-----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, CDbAp6XviSiSei/qNMGTKfuJbMAHUdhwWVeb3zM4TUum2gcf2iGuBKhJ9L2T9kg1 Cj5cObpV772F1ZwGpqz40g== 0001264931-04-000121.txt : 20040819 0001264931-04-000121.hdr.sgml : 20040819 20040819095655 ACCESSION NUMBER: 0001264931-04-000121 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040819 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: 04985332 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 doc1.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 June 30, 2004 [ ] 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 June 30, 2004, there were 17,829,628 shares of common stock outstanding. Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] INDEX TO FORM 10-QSB Page No -------- PART I - ------- Item 1. Financial Statements Unaudited Condensed Consolidated Balance Sheet - As of June 30, 2004 3 Unaudited Condensed Consolidated Statements of Operations - Three and Six Months Ended June 30, 2004 and 2003 4 Unaudited Condensed Consolidated Statements of Cash Flows - Six Months Ended June 30, 2004 and 2003 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operations 14 Item 3. Controls and Procedures 17 PART II - ------- Item 1. Legal Proceedings 18 Item 2. Changes in Securities 18 Item 3. Defaults Upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 5. Other Information 18 Item 6. Exhibits 18 PART I -- FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Unaudited financial statements China World Trade Corporation for the six months ended June 30, 2004 and 2003. CHINA WORLD TRADE CORPORATION UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET As of June 30, 2004 ============================================================================== ASSETS NOTE US$ -------------- CURRENT ASSETS Cash and cash equivalents 32,935 Trade and other receivables 3 111,746 Rental and other deposits 254,953 Prepayments 102,428 Inventories 9,142 -------------- Total current assets 511,204 -------------- INTANGIBLE ASSET 1,590,000 -------------- GOODWILL 359,346 -------------- PROPERTY, PLANT AND EQUIPMENT, NET 3,259,749 -------------- Total assets 5,720,299 ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade and other payables 4 505,621 Deferred income 6,551 Long-term bank loan - current portion 5 44,301 -------------- TOTAL CURRENT LIABILITIES 556,473 -------------- Long-term bank loan - non-current portion 5 425,952 Due to a shareholder 8(e) 954,995 -------------- TOTAL LIABILITIES 1,937,420 -------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, par value of US$0.001 each; 10,000,000 shares authorized, none issued or outstanding - Common stock, par value of US$0.001 each; 50,000,000 shares authorized, 17,829,628 shares issued at June 30, 2004 6 17,837 Additional paid-in capital 16,207,204 Accumulated deficit (12,442,162) -------------- TOTAL STOCKHOLDERS' EQUITY 3,782,879 -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 5,720,299 ============== The financial statements should be read in conjunction with the accompanying notes.
CHINA WORLD TRADE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three-month and six-month periods ended June 30, 2004 and 2003 =============================================================================================================== THREE-MONTH PERIOD ENDED JUNE 30, SIX-MONTH PERIOD ENDED JUNE 30, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ US$ US$ US$ US$ UNAUDITED Unaudited UNAUDITED Unaudited OPERATING REVENUES 335,569 880,852 639,340 1,384,391 Operating costs and expenses (161,545) (352,207) (347,546) (464,907) Selling, general and administrative expenses (875,108) (989,321) (2,502,045) (1,635,756) ------------ ------------ ------------ ------------ LOSS FROM OPERATIONS (701,084) (460,676) (2,210,251) (716,272) NON-OPERATING INCOME (EXPENSES) Other income 102,061 422 102,150 1,507 Interest expense (4,738) (3,560) (8,730) (5,832) Equity in net loss of affiliate - (32,051) - (32,051) ------------ ------------ ------------ ------------ LOSS BEFORE INCOME TAXES AND MINORITY INTEREST (603,761) (495,865) (2,116,831) (752,648) Provision for income taxes - - - - ------------ ------------ ------------ ------------ LOSS BEFORE MINORITY INTEREST (603,761) (495,865) (2,116,831) (752,648) Minority interest 628 315 628 40,522 ------------ ------------ ------------ ------------ NET LOSS (603,133) (495,550) (2,116,203) (712,126) ============ ============ ============ ============ LOSS PER SHARE OF COMMON STOCK - - Basic (0.03) (0.05) (0.12) (0.07) ============ ============ ============ ============ Weighted average number of shares of common stock outstanding 17,787,331 10,970,471 17,018,219 10,443,024 ============ ============ ============ ============
The financial statements should be read in conjunction with the accompanying notes.
CHINA WORLD TRADE CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six-month period ended June 30, 2004 and 2003 =============================================================================================================== SIX-MONTH PERIOD ENDED JUNE 30, 2004 2003 ------------ ------------ NOTE US$ US$ UNAUDITED Unaudited CASH FLOWS FROM OPERATING ACTIVITIES: Net loss (2,116,203) (712,126) Adjustments to reconcile net loss to net cash used in operating activities: Minority interest (628) (40,522) Amortization of intangible assets 180,000 32,051 Stock issued for services 496,200 - Depreciation 70,173 55,709 Impairment loss on property, plant and equipment - 110,005 Impairment loss on goodwill 251,448 - Increase (Decrease) in deferred income (16,626) (224,127) Changes in working capital: Trade and other receivables 75,236 126,412 Rental and other deposits 2,216 (9,639) Prepayments 455,607 2,653 Inventories 64,241 (82,923) Trade and other payables (631,655) 228,692 ------------ ------------ NET CASH (USED IN) OPERATING ACTIVITIES (1,169,991) (513,815) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of subsidiaries 10 - 123,707 Acquisition of an affiliate - (32,051) Acquisition of property, plant and equipment (471,138) (47,799) ------------ ------------ NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES (471,138) 43,857 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Capital contribution from minority shareholder of a subsidiary - 4,477 Advance from a shareholder 555,789 - Repayment of amount borrowed (321,496) - Issuance of new shares 1,125,000 512,820 ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 1,359,293 517,297 ------------ ------------ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (281,836) 47,339 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 314,771 74,355 ------------ ------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD 32,935 121,694 ============ ============ ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS Cash and bank balances 32,935 121,694 ============ ============ NON-CASH INVESTING AND FINANCING ACTIVITIES Common stocks issued for services 496,200 - Purchase of subsidiary by issuance of common stock 240,000 3,200,000 Purchase consideration in arrear 120,000 - ============ ============
The financial statements should be read in conjunction with the accompanying notes. CHINA WORLD TRADE CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------- Three-month and six-month periods ended June 30, 2004 and 2003 1. BASIS OF PRESENTATION The accompanying financial data as of June 30, 2004 and for the three-month and six-month periods ended June 30, 2004 and 2003, have been prepared by the Company, without audit. Following the change of the Company's financial year end date from September 30 to December 31 with effect from the period ended December 31, 2003, these quarterly financial statements have been prepared based on the newly adopted financial year. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America 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 financial statements for the year ended September 30, 2003. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 June 30, 2004 and for the three-month and six-month periods ended June 30, 2004 and 2003, have been made. The results of operations for the three-month and six-month periods ended June 30, 2004 and 2003 are not necessarily indicative of the operating results for the full year. 2. PREPARATION OF FINANCIAL STATEMENTS The Company has net loss of US$603,133 and US$2,116,203 for the three-month and six-month periods ended June 30, 2004. The Company is an investment holding company. The subsidiaries are principally engaged in the businesses of club services and properties investments. Management has developed a strategy, which it believes can be accomplished and will enable the Company to operate in the future. However, there can be no assurance that the Company will be successful with its efforts to attain profitable operations. The inability of the Company to attain profitable operations in the near term could adversely impact the Company's business, financial position and prospects. 3. TRADE AND OTHER RECEIVABLES AS OF JUNE 30, 2004 Note US$ ------------- Trade receivables 22,084 Due from related parties 8(c) 75,818 Other receivables 13,844 ------------- 111,746 ============= 4. TRADE AND OTHER PAYABLES AS OF JUNE 30, 2004 Note US$ ------------- Trade payables 18,176 Accrued charges 104,187 Other payables 107,616 Due to related parties 8(d) 235,327 Deposits received 40,315 ------------- 505,621 ============= 5. LONG-TERM BANK LOAN The outstanding loan balance of US$470,253 as of June 30, 2004 bears interest at 4% per annum and is repayable serially from 2004 to 2013. The maturity of the long-term bank loan is as follows: PRINCIPAL PAYABLES DURING THE FOLLOWING PERIODS US$ 44,301 July 2004 to June 2005 - --------- 46,106 July 2005 to June 2006 47,984 July 2006 to June 2007 49,939 July 2007 to June 2008 51,974 July 2008 to June 2009 229,949 from July 2009 onwards - --------- 425,952 - --------- 470,253 ========= 6. ISSUANCE OF SHARES The following capital stock transactions, which were all recorded at fair values as of their respective date of agreements, occurred during the three-month period ended June 30, 2004: a) On May 7, 2004, the Company issued 24,027 shares to The Research Works, Inc. for consulting services provided. b) On may 7, 2004, the Company issued 80,000 shares to the shareholders of CEO Clubs China Limited as consideration of 5,100 shares of CEO Clubs China Limited. 7. STOCK-BASED COMPENSATION The Company records compensation expense for stock-based employee compensation plans using the intrinsic value method in which compensation expense, if any, is measured as the excess of the market price of the stock over the exercise price of the award on the measurement date. On December 31, 2003, the Board of Directors adopted a stock option plan (The 2003 Plan). The 2003 Plan allows the Board of Directors to grant stock options to various employees of the Company. 1,000,000 stock options were issued in accordance with the terms of the 2003 Plan on December 31, 2003 to certain officers and directors at an exercise price of US$0.673 per share. The stock options will vest and become exercisable according to the following schedule: On April 30, 2004: 25 % On December 30, 2004: 25 % Each quarter thereafter: 6.25% (until fully vested) As the exercise price of the 2003 Plan is higher than the market price of the underlying stock on the date of grant, pursuant to APB Opinion No. 25, no compensation expense has been recognized for stock options granted. Had compensation expenses for the same stock options been determined based on their fair values at the dates of grant and been amortized over the period from the date of grant to the date that the award is vested, consistent with the provisions of SFAS No. 123, the Company's net loss and loss per share would have been reported as follows:
Three-Month Period Ended June 30, Six-Month Period Ended June 30, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ NOTE US$ US$ US$ US$ Net loss As reported (603,133) (495,550) (2,116,203) (712,126) Total stock-based compensation expenses (81,175) - (202,938) - ------------ ------------ ------------ ------------ Pro forma (684,308) (495,550) (2,319,141) (712,126) ============ ============ ============ ============ Basic net loss per share As reported (0.04) (0.05) (0.13) (0.07) ------------ ------------ ------------ ------------ Pro forma (0.04) (0.05) (0.14) (0.07) ============ ============ ============ ============
The options granted had a weighted average "fair value" per share on date of grant of US$0.65. For purposes of pro forma disclosure, the estimated fair value of the options is amortized to expenses over the options' vesting periods, i.e., 3 years as prescribed under 2003 Plan. The fair value of the option is estimated on the date of the grant using the Black-Scholes option price model, assuming no dividends and with the following assumptions: Risk-free interest rate 2.1 % Expected volatility 2.24% Contractual life 3 years 8. RELATED PARTY TRANSACTIONS (a) Names and relationship of related parties Existing relationships with the Company ---------------------------------------- Mr. Bernard Chan A shareholder of the Company Mr. Bobby Yu A former director of a subsidiary Mr. Chan Chi Ming A director of the Company Mr. Luo Chao Ming A director of the Company Mr. John Hui A director of the Company Mr. Ringo Leung A former director of the Company Mr. William Tsang A shareholder and director of the Company Beijing Wanlong Economic Consultancy Corporation Ltd. PRC partner of a subsidiary General (Guangzhou) Business Network Ltd. An affiliate of the Company Guangzhou City International Exhibition Co. PRC partner of a subsidiary Guangzhou Cyber Strategy Limited A company in which a director of the Company has beneficial interest Guangzhou Goldlion City Properties Co., Ltd. A company controlled by close family members of a director Xelex Inc. A company in which a shareholder of the Company has beneficial interest Top Link Ventures Limited A company in which a director of the Company has beneficial interest Union East Consultants Limited A company in which a former director of a subsidiary has beneficial interest Dimension Marketing Limited A shareholder of a former subsidiary Simon Guo A director of a subsidiary Li Jingping A director of a subsidiary Yang Xin A shareholder of the Company Zhao Lin A shareholder of the Company Cui Wencheng A shareholder of the Company 8. RELATED PARTY TRANSACTIONS (CONTINUED) (b) Summary of related party transactions
Three-Month Period Ended June 30, Six-Month Period Ended June 30, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ US$ US$ US$ US$ Consulting fee expenses to - ----------------------------- Mr. Ringo Leung - - 5,128 - Mr. Chan Chi Ming - 15,385 - 15,385 Mr. Bernard Chan - 3,846 2,564 8,974 Mr. Bobby Yu - - - 4,231 Mr. John Hui - 5,682 57,692 31,323 Mr. William Tsang - 87,692 57,692 113,333 Mr. Luo Chao Ming 4,349 - 8,698 - Beijing Wanlong Economic Consultancy Corporation Ltd. 4,531 4,531 9,062 9,062 Guangzhou City International Exhibition Co. 4,531 4,531 9,062 9,062 Xelex Inc. 15,385 - 20,513 - Top Link Ventures Limited 15,385 - 30,770 - Guangzhou Cyber Strategy Limited - - 1,938 - ============ ============ ============ ============ Rent and related expenses to - -------------------------------- Guangzhou Goldlion City Properties Co., Ltd. 113,384 170,798 220,918 341,596 ============ ============ ============ ============ Consultancy fee income from - ------------------------------ Guangzhou Cyber Strategy Limited - 96,154 - 192,308 ============ ============ ============ ============ Membership fee income from - ----------------------------- Guangzhou Cyber Strategy Limited - 16,008 - 32,016 Union East Consultants Limited - 16,008 - 16,008 ============ ============ ============ ============ Loans advanced to - ------------------- Dimension Marketing Limited - 7,249 - 7,249 ============ ============ ============ ============ Assets purchase from - ---------------------- Dimension Marketing Limited - 691 - 691 ============ ============ ============ ============
8. RELATED PARTY TRANSACTIONS (CONTINUED) (c) Due from a related party AS OF JUNE 30, 2004 Note US$ ------------- Guangzhou Cyber Strategy Limited 75,818 ============= The amount due from a related party represents unsecured advances which is interest-free and repayable on demand. (d) Due to related parties AS OF JUNE 30, 2004 US$ ------------- Mr. Chan Chi Ming 5,128 Mr. John Hui 57,105 Mr. Ringo Leung 1,095 Guangzhou Goldlion City Properties Co., Ltd. 7,785 Beijing Wanlong Economic Consultancy Corporation Ltd. 18,122 Guangzhou City International Exhibition Company 9,061 General (Guangzhou) Business Network Limited 10,519 Top Link Ventures Limited 5,128 Cui Wencheng 11,616 Yang Xin 7,488 Simon Guo 28,942 Li Jingping 62,594 Zhao Lin 5,616 Xelec Inc. 5,128 ------------- Classified as current liabilities 235,327 ============= The amounts due from related parties represent unsecured advances which are interest-free and repayable on demand. (e) Due to a shareholder AS OF JUNE 30, 2004 US$ ------------- Mr. William Tsang 954,995 ============= The amount due to a shareholder represents unsecured advances which is interest-free and not repayable within one year. 9. SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION (A) SUMMARY OF EFFECT OF ACQUISITION OF SUBSIDIARY SIX MONTHS ENDED JUNE 30, 2004 US$ ------------- NET ASSETS ACQUIRED TRADE AND OTHER RECEIVABLES 654 ADD: GOODWILL ARISING FROM ACQUISITION OF SUBSIDIARY 359,346 ------------- CONSIDERATION 360,000 ============= (B) ANALYSIS OF THE NET INFLOW OF CASH AND CASH EQUIVALENTS IN RESPECT OF ACQUISITION DURING THE PERIOD SIX MONTHS ENDED JUNE 30, 2004 US$ ------------- CONSIDERATION (360,000) ISSUANCE OF COMMON STOCK FOR SATISFYING THE CONSIDERATION 240,000 PURCHASE CONSIDERATION IN ARREAR 120,000 ------------- NET INFLOW OF CASH AND CASH EQUIVALENTS - ============= In addition to the above consideration of US$360,000, the Company has committed to inject cash of US$120,000 to the newly acquired subsidiary as operating funds. 10. BUSINESS SEGMENT INFORMATION
Three-Month Period Ended June 30, Six-Month Period Ended June 30, 2004 2003 2004 2003 ------------ ------------ ------------ ------------ US$ US$ US$ US$ OPERATING REVENUES Club services 101,694 502,690 173,089 888,737 Consultancy service - 96,154 - 192,309 Rental 182,588 14,780 342,844 30,224 Sale of goods 51,440 265,173 123,560 271,068 Others (153) 2,053 (153) 2,053 ------------ ------------ ------------ ------------ 335,569 880,852 639,340 1,384,391 ============ ============ ============ ============ LOSS FROM OPERATIONS Club services (281,179) (92,160) (504,179) (271,083) Consultancy service - 8,208 - 101,128 Rental (41,096) (260,872) (85,743) (378,990) Sale of goods 825 (19,224) (27,990) (33,528) Others - (20,158) - (20,158) ------------ ------------ ------------ ------------ (321,450) (384,176) (617,912) (602,631) Corporate expenses (379,634) (76,500) (1,592,399) (113,641) ------------ ------------ ------------ ------------ Consolidated operating loss (701,084) (460,676) (2,210,251) (716,272) Other income 102,061 422 102,150 1,507 Interest expense (4,738) (3,560) (8,730) (5,832) Minority interest 628 - 628 - ------------ ------------ ------------ ------------ Consolidated loss before income taxes (603,133) (463,814) 2,116,203 (720,597) ============ ============ ============ ============
9. POST BALANCE SHEET EVENT On July 20, 2004, Mr. William Tsang and Powertronic Holdings Limited ("Powertronic") exercised their warrants. Mr. Tsang and Powertronic purchased 1,500,000 and 2,000,000 shares of the common stock of the Company at a price of US$0.92 and US$0.575 per share respectively. After the purchase, Mr. Tsang held 4,500,000 and 2,500,000 warrants to purchase 4,500,000 and 2,500,000 shares at a price of US$0.75 and US$0.92 respectively. Powertronic held 2,000,000 warrants to purchase 2,000,000 shares at a price of US$0.575. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. CHINA WORLD TRADE CORPORATION 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 We were incorporated in the State of Nevada in 1998 to engage in any lawful corporate undertaking. Our business objective is to open and operate business clubs in the major cities of China in association with the World Trade Center Association in order to position ourselves as the platform to facilitate trade between China and the world market. We currently operate a club in Guangzhou, PRC, and are in the process of opening a club in Beijing, PRC, which is completed and fully operational in the April 2004. Additionally, we expect to open a club in Shanghai and Shenzhen, PRC in 2005. Finally, we plan to create a Chinese/English internet portal to serve foreign and Chinese small to medium sized business. No assurances can be given, however, that we will be successful in our endeavors. Our growth and development as a business enterprise has been marked by a number of significant corporate events. Pursuant to a Share Exchange Agreement, dated as of August 10, 2000, between 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. According, we controlled the operations of VEL, and Main Edge became our majority stockholder. We then undertook an 8-for-1 forward split that was effective on 15th day of September 2000, which resulted in Main Edge owing 15,689,400 shares of our common stock. Then, five major developments occurred. These were: (i) the consummation of two private placement financings by Powertronic Holdings Limited ("Powertronic") in September 2002 and December 2002 in which it acquired shares of our common stock, (ii) an acquisition of all the issued and outstanding shares of General Business Network (Holdings) Ltd. in December 2002, (iii) a 1-for-30 reverse stock split that was effective on September 1, 2002. (iv) the assignment of the rights of the after tax rental income of certain premises from Mr. Tsang for a five year period in December 2003, and (v) the exercise of warrant by Mr. Tsang in March 2004. As a result of these transactions, Mr. Chi Hung Tsang became the new major shareholder and owns over 9,200,000 shares of our common stock and Powertronic owns 2,000,000 shares. Mr. Chi Hung Tsang is currently Chairman of our Board of Directors. 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 June 30, 2003 and 2004. The data should be read in conjunction with the audited and unaudited Condensed Consolidated Financial Statements of the Company and related notes thereto.
Three-Month Period Ended June 30, Six-Month Period Ended June 30, 2004 2003 2004 2003 (Amounts in thousands US$) ------------ ------------ ------------ ------------ US$ US$ US$ US$ Operating revenue 336 881 639 1,384 Operating costs and expenses (162) (352) (347) (464) Selling, general & administrative expenses (875) (989) (2,502) (1,636) ------------ ------------ ------------ ------------ Loss from Operations (701) (460) (2,210) (716) Other Income 102 - 102 2 Interest expense (5) (4) (9) (6) Equity in net loss of affiliate - (32) - (32) Minority interest 1 - 1 40 ------------ ------------ ------------ ------------ Net Loss (603) (496) (2,116) (712) ============ ============ ============ ============
THREE-MONTH PERIOD ENDED JUNE 30, 2004 COMPARED TO THREE-MONTH PERIOD ENDED JUNE 30, 2003 OPERATING REVENUE The aim of the Company is to continue to provide trade agency business linking companies in China and the rest of the world. As of June 30, 2004, we had three operating arms, namely the Beijing World Trade Center Club ("BWTCC"), Guangzhou World Trade Center Club ("GWTCC"), and General Business Network (Holdings) Limited ("GBN"). BWTCC has completed its renovation in late April 2004 and is engaged in the establishment of a business club located in Beijing, while GWTCC is engaged in the operation with the business club in Guangzhou, the PRC. In addition to provide recreation, business center services, communication and information services, products exhibitions services, and commercial and trading brokerage services by both BWTCC and GWTCC, GWTCC also provides food and beverages. GBN is an investment holding company, which primarily engages in property investments, advertising and promotional businesses, consulting and trading businesses. 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, and trading business through a subsidiary of GBN since March 2003. Operating revenue for the three-month period ended June 30, 2004 was $336,000, compared to $881,000 for the same corresponding period in year 2003, a decrease of $545,000 or 62%. The decrease was mainly the result of the decrease in revenue generated from club related and trading businesses, which was partially offset by an increase in rental income. The reason for the decrease in club related businesses was due to the closing down of the Chinese restaurant to further trim costs of the club facilities in Guangzhou. Of the $336,000 revenue in year 2004, approximately $102,000 (30%) was generated from providing club related services by GWTCC and BWTCC, $51,000 (15%) from trading business, and $183,000 (55%) from rental. Operating costs and expenses was $162,000 for the three-month period ended June 30, 2004, as compared to the same corresponding period in year 2003 of $352,000, a decrease of $190,000. The $190,000 decrease was primarily incurred in relation to the decrease in the cost of sales in the trading business. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses decreased by $114,000 or 12% to $875,000 for the three-month period ended June 30, 2004 from $989,000 for the same corresponding period in 2003. The increase was mainly due to: i) Staff Costs of GWTCC: Staff related costs of the GWTCC decreased by $98,000 or 61% to $61,000 as compared to the same corresponding period in year 2003 of $159,000. The decrease was the result of the cessation of the Chinese restaurant of GWTCC. ii) Corporate Image Promotion Expenses: Corporate promotion related expenses was approximately $86,000, as compared to approximately $20,000 for the same corresponding period in year 2003, an increase of $66,000 or 330%. These expenses consisted of expenses in connection with hotel lodging, travel and promotion for the investors' awareness effort, which the China World Trade Corporation was necessitated to incur in the US as a publicly listing company. Other major decrease in selling, general and administrative expenses includes a decrease of commission expense of $108,000 for the three-month ended June 30, 2004. FINANCIAL INCOME/(EXPENSES), NET There was an insignificant amount of approximately $5,000 of interest expenses for the three-month period ended June 30, 2004, as compared to $4,000 for the same corresponding period in year 2003. INCOME TAXES The Group is subject to income taxes on an equity basis on income arising in or derived from the tax jurisdiction in which it is domiciled and operates. The Hong Kong subsidiaries incurred losses for taxation purposes for the period and thus Hong Kong Profits Tax has not been provided. Since the PRC subsidiaries have sustained losses for the PRC income tax purposes, the Company has not recorded any PRC income tax expense. PRC income tax in the future will be calculated at the applicable rates relevant to the PRC subsidiaries. SIX-MONTH PERIOD ENDED JUNE 30, 2004 COMPARED TO SIX-MONTH PERIOD ENDED JUNE 30, 2003 OPERATING REVENUE Operating revenue for the six-month period ended June 30, 2004 was $639,000, compared to $1,384,000 for the same corresponding period in year 2003, a decrease of $745,000 or 54%. The decrease was mainly the result of the decrease in revenue generated from club related and trading businesses, which was partially offset by an increase in rental income. The reason for the decrease in club related businesses was due to the closing down of the Chinese restaurant to further trim costs of the club facilities in Guangzhou. Of the $639,000 revenue in year 2004, approximately $173,000 (27%) was generated from providing club related services by GWTCC and BWTCC, $123,000 (19%) from trading business, and $343,000 (54%) from rental. Operating costs and expenses was $348,000 for the six-month period ended June 30, 2004, as compared to the same corresponding period in year 2003 of $464,000, a decrease of $116,000. The $116,000 decrease was primarily incurred in relation to the decrease in the cost of sales in the trading business and the cessation of the Chinese restaurant in GWTCC. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses increased by $866,000 or 53% to $2,502,000 for the six-month period ended June 30, 2004 from $1,636,000 for the same corresponding period in 2003. The increase was mainly due to: i) Professional Fees: Professional fees increased by approximately $911,000 for the six-month period ended June 30, 2004, as compared to the same corresponding period in 2003. The increase was mainly due to the additional fees paid to accounting, outside consultants and US securities professionals to maintain the corporate status of the Company, to market the co-brand WTC Kim's Card, to provide IT advices, and to seek future capital raising opportunities. Due mainly to the tight working capital control policy imposing by the Company, the outside consultants and the US securities professionals were paid by consultant shares rather than by cash. The increase of $911,000 in professional fees was mainly a result of the non-cash accounting entries. ii) Staff Costs of GWTCC: During the second quarter of 2004, Staff related costs of the GWTCC decreased by $98,000 or 61% to $61,000 as compared to the same corresponding period in year 2003 of $159,000. The decrease was the result of the cessation of the Chinese restaurant of GWTCC. iii) Corporate Image Promotion Expenses: Corporate promotion related expenses increased by approximately $85,000, as compared to the same corresponding period in year 2003. These expenses consisted of expenses in connection with hotel lodging, travel and promotion for the investors' awareness effort, which the China World Trade Corporation was necessitated to incur in the US as a publicly listing company. FINANCIAL INCOME/(EXPENSES), NET There was an amount of approximately $9,000 of interest expenses for the six-month period ended June 30, 2004, as compared to approximately $6,000 for the same corresponding period in year 2003. LIQUIDITY AND CAPITAL RESOURCES During the reporting period, a total of 104,027 shares of the common stock of China World Trade Corporation were issued, of which 24,027 shares were paid for the research services rendered by The Research Works and the remaining 80,000 shares were used for the facilitation of the CEO Clubs acquisition. 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. OTHER SIGNIFICANT EVENTS On April 7, 2004, China World Trade Corporation entered into a share exchange agreement with CEO Clubs China Limited ("CEO Clubs") to acquire 51% of the total issued and outstanding shares of the common stock of CEO Clubs. On closing a total of 80,000 restricted shares of the common stock of China World Trade Corporation were issued on May 7, 2004 and US$120,000 in deferred cash payment. This transaction was completed on May 1, 2004. In mid April of 2004, the BWTCC has completed its renovation of the 2nd Floor of the Landmark Tower in Beijing and has opened for business. The Company entered into an Equity Transfer Agreement dated April 20, 2004 and a Supplementary Agreement dated June 1, 2004 to acquire 51% of the capital stock of Guangdong New Generation Commercial Management Limited, a limited liability company organized under the laws of the Peoples' Republic of China ("New Generation") from Guangdong Huahao Industries Group Co., Ltd. New Generation is engaged in flight ticketing, insurance and travel agents services. The total consideration of this acquisition was approximately US$10,232,000, of which approximately US$1.2 million in cash was paid on closing (with the payment of approximately US$1.5 million in cash to be deferred until September 30, 2004), and the remaining approximately US$7.5 million was paid by issuing a total of 4,081,238 restricted shares of the common stock of the Company. This acquisition was closed on August 2, 2004. On July 20, 2004, the major controlling shareholder and Chairman of China World Trade Corporation, Mr. Chi Hung Tsang and a second major shareholder, Powertronic Holdings Limited exercised warrants to purchase additional 3.5 million shares of the common stock of the Company. As a result, the Company received total net proceeds of approximately US$2.5 million, which was used to complete the acquisition of New Generation and to provide addition working capital to further advance the development of the China World Trade Corporation. As a result of all the said significant events happened during and after the reporting period, the pro forma net asset value of the Company as of March 31, 2004 increased to approximately US$14 million. (Please refer to our Form 8K filing on August 12, 2004). PROFORMA FINANCIAL STATEMENTS The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2004 and the unaudited pro forma condensed consolidated statements of operations for the three-month period ended March 31, 2004 are based on the historical financial statements of China World Trade Corporation, Guangdong New Generation Commercial Management Limited ("GNGCM") and Guangdong Hauhao Insurance Agency Limited ("GHIAL") after giving effect to the acquisition of GNGCM and GHIAL by the Company ("Acquisition") using the purchase method of accounting and the assumptions and adjustments described in the accounting notes to the unaudited pro forma condensed consolidated financial statements. The Acquisition was completed on August 2, 2004. The unaudited pro forma condensed consolidated balance sheet of the Company, GNGCM and GHIAL as of March 31, 2004 is presented to give effect to the Acquisition as if it had occurred on March 31, 2004. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical consolidated financial statements and accompanying notes contained in the Company's Form 10-KSB for the year ended September 30, 2003 filed on January 13, 2004, the Company's Form-10QSB quarterly report for the three-month period ended March 31, 2004 filed on May 14, 2004 and the audited financial statements of GNGCM and GHIAL for the year ended December 31, 2003 and for the three-month period ended March 31, 2004 prepared in accordance with the accounting principles generally accepted in the United States of America ("USGAAP"). The unaudited pro forma condensed consolidated financial statements are not intended to be representative or indicative of the consolidated results of operations or financial condition of the Company that could have been reported had the Acquisition been completed as of the dates presented, and should not be taken as representative of the future consolidated results of operations or financial condition of the Company.
CHINA WORLD TRADE CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2004 PRO FORMA Pro forma CONSOLIDATED GNGCM GHIAL The Company adjustments BALANCE ----------- ----------- ----------- ----------- ----------- US$ US$ US$ US$ US$ ASSETS CURRENT ASSETS Cash and cash equivalents 2,312,366 21,406 827,792 (2,745,000) (a) 2,916,564 2,500,000 (b) Trade receivable 1,144,170 - 18,015 1,162,185 Other receivable - 581,878 24,847 606,725 Due from related parties 20,736 - 115,525 136,251 Rental and other deposits 664,406 - 338,732 1,003,138 Prepayments - 845 87,989 88,834 Inventories - - 50,682 50,682 Short term investment 12,067 - - 12,067 ----------- ----------- ----------- ----------- TOTAL CURRENT ASSTS 4,153,735 604,129 1,463,582 5,976,446 Intangible asset - - 1,680,000 1,680,000 Goodwill - - 30,000 14,139,499 (c) 14,169,499 Property, plant and equipment, net 119,429 8,766 3,041,713 3,169,908 Investment in a subsidiary - - - 10,232,000 (a) - (10,232,000) (c) ----------- ----------- ----------- ----------- TOTAL ASSETS 4,273,164 612,895 6,215,295 24,995,853 =========== =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Trade payables 4,052,587 - 19,671 4,072,258 Accrued charges 1,370,414 - 95,428 1,465,842 Other payables - 31,962 107,755 139,717 Tax payables 1,123,445 4,573 - 1,128,018 Due to related parties 580,373 - 140,926 721,299 Deposits received - - 39,471 39,471 Deferred income - - 6,362 6,362 Short term bank loan 1,206,695 - - 1,206,695 Long-term bank loan - current portion - - 43,861 43,861 ----------- ----------- ----------- ----------- TOTAL CURRENT LIABILITIES 8,333,514 36,535 453,474 8,823,523 Long-term bank loan - - non-current portion - - 437,194 437,194 Due to a shareholder - - 1,299,615 1,299,615 ----------- ----------- ----------- ----------- Total liabilities 8,333,514 36,535 2,190,283 10,560,332 ----------- ----------- ----------- ----------- Minority interest - - - 423,509 (c) 423,509 ----------- ----------- ----------- ----------- STOCKHOLDERS' EQUITY 4,081 (a) 3,500 (b) Common stock 603,347 1,206,695 17,726 (1,810,042) (c) 25,307 Additional paid-in capital - - 15,846,315 7,482,919 (a) 25,825,734 2,496,500 (b) Due from related party (4,785,937) (1,362,989) - 6,148,926 (c) - Dedicated reserves 301,674 110,872 - (412,546) (c) - Accumulated (deficit) profit (179,434) 621,782 (11,839,029) (442,348) (c) (11,839,029) ----------- ----------- ----------- ----------- TOTAL STOCKHOLDERS' EQUITY (4,060,350) 576,360 4,025,012 14,012,012 ----------- ----------- ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 4,273,164 612,895 6,215,295 24,995,853 =========== =========== =========== ===========
CHINA WORLD TRADE CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS THREE-MONTH PERIOD ENDED MARCH 31, 2004 - ------------------------------------------------------------------- PRO FORMA Pro forma CONSOLIDATED GNGCM GHIAL The Company adjustments BALANCE ----------- ----------- ----------- ----------- ----------- US$ US$ US$ US$ US$ OPERATING REVENUES 1,702,463 163,543 303,771 2,169,777 ----------- ----------- ----------- ----------- OPERATING EXPENSES Operating costs and expenses (956,869) (9,724) (186,001) (1,152,594) Selling, general and administrative expenses (134,490) (60,282) (1,626,937) (1,821,709) ----------- ----------- ----------- ----------- PROFIT (LOSS) FROM OPERATIONS 611,104 93,537 (1,509,167) (804,526) NON-OPERATING (EXPENSES) INCOME Other income 1,958 61 89 2,108 Interest expenses (18,647) - (3,992) (22,639) ----------- ----------- ----------- ----------- PROFIT (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST 594,415 93,598 (1,513,070) (825,057) INCOME BEFORE INCOME TAXES AND MINORITY INTERESTS Provision for income taxes (42,446) (4,573) - (47,019) ----------- ----------- ----------- ----------- PROFIT (LOSS) BEFORE MINORITY INTEREST 551,969 89,025 (1,513,070) (872,076) ----------- ----------- ----------- ----------- MINORITY INTEREST - - - (335,880) (d) (335,880) ----------- ----------- ----------- ----------- NET PROFIT (LOSS) 551,969 89,025 (1,513,070) (1,207,956) =========== =========== =========== =========== LOSS PER SHARE OF COMMON STOCK - - Basic - - (0.09) (0.06) =========== =========== =========== =========== Weighted average number of shares of common stock outstanding - - 16,249,106 4,081,238 (e) 20,330,344 =========== =========== =========== ===========
CRITICAL ACCOUNTING POLICIES Besides the accounting policies as described in note 1 to the financial statements for the period ended June 30, 2004, 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: 3.1 Articles of incorporation are hereby incorporated by reference into Form 31.1 CEO Certification Pursuant to Section 302 31.2 CFO Certification Pursuant to Section 302 32.1 CEO & CFO Certification Pursuant to Section 906 (b) Reports on Form 8-K; There were no 8-Ks filed in the last three months. 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: August 16, 2004 /s/ John H.W. Hui ------------------------------- -------------------------------- John H.W. Hui Chief Executive Officer EX-31.1 2 doc2.txt CERTIFICATIONS OF CEO Exhibit 31.1 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, the Chief Executive Officer of the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China World Trade Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 16, 2004 /s/ John H.W. Hui - -------------------- John H.W. Hui Chief Executive Officer EX-31.2 3 doc3.txt CERTIFICATIONS OF CFO Exhibit 31.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Bernard Chan, the Chief Financial Officer of the Company, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of China World Trade Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) for the registrant and have: a. Designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 16, 2004 /s/ Bernard Chan - ------------------ Bernard Chan Chief Financial Officer EX-32.1 4 doc4.txt SEC 1350 CERTIFICATIONS OF CEO Exhibit 32.1 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 June 30, 2004 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: August 16, 2004 EX-32.2 5 doc5.txt SEC 1350 CERTIFICATIONS OF CFO Exhibit 32.2 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 June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Bernard Chan, 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/ Bernard Chan - ------------------ Bernard Chan Chief Financial Officer Date: August 16, 2004 -----END PRIVACY-ENHANCED MESSAGE-----