<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
------------------------------
FORM 10-Q
(MARK ONE)
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997 OR
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO -----------
------------
------------------------------
CHINA RESOURCES DEVELOPMENT, INC.
(Exact Name of Registrant as Specified in Charter)
Nevada 33-5628-NY 87-0263643
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
23/F Office Tower, Convention Plaza
1 Harbour Road
Wanchai, Hong Kong
(Address of principal executive offices)
Registrant's telephone number, including area code: 011-852-2810-7205
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
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: 5,779,004 shares of common
stock, $.001 par value, as of May 15, 1997.
Page 1 of 29 pages Exhibit Index on Page 20
<PAGE> 2
CONVENTIONS
Unless otherwise specified, all references in this report to "U.S.
Dollars," "Dollars," "U.S.$," or "$" are to United States dollars; and all
references to "Renminbi" or "Rmb" or "yuan" are to Renminbi yuan, which is the
lawful currency of the People's Republic of China ("China" or "PRC"). The
Company and Billion Luck maintain their accounts in U.S. Dollars and Hong Kong
Dollars, respectively. HARC and the Operating Subsidiaries maintain their
accounts in Renminbi yuan. The financial statements of the Company and its
subsidiaries are prepared in Renminbi. Translations of amounts from Renminbi
to U.S. Dollars are for the convenience of the reader. Unless otherwise
indicated, any translations from Renminbi to U.S. Dollars or from U.S. Dollars
to Renminbi have been made at the single rate of exchange as quoted by the
People's Bank of China (the "PBOC Rate") on March 31, 1997, which was U.S.$1.00
= Rmb8.30. The Renminbi is not freely convertible into foreign currencies and
the quotation of exchange rates does not imply convertibility of Renminbi into
U.S. Dollars or other currencies. All foreign exchange transactions take place
either through the Bank of China or other banks authorized to buy and sell
foreign currencies at the exchange rates quoted by the People's Bank of China.
No representation is made that the Renminbi or U.S. Dollar amounts referred to
herein could have been or could be converted into U.S. Dollars or Renminbi, as
the case may be, at the PBOC Rate or at all.
References to "Billion Luck" refer to Billion Luck Company Ltd., a British
Virgin Islands company, which is a wholly-owned subsidiary of the Company.
References to "Company" and "Registrant" are to China Resources
Development, Inc., and include, unless the context requires otherwise, the
operations of Billion Luck, HARC, First Supply, and Second Supply (all as
hereinafter defined).
References to "Farming Bureau" are to the Hainan Zhongwei Agricultural
Reclamation General Company, a division of the Ministry of Agriculture, the PRC
government agency responsible for matters relating to agriculture.
References to "First Supply" are to First Goods And Materials Supply And
Sales Corporation, a company organized in the PRC and a wholly-owned subsidiary
of HARC.
References to "Guilinyang Farm" are to Hainan Province Guilinyang State
Farm, a PRC entity which is owned and controlled by the Farming Bureau.
References to "Hainan" are to Hainan Province of the PRC.
References to "Hainan State Farms" are to the rubber farms in Hainan
controlled by the Farming Bureau.
References to "HARC" are to Hainan Zhongwei Agricultural Resources Company
Limited, a company organized in the PRC, whose capital is owned 56% by Billion
Luck, 39% by the Farming Bureau and 5% by Guilinyang Farm.
References to "Operating Subsidiaries" are to the consolidated operations,
assets and/or activities, as the context indicates, of First Supply and Second
Supply.
-2-
<PAGE> 3
References to the "PRC" or "China" are to the People's Republic of China
and include all territory claimed by or under the control of the Central
Government, except Hong Kong, Macau, and Taiwan.
References to "Restructuring Agreement" are to the Shareholders' Agreement
on Business Restructuring among Billion Luck, the Farming Bureau and Guilinyang
Farm, and the Assets and Staff Transfer Agreement among HARC, First Supply,
Second Supply and the Farming Bureau, both of which were effective as of
October 1, 1996.
References to "Second Supply" are to Second Goods And Materials Supply And
Sales Corporation, a company organized in the PRC and a wholly-owned subsidiary
of HARC.
References to "Tons" are to metric tons.
-3-
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Ended
Note March 31,
--------------------------------
1997 1996 1997
RMB RMB US$
(unaudited)
<S> <C> <C> <C>
SALES 109,398 255,120 13,181
COST OF SALES (101,118) (241,021) (12,183)
-------- --------- -------
GROSS PROFIT 8,280 14,099 998
DEPRECIATION OF FIXED ASSETS (334) (595) (40)
SELLING AND ADMINISTRATIVE EXPENSES (7,459) (9,986) (899)
-------- --------- -------
OPERATING INCOME 487 3,518 59
FINANCIAL INCOME/ (EXPENSES), NET 647 (5,189) 78
OTHER INCOME 8,810 9,338 1,061
-------- --------- -------
INCOME BEFORE INCOME TAXES 9,944 7,667 1,198
INCOME TAXES (2,126) (1,991) (256)
-------- --------- -------
NET INCOME BEFORE MINORITY INTERESTS 7,818 5,676 942
MINORITY INTERESTS (4,437) (3,180) (535)
-------- --------- -------
NET INCOME FOR THE PERIOD 3,381 2,496 407
======== ========= =======
EARNINGS PER SHARE 2 0.60 1.73 0.07
======== ========= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-4-
<PAGE> 5
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997, AND DECEMBER 31, 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996 MARCH 31, 1997
-------------- ----------------- --------------
NOTES RMB RMB US$
----- (UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents 126,372 131,006 15,226
Trade receivables (allowance for doubtful
accounts in 1996 and 1997 - nil) 32,195 4,212 3,879
Other receivables, deposits and
prepayments 70,372 48,755 8,478
Inventories 3 71,181 55,452 8,576
Amounts due from related
companies 136,796 147,221 16,481
Amount due from Farming
Bureau 2,280 298,570 275
-------------- ----------------- --------------
TOTAL CURRENT ASSETS 439,196 685,216 52,915
FIXED ASSETS 4 6,931 6,504 835
INVESTMENTS 11,044 12,344 1,331
GOODWILL 1,042 1,049 126
-------------- ----------------- --------------
TOTAL ASSETS 458,213 705,113 55,206
============== ================= ==============
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans --- 292,560 ---
Amounts due to related companies 3,025 --- 364
Amounts due to shareholders --- 4,976 ---
Accounts payable 86,524 25,848 10,425
Income taxes payable 19,181 17,063 2,311
Other payables and accrued
liabilities 20,294 43,295 2,445
-------------- ----------------- --------------
TOTAL CURRENT
LIABILITIES 129,024 383,742 15,545
MINORITY INTERESTS 113,017 108,580 13,617
-------------- ----------------- --------------
TOTAL LIABILITIES AND
MINORITY INTERESTS 242,041 492,322 29,162
============== ================= ==============
</TABLE>
-5-
<PAGE> 6
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996 MARCH 31, 1997
-------------- ----------------- --------------
NOTES RMB RMB US$
----- (UNAUDITED) (AUDITED) (UNAUDITED)
<S> <C> <C> <C>
SHAREHOLDERS' EQUITY
Common Stock, US$0.001 par
value: Authorized - 200,000,000
shares in 1997 and 1996;
Issued and outstanding -
5,779,004 shares in 1997 and
1996 48 48 6
Preferred stock, authorized -
10,000,000 shares in 1997 and
1996:
Series B preferred stock,
US$0.001 par value: Authorized
- - 3,200,000 shares in 1997 and
1996; Issued and outstanding -
3,220,000 shares in 1997 and
1996 270 270 33
Additional paid-in capital 147,194 147,194 17,734
Reserves 17,748 17,748 2,138
Retained earnings 50,912 47,531 6,134
-------------- ----------------- --------------
TOTAL SHAREHOLDERS' EQUITY 216,172 212,791 26,045
-------------- ----------------- --------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY 458,213 795,113 55,207
============== ================= ==============
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-6-
<PAGE> 7
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
Series B Addi-
Series A Convertible Series B tional Retained
Common Preferred Preferred Preferred Paid-In Earn-
Stock Stock Stock Stock Capital Reserves ings Total
RMB RMB RMB RMB RMB RMB RMB RMB
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 101 53,930 -- -- 20,961 8,930 20,527 104,449
31, 1995
Issuance of 1,283 -- -- -- -- 72,520 -- -- 72,520
shares of Series B
convertible
preferred stock,
net of shares
issuance costs
Conversion of 1,653 383 -- -- -- (383) -- -- --
shares of Series B
convertible
preferred stock to
4,579,004 shares of
common stock
Exchange of 270 (53,930) -- -- 53,660 -- -- --
6,400,000 shares of
Series A preferred
stock for
3,200,000 shares of
common stock with
substantial
restrictions
("Restricted Common
Stock")
Exchange of (270) -- -- 270 -- -- -- --
3,200,000 shares of
Restricted Common
Stock for 3,200,000
shares of Series B
preferred stock
Reverse stock (436) -- -- -- 436 -- -- --
split, ten-to-one
Net income -- -- -- -- -- -- 35,822 35,822
Transfer to reserves -- -- -- -- -- 8,818 (8,818) --
----- -------- ----------- --------- ------- -------- ------- -------
Balance at December 48 -- -- 270 147,194 17,748 47,531 212,791
31, 1996
Net income for the -- -- -- -- -- -- 3,381 3,381
period ----- -------- ----------- --------- ------- -------- ------- -------
Balance at March 48 -- -- 270 147,194 17,748 50,912 216,272
31, 1997 ===== ======== =========== ========= ======= ======== ======= =======
</TABLE>
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<PAGE> 8
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Amounts in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------------------
1997 1996 1997
RMB RMB US$
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income 3,381 2,496 407
Adjustments to reconcile net income to net
cash provided by/(used in) operating activities:
Minority interests 4,437 3,180 535
Depreciation and amortization 341 602 41
Loss on disposal of fixed assets -- 5 --
Decrease/(increase) in assets:
Trade receivables (27,984) (37,411) (3,371)
Other receivables, deposits and prepayments (21,616) (79,830) (2,604)
Inventories (15,729) 43,263 (1,895)
Amount due from Farming Bureau 3,730 48,138 449
Amounts due from related companies 10,425 369 1,256
Other current assets -- 19,448 --
Increase/(decrease) in liabilities:
Amounts due to related companies 3,025 (7,021) 364
Accounts payable 60,676 4,775 7,310
Income taxes payable 2,118 1,806 255
Other payables and accrued liabilities (23,001) 14,425 (2,771)
-------- ------- -------
Net cash provided by / (used in) operating
activities (197) 14,245 (24)
-------- ------- -------
CASH FLOWS PROVIDED BY/(USED IN)
INVESTING ACTIVITIES:
Purchases of fixed assets (761) (1,207) (92)
Additions to construction in progress -- -- --
Proceeds from sale of investments 1,300 300 157
-------- ------- -------
Net cash provided by/(used in) investing activities 539 (907) 65
-------- ------- -------
CASH FLOWS PROVIDED BY/(USED IN)
FINANCING ACTIVITIES
Issue of share capital less share offering costs -- 45,934 --
Loans from shareholders -- -- --
Repayment of loans to shareholders (4,976) (15,426) (599)
Repayment of bank borrowings -- -- --
Cash remitted to Farming Bureau -- -- --
Short term advances -- 362 --
Loans to related companies -- -- --
Cash from repayment of loans by related companies -- -- --
Net cash provided by/(used in) financing activities (4,976) 30,870 (599)
======== ======= =======
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS (4,634) 44,208 (558)
Cash and cash equivalents, at beginning of period 131,006 56,942 15,784
-------- ------- -------
Cash and cash equivalents, at end of period 126,372 101,150 15,226
======== ======= =======
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated financial statements.
-8-
<PAGE> 9
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
(Amounts in thousands)
1. BASIS OF PRESENTATION:
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
the three-month period ended March 31, 1997, are not necessarily indicative
of the results that may be expected for the year ending December 31, 1997.
The unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year ended
December 31, 1996.
2. EARNINGS PER SHARE:
The computation of primary earnings per share for the three months ended
March 31, 1997, is based on the weighted average number of shares of common
stock outstanding after giving effect to dilutive stock options, which are
included as common share equivalents using the treasury stock method and
assumed to be converted to common stock. The number of shares used in
computing the primary earnings per share was 5,673,186. Fully diluted
earnings per share is not materially different from primary earnings per
share.
The computation of primary earnings per share for the three months ended
March 31, 1996, is based on the weighted average number of common stock
outstanding after giving effect to dilutive stock options and Series B
convertible preferred stock, which are included as common share equivalents
using the treasury stock method and assumed to be converted to common stock,
respectively. The number of shares used in computing the primary earnings
per share was 1,439,683 as if the one-for-ten reverse stock split had been
completed at the beginning of the period. Fully diluted earnings per share
is not materially different from primary earnings per share.
3. INVENTORIES:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
--------- ------------
RMB RMB
(unaudited) (audited)
<S> <C> <C>
Finished goods 71,181 55,452
====== ======
</TABLE>
Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out method.
4. FIXED ASSETS:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------ ------
RMB RMB
(unaudited) (audited)
<S> <C> <C>
Cost:
Buildings 3,806 3,806
Plant, machinery and equipment 1,656 1,645
Transportation vehicles and equipment 5,014 4,264
------ -----
10,476 9,715
------ -----
Accumulated depreciation:
Buildings 1,925 1,711
Plant, machinery and equipment 278 238
Transportation vehicles and equipment 1,342 1,262
------ -----
3,545 3,211
------ -----
Net book value 6,931 6,504
====== =====
</TABLE>
5. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------
1997 1996
RMB RMB
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash paid during the period for interest expenses 651 28,258
==== ======
</TABLE>
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table shows the selected unaudited condensed consolidated
income statements data of the Company and its subsidiaries for the three months
ended March 31, 1996 and 1997. The data should be read in conjunction with the
unaudited Condensed Consolidated Financial Statements of the Company and
related Notes thereto.
The discussions below are presented in the Company's primary operating
currency which is the Renminbi Yuan ("Rmb"). For information purposes the
amounts have been translated into U.S. dollars at an exchange rate of $1.00 =
Rmb8.30 which represents the single rate of exchange as quoted by the People's
Bank of China on March 31, 1997. No representation is made that Rmb amounts
could have been, or could be, converted into U.S. dollars at that rate or any
other rate.
<TABLE>
<CAPTION>
(Amounts in thousands) Three months ended
March 31,
---------
1997 1996
(unaudited) (unaudited)
RMB RMB
<S> <C> <C>
Sales:
Distribution of natural rubber 96,082 233,351
Procurement of materials and supplies 13,316 21,769
------- -------
109,398 255,120
======= =======
Gross profit 8,280 14,099
Gross profit margin (%) 7.57 5.53
Income before income taxes 9,944 7,667
Income taxes (2,126) (1,991)
------- -------
Net income 7,818 5,676
Minority interests (4,437) (3,180)
------- -------
Net income after minority interests 3,381 2,496
======= =======
</TABLE>
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<PAGE> 11
SALES AND GROSS PROFIT
Total net sales for the quarter ended March 31, 1997 decreased by
approximately Rmb146 million (US$17.5 million) or 57.1% to approximately Rmb109
million (US$13.1 million), compared to approximately Rmb255 million (US$30.7
million) for the corresponding period in 1996. Net sales of natural rubber
declined by approximately Rmb137 million (US$16.5 million) or 58.8% to
approximately Rmb96 million (US$11.6 million), compared to approximately Rmb233
million (US$28.1 million) for the corresponding period in 1996. Net sales
revenue from the procurement of materials and supplies also decreased by
approximately Rmb8.5 million (US$1.0 million) or 38.8% to Rmb13.3 million
(US$1.6 million), compared to approximately Rmb21.8 million (US$2.6 million)
for the corresponding period in 1996.
The domestic natural rubber consumption market remained rather weak
for the first quarter of fiscal 1997. There is an over supply of natural
rubber in the domestic market as a result of excess backlog of natural rubber
inventory in the market brought forward from fiscal 1996, an influx of imported
natural rubber and a drop in worldwide rubber prices. The domestic natural
rubber price further plummeted to approximately Rmb10,800 (US$1,301) per ton at
the quarter end compared to approximately Rmb12,000 (US$1,446)per ton at the
beginning of the quarter and approximately Rmb14,500 (US$1,747) per ton for
the comparable period in 1996.
In protecting the Company against the decline in domestic natural rubber
price, management has made a strategic move at the beginning of the quarter to
divert a portion of the natural rubber distribution under a non-exclusive
agency arrangement with an affiliate of the Farming Bureau (the "Affiliate").
Under this agency arrangement, the Company, by making use of its sales network,
receives a fixed percentage of commission income for every dollar of natural
rubber sales made by the Affiliate that was arranged through the sales network
of the Company. Sales of natural rubber under agency arrangement were not
recorded by the Company as sales revenue but only the commission earned from
such sales was included under other income. By adopting this strategy, the
Company successfully reduced the price risk associated with holding natural
rubber inventory as well as other stock holding costs. This change in sales
strategy, together with the drop in sales quantity and domestic natural rubber
price, mainly account for the decrease in the Company's sales revenue from the
distribution of natural rubber.
Net sales from procurement of materials and supplies remained low at the
first quarter of fiscal 1997 because of the weak consumption market. The
Company also reduced in scope on those procurement segments with unsatisfactory
net margin contribution. This accounts for the drop in the net sales revenue
from procurement of materials and supplies.
Gross profit decreased by Rmb5,819,000 (US$701,084) or 41.3% to
Rmb8,280,000 (US$997,590), compared to Rmb14,099,000 (US$1,698,675) for the
corresponding period in 1996. The drop in gross profit was mainly due to the
reduction in net sales revenue. Gross profit margin increased by 2.1 percentage
points to 7.6% for the first quarter of fiscal 1997, compared to 5.5% for the
corresponding period in 1996. The gross profit margin on natural rubber
distribution increased by 1.9 percentage points to 7.1% for the first quarter
ended March 31, 1997, compared with 5.2% for the corresponding period in 1996.
The improved gross margin was mainly a result of contribution from rubber
futures gain on specific hedges of natural rubber inventory held and natural
rubber purchase commitment, which was used to reduce the carrying cost of the
natural rubber inventory. Gross profit margin from procurement of materials
supplies also increased by 2 percentage points to 11% for the first quarter of
fiscal 1997, compared to 9% for the corresponding period in 1996. The improved
gross margin was mainly a result of the management's decision to reduce those
procurements with low gross margin contribution and focus on those segments with
relatively higher gross margin contribution, such as fuels and chemicals and
fertilizers and pesticides.
-11-
<PAGE> 12
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses decreased by Rmb2,527,000 (US$304,458)
or 25.3% to Rmb7,459,000 (US$898,675) for the first quarter of fiscal 1997,
compared with Rmb9,986,000 (US$1,203,133) for the corresponding period in 1996.
The reduction is primarily a result of the restructuring of operations
implemented with effect from the last quarter of fiscal 1996. The
restructuring has resulted in reduced administrative overheads, staff costs and
the related welfare expenses. The reduction in operating expenses achieved
through the restructuring of operations was partially offset by the increase in
legal and professional fees associated with regulatory compliance and public
relations costs incurred as a result of the NASDAQ listing status of the
Company.
NET FINANCIAL INCOME(EXPENSES)
The Company recorded net financial income of Rmb647,000 (US$77,952)
for the first quarter of fiscal 1997 compared to net financial expenses of
Rmb5,189,000 (US$625,181) for the corresponding period in 1996. This was
primarily attributable to the reduction in bank interest expenses following the
execution of the Restructuring Agreement effective on October 1, 1996. Pursuant
to the Restructuring Agreement, all outstanding bank loans of the Company were
deemed assigned to the Farming Bureau, together with certain accounts receivable
from the farms and certain affiliates of the Farming Bureau. As a result, all
bank interest incurred by the Company commencing October 1, 1996 was recovered
from the Farming Bureau. The net financial income for the quarter ended March
31, 1997 represented mainly the bank interest income and the foreign exchange
gain.
OTHER INCOME, NET
Other income decreased by Rmb528,000 (US$63,614) or 5.7% to Rmb8,810,000
(US$1,061,446) for the quarter ended March 31, 1997, compared with Rmb9,338,000
(US$1,125,060) for the corresponding period in 1997. The decrease was mainly
due to less income from trading of rubber futures contracts was earned during
fiscal quarter of 1997 as compared to that of 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are to fund accounts receivable,
inventories and to expand business operations. The Company has financed its
working capital requirements mainly through a combination of internally
generated cash and proceeds from the offshore private placements completed in
the year 1996. Net cash used in operating activities was Rmb197,000
(US$24,000) for the three months ended March 31, 1997. Net cash provided by
operating activities was Rmb14,245,000 (US$1,716,265) for the three months
ended March 31, 1996. The Company had a working capital surplus of
approximately Rmb310 million (US$37.3 million) as of March 31, 1997.
On March 28, 1997 and March 31, 1997, the Company completed formal
assignments, in the aggregate, of approximately Rmb293 million (US$35.3
million) in bank loans to the Farming Bureau.
There has been no other significant change in financial condition and
liquidity since the fiscal year ended December 31, 1996. The Company believes
that the net proceeds retained from its capital raising efforts, together with
internally generated funds, will be sufficient to satisfy its anticipated
working capital needs for at least the next 12 months.
-12-
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS:
None.
ITEM 2. CHANGES IN SECURITIES:
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES:
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
None.
ITEM 5. OTHER INFORMATION:
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following Exhibits are filed as part of this Form 10-Q or
incorporated by reference as indicated below:
Exhibit No. Exhibit Description
3.1 Articles of Incorporation of the Registrant, filed on January
15, 1986 (Filed with Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1994, and incorporated herein by reference.)
3.2 By-laws of the Registrant (Filed with Annual Report on Form
10-K/A for the fiscal year ended December 31, 1994, and incorporated
herein by reference.)
3.3 Certificate of Amendment of Articles of Incorporation of the
Registrant, filed on November 18, 1994 (Filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
3.4 Certificate of Amendment of Articles of Incorporation of the
Registrant, filed on November 18, 1994 (Filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
-13-
<PAGE> 14
3.5 Certificate of Amendment of Articles of Incorporation of the
Registrant, effective March 31, 1995, and filed on June 19, 1995
(Filed with Quarterly Report on Form 10-Q/A for the fiscal quarter
ended March 31, 1995, and with Current Report on Form 8-K dated June
19, 1995, and incorporated herein by reference.)
3.6 Certificate of Amendment of Articles of Incorporation of the
Registrant, effective December 30, 1996 (Filed with annual report on
Form 10-K for the fiscal year ended December 31, 1996, and
incorporated herein by reference.)
3.7 Amended and Restated By-laws of the Registrant, as amended on
December 30, 1996 (Filed with annual report on Form 10-K for the
fiscal year ended December 31, 1996, and incorporated herein by
reference.)
4.1 Certificate of Designation of Series B Convertible Preferred
Stock, filed on December 13, 1995 (Filed with Current Report on Form
8-K dated March 8, 1996, and incorporated herein by reference.)
4.2 Certificate of Amendment of Certificate of Designation of
Series B Convertible Preferred Stock, effective December 31, 1997
(Filed with annual report on Form 10-K for the fiscal year ended
December 31, 1996, and incorporated herein by reference.)
10.1 Assignment Agreement dated January 21, 1994, by and between Hong
Wah (Holdings) Limited and Billion Luck Company Ltd. (Filed
with Annual Report on Form 10-K/A for the fiscal year ended December
31, 1994, and incorporated herein by reference.)
10.2 Contract on Investment for the Setting up of Hainan Agricultural
Resources Company Ltd. dated January 31, 1994, by and among
Hainan Province Agricultural Reclamation General Company (the Farming
Bureau), Hainan Province Guilinyang State Farm, and Billion Luck
Company Ltd. (Original Chinese version with English translation
filed with Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994, and incorporated herein by reference.)
10.3 Loan Agreement dated May 10, 1994, by and among Everbright
Finance & Investment Co. Limited, Worlder International Company
Limited, Hong Wah Investment Holdings Limited, Silverich Limited,
Brender Services Limited, and Billion Luck Company Ltd. (Filed with
Annual Report on Form 10-K/A for the fiscal year ended December 31,
1994, and incorporated herein by reference.)
10.4 Credit Agreement dated June 1, 1994, by and among Everbright
Finance & Investment Co. Limited, Worlder International Company
Limited, Hong Wah Investment Holdings Limited and Billion Luck
Company Ltd. (Filed with Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1994, and incorporated herein by reference.)
10.5 Contract on the Transfer of Share Ownership of Hainan Zhongya
Aluminum Co., Ltd. dated July 11, 1994, by and between Hainan
Province Guilinyang State Farm and Hainan
-14-
<PAGE> 15
Agricultural Resources Co., Ltd. (Filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.6 Letter Agreement dated August 8, 1994, by and among Everbright
Finance & Investment Co. Limited, Worlder International Company
Limited, Hong Wah Investment Holdings Limited and Billion Luck
Company Ltd., supplementing Credit Agreement dated June 1, 1994
(Filed with Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994, and incorporated herein by reference.)
10.7 Letter Agreement dated October 24, 1994, by and among Everbright
Finance & Investment Co. Limited, Worlder International Company
Limited, and Billion Luck Company Ltd. (Filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.8 Acquisition Agreement, by and among the Registrant and the
shareholders of Billion Luck Company Ltd. (Filed with Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1994,
and incorporated herein by reference.)
10.9 Agreement on Service and Cooperation dated November 5, 1994, by
and between Hainan Province Agricultural Reclamation General
Company (the Farming Bureau) and Hainan Agricultural Resources
Company Ltd. (Original Chinese version with English translation filed
with Annual Report on Form 10-K/A for the fiscal year ended December
31, 1994, and incorporated herein by reference.)
10.10 Land Use Agreement dated November 5, 1994, by and between Hainan
Province Agricultural Reclamation No. 1 Materials Supply & Sales
Company (First Supply) and Hainan Province Agricultural Reclamation
Jin Long Materials General Company (Original Chinese version with
certified English translation filed with Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1994, and incorporated herein
by reference.)
10.11 Land Use Agreement dated November 5, 1994, by and between Hainan
Province Agricultural Reclamation No. 2 Materials Supply & Sales
Company (Second Supply) and Hainan Province Agricultural Reclamation
Jin Huan Materials General Company (Original Chinese version with
certified English translation filed with Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1994, and incorporated herein
by reference.)
10.12 Long-Term Sale and Purchase Agreement dated November 5, 1994, by
and among Hainan Province Agricultural Reclamation General Company
(the Farming Bureau), Hainan Agricultural Resources Company Ltd.,
Hainan Province Agricultural Reclamation No. 1 Materials Supply &
Marketing Company (First Supply), and Hainan Province Agricultural
Reclamation No. 2 Materials Supply & Marketing Company (Second Supply)
(Original Chinese version with English translation filed with Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
-15-
<PAGE> 16
10.13 Agreement on Assignment of Accounts Receivable dated November 5,
1994, by and among Hainan Province Agricultural Reclamation General
Company (the Farming Bureau), Billion Luck Company Ltd., Hainan
Province Guilinyang State Farm, Hainan Agricultural Resources Company
Ltd., Hainan Province Agricultural Reclamation No. 1 Materials Supply
& Marketing Company (First Supply), and Hainan Province Agricultural
Reclamation No. 2 Materials Supply & Marketing Company (Second Supply)
(Original Chinese version with English translation filed with Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.14 Rental Agreement, by and between General Bureau of Hainan State
Farms (the Farming Bureau) and Hainan Agricultural Resources Company
Limited (Original Chinese version with English Translation filed with
Annual Report on Form 10-K/A for the fiscal year ended December 31,
1994, and incorporated herein by reference.)
10.15 Guaranty Agreement, by and among Hainan Province Agricultural
Reclamation General Company (the Farming Bureau), Hainan Agricultural
Reclamation No. 1 Materials Supply & Sales Company (First Supply) and
Hainan Agricultural Reclamation No. 2 Materials Supply & Sales Company
(Second Supply) (Original Chinese version with certified English
Translation filed with Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1994, and incorporated herein by reference.)
10.16 Financial Consulting Agreement dated February 1, 1994, by and
between Brender Services Limited and Billion Luck Company Ltd., and
Extension Agreement dated November 1, 1994, by and between Brender
Services Limited and Billion Luck Company Ltd. (Filed with Annual
Report on Form 10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.17 Exchange Agreement, by and among the Registrant, Hong Wah
Investment Holdings Limited, Everbright Finance & Investment Co. Ltd.,
Worlder International Company Limited and Silverich Limited, executed
as of March 31, 1995 (Filed with Quarterly Report on Form 10-Q/A for
the fiscal quarter ended March 31, 1995, and incorporated herein by
reference.)
10.18 China Resources Development, Inc., 1995 Stock Option Plan,
adopted as of March 31, 1995 (Filed with Quarterly Report on Form
10-Q/A for the fiscal quarter ended March 31, 1995, and the Current
Report on Form 8-K dated June 19, 1995, and incorporated herein by
reference.)
10.19 Consulting Agreement between the Registrant and Brender Services
Limited, dated April 30, 1995 (Filed with Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1995, and incorporated
herein by reference.)
10.20 Letter dated June 1, 1995 extending the repayment date to
December 31, 1995, for loans extended to Billion Luck by Everbright
Finance & Investment Co. Limited, Worlder International Company
Limited and Hong Wah Investment Holdings Limited, pursuant
-16-
<PAGE> 17
to Credit Agreement dated June 1, 1994 (Filed with Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30,
1995, and incorporated herein by reference.)
10.21 Agreement on Administrative Expenses Apportionment between First
Supply and Jin Ling Corporation, dated March 15, 1995 (Original
Chinese version with English translation filed with Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and
incorporated herein by reference.)
10.22 Agreement on Administrative Expenses Apportionment between
Second Supply and Jin Huan Corporation, dated March 15, 1995
(Original Chinese version with English translation filed with Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, and
incorporated herein by reference.)
10.23 Agreement on Rubber Purchase Deposits among HARC, First Supply,
Second Supply and the Farming Bureau, dated March 30, 1995 (Original
Chinese version with English translation filed with Annual Report on
Form 10-K for the fiscal year ended December 31, 1995, and
incorporated herein by reference.)
10.24 Employment Agreement between Billion Luck and Han Jian Zhun,
dated August 1, 1995 (Filed with Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated herein by
reference.)
10.25 Employment Agreement between Billion Luck and Li Fei Lie, dated
August 1, 1995 (Filed with Annual Report on Form 10-K for the fiscal
year ended December 31, 1995, and incorporated herein by reference.)
10.26 Contract on Investment in the Xilian Timber Mill between HARC
and the State-Run Xilian Farm of Hainan Province dated July 7, 1994,
and Supplementary Agreement dated December 24, 1994 (Original Chinese
version with English translation filed with Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, and incorporated herein
by reference.)
10.27 Exchange Agreement, by and between the Registrant and Everbright
Finance & Investment Co. Limited, dated July 22, 1996 (Filed with
Quarterly Report on Form 10-Q for the fiscal quarter ended September
30, 1996, and incorporated herein by reference.)
10.28 Loan Agreement between HARC and the Farming Bureau, dated March
25, 1996, and the supplementary agreement dated December 31, 1996
(Certified English translation of original Chinese version filed with
annual report on Form 10-K/A for the fiscal year ended December 31,
1996.)
10.29 Loan Agreement between HARC and the Registrant, dated March 25,
1996 (Certified English translation of original Chinese version filed
with annual report on Form 10-K/A for the fiscal year ended December
31, 1996.)
-17-
<PAGE> 18
10.30 Rental Agreement between HARC and the Hainan Farming Bureau
Testing Center, dated August 9, 1996 (Certified English translation
of original Chinese version filed with annual report on Form 10-K for
the fiscal year ended December 31, 1996.)
10.31 Shareholders' Agreement on Business Restructuring among the
Farming Bureau, Guilinyang Farm and Billion Luck, dated as of October
1, 1996 (Certified English translation of original Chinese version
filed with annual report on Form 10-K for the fiscal year ended
December 31, 1996.)
10.32 Assets and Staff Transfer Agreement among the Farming Bureau,
HARC, First Supply and Second Supply, dated as of October 1, 1996
(Certified English translation of original Chinese version filed with
annual report on Form 10-K for the fiscal year ended December 31,
1996.)
10.33 Exchange Agreement, by and between the Registrant and Everbright
Finance & Investment Co. Limited, dated December 31, 1996 (Filed with
annual report on Form 10-K for the fiscal year ended December 31,
1996.)
10.34 China Resources Development, Inc., Amended and Restated 1995
Stock Option Plan, as amended on December 30, 1996 (Filed with annual
report on Form 10-K for the fiscal year ended December 31, 1996.)
10.35 Agency Agreement on Natural Rubber Distribution between Hainan
General Bureau Jin Huan Materials Supply General Company and HARC,
dated January 2, 1997 (certified English translation of original
Chinese version filed herewith.)
11 Computation of Earnings (Loss) Per Share (Contained in Financial
Statements in Part I, Item 1, hereof.)
27.1 Financial Data Schedule (Filed herewith. For SEC use only.)
(b) During the three months ended March 31, 1997, the Company filed
no Current Reports on Form 8-K.
-18-
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHINA RESOURCES DEVELOPMENT, INC.
May 19, 1997 By:/s/ Li Shunxing
-------------------------------
Li Shunxing, President
By:/s/ Tam Cheuk Ho
-------------------------------
Tam Cheuk Ho, Chief Financial Officer
-19-
<PAGE> 20
EXHIBITS INDEX
Exhibit No. Exhibit Description Page No.
- ---------- ------------------- --------
3.1 Articles of Incorporation of the Registrant, filed
on January 15, 1986 (Filed with Annual Report on Form
10-K/A for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
3.2 By-laws of the Registrant (Filed with Annual
Report on Form 10-K/A for the fiscal year ended December
31, 1994, and incorporated herein by reference.)
3.3 Certificate of Amendment of Articles of
Incorporation of the Registrant, filed on November 18,
1994 (Filed with Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1994, and incorporated
herein by reference.)
3.4 Certificate of Amendment of Articles of
Incorporation of the Registrant, filed on November 18,
1994 (Filed with Annual Report on Form 10-K/A for the
fiscal year ended December 31, 1994, and incorporated
herein by reference.)
3.5 Certificate of Amendment of Articles of
Incorporation of the Registrant, effective March 31,
1995, and filed on June 19, 1995 (Filed with Quarterly
Report on Form 10-Q/A for the fiscal quarter ended March
31, 1995, and with Current Report on Form 8-K dated June
19, 1995, and incorporated herein by reference.)
3.6 Certificate of Amendment of Articles of
Incorporation of the Registrant, effective December 30,
1996 (Filed with annual report on Form 10-K for the
fiscal year ended December 31, 1996, and incorporated
herein by reference.)
3.7 Amended and Restated By-laws of the Registrant, as
amended on December 30, 1996 (Filed with annual report
on Form 10-K for the fiscal year ended December 31,
1996, and incorporated herein by reference.)
4.1 Certificate of Designation of Series B Convertible
Preferred Stock, filed on December 13, 1995 (Filed with
Current Report on Form 8-K dated March 8, 1996, and
incorporated herein by reference.)
4.2 Certificate of Amendment of Certificate of
Designation of Series B Convertible Preferred Stock,
effective December 31, 1997 (Filed with annual report
on Form 10-K for the fiscal year ended December 31,
1996, and incorporated herein by reference.)
<PAGE> 21
10.1 Assignment Agreement dated January 21, 1994, by and
between Hong Wah (Holdings) Limited and Billion Luck
Company Ltd. (Filed with Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.2 Contract on Investment for the Setting up of Hainan
Agricultural Resources Company Ltd. dated January 31,
1994, by and among Hainan Province Agricultural
Reclamation General Company (the Farming Bureau), Hainan
Province Guilinyang State Farm, and Billion Luck Company
Ltd. (Original Chinese version with English translation
filed with Annual Report on Form 10-K/A for the fiscal
year ended December 31, 1994, and incorporated herein by
reference.)
10.3 Loan Agreement dated May 10, 1994, by and among
Everbright Finance & Investment Co. Limited, Worlder
International Company Limited, Hong Wah Investment
Holdings Limited, Silverich Limited, Brender Services
Limited, and Billion Luck Company Ltd. (Filed with
Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994, and incorporated herein by reference.)
10.4 Credit Agreement dated June 1, 1994, by and among
Everbright Finance & Investment Co. Limited, Worlder
International Company Limited, Hong Wah Investment
Holdings Limited and Billion Luck Company Ltd. (Filed
with Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1994, and incorporated herein by
reference.)
10.5 Contract on the Transfer of Share Ownership of
Hainan Zhongya Aluminum Co., Ltd. dated July 11, 1994, by
and between Hainan Province Guilinyang State Farm and
Hainan Agricultural Resources Co., Ltd. (Filed with
Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994, and incorporated herein by reference.)
10.6 Letter Agreement dated August 8, 1994, by and among
Everbright Finance & Investment Co. Limited, Worlder
International Company Limited, Hong Wah Investment
Holdings Limited and Billion Luck Company Ltd.,
supplementing Credit Agreement dated June 1, 1994 (Filed
with Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1994, and incorporated herein by
reference.)
10.7 Letter Agreement dated October 24, 1994, by and
among Everbright Finance & Investment Co. Limited,
Worlder International Company Limited, and Billion Luck
Company Ltd. (Filed with Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.8 Acquisition Agreement, by and among the Registrant
and the shareholders of Billion Luck Company Ltd. (Filed
with Annual Report on Form 10-K/A
<PAGE> 22
for the fiscal year ended December 31, 1994, and
incorporated herein by reference.)
10.9 Agreement on Service and Cooperation dated November
5, 1994, by and between Hainan Province Agricultural
Reclamation General Company (the Farming Bureau) and
Hainan Agricultural Resources Company Ltd. (Original
Chinese version with English translation filed with
Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1994, and incorporated herein by reference.)
10.10 Land Use Agreement dated November 5, 1994, by and
between Hainan Province Agricultural Reclamation No. 1
Materials Supply & Sales Company (First Supply) and
Hainan Province Agricultural Reclamation Jin Long
Materials General Company (Original Chinese version with
certified English translation filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994,
and incorporated herein by reference.)
10.11 Land Use Agreement dated November 5, 1994, by and
between Hainan Province Agricultural Reclamation No. 2
Materials Supply & Sales Company (Second Supply) and
Hainan Province Agricultural Reclamation Jin Huan
Materials General Company (Original Chinese version with
certified English translation filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994,
and incorporated herein by reference.)
10.12 Long-Term Sale and Purchase Agreement dated
November 5, 1994, by and among Hainan Province
Agricultural Reclamation General Company (the Farming
Bureau), Hainan Agricultural Resources Company Ltd.,
Hainan Province Agricultural Reclamation No. 1 Materials
Supply & Marketing Company (First Supply), and Hainan
Province Agricultural Reclamation No. 2 Materials Supply
& Marketing Company (Second Supply) (Original Chinese
version with English translation filed with Annual Report
on Form 10-K/A for the fiscal year ended December 31,
1994, and incorporated herein by reference.)
10.13 Agreement on Assignment of Accounts Receivable
dated November 5, 1994, by and among Hainan Province
Agricultural Reclamation General Company (the Farming
Bureau), Billion Luck Company Ltd., Hainan Province
Guilinyang State Farm, Hainan Agricultural Resources
Company Ltd., Hainan Province Agricultural Reclamation
No. 1 Materials Supply & Marketing Company (First
Supply), and Hainan Province Agricultural Reclamation No.
2 Materials Supply & Marketing Company (Second Supply)
(Original Chinese version with English translation filed
with Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1994, and incorporated herein by
reference.)
<PAGE> 23
10.14 Rental Agreement, by and between General Bureau of
Hainan State Farms (the Farming Bureau) and Hainan
Agricultural Resources Company Limited (Original Chinese
version with English Translation filed with Annual Report
on Form 10-K/A for the fiscal year ended December 31,
1994, and incorporated herein by reference.)
10.15 Guaranty Agreement, by and among Hainan Province
Agricultural Reclamation General Company (the Farming
Bureau), Hainan Agricultural Reclamation No. 1 Materials
Supply & Sales Company (First Supply) and Hainan
Agricultural Reclamation No. 2 Materials Supply & Sales
Company (Second Supply) (Original Chinese version with
certified English Translation filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994,
and incorporated herein by reference.)
10.16 Financial Consulting Agreement dated February 1,
1994, by and between Brender Services Limited and Billion
Luck Company Ltd., and Extension Agreement dated November
1, 1994, by and between Brender Services Limited and
Billion Luck Company Ltd. (Filed with Annual Report on
Form 10-K/A for the fiscal year ended December 31, 1994,
and incorporated herein by reference.)
10.17 Exchange Agreement, by and among the Registrant,
Hong Wah Investment Holdings Limited, Everbright Finance
& Investment Co. Ltd., Worlder International Company
Limited and Silverich Limited, executed as of March 31,
1995 (Filed with Quarterly Report on Form 10-Q/A for the
fiscal quarter ended March 31, 1995, and incorporated
herein by reference.)
10.18 China Resources Development, Inc., 1995 Stock
Option Plan, adopted as of March 31, 1995 (Filed with
Quarterly Report on Form 10-Q/A for the fiscal quarter
ended March 31, 1995, and the Current Report on Form 8-K
dated June 19, 1995, and incorporated herein by
reference.)
10.19 Consulting Agreement between the Registrant and
Brender Services Limited, dated April 30, 1995 (Filed
with Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995, and incorporated herein by
reference.)
10.20 Letter dated June 1, 1995, extending the repayment
date to December 31, 1995, for loans extended to Billion
Luck by Everbright Finance & Investment Co. Limited,
Worlder International Company Limited and Hong Wah
Investment Holdings Limited, pursuant to Credit Agreement
dated June 1, 1994 (Filed with Quarterly Report on Form
10-Q for the fiscal quarter ended September 30, 1995, and
incorporated herein by reference.)
10.21 Agreement on Administrative Expenses Apportionment
between First Supply and Jin Ling Corporation, dated
March 15, 1995 (Original Chinese version
with English translation filed with Annual Report on
Form 10-K for the fiscal year ended December 31, 1995,
and incorporated herein by reference.)
<PAGE> 24
10.22 Agreement on Administrative Expenses Apportionment
between Second Supply and Jin Huan Corporation, dated
March 15, 1995 (Original Chinese version with English
translation filed with Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated
herein by reference.)
10.23 Agreement on Rubber Purchase Deposits among HARC,
First Supply, Second Supply and the Farming Bureau, dated
March 30, 1995 (Original Chinese version with English
translation filed with Annual Report on Form 10-K for the
fiscal year ended December 31, 1995, and incorporated
herein by reference.)
10.24 Employment Agreement between Billion Luck and Han
Jian Zhun, dated August 1, 1995 (Filed with Annual
Report on Form 10-K for the fiscal year ended December
31, 1995, and incorporated herein by reference.)
10.25 Employment Agreement between Billion Luck and Li
Fei Lie, dated August 1, 1995 (Filed with Annual Report
on Form 10-K for the fiscal year ended December 31, 1995,
and incorporated herein by reference.)
10.26 Contract on Investment in the Xilian Timber Mill
between HARC and the State-Run Xilian Farm of Hainan
Province dated July 7, 1994, and Supplementary Agreement
dated December 24, 1994 (Original Chinese version with
English translation filed with Annual Report on Form 10-K
for the fiscal year ended December 31, 1995, and
incorporated herein by reference.)
10.27 Exchange Agreement, by and between the Registrant
and Everbright Finance & Investment Co. Limited, dated
July 22, 1996 (Filed with Quarterly Report on Form 10-Q
for the fiscal quarter ended September 30, 1996, and
incorporated herein by reference.)
10.28 Loan Agreement between HARC and the Farming Bureau,
dated March 25, 1996, and the supplementary agreement
dated December 31, 1996 (Certified English translation of
original Chinese version filed with annual report on Form
10-K/A for the fiscal year ended December 31, 1996.)
10.29 Loan Agreement between HARC and the Registrant,
dated March 25, 1996 (Certified English translation of
original Chinese version filed with annual report on Form
10-K/A for the fiscal year ended December 31, 1996.)
10.30 Rental Agreement between HARC and the Hainan
Farming Bureau Testing Center, dated August 9, 1996
(Certified English translation of original Chinese
version filed with annual report on Form 10-K for the
fiscal year ended December 31, 1996.)
<PAGE> 25
10.31 Shareholders' Agreement on Business Restructuring
among the Farming Bureau, Guilinyang Farm and Billion
Luck, dated as of October 1, 1996 (Certified English
translation of original Chinese version filed with annual
report on Form 10-K for the fiscal year ended December
31, 1996.)
10.32 Assets and Staff Transfer Agreement among the
Farming Bureau, HARC, First Supply and Second Supply,
dated as of October 1, 1996 (Certified English
translation of original Chinese version filed with annual
report on Form 10-K for the fiscal year ended December
31, 1996.)
10.33 Exchange Agreement, by and between the Registrant
and Everbright Finance & Investment Co. Limited, dated
December 31, 1996 (Filed with annual report on Form 10-K
for the fiscal year ended December 31, 1996.)
10.34 China Resources Development, Inc., Amended and
Restated 1995 Stock Option Plan, as amended on December
30, 1996 (Filed with annual report on Form 10-K for the
fiscal year ended December 31, 1996.)
10.35 Agency Agreement on Natural Rubber Distribution between Hainan 26
General Bureau Jin Huan Materials Supply General Company and HARC,
dated January 2, 1997 (certified English translation of original
Chinese version filed herewith.)
11 Computation of Earnings (Loss) Per Share (Contained
in Financial Statements in Part I, Item 1, hereof.)
27.1 Financial Data Schedule (Filed herewith. For SEC use only.) 29
<PAGE> 1
EXHIBIT 10.35
Agency Agreement on Natural Rubber Distribution between
Hainan General Bureau Jin Huan Materials Supply General
Company and HARC, dated January 2, 1997 (Certified English
translation of original Chinese version)
The undersigned officer of China Resources Development, Inc., hereby represents
that the following is a fair and accurate English translation of the original
Chinese version of the Agency Agreement on Natural Rubber Distribution between
Hainan General Bureau Jin Huan Materials Supply General Company and HARC, dated
as of January 2, 1997.
/s/ Wong Wah On
-----------------------------
Wong Wah On, Financial Controller
<PAGE> 2
AGENCY AGREEMENT ON NATURAL RUBBER DISTRIBUTION
Party A: Hainan General Bureau Jin Huan Materials Supply General Company
(the "Principal")
Party B: Hainan Zhongwei Agricultural Resources Company Ltd. (the "Agent")
WHEREAS, the Principal is a wholly-owned subsidiary of the General Bureau of
the Hainan State Farms (the "Farming Bureau") and is authorized by the Farming
Bureau to manage sales of the natural rubber on behalf of the Hainan State
Farms.
NOW, THEREFORE, pursuant to friendly mutual consultation, Party A agrees to
appoint Party B as agent to distribute the natural rubber for Party A.
1. DUTIES OF THE AGENT
The agent shall:
(1) Assist the Principal to distribute the natural rubber to all provinces
and cities across China by utilizing the established sales network of the
Agent;
(2) Advise on the general market conditions of natural rubber;
(3) Assist the Principal in formulating a sales contract with the buyer and to
assist the Principal in the collection of trade debts; and
(4) Assist the Principal to store and transport the natural rubber inventory.
The compensation for such type of services by the Agent should be governed by
a separate contract between the Principal and the Agent.
2. COMMISSION
The Principal shall pay 1.25% of the total sales revenue generated through the
sales network of the Agent as commission.
3. DUTIES OF THE PRINCIPAL
The Principal shall be responsible to provide copies of the sales contract to
the Agent and to warrant the quality of natural rubber that the Principal
supplies.
4. TERMINATION
Either party can terminate this Agreement by a one month notice in writing.
Commission shall be payable on all sales of natural rubber during the period
of the Agency Agreement.
<PAGE> 3
5. MISCELLANEOUS
This Agreement shall become effective upon the date it is signed by the
Parties. This Agreement shall be made in duplicate and each party shall retain
one copy.
Party A: Party B:
Hainan General Bureau Jin Huan Hainan Zhongwei Agricultural
Materials Supply General Company Resources Company Ltd.
/s/ Lin Ming Jiao /s/ Han Jian Zhun
- ------------------------------------ -------------------------------
By: Lin Ming Jiao By: Han Jian Zhun
Date: January 2, 1997 Date: January 2, 1997
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