SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter period ended SEPTEMBER 30, 1999 [ ] Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ___________ to _____________ CHINA RESOURCES DEVELOPMENT, INC. (Exact Name of registrant as Specified in Charter) Nevada 33-5628-NY 87-0263643 (State or other Jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) Room 2005, 20/F, Universal Trade Centre, 3-5A Arbuthnot Road, Central, Hong Kong Telephone: 011-852-28107205 (Address and telephone number of principal executive offices) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. Yes X No ------ ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 592,900 shares of common stock, $0.001 par value, as of November 15, 1999. Page 1 of 21 pages Exhibit Index on Page 18 CONVENTIONS Unless otherwise specified, all references in this report to "U.S. Dollars," "Dollars," "US$," or "$" are to United States dollars; all references to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to "Renminbi" or "RMB" or "Yuan" are to Renminbi Yuan, which is the lawful currency of the People's Republic of China ("China" or "PRC"). The Company and Billion Luck maintain their accounts in U.S. Dollars and Hong Kong Dollars, respectively. HARC and the Operating Subsidiaries maintain their accounts in Renminbi. The financial statements of the Company and its subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars are for the convenience of the reader. Unless otherwise indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have been made at the single rate of exchange as quoted by the People's Bank of China (the "PBOC Rate") on September 30, 1999, which was approximately U.S.$1.00 = Rmb8.28. Translations from Hong Kong Dollars to U.S. Dollars have been made at the single rate of exchange as quoted by the Hongkong and Shanghai Banking Corporation Limited on September 30, 1999, which was approximately US$1.00 = HK$7.75. The Renminbi is not freely convertible into foreign currencies and the quotation of exchange rates does not imply convertibility of Renminbi into U.S. Dollars or other currencies. All foreign exchange transactions take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People's Bank of China. No representation is made that the Renminbi or U.S. Dollar amounts referred to herein could have been or could be converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or at all. References to "Billion Luck" are to Billion Luck Company Ltd., a British Virgin Islands company, which is a wholly-owned subsidiary of the Company. References to "Company" and "Registrant" are to China Resources Development, Inc., and include, unless the context requires otherwise, the operations of Billion Luck, HARC, First Supply, and Second Supply (all as hereinafter defined). References to "Farming Bureau" are to the Hainan Agricultural Reclamation General Company, a division of the Ministry of Agriculture, the PRC government agency responsible for matters relating to agriculture. References to "First Supply" are to First Goods And Materials Supply And Sales Corporation, a company organized in the PRC and a wholly-owned subsidiary of HARC. References to "Guilinyang Farm" are to Hainan Province Guilinyang State Farm, a PRC entity which is owned and controlled by the Farming Bureau. References to "Hainan" are to Hainan Province of the PRC. References to "Hainan State Farms" are to the rubber farms in Hainan controlled by the Farming Bureau. References to "HARC" are to Hainan Zhongwei Agricultural Resources Company Limited, a company organized in the PRC, whose capital is owned 56% by Billion Luck, 39% by the Farming Bureau and 5% by the Company. References to "Operating Subsidiaries" are to the consolidated operations, assets and/or activities, as the context indicates, of First Supply, Second Supply and HARC. References to the "PRC" or "China" include all territory claimed by or under the control of the Central Government, except Hong Kong, Macau, and Taiwan. References to "Second Supply" are to Second Goods And Materials Supply And Sales Corporation, a company organized in the PRC and a wholly-owned subsidiary of HARC. References to "Tons" are to metric tons. 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED) FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Amounts in thousands, except share and per share data) THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1999 1998 1999 1999 1998 1999 ---- ---- ---- ---- ---- ---- RMB RMB US$ RMB RMB US$ NET SALES 190,190 155,122 22,970 295,505 368,489 35,689 COST OF SALES (186,900) (148,944) (22,573) (289,968) (352,948) (35,020) ----------------------------------------------------------------------- GROSS PROFIT 3,290 6,178 397 5,537 15,541 669 DEPRECIATION (328) (491) (40) (1,150) (1,312) (139) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (5,441) (6,110) (657) (16,597) (21,645) (2,005) FINANCIAL INCOME, NET 221 1,728 27 803 6,460 97 OTHER INCOME, NET 2,991 403 361 9,297 2,021 1,123 ----------------------------------------------------------------------- INCOME/(LOSS) BEFORE INCOME TAXES 733 1,708 88 (2,110) 1,065 (255) INCOME TAXES (323) (749) (39) (943) (1,802) (114) ----------------------------------------------------------------------- INCOME/(LOSS) BEFORE MINORITY INTERESTS 410 959 49 (3,053) (737) (369) MINORITY INTERESTS (1,236) (1,421) (149) (1,894) (3,359) (228) ----------------------------------------------------------------------- NET LOSS (826) (462) (100) (4,947) (4,096) (597) ======= ======= ======= ======= ======= ======= BASIC AND DILUTED LOSS PER SHARE* (1.39) (0.77) (0.17) (8.34) (6.81) (1.01) ======= ======= ======= ======= ======= ======= WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING* 592,900 599,567 592,900 592,900 601,789 592,900 ======= ======= ======= ======= ======= ======= * The computation of basic and diluted loss per share for the periods presented are based on weighted average number of shares outstanding as if the one- for-ten reverse stock split, effective on June 11, 1999, had been completed at the beginning of the respective periods. See notes to condensed consolidated financial statements. 3 CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998 (Amounts in thousands, except share and per share data) September 30, December 31, September 30, 1999 1998 1999 RMB RMB US$ Notes (Unaudited) (Note) (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents 64,186 129,238 7,752 Trading securities 55,858 - 6,746 Trade receivables 3,778 8,463 456 Inventories 2 8,197 10,569 990 Other receivables, deposits and prepayments 65,531 30,449 7,914 Amount due from Farming Bureau 24,932 33,667 3,011 Amounts due from related companies 34,623 30,802 4,182 ---------- ---------- ---------- TOTAL CURRENT ASSETS 257,105 243,188 31,051 PROPERTY AND EQUIPMENT 3 10,241 7,243 1,237 INVESTMENTS 119,301 119,301 14,408 GOODWILL 973 994 118 ---------- ---------- ---------- TOTAL ASSETS 387,620 370,726 46,814 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 18,909 12,204 2,284 Other payables and accrued liabilities 25,899 15,476 3,128 Income taxes payable 17,309 16,366 2,090 Amounts due to related companies 28,987 31,291 3,501 ---------- ---------- ---------- TOTAL CURRENT LIABILITIES 91,104 75,337 11,003 MINORITY INTERESTS 114,019 107,945 13,770 ---------- ---------- ---------- TOTAL LIABILITIES AND MINORITY INTERESTS 205,123 183,282 24,773 ---------- ---------- ---------- SHAREHOLDERS' EQUITY Common stock, US$0.001 par value: Authorized - 200,000,000 shares in 1999 and 1998 Issued and outstanding - 592,900 shares in 1999 and 5,929,004 shares in 1998 5 49 1 Preferred stock, authorized - 10,000,000 shares in 1999 and 1998 Series B preferred stock, US$0.001 par value: Authorized - 3,200,000 shares in 1999 and 1998 Issued and outstanding - 320,000 shares 1999 and 3,200,000 shares in 1998 3 27 - Additional paid-in capital 156,632 156,564 18,917 Reserves 26,274 26,274 3,173 Retained earnings/(accumulated losses) (413) 4,534 (50) Accumulated other comprehensive income/(loss) (4) (4) - ---------- ---------- ---------- TOTAL SHAREHOLDERS' EQUITY 182,497 187,444 22,041 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 387,620 370,726 46,814 ========== ========== ========== Note: The balance sheet at December 31, 1998 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. See notes to condensed consolidated financial statements. 4 CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 (Amounts in thousands) Accumulated Series A Series B Additional other Common preferred preferred paid-in Retained comprehensive stock stock stock capital Reserves earnings income/(loss) Total RMB RMB RMB RMB RMB RMB RMB Balance at January 1, 1999 49 - 27 156,564 26,274 4,534 (4) 187,444 One-for-ten reverse stock split (44) - (24) 68 - - - - Net loss - - - - - (4,947) - (4,947) -------- ------ ------ ------- ------- ------- ------ ------- Balance at September 30, 1999 5 - 3 156,632 26,274 (413) (4) 182,497 ======== ====== ====== ======= ====== ======= ====== ======= See notes to condensed consolidated financial statements. 5 CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 (Amounts in thousands) NINE MONTHS ENDED SEPTEMBER 30, ------------------------------- 1999 1998 1999 ---- ---- ---- RMB RMB US$ OPERATING ACTIVITIES Net loss (4,947) (4,096) (597) Adjustments to reconcile net loss to net cash provided by/(used by) operating activities: Depreciation and amortization 1,171 1,332 141 Minority interests 1,894 3,359 229 Loss on disposal of property and equipment 522 - 63 Unrealized gain on trading securities (922) - (111) Changes in operating assets and liabilities: Trade receivables 4,685 465 565 Inventories 2,372 43,504 286 Other receivables, deposits and prepayments (35,082) 2,565 (4,237) Amount due from Farming Bureau 8,735 5,313 1,055 Amounts due from related companies (3,821) (21,834) (461) Accounts payable 6,705 (6,137) 810 Other payables and accrued liabilities 10,423 1,946 1,259 Income taxes payable 943 (4,214) 114 Amounts due to related companies (2,304) - (278) ---------- ---------- ---------- Net cash provided by/(used in) operating activities (9,626) 22,203 (1,162) ---------- ---------- ---------- INVESTING ACTIVITIES Purchases of property and equipment (5,016) (366) (606) Purchases of trading securities (54,936) - (6,635) Purchase of investments - (250) - Proceeds from disposal of property and equipment 346 - 42 Increase in minority interests 4,180 50 505 ---------- ---------- ---------- Net cash used in investing activities (55,426) (566) (6,694) ---------- ---------- ---------- FINANCING ACTIVITIES Stock repurchase - (864) - ---------- ---------- ---------- NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS (65,052) 20,773 (7,856) Cash and cash equivalent, at beginning of period 129,238 124,547 15,608 ---------- ---------- ---------- Cash and cash equivalent, at end of period 64,186 145,320 7,752 ========== ========== ========== See notes to condensed consolidated financial statements. 6 CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (Amounts in thousands) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months period ended September 30, 1999, are not necessarily indicative of the results that may be expected for the year ending December 31, 1999. 2. INVENTORIES September 30, December 31, 1999 1998 RMB RMB Finished goods 8,197 10,569 ====== ====== 3. PROPERTY AND EQUIPMENT, NET September 30, December 31, 1999 1998 RMB RMB At cost: Buildings and leasehold improvements 9,233 6,052 Machinery, equipment and motor vehicles 6,918 6,904 ---------- ---------- 16,151 12,956 Accumulated depreciation: (5,910) (5,713) ---------- ---------- Net book value 10,241 7,243 ========== ========== 7 4. SEGMENT FINANCIAL INFORMATION Three months ended Nine months ended September 30, September 30, 1999 1998 1999 1998 RMB RMB RMB RMB Net sales to external customers: Natural rubber Net sales to unaffiliated customers 181,733 136,268 270,194 298,980 Net sales to affiliates - 11,290 - 15,340 ---------- ---------- ---------- ---------- 181,733 147,558 270,194 314,320 ---------- ---------- ---------- ---------- Materials, supplies and other Agricultural products: Net sales to unaffiliated customers 8,270 1,186 11,483 34,223 Net sales to affiliates 187 6,378 13,828 19,946 ---------- ---------- ---------- ---------- 8,457 7,564 25,311 54,169 ---------- ---------- ---------- ---------- Total consolidated net sales 190,190 155,122 295,505 368,489 ========== ========== ========== ========== Segment profit/(loss): Natural rubber 1,586 3,683 (2,665) 8,250 Material, supplies and other agricultural products (1,183) (1,215) (1,633) (4,284) ---------- ---------- ---------- ---------- Total segment profit/(loss) 403 2,468 (4,298) 3,966 Reconciling items: Corporate expenses (2,749) (2,578) (8,137) (9,473) Income from long term investment - - 6,664 - Gain from trading securities 2,858 - 2,858 - Interest income 267 1,829 875 6,840 Interest expense (46) (11) (72) (268) ---------- ---------- ---------- ---------- Total consolidated profit/(loss) before income taxes 733 1,708 (2,110) 1,065 ========== ========== ========== ========== September 30, December 31, 1999 1998 RMB RMB Segment assets: Natural rubber 211,521 258,090 Material, supplies and other agricultural products 17,026 16,298 ---------- ---------- Total segment assets 228,547 274,388 Reconciling items: Corporate assets 9,536 8,046 Investments 119,301 119,301 Trading securities 55,858 - Intersegment receivables (25,622) (31,009) ---------- ---------- Total consolidated assets 387,620 370,726 ========== ========== 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION RESULTS OF OPERATIONS The following table shows the selected unaudited condensed consolidated income statement data of the Company and its subsidiaries for the three months and nine months ended September 30, 1999 and 1998. The data should be read in conjunction with the unaudited Condensed Consolidated Financial Statements of the Company and related notes thereto. The discussions below are presented in the Company's primary operating currency, which is the Renminbi Yuan ("RMB"). For information purposes only, the amounts may be translated into U.S. dollars at an exchange rate of $1.00 = RMB8.28, which represents the approximate single rate of exchange as quoted by the People's Bank of China on September 30, 1999. No representation is made that RMB amounts could have been, or could be, converted into U.S. dollars at that rate or any other rate. (Amounts in thousands) THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, -------------------------------- ------------------------------- 1999 1998 1999 1998 RMB RMB RMB RMB Net sales: Natural rubber 181,733 147,558 270,194 314,320 Materials, supplies and other agricultural products 8,457 7,564 25,311 54,169 ---------- ---------- ---------- ---------- 190,190 155,122 295,505 368,489 ---------- ---------- ---------- ---------- Gross profit 3,290 6,178 5,537 15,541 Gross profit margin (%) 1.73 3.98 1.87 4.22 Income/(loss) before income taxes 733 1,708 (2,110) 1,065 Income taxes (323) (749) (943) (1,802) ---------- ---------- ---------- ---------- Income/(loss) before minority 410 959 (3,053) (737) interests Minority interests (1,236) (1,421) (1,894) (3,359) ---------- ---------- ---------- ---------- Net income/(loss) (826) (462) (4,947) (4,096) ========== ========== ========== ========== NET SALES AND GROSS PROFIT Total net sales for the third quarter of fiscal 1999 increased by approximately RMB35 million (US$4.2 million) or 23% to approximately RMB190 million (US$22.9 million), compared to approximately RMB155 million (US$18.7 million) for the corresponding period in 1998. Net sales of natural rubber increased by approximately RMB34 million (US$4.1 million) or 23% to approximately RMB182 million (US$22.0 million), compared to approximately RMB148 million (US$17.9 million) for the corresponding period in 1998. Net sales revenue from the procurement of materials and supplies increased by approximately RMB1 million (US$120,000) or 12% to approximately RMB8.5 million (US$1 million), compared to approximately RMB7.5 million (US$906,000) for the corresponding period in 1998. For the nine months ended September 30, 1999, the Company's total net sales decreased by approximately RMB73 (US$8.8 million) or 19.8% to approximately RMB296 million (US35.7 million), compared to approximately RMB368 million (US$44.4 million) for the corresponding period in 1998. The net sales of natural rubber decreased by approximately RMB44 (US$5.3 million) or 14.0% while the net sales of materials and supplies decreased by RMB29 million (US$3.5 million) or 53.3%. Net sales of natural rubber increased by 23% for the third quarter of 1999. This increase was mainly due to the fact that the natural rubber price has rebounded from a record low of approximately RMB6,600 per ton in the third quarter of 1998 to approximately RMB8,300 per ton in the third quarter of 1999. Although the sales quantity for the third quarter of 1999 was approximately 3% 9 lower than that of the corresponding period in 1998, the 26% increase in natural rubber price has caused the sales revenue to increase by 23%. Net sales of natural rubber decreased by 14% for the nine months ended September 30, 1999 compared to the corresponding period in 1998. This decrease was mainly due to the continuing weak consumption market in 1999 and the influx of imported rubber. The decrease in net sales of procurement of materials, supplies and other agricultural products for the nine months ended September 30, 1999 was mainly due to the sales of barley of Rmb29 million (US$3.5 million) in 1998. There were no sales of barley in 1999, as this product was not profitable and management decided to suspend the trading of this product. Overall gross profit decreased by approximately RMB10 million (US$1.2 million) or 64% to RMB5.5 million (US$664,000) for the nine months ended September 30, 1999, from approximately RMB15.5 million (US$1.9 million) for the corresponding period in 1998. Gross profit margin decreased to 1.87% for the nine months ended September 30, 1999 from 4.22% for the corresponding period in 1998. Overall gross profit for the third quarter of 1999 decreased by RMB2.9 million (US$350,000) or 46.7% to RMB3.3 million (US$398,000), from RMB6.2 million (US$749,000) for the corresponding period in 1998. Gross profit margin decreased to 1.73% for the third quarter of 1999 from 3.98% for the corresponding period in 1998. The decrease in gross profit margin was primarily due to the decrease in guaranteed profit on natural rubber sales by the Farming Bureau from 3.5% to 1.5%. The selling price of domestic natural rubber reached a record low in the year 1998, and the existing state of the natural rubber market is expected to persist for quite some time. Upon a request by the Farming Bureau, and in view of the existing state of the natural rubber market, a mutual agreement dated May 21, 1999 was entered into between the Farming Bureau and the Operating Subsidiaries. Pursuant to this agreement, the minimum gross profit guarantee of 3.5% earned by the Operating Subsidiaries on natural rubber sales has been reduced to 1.5% in order to reflect the prevailing market rate more realistically. The agreement took effect from April 1, 1999. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the third quarter of 1999 were RMB5.4 million (US$652,000), compared to RMB6.1 million (US$737,000) for the corresponding period in 1998. Selling, general and administration expenses for the nine months ended September 30, 1999 were RMB16.6 million (US$2.0 million), compared to RMB21.6 million (US$2.6 million) for the corresponding period in 1998. The decrease was mainly due to the decrease in the Company's net sales. The Company also successfully adopted additional measures to control costs, including salary cuts and reduction of entertainment expenses and legal and professional fees. FINANCIAL INCOME, NET Net financial income decreased significantly from RMB6.5 million (US$785,000) for the nine months ended September 30, 1998 to RMB803,000 (US$97,000) for the corresponding period in 1999, and from RMB1.7 million (US$205,000) for the third quarter of 1998 to RMB221,000 (US$27,000) for the corresponding period in 1999. The Company placed RMB123 million time deposits with financial institutions since the second quarter of 1998 that matured in the fourth quarter of 1998. These time deposits earned higher interest than the saving accounts utilized in 1999, which accounted for the decrease in financial income in 1999. OTHER INCOME, NET Other income increased significantly from RMB2.0 million (US$242,000) for the nine months ended September 30, 1998 to RMB9.3 million (US$1.1 million) for the corresponding period in 1999, and from RMB403,000 (US$49,000) for the third quarter of 1998 to RMB3.0 million (US$362,000) for the corresponding period in 1999. Other income in 1998 mainly represented net income from the trading of rubber futures contracts. However, other income in 1999 mainly represented the dividend income received on the long-term investment in the second quarter, which amounted to RMB6.6 million (US$797,000), and the net gain from the trading of securities in the third quarter, which amounted to RMB2.8 million (US$338,000). 10 MINORITY INTERESTS Pursuant to an Agreement for the Sale and Purchase of Share in HARC dated April 30, 1998 between Guilinyang Farm and the Company, the Company purchased 5,000,000 shares, representing 5% of the total issued and outstanding share capital of HARC, from Guilinyang Farm for a total consideration of RMB7 million (US$846,000). After the said purchase, the Company's effective interest in HARC increased from 56% to 61%. Minority interests after the said purchase represent a 39% interest in HARC held by the Farming Bureau compared with 44% before the said purchase. LIQUIDITY AND CAPITAL RESOURCES The Company's primary liquidity needs are to fund inventories and trade receivables and, to a lesser extent, to expand business operations. The Company has financed its working capital requirements primarily through internally generated cash. The Company has a working capital surplus of approximately RMB166 million (US$20.0 million) as of September 30, 1999, compared to that of approximately RMB168 million (US$20.3 million) as of December 31, 1998. Net cash used in operating activities for the nine months ended September 30, 1999 was approximately RMB9.6 million (US$1.2 million) as compared to net cash provided by operating activities of approximately RMB22.2 million (US$2.7 million) for the corresponding period in 1998. Net cash flows from the Company's operating activities are attributable to the Company's income and changes in operating assets and liabilities. There has been no other significant change in financial condition and liquidity since the fiscal year ended December 31, 1998. The Company believes that internally generated funds will be sufficient to satisfy its anticipated working capital needs for at least the next twelve months. MARKET RISK AND RISK MANAGEMENT POLICIES The Company's interest income is most sensitive to changes in the general level of interest rates. As at September 30, 1999, approximately 90% of the Company's cash equivalents are mainly Renminbi, United States Dollar and Hong Kong Dollar deposits with financial institutions, bearing market interest rates without fixed term. The remaining balance of cash equivalents are Hong Kong Dollar short-term fixed deposits. Since 1996, the Company's board of directors has adopted a risk management resolution authorizing the management to enter into natural rubber commodities futures contracts for hedging the price risk associated with certain firm commitments for the purchase of natural rubber. The Company also trades natural rubber commodity futures contracts that are not specific hedges. As at September 30, 1999, the Company had neither a position in natural rubber commodity futures contracts, nor firm commitments for the purchase of natural rubber. In 1999, the Company has allocated a total of RMB53 million (US$6.4 million) for securities trading in the PRC stock market. The primary objective of the Company's securities trading activities is to preserve principal while at the same time maximizing yields without significantly increasing risk. To achieve this objective, the Company entered into an agreement with a third party in the PRC. According to the agreement, the Company provides funding for securities trading amounting to RMB45 million (US$5.4 million) and is guaranteed a minimum return that equals the bank deposit rates. Although the Company is not exposed to the price risk of the securities, the upside gain on securities trading is shared with that third party as agreed. For the balance of RMB8 million (US$966,000), the Company faces price risk from adverse market movement. 11 YEAR 2000 ISSUE The Company has been addressing the potential risks associated with the year 2000 issue. It has established a program to assess and modify internal information technology ("IT") and non-information technology ("non-IT") operations that are at risk, and further, to evaluate the year 2000 readiness of key third parties with which the Company conducts business. For the IT systems, the assessment phase and modification phase, which include software replacements and system upgrades, have been completed. The total cost directly associated with the year 2000 issue was less than US$20,000. The IT systems are being tested for year 2000 compliance and are expected to be completed by the end of 1999. For the non-IT systems, the management has finished the assessment and testing phases and is confident that all key non-IT systems are year 2000 compliant. The Company has conducted informal communications with key third parties with which the Company conducts business in order to evaluate the Company's exposure to their year 2000 compliance. To-date, a majority of these third parties have indicated that they are already year 2000 compatible or that their year 2000 exposure is limited. However, the Company can give no assurance that these third parties will not be materially impacted by year 2000 issues. The Company is continuing with follow-up communications with key third parties. The Company has developed a contingency plan which would be implemented in the event that any of the Company's efforts to address and correct the year 2000 issues are not effective, which include identifying alternate suppliers, identifying manual methods for continuing operations and purchasing buffer inventories. Even though the Company has developed such a contingency plan, there can be no assurance that the plan will address all problems that may arise or that such plan, if implemented, will operate successfully. 12 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS: NONE 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 NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following Exhibits are filed as part of this Form 10-Q or incorporated by reference as indicated below: EXHIBIT NO. EXHIBIT DESCRIPTION ----------- ------------------- 3.1 Articles of Incorporation of the Registrant, filed on January 15, 1986 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.2 By-laws of the Registrant (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.3 Certificate of Amendment of Articles of Incorporation of the Registrant, filed on November 18, 1994 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.4 Certificate of Amendment of Articles of Incorporation of the Registrant, filed on November 18, 1994 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.5 Certificate of Amendment of Articles of Incorporation of the Registrant, effective March 31, 1995, and filed on June 19, 1995 (FILED WITH QUARTERLY REPORT ON FORM 10-Q/A FOR THE FISCAL QUARTER ENDED MARCH 31, 1995, AND WITH CURRENT REPORT ON FORM 8-K DATED JUNE 19, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 3.6 Certificate of Amendment of Articles of Incorporation of the Registrant, effective December 30, 1996 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 3.7 Amended and Restated By-laws of the Registrant, as amended on December 30, 1996 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 13 4.1 Certificate of Designation of Series B Convertible Preferred Stock, filed on December 13, 1995 (FILED WITH CURRENT REPORT ON FORM 8-K DATED MARCH 8, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 4.2 Certificate of Amendment of Certificate of Designation of Series B Convertible Preferred Stock, effective December 31, 1997 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.1 Land Use Agreement dated November 5, 1994, by and between Hainan Province Agricultural Reclamation No. 1 Materials Supply & Sales Company (First Supply) and Hainan Province Agricultural Reclamation Jin Long Materials General Company (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.10 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.2 Land Use Agreement dated November 5, 1994, by and between Hainan Province Agricultural Reclamation No. 2 Materials Supply & Sales Company (Second Supply) and Hainan Province Agricultural Reclamation Jin Huan Materials General Company (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.11 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.3 Long-Term Sale and Purchase Agreement dated November 5, 1994, by and among Hainan Province Agricultural Reclamation General Company (the Farming Bureau), Hainan Agricultural Resources Company Ltd., Hainan Province Agricultural Reclamation No. 1 Materials Supply & Marketing Company (First Supply), and Hainan Province Agricultural Reclamation No. 2 Materials Supply & Marketing Company (Second Supply) (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.12 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.4 Rental Agreement, by and between General Bureau of Hainan State Farms (the Farming Bureau) and Hainan Agricultural Resources Company Limited (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.14 TOANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.5 Guaranty Agreement, by and among Hainan Province Agricultural Reclamation General Company (the Farming Bureau), Hainan Agricultural Reclamation No. 1 Materials Supply & Sales Company (First Supply) and Hainan Agricultural Reclamation No. 2 Materials Supply & Sales Company (Second Supply) (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.15 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.6 China Resources Development, Inc., 1995 Stock Option Plan, adopted as of March 31, 1995 (FILED AS EXHIBIT 10.18 TO QUARTERLY REPORT ON FORM 10-Q/A FOR THE FISCAL QUARTER ENDED MARCH 31, 1995, AND THE CURRENT REPORT ON FORM 8-K DATED JUNE 19, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 10.7 Contract on Investment in the Xilian Timber Mill between HARC and the State-Run Xilian Farm of Hainan Province dated July 7, 1994, and Supplementary Agreement dated December 24, 1994 (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.26 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 10.8 Loan Agreement between HARC and the Farming Bureau, dated March 25, 1996, and the supplementary agreement dated December 31, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.28 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996,AND INCORPORATED HEREIN BY REFERENCE.) 14 10.9 Loan Agreement between HARC and the Registrant, dated March 25, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.29 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.10 Rental Agreement between HARC and the Hainan Farming Bureau Testing Center, dated August 9, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.30 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.11 China Resources Development, Inc., Amended and Restated 1995 Stock Option Plan, as amended on December 30, 1996 (FILED AS EXHIBIT 10.34 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.12 Advertising and Media Agreement by and between the Registrant and Marketing Direct Concepts, Inc., dated April 1, 1997 (FILED AS EXHIBIT 10.36 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED HEREIN BY REFERENCE.) 10.13 Financial Consulting Agreement by and between the Registrant and Integrated Capital Development Group, Inc., dated May 1, 1997 (FILED AS EXHIBIT 10.37 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED HEREIN BY REFERENCE.) 10.14 Consulting Agreement between the Registrant and Brender Services Limited, dated April 30, 1997 (FILED AS EXHIBIT 10.38 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.15 Stock Purchase Agreement, by and between HARC and Guilinyang Farm, dated December 29, 1997. (FILED AS EXHIBIT 10.39 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.16 Agreement for the Sale and Purchase of Share in Hainan Zhongya Aluminum Company Ltd., dated December 29, 1997, by and between First Supply and Guilinyang Farm. (FILED AS EXHIBIT 10.40 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.17 Agreement for the Sale and Purchase of Share in Hainan Zhongwei Agricultural Resources Company Ltd., dated April 30, 1998, by and between Guilinyang Farm and the Company. (FILED AS EXHIBIT 10.41 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.18 Employment Agreement between the Company and Li Feilie, dated August 1, 1998 (FILED AS EXHIBIT 10.42 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.19 Employment Agreement between the Company and Tam Cheuk Ho, dated February 1, 1999 (FILED AS EXHIBIT 10.43 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.20 Employment Agreement between the Company and Wong Wah On, dated February 1, 1999 (FILED AS EXHIBIT 10.44 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 15 10.21 Service Agreement between the Company and Ching Lung Po, dated February 1, 1999 (FILED AS EXHIBIT 10.45 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.22 Long-Term Sale and Purchase Supplementary Agreement No. 3 by and among Farming Bureau, HARC, First Supply and Second Supply, dated May 21, 1999 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.22 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1999 AND INCORPORATED HEREIN BY REFERENCE.) 11 Computation of Earnings/(Loss) Per Share (CONTAINED IN FINANCIAL STATEMENTS IN PART I, ITEM I HEREOF.) 27.1 Financial Data Schedule (FILED HEREWITH. FOR SEC USE ONLY.) (b) During the three months ended September 30, 1999, the Company filed no current reports on Form 8-K. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CHINA RESOURCES DEVELOPMENT, INC. November 15, 1999 By:/s/ Ching Lung Po ------------------------------------- Ching Lung Po, President By:/s/ Tam Cheuk Ho ------------------------------------- Tam Cheuk Ho, Chief Financial Officer 17 EXHIBIT INDEX EXHIBIT NO. EXHIBIT DESCRIPTION ----------- ------------------- 3.1 Articles of Incorporation of the Registrant, filed on January 15, 1986 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.2 By-laws of the Registrant (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.3 Certificate of Amendment of Articles of Incorporation of the Registrant, filed on November 18, 1994 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.4 Certificate of Amendment of Articles of Incorporation of the Registrant, filed on November 18, 1994 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 3.5 Certificate of Amendment of Articles of Incorporation of the Registrant, effective March 31, 1995, and filed on June 19, 1995 (FILED WITH QUARTERLY REPORT ON FORM 10-Q/A FOR THE FISCAL QUARTER ENDED MARCH 31, 1995, AND WITH CURRENT REPORT ON FORM 8-K DATED JUNE 19, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 3.6 Certificate of Amendment of Articles of Incorporation of the Registrant, effective December 30, 1996 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 3.7 Amended and Restated By-laws of the Registrant, as amended on December 30, 1996 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 4.1 Certificate of Designation of Series B Convertible Preferred Stock, filed on December 13, 1995 (FILED WITH CURRENT REPORT ON FORM 8-K DATED MARCH 8, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 4.2 Certificate of Amendment of Certificate of Designation of Series B Convertible Preferred Stock, effective December 31, 1997 (FILED WITH ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.1 Land Use Agreement dated November 5, 1994, by and between Hainan Province Agricultural Reclamation No. 1 Materials Supply & Sales Company (First Supply) and Hainan Province Agricultural Reclamation Jin Long Materials General Company (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.10 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.2 Land Use Agreement dated November 5, 1994, by and between Hainan Province Agricultural Reclamation No. 2 Materials Supply & Sales Company (Second Supply) and Hainan Province Agricultural Reclamation Jin Huan Materials General Company (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.11 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.3 Long-Term Sale and Purchase Agreement dated November 5, 1994, by and among Hainan Province Agricultural Reclamation General Company (the Farming Bureau), Hainan Agricultural Resources Company Ltd., Hainan Province Agricultural Reclamation No. 1 Materials Supply & Marketing Company (First Supply), and Hainan Province Agricultural Reclamation No. 2 Materials Supply & Marketing Company (Second Supply) (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.12 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 18 10.4 Rental Agreement, by and between General Bureau of Hainan State Farms (the Farming Bureau) and Hainan Agricultural Resources Company Limited (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.14 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.5 Guaranty Agreement, by and among Hainan Province Agricultural Reclamation General Company (the Farming Bureau), Hainan Agricultural Reclamation No. 1 Materials Supply & Sales Company (First Supply) and Hainan Agricultural Reclamation No. 2 Materials Supply & Sales Company (Second Supply) (ORIGINAL CHINESE VERSION WITH CERTIFIED ENGLISH TRANSLATION FILED AS EXHIBIT 10.15 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.) 10.6 China Resources Development, Inc., 1995 Stock Option Plan, adopted as of March 31, 1995 (FILED AS EXHIBIT 10.18 TO QUARTERLY REPORT ON FORM 10-Q/A FOR THE FISCAL QUARTER ENDED MARCH 31, 1995, AND THE CURRENT REPORT ON FORM 8-K DATED JUNE 19, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 10.7 Contract on Investment in the Xilian Timber Mill between HARC and the State-Run Xilian Farm of Hainan Province dated July 7, 1994, and Supplementary Agreement dated December 24, 1994 (ORIGINAL CHINESE VERSION WITH ENGLISH TRANSLATION FILED AS EXHIBIT 10.26 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995, AND INCORPORATED HEREIN BY REFERENCE.) 10.8 Loan Agreement between HARC and the Farming Bureau, dated March 25, 1996, and the supplementary agreement dated December 31, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.28 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996,AND INCORPORATED HEREIN BY REFERENCE.) 10.9 Loan Agreement between HARC and the Registrant, dated March 25, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.29 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.10 Rental Agreement between HARC and the Hainan Farming Bureau Testing Center, dated August 9, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.30 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.11 China Resources Development, Inc., Amended and Restated 1995 Stock Option Plan, as amended on December 30, 1996 (FILED AS EXHIBIT 10.34 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.) 10.12 Advertising and Media Agreement by and between the Registrant and Marketing Direct Concepts, Inc., dated April 1, 1997 (FILED AS EXHIBIT 10.36 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED HEREIN BY REFERENCE.) 10.13 Financial Consulting Agreement by and between the Registrant and Integrated Capital Development Group, Inc., dated May 1, 1997 (FILED AS EXHIBIT 10.37 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED HEREIN BY REFERENCE.) 19 10.14 Consulting Agreement between the Registrant and Brender Services Limited, dated April 30, 1997 (FILED AS EXHIBIT 10.38 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.15 Stock Purchase Agreement, by and between HARC and Guilinyang Farm, dated December 29, 1997. (FILED AS EXHIBIT 10.39 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.16 Agreement for the Sale and Purchase of Share in Hainan Zhongya Aluminum Company Ltd., dated December 29, 1997, by and between First Supply and Guilinyang Farm. (FILED AS EXHIBIT 10.40 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.) 10.17 Agreement for the Sale and Purchase of Share in Hainan Zhongwei Agricultural Resources Company Ltd., dated April 30, 1998, by and between Guilinyang Farm and the Company. (FILED AS EXHIBIT 10.41 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.18 Employment Agreement between the Company and Li Feilie, dated August 1, 1998 (FILED AS EXHIBIT 10.42 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.19 Employment Agreement between the Company and Tam Cheuk Ho, dated February 1, 1999 (FILED AS EXHIBIT 10.43 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.20 Employment Agreement between the Company and Wong Wah On, dated February 1, 1999 (FILED AS EXHIBIT 10.44 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.21 Service Agreement between the Company and Ching Lung Po, dated February 1, 1999 (FILED AS EXHIBIT 10.45 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND INCORPORATED HEREIN BY REFERENCE.) 10.22 Long-Term Sale and Purchase Supplementary Agreement No. 3 by and among Farming Bureau, HARC, First Supply and Second Supply, dated May 21, 1999 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.22 TO QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1999 AND INCORPORATED HEREIN BY REFERENCE.) 11 Computation of Earnings/(Loss) Per Share (CONTAINED IN FINANCIAL STATEMENTS IN PART I, ITEM I HEREOF.) 27.1 Financial Data Schedule (FILED HEREWITH. FOR SEC USE ONLY.)