SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2002
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from__________to__________.
Commission File No. 0-27323
CHINA GLOBAL DEVELOPMENT, INC.
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(Exact name of registrant as specified in its charter)
Nevada 87-0403828
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
4766 Holladay Blvd., Holladay, Utah 84117
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(Address of principal executive offices)
801-273-9300
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(Issuer's telephone number)
Seventh District North, Chung Ping Region, Beijing, China
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(Former address)
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 NO X
As of September 18, 2002, 47,106,248 shares of Common Stock of the issuer
were outstanding.
CHINA GLOBAL DEVELOPMENT, INC.
INDEX
Page
Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - June 30, 2002 and
December 31, 2001 3
Unaudited Statements of Income - For the
six months ended June 30, 2002 and 2001 4
Unaudited Statements of Cash Flows-
For the six months ended June 30, 2002 and 2001 5
Notes to Consolidated Financial Statements 6
Item 2. Management Discussion and Analysis of Financial
Condition and Results of Operations 7-8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Service Securities 9
Item 4. Submission of Matters to a Vote of Securities Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements included herein have been prepared by the
Company, 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 generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of June 301, 2001 and the results of its operations and changes in
its financial position from December 31, 2001 through June 30, 2002 have been
made. The results of its operations for such interim period is not necessarily
indicative of the results to be expected for the entire year.
CHINA GLOBAL DEVELOPMENT, INC.
BALANCE SHEETS
Assets
June 30, 2002 December 31, 2001
------------- -----------------
$ - $ -
Total Assets
Liabilities and Stockholders' Equity
Current liabilities $ 39,206 $ 5,305
Accounts Payable - 45,500
Line of Credit - 132,246
Interest Payable - 730,991
Short-term Loans - 20,000
------ -------
Shareholder Loans 39,206 934,042
Total Current Liabilities
Long Term Liabilities:
Vehicle Loan $ - $ 14,500
Total Long Term Liabilities - 14,500
Total Liabilities 39,206 948,542
------ -------
Stockholders' Equity
Preferred Stock; 5,000,000 as of
December 31, 2001 and 10,000,000
as of June 30, 2002 authorized
at $.001 par value;
No shares issued and outstanding - -
Common stock, $.001 par value; 50,000,000
shares authorized as of December 31,
2001 and 100,000,000 Shares authorized
as of June 30, 2002 5,404,497 and
47,106,248 shares issued
and outstanding respectively 47,106 -
Additional paid in capital 3,095,669 2,188,828
Accumulated Deficit (3,181,981) (3,142,775)
----------- -----------
Total stockholders' equity (39,206) (948,542)
----------- -----------
Total liabilities and equity $ - $ -
=========== ===========
CHINA GLOBAL DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30 Six Months Ended June 30 Since Inception
2002 2001 2002 2001
---- ---- ---- ----
Sales - - - - 404,898
Cost of Goods Sold - - - - 258,533
- - - - -------
Gross Profit - - - - 146,365
General and Administrative 21,268 4,071 39,206 49,071 1,777,452
Depreciation & Amortization - 3,405 - 6,810 17,026
- ----- - ----- ------
Total Expenses 21,268 7,476 39,206 55,881 1,784,478
Net Operating Income (loss) (21,268) (7,476) (39,206) (55,881) 1,638,113
Other Revenue (expense)
Interest - (12,325) - (20,725) (38,693)
- -------- - -------- --------
Net Income 21,268 (19,801) 39,206 (76,606) 1,676,806
====== ======== ====== ======== =========
Net Loss Per Share .00 .00 .00 .00
=== === === ===
Average Shares Outstanding 47,106,248 14,282,997 47,106,248 14,282,997
========== ========== ========== ==========
CHINA GLOBAL DEVELOPMENT, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended
June 30, 2002 June 30, 2001
------------- -------------
Cash Flows From Operating Activities
Net income (loss) ($ 39,206) (76,606)
Adjustments to reconcile net
Income to net cash provided by operating
activities:
Depreciation - 6,810
Shares for services 108
Changes in current assets and liabilities
Increase in inventory -
Increase in accounts payable 33,901
Decrease in interest payable (132,2460
Increase in accrued expenses - 65,725
Decrease in line of credit (45,500)
Decrease in short term loan (730,991)
Decrease in shareholder loans (20,000)
Decrease in long term loans (14,500)
Net cash provided (used in) operating
Activities 948,542 3,963
Cash Flow From Investing Activities - -
Cash Flow From Financing Activities
Issuance of Shares for Assumption of corporate
liabilities
948,542 3,963
Total Cash Provided from Financing Activities 948,542 3,963
Net increase in cash 0 0
Cash - Beginning of Period 0 0
Cash - End of Period 0 0
NOTES TO FINANCIAL STATEMENTS
Note 1 -- Basis of Presentation
The unaudited condensed consolidated financial statements of China Global
Development, Inc. have been prepared in accordance with generally accepted
accounting principles for interim financial information and pursuant to the
requirements for reporting on Form 10-QSB. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. However, such information reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair statement of results for the
interim periods. Results shown for interim periods are not necessarily
indicative of the results to be obtained for a full fiscal year. These interim
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company Form 10-KSB for the fiscal
year ended December 31, 2001.
Note 2 - Nullification of the Acquisition of Rainbow Light Global Corporation,
Inc. acquisition
In August 2002, the Board of directors voted to rescind the acquisition of
Rainbow Light Global Corporation, and in September 2002, the Shareholders will
ratify this decision. Because of this recission, the financial statements of the
Company are presented as if this transaction never occurred.
Item 2. Management Discussion and Analysis of Financial Condition and Results of
Operations
General
China Global Development, Inc. (formerly iBonzai.com, (the "Company") was
organized on December 26, 1991 as a Delaware corporation under the name of Life
Medical Technologies, Inc. in the business of bringing new medical product
technology to the health care market place. In 1995, the Company cut back its
operations and eliminated most staffing. From 1996 to 1999, the Company
maintained a skeleton crew to maintain and ship existing orders from its
inventory, but conducted no marketing or research and did not develop any
additional products. By mid 1997, all employees were laid off and part time help
was maintained to handle the existing sales and shipping of products. By 1999,
sales had declined to minimal levels and all remaining assets were distributed
to its wholly owned subsidiary (see below) and sold off to two of its former
employees.
The Company acquired several subsidiaries in 1995, but either sold off all
entities by the end of 1998 or allowed the entities to lapse into nonexistence.
As of December 31, 1999, only the parent corporation, Life Medical Technologies,
Inc. remained.
In approximately March of 2000, the Company changed its name from Life Medical
Technologies, Inc. to I-SIM International Corporation. Subsequently, the Company
changed its name back to Life Medical Technologies, Inc.
On May 11, 2000, the Company acquired all the of equity of Virtual Market
Solutions.com, Inc., a privately-held Nevada corporation doing business as
iBonZai.com ("iBonzai") in exchange for 9,250,000 shares to two officers of the
company. As a result of the acquisition, iBonZai became a wholly-owned
subsidiary of the Company.
Due to the change in the Internet industry following the U.S. market break in
the end of the second quarter of 2000, VMS experienced substantial obstacles in
developing its business as a provider of broadbank backbone, billing services
and technical support to internet service providers. As the general and Internet
industry economic conditions continued to deteriorate during the first half of
2001, management suspended operations and laid off all its employees. Following
the events of September 11, 2001, management determined that it was in the best
interest of the Company to rescind the acquisition of VMS. Effective November
28, 2001, the Company rescinded the acquisitin of VMS in an effort to complete a
restructure of the Company's capital and shed itself of debt. The financial
statements for the year ended December 31, 2001 refer to financial numbers at
December 31, 2000 in which the financial information of VMS has been removed
(except for any debt guaranteed or assumed by the Company). As part of the
rescission, VMS retained all assets of the Company and the debt, as well as the
accrued interest on the notes remaining with iBonzai.com, Inc. As such,
9,250,000 shares of the Company's common stock was rescinded, and the Company's
additional paid-in capital, and accumulated deficit was returned to the books.
The financial statements reflect the position of the Company, as if, the
acquisition of VMS did not take place, however, the assumption of the
liabilities remains with the Company as part of the rescission agreement. Due to
the assumption of the liabilities the expenses for the Company amounted to
$129,320 and $1,150,594 for the years 2001 and 2000 respectively.
14
On January 10, 2002, the Company was merged into Ibonzai.com, Inc. a Nevada
corporation, for the purposes of changing corporate domicile. On January 15,
2002, the Company changed its name to China Global Development, Inc. and
effected a 1 for 25 reverse stock split. Capitalization remained at 100,000,000
shares of common stock having a par value of $.001 per share and 10,000,000
shares of preferred stock having a par value of $.001 per share.
On February 7, 2002, the Company acquired all of the issued and outstanding
shares of Rainbow Light Global Corporation, a British Virgin Islands Corporation
("Rainbow"). Rainbow is the owner of 95% of the shares of Beijing Baxian Real
Estate Development Company Limited, a People's Republic of China corporation
engaged in the property development and construction industries in the People's
Republic of China.
In August 2002, the Board of Directors voted to rescind the acquisition of
Rainbow Light Global Corporation (Rainbow). It is anticipated that the
shareholders will ratify this decision at the shareholder meeting on September
27, 2002. Because of this recission, the financial information contained herein
does not reflect any information for Rainbow.
Forward Looking Statements
Discussions and information in this document, which are not historical facts,
should be considered forward-looking statements. With regard to forward-looking
statements, including those regarding the potential revenues from increased
sales, and the business prospects or any other aspect of China Global
Development, Inc., actual results and business performance may differ materially
from the projected or estimated in such forward-looking statements. China Global
Development, Inc. has attempted to identify in this document certain of the
factors that it currently believes may cause actual future experience and
resultes to differ from its current expectations. Differences may be caused by a
variety of factors, including but not limited to, adverse economic conditions,
entry of new and stronger competitors, inadequate capital and the inability to
obtain funding from third parties.
Results of Operation
For the six months ended June 30, 2002 and 2001, respectively, the Company had
no revenues.
For the six months ended June 30, 2002, the Company incurred general and
administrative fees of $39,206, principally professional fees. This represents a
decline of $9,865 or 20.1% from the six months period ended June 30, 2001 when
such expenses totaled $49,071. Although professional fees were greater for the
current period, the expenses from the corresponding period of 2001 were greater
because the Company was shutting down its ISP operations.
For the six months ended June 30, 2002, the Company had no depreciation or
amortization expenses as all of its fixed assets had been exchanged. This
compares with depreciation and amortization expense of $6,810 for the
corresponding period of the prior year.
For the six months ended June 30,2002, the Company had no interest expense. This
compares with interest expense of $20,725 for the corresponding period of the
prior year when the Company had both bank and shareholder loans.
As a result of the foregoing, the net operating loss of the Company decreased to
$39,206 for the six months ended June 30, 2002 from $76,606 for the
corresponding period of the prior year.
Liquidity and Capital Resources
As of June 30, 2002, the Company had no cash and a deficit in working capital of
$39,206. This compares with no cash and a deficit in working capital of $934,042
as of June 30, 2001.
Net cash used in operating activities for the six months ended June 30, 2002
increased by $944,579 to $948,542 from $3,963 for the corresponding period of
the prior year. This increase resulted from net changes in the current accounts
which was partially offset by a reduced net operating loss.
There were no investing activities in either the six months ended June 30, 2002
or June 30, 2001.
Net cash provided by financing activities increased by $944,579 for the six
months ended June 30, 2002 from $3,963 for the corresponding period of the prior
year. All of the increase resulted from the issuance of shares in exchange for
an assumption of the Company's liabilities.
The Company has no plans for any capital expenditures. The sole activity of the
Company is to find an operating company to acquire or with which to merge. Until
such time, the Company will be completely dependent on the sale of its shares or
loans from shareholders, without which the Company will be unable to continue.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
To the best of management's knowledge, there are no legal proceedings or
threatened legal proceedings against the Company.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On January 10,2002, the shareholders approved a change in the Company's state of
incorporation from Delaware to Nevada, a reverse split of the Company's shares
and change in the Company's name from Ibonzai.com, Inc. to China Global
Development, Inc. On Septembber 21, 2002, the shareholders will vote to ratify
the Board of Director decision to rescind the acquisition of Rainbow Light
Global Corporation.
Item 5. Other Information
On February 7, 2002, the Company's board of directors approved the acquisition
of Rainbow Light Global Corporation for 15,000,000 shares of the Company's
Common Stock.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
1. 99.1 Certification of the Chief Executive Officer and the Chief
Financial Officer
Reports on Form 8-K
a) Form 8-K dated January 28, 2002 reporting a change in the Company's
state of incorporation, the reverse split of its shares and the change
of the Company's name.
b) Form 8-K dated February 2, 2002 reporting the acquisition of Rainbow
Light Global Corporation.
c) Form 8-K dated March 26, 2002 reporting a change in the Company's
certifying accountants
Signature
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
CHINA GLOBAL DEVELOPMENT, INC.
/s/ Zheng Baohua
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September 19, 2002 Zheng Baohua
Chief Executive Officer
September 19, 2002 /s/ Baldwin Yung
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Baldwin Yung
Chief Financial Officer