U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED APRIL 30TH, 2003
Commission File No. 0-25553
HUBEI PHARMACEUTICAL GROUP LTD.
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(Name of Small Business Issuer in its Charter)
Nevada 88-0419476
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State or other jurisdiction of I.R.S. employer identification
incorporation or organization number
410 PARK AVENUE, 15TH FLOOR
NEW YORK, NY, USA
10222
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(Address of principal executive offices)
(604) 881-2899
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Issuer's telephone number
PAN ASIA COMMUNICATIONS CORP
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Former name or former address, if changed since last report
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 Company was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
----- ----- ----- -----
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Not applicable
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the Issuer's classes of common
equity, as of the latest practicable date: As of April 30th, 2003 the company
had issued 4,582,876 shares
DOCUMENTS INCORPORATED BY REFERENCE
A description of any "Documents Incorporated by Reference" is contained in Item
6 of this Report.
TRANSITIONAL SMALL BUSINESS ISSUER FORMAT YES NO X
-
I N D E X
PART I Financial Information
Item 1 Financial Statements Page
Balance Sheet 3
Statement of Operations 4
Statements of Retained Earnings 5
Statement of Cash Flows 6
Statement of Stockholders Equity 7
Notes to the Financial Statements 8
PART II Other Information 11
Signatures 12
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
AT APRIL 30, 2003 AND APRIL 30, 2002
(EXPRESSED IN US DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
----------- ---------
2003 2002
----------- ---------
ASSETS
Current Assets
Cash and cash equivalents $ 18,930 $ 287
Advance to Red Dot Capital 3,000 --
Advances to Hubei Pharmaceutical Company, Ltd. 182,050 --
----------- -----------
$ 203,980 $ 287
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Current Liabilities
Accounts payable $ 121,516 $ 73,576
Advances payable 17,055 23,015
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138,571 96,591
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Shareholders Equity
Capital Stock
Par value (4,582,876 shares post-consolidation) 18,829 1,523
Additional paid in capital 1,265,163 522,227
Advances on proposed subscriptions 265,070 --
Retained Earnings (deficit) (1,483,653) (620,054)
------------ ----------
65,409 (96,304)
------------ ----------
$ 203,980 $ 287
============ ==========
See accompanying notes to the financial statements
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
(EXPRESSED IN US DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
Cumlative from
Inception Date of
December 18th, 1998
to April 30th Three Months Ended April 30th
--------------- ----------------------------------
2003 2003 2002
--------------- -------------- ------------------
Revenue $ -- $ -- $ --
General and Administration Costs
Bank charges 2,229 946 42
Consulting fees -- -- --
Interest 117,003 -- --
Office and sundry 32,100 612 --
Professional fees 76,751 8,389 1,630
Stock transfer and filing fees 27,541 1,403 532
Travel and promotion 8,815 -- --
Foreign exchange loss (gain) 198 -- --
Mineral property maintenance and 11,201 -- --
exploration expenditures
Management fees 147,000 6,000 --
Issuance for compensation 25,000 25,000 --
Finders fees 8.900 8,900 --
Write off of accounts payable (70,000) (70,000) --
--------------- -------------- ------------------
386,738 (18,750) 2,204
--------------- -------------- ------------------
Net profit (loss) from operations (386,738) 18,750 (2,204)
Loss on terminated acquisitions (1,059,415) -- --
Abandonment of mineral property (3,500) -- --
Contract cancellation (34,000) -- --
--------------- -------------- ------------------
Net profit (loss) for the period $ (1,483,653) $ 18,750 $ (2,204)
=============== ============== ==================
Basic and diluted earnings (loss) per common share $ (0.32) $ 0.00 $ 0.00
=============== ============== ==================
Weighted average number of shares outstanding 4,582,876 4,582,876 1,522,506
=============== ============== ==================
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
STATEMENTS OF RETAINED EARNINGS
(EXPRESSED IN US DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
Cumlative from
Inception Date of
December 18th, 1998
to April 30th Three Months Ended April 30th
-------------- --------------------------------
2003 2003 2003
-------------- ------------- -----------------
Profit (loss) for the period (1,483,653) 18,750 (2,204)
Retained earnings (deficit)
beginning of period -- (1,502,403) (617,850)
------------------------------------------------
Retained earnings (deficit)
end of period (1,483,653) (1,483,653) 620,054
============== ============= =================
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(EXPRESSED IN US DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
Cumlative from
Inception Date of
December 18th, 1998
to April 30th Three Months Ended April 30th
--------------------- ----------------------------------
2003 2003 2002
--------------------- -------------- ------------------
Cash derived from (applied to)
Operating activities
Net profit (loss) for the period $ (1,483,653) $ 18,750 $ (2,204)
Items not requiring use of cash
Stock issued for other than cash 971,990 43,000 --
Cancellation of issuance for debt (120,000) (120,000) --
Loss on advances 357,634 -- --
Abandonment of mineral property 3,500 -- --
Changes in non-cash working capital items
Accounts payable increase (decrease) 121,518 (2,906) (7,405)
Advance to Red Dot Capital (3,000) (3,000) --
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(152,011) (64,156) (9,609)
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Financing activities
Capital stock issued 65,000 -- --
Convertible debt 367,000 -- --
Advances payable 17,055 -- 9,679
Advances on proposed subscriptions 265,070 265,070 --
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714,125 265,070 9,679
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Investing activities
Acquisition advances (357,634) -- --
Mineral property (3,500) -- --
Advances to Hubei Pharmaceutical Company Ltd. (182,050) (182,050) --
--------------------- -------------- ------------------
(543,184) (182,050) --
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Cash and cash equivalents,
Increase (decrease) during the period 18,930 18,864 70
Cash and cash equivalents,
Beginning of period -- 66 217
--------------------- -------------- ------------------
Cash and cash equivalents,
End of period $ 18,930 $ 18,930 $ 287
===================== ============== ==================
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
AS AT APRIL 30TH, 2003
(EXPRESSED IN US DOLLARS)
(UNAUDITED - PREPARED BY MANAGEMENT)
Additional Retained
Number of Par Paid-in Earnings
Shares Value Capital (deficit) Total
------------ ---------- ------------ ------------- ----------
Shares issued for cash at $0.01 600,006 $ 600 $ 59,400 $ -- 60,000
Shares issued for cash at $0.10 5,000 5 4,995 -- 5,000
Net loss for the period (7,401) (7,401)
------------ ---------- ------------ ------------- ----------
Balance, January 31st, 1999 605,006 605 64,395 (7,401) 57,599
Net loss for the year (46,422 (46,422)
------------ ---------- ------------ ------------- ----------
Balance, January 31st, 2000 605,006 605 64,395 (53,823) 11,177
Shares issued for convertible debt 917,500 918 457,832 -- 458,750
Net loss for the year (547,038) (547,038)
------------ ---------- ------------ ------------- ----------
Balance, January 31st, 2001 1,522,506 1,523 522,227 (600,861) (77,111)
Net loss for the year (16,989) (16,989)
------------ ---------- ------------ ------------- ----------
Balance, January 31st, 2002 1,522,506 1,523 522,527 (617,850) (94,100)
Shares issued for acquisition of
business 14,000,000 14,000 1,246,000 1,260,000
Shares issued for debt 17,629,136 17,629 747,756 765,385
Shares issued for services 5,950,000 5,950 529,550 535,500
Shares cancelled on rescission of
acquisition agreement (23,272,880) (23,273) (1,700,370) (1,723,643)
Net loss for the year (884,553) (884,553)
------------ ---------- ------------ ------------- ----------
Balance, January 31st, 2003 15,828,762 15,829 1,345,163 (1,502,403) (141,411)
Shares issued for consulting fee
March 5th, 2003 1,500,000 1,500 13,500 15,000
Shares issued for debt
March 14th, 2003 1,500,000 1,500 13,500 15,000
Shares issued for bonus
March 17th, 2003 1,000,000 1,000 9,000 10,000
Cancellation of issuance for debt
March 24th, 2003 (4,000,000) (4,000) (116,0000 (120,000)
Advances on proposed
subscriptions 265,070
------------ ---------- ------------ ------------- ----------
15,828,762 15,829 1,265,163 (1,502,403) 43,659
------------ ---------- ------------ ------------- ----------
1 : 10 consolidation 1,582,876 15,829 1,265,163 (1,502,403) 43,659
Shares issued for the deposit of
acquisition of 57.1% interest of
Hubei Pharmaceutical Co. Ltd.
(Total 22,000,000 shares recorded
at par value for now) 3,000,000 3,000 3,000
Net profit for three months
April 30th, 2003 18,750 18,750
------------ ---------- ------------ ------------- ----------
Balance, April 30th, 2003 4,582,876 $ 18,829 $ 1,265,163 ($1,483,653) $ 65,409
============ ========== ============ ============= ==========
HUBEI PHARMACEUTICAL GROUP, LTD.
(Formerly Explore Technologies, Inc.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
APRIL 30TH, 2003
(Unaudited - Prepared by management)
(STATED IN U.S. DOLLARS)
1. BASIS OF PRESENTATION
The unaudited financial statements as of April 30th, 2003 included herein have
been prepared without audit 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 United
States generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. It is suggested that these financial
statements be read in conjunction with the January 31, 2003 audited financial
statements and notes thereto.
2. CHANGE OF NAME
Effective April 2nd 2003, the Company underwent a name change to Hubei
Pharmaceutical Group, Ltd.
3. SHARE CAPITAL
On March 5th, 2003 the Company issued 1,500,000 shares of common stock, at a
price of $0.01 per share in accordance with Rule S-8 to consultants for services
rendered.
On March 14th, 2003 the Company issued 1,500,000 shares of common stock, at a
price of $0.01 per share to a creditor in settlement of a debt $15,000.00. These
shares were issued under the conditions of Rule 144 and carry an appropriate
restrictive legend.
On March 17th, 2003 the Company issued 1,000,000 shares of common stock, at a
price of $0.01 per share to its president as a signing bonus pursuant to a
resolution dated December 4th, 2002. These shares were issued under the
conditions of Rule 144 and carry an appropriate restrictive legend. This
President has since resigned.
On March 24th, 2003 four million shares were returned to the transfer agent for
cancellation pursuant to a renegotiated debt settlement. The Company
re-negotiated a debt settlement made previously with Eurocapital Holdings A.V.V.
("EuroCapital"), referenced in the audited statement dated January 31st, 2003.
Under the terms of the re-negotiated agreement, EuroCapital agreed to tender
their 4,000,000 shares on the condition that the Company make a payment to
EuroCapital and/or their nominee in the sum of Fifty Thousand Dollars
(US$50,000). The company paid EuroCapital holdings the sum of $50,000 on March
18th, 2003. The 4,000,000 shares were returned to the transfer agent for
cancellation on March 24th, 2003.
On April 2nd, 2003 the Company consolidated its issued and outstanding common
shares on a 10-old; 1-new basis. Following the rollback, the Company's
authorized capital was increased back to ONE HUNDRED MILLION (100,000,000)
shares.
On April 3rd, 2003 the company issued 3,000,000 shares of common stock pursuant
to an agreement entered into with Red Dot Capital, Inc. to acquire a 57.1%
interest in a joint venture located in China. This issue has been recorded at
par value pending completion of the transaction. These shares were issued under
the conditions of Rule 144 and carry an appropriate restrictive legend. An
additional legend provides that the shares are to be returned to treasury for
cancellation unless the terms and conditions of a joint venture agreement
between Red Dot Capital and Hubei Zenith Airbeck Pharmaceutical Co.
Ltd.("Airbeck") are fulfilled and certain assets in the form of production
licenses transferred in to the joint venture by Airbeck.
The Company received a total of $265,070 to April 30th, 2003 as advances on
proposed subscriptions pursuant to a private placement of the Company's common
stock with a small group of accredited investors. Shares to be issued with
respect to the private placement will be issued in reliance on exemptions from
registration under the Securities Act of 1933, as amended. As a result, all
shares of the Company issued with respect to the private placements will be
subject to restrictions on transfer under the applicable provisions of the
securities act and carry a legend reflecting such restrictions.
As at April 30th, 2003 the Company had advanced a total of $182,050 dollars to
the Hubei Pharmaceutical Co. Ltd. joint venture in the form of a short term loan
to be repaid on or before July 31st, 2003.
4. MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
THE FOLLOWING DISCUSSION INCLUDES FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE
COMPANY'S FUTURE FINANCIAL PERFORMANCE. ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS DEPENDING UPON A
VARIETY OF FACTORS. ONE CAN IDENTIFY THESE FORWARD-LOOKING STATEMENTS BY USE OF
WORDS SUCH AS "STRATEGY," "EXPECTS," "PLANS," "ANTICIPATES," "BELIEVES," "WILL,"
"CONTINUES," "ESTIMATES," "INTENDS," "PROJECTS," "GOALS," "TARGETS" AND OTHER
WORDS OF SIMILAR MEANING. ONE CAN ALSO IDENTIFY THEM BY THE FACT THAT THEY DO
NOT RELATE STRICTLY TO HISTORICAL OR CURRENT FACTS. THESE STATEMENTS ARE BASED
ON OUR ASSUMPTIONS AND ESTIMATES AND ARE SUBJECT TO RISKS AND UNCERTAINTIES. SEE
ALSO THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED JANUARY 31st,
2003.
On February 26th 2003, the Company identified a new business opportunity and on
March 18th 2003 entered into an Acquisition Agreement with Red Dot Capital Inc.
("Red Dot") to acquire 100% of Red Dot's right to acquire, on certain terms and
conditions, a 57.1% joint venture interest with Hubei Zenith Airbeck
Pharmaceutical Co. Ltd. ("Airbeck") in Hubei Pharmaceutical Co. Ltd. ("HBJV"), a
private Chinese company to be involved in research, development, production and
sale of certain pharmaceutical products that Airbeck would contribute to HBJV.
The new joint venture, Hubei Pharmaceutical Co. Ltd. is incorporated in China
and licensed for research, development, manufacturing and distribution of
pharmaceutical products. On June 4th, 2003 the Company received confirmation
from HBJV that effective May 9th, the State Drug Administration (SFDA), China's
equivalent to the Food and Drug Administration in the United States, issued an
approval certificate transferring the dosage division production licenses from
Airbeck to HBJV. In total, 114 production licenses have been transferred to
HBJV by Airbeck in exchange for its 42.9% interest. Airbeck continue to operate
the division under a special transitional provision allowing them to produce and
ship under the licensing now owned by HBJV. Completion of the transfer of
Airbeck's licenses into HBJV was a significant part of the Acquisition agreement
between the Company and Red Dot and a determining factor as to when the Company
would complete the acquisition of Red Dot's 57.1 percent interest in HBJV. The
company plans to complete the acquisition of Red Dot's interest before the end
of the current quarter, July 31st 2003, and is contracting for an audit of the
joint venture immediately following completion to ensure timely filings of the
necessary supporting documentation.
The Company has not earned any revenue from activities since incorporation. The
Company's primary source of funds since incorporation has been through the issue
of its common stock. The Company does not anticipate revenues resulting from a
return on its investment in HBJV until some time after the Company successfully
implements its business plan for HBJV and achieves a level of sales adequate to
support the Company's cost structure. The company raised $350,053 dollars, net
of costs, through a private placement of its securities with a small group of
accredited investors closed on May 30th, 2003. The company is currently
exploring options with respect to additional financing to ensure sufficient
working capital is available to fund implementation of its business plan to
further develop HBJV in the first 12 months of operation. Aggressive expansion
will not be possible until additional funds are raised. Financing may be
concluded on the basis of debt, equity or a combination thereof.
PART 11 OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 26th 2003, O'Neill & Company filed a civil complaint against the
Company with the District Court, Clark County in Nevada for unpaid legal
services in the amounts of $30,960.25 and US$3,630.25
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Messrs. Cecil Morris and Mark Glusing resigned their offices as directors on
April 2nd, 2003. Mr. Reid Li was appointed as a director and President on April
2nd, 2003. Mr. Eric Fletcher was appointed as a director and Corporate
Secretary on April 2nd, 2003. Mr. Clint Cheng was appointed as a director on
April 9th, 2003.
On December 13th, 2001 the Company filed a Form 10QSB indicating in the notes to
financial statements, Item 2, sub-paragraph ii) that during the period ended
October 31, 2001, the Company granted incentive share purchase options to two
directors to purchase 20,000 shares at an exercise price of $0.20 per share
expiring August 27, 2002. Subsequently on Form 10KSB filed May 15th, 2003 the
notes to financial statements, Item 4, paragraph 6 indicates that as at January
31st, 2003 options to purchase 20,000 shares at a price of $0.20 are outstanding
and that there is no expiry date on the options. Management are investigating
this but believe that these options to purchase expired on August 27th, 2002.
ITEM 6. EXHIBITS AND REPORTS
The following reports are included by reference:
1. Form 8-K notification of a debt settlement for 4,000,000 common shares,
filed on February 4, 2003
2. Schedule 13D, regarding 4,000,000 share debt settlement, filed on February
7, 2003
3. Form 8-K notification of a debt settlement for 1,030,636 common shares,
filed on February 7, 2003
4. Schedule 13D, regarding 1,030,636 common shares, filed on February 11,
2003.
5. Form S-8, regarding 1,500,000 shares paid to consultants, filed on March
10th, 2003
6. Form 8-K, regarding registration of 1,500,000 shares paid to consultants,
filed on March 12th, 2003
7. Schedule 13D, regarding 1,500,000 common shares, filed March 20th, 2003
8. Form 8-K, regarding acquisition agreement, name change, consolidation,
3,000,000 shares issued, resignation of directors, appointment of new
directors
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: June 24th, 2003 Hubei Pharmaceutical Group, Ltd.
By: /s/ Reid Li
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Reid Li, President.
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CERTIFICATION
I, Reid Li, President of Hubei Pharmaceutical Group, Ltd., certify that:
1: I have reviewed this quarterly report on Form 10-QSB of Hubei Pharmaceutical
Group, Ltd.
2; Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report: and
3: Based on my knowledge, the financial statements and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows (if
applicable) of the registrant as of, and for, the periods presented in this
report.
HUBEI PHARMACEUTICAL GROUP, LTD.
By: /s/ Reid Li
-----------------
Reid Li -President and Principal Executive Officer.
Date: June 24th, 2003.
END OF FILING