SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

(Mark One)

[X]  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

                   For the Fiscal Year-ended December 31, 1999

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

        For the transition period from ______________ to _______________.

                         Commission File No. 33-18834-LA

                             OPAL TECHNOLOGIES, INC.
                 (Name of small business issuer in its charter)

          Nevada                                         87-0306463
--------------------------------         ---------------------------------------
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
 incorporation or organization)


         Suite 4704, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
               (Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Include Area Code: 011-852-2541-1999

Securities Registered Pursuant to Section 12(b) of the Act:

     Title of Each Class          Name of Each Exchange on Which Registered
     -------------------          -----------------------------------------
             None                                None

Securities Registered Pursuant to Section 12(g) of the Act:

                                      None
                                ----------------
                                (Title of Class)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past twelve (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 ninety (90)
days. Yes   No  X
         ---  ----

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
Regulation S-B is not contained in this form, and will not 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]

     The issuer's revenues for its most recent fiscal year were $361,000.

     As of May 19, 2000,  67,241,954  shares of common  stock of the  Registrant
were  outstanding.  As of such date,  the  aggregate  market value of the common
stock  held by  non-affiliates,  based  on the  closing  bid  price  on the NASD
Bulletin Board, was approximately $4,269,994.

                       DOCUMENTS INCORPORATED BY REFERENCE

     No annual reports to security holders, proxy or information statements,  or
prospectuses  filed  pursuant  to Rule 424(b) or (c) have been  incorporated  by
reference in this report.

     Transitional Small Business Disclosure Format: Yes    No   X
                                                       ---    -----


<PAGE>

                                TABLE OF CONTENTS

                                                                          Page
                                                                         ------
PART I

       ITEM 1.  DESCRIPTION OF BUSINESS..................................... 3
       ITEM 2.  DESCRIPTION OF PROPERTIES................................... 7
       ITEM 3.  LEGAL PROCEEDINGS........................................... 7
       ITEM 4.  SUBMISSION OF MATTERS TO A VOTE
                OF SECURITY HOLDERS......................................... 7

PART II

       ITEM 5.  MARKET FOR COMMON EQUITY AND
                RELATED STOCKHOLDER MATTERS................................. 7
       ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS........................ 8
       ITEM 7.  FINANCIAL STATEMENTS........................................13
       ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                ON ACCOUNTING AND FINANCIAL DISCLOSURE......................13

PART III

       ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
                AND CONTROL PERSONS; COMPLIANCE WITH
                SECTION 16(a) OF THE EXCHANGE ACT...........................13
       ITEM 10. EXECUTIVE COMPENSATION......................................14
       ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                OWNERS AND MANAGEMENT.......................................14
       ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............15
       ITEM 13. EXHIBITS AND REPORTS OF FORM 8-K............................15

                SIGNATURES..................................................16

                FINANCIAL STATEMENTS.......................................F-1



<PAGE>
                                     PART I


ITEM 1. DESCRIPTION OF BUSINESS

     This Form 10-KSB contains forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. The Company's actual results could differ  materially from
those set forth in the  forward-looking  statements.  Certain factors that might
cause such a difference are discussed in the section  entitled  "Certain Factors
Affecting Future Operating Results" beginning on page 10 of this Form 10-KSB.

Background

     Opal  Technologies,  Inc.  ("Opal") was incorporated in the State of Nevada
May 14, 1987 under the name of  Sportsland,  Inc.  Following the  acquisition of
Enpak Medical Corporation and its subsidiary,  Enpak Surgical Products,  Inc. in
1994,  Opal changed its name to Med-Tex  Corporation.  The Enpak  companies were
engaged in assembling  and marketing  custom and standard  surgical kits used in
diagnostic and surgical  procedures.  On October 31, 1996,  Opal disposed of its
entire interest in the Enpak companies and remained dormant from that time until
May  1997.  On  May  14,  1997,  in  anticipation  of  an  acquisition,  Med-Tex
Corporation changed its name to Opal Technologies,  Inc. and affected an one for
ten  reverse  stock  split,   re-classified  its  authorized  share  capital  of
50,000,000  shares of Common Stock, par value $.001 each into 49,000,000  shares
of Common Stock par value $.001 each and  1,000,000  shares of Preferred  Stock,
par value $.001 each.

     On June 6, 1997, Opal entered into an agreement with Bestalong Group,  Inc.
("Bestalong";  a company  incorporated in the British Virgin Islands) to acquire
from Bestalong a 100% interest in Triple Star Holdings Limited ("TSH"; a company
incorporated  in the  British  Virgin  Islands)  and a  100%  interest  in  Opal
Agriculture  Development  Limited ("OAD"; a company  incorporated in the British
Virgin  Islands) by (i) issuing to  Bestalong  8,452,768  shares of post reverse
common stock and 100,000 shares of Series A preferred  stock,  and (ii) assuming
Bestalong's liabilities in the form of a promissory note of US$2,100,000,  which
was subsequently canceled by the issuance of 4,200,000 post-reverse split shares
of common stock. Bestalong is beneficially controlled by Mr. John K.C. Koon, the
Chairman and Chief Executive Officer of the Company.

The TSH Group

     TSH and its  wholly-owned  subsidiary,  Triple Star Group Limited ("TSG"; a
company  incorporated  in the British  Virgin  Islands) are  investment  holding
companies.  On August 6, 1996,  TSG  acquired  a 55%  interest  in Beijing  Opal
Agriculture  Biochemistry  Co., Ltd.  ("Beijing  Opal"), an equity joint venture
established  in the  People's  Republic of China ("the  PRC").  Beijing  Opal is
engaged in the manufacturing and sale of organic agricultural fertilizers.

     Beijing Opal was originally established as a PRC equity joint venture for a
period of 20 years beginning  February 8, 1995 to February 7, 2015 between Ideit
Enterprise Co., Ltd. ("IECL";  a company  incorporated in Taiwan) owning 40% and
Beijing Opal Biochemistry Factory ("BOBF"; a PRC state-owned  enterprise) owning
60%.  Pursuant  to a Sale and  Purchase  Agreement  dated  August 6,  1996,  TSG
acquired  from IECL a 40% interest in Beijing Opal and acquired  from BOBF a 15%
interest in Beijing Opal for approximately  US$140,000.  A revised joint venture
agreement  between  TSG and BOBF was  executed  on  August  6,  1996,  which was
approved by the relevant PRC  authorities  on March 24, 1997.  Under the revised
joint venture agreement,  the joint venture period has been extended to 30 years
from February 8, 1995 to February 7, 2025,  and the total  investment to be made
by Beijing Opal has been increased from US$350,000 to US$10,000,000  (equivalent
to  approximately   Rmb82,900,000),   of  which   US$6,000,000   (equivalent  to
Rmb49,920,000)  must be in the form of registered  capital to be invested within
one year after  Beijing Opal obtains its revised  business  license from the PRC
authorities.  By December 31, 1997, all of the registered capital requirement of
Beijing  Opal   (US$6,000,000)   was  paid  and  verified  by  certified  public
accountants in the PRC under PRC regulations.

The other key provisions of the revised joint venture agreement are:

*    the profit and loss sharing ratio is the same as the respective  percentage
     of equity interest;

*    upon early  termination  or  liquidation of Beijing Opal, the net assets of
     Beijing  Opal  will  be  distributed  in  accordance  with  the  respective
     percentage of equity interest; and

*    the Board of Directors of Beijing Opal will consist of seven members,  four
     designated by TSG and three designated by BOBF.

                                       3
<PAGE>

OAD

     OAD was incorporated in the British Virgin Islands on December 15, 1995. On
January 2, 1996,  OAD issued 50,000 shares of common stock to Asian  Connections
Limited,  a  company  incorporated  in the  British  Virgin  Islands,  owned  by
independent investors, for a total cash consideration of US$50,000. On March 22,
1997,   Bestalong   acquired  the  entire  interest  in  OAD  for  approximately
US$19,405,000.

     OAD  is  engaged  in  the  trading  of  organic   agricultural   fertilizer
manufactured by Beijing Opal. On December 16, 1996, OAD was appointed by Beijing
Opal as its sole agent and was granted the  exclusive  right to  distribute  and
sell organic  agriculture  fertilizer  manufactured  by Beijing Opal in the PRC,
Hong Kong,  Taiwan and Macau for a period  from  January 1, 1997 to  February 7,
2015.

Principal Products

     Opal (together with its subsidiaries  TSG and OAD is collectively  referred
to as "the Company") is engaged in the  manufacturing,  selling and distribution
of environment  friendly organic  fertilizers.  The Company's principle products
include a series of organic mineral  fertilizers  produced in both liquid ("Opal
Foliar") and granular forms. ("Opal Granules").

     Designed to be diluted  300-800  times with  water,  Opal Foliar is applied
directly  onto  crops as well as the soil.  thereby  aiding  photosynthesis  and
providing  necessary  nutrients to the plant's soil. This fertilizer consists of
one general-purpose  fertilizer used on a variety of crops, and several specific
fertilizers,  each for a specified  crop.  Fertilizers  in the Opal Foliar group
contain a balance of key nutrients such as nitrogen,  phosphorous and potassium,
and trace elements, humic acids and organic colloidal matter derived from peat.

     The Opal  Granules are granular in form and release  nutrients  slowly into
the soil.  The  granular  process is slower  than the foliar  process  but has a
longer lasting effect.  Key nutrients  include nitrogen,  phosphoric  anhydride,
potassium  oxide,  calcium  oxide,   magnesium  oxide,  silicon  dioxide,  trace
material,  humic  acid  and  organic  matters.  These  fertilizers  can  replace
conventional  chemical  fertilizers,  like urea, with the advantage that they do
not cause environmental problems for the soil.

     The  Company  also  manufactures  and sells  Opal Soil  Conditioner,  a key
ingredient of both the Opal Foliar and the Opal Granules which is  independently
applied.

Manufacturing Division

     The Company  manufactures  its products in its  Sino-foreign  joint venture
factory located in Shunyi County,  Beijing,  China. The  joint-venture  company,
Beijing Opal  Agricultural and  Biochemistry  Company Limited ( "Beijing Opal"),
purchased the land use rights for fifty (50) years to a block of land consisting
of  approximately  206 acres.  In August  1997,  Beijing  Opal  opened the first
segment of Phase I, a 53,000 square foot spray fertilizer facility. The plant is
capable of producing up to 7,500  metric tons of spray  fertilizers,  and can be
expanded to produce an additional  7,500 metric tons. This facility is also used
for the production of specially formulated catalyst,  an essential ingredient in
the production of granular fertilizers and soil conditioners.

     In  November  1998,  the  Company  completed  the  second  segment  of  the
production  facility.  This  segment  adds  110,500  square feet to the existing
facility and is capable of producing 100,000 metric tons of granular fertilizers
per year.  This  facility  began  operation  in March  1999.  The  Company  also
constructed an administration  building,  green house, and staff quarters at the
site.

                                       4
<PAGE>

Sales Division

     The sale and  marketing of Opal  products is conducted by Opal  Agriculture
Development Limited (referred to as "OAD"). OAD has contracted with Beijing Opal
for the exclusive distribution of Beijing Opal's products through 2015. Although
OAD's marketing territory includes the People's Republic of China,  Taiwan, Hong
Kong and Macau, it has concentrated its sales and marketing efforts in China and
Taiwan.  Sales in China are made through  several  tiers of  distributors,  from
provincial distributors to county/city  distributors to town/village agents. The
village  agents  sell  directly to the  farmers.  Most of the  distributors  are
agricultural  product companies  authorized by the government to sell fertilizer
and other agricultural chemicals, or government agencies which operate under the
agriculture  committees of provinces,  counties or villages.  In provinces where
there  are  no  provincial  distributors,  OAD  sells  directly  to  county/city
distributors.

     OAD also sells to major end users,  such as large farms.  In addition,  OAD
works closely with agricultural  research institutions in tests of its products.
Among these  institutions  is the China National  Hybrid Rice Research Centre of
Hunan, which has signed an agreement to promote the Company's products.

     Over the past several years,  Opal Beijing has been conducting  tests on 20
state owned farms in Taiwan in an attempt to secure government  approval for its
product.  In 1998, the Taiwanese  government agency responsible for agricultural
planning  and  coordination  signed an  exclusive  five-year  contract  with the
Company  for the  purchase  of  organic  mineral  fertilizers  to be  funded  by
irrevocable  letter of credit.  The trial  order for the first year  consists of
1,000 metric tons of Opal Foliar and 30,000  metric tons of Opal Granules with a
value of US$10 million. The contract will be updated annually.

Research and Development

     The Company employs 15 personnel whose  activities  relate primarily to the
improvement of the existing products.  The Company spent  approximately  $280,00
and  $400,00  during 1999 and 1998  respectively  on  research  and  development
activities.

Competition

     The Company has traditionally targeted PRC and Taiwan markets, and competes
primarily with locally  manufactured  spray fertilizers and a few imported spray
fertilizers.  Most of the  competitors'  products  are  designed as additives of
trace elements and are for foliar use only; therefore, they are not used as soil
conditioners.  However,  Opal Foliar can be applied  directly to the soil,  thus
creating a healthier root system, an environment for microbiological activities,
and  improved  soil  conditions.  Despite  this  fertilizer  conditioning  edge,
competition in this sector of the market is intense.  The Company  believes that
the endorsement of its products by the National Green Food Centre of China,  its
new modern production  facility and several years of field testing will give the
Company a firm footing in the Chinese market.

     Currently,  China uses  approximately  38 million  metric  tons of chemical
fertilizers,  10 million metric tons of which are imported. However, the Central
Government  has formulated a policy to gradually  replace  chemical with organic
mineralized fertilizers.  Following the inauguration of its granular facility in
its  Beijing  factory,  Opal will be the only  producer of  mineralized  organic
fertilizer  in granular  form in the PRC.  This should  position  the Company to
compete in the market of traditional chemical fertilizers.

     In late  1998 the  Taiwanese  Commodities  Inspection  Bureau  granted  its
approval to the Company's samples, clearing the way for shipment pursuant to the
5 year contract  described above. This evidences  Taiwan's first attempt in over
25 years to import  fertilizers,  and the Company  believes  its  presence as an
initial supplier will give it a competitive edge in Taiwan.

Raw Materials

     The major  raw  material  utilized  in the  production  of  Beijing  Opal's
fertilizers is peat.  This is available in abundance in the PRC. The Company has
historically  purchased  the  majority of its raw  materials  from  Beijing Opal
Biochemistry Factory ("BOBF"),  the PRC state owned enterprise which owns 45% of
Beijing Opal.  Other raw materials used in  production,  such as bone powder and
potassium chloride are generally available in sufficient  quantities to meet the
Company's requirements.

                                       5
<PAGE>

Employees

     As of December 31, 1999, the Company had 65 employees.

Federal, State and Local Regulations Regarding Environment

     Federal,  state  and  local  regulations  relating  to  protection  of  the
environment  have not had,  and are not  expected  to have,  a material  adverse
effect  upon  the  Company's  capital  expenditures,   liquidity,  earnings,  or
competitive  position.  The  Company's  manufacturing   facilities  comply  with
existing environmental requirements of the Chinese government.

Trademarks, Patents and Licenses

     The Company has developed  proprietary  technology  relating to its organic
mineral fertilizers, but has no trademarks or patent registrations.  Through its
subsidiary  OAD, the Company has obtained a license for the  exclusive  right to
sell and distribute organic fertilizer manufactured by Beijing Opal for 18 years
up to February 7, 2015.  The Company  has  received  endorsement  from the China
Green Food Centre  certifying  that the Company's  products are  environmentally
friendly.

ITEM 2. DESCRIPTION OF PROPERTIES

     The Company leases  approximately  2,900 square feet of office in Hong Kong
for use as its  corporate  headquarters.  As  described  in Item 1, the  Company
manufactures its products in its  Sino-foreign  joint venture factory located in
Shunyi County,  Beijing,  China. Beijing Opal purchased the land use rights to a
block of land  consisting  of  approximately  206 acres for 50 years.  In August
1997,  Beijing  Opal  opened  Phase I, a 53,000  square  foot  spray  fertilizer
facility capable of producing up to 7,500 metric tons of spray  fertilizers.  In
November  1998,  the  Company  completed  the second  segment of the  production
facility.  This segment adds 110,500 square feet to the existing facility and is
capable of producing  100,000 metric tons of granular  fertilizers per year. The
Company also  constructed an  administration  building,  green house,  and staff
quarters at the site.  The Company  believes that these  properties are adequate
for its present needs.

ITEM 3. LEGAL PROCEEDINGS

     The Company is not  presently a party to, and  management  is not aware of,
any pending or threatened legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No  matters  were  submitted  to a vote of  security  holders  through  the
solicitation  of  proxies,  or  otherwise,  during  the  fourth  quarter  of the
Company's fiscal year-ended December 31, 1999.

                                       6
<PAGE>

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

     The  Company's  common  stock is  currently  traded  on the OTC  Electronic
Bulletin  Board and is quoted under the symbol OPAL.  The trading  market in the
Company's  common stock is limited and sporadic.  The following table sets forth
the high and low bid price per share  for the  Company's  common  stock for each
quarterly period.

                                1999                            1998
                         -------------------           -------------------
                          High         Low               High         Low
                         ------       ------           --------      -----

First Quarter            .45           .22              2.75         .50
Second Quarter           .50           .27              2.50         .875
Third Quarter            .41           .13              1.25         .375
Fourth Quarter           .19           .06              0.60         .26

     The quotation  reflects the  inter-dealer  prices  without  retail  markup,
markdown or commissions and may not represent actual transactions.

     As of May 19, 2000 the bid price of the Common Stock was $0.26.

Record Holders

     As of May 19, 2000 there were approximately 601 record owners of the Common
Stock of the Company.

Dividends

     The Company has never  declared  or paid any cash  dividends  on its Common
Stock and does not expect to declare or pay any such dividend in the foreseeable
future.

Sales of Unregistered Securities

     On June 6, 1997,  the Company  acquired  all of the issued and  outstanding
capital stock of Triple Star Holdings Limited and Opal  Agriculture  Development
Limited in exchange for 8,452,768  shares of the Company's  common stock,  $.001
par value,  100,000 shares of the Company's Series A Preferred Stock,  $.001 par
value and the issuance of 4,200,000 shares of the Company's common stock,  $.001
par value for the cancellation of the promissory note.

     On July 1, 1997,  the Company sold  11,400,000  shares of its common stock,
$.001 par value,  at $0.50 per share for a total of  $5,700,000  pursuant to the
exemption provision of Regulation S.

     On September 29, 1997, the Company issued  11,000,000  shares of its common
stock, $.001 par value for the cancellation of $5,500,000 in debt.

     On September 28, 1999, the Company issued  25,000,000  shares of its common
stock,  $.001 par value to Bestalong,  Inc. for  5,000,000  shares or 38.116% of
China Can Holdings, Inc., a BVI Company.

                                       7
<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

     This Form 10-KSB contains forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. The Company's actual results could differ  materially from
those set forth in the  forward-looking  statements.  Certain factors that might
cause such a difference are discussed in the section  entitled  "Certain Factors
Affecting Future Operating Results" beginning on page 9 of this Form 10-KSB.

Overview

     In June 1997,  the Company  acquired  the  operations  of Opal  Agriculture
Development Limited ("OAD") and Triple Star Holding Limited ("Triple Star"). For
the year prior to the  acquisition  of OAD and Triple  Star,  the Company had no
operations  other than the sale of its inactive  Enpak Medical  assets.  OAD and
Triple Star are engaged in the production and sale of fertilizer in the People's
Republic of China.  The  financial  statements  of the Company and the following
discussion  include  the  operations  of OAD and  Triple  Star  for all  periods
presented.

     The  Company's  focus over the past year has been to  complete  its organic
fertilizer  production  facilities.  With Phase I of the Beijing Plant completed
and the  procurement  of a $10 million loan, the Company is poised to begin full
production.  During the  development  stage between 1997 and 1998, the Company's
major product was Opal Foliar, which, as previously  described,  is a supplement
of the traditional  fertilizers.  With the completion of its Beijing facilities,
the Company  introduced  Opal  Granules  into the market.  The Company  plans to
market Opal Foliar and Granules together as a complete package, enabling farmers
to  use  Opal  Granules  as  base  fertilizers  replacing  traditional  chemical
fertilizers,  and Opal Foliar as  supplementary  supply of  essential  nutrients
during the growth cycle.

     Despite  having  completed  Phase I of its  Beijing  facility,  the Company
suffered  unexpected losses as a result of the devastating floods of the Yangtze
River in China in 1998.  Sales volume dropped  substantially;  and  distributors
failed  to timely  pay trade  debts to the  Company.  Additionally,  some of the
distributors  goods were  damaged by the flood.  As a result,  the  Company  has
increased its allowance for doubtful accounts during 1998.

     In an effort to diversify its market,  Management  has explored other Asian
markets such as Taiwan,  Malaysia,  Philippines and Vietnam. As a result of this
effort, the Taiwanese  government agency  responsible for agricultural  planning
and coordination has signed an exclusive five-year contract with the Company for
the purchase of organic mineral  fertilizers to be funded by irrevocable  letter
of credit.  The trial order for the first year  consists of 1,220 metric tons of
Opal Foliar and 29,000 metric tons of Opal  Granules,  a value of US$10 million.
The contract will be updated annually.

Results of Operations - Fiscal Year 1999 Compared to Fiscal Year 1998

     The  following  table sets forth  certain  items as a  percentage  of total
revenues from the Company's Statements of Operations during 1998 and 1997:

<TABLE>
                                                    1998               1999

                                              Amount  %           Amount   %
                                              ($000)  of Sales    ($000)  of Sales
                                             -------- --------   -------- --------
<S>                                          <C>      <C>        <C>       <C>

Sales Revenues                                 840     100.0%       361     100.0%
Cost of Goods Sold                             716      85.2%       227      62.9%
Gross Profit                                   124      14.8%       134      37.1%
Selling, General and Administrative Expense    338      40.2%     2,344     649.3%
Interest Expense, net                          165      19.6%       494     136.8%
Net loss                                      (358)     -        (2,386)       -
</TABLE>

                                       8
<PAGE>

     Net  Sales.  Net sales  for the year  ended  December  31,  1999  decreased
$479,000 or 57% to $361,000  from  $840,000  for the prior year.  This  decrease
resulted  from a lack of sale of  granular  products  which the  Company did not
produce because of insufficient working capital.

     Gross Profits. Gross profits for the year ended December 31, 1999 increased
by $10,000 or 8.1% to 134,000 from $124,000 for the prior year. The gross profit
for 1998 was  distorted by the high rate of  non-collectible  receivables  which
were booked as a reduction  of sale.  However,  the company  still  incurred the
expense of producing  goods for these sales,  thus making the cost of goods sold
disproportionately high as a percentage of net sales.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  for the year ended  December  31,  1999  increased  by
$2,006,000  or 593.5% to  $2,344,000  from  $338,000  for the prior  year.  This
increase  resulted from the  Company's  decision to increase the number of sales
teams, the promotion and marketing  expenses,  and other related  administrative
expenses in expectation of the production of 100,000 MT. of organic granules.

     Interest Expense,  Net.  Interest expense,  net for the year ended December
31, 1999 increased by $329,000 or 199.4% to $494,000 from $165,000 for the prior
year.  This  increase  resulted  from  increased  short-term  borrowings to fund
current production.

     Because  of reduced  sales,  higher  selling,  general  and  administrative
expenses and increased  interest expense,  the Company's net loss after minority
interest for the year ended  December 31, 1999 increased by $2,028,000 or 566.5%
to 2,386,000 from $385,000 for the prior year.

Changes in Financial Condition, Liquidity and Capital Resources

     For the past  twelve  months,  the  Company  has funded its  operating  and
capital  requirements with loans from various third parties.  As of December 31,
1999,  the  Company  had  cash of  $19,000  and a  working  capital  deficit  of
($5,316,000).  This compares with cash of $384,000 and a working capital deficit
of $158,000 as of December 31, 1998.

     Net cash  provided by  operating  activities  increased to $696,000 for the
year-ended  December 31, 1999 compared to $158,000 of net cash used in operating
activities  for the  year-ended  December 31, 1998.  This change  resulted  from
increases  in  payables  which were  partially  offset by an  increase  in other
assets, inventories and the net operating loss.

     Net  cash  used in  investing  activities  decreased  to  $183,000  for the
year-ended  December 31, 1999 from  $2,435,000 for the prior year. This decrease
resulted from reduced  expenditures  for the acquisition of property,  machinery
and equipment and no loan payment.

     Net  cash  used in  financing  activities  increased  to  $895,000  for the
year-ended  December 31, 1999 from  $2,942,000 for the  year-ended  December 31,
1998.  The  change  is  attributable  to the  repayment  of  loans  and  reduced
shareholder loans.

     Despite its negative cash flow from operating activities on April 10, 2000,
the Company has secured  financing of $10,000,000 loan from an independent third
party. With the financing, the Company has sufficient working capital to execute
its business plan for the next twelve months.

Certain Factors Affecting Future Operating Results

     This Form 10-KSB contains forward-looking  statements within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934. The Company's actual results could differ  materially from
those set forth in the  forward-looking  statements.  Certain factors that might
cause such a difference include the following:

Business Risks

Need for Additional Capital.  The Company requires additional capital or outside
financing  in order to meet its  financial  needs for the current  fiscal  year.
Subsequent  to year end, the Company  obtained a loan of  $10,000,000.  However,
there is no  assurance  that the  Company  will be able to  generate  sufficient
earnings to repay this loan or that the lender will convert this loan to equity.

                                       9
<PAGE>

Limited operating history.  The Company reorganized and commenced its operations
in trading and manufacturing of organic agricultural fertilizers in August 1996,
and such  operations  were still in the  development  stages as of December  31,
1999. The Company  incurred losses from  continuing  operations (net of minority
interests)  for the years ended  December 31, 1998 and 1999,  and its operations
are subject to all the risks inherent in an emerging business enterprise.  These
include,   but  are  not  limited   to,   competition   from  other   fertilizer
manufacturers,  the  need  to  expand  production  and  distribution,  and  slow
settlement of billing to new customers.  Realization of the Company's investment
in assets is dependent on the success of its future operations.

Dependence  strategic  relationship.  The Company conducts its operations in the
PRC through an equity joint venture with Beijing Opal biochemical Factory, a PRC
government owned entity. Any deterioration of this strategic  relationship could
have an adverse effect on the operations and financial position of the Company.

Concentration  of credit risk. A substantial  portion of the Company's sales are
made to a small number of customers  on an open account  basis and  generally no
collateral is required. Details of individual customers accounting for more than
5% of the Company's sales are as follows:
<TABLE>

                                                                  1998          1999
                                                               ----------     ----------
<S>                                                             <C>           <C>

Agricultural and Production Information Company, a related             -              -
party
Heng Yang Agricultural and Technology Development Company              -              -
Yunnan Xing Long Agriculture and Trade Development Centre          13.0%              -
Xin Jiang Agriculture and Science Institute                            -              -
Gansu Nong Ken Technological  Development Company                      -              -
Xiamen Station of Soil and Fertilizer Work                         12.5%              -
Zhejiang Jiangshan Group                                            8.4%              -
Hunan Dalong Group                                                 15.5%              -
Hainan Global Industry Company Limited                             15.0%          42.2%
Shaoguan Agricultural Association                                   7.7%              -
Wulong Group                                                        5.5%              -
Foshan Couty Enterprises Co.                                           -          18.8%
Shanghai Yong Dao Trading Company Limited                              -          15.1%
                                                              ===========     ==========
</TABLE>

Concentration  of accounts  receivable  as of  December  31, 1998 and 1999 is as
follows:

                                                         1998           1999
                                                    -----------      ---------
Five largest accounts receivable                         54.4%          53.7%

The Company  performs  ongoing credit  evaluation of each  customer's  financial
condition.  It maintains reserves for potential credit losses and such losses in
aggregate have not exceeded management's  projections.  As of December 31, 1999,
the  Company  maintained  a specific  provision  of  approximately  US$2,178,000
against its trade receivables.  The Directors,  in their opinion,  consider that
the risk of recoverability of the unprovided for receivable is minimal.

                                       10
<PAGE>

Concentration of suppliers.  The Company purchases raw material from a number of
suppliers.  Details of individual  suppliers  accounting for more than 5% of the
Company's purchases are as follows:

                                                            1998         1999
                                                         ----------    ---------
Purchase from:                                              71.6%          13%
Agriculture and Production Information Company
Shun Yi County Chemical Fertilizer                              -            -
Shengli Plastic Factory                                     11.6%            -
Bestalong                                                       -            -
Nuclear Industry Xi Feng Hong Tai Chemical Factory              -          10%
Tianjing Da Fang Chemical Limited                               -           6%
Yunnan Province Chemical Company                                -           5%
Miyun Carton Box Factory                                        -          13%
Neimenggu Yikezhaomeng Tax Bureau                               -          15%

Factors Affecting  Fertilizer Demand and Prices.  With virtually of its sales in
China and Taiwan,  the Company's  operating  results are highly  dependent  upon
conditions  in the PRC and  Taiwanese  agricultural  industries.  A  variety  of
factors beyond the Company's control can materially affect fertilizer demand and
pricing.  These  factors  include  but  are not  limited  to:  planted  acreage;
government agricultural policies,  projected grain stocks, crop failure, weather
and  changes in  agricultural  production  methods  and  seasonality  based upon
weather related shifts in planting.

Permitting.   The  Company  holds  several   environmental   and  other  permits
authorizing  operations at its Beijing  facility.  A decision by a  governmental
agency  to deny an  application  for a new or  renewed  permit,  or to revoke or
substantially modify an existing permit, could have a material adverse effect on
the Company's ability to continue operations.

Dependence on Management. The operations of the Company have depended to a great
extent on  management  efforts of John Koon,  yet the Company has no  employment
agreement with either. The loss of the service of key personnel or the inability
to attract additional personnel as required could have a material adverse effect
on the Company's business, financial condition and results of operations.

Competition.  The  fertilizer  industry is highly  competitive in China and many
competitors,  both  domestic  and  international,   have  substantially  greater
technical, financial and marketing resources than the Company.

Currency  Exchange Rates.  The Company  transacts  business in Renminbi and U.S.
dollars.  In all trading  transactions  involving  more than one  currency,  the
Company  employs  strategies  to minimize or  eliminate  risks  associated  with
currency exchange rate fluctuations; however it is not possible to eliminate all
exchange  rate  risk,  and the  Company  may  experience  losses  as a result of
exchange rate fluctuations from time to time.

Inflation.  The Company has made its projections  assuming a stable economy, and
has not  considered  any  inflation  factors which would affect the value of the
products and the purchasing ability of its customers.

                                       11
<PAGE>

China and Other Foreign Operation Risks

Internal  Political  and  Other  Risks.   Substantially  all  of  the  Company's
operations are conducted in the PRC and, accordingly,  the Company is subject to
special  considerations  and  significant  risks not typically  associated  with
companies  operating in North  America and Western  Europe.  These include risks
associated with, among others,  the political,  economic and legal  environments
and foreign currency  exchange.  The Company's results may be affected by, among
other  things,  changes in the  political  and social  conditions in the PRC and
changes  in  governmental   policies  with  respect  to  laws  and  regulations,
anti-inflationary measures, currency conversion and remittance abroad, and rates
and methods of taxation. Changes in policies by the Chinese government resulting
in changes in laws,  regulations,  or the interpretation  thereof,  confiscatory
taxation,  restrictions on imports and sources of supply,  currency devaluations
or the expropriation of private enterprise could materially adversely affect the
Company. Under its current leadership,  the Chinese government has been pursuing
economic  reform  policies,  including  the  encouragement  of private  economic
activity  and  greater  economic  decentralization.  There can be no  assurance,
however, that the Chinese government will continue to pursue such policies, that
such  policies  will be  successful  if pursued,  that such policies will not be
significantly altered from time to time or that business operations in the China
would not become subject to the risk of  nationalization,  which could result in
the total loss of  investments  in that  country.  Economic  development  may be
limited as well by the  imposition  of  austerity  measures  intended  to reduce
inflation,  the inadequate  development of an  infrastructure  and the potential
unavailability   of   adequate   power  and  water   supplies,   transportation,
satisfactory roads and communications.

Uncertain  Legal  System  and  Application  of Laws.  The legal  system of China
relating  to  foreign  investments  is both new and  continually  evolving,  and
currently  there  can be no  certainty  as to the  application  of its  laws and
regulations in particular instances.  China does not have a comprehensive system
of  laws.  Enforcement  of  existing  laws or  agreements  may be  sporadic  and
implementation and interpretation of laws inconsistent. The Chinese judiciary is
relatively  inexperienced in enforcing the laws that exist,  leading to a higher
than usual degree of  uncertainty  as to the outcome of  litigation.  Even where
adequate  law  exists  in China,  it may not be  possible  to  obtain  swift and
equitable enforcement of that law.

Inflation  and  China's  Rapid  Economic  Growth.  In an attempt to control  the
country's  rapidly  growing  inflation  rate,  the  Chinese  government  imposed
measures  attempting to check  inflation but to date those methods have not been
effective.  Because  almost all of the  Company's  operations  are  conducted in
China, that country's inflation and austerity may adversely effect the Company's
business.

ITEM 7. FINANCIAL STATEMENTS

     The  consolidated  financial  statements of the Company,  together with the
independent  auditors' report thereon of Arthur Andersen & Co., appears on pages
F-2 through F-32 of this report.  See Index to Financial  Statements on page F-1
of this report.

ITEM 8.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

     On January 23, 1998, the Board of Directors  selected Arthur Andersen & Co.
of Hong Kong, as its certifying accountants for the year-ended December 31, 1998
replacing H.J. Swart & Co. of Kissimmee, Florida. During the preceding two years
and the subsequent interim periods preceding their dismissal, the Company had no
disagreements with the prior accountants on any matter of accounting  principals
or practices, financial statement disclosure, or auditing scope or procedure.

     On February 9, 2000, the Board of Directors selected Grant Thornton of Hong
Kong as its  certifying  accountants  for  the  year  ended  December  31,  1999
replacing Arthur Andersen & Co. who had resigned.  During the period that Arthur
Andersen & Co. was the certifying  accountant,  the Company had no disagreements
with  them on any  matter  of  accounting  principals  or  practices,  financial
statement disclosures or auditing scope or procedure.

                                       12
<PAGE>

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTORS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

Information Regarding Present Directors and Executive Officers

     The following table sets forth the names and ages of the present  executive
officers and directors of the Company and the positions held by each.

  Name                   Age       Title
---------               -----    ----------

John Koon                53     Chairman of the Board, President and
                                Director
Cheng Kai Sum, Eric      41     Director and acting CEO
Au Wah, Edmond           46     Director
Chen Long Chen           50     Vice President, Sales and Marketing and Director
Chen Xing Hua            52     General Manager of Beijing Opal
Michael W. Botts         53     Vice President of Research and Development and
                                Director
James H. Shane           55     Director
Chung Siu Wah            43     Director
Miss Ho Wan Lai, Tammy   41     Chief Financial Officer

Mr. John Koon,  Chairman of the Board,  President and Chief Executive Officer of
the  Company,  is the  founder  and  Chairman  of  Bestalong  Group,  Inc.,  the
controlling  shareholder of the Company.  He is also a principal and director of
several private  companies with  operations in China.  Mr. Koon is a graduate of
the  University  of Hong Kong with a Bachelor  of Social  Services  majoring  in
Accounting  and  Economics.  He is a member of the  International  Institute  of
Management.

Mr. Eric Cheng, is an Executive  Director of United Power Investment  Limited, a
company listed on The Stock Exchange of Hong Kong Limited.  Mr. Cheng  graduated
with an honors from the Faculty of Social Sciences,  The University of Hong Kong
in 1982 majoring in Business Management and Economics. Since his graduation, Mr.
Cheng  held  various  senior  positions  with  major   international   financial
institutions including Citicorp and James Capel (a unit of hte HSBC group).

Mr. Au Wah Edmond, is a Director of Golden Island (Management) Limited, a wholly
owned  subsidiary of United Power  Investment  Limited,  a company listed on The
Stock Exchange of Hong Kong Limited. Mr. Au is also a director of Dynasty Hotel,
Zhaoqing, The People's Republic of China (PRC) and several other privately owned
companies  in Hong  Kong  and  PRC.  Mr.  Au is a member  of  Certified  General
Accountants of Canada (CGA) and has held senior finance and management positions
in various companies and busines sectors in Hong Kong, PRC, Canada and Singapore
over the last twenty years.

Mr. Chen Long Chen, a director and Vice President for Sales and  Marketing,  has
been  involved in the  fertilizer  project  since 1990.  Prior  thereto,  he was
involved in various  trials and tests of organic  fertilizers in Vietnam for the
production of seeds for Taiwan.  In addition to sales and marketing,  he is also
responsible for product applications,  sourcing and quality control. Mr. Chen is
a graduate of the Taipei Technical University.

Mr. Chen Xing Hua,  has been General  Manager of Beijing Opal since 1995.  He is
responsible for the plant  construction  and production of organic  fertilizers.
From  1981 to 1997,  he served as  General  Manager  of  Beijing  Shunyi  County
Agricultural Supplies and Provision  Corporation,  a Chinese Government official
agent for the supply and  distribution of fertilizers to farmers.  Mr. Chen is a
graduate of the Beijing Agricultural University, with a major in fertilizers.

Mr. Michael W. Botts, a Director and Vice President of Research and  Development
of the  Company,  is a soil  scientist  who  developed  the OMS  technology  and
invented  the  chelating  agent  KOM.  He is also the  technical  advisor of the
procurement,  installation  and  testing of OPAL OMF  production  facilities  in
Beijing.  Mr. Botts holds a Bachelor of Science  degree in Soil Science from the
University of Oregon.

Mr. James H. Shane, a Director,  is the President and Chief Executive Officer of
Shane Associates Limited, a diversified  operating company in the United States.
He has been  developing  and managing  real estate  properties  since 1969 and a
consultant  for US  companies  in the  importing  of products  from Pacific Rims
countries.

                                       13
<PAGE>

Mr. Chung Siu Wah,  Director has been a solicitor  practicing in Hong Kong since
1989 and is a partner of Messrs. Tony Kan and Company, Solicitors and Notaries.

Ms. Ho Wan Lai,  Tamm,  has been  employed in the  accounting  field for various
corporations and organizations in Hong Kong and the PRC for over the past twenty
years.

ITEM 10. EXECUTIVE COMPENSATION

     The  following  officers  received  compensation  from the  Company for the
current and/or prior calendar year. Mr. John Koon, the Chief  Executive  Officer
of the Company, did not receive compensation for either year.

                                                           Total Compensation
                                                           ------------------
                                                               (US000)
Kenneth Poon             1999                              $   64,000
                         1998                              $   90,000

     Messrs. Botts and Chen each received management fees which are disclosed in
"Certain  Relationships  and  Related  Transactions".  No other  officer  of the
Company received compensation for either the year-ended December 1998 or 1997.

     Each  non-executive  director was compensated  with 50,000 shares of common
stock for their services as directors.  No additional  compensation  was paid to
non-executive directors.

     The Board of  Directors  of the  Company  annually  reviews  all  executive
positions and compensation.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table sets forth as of September  10,  1999,  the number of
shares of the Company's Common Stock known to be held by the executive  officers
and directors  individually and as a group and by beneficial owners of more than
five percent of the Company's Common Stock.
<TABLE>

                                                          Amount and Nature of
                                                 ------------------------------------
Name and Address of Beneficial Owner             Beneficial Owner    Percent of Class
---------------------------------------------    ----------------    ----------------
<S>                                              <C>                 <C>

John Koon                                             43,671,768             64.95%
Chen Long Chen                                         2,220,480              3.28%
Chen Xing Hua                                            100,000             .0015%
Michael W. Botts                                         100,000             .0015%
James H. Shane                                            50,000             .0007%
                                                 ----------------    ---------------
Total all officers and directors (5 persons)                                 68.23%
                                                 ----------------    ---------------
</TABLE>

(1)  The persons names in the table have sole voting and  investment  power with
     respect to all shares of Common Stock shown as beneficially  owned by them,
     and the information contained in the footnotes to the table.

(2)  Address is Suite 4704, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong.

                                       14
<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
<TABLE>

Name and relationship of related parties:
<S>                                              <C>

Name of related parties                          Relationship with the Company
Bestalong Group, Inc. ("Bestalong")              Parent company
Anshun Opal Company Limited ("Anshun Opal")      Subsidiary of Bestalong Group, Inc.
Agriculture and Production Information Company   Holding company of BOBF
Best Wishes Holding Company ("BWH")              Common director
</TABLE>

Summary of related party balances and transactions is as follows:
<TABLE>

                                              1997        1998              1999
                                            --------    --------    ---------------------
                                            Rmb '000    Rmb '000    Rmb '000     Rmb '000
<S>                                         <C>         <C>         <C>          <C>

Due from a shareholder                         3,430          -           -            -
- Bestalong
Due from (to) a director (a)                      19        (21)         11            1
- Mr. Chen Long Chen                               -          -         (62)          (7)
- Mrs. Koon Woo Kam Oi
Due from (to) a related company (a)                -         45           -            -
- Anshun Opal                                      -          -         696           84
- BWH
Loan from a shareholder                            -     15,378      24,078        2,908
- Bestalong (Note 17)
Accounts payable to related companies          4,072      4,001       3,818          461
(b)
- APIC
Sales to related companies (c)                14,609          -           -            -
- APIC                                             -         40           -            -
- Bestalong
Purchases from related companies (d)           3,648      4,331         271           33
- APIC                                         2,568          -           -            -
- Bestalong
Interest expenses paid to                          -          -       1,987          240
- Bestalong
Rental expenses paid to                           29         55           -            -
- APIC                                           831        578       1,663          201
- Bestalong
Management fees paid to directors (e)            357        183          25            3
- Mr. Michael William Botts                        -          -         835          101
- BWH                                            897        904           -            -
- Mr. Chen Long Chen                       -----------  ---------  ----------   ---------
</TABLE>

Notes:

a.   The balances due from (to) related  companies and directors were unsecured,
     non-interest bearing and without pre-determined repayment terms.

                                       15
<PAGE>

b.   These  represented  payables on  purchases  of raw  materials  from related
     companies in the ordinary course of business.

c.   Sales to APIC were at cost for the year ended  December 31, 1997.  Sales to
     Bestalong were at cost for the year ended December 31, 1998.

d.   Purchases  from related  companies  were made at the original  cost with no
     mark-up charges.

e.   These  represent  management  fees paid to Mr. Michael  William Botts and a
     related company for the provision of executive services.

In addition,  the Group re-imbursed Bestalong for expenditures (both capital and
operating  in  nature)  incurred  by  Bestalong  on  behalf of the  Group.  Such
re-imbursement  amounted to  approximately  Rmb25,020,000,  Rmb1,274,000 and Nil
during the years ended December 31, 1997, 1998 and 1999.

The Company acquired from Bestalong,  Inc. "Bestalong"  5,000,000 shares in CCHI
by  issuing  to  Bestalong  25,000,000  shares of  common  stock.  Bestalong  is
beneficially  controlled  by Mrs.  Koon Woo Kam Oi, a director  of the  Company.
(Note 1)

                                     PART IV

ITEM 13. EXHIBITS AND REPORTS OF FORM 8-K

(a)  Exhibits

       3.1      Articles of Incorporation(3)
       4.1      Certificate of designation of Preferred Stock, Series A
       4.2      Warrant to Corinthian (2)
       23.1     Consent of Arthur Andersen
       27.1     Financial Data Schedules (1)

       (1)      Filed herewith
       (2)      Incorporated by reference to the respective exhibits filed with
                the Company's Quarterly Report on Form 10-QSB for the quarter
                ended June 30, 1998
       (3)      Incorporated by reference to the respective exhibits filed with
                the Company's Report on Form 8-A filed on July 6, 1998.

(b)  Reports on Form 8-K

     The Company filed no reports on Form 8-K during the quarter ended  December
     31, 1999.

                                       16
<PAGE>

                                   SIGNATURES

     In accordance  with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                               OPAL TECHNOLOGIES, INC.


                                               By: /s/ John Koon
                                                  ---------------------
                                                  John Koon, Chairman


Dated: May _____, 2000

     In  accordance  with the Exchange Act, this report has been signed below by
the following  persons on behalf of the  registrant and in the capacities and on
the dates indicated.

       Signature          Title                                         Date
     -------------       -------                                       ------
/s/ John Koon           Chairman of the Board, President,
----------------------
John Koon               Chief Executive Officer and Director        May __, 2000

/s/ Chen Long Chen      Vice President, Sales and Marketing and
----------------------
 Chen Long Chen         Director                                    May __, 2000

/s/ Michael W. Botts    Vice President of Research and
----------------------
Michael W. Botts        Development and Director                    May __, 2000

/s/ Eric Cheng          Director                                    May __, 2000
----------------------
Eric Cheng

/s/ Au Wah Edmond       Director                                    May __, 2000
----------------------
Au Wah Edmond


                                       17
<PAGE>

                             OPAL TECHNOLOGIES, INC.

                   Index to Consolidated Financial Statements


                                                                          Page
                                                                         ------

Independent Auditors Report                                               F-2

Consolidated Balance Sheet as of December 31, 1998 and 1999               F-3

Consolidated Statement of Operations for the Years Ended December 31,
1997, 1998 and 1999                                                       F-4

Consolidated Statements of Cash Flows for the Years Ended December 31,
1997, 1998 and 1999                                                       F-5

Consolidated Statements of Stockholders' Equity (Deficit) for the
Years Ended December 31, 1997, 1998 and 1999                              F-7

Notes to Consolidate Financial Statements                                 F-8

                                       18
<PAGE>

Opal Technologies Inc.
Report of Independent Certified Public Accountants


To the Board of Directors and the Shareholders of Opal Technologies Inc.:

We  have  audited  the   accompanying   consolidated   balance  sheets  of  Opal
Technologies Inc. (a company incorporated in the State of Nevada,  United States
of America;  the  "Company") and  Subsidiaries  (the "Group") as of December 31,
1998 and 1999, and the related consolidated statements of operations, cash flows
and changes in shareholders'  equity for the years ended December 31, 1997, 1998
and 1999.  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.  The financial  statements of Opal  Technologies
Inc. as of December 31, 1998 and for the years ended December 31, 1997 and 1998,
were audited by other  auditors  whose  report  dated August 31, 1999,  on those
statements  included an explanatory  paragraph that described the issue of going
concern discussed in Note 1 to the financial statements.

We conducted our audit in accordance with generally  accepted auditing standards
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 Opal Technologies
Inc. and Subsidiaries as of December 31, 1998 and 1999, and the results of their
operations and their cash flows for the years ended December 31, 1997,  1998 and
1999, in conformity with generally accepted accounting  principles in the United
States of America.

The accompanying financial statements have been prepared assuming that the Group
will continue as a going concern.  As discussed in Note 26a to the  accompanying
financial  statements,  the Group  has  suffered  net  losses  (net of  minority
interests) of  approximately  Rmb29,670,000  and  Rmb19,745,000  (equivalent  to
US$3,583,000  and  US$2,386,000)  respectively  for the years ended December 31,
1998 and 1999,  respectively.  As of December  31,  1999,  the  Group's  current
liabilities   exceeded  its  current  assets  by   approximately   Rmb44,014,000
(equivalent to  US$5,316,000).  These matters raise  substantial doubt about the
Group's ability to continue as a going concern.  Management's plans in regard to
these matters are  described in Note 1. The financial  statements do not include
any adjustments relating to the recoverability and classification of the Group's
assets and  classification  of the Group's  liabilities  as of December 31, 1999
that might result should the Group be unable to continue as a going concern.



GRANT THORNTON




Hong Kong

April 28, 2000

                                      F-2

<PAGE>

                             Opal Technologies Inc.
                          Consolidated Balance Sheets
                        As of December 31, 1998 and 1999
<TABLE>

                                                    Notes      1998               1999
                                                            ----------    -------------------
                                                              Rmb'000     Rmb'000     US$'000
<S>                                                 <C>     <C>           <C>         <C>

ASSETS AND LIABILITIES
Current assets
Cash and bank deposits                                          3,182         154          19
Accounts receivable, net                              6         2,391       2,358         285
Due from a director                                   24            -          11           1
Due from a related company                            24           45           -           -
Prepayments and other current assets                            1,225       1,400         169
Inventories, net                                      7         9,636       7,900         954
                                                    -----    ---------   ---------    --------
Total current assets                                           16,479      11,823       1,428

Construction-in-progress                              9        63,912      75,924       9,170
Licensing costs, net                                  10        7,093       6,649         803
Goodwill, net                                         11        1,458       1,375         166
Investment                                            5             -      40,423       4,882
                                                    -----    ---------   ---------    --------
Total assets                                                  158,945     202,806      24,494
                                                             =========   =========    ========
LIABILITIES, MINORITY INTERESTS AND
Current liabilities
Short-term borrowings                                12        20,470       7,200         870
Accounts payable                                     15         6,312      37,049       4,475
Accrued liabilities                                  13         2,484       4,838         584
Loan from PRC joint venture partner                  16             -       5,677         686
Due to a related company                             24             -         696          84
Due to a director                                    24            21          62           7
Taxation payable                                     14           315         315          38
                                                    -----    ---------   ---------    --------
Total current liabilities                                      29,602      55,837       6,744
                                                             ---------   ---------    --------
Non-current payable                                            20,635           -           -
Long-term borrowings                                  12            -      17,000       2,053
Loan from PRC joint venture partner                   16        5,627           -           -
Loans from a shareholder                            17,24      15,378      24,078       2,908
                                                    -----    ---------   ---------    --------
Total liabilities                                              71,242      96,915      11,705
                                                             ---------   ---------    --------
Minority Interests                                             19,796      16,190       1,955
                                                             ---------   ---------    --------
Shareholders' equity :
Common stock, par value US$0.001 :
-   Authorized 49,000,000 and 100,000,000
-   Outstanding and fully paid 35,991,964 and
    60,991,964 shares as of December 31, 1998
    and 1999 respectively                             19          299         505          61
Preferred stock, par value US$0.001 :
-   Authorized 1,000,000 and 25,000,000 shares
    as of December 31, 1998 and 1999 respectively
-   Outstanding and fully paid 100,000 shares
    as of December 31, 1998 and 1999                  19            1            1          -
Additional paid-in capital                                    101,894      143,088     17,281
Accumulated losses                                            (33,876)     (53,621)    (6,475)
Cumulative translation adjustments                               (411)        (272)       (33)
                                                             ---------   ---------    --------
Total shareholders' equity                                     67,907       89,701     10,834
                                                             ---------   ---------    --------
Total liabilities, minority interests and                     158,945      202,806     24,494
                                                             =========   =========    ========

</TABLE>

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

Translation of amounts from Renminbi  ("Rmb") into United States dollars ("US$")
is for the  convenience  of readers and has been made at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York on December 31, 1999 of US$1.00
= Rmb8.28.  No representation is made that the Renminbi amounts could have been,
or could be,  converted  into United States  dollars at the rate or at any other
rate.

                                      F-3
<PAGE>

                             Opal Technologies Inc.
                     Consolidated Statements of Operations
              For the years ended December 31, 1997, 1998 and 1999
<TABLE>


                                            Note     1997        1998               1999
                                                   ---------   ---------   ----------------------
                                                    Rmb'000     Rmb'000     Rmb'000      US$'000
<S>                                        <C>     <C>         <C>         <C>           <C>

Net sales                                            37,664       6,952       2,985        361
Cost of goods sold                                  (25,736)     (5,927)     (1,876)      (227)
                                                   ---------    --------    ---------   -------
Gross profit                                         11,928       1,025       1,109        134
Loss from sales return                                    -      (3,504)          -          -
Selling, general and administrative expense         (12,260)    (27,983)    (19,394)    (2,344)
Interest expense                                          -      (1,396)     (4,089)      (494)
Interest income                                          77          29           -          -
Other expenses, net                                     (38)        (50)          -          -
Share of losses in an investment                          -           -        (977)      (118)
                                                   ---------    --------    ---------   -------
Loss before income taxes                               (293)    (31,879)    (23,351)    (2,822)
Provision for income taxes                   14        (315)          -           -          -
                                            ----   ---------    --------    ---------   -------
Loss before minority interests                         (608)    (31,879)    (23,351)    (2,822)
Minority interests                                        3       2,209       3,606        436
                                                   ---------    --------    ---------   -------
Net loss                                               (605)    (29,670)    (19,745)    (2,386)
                                                   ---------    --------    ---------   -------
Basic and diluted loss per share                      (0.03)      (0.82)      (0.45)    (0.05)
                                                   =========    ========    =========   =======
</TABLE>


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

Translation of amounts from Renminbi  ("Rmb") into United States dollars ("US$")
is for the  convenience  of readers and has been made at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York on December 31, 1999 of US$1.00
= Rmb8.28.  No representation is made that the Renminbi amounts could have been,
or could be,  converted  into United States dollars at that rate or at any other
rate.

                                      F-4
<PAGE>

                             Opal Technologies Inc.
                     Consolidated Statements of Cash Flows
              For the years ended December 31 1997, 1998 and 1999
<TABLE>


                                                           1997        1998             1999
                                                        ---------    --------     ------------------
                                                         Rmb'000      Rmb'000     Rmb'000    US$'000
<S>                                                     <C>          <C>          <C>        <C>

Cash flows from operating activities :
Net loss                                                   (605)    (29,670)    (19,745)     (2,386)
Adjustments to reconcile net loss to net cash used
    Depreciation of property, machinery and                 960       2,053       3,452         417
    Amortization of licensing costs                         444         443         444          54
    Amortization of goodwill                                 84          82          83          10
    Net loss on disposals of fixed assets                     -          97           -           -
    Imputed interest on shareholder's loan (Note 16)          -         406           -           -
    Share of losses in an investment                          -           -         977         118
    Minority interests                                       (3)     (2,209)     (3,606)       (436)
(Increase)/Decrease in operating assets :
    Accounts receivable, net                            (17,079)     19,134          33           4
    Prepayments and other current assets                    (57)     (1,013)     (1,165)       (140)
    Inventories, net                                      1,588      (4,306)      1,736         209
Increase/(Decrease) in operating liabilities :-
    Accounts payable                                     (1,560)      1,122      21,220       2,562
    Accrued liabilities                                     103         815       2,354         284
    Taxation payable                                        315           -           -           -
                                                       ---------   ---------    --------     -------
    Net cash (used in)/provided by  operating           (15,810)    (13,046)      5,783         696
                                                       ---------   ---------    --------     -------
Cash flows from investing activities :
Acquisition of property, machinery and equipment        (40,579)    (23,680)     (1,566)       (189)
Proceeds from disposals of fixed assets                       -          90           -           -
(Advance to) Repayment from a shareholder                (3,430)      3,430           -           -
(Advance to) Repayment from a director                      (14)         40         (11)          1
(Advance to) Repayment from a related company               749         (45)         45           5
                                                        ---------   ---------    --------     -------
Net cash used in investing activities                   (43,274)    (20,165)     (1,532)       (183)
                                                        ---------   ---------    --------     -------
Cash flows from financing activities
Issuance of common stock                                 47,567           -           -           -
New bank loan                                            10,000       5,000      10,000       1,208
Other loans                                                 300       5,170       7,000         845
Repayment of loans                                            -           -     (13,270)     (1,603)
Increase/(Decrease) in non-current payable               22,135      (1,500)    (20,635)     (2,491)
New loans from PRC joint venture partner                  3,046         312          50           6
New loans from a shareholder                             25,020      15,378       8,700       1,051
New loans from a director                                     -           -          41           5
New loans from a related company                              -           -         696          84
Repayment of loans to a shareholder                     (37,512)          -           -           -
                                                        ---------   ---------    --------     -------
Net cash provided by/(used in) financing activities      70,556      24,360      (7,418)       (895)
                                                        ---------   ---------    --------     -------
Effect of cumulative translation adjustments                 46         (45)        139          17
                                                        ---------   ---------    --------     -------
Net increase/(decrease) in cash and bank deposits        11,518      (8,896)     (3,028)       (365)
Cash and bank deposits, as of beginning of year             560      12,078       3,182         384
                                                        ---------   ---------    --------     -------
Cash and bank deposits, as of end of year                12,078       3,182         154          19
                                                        ---------   ---------    --------     -------

</TABLE>

The accompanying notes are an integral part of these financial statements

Translation of amounts from Renminbi  ("Rmb") into United States dollars ("US$")
is for the  convenience  of readers and has been made at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs
purposes by the Federal Reserve Bank of New York on December 31, 1999 of US$1.00
= Rmb8.28.  No representation is made that the Renminbi amounts could have been,
or could be,  converted  into United States dollars at that rate or at any other
rate.

                                      F-5
<PAGE>

                             Opal Technologies Inc.
           Consolidated Statements of Changes in Shareholders' Equity
              For the years ended December 31, 1997, 1998 and 1999
<TABLE>

                                                    Common stock         Preferred stock
                                                  ---------------       -----------------                        Accumulated
                                                                                                                 other comprehensive
                                                                                     Additional                 income cumulative
                                                  Numbers            Numbers           paid in    Accumulated    translation
                                                of shares   Amount  of shares  Amount  capital      losses       adjustments
                                                ---------   ------  ---------  ------ ----------  -----------   --------------------
<S>                                             <C>         <C>     <C>        <C>    <C>         <C>

Balance as of  January 1, 1997                    12,653     105      100        1       8,213      (3,601)       (412)
Issuance of common stock for cash                 11,400      95        -        -      47,472           -           -
Effect of the exchange reorganization                939       8        -        -          (8)          -           -
Issuance of common stock by capitalization of
loan from a shareholder (note 17)
Net loss                                               -       -        -        -           -        (605)          -
Translation adjustments                                -       -        -        -           -           -          46
                                                 --------  ------   ------    -----  ----------   ----------     -------
Balance as of December 31, 1997                   35,992     299      100        1     101,488      (4,206)       (366)
Net loss                                               -       -        -        -           -     (29,670)          -
Shareholder's contribution                             -       -        -        -         406           -           -
Translation adjustments                                -       -        -        -           -           -         (45)
                                                  --------  ------   ------    -----  ----------   ----------     -------
Balance as of December 31, 1998                   35,992     299      100        1     101,894     (33,876)       (411)
Issuance of common stock (note 19)                25,000     206        -        -      41,194           -           -
Net loss                                               -       -        -        -           -     (19,745)          -
Translation adjustments                                -       -        -        -           -           -         139
                                                  --------  ------   ------    -----  ----------   ----------     -------
Balance as of December 31, 1999                   60,992     505      100        1     143,088     (53,621)       (272)
                                                  --------  ------   ------    -----  ----------   ----------     -------
</TABLE>


                                      F-6
<PAGE>

                             Opal Technologies Inc.
                 Notes to the Consolidated Financial Statements

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES

     Opal  Technologies  Inc. (the  "Company") was  incorporated in the State of
     Nevada in the United  States of America on September  9, 1987.  With effect
     from May 14, 1997, the Company changed its name from Med-Tex Corporation to
     Opal Technologies Inc.

     During the period  from  October  31,  1996 to June 6,  1997,  the  Company
     remained dormant.

     Acquisition of subsidiaries
     ---------------------------
     On June 6, 1997, the Company entered into an agreement with Bestalong Group
     Inc. ("Bestalong"; a company incorporated in the British Virgin Islands) to
     acquire  from  Bestalong a 100%  interest in Triple Star  Holdings  Limited
     ("TSH";  a company  incorporated  in the British Virgin Islands) and a 100%
     interest  in  Opal  Agriculture   Development  Limited  ("OAD";  a  company
     incorporated  in the British  Virgin  Islands) by (i) issuing to  Bestalong
     8,452,768 shares of common stock (after the one-for-ten reverse stock split
     described in Note 19) and 100,000 shares of Series A preferred  stock,  and
     (ii) assuming  Bestalong's  liabilities in the form of a promissory note of
     US$2,100,000, which was subsequently cancelled by the issuance of 4,200,000
     shares of common stock (after the one-for-ten reverse stock split described
     in Note 19). Bestalong is beneficially  controlled by Mr. John K.C. Koon, a
     director of the Company.

     TSH Group
     ---------
     TSH and its  wholly-owned  subsidiary,  Triple Star Group Limited ("TSG"; a
     company  incorporated in the British Virgin Islands) are investment holding
     companies.  On August 6, 1996,  TSG acquired a 55% interest in Beijing Opal
     Agriculture  Biochemistry  Co.,  Ltd.  ("Beijing  Opal"),  an equity  joint
     venture  established  in the People's  Republic of China (the  "PRC").  The
     remaining 45% is held by Beijing Opal  Biochemistry  Factory "BOBF",  a PRC
     state -  owned  enterprise.  Beijing  Opal is  principally  engaged  in the
     manufacturing and sale of organic agricultural fertilizers.

                                      F-7
<PAGE>

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

     TSH Group (Continued)
     ---------
     A revised  joint  venture  agreement  between TSG and BOBF was  executed on
     August 6, 1996, which was approved by the relevant PRC authorities on March
     24, 1997.  Under the revised  joint  venture  agreement,  the joint venture
     period has been  extended to 30 years from  February 8, 1995 to February 7,
     2025,  and the total  investment  of Beijing Opal has been  increased  from
     US$350,000 to US$10,000,000 (equivalent to approximately Rmb82,900,000), of
     which US$6,000,000 (equivalent to approximately Rmb49,920,000) has to be in
     the form of registered capital to be injected within one year after Beijing
     Opal obtains its revised business  license from the PRC authorities.  As of
     December  31,  1997,  all of the  registered  capital  of  Beijing  Opal of
     US$6,000,000 was paid-up and verified by a certified  public  accountant in
     the PRC according to the PRC regulations.

     The other key provisions of the revised joint venture agreement are:

     -    the  profit  and loss  sharing  ratio  is the  same as the  respective
          percentage of equity interest.

     -    upon early  termination or liquidation of Beijing Opal, the net assets
          of Beijing Opal will be distributed in accordance  with the respective
          percentage of equity interest.

     -    the Board of Directors of Beijing Opal consists of seven members, with
          four designated by TSG and three designated by BOBF.

     OAD
     ---
     OAD  is  principally  engaged  in  the  trading  of  organic   agricultural
     fertilizer  manufactured  by Beijing  Opal.  On December 16, 1996,  OAD was
     appointed by Beijing  Opal as its sole agent and was granted the  exclusive
     right to distribute  and sell organic  fertilizer  manufactured  by Beijing
     Opal in the PRC, Hong Kong,  Taiwan,  and Macau for the period from January
     1, 1997 to February 7, 2015.

     Current year investment
     -----------------------
     On September 5, 1999, the company  entered into an agreement with Bestalong
     Inc. (a company incorporated in the City of Monrovia, Republic of Liberia),
     to acquire from Bestalong Inc., 38.46% interest (5,000,000 shares) in China
     Can Holdings Inc.,  ("CCHI";  a company  incorporated in the British Virgin
     Islands) by issuing to Bestalong  Inc.  25,000,000  shares of common stock.
     Bestalong is beneficially controlled by Mrs. Koon Woo Kam Oi, a director of
     the company.

                                      F-8
<PAGE>

1.   ORGANIZATION AND PRINCIPAL ACTIVITIES (Continued)

     Management Plan
     ---------------
     During the years  ended  December  31,  1998 and 1999,  the Group  reported
     recurring  net  losses  (net  of  minority   interests)  of   approximately
     Rmb29,670,000   and   Rmb19,745,000   (equivalent   to   US$3,583,000   and
     US$2,386,000) respectively.  The Group also has recurring net cash used and
     received  in  operating  activities  of  approximately   Rmb13,046,000  and
     Rmb5,783,000  (equivalent to  US$1,575,000  and  US$696,000)  for the years
     ended  December  31, 1998 and 1999,  respectively,  and as of December  31,
     1999,  the Group's  current  liabilities  exceeded  its  current  assets by
     approximately Rmb44,014,000 (equivalent to US$5,316,000).

     The Group has completed the installation of a granule  production  facility
     and signed a five-year exclusive sales contract with a Taiwanese government
     owned  company  which has agreed to place  orders of 30,000  metric tons of
     Opal  Granules and 1,000  metric tons of Opal  Foliar.  The actual sales to
     this  company  in  1999   amounted  to  only   approximately   Rmb1,168,000
     (equivalent to US$141,000).  All export sales will be covered by letters of
     credit or  telegraphic  transfer to be received  prior to shipment.  In the
     light of this new payment terms arrangement, the cash flow situation of the
     Group is expected to improve in 2000.

     In August 1999, a sales contract was signed with a company in Shanghai. The
     order  consists  of  100,000  tons  of  granule  fertilizer   amounting  to
     approximately Rmb195 million (equivalent to US$23,550,000).  The subsequent
     delivery of goods will take place in 2000.

     Subsequent  to the year ended  December 31, 1999,  the Group issued a US$10
     million three year  Convertible  Note (see Note 27c). This Convertible Note
     enables the Group to begin production and complete its physical  facilities
     in Beijing.  Management believes that this additional  financing along with
     its current  facilities will be sufficient to support the Group's liquidity
     requirements through the end of 2000.

                                      F-9
<PAGE>

2.   BASIS OF PRESENTATION

     The  acquisitions  of TSH and OAD by the  Company on June 6, 1997 have been
     treated  as a  reverse  acquisition  since  TSH and OAD are the  continuing
     entities as a result of the  recapitalization  and  restructuring.  On this
     basis, the historical  financial statements prior to June 6, 1997 represent
     the  combined   financial   statements  of  TSH  and  OAD.  The  historical
     shareholders'  equity  accounts of the Company as of December 31, 1996 have
     been retroactively  restated to reflect the issuance of 8,452,768 shares of
     common  stock  (after the effect of the reverse  stock split - described in
     Note 19) and 100,000  shares of Series A preferred  stock to Bestalong  and
     the issuance of  4,200,000  shares of common stock (after the effect of the
     reverse  stock  split -  described  in Note 19) for the  cancellation  of a
     promissory note (see Note 1).

     Beijing Opal is 55% owned by the Group and  accordingly  its operations are
     included in the  consolidated  financial  statements  of the Group from the
     date of acquisition.

     The investment in CCHI on September 5, 1999 was recorded at its fair value.
     Investment in CCHI is accounted for using the equity method of accounting.


                                      F-10
<PAGE>


3.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a)   Basis of consolidation

          The  consolidated  financial  statements  include the  accounts of the
          Company  and  its  subsidiaries.  Investments  of 20% - 50%  in  other
          companies are accounted for under the equity method of accounting. All
          material intra-group balances and transactions have been eliminated on
          consolidation.

     b)   Goodwill

          Goodwill,  being the excess of cost over the fair value of the Group's
          share of the net assets of a subsidiary  (Beijing Opal)  acquired,  is
          amortized on a  straight-line  basis over 20 years.  The  amortization
          recorded  during the years ended  December  31, 1997,  1998,  1999 was
          approximately  Rmb84,000,   Rmb82,000  and  Rmb83,000,   respectively.
          Accumulated  amortization  as  of  December  31,  1998  and  1999  was
          approximately Rmb200,000 and Rmb283,000, respectively.

          Management  reviews  and  evaluates  the  recoverability  of  goodwill
          periodically  as part of its assessment of the  recoverability  of the
          Group's  share of net assets of  subsidiary  to which it relates.  The
          determinants used for this evaluation include management's estimate of
          the asset's  ability to generate  positive  income from operations and
          positive  cash  flow  in  future  periods.   In  the  opinion  of  the
          management, no material impairment existed as of December 31, 1999.

     c)   Inventories

          Inventories  are stated at the lower of cost,  on a  weighted  average
          basis, and market value. Costs of  work-in-process  and finished goods
          comprise direct materials, direct labor and an attributable portion of
          production overheads.

     d)   Property, machinery and equipment

          Property,  machinery  and  equipment  are  recorded at cost.  Gains or
          losses on disposals are reflected in current operations.  Depreciation
          for financial  reporting  purposes is provided using the straight-line
          method over the estimated useful lives of the assets as follows : land
          use rights - 27 years, buildings - 10 years, machinery and equipment -
          5 years, motor vehicles - 5 years,  furniture and office equipment - 5
          years.  No  depreciation  has  been or will be  provided  for a set of
          unified  production system for producing  granule  fertilizer until it
          has been put into use. All ordinary repair and  maintenance  costs are
          expensed as incurred.

                                      F-11
<PAGE>

3.   PRINCIPAL ACCOUNTING POLICIES (Continued)

     d)   Property, machinery and equipment (Continued)

          The  Group  recognizes  an  impairment  loss  on a  fixed  asset  when
          evidence,  such as the sum of expected future cash flows (undiscounted
          and without interest  charges)  indicates that future  operations will
          not  produce  sufficient  revenue to cover the related  future  costs,
          including  depreciation,  and when the  carrying  amount  of the asset
          cannot be realized through sale. Measurement of the impairment loss is
          based on the amounts by which the assets' carrying values exceed their
          value.

     e)   Construction-in-progress

          Construction-in-progress represents cost of land use rights as well as
          factories, office and machinery under construction.  It is the Group's
          policy  to  capitalize  interest  during  the  construction  phase  of
          qualifying assets in accordance with Statement of Financial Accounting
          Standards No. 34. During the years ended  December 31, 1997,  1998 and
          1999,  Nil,  approximately  Rmb487,000,   and  Nil  of  interest  were
          capitalized.

     f)   Licensing costs

          Licensing  costs are costs incurred to acquire the exclusive  right to
          distribute  and  sell a  brand  of  organic  agricultural  fertilizer.
          Amortization  for financial  reporting  purposes is provided using the
          straight-line  method  over  the  license  period  of  18  years.  The
          amortization  recorded  during the years ended December 31, 1997, 1998
          and 1999 was  approximately  Rmb444,000,  Rmb443,000  and  Rmb444,000,
          respectively.  Accumulated  amortization  as of December  31, 1998 and
          1999  was  approximately  Rmb444,000,   Rmb887,000  and  Rmb1,331,000,
          respectively.

          Management reviews and evaluates the recoverability of licensing costs
          periodically  as part of its assessment of the  recoverability  of the
          Group's net assets.  The determinants used for this evaluation include
          management's  estimate  of the asset's  ability to  generate  positive
          income from  operations and positive cash flow in future  periods.  In
          the opinion of the management,  no material  impairment  existed as of
          December 31, 1999.

                                      F-12
<PAGE>


3.   PRINCIPAL ACCOUNTING POLICIES (Continued)

     g)   Revenue recognition

          Net sales represent the invoiced value of goods supplied to customers,
          net of sales  returns  and  allowances.  Revenue  is  recognized  upon
          delivery of goods and passage of title to customers. Sales returns and
          allowances are recorded and/or estimated at the time of the sale.

     h)   Income taxes

          The group  accounts for income taxes under the provisions of Statement
          of Financial  Accounting Standards No. 109, which requires recognition
          of deferred tax assets and  liabilities  for the  expected  future tax
          consequences  of  events  that  have been  included  in the  financial
          statements or tax returns.  Deferred  income taxes are provided  using
          the liability  method.  Under the liability  method,  deferred  income
          taxes are recognized for all significant temporary differences between
          the tax and financial statement bases of assets and liabilities.

     i)   Operating leases

          Operating leases represent those leases under which  substantially all
          the risks and rewards of  ownership of the leased  assets  remain with
          the lessors.  Rental  payments under  operating  leases are charged to
          expense on the  straight-line  basis  over the period of the  relevant
          leases.

     j)   Comprehensive income

          The Group has adopted Statement of Financial  Accounting Standards No.
          130 ("SFAS No. 130"),  which  requires the Group to report all changes
          in equity during a period,  except for those resulting from investment
          by owners and distribution to owners, in financial  statements for the
          period  in  which  they  are  recognized.   The  Group  has  disclosed
          comprehensive  income,  which  encompasses  net  income  and  currency
          translation adjustments,  in the consolidated statements of changes in
          shareholders' equity and Note 18 to the financial statements.

                                      F-13
<PAGE>

3.   PRINCIPAL ACCOUNTING POLICIES (Continued)

     k)   Foreign currencies translation

          The Group  considers  Renminbi  ("Rmb") as its functional  currency as
          most of the Group's business activities are based in Reminbi.

          The  translation of the financial  statements of group  companies into
          Renminbi is performed  for balance  sheet  accounts  using the closing
          exchange  rate in effect at the balance sheet date and for revenue and
          expense accounts using the average exchange rate during each reporting
          period.  Gains or losses  resulting from  translation  are included in
          shareholders' equity separately as cumulative translation adjustments.
          Aggregate (losses) gains from foreign currency  transactions  included
          in the results of  operations  for the years ended  December 31, 1997,
          1998  and  1999  were   approximately   Rmb(38,000),   Rmb131,000  and
          Rmb(9,000) respectively.

     l)   Loss per common share

          Basic loss per common share is computed in accordance  with  Statement
          of Financial Accounting Standard No. 128 by dividing net loss for each
          year  by the  weighted  average  number  of  shares  of  common  stock
          outstanding  during the years,  as if the common  stock issued for the
          acquisition  of OAD and TSH (see Note 1) and the  one-for-ten  reverse
          stock splits (see Note 19.a) had been  consummated  prior to the years
          presented.

          The  computation  of diluted loss per common share is similar to basic
          loss per common  share,  except that the  denominator  is increased to
          include the number of  additional  common  shares that would have been
          outstanding if all dilutive  securities  outstanding  during the years
          were exercised.

          The basic and  diluted  loss per  common  share  were the same for the
          years presented because there were no dilutive securities  outstanding
          as of each year end.  The  numerator  in  calculating  both  basic and
          diluted  loss per share for each year is the  reported  net loss.  The
          denominator  is based on the  following,  weighted-average  number  of
          common shares.

                                            1997         1998         1999
                                           ------       ------       ------
                Basic/Diluted            22,172,000   35,991,964   43,684,272

                                      F-14
<PAGE>


3.   PRINCIPAL ACCOUNTING POLICIES (Continued)

     m)   Use of estimates

          The  preparation of financial  statements in conformity with generally
          accepted  accounting  principles  in  the  Unites  States  of  America
          requires  management  to make  estimates and  assumptions  that affect
          certain reported amounts and disclosures.  Accordingly, actual results
          could differ from those estimates.

     n)   Segment reporting

          The Group  adopted  SFAS No.  131,  "Disclosure  about  Segments of an
          Enterprise  and  Related  Information"  (SFAS No.  131).  The  Group's
          results of  operations  and  financial  position  were not affected by
          implementation  of SFAS  No.  131 as it  operates  in only one line of
          business,   the  production   and  trading  of  organic   agricultural
          fertilizer and it mainly sells to Asia.

     o)   Pension and other post retirement benefits

          The Group adopted SFAS No. 132 "Employers'  Disclosures about Pensions
          and Other Post Retirement  Benefits".  The pension plan of the Group's
          Subsidiary  in  Beijing  is  a  defined  contribution  plan  and  that
          subsidiary is not liable for any post retirement benefits.

     p)   New Accounting Pronouncements

          In June  1998,  the FASB  issued  Statement  of  Financial  Accounting
          Standards  (FAS) No.133,  "Accounting  for Derivative  Instruments and
          Hedging Activities".  FAS 133 establishes standards for accounting and
          reporting for derivative instruments and confirms the requirements for
          treatment of different types of hedging activities.  This statement is
          effective  for  all  fiscal  years  beginning  after  June  15,  2000.
          Management  has not determined if the statement will have an impact on
          the Group's operations or financial position.

                                      F-15
<PAGE>

4.   SUBSIDIARIES

     Details of the Company's  subsidiaries (which together with the Company are
     collectively  referred to as the "Group") as of December 31, 1999,  were as
     follows :
<TABLE>

                                                                Percentage of
                                              Place of        equity interest    Principal
                     Name                   incorporation          held          activities
                    ------                 ---------------   -----------------  ------------
          <S>                             <C>                <C>                <C>
           Triple Star Holdings Limited   The British Virgin       100%        Investment holding
           Triple Star Group Limited      The British Virgin       100%        Investment holding
           Opal Agriculture Development   The British Virgin       100%        Trading of organic
                                                                               agricultural fertilizers
           Beijing Opal Agriculture
             Biochemistry Co., Ltd.       The PRC                  55%         Manufacturing and sale of
                                                                               organic agricultural fertilizers

</TABLE>


5.   INVESTMENT

     Details of the Company's  investments in other companies as of December 31,
     1999, were as follows :
<TABLE>

                                                             Percentage of
                                         Place of           equity interest     Principal
                   Name                incorporation             held           activities
                  ------              ---------------       ---------------    ------------
           <S>                        <C>                   <C>                <C>

           China Can Holdings  Inc.     The British Virgin       38.46%        Investment holding
           Shijiazhuang Huale Metal     The PRC                     25%        Manufacturing and
                                                                               sale of metal can tops

     Summarized information on the investment in CCHI

                                                                   Rmb               US$
          Loss for the year                                     7,687,782           928,476
          Non-current assets                                  111,001,692        13,406,001
          Current assets                                        4,370,232           527,806
          Current liabilities                                   8,394,844         1,013,870
          Share capital and reserve                            77,859,821         9,403,360

</TABLE>

     The  above  figures  are  based  on  the  audited  consolidated   financial
     statements of CCHI for the year ended December 31, 1999.

                                      F-16
<PAGE>

6.   ACCOUNTS RECEIVABLE

                                                   1998            1999
                                                  ------    ------------------
                                                  Rmb'000   Rmb'000    US$'000
       Trade receivables                          20,000    20,391      2,463
       Less :   Allowance for bad and
       doubtful accounts                         (17,609)  (18,033)    (2,178)
                                                ---------  --------    -------
       Accounts receivable, net                    2,391     2,358        285
                                                =========  ========    =======

7.   INVENTORIES

         Inventories comprised :
                                                     1998            1999
                                                   --------  ------------------
                                                   Rmb'000   Rmb'000    US$'000
           Raw materials                            4,732      5,180       625
           Work-in-process                            762        698
           Finished goods                           6,442      6,057       732
                                                  --------   --------   -------
                                                   11,936     11,935     1,441
           Less :   Allowance for slow-moving
           and obsolete inventories                (2,300)    (4,035)     (487)
                                                  --------   --------   -------
           Inventories, net                         9,636      7,900       954
                                                  ========   ========   =======

8.   PROPERTY, MACHINERY AND EQUIPMENT

                                                    1998            1999
                                                  --------   -------------------
                                                   Rmb'000   Rmb'000     US$'000
            Property, machinery and equipment :
            Land use rights                        9,377      9,376      1,133
            Buildings                              5,335      5,335        644
            Machinery and equipment               57,221     55,992      6,762
            Motor vehicles                         1,017      1,017        123
            Furniture and office equipment           121        342         41
                                                 --------   --------    -------
          Cost                                    73,071     72,062      8,703
          Less :   Accumulated depreciation       (3,068)    (5,450)      (658)
                                                 --------   --------    -------
          Property, machinery and equipment, net  70,003     66,612      8,045
                                                 ========   ========    =======

                                      F-17
<PAGE>


8.   PROPERTY, MACHINERY AND EQUIPMENT (Continued)

     Private  ownership  of land is not  allowed  in the PRC;  rather,  entities
     acquire the right to use land for a designated term. The Group's  buildings
     are  situated  on  land  in  Beijing,  the PRC  for a  period  of 50  years
     commencing from the issuance date of land use right certificate.  The Group
     is in the  process  of  completing  the legal  agreements  relating  to the
     acquisition of the land use right as of December 31, 1999 (see note 9).

     Certain  machinery  and  equipment  with  net book  value of  approximately
     Rmb9,240,000   and   Rmb17,126,000  as  of  December  31,  1998  and  1999,
     respectively, were pledged to secure certain of the Group's borrowings (see
     Notes 12 and 23).


9.   CONSTRUCTION-IN-PROGRESS

     Construction-in-progress  represents  the land use rights and factories and
     office  buildings  and  machinery  under  construction  in the  PRC,  which
     comprised :


                                            1998             1999
                                         ---------   --------------------
                                          Rmb'000    Rmb'000      US$'000
            Land use rights                41,458     41,458        5,007
            Construction cost              21,967     33,979        4,104
            Machinery                           -          -            -
            Interest cost capitalized         487        487           59
                                          --------   --------     --------
                                           63,912     75,924        9,170
                                          ========   ========     ========

     Private  ownership  of land is not  allowed  in the PRC;  rather,  entities
     acquire the right to use the land for a designated term. As of December 31,
     1999 land use rights  represented the cost of acquiring the land use rights
     to a plot of land of approximately 206 acres (1998 - 206 acres) in Beijing,
     the PRC for a period of 50 years  commencing  from the issuance date of the
     land use right  certificate.  The Group is in the process of completing the
     legal  agreements  relating to the acquisition of the land use right. As of
     December  31,  1998 and  1999,  approximately  168  acres of land was under
     development and was recorded as construction-in-progress.  The remaining 38
     acres of land was  recorded as  property,  machinery  and  equipment  as of
     December 31, 1998 and 1999.


                                      F-18
<PAGE>

10.  LICENSING COSTS

                                                 1998             1999
                                                ------     -------------------
                                                Rmb'000    Rmb'000     US$'000
            Licensing costs                     7,980        7,980       964
            Less : Accumulated amortization      (887)      (1,331)     (161)
                                               --------    ---------    -----
            Licensing costs, net                7,093        6,649       803
                                               ========    =========    =====

     Licensing  costs  represent  fees  paid  to a third  party  to  obtain  the
     exclusive  right to  distribute  and sell  organic  agriculture  fertilizer
     manufactured by Beijing Opal in the PRC, Hong Kong, Taiwan and Macau for 18
     years up to February 7, 2015.


11.  GOODWILL

                                                 1998             1999
                                                ------     -------------------
                                                Rmb'000    Rmb'000     US$'000
           Goodwill                             1,658      1,658          200
           Less : Accumulated amortization       (200)      (283)         (34)
                                               -------    -------      -------
           Goodwill, net                        1,458      1,375          166
                                               =======    =======      =======

12.  BORROWINGS

     Short-term borrowings comprised :

                                                 1998              1999
                                               --------    --------------------
                                                Rmb'000    Rmb'000      US$'000
            Short-term bank loan(a)             15,000      5,000          604
            Other loans (b)                      5,470      2,200          266
                                               --------    -------       ------
                                                20,470      7,200          870
                                               ========    =======       ======

     Long-term borrowings comprised :

                                                1998               1999
                                               -------     --------------------
                                               Rmb'000     Rmb'000      US$'000
           Long-term bank loan(a)                  -       10,000        1,208
           Other loans (b)                         -        7,000          845
                                               -------     -------      -------
                                                   -       17,000        2,053
                                               =======     =======      =======
                                      F-19
<PAGE>

12.  BORROWINGS (Continued)

     Notes :

     a.   Bank loans are denominated in Renminbi and bear interest  ranging from
          5.86% to 7.92% per annum as of December 31, 1999.  They are guaranteed
          by a  third  party  in the  PRC  and  are  collateralized  by  certain
          machinery and equipment of the Group (see Notes 8 and 23).

     b.   Other  loans  include  a  loan  from  third  parties  in  the  PRC  of
          Rmb4,720,000  and  Rmb9,200,000  as of  December  31,  1998 and  1999,
          respectively,  which bear interest ranging from 6% to 12% per annum as
          of December 31, 1999. A payment of  Rmb1,200,000  is due July 2000 and
          another  payment of  Rmb1,000,000  is due December 2000. The remaining
          payment of  Rmb7,000,000  is due March 2001. They were guaranteed by a
          third party in the PRC and are collateralized by certain machinery and
          equipment  of the Group  (see  Notes 8 and 23).  They  were  drawn for
          financing  the  construction  of  the  Group's  factories  and  office
          buildings. In addition, there was a loan from a third party in the PRC
          of Rmb750,000 and Nil as of December 31, 1998 and 1999,  respectively,
          which was unsecured,  non-interest bearing and without  pre-determined
          repayment  terms.  It was  used to  finance  the  construction  of the
          Group's factories and office buildings.


13.  ACCRUED LIABILITIES

     Accrued liabilities comprised :

                                                1998               1999
                                              --------    ----------------------
                                               Rmb'000    Rmb'000        US$'000
            Accruals for operating expenses
           - salary and bonus                    385       1,111           134
           - professional fees                 1,098       1,052           127
           - interest expense                    247         615            74
            Provision for welfare fund (a)       190         485            59
            Provision for pension fund (a)       183         289            35
            Others                               381       1,286           155
                                              -------     -------        ------
                                               2,484       4,838           584
                                              =======     =======        ======
     Note :

     a.   Welfare  fund is provided  at 19% and 18% of total  salary of 1998 and
          1999 and pension fund is provided at 17% of total salary.  The welfare
          fund is for  welfare  expenses  of  employees  (see  Note  20) and the
          pension fund is for the employees' retirement benefit (see Note 21).

                                      F-20
<PAGE>

14.  INCOME TAXES

     The Company and its  subsidiaries  are subject to income taxes on an entity
     basis on income arising in or derived from the tax  jurisdictions  in which
     they operate.  The British Virgin  Islands  entities (TSH, TSG and OAD) are
     incorporated under the International  Business Companies Act of the British
     Virgin Islands and,  accordingly,  are exempted from payment of the British
     Virgin  Islands  income  taxes.  OAD carries on business in the PRC through
     Beijing Opal and, consequently,  is subject to PRC enterprise income tax at
     a rate of 33% (30% state tax and 3% local tax).  Beijing  Opal also carries
     on  business  in the PRC and is subject to PRC  enterprise  income tax at a
     rate of 33% (30%  state tax and 3% local  tax).  However,  Beijing  Opal is
     exempted from the state and local income taxes for two years  starting from
     the  first  year of  profitable  operations  and then is  subject  to a 50%
     reduction  for the next ten years.  The first  profitable  year for Beijing
     Opal was the year ended  December 31, 1996.  If the tax holiday for Beijing
     Opal did not exist,  the  Group's  income  tax  expenses  (net of  minority
     interests) would have been increased by approximately,  Rmb263,000, Nil and
     Nil for the years ended December 31, 1997, 1998 and 1999, respectively.

     Deferred  income  taxes  result  from the effect of  transactions  that are
     recognized in different  periods for financial and tax reporting  purposes.
     They relate  primarily to net operating  losses and allowances for doubtful
     accounts.  The  deferred  tax  assets  were  fully  offset  by a  valuation
     allowance, as the realization cannot be reasonably assured.


15.  ACCOUNTS PAYABLE

     Included  in  accounts  payable  are the  liabilities  for the  balance  of
     acquisition  costs of the land for  construction  of  factories  and office
     buildings.  The  amount is  non-interest  bearing  and is wholly  repayable
     before  December  31,  2000.  The amount was  classified  as a  non-current
     payable in the prior year.


16.  LOAN FROM PRC JOINT VENTURE PARTNER

     This  represents  a loan from the PRC  joint  venture  partner - BOBF,  for
     financing the  operations of the Group,  which is  denominated in Renminbi,
     unsecured,  non-interest  bearing and  repayable on demand.  The amount was
     classified as a long-term liability in the prior year.

                                      F-21
<PAGE>

17.  LOANS FROM A SHAREHOLER

     During the year ended December 31, 1997, approximately Rmb45,902,000 of the
     loans from  Bestalong  were  converted to equity by issuance of  11,000,000
     shares of common stock, par value US$0.001, at US$0.50 per share.

     As of December 31, 1999, loans from Bestalong, a major shareholder,  amount
     to approximately  Rmb24,078,000 (equivalent to US$2,908,000) are unsecured,
     bear  interest at 9% per annum and  Bestalong  has agreed not to demand the
     Group for repayment until the Group is financially capable to do so.


18.  COMPREHENSIVE INCOME

                                          1997       1998            1999
                                        -------    -------    ------------------
                                        Rmb'000    Rmb'000    Rmb'000    US$'000
            Net loss                     (605)     (29,670)   (19,745)   (2,386)
            Other comprehensive income
           - Translation adjustments       46          (45)       139        17
                                        -------    --------   --------   -------
            Comprehensive income         (559)     (29,715)   (19,606)   (2,369)
                                        =======    ========   ========   =======

19.  SHARE CAPITAL

     a)   Common Stock

          During the period from January 1, 1997 (the  earliest  date covered by
          the report) to June 5, 1997, the Company had authorized  share capital
          of 50,000,000  shares of common stock,  par value  US$0.001  each, and
          outstanding  share capital of 9,391,964  shares of common  stock,  par
          value  US$0.001 each. On June 6, 1997,  the Company  reclassified  its
          authorized  share  capital of 50,000,000  shares of common stock,  par
          value US$0.001 each, into 49,000,000 shares of common stock, par value
          US$0.001  each,  and 1,000,000  shares of preferred  stock,  par value
          US$0.001  each.  Also, it effected a  one-for-ten  reverse stock split
          resulting in 939,196 shares of common stock,  par value US$0.001 each,
          being outstanding. This reverse split has been reflected retroactively
          in the accompanying financial statements and all loss per common share
          computations.

                                      F-22
<PAGE>

19.  SHARE CAPITAL (Continued)

     On June 6, 1997, in connection  with the  acquisitions  of TSH and OAD (see
     Note 1), the Company  issued  8,452,768  shares of common stock,  par value
     $0.001 each (after  one-for-ten  reverse stock split). On July 1, 1997, the
     Company issued  4,200,000  shares of common stock,  par value US$0.001 each
     (after the one-for-ten  reverse stock split), for a consideration of US$0.5
     per  share,  in  return  for  the  cancellation  of a  promissory  note  of
     US$2,100,000 (equivalent to Rmb17,451,000) (see Note 1).

     On July 1, 1997, the Company issued  11,400,000 shares of common stock, par
     value US$0.001 each, for cash consideration of US$0.5 per share, and raised
     US$5,700,000 (equivalent to Rmb47,567,000).

     On  September  29, 1997,  the Company  issued  11,000,000  shares of common
     stock,  par value  US$0.001  each, at US$0.5 per share to capitalize a loan
     from a shareholder  amounting to US$5,500,000  (equivalent to Rmb45,902,000
     see Note 17).

     On  September  5, 1999,  the  authorized  common  stock of the  Company was
     increased from 49,000,000  shares, par value of US$0.001 each to 99,000,000
     shares, par value of US$0.001 each.

     On September 5, 1999, in connection with the acquisitions of CCHI (see Note
     1),  the  Company  issued  25,000,000  shares  of common  stock,  par value
     US$0.001 each. The investment was recorded at its fair value.

     On  November  1, 1999,  the  authorized  common  stock of the  Company  was
     increased from 99,000,000 shares, par value of US$0.001 each to 100,000,000
     shares, par value of US$0.001 each.

b)   Preferred stock

     On June 6, 1997, the Company authorized the creation of 1,000,000 shares of
     preferred  stock,  par value  US$0.001  each,  and  authorized its board of
     directors to assign these  preferred  stock to different  series and to fix
     the related designation, powers, preference and rights of the shares.

                                      F-23
<PAGE>

19.  SHARE CAPITAL (Continued)

     On June 6, 1997, in connection  with the  acquisitions  of TSH and OAD (see
     Note 1), the Company issued 100,000 shares of Series A preferred stock, par
     value  US$0.001  each.  The Series A preferred  stock carries  preferential
     rights to  dividends,  is not  subject to  redemption  and has  liquidation
     preference  of US$0.001  per share.  Also,  the 100,000  shares of Series A
     preferred  stock carry voting  rights of 30% of the total voting  rights on
     all corporate matters.

     On  November 1, 1999,  the  authorized  preferred  stock of the Company was
     increased from 1,000,000  shares,  par value of US$0.001 each to 25,000,000
     shares, par value of US$0.001 each.


20.  DISTRIBUTION OF INCOME

     At present, a major portion of the Group's income is contributed by Beijing
     Opal.  Income  of  Beijing  Opal as  determined  under  generally  accepted
     accounting  principles  in the PRC is  distributable  to its joint  venture
     partners after transfer to (i) contributory  dedicated  capital as required
     under PRC  government  regulations  and the  joint  venture's  articles  of
     association,  and (ii)  discretionary  dedicated  capital as  determined by
     Beijing Opal's board of directors.  Discretionary capital includes a salary
     fund and a staff welfare fund.  Contributory dedicated capital is a form of
     legal reserve fund. Contributory and discretionary dedicated capital is not
     distributable in the form of dividends.

     A  reconciliation  of the  consolidated  accumulated loss reported under US
     GAAP to that reported under PRC GAAP as of December 31, 1998 and 1999 is as
     follows :
<TABLE>

                                                           1998             1999
                                                         -------    --------------------
           <S>                                          <C>         <C>         <C>
                                                         Rmb'000    Rmb'000      US$'000
            Accumulated loss, under PRC GAAP             (16,217)   (49,998)     (6,038)
            Increase in allowance for doubtful accounts  (15,331)    (1,873)       (226)
            Increase in allowance for obsolete            (2,246)    (1,667)       (201)
            Amortization of goodwill                         (82)       (83)        (10)
                                                        ----------  --------    --------
            Accumulated loss, under US GAAP              (33,876)   (53,621)     (6,475)
                                                        ==========  ========    ========
</TABLE>


                                      F-24
<PAGE>


21.  RETIREMENT PLAN

     The  Group's  employees  in the PRC are all  employed by Beijing  Opal.  As
     stipulated   by  PRC   regulations,   Beijing  Opal   maintains  a  defined
     contribution  retirement  plan  for  all  of  its  employees.  All  retired
     employees  are  entitled to an annual  pension  equal to their basic annual
     salary upon  retirement.  Beijing  Opal  contributes  to a state  sponsored
     retirement plan approximately 17% of the basic salary of its employees, and
     has  no  further   obligations   for  the  actual   pension   payments   or
     post-retirement  benefits  beyond  the  annual  contributions.   The  state
     sponsored retirement plan is responsible for the entire pension obligations
     payable  to  retired   employees.   Beijing   Opal's   contributions   were
     approximately  Rmb73,000,  Rmb76,000  and  Rmb106,000  for the years  ended
     December 31, 1997, 1998 and 1999, respectively.


22.  COMMITMENTS

     The Group has capital commitments amounting to approximately Rmb143,000 and
     Rmb19,034,000  as  of  December  31,  1998  and  1999   respectively,   for
     construction of factories and office buildings in the PRC.

     The Group has operating commitments amounting to approximately Rmb1,500,000
     and Nil as of December 31, 1998 and 1999, respectively,  for sponsorship of
     an exhibition in the PRC.

23.  BANKING FACILITIES

     The Group has  banking  facilities  of  approximately  Rmb15,000,000  as of
     December 31, 1998 and 1999 for bank loans.  The facilities  have been fully
     utilized as of December 31, 1998 and 1999. These facilities are secured by:

     a.   Pledges  of the  Group's  machinery  and  equipment  of  approximately
          Rmb9,240,000 as of December 31, 1998 and 1999 (Note 8 and 12); and

     b.   Guarantee given by third parties in the PRC.


                                      F-25
<PAGE>

24.  RELATED PARTY TRANSACTIONS

     Name and relationship of related parties :

     Name of related parties                      Relationships with the Company
     -----------------------                      ------------------------------
     Bestalong Group Inc. ("Bestalong")           Parent company
     Anshun Opal Company Limited ("Anshun Opal")  Subsidiary of Bestalong Group
                                                  Inc.
     Agriculture and Production Information
     Company                                      Holding company of BOBF
     Best Wishes Holdings Company ("BWH")         Common director

     Summary of related party balances and transactions is as follows :
<TABLE>

                                                       1997       1998           1999
                                                     -------    -------    ----------------
                                                     Rmb'000    Rmb'000    Rmb'000  US$'000
         <S>                                         <C>        <C>        <C>      <C>

          Due from a shareholder                      3,430          -          -        -
          - Bestalong
          Due from (to) a director (a)
          - Mr Chen Long Chen                            19        (21)        11        1
          - Mrs Koon Woo Kam Oi                           -          -        (62)      (7)
          Due from (to) a related company (a)
          - Anshun Opal                                   -         45          -        -
          - BWH                                           -          -        696       84
          Loan from a shareholder
          - Bestalong (Note 17)                           -     15,378     24,078    2,908
          Accounts payable to related companies (b)
          - APIC                                      4,072      4,001      3,818      461
          Sales to related companies (c)
          - APIC                                     14,609          -          -        -
          - Bestalong                                     -         40          -        -
          Purchases from related companies (d)
          - APIC                                      3,648      4,331        271       33
          - Bestalong                                 2,568          -          -        -
          Interest expenses paid to
          - Bestalong                                     -          -      1,987      240
          Rental expenses paid to
          - APIC                                         29         55          -        -
          - Bestalong                                   831        578      1,663      201
          Management fees paid to directors (e)
          - Mr Michael William Botts                    357        183         25        3
          - BWH                                           -          -        835      101
          - Mr Chen Long Chen                           897        904          -        -
                                                      ------      -----      -----    ------
</TABLE>


                                      F-26
<PAGE>

24.  RELATED PARTY TRANSACTIONS (Continued)

     Notes :

     a.   The  balances  due from (to)  related  companies  and  directors  were
          unsecured,  non-interest bearing and without pre-determined  repayment
          terms.

     b.   These represented  payables on purchases of raw materials from related
          companies in the ordinary course of business.

     c.   Sales to APIC were at cost for the year ended December 31, 1997. Sales
          to Bestalong were at cost for the year ended December 31, 1998.

     d.   Purchases  from related  companies were made at the original cost with
          no mark-up charges.

     e.   These represent  management fees paid to Mr. Michael William Botts and
          a related company for the provision of executive services.

     In addition,  the Group reimbursed Bestalong for expenditures (both capital
     and operating in nature) incurred by Bestalong on behalf of the Group. Such
     reimbursements  amounted to approximately  Rmb25,020,000,  Rmb1,274,000 and
     Nil during the years ended December 31, 1997, 1998 and 1999.

     The Company  acquired from Bestalong Inc.  'Bestalong'  5,000,000 shares in
     CCHI by issuing to Bestalong  25,000,000 shares of common stock.  Bestalong
     is  beneficially  controlled  by Mrs.  Koon Woo Kam Oi, a  director  of the
     Company. (Note 1)


25.  SUPPLEMENTAL DISCLOSURE OF CASHFLOW INFOMATION

     a)   Cash paid for interest comprised :

                                     1997         1998             1999
                                    -------      -------    ------------------
                                    Rmb'000      Rmb'000    Rmb'000    US$'000
                 Interest expense        -        1,396      1,733       209

     b)   Non-cash items :

          On September 5, 1999, the Company issued  25,000,000  shares of common
          stock for acquiring CCHI (See Note 1).

                                      F-27
<PAGE>

26.  OPERATING RISKS

     a)   Limited operating history

          The Group  reorganized  and  commenced  its  operations in trading and
          manufacturing of organic agricultural  fertilizers in August 1996. The
          Group  incurred  losses (net of minority  interest)  of  approximately
          Rmb29,670,000  and Rmb  19,745,000  (equivalent  to  US$3,583,000  and
          US$2,386,000)  for  the  years  ended  December  31,  1998  and  1999,
          respectively,  and had accumulated  losses  amounting to approximately
          Rmb33,876,000  and Rmb  53,621,000  (equivalent  to  US$4,089,000  and
          US$6,475,000)  as of  December  31, 1998 and 1999,  respectively.  The
          Group's  operations  are  subject  to all  the  risks  inherent  in an
          emerging business  enterprise.  These include,  but are not limited to
          competition  from other fertilizer  manufacturers,  the need to expand
          production and  distribution,  and slow  settlement of billings to new
          customers.   Realization  of  the  Group's  investment  in  assets  is
          dependent on the success of its future operations.

         b)    Dependence strategic relationship

          The Group  conducts its  operations in the PRC through an equity joint
          venture with BOBF as described  in Note 1. Any  deterioration  of this
          strategic  relationship could have an adverse effect on the operations
          and financial position of the Group.

                                      F-28
<PAGE>

26.  OPERATING RISKS (Continued)

     c)   Concentration of credit risk

          A  substantial  portion of the Group's sales is made to a small number
          of customers on an open account  basis and  generally no collateral is
          required.  Details of individual customers accounting for more than 5%
          of the Group's sales are as follows :


                                                       1997      1998      1999
                                                      ------    ------    ------
            Agriculture and Production
            Information Company, a related
            party                                      38.9%        -         -

            Heng Yang Agriculture and Technology
            Development Company                        11.6%        -         -

            Yunnan Xing Long Agriculture and
            Trade Development Centre                   11.4%     13.0%        -

            Xin Jiang Agriculture and Science
            Institute                                   8.2%        -         -

            Gansu Nong Ken Technological
            Development Company                         5.2%        -         -

            Xiamen Station of Soil and Fertilizer Work    -      12.5%        -

            Zhejiang Jiangshan Group                      -       8.4%        -

            Hunan Dalong Group                            -      15.5%     42.2%

            Hainan Global Industry Company Ltd.           -      15.0%        -

            Shaoguan Agricultural Assocation              -       7.7%        -

            Wulong Group                                  -       5.5%        -

            Foshan Couty Enterprises Co.                  -         -      18.8%

            Shanghai Yong Dao Trading Company             -         -      15.1%


                                      F-29
<PAGE>

26.  OPERATING RISKS (Continued)

c)   Concentration of credit risk (Continued)

     Concentration of accounts receivable as of December 31, 1998 and 1999 is as
     follows :


                                                             1998         1999
                                                            ------       ------
                   Five largest accounts receivable          54.4%        53.7%

     The Group performs ongoing credit  evaluation of each customer's  financial
     condition.  It maintains  reserves  for  potential  credit  losses and such
     losses in  aggregate  have not  exceeded  management's  projections.  As of
     December  31,  1999,   the  Group   maintained  a  specific   provision  of
     approximately Rmb18,000,000 representing 88% of its trade receivables.  The
     Directors,  in their opinion,  consider that the risk of  recoverability of
     the unprovided receivable is minimal.

d)   Concentration of suppliers

     The Group  purchases raw material  from a number of  suppliers.  Details of
     individual  suppliers  accounting for more than 5% of the Group's purchases
     are as follows :


                                           1997          1998             1999
                                          ------        ------           ------
     Purchases from :
     Agriculture and Production
     Information Company                   15.9%         71.6%             13%

     Shun Yi County Chemical Fertilizer
     Factory                               63.7%            -               -

     Shengli Plastic Factory                  -          11.6%              -

     Bestalong                              9.8%            -               -

     Nuclear Industry Xi Feng Hong Tai
     Chemical Factory                          -            -              10%

     Tianjing Da Fang Chemical Limited
     Company                                   -            -               6%

     Yunnan Province Chemical Company          -            -               5%

     Miyun Carton Box Factory                  -            -              13%

     Neimenggu Yikezhaomeng Tax Bureau         -            -              15%



                                      F-30
<PAGE>

26.  OPERATING RISKS (Continued)

     e)   Country risk

          Substantially  all of the  Group's  operations  are  conducted  by its
          subsidiary  Beijing  Opal, in the PRC and,  accordingly,  the Group is
          subject to special  considerations and significant risks not typically
          associated  with  companies  operating  in North  America  and Western
          Europe.  These  include  risks  associated  with,  among  others,  the
          political,  economic  and  legal  environments  and  foreign  currency
          exchange.  The Group's results may be affected by, among other things,
          changes in the political and social  conditions in the PRC and changes
          in  governmental  policies  with  respect  to  laws  and  regulations,
          anti-inflationary measures, currency conversion and remittance abroad,
          and rates and methods of taxation.  The PRC government has implemented
          economic  reform  policies in recent  years,  and these reforms may be
          refined or changed by the  government at any time. It is also possible
          that a change in the PRC leadership  could lead to changes in economic
          policy.

          In  addition,   a  substantial  portion  of  the  Group's  revenue  is
          denominated  in Renminbi  ("Rmb"),  which must be converted into other
          currencies before  remittance  outside the PRC. Both the conversion of
          Renminbi into other foreign  currencies  and the remittance of foreign
          currencies abroad require approvals of the PRC government.


27.  SUBSEQUENT EVENTS

     a)   Increase of authorised common stock

          On January 25, 2000,  the  authorized  common stock of the Company was
          increased  from  100,000,000  shares,  par value of  US$0.001  each to
          200,000,000 shares, par value of US$0.001 each.

     b)   Common stock purchase warrant

          On January 10, 2000, the Company  entered into a common stock purchase
          warrant  agreement  with LB Asia Limited in respect of issuance of two
          warrants to LB Asia  Limited for the  purchases of common  stock:  the
          first warrant for the purchases of 6,250,000  common stocks at a price
          of US$0.15  per stock  exercisable  any time on or before  January 10,
          2002 and the second  warrant for the  purchases  of  6,250,000  common
          stocks  at a price of  US$0.2  per  stock  exercisable  any time on or
          before January 10, 2003.
                                      F-31
<PAGE>


27.  SUBSEQUENT EVENTS (Conintued)

     c)   Convertible note

          On April 7, 2000, the Company issued to Marlborough  Gold Limited,  (a
          wholly owned subsidiary of United Power Investment  Limited, a company
          listed in Hong Kong,  "the Holder")  US$10,000,000  of 4%  convertible
          note (the  "Note")  due on April 9, 2003.  The Holder is  entitled  to
          convert the original  principal amount of the Note into fully paid and
          non-assessable  shares of common stock,  par value US$0.001 each, at a
          conversion  price  equal to US$0.20 at any time after 10 October  2000
          provided  that the  Company  shall be required to convert no less than
          US$1,000,000 of the original amount.  Interest is payable quarterly in
          arrears.

                                      F-32