, common stock
Issued upon cashless exercise of
warrants 500,891 501 (501) -- --
Balance, December 31, 2003 9,896,679 9,897 2,110,278 -- (2,180,121)
----------- ----------- ----------- ------------- -----------
Net loss for the six months
ended June 30, 2004 (unaudited) -- -- -- -- (103,572)
----------- ----------- ----------- ------------- -----------
Balance, June 30, 2004 (unaudited) 9,896,679 $ 9,897 $ 2,110,278 $ -- $(2,283,693)
=========== =========== =========== ============= ===========
Retained earnings accumulated prior to the development stage $ 633,605
Deficit accumulated during the development stage (2,917,298)
-----------
$(2,283,693)
===========
The accompanying notes are an integral part of these financial statements.
F-4
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 Six Months Ended 2000 Through
June 30 June 30,
----------- ----------- -----------
2004 2003 2004
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (103,572) $ (107,053) $(2,917,298)
Adjustments to reconcile net income (loss) to net
cash used by operating activities:
Depreciation expense 143 215 2,149
Discontinued operations -- -- 1,990,314
Gain on settlement of debt -- -- (237,163)
Fair value warrants granted -- -- 31,315
Changes in assets and liabilities:
(Increase) in accounts receivable-related party (610) (1,200) (2,212)
(Increase) in exchange credits -- (842) 19,594
Increase (decrease) in accounts payable and accrued
expenses 78,414 4,904 (428,351)
(Increase) decrease in prepaid expenses 5,736 78,767 (5,737)
Increase in related party payable -- 11,339 (4,077)
----------- ----------- -----------
Net Cash (Used) by Operating Activities (19,889) (13,870) (1,551,466)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of exchange credits -- 20,661 419,980
Increase in note receivable -- -- (82,592)
Receipt of payment on note receivable -- -- 80,000
Increase in note receivable - related party -- -- (20,000)
----------- ----------- -----------
Net Cash Provided (Used) by Investing Activities -- 20,661 397,388
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loss of cash from discontinued operations -- -- (424,757)
Common stock issued for cash -- -- 1,200,000
Proceeds from related party -- (3,246) 129,474
Proceeds from notes payable 17,031 -- 17,031
Increase in Notes Payable -- -- (323,011)
----------- ----------- -----------
Net Cash Provided (Used) by Financing Activities 17,031 (3,246) 598,737
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (2,858) 3,545 (555,341)
CASH AT BEGINNING OF PERIOD 3,789 3,268 556,272
----------- ----------- -----------
CASH AT END OF PERIOD $ 931 $ 6,813 $ 931
=========== =========== ===========
Cash Paid For:
Interest $ -- $ -- $ 3,000
Income taxes $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements.
F-5
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 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 and cash flows at June 30, 2004 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, 2003 audited financial statements. The results of
operations for period ended June 30, 2004 are not necessarily
indicative of the operating results for the full year.
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.
4
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 an 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 2003, filed on April 14, 2004, 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 Annu Hui Brewery, 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.
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, 2004, there were no issuances of the
Company's common stock.
5
Results of Operations
- ---------------------
For the three month period ended June 30, 2004, the Company sustained a
loss of ($53,407), or ($0.01) per share (basic and diluted) on revenue of $0.00.
The loss in the second quarter of 2004 can be contributed to the fact the
Company had no revenue producing operations yet still had administrative
expenses. For the comparable period of 2003, the Company sustained a loss of
($65,035) on revenues of $0.00. The stockholder's equity (deficit) for the
quarter ended June 30, 2004 was ($163,518).
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
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 June 30, 2004, there were no changes in
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the quarter ended June 30, 2004, there were no defaults upon
senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended June 30, 2004, there were no submission of
matters to a vote of security holders.
ITEM 5. OTHER
During the quarter ended June 30, 2004, 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, 2004, there were no reports on form
8-K.
6
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 23rd day of August, 2004.
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, President, August 23, 2004
- ---------------- CFO, Treasurer and Director
James Tilton
/s/Jane Zheng Secretary and Director August 23, 2004
- ----------------
Jane Zheng
/s/Gordon Wilson Director August 23, 2004
- -----------------
Gordon Wilson
7