-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BQyjK5/Kn1UHjrlu9FjLk3d9U0FqGzBPjl1UOmw0RFIVCWIeSflY48zS3w+VBtip 5U8xnzl7xRxdyDKGdEbbrg== 0000939802-03-000173.txt : 20030522 0000939802-03-000173.hdr.sgml : 20030522 20030522110158 ACCESSION NUMBER: 0000939802-03-000173 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030522 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHINA WORLD TRADE CORP CENTRAL INDEX KEY: 0001081834 STANDARD INDUSTRIAL CLASSIFICATION: OPERATIVE BUILDERS [1531] IRS NUMBER: 870629754 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26119 FILM NUMBER: 03715580 BUSINESS ADDRESS: STREET 1: GOLDION DIGITAL NETWORK CENTER STREET 2: 138 TI YU RD. E. 4TH FL CITY: TIAN HE GUANGZHOU STATE: K3 ZIP: 00000 BUSINESS PHONE: 01185298826818 MAIL ADDRESS: STREET 1: GOLDION DIGITAL NETWORK CENTER STREET 2: 138 YI TU RD E. CITY: TIAN HE GUANGHOU STATE: K3 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: TXON INTERNATIONAL DEVELOPMENT CORP DATE OF NAME CHANGE: 19990329 10QSB 1 form10qsb123102.txt OMB APPROVAL OMB Number: 3235-0416 Expires: December 31, 2005 Estimated average burden hours per response: 174.00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2002 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _________________ to _________________ Commission file number 000-26119 CHINA WORLD TRADE CORPORATION ______________________________________________________ (Exact name of small business issuer as specified in its charter) Nevada 87-0629754 _____________________________ ____________________________________ (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 4th Floor, Goldlion Digital Network Center 138 Tiyu Road East, Tianhe Guangzhou, PRC _______________________________________________________ (Address of principal executive offices) (001-8620) 3878 - 0286 (Issuer's telephone number) _________________________________________________________ (Former name, address and fiscal year, if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section l2, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes [ ] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As at March 27, 2003, there were 10,970,497 shares of common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Unaudited financial statements China World Trade Corporation for the three months ended December 31, 2002. CHINA WORLD TRADE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three months ended December 31, 2002 and 2001 - --------------------------------------------------------------------------------------------------------------------------- Three months ended December 31, -------------------------------- 2001 2002 NOTE US$ US$ Unaudited Unaudited OPERATING REVENUES - 509,559 Operating costs and expenses - (108,702) Selling, general and administrative expenses (668,127) (780,051) -------------- ------------- LOSS FROM OPERATIONS (668,127) (379,194) NON-OPERATING (EXPENSES) INCOME Other income 40 Interest expenses (1,958) (2,206) -------------- ------------- LOSS BEFORE INCOME TAXES AND MINORITY INTEREST (670,085) (381,360) Provision for income taxes - - -------------- ------------- LOSS BEFORE MINORITY INTEREST (670,085) (381,360) Minority interest - 79,949 -------------- ------------- NET LOSS (670,085) (301,411) ============== ============= LOSS PER SHARE OF COMMON STOCK 4 - - Basic (0.82) (0.04) ============== ============= Weighted average number of shares of common stock outstanding 815,667 6,970,497 ============== ============= The accompanying notes are an integral part of these unaudited financial statements. - ---------------------------------------------------------------------------------------------------------------------------
CHINA WORLD TRADE CORPORATION CONDENSED CONSOLIDATED BALANCE SHEET As of December 31, 2002 - --------------------------------------------------------------------------------------------------------------------------- As of As of September December 30, 2002 31, 2002 Note US$ US$ ASSETS Unaudited CURRENT ASSETS Cash and cash equivalents 32,888 74,355 Trade and other receivables 5 43,790 434,243 Rental and other deposits 341,731 343,394 Prepayments 2,420 71,218 Inventories 35,930 56,577 --------------- -------------- TOTAL CURRENT ASSETS 456,759 979,787 Property, plant and equipment, net 3,046 45,144 --------------- -------------- TOTAL ASSETS 459,805 1,024,931 =============== ============== LIABILITIES AND SHAREHOLDERS' DEFICIT CURRENT LIABILITIES Trade and other payables 6 807,715 1,262,948 Deferred income 8,114 397,619 --------------- -------------- TOTAL CURRENT LIABILITIES 815,829 1,660,567 Minority interest 17,777 39,576 --------------- -------------- 833,606 1,700,143 --------------- -------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIT Preferred stock, par value of US$0.001 each; 10,000,000 shares authorized, none issued or outstanding - - Common stock, par value of US$0.001 each; 50,000,000 shares authorized, 6,970,497 shares issued at December 31 and September 30, 2002 971 971 Common stock to be issued 6,000 6,000 Additional paid-in capital 6,810,207 6,810,207 Accumulated deficit (7,190,979) (7,492,390) --------------- -------------- TOTAL STOCKHOLDERS' DEFICIT (373,801) (675,212) --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 459,805 1,024,931 =============== ============== The accompanying notes are an integral part of these unaudited financial statements. - --------------------------------------------------------------------------------------------------------------------------
CHINA WORLD TRADE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended December 31, 2002 and 2001 - --------------------------------------------------------------------------------------------------------------------------- Three Three Months Months Ended Ended December December 31, 2001 31, 2002 ------------- ------------- US$ US$ Unaudited Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss (670,085) (301,411) Adjustments to reconcile net loss to net cash provided by (used) in operating activities: Minority interest (98) (79,949) Stock issued for services 718,000 - Fixed assets written off 854 - Depreciation - 1,681 Increase in deferred income - 389,505 Changes in working capital: Trade and other receivables 362 (390,453) Rental and other deposits - (1,663) Prepayments - (68,798) Inventories - (20,647) Trade and other payables 237,868 455,233 ------------- ------------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 286,901 (16,502) ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES Website development costs (300,000) - Acquisition of property, plant and equipment - (43,779) ------------- ------------- (300,000) (43,779) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceed from issuance of common stock 14,188 - Capital contribution from minority shareholder of a subsidiary - 101,748 ------------- ------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 14,188 101,748 ------------- ------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 1,089 41,467 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 43 32,888 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD 1,132 74,355 ============= ============= ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 1,132 74,355 ============= ============= The accompanying notes are an integral part of these unaudited financial statements. - ------------------------------------------------------------------------------------------------------------------------
CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 1. BASIS OF PRESENTATION The accompanying financial data as of December 31, 2002 and for the three months ended December 31, 2002 and 2001, have been prepared by the Company, without audit. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's audited annual financial statements for the year ended September 30, 2002. The preparation of financial statements in conformity with general accepted accounting principles requires management to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results could differ from these estimates. In the opinion of the management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of December 31, 2002 and for the three months ended December 31, 2002 and 2001, have been made. The results of operations for the three months ended December 31, 2002 and 2001 are not necessarily indicative of the operating results for the full year. 2. PREPARATION OF FINANCIAL STATEMENTS The Group has a negative working capital of US$680,780 and US$359,070 as of December 31, and September 30, 2002. Besides, the Group has net loss of US$301,411 and US$670,085 for the three-month periods ended December 31, 2002 and 2001 respectively. These conditions raise substantial doubt about the Group's ability to continue as a going concern. Continuation of the Group as a going concern is dependent upon obtaining additional working capital through additional equity funding and attaining profitable operations in the future. The management has developed a strategy, which it believes will accomplish these objectives which will enable the Group to operate in the future. However, there can be no assurance that the Group will be successful with its efforts to raise additional capital and attain profitable operations. The inability of the Group to secure additional financing and attain profitable operations in the near term could adversely impact the Group's business, financial position and prospects. - -------------------------------------------------------------------------------- CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 3. NEW ACCOUNTING PRONOUNCEMENTS In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation -Transition and Disclosure - an amendment of FASB Statement No. 123". This Statement amends SFAS No. 123, "Accounting for Stock-Based Compensation", to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. Certain provisions of SFAS No. 148 are effective from December 15, 2002. The management believes that adoption of this standard does not have impact on the Group's financial statements. In December 2002, the FASB issued FASB Interpretation No. 46, ("FIN 46") "Consolidation of Variable Interest Entities" which changes the criteria by which one company includes another entity in its consolidated financial statements. FIN 46 requires a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. The consolidation requirements of FIN 46 apply immediately to variable interest entities created after January 31, 2003, and apply in the first fiscal period beginning after June 15, 2003, for variable interest entities created prior to February 1, 2003. The management believes that adoption of this statement does not have impact on the Group's financial statements. In January 2003, the FASB's Emerging Issues Task Force reached a consensus on Issue 02-16, Accounting by a Customer (including a Reseller) for Cash Consideration Received from a Vendor. Issue 02-16 provides guidance on how a customer should account for cash consideration received from a vendor. The transition provisions apply prospectively to arrangements entered into or modified subsequent to December 31, 2002 and would require all amounts received from vendors to be accounted for as a reduction of the cost of the products purchased unless certain criteria are met to allow presentation as a reduction of advertising expense. The Group will adopt the provisions of Issue 02-16 on January 1, 2003. Management believes that adoption of Issue 02-16 will not have a material impact on the classification and timing of recognition of vendor consideration in the Group's statements of operations. In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". The SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities". Subject to certain exceptions, this Statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003 and all provisions of this Statement should be applied prospectively. The Group had no derivative instruments outstanding. The management does not expect the adoption of SFAS No. 149 will have a material impact on the Group's consolidated financial statements. - -------------------------------------------------------------------------------- CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 4. LOSS PER SHARE OF COMMON STOCK On September 1, 2002, all of the Company's issued and outstanding shares of common stock of US$0.001 each underwent a one for thirty reverse stock split, with no change in their par value. The Company's authorized share capital of 50,000,000 shares of common stock of US$0.001 each remains unchanged. The comparative amount of the loss per share of common stock and the weighted average number of shares of common stock outstanding have been adjusted as a result of the reverse stock split mentioned above. 5. TRADE AND OTHER RECEIVABLES
As of As of September December 30, 2002 31, 2002 NOTE US$ US$ Trade receivables - 25,333 Due from related parties 7(c) 4,504 40,545 Other receivables 39,286 368,365 -------------- -------------- 43,790 434,243 ============== ==============
6. TRADE AND OTHER PAYABLES
As of As of September December 30, 2002 31, 2002 NOTE US$ US$ Trade payables - 75,799 Accrued charges 296,316 340,171 Other payables 6(a) 165,664 48,605 Notes payables 72,796 75,002 Due to related parties 7(d) 272,939 715,391 Deposits received - 7,980 -------------- -------------- 807,715 1,262,948 ============== ==============
(a) Other payables as of December 31, 2002 included an amount of US$28,270, which was due from General Business Network (Holdings) Limited ('GBN"). GBN has become a wholly-owned subsidiary of the Company since January 2003. Further details of the acquisition of GBN have been described in note 8 to the financial statements. - -------------------------------------------------------------------------------- CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 7. RELATED PARTY TRANSACTIONS (a) Names and relationship of related parties
Existing relationships with the Company Mr. Alfred Or A director of the Company Mr. Bobby Yu A director of a subsidiary Mr. James Mak A director of the Company Mr. John Hui A director of the Company Mr. Steven Hui Close family member of a director of the Company Mr. William Tsang A director of the Company Goldlion Holdings Limited A company controlled by close family members of a director Guangzhou Cyber Strategy Limited A company in which a director of the Company has beneficial interest Health & Wealth Inc. A company in which a director of a subsidiary has beneficial interest Beijing Man Lung Economy PRC partner of a subsidiary Consulting Company Powertronic Holdings Limited A shareholder of the Company
(b) Summary of related party transactions
Three Months Ended December 31, 2002 --------------- US$ Consultancy fee expenses to Guangzhou City International Exhibition Co. 4,531 Beijing Man Lung Economy Consulting Company 4,531 Mr. John Hui 6,410 Health & Wealth Inc. 15,024 Mr. Bobby Yu 4,231 ============ Consultancy fee income from Guangzhou Cyber Strategy Limited 96,154 ============ Membership fee income from Guangzhou Cyber Strategy Limited 16,008 ============
CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 7. RELATED PARTY TRANSACTIONS (CONT'D)
(c) Due from related parties As of December 31, 2002 ------------- US$ Mr. John H. W. Hui 3,823 Mr. Alfred Or 1,208 Goldlion Holdings Limited 35,514 ------------- 40,545 =============
The amounts due from related parties represent unsecured advances which are interest-free and repayable on demand. (d) Due to related parties
As of December 31, 2002 ------------- US$ Mr. James Mak 2,340 Mr. Steven Hui 54,082 Guangzhou Cyber Strategy Limited 24,661 Beijing Man Lung Economy Consulting Company 18,116 Health & Wealth Inc. 18,422 Powertronic Holdings Limited 597,770 ------------- 715,391 =============
The amounts due to related parties represent unsecured advances which are interest-free and repayable on demand. - -------------------------------------------------------------------------------- CHINA WORLD TRADE CORPORATION NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS Three months ended December 31, 2002 and 2001 - -------------------------------------------------------------------------------- 8. POST BALANCE SHEET EVENTS Pursuant to a Share Exchange Agreement entered into between the Company and Mr. Tsang Chi Hung ("Mr. Tsang") on December 17, 2002, Mr. Tsang agreed to transfer 10,000 ordinary shares of GBN to the Company in exchange for the issuance by the Company of 4,000,000 shares of its common stock with par value of US$0.001 each and a two-year warrant (the "Warrant") to purchase up to 4,000,000 shares of the common stock of the Company. The Warrant is exercisable at a price of US$0.92 per share. The transaction was completed on January 24, 2003 and GBN became a wholly-owned subsidiary of the Company. GBN was incorporated in Hong Kong on July 15, 2002 and is principally engaged in property investments and investment holdings. The acquisition of GBN and its subsidiaries will be accounted for under the purchase method of accounting. The purchase price will be allocated based on the estimated fair values at the date of acquisition. The results of the acquired businesses will be included in the consolidated financial statements since the acquisition date. - -------------------------------------------------------------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS All forward-looking statements contained herein are deemed by the company to be covered by and to qualify for the safe harbor protection provided by the private securities litigation reform act of 1995. Prospective shareholders should understand that several factors govern whether any forward - looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward - looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the company. Although the company believes that the assumptions underlying the forward - looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward - looking statements contained herein will be realized. Based on actual experience and business development, the company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the company's results of operations. In light of the significant uncertainties inherent in the forward - looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the company or any other person that the objectives or plans of the company will be achieved. OVERVIEW Pursuant to the Share Exchange Agreement dated as of August 10, 2000, by us, Virtual Edge Limited ("VEL"), and Main Edge International Limited ("Main Edge"), Main Edge transferred all of the issued and outstanding shares of the capital stock of VEL to the Company in exchange of 1,961,175 shares of our pre-split common stock, representing approximately 75% of our outstanding shares of the common stock. As a result of an 8-for-1 forward split that was effective on 15th September 2000, Main Edge held 15,689,400 shares of our common stock. Furthermore, subsequent to two private placement financings by Powertronic Holdings Limited ("Powertronic") in September 2002 and December 2002, the acquisition of all the issued and outstanding shares of General Business Network (Holdings) Ltd. ("GBN") in December 2002 and an 1-for-30 reverse split that was effective on 1st September 2002, Mr. Chi Hung Tsang now holds 4,000,000 shares of our common stock (representing approximately 36.4%* of the total issued and outstanding shares of our common stock), Powertronic holds 2,000,000 shares (or approximately 18.2%*), and as a result, Main Edge holds only 522,980 shares (or approximately 4.8%*). * Not including shares to be issued upon the exercise of warrants issued by the Company. RESULTS OF OPERATIONS The following table shows selected data of the Company and its subsidiaries for the three-month period ended December 31, 2002 and 2001 as extracted from the Condensed Consolidated Financial Statements included in Item 1 of this Form 10QSB. (Amounts in thousands US$) THREE-MONTH PERIOD ENDED DECEMBER 31 2002 2001 Revenue 510 -- Operating costs and expenses (109) -- Selling, general & administrative expenses (780) (668) ----- ----- Loss from operations (379) (668) Other income (expenses) (2) (2) ----- ----- Loss before minority interest (381) (670) Minority interests 80 -- ----- ----- Net loss (301) (670) ----- ----- Three-month Period Ended December 31, 2002 Compared to Three-Month Period Ended December 31, 2001 OPERATING REVENUE The aim of the Company is to continue to establish and operate World Trade Center Clubs (associated with the World Trade Center Association) and provide trade agency business linking companies in China and the rest of the world. As of December 31, 2002, we had three operating entities, namely the Beijing World Trade Center Club ("BWTCC"), Guangzhou World Trade Center Club ("GWTCC") and Infotech Enterprises Limited ("Infotech"). BWTCC will be engaged in the establishment of a business club located in Beijing and GWTCC is engaged in the operation with the business club in Guangzhou, the PRC. GWTCC provides food and beverages, recreation, business center services, communication and information services, products exhibitions services, and commercial and trading brokerage services. Infotech will build a bilingual, English and Chinese, business-to-business portal for the Company as well as providing system integration related services to third parties customers and members. In January 2003, the Company acquired 100% shareholding of General Business Network (Holdings) Limited , an investment holding company which primarily engages in property investments and trading business. The Company has started to recruit members, and to provide consultancy, catering and business center services through its subsidiary GWTCC located in Guangdong Province, the PRC since June 2002. Sales revenue for the three-month period ended December 31, 2002 was $510,000, compared to none for the same corresponding period in year 2001. Of the $510,000 revenue in fiscal year 2002, approximately $214,000 (42%) was generated from providing catering services, $42,000 (8%) from providing business center and conference services, $96,000 (19%) from providing consultancy services and the remaining revenue of $158,000 (31%) from membership fees. Costs of sales increased by $109,000 for the three-month period ended December 31, 2002, as compared to none for the same corresponding period in year 2001. The $109,000 is primarily incurred in relation to the catering services that the Company provided through GWTCC. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by $112,000 or 17% to $780,000 for the three-month period ended December 31, 2002 from $668,000 for the corresponding period in 2001. The increase was mainly due to: i) Salaries: Salaries increased by 171,000 for the three-month period ended December 31, 2002, compared to only $3,000 for the same corresponding period in year 2001. The increase was mainly due to the salaries paid to staff to support the operation of GWTCC. ii) Rental and Building Management fee: Rental and building management fee totaled $250,000 for the three-month period ended December 31, 2002, compared to only $8,000 for the same corresponding period in year 2001. This increase was primarily due to costs for renting premises for the operation of GWTCC in Guangzhou, the PRC. iii) Utility and Office Expenses: Utility and office expenses were $88,000 for the three-month period ended December 31, 2002, compared to none for the same corresponding period in year 2001. The increase was primarily the result of the additional cost for the operation of GWTCC. iv) Advertising and Promotion Expenses: The advertising and promotion expenses were $37,000 for the three-month period ended December 31, 2002, compared to none for the same corresponding period in year 2001. These expenses were the result of additional effort and costs for the promotion of the corporate image as well as for the recruitment of members. The increase of the selling, general and administrative expenses was partially offset by the decrease in profession fees. During the three-month period ended December 31, 2001, substantial professional fees were incurred to hire consultants to act as liaison with the Chinese government and to provide different corporate finance services for the development of the Company. Less professional fees were incurred during current period as the Company is more established comparing to a year ago. FINANCIAL INCOME/(EXPENSES), NET Financial expenses of $2,000 for the three-month period ended December 31, 2002 maintains at a similar level when compared to approximately $2,000 for the same corresponding period in year 2001. INCOME TAXES The Company is still operating at a loss for the three-month period ended December 31, 2002. Thus, no income taxes incurred for the reporting periods. LIQUIDITY AND CAPITAL RESOURCES The Company underwent a 1 for 30 reverse stock split of the shares of its common stock, effective on September 1, 2002. Between September 8 and September 12, 2002, the Company entered into agreements with its subsidiaries whereas the Company would take on approximately $2.7 million in debt from subsidiaries to related parties, and in exchange, the subsidiaries became liable to the Company for the same amount of debt that takes on by the Company. The Company issued a total of 4 million post-split shares in exchange for cancellation of approximately $0.4 million in debt owed to related parties as well as approximately $2.3 million in debt and fees owed to third parties The Company and Powertronic Holdings Limited entered into two share purchase agreements dated September 3, 2002 and December 17, 2002 to purchase 2,000,000 shares and warrants (to purchase up to another 4,000,000 shares) for a total purchase price of $1,000,000. These two private financings were completed on January 24, 2003 and the respective shares were issued accordingly. We believe that the level of financial resources is a significant factor for our future development and accordingly may choose at any time to raise capital through debt or equity financing to strengthen its financial position, facilitate growth and provide us with additional flexibility to take advantage of business opportunities. CRITICAL ACCOUNTING POLICIES Besides the accounting policies as described in note 1 to the financial statements for the year ended September 30, 2002, the management considers that the Group has not adopted any other critical accounting policies. ITEM 3. CONTROLS AND PROCEDURES. Within the 90-day period prior to the filing of this report, an evaluation was carried out under the supervision and with participation of the Company's management, including the Chief Executive Officer and Principal Financial Officer, of the effectiveness of the disclosure controls and procedures (as defined in Rule 13a-14(c) under the Securities Exchange Act of 1934). Based on the evaluation, the Chief Executive Officer and Principal Financial Officer have concluded that disclosure controls and procedures are, to the best of their knowledge, effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. Subsequent to the date of their evaluation, there were no significant changes in the Company's internal controls or in other factors that could significantly affect these controls, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II -- OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. We are not a party to any pending or to the best of our knowledge, any threatened legal proceedings. No director, officer or affiliate, or owner of record of more than five percent (5%) of our securities, or any associate of any such director, officer or security holder is a party adverse to us or has a material interest adverse to ours in any pending litigation. 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) Exhibits: 99.1 CEO Certification 99.1 CFO Certification (b) Reports on Form 8-K; On March 3, 2003, a Form 8K in connection with events taking place in September 8, 2002, regarding items 1,2 and 7 was filed with the SEC. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. China World Trade Corporation ______________________________ (Registrant) Date: May 22, 2003 /s/ John H.W. Hui _______________________________ _______________________________ John H.W. Hui Chief Executive Officer Date: May 22, 2003 _______________________________ /s/ Keith Wong _______________________________ Keith Wong Cheif Financial Officer *Print the name and title of each signing officer under his signature. CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, John H.W. Hui, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China World Trade Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; (5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial date and have identified for the registrant's auditors any auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 22, 2003 _/s/ John H.W. Hui__________ John H.W. Hui Chief Executive Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Keith Wong, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China World Trade Corporation; 2. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and (c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): (a) significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial date and have identified for the registrant's auditors any auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 22, 2003 /s/ Keith Wong_______ Keith Wong Chief Financial Officer EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of China World Trade Corporation, a Nevada company (the "Company") on Form 10-QSB for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John H.W. Hui, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. __/s/ John H.W. Hui__________ John H.W. Hui Chief Executive Officer Date: May 22, 2003 EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of China World Trade Corporation, a Nevada company (the "Company") on Form 10-QSB for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Keith Wong, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. ___/s/_Keith Wong____________ Keith Wong Chief Financial Officer Date: April 11, 2003 Date: May 22, 2003 SF 865435 v3 5/21/03 8:54 AM (39830.0001) -----END PRIVACY-ENHANCED MESSAGE-----