UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31,1999

                         Commission file number: 0-11734

                         CHINA FOOD AND BEVERAGE COMPANY
                         -------------------------------
             (Exact Name of Registrant as Specified in its Charter)

           NEVADA                                       87-0548148
           ------                                       ----------
  (State of Incorporation)                  (I.R.S. Employer Identification No.)

             8 West 38th Street, 9th floor, New York, New York 10018
             -------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (212) 398-7833
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

               SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF
                      THE SECURITIES EXCHANGE ACT OF 1934:

                                         Name of Each Stock Exchange on Which
                                         ------------------------------------
            Title of Each Class                      Registered
            -------------------                      ----------
 Common Stock, Par Value $0.001 Per Share                None

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-B is not contained herein 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. [ ]

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

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant at December 31, 1999, was approximately $2,749,164.

         The  number of shares  of  Registrant's  Common  Stock  outstanding  on
December 31,1999,was 5,546,505.

         The  Registrant's  total revenues for the year ended December 31, 1999,
were $15,122,886.

                    Total of Sequentially Numbered Pages: 27





                                       1
<PAGE>




                                TABLE OF CONTENTS

                                     PART I

ITEM 1.      DESCRIPTION OF BUSINESS..........................................3

ITEM 2.      DESCRIPTION OF PROPERTY..........................................5

ITEM 3.      LEGAL PROCEEDINGS................................................5

ITEM 4.      SUBMISSION OF MATTERS
             TO A VOTE OF SECURITY HOLDERS....................................5

                                     PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED
             STOCKHOLDER  MATTERS.............................................5

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS.......................................................6

ITEM 7.      FINANCIAL STATEMENTS.............................................8

ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH
             ACCOUNTANTS......................................................9

                                    PART III

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

ITEM 10.     EXECUTIVE COMPENSATION...........................................9

ITEM 11.     SECURITY OWNERSHIP OF BENEFICIAL OWNERS..........................10

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED
             TRANSACTIONS.....................................................10

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K.................................10

SIGNATURES....................................................................11

INDEX TO EXHIBITS...............................ATTACHED TO END OF THIS DOCUMENT



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                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

Business Development

         China Food & Beverage Company,  a Nevada corporation (the "Company" or,
"Corporation"),  has executive  offices at: 8 West 38th Street,  9th floor,  New
York, New York 10018. The Company was incorporated in Nevada on November 6, 1981
under  the  name  Logos  Scientific  Inc.  Until  1991,  the  Company  sold  and
distributed  medical  diagnostic  equipment through its Volu-Sol  division.  The
Company sold that division in December 1991. On May 5, 1992, the Company changed
its name to Logos International, Inc.

         During 1992 and 1993, the Company's operations involved the acquisition
of small  companies  with  diverse  operations.  The  Company  acquired  several
subsidiaries  including: an automotive body and paint shop, an automobile towing
operation,  an art and frame gallery, an office staffing company, and a printing
and  publishing  concern.  The  Company  primarily  acquired  small,  distressed
companies  located  in  the  State  of  Utah.  The  Company's  intention  was to
restructure the operations of these subsidiaries to increase their cash flow and
revenues.  Due  primarily  to  undercapitalization,  the  Company's  attempts to
reverse the fortunes of its subsidiaries  failed.  Throughout 1993 and 1994, the
Company liquidated or otherwise  transferred all of its subsidiary  corporations
and other assets in an attempt to settle  actual and potential  liabilities.  By
the end of 1994, the Company had disposed of nearly all of its assets.  For more
information on these events, see the Company's Form 10-KSB for fiscal year ended
December 31, 1994.

         On October 23, 1995,  the Company  acquired all  outstanding  shares of
OMAP International  Incorporated,  a closely-held Nevada corporation ("OII"). As
consideration for the acquisition of OII, the Company issued 433,805  restricted
shares of the Company's  common stock to the shareholders of OII.1 OII owned the
right to acquire patents related to a collating device which sorts and assembles
flat sheets of paper. OII also owned all outstanding capital stock of OMAP SA, a
Belgian research and development  company which filed for bankruptcy  protection
shortly after the Company's  acquisition of OII. The Company changed its name to
OMAP  Holdings  Incorporated  to  reflect  its  ownership  of OII and  moved its
principal  offices  to  Kew  Gardens,   New  York.  The  three  individuals  who
collectively  owned,  directly or indirectly,  100% of OII's outstanding  common
stock prior to October 23, 1995 were Aster De  Schrijver,  James Tilton and Jane
Zheng.  Pursuant to the  acquisition  of OII, the Company  underwent a change of
control and these three individuals obtained a majority interest in the Company.
De Schrijver,  Tilton and Zheng were also  appointed as the Company's  directors
and/or officers.

         On December 15, 1995, the Company  acquired  technology and proprietary
information  necessary to manufacture and develop collators  including drawings,
production  know-how,  and trade names and information  related to distributors.
This  information  and technology  were known as the "Barenthin  Technology." In
exchange for the Barenthin  Technology,  the Company  issued  11,112  restricted
shares of Common Stock.

         On December 15,1995,  the Company also acquired beneficial ownership of
100% of the outstanding  shares of Establissements R. Kohl, a French corporation
("Kohl"). Kohl manufactured lighting equipment and heating devices.

          (1)In return for Kohl's  shares,  the Company issued a total of 19,048
shares of restricted Common Stock to the former owners of Kohl. The Company also
paid  $1,000,000 in bank drafts and made a $200,000 loan to Kohl. Kohl owned and
operated an  approximately  100,000 square foot  manufacturing  plant in Calais,
France and the machinery and equipment housed in the plant.

         The Company made these three  acquisitions in 1995 pursuant to a single
business plan.  The Company  planned to develop the patents owned by OII and the
Barenthin  technology to manufacture paper collators in the manufacturing  plant
operated by Kohl. Kohl was to manufacture and distribute  three different models
of collators  varying as to quality and price, each of which would implement the
patents which were obtained  through the Company's  acquisition of OII. Kohl was
also to continue manufacturing heating equipment and lighting fixtures. Finally,
Kohl was to  produce a line of  portable  food  vending  machines,  including  a
vending  machine  that  cooks and  dispenses  french  fries for which Kohl owned
patents.




                                       3
<PAGE>




         During the 1996 fiscal year, Kohl continued to produce and sell heating
and lighting  equipment as it had done prior to its  acquisition by the Company.
Kohl also produced  prototypes for its paper  collators and patented  french fry
machine.  However,  Kohl could not obtain the  investment  capital  necessary to
produce and distribute either the collators or the vending machines according to
Kohl's  business plan.  Kohl's  revenues were also  insufficient  to finance the
production  and  distribution  of  these  products.  Accordingly,   neither  the
collators  nor the vending  machines  were ever sold by Kohl.  The  inability to
obtain  investment  capital,  paired with capital  expenditures Kohl had made in
connection  with the  development of collators and vending  machine  prototypes,
created a working capital  deficiency which impaired Kohl's ongoing  operations.
Kohl became delinquent with several of its trade creditors and in November 1996,
Kohl  applied  for  protection  under the  bankruptcy  laws of France.  On April
28,1997,  the French Tribunal  administering  the bankruptcy of Kohl sold all of
Kohl's  assets  except the french fry vending  machines and  inventory and spare
parts related thereto, vendor patents and the Company's license. The Company may
appeal this sale and is currently investigating its rights under applicable law.
For more  information on Kohl, see "Item 6 Management's  Discussion and Analysis
of Financial Condition and Results of Operations."

         After the bankruptcy  proceedings of Kohl, the Company discontinued its
involvement in the  manufacture of collators,  heaters,  lighting  equipment and
other products designed,  manufactured  and/or produced by Kohl. The Company was
left  with  few  assets,  most of  which  were  related  to the  manufacture  of
collators.

         On March 15, 1997, the Company entered into an agreement to acquire all
of the  capital  stock of American  China  Development  Corporation,  a Bahamian
corporation("ACDC"). ACDC owns a 60% interest in a joint venture in the People's
Republic of China ("PRC") which operates a beer brewery in the city of Qidong in
the  Jiangsu  province of the PRC.  The joint  venture's  brewery,  known as the
Nantong Aitesi Beer Company,  Ltd., produces and distributes beer in the city of
Qidong and to  surrounding  areas  within a 50 mile  radius.  The Company was to
purchase ACDC from Dizon Investments  Limited,  an investment  company organized
under the laws of the  British  Virgin  Islands.  The  Agreement  called for the
Company to acquire  ACDC in exchange  for  issuing  6,667  restricted  shares of
Common Stock to Dizon.  On November 8, 1998, the Company and Dizon rescinded the
Agreement  because  verifiable  financials  were never  delivered  and the 6,667
shares, which were being held in escrow, were returned to the Company

         The Company's  development has remained focused in pursuit of acquiring
breweries  in the People's  Republic of China of which  progress is set forth in
detail in Item 6 -  "Management's  Discussion  and  Analysis  of  Operations  of
Financial Condition and Results of Operations."

Business of Issuer

         Since the  disposition of Kohl,  the Company's  business has focused on
seeking to invest in business  opportunities  primarily  related to the food and
beverage  industry.  The  Company  will  continue  to seek to  acquire,  similar
businesses both in China and other  countries.  To a lesser extent,  the Company
will also seek to invest in domestic food and beverage  concerns and in entities
with operations outside of the food and beverage industry.

         The  Company  intends  to locate its  target  investment  opportunities
through  contacts which  management has in the food and beverage  industry.  The
Company  has no full  or part  time  employees,  aside  from  its  officers  and
directors.  If the  Company  requires  additional  personnel  to  carry  out its
business  objectives,  it will  retain  outside  consultants.  In the past,  the
Company has been successful in retaining consultants through the issuance of its
Common Stock and the Company  intends to continue this practice in an attempt to
avoid expending valuable cash flows.

         Since the Company does not have significant  liquid assets, the Company
intends to acquire  business  opportunities  through the  issuance of its equity
securities. This will likely result in future dilution of the ownership interest
enjoyed by the  Company's  current  shareholders.  The Company has had some past
experience in acquiring  subsidiaries in this manner.  However,  the Company can
provide no assurance that it will be able to continue such  acquisitions  in the
future.  It is also likely  that any future  acquisitions  by the  Company  will
require the Company to make capital contributions to the acquired businesses.

         Though three of seven board members of Anhui Haodun  Brewery Co., Ltd.,
sit on the board of China Food and  Beverage  Development,  the Company does not
intend to  participate  in the day to day  management of any business  which the
Company may acquire.  The Company's objective is to find business entities which
the Company feels are greatly  undervalued,  acquire such  entities  through the
issuance of Common  Stock,  make  required  investments  in such  entities,  and
receive a return on its investment in the form of dividends or  appreciation  in
the value of the subsidiary.




                                       4
<PAGE>




ITEM 2.   DESCRIPTION OF PROPERTY

         The Company  presently owns a complex of  approximately 14 buildings of
various  dimensions  and square  footage,  situated at: #28 Juichang Rd.,  Luan,
Anhui province, People's Republic of China.

ITEM 3.   LEGAL PROCEEDINGS

         In December 1998,  Canton  Financial  Services  Corporation,  Salt Lake
City, Utah, filed suit against the Company in the Third Judicial District Court,
Salt Lake City,  Utah, for the amount of $45,253.48 for non-payment of services.
The lawsuit settled for $40,500 and dismissed on March 1, 1999.

         Oasis  International  Hotel & Casino,  Inc. v. China Food and  Beverage
Company - On June  14,1999  suit was filed in the Supreme  Court of the State of
New York,  Case Number  114222/99.  In April 1996,  the Company  received a cash
advance in the amount of $160,000 from Pienne Chow ("Chow"). On or about October
8,1997,the  Company  executed  a  Promissory  Note  in  favor  of  Chow  for the
aforementioned  $160,000  together with interest.  On or about December 3, 1998,
Chow assigned her right, title and interest in said Note to Oasis  International
Hotel & Casino,  Inc.  ("Oasis")  and Oasis sued the  Company  on the same.  The
Company is still in settlement negotiations with Oasis.

         As of the date of this  filing,  the parties  have  informally  settled
their differences and are awaiting a formal order of dismissal from the court.

         Securities and Exchange  Commission v. China Food & Beverage,  James C.
Tilton,  et al. - On July 14,  1999,  the  Securities  and  Exchange  Commission
("SEC") in the United States District Court, Southern District of Florida, Civil
Action  No.  99-1968-CIV-GOLD,  filed  a  Complaint  for  Injunctive  and  Other
Equitable Relief, as well as a Temporary  Restraining Order against,  et al, the
Company and James C. Tilton  ("Tilton")individually  who is the Company's  chief
executive  officer.  On April 15,  1999,  the Company  entered into a Consulting
Agreement with The Globus Group, Inc. ("Globus"), a Nevada corporation,  whereby
Globus was to act as a "...marketing consultant/promoter..." of the Company. The
complaint  alleges  that the  Company,  knowingly  or  unknowingly  disseminated
material to the public based on Globus'  false  representations  to the Company.
The  complaint  further  alleges that when  informed that Globus was engaging in
this  and  other  improper  activities  that  might  result  in  creating  false
impressions with the public,  Tilton did not take appropriate  corrective action
quickly enough.

         As soon as the Company became aware of the SEC's complaint, the Company
took immediate  steps to  investigate  the  allegations  against  Globus.  After
numerous attempts to contact Globus, without success, the Company's Officers and
Board of  Directors  felt it was in the  Company's  best  interest  to  formally
terminated the aforementioned Consulting Agreement with Globus.

         An offer was made by the  Company  and  accepted  by the SEC which when
memorialized will have the Company the subject to a limited Consent Decree.

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

         During  the  fourth  quarter  of the 1999  fiscal  year,  there were no
matters submitted to a vote of the Company's shareholders.

                                     PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

         The  following  table sets forth the prices of the Common  Stock on the
OTC Bulletin  Board for each quarter  during  fiscal years 1998 and 1999.  These
over-the-counter market quotations are based on inter-dealer bid prices, without
markup,  markdown,  or  commission,  and may not  necessarily  represent  actual
transactions.






                                       5
<PAGE>



                  QUARTER                  HIGH              LOW
                  -------                  ----              ---
Quarter Ending December 31, 1999           $2.25             $1.94

Quarter Ending September 30, 1999          $2.63             $2.38

Quarter Ended June 30, 1999                $3.50             $3.50

Quarter Ended March 31, 1999               $4.75             $4.75

Quarter Ended December 31, 1998            $5.00             $5.00

Quarter Ended September 30, 1998           $0.07             $0.07

Quarter Ended June 30, 1998                $0.56             $0.56

Quarter Ended March 31, 1998               $0.66             $0.65

Shareholders

         There were  approximately  1549  record  holders of Common  Stock as of
December 31, 1999,  holding a total of  5,546,505  outstanding  shares of Common
Stock.

Reverse Split

         On December 21, 1998, the Company effected a 1-for-100 reverse split of
its Common  Stock.  The reverse split  affected only the issued and  outstanding
Common Stock and did not affect the number of shares of Common Stock  authorized
for issuance by the Company.  All fractional  shares  resulting from the reverse
split were rounded up to the nearest whole share.

Dividends

         The Company has never  declared a cash dividend on its Common Stock and
does  not  anticipate  doing  so in the  near  future.  The  future  payment  of
dividends,  if any, on the Common Stock is within the discretion of the board of
directors  and will  depend on the  Company's  earnings,  capital  requirements,
financial condition, and other relevant factors.

ITEM  6  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The Company's  analysis of its  financial  condition and results of its
operations  was addressed in the Company's  10-KSB,  filed,  on or about,  April
14,1998. Several significant events have occurred since that filing to date that
are set forth  below,  and may be  considered  material  changes  affecting  the
Company's position.

         On October 7, 1997, the Company executed a $160,000  promissory note to
settle any and all potential  claims against the Company  stemming from an April
1996  overseas  offering  of the  Company's  Common  Stock  which had since been
rescinded.  The  promissory  note  bears  interest  a rate of 19.5% and  matures
October 19, 1998. The Company issued 7,677 pre-December 21,1998,1 to 100 reverse
split shares of Common  Stock to an escrow agent to secure  payment of principal
and  interest  due on the note.  The 7,677  shares  are listed as issued but not
outstanding.  In the event the Company defaults on the note payable,  the shares
of stock will be used to pay the note. At December 31,1997, the accrued interest
was  $53,000.  The  Company  canceled  the  3,500,000  pre-split  or the 116,667
post-spilt shares which were issued in 1996. In anticipation of the December 21,
1998,  reverse split and the employee  option program adopted on January 8,1999,
James Tilton, Jane Zheng relinquished their above-referenced options on December
9, 1998.

         After  entering  into a Letter of  Intent on  December  19,  1997,  the
Company  and  Victoria  Beverage  Company  Limited("Victoria"),  an  Isle of Man
corporation,  entered into a formal  Agreement on January 30, 1998,  pursuant to
which  the  Company   acquired  100%  of  Victoria   Beverage   Company  Limited
("Victoria").  Victoria owns a 60% interest in the Sui Ning Beer Factory located
in Szechuan  Province,  Peoples  Republic  of China.  The  purchase  price was a
$15,000,000  debenture issued in favor of the shareholders of Victoria,  payable
interest  only at 6.25% per annum,  semi-annually  commencing 18 months from the
date of the Agreement;  and the principal is payable 5 years from such date. The
debenture is  convertible  18 months from the date of the Agreement at $5.00 per
share of the  Company's  Common Stock.  If the  debenture is converted  into the
Company's  Common  Stock,   Victoria's  former  shareholders  would  become  the
Company's  largest  shareholders  and may be capable of  influencing  the future
business  policy.  The Company filed a Form 8-K with respect to this transaction
on  February  13,  1998.  Closing  of this  transaction  was  pending  upon  the
submission of verifiable financials from Victoria.




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<PAGE>




         On April 20,1998,  the Company rescinded the  aforementioned  Agreement
because Victoria  rescinded their Agreement with the Sui Ning Beer Factory ("Sui
Ning"),  because Victoria was unable to obtain certified  financial  information
from Sui Ning.  Since the Company's  Agreement  with the Sellers was  predicated
upon Victoria's  majority ownership in Sui Ning, the Company and Sellers decided
that the Agreement was no longer viable. On April 27,1998, the Company filed the
appropriate Form 8-K.

         Though the Company  and the Sellers  rescinded  their  January  30,1998
Agreement to purchase  Victoria,  based upon the fact that Victoria had recently
acquired a majority  interest in the Anhui Haodun  Brewery,  Ltd.  ("Anhui"),  a
brewery located in the People's  Republic of China,  the Sellers and the Company
entered into an Agreement on April 27, 1998, pursuant to which the Company would
purchase  from the Sellers,  100% of  Victoria's  stock in Anhui in return for a
debenture in the face amount of US$21,000,000, which shall be for a term of five
(5) years  bearing an  interest  rate of eight  percent  (8%) per annum.  At the
Company's  option,  the debenture may be converted  into shares of the Company's
common  stock at a  conversion  price of five  dollars  ($5.00)  per share.  The
Sellers  were able to provide the Company  with  appropriate  documentation  and
accounting verifying that Victoria owned a fifty-five percent  (55%)ownership of
Anhui. If the debenture is converted into the Company's Common Stock, Victoria's
former  shareholders would become the Company's largest  shareholders and may be
capable of influencing the Company's future business policies. The Company filed
a Form 8-K with respect to this transaction on May 6, 1998.

         The Company, as Buyers, and Calder Investments,  Ltd. and Li Lin Hu, as
Sellers,  entered into an Agreement on January 30,1998,whereby the Company would
purchase  100% of the stock in the  Victoria  Beverage  Company,  Ltd.  On April
20,1998,  the Company rescinded this Agreement because Victoria  rescinded their
Agreement  with the Sui Ning Beer  Factory("Sui  Ning"),  because  Victoria  was
unable to  obtain  certified  financial  information  from Sui  Ning.  Since the
Company's  Agreement with the Sellers was predicated  upon  Victoria's  majority
ownership  in Sui Ning,  the Company  decided that the  Agreement  was no longer
viable,  and the  Sellers  agreed.  On April 27,  1998,  the  Company  filed the
appropriate Form 8-K.

         On December 30, 1998, the Company closed on the April 27,1998,Agreement
with Calder Investments Limited and Li, Lin Hu by issuing its 5 year and one day
8% Debenture in the amount of $10,500,000 to each of Calder Investments  Limited
and Li, Lin Hu. This  issuance  consummated  the  transactions  described in the
Company 8-K dated May 6, 1998. On the same day,  December 30, 1998,  the Company
caused  the  conversion  of  the  Debentures   above   described  in  the  terms
incorporated  therein by  issuing  to each of Li, Lin Hu and Calder  Investments
Limited  thereupon caused 1,050,000 of their shares to be issued to Anhui Lui An
Beer  Company  Ltd.,  to redeem  their note to Anhui Lui An Beer Company Ltd. On
December 31, 1998, the Company issued a total of 4,200,000  shares of its common
stock to the following persons and entities in the following amounts pursuant to
Debentures which were converted on December 30, 1998; Calder Investments Limited
=1,050,000  shares of common stock; Li, Lin Hu =1,050,000 shares of common stock
Anhui Liu An Beer Company Ltd. = 2,100,000 shares of common stock. This issuance
caused the three  individuals and entities above set forth to become the control
persons of the Registrant.

         Through a reverse merger recapitalization by which the Company acquired
100% of Victoria Beverage  Company,  Ltd., for 4,200,000 shares of the Company's
common stock,  resulted in the Company  owning 55% of Anhui Hao Dun Brewery Co.,
Ltd.,  situated in the People's Republic of China. As opposed to the year ending
1998,  when the Company's total assets year were valued at $15,998,864 of which,
the total assets year ending 1999 were $15,587,923,  as set forth on page F-4 of
the Financials  attached  hereto.  Total "Current  Assets" are  $3,625,724.  The
"Fixed  Assets"  ($8,996,320)  include a complex of buildings  and equipment for
making beer.  The  "construction  in progress  "as listed  under "Other  Assets"
refers to a nitrogen  separating machine being developed in conjunction with the
brewing processes.

         On December 10,  1998,  the Company  authorized a reverse  split of its
common  stock  on the  basis  of 1 new  share  for  every  100  shares  owned by
shareholders  of record.  Fractional  shares  were  rounded up to the next whole
share.  The effective date of the reverse split was December 21, 1998. The total
number of shares issued and  outstanding  before the reverse was 7,364,349.  The
total  number  of  shares   issued  and   outstanding   after  the  reverse  was
approximately  73,644. The Company filed the appropriate 8-K reflecting 1 to 100
reverse split on December 18, 1998.

         On January  6, 1999,  a majority  of the  shareholders  of the  Company
voting  their  shares  in lieu of a  formal  shareholders  meeting  adopted  the
Company's 1999 Stock Option Plan reserving for issuance  1,000,000 shares of the
Company's  common stock which plan is to be  administered by the Company's Board
of  Directors.  At the same time,  the  shareholders  voted in favor of James A.
Tilton, Jane Zheng, Kitty Chow, Stanley Merdinger and Li, Lin Hu to be directors
of the Company until the next shareholders  meeting.  (The shares were issued by
the Company's auditors on December 31, 1998.)




                                       7
<PAGE>




         The Company  enacted the 1999 Stock Option Plan (the "Plan")on  January
8, 1999, which is intended to provide incentives: (a)to the officers, directors,
counsels  and  other  employees  of  China  Food &  Beverage  Company,  a Nevada
corporation  (the  "Company"),  and any  present or future  subsidiaries  of the
Company   (individually  a  "Related   Corporation"  and  collectively  "Related
Corporations")  by providing  them with  opportunities  to purchase stock in the
Company  pursuant to options granted  hereunder that qualify as "incentive stock
options" under Section  422A(b) of the Internal  Revenue Code of 1986,as amended
(the  "Code")(individually  an "ISO" and collectively  "ISOs");(b)to  directors,
officers,  employees and consultants of the Company and Related  Corporations by
providing them with  opportunities  to purchase stock in the Company pursuant to
options  granted  hereunder  that  do  not  qualify  as  ISOs   (individually  a
"Non-Qualified   Option"and   collectively   "Non-Qualified   Options");   (c)to
directors,  officers,  employees  and  consultants  of the  Company  and Related
Corporations  by providing them with awards of stock in the Company  ("Awards");
and (d) to director,  officers,  employees  and  consultants  of the Company and
Related  Corporations  by  providing  them  with  opportunities  to make  direct
purchases  of stock in the  Company("Purchases").  Both  ISOs and  Non-Qualified
Options are referred to hereinafter  individually as an "Option"and collectively
as "Options." Options,  Awards and authorizations to make Purchases are referred
to hereinafter collectively as "Stock Rights". As used herein the terms "parent"
and  "subsidiary"   mean  "parent   corporation"  and  subsidiary   corporation,
respectively,  as those  terms are  defined  in  Section  425 of the  Code.  The
specifics  of  the  Plan  were  filed  on  January  8,1999  pursuant  to  a  S-8
Registration and may be viewed in their entirety via the Edgar filing system.

         Li, Lin Hu was  appointed  as a Director  of the  Company on January 6,
1999,  a former 50% owner of Victoria  Beverage  Company and  currently a senior
executive with Tiancheng.

         The fact that the Company  conducts  business  and owns the majority of
its  assets in the  People's  Republic  of China  could  expose  the  Company to
material  and possible  economic  risks.  These risks may  include,  but are not
limited  to,  military  repression,   expropriation,  changing  fiscal  regimes,
fluctuations in currency exchange rates, high rates of inflation, worker unrest,
and the absence of industrial  and economic  infrastructure.  Operations  may be
affected by government  regulations  with respect to  productions  restrictions,
price   controls,   export   controls,   embargoes,   income  and  other  taxes,
environmental  legislation,  labor, welfare benefit policies, land use, etc. The
effect of these factors cannot be accurately assessed or predicted.

Events That Took Place Subsequent to Fiscal Year Ending December 31, 1999

         Kitty Chow  resigned on January 31, 2000 from the Board of Directors to
pursue other interests.

         Stanley  Merdinger  resigned February 8, 2000 from Board of Director to
pursue other interests.

Results of Operations

         As a result of the  aforementioned  acquisition  of  Victoria  Beverage
Company, Ltd., and its subsidiary,  Anhui Hao Dun Brewery  Co.,Ltd.("Anhui"),the
Company's "Total Liabilities and Stockholder's  Equity" for year ending 1999 was
$15,587,923 of which, as set forth on Page F-5 of the attached  Financials.  The
"Consolidated  Statement  of  Operations"  set forth on Page F-6 of the attached
Financial Statements,  the Net Sales decreased in 1999 by 5%. Cost of Sales also
decreased in 1999 by 7%. This decrease can  attributed  to less sales,  and as a
consequence,  the Gross  Margin  increased  approximately  1.6% from  33.2% year
ending  1998 to  34.8%  year  ending  1999.  A light  decrease  in  costs of raw
materials.  It should be noted that "Selling  Expenses" in 1999 increased nearly
75%.  This   difference   can  be  attributed  to  more   commission   salesman.
Administrative  cost increases were due to an increase in operational  expenses.
In year ending 1998, the brewery had comprehensive income of $763,320 before the
minority interest valued at $343.494.  The "Net  Comprehensive  Income" for 1999
was more than 108% less than in 1998 as a result of increased operating expenses
and an increase  in interest  expenses.  Additionally,  the company  incurred an
increase in income tax expenses.  The "income per share" was down as well,  from
$0.09 in 1998 to a minus $0.13 for the year ending 1999.

Capital Resources and Liquidity

         During 1999, the Company issued 234,500 shares of Common Stock for cash
valued at $1.86 per share;  44,203  shares  were  issued for  services  rendered
valued at $1.99 per  share;  and,  8,850  shares  valued at $2.00 per share were
issued for debt conversion.  The increase of positive cash flow reflected on the
"Consolidated Statements of Cash Flow" Page F-8 of the attached Financials, is a
result of money spent by the beverage  company  purchasing  and repairing  fixed
assets.

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the audited financial  statements  attached hereto and numbered F-1
through F-15.




                                       8

<PAGE>

                         CHINA FOOD AND BEVERAGE COMPANY

                                AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 1999


<PAGE>







<TABLE>
<CAPTION>

                                 C O N T E N T S

<S>                                                                                               <C>
Independent Auditors' Report..................................................................... F - 3

Consolidated Balance Sheet....................................................................... F - 4

Consolidated Statements of Operations............................................................ F - 6

Consolidated Statements of Stockholders' Equity.................................................. F - 7

Consolidated Statements of Cash Flows............................................................ F - 8

Notes to the Consolidated Financial Statements................................................... F - 10
</TABLE>


<PAGE>








                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

Board of Directors

China Food and Beverage Company and Subsidiaries
Las Vegas, Nevada

We have audited the  accompanying  consolidated  balance sheet of China Food and
Beverage and  Subsidiaries as of December 31, 1999 and the related  consolidated
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended December 31, 1999 and 1998. These  consolidated  financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of China
Food and Beverage  Company and  Subsidiaries  as of December  31, 1999,  and the
consolidated  results  of their  operations  and their  cash flows for the years
ended  December  31,  1999 and  1998,  in  conformity  with  generally  accepted
accounting principles.

/s/Jones, Jensen & Company
--------------------------
Jones, Jensen & Company
Salt Lake City, Utah

April 10, 2000

                                      F-3
<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                           Consolidated Balance Sheet

                                     ASSETS
                                     ------

                                                            December 31,
                                                             1999

CURRENT ASSETS

   Cash and cash equivalent                            $         995,846
   Accounts receivable (net) (Note 1)                          1,868,994
   Note receivable                                                66,728
   Inventory (Note 5)                                            626,262
   Other receivables                                              67,894
                                                       -----------------

     Total Current Assets                                      3,625,724
                                                       -----------------

PROPERTY AND FIXED ASSETS (Note 4)

   Buildings                                                   3,339,090
   Machinery and equipment                                     8,575,984
   Land                                                          277,817
   Accumulated depreciation                                   (3,196,571)
                                                       -----------------

     Total Fixed Assets                                        8,996,320
                                                       -----------------

OTHER ASSETS

   Construction in progress                                      218,921
   Deferred and prepaid expenses (Note 6)                      2,746,958
                                                       -----------------

     Total Other Assets                                        2,965,879
                                                       -----------------

     TOTAL ASSETS                                      $      15,587,923
                                                       =================


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



                                      F-4
<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                     Consolidated Balance Sheet (Continued)

                                                               December 31,
                                                                  1999
                                                          -----------------
CURRENT LIABILITIES

   Accounts payable                                       $       1,308,760
   Related party payable                                            127,001
   Accrued expenses                                               1,177,287
   Taxes payable (Note 3)                                         4,032,426
   Customer prepayments                                              43,864
   Notes payable (Note 2)                                         5,971,797
                                                          -----------------

     Total Current Liabilities                                   12,661,135
                                                          -----------------

LONG-TERM LIABILITIES

   Other liabilities                                                180,448
                                                          -----------------

     Total Long-Term Liabilities                                    180,448
                                                          -----------------

     Total Liabilities                                           12,841,583
                                                          -----------------

MINORITY INTEREST                                                 1,638,740
                                                          -----------------

STOCKHOLDERS' EQUITY

   Common stock; 100,000,000 shares
    authorized of $0.001
    par value, 5,546,505 shares
    issued and 5,250,086 outstanding                                  5,547
   Additional paid-in capital                                       872,070
   Related party receivable                                        (412,043)
   Other comprehensive income                                         8,421
   Retained earnings                                                633,605
                                                          -----------------

     Total Stockholders' Equity                                   1,107,600
                                                          -----------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           $      15,587,923
                                                          =================

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

                                       F-5


<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                      Consolidated Statements of Operations

                                               For the Years Ended
                                                 December 31,
                                         -----------------------------
                                             1999            1998
                                         ------------    ------------

NET SALES                                $ 15,122,886    $ 15,957,499

COST OF SALES                               9,858,731      10,647,010
                                         ------------    ------------

GROSS MARGIN                                5,264,155       5,310,489
                                         ------------    ------------

COSTS AND EXPENSES

   Selling expenses                           323,089         184,672
   General and administrative               2,046,149       1,522,012
                                         ------------    ------------

     Total Costs and Expenses               2,369,238       1,706,684
                                         ------------    ------------

INCOME BEFORE OTHER EXPENSE                 2,894,917       3,603,805
                                         ------------    ------------

OTHER EXPENSE

   Interest expense                           770,607         664,259
                                         ------------    ------------

     Total Other Expense                      770,607         664,259
                                         ------------    ------------

INCOME (LOSS) BEFORE TAX                    2,124,310       2,939,546

INCOME TAX EXPENSE (Note 3)                 2,715,508       2,176,226
                                         ------------    ------------

INCOME (LOSS) BEFORE MINORITY INTEREST       (591,198)        763,320

MINORITY INTEREST                             (68,010)       (343,494)
                                         ------------    ------------

NET INCOME (LOSS)                            (659,208)        419,826

OTHER COMPREHENSIVE INCOME

   Currency translation adjustment                729           3,578
                                         ------------    ------------

     Total Other Comprehensive Income             729           3,578
                                         ------------    ------------

NET COMPREHENSIVE INCOME (LOSS)          $   (658,479)   $    423,404
                                         ============    ============

BASIC INCOME (LOSS) PER SHARE            $      (0.12)   $       0.09
                                         ============    ============

WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING                                5,415,809       4,633,921
                                         ============    ============


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

                                       F-6


<PAGE>

<TABLE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Consolidated Statement of Stockholders' Equity
<CAPTION>


                                           Common Stock           Additional         Stock           Other
                                   -----------------------------  Paid-In         Subscription    Comprehensive      Retained
                                     Shares           Amount       Capital         Receivable         Income         Earnings
                                   -------------  --------------  ------------   --------------  -----------------  ----------

<S>                                 <C>          <C>            <C>            <C>              <C>               <C>
Balance, December 31, 1997          4,200,000    $     4,200    $ 1,300,497    $      --        $     4,114       $   872,987

Common stock issued for
 the acquisition of Victoria           37,346             37    (1,991, 612)          --               --               --

Common stock issued for
 cash at $54.11 per share               9,902             10        535,875           --               --               --

Common stock issued for
 debt conversion at $62.24
 per share                                241           --           15,000           --               --               --

Common stock issued for
 services rendered at $0.46
 per share                          1,016,942          1,017        469,883        (23,083)            --               --

Cancellation of common

 stock                                 (6,667)            (6)             6           --               --               --

Currency translation

 adjustment                              --             --             --             --              3,578             --

Net income for the year ended
 December 31, 1998                       --             --             --             --               --             419,826
                                  -----------    -----------    -----------    -----------      -----------       -----------

Balance, December 31, 1998          5,257,764          5,258        329,649        (23,083)           7,692         1,292,813

Common stock issued for
 services at $1.99 per share           44,203             44         88,002           --               --               --

Common stock issued for
 cash at $1.86 per share              234,500            235        436,729           --               --               --

Fractional shares issued                1,188              1             (1)          --               --               --

Receipt of stock subscription            --             --             --           23,083             --               --

Currency translation adjustment          --             --             --             --                729             --

Common stock issued for
 cancellation of debt at $2.00
 per share                              8,850              9         17,691           --               --               --

Net loss for the year ended
 December 31, 1999                       --             --             --             --               --            (659,208)
                                  -----------    -----------    -----------    -----------      -----------       -----------
Balance, December 31, 1999          5,546,505    $     5,547    $   872,070    $      --        $     8,421       $   633,605
                                  ===========    ===========    ===========    ===========      ===========       ===========
</TABLE>

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

                                        F-7


<PAGE>


<TABLE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
<CAPTION>

                                                                        For the Years Ended
                                                                           December 31,
                                                                    --------------------------
                                                                        1999           1998
                                                                    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                                 <C>            <C>
   Net income (loss)                                                $  (659,208)   $   419,826
   Adjustments to reconcile net income (loss) to net cash
    used by operating activities:
     Depreciation and amortization                                      990,493        947,924
     Common stock issued for services                                    88,046        447,817
   Changes in assets and liabilities:
     (Increase) decrease in accounts receivable                        (316,445)       997,610
     (Increase) decrease in note receivable                              35,952        (66,446)
     (Increase) decrease in other receivables                           (27,765)       656,229
     (Increase) decrease in inventory                                   812,706       (465,773)
     (Increase) in deferred and prepaid assets                         (701,842)    (1,989,846)
     (Increase) in deposits                                             215,000       (215,000)
     Increase in accounts payable and accrued expenses                  204,101        870,796
     Increase (decrease) in customer prepayments                       (381,288)       (89,166)
     Increase (decrease) in taxes payable                              (833,008)       671,973
     Increase in minority interest                                       68,010           --
                                                                    -----------    -----------

       Net Cash (Used) Provided by Operating Activities                (505,248)     2,185,944
                                                                    -----------    -----------


CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of fixed assets                                            (449,243)    (1,268,585)
                                                                    -----------    -----------

       Net Cash (Used) by Investing activities                         (449,243)    (1,268,585)
                                                                    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Proceeds to related party                                           (412,043)          --
   Common stock issued for cash                                         436,964        535,885
   Proceeds from notes payable                                        4,055,078      4,797,109
   Payments on notes payable                                         (2,555,343)    (6,067,780)
                                                                    -----------    -----------

       Net Cash Provided (Used) by Financing Activities               1,524,656       (734,786)
                                                                    -----------    -----------

NET INCREASE (DECREASE) IN CASH                                         570,165        182,573

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                          425,681        243,108
                                                                    -----------    -----------

CASH AND CASH EQUIVALENTS AT END OF YEAR                            $   995,846    $   425,681
                                                                    ===========    ===========
</TABLE>


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

                                       F-8


<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                Consolidated Statements of Cash Flows (Continued)

                                                           For the Years Ended
                                                               December 31,
                                                         -----------------------
                                                            1999         1998
                                                          --------     --------
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITY

Cash Paid For:

   Interest                                               $648,780      $664,259
   Income taxes                                           $426,402      $   --


SCHEDULE OF NON-CASH FINANCING ACTIVITIES

   Common stock issued for debt                           $ 17,700      $ 15,000







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

                                       F-9


<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 1 -      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Business Organization

              China Food and Beverage  Company (the Company) was incorporated on
              November  6,  1987  under  the laws of the  State of  Nevada.  The
              Company subsequently ceased its original business activity in 1997
              and  thereafter  primarily  investigated  and sought new  business
              opportunities.

              The Company has a 100% owned subsidiary, Victoria Beverage Company
              Limited  (Victoria),  which has a 55% owned subsidiary  (Anhui Hao
              Dun Brewery Co. Ltd.) (Anhui) which was incorporated in the nation
              of China in 1986,  for the purpose of  operating  a beer  brewery.
              Victoria  was  incorporated  in the Isle of Man of May 9, 1993 for
              the purpose of acquiring foreign companies.

              The Company acquired 100% of the shares of Victoria which owns 55%
              of Anhui for 4,200,000  shares of the Company's  common stock. The
              acquisition  was accounted for as a  recapitalization  of Victoria
              because the shareholders of Victoria  controlled the Company after
              the acquisition.  Therefore,  Victoria is treated as the acquiring
              entity.  There  was no  adjustment  to the  carrying  value of the
              assets or liabilities of Victoria in the exchange.  The Company is
              the  acquiring  entity  for legal  purposes  and  Victoria  is the
              surviving  entity for accounting  purposes.  On December 18, 1998,
              the  shareholders  of the Company  authorized a 1-for-100  reverse
              stock   split.   All   references   to  common   stock  have  been
              retroactively restated to reflect the reverse stock split.

              b.  Accounting Method

              The Company's financial  statements are prepared using the accrual
              method of  accounting.  The Company has elected a December 31 year
              end.

              c.  Cash and Cash Equivalents

              Cash equivalents  include  short-term,  highly liquid  investments
              with   maturities   of  three  months  or  less  at  the  time  of
              acquisition.

              d.  Basic Income (Loss) Per Share

              The  computations of basic income (loss) per share of common stock
              are based on the weighted average number of shares outstanding.

                                       For the Year Ended
                                       December 31, 1999
                   -------------------------------------------------------------
                        Loss                 Shares               Per Share
                    (Numerator)           (Denominator)          Amount

     Net Loss      $  (659,208)             5,415,809            $    (0.12)
                   ==================    =================     =================




                                      F-10


<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 1 -      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
              (Continued)

              d.  Basic Income (Loss) Per Share (Continued)

                                       For the Year Ended
                                       December 31, 1998
                   -------------------------------------------------------------
                         Income              Shares              Per Share
                        (Numerator)       (Denominator)            Amount

    Net Income     $    419,826              4,633,921            $  0.09
                   ==================    =================     =================

              e.  Principles of Consolidation

              The consolidated  financial statements include those of China Food
              and Beverage Company,  Victoria Beverage Company Limited and Anhui
              Hao Dun Brewery Co. Ltd. All significant intercompany accounts and
              transactions have been eliminated.

              f.  Estimates

              The  preparation  of  financial   statements  in  conformity  with
              generally accepted  accounting  principles  requires management to
              make estimates and assumptions that affect the reported amounts of
              assets and  liabilities  and  disclosure of contingent  assets and
              liabilities  at the  date  of the  financial  statements  and  the
              reported  amounts of revenues  and expenses  during the  reporting
              period. Actual results could differ from those estimates.

              g.  Accounts Receivable

              The Company's  accounts  receivable  are shown net of an allowance
              for bad debt of $207,666  and  $107,150  at December  31, 1999 and
              1998.

              h.  Advertising

              The Company has  capitalized  the costs of acquiring the rights to
              advertise on the streets of its home city, Luan,  Peoples Republic
              of China, for 20 years and is amortizing those costs over the life
              of the agreement.

              i.  Foreign Currency Translation

              Monetary assets and liabilities  denominated in foreign currencies
              are  translated  into  United  States  dollars  at the  period and
              exchange   rate.   Non-monetary   assets  are  translated  at  the
              historical   exchange   rate  and  all  income  and  expenses  are
              translated  at the exchange  rates  prevailing  during the period.
              Foreign exchange currency translation  adjustments are included in
              the stockholders' equity section as other comprehensive income.

              j.  Fair Value of Financial Instruments

              As at  December  31,  1999,  the  fair  value  of  cash,  accounts
              receivable and accounts and advances payable including amounts due
              to and from related parties,  approximate  carrying values because
              of the short-term maturity of these instruments.

                                      F-11


<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 1 -      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
              (Continued)

              k.  Foreign Operations

              The Company currently conducts  activities in The Peoples Republic
              of China (PRC). The Company may be materially  adversely  affected
              by possible  political or economic  instability  in PRC. The risks
              include,   but   are  not   limited   to,   military   repression,
              expropriation,  changing fiscal regimes,  extreme  fluctuations in
              currency  exchange rates,  high rates of inflation and the absence
              of  industrial  and  economic  infrastructure.  Operations  may be
              affected in varying degrees by government regulations with respect
              to  production  restrictions,  price  controls,  export  controls,
              income and other taxes, expropriation of property,  maintenance of
              claims,   environmental   legislation,   labor,   welfare  benefit
              policies, land use, land claims of local residents,  water use and
              safety.   The  effect  of  these  factors   cannot  be  accurately
              predicted.

              l.  Capital Assets and Amortization

              Capital assets are recorded at cost and  amortization  is provided
              over the estimated  economic life on a straight-line  basis at the
              following rates:

                           Machinery                 14 years
                           Buildings                 25 years

              m.  Income Taxes

              Income  tax  expense  consist  of  Consumption  Tax (CT)  which is
              calculated  by  multiplying  $26.58  by each ton of beer  which is
              sold, and the City  Construction  Tax (CCT) which is calculated by
              multiplying  7% of the  total VAT and CT,  Education  Tax which is
              calculated  by  multiplying  2% of the total VAT and CT as well as
              Income Tax which is  calculated by  multiplying  net income before
              taxes by 33%.  Total income taxes for the years ended December 31,
              1999 and 1998 were  $2,715,508  and  $2,176,226.  At December  31,
              1999, the Company had prepaid  Income Taxes and City  Construction
              Taxes of $426,402 which are netted with the taxes payable.

              n.  Change in Accounting Principle

              In June  1998,  the FASB  issued  SFAS No.  133,  "Accounting  for
              Derivative  Instruments  and Hedging  Activities"  which  requires
              companies to record derivatives as assets or liabilities, measured
              at fair market value. Gains or loses resulting from changes in the
              values of those  derivatives  would be accounted  for depending on
              the use of the  derivative  and  whether  it  qualifies  for hedge
              accounting.  The key  criterion  for hedge  accounting is that the
              hedging   relationship  must  be  highly  effective  in  achieving
              offsetting  changes in fair value or cash  flows.  SFAS No. 133 is
              effective for all fiscal  quarters of fiscal years beginning after
              June 15,  1999.  The  adoption of this  statement  had no material
              impact on the Company's financial statements.

                                      F-12


<PAGE>



                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 1 -      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
              (Continued)

              o.  Revenue Recognition

              The  Company  recognizes  revenue  at  the  time  the  product  is
              delivered to the customer and expenses are recognized as incurred.

NOTE 2 -      NOTES PAYABLE


              The Company  has taken out  several  loans from the  Industrial  &
               Commercial  Bank  and the  Agriculture  Bank.  These  loans  bear
               interest at 10% to 12%, are due in 2000,

              and are secured by the fixed assets of the Company. $ 5,450,131

              The  Company  has  received  advances  from its  employees  of the
               Company  which are interest  bearing at rates  between 6% and 12%
               per annum and due on demand. These funds are to be used for staff
               welfare and other

                           employee expenses.              521,666
                                                 -----------------
                          Total Notes Payable            5,971,797

                        Less: Current Portion          (5,971,797)
                                                 -----------------
                            Long-Term Portion       $          -
                                                 =================

NOTE 3 -      TAXES PAYABLE

              Taxes payable consisted of the following at December 31, 1999:

                           Gross revenue tax       $     155,658
                             Consumption tax           4,124,916
                               Education tax             178,438
                       City construction tax            (156,059)
                                  Income tax            (270,527)
                                               -----------------
                                       Total       $   4,032,426
                                               =================

              The Company  had value added and income tax expense of  $2,715,508
              and  $2,176,226  for the years ended  December  31, 1999 and 1998.
              These  amounts are computed  based on the income of the Company in
              the Peoples Republic of China.

                                      F-13


<PAGE>


<TABLE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998
<CAPTION>


NOTE 4 -      PROPERTY AND FIXED ASSETS
                                                                                                       1999
                                                                              Accumulated             Net Book
                                                             Cost             Depreciation            Value
                                                     ------------------  -------------------   -----------------
<S>                                                  <C>                 <C>                   <C>
              Machinery and equipment                $        8,575,984  $         2,441,028   $       6,134,956
              Building                                        3,339,090              755,543           2,583,547
              Land                                              277,817               -                  277,817
                                                     ------------------  -------------------   -----------------

                                                     $       12,192,891  $         3,196,571   $       8,996,320
                                                     ==================  ===================   =================
</TABLE>

              During the years ended  December  31,  1999 and 1998,  the Company
              expensed $805,729 and $763,267 in depreciation, respectively.

NOTE 5 -      INVENTORY

              Inventory

              Inventories  for the year ended December 31, 1999 consisted of the
following:

                                                          1999
                                                   -----------------
              Finished goods                       $          36,778
              Work-in-process                                 81,809
              Raw materials and supplies                     507,675
                                                   -----------------

                           Total                   $         626,262
                                                   =================

              Inventories  consist of  bottled  beer,  beer in  process  and raw
              materials  and are stated at the lower of cost or market using the
              average cost method.

NOTE 6 -      DEFERRED AND PREPAID EXPENSES

              Deferred and prepaid expenses consist of the following:

                           Prepaid advertising       $         424,475
                           Trademark                         2,322,483
                                                     -----------------
                                                     $       2,746,958
                                                     =================
              The prepaid  advertising  is being  amortized  over a period of 20
              years, the trademark is being amortized over a period of 15 years.
              Amortization  expense  for the years ended  December  31, 1999 and
              1998 was $184,764 and $184,657, respectively.

                                      F-14


<PAGE>


                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                 Notes to the Consolidated Financial Statements
                           December 31, 1999 and 1998

NOTE 7 -      CONCENTRATIONS OF RISK

              a.  Cash and Cash Equivalents

              The Company  had cash of $578,727 in banks  located in The Peoples
              Republic of China.  These  accounts are not insured by the Federal
              Deposit  Insurance  Corporation.  Additionally,  the  Company  has
              $452,403  of cash  equivalents  held with ITEX  Corporation.  This
              balance  is  not   insured  by  the  Federal   Deposit   Insurance
              Corporation.

              b.  Accounts Receivable

              The  Company   provides  for  accounts   receivable   as  part  of
              operations.  Management  does  not  believe  that the  Company  is
              subject to credit risks outside the normal course of business.

NOTE 8 -      CUSTOMERS AND EXPORT SALES

              During 1999 and 1998,  the Company  operated one industry  segment
              which is the manufacturing and marketing of alcoholic products.

              The  Company's  financial  instruments  subject to credit risk are
              primarily trade accounts receivable from its customers.

                                              For the Years Ended
                                                  December 31,
                                       ---------------------------------------
                                              1999                    1998
                                       -------------------   -----------------

              Foreign sales            $        15,122,886   $      15,957,499
                                       ===================   =================



                                       F-15


<PAGE>





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

None.

PART III

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

      Name                      Age       Position(s) and Office(s)
      ----                      ---       -------------------------

      James Tilton               38       President, Chief Executive Officer,
                                          Treasurer, Director

      Jane Zheng                 37       Secretary, Director

      Li Lin Hu                  55       Director

      James  Tilton was  appointed  the  Company's  president,  chief  executive
officer,  treasurer and one of its directors on October 23, 1995. Mr. Tilton has
extensive business and marketing  experience in the Far East and has worked with
his wife, Jane Zheng, in partnership with the Metallic Building  Company("MBC"),
a subsidiary  of NCI Building  Systems,  to market its  pre-engineered  building
materials in the People's  Republic of China  ("PRC")  since 1992.  For the last
five years and again with Jane Zheng,  he has assisted Star Brite, a division of
Oceans  Bio-Tech,  in  establishing a sales  distribution  system in PRC for its
chemical  products.  Mr. Tilton is also a director of Tianrong Building Material
Holdings, Ltd., a Utah corporation.

      Jane Zheng was  appointed  as  secretary  and a director of the Company on
October 23, 1995. Ms. Zheng has extensive  business and marketing  experience in
the Far East and has worked with her husband,  James Tilton, in partnership with
the Metallic Building Company ("MBC"), a subsidiary of NCI Building Systems,  to
market its pre-engineered building materials in the PRC since 1992. For the last
five years and again with James  Tilton,  Ms. Zheng has assisted  Star Brite,  a
division of Oceans  Bio-Tech,  in  establishing a sales  distribution  system in
China for its  chemical  products.  She  received  her  engineering  degree from
Shanghai  University,  in Shanghai,  China.  Ms. Zheng also has an MBA degree in
Finance from Adelphi University,  New York, and serves as a director of Tianrong
Building Material Holdings, Ltd., a Utah corporation.

      Li, Lin Hu, who has Master in Business  Administration  from China Economy
and Management  College is a senior economist and was appointed as a director of
the Company on or about January 6, 1999. Li is also executive  Vice-President of
Tiancheng Group, as referenced to throughout herein.

Compliance With Section 16(a)of the Exchange Act

      Based  solely upon a review of Forms 3, 4 and 5 furnished  to the Company,
the  Company is not aware of any person  who, at any time during the fiscal year
ended December 31,1998,was a director, officer, or beneficial owner of more than
ten  percent of the  Common  Stock of the  Company,  and who failed to file on a
timely basis reports required by Section 16(a)of the Securities  Exchange Act of
1934 during such fiscal year.

ITEM 10.  EXECUTIVE COMPENSATION

      The following table summarizes certain  information  concerning  executive
compensation  paid to or accrued by the Company's chief executive officer during
the Company's  last three fiscal years.  During this time no executive  officer,
excluding James Tilton, the current chief executive officer,  earned or received
annual compensation exceeding $100,000.
<TABLE>
<CAPTION>

                                            SUMMARY COMPENSATION TABLE

                                         Annual Compensation  Awards       Long Term     Compensation

Name and Principal Position   Year    Salary($)   Bonus($)    Other        Restricted    Options/    LTI     Other
                                                              Annual       Stock         SARs (#)    Payout
                                                               Comp.       Awards

------------------------------------------------------------------------------------------------------------------------
<S>                           <C>      <C>         <C>         <C>         <C>           <C>         <C>       <C>
James Tilton,                 1999     34,500      -0-         -0-         -0-           -0-         -0-       -0-
President                     1998     68,500      -0-         -0-         -0-           -0-         -0-       -0-
                              1997     50,000      -0-         -0-         -0-           -0-         -0-       -0-
</TABLE>





                                       9
<PAGE>




      The Company has compensated its directors by issuing them shares of Common
Stock registered  pursuant to a Form S-8 registration  statement.  The number of
shares issued to directors as compensation for services is based on the time and
effort  expended by the directors  during the year,  as determined  from time to
time by the Company's  board of  directors,  and is not evidenced by any written
compensation plan.

      The Company has an Employment Agreement,  effective October 23, 1995, with
James  Tilton,  its  president  and chief  executive  officer.  Pursuant  to the
Agreement, Mr. Tilton received an initial salary of $60,000, subject to periodic
review and  adjustment  by the board of  directors.  The  Company  also pays the
health insurance premiums of Mr. Tilton and his dependents.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

      The following  table sets forth certain  information  concerning the stock
ownership as of December 31, 1999, with respect to: (i) each person who is known
to the Company to beneficially  own more than 5% of the Company's  Common Stock;
(ii) all directors;  and (iii) directors and executive  officers as a group (the
notes below are necessary  for a complete  understanding  of the  figures).  The
Company  calculated  the owners of 5% of the Common  Stock  using the  5,546,505
shares of Common Stock issued on December 31, 1999.
<TABLE>
<CAPTION>

                                            Name and Address
         Title of Class                     Amount and Nature of
         of Beneficial Owner                Beneficial Ownership                 Percentage of Class
         -------------------                --------------------                 -------------------

<S>                                         <C>                                         <C>
Common Stock Par Value $0.001               Anhui Liu An Beer Company                   38%
                                                 2,100,000

Common Stock Par Value $0.001               Calder Investments, Ltd.                    19%
                                                 1,050,000

Common Stock Par Value $0.001               Tiancheng China Corp, Ltd.(a)               10%
                                                   530,000

Common Stock Par Value $0.001               Jane Zheng, Director &                       5%
                                            Secretary (c)
                                            82-66 Austin Street
                                            Kew Gardens, NY 11415
                                                   284,752

Common Stock Par Value $0.001               James Tilton, Director,                      1%
                                            President & Treasurer(b)
                                            82-66 Austin Street
                                            Kew Gardens, NY 11415
                                                    57,251


Common Stock Par Value $0.001               Li Lin Hu, Director (a)                      0%
</TABLE>


(a) Tiancheng is an operating  entity  incorporated in the People's  Republic of
China of which Li Lin Hu is an officer and director.  (b) Includes 211 shares of
common stock owned by ATJ,  Incorporated,  a Delaware holding company,  of which
James A. Tilton is sole officer, director and shareholder.

(c)  Includes 185 shares of common  stock owned by ZJ,  Incorporated  a Delaware
holding company, of which Jane Zheng is sole officer, director and shareholder.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

N/A

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

None.




                                       10
<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, this 14th day of April, 2000.

      China Food and Beverage Company

        James Tilton, President

      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/ James Tilton
------------------------          President,                     April 14,2000
James Tilton                      Chief Executive Officer,
                                  Treasurer and Director
/s/ Jane Zheng
------------------------          Secretary and Director         April 14,2000
Jane Zheng

/s/ Lin Hu Li
------------------------          Director                       April 14,2000
Lin Hu Li

                                       11