-----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, HXYV3p1oanlRyPaQeGe1Gn10Avx2JYEDQI12JceCTRO7nmY/WCUqec+fcxw19Rs0 r8QpkCtutQrxdEOsncOuDQ== 0001113182-01-500023.txt : 20010522 0001113182-01-500023.hdr.sgml : 20010522 ACCESSION NUMBER: 0001113182-01-500023 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010521 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: SEC FILE NUMBER: 000-26119 FILM NUMBER: 1644699 BUSINESS ADDRESS: STREET 1: C/O LOEB & LOEB LLP DAVID FICKSMAN STREET 2: 10100 SANTA MONICA BLVD STE 2200 CITY: LOS ANGELES STATE: CA ZIP: 900674164 BUSINESS PHONE: 8015748000 MAIL ADDRESS: STREET 1: LOEB & LOEB STREET 2: 10100 SANTA MONICA BLVD STE 2200 CITY: LOS ANGELES STATE: CA ZIP: 90067 FORMER COMPANY: FORMER CONFORMED NAME: TXON INTERNATIONAL DEVELOPMENT CORP DATE OF NAME CHANGE: 19990329 10QSB 1 chwt10q32001.txt CHINAWORLD TRADE 10QSB 3/31/2001 U.S. 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 March 31, 2001. _____ Transition report under section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to __________. Commission File No.: ________ CHINA WORLD TRADE CORPORATION (Name of small business in its charter) Nevada 87-0629754 - ------------------------------------------------------------------------- (State or other Jurisdiction of Incorporation) (IRS Employer Id. No.) Jing An Center No. 8 Bei San Huan Easr Road Chaoyang District, Beijing THE PRC 100028 (Address of Principal Office) (Zip Code) Issuer's telephone number: 011-852-988-26818 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ______ Applicable only to issuers involved in bankruptcy proceedings during the past five years. Check whether the issuer has filed all documents and reports required to be filed by Section 12, 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. At March 31, 2001 there were 23,822,800 shares of common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes _______ No X PART I ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS The unaudited financial statements of registrant for the three month period ended December 31, 2000, follow. The financial statements reflect all adjustments which are, in the opinion of management, necessary to a fair statement of the results for the interim period presented. INDEPENDENT ACCOUNTANT'S REPORT China World Trade Corporation (A Development Stage Company) We have reviewed the accompanying balance sheets of China World Trade Corporation (a development stage company) as of March 31, 2001 and September 30, 2000, and the related statements of operations for the three and six month periods ended March 31, 2001 and 2000, and cash flows for the six month periods ended March 31, 2001 and 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. Respectfully submitted /s/Robinson, Hill & Company Certified Public Accountants Salt Lake City, Utah May 17, 2001 CHINA WORLD TRADE CORPORATION (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS
March 31, September 30, 2000 2001 -------- ---------- Current Assets Cash and cash equivalents $57 $479 Rental deposits 258,299 258,299 Other receivables 362 362 ------- ------- Total Current Assets 258,718 259,140 Fixed Assets Furniture and fixtures 2,848 2,848 Less: Accumulated depreciation (1,709) (1,424) ------- ------- Total Fixed Assets 1,139 1,424 ------- ------- Total Assets $259,857 $260,564 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Accrued Liabilities $248,037 $132,663 Due to related parties 2,048,824 1,922,492 ------- ------- Total Liabilities 2,296,861 2,055,155 ------- ------- Minority Interest (126,808) 22,935 ------- ------- Stockholders' Equity Preferred stock (par value $0.001), 10,000,000 shares authorized, no shares issued at March 31, 2001 and September 30, 2000 - - Common stock (par value $0.001), 50,000,000 shares authorized, 23,822,800 and 21,322,800 shares issued at March 31, 2001 and September 30, 2000 23,823 21,323 Capital in excess of par value 2,819,578 2,262,703 Deficit accumulated during development stage (4,753,597) (4,101,552) ------- ------- Total Stockholders' Equity (1,910,196) (1,817,526) ------- ------- Total Liabilities and Stockholders' Equity $259,857 $260,564 ========= ========= Equity
See accompanying notes and accountants' report CHINA WORLD TRADE CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS
Cumulative since January 29, 1998 For the six months For the six months inception of ended ended development March 31, March 31, stage 2001 2000 2001 2000 Revenues $ $ $ $ $ - - - - - Expenses Selling, general & administrative 84,919 30 242,414 274 1,305,928 expenses --------- ------- --------- ------- ---------- Operating Loss (84,919) (30) (242,414) (274) (1,305,928) --------- ------- --------- ------- ----------- Other income (expense): Write down of goodwill - - (559,375) - (3,606,457) --------- ------- --------- ------- ----------- Minority Interest 74,044 - 149,867 - 158,911 --------- ------- --------- ------- ----------- Loss before taxes (10,875) (30) (651,922) (274) (4,753,474) Income taxes - - - - - --------- ------- --------- ------- ----------- Net Loss $ (10,875) $(30) $(651,922) $(274) $(4,753,474) ========= ======= ========= ======= =========== Basic per Share Amounts Net Income (Loss) $0.00 $0.00 $ (0.03) $0.00 ========= ======= ========= =======
See accompanying notes and accountants' report CHINA WORLD TRADE CORPORATION (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CASH FLOWS
Cumulative For the Six since Months Ended January 29, March 31, 1998 Inception of development ------------------ -------------- 2001 2000 stage --------- -------- -------------- Cash Flows from Operating Activities: Cash paid to suppliers and employees $(126,754) $(360) $(535,972) --------- -------- -------------- Net cash used in operating activities (126,754) - (535,972) --------- -------- -------------- Cash Flows from Investing Activities: Investment in deferred development costs - - (6,000) --------- -------- -------------- Net cash used by investing activities - - (6,000) --------- -------- -------------- Cash Flows from Financing Activities: Proceeds from common stock to be issued - - 323,100 Proceeds from issuance of common stock - - 10,479 Proceeds from related party 126,332 - 183,600 Contributed capital from shareholders - - 24,850 --------- -------- -------------- Net cash provided by financing activites 126,332 542,029 --------- -------- -------------- Net change in cash and cash equivalents (422) (360) 57 Cash and cash equivalents at beginning of 479 1,035 - Year --------- -------- -------------- Cash and cash equivalents at end of year $57 $675 $57 Reconciliation of Net Loss to Net Cash Used in Operating Activities: Net loss (651,922) (274) (4,753,474) ========= ======== ============== Adjustments used to reconcile net loss to Net cash used in operating activities: Depreciation 286 - 340 Loss on Investments - - 6,000 Goodwill writedown 559,375 - 3,606,457 Increase in accounts payable & accrued 115,374 (86) 690,850 expenses Increase (Decrease) in accounts payable to - - 16,200 officers Stock issued for services - - 52,566 Stock issued for salaries - - 4,000 Minority Interest (149,867) - (158,911) --------- -------- -------------- Net cash used in operating activities $(126,754) $(360) $(535,972) ========= ======== ==============
Supplemental Disclosure of Non-Cash Investing and Financing Activities: In 1999 shareholder advances of $16,200 were converted to Capital in Excess of Par Value. On August 14, 2000, 15,689,400 shares of common stock were issued to acquire Virtual Edge Limited and 34, 996,400 shares were canceled pursuant to a share exchange agreement. On October 18, 2000, 2,500,000 shares of common stock were issued to acquire 49% of Infotech Enterprises Limited pursuant to a share exchange agreement. See accompanying notes and accountants' report CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES This summary of accounting policies for China World Trade Corporation is presented to assist in understanding the Company' financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements. INTERIM STATEMENTS The unaudited financial statements as of March 31, 2001 and 2000 for the three and six month periods then ended reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the six months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years. ORGANIZATION AND BASIS OF PRESENTATION The Company was incorporated under the laws of the state of Nevada on January 29, 1998 as Weston International Development Corporation. On July 28, 1998 the name of the Company was changed to Txon International Development Corporation. On August 14, 2000 the Company acquired 100% of Virtual Edge Limited (a British Virgin Islands Company) pursuant to a share exchange agreement. On September 15, 2000 the Company changed its name to China World Trade Corporation. The Company is in the development stage since January 29, 1998 (inception) and has not commenced planned principal operations. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of China World Trade Corporation ("CWTC") and its wholly-owned subsidiaries: x Virtual Edge Limited ("VEL"), a British Virgin Islands Company (100% owned by CWTC) x Infotech Enterprises Limited ("Infotech"), a British Virgin Islands Company (49% owned by CWTC and 51% owned by VEL) x Beijing World Trade Center Club ("BWTCC"), a People's Republic of China Company (75% owned by VEL) The results of subsidiaries acquired during the year are consolidated from their effective dates of acquisition. All significant inter-company accounts and transactions have been eliminated. CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) NATURE OF BUSINESS The Company through its subsidiaries intends to build a bilingual (Chinese and English) Business to Business Portal, and establish a club in Beijing to provide food and beverages, recreation, business center services, communication and information services, product exhibition services and trading brokerage services to its member. CASH EQUIVALENTS For the purpose of reporting cash flows, the Company considers all highly liquid debt instruments purchased with maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. PERVASIVENESS OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles required management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. TRANSLATION OF FOREIGN CURRENCY The Companies functional currencies include U.S. Dollars and Chinese Renminbi. All balance sheet accounts of foreign operations are translated into U.S. dollars at the year-end rate of exchange and statement of operations items are translated at the weighted average exchange rates for the year. The resulting translation adjustments are made directly to a separate component of the stockholders' equity. Gains or losses from other foreign currency transactions, such as those resulting from the settlement of foreign receivables or payables, are included in the Statements of Operations. CONCENTRATION OF CREDIT RISK The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution, in the form of demand deposits. CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) DEPRECIATION Property, plant and equipment, are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated economic useful lives of the related assets as follows: Furniture & Fixtures 5-10 years Equipment 5-7 years Maintenance and repairs are charged to operations; betterments are capitalized. The cost of property sold or otherwise disposed of and the accumulated depreciation thereon are eliminated from the property and related accumulated depreciation accounts, and any resulting gain or loss is credited or charged to income. The Company has adopted the Financial Accounting Standards Board SFAS No., 121, "Accounting for the Impairment of Long-lived Assets." SFAS No. 121 addresses the accounting for (i) impairment of long-lived assets, certain identified intangibles and goodwill related to assets to be held and used, and (ii) long-live lived assets and certain identifiable intangibles to be disposed of. SFAS No. 121 requires that long-lived assets and certain identifiable intangibles be held and used by an entity be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum of the expected future cash flows from the used of the asset and its eventual disposition (un-discounted and without interest charges) is less than the carrying amount of the asset, an impairment loss is recognized. NET LOSS PER COMMON SHARE There are no dilutive potential common stock equivalents for 2001 and 2000 and are thus not considered. The reconciliations of the numerators and denominators of the basic EPS computations are as follows: CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Continued) NOTE 1 - ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES (CONTINUED) NET LOSS PER COMMON SHARE (CONTINUED)
Loss Shares Per-Share (Numerator) (Denominator) Amount For the three months ended March 31, 2001 ----------------------------------------- Basic Loss per Share Loss to common shareholders $(10,875) 23,822,800 $0.00 ======== ========== ======== For the six months ended March 31, 2001 ----------------------------------------- Basic Loss per Share Loss to common shareholders $(651,922) 23,587,993 $(0.03) ======== ========== ======== For the three months ended March 31, 2000 ----------------------------------------- Basic Loss per Share Loss to common shareholders $ (30) 3,138,000 $0.00 ======== ========== ======== For the six months ended March 31, 2000 ----------------------------------------- Basic Loss per Share Loss to common shareholders $(274) 3,138,000 $0.00 ======== ========== ========
NOTE 2 - INCOME TAXES The Company has accumulated tax losses estimated at $543,000 expiring in years beginning 2013. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. The amount of net operating loss carryforward available to offset future taxable income will be limited if there is a substantial change in ownership. In accordance with SFAS No. 109, a valuation allowance is provided when it is more likely than not that all or some portion of the deferred tax asset will not be realized. Due to the uncertainty with respect to the ultimate realization of the net operating loss carry forward, the Company established a valuation allowance for the entire net deferred income tax asset as of September 30, 2000. NOTE 3 - GOING CONCERN / DEVELOPMENT STAGE The Company has not begun principal operations and as is common with a development stage company, the Company has had recurring losses during its development stage. Continuation of the Company as a going concern is dependent upon obtaining the additional working capital necessary to be successful in its planned activity, and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding and long term financing, which will enable the Company to operate for the coming year. CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Continued) NOTE 4 - COMMITMENTS As of March 31, 2001 all activities of the Company have been conducted by corporate officers from either their homes or business offices. Currently, there are no outstanding debts owed by the company for the use of these facilities and there are no commitments for future use of the facilities. NOTE 5 - RELATED PARTY TRANSACTIONS (a) Names and relationship of related parties EXISTING RELATIONSHIPS WITH THE COMPANY Mr. John H. W. Hui President and Director of the Company Mr. Steven K. F. Hui Close family member of a director of the Company Mr. Alfred Or A director of a subsidiary Belford Enterprises Limited A company in which a director of The Company has beneficial interest Main Edge International Limited Major shareholder of the Company PRC Partner PRC partner of a subsidiary (b) As of March 31, 2001, the Company owes the following amounts to related parties:
March 31, 2001 ------ Mr. John H. W. Hui $342,078 Mr. Steven K.F. Hui 54,082 Mr. Alfred Or 116,645 Belford Enterprises Limited 799,275 Main Edge International Limited 695,977 PRC Partner 40,767 ----------- $2,048,824
The amounts due to related parties represent unsecured advances which are interest-free and repayable on demand. CHINA WORLD TRADE CORPORATION AND SUBSIDIARIES (A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2001 AND 2000 (Continued) NOTE 6 - ACQUISITION OF SUBSIDIARIES Pursuant to a Share Exchange Agreement entered into between the Company and Vast Opportunity Limited ("VOL"), VOL transferred its 49 shares of the common stock, par value $1 of Infotech to the Company in exchange for the issuance by the Company of 2,500,000 shares of its common stock with par value of $0.001. The transaction was completed on October 18, 2000 when Infotech became a wholly-owned subsidiary of the Company, with 49% shareholding directly held by the Company and 51% shareholding held by Virtual Edge Limited, a wholly owned subsidiary of the Company. NOTE 7 - STOCK OPTIONS AND WARRANTS On October 20, 2000, the 2000 Stock Option Plan was approved by the written consent of a majority of shareholders. The purpose of the plan is to attract, motivate and retain directors, officers and key employees and consultants through the use of long-term incentives which are tied to shareholder value. The plan provides for a maximum of 3,000,000 shares of common stock awarded under the plan. As of March 31, 2001 no options have been granted under the plan ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The following discussion should be read in conjunction with the accompanying financial statements for the three-month periods ended December 31, 2000 and 1999; and the Form 10-KSB filed by the Company for the year ended September 30, 2000. Special Note Regarding Forward-Looking Statements: Certain statements in this report and elsewhere (such as in other filings by the Company with the Securities and Exchange Commission ("SEC"), press releases, presentations by the Company or its management and oral statements) may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," and "should," and variations of these words and similar expressions, are intended to identify these forward-looking statements. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements, which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. OVERVIEW Pursuant to the Share Exchange Agreement dated as of August 10, 2000, by and among China World Trade Corporation (the "Company"), 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 the pre- split common stock of the Company, representing approximately 75% of the outstanding shares of the common stock of the Company. As a result of an 8-for-1forward split that was effective on 15{th} September 2000, Main Edge holds 15,689,400 shares of the common stock of the Company. RESULTS OF OPERATIONS The following table shows the selected audited and unaudited condensed consolidation income statement data of the Company and its subsidiaries for the three-month period and six-month period ended March 31, 2000 and 2001. The data should be read in conjunction with the unaudited Condensed Consolidated Financial Statements of the Company and related notes thereto.
THREE-MONTHS PERIOD ENDED Six-month March 31 period ended MARCH 31 2000 2001 2000 2001 Operating Revenue -- -- -- -- Operating Expenses General & Administrative expenses (30) (84,919) (274) (242,414) Loss from Operations (30) (84,919) (274) (242,414) Write down of goodwill - - - (559,375) Minority Interest - 74,044 - 149,867 ------ ------- ----- -------- Net Income (Loss) (30) (10,875) (274) (651,922)
OPERATING REVENUE The Company is still in its development stage and there were not any operating revenue since inception on January 29, 1998 to March 31, 2001. The objective of the Company is to provide a trade agency business linking companies in China and the rest of the world. The Company currently has two operating arms, namely the Beijing World Trade Center Club ("BWTCC") and Infotech Enterprises Limited ("Infotech"). BWTCC will be engaged in the establishment of a business club located in Beijing, the PRC. The club will provide 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. Three-Month Period Ended March 31, 2001 Compared to Three-Month Period Ended March 31, 2000 GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses increased by $84,889 to $84,919 for The three-month period ended March 31, 2001 from $30 for the corresponding period in year 2000. The increase was mainly due to: i. Before acquiring Virtual Edge Limited in August 2000, the Company was in its development stage seeking good acquisition opportunities. Therefore, after the acquisition of Virtual Edge Limited, the financial statements of the Company reflect the operating results of its wholly owned subsidiary, Virtual Edge Limited. ii. Management Fee increased by $42,500 for the three-month period ended March 31, 2001 from none for the same period in 2000. The management fee was payable to the officers of the company for the three-month period ended March 31, 2000. iii. Legal fee increased by $14,120 for the three-month period ended March 31, 2001 from none for the corresponding period in 2000. This fee was spent on advices provided by legal counsel of the Company for the fulfillment of SEC requirements and other legal matters. FINANCIAL INCOME/(EXPENSES), NET There was not any financial income or expenses since inception to March 31, 2001. INCOME TAXES The Company is still at it development stage and did not generate any revenue nor income for period since inception to March 31, 2001. Thus, no income taxes incurred for the reporting periods. LIQUIDITY AND CAPITAL RESOURCES There has been no other significant change in financial condition and liquidity since the fiscal year ended September 31, 2000. Management believes that the level of financial resources is a significant factor for the future development of the Company and accordingly may choose at any time to raise capital through debt or equity financing to strengthen its financial position, facilitate growth and provide the Company with additional flexibility to take advantage of business opportunities. Six-Month Period Ended March 31, 2001 Compared to Six-Month Period Ended March 31, 2000 GENERAL AND ADMINISTRATIVE EXPENSES General and administrative expenses increased by $242,140 to $242,414 for the six-month period ended March 31, 2001 from $274 for the corresponding period in year 2000. The increase was mainly due to: i) Before acquiring Virtual Edge Limited in August 2000, the Company was in its development stage seeking good acquisition opportunities. Therefore, after the acquisition of Virtual Edge Limited, the financial statements of the Company reflect the operating results of its wholly owned subsidiary, Virtual Edge Limited. ii) Management Fee increased by $85,000 for the six-month period ended March 31, 2001 from none for the same period in 2000. The management fee was payable to the officers of the company for the three-month period ended March 31, 2000. iii) Legal fee increased by $35,820 for the three-month period ended March 31, 2001 from none for the corresponding period in 2000. This fee was spent on advices provided by legal counsel of the Company for the fulfillment of SEC requirements and other legal matters. FINANCIAL INCOME/(EXPENSES), NET There was not any financial income or expenses since inception to March 31, 2001. INCOME TAXES The Company is still at it development stage and did not generate any revenue nor income for period since inception to March 31, 2001. Thus, no income taxes incurred for the reporting periods. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) None (b) No reports on Form 8-K were filed by the Company for the quarter ended March 31, 2001. 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 BY: /s/ John H.W. Hui ------------------------- John H.W. Hui, President Date: May 17, 2001 -----END PRIVACY-ENHANCED MESSAGE-----