SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter period ended SEPTEMBER 30, 1999
[ ] 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.)
Room 2005, 20/F, Universal Trade Centre,
3-5A Arbuthnot Road, Central, Hong Kong
Telephone: 011-852-28107205
(Address and telephone number of
principal executive offices)
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 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: 592,900 shares of common stock,
$0.001 par value, as of November 15, 1999.
Page 1 of 21 pages Exhibit Index on Page 18
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CONVENTIONS
Unless otherwise specified, all references in this report to "U.S.
Dollars," "Dollars," "US$," or "$" are to United States dollars; all references
to "Hong Kong Dollars" or "HK$" are to Hong Kong 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. The financial statements of the Company and its subsidiaries are
prepared in Renminbi. Translations of amounts from Renminbi to U.S. Dollars and
from Hong Kong Dollars 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 September 30, 1999,
which was approximately U.S.$1.00 = Rmb8.28. Translations from Hong Kong Dollars
to U.S. Dollars have been made at the single rate of exchange as quoted by the
Hongkong and Shanghai Banking Corporation Limited on September 30, 1999, which
was approximately US$1.00 = HK$7.75. 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" are 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 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 the Company.
References to "Operating Subsidiaries" are to the consolidated
operations, assets and/or activities, as the context indicates, of First Supply,
Second Supply and HARC.
References to the "PRC" or "China" include all territory claimed by or
under the control of the Central Government, except Hong Kong, Macau, and
Taiwan.
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.
2
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENTS (UNAUDITED)
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Amounts in thousands, except share and per share data)
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1999 1998 1999 1999 1998 1999
---- ---- ---- ---- ---- ----
RMB RMB US$ RMB RMB US$
<S> <C> <C> <C> <C> <C> <C>
NET SALES 190,190 155,122 22,970 295,505 368,489 35,689
COST OF SALES (186,900) (148,944) (22,573) (289,968) (352,948) (35,020)
-----------------------------------------------------------------------
GROSS PROFIT 3,290 6,178 397 5,537 15,541 669
DEPRECIATION (328) (491) (40) (1,150) (1,312) (139)
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES (5,441) (6,110) (657) (16,597) (21,645) (2,005)
FINANCIAL INCOME, NET 221 1,728 27 803 6,460 97
OTHER INCOME, NET 2,991 403 361 9,297 2,021 1,123
-----------------------------------------------------------------------
INCOME/(LOSS) BEFORE
INCOME TAXES 733 1,708 88 (2,110) 1,065 (255)
INCOME TAXES (323) (749) (39) (943) (1,802) (114)
-----------------------------------------------------------------------
INCOME/(LOSS) BEFORE
MINORITY INTERESTS 410 959 49 (3,053) (737) (369)
MINORITY INTERESTS (1,236) (1,421) (149) (1,894) (3,359) (228)
-----------------------------------------------------------------------
NET LOSS (826) (462) (100) (4,947) (4,096) (597)
======= ======= ======= ======= ======= =======
BASIC AND DILUTED
LOSS PER SHARE* (1.39) (0.77) (0.17) (8.34) (6.81) (1.01)
======= ======= ======= ======= ======= =======
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING* 592,900 599,567 592,900 592,900 601,789 592,900
======= ======= ======= ======= ======= =======
</TABLE>
* The computation of basic and diluted loss per share for the periods
presented are based on weighted average number of shares outstanding as if
the one- for-ten reverse stock split, effective on June 11, 1999, had been
completed at the beginning of the respective periods.
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
(Amounts in thousands, except share and per share data)
September 30, December 31, September 30,
1999 1998 1999
RMB RMB US$
Notes (Unaudited) (Note) (Unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 64,186 129,238 7,752
Trading securities 55,858 - 6,746
Trade receivables 3,778 8,463 456
Inventories 2 8,197 10,569 990
Other receivables, deposits and prepayments 65,531 30,449 7,914
Amount due from Farming Bureau 24,932 33,667 3,011
Amounts due from related companies 34,623 30,802 4,182
---------- ---------- ----------
TOTAL CURRENT ASSETS 257,105 243,188 31,051
PROPERTY AND EQUIPMENT 3 10,241 7,243 1,237
INVESTMENTS 119,301 119,301 14,408
GOODWILL 973 994 118
---------- ---------- ----------
TOTAL ASSETS 387,620 370,726 46,814
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable 18,909 12,204 2,284
Other payables and accrued liabilities 25,899 15,476 3,128
Income taxes payable 17,309 16,366 2,090
Amounts due to related companies 28,987 31,291 3,501
---------- ---------- ----------
TOTAL CURRENT LIABILITIES 91,104 75,337 11,003
MINORITY INTERESTS 114,019 107,945 13,770
---------- ---------- ----------
TOTAL LIABILITIES AND MINORITY
INTERESTS 205,123 183,282 24,773
---------- ---------- ----------
SHAREHOLDERS' EQUITY
Common stock, US$0.001 par value:
Authorized - 200,000,000 shares in 1999
and 1998
Issued and outstanding - 592,900 shares in
1999 and 5,929,004 shares in 1998 5 49 1
Preferred stock, authorized -
10,000,000 shares in 1999 and 1998
Series B preferred stock, US$0.001 par
value:
Authorized - 3,200,000 shares in 1999
and 1998
Issued and outstanding - 320,000 shares
1999 and 3,200,000 shares in 1998 3 27 -
Additional paid-in capital 156,632 156,564 18,917
Reserves 26,274 26,274 3,173
Retained earnings/(accumulated losses) (413) 4,534 (50)
Accumulated other comprehensive income/(loss) (4) (4) -
---------- ---------- ----------
TOTAL SHAREHOLDERS' EQUITY 182,497 187,444 22,041
---------- ---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY 387,620 370,726 46,814
========== ========== ==========
</TABLE>
Note: The balance sheet at December 31, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(Amounts in thousands)
Accumulated
Series A Series B Additional other
Common preferred preferred paid-in Retained comprehensive
stock stock stock capital Reserves earnings income/(loss) Total
RMB RMB RMB RMB RMB RMB RMB
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1999 49 - 27 156,564 26,274 4,534 (4) 187,444
One-for-ten reverse
stock split (44) - (24) 68 - - - -
Net loss - - - - - (4,947) - (4,947)
-------- ------ ------ ------- ------- ------- ------ -------
Balance at September
30, 1999 5 - 3 156,632 26,274 (413) (4) 182,497
======== ====== ====== ======= ====== ======= ====== =======
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Amounts in thousands)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1999 1998 1999
---- ---- ----
RMB RMB US$
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss (4,947) (4,096) (597)
Adjustments to reconcile net loss to
net cash provided by/(used by) operating
activities:
Depreciation and amortization 1,171 1,332 141
Minority interests 1,894 3,359 229
Loss on disposal of property and equipment 522 - 63
Unrealized gain on trading securities (922) - (111)
Changes in operating assets and liabilities:
Trade receivables 4,685 465 565
Inventories 2,372 43,504 286
Other receivables, deposits and prepayments (35,082) 2,565 (4,237)
Amount due from Farming Bureau 8,735 5,313 1,055
Amounts due from related companies (3,821) (21,834) (461)
Accounts payable 6,705 (6,137) 810
Other payables and accrued liabilities 10,423 1,946 1,259
Income taxes payable 943 (4,214) 114
Amounts due to related companies (2,304) - (278)
---------- ---------- ----------
Net cash provided by/(used in) operating activities (9,626) 22,203 (1,162)
---------- ---------- ----------
INVESTING ACTIVITIES
Purchases of property and equipment (5,016) (366) (606)
Purchases of trading securities (54,936) - (6,635)
Purchase of investments - (250) -
Proceeds from disposal of property and equipment 346 - 42
Increase in minority interests 4,180 50 505
---------- ---------- ----------
Net cash used in investing activities (55,426) (566) (6,694)
---------- ---------- ----------
FINANCING ACTIVITIES
Stock repurchase - (864) -
---------- ---------- ----------
NET INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS (65,052) 20,773 (7,856)
Cash and cash equivalent, at beginning of period 129,238 124,547 15,608
---------- ---------- ----------
Cash and cash equivalent, at end of period 64,186 145,320 7,752
========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(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 nine months period ended
September 30, 1999, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999.
2. INVENTORIES
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
RMB RMB
<S> <C> <C>
Finished goods 8,197 10,569
====== ======
</TABLE>
3. PROPERTY AND EQUIPMENT, NET
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
RMB RMB
<S> <C> <C>
At cost:
Buildings and leasehold improvements 9,233 6,052
Machinery, equipment and motor vehicles 6,918 6,904
---------- ----------
16,151 12,956
Accumulated depreciation: (5,910) (5,713)
---------- ----------
Net book value 10,241 7,243
========== ==========
</TABLE>
7
<PAGE>
4. SEGMENT FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
RMB RMB RMB RMB
<S> <C> <C> <C> <C>
Net sales to external customers:
Natural rubber
Net sales to unaffiliated customers 181,733 136,268 270,194 298,980
Net sales to affiliates - 11,290 - 15,340
---------- ---------- ---------- ----------
181,733 147,558 270,194 314,320
---------- ---------- ---------- ----------
Materials, supplies and other
Agricultural products:
Net sales to unaffiliated customers 8,270 1,186 11,483 34,223
Net sales to affiliates 187 6,378 13,828 19,946
---------- ---------- ---------- ----------
8,457 7,564 25,311 54,169
---------- ---------- ---------- ----------
Total consolidated net sales 190,190 155,122 295,505 368,489
========== ========== ========== ==========
Segment profit/(loss):
Natural rubber 1,586 3,683 (2,665) 8,250
Material, supplies and other
agricultural products (1,183) (1,215) (1,633) (4,284)
---------- ---------- ---------- ----------
Total segment profit/(loss) 403 2,468 (4,298) 3,966
Reconciling items:
Corporate expenses (2,749) (2,578) (8,137) (9,473)
Income from long term investment - - 6,664 -
Gain from trading securities 2,858 - 2,858 -
Interest income 267 1,829 875 6,840
Interest expense (46) (11) (72) (268)
---------- ---------- ---------- ----------
Total consolidated profit/(loss) before
income taxes 733 1,708 (2,110) 1,065
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
RMB RMB
<S> <C> <C>
Segment assets:
Natural rubber 211,521 258,090
Material, supplies and other
agricultural products 17,026 16,298
---------- ----------
Total segment assets 228,547 274,388
Reconciling items:
Corporate assets 9,536 8,046
Investments 119,301 119,301
Trading securities 55,858 -
Intersegment receivables (25,622) (31,009)
---------- ----------
Total consolidated assets 387,620 370,726
========== ==========
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
The following table shows the selected unaudited condensed consolidated
income statement data of the Company and its subsidiaries for the three months
and nine months ended September 30, 1999 and 1998. 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 only, the
amounts may be translated into U.S. dollars at an exchange rate of $1.00 =
RMB8.28, which represents the approximate single rate of exchange as quoted by
the People's Bank of China on September 30, 1999. 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 SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
RMB RMB RMB RMB
<S> <C> <C> <C> <C>
Net sales:
Natural rubber 181,733 147,558 270,194 314,320
Materials, supplies and other
agricultural products 8,457 7,564 25,311 54,169
---------- ---------- ---------- ----------
190,190 155,122 295,505 368,489
---------- ---------- ---------- ----------
Gross profit 3,290 6,178 5,537 15,541
Gross profit margin (%) 1.73 3.98 1.87 4.22
Income/(loss) before income taxes 733 1,708 (2,110) 1,065
Income taxes (323) (749) (943) (1,802)
---------- ---------- ---------- ----------
Income/(loss) before minority 410 959 (3,053) (737)
interests
Minority interests (1,236) (1,421) (1,894) (3,359)
---------- ---------- ---------- ----------
Net income/(loss) (826) (462) (4,947) (4,096)
========== ========== ========== ==========
</TABLE>
NET SALES AND GROSS PROFIT
Total net sales for the third quarter of fiscal 1999 increased by
approximately RMB35 million (US$4.2 million) or 23% to approximately RMB190
million (US$22.9 million), compared to approximately RMB155 million (US$18.7
million) for the corresponding period in 1998. Net sales of natural rubber
increased by approximately RMB34 million (US$4.1 million) or 23% to
approximately RMB182 million (US$22.0 million), compared to approximately RMB148
million (US$17.9 million) for the corresponding period in 1998. Net sales
revenue from the procurement of materials and supplies increased by
approximately RMB1 million (US$120,000) or 12% to approximately RMB8.5 million
(US$1 million), compared to approximately RMB7.5 million (US$906,000) for the
corresponding period in 1998.
For the nine months ended September 30, 1999, the Company's total net
sales decreased by approximately RMB73 (US$8.8 million) or 19.8% to
approximately RMB296 million (US35.7 million), compared to approximately RMB368
million (US$44.4 million) for the corresponding period in 1998. The net sales of
natural rubber decreased by approximately RMB44 (US$5.3 million) or 14.0% while
the net sales of materials and supplies decreased by RMB29 million (US$3.5
million) or 53.3%.
Net sales of natural rubber increased by 23% for the third quarter of
1999. This increase was mainly due to the fact that the natural rubber price has
rebounded from a record low of approximately RMB6,600 per ton in the third
quarter of 1998 to approximately RMB8,300 per ton in the third quarter of 1999.
Although the sales quantity for the third quarter of 1999 was approximately 3%
9
<PAGE>
lower than that of the corresponding period in 1998, the 26% increase in natural
rubber price has caused the sales revenue to increase by 23%. Net sales of
natural rubber decreased by 14% for the nine months ended September 30, 1999
compared to the corresponding period in 1998. This decrease was mainly due to
the continuing weak consumption market in 1999 and the influx of imported
rubber.
The decrease in net sales of procurement of materials, supplies and
other agricultural products for the nine months ended September 30, 1999 was
mainly due to the sales of barley of Rmb29 million (US$3.5 million) in 1998.
There were no sales of barley in 1999, as this product was not profitable and
management decided to suspend the trading of this product.
Overall gross profit decreased by approximately RMB10 million (US$1.2
million) or 64% to RMB5.5 million (US$664,000) for the nine months ended
September 30, 1999, from approximately RMB15.5 million (US$1.9 million) for the
corresponding period in 1998. Gross profit margin decreased to 1.87% for the
nine months ended September 30, 1999 from 4.22% for the corresponding period in
1998. Overall gross profit for the third quarter of 1999 decreased by RMB2.9
million (US$350,000) or 46.7% to RMB3.3 million (US$398,000), from RMB6.2
million (US$749,000) for the corresponding period in 1998. Gross profit margin
decreased to 1.73% for the third quarter of 1999 from 3.98% for the
corresponding period in 1998. The decrease in gross profit margin was primarily
due to the decrease in guaranteed profit on natural rubber sales by the Farming
Bureau from 3.5% to 1.5%. The selling price of domestic natural rubber reached a
record low in the year 1998, and the existing state of the natural rubber market
is expected to persist for quite some time. Upon a request by the Farming
Bureau, and in view of the existing state of the natural rubber market, a mutual
agreement dated May 21, 1999 was entered into between the Farming Bureau and the
Operating Subsidiaries. Pursuant to this agreement, the minimum gross profit
guarantee of 3.5% earned by the Operating Subsidiaries on natural rubber sales
has been reduced to 1.5% in order to reflect the prevailing market rate more
realistically. The agreement took effect from April 1, 1999.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the third quarter of
1999 were RMB5.4 million (US$652,000), compared to RMB6.1 million (US$737,000)
for the corresponding period in 1998.
Selling, general and administration expenses for the nine months ended
September 30, 1999 were RMB16.6 million (US$2.0 million), compared to RMB21.6
million (US$2.6 million) for the corresponding period in 1998.
The decrease was mainly due to the decrease in the Company's net sales.
The Company also successfully adopted additional measures to control costs,
including salary cuts and reduction of entertainment expenses and legal and
professional fees.
FINANCIAL INCOME, NET
Net financial income decreased significantly from RMB6.5 million
(US$785,000) for the nine months ended September 30, 1998 to RMB803,000
(US$97,000) for the corresponding period in 1999, and from RMB1.7 million
(US$205,000) for the third quarter of 1998 to RMB221,000 (US$27,000) for the
corresponding period in 1999. The Company placed RMB123 million time deposits
with financial institutions since the second quarter of 1998 that matured in the
fourth quarter of 1998. These time deposits earned higher interest than the
saving accounts utilized in 1999, which accounted for the decrease in financial
income in 1999.
OTHER INCOME, NET
Other income increased significantly from RMB2.0 million (US$242,000)
for the nine months ended September 30, 1998 to RMB9.3 million (US$1.1 million)
for the corresponding period in 1999, and from RMB403,000 (US$49,000) for the
third quarter of 1998 to RMB3.0 million (US$362,000) for the corresponding
period in 1999. Other income in 1998 mainly represented net income from the
trading of rubber futures contracts. However, other income in 1999 mainly
represented the dividend income received on the long-term investment in the
second quarter, which amounted to RMB6.6 million (US$797,000), and the net gain
from the trading of securities in the third quarter, which amounted to RMB2.8
million (US$338,000).
10
<PAGE>
MINORITY INTERESTS
Pursuant to an Agreement for the Sale and Purchase of Share in HARC
dated April 30, 1998 between Guilinyang Farm and the Company, the Company
purchased 5,000,000 shares, representing 5% of the total issued and outstanding
share capital of HARC, from Guilinyang Farm for a total consideration of RMB7
million (US$846,000). After the said purchase, the Company's effective interest
in HARC increased from 56% to 61%. Minority interests after the said purchase
represent a 39% interest in HARC held by the Farming Bureau compared with 44%
before the said purchase.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity needs are to fund inventories and trade
receivables and, to a lesser extent, to expand business operations. The Company
has financed its working capital requirements primarily through internally
generated cash.
The Company has a working capital surplus of approximately RMB166
million (US$20.0 million) as of September 30, 1999, compared to that of
approximately RMB168 million (US$20.3 million) as of December 31, 1998. Net cash
used in operating activities for the nine months ended September 30, 1999 was
approximately RMB9.6 million (US$1.2 million) as compared to net cash provided
by operating activities of approximately RMB22.2 million (US$2.7 million) for
the corresponding period in 1998. Net cash flows from the Company's operating
activities are attributable to the Company's income and changes in operating
assets and liabilities.
There has been no other significant change in financial condition and
liquidity since the fiscal year ended December 31, 1998. The Company believes
that internally generated funds will be sufficient to satisfy its anticipated
working capital needs for at least the next twelve months.
MARKET RISK AND RISK MANAGEMENT POLICIES
The Company's interest income is most sensitive to changes in the
general level of interest rates. As at September 30, 1999, approximately 90% of
the Company's cash equivalents are mainly Renminbi, United States Dollar and
Hong Kong Dollar deposits with financial institutions, bearing market interest
rates without fixed term. The remaining balance of cash equivalents are Hong
Kong Dollar short-term fixed deposits.
Since 1996, the Company's board of directors has adopted a risk
management resolution authorizing the management to enter into natural rubber
commodities futures contracts for hedging the price risk associated with certain
firm commitments for the purchase of natural rubber. The Company also trades
natural rubber commodity futures contracts that are not specific hedges. As at
September 30, 1999, the Company had neither a position in natural rubber
commodity futures contracts, nor firm commitments for the purchase of natural
rubber.
In 1999, the Company has allocated a total of RMB53 million (US$6.4
million) for securities trading in the PRC stock market. The primary objective
of the Company's securities trading activities is to preserve principal while at
the same time maximizing yields without significantly increasing risk. To
achieve this objective, the Company entered into an agreement with a third party
in the PRC. According to the agreement, the Company provides funding for
securities trading amounting to RMB45 million (US$5.4 million) and is guaranteed
a minimum return that equals the bank deposit rates. Although the Company is not
exposed to the price risk of the securities, the upside gain on securities
trading is shared with that third party as agreed. For the balance of RMB8
million (US$966,000), the Company faces price risk from adverse market movement.
11
<PAGE>
YEAR 2000 ISSUE
The Company has been addressing the potential risks associated with the
year 2000 issue. It has established a program to assess and modify internal
information technology ("IT") and non-information technology ("non-IT")
operations that are at risk, and further, to evaluate the year 2000 readiness of
key third parties with which the Company conducts business.
For the IT systems, the assessment phase and modification phase, which
include software replacements and system upgrades, have been completed. The
total cost directly associated with the year 2000 issue was less than US$20,000.
The IT systems are being tested for year 2000 compliance and are expected to be
completed by the end of 1999. For the non-IT systems, the management has
finished the assessment and testing phases and is confident that all key non-IT
systems are year 2000 compliant.
The Company has conducted informal communications with key third
parties with which the Company conducts business in order to evaluate the
Company's exposure to their year 2000 compliance. To-date, a majority of these
third parties have indicated that they are already year 2000 compatible or that
their year 2000 exposure is limited. However, the Company can give no assurance
that these third parties will not be materially impacted by year 2000 issues.
The Company is continuing with follow-up communications with key third parties.
The Company has developed a contingency plan which would be implemented
in the event that any of the Company's efforts to address and correct the year
2000 issues are not effective, which include identifying alternate suppliers,
identifying manual methods for continuing operations and purchasing buffer
inventories. Even though the Company has developed such a contingency plan,
there can be no assurance that the plan will address all problems that may arise
or that such plan, if implemented, will operate successfully.
12
<PAGE>
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.)
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/A 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/A FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED
HEREIN BY REFERENCE.)
13
<PAGE>
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/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY
REFERENCE.)
10.1 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 AS EXHIBIT 10.10 TO ANNUAL REPORT ON FORM 10-K/A FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN
BY REFERENCE.)
10.2 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 AS EXHIBIT 10.11 TO ANNUAL REPORT ON FORM 10-K/A FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN
BY REFERENCE.)
10.3 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 AS EXHIBIT 10.12 TO
ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.)
10.4 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 AS EXHIBIT 10.14 TOANNUAL REPORT ON
FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND
INCORPORATED HEREIN BY REFERENCE.)
10.5 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 AS
EXHIBIT 10.15 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY
REFERENCE.)
10.6 China Resources Development, Inc., 1995 Stock Option Plan,
adopted as of March 31, 1995 (FILED AS EXHIBIT 10.18 TO
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.)
10.7 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 AS
EXHIBIT 10.26 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1995, AND INCORPORATED HEREIN BY
REFERENCE.)
10.8 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 AS EXHIBIT 10.28 TO ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996,AND INCORPORATED
HEREIN BY REFERENCE.)
14
<PAGE>
10.9 Loan Agreement between HARC and the Registrant, dated March
25, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE
VERSION FILED AS EXHIBIT 10.29 TO ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED
HEREIN BY REFERENCE.)
10.10 Rental Agreement between HARC and the Hainan Farming Bureau
Testing Center, dated August 9, 1996 (CERTIFIED ENGLISH
TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.30
TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.)
10.11 China Resources Development, Inc., Amended and Restated 1995
Stock Option Plan, as amended on December 30, 1996 (FILED AS
EXHIBIT 10.34 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY
REFERENCE.)
10.12 Advertising and Media Agreement by and between the Registrant
and Marketing Direct Concepts, Inc., dated April 1, 1997
(FILED AS EXHIBIT 10.36 TO QUARTERLY REPORT ON FORM 10-Q FOR
THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED
HEREIN BY REFERENCE.)
10.13 Financial Consulting Agreement by and between the Registrant
and Integrated Capital Development Group, Inc., dated May 1,
1997 (FILED AS EXHIBIT 10.37 TO QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED
HEREIN BY REFERENCE.)
10.14 Consulting Agreement between the Registrant and Brender
Services Limited, dated April 30, 1997 (FILED AS EXHIBIT 10.38
TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.15 Stock Purchase Agreement, by and between HARC and Guilinyang
Farm, dated December 29, 1997. (FILED AS EXHIBIT 10.39 TO
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.16 Agreement for the Sale and Purchase of Share in Hainan Zhongya
Aluminum Company Ltd., dated December 29, 1997, by and between
First Supply and Guilinyang Farm. (FILED AS EXHIBIT 10.40 TO
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.17 Agreement for the Sale and Purchase of Share in Hainan
Zhongwei Agricultural Resources Company Ltd., dated April 30,
1998, by and between Guilinyang Farm and the Company. (FILED
AS EXHIBIT 10.41 TO QUARTERLY REPORT ON FORM 10-Q FOR THE
FISCAL QUARTER ENDED JUNE 30, 1998 AND INCORPORATED HEREIN BY
REFERENCE.)
10.18 Employment Agreement between the Company and Li Feilie, dated
August 1, 1998 (FILED AS EXHIBIT 10.42 TO ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND
INCORPORATED HEREIN BY REFERENCE.)
10.19 Employment Agreement between the Company and Tam Cheuk Ho,
dated February 1, 1999 (FILED AS EXHIBIT 10.43 TO ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 AND INCORPORATED HEREIN BY REFERENCE.)
10.20 Employment Agreement between the Company and Wong Wah On,
dated February 1, 1999 (FILED AS EXHIBIT 10.44 TO ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 AND INCORPORATED HEREIN BY REFERENCE.)
15
<PAGE>
10.21 Service Agreement between the Company and Ching Lung Po, dated
February 1, 1999 (FILED AS EXHIBIT 10.45 TO ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND
INCORPORATED HEREIN BY REFERENCE.)
10.22 Long-Term Sale and Purchase Supplementary Agreement No. 3 by
and among Farming Bureau, HARC, First Supply and Second
Supply, dated May 21, 1999 (CERTIFIED ENGLISH TRANSLATION OF
ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.22 TO QUARTERLY
REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1999
AND INCORPORATED HEREIN BY REFERENCE.)
11 Computation of Earnings/(Loss) Per Share (CONTAINED IN
FINANCIAL STATEMENTS IN PART I, ITEM I HEREOF.)
27.1 Financial Data Schedule (FILED HEREWITH. FOR SEC USE ONLY.)
(b) During the three months ended September 30, 1999, the Company filed
no current reports on Form 8-K.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CHINA RESOURCES DEVELOPMENT, INC.
November 15, 1999 By:/s/ Ching Lung Po
-------------------------------------
Ching Lung Po, President
By:/s/ Tam Cheuk Ho
-------------------------------------
Tam Cheuk Ho, Chief Financial Officer
17
<PAGE>
EXHIBIT INDEX
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.)
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/A 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/A 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/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY
REFERENCE.)
10.1 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 AS EXHIBIT 10.10 TO ANNUAL REPORT ON FORM 10-K/A FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN
BY REFERENCE.)
10.2 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 AS EXHIBIT 10.11 TO ANNUAL REPORT ON FORM 10-K/A FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN
BY REFERENCE.)
10.3 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 AS EXHIBIT 10.12 TO
ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1994, AND INCORPORATED HEREIN BY REFERENCE.)
18
<PAGE>
10.4 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 AS EXHIBIT 10.14 TO ANNUAL REPORT ON
FORM 10-K/A FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994, AND
INCORPORATED HEREIN BY REFERENCE.)
10.5 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 AS
EXHIBIT 10.15 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1994, AND INCORPORATED HEREIN BY
REFERENCE.)
10.6 China Resources Development, Inc., 1995 Stock Option Plan,
adopted as of March 31, 1995 (FILED AS EXHIBIT 10.18 TO
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.)
10.7 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 AS
EXHIBIT 10.26 TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1995, AND INCORPORATED HEREIN BY
REFERENCE.)
10.8 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 AS EXHIBIT 10.28 TO ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996,AND INCORPORATED
HEREIN BY REFERENCE.)
10.9 Loan Agreement between HARC and the Registrant, dated March
25, 1996 (CERTIFIED ENGLISH TRANSLATION OF ORIGINAL CHINESE
VERSION FILED AS EXHIBIT 10.29 TO ANNUAL REPORT ON FORM 10-K/A
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED
HEREIN BY REFERENCE.)
10.10 Rental Agreement between HARC and the Hainan Farming Bureau
Testing Center, dated August 9, 1996 (CERTIFIED ENGLISH
TRANSLATION OF ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.30
TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1996, AND INCORPORATED HEREIN BY REFERENCE.)
10.11 China Resources Development, Inc., Amended and Restated 1995
Stock Option Plan, as amended on December 30, 1996 (FILED AS
EXHIBIT 10.34 TO ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1996, AND INCORPORATED HEREIN BY
REFERENCE.)
10.12 Advertising and Media Agreement by and between the Registrant
and Marketing Direct Concepts, Inc., dated April 1, 1997
(FILED AS EXHIBIT 10.36 TO QUARTERLY REPORT ON FORM 10-Q FOR
THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED
HEREIN BY REFERENCE.)
10.13 Financial Consulting Agreement by and between the Registrant
and Integrated Capital Development Group, Inc., dated May 1,
1997 (FILED AS EXHIBIT 10.37 TO QUARTERLY REPORT ON FORM 10-Q
FOR THE FISCAL QUARTER ENDED JUNE 30, 1997, AND INCORPORATED
HEREIN BY REFERENCE.)
19
<PAGE>
10.14 Consulting Agreement between the Registrant and Brender
Services Limited, dated April 30, 1997 (FILED AS EXHIBIT 10.38
TO ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.15 Stock Purchase Agreement, by and between HARC and Guilinyang
Farm, dated December 29, 1997. (FILED AS EXHIBIT 10.39 TO
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.16 Agreement for the Sale and Purchase of Share in Hainan Zhongya
Aluminum Company Ltd., dated December 29, 1997, by and between
First Supply and Guilinyang Farm. (FILED AS EXHIBIT 10.40 TO
ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER
31, 1997 AND INCORPORATED HEREIN BY REFERENCE.)
10.17 Agreement for the Sale and Purchase of Share in Hainan
Zhongwei Agricultural Resources Company Ltd., dated April 30,
1998, by and between Guilinyang Farm and the Company. (FILED
AS EXHIBIT 10.41 TO QUARTERLY REPORT ON FORM 10-Q FOR THE
FISCAL QUARTER ENDED JUNE 30, 1998 AND INCORPORATED HEREIN BY
REFERENCE.)
10.18 Employment Agreement between the Company and Li Feilie, dated
August 1, 1998 (FILED AS EXHIBIT 10.42 TO ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND
INCORPORATED HEREIN BY REFERENCE.)
10.19 Employment Agreement between the Company and Tam Cheuk Ho,
dated February 1, 1999 (FILED AS EXHIBIT 10.43 TO ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 AND INCORPORATED HEREIN BY REFERENCE.)
10.20 Employment Agreement between the Company and Wong Wah On,
dated February 1, 1999 (FILED AS EXHIBIT 10.44 TO ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1998 AND INCORPORATED HEREIN BY REFERENCE.)
10.21 Service Agreement between the Company and Ching Lung Po, dated
February 1, 1999 (FILED AS EXHIBIT 10.45 TO ANNUAL REPORT ON
FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998 AND
INCORPORATED HEREIN BY REFERENCE.)
10.22 Long-Term Sale and Purchase Supplementary Agreement No. 3 by
and among Farming Bureau, HARC, First Supply and Second
Supply, dated May 21, 1999 (CERTIFIED ENGLISH TRANSLATION OF
ORIGINAL CHINESE VERSION FILED AS EXHIBIT 10.22 TO QUARTERLY
REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1999
AND INCORPORATED HEREIN BY REFERENCE.)
11 Computation of Earnings/(Loss) Per Share (CONTAINED IN
FINANCIAL STATEMENTS IN PART I, ITEM I HEREOF.)
27.1 Financial Data Schedule (FILED HEREWITH. FOR SEC USE ONLY.)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q REPORT OF CHINA RESOURCES DEVELOPMENT, INC. FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> RENMINBI YUAN
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 8.28
<CASH> 64,186
<SECURITIES> 55,858
<RECEIVABLES> 3,778
<ALLOWANCES> 0
<INVENTORY> 8,197
<CURRENT-ASSETS> 257,105
<PP&E> 16,151
<DEPRECIATION> 5,910
<TOTAL-ASSETS> 387,620
<CURRENT-LIABILITIES> 91,104
<BONDS> 0
0
3
<COMMON> 5
<OTHER-SE> 182,489
<TOTAL-LIABILITY-AND-EQUITY> 387,620
<SALES> 295,505
<TOTAL-REVENUES> 295,505
<CGS> 289,968
<TOTAL-COSTS> 289,968
<OTHER-EXPENSES> 17,747
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,110)
<INCOME-TAX> 943
<INCOME-CONTINUING> (4,947)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,947)
<EPS-BASIC> (8.34)
<EPS-DILUTED> (8.34)
</TABLE>
