UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 1997
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required) for the transition period from ____________________ to
_____________________
Commission file number: 0-11734
CHINA FOOD AND BEVERAGE COMPANY
(Name of Small Business Issuer in Its Charter)
Nevada 87-0548148
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
82-66 Austin Street, Kew Gardens, New York 11415
(Address of Principal Executive Offices) (Zip Code)
(212) 398-7833
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes No XX
The number of shares outstanding of Registrant's common stock ($0.001 par value)
as of November 7, 1997 was 4,710,983.
Total of Sequentially Numbered Pages: 8
Exhibit Index on Page: 8
<PAGE>
TABLE OF CONTENTS
PART 1
ITEM 1. FINANCIAL STATEMENTS ............................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION .......... 3
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ................................... 6
SIGNATURES ......................................................... 7
INDEX TO EXHIBITS .................................................. 8
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
Unless otherwise indicated, the term "Company" refers to China Food and
Beverage Company and its subsidiaries and predecessors. Consolidated, unaudited
interim financial statements including a balance sheet for the Company as of the
fiscal quarter ended September 30, 1997 and statements of operations and
statements of cash flows for the interim period up to the date of such balance
sheet and the comparable period of the preceding fiscal year are attached hereto
as Pages F-1 through F-6 and are incorporated herein by this reference.
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARY
(FORMERLY OMAP HOLDINGS INCORPORATED AND SUBSIDIARY)
CONSOLIDATED UNAUDITED CONDENSED BALANCE SHEET
ASSETS
September 30
1997
-------------------
CURRENT ASSETS
Cash .......................................................... $ 1,482
Accounts receivable - related parties ......................... 69,281
------------
TOTAL CURRENT ASSETS .... 70,763
------------
PROPERTY AND EQUIPMENT - NET .................................. --
OTHER ASSETS
Investments in American China Development Company ............. 1,600,000
Refundable deposit ............................................ 53,750
------------
TOTAL OTHER ASSETS .... 1,653,750
------------
TOTAL ASSETS .... $ 1,724,513
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .............................................. $ 141,491
Accounts payable - related parties ............................ 5,204
Accrued liabilities - foreign investors ....................... 102,898
Payroll taxes payable ......................................... 113,943
------------
TOTAL CURRENT LIABILITIES .... 363,536
------------
LONG TERM LIABILITIES ......................................... --
COMMITMENTS AND CONTINGENCIES ................................. --
STOCKHOLDERS' EQUITY
Common stock-$.001 par value: 100,000,000 shares authorized;
2,091,190 shares issued and outstanding at 9/30/97 ............ 2,091
Additional paid-in capital .................................... 15,740,532
Accumulated deficit ........................................... (14,381,646)
------------
TOTAL STOCKHOLDERS' EQUITY .... 1,360,977
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .... $ 1,724,513
============
See notes to consolidated unaudited condensed financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARY
(FORMERLY OMAP HOLDINGS INCORPORATED AND SUBSIDIARY)
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
------------------------------------------------------
September 30 September 30 September 30 September 30
1997 1996 1997 1996
---------------------------- --------------------------
<S> <C> <C> <C> <C>
Revenue (net of returns) ................................ $ -- $ 692,301 $ -- $ 2,218,874
Cost of revenue ......................................... -- 396,861 -- 1,382,430
----------- ----------- ----------- -----------
Gross profit ....................... -- 295,440 -- 836,444
Operating expenses:
Selling, general and administrative ................... 63,873 561,527 230,802 1,861,969
----------- ----------- ----------- -----------
Operating income (loss) ............ (63,873) (266,087) (230,802) (1,025,525)
Other income (expense):
Interest income ....................................... -- 1,127 -- 3,618
Dividend income ....................................... 132 -- 132
Interest expense ...................................... -- (6,047) -- (19,593)
Misc. other income (expenses) ......................... -- -- -- 96
----------- ----------- ----------- -----------
Total Other Income (expenses) ........ 132 (4,920) 132 (15,879)
----------- ----------- ----------- -----------
Net loss before income taxes ............................ (63,741) (271,007) (230,670) (1,041,404)
----------- ----------- ----------- -----------
Income taxes ............................................ -- (506) -- (506)
----------- ----------- ----------- -----------
Net operating loss ...................................... (63,741) (271,513) (230,670) (1,041,910)
Extraordinary items ..................................... -- (11,568) -- (8,460)
----------- ----------- ----------- -----------
Net loss ................................................ $ (63,741)$ (283,081)$ (230,670) $ (1,050,370)
=========== =========== =========== ===========
Income (loss) per common share
Income (loss) before extraordinary items .............. (0.03) (0.01) (0.12) (0.05)
Income (loss) from extraordinary items ................ -- (0.00) -- (0.00)
----------- ----------- ----------- -----------
Income (loss) per weighted average common share ......... $ (0.03) (0.01) (0.12) (0.05)
=========== =========== =========== ===========
Weighted average number of common shares
used to compute net loss per common share ............. 2,091,190 23,704,544 1,955,611 21,868,823
=========== =========== =========== ===========
See notes to consolidated unaudited condensed financial statements.
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARY
(FORMERLY OMAP HOLDINGS INCORPORATED AND SUBSIDIARY)
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
Total
Additional Stockholders'
Common Stock Paid-in Accumulated Equity
------------------------------------
Shares Amount Capital Deficit (Deficit)
----------------- --------------- --------------- --------------- --------------
Balance
<S> <C> <C> <C> <C> <C> <C>
January 1, 1997 .................... 38,945,760 $ 38,946 $ 13,904,078 $ (14,150,975) $ (207,951)
1-for-30 reverse split ............. (37,647,568) (37,648) 37,648 -- --
Common stock issued
for services ....................... 440,000 440 387,060 -- 387,500
Common stock for cash .............. 18,333 18 10,982 -- 11,000
Common stock for assets ............ 738,334 738 1,653,012 -- 1,653,750
Common stock for debts ............. 13,000 13 19,487 -- 19,500
Rounding error ..................... -- 1 (2) -- (1)
Net loss for the quarter
ending March 31,1997 ............... -- -- -- (437,912) (437,912)
------------ ------------ ------------ ------------ ------------
Balance
March 31, 1997 ..................... 2,507,859 2,508 16,012,265 (14,588,887) 1,425,886
------------ ------------ ------------ ------------ ------------
Common stock issued
for services ....................... (416,669) (417) (271,733) -- (272,150)
Net income for the quarter
ending June 30,1997 ................ -- -- -- 270,982 270,982
------------ ------------ ------------ ------------ ------------
Balance
June 30, 1997 ...................... 2,091,190 2,091 15,740,532 (14,317,905) 1,424,718
------------ ------------ ------------ ------------ ------------
Net income for the quarter
ending September 30,1997 ........... -- -- -- (63,741) (63,741)
------------ ------------ ------------ ------------ ------------
Balance
September 30, 1997 ................. 2,091,190 $ 2,091 $ 15,740,532 $(14,381,646) $ 1,360,977
============ ============ ============ ============ ============
See notes to consolidated unaudited condensed financial statements.
F-3
</TABLE>
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARY
(FORMERLY OMAP HOLDINGS INCORPORATED AND SUBSIDIARY)
CONSOLIDATED UNAUDITED CONDENSED STATEMENTS OF CASH FLOW
For the nine months ended
September 30
---------------------------
1997 1996
--------------------------
Net income (loss) .................................... $(230,670) $(1,050,370)
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities:
Depreciation and amortization ................... -- 362,055
Bad debt expenses ............................... 17,462 --
Common stock issued for services ................ 115,350 350,285
(Increase) decrease in:
Accounts receivable - net ....................... -- 679,153
Accounts receivable - related parties ........... (50,996) (160,000)
Accounts receivable - other ..................... 426,702 (353,607)
Inventories ..................................... -- 49,991
Prepaid expenses ................................ -- 13,316
Investment Securities ........................... -- (10,000)
Increase (decrease) in:
Accounts payable and accrued expenses ........... (4,155) (443,486)
Accounts payable - related party ................ (375,255) (326,002)
Accounts payable - foreign investors ............ 102,898 --
Payroll taxes payable ........................... -- (448,787)
--------- -----------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES .............. 1,336 (1,337,452)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures ............................ -- (10,692)
--------- -----------
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES ............. -- (10,692)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash for previously-issued stock ................ -- --
Common stock issued for cash .................... -- 720,000
Increase in long-term debt ...................... -- 19,737
--------- -----------
NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES ............. -- 739,737
NET INCREASE (DECREASE ) IN CASH ..................... 1,336 (608,407)
CASH AT BEGINING OF PERIOD ........................... 146 623,306
--------- -----------
CASH AT END OF PERIOD $ ........... 1,482 $ 14,899
========= ===========
See notes to consodlidated unaudited condensed financial statements.
F-4
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARY
(FORMERLY OMAP HOLDINGS, INCORPORATED AND SUBSIDIARY)
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
1. Basis of Presentation
The accompanying consolidated unaudited condensed financial statements
have been prepared by management in accordance with the instructions in Form
10-QSB and, therefore, do not include all information and footnotes required by
generally-accepted accounting principles and should, therefore, be read in
conjunction with the Company's Annual Report to Shareholders on Form 10-KSB for
the fiscal year ended December 31, 1996. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations results are not
necessarily indicative of the results for the full year ended December 31, 1997.
2. Investment in American China Development Corporation
On March 15, 1997, the Company acquired 100% of the issued and
outstanding shares of American China Development Corporation ("ACDC"), which
owns a 60% interest in a joint venture which operates a beer brewery in China.
The Company continues to record this investment at cost based on the fact that
it does not have significant influence over the financial and operating policies
of ACDC. This lack of significant influence is illustrated by the fact that: (1)
the Company's directors are not represented on the board of directors of ACDC;
(2) the Company's management does not participate in ACDC's policy making
process; (3) there are no material intercompany transactions between the Company
and ACDC; and (4) there is no interchange of managerial personnel or
technological dependency between the two companies. Please refer to the 10-QSB
filed for the quarter ended March 31, 1997 for more detail on this investment.
2. Changes in Common Stock
The Joint Venture Agreement between ACDC and its Chinese partner
requires the Company to invest $2,000,000 in the beer brewery in China. During
the second quarter of 1997, the Company executed a loan agreement with an
unaffiliated third party to provide the Company with a $2,000,000 loan. On July
7, 1997, the Company issued 1,500,000 shares of its common stock to Epimed Inc.
in order to obtain a $300,000 letter of credit to pay for the loan processing
fee. The shares served as collateral on the letter of credit. On July 11, 1997,
the Company became aware that Epimed failed to deliver the letter of credit as
promised and placed a stop transfer order on the 1,500,000 shares issued. The
Company is in the process of obtaining a court order to cancel the stock
certificate. The Company believes that it will be able to cancel the stock
certificate and therefore did not record the issuance of 1,500,000 shares.
Consequently, the shares have been subtracted from the total number of shares
outstanding as recorded by the transfer agent.
On April 10, 1997, the Company effected a 1-for-30 reverse split of its
common stock.
All references to the Company's common stock have been adjusted to reflect the
reverse split.
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY AND SUBSIADIRY
(FORMERLY OMAP HOLDINGS, INCORPORATED AND SUBSIDIARY)
NOTES TO CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
4. Investments from Foreign Investors
During the third quarter of 1997, the Company obtained $102,898 in cash
from various foreign investors. The Company initially intended to issue shares
of its common stock in exchange for cash received. However, disputes arose
between the Company and the foreign investors concerning the manner in which the
stock was to be issued. The Company is currently negotiating with the foreign
investors toward a settlement of these disputes. As of the date of this filing,
the Company is not certain whether stock or promissory notes will be given to
these foreign investors. Consequently, the Company recorded a current liability
in the amount of $102,898 to reflect the cash infusion from these foreign
investors.
5. Additional footnotes included by reference
Except as indicated in Notes 1- 4 above, there have been no other
material changes in the information disclosed in the notes to the financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996. Therefore, those footnotes are included herein by
reference.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
From October 1995 to November 1996, the Company's business primarily
involved the production of paper collators, vending machines and heating and
lighting equipment through the Company's former subsidiary, Establissements R.
Kohl ("Kohl"). Kohl was a French corporation whose principal asset was a 100,000
square foot manufacturing plant located in Calais, France. The Company acquired
Kohl in December 1995. Prior to its acquisition by the Company, Kohl
manufactured lighting fixtures and heating equipment, both of which were sold
through existing distribution contracts. Prior to its acquisition of Kohl, the
Company had acquired patents related to the production of collators and
technology and proprietary information related to the manufacture of paper
processing devices. From October 1995 to November 1996, Kohl was the Company's
only income producing asset.
The Company planned to develop the acquired patents and technology to
manufacture paper collators in the manufacturing plant operated by Kohl. Kohl
was to manufacture and distribute three different models of collators varying as
to quality and price, each of which would implement the patents previously
obtained by the Company. Kohl was also to continue manufacturing heating
equipment and lighting fixtures. Finally, Kohl was to produce a line of patented
portable food vending machines.
During the end of 1995 and throughout 1996, Kohl continued to produce
and distribute lighting and heating equipment, as it had done prior to its
acquisition by the Company. Kohl also produced prototypes for several different
models of its paper collators and a prototype for one of its patented vending
machines.
At the time that the Company acquired Kohl, Kohl had a shortage of
working capital and required an immediate capital infusion. Kohl was delinquent
in paying some of its trade creditors and needed additional capital to perfect
the design and begin the manufacture of its collators and vending machines.
After it acquired Kohl, the Company attempted to raise debt or equity financing
to invest into Kohl, but was unable to obtain the capital necessary to assist
Kohl in sustaining its operations. Accordingly, Kohl was unable to ever commence
the distribution of its collators or vending machines and did not realize any
revenue from the production of these products. Without additional capital, Kohl
could not offset the research and development costs associated with these
products and could not continue to meet its short term obligations.
After becoming delinquent with several trade creditors, Kohl petitioned
for bankruptcy protection under the laws of France in November 1996. This
decision resulted from Kohl's shortage of working capital and from pressure
imposed by Kohl's creditors. On April 28, 1997, the French Tribunal
administering the bankruptcy of Kohl sold nearly all of Kohl's assets, including
Kohl's manufacturing plant, at a hearing at the Commercial Court. The only
assets which were not sold at that proceeding were vending machine prototypes,
inventory and spare parts related thereto and vendor patents.
<PAGE>
Aside from the few assets surviving Kohl's bankruptcy sale, the
Company's only significant remaining assets were patents related to the
manufacture of collators which were owned by a separate subsidiary of the
Company. After the sale of Kohl, the Company discontinued the manufacture of
collators and ceased making payments necessary to maintain ownership of the
patent rights. Accordingly, on June 19, 1997, the Company received notice that
its rights to these patents had lapsed.
On March 15, 1997 and while the bankruptcy sale of Kohl was pending,
the Company acquired all outstanding capital stock of a Bahamian corporation
called American China Development Corporation ("ACDC") from a Company known as
Dizon Investments Limited. The Company acquired ACDC in exchange for the
Company's issuance of 666,667 shares of its common stock to Dizon. ACDC owns a
60% interest in a joint venture in the People's Republic of China (the "PRC").
According to the joint venture agreement, ACDC will have the right to obtain a
60% equity interest in a limited liability company within the Chinese territory
to be operated in accordance with the Laws of the PRC on Joint Ventures Using
Chinese and Foreign Investment. The purpose of the joint venture is to operate
an existing beer brewery in the Jiangsu province of the PRC known as the Nantong
Aitesi Beer Company. This brewery has been in existence since the 1950's and has
been State-owned since that time. The brewery currently distributes beer locally
to the City of Quidong and surrounding areas within a 50 mile radius. To reflect
its acquisition of ACDC and its control of the joint venture interest owned by
ACDC, the Company changed its name to China Food and Beverage Company on March
31, 1997.
The objectives of the joint venture are to improve the quality of the
brewery's products, improve the capacity of the brewery and increase the market
share of the brewery's products. In order to accomplish these objectives, the
joint venture requires a substantial capital contribution from ACDC, the foreign
party to the joint venture. Under the joint venture agreement, ACDC is required
to contribute $2 million in cash and equipment to the joint venture within six
months after the joint venture has been approved by the Chinese government
authorities.
The Company acquired ACDC and the joint venture interest owned by ACDC
because the Company seeks to capitalize on the enormous Chinese consumer market.
The Chinese beer market is dominated by small, local breweries which distribute
locally in their province or region. The Company believes that if substantial
capital contributions are made to improve the quality of the beer produced by
the brewery and the efficiency of the production process, the brewery can
increase its market share and revenues and thereby increase the value of ACDC's
investment in the joint venture. This belief is based upon an internal business
plan produced by the Chinese partner in the joint venture.
However, ACDC's investment in the joint venture is also subject to
several risks and uncertainties. The most prominent risk involves the capital
contributions required to be made by ACDC. The joint venture agreement requires
ACDC to invest $2 million in United States currency within six months after the
joint venture is approved. If ACDC is delinquent in making any capital
contributions required under the joint venture agreement, it is subject to a 10%
annual interest charge and further subject to a 0.5% penalty on all amounts in
default. ACDC also risks losing its business license (which would effectively
terminate its ability to carry out the purposes of the joint venture) if it
fails to make its required capital contributions. Accordingly, the success of
ACDC is substantially dependent on its ability to raise the capital necessary to
meet its commitments under the joint venture. ACDC does not have substantial
assets aside from the joint venture interest and will therefore be dependent
upon the Company in making its required capital contributions. Given the
Company's limited cash flow and history of operating losses, as well as its
experience with Kohl, there is a substantial risk that ACDC will not be able to
make the scheduled capital contributions. The Company intends to raise capital
primarily through private offerings of its Common Stock or through debt
financing, and the Company can provide no assurances that it will be able to
generate sufficient capital in this manner. If ACDC and/or the Company are
unable to raise this capital, the Company's investment in ACDC will not succeed.
There are additional risks and uncertainties involved with ACDC's
investment in the Chinese joint venture. A substantial portion of the business
plan prepared by the Chinese partner in the joint venture is premised upon
projections about how the Chinese consumer market in general, and the beer
market in particular, will develop in the future. Many of these projections are
based on developments in Hong Kong, Japan and other markets. There is a risk
that these projections will prove to be inaccurate, that the market for beer in
the PRC will not expand and that the revenues to be produced by the brewery
could fall substantially short of projections made in the business plan. Another
risk posed by the investment in the joint venture involves currency exchange
rates which may nullify any dividends, profit sharing or other income that ACDC
realizes through its investment in the joint venture. Finally, the joint venture
is subject to political risks caused by political uncertainty in the PRC and
relative infancy of Western investment in formerly State-owned Chinese
companies.
<PAGE>
On April 10, 1997, the Company's board of directors authorized the
Company to effect a 1-for-30 reverse split of all issued and outstanding shares
of Common Stock. The reverse split did not affect the authorized shares of
Common Stock. All fractional shares of Common Stock were rounded up to the
nearest whole share. The Company effected the reverse split because it believed
that the number of issued and outstanding shares of Common Stock was
disproportionately large compared to the Company's revenue, net income and net
worth.
During the second quarter of 1997, the Company obtained a commitment
from an unaffiliated entity to provide the Company with debt capital in the
amount of $2 million. The Company intended to invest this debt capital into
ACDC. The loan agreement required the Company to pay a $300,000 loan processing
fee. On July 7, 1997 and in order to pay the processing fee necessary to secure
the debt financing, the Company entered an agreement to obtain a $300,000 letter
of credit to be provided by a company known as Epimed, Inc. The Company issued
1,500,000 shares (or approximately 41.7% of the total shares currently issued
and outstanding) to Epimed to secure the Company's repayment of amounts borrowed
against the letter of credit. On July 11, 1997, the Company became aware that
Epimed had failed, without cause, to deliver the letter of credit as required.
The Company placed a stop transfer order on the shares of Common Stock issued to
secure the letter of credit, and is in the process of obtaining a court order to
cancel those shares. However, the 1.5 million shares have been treated as
outstanding for purposes of disclosure on this Form 10-QSB. The Company has been
unable to otherwise obtain the required loan processing fee and therefore has
been unable to secure the $2 million in debt financing. The Company is currently
seeking alternative means of financing the capital contributions required by the
Chinese joint venture, but can provide no assurances that such financing will be
available.
On September 2, 1997, the Company granted options to purchase Common
Stock to two of its officers and directors. The Company granted an option to
purchase 1 million shares of Common Stock to James Tilton, the Company's
president, chief executive officer, treasurer and director. The Company granted
an additional option to purchase 1 million shares of Common Stock to Jane Zheng,
the Company's secretary and director. The exercise price for each option was set
at $0.31, the bid price of the Common Stock on the date the options were
granted. The options were granted to compensate Mr. Tilton and Ms. Zheng as a
bonus and for the services they perform as the Company's only employees.
On September 25, 1997, the Company executed a Consulting Agreement with
a company known as The Hayden Group, Inc. Pursuant to the Consulting Agreement,
the Company will receive consulting services related to management, marketing
and corporate structure. The consultant was also retained to help the company
more effectively disseminate corporate information to the public. As
consideration for the services to be performed, the Company granted to the
consultant options to purchase 600,000 shares of Common Stock. The exercise
prices for the options are as follows: (i) 150,000 shares exercisable at $0.15
per share; (ii) 150,000 shares exercisable at $0.30 per share; (iii) 150,000
shares exercisable at $0.50 per share; and (iv) 150,000 shares exercisable at
$0.90 per share. All options are exercisable for a period of three years.
Events Subsequent to Third Quarter
On October 7, 1997, the Company executed a $160,000 promissory note to
settle any and all potential claims against the Company stemming from an April
1996 offshore offering of the Company's Common Stock which had since been
rescinded. The promissory note bears interest a rate of 19.5% and matures
October 19, 1998. The Company issued 767,742 shares of Common Stock to an escrow
agent to secure payment of principal and interest due on the note.
<PAGE>
Results of Operations
Gross revenues for the nine months ended September 30, 1997 and the
quarter ended September 30, 1997 were zero compared to $2,218,874 and $692,301
for the same periods in 1996. Costs of revenues decreased from $1,382,430 for
the nine-month period ending September 30, 1996 to zero for the same period in
1997. Costs of revenues were $396,861 for the quarter ended September 30, 1996
and zero for the same quarter in 1997. The decrease in all situations is
attributable to the fact that Kohl, which was the Company's only source of
operating revenues, filed for bankruptcy protection and discontinued its
operations in November 1996.
Selling, general, and administrative expenses were $230,802 for the
first three quarters of 1997, during which the Company incurred $152,258 in
accounting and consulting expenses. During the same period in 1996, the Company
recorded $1,861,969 in selling, general, and administrative expenses, of which
consulting and payroll expenses accounted for $1,110,409. During the quarter
ended September 30, the Company incurred selling, general, administrative
expenses in the amount of $63,873 and $561,527 for 1997 and 1996, respectively.
Net loss was $230,670 during the first nine months of 1997 compared to
$1,050,370 for the same period in 1996. For the three months ended September 30,
net loss was $63,471 for 1997 and $283,081 for 1996.
Capital Resources and Liquidity
On April 10, 1997, the Company effected a 1-for-30 reverse split of
its common stock. All references to the Company's Class A Common Stock have been
adjusted to reflect the reverse split.
During the third quarter of 1997, the Company obtained $102,898 in cash
from various foreign investors. The Company initially intended to issue shares
of its common stock in exchange for cash received. However, disputes arose
between the Company and the foreign investors concerning the manner in which the
stock was to be issued. The Company is currently negotiating with the foreign
investors toward a settlement of these disputes. As of the date of this filing,
the Company is not certain whether stock or promissory notes will be given to
these foreign investors. Consequently, the Company recorded a current liability
in the amount of $102,898 to reflect the cash infusion from these foreign
investors.
The Company had a working capital deficiency of $292,773 as of
September 30, 1997 compared to a net working capital of $244,663 at the end of
September 1996. Kohl's operations accounted for a majority of the working
capital in 1996. After Kohl filed for bankruptcy, the Company was left with few
current assets and many current liabilities.
Net stockholders' equity in the Company was $1,360,977 on September 30,
1997 and $5,312,286 as of September 30, 1996. The main reason behind the
decrease was the Company's substantial loss suffered in 1996 ($6,851,350).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Index to Exhibits. Exhibits required to be attached by Item 601 of
Regulation S-B are listed in the Index to Exhibits beginning on page 8
of this Form 10-QSB. The Index to Exhibits is incorporated herein by
this reference.
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K
during the quarter ended September 30, 1997.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized this 18TH day of November 1997.
China Food and Beverage Company
/s/ James Tilton
----------------
James Tilton, President
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/James Tilton Chief Executive Officer, President, November 19, 1997
- --------------- Treasurer and Director
James Tilton
/s/Stanley Merdinger Director November 19, 1997
- -------------------
Stanley Merdinger
/s/ Kitty Chow Director November 19, 1997
Kitty Chow
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER PAGE DESCRIPTION
3(i) * The Company's Articles of Incorporation, as
restated to reflect the October 30, 1995
Certificate of Amendment to the Company's Articles
of Incorporation, incorporated herein by reference
to the Company's annual report of Form 10-KSB filed
with the Commission on October 2, 1996.
3(ii) * The Company's Bylaws, incorporated herein by
reference to the Company's annual report on Form
10-KSB for the year ended December 31, 1992.
10(i)(a) * Agreement and Plan of Exchange between the Company
and OMAP International Incorporated, dated October
23, 1995, filed as Exhibit 2(a) to Registrant's
Current Report on Form 8-K on April 22, 1996.
10(i)(b) * Agreement for Acquisition of Assets between the
Company and Otto Barenthin, dated December 15,
1995, filed as Exhibit 2(b) to Registrant's Current
Report on Form 8-K on April 22, 1996.
10(i)(c) * Contract of Transfer and Exchange of Shares between
the Company, Maurice Van Gysel and Jacky Caille,
dated December 15, 1995, filed as Exhibit 2(c) to
Registrant's Current Report on Form 8-K on April
22, 1996.
10(i)(d) * Agreement between the Company and Dizon Investments
Limited, dated March 15, 1997, filed as Exhibit
10(i)(g) to Registrant's Annual Report on Form
10-KSB filed October 20, 1997.
10(i)(e) * Consulting Agreement between the Company and The
Hayden Group, dated September 25, 1997, filed as
Exhibit 10(i)(h) to Registrant's Annual Report on
Form 10-KSB filed October 20, 1997.
10(i)(f) * Joint Venture Contract of American China
Development Corporation, dated November 11, 1997,
filed as Exhibit 10(i)(i) to Registrant's Annual
Report on Form 10-KSB filed October 20, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED UNAUDITED CONDENSED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S
SEPTEMBER 30, 1997 QUARTERLY REPORT ON FORM 10 QSB AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCC BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000717228
<NAME> OMAP Holdings Incorporated
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,482
<SECURITIES> 0
<RECEIVABLES> 69,281
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 70,763
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,724,513
<CURRENT-LIABILITIES> 363,536
<BONDS> 0
0
0
<COMMON> 2,091
<OTHER-SE> 1,358,886
<TOTAL-LIABILITY-AND-EQUITY> 1,724,513
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 63,873
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (63,741)
<INCOME-TAX> 0
<INCOME-CONTINUING> (63,741)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (63,741)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
