<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 14, 2000
-------------------------
CHINA WORLD TRADE CORPORATION
--------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
Nevada 000-26119 87-0629754
-------------------------------------------------------------------------------------------
(State of Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
</TABLE>
13C Chinaweal Center 414-424 Jaffe Road, Wanchai, Hong Kong
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (852) 988-26818
---------------------------
TXON INTERNATIONAL DEVELOPMENT CORPORATION
--------------------------------------------------------------------------------
(Former name or Former Address, if Changed Since Last Report)
Page 1 of 15
<PAGE>
Item 7. Financial Statement, Pro Forma Financial Information and Exhibits.
(b) Financial Statements of Business Acquired. Audited Financial Statements
for Virtual Edge Limited consisting of consolidated balance sheets of Virtual
Edge Limited as of March 31, 2000 and June 30, 2000 and the related consolidated
statements of operations, changes in shareholders' (deficit) equity and cash
flows for each of the period/year in the two years period ended March 31, 2000
and for the three months period ended June 30, 2000 and the amounts included in
the consolidated cumulative period February 18, 1999 (inception) through June
30, 2000.
Page 2 of 15
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders of
Virtual Edge Limited
--------------------------------------------------------------------------------
We have audited the accompanying consolidated balance sheets of Virtual Edge
Limited (a development stage company) ("the Company") as of March 31, 2000 and
June 30, 2000 and the related consolidated statements of operations, changes in
shareholders' (deficit) equity and cash flows for each of the period/year in the
two years period ended March 31, 2000 and for the three months period ended June
30, 2000 and the amounts included in the consolidated cumulative period February
18, 1999 (inception) through June 30, 2000. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above and
prepared on the basis of presentation as set out in notes 2 and 3 to the
financial statements, present fairly, in all material respects, the consolidated
financial position of the Company as of March 31, 2000 and June 30, 2000 and the
results of its operations and cash flows for each of the period/year in the two
years period ended March 31, 2000 and for the three months period ended June 30,
2000 and the amounts included in the consolidated cumulative period February 18,
1999 (inception) through June 30, 2000 in conformity with United States
generally accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 1 to the
consolidated financial statements, the Company is in the development stage since
its inception and has suffered losses from operations, which raises substantial
doubt about its ability to continue as a going concern. Management's plans in
regard to these matters are described in note 12 to the financial statements.
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Moores Roland
Moores Rowland
Chartered Accountants
Certified Public Accountants
Hong Kong
Dated: October 4, 2000
--------------------------------------------------------------------------------
Page 3 of 15
<PAGE>
Virtual Edge Limited
(A Development Stage Company)
Consolidated Statements of Operations
Period ended June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Period from Year ended Period ended Period from
February 18, March 31, 2000 June 30, 2000 inception
1999 to (February 18,
March 31, 1999) to June
1999 30, 2000
--------------- --------------- --------------- -----------------
Note US$ US$ US$ US$
<S> <C> <C> <C> <C> <C>
Operating revenue - - - -
Operating expenses
General and administrative expenses (1,469) (706,305) (375,891) (1,083,665)
-------------- --------------- --------------- ----------------
Loss from operations (1,469) (706,305) (375,891) (1,083,665)
Minority interest - 105,258 42,064 147,322
-------------- --------------- --------------- ----------------
Loss before income taxes (1,469) (601,047) (333,827) (936,343)
Provision for income taxes 10 - - - -
-------------- --------------- --------------- ----------------
Net loss (1,469) (601,047) (333,827) (936,343)
============== =============== =============== ================
Loss per ordinary shares
- Basic (1,469) (601,047) (0.24)
============== =============== ===============
Weighted average number of ordinary
shares outstanding 1 1 1,373,627
============== =============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
--------------------------------------------------------------------------------
<PAGE>
Virtual Edge Limited
(A Development Stage Company)
Consolidated Balance Sheets
As of June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
As of March 31, As of June 30,
2000 2000
-------------- --------------
Note US$ US$
<S> <C> <C> <C>
ASSETS
Current asset
Cash and cash equivalents 1 399
Prepayment 4 - 845,280
Rental deposits - 258,299
Other receivables 5 2,591,268 -
-------------- --------------
Total current assets 2,591,269 1,103,978
Property, plant and equipment 6 - 1,567
Prepayment, non-current 4 - 798,320
Goodwill 7 - 1,603,348
-------------- --------------
Total assets 2,591,269 3,507,213
============== ==============
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Current liabilities
Accrued charges 30,457 27,539
Due to related parties 8 723,736 1,798,059
-------------- --------------
Total current liabilities 754,193 1,825,598
Due to related party, non-current 8 2,544,800 -
-------------- --------------
Total liabilities 3,298,993 1,825,598
-------------- --------------
Minority interest (105,209) 117,958
-------------- --------------
Shareholders' (deficit) equity
Share capital 9 1 2,500,000
Accumulated deficit (602,516) (936,343)
-------------- --------------
Total shareholders' (deficit) equity (602,515) 1,563,657
-------------- --------------
Total liabilities and shareholders' (deficit) equity 2,591,269 3,507,213
============== ==============
</TABLE>
Approved by the sole director on October 4, 2000
______________________________
Director
The accompanying notes are an integral part of these financial statements.
--------------------------------------------------------------------------------
<PAGE>
Virtual Edge Limited
(A Development Stage Company)
Consolidated Statements of Shareholders' (Deficit) Equity
Period ended June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Share capital
--------------------------------- Accumulated
Shares Par value deficit Total
US$ US$ US$
<S> <C> <C> <C> <C>
Issuance of ordinary share on 1 1 - 1
March 30, 1999
Net loss for the period - - (1,469) (1,469)
--------------- -------------- -------------- --------------
Balance as of March 31, 1999 1 1 (1,469) (1,468)
Net loss for the year - - (601,047) (601,047)
--------------- -------------- -------------- --------------
Balance as of March 31, 2000 1 1 (602,516) (602,515)
Issuance of ordinary shares on 2,499,999 2,499,999 - 2,499,999
May 12, 2000
Net loss for the period - - (333,827) (333,827)
--------------- -------------- -------------- --------------
Balance as of June 30, 2000 2,500,000 2,500,000 (936,343) 1,563,657
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
--------------------------------------------------------------------------------
<PAGE>
Virtual Edge Limited
(A Development Stage Company)
Consolidated Statements of Cash Flows
Period ended June 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
From Period from
February inception
18, 1999 Year ended Period (February 18,
to March March 31, ended June 1999) to June
Note 31, 1999 2000 30, 2000 30, 2000
---------- ------------ ------------ ---------------
US$ US$ US$ US$
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss (1,469) (601,047) (333,827) (936,343)
Adjustments to reconcile net loss to
net cash used in operating activities:
Minority interest - (105,258) (42,064) (147,322)
Amortization of goodwill - - 145,759 145,759
Depreciation - - 47 47
Changes in working capital:
Prepayment and rental deposits - - 93,920 93,920
Other receivable - (46,468) 46,468 -
Accrued charges 750 29,707 (7,126) 23,331
Due to related parties 719 723,017 96,823 820,559
---------- ------------ ------------ ---------------
Net cash used in operating activities - (49) - (49)
---------- ------------ ------------ ---------------
Cash flows from investing activities
Acquisition of subsidiary 11 - - 398 398
---------- ------------ ------------ ---------------
Cash flows from financing activities:
Proceed from issuance of share 1 - - 1
Capital contributed by minority interest - 49 - 49
---------- ------------ ------------ ---------------
Net cash provided by financing
activities 1 49 - 50
---------- ------------ ------------ ---------------
Net increase in cash and cash
equivalents 1 - 398 399
Cash and cash equivalents at beginning
of period - 1 1 -
---------- ------------ ------------ ---------------
Cash and cash equivalents at end of
period 1 1 399 399
========== ============ ============ ===============
Analysis of balances of cash and cash
equivalents
Cash and bank balances 1 1 399 399
========== ============ ============ ===============
Non-cash investing and financing
activities
Temporary payment which was settled by
shareholder's loan - 2,544,800 - 2,544,800
Increase in share capital by
capitalization of shareholder's loan - - 2,499,999 2,499,999
========== ============ ============ ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
--------------------------------------------------------------------------------
<PAGE>
1. ORGANIZATION AND PRINCIPAL ACTIVITIES
The Company was incorporated in the British Virgin Islands ("BVI") on
February 18, 1999 with authorized share capital of 50,000 shares at a par
value of US$1 each. The Company is an investment holding company.
By a written resolution of the sole director dated 12 May 2000, the
authorised share capital of the Company was increased to US$2,500,000 by
the creation of an additional 2,450,000 shares of US$1 each.
On the same date, the issued share capital of the Company was increased to
US$2,500,000 by alloting 2,499,999 shares of US$1 each for capitalization
of loan at par. These shares rank pari passu with the existing share in all
respects.
On October 5, 1999, the Company subscribed 51 shares of US$1 each of
Infotech Enterprises Limited ("Infotech"). Infotech was incorporated on
July 2, 1999 with an initial share capital of 100 shares of US$1 each
issued on October 5, 1999. Infotech is still in development stage and is
engaged in building a bilingual (Chinese and English) Business-to-Business
Portal.
On October 10, 1999, the Company signed an agreement with Belford
Enterprises Limited ("Belford") pursuant to which Belford agreed to
transfer its 75% interest in Beijing World Trade Center Club ("BWTCC") to
the Company at a consideration of US$2,544,800. The consideration was
settled by the allotment of preference shares by Main Edge Limited, the
Company's holding company, to Belford. Completion of the agreement was
subject to approval from the government of The Peoples' Republic of China
(the "PRC") and the approval was obtained in May 2000. BWTCC is still in
development stage and is engaged in the establishment of a club located in
Beijing, the PRC. The club will provide food and beverages, recreation,
business centre services, communication and information services, products
exhibitions services, commercial and trading brokerage services to its
members.
The acquisitions of Infotech and BWTCC have been accounted for under the
purchase method of accounting. The purchase price has been allocated based
on the estimated fair values at date of acquisition. This allocation has
resulted in acquired goodwill of US$1,749,107, which is being amortized on
a straight-line basis over three years. The results of the acquired
businesses have been included in the consolidated financial statements
since the acquisition date.
The following unaudited pro forma information presents a summary of our
consolidated results of operations as if the acquisition had taken place on
April 1, 1999.
Year ended Period ended
March 31, June 30,
2000 2000
----------- -------------
US$ US$
Net loss (1,539,532) (342,062)
=========== =============
Loss per ordinary share (1,539,532) (0.25)
=========== =============
These unaudited pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have resulted had the acquisition occurred
on the date indicated, or which may result in the future.
2. BASIS OF PRESENTATION
These financial statements have been prepared in accordance with accepted
accounting principles in the United States of America ("US GAAP").
<PAGE>
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of accounting
The financial statements have been prepared under the historical cost
convention. Cost in relation to assets represents the cash amount paid
or the fair value of the asset, as appropriate.
(b) Principles of consolidation
The consolidated financial statements include the financial
information of the Company and its subsidiaries (the "Group"). The
acquisition of subsidiaries is accounted for using purchase accounting
method.
The results of subsidiary acquired during the year are consolidated
from their effective dates of acquisition.
All material intercompany balances and transactions have been
eliminated on consolidation.
(c) Goodwill on consolidation
Goodwill arising on consolidation, being the excess of the purchase
consideration payable at the time of acquisition of the subsidiaries
over the fair values of the net underlying assets acquired, is
recognised as an asset and amortized by equal annual installments over
its estimated useful economic life of three years. The carrying
amount of goodwill is reviewed annually by management and written down
for permanent impairment where it is considered necessary.
(d) Foreign currencies
Transactions in foreign currencies are translated at the approximate
rates of exchange on the dates of transactions. Monetary assets and
liabilities denominated in foreign currencies at year end are
translated at the approximate rates ruling at the balance sheet date.
Non-monetary assets and liabilities are translated at the rates of
exchange prevailing at the time the asset or liability was acquired.
Exchange gains and losses are recorded in the consolidated statement
of operation.
(e) Deferred taxes
Provision for deferred taxes requires the recognition of deferred tax
assets and liabilities for the estimated future tax effects
attributable to temporary differences without regard to the
probability of future reversal. As the temporary difference is
considered as not material, no provision for deferred taxes has been
made under the US GAAP.
(f) Related parties
Parties are considered to be related if one party has the ability to
control the other party or exercise significant influence over the
other party in making financial and operating decisions.
(g) Cash and cash equivalents
For the purposes of the consolidated statement of cash flows, the
Group considers all highly liquid debt instruments with an original
maturity within three months or less to be cash equivalents.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(h) Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost less accumulated
depreciation. The cost of an asset consists of its purchase price and
any directly attributable costs of bringing the asset to its present
working condition and location for its intended use. Expenditure
incurred after the assets have been put into operation, such as
repairs and maintenance, is charged to the consolidated statement of
operation in the period in which it is incurred. In situations where
it can be clearly demonstrated that the expenditure has resulted in an
increase in the future economic benefits expected to be obtained from
the use of the assets, the expenditure is capitalized.
<PAGE>
When assets are sold or retired, their costs and accumulated
depreciation are removed from the accounts and any gain or loss
resulting from their disposal is included in the consolidated
statement of operation.
Depreciation is calculated to write off the cost of property, plant
and equipment over their estimated useful lives from the date on which
they become fully operational using the straight-line method at the
annual rate of 20%.
(i) Operating leases
Leases where substantially all the rewards and risks of ownership of
assets remain with the leasing company are accounted for as operating
leases. Rentals payable under operating leases are recorded in the
consolidated statement of operation on a straight-line basis over the
lease term.
(j) Organization costs
Organization costs comprise of rental expenses and other start-up cost
and are expensed in the consolidated statement of operation during the
year in which they are incurred.
(k) Loss per share
Loss per share is based on net loss attributable to shareholders and
the weighted average number of ordinary shares outstanding during the
year.
Diluted loss per share is not shown because there is no dilutive
potential ordinary shares.
(l) New accounting pronouncements
Accounting for derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Stnadards (SFAS) No.133, "Accounting
for derivative instruments and hedging activities", which establishes
new accounting and reporting stanadards for derivative instruments.
In June 1999, the FASB issued SFAS No. 137, "Accounting for derivative
instruments and hedging activities - Deferral of the effective date of
FASB Statement No. 133" and in June 2000, the FASB issued SFAS No.
138, "Accounting for certain derivative instruments and certain
hedging activities - An amendment of FASB Statement No. 133".
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
(l) New accounting pronouncements (Continued)
These rules require that all derivative instruments be reported in the
consolidated financial statements at fair value. Changes in the fair
value of derivatives are to be recorded each period in earnings or
other comprehensive income, depending on whether the derivative is
designated and effective as part of a hedged transaction, and on the
type of hedge transaction. Gains or losses on derivative instruments
reported inother comprehensive income must be reclassified as earnings
in the period in which earnings are affected by the underlying hedged
item, and the ineffective portion of all hedges must be recognized in
earnings in the current period. These new standards may result in
additional volatility in reported earnings, other comprehensive income
and accumulated other comprehensive income.
These rules become effective for the Group on July 2, 2000. The
management expects the adoption of this statement would have no impact
on the Group's financial position and results of operations.
Accounting for certain sales incentives
In May 2000, the Emerging Issues Task Force ("EITF") of the FASB
announced that it had reached a conclusion on Issue 00-14, "Accounting
for certain sales incentives". Issue 00-14 establishes requirements
for the recognition and presentation in financial statements of sales
incentives such as discounts, coupons and rebates. The EITF
conclusions on this issue
<PAGE>
become effective for the Group in 2001. At this time, the management
does not expect the adoption of this statement would modify the
Group's reported pre-tax loss or net loss presented in the
consolidated statement of operations.
Accounting for shipping and handling fees and costs
In July 2000, the EITF of the FASB announced that it had reached a
conclusion on Issue 00-10, "Accounting for shipping and handling fees
and costs". Issue 00-10 requires that all amounts billed to customers
in sale transactions related to shipping and handling represent
revenues earned for he goods provided and should be classified as
such. This conclusion becomes effective for the Group in 2001. Upon
adoption of the consensus, comparative financial statements for prior
periods must comply with the classification guidelines of this issue.
At this time, the management does not expect that the adoption of this
statement would modify the Group's reported pre-tax loss or net loss
presented in the consolidated statement of operations.
4. PREPAYMENT
The carrying amount of prepayment in the balance sheet represents the
amount of prepaid rental of the club premises of a subsidiary as follows:
As of March As of June
31, 2000 30, 2000
-------------- --------------
US$ US$
Total rental prepaid 1,643,600
Less: Current portion - (845,280)
-------------- --------------
Long term portion - 798,320
============== ==============
The total amount of rental prepaid will be written off to the consolidated
statement of operation in each of the following two periods as follows:
US$
Period from July 1, 2000 to 31 March, 2001 845,280
Year ended March 31, 2002 798,320
--------------
Total rental prepaid 1,643,600
==============
5. OTHER RECEIVABLES
As of March As of June
31, 2000 30, 2000
-------------- --------------
US$ US$
Temporary payment 2,544,800 -
Other receivable 46,468 -
-------------- --------------
2,591,268 -
============== ==============
The temporary payment represented consideration paid for the transfer of
75% interest in BWTCC while the other receivable represents amount due from
BWTCC. As mentioned in note 1 to the financial statements, approval from
the PRC government for the share transfer was not obtained as at the
balance sheet date. As a result, the consideration paid was classified as
temporary payment and the amount due from BWTCC was classified as other
receivable as of March 31, 2000.
<PAGE>
The approval was subsequently obtained in May 2000. Thus as of June 30,
2000, the consideration paid and the amount due from BWTCC was accounted
for as investment in a subsidiary and amount due from a subsidiary
respectively.
6. PROPERTY, PLANT AND EQUIPMENT
As of March As of June
31, 2000 30, 2000
-------------- --------------
US$ US$
Furniture and fixtures:
Cost - 2,848
Less: Accumulated depreciation - (1,281)
-------------- --------------
Net book value - 1,567
============== ==============
7. GOODWILL
As of March As of June
31, 2000 30, 2000
---------------- --------------
US$ US$
Acquisition of subsidiaries - 1,749,107
Less: Amortization charge - (145,759)
---------------- --------------
Net book value - 1,603,348
================ ==============
8. RELATED PARTY TRANSACTIONS
<TABLE>
<S> <C>
(a) Names and relationship of related parties Existing relationships with the
-------------------------------
Mr. John H. W. Hui A director of the Company
Mr. Steven K. F. Hui Close family member of a director of
the Company
Mr. Alfred Or A director of a subsidiary
Vast Opportunity Limited Minority shareholder of a subsidiary
Belford Enterprises Limited A company in which a director of the
Company has beneficial interest
Main Edge International Limited Intermediate holding company
PRC partner of a subsidiary
</TABLE>
<PAGE>
8. RELATED PARTY TRANSACTIONS (Continued)
(b) Summary of related party transactions
<TABLE>
<CAPTION>
Period from
Period from inception
February 18, Period (February
1999 to Year ended ended 18, 1999) to
March 31, March 31, June 30, June 30,
1999 2000 2000 2000
--------------- --------------- --------------- --------------
US$ US$ US$ US$
<S> <C> <C> <C> <C>
Management fee to:
Mr. John H. W. Hui - 108,333 25,000 133,333
Mr. Steven K. F. Hui - 66,667 - 66,667
Mr. Alfred Or - 36,645 20,000 56,645
=============== =============== =============== ==============
</TABLE>
As mentioned in note 1 to the financial statements, on October 10,
1999, the Company signed an agreement with Belford Enterprises Limited
( "Belford") pursuant to which Belford agreed to transfer its 75%
interest in Beijing World Trade Center Club ("BWTCC") to the Company
at a consideration of US$2,544,800. Further details of the
transactions have been described in note 1 to the financial
statements.
(c) Due to related parties
<TABLE>
<CAPTION>
As of March As of June
31, 2000 30, 2000
-------------- --------------
US$ US$
<S> <C> <C>
Mr. John H. W. Hui 522,854 -
Mr. Steven K.F. Hui 66,667 118,192
Mr. Alfred Or 36,645 56,645
Vast Opportunity Limited 97,570 114,686
Belford Enterprises Limited - 794,440
Main Edge International Limited - 695,977
- 18,119
-------------- --------------
Classified as current liabilities 723,736 1,798,059
Non-current liabilities:
Main Edge International Limited 2,544,800 -
-------------- --------------
3,268,536 1,798,059
============== ==============
</TABLE>
The amounts due to related parties represent unsecured advances which
are interest free and repayable on demand.
9. SHARE CAPITAL
As of March 31, 2000 As of June 30, 2000
----------------------- -----------------------
No. of No. of
shares HK$ shares HK$
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Authorised:
Ordinary shares of US$1 each 50,000 50,000 2,500,000 2,500,000
------ ------- ----------- ----------
Issued and fully paid:
At beginning of year 1 1 1 1
New shares issued - - 2,499,999 2,499,999
------ ------- ----------- ----------
At balance sheet date 1 1 2,500,000 2,500,000
------ ------- ----------- ----------
</TABLE>
By a written resolution of the sole director dated 12 May 2000, the
authorised share capital of the Company was increased to US$2,500,000 by
the creation of an additional 2,450,000 shares of US$1 each.
On the same date, the issued share capital of the Company was increased to
US$2,500,000 by allotting 2,499,999 shares of US$1 each at par for
capitalization of loan from the holding company. These shares rank pari
passu with the existing share is all respects.
10. PROVISION FOR INCOME TAXES
As the Company and its subsidiaries are in the development stage, they have
not recorded any income tax expenses.
11. SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION
(a) Summary of effect of acquisition of subsidiary
Period
ended
June 30,
2000
US$
Net assets acquired 1,614
Property, plant and equipment 1,995,819
Prepayment and rental deposits 398
Cash and cash equivalents (4,208)
Accrued charges (932,699)
Due to related parties -------------
1,060,924
(265,231)
Minority interest -------------
795,693
1,749,107
Add: Goodwill arising from acquisition of subsidiary -------------
2,544,800
Consideration -------------
11. SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION (Continued)
(b) Analysis of the net inflow of cash and cash equivalents in respect of
acquisition during the period
Period
ended
June 30,
2000
US$
<PAGE>
<TABLE>
<S> <C>
Consideration (2,544,800)
Bank balance and cash acquired 398
Due to related party, non-current 44,801
Issuance of ordinary share by capitalisation of loan from the holding company 2,499,999
---------------
Net inflow of cash and cash equivalents 398
---------------
</TABLE>
12. GOING CONCERN
The Group has not commenced revenue producing activities, and, accordingly,
is considered in the development stage. Since inception, the Group has
incurred recurring losses from operations, has an accumulated deficit of
US$602,516 and US$936,343 at March 31, 2000 and June 30, 2000 respectively
and has a negative working capital of US$721,620 at June 30, 2000. These
conditions raise substantial doubt about the Group's ability to continue as
a going concern.
Continuation of the Group as a going concern is dependent upon obtaining
additional working capital and the management has developed a strategy,
which it believes will accomplish this objective through additional equity
funding which will enable the Group to operate in the future. However,
there can be no assurance that the Group will be successful with its
efforts to raise additional capital. The inability of the Group to secure
additional financing in the near term could adversely impact the Group's
business, financial position and prospects.
13. IMMEDIATE HOLDING COMPANY
The directors consider the immediate holding company at the balance sheet
date is Main Edge Limited, a company incorporated in the British Virgin
Islands.
12. POST BALANCE SHEET EVENT
Pursuant to a Share Exchange Agreement entered into between the Company,
Main Edge International Limited ("Main Edge"), Txon International
Development Corporation ("Txon") and certain sharesholders of Txon on
August 10, 2000, Main Edge transferred 100% of the issued and outstanding
shares of capital stock of the Company in exchange for the issuance by Txon
of 1,961,175 shares of its common stock with par value of US$0.001 each.
The 1,961,175 shares constitute 75.16% of the issued and outstanding shares
of Txon's common stock.
The transaction was completed on August 14, 2000 when Txon became the
immediate holding company of the Company. Txon is a U.S. public company
listed on the National Association of Securities Dealers Over-the-Counter
Bulletin Board.
<PAGE>
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 hereunto duly authorized.
CHINA WORLD TRADE CORPORATION
Date October 19, 2000 By /s/ John H.W. Hui
---------------------- -----------------------------
Name: John H.W. Hui
Title: President
