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, 2006.
[ ] 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
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CHINA FOOD AND BEVERAGE COMPANY
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(Name of Small Business Issuer in Its Charter)
Nevada 87-0546148
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
710 W. 24th Street, Kansas City, MO 64108
-----------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(877) 667-9377
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(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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS: The number of shares outstanding of
Registrant's common stock ($0.001 par value) as of September 1, 2006 was
10,396,679.
Transitional Small Business Disclosure format (check one) : Yes [ ] No [X]
TABLE OF CONTENTS
PART 1
Page
----
ITEM 1. FINANCIAL STATEMENTS...............................................3
F-4
ITEM 2. PLAN OF OPERATION.................................................10
PART II
ITEM 1. LEGAL PROCEEDINGS.................................................11
ITEM 2. CHANGES IN SECURITIES.............................................11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES...................................11
ITEM 4. SUBMISSION TO A VOTE OF SECURITY HOLDERS..........................11
ITEM 5. OTHER.............................................................11
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K..................................11
SIGNATURES.................................................12
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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, do not include all
information and footnotes required by generally accepted accounting principles
and should, therefore, be read in conjunction with the Company's Annual Report
to Shareholders on Form 10-KSB for the fiscal year ended December 31, 2005.
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, 2006. Accordingly, unaudited interim financial statements,
including a balance sheet for the Company as of the fiscal quarter and six
months ended June 30, 2006, 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-8 and are incorporated herein by this reference.
-3-
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Balance Sheet
ASSETS
June 30, December 31,
2006 2005
(unaudited)
----------- -----------
CURRENT ASSETS
Cash $ 36 $ 132
----------- -----------
Total Current Assets 36 132
----------- -----------
PROPERTY AND FIXED ASSETS -- --
----------- -----------
TOTAL ASSETS $ 36 $ 132
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 496,252 $ 400,739
Accounts payable - related party 46,504 47,947
----------- -----------
Total Current Liabilities 542,756 448,686
----------- -----------
Total Liabilities 542,756 448,686
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 100,000,000 shares authorized at $0.001
par value, 10,396,679 shares issued and
outstanding 10,397 10,397
Additional paid-in capital 2,159,778 2,159,778
Retained earnings accumulated prior to the
development stage 633,605 633,605
Deficit accumulated during the development stage (3,346,500) (3,252,334)
----------- -----------
Total Stockholders' Equity (Deficit) (542,720) (448,554)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 36 $ 132
=========== ===========
The accompanying notes are an integral part of these financial statements.
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CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Statements of Operations
(unaudited)
From
Inception of
Development
Stage on
January 1,
For the Three Months Ended For the Six Months Ended 2000 Through
June 30, June 30, June 30,
---------------------------- --------------- ------------ ------------
2006 2005 2006 2005 2006
------------ ------------ ------------ ------------ ------------
NET SALES $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
COSTS AND EXPENSES
General and administrative 53,749 52,962 94,166 144,359 1,606,518
------------ ------------ ------------ ------------ ------------
Total Costs and Expenses 53,749 52,962 94,166 144,359 1,606,518
------------ ------------ ------------ ------------ ------------
LOSS BEFORE OTHER EXPENSE (53,749) (52,962) (94,166) (144,359) (1,606,518)
------------ ------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Refund tax penalties -- -- -- -- 16,237
Interest expense -- -- -- -- (16,296)
Interest income -- 122 -- 334 13,228
------------ ------------ ------------ ------------ ------------
Total Other Income (Expense) -- 122 -- 334 13,169
------------ ------------ ------------ ------------ ------------
LOSS BEFORE TAX, EXTRAORDINARY
ITEM, AND DISCONTINUED
OPERATIONS (53,749) (52,840) (94,166) (144,025) (1,593,349)
INCOME TAX EXPENSE -- -- -- -- --
------------ ------------ ------------ ------------ ------------
LOSS BEFORE EXTRAORDINARY ITEM (53,749) (52,840) (94,166) (144,025) (1,593,349)
GAIN ON DISPOSITION OF DEBT -- -- -- -- 237,163
------------ ------------ ------------ ------------ ------------
LOSS BEFORE DISCONTINUED
OPERATIONS (53,749) (52,840) (94,166) (144,025) (1,356,186)
LOSS ON DISCONTINUED
OPERATIONS -- -- -- -- (1,990,314)
------------ ------------ ------------ ------------ ------------
NET LOSS $ (53,749) $ (52,840) $ (94,166) $ (144,025) $ (3,346,500)
============ ============ ============ ============ ============
BASIC LOSS PER SHARE $ (0.01) $ (0.01) $ (0.01) $ (0.01)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 10,396,679 9,896,679 10,396,679 9,896,679
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
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CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
Common Stock Additional
-------------------------- Paid-In Other Retained
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)
----------- ----------- ----------- ----------- -----------
(continued)
-6A-
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit) (continued)
Common Stock Additional
-------------------------- Paid-In Other 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) -- --
Net loss for the year ended
December 31, 2003 -- -- -- -- (210,770)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2003 9,896,679 9,897 2,110,278 -- (2,180,121)
Net loss for the year ended
December 31, 2004 -- -- -- -- (204,775)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2004 9,896,679 9,897 2,110,278 -- (2,384,896)
Common stock issued for services
(unaudited) 500,000 500 49,500 -- --
Net loss for the year ended
December 31, 2005 -- -- -- -- (233,833)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2005 10,396,679 10,397 2,159,778 -- (2,618,729)
Net loss for the six months ended
June 30, 2006 (unaudited) -- -- -- -- (94,166)
----------- ----------- ----------- ----------- -----------
Balance, June 30, 2006
(unaudited) 10,396,679 $ 10,397 $ 2,159,778 -- $(2,712,895)
=========== =========== =========== =========== ===========
Retained earnings accumulated prior to the development stage $ 633,605
Deficit accumulated during the development stage (3,346,500)
------------
$(2,712,895)
============
The accompanying notes are an integral part of these financial statements.
-6B-
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception of
Development
Stage on
For the Six Months Ended January 1,
June 30 2000 Through
-------------------------- June 30,
2006 2005 2006
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (94,166) $ (144,025) $(3,346,500)
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Depreciation expense -- -- 2,149
Discontinued operations -- -- 1,990,314
Gain on settlement of debt -- -- (237,163)
Fair value warrants granted -- -- 31,315
Common stock issued for services -- 50,000 50,000
Changes in assets and liabilities:
(Increase) in accounts receivable-related party -- 2,994 (1,602)
(Increase) in exchange credits -- -- 19,594
Increase (decrease) in accounts payable and accrued
expenses 95,513 90,694 (80,585)
(Increase) in prepaid expenses -- (334) --
Increase (decrease) in related party payable (1,443) -- 12,954
----------- ----------- -----------
Net Cash (Used) by Operating Activities (96) (671) (1,559,524)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in interest receivable -- -- 4,194
Proceeds from sale of exchange credits -- -- 419,980
Increase in note receivable -- -- (82,592)
Receipt of payment on note receivable -- -- 80,000
Increase in note receivable - related party -- -- --
----------- ----------- -----------
Net Cash Provided by Investing Activities -- -- 421,582
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Loss of cash from discontinued operations -- -- (424,757)
Common stock issued -- -- 1,200,000
Proceeds from related party -- -- 129,474
Proceeds from notes payable -- -- --
Increase in Notes Payable -- -- (323,011)
----------- ----------- -----------
Net Cash (Used) by Financing Activities -- -- 581,706
----------- ----------- -----------
NET (DECREASE) IN CASH (96) (671) (556,236)
CASH AT BEGINNING OF PERIOD 132 899 556,272
----------- ----------- -----------
CASH AT END OF PERIOD $ 36 $ 228 $ 36
=========== =========== ===========
The accompanying notes are an integral part of these financial statements.
-7-
From
Inception of
Development
Stage on
For the Six Months Ended January 1,
June 30 2000 Through
-------------------------- June 30,
2006 2005 2006
----------- ----------- -----------
Cash Paid For:
Interest $ -- $ -- $ 3,000
Income taxes $ -- $ -- $ --
Schedule of Non-Cash Activities:
Fair value of warrants issued $ -- $ -- $ 31,315
Common stock issued for services $ -- $ -- $ 50,000
-8-
CHINA FOOD AND BEVERAGE COMPANY
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2006 and December 31, 2005
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying unaudited condensed financial statements have been
prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with accounting principles generally accepted in the United
States of America have been condensed or omitted in accordance with
such rules and regulations. The information furnished in the interim
condensed financial statements include normal recurring adjustments
and reflects all adjustments, which, in the opinion of management, are
necessary for a fair presentation of such financial statements.
Although management believes the disclosures and information presented
are adequate to make the information not misleading, it is suggested
that these interim condensed financial statements be read in
conjunction with the Company's most recent audited financial
statements and notes thereto included in its December 31, 2005 Annual
Report on Form 10-KSB. Operating results for the three and six months
ended June 30, 2006 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2006.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting
principles generally accepted in the United States 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.
-9-
ITEM 2. PLAN OF OPERATIONS
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 2005, filed on May 5, 2006, 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 its prior operations, the Company has continued to
seek to acquire businesses both in China and other countries. The Company
currently has no ongoing day to day operations or sales.
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 six month period ended June 30, 2006, there were no issuances of
the Company's common stock. The Company has no working capital available and is
seeking an acquisition opportunity.
Results of Operations
- ----------------------------
For the three and six month periods ended June 30, 2006, the Company
sustained net losses of ($53,749) and ($94,166) respectively. For the three and
six month periods ended June 30, 2005, (prior year) the Company sustained losses
of ($52,840) and ($144,025) respectively. The decrease in the loss from 2005 to
2006 is attributable to less expenditures for the general and administrative
expenses of the company. Losses as a whole are attributable to the fact the
Company has no revenue producing operations yet still had administrative
expenses.
-10-
The net loss per share of stock (basic and diluted) were ($0.00) and
($0.01) respectively for the three and six month periods ended June 30, 2006.
The net loss per share of stock (basic and diluted) were ($0.01) and ($0.01) for
the three and six month periods ended June 30, 2005 (prior year).
The net stockholders' deficit at June 30, 2006 was ($542,720) compared to a
deficit at June 30, 2005 of ($488,554).
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
During the six month period ended June 30, 2006, there were no legal
proceedings involving the Company.
ITEM 2. CHANGES IN SECURITIES
During the six month period ended June 30, 2006, there were no changes in
securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
During the six month period ended June 30, 2006, there were no defaults
upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the six month period ended June 30, 2006, there were no submission
of matters to a vote of security holders.
ITEM 5 OTHER
During the six month period ended June 30, 2006, there were no other issues
to be reported by the Company.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
During the six month period ended June 30, 2006, there were no reports on
Form 8-K. Exhibit 31.1 Certification of quarterly report on Form 10-QSB and
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 are attached.
-11-
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 1st day of September 2006.
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,
- ----------------- CFO, Treasurer and Director September 1, 2006
James Tilton
/s/Jane Zheng Secretary and Director September 1, 2006
- -----------------
Jane Zheng
- -----------------
/s/Gordon Wilson Director September 1, 2006
- -----------------
Gordon Wilson
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