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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 Or 15(D) Of The Securities Act Of 1934
For the quarterly period ended May 31, 2000
Commission file number: 0-26217
CHINA NETTV HOLDINGS INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-02031-70
(State or other jurisdiction of (IRS Employee Identification No.)
incorporation or organization)
Suite 830 - 789 West Pender Street, Vancouver, B.C. V6C 1H2
(Address of principal executive offices)
(604) 689-4407
(Issuer's telephone number)
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 and 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 filing
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:
Common Stock, $0.001 par value 13,562,480
(Class) (Outstanding as of May 31, 2000)
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CHINA NETTV HOLDINGS INC.
FORM 10-QSB
INDEX
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Page
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Part I - FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements
Report on Review by Independent Certified Public Accountants..............3
Balance Sheet as at May 31, 2000 and August 31............................5
Consolidated Balance Sheet of China NetTV Holdings Inc.
and China NetTV Corp.................................................6
Statement of Operations
for the three and nine months ended May 31, 2000 and 1999 and for
the Period September 15, 1998 (date of inception) to May 21, 2000....7
Statement of Cash Flows
for the nine months ended May 31, 2000 and 1999 and for the
Period September 15, 1998 (date of inception) to May 31, 2000........8
Notes to Financial Statements.............................................9
Item 2. Management's Discussion and Analysis or Plan of Operation.................12
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..........................................12
Signatures.........................................................................13
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ANDERSEN ANDERSEN & STRONG, L.C. 941 East 3300 South, Suite 202
-------------------------------- Salt Lake City, Utah 84106
CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS
Telephone 801 486-0096
Fax 801 486-0098
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
China NetTV Holdings Inc.
We have reviewed the condensed balance sheet of China NetTV Holdings Inc.
(exploration stage company) as of May 31, 2000 and August 31, 1999 and the
related condensed statement of operations and the condensed statement of cash
flows for the three and nine months ended May 31, 2000 and 1999 and the periods
August 31, 1999 (date of inception) to May 31, 2000. These financial statements
are the responsibility of the company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making enquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
Andersen Andersen and Strong
Salt Lake City, Utah
June 30, 2000
3
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FINANCIAL STATEMENTS
THE ACCOMPANYING BALANCE SHEETS OF CHINA NETTV HOLDINGS, INC. ( DEVELOPMENT
STAGE COMPANY) AT MAY 31, 2000 AND AUGUST 31 1999, AND THE RELATED STATEMENTS OF
OPERATIONS FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2000 AND 1999 AND THE
PERIOD SEPTEMBER 15, 1998 (DATE OF INCEPTION) TO MAY 31, 2000, AND THE STATEMENT
OF CASH FLOWS FOR THE NINE MONTHS ENDED MAY 31, 2000 AND 1999, AND THE PERIOD
SEPTEMBER 15, 1998 TO MAY 31, 2000, HAVE BEEN PREPARED BY THE COMPANY'S
MANAGEMENT AND THEY DO NOT INCLUDE ALL INFORMATION AND NOTES TO THE FINANCIAL
STATEMENTS NECESSARY FOR A COMPLETE PRESENTATION OF THE FINANCIAL POSITION,
RESULTS OF OPERATIONS, AND CASH FLOWS IN CONFORMITY WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS CONSIDERED
NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS OF OPERATIONS AND FINANCIAL
POSITION HAVE BEEN INCLUDED AND ALL SUCH ADJUSTMENTS ARE OF A NORMAL RECURRING
NATURE.
OPERATING RESULTS FOR THE NINE MONTHS ENDED MAY 31, 2000, ARE NOT NECESSARILY
INDICATIVE OF THE RESULTS THAT CAN BE EXPECTED FOR THE YEAR ENDING AUGUST 31,
2000.
4
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MAY 31, 2000 AND AUGUST 31, 1999
<CAPTION>
MAY 31, AUG 31,
2000 1999
--------- ---------
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ASSETS
CURRENT ASSETS
Cash $ 31,438 $ 20,534
--------- ---------
Total Current Assets $ 31,438 $ 20,534
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 34,603 $ 4,500
Accounts payable 1,470 2,879
--------- ---------
Total Current Liabilities 36,073 7,379
--------- ---------
STOCKHOLDERS' EQUITY
Common stock
200,000,000 shares authorized, at $0.001 par
value; 13,562,480 shares issued and outstanding 13,562 13,562
Capital in excess of par value 22,686 18,186
Deficit accumulated during the development stage (40,883) (18,593)
--------- ---------
Total Stockholders' Equity (deficit) (4,635) 13,155
--------- ---------
$ 31,438 $ 20,534
========= =========
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The accompanying notes are an integral part of these financial statements.
5
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CHINA NETTV HOLDINGS, INC. AND SUBSIDIARY
(DEVELOPMENT STAGE COMPANIES)
CONSOLIDATED BALANCE SHEETS
MAY 31, 2000
CHINA INC. CHINA CORP COMBINED
---------- ---------- --------
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ASSETS
CURRENT ASSETS
Cash $ 31,438 $ - $ 31,438
--------- --------- ---------
Total Current Assets 31,438 31,438
--------- --------- ---------
INVESTMENT - 51% interest in Chengdu
Qianfeng Digital Audio/Video Equipment Co. - -
--------- --------- ---------
$ 31,438 $ - $ 31,438
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related party $ 34,603 $ - $ 34,603
Accounts payable 1,470 - 1,470
--------- --------- ---------
Total Current Liabilities 36,073 36,073
--------- --------- ---------
STOCKHOLDERS' EQUITY
Common stock
200,000,000 shares authorized, at $0.001 par
value; 13,562,480 shares issued and outstanding 13,562 - 13,562
Capital in excess of par value 22,686 - 22,686
Deficit accumulated during the development stage (40,883) - (40,883)
--------- --------- ---------
Total Stockholders' Equity (deficit) (4,635) (4,635)
--------- --------- ---------
$ 31,438 $ - $ 31,438
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MAY 31, 2000 AND 1999
AND THE PERIOD SEPTEMBER 15, 1998 (DATE OF INCEPTION) TO MAY 31, 2000
<CAPTION>
THREE MONTHS NINE MONTHS SEPT 15, 1998
MAY 31, MAY 31, MAY 31, MAY 31, TO MAY 31,
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
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REVENUES $ - $ - $ - $ - $ -
EXPENSES 4,809 6,980 22,290 9,067 40,883
---------- ---------- ---------- ---------- ----------
NET LOSS $ (4,809) $ (6,980) $ (22,290) $ (9,067) $ (40,883)
========== ========== ========== ========== ==========
LOSS PER COMMON SHARE
Basic $ ____ $____ $____ $____
AVERAGE OUTSTANDING SHARES
Basic 13,562,480 13,562,480 13,562,480 6,012,058
---------- ---------- ---------- ----------
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The accompanying notes are an integral part of these financial statements.
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 31, 2000 AND
1999 AND THE PERIOD SEPTEMBER 15 , 1998
(DATE OF INCEPTION) TO MAY 31, 2000
<CAPTION>
NINE MONTHS
----------- SEPT 15, 1998
MAY 31, MAY 31, TO MAY 31,
2000 1999 2000
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(22,290) $ (9,067) $(40,883)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Changes in accounts payable (1,409) 969 1,470
Changes in advances from related parties 30,103 4,500 34,603
Capital contribution - expenses 4,500 3,150 9,000
--------- --------- ---------
Net Increase (Decrease) in Cash From Operations 10,904 (448) 4,190
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
--------- --------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from issuance of common stock - 27,248 27,248
--------- --------- ---------
Net Increase in Cash 10,904 26,800 31,438
Cash at Beginning of Period 20,534 - -
--------- --------- ---------
Cash at End of Period $ 31,438 $ 26,800 $ 31,438
========= ========= =========
SCHEDULE OF NONCASH FLOWS FROM OPERATING ACTIVITIES
Capital contributions - expenses paid by officer $9,000
------
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated under the laws of the State of Nevada on September
15, 1998 with the name "Vancouver's Finest Coffee Company" with authorized
common stock of 200,000,000 shares at $0.001 par value. On May 30, 2000 the name
was changed to "China NetTV Holdings, Inc."
The Company was organized for the purpose of marketing retail specialty coffee
through the establishment of coffee kiosks however during May 2000 the Company
changed its business purpose to the operations of digital technology.
Note 5
The Company is in the development stage.
Since its inception the Company has completed Regulation D offerings of
13,562,480 shares of its capital stock for cash.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
------------------
The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
------------
On May 31, 2000 the Company had a net operating loss carryforward of $40,883.
THE TAX BENEFIT FROM THE LOSS CARRY FORWARD HAS BEEN FULLY OFFSET BY A VALUATION
RESERVE BECAUSE THE USE OF THE FUTURE TAX BENEFIT IS DOUBTFUL SINCE THE COMPANY
HAS NO OPERATIONS. THE LOSS CARRYFORWARD WILL EXPIRE IN 2021.
Earnings (Loss) Per Share
-------------------------
Earnings (loss) per share amounts are computed based on the weighted average
number of shares actually outstanding.
FOREIGN CURRENCY TRANSLATION
----------------------------
PART OF THE TRANSACTIONS OF THE COMPANY WERE COMPLETED IN CANADIAN DOLLARS AND
HAVE BEEN TRANSLATED TO US DOLLARS AS INCURRED, AT THE EXCHANGE RATE IN EFFECT
AT THE TIME, AND THEREFORE, NO GAIN OR LOSS FROM THE TRANSLATIONS IS RECOGNIZED.
THE FUNCTIONAL CURRENCY IS CONSIDERED TO BE US DOLLARS.
9
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued
COMPREHENSIVE INCOME
--------------------
THE COMPANY ADOPTED STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 130. THE
ADOPTION OF THIS STANDARD HAD NO IMPACT ON THE TOTAL STOCKHOLDER'S EQUITY ON
OCTOBER 31, 1999.
RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
THE COMPANY DOES NOT EXPECT THAT THE ADOPTION OF OTHER RECENT ACCOUNTING
PRONOUNCEMENTS WILL HAVE A MATERIAL IMPACT ON ITS FINANCIAL STATEMENTS.
Financial Instruments
---------------------
The carrying amounts of financial instruments, including cash and accounts
payable, are considered by management to be their estimated fair values.
Estimates and Assumptions
-------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing these financial statements.
3. RELATED PARTY TRANSACTIONS
Related parties have acquired 44% of the common stock issued.
Other related party transactions are shown in the balance sheet and the
statement of cash flows.
4. GOING CONCERN
Management is planning to further develop operations in digital technology
however to be successful in this effort the Company will need additional working
capital.
Continuation of the Company as a going concern is dependent upon obtaining
additional working capital and the management of the Company has developed a
strategy, which it believes will accomplish this objective through additional
funding through loans from officers, loans from financial institutions, or sale
10
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CHINA NETTV HOLDINGS, INC.
(DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. GOING CONCERN - continued
of its common capital stock , which will enable the Company to operate for the
coming year.
CONTINUATION OF THE COMPANY AS A GOING CONCERN FOR THE COMING YEAR IS DEPENDENT
UPON RECEIVING THE FUNDING NEEDED AND THERE CAN BE NO ASSURANCE THAT THE COMPANY
WILL BE SUCCESSFUL IN ITS EFFORTS TO OBTAIN THE NEEDED WORKING CAPITAL.
5. ACQUISITION OF ALL OUTSTANDING SHARES OF CHINA NETTV CORP.
During May 2000 the Company entered into an agreement to acquire all of the
oustanding stock of China NetTV Corp in a stock for stock exchange in which
major stockholder's of the Company exchanged 6,000,000 shares of the Company
they own for all the outstanding stock of China NetTV Corp and as part of the
transaction transfer the stock of China NetTV Corp. to the Company as a capital
contribution.
China NetTV Corp. was organized under the laws of the British Virgin Islands and
its only asset is an agreement outlined below.
China NetTV Corp. has agreed to acquire 51% interest of Chengdu Qianfeng Digital
Audio/Video Equipment Co. Ltd. Chengdu Qianfeng Digital Audio/Video Equipment
Co. Ltd. owns the proprietary technology that supplies complete turnkey digital
TV broadcasting solutions, including set-top boxes that convert digital
broadcast signals into analog signals. They intend to incorporate Smart Card
WebTV technology into their set-top boxes.
Included in the following is an unaudited consolidated pro-forma balance sheet
of the Company and China NetTV Corp. as if the acquisition had been completed on
August 31, 1999. All intercompany transactions have been eliminated.
11
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ITEM 2. PLAN OF OPERATIONS
At the Company's First Annual General Meeting held on March 24, 2000, the
Company's shareholders approved a resolution to allow the directors to pursue
another line of business other than the originally proposed coffee kiosk
business. Based on the analysis of the merits of the coffee kiosk business,
management made the decision not to continue to proceed in this direction.
On May 4, 2000, the Company signed an agreement to acquire China NetTV Corp.,
who in turn had signed a letter of intent with Sichuan Qianfeng Digital
Audio/Video Equipment Co. Ltd. to form a co-operative Joint Venture in China.
On May 11, 2000, the Company accepted the resignation of Kirsten Wilson, Ryan
Wilson and Fred Burns and appointed Ernest Cheung, Maurice Tsakok and Marc Hung
to the Board of Directors. Mr. Cheung was appointed President of the Company.
On May 30, 2000, the Company changed its name to China NetTV Holdings Inc. to
reflect its change in business.
The Company plans to pursue the development of operations in digital technology.
Liquidity and Capital Resources
-------------------------------
The Company will need additional working capital to finance its joint venture
with China NetTV Corp. to produce and market Digital Television Transmission
Systems and TV Set-Top Boxes. The Company has adequate funds to maintain its
operations over the next several months, but will be requiring additional
capital after that period.
Results of Operations
---------------------
The Company has had no operations during this reporting period.
Part II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant (1)
3.2 By-laws of the Registrant (1)
10.1 Agreement between the Registrant and China NetTV Corp. dated
May 4, 2000 (2)
12
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10.2 Letter of Intent between the China NetTV Corp. and Chengdu
Qianfeng Digital Audio/Video Equipment Co. Ltd. of China *
27.1 Financial Data Schedule for the nine months ended March 31,
2000 (electronic filing only)*
99 News Release of Registrant, dated May 11, 2000 (2)
--------------------
* To be filed herewith
(1) Included as an Exhibit to China NetTV Holdings Inc.'s
registration statement on Form 10-SB filed on May 28, 1999
(2) Included as an Exhibit to China NetTV Holdings Inc.'s current
report on Form 8-K filed on May 30, 2000
(b) Reports on Form 8-K filed during the three months ended May 31, 2000.
On May 30, 2000, the Company filed a Form 8-K describing the change of
control in the Company, the Company's acquisition of China NetTV Corp.,
a corporation formed under the laws of the British Virgin Islands and
the Company's subsequent name change to China NetTV Holdings Inc. from
Vancouver's Finest Coffee Company.
SIGNATURES
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.
Date: July 5, 2000 China NetTV Holdings Inc.
/s/ Maurice Tsakok
--------------------
Maurice Tsakok
Secretary
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