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Previous: MUNICIPAL FUND FOR NEW YORK INVESTORS INC, N-30D, 1999-03-15 |
Next: SHUFFLE MASTER INC, 10-Q, 1999-03-15 |
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported)........ December 30, 1998
CHINA FOOD & BEVERAGE COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 0-11734 87-0548148
------ ------- ----------
(State or other jurisdiction of (Commission (I.R.S. Employer Identification
incorporation or organization) File No.) No.)
8 West 38th Street, 9th Floor, New York, NY 10018
-----------------------------------------------------
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (212) 398-7833
------------------
<PAGE>
Item 7. Financial Statements and Pro Forma Financial Information
ANHUI HAO DUN BREWERY CO. LTD.
FINANCIAL STATEMENTS
December 31, 1997
<PAGE>
C O N T E N T S
Independent Auditors' Report.................................................. 3
Balance Sheet................................................................. 4
Statement of Operations....................................................... 6
Statement of Stockholders' Equity............................................. 7
Statement of Cash Flows....................................................... 8
Notes to the Financial Statements............................................ 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Directors
Anhui Hao Dun Brewery Co. Ltd.
Anhui, Peoples Republic of China
We have audited the accompanying balance sheet of Anhui Hao Dun Brewery Co. Ltd.
as of December 31, 1997 and the related statements of operations, stockholders'
equity and cash flows for the year ended December 31, 1997. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Anhui Hao Dun Brewery Co. Ltd.
as of December 31, 1997, and the results of its operations and its cash flows
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
Jones, Jensen & Company
Salt Lake City, Utah
February 27, 1999
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Balance Sheet
ASSETS
------
December 31,
1997
-----------------
CURRENT ASSETS
Cash and cash equivalents $ 243,108
Accounts receivable (net) (Note 1) 2,550,159
Note receivable 36,234
Inventory 973,195
Other receivables 696,358
-----------------
Total Current Assets 4,499,054
-----------------
FIXED ASSETS (Note 4)
Buildings 3,339,090
Machinery and equipment 7,937,790
Accumulated depreciation (1,627,575)
-----------------
Total Fixed Assets 9,649,305
-----------------
OTHER ASSETS
Construction in progress 226,290
Deferred and prepaid expenses 1,115,924
-----------------
Total Other Assets 1,342,214
-----------------
TOTAL ASSETS $ 15,490,573
=================
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Balance Sheet
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
December 31,
1997
-----------------
<S> <C>
CURRENT LIABILITIES
Accounts payable $ 394,162
Accrued expenses 1,906,372
Taxes payable (Note 3) 4,619,863
Customer prepayments 514,318
Notes payable (Note 2) 5,383,789
-----------------
Total Current Liabilities 12,818,504
-----------------
LONG-TERM LIABILITIES
Notes payable (Note 2) 361,980
Other liabilities 128,261
-----------------
Total Long-Term Liabilities 490,241
-----------------
Total Liabilities 13,308,745
-----------------
STOCKHOLDERS' EQUITY
Paid-in capital, no par value, no shares issued and outstanding 1,304,697
Currency translation adjustment 4,144
Retained earnings 872,987
-----------------
Total Stockholders' Equity 2,181,828
-----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 15,490,573
=================
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Statement of Operations
For the Year Ended December 31, 1997
NET SALES $ 14,659,236
COST OF SALES 9,226,327
-----------------
GROSS MARGIN 5,432,909
-----------------
COSTS AND EXPENSES
Selling expenses 459,503
General and administrative 1,479,783
-----------------
Total Costs and Expenses 1,939,286
-----------------
INCOME BEFORE OTHER EXPENSE 3,493,623
-----------------
OTHER EXPENSE
Interest expense 696,630
-----------------
Total Other Expense 696,630
-----------------
INCOME BEFORE TAX 2,796,993
VALUE ADDED TAX AND INCOME TAX EXPENSE (Note 3) 1,985,657
-----------------
NET INCOME $ 811,336
=================
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
Currency
Paid-In Translation Retained
Capital Adjustment Earnings
------------------ ------------------ -----------------
<S> <C> <C> <C>
Balance, December 31, 1996 $ 1,304,697 $ - $ 61,651
Currency translation adjustment - 4,114 -
Net income for the year ended
December 31, 1997 - - 811,336
------------------ ------------------ -----------------
Balance, December 31, 1997 $ 1,304,697 $ 4,114 $ 872,987
================== ================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Statement of Cash Flows
<TABLE>
<CAPTION>
December 31,
1997
-----------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 811,337
Adjustments to reconcile net income to net cash
used by operating activities:
Depreciation 629,202
Bad debt expense 50,946
Changes in assets and liabilities:
(Increase) in accounts receivable (1,533,003)
(Increase) in note receivable (36,234)
(Increase) in other receivables (619,824)
(Increase) in inventory (75,273)
(Increase) in deferred/prepaid assets (191,953)
Decrease in construction in progress 245,955
Increase in accounts payable and accrued expenses 935,832
Increase in customer prepayments 385,420
Increase in taxes payable 2,075,112
-----------------
Net Cash Provided by Operating Activities 2,677,517
-----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (3,282,278)
-----------------
Net Cash (Used) in Investing Activities (3,282,278)
-----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable 2,249,776
Payments on notes payable (1,704,155)
-----------------
Net Cash Provided by Financing Activities 545,621
-----------------
NET (DECREASE) IN CASH (59,140)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 302,248
-----------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 243,108
=================
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES:
Cash Paid For:
Interest $ 696,630
Income taxes $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Notes to the Financial Statement
December 31, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
The financial statements are those of Anhui Hao Dun Brewery Co.
Ltd. (the Company) The Company was organized in the city of Luan,
Anhui Province in the People's Republic of China in 1986 for the
purpose of making and distributing beer products. The Company was
organized as a state owned entity, accordingly, no shares were
authorized, issued or outstanding.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31 year
end.
c. Cash and Cash Equivalents
Cash equivalents include short term, highly liquid investments
with maturities of three months or less at the time of
acquisition.
d. Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
e. Accounts Receivable
The Company's accounts receivable are shown net of an allowance
for bad debt of $107,150 at December 31, 1997.
f. Advertising
The Company expenses the advertising costs as incurred.
g. Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies
are translated into United States dollars at the period and
exchange rate. Non-monetary assets are translated at the
historical exchange rate and all income and expenses are
translated at the exchange rates prevailing during the period.
Foreign exchange currency translation adjustments are included in
the stockholders' equity section.
9
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Notes to the Financial Statement
December 31, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
h. Fair Value of Financial Instruments
As at December 31, 1997, the fair value of cash, accounts
receivable and accounts and advances payable including amounts due
to and from related parties, approximate carrying values because
of the short-term maturity of these instruments.
i. Foreign Operations
The Company currently conducts activities in The Peoples Republic
of China (PRC). The Company may be materially adversely affected
by possible political or economic instability in PRC. The risks
include, but are not limited to, military repression,
expropriation, changing fiscal regimes, extreme fluctuations in
currency exchange rates, high rates of inflation and the absence
of industrial and economic infrastructure. Operations may be
affected in varying degrees by government regulations with respect
to production restrictions, price controls, export controls,
income and other taxes, expropriation of property, maintenance of
claims, environmental legislation, labor, welfare benefit
policies, land use, land claims of local residents, water use and
mine safety. The effect of these factors cannot be accurately
predicted.
j. Capital Assets and Amortization
Capital assets are recorded at cost and amortization is provided
over the estimated economic life on a straight-line basis at the
following rates:
Machinery 14 years
Buildings 25 years
k. Income Taxes
Taxes payable consist of Value Added Tax (VAT) which is calculated
by multiplying 17% of sales minus the purchasing tax, Consumption
Tax (CT) which is calculated by multiplying $26.84 by each ton of
beer which is sold, and the City Construction Tax (CCT) which is
calculated by multiplying 7% of the total VAT and CT.
10
<PAGE>
ANHUI HAO DUN BREWERY CO. LTD.
Notes to the Financial Statement
December 31, 1997
<TABLE>
<CAPTION>
NOTE 2 - NOTES PAYABLE
December 31,
1997
-----------------
<S> <C>
The Company has taken out several loans from the Industrial &
Commercial Bank and the Agriculture Bank. These loans bear
interest at 12%, require monthly payments of $122,020 and are
secured by the fixed
assets of the Company. $ 2,038,973
The Company has received advances from its employees of the
Company which were interest bearing at rates between 6% and 12%
per annum and due on demand. These funds
are to be used for staff welfare and other employee expenses. 3,706,796
-----------------
Total Notes Payable 5,745,769
Less: Current Portion (5,383,789)
-----------------
Long-Term Portion $ 361,980
=================
Maturities of notes payable:
1998 $ 5,383,789
1999 361,980
-----------------
Total $ 5,745,769
=================
NOTE 3 - TAXES PAYABLE
Taxes payable consisted of the following at December 31, 1997:
Value added tax $ 976,005
Consumption tax 3,500,998
City construction tax 142,860
-----------------
Total $ 4,619,863
=================
</TABLE>
The Company had value added and income tax expense of $1,985,656
for the year ended December 31, 1997.
NOTE 4 - FIXED ASSETS
<TABLE>
<CAPTION>
1997
Accumulated Net Book
Cost Depreciation Value
------------------ ------------------ -------------------
<S> <C> <C> <C>
Machinery and equipment $ 7,937,790 $ 1,139,303 $ 6,794,487
Buildings 3,339,090 488,272 2,850,818
------------------ ------------------ -------------------
$ 11,276,880 $ 1,627,575 $ 9,649,305
================== ================== ===================
</TABLE>
During the year ended December 31, 1997, the Company expensed
$629,202 in depreciation.
11
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
CONSOLIDATED PROFORMA FINANCIAL STATEMENTS
December 31, 1997
<PAGE>
C O N T E N T S
Consolidated Proforma Balance Sheet........................................... 3
Consolidated Proforma Statement of Operations................................. 5
Statement of Assumptions and Disclosures...................................... 6
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
Consolidated Proforma Balance Sheet
December 31, 1997
(Unaudited)
ASSETS
------
<TABLE>
<CAPTION>
China Food Victoria Proforma
and Beverage Beverage Anhui Hao Adjustments
Company and Company Dun Brewery Increase Proforma
Subsidiary Limited Co. Ltd. (Decrease) Consolidated
----------------- ----------------- ------------------ ----------------- ---------------
CURRENT ASSETS
<S> <C> <C> <C> <C> <C>
Cash $ 947 $ - $ 243,108 $ - $ 244,055
Accounts receivable, net - - 2,550,159 - 2,550,159
Inventory - - 973,195 - 973,195
Note receivable - - 36,234 - 36,234
Other receivables - - 696,358 - 696,358
----------------- ----------------- ------------------ ----------------- ---------------
Total Current Assets 947 - 4,499,054 - 4,500,001
----------------- ----------------- ------------------ ----------------- ---------------
FIXED ASSETS
Buildings - - 3,339,090 - 3,339,090
Machinery and equipment - - 7,937,790 - 7,937,790
Accumulated depreciation - - (1,627,575) - (1,627,575)
----------------- ----------------- ------------------ ----------------- ---------------
Total Fixed Assets - - 9,649,305 - 9,649,305
----------------- ----------------- ------------------ ----------------- ---------------
OTHER ASSETS
Investment - 10,500,000 - (10,500,000) -
Construction in progress - - 226,290 - 226,290
Deferred and prepaid
expenses - - 1,115,924 - 1,115,924
----------------- ----------------- ------------------ ----------------- ---------------
Total Other Assets - 10,500,000 1,342,214 (10,500,000) 1,342,214
----------------- ----------------- ------------------ ----------------- ---------------
TOTAL ASSETS $ 947 $ 10,500,000 $ 15,490,573 $ (10,500,000) $ 15,491,520
================= ================= ================== ================= ===============
</TABLE>
See Summary of Assumptions and Disclosures.
3
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
Consolidated Proforma Balance Sheet (Continued)
December 31, 1997
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
<TABLE>
<CAPTION>
China Food Victoria Proforma
and Beverage Beverage Anhui Hao Adjustments
Company and Company Dun Brewery Increase Proforma
Subsidiary Limited Co. Ltd. (Decrease) Consolidated
----------------- ----------------- ------------------ ----------------- ---------------
CURRENT LIABILITIES
<S> <C> <C> <C> <C> <C>
Accounts payable $ 77,682 $ - $ 394,162 $ 25,000 $ 496,844
Accrued expenses 211,364 - 7,040,553 - 7,251,917
Payable - stockholders 47,382 - - - 47,382
Notes payable - 10,500,000 5,383,789 (10,500,000) 5,383,789
----------------- ----------------- ------------------ ----------------- ---------------
Total Current Liabilities 336,428 10,500,000 12,818,504 (10,475,000) 13,179,932
----------------- ----------------- ------------------ ----------------- ---------------
LONG-TERM DEBT
Notes payable - less current
portion 160,000 - 490,241 - 650,241
----------------- ----------------- ------------------ ----------------- ---------------
Total Long-Term Debt 160,000 - 490.241 - 650,241
----------------- ----------------- ------------------ ----------------- ---------------
TOTAL LIABILITIES 496,428 10,500,000 13,308,745 (10,475,000) 13,830,173
----------------- ----------------- ------------------ ----------------- ---------------
MINORITY INTEREST - - - 981,823 981,823
----------------- ----------------- ------------------ ----------------- ---------------
STOCKHOLDERS' EQUITY
(DEFICIT)
Common stock: 100,000,000
shares authorized of $0.001
par value, 4,229,315 shares
issued and outstanding 2,930 2 - 1,297 4,229
Additional paid-in capital 15,997,741 - 1,304,697 (17,139,170) 163,268
Foreign currency adjustment - - 4,144 - 4,144
Retained earnings (16,496,152) (2) 872,987 16,131,050 507,883
----------------- ----------------- ------------------ ----------------- ---------------
Total Stockholders' Equity
(Deficit) (495,481) - 2,181,828 (1,006,823) 679,524
----------------- ----------------- ------------------ ----------------- ---------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIT) $ 947 $ 10,500,000 $ 15,490,573 $ (10,500,000) $ 15,491,520
================= ================= ================== ================= ===============
</TABLE>
See Summary of Assumptions and Disclosures.
4
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
Consolidated Statement of Operations
December 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
China Food Victoria Proforma
and Beverage Beverage Anhui Hao Adjustments
Company and Company Dun Brewery Increase Proforma
Subsidiary Limited Co. Ltd. (Decrease) Consolidated
----------------- ----------------- ------------------ ----------------- ---------------
<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ 14,659,236 $ - $ 14,659,236
----------------- ----------------- ------------------ ----------------- ---------------
OPERATING EXPENSES
Cost of product sold - - 9,226,327 - 9,226,327
Selling expense - - 459,503 - 459,503
Depreciation and amortization - - 76,597 - 76,597
General and administrative 689,215 - 1,403,186 - 2,092,401
----------------- ----------------- ------------------ ----------------- ---------------
Total Operating Expenses 689,215 - 11,165,613 - 11,854,828
----------------- ----------------- ------------------ ----------------- ---------------
OPERATING (LOSS) INCOME (689,215) - 3,493,623 - 2,804,408
----------------- ----------------- ------------------ ----------------- ---------------
OTHER EXPENSES
Loss on investment 1,600,000 - - - 1,600,000
Interest expense 55,962 - 696,630 - 752,592
----------------- ----------------- ------------------ ----------------- ---------------
Total Other Expense 1,655,962 - 696,630 - 2,352,592
----------------- ----------------- ------------------ ----------------- ---------------
LOSS BEFORE INCOME TAXES (2,345,177) - 2,796,993 - 451,816
INCOME TAXES - - 1,985,656 - 1,985,656
----------------- ----------------- ------------------ ----------------- ---------------
NET (LOSS) INCOME $ (2,345,177) $ - $ 811,337 $ - $ (1,533,840)
================= ================= ================== ================= ===============
</TABLE>
See Summary of Assumptions and Disclosures.
5
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
Summary of Assumptions and Disclosure
December 31, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Organization
China Food and Beverage Company (the Company) was incorporated on
November 6, 1987 under the laws of the State of Nevada. The
Company subsequently ceased its original business activity in 1997
and thereafter primarily investigated and sought new business
opportunities.
The Company has a 100% owned subsidiary, Victoria Beverage Company
Limited (Victoria), which has a 55% owned subsidiary (Anhui Hao
Dun Brewery Co. Ltd.) (Anhui) which was incorporated in the nation
of China in 1986, for the purpose of operating a beer brewery.
Victoria was incorporated in the Isle of Man on May 9, 1993 for
the purpose of acquiring foreign companies.
The Company has entered into an agreement to acquire 100% of the
shares of Victoria who owns 55% of Anhui for 4,200,000 shares of
the Company's common stock. The acquisition will be accounted for
as a purchase of Victoria.
The acquisition was accounted for as a recapitalization of
Victoria because the shareholders of Victoria controlled the
Company after the acquisition. Therefore, Victoria is treated as
the acquiring entity. There was no adjustment to the carrying
value of the assets or liabilities of Victoria in the exchange.
The Company is the acquiring entity for legal purposes and
Victoria is the surviving entity for accounting purposes.
<TABLE>
<CAPTION>
1. Record the purchase of Victoria through the issuance of
4,200,000 shares of common stock:
<S> <C>
Common stock $ 4,200
Additional paid-in capital (620,921)
Minority interest 981,823
Retained earnings (365,102)
------------------
Total $ -
==================
2. Record the estimated costs of the merger:
Accounts payable $ 25,000
Additional paid-in capital (25,000)
------------------
Total $ -
==================
3. Record a 1 share for 100 shares reverse split of China Food and Beverage Company:
Common stock $ (2,901)
Additional paid-in capital 2,901
------------------
Total $ -
==================
</TABLE>
6
<PAGE>
CHINA FOOD AND BEVERAGE COMPANY
AND SUBSIDIARIES
Summary of Assumptions and Disclosure
December 31, 1997
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
a. Business Organization (Continued)
4. Eliminate the equity of China Food and Beverage Company:
<TABLE>
<CAPTION>
<S> <C>
Additional paid-in capital $ (16,496,152)
Deficit accumulated during the development
stage 16,496,152
Total $ -
==================
5. Eliminate the investment and note payable of Victoria Beverage
Co. Ltd.:
Note payable $ (10,500,000)
Investment in Anhui 10,500,000
------------------
Total $ -
==================
6. Eliminate the common stock of Victoria:
Common stock $ (2)
Additional paid-in capital 2
------------------
Total $ -
==================
</TABLE>
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.Date:
January 8, 1999
CHINA FOOD & BEVERAGE COMPANY
(Registrant)
By: /s/ James Tilton
-----------------------------
James Tilton, President
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