SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

                        CHINA RESOURCES DEVELOPMENT, INC.
             (Exact name of Registrant as specified in its Charter)

           Nevada                       0-26046                 87-02623643
           ------                       -------                 -----------
(State or other jurisdiction     (Commission File No.)         (IRS Employer
      of incorporation)                                     Identification No.)

                     Room 2105, West Tower, Shun Tak Centre,
                  200 Connaught Road C., Sheung Wan, Hong Kong
                          Telephone: 011-852-2810-7205
          (Address and telephone number of principal executive offices)

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

         Check whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [ X ]    No [    ]

         Check if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ X ]

         State the aggregate market value of the voting stock held by
non-affiliates of the registrant on March 28, 2003 computed by reference to the
average bid and asked prices of such stock: $929,836.

         Note: If a determination as to whether a particular person or entity is
an affiliate cannot be made without involving unreasonable effort and expense,
the aggregate market value of the common stock held by non-affiliates may be
calculated on the basis of assumptions reasonable under the circumstances,
provided that the assumptions are set forth in this Form.

         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. 837,823 shares of
Common Stock, $.001 par value (as of March 28, 2003).

         Transitional Small Business Disclosure Format (check one):
                                Yes [ ] No [ X ]

         DOCUMENTS INCORPORATED BY REFERENCE:  None.



<PAGE>


                                   CONVENTIONS
                                   -----------


         Unless otherwise specified, all references in this report to "U.S.
Dollars," "Dollars," "US$," or "$" are to United States dollars; all references
to "Hong Kong Dollars" or "HK$" are to Hong Kong dollars; and all references to
"Renminbi" or "Rmb" or "yuan" are to Renminbi yuan, which is the lawful currency
of the People's Republic of China ("China" or "PRC"). The Company maintains its
accounts in U.S. Dollars. The accounts of the Company's subsidiaries are
maintained in either Hong Kong Dollars or Renminbi. The financial statements of
the Company and its subsidiaries are prepared in Renminbi. Translations of
amounts from Renminbi to U.S. Dollars and from Hong Kong Dollars to U.S. Dollars
are for the convenience of the reader. Unless otherwise indicated, any
translations from Renminbi to U.S. Dollars or from U.S. Dollars to Renminbi have
been made at the single rate of exchange as quoted by the People's Bank of China
(the "PBOC Rate") on December 31, 2002, which was U.S.$1.00 = Rmb8.28.
Translations from Hong Kong Dollars to U.S. Dollars have been made at the single
rate of exchange as quoted by the Hongkong and Shanghai Banking Corporation
Limited on December 31, 2002, which was US$1.00 = HK$7.80. The Renminbi is not
freely convertible into foreign currencies and the quotation of exchange rates
does not imply convertibility of Renminbi into U.S. Dollars or other currencies.
All foreign exchange transactions take place either through the Bank of China or
other banks authorized to buy and sell foreign currencies at the exchange rates
quoted by the People's Bank of China. No representation is made that the
Renminbi or U.S. Dollar amounts referred to herein could have been or could be
converted into U.S. Dollars or Renminbi, as the case may be, at the PBOC Rate or
at all.

         References to "Billion Luck" are to Billion Luck Company Ltd., a
British Virgin Islands company, which is a wholly-owned subsidiary of the
Company.

         References to "Central Government" refer to the national government of
the PRC and its various ministries, agencies, and commissions.

         References to "Common Stock" are to the Common Stock, $.001 par value,
of China Resources Development, Inc. All per share references to Common Stock
have been adjusted to give effect to a one-for-ten reverse split on December 31,
1996, and a one-for-ten reverse split on June 11, 1999.

         References to "Company" are to China Resources Development, Inc., and
include, unless the context requires otherwise, the operations of its
subsidiaries (all as hereinafter defined).

         References to "Farming Bureau" are to the Hainan Agricultural
Reclamation General Company, a division of the Ministry of Agriculture, the PRC
government agency responsible for matters relating to agriculture.

         References to "First Supply" are to First Goods And Materials Supply
And Sales Corporation, a company organized in the PRC and a wholly-owned
subsidiary of HARC.

         References to "GAAP" or "U.S. GAAP" are to generally accepted
accounting principles of the United States.

         References to "Guilinyang Farm" are to Hainan Province Guilinyang State
Farm, a PRC entity which is owned and controlled by the Farming Bureau.

         References to "Hainan" are to Hainan Province of the PRC.

         References to "Hainan State Farms" are to the rubber farms in Hainan
controlled by the Farming Bureau.

         References to "Hainan Weilin" are to Hainan Weilin Timber Limited
Liability Company, a limited liability company organized in the PRC, whose
capital was owned 58% by HARC. On April 30, 2001, HARC disposed of its 58%
interest in Hainan Weilin to the Farming Bureau.

                                      -2-
<PAGE>

         References to "HARC" are to Hainan Cihui Industrial Company Limited
(formerly known as Hainan Zhongwei Agricultural Resources Company Limited), a
Sino-foreign joint stock company organized in the PRC, and is a wholly-owned
subsidiary of the Company.

         References to "Local Governments" are to governments in the PRC,
including governments at all administrative levels below the Central Government,
including provincial governments, governments of municipalities directly under
the Central Government, municipal governments, county governments, and township
governments.

         References to "Medi-China" are to Zhongwei Medi-China.com Limited, a
Hong Kong company and a wholly-owned subsidiary of Silver Moon.

         References to the "PRC" or "China" include all territory claimed by or
under the control of the Central Government, except Hong Kong, Macau, and
Taiwan.

         References to "PRC Government" include the Central Government and Local
Governments.

         References to "Provinces" include provinces, autonomous regions, and
municipalities directly under the Central Government.

         References to "Restructuring Agreements" are to the Shareholders'
Agreement on Business Restructuring among Billion Luck, the Farming Bureau and
the Company, and the Assets and Staff Transfer Agreement among HARC, First
Supply, Second Supply, Sales Centre and the Farming Bureau, both of which were
effective as of January 1, 2000.

         References to "Second Supply" are to Second Goods And Materials Supply
And Sales Corporation, a company organized in the PRC and a wholly-owned
subsidiary of HARC.

         References to "Series A Preferred Stock" are to the Company's Series A
Preferred Stock, $1.00 par value, of which no shares are outstanding.

         References to "Series B Preferred Stock" are to the Company's Series B
Preferred Stock, $.001 par value, of which 320,000 shares are outstanding.

         References to "Silver Moon" are to Silver Moon Technologies Limited, a
British Virgin Islands company, whose capital is 80% owned by the Company.

         References to "Sunwide" are to Sunwide Capital Ltd., a British Virgin
Islands company, which is a wholly-owned subsidiary of Billion Luck.

         References to "Xubu" are to Shenzhen Xubu Investment Co. Ltd., a
company organized in the PRC and a wholly-owned subsidiary of HARC.

         References to "Zhongwei Trading" are to Hainan Zhongwei Trading Company
Limited, a company organized in the PRC, whose capital is owned 95% by HARC and
5% by Billion Luck.

         References to "Zhuhai Zhongwei" are to Zhuhai Zhongwei Development
Company Limited, a company organized in the PRC and a wholly-owned subsidiary of
HARC.


FORWARD-LOOKING STATEMENTS

         This report contains statements that constitute forward-looking
statements. Those statements appear in a number of places in this report and
include, without limitation, statements regarding the intent, belief and current
expectations of the Company, its directors or its officers with respect to the
Company's policies regarding investments, dispositions, financings, conflicts of

                                      -3-
<PAGE>

interest and other matters; and trends affecting the Company's financial
condition or results of operations. Any such forward-looking statement is not a
guarantee of future performance and involves risks and uncertainties, and actual
results may differ materially from those in the forward-looking statement as a
result of various factors. The accompanying information contained in this
report, including without limitation the information set forth above and the
information set forth under the heading, "Management's Discussion and Analysis
of Results of Operations and Financial Condition," identifies important factors
that could cause such differences. With respect to any such forward-looking
statement that includes a statement of its underlying assumptions or bases, the
Company cautions that, while it believes such assumptions or bases to be
reasonable and has formed them in good faith, assumed facts or bases almost
always vary from actual results, and the differences between assumed facts or
bases and actual results can be material depending on the circumstances. When,
in any forward-looking statement, the Company, or its management, expresses an
expectation or belief as to future results, that expectation or belief is
expressed in good faith and is believed to have a reasonable basis, but there
can be no assurance that the stated expectation or belief will result or be
achieved or accomplished.


                                      -4-
<PAGE>


                                     PART I

[Item 1]                            BUSINESS

GENERAL

         The Company was incorporated as Magenta Corp. on January 15, 1986, in
the State of Nevada. The Company was formed to acquire businesses that would
provide a profit to the Company. The Company had no operating business until
control of it was acquired in December 1994, by the former shareholders of
Billion Luck, who exchanged all of the issued and outstanding shares of capital
stock of Billion Luck for 108,000 shares of the Company's Common Stock. As a
result of the acquisition, the former shareholders of Billion Luck acquired 90%
of the issued and outstanding shares of the then outstanding Common Stock of the
Company, and the Company became the owner of all the outstanding shares of
capital stock of Billion Luck.

         Billion Luck was incorporated in the British Virgin Islands on December
14, 1993. HARC was established in Hainan Province, the People's Republic of
China, by Billion Luck, Guilinyang Farm, and the Farming Bureau. Pursuant to an
approval document dated March 16, 1997, issued by the Hainan Provincial
Securities Management Office, the name of HARC was changed from "Hainan
Agricultural Resources Company Limited" to "Hainan Zhongwei Agricultural
Resources Company Limited." Pursuant to another approval document dated October
9, 2001, the name of HARC was changed to "Hainan Cihui Industrial Company
Limited."

         HARC is a Chinese company incorporated on June 28, 1994, with a
registered capital of Rmb100 million (US$12.08 million). Billion Luck made a
cash contribution of Rmb56 million (US$6.76 million) to purchase a 56% interest
in HARC. The remaining interests in HARC were acquired by Guilinyang Farm (5%)
for a cash contribution of Rmb5 million (US$0.60 million) and by the Farming
Bureau (39%) through the contribution of its interests in two of its
subsidiaries, First Supply and Second Supply, which were valued at Rmb39 million
(US$4.71 million). Pursuant to an agreement dated January 31, 1994, between
Billion Luck, Guilinyang Farm, and the Farming Bureau, the parties thereto
agreed to establish HARC to act as the holding company of First Supply and
Second Supply. Pursuant to an Agreement for the Sale and Purchase of Share in
HARC dated April 30, 1998 between Guilinyang Farm and the Company, the Company
purchased 5,000,000 shares, representing 5% of the total issued and outstanding
share capital of HARC, from Guilinyang Farm for consideration of Rmb7 million
(US$0.85 million). On April 30, 2001, Billion Luck, through its nominees,
acquired the remaining 39% equity interest in HARC from the Farming Bureau for
total consideration of Rmb129.4 million (US$15.6 million). Following the
acquisitions, HARC became an indirect wholly-owned subsidiary of the Company.

         Before January 1, 2000, the Company's two primary businesses were the
marketing and distribution of natural rubber and the procurement of production
materials, supplies and other agricultural products, which were conducted
through HARC, First Supply and Second Supply. As part of its risk management
strategy, from time-to-time the Company entered into commodity futures contracts
to hedge against the exposure to price risk associated with existing inventories
and certain firm commitments for the purchase of natural rubber. The Company
also entered into natural rubber commodity futures contracts that were not
specific hedges, in anticipation of a rise or fall in the price of natural
rubber, based on management's knowledge of the supply and demand situation with
respect to natural rubber in the PRC. Pursuant to a Shareholders' Agreement on
Business Restructuring dated March 3, 2000 among the Company, Billion Luck and
the Farming Bureau, the natural rubber distribution business and the procurement
of materials and supplies business of HARC, First Supply and Second Supply
ceased effective as of January 1, 2000. The assets, liabilities and staff
related thereto were conveyed to the Farming Bureau. The purchase price was the
book value or the fair value of the net assets transferred, as determined by an
independent valuer, as of December 31, 1999, whichever was lower. Following
these transactions, First Supply and Second Supply became dormant. Due to
declines in the performance of natural rubber distribution and the materials and
supplies procurement business, in 1998, management determined that it was in the
best interest of the Company to cease the operations of these two businesses.
Since then, management has been exploring other investment opportunities.

         Zhongwei Trading was incorporated on September 28, 1998, with a
registered capital of Rmb5 million (US$0.60 million). Zhongwei Trading is owned
95% by HARC and 5% by Billion Luck. Zhongwei Trading invested in marketable
securities listed in the China Stock Market as short-term investments in 1999.
Zhongwei Trading has been dormant since 2001.

                                      -5-
<PAGE>

         In late 1999 and early 2000, HARC entered into several new lines of
businesses, including supermarket operations (through Zhuhai Zhongwei) and the
sale of processed timber wooden blocks (through Hainan Weilin). Zhuhai Zhongwei
was incorporated on May 18, 1999, with a registered capital of Rmb6 million
(US$0.72 million). Zhuhai Zhongwei is a wholly-owned subsidiary of HARC and is
principally engaged in the operation of a supermarket in Zhuhai, PRC, which
sells food and daily products. Hainan Weilin, incorporated on June 22, 1999 with
a registered capital of Rmb8.56 million (US$1.03 million) was owned 58% by HARC.
The annual production capacity of Hainan Weilin was 5,000 cubic meters. The
processing factory operated from early 2000 through October 2000 at only one
third of its full capacity. In light of economic conditions, lack of
productivity and unprofitable operations, the Company formally ceased processed
timber operations following the disposition of its 58% interest in Hainan Weilin
to the Farming Bureau on April 30, 2001 for a consideration of Rmb3.8 million
(US$0.46 million).

         Xubu was incorporated on June 18, 1999, with a registered capital of
Rmb30 million (US$3.6 million). Xubu is a wholly-owned subsidiary of HARC. Based
in Shenzhen, Xubu was established for the purpose of seeking investment
opportunities in China. No investment opportunities have yet been funded.

         Sunwide was incorporated in the British Virgin Islands on January 22,
2001. Sunwide is mainly engaged in investing in marketable securities traded in
US markets as short-term investments.

         Silver Moon is a British Virgin Islands company incorporated on March
24, 2000. The principal business of Silver Moon and its wholly-owned subsidiary,
Medi-China (formerly known as Sky Creation Technology Limited), a Hong Kong
company incorporated on October 15, 1999, is to provide online Internet
healthcare content, through its website, medi-china.com, which offers
health-related content in both English and Chinese, with a focus on Chinese
herbal medicine and therapies. On June 30, 2000, the Company acquired an 80%
equity interest in Silver Moon for total consideration of US$1.5 million through
the issuance of 244,897 shares of unregistered restricted common stock to Silver
Moon's former sole equity owner, E-link Investment Limited. The number of shares
issued was based upon a per share price of US$6.125, which was the closing bid
price of the Company's common stock as quoted on the Nasdaq SmallCap Market on
June 29, 2000. In March 2001, E-link Investment Limited sold its equity position
in the Company to Anka Capital Ltd., a corporation related to the Company
through common directors (see "Directors and Executive Officers of the
Registrant"). Neither Silver Moon nor Medi-China has contributed to the
Company's revenues. In light of the global economic downturn and pessimism
towards the technology sector for Internet related products and services,
management is aware that Silver Moon and Medi-China will have to wait patiently
for a full economic recovery. In view of the uncertainty lying ahead, the
Company has adopted a cautious and prudent approach to control costs and
minimize risks. Consequently, the Company has determined not to devote
additional resources to the website, but to maintain the status quo during the
current fragile economic situation, and be prepared to act upon potential
opportunities once the e-commerce industry stabilizes and demonstrates signs of
revival.

                                      -6-
<PAGE>

         The following chart illustrates the equity ownership by percentage of
each of the Company's subsidiaries as of December 31, 2002:
<TABLE>
<CAPTION>
<S>     <C>                     <C>                                 <C>                           <C>

                                     --------------------------
                                     |    CHINA RESOURCES     |
         ----------------------------|   DEVELOPMENT, INC.    |------------------------------------------
         |                           | a Nevada corporation   |                                         |
         |                           --------------------------                                         |
         |                                          |                                                   |
         |                                          |                                                   |
         |                                          |                                                   |
         |                                     100% |                                                   |  80%
         |                           --------------------------                                     ---------------
         |                           |     BILLION LUCK       |                                     | SILVER MOON  |
         |                           |COMPANY LTD., a British |                                     |  a British   |
         |                           |Virgin Islands company  |-------------------------------      |    Virgin    |
         |                           |                        |                              |      |   Islands    |
         |                           |                        |                              |      |   company    |
         |                           --------------------------                              |      ---------------|
         |                                          |                                        |          |
         |                |-----------------------------------------------------|            |          |
         |                | 95%                                                 | 100%       |          |  100%
         |         ---------------                                      ------------------   |      ---------------
         |         |    HARC     |                                      |     SUNWIDE    |   |      |  MEDI-CHINA |
         |   5%    |    a PRC    |                                      |a British Virgin|   |      | a Hong Kong |
         --------- |   company   |                                      | Islands company|   |      |   company   |
                   ---------------                                      ------------------   |      ---------------
                          |                                                                  |
              |----------------------------------------------------------------|             |
         100% |           | 100%            | 100%           | 100%            |  95%        |
   --------------- ----------------  ---------------   -----------------  ----------------   |
   |FIRST SUPPLY | |   SECOND     |  |    XUBU     |   |    ZHUHAI     |  |  ZHONGWEI    |   |
   |   a PRC     | |   SUPPLY     |  |   a PRC     |   |   ZHONGWEI    |  |   TRADING    | 5%|
   |  company    | |a PRC company |  |  company    |   |a PRC company  |  |a PRC company |---
   --------------- ----------------  ---------------   -----------------  ----------------
</TABLE>



         As of December 31, 2002, the Company's only active operations consisted
of its supermarket business.


SUPERMARKET OPERATIONS

         The Company, through Zhuhai Zhongwei, has been engaged in retail
supermarket operations since the fourth quarter of 1999. The supermarket which
Zhuhai Zhongwei operates is located in Zhuhai City of Guangdong Province. The
supermarket sells more than 10,000 consumer products to customers in the PRC.

         Zhuhai Zhongwei purchases consumer products, for resale, from numerous
suppliers, and no single supplier accounted for more than 10% of total purchases
of consumer products in 2001 and 2002. For the year ended December 31, 2002,
Zhuhai Zhongwei had approximately 140 suppliers which supplied a wide variety of
products, including fresh meat, fruits and grocery, sanitary products, canned
drink and food, snacks, frozen food, fast food, cigarettes, phone cards, wine,
etc. The value of total purchases of consumer products was approximately Rmb4.9
million (US$592,000) and RMB5.7 million (US$688,000) in 2001 and 2002,
respectively. The top five suppliers accounted for approximately 18% and 23% of
total purchases in 2001 and 2002, respectively. Zhuhai Zhongwei has not entered
into any long-term purchase arrangement with any supplier. However, Zhuhai
Zhongwei does not anticipate that it will incur difficulties in the sourcing of
its products. All purchases were made locally in Renminbi on either a cash basis
or open account basis payable within 7 to 30 days.

         Zhuhai Zhongwei targets the residents of Zhuhai City as its customers
and, due to the nature of retail operations, no single customer accounted for
more than 5% of total revenues from the sales of consumer products in 2001 and
2002. All sales from supermarket operations are paid in Renminbi, on a cash
basis.

         The retailing business is not seasonal in nature, although a slightly
higher proportion of sales are recorded during summer months when cold drinks
and fresh fruits are in larger demand.

         Zhuhai Zhongwei faces severe competition in its supermarket operations.
There are several large chain supermarkets in Zhuhai City, all of which operate
in larger quarters and offer a greater choice of products. These supermarkets
are generally able to offer competitive prices to their customers due to bulk
purchases and economies of scale. Zhuhai Zhongwei also faces competition from
convenience stores. As the supermarket operated by Zhuhai Zhongwei is located in
an upscale residential area where the residents seek higher quality products and
services, management believes that the competitive advantages of Zhuhai Zhongwei
rest on its ability to source high quality products and provide superior
service.

                                      -7-
<PAGE>

         As at December 31, 2002, Zhuhai Zhongwei had a total of 32 employees as
follows:

         Accounting, administration and management                           6
         Purchasing and supplies                                            17
         Cashier                                                             4
         Others                                                              5
                                                                            --
                                                                            32
                                                                            ==

         Apart from the employees of Zhuhai Zhongwei, the Company and its other
subsidiaries had a total of 23 employees as follows:

         Accounting, administration and management                          17
         Cashier                                                             1
         Others                                                              5
                                                                            --
                                                                            23
                                                                            ==

PRC LEGAL SYSTEM

         Since 1979, many laws and regulations addressing economic matters in
general have been promulgated in the PRC. Despite development of its legal
system, the PRC does not have a comprehensive system of laws. In addition,
enforcement of existing laws may be uncertain and sporadic, and implementation
and interpretation thereof inconsistent. The PRC judiciary is relatively
inexperienced in enforcing the laws that exist, leading to a higher than usual
degree of uncertainty as to the outcome of any litigation. Even where adequate
law exists in the PRC, it may be difficult to obtain swift and equitable
enforcement of such law, or to obtain enforcement of a judgment by a court of
another jurisdiction. The PRC's legal system is based on written statutes and,
therefore, decided legal cases are without binding legal effect, although they
are often followed by judges as guidance. The interpretation of PRC laws may be
subject to policy changes reflecting domestic political changes. As the PRC
legal system develops, the promulgation of new laws, changes to existing laws
and the pre-emption of local regulations by national laws may adversely affect
foreign investors. The trend of legislation over the past 20 years has, however,
significantly enhanced the protection afforded foreign investors in enterprises
in the PRC. However, there can be no assurance that changes in such legislation
or interpretation thereof will not have an adverse effect upon the business
operations or prospects of the Company.

         The activities of the Company's principal subsidiaries in China are by
law subject, in some cases, to administrative review and approval by various
national, provincial, and local agencies of the Chinese government. In
particular, the realization of the Company's future investment plans in China
will also be subject to PRC government approvals.


[Item 2]                          PROPERTIES

         The Company's administrative offices, supermarket and other facilities
of HARC and its principal subsidiaries are located in Hong Kong, Hainan, Zhuhai
and Shenzhen in the PRC.

         Pursuant to an office sharing agreement dated September 1, 2000, the
Company's head office in Hong Kong is shared on an equal basis between the
Company and Anka Consultants Limited, a private Hong Kong company which is owned
by certain directors of the Company. The lease was for an initial term of 2
years from September 1, 2000 to August 31, 2002 and was renewed for an
additional two years, which commenced September 1, 2002. The total area of the
office is approximately 230 square meters. For the years ended December 31, 2001
and 2002, the Company paid rent and its share of rental expenses to Anka
Consultants Limited amounting to HK$288,000 (US$37,000) and HK$268,000
(US$34,000), respectively. The office sharing agreement provides that the
Company share certain costs and expenses in connection with its use of the
office.

                                      -8-
<PAGE>

         On May 30, 2001, a rental agreement was entered into between HARC and
Haikou Nanyang Building Co. Ltd., an unaffiliated third party, with respect to
the rental of office space in Hainan with a total gross area of 138 square
meters. The rental agreement was for a period of 1 year from June 4, 2001 to
June 3, 2002 at a monthly rental of Rmb4,131 (US$499). The rental agreement was
renewed for an additional year from June 4, 2002 to June 3, 2003 at a monthly
rental of Rmb3,631 (US$439).

         The structure and building in which the Company operates its
supermarket is owned by Zhuhai Zhongwei, the Company's wholly-owned subsidiary,
with a total gross area of 720 square meters.

         HARC also maintains a branch office in Shenzhen with a total gross area
of 708 square meters. The rental agreement is for a period of 8 years from
December 1, 1999 to December 1, 2007 at an annual rental of Rmb509,540
(US$61,538).


[Item 3]                       LEGAL PROCEEDINGS

         There are no legal proceedings pending or threatened against the
Company or any of its subsidiaries as of December 31, 2002.


[Item 4]                   SUBMISSION OF MATTERS TO A
                            VOTE OF SECURITY HOLDERS

         On November 12, 2002, the Company held its annual meeting of
shareholders, at which a quorum of shares held of record on October 8, 2002 were
present in person or represented by proxy, and the following proposals by the
Board of Directors were approved by the holders of a majority of the outstanding
shares of the Company:

         1.       the election of Wan Ying Lin and Lo Kin Cheung to serve as
                  Class III directors (Wan Ying Lin - 990,176 votes for, 41,433
                  abstentions; Lo Kin Cheung - 990,146 votes for, 41,433
                  abstentions); and

         2.       the ratification of the appointment of Horwath Gelfond
                  Hochstadt Pangburn, P.C. as the Company's independent
                  accountants for the fiscal year ending December 31, 2002
                  (991,329 votes for, 39,557 votes against, 953 abstentions).


                                     PART II

[Item 5]              MARKET FOR REGISTRANT'S COMMON EQUITY
                         AND RELATED STOCKHOLDER MATTERS

         The Company's Common Stock is quoted on the electronic inter-dealer
quotation system operated by The Nasdaq Stock Market, Inc. ("The Nasdaq Stock
Market"), a subsidiary of the National Association of Securities Dealers, Inc.
("NASD"), in the category of Small Cap Issues. Since August 7, 1995, the
Company's Common Stock has traded on The Nasdaq Stock Market under the symbol
"CHRB." Prior to such date, the Company's Common Stock was traded in the
over-the-counter market on the OTC Bulletin Board operated by the NASD under the
symbol "CEVL." Until August 7, 1995, there was only a limited trading market for
the Company's Common Stock. The following table sets forth the high and low bid
prices for the Company's Common Stock as reported by The Nasdaq Stock Market for
each fiscal quarter of 2001 and 2002. The bid prices are inter-dealer prices,

                                      -9-
<PAGE>

without retail markup, markdown or commission, and may not necessarily reflect
actual transactions. All of the below quotations were obtained from Bloomberg
Business News, and the quotations have been adjusted to give retroactive effect
to the one-for-ten reverse stock split that was effective as of June 11, 1999:
<TABLE>
<CAPTION>

                      Period                              High Bid             Low Bid
                      ------                              --------             -------
<S>                                                       <C>                  <C>

         2002 Fiscal Year, quarter ended:
                  March 31, 2002.....................       $2.80               $2.15
                  June 30, 2002......................        2.51                1.80
                  September 30, 2002.................        2.60                1.20
                  December 31, 2002..................        2.11                1.13
         2001 Fiscal Year, quarter ended:
                  March 31, 2001.....................       $3.84               $2.38
                  June 30, 2001......................        3.15                2.51
                  September 30, 2001.................        3.71                2.55
                  December 31, 2001..................        3.00                2.15
</TABLE>

         On December 31, 2002, there were 1,940 holders of record of the
Company's Common Stock.

         The Company has not paid any dividends with respect to its Common Stock
and has no present plan to pay any dividends in the foreseeable future. The
Company intends to retain its earnings to support the growth and expansion of
its business.

         Any dividends paid in the future by the Company will be paid at the
discretion of the Company's Board of Directors and will be dependent upon
distributions, if any, made by HARC to Billion Luck. Applicable PRC law and
HARC's Articles of Association (the "Articles") require that, before HARC, as a
limited joint stock company, distributes profits to investors, it must (1)
satisfy all taxes; (2) provide for all losses incurred in previous years; and
(3) allocate a specified percentage of remaining profits to each of the
following: a surplus reserve (in the amount of 10% of such remaining profits), a
collective welfare fund (in the amount of 10% of such remaining profits), and an
incentive fund (in an amount between 5% and 10% of such remaining profits). The
Articles provide that the foregoing may be adjusted by HARC'S board of directors
based upon HARC's business performance and development needs, subject to the
approval of HARC's shareholders. In addition to the foregoing, any future
determination to pay a dividend to holders of shares of Common Stock will depend
on the Company's results of operations, its financial condition and other
factors deemed relevant by the Board of Directors. Since the acquisition of
Billion Luck by the Company in December 1994, the Company has not received any
distributions from any of its subsidiaries and has not made any distributions to
its shareholders.


[Item 6]               MANAGEMENT'S DISCUSSION AND ANALYSIS
                              OR PLAN OF OPERATION

         The following discussion should be read in conjunction with the
Consolidated Financial Statements of the Company and related Notes thereto, and
other financial information included elsewhere herein. The financial statements
of the Company are prepared in conformity with U.S. GAAP.

OVERVIEW

THE COMPANY

         The Company previously engaged in marketing and distribution of natural
rubber and rubber products produced by the Hainan State Farms and non-state
farms in the PRC, procurement of production materials and supplies, including
chemicals, farm equipment and machinery, automobiles and other commodities for
use primarily by the Hainan State Farms and other unaffiliated customers, and
trading in natural rubber commodity futures contracts. During the period from
the fourth quarter of 1999 into the second quarter of 2001, the Company entered
into a series of unrelated transactions and, as a result, disposed of certain
prior business opportunity investments and acquired others. During the fourth

                                      -10-
<PAGE>

quarter of 1999, the Company commenced operations of its supermarket, through
Zhuhai Zhongwei. Effective January 1, 2000, the assets, liabilities and staff
relating to the Company's natural rubber distribution business and its
procurement of materials and supply business were transferred to the Farming
Bureau. During the first quarter of 2000, the Company commenced processed timber
operations, and, in April 2001, due to factors including management's evaluation
of market conditions, ceased such operations by disposing of its 58% interest in
Hainan Weilin to the Farming Bureau. In April 2001, the Company, through its
nominees, acquired the 39% minority interest in HARC from the Farming Bureau,
resulting in HARC becoming an indirect wholly-owned subsidiary of the Company.
In light of the foregoing transactions, operating results of prior years should
not be viewed as being indicative of operating results that may be expected in
future years. The Company is actively seeking other business opportunities to
enhance shareholder values.

         The statements under "Results of Operations" and "Liquidity and Capital
Resources" relate to the operations and financial condition of the Company and
its direct and indirect subsidiaries.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

SALES AND GROSS PROFIT- NATURAL RUBBER/COPPER

         Notwithstanding the cessation of natural rubber operations in early
2000, from time-to-time the Company trades natural rubber, based upon
management's evaluation of market conditions. The Company had sales of
Rmb4,093,000 (US$494,000) and gross loss of Rmb157,000 (US$19,000) on natural
rubber operations in 2001. As a result of a decline in the natural rubber market
in the second half of 2001, the Company sold all of its rubber inventories in
late 2001, and a loss was recorded. In 2002, the Company occasionally traded
copper. Sales and gross profit amounted to RMB1,948,000 (US$235,000) and
RMB3,000 (US$362), respectively.

SALES AND GROSS PROFIT - SUPERMARKET OPERATIONS

         Net sales from supermarket operations increased by 20.4% from
Rmb5,999,000 (US$725,000) for the year ended December 31, 2001 to Rmb7,222,000
(US$872,000) for the year ended December 31, 2002. For the year ended December
31, 2001, supermarket operations had gross profit and gross profit margin of
Rmb417,000 (US$50,000) and 7.0%, respectively. For the year ended December 31,
2002 supermarket operations had gross profit and gross profit margin of
Rmb663,000 (US$80,000) and 9.2%, respectively. The increase in net sales was due
to increased sales volume resulting from the successful marketing efforts of the
Company and its ability to retain its customers. The increase in gross profit
margin was due to the Company's ability to source less expensive products during
the year.

AMORTIZATION

         Amortization expense for 2001 represented amortization of website
technology, acquired on June 30, 2000, which was being amortized on the
straight-line basis over two years. The Company wrote off the acquired website
technology in 2001.

VALUATION ALLOWANCES

         Valuation allowances included the impairment loss on the Company's
investment in Hainan Sundiro Motorcycle Co. Ltd. amounting to Rmb46,615,000
(US$5,630,000), and the write off of VAT receivable of Rmb1,563,000
(US$189,000).

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

         Selling and administrative expenses decreased by Rmb4,055,000
(US$490,000) or 26.6% to Rmb11,164,000 (US$1,348,000) in 2002 from Rmb15,219,000
(US$1,838,000) in 2001. The decrease was mainly due to reduced salary and rental
expenses in HARC resulting from a relocation to a smaller office in mid-2001 and
a related reduction of headcounts, as well as a reduction in the Company's legal
and professional fees.

                                      -11-
<PAGE>

FINANCIAL INCOME, NET

         Net financial income decreased from Rmb1,318,000 (US$159,000) in 2001
to Rmb670,000 (US$81,000) in 2002. The decrease was mainly attributable to the
decrease in interest income earned of Rmb867,000 (US$105,000) in 2002 as a
result of the decrease in short term loans granted to unaffiliated third
parties. The decrease was partly offset by a margin loan interest expenses of
Rmb229,000 (US$28,000) in 2001.

OTHER INCOME/(EXPENSES), NET

         Net other income in 2001 mainly consisted of a net gain on trading of
marketable securities of Rmb7,055,000 (US$852,000) and a premium earned on
written call option of Rmb3,182,000 (US$384,000), which was partly offset by the
write off of acquired website technology of Rmb2,936,000 (US$355,000). Net other
expenses in 2002 mainly represented the net loss on trading of marketable
securities of Rmb1,622,000 (US$196,000).

INCOME TAXES

         It is management's current intention to reinvest all income
attributable to the Company earned by its operations outside the US.
Accordingly, no US federal and state income taxes have been provided in these
consolidated financial statements.

         Income taxes consist of PRC federal income tax computed at 15% on
assessable income for foreign investment enterprises operating in Zhuhai.


CRITICAL ACCOUNTING POLICIES

         Our financial statements reflect the selection and application of
accounting policies which require management to make significant estimates and
assumptions. We believe that the following are some of the more significant
judgment areas in the application of our accounting policies that currently
affect our financial condition and results of operations.

IMPAIRMENT OF INTANGIBLE ASSETS

         Whenever events or changes in circumstances indicate that the carrying
values of our intangible assets may be impaired, management performs an analysis
to determine the recoverability of the asset's carrying value. Intangible assets
consisted of acquired website technology which was amortized on the
straight-line basis over two years. Management's analysis indicated that the
carrying value of the acquired website technology was not recoverable from
future cash flows. The Company therefore wrote off the balance of unamortized
acquired website technology of Rmb2,936,000 (US$355,000) as of December 31,
2001, the effects of which are reflected on the statements of operations.

INVESTMENTS

         Equity investments, not being a subsidiary and which do not have a
readily determinable fair value, are accounted for by the cost method. The
Company periodically reviews investments for any permanent impairment based on
market prices, earning trends, dividend payment, assets quality and the
long-term prospect of the investment. The Company will make a provision if
permanent impairment of the investment is determined.

                                      -12-
<PAGE>

DEFERRED TAX ASSETS

         The Company is required to assess the ultimate realization of deferred
tax assets generated from net operating loss carryforwards. This assessment
takes into consideration of the availability and character of future taxable
income. As management estimates that there will be no taxable income generated
for the foreseeable future, no deferred tax assets are recognized in the
financial statements.

REVENUE RECOGNITION

         Revenue from product sales is recognized at the point of sale for
retail sales and upon the delivery of goods for other sales, when all
performance obligations have been completed and there is reasonably assured
collectibility. Dividend income is recognized upon the establishment of the
right to receive such payment.


LIQUIDITY AND CAPITAL RESOURCES

         The Company's and its subsidiaries' primary liquidity needs are to fund
inventories and operating expenses, and to expand business operations. The
Company has financed its working capital requirements through internally
generated cash.

         Net cash provided by/(used in) operating activities was Rmb11,559,000
(US$1,396,000) and (Rmb4,313,000) (US$522,000) in fiscal 2001 and 2002,
respectively. Net cash flows from the Company's operating activities are
attributable to the Company's income and changes in operating assets and
liabilities.

         The Company had a working capital surplus of approximately Rmb6,864,000
(US$829,000) as of December 31, 2002, compared to that of approximately of
Rmb18,000,000 (US$2,174,000) as of December 31, 2001. The decrease was mainly
due to the loss incurred by the Company during the year. Net cash provided by
investing activities in 2002 is mainly attributable to repayment of a short term
loan from a third party.

         Net cash provided by/(used in) financing activities was Rmb11,298,000
(US$1,364,000) and (Rmb11,298,000) (US$1,364,000) in fiscal 2001 and 2002,
respectively. Net cash flows from the Company's financing activities are
attributable to repayment of advances to a former vice president.

         Except as disclosed above, there have been no significant changes in
the financial condition and liquidity during the year. The Company believes that
internally generated funds will be sufficient to satisfy its anticipated working
capital needs for at least the next 12 months.


FACTORS RELATING TO FORWARD-LOOKING STATEMENTS

         Factors that could cause our actual results of operations to differ
materially from those contained in forward looking statements include the
following:

RISKS ASSOCIATED WITH FOREIGN OPERATIONS

o    Our principal subsidiaries operate in the People's Republic of China, and
     are, by law, subject to administrative review by various national,
     provincial and local agencies of the Chinese government - governmental
     oversight and/or changes to existing rules and regulations could adversely
     affect our results of operations.

o    The Company's operations and financial results could be adversely affected
     by economic conditions and changes in the policies of the PRC government,
     such as changes in laws and regulations (or the interpretation thereof),
     including measures which may be introduced to regulate or stimulate the
     rate of economic growth. The rate of deflation of the PRC economy, based on
     published consumer price information, was 2.6 percent for 1998, 3.0 percent
     for 1999 and 0.4 percent for 2000. The PRC government has taken certain
     measures to stimulate domestic demand and consumption. There can be no
     assurance that these measures will be successful.

                                      -13-
<PAGE>

o    The PRC does not have a comprehensive system of laws and enforcement of
     existing laws may be uncertain and sporadic, and the implementation and
     interpretation thereof inconsistent. Even where adequate law exists in the
     PRC, it may be difficult to obtain swift and equitable enforcement of such
     law, or to obtain enforcement of a judgment by a court of another
     jurisdiction. Decided legal cases are without binding legal effect,
     although judges are often guided by prior decisions. The interpretation of
     PRC laws may be subject to policy changes reflecting domestic political
     changes, and new laws, changes to existing laws and the pre-emption of
     local regulations by national laws may adversely affect foreign investors.

o    All of the Company's sales and purchases are made domestically and are
     denominated in Renminbi. Accordingly, the Company and its subsidiaries do
     not have material market risk with respect to currency fluctuation. As the
     reporting currency of the Company's consolidated financial statements is
     also Renminbi, there is no significant translation difference arising on
     consolidation. However, the Company may suffer an exchange loss when it
     converts Renminbi to other currencies, such as Hong Kong dollars or United
     States dollars.

o    The Company's interest income is sensitive to changes in the general level
     of Renminbi and Hong Kong dollars interest rates. In this regard, changes
     in interest rates affect the interest earned on the Company's cash
     equivalents. As of December 31, 2002, the Company's cash equivalents are
     mainly Renminbi and Hong Kong Dollar deposits with financial institutions,
     bearing market interest rates without fixed term.

o    While we are a Nevada corporation, our officers and directors are
     non-residents of the United States, our assets are located in the PRC and
     our operations are conducted in the PRC; therefore, it may not be possible
     to effect service of process on such persons in the United States, and it
     may be difficult to enforce any judgments rendered against us or them.

GENERAL RISKS OF OPERATIONS

o    We have discontinued many of our operations and we are currently dependent
     upon the success of one line of business - our supermarket operations; and
     while our supermarket operations generate operating revenues, those
     revenues are not sufficient to offset expenses, resulting in continued
     losses from operations.

o    Unless we are able to reduce expenses, increase our profit margins and/or
     acquire profitable operations, we will likely continue to incur losses and
     investors in our shares may be unable to recoup their investment.

o    We intend to investigate and evaluate potential investment opportunities,
     including acquisition candidates; however, we may be unable to acquire
     business operations that prove to be profitable; we will continue to incur
     administrative and professional expenses in connection with our evaluation
     and acquisition of business operations, without corresponding revenues from
     those operations prior to acquisition.

o    As of December 31, 2002, the Company had short-term investments in
     marketable securities in the Hong Kong stock market and Nasdaq market with
     a total market value of Rmb1,185,000 (US$143,000). These investments expose
     the Company to market risks that may cause the future value of these
     investments to be lower than the original cost of such investments at the
     time of purchase.

o    The market for our Common Stock is not active and the limited trading
     volume in our shares could result in substantial market volatility in the
     price for our shares.

o    Our supermarket operations face competition from larger, more capitalized
     companies than ours and we may be unable to compete successfully.

o    We do not intend to pay dividends for the foreseeable future - we intend to
     reinvest earnings from operations, if any, back into our operations. The
     payment of dividends is subject to numerous restrictions imposed under PRC
     law and under the Articles of Association of HARC, a wholly-owned
     subsidiary.


                                      -14-
<PAGE>

[Item 7]                      FINANCIAL STATEMENTS

         The Company's Consolidated Financial Statements for the fiscal years
ended December 31, 2001 and 2002 are included herewith as Appendix A and
incorporated herein by reference.


[Item 8]          CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                     ON ACCOUNTING AND FINANCIAL DISCLOSURE

         At a meeting on April 30, 2002, the Board of Directors of the Company
approved the engagement of Horwath Gelfond Hochstadt Pangburn, P.C. as
independent auditors of the Company for the fiscal year ended December 31, 2002,
to replace the firm of Ernst & Young ("E&Y"), who were dismissed as the
Company's auditors effective April 30, 2002.

         The reports of E&Y on the Company's financial statements for the past
two years did not contain an adverse opinion or disclaimer of opinion, and were
not qualified or modified as to uncertainty, audit scope, or accounting
principles.

         In connection with the audits of the Company's financial statements for
each of the two fiscal years ended December 31, 2001, and in subsequent interim
period, there were no disagreements with E&Y on any matters of accounting
principles or practices, financial statements disclosure, or audition scope and
procedures which, if not resolved to the satisfaction of E&Y would have caused
E&Y to make reference to the subject matter in their report.


                                    PART III


[Item 9]       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS

         The following table sets forth the current directors and executive
officers of the Company as of March 31, 2003, and their ages and positions with
the Company:
<TABLE>
<CAPTION>

                                       Age                         Position
                                       ---                         --------

<S>                                    <C>             <C>
Ching Lung Po                          56              Chairman of the Board of Directors, President and Chief Executive
                                                       Officer

Tam Cheuk Ho                           40              Director and Chief Financial Officer

Wong Wah On                            39              Director, Secretary and Financial Controller

Lam Kwan Sing                          33              Director

Ng Kin Sing                            40              Director

Lo Kin Cheung                          38              Director
</TABLE>

                                      -15-
<PAGE>

         Mr. Ching Lung Po has been a director of the Company since February 4,
1998. He was appointed Chairman of the Board of Directors on January 25, 1999,
Chief Executive Officer and President of the Company on February 1, 1999 and
June 1, 1999, respectively. Mr. Ching has also been the Chairman of the Board of
Directors and President of OVM International Holding Corp. (OTC Bulletin Board:
OVMI), which is included on the OTC Bulletin Board operated by the Nasdaq, since
September 1996. Mr. Ching has been involved for more than 20 years in the
management of production and technology for industrial enterprises in PRC. He
worked in Heilongjiang Suihua Electronic Factory as an engineer from 1969 to
1976 and was the Head of the Heilongjiang Suihua Industrial Science & Technology
Research Institute from 1975 to 1976. Mr. Ching joined the Heilongjiang Qingan
Factory in 1976 and has been the General Manager since 1976. In 1988, Mr. Ching
started his own business and established the Shenzhen Hongda Science &
Technology Company Limited in Shenzhen, which manufactures electronic products.
Mr. Ching graduated from the Harbin Military and Engineering Institute and holds
the title of Senior Engineer.

         Mr. Tam Cheuk Ho has been a director and the Chief Financial Officer of
the Company since December 2, 1994. Prior to joining the Company, from July 1984
through January 1992, he worked as Audit Manager at Ernst & Young, Hong Kong,
and from February 1992 through September 1992, as Financial Controller at Tack
Hsin Holdings Limited, a listed company in Hong Kong, where he was responsible
for accounting and financial functions. From October 1992, through December,
1994, Mr. Tam was Finance Director of Hong Wah (Holdings) Limited. He is a
fellow of both the Hong Kong Society of Accountants and the Chartered
Association of Certified Accountants. He is also a certified public accountant
in Hong Kong. He holds a Bachelor's degree in Business Administration from the
Chinese University of Hong Kong. Mr. Tam is also a director of Anka Capital
Limited, a privately-held corporation, through which he is a principal
shareholder of the Company.

         Mr. Wong Wah On has been a director of the Company since December 30,
1997. Mr. Wong is also the Financial Controller and Secretary of the Company. He
is responsible for assisting the Chief Financial Officer with the Company's
treasury, accounting and secretarial functions. From October 1992 through
December 1994, Mr. Wong was the Deputy Finance Director of Hong Wah (Holdings)
Limited. From July 1988 through October 1992, he was the audit supervisor at
Ernst & Young, Hong Kong. Mr. Wong is also a director of Anka Capital Limited, a
privately-held corporation, through which he is a principal shareholder of the
Company. He received a professional diploma in Company Secretaryship and
Administration from the Hong Kong Polytechnic University. He is a fellow of both
the Chartered Association of Certified Accountants and the Hong Kong Society of
Accountants, and an associate of the Institute of Chartered Secretaries and
Administrators. He is also a certified public accountant in Hong Kong.

         Mr. Lam Kwan Sing has been a director of the Company since March 20,
2003, and also serves as a member of the Audit Committee. From 2002 to present,
Mr. Lam has been the executive director of Pacific Challenge Holdings Limited, a
Hong Kong listed company, where he is responsible for the overall corporate
finance and accounting operations. From 2000 to 2002, Mr. Lam was the business
development manager of China Development Corporation Limited, a Hong Kong listed
company. From 1997 to 2000, he was the business development manager of Chung Hwa
Development Holdings Limited, a Hong Kong listed company. From 1995 to 1997, Mr.
Lam was the assistant manager (Intermediaries supervision) of Hong Kong
Securities and Futures Commission. Mr. Lam holds a Bachelor's degree in
Accountancy from the City University of Hong Kong.

         Mr. Ng Kin Sing has been a director of the Company since February 1,
1999, and also serves as a member of the Audit Committee. From April 1998 to the
present, Mr. Ng has been the managing director of Action Plan Limited, a
securities investment company. From November 1995 until March 1998, Mr. Ng was
sales and dealing director for NatWest Markets (Asia) Limited; and from May 1985
until October 1996, he was the dealing director of BZW Asia Limited, an
international securities brokerage house. Mr. Ng holds a Bachelor's degree in
Business Administration from the Chinese University of Hong Kong.

         Mr. Lo Kin Cheung has been a director of the Company since May 30,
2000, and also serves as a member of the Audit Committee. From September 2001 to
present, Mr. Lo has been the chief financial officer of Lee Fung - Asco Printers
Holdings Limited, a Hong Kong listed company, where he is responsible for the
overall corporate financial operations. From March 1998 to August 2001, Mr. Lo
was the executive director of Wiltec Holdings Limited, a Hong Kong listed
company, where he was responsible for corporate development and day-to-day
operations. From July 1986 until March 1998, Mr. Lo was the principal at Ernst &
Young, Hong Kong. He is a fellow of both the Hong Kong Society of Accountants
and the Chartered Association of Certified Accountants. He holds a Bachelor's
degree of Science from the University of Hong Kong.

                                      -16-
<PAGE>

         At the annual meeting of shareholders on November 12, 2002, Messrs. Wan
Ying Lin and Lo Kin Cheung were elected to serve as Class III Directors until
the annual meeting to be held in 2005 and until their successors have been duly
elected and qualified. Messrs. Ching Lung Po and Ng Kin Sing serve in Class II
until the annual meeting to be held in 2004 and until their successors have been
duly elected and qualified; and Messrs. Tam Cheuk Ho and Wong Wah On serve in
Class I until the annual meeting to be held in 2003 and until their successors
have been duly elected and qualified. Mr. Wan Ying Lin resigned as a director of
the Company effective March 1, 2003. Mr. Lam Kwan Sing was appointed to serve as
Class III Director to fill the vacant position created by the resignation of Mr.
Wan on March 20, 2003.

         The officers of the Company are elected annually at the first Board of
Directors meeting following the annual meeting of shareholders, and hold office
until their respective successors are duly elected and qualified, unless sooner
displaced.


COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         Based solely upon a review of Forms 3, 4 and 5 furnished to the Company
for the fiscal year ended December 31, 2002, no person subject to Section 16(a)
of the Exchange Act based upon their relationship to the Company failed to
timely file any of the foregoing reports.


[Item 10]                 EXECUTIVE COMPENSATION
<TABLE>
<CAPTION>

                                             SUMMARY COMPENSATION TABLE



                                                   Annual Compensation              Long Term
                                                                                  Compensation
                                          ------------------------------------- -----------------

                                                                     Other         Securities
                                                                    Annual         Underlying         All Other
                                           Salary     Bonus      Compensation        Options        Compensation
Name and Principal Position       Year      (US$)     (US$)          (US$)             (1)              (US$)
-------------------------------- -------- --------- ---------- ---------------- ----------------- -----------------

<S>                               <C>     <C>           <C>           <C>            <C>                 <C>
Ching Lung Po, President and      2002    133,333      -0-           -0-             40,000             -0-
Chief Executive Officer           2001    276,923      -0-           -0-             40,000             -0-
                                  2000    276,923      -0-           -0-              -0-               -0-


Tam Cheuk Ho, Director and        2002    230,769      -0-           -0-             40,000             -0-
Chief Financial Officer           2001    230,769      -0-           -0-             40,000             -0-
                                  2000    230,769      -0-           -0-               60               -0-


Wong Wah On, Director,            2002    153,846      -0-           -0-             40,000             -0-
Secretary and Financial           2001    153,846      -0-           -0-             40,000             -0-
Controller                        2000    153,846      -0-           -0-               60               -0-
================================ ======== ========= ========== ================ ================= =================
</TABLE>

(1) As of December 31, 2002, none of the stock options held by Mr. Ching, Mr.Tam
and Mr. Wong were exercisable. None of such options was "in-the-money" at such
date, as the fair market value (as defined in the Company stock option plan) of
the common stock on December 31, 2002, was US$1.58 per share.

                                      -17-
<PAGE>


         On February 1, 1999, the Company entered into a Service Agreement with
Ching Lung Po. In accordance with the terms of the Service Agreement, Mr. Ching
has been employed by the Company as Chief Executive Officer and to perform such
duties as the Board of Directors shall from time to time determine. Mr. Ching
shall receive a base salary of HK$2,160,000 (US$276,923) annually. The
Employment Agreement has a term of two years and shall be automatically renewed
unless earlier terminated as provided therein. On June 1, 2002, the Company
entered into a Supplemental Service Agreement with Ching Lung Po, reducing his
base salary to HK$240,000 (US$30,769) per annum with all other terms of the
Service Agreement remaining in full force and effect.

         On February 1, 1999, the Company entered into an Employment Agreement
with Tam Cheuk Ho. In accordance with the terms of the Employment Agreement, Mr.
Tam has been employed by the Company as the Chief Financial Officer and to
perform such duties as the Board of Directors shall from time to time determine.
Mr. Tam shall receive a base salary of HK$1,800,000 (US$230,769) annually, which
base salary shall be adjusted on each anniversary of the Employment Agreement to
reflect a change in the applicable consumer price index or such greater amount
as the Company's Board of Directors may determine. The initial two year term of
Employment Agreement has expired, and the term of the Agreement continues to
automatically renew each year, until terminated as provided therein.

         On February 1, 1999, the Company entered into an Employment Agreement
with Wong Wah On. In accordance with the terms of the Employment Agreement, Mr.
Wong has been employed by the Company as the Financial Controller and Corporate
Secretary and to perform such duties as the Board of Directors shall from time
to time determine. Mr. Wong shall receive a base salary of HK$1,200,000
(US$153,846) annually, which base salary shall be adjusted on each anniversary
of the Employment Agreement to reflect a change in the applicable consumer price
index or such greater amount as the Company's Board of Directors may determine.
The initial two year term of the Employment Agreement has expired, and the
Agreement continues to automatically renew each year, until terminated as
provided therein.

         The Company has no other employment contracts with any of its officers
or directors and maintains no retirement, fringe benefit or similar plans for
the benefit of its officers or directors. The Company may, however, enter into
employment contracts with its officers and key employees, adopt various benefit
plans and begin paying compensation to its officers and directors as it deems
appropriate to attract and retain the services of such persons.

         The Company does not pay fees to directors for their attendance at
meetings of the Board of Directors or of committees; however, the Company may
adopt a policy of making such payments in the future. The Company will reimburse
out-of-pocket expenses incurred by directors in attending Board and committee
meetings. During the fiscal year ended December 31, 2002, no long-term incentive
plans or pension plans were in effect with respect to any of the Company's
officers, directors or employees.


                                      -18-
<PAGE>


[Item 11]          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                                 AND MANAGEMENT

BENEFICIAL OWNERS OF MORE THAN 5%
OF THE COMPANY'S COMMON STOCK

         The following table sets forth, to the knowledge of management, each
person or entity who is the beneficial owner of more than 5% of the outstanding
shares of the Company's Common Stock and Series B Preferred Stock outstanding as
of March 31, 2003 the number of shares owned by each such person and the
percentage of the outstanding shares and vote represented thereby. Each share of
Common Stock and each share of Series B Preferred Stock receives one vote per
share on each matter voted upon by shareholders. The table is based upon 837,823
shares of Common Stock and 320,000 shares of Series B Preferred Stock being
issued and outstanding as of March 31, 2003.
<TABLE>
<CAPTION>

                                                         Amount and
         Name and Address                                 Nature of                    Percent of            Percent of
        of Beneficial Owner                       Beneficial Ownership (1)               Class                  Vote
        -------------------                       ------------------------               -----                  ----

<S>                                               <C>                                     <C>                   <C>
Winsland Capital Limited                          33,480 Common Stock                     4.0%                  30.5%
TrustNet Chambers                                 320,000 Series B Preferred              100%
P.O. Box 3444, Road Town
Tortola, British Virgin Islands

Worlder International Company                     48,600 Common Stock                     5.8%                   4.2%
 Limited (2)
21/F., Great Eagle Centre
No. 23 Harbour Road
Hong Kong

Anka Capital Limited                              244,897 Common Stock                    29.2%                 21.2%
Room 2105, West Tower
Shun Tak Centre, 200 Connaught Rd. C.
Hong Kong
</TABLE>

(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.

(2) Of the 48,600 shares of Common Stock indicated, Worlder International
Company Limited ("Worlder") directly owns 35,100 shares, and the remaining
13,500 shares are owned by Silverich Limited, which is wholly-owned by Worlder.


SHARE OWNERSHIP OF OFFICERS AND DIRECTORS

         The following table sets forth certain information with respect to the
beneficial ownership and voting power of Common Stock and Series B Preferred
Stock as of March 31, 2003, by (i) each director of the Company, (ii) each
executive officer of the Company named in the summary compensation table, and
(iii) all directors and executive officers of the Company as a group. All
information with respect to beneficial ownership has been furnished by the
respective director or executive officer (in the case of shares beneficially
owned by each of them). Unless otherwise indicated in a footnote, each
stockholder possesses sole voting and investment power with respect to the
shares indicated as beneficially owned. Each share of Common Stock and each
share of Series B Preferred Stock receives one vote per share on each matter
voted upon by shareholders. The table is based upon 837,823 shares of Common
Stock and 320,000 shares of Series B Preferred Stock being issued and
outstanding as of March 31, 2003.
<TABLE>
<CAPTION>

                                                      Amount and
              Name of                                  Nature of                    Percent of              Percent of
         Beneficial Owner                      Beneficial Ownership (1)                Class                   Vote
         ----------------                      ------------------------                -----                   ----

<S>                                             <C>                                     <C>                    <C>
         Ching Lung Po                          73,480 Common Stock (2)                 8.4%                   32.9%
                                               320,000 Series B Preferred               100%

         Tam Cheuk Ho                          284,897 Common Stock (3)                32.5%                   23.8%

         Wong Wah On                           289,217 Common Stock (4)                33.0%                   24.2%

         Lam Kwan Sing                            -0-                                   N/A                     N/A

         Ng Kin Sing                              -0-                                   N/A                     N/A

         Lo Kin Cheung                            -0-                                   N/A                     N/A

         All executive officers                402,697 Common Stock                    42.0%                   56.6%
         and directors as a group              320,000 Series B Preferred            100.00%
         (of 6 persons)
</TABLE>

                                      -19-
<PAGE>

(1) The inclusion herein of any shares deemed beneficially owned does not
constitute an admission of beneficial ownership of these shares.

(2) Winsland Capital Limited owns 33,480 shares of Common Stock and 320,000
shares of Series B Preferred Stock. Winsland Capital Limited is beneficially
owned by Ching Lung Po. The table includes 40,000 shares of Common Stock
issuable upon exercise of options granted under the Company's Stock Option Plan
as described under "Stock Options," below.

(3) Anka Capital Limited ("Anka") owns 244,897 shares of Common Stock. Anka is
50% owned by Tam Cheuk Ho and 50% owned by Wong Wah On. Tam Cheuk Ho disclaims
beneficial ownership of the securities held by Anka, except to the extent of his
pecuniary interest in the shares. The table includes 40,000 shares of Common
Stock issuable upon exercise of options granted under the Company's Stock Option
Plan as described under "Stock Options," below.

(4) Of the shares of Common Stock indicated, Brender Services Limited, which is
beneficially owned by Wong Wah On, owns 4,320 shares of Common Stock. The
remaining 244,897 shares represent shares of Common Stock owned by Anka which is
50% owned by Wong Wah On. Wong Wah On disclaims beneficial ownership of the
seurities held by Anka, except to the extent of his pecuniary interest in the
shares. The table includes 40,000 shares of Common Stock issuable upon exercise
of options granted under the Company's Stock Option Plan as described under
"Stock Options," below.

STOCK OPTIONS

         The Company adopted a Stock Option Plan (the "Plan") as of March 31,
1995. The Plan allows the Board of Directors, or a committee thereof at the
Board's discretion, to grant stock options to officers, directors, key
employees, consultants and affiliates of the Company. Initially, 24,000 shares
of common stock could be issued and sold pursuant to options granted under the
Plan. "Incentive Stock Options" within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), may be granted to
employees, including officers, whether or not they are members of the Board of
Directors, and nonqualified stock options may be granted to any such employee or
officer and to directors, consultants, and affiliates who perform substantial
services for or on behalf of the Company or its subsidiaries.

         On December 30, 1996, the shareholders of the Company adopted an
amendment to the Plan (a) to change the number of shares of Common Stock subject
to the Plan to that number of shares which would, in the aggregate and if deemed
outstanding, constitute 20% of the Company's then-outstanding shares of Common
Stock, as determined at the time of granting stock options, and (b) to allow
Nonqualified Stock Options, as defined in the Plan, to be exercisable in less
than one year.

         The Board of Directors, or a committee appointed by the Board (the
"Committee"), is vested with authority to (i) select persons to participate in
the Plan; (ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
grants will be made; (iii) interpret the Plan; and (iv) adopt, amend, or rescind
such rules and regulations for carrying out the Plan as it may deem appropriate.
The Board of Directors has the power to modify or terminate the Plan and from
time to time may suspend, and if suspended may reinstate, any or all of the
provisions of the Plan except that (i) no modification, suspension, or
termination of the Plan may, without the consent of the grantee affected, alter
or impair any grant previously made under the Plan; and (ii) no modification
shall become effective without prior consent of the shareholders of the Company
that would (a) increase the maximum number of shares reserved for issuance under
the Plan, except for certain adjustments allowed by the Plan; or (b) change the
classes of employees eligible to participate in the Plan.

                                      -20-
<PAGE>

         The Plan provides that the price per share deliverable upon the
exercise of each Incentive Stock Option shall not be less than 100% of the fair
market value of the shares on the date the option is granted, as the Committee
determines. In the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total combined
voting power of all classes of stock of the Company or any of its subsidiaries,
such price per share, if required by the Code at the time of grant, shall not be
less than 110% of the fair market value of the shares on the date the option is
granted. The price per share deliverable upon the exercise of each nonqualified
stock option shall not be less than 80% of the fair market value of the shares
on the date the option is granted, as the Committee determines.

         Options may be exercised in whole or in part upon payment of the
exercise price of the shares to be acquired. Payment shall be made in cash or,
in the discretion of the Committee, in shares previously acquired by the
participant or in a combination of cash and shares of Common Stock. The fair
market value of shares of Common Stock tendered on exercise of options shall be
determined on the date of exercise.

         As of June 15, 2001, the board of directors adopted the recommendations
of a committee of disinterested persons appointed by the board of directors in
accordance with the terms of the Plan and granted stock options to purchase
shares of the Company's Common Stock to the following officers, directors and
employees:

                  Ching Lung Po                               40,000 shares
                  Tam Cheuk Ho                                40,000 shares
                  Wong Wah On                                 40,000 shares
                  Ma Sin Ling                                 30,000 shares
                  Tse Chi Kai                                 10,000 shares
                  Fu Yang Guang                                1,000 shares
                  Lin Jia Ping                                 1,000 shares
                  Yu Jing Song                                 1,000 shares

         As of December 31, 2002, options to purchase 163,000 shares of Common
Stock were granted. During the fiscal year ended December 31, 2002, no holder of
stock options exercised such options and all stock options granted prior to June
15, 2001 had either expired, lapsed due to termination of employment or had been
cancelled by mutual consent.


[Item 12]         CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On January 31, 1994, the Farming Bureau, Guilinyang Farm, and Billion
Luck entered into a Contract On Investment For The Setting Up Of Hainan
Agricultural Resources Company Ltd. pursuant to which such parties agreed to
establish HARC as a limited liability joint stock company under the Rules for
Standardized Incorporated Companies in the PRC and the regulations of Hainan
Province. The agreement provided that HARC's total initial capitalization of
Rmb100 million (US$12 million) in assets and cash was to be contributed as
follows: the Farming Bureau (39%), Guilinyang Farm (5%) and Billion Luck (56%).

         On April 27, 2001, HARC disposed of its 12.64% equity interest in
Xilian Mill to the Farming Bureau for consideration of Rmb5 million (US$603,865)
pursuant to an Agreement for the Sale and Purchase of Shares in Xilian Timber
Mill.

         On July 15, 1994, the Farming Bureau and HARC entered into a Rental
Agreement for the rental of 532 square meters of a building located in Haikou
City, PRC, in which HARC's corporate headquarters are located. Such rental
agreement is for a period of 10 years at an annual rental of Rmb170,240
(US$20,560) payable in equal semi-annual installments. On July 1, 2001, pursuant
to mutual agreement, both parties agreed to terminate the rental agreement. For
each of the two years ended December 31, 2001 and 2002, HARC paid rental of
Rmb85,000 (US$10,266 ) and nil, respectively, to Farming Bureau.

                                      -21-
<PAGE>

         On September 1, 2000, the Company and Anka Consultants Limited, a
private Hong Kong company which is owned by certain directors of the Company,
entered into an office sharing agreement, from which the Company's head office
in Hong Kong is shared on an equal basis between the two parties. The lease was
for a period of 2 years from September 1, 2000 to August 31, 2002 and was
renewed for another two years from September 1, 2002. The office sharing
agreement also provides that the Company shall share certain costs and expenses
in connection with its use of the office. For the years ended December 31, 2001
and 2002, the Company paid rental expenses to Anka Consultants Limited amounted
to HK$288,000 (US$37,000) and HK$268,000 (US$34,000), respectively.

         On April 30, 2001, Billion Luck, through its nominees, acquired 39%
minority equity interest in HARC from the Farming Bureau, for total
consideration of Rmb129,405,000 (US$15,629,000). Concurrent with the
acquisition, HARC entered into several agreements with the Farming Bureau to
dispose of certain assets, including 24,877,008 shares of Hainan Sundiro
Motorcycle Co. Ltd., for consideration of Rmb70 million (US$8,454,000), a 12.64%
equity interest in Xilian Mill for consideration of Rmb5 million (US$603,865)
and 58% interest in Hainan Weilin for consideration of Rmb3.8 million
(US$459,000).

         Other related party transactions are disclosed elsewhere in this Report
under "Stock Options" and "Executive Compensation".

                                      -22-
<PAGE>

                                     PART IV

[Item 13]               EXHIBITS AND REPORTS ON FORM 8-K


         The following financial statements are filed as a part of this Form
10-KSB in Appendix A hereto:


                  Independent auditors' reports, together with consolidated
                  financial statements for the Company and subsidiaries,
                  including:

                  a.       Consolidated statements of operations for the years
                           ended December 31, 2001 and 2002

                  b.       Consolidated balance sheet as of December 31, 2002

                  c.       Consolidated statements of shareholders' equity for
                           the years ended December 31, 2001 and 2002

                  d.       Consolidated statements of cash flows for the years
                           ended December 31, 2001 and 2002

                  e.       Notes to consolidated financial statements.

         The information required in Schedule 11 valuation and qualifying
         accounts is included in the notes to the consolidated financial
         statements on page F-7. All other schedules for which provision is made
         in the applicable accounting regulation of the Securities and Exchange
         Commission are not required under the related instructions or are
         inapplicable and therefore have been omitted.


         The following Exhibits are filed as part of this Form 10-KSB:

     Exhibit No.                      Exhibit Description
     -----------                      -------------------

        3.1       Articles of Incorporation of the Registrant, filed on January
                  15, 1986 (Filed with Annual Report on Form 10-K/A for the
                  fiscal year ended December 31, 1994, and incorporated herein
                  by reference.)

        3.2       By-laws of the  Registrant  (Filed with Annual Report on
                  Form 10-K/A for the fiscal year ended  December 31, 1994,
                  and incorporated herein by reference.)

        3.3       Certificate of Amendment of Articles of Incorporation of the
                  Registrant, filed on November 18, 1994 (Filed with Annual
                  Report on Form 10-K/A for the fiscal year ended December 31,
                  1994, and incorporated herein by reference.)

        3.4       Certificate of Amendment of Articles of Incorporation of the
                  Registrant, filed on November 18, 1994 (Filed with Annual
                  Report on Form 10-K/A for the fiscal year ended December 31,
                  1994, and incorporated herein by reference.)

        3.5       Certificate of Amendment of Articles of Incorporation of the
                  Registrant, effective March 31, 1995, and filed on June 19,
                  1995 (Filed with Quarterly Report on Form 10-Q/A for the
                  fiscal quarter ended March 31, 1995, and with Current Report
                  on Form 8-K dated June 19, 1995, and incorporated herein by
                  reference.)

        3.6       Certificate of Amendment of Articles of Incorporation of the
                  Registrant, effective December 30, 1996 (Filed with Annual
                  Report on Form 10-K/A for the fiscal year ended December 31,
                  1996, and incorporated herein by reference.)

                                      -23-
<PAGE>

        3.7       Amended and Restated By-laws of the Registrant, as amended on
                  December 30, 1996 (Filed with Annual Report on Form 10-K/A for
                  the fiscal year ended December 31, 1996, and incorporated
                  herein by reference.)

        4.1       Certificate of Designation of Series B Convertible Preferred
                  Stock, filed on December 13, 1995 (Filed with Current Report
                  on Form 8-K dated March 8, 1996, and incorporated herein by
                  reference.)

        4.2       Certificate of Amendment of Certificate of Designation of
                  Series B Convertible Preferred Stock, effective December 31,
                  1997 (Filed with Annual Report on Form 10-K/A for the fiscal
                  year ended December 31, 1996, and incorporated herein by
                  reference.)

       10.1       China Resources Development, Inc., 1995 Stock Option Plan,
                  adopted as of March 31, 1995 (Filed as Exhibit 10.18 to
                  Quarterly Report on Form 10-Q/A for the fiscal quarter ended
                  March 31, 1995, and the Current Report on Form 8-K dated June
                  19, 1995, and incorporated herein by reference.)

       10.2       China Resources Development, Inc., Amended and Restated 1995
                  Stock Option Plan, as amended on December 30, 1996 (Filed as
                  Exhibit 10.34 to Annual Report on Form 10-K/A for the fiscal
                  year ended December 31, 1996, and incorporated herein by
                  reference.)

       10.3       Employment Agreement between the Company and Tam Cheuk Ho,
                  dated February 1, 1999 (Filed as Exhibit 10.43 to Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1998, and incorporated herein by reference.)

       10.4       Employment Agreement between the Company and Wong Wah On,
                  dated February 1, 1999 (Filed as Exhibit 10.44 to Annual
                  Report on Form 10-K for the fiscal year ended December 31,
                  1998, and incorporated herein by reference.)

       10.5       Service Agreement between the Company and Ching Lung Po, dated
                  February 1, 1999 (Filed as Exhibit 10.45 to Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1998, and
                  incorporated herein by reference.)

       10.6       Agreement for the Sale and Purchase of Shares in HARC by and
                  between the Farming Bureau and Shenzhen Shenhua Investment Co.
                  Ltd. dated April 17, 2001 (Certified English translation of
                  original Chinese version filed as Exhibit 10.27 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

       10.7       Agreement for the Sale and Purchase of Shares in HARC by and
                  between the Farming Bureau and Shenzhen Fengsun Development
                  Co. Ltd. dated April 17, 2001 (Certified English translation
                  of original Chinese version filed as Exhibit 10.28 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

       10.8       Agreement for the Sale and Purchase of Shares in HARC by and
                  between the Farming Bureau and Hainan Zhongwei Trading Co.
                  Ltd. dated April 17, 2001 (Certified English translation of
                  original Chinese version filed as Exhibit 10.29 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

       10.9       Agreement for the Sale and Purchase of Shares in HARC by and
                  between the Farming Bureau and Shenzhen Chaopeng Investment
                  Co. Ltd. dated April 17, 2001 (Certified English translation
                  of original Chinese version filed as Exhibit 10.30 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

       10.10      Agreement for the Sale and Purchase of Shares in HARC by and
                  between the Farming Bureau and Shenzhen Feishang Development
                  Co. Ltd. dated April 17, 2001 (Certified English translation
                  of original Chinese version filed as Exhibit 10.31 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

                                      -24-
<PAGE>

       10.11      Form of Declaration of Trust (Certified English translation of
                  original Chinese version filed as Exhibit 10.32 to Current
                  Report on Form 8-K filed May 17, 2001, and incorporated herein
                  by reference.)

       10.12      Agreement for the Sale and Purchase of Shares in Xilian Timber
                  Mill by and between HARC and the Farming Bureau dated April
                  17, 2001 (Certified English translation of original Chinese
                  version filed as Exhibit 10.33 to Current Report on Form 8-K
                  filed May 17, 2001, and incorporated herein by reference.)

       10.13      Agreement for the Sale and Purchase of Shares in Hainan Weilin
                  by and between HARC and the Farming Bureau dated April 17,
                  2001 (Certified English translation of original Chinese
                  version filed as Exhibit 10.34 to Current Report on Form 8-K
                  filed May 17, 2001, and incorporated herein by reference.)

       10.14      Agreement for the Sale and Purchase of Shares in Hainan
                  Sundiro Motorcycle Co. Ltd. by and between HARC and the
                  Farming Bureau dated April 17, 2001 (Certified English
                  translation of original Chinese version filed as Exhibit 10.35
                  to Current Report on Form 8-K filed May 17, 2001, and
                  incorporated herein by reference.)

       11.3       Computation of Earnings Per Share for Fiscal Year ended
                  December 31, 2002 (Contained in Financial Statements filed
                  herewith.)

       21         Subsidiaries of the Registrant (Filed herewith.)

       99.1       Certification of Chief Executive Officer (Filed herewith.)

       99.2       Certification of Chief Financial Officer (Filed herewith.)

         During the last quarter of the fiscal year ended December 31, 2002, the
Company filed no reports on Form 8-K.



[Item 14]               CONTROLS AND PROCEDURES

         (a)  Evaluation of Disclosure Controls and Procedures

         Disclosure controls and procedures are designed to ensure that
information required to be disclosed in the reports filed or submitted under the
Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms. Disclosure controls and
procedures include, without limitation, controls and procedures designed to
ensure that information required to be disclosed in the reports filed under the
Exchange Act is accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure. Within the 90 days prior to the filing
of this report, the Company carried out an evaluation, under the supervision and
with the participation of the Company's management, including the Company's
Chief Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon and as of the date of that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.

                                      -25-
<PAGE>

         (b)  Changes in Internal Controls

         There were no changes in the Company's internal controls or in other
factors that could have significantly affected those controls subsequent to the
date of the Company's most recent evaluation.

                                      -26-
<PAGE>



                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                         CHINA RESOURCES DEVELOPMENT, INC.



                                         By: /s/ Ching Lung Po
                                             ------------------------
                                             Ching Lung Po, President

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>


                  Signature                                     Title                              Date
                  ---------                                     -----                              ----
<S>                                                  <C>                                      <C>

/s/ Ching Lung Po                                   President, Chairman of the                 April 15, 2003
---------------------------                         Board of Directors, Chief
Ching Lung Po                                       Executive Officer



/s/ Tam Cheuk Ho                                    Chief Financial Officer/                   April 15, 2003
---------------------------                         Director
Tam Cheuk Ho


/s/ Wong Wah On                                     Financial Controller/                      April 15, 2003
---------------------------                         Director/Secretary
Wong Wah On


/s/ Lam Kwan Sing                                   Director                                   April 15, 2003
---------------------------
Lam Kwan Sing


/s/ Ng Kin Sing                                     Director                                   April 15, 2003
---------------------------
Ng Kin Sing


/s/ Lo Kin Cheung                                   Director                                   April 15, 2003
---------------------------
Lo Kin Cheung
</TABLE>

                                      -27-
<PAGE>


                     CERTIFICATE OF CHIEF EXECUTIVE OFFICER


I, Ching Lung Po, Chief Executive Officer of China Resources Development, Inc.
("Registrant"), certify that:


         1. I have reviewed this annual report on Form 10-KSB of China Resources
Development, Inc. ("Registrant");


         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; and


         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; and


         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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of the 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 data and have identified for the
registrant's 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 are 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: April 15, 2003                              /s/ Ching Lung Po
                                                 -------------------------------

                                                 Name:  Ching Lung Po

                                                 Title:  Chief Executive Officer


                                      -28-
<PAGE>

                     CERTIFICATE OF CHIEF FINANCIAL OFFICER


I, Tam Cheuk Ho, Chief Financial Officer of China Resources Development, Inc.
("Registrant"), certify that:


         1. I have reviewed this annual report on Form 10-KSB of China
Resources Development, Inc. ("Registrant");


         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; and


         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; and


         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 officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of the 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 data and have identified for the
registrant's 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 are 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: April 15, 2003                              /s/ Tam Cheuk Ho
                                                 -------------------------------

                                                 Name:  Tam Cheuk Ho

                                                 Title:  Chief Financial Officer

                                      -29-

<PAGE>

                                   Appendix A

                       CHINA RESOURCES DEVELOPMENT, INC.

                       Consolidated Financial Statements

                     Years ended December 31, 2001 and 2002

<PAGE>

CHINA RESOURCES DEVELOPMENT, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                                       Pages

Reports of independent auditors                                     F-2 - F-3

Consolidated statements of operations                                  F-4

Consolidated balance sheet                                          F-5 - F-6

Consolidated statements of shareholders' equity                        F-7

Consolidated statements of cash flows                                  F-8

Notes to consolidated financial statements                          F-9 - F-27

                                      F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders

China Resources Development, Inc.


We have audited the accompanying consolidated balance sheet of China Resources
Development, Inc. and subsidiaries as of December 31, 2002, and the related
consolidated statements of operations, shareholders' equity, and cash flows for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of China Resources
Development, Inc. and subsidiaries at December 31, 2002, and the results of
their operations and their cash flows for the year then ended, in conformity
with accounting principles generally accepted in the United States of America.

Horwath Gelfond Hochstadt Pangburn, P.C.
Denver, Colorado

March 14, 2003

                                      F-2
<PAGE>

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders

China Resources Development, Inc.


We have audited the accompanying consolidated statements of operations,
shareholders' equity, and cash flows for the year ended December 31, 2001.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated results of operations of China Resources
Development, Inc. and subsidiaries and their cash flows for the year ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America.




Ernst & Young
Hong Kong
March 28, 2002


                                      F-3
<PAGE>

CHINA RESOURCES DEVELOPMENT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                                    Year ended December 31,
                                                         Notes     2001       2002      2002
                                                                   RMB        RMB        US$

<S>                                                      <C>      <C>         <C>        <C>
NET SALES                                                         10,092      9,170      1,107

COST OF SALES                                                     (9,832)    (8,504)    (1,027)
                                                                 -------    -------     ------

GROSS PROFIT                                                         260        666         80

DEPRECIATION                                                        (815)      (842)      (101)

AMORTIZATION                                                      (6,628)        --         --

VALUATION ALLOWANCE                                        21         --    (48,178)    (5,818)

SELLING, GENERAL AND
   ADMINISTRATIVE EXPENSES, including
     expenses incurred to related parties of RMB391
     and RMB285 in 2001 and 2002, respectively                   (15,219)   (11,164)    (1,348)

FINANCIAL INCOME, NET                                       4      1,318        669         81

LOSS ON DISPOSITION OF ASSETS                               3    (16,001)        --         --

OTHER INCOME/(EXPENSE), NET                                 5      7,346     (1,333)      (161)
                                                                 -------    -------     ------

LOSS FROM CONTINUING OPERATIONS
   BEFORE INCOME TAXES                                           (29,739)   (60,182)    (7,267)

INCOME TAXES                                                6     (1,579)       (50)        (6)
                                                                 -------    -------     ------

LOSS FROM CONTINUING OPERATIONS
   BEFORE MINORITY INTERESTS                                     (31,318)   (60,232)    (7,273)

MINORITY INTERESTS                                                 1,198         --         --
                                                                 -------    -------     ------


LOSS FROM CONTINUING OPERATIONS                                  (30,120)   (60,232)    (7,273)

DISCONTINUED OPERATIONS
   Loss on continuing operations of
     discontinued timber segment                                     (24)        --         --
                                                                 -------    -------     ------


NET LOSS                                                         (30,144)   (60,232)    (7,273)
                                                                 =======    =======     ======

LOSS PER SHARE:
Basic and diluted
   Continuing operations                                          (35.95)    (71.89)     (8.68)
   Discontinued operations                                         (0.03)        --         --
                                                                 -------    -------     ------

                                                                  (35.98)    (71.89)     (8.68)
                                                                 =======    =======     ======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-4
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

CONSOLIDATED BALANCE SHEET

December 31, 2002

(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                        Notes         RMB            US$
<S>                                                     <C>        <C>            <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                             4,082            493
Trading securities                                        7           1,185            143
Inventories                                                             649             78
Other receivables, deposits and prepayments                           6,916            835
Short term loans receivable                               8           3,498            423
Amounts due from employees                               14             190             23
                                                                   --------        -------

TOTAL CURRENT ASSETS                                                 16,520          1,995
                                                                   --------        -------

PROPERTY AND EQUIPMENT                                    9           6,468            781

INVESTMENTS                                              10          63,000          7,609

VALUE-ADDED TAX RECEIVABLE                                            3,124            377
                                                                   --------        -------

TOTAL ASSETS                                                         89,112         10,762
                                                                   ========        =======
</TABLE>
                                  (Continued)

                                      F-5
<PAGE>


CHINA RESOURCES DEVELOPMENT, INC.

CONSOLIDATED BALANCE SHEET (continued)

December 31, 2002

(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                        Notes         RMB            US$
<S>                                                     <C>        <C>            <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable                                                        256             31
Other payables and accrued liabilities                   11           8,984          1,006
Income taxes payable                                      6              50             85
Amounts due to related companies                         14             366             44
                                                                   --------        -------

TOTAL CURRENT LIABILITIES                                             9,656          1,166
                                                                   --------        -------

COMMITMENTS                                              19

SHAREHOLDERS' EQUITY
Preferred stock, authorized -
   10,000,000 shares:
     Series B preferred stock, US$0.001 par value:       13
       Authorized - 320,000 shares

       Issued and outstanding - 320,000 shares                            3              1
Common stock, US$0.001 par value:
   Authorized - 200,000,000 shares

   Issued and outstanding - 837,797 shares                                7              1
Additional paid-in capital                                          169,052         20,417
Reserves                                                 18          28,028          3,385
Accumulated deficit                                                (117,792)       (14,227)
                                                                   --------        -------
Accumulated other comprehensive income                                  158             19
                                                                   --------        -------

TOTAL SHAREHOLDERS' EQUITY                                           79,456          9,596
                                                                   --------        -------
TOTAL LIABILITIES AND
   SHAREHOLDERS' EQUITY                                              89,112         10,762
                                                                   ========        =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-6
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                                              Accumulated
                                 Series B             Additional                                    other
                                Preferred     Common     paid-in              Accumulated   comprehensive
                                    stock      stock     capital   Reserves       deficit          income      Total
                                ------------------------------------------------------------------------------------
                                      RMB        RMB         RMB        RMB           RMB             RMB        RMB
                                                                   (note 18)
<S>                                     <C>        <C>   <C>         <C>          <C>                  <C>   <C>
Balance at January 1, 2001              3          7     169,052     28,028       (27,416)             18    169,692

Net loss                                                                          (30,144)                   (30,144)
Currency translation
    adjustments                                                                                        33         33
                                                                                                             -------
Comprehensive loss                                                                                           (30,111)
                                        -          -     -------     ------      --------             ---    -------

Balance at December 31, 2001            3          7     169,052     28,028       (57,560)             51    139,581

Net loss                                                                          (60,232)                   (60,232)
Currency translation
    adjustments                                                                                       107        107
                                                                                                             -------
Comprehensive loss                                                                                           (60,125)
                                        -          -     -------     ------      --------             ---    -------

Balance at December 31, 2002            3          7     169,052     28,028      (117,792)            158     79,456
                                        =          =     =======     ======      ========             ===    =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-7
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)
<TABLE>
<CAPTION>

                                                                    Year ended December 31,
                                                                 2001        2002       2002
                                                                  RMB         RMB        US$
<S>                                                            <C>        <C>         <C>
OPERATING ACTIVITIES
Net loss                                                       (30,144)   (60,232)    (7,274)
Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
       Depreciation and amortization                             7,510        842        102
       Write off of intangible asset                             2,936         --         --
       Loss on disposition of assets                            16,001         --         --
       Loss on impairment of investment                             --     46,615      5,630
       Minority interests                                       (1,215)        --         --
       Allowance on VAT receivable                                  --      1,563        188
       Loss on disposal of property and equipment, net             466         --         --

Changes in operating assets and liabilities:
    Trading securities                                          56,640      4,559        551
    Inventories                                                    (12)       (39)        (5)
    Other receivables, deposits and prepayments                  1,682     (2,281)      (276)
    Amount due from Farming Bureau                              (1,096)        --         --
    Amounts due from related companies                              31        636         77
    Amounts due from employees                                    (274)       706         85
    Amounts due to related companies                              (300)        --         --
    Accounts payable                                               (22)         9          1
    Other payables and accrued liabilities                     (41,323)     3,713        448
    Income taxes payable                                           679       (404)       (49)
                                                               -------    -------     ------
Net cash provided by/(used in) operating activities             11,559     (4,313)      (522)
                                                               -------    -------     ------

INVESTING ACTIVITIES
    Purchases of property and equipment                           (665)       (31)        (4)
    Acquisition of minority interest in a subsidiary           (36,000)        --         --
    Disposal of a subsidiary                                        (1)        --         --
    Short term loans advanced to third parties                 (21,852)    (1,590)      (192)
    Repayment of a short term loan from a third party            6,364     13,580      1,640
                                                               -------    -------     ------

Net cash (used in)/provided by investing activities            (52,154)    11,959      1,444
                                                               -------    -------     ------

FINANCING ACTIVITIES
    Advances from/(repayment to) a former vice president        11,298    (11,298)    (1,364)
                                                               -------    -------     ------

Net cash provided by/(used in) financing activities             11,298    (11,298)    (1,364)
                                                               -------    -------     ------

Effect of exchange rate changes on cash                             --        107         13
                                                               -------    -------     ------

NET DECREASE IN CASH AND CASH
  EQUIVALENTS                                                  (29,297)    (3,545)      (429)

CASH AND CASH EQUIVALENTS, AT BEGINNING
  OF YEAR                                                       36,924      7,627        922
                                                               -------    -------     ------


CASH AND CASH EQUIVALENTS, AT END
  OF YEAR                                                        7,627      4,082        493
                                                               =======    =======     ======
</TABLE>

    The accompanying notes are an integral part of these consolidated financial
statements.

                                      F-8
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES

         The following depicts China Resources Development, Inc. and its
         subsidiaries (collectively the "Group") at December 31, 2002:

<TABLE>
<CAPTION>
<S>     <C>                     <C>                                 <C>                           <C>

                                     --------------------------
                                     |    CHINA RESOURCES     |
         ----------------------------|   DEVELOPMENT, INC.    |------------------------------------------
         |                           | a Nevada corporation   |                                         |
         |                           --------------------------                                         |
         |                                          |                                                   |
         |                                          |                                                   |
         |                                          |                                                   |
         |                                     100% |                                                   |  80%
         |                           --------------------------                                     ---------------
         |                           |     BILLION LUCK       |                                     | SILVER MOON  |
         |                           |COMPANY LTD., a British |                                     |  a British   |
         |                           |Virgin Islands company  |-------------------------------      |    Virgin    |
         |                           |                        |                              |      |   Islands    |
         |                           |                        |                              |      |   company    |
         |                           --------------------------                              |      ---------------|
         |                                          |                                        |          |
         |                |-----------------------------------------------------|            |          |
         |                | 95%                                                 | 100%       |          |  100%
         |         ---------------                                      ------------------   |      ---------------
         |         |    HARC     |                                      |     SUNWIDE    |   |      |  MEDI-CHINA |
         |   5%    |    a PRC    |                                      |a British Virgin|   |      | a Hong Kong |
         --------- |   company   |                                      | Islands company|   |      |   company   |
                   ---------------                                      ------------------   |      ---------------
                          |                                                                  |
              |----------------------------------------------------------------|             |
         100% |           | 100%            | 100%           | 100%            |  95%        |
   --------------- ----------------  ---------------   -----------------  ----------------   |
   |FIRST SUPPLY | |   SECOND     |  |    XUBU     |   |    ZHUHAI     |  |  ZHONGWEI    |   |
   |   a PRC     | |   SUPPLY     |  |   a PRC     |   |   ZHONGWEI    |  |   TRADING    | 5%|
   |  company    | |a PRC company |  |  company    |   |a PRC company  |  |a PRC company |---
   --------------- ----------------  ---------------   -----------------  ----------------
</TABLE>

         China Resources Development, Inc. ("CRDI" or "the Company"), is a U.S.
         holding Company, incorporated in Nevada in 1986.

         Billion Luck Company, Limited ("Billion Luck") is a British Virgin
         Islands ("BVI") holding company incorporated in 1993.

         Hainan Cihui Industrial Company Limited ("HARC") is a People's Republic
         of China ("PRC") company incorporated in 1994. In 2001 and 2002, HARC
         performed limited commodity trading. At January 1, 2001, the Company
         owned 61% of HARC. On April 30, 2001, the Company acquired the
         remaining 39% from the Hainan Agricultural Reclamation General Company
         ("the Farming Bureau"), a division of the Ministry of Agriculture, the
         PRC agency responsible for matters relating to agriculture, for RMB
         129.4 million. Payment was primarily through the exchange of the
         Company's 13% interest in the Xilian Timber Mill, its 58% interest in
         Hainan Weilin Timber Limited Liability Company and a 3.4% interest in
         Hainan Sundiro Motorcycle Co. Ltd (reducing its ownership interest
         5.3%). The exchange was based on the carrying value of the assets
         exchanged and resulted in a net loss of approximately RMB16 million to
         the Company. The results of operations and losses previously allocated
         to the minority shareholder of HARC have been included in operations
         from the date of the exchange.

                                      F-9
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

1.       ORGANIZATION AND PRINCIPAL ACTIVITIES (continued)

         Before January 1, 2000, the Company's two primary businesses were the
         marketing and distribution of natural rubber and the procurement of
         production materials, supplies and other agricultural products, which
         were conducted through HARC. As part of its risk management strategy,
         from time to time, the Company entered in to commodity futures
         contracts to hedge against the exposure to price risk associated with
         existing inventories and certain firm commitments for the purchase of
         natural rubber. The Company also entered into natural rubber commodity
         futures contracts that were not specific hedges, in anticipation of a
         rise or fall in the price of natural rubber, based on management's
         knowledge of the supply and demand situation with respect to natural
         rubber in the PRC. As of December 31, 2002, the Company was not a party
         to any commodity futures contracts.

         Hainan Zhongwei Trading Company Limited ("Zhongwei Trading") is a PRC
         company incorporated in 1998 and principally engaged in the investment
         in marketable securities in the PRC. Zhongwei Trading is owned 95% by
         HARC and 5% by Billion Luck.

         Zhuhai Zhongwei Development Company Limited ("Zhuhai Zhongwei") is a
         PRC company incorporated in 1999 and engaged in the operation of a
         supermarket in Zhuhai, PRC. Zhuhai Zhongwei is a wholly-owned
         subsidiary of HARC. As of December 31, 2002, the Company's only active
         operations consisted of its supermarket business.

         Shenzen Xubu Investment Company Limited ("Xubu"), a wholly-owned
         subsidiary of HARC is a PRC company incorporated in 1999. Xubu was
         established for the purpose of seeking investment opportunities in
         China.

         Sunwide Capital Limited ("Sunwide") is a BVI company incorporated in
         2001 and engaged in the investment in US-listed securities. Sunwide is
         a wholly-owned subsidiary of Billion Luck.

         Silver Moon Technologies Limited ("Silver Moon") is a BVI company
         incorporated in 2000 with its primary operations to be the provision of
         online internet healthcare information. Zhongwei Medi-China.com Limited
         ("Medi-China") is a Hong Kong company incorporated in 1999 to conduct
         the business of Silver Moon.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      Principles of consolidation
                  ---------------------------
                  The consolidated financial statements of CRDI and its
                  subsidiaries ("The Group") are prepared in accordance with
                  accounting principles generally accepted in the United States
                  of America ("US GAAP") and include the accounts of the Company
                  and its subsidiaries. Significant intercompany accounts and
                  transactions have been eliminated on consolidation.



                                      F-10
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         (b)      Use of estimates
                  ----------------
                  The preparation of the consolidated financial statements in
                  conformity with US GAAP requires 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 consolidated financial
                  statements and the reported amounts of revenues and expenses
                  during the reporting year. Actual results could differ from
                  those estimates.

         (c)      Cash and cash equivalents
                  -------------------------
                  The Group considers all highly liquid investments and cash
                  deposits with financial institutions with original maturities
                  of three months or less to be cash equivalents.

         (d)      Trading securities
                  ------------------
                  Equity securities that are bought and held principally for the
                  purpose of selling them in the near term are classified as
                  trading securities and are reported at fair value, with
                  unrealized gains and losses included in current operations.

         (e)      Inventories
                  -----------
                  Inventories consist primarily of merchandise held for sale
                  (grocery items) and are stated at the lower of cost or market
                  value. Cost is determined using the weighted average method.

         (f)      Property and equipment
                  ----------------------
                  Property and equipment are stated at cost less accumulated
                  depreciation. Expenditures for routine repairs and maintenance
                  are expensed as incurred.

                  Depreciation is calculated on the straight-line basis to write
                  off the cost less estimated residual value of each asset over
                  its estimated useful life. Estimated useful lives are as
                  follows:

                  Buildings                                     25 - 50 years
                  Machinery, equipment and motor vehicles        5 - 15 years
                  Fixtures and furniture                              5 years

                  Management assesses the carrying values of its long-lived
                  assets for impairment when circumstances warrant such a
                  review. Generally, long-lived assets are considered impaired
                  if the expected net sales value is less than the assets'
                  carrying values. If an impairment is indicated, the loss is
                  measured based on the amounts by which the carrying values of
                  the assets exceed their fair values.

         (g)      Investments
                  -----------
                  Long-term investments, which are neither subsidiaries nor
                  equity investments are stated at cost less valuation
                  allowances.

                                      F-11
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         (h)      Stock-based compensation
                  ------------------------
                  Statement of Financial Accounting Standards ("SFAS") No. 123
                  "Accounting for Stock-Based Compensation" allows companies to
                  choose whether to account for employee stock-based
                  compensation on a fair value method, or to continue accounting
                  for such compensation under the intrinsic value method
                  prescribed in Accounting Principles Board Opinion No 25,
                  Accounting for Stock Issued to Employees ("APB 25"). The
                  Company has chosen to continue to account for employee
                  stock-based compensation using APB 25.

         (i)      Revenue recognition
                  -------------------
                  Revenue from product sales is recognized at the point of sale
                  for retail sales and upon the delivery of goods for other
                  sales, when all performance obligations have been completed
                  and collectibility is reasonably assured.

         (j)      Income taxes
                  ------------
                  Deferred tax assets and liabilities are recognized for the
                  estimated future tax consequences attributable to differences
                  between the financial statement carrying amounts of existing
                  assets and liabilities and their respective tax bases.
                  Deferred tax assets and liabilities are measured using enacted
                  tax rates expected to apply to taxable income in the years in
                  which those temporary differences are expected to be recovered
                  or settled.

         (k)      Loss per share
                  --------------
                  Basic earnings (loss) per share amounts are calculated using
                  the weighted average number of shares of common stock
                  outstanding during the period. Diluted earnings per share
                  assumes the conversion, exercise or issuance of all potential
                  common stock instruments, such as options or warrants, unless
                  the effect is to reduce a loss or increase earnings per share.
                  The basic and diluted weighted average shares outstanding
                  during each of the years ended December 31, 2001 and 2002 were
                  837,797.

         (l)      Advertising costs
                  -----------------
                  All advertising costs are expensed as incurred.

         (m)      Foreign currency translation
                  ----------------------------
                  The functional currency of substantially all the operations of
                  the Group is Renminbi ("RMB"), the national currency of the
                  PRC. The financial statements of subsidiary operations with
                  functional currency other than RMB have been translated into
                  RMB using the closing rate method and all balance sheet
                  accounts have been translated using the exchange rates in
                  effect at the balance sheet date and statements of operations
                  amounts have been translated using the weighted average
                  exchange rate for the year. Resulting translation adjustments
                  are reported as a separate component of comprehensive income.

                                      F-12
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

         (m)      Foreign currency translation (continued)
                  ----------------------------------------
                  Transactions denominated in currencies other than RMB are
                  translated into RMB at the applicable rates of exchange
                  prevailing at the dates of the transactions. Monetary assets
                  and liabilities denominated in other currencies have been
                  translated into RMB at the rate of exchange at the balance
                  sheet date. The resulting exchange gains or losses are
                  credited or charged to the consolidated statements of
                  operations.

                  The financial statements are stated in Renminbi. The
                  translation of amounts from RMB into US$ is included solely
                  for the convenience of the reader and has been made at the
                  rate of exchange quoted by the People's Bank of China on
                  December 31, 2002 of US$1.00 = RMB8.28. No representation is
                  made that the RMB amounts could have been, or could be,
                  converted into US$ at that rate on December 31, 2002 or at any
                  other date.

         (n)      Written call
                  ------------
                  Premiums on options written by the Group are recorded as
                  liabilities and the option is adjusted to the current fair
                  value at the balance sheet date. Premiums received from
                  writing options are treated by the Group on the expiration
                  date as realized gains from investments. The difference
                  between the premiums and the amount paid on effecting a
                  closing purchase transaction, is also treated as a realized
                  gain, or, if the premium is less than the amount paid for the
                  closing purchase transaction, as a realized loss. The Group as
                  writer of options bears the market risk of an unfavorable
                  change in the price of the security underlying the written
                  option. The Group had no written calls in 2002.

         (o)      Comprehensive income
                  --------------------
                  The Company has adopted "Reporting Comprehensive Income"
                  ("SFAS 130"), which establishes requirements for disclosure of
                  comprehensive income including certain items previously not
                  included in the statements of operations, including minimum
                  pension liability adjustments and foreign currency translation
                  adjustments, among others. The Company's only components of
                  comprehensive gains are foreign currency translation
                  adjustments.

                                      F-13
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          (p)     Recently issued accounting pronouncements
                  -----------------------------------------
                  In January 2003, the Financial Accounting Standards Board
                  ("FASB") issued SFAS Interpretation No. 46, Consolidation of
                  Variable Interest Entities ("FIN 46"), which changes the
                  criteria by which one company includes another entity in its
                  consolidated financial statements. FIN 46 requires a variable
                  interest entity ("VIE") 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
                  VIE's created after January 31, 2003, and apply in the first
                  fiscal period beginning after June 15, 2003, for VIE's created
                  prior to February 1, 2003. As the Company does not currently
                  have an interest in a VIE, management does not expect that the
                  adoption of FIN 46 will have a significant immediate impact on
                  the financial condition or results of operations of the
                  Company.

                  In November 2002, the FASB issued SFAS Interpretation No. 45
                  ("FIN 45"), Guarantor's Accounting and Disclosure Requirements
                  for Guarantees, Including Indirect Guarantees and Indebtedness
                  of Others. FIN 45 elaborates on the disclosures to be made by
                  the guarantor in its interim and annual financial statements
                  about its obligations under certain guarantees that it has
                  issued. It also requires that a guarantor recognize, at the
                  inception of a guarantee, a liability for the fair value of
                  the obligation undertaken in issuing the guarantee. The
                  initial recognition and measurement provisions of this
                  interpretation are applicable on a prospective basis to
                  guarantees issued or modified after December 31, 2002, while
                  the provisions of the disclosure requirements are effective
                  for financial statements of interim or annual reports ending
                  after December 15, 2002. The Company is currently evaluating
                  the recognition provisions of FIN 45, but does not expect that
                  the adoption of FIN 45 will have a significant immediate
                  impact on the financial condition or results of operations of
                  the Company, as the Company has made no guarantees.

                  In July 2001, the FASB issued SFAS No. 141, Business
                  Combinations, and SFAS No. 142, Goodwill and Other Intangible
                  Assets. SFAS No. 141 requires that the purchase method of
                  accounting be used for all business combinations initiated
                  after June 30, 2001. Use of the pooling-of-interests method is
                  prohibited after that date. SFAS No. 142 changes the
                  accounting for goodwill and intangible assets with indefinite
                  lives from an amortization method to an impairment-only
                  approach and requires intangible assets with finite lives to
                  be amortized over their useful lives. Thus, amortization of
                  goodwill and intangible assets with indefinite lives will
                  cease upon adoption of the statement. SFAS No. 142 was
                  required to be applied by the Company on January 1, 2002. The
                  Company determined that adoption of these


                                      F-14
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

          (p)     Recently issued accounting pronouncements (continued)
                  -----------------------------------------------------
                  pronouncements did not have an impact on the Company's
                  financial position or results of operations.

                  In August 2001, the FASB issued SFAS No. 144, Accounting for
                  the Impairment or Disposal of Long-Lived Assets, which
                  addresses accounting and financial reporting for the
                  impairment or disposal of long-lived assets. This statement
                  was effective for the Company on January 1, 2002. The Company
                  determined that adoption of this pronouncement did not have an
                  impact on the Company's financial position or results of
                  operations.

         (q)      Reclassifications
                  -----------------
                  Certain amounts in prior years have been reclassified to
                  conform to the current year presentation.

3.       BUSINESS ACQUISITIONS

         On June 30, 2000 the Group entered into an acquisition agreement
         ("Acquisition") to acquire an 80% equity interest in Silver Moon
         Technologies Limited ("Silver Moon"), a British Virgin Islands
         corporation which was incorporated on March 24, 2000, for a
         consideration of US$1,500 (RMB12,420) by issuing 244,897 shares of the
         Company's unregistered restricted common stock of US$0.001 par value to
         Silver Moon's former sole equity owner, E-link Investment Limited
         ("E-link"). The principal activities of Silver Moon and its
         wholly-owned subsidiary, Zhongwei Medi-China.com Limited (formerly
         known as Sky Creation Technology Limited), a Hong Kong company, is
         providing healthcare content on the Internet which focuses on Chinese
         herbal medicine and therapies.

         The transaction was accounted for as a purchase; the cost of the
         acquisition exceeded the fair value of the net assets acquired by
         RMB12,405 which was classified as acquired website technology and was
         being amortized over two years. In the fourth quarter of 2001,
         management determined that the website's functionality was inadequate
         for the Company's intended purpose in view of the fact that no revenue
         was generated during 2001 from the site and none is anticipated in the
         foreseeable future. Consequently, an impairment charge was recorded to
         selling, general and administrative expenses in 2001 for the entire
         unamortized balance of RMB2,936.

         During 2001, the Group recognized a loss of RMB 16,001 on the exchange
         of: (i) cash of RMB 36,000; (ii) its 13% equity interest in Xilian
         Timber Mill; (iii) its 58% equity interest in Hainan Weilin Timber
         Limited Liablility Company; and (iv) a portion of HARC's interest in
         Hainan Sundiro Motorcycle Co. Ltd. for the Hainan Agricultural
         Reclamation General Company's (a division of the Ministry of
         Agriculture, the PRL government agency responsible for matters relating
         to agriculture) ("The Farming


                                      F-15
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

3.       BUSINESS ACQUISITIONS (continued)

         Bureau") 39% equity interest in HARC, computed based on the carrying
         value of assets exchange. The results of operations and losses
         previously allocated to the minority shareholder of HARC have been
         included in operations from the date of the exchange.

4.       FINANCIAL INCOME, NET

         Financial income, net represents:
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                  --------------------------
                                                                    RMB                  RMB
<S>                                                               <C>                    <C>
         Interest income                                          1,537                  669
         Interest expense                                          (229)                  --
         Foreign exchange gains, net                                 10                   --
                                                                  -----                  ---
                                                                  1,318                  669
                                                                  =====                  ===
</TABLE>


5.       OTHER INCOME/(EXPENSE), NET

         Other income/(expense), net represents:
<TABLE>
<CAPTION>

                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                              <C>                  <C>
         Realized gain on call option written                     3,182                   --
         Net gain on trading of marketable securities             7,055                  109
         Loss on disposal of property and equipment, net           (466)                  --
         Recovery of bad debts written-off                        1,664                   --
         Unrealized loss on marketable securities                  (573)              (1,731)
         Write off of acquired website technology                (2,936)                  --
         Other                                                     (580)                 289
                                                                 ------               ------
                                                                  7,346               (1,333)
                                                                 ======               ======
</TABLE>

                                      F-16
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

6.       INCOME TAXES

         Pre-tax loss from continuing operations for the years ended December 31
         was taxable in the following jurisdictions:
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                             <C>                  <C>
         PRC (excluding Hong Kong)                               (6,728)             (54,953)
         Other countries:
             USA                                                (23,748)              (6,574)
             Hong Kong                                              737                1,345
                                                                -------              -------
                                                                (29,739)             (60,182)
                                                                =======              =======
</TABLE>

         The provision for income tax for continuing operations consisted of the
         following:
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                               <C>                     <C>
         Current:
             PRC federal income tax                               1,579                   50
                                                                  =====                   ==
</TABLE>

         It is management's intention to reinvest all the income attributable to
         the Group earned by its operations outside the United States of America
         (the "U.S."). Accordingly, no U.S. corporate income taxes have been
         provided in these consolidated financial statements.

         Under the current laws of the BVI, dividends and capital gains arising
         from the Company's investments in the BVI are not subject to income
         taxes and no withholding tax is imposed on payments of dividends to the
         Company.

                                      F-17
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

6.       INCOME TAXES (continued)

         The reconciliation of income taxes/(tax benefit) for income tax
         computed at the PRC federal statutory tax rate applicable to foreign
         investment enterprises operating in Hainan, Zhuhai and Shenzhen Special
         Economic Zones in the PRC, to income tax expense is as follows:
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                              <C>                  <C>
         PRC federal statutory tax rate                              15%               15%

         Computed expected income taxes (tax benefit)            (4,461)              (9,027)
         Higher effective income tax rates
            of other countries                                   (4,505)                 784
         Net increase in valuation allowance                      8,966                8,243
         Non-deductible expenses                                  1,263                   74
         Others                                                     316                  (24)
                                                                 ------               ------

         Income tax expense for the year                          1,579                   50
                                                                 ======               ======
</TABLE>

         The deferred tax asset of the Group is comprised of the following:
<TABLE>
<CAPTION>
                                                                          December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                             <C>                  <C>
         Deferred tax asset:
             Net operating loss carry forwards                   22,097               30,340
             Less: Valuation allowance                          (22,097)             (30,340)
                                                                -------              -------
                                                                     --                   --
                                                                =======              =======
</TABLE>

         No undistributed earnings of the Group's foreign subsidiaries were
         available at December 31, 2001 and 2002. Upon distribution of those
         earnings in the form of dividends or otherwise, the Group would be
         subject to U.S. income taxes. Determination of the amount of
         unrecognized deferred U.S. income tax liability is not practicable
         because of the complexities associated with its hypothetical
         calculation.

                                      F-18
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

6.       INCOME TAXES (continued)

         At December 31, 2002, the Group had net operating loss carry forwards
         ("NOLs") of approximately RMB 30 million for U.S. income tax purposes
         that expire in various years through 2022. At December 31, 2002, the
         Group's subsidiaries in the PRC had NOLs amounting to approximately RMB
         3 million for PRC income tax purposes that expire in 2006.

7.       TRADING SECURITIES
<TABLE>
<CAPTION>
                                                                          December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                               <C>                 <C>
         Trading securities listed on NASDAQ
             At cost                                              1,478                1,478
             Less: unrealized loss                                  (21)              (1,093)
                                                                  -----               ------
         Fair value                                               1,457                  385
                                                                  -----               ------

         Trading securities listed on Hong Kong
             Stock Exchange

                At cost                                           4,839                2,013
              Add: unrealized gain                                  113                   --
                Less: unrealized loss                              (665)              (1,213)
                                                                  -----               ------
         Fair value                                               4,287                  800
                                                                  -----               ------

              Total                                               5,744                1,185
                                                                  =====               ======
</TABLE>

8.       SHORT TERM LOANS RECEIVABLE

         As of December 31, 2002, short term loans receivable represented
         advances to two unaffiliated parties of RMB2,508 and RMB1,309 with
         interest at 10%. RMB1,309 of loans receivable are due on April 18, 2003
         and are unsecured. Loans of RMB2,508 were in default at December 31,
         2002 and were repaid in February and March 2003.

9.       PROPERTY AND EQUIPMENT

         At December 31, 2002, property and equipment consisted of:
<TABLE>
<CAPTION>
<S>                                                                                   <C>
                                                                                         RMB
         At cost:
            Buildings                                                                  4,260
            Machinery, equipment and motor vehicles                                    4,144
            Fixtures and furniture                                                       219
                                                                                      ------
                                                                                       8,623

         Accumulated depreciation                                                     (2,155)
                                                                                      ------
                                                                                       6,468
                                                                                      ======
</TABLE>

                                      F-19
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

10.      INVESTMENTS

         Cost method investments comprise:
<TABLE>
<CAPTION>
                                                                                         RMB
<S>                                                                                  <C>
         Investment balance in Hainan Sundiro Motorcycle Co., Ltd.
             ("Sundiro") at December 31, 2001                                        109,615
         Valuation allowance for the year ended December 31, 2002                    (46,615)
                                                                                     -------
                                                                                      63,000
                                                                                     =======
</TABLE>

         Cost method investments are interests in unlisted shares/equity of PRC
         companies in which the Group does not have a significant influence over
         their operating and financial policies. As of December 31, 2002, the
         Group owns an equity interest of 5.3% of Sundiro. The Company monitors
         its investment in Sundiro by reference to the fair market value of
         Sundiro's publicly traded shares. During the fourth quarter of 2002 and
         the first quarter of 2003, the Company determined that there had been
         an other-then temporary decline in the value of its investment and
         recorded a write-down of RMB46,615.

11.      OTHER PAYABLES AND ACCRUED LIABILITIES

         At December 31, 2002, other payables and accrued liabilities consisted
         of:
<TABLE>
<CAPTION>
                                                                                         RMB
<S>                                                                                    <C>
         Accrued salaries of a director                                                1,488
         Other payables                                                                1,018
         Accrued liabilities                                                           2,112
         Advances from a company owned by a former vice president                      3,710
                                                                                       -----
                                                                                       8,328
                                                                                       =====
</TABLE>

         The advances from a company owned by a former vice president are
         unsecured, interest-free and have no fixed terms of repayment.

                                      F-20
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

12.      STOCK OPTIONS

         The Group adopted a stock option plan (the "Plan") as of March 31,
         1995. The Plan allows the Board of Directors, or a committee thereof at
         the Board's discretion, to grant stock options up to 20% of the
         Company's outstanding common stock to officers, directors, key
         employees, consultants and affiliates of the Group. Such shares may
         represent authorized but unissued shares as well as repurchased or
         forfeited shares for any grant under the Plan that was expired or
         unexercised. The Board of Directors has the ability to set a holding
         period of less than one year for non-qualified stock options.

         At January 1, 2001 options to purchase 24,000 shares of the Company's
         common stock were outstanding. The options had an exercise price of
         US$42 (RMB348.6) per share and were exercisable through May 2006.

         Pursuant to a special resolution of the Board of Directors on June 15,
         2001, the 24,000 stock options outstanding as of June 15, 2001 were
         canceled by mutual consent and 163,000 new stock options were granted
         to officers, directors and key employees of the Group at an exercise
         price of US$2.95 (RMB24.4) per share (the fair market value of the
         common stock as of June 15, 2001). The options are exercisable from
         December 15, 2001 to June 14, 2004. No stock options were granted in
         2002.

         The Company applies APB 25 for its employee stock-based compensation
         plans. Had compensation cost for the Company's stock plan been
         determined based on fair value at the grant date for awards under the
         Plan consistent with the method prescribed under SFAS No. 123, the
         Company's pro forma net loss and net loss per share for the year ended
         December 31, 2001 would have been RMB30,677 and RMB36.62, respectively.
         The fair value for these options was estimated at the date of grant
         using the Black-Scholes option pricing model with the following
         weighted average assumptions: risk-free interest rate of 4%; no
         dividend yield; volatility factors of the expected market price of the
         Company's common stock of 129.6%; and a weighted average expected life
         of the options of 3 years.

         The Black-Scholes option pricing model was developed for use in
         estimating the fair value of traded options which have no vesting
         restrictions and are fully transferable. In addition, option valuation
         models require the input of highly subjective assumptions including the
         expected stock price volatility. Because the Company's stock options
         have characteristics significantly different from those of traded
         options, and because changes in the subjective input assumptions can
         materially affect the fair value estimate, in management's opinion, the
         existing models do not necessarily provide a reliable single measure of
         the fair value of its stock options.

13.      PREFERRED STOCK

         The preferred stock entitles the holders to voting rights to the same
         extent and in the same manner as shares of common stock; has no
         preemptive or other subscription rights and is not subject to any
         future calls or assessments. There are no redemption or sinking fund
         provisions applicable to the preferred stock and they have no rights to
         dividends or to distribution upon liquidation or dissolution of the
         Company.

                                      F-21
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

14.      RELATED PARTY BALANCES AND TRANSACTIONS


         At December 31, 2001 and 2002 the Company owed RMB366 to related
         companies. At January 1, 2002 the Company was owed RMB636 by related
         companies, all of which was repaid during the year ended December 31,
         2002. These amounts are unsecured, interest-free and are repayable on
         demand.

         At January 1, 2002 the Company had RMB896 due from its employees
         representing bank accounts held by employees on behalf of the Group.
         Amounts due at December 31, 2002 were RMB190.

15.      SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                             <C>                       <C>
         Cash paid during the year for:
             Interest                                               229                   --
                                                                =======                   ==
             Income tax                                           1,346                   --
                                                                =======                   ==

         Non-cash investing and financing activities:
             Acquisition of minority interest in a
                  subsidiary                                    114,265                   --
                                                                =======                   ==
</TABLE>

16.      CONCENTRATION OF RISK

         Concentration of credit risk:

         Financial instruments that potentially subject the Group to significant
         concentration of credit risk consist principally of cash deposits,
         short term loans receivable, and related companies and cost method
         investments.

         (i)      Cash and cash deposits

                  The Group maintains its cash and cash deposits primarily with
                  various PRC government authorized financial institutions. The
                  Group performs periodic evaluations of the relative credit
                  standing of those financial institutions that are considered
                  in the Group's investment strategy.

         (ii)     Short term loans receivable

                  The Group carefully assesses the recoverability of loans not
                  guaranteed or secured by collateral.

                                      F-22
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

16.      CONCENTRATION OF RISK (continued)

         (iii)    Cost method investments

                  The Group's cost method investments consist of interests in
                  unlisted shares/equity of PRC companies in which the Group
                  does not have a significant influence over their operating and
                  financial policies.

17.      FAIR VALUE OF FINANCIAL INSTRUMENTS

         The following methods and assumptions were used by the Group in
         estimating its fair value disclosures for financial instruments:

         (i)      Cash and cash equivalents

                  The carrying amount reported in the consolidated balance
                  sheets for cash and cash equivalents approximate their fair
                  value.

         (ii)     Marketable securities

                  The carrying amount reported in the consolidated balance
                  sheets for marketable securities represents their fair values.
                  The fair values for marketable securities are based on quoted
                  market prices.

         (iii)    Short term loans receivable, accounts payable and other
                  payables

                  The carrying amounts reported in the balance sheet for short
                  term loans receivable, accounts payable and other payables
                  approximate their fair values.

         (iv)     Amounts due from/to related companies

                  The fair values of amounts due from/to the related companies
                  cannot be determined due to the related party nature of those
                  balances.

         (v)      Cost method investments

                  The Group believes that the carrying amounts represent the
                  Group's best estimate of current economic values of these
                  investments.

18.      RESERVES AND DISTRIBUTION OF PROFITS

         In accordance with the relevant PRC regulations and the Articles of
         Association of HARC (the "Articles of Association"), appropriations
         representing 10% of the net income as reflected in HARC's PRC statutory
         financial statements are allocated to the surplus reserve and 10% to
         the collective welfare fund.

                                      F-23
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

18.      RESERVES AND DISTRIBUTION OF PROFITS (continued)

         Subject to certain restrictions set out in the relevant PRC regulations
         and the Articles of Association, the surplus reserve may be distributed
         in the form of share bonus issues.

         In accordance with the relevant PRC regulations and the Articles of
         Association, the collective welfare fund must be used for capital
         expenditure on staff welfare facilities. Such facilities are for the
         use of the staff and are owned by HARC.

         According to relevant laws and regulations in the PRC, distributable
         reserves of HARC and its subsidiaries are determined in accordance with
         the relevant PRC accounting rules and regulations. HARC had no retained
         earnings available for distribution as of December 31, 2001 and 2002.

         There were no appropriations to the surplus reserve or to the
         collective welfare fund for the years ended December 31, 2001 and 2002.

19.      COMMITMENTS

         The Company leases buildings in the PRC and in Hong Kong. The PRC
         leases are for periods ranging from one to nine years, expire on
         various dates through 2007, and provide for monthly rent expense of
         approximately RMB42. The Company leases its Hong Kong office space from
         a company affiliated with one of the Company's directors. The Hong Kong
         office lease expires in August 2004 and provides for monthly rent
         expense of approximately RMB24. Through June 2003, the Company also
         leased office space in Hainan under a non-cancelable operating lease
         providing for monthly rent expense of approximately RMB 4.

         At December 31, 2002, future minimum payments under non-cancelable
         operating leases are as follows:
<TABLE>
<CAPTION>
                                                                                         RMB
<S>                                                                                    <C>
                  Payable in:
                      2003                                                               792
                      2004                                                               696
                      2005                                                               504
                      2006                                                               504
                      2007                                                               504
                                                                                       -----
                  Total minimum lease payments                                         3,000
                                                                                       -----
</TABLE>
         Rental expenses under operating leases for the years ended December 31,
         2001 and 2002 amounted to RMB1,254 and RMB1,030 respectively.



                                      F-24
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

20.      FOREIGN CURRENCY EXCHANGE

         The RMB is not freely convertible into foreign currencies.

         Effective from January 1, 1994, a single rate of exchange is quoted
         daily by the People's Bank of China (the "Unified Exchange Rate").
         However, the unification of the exchange rates does not imply
         convertibility of RMB into US$ or other foreign currencies. All foreign
         exchange transactions continue to take place either through the Bank of
         China or other banks authorized to buy and sell foreign currencies at
         the exchange rates quoted by the People's Bank of China.

21.      VALUATION AND QUALIFYING ACCOUNTS

         (1)      Sundiro (investment valuation)                 46,615
         (2)      VAT receivable valuation allowance              1,563
         (3)      Inventory write-down                            2,683
         (4)      Other                                             275
                                                                 ------
                  Total balance at December 31, 2002             51,136
                                                                 ======

         No provisions was made during the year ended December 31, 2001. During
         2002, an addition of RMB 46,615 was made to the reserve related to the
         impairment of the Company's investment in Hainan Sundiro Motorcycle Co
         Ltd., and an allowance of RMB 1,563 was provided against the VAT
         receivable.

22.      SEGMENT FINANCIAL INFORMATION

         The Company classifies its business into two operating segments, which
         are defined by the products offered as follows:

         Grocery and food products
         -------------------------
         The Group's supermarket division primarily sells foods and grocery
         products to customers in the PRC.

         Commodity trading
         -----------------
         The Group's materials, supplies and other commodity products division
         primarily traded materials, supplies and other commodity products to
         farms, manufacturers and other distributors in the PRC.

                                      F-25
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

22.      SEGMENT FINANCIAL INFORMATION (continued)

         The Group evaluates performance and allocates resources based on profit
         or loss from operations before interest, gains and losses on the
         Group's investment portfolio, and income taxes. The accounting policies
         of the reportable segments are the same as those described in the
         summary of significant accounting policies. Intersegment sales and
         transfers between reportable segments are not material to any period
         presented.

         Operating segment information
         -----------------------------
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                              <C>                   <C>
         Net sales:
             Natural rubber/copper:
                 Net sales to unaffiliated customers              4,093                1,948
             Supermarket operations:
                 Net sales to unaffiliated customers              5,999                7,222
                                                                 ------                -----
         Total consolidated net sales                            10,092                9,170
                                                                 ======                =====
         Depreciation and amortization expenses:
             Copper                                                  --                   30
             Supermarket operations                                 143                  154
                                                                 ------                -----

         Total segment depreciation and amortization expenses       143                  184

         Reconciling item:
             Depreciation and amortization expenses
                 attributable to corporate assets                 7,367                  658
                                                                 ------                -----
         Total consolidated depreciation and
             amortization expenses                                7,510                  842
                                                                 ======                =====
</TABLE>
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                             <C>                  <C>
         Segment profit/(loss):
             Natural rubber/copper                                 (157)                   3
             Supermarket operations                                 417                  663
                                                                -------              -------

         Total segment profit                                       260                  666

         Reconciling items:
             Corporate expenses                                 (31,307)             (61,517)
             Interest income                                      1,537                  669
             Interest expense                                      (229)                  --
                                                                -------              -------

         Total consolidated loss before income taxes            (29,739)             (60,182)
                                                                =======              =======
</TABLE>

                                      F-26
<PAGE>
CHINA RESOURCES DEVELOPMENT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2001 and 2002

(Amounts in thousands, except share and per share data)

22.      SEGMENT FINANCIAL INFORMATION (continued)
<TABLE>
<CAPTION>
                                                                                         RMB
<S>                                                                                   <C>
         Segment assets:
             Copper                                                                    6,024
             Supermarket operations                                                    6,762
                                                                                      ------
         Total segment assets                                                         12,786

         Reconciling items:
             Corporate assets                                                         13,326
             Investments                                                              63,000
                                                                                      ------
         Total consolidated assets                                                    89,112
                                                                                      ======
</TABLE>
<TABLE>
<CAPTION>
                                                                     Year ended December 31,
                                                                   2001                 2002
                                                                 ---------------------------
                                                                    RMB                  RMB
<S>                                                             <C>                  <C>
         Expenditure for additions to long-lived assets:
             Copper                                                  --                   10
             Supermarket operations                                  79                    8
                                                                    ---                   --
         Total segment expenditure for
             additions to long-lived assets                          79                   18

         Reconciling item:
             Corporate assets                                       586                   13
                                                                    ---                   --
         Total consolidated expenditure for
             additions to long-lived assets                         665                   31
                                                                    ===                   ==
</TABLE>

         Long-lived assets of reportable segments and corporate assets
         consisting of property and equipment located in the PRC and Hong Kong.

         Major customers
         ---------------
         The Group did not have any customers that represented more than 10% of
         the total consolidated net sales in 2001. Sales of copper of RMB1,384
         were made to a customer in the PRC, representing 15% of total
         consolidated net sales in 2002.

                                      F-27