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, 1997

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.)


                82-66 Austin Street Kew Gardens, New York 11415
                    (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:

      Title of Each Class                          Name of Each Stock Exchange 
      -------------------                             on Which 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      NO  X
                                              ---     ---
         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant at December 31, 1997, was approximately $1,879,643.20.

         The  number of shares  of  Registrant's  Common  Stock  outstanding  on
December 31, 1997, was 2,931,546.

         The  Registrant's  total revenues for the year ended December 31, 1997,
were $0.



<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 ...............   6

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ...........  6

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS ..............................................  7

ITEM 7.  FINANCIAL STATEMENTS ............................................... 12

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ...................... 12

                                    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 BENEFICIAL OWNERS ............................ 15

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................... 16

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K ................................... 17

         SIGNATURES ......................................................... 18

         INDEX TO EXHIBITS .................................................. 19


                                       2
<PAGE>


                                     PART I


--------------------------------------------------------------------------------
ITEM 1.  DESCRIPTION OF BUSINESS
--------------------------------------------------------------------------------


Business Development
--------------------

         China Food & Beverage Company,  a Nevada corporation (the "Company" or,
"Corporation"),  has executive offices at: 82-66 Austin Street, Kew Gardens, New
York 11415. 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.2 In return

-----------------------


       1   As used  throughout  this Form 10-KSB,  the term "Common Stock" shall
refer to the Company's common stock, par value $0.001. All references to numbers
of shares in this  document  have been  adjusted  to  account  for the  30-for-1
reverse stock split which the Company effected on April 10, 1997.

       2   Under French corporate law, a corporation  such as Kohl must maintain
at least seven shareholders.  Accordingly, six individuals, including two of the
Company's  directors,  were each issued one share of Kohl's  stock.  The Company
acquired the remaining  4,356 shares of Kohl (99.86%).  Each other owner of Kohl
executed the equivalent of a written  proxy,  giving the Company (China Food and
Beverage Company) the power to vote on behalf of the record shareholders.


                                       3
<PAGE>


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.

         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  acquired  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 purchased ACDC from Dizon Investments
Limited,  an investment  company  organized under the laws of the British Virgin
Islands.  The Company  acquired ACDC in exchange for issuing 666,667  restricted
shares of Common  Stock to Dizon.  This  transaction  made Dizon the  beneficial
owner of approximately 18.5% of the Company's Common Stock. For more information
on this  transaction,  see "Item 6 -  Management's  Discussion  and  Anaylsis of
Operations of Financial Condition and Results of Operations."

         To reflect its acquisition of ACDC and its control of the joint venture
interest owned by ACDC, the Company  changed its name to China Food and Beverage
Company on March 31, 1997.



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.  As stated above, the Company has acquired a subsidiary which

 
                                        4

<PAGE>

owns a 60%  interest  in a joint  venture to  operate a brewery in the PRC.  The
Company will seek to acquire  additional,  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.

         The Company does not intend to participate in the day to day management
of the joint venture operating the Chinese brewery,  nor does the Company intend
to take an active management role in any subsequent businesses which the Company
may acquire in the future. 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.



--------------------------------------------------------------------------------
ITEM 2.  DESCRIPTION OF PROPERTY
--------------------------------------------------------------------------------


         Prior  to  November  1996,  the  Company's   subsidiary  Kohl  owned  a
manufacturing  plant  located in Calais,  France.  In November  1996,  the plant
became part of Kohl's  bankruptcy estate and was ultimately sold in Kohl's April
28, 1997, bankruptcy sale. The Company does not currently own any real property.



--------------------------------------------------------------------------------
ITEM 3.  LEGAL PROCEEDINGS
--------------------------------------------------------------------------------


         V.K.   Holdings,   Inc.   ("VK")   sued  the   Company   (Case   Number
93-05193-00-0-G)  on September 7, 1993 in the 319TH  Judicial  District Court of
Nueces County, Corpus Christi,  Texas. VK alleged fraud, violation of securities
laws, and other related  causes of action.  Also named as defendants in the suit
are Chad Burnett,  Richard  Surber and Kenneth R. O'Neal in their  capacities as
officers  and  directors  of the  Company in  November  1992,  the time when the
alleged  fraudulent  acts  took  place.  The  matter  has  been  settled  to the
satisfaction of all parties concerned and as of the date of this submission, are
waiting for the Court to sign an Order dismissing the suit.






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


         During  the  fourth  quarter  of the 1997  fiscal  year,  there were no
matters submitted to a vote of the Company's shareholders.


                                       5
<PAGE>

                                     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 1996 and 1997.  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.  The  increases  reflected  in the  quarters  ended June 30, 1997,
September  30, 1997 and  December  31, 1997,  are  attributable  to the 30-for-1
reverse split effected by the Company on April 10, 1997.



             QUARTER                             HIGH           LOW

Quarter Ending December 31, 1997             $   0.75      $   2.12

Quarter Ending September 30, 1997            $   0.56      $   0.31

Quarter Ended June 30, 1997                  $   0.63      $   0.02

Quarter Ended March 31, 1997                 $   0.08      $   0.03

Quarter Ended December 31, 1996              $   0.50      $   0.01

Quarter Ended September 30, 1996             $   0.75      $   0.19

Quarter Ended June 30, 1996                  $   3.37      $   0.50

Quarter Ended March 31, 1996                 $   5.00      $   2.50



Shareholders
------------

      There  were  approximately  1,485  record  holders  of Common  Stock as of
December 31, 1997,  holding a total of  2,931,546  outstanding  shares of Common
Stock.

Reverse Split
-------------

      On April 10, 1997,  the Company  effected a 30-for-1  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.


                                       6
<PAGE>

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,  October
23, 1997.  Though several  significant  events have occurred  during that 6 week
period, from October 23, 1997 through December 31, 1997, as are set forth below,
there were no material changes that would alter the Company's position.

      Prior to the last quarter of 1991, the Company's  primary business was the
sale and  distribution  of  medical  and  laboratory  diagnostic  equipment.  In
December 1991, the Company sold off its medical supplies  division and underwent
a change of  control.  Under the  direction  of new  management,  the  Company's
objective was directed toward acquiring  operating  subsidiaries in an effort to
generate  revenues and maintain the Company as a viable  concern.  The Company's
focus was to acquire financially distressed companies and restructure them in an
attempt to make their business profitable.  The Company also vigorously searched
for undervalued assets to acquire and later liquidate at a profit. The Company's
efforts to reverse  the  fortunes  of its  acquired  subsidiaries  were  largely
unsuccessful  due  to  undercapitalization  and  the  subsidiaries'  failure  to
generate  positive cash flow.  Between  December 1993 and  September  1994,  the
Company  liquidated all of its  subsidiaries  in an attempt to settle actual and
potential liabilities. Between October 1994 and October 1995, the Company had no
significant assets.

      On October 23, 1995, the Company  acquired all outstanding  shares of OMAP
International  Incorporated,  a closely held corporation whose primary asset was
the right to  acquire  patents  related  to the  production  of paper  collators
("OII").  The  Company  acquired  OII by issuing a  controlling  interest of the
Company's Common Stock to the theretofore  owners of OII. The group who obtained
a controlling interest in the Company pursuant to this transaction  consisted of
James  Tilton,  Aster De  Schrijver  and Jane  Zheng.  As part of the  change of
control,  these  individuals  were  appointed as officers  and  directors of the
Company.

      Under  new  management,  the  Company  attempted  to  primarily  focus its
operations  on the  production  of paper  collators.  On December 15, 1995,  the
Company  acquired   technology  and  proprietary   information  related  to  the
manufacture  of collators  and related  paper  processing  devices.  The Company
acquired this  technology and  information,  collectively  called the "Barenthin
Technology,"  by issuing shares of its Common Stock.  This Barenthin  Technology
included access to 15 distributors who had marketed similar collators throughout
Europe.  On December 15, 1995,  the Company also  acquired a 99.86%  interest in
Establissements  R. Kohl, a French company that manufactured  heating equipment,
lighting fixtures and vending machines ("Kohl").  Kohl employed approximately 32
employees.  Kohl's primary assets were a manufacturing  plant located in Calais,
France,  manufacturing  equipment used to produce  Kohl's  products and goodwill
associated with Kohl's  manufacturing  business.  Kohl was acquired  through the
Company's  issuance of Common Stock and the payment of  $1,000,000 to the former
owners of Kohl.  Kohl also made a $200,000 loan to Kohl which was used to settle
notes which Kohl executed in favor of the former owners. For more information on
these transactions, see "Item 1- Description of Business."

      The former owners of Kohl,  Maurice Van Gysel and Jacky  Caille,  remained
with Kohl as directors and co-general  managers.  Under the Company's ownership,
Kohl continued to manufacture the heating  equipment and lighting fixtures which
it had produced prior to Kohl's acquisition by the Company.  Kohl maintained its
prior contracts for the distribution of heating equipment and lighting fixtures.
The  sale of  heating  and  lighting  equipment  constituted  nearly  all of the
revenues generated by Kohl during 1996.


                                       7
<PAGE>

      During the end of 1995 and  throughout  1996,  the Company  also  produced
prototypes for several different models of its paper collators.  These collators
were  based  on the  patents  owned  by OII and the  Barenthin  Technology.  The
collator  prototypes were produced in Kohl's  manufacturing plant and were to be
sold to  distributors  the  Company  learned of through its  acquisition  of the
Barenthin Technology. Kohl also produced a prototype for a french fry cooker and
dispenser.  This vending machine was based upon patents which were owned by Kohl
at the time that Kohl was acquired by the Company.

      At the time that the Company acquired Kohl, Kohl had a shortage of working
capital and required an  immediate  capital  infusion.  Kohl was  delinquent  in
paying some of its trade creditors and needed additional  capital to perfect the
design and begin the  manufacture  of its  collators and vending  machines.  The
Company was unable to obtain the capital  necessary to assist Kohl in sustaining
its operations.  Accordingly,  Kohl was unable to ever commence the distribution
of its  collators  or vending  machines and did not realize any revenue from the
production  of  these  products.  Since  the  Company  had  planned  its  future
operations  around the  production  and sale of these new products by Kohl,  the
inability to distribute  collators and vending machines  significantly  impacted
the operations of the Company.

      On April 1, 1996, Jacky Caille and Maurice Van Gysel resigned as directors
of Kohl.  These  resignations  were the result of a dispute between Caille,  Van
Gysel and the Company  concerning the  consideration  the former were to receive
for their  sale of Kohl to the  Company.  Caille  and Van Gysel  also  expressed
general  dissatisfaction  with  management  decisions  of Kohl.  On May 7, 1996,
Kohl's board of directors  terminated Caille and Van Gysel from their respective
positions  as general  managers.  Caille and Van Gysel were  replaced by Georges
d'Humieres.

      In November 1996, Kohl petitioned for bankruptcy protection under the laws
of France.  This decision  resulted from Kohl's  shortage of working capital and
from pressure imposed by trade creditors. On April 28, 1997, the French Tribunal
administering the bankruptcy of Kohl sold nearly all of Kohl's assets, including
Kohl's  manufacturing  plant,  at a hearing at the  Commercial  Court.  The only
assets  which  were not sold at that  proceeding  were the  french  fry  vending
machine  prototypes,  inventory  and spare  parts  related  thereto  and  vendor
patents.

      As a result of the  bankruptcy  sale,  the Company's  only assets were the
unsold assets of Kohl and patents  related to the manufacture of collators which
were owned by OII. Because the Company discontinued the manufacture of collators
and vending  machines,  the Company  amortized 100% of the net book value of the
patents on its financial statements for the fiscal year ended December 31, 1996.
On June 30, 1997,  the Company's  right to the patents  lapsed after the Company
had  discontinued  the payments  necessary  to maintain  ownership of the patent
rights. The Company also realized a loss from discontinued  operations amounting
to the full value of the Company's  investment in Kohl. For more  information of
this matter, see the subsection "Results of Operations" below.

      On March 15, 1997, and while the bankruptcy sale of Kohl was pending,  the
Company acquired all outstanding capital stock of a Bahamian  corporation called
American China Development  Corporation ("ACDC").  ACDC owns a 60% interest in a
joint  venture in the People's  Republic of China (the "PRC").  According to the
joint  venture  agreement,  ACDC will obtain a 60% equity  interest in a limited
liability company within the Chinese territory to be operated in accordance with
the Laws of the PRC on Joint Ventures Using Chinese and Foreign Investment.  The
purpose  of the joint  venture is to operate  an  existing  beer  brewery in the
Jiangsu  province of the PRC known as the  Nantong  Aitesi  Beer  Company.  This
brewery  has been in  existence  since the 1950's and has been State owned since
that time. The brewery currently distributes beer locally to the City of Quidong
and surrounding areas within a 50 mile radius.

      The  objectives  of the joint  venture  are to improve  the quality of the
brewery's products,  improve the capacity of the brewery and increase the market
share of the brewery's  products.  In order to accomplish these objectives,  the
joint venture requires a substantial capital contribution from ACDC, the foreign
party to the joint venture. Under the joint venture agreement,  ACDC is required
to contribute  $2 million in cash and equipment to the joint venture  within six
months  after the joint  venture has been  approved  by the  Chinese  government
authorities.

      The Company  acquired  ACDC and the joint venture  interest  owned by ACDC
because the Company seeks to capitalize on the enormous Chinese consumer market.
The Chinese beer market is dominated by small,  local breweries which distribute


                                       8
<PAGE>

locally in their  province or region.  The Company  believes that if substantial
capital  contributions  are made to improve the quality of the beer  produced by
the Quidong  brewery and the efficiency of the production  process,  the brewery
can increase  its market  share and  revenues and thereby  increase the value of
ACDC's  investment in the joint  venture.  This belief is based upon an internal
business plan produced by the Chinese partner in the joint venture.

      However, ACDC's investment in the joint venture is also subject to several
risks  and   uncertainties.   The  most  prominent  risk  involves  the  capital
contributions  required to be made by ACDC. The joint venture agreement requires
ACDC to invest $2 million in United States  currency within six months after the
joint  venture  is  approved.  If ACDC  is  delinquent  in  making  any  capital
contributions required under the joint venture agreement, it is subject to a 10%
annual  interest  charge and further subject to a 0.5% penalty on all amounts in
default.  ACDC also risks losing its business  license (which would  effectively
terminate  its  ability to carry out the  purposes  of the joint  venture) if it
fails to make its required capital  contributions.  Accordingly,  the success of
ACDC is substantially dependent on its ability to raise the capital necessary to
meet its  commitments  under the joint venture.  ACDC does not have  substantial
assets aside from the joint  venture  interest  and will  therefore be dependent
upon the  Company  in  making  its  required  capital  contributions.  Given the
Company's  limited  cash  flow  and  history  of  operating  losses,  there is a
substantial  risk  that  ACDC  will  not be able to make the  scheduled  capital
contributions.  The Company intends to raise capital  primarily  through private
offerings of its Common Stock or,  through debt  financing,  and the Company can
provide no  assurances  that it will be able to generate  sufficient  capital in
this manner.  If ACDC and/or the Company are unable to raise this  capital,  the
Company's investment in ACDC will not succeed.

      During the second quarter of 1997, the Company  obtained a commitment from
an unaffiliated entity to provide the Company with debt capital in the amount of
$2 million.  The loan  agreement  required  the  Company to pay a $300,000  loan
processing  fee.  On July 7,  1997,  and in  order  to pay  the  processing  fee
necessary  to secure the debt  financing,  the Company  entered an  agreement to
obtain a $300,000  letter of credit  from a company  known as Epimed,  Inc.  The
Company  issued  1,500,000  shares (or  approximately  41.7% of the total shares
issued and outstanding) to Epimed to secure the Company's  repayment of proceeds
borrowed from the letter of credit.  On July 11, 1997,  the Company became aware
that  Epimed had  failed,  without  cause,  to  deliver  the letter of credit as
required. The Company placed a stop transfer order on the shares of Common Stock
issued to secure the  letter of credit,  and is in the  process of  obtaining  a
court order to cancel those  shares.  However,  the 1.5 million  shares have not
been treated as outstanding for purposes of disclosure on this Form 10-KSB.  The
Company has been unable to otherwise obtain the required loan processing fee and
therefore has been unable to secure the $2 million in debt financing.

      There  are  additional  risks  and  uncertainties   involved  with  ACDC's
investment in the Chinese joint venture.  A substantial  portion of the business
plan  prepared by the  Chinese  partner in the joint  venture is  premised  upon
projections  about how the  Chinese  consumer  market in  general,  and the beer
market in particular,  will develop in the future. Many of these projections are
based on  developments  in Hong Kong,  Japan and other markets.  There is a risk
that these projections will prove to be inaccurate,  that the market for beer in
the PRC will not  expand  and that the  revenues  to be  produced  by the Qidong
Brewery could fall substantially short of projections made in the business plan.
Another risk posed by the  investment  in the joint  venture  involves  currency
exchange rates which may nullify any  dividends,  profit sharing or other income
that ACDC realizes  through its  investment in the joint venture.  Finally,  the
joint venture is subject to political  risks caused by political  uncertainty in
the PRC and  relative  infancy of Western  investment  in  formerly  State-owned
Chinese companies.

      On April 10 1997, the Company's board of directors  authorized the Company
to effect a 1-for-30  reverse split of its issued and outstanding  Common Stock.
The reverse  split did not affect the  authorized  shares of Common  Stock.  All
fractional  shares of Common Stock were  rounded up to the nearest  whole share.
The Company  effected the reverse  split  because it believed that the number of
issued  and  outstanding  shares of Common  Stock was  disproportionately  large
compared to the Company's revenue, net income and net worth.

      On September 2, 1997, the Company granted options to purchase Common Stock
to two of its officers and directors.  The Company granted an option to purchase
1 million shares of Common Stock to James Tilton, the Company's president, chief
executive  officer,  treasurer and director.  The Company  granted an additional
option to purchase 1 million shares of Common Stock to Jane Zheng, the Company's
secretary and director. The exercise price for each option was set at $0.31, the


                                       9
<PAGE>

bid price of the Common Stock on the date the options were granted.  The options
were  granted to  compensate  Mr.  Tilton  and Ms.  Zheng as a bonus and for the
services they perform as the Company's only employees.

      On September 25, 1997, the Company executed a Consulting  Agreement with a
company known as The Hayden Group,  Inc.  Pursuant to the Consulting  Agreement,
the Company will receive  consulting  services related to management,  marketing
and corporate  structure.  The  consultant was also retained to help the company
more  effectively   disseminate   corporate   information  to  the  public.   As
consideration  for the  services to be  performed,  the  Company  granted to the
consultant  options to purchase  600,000  shares of Common  Stock.  The exercise
prices for the options are as follows:  (i) 150,000 shares  exercisable at $0.15
per share;  (ii) 150,000 shares  exercisable  at $0.30 per share;  (iii) 150,000
shares  exercisable at $0.50 per share;  and (iv) 150,000 shares  exercisable at
$0.90 per share. All options are exercisable for a period of three years.

      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  offshore  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 767,742 shares of Common Stock to an escrow
agent to secure  payment of principal and interest due on the note.  The 767,742
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.

      On or about  November 3, 1997,  the Company  passed a  resolution  for the
issuance of 35,000 shares of its Common Stock to each of the following entities:
Stanley  Merdinger,  to remain a director of the Corporation and as compensation
for past  services  rendered  as an acting  director;  Kitty  Chow,  to remain a
director of the Corporation and as compensation for past services rendered as an
acting director of the Corporation;  Ms. Deanne Ofsink, an attorney who rendered
legal services to the Corporation;  to Jane Zheng, as an inducement to remain as
an officer and director of the Corporation and as compensation for past services
rendered as an acting  director  and officer in the  Corporation;  and,  35, 000
shares to James Tilton, as an inducement to remain as an officer and director of
the Company and as compensation for past services rendered as an acting director
and officer of the  Corporation.  The  proposed  maximum  offering  price of the
Company's  Common  Stock  issued to each party in this  paragraph  was $0.05 per
share for an  aggregate  offering  price of  $19,500.  Each  individual's  stock
issuance was issued pursuant to a Form S-8 registration and was accompanied by a
Letter of Consent and an Opinion  Letter  prepared by Herbert M.  Jacobi,  Esq.,
counsel  for  the  Company,  regarding  the  legality  of the  securities  being
registered  under the Form S-8 registration  and,  Consent of Jones,  Jensen and
Co., independent public accountants for the Registrant. The formal filing of the
applicable S-8 registration forms was on or about November 4, 1997.

      On or about December 17, 1997, the Company  entered into an Agreement with
Tiancheng  Co., Ltd., a subsidiary of China  International  Trust and Investment
Corporation  ("CITIC")to locate and assist the Company in acquisition of no less
than 2, and up to as many as 8, additional  breweries and beverage  companies in
the Peoples  Republic of China.  CITIC owns numerous  companies  throughout  the
world. It has representative offices in Tokyo, New York, and Frankfurt, Germany,
as well as in China proper.  CITIC presently has assets of  approximately  $31.3
billion  and  shareholder's  equity of  approximately  $20  billion,  and earned
approximately  $247 million in the year 1995.  CITIC has  investments in several
Asian satellite projects,  including AsiaSat II, Cathay Pacific Airways,  Dragon
Air and CITIC  Industrial  Bank,  China's  sixth  largest  bank.  In return  for
Tiancheng  assisting  the  Company in  locating  and  acquiring  brewery  and/or
beverage sites in China,  as well as,  performing any and due diligence that may
be required or requested  with regard to these  acquisitions,  the Company shall
pay to Tiancheng  the sum of $150,000  cash,  and 500,000  shares of  restricted
Common  Stock to be valued at no less  than  $5.00  from one year of the date of
issuance.  Should the stock's value be less than $5.00 one year from the date of
issuance,  the Company shall issue additional shares to Tiancheng to make up the
difference.  Tiancheng  has also agreed to assist the Company in  financing  any
acquisitions  that result from its efforts as set forth in the Agreement between
the parties.


                                       10
<PAGE>

Events Subsequent to the Fiscal Year
------------------------------------

      On  November  7,  1995,  ADS Ltd.,  an Isle of Man  corporation,  acquired
341,786  shares of the  Company's  unregistered  Common  Stock.  Because  of the
bankruptcy of OMAP SA, which is referred to herein supra, of which principals of
ADS were also principals in OMAP SA, the Company placed a stop-transfer on ADS's
341,786 shares.  Based upon the advice of Company's counsel,  that the Company's
legal standing was somewhat tenuous, the stop-transfer on the 341,786 ADS shares
was removed on March 12, 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 or about February
13,  1998.  Closing  of this  transaction  is  pending  upon the  submission  of
verifiable financials from Victoria.

      On or about  February 11, 1998,  the Company  passed a resolution  for the
issuance of 50,000 shares of its Common Stock to each of the following entities:
Stanley  Merdinger,  who  presently  is  a  director  of  the  Corporation,   as
compensation for services rendered on behalf of the Corporation; Kitty Chow, who
presently is a director of the Corporation,  for services  rendered on behalf of
the Corporation;  Ms. Deanne Ofsink,  an attorney who rendered legal services to
the  Corporation;  Jane  Zheng,  as an  inducement  to remain as an officer  and
director of the  Corporation;  and,  50,000  shares of its Common Stock to James
Tilton,  as an  inducement  to remain as an officer and director of the Company.
The proposed maximum offering price of the Company's Common Stock issued to each
party in this  paragraph was $0.69 per share for an aggregate  offering price of
$34,500.  Each  individual's  stock  issuance was issued  pursuant to a Form S-8
registration  and was  accompanied  by a Letter of Consent and an Opinion Letter
prepared by Herbert M.  Jacobi,  Esq.,  counsel for the Company,  regarding  the
legality of the securities being registered under the Form S-8 registration and,
Consent  of  Jones,  Jensen  and Co.,  independent  public  accountants  for the
Registrant. The formal filing of the applicable S-8 registration forms was on or
about February 23, 1998.

      On  March  5,  1998,  the  Company  terminated  its  September  25,  1997,
Consulting Agreement with The Hayden Group, Inc.,  referenced to herein above in
the preceding  Section.  The Hayden Group failed to carry out its obligations as
set forth in the Agreement.  Accordingly, the Company's management felt that the
unilateral   termination   was   warranted   based   on   The   Hayden   Group's
non-performance.

Results of Operations
---------------------

      As a result of the investment of American China Development Corporation in
March  1997,the  Company  incurred  a loss of  investment  value of  $1,600,000.
Coupled with general costs of doing business, the Company incurred a net loss in
1997 of $2,345,177.  The Company's recent foray into the acquisition of beer and
beverage  companies  in the  People's  republic of China,  did not result in any
revenues for the fiscal year 1997.

      Due to the fact that Kohl applied for and received  bankruptcy  protection
in November  1996,  the financial  statements for Kohl have not been included in
the Company's audited financial statements for the year ended December 31, 1996.
The Company did not include  Kohl in its audited  financial  statements  for the
year ended  December  31,  1995,  because  of the  minimal  level of  operations
performed by Kohl  between  December 15, 1995 (the date Kohl was acquired by the
Company) and December 31, 1995.  Accordingly,  the Company recorded no operating
revenues for either 1996 or 1995. Since the Company did not record any operating
revenues  for either 1996 or 1995,  no costs of sales were  incurred  for either
year.


                                       11
<PAGE>

      The  Company  had a loss from  discontinued  operations  in the  amount of
$6,851,350  and  $652,508  for 1996 and  1995,  respectively.  The loss for 1996
resulted from the Company's decision to write off all of its investments in Kohl
and related goodwill.  The Company also wrote off patents on paper collators due
to its  inability to sell the patents.  The writeoff  resulted in  $2,170,833 in
amortization expenses,  which was recorded to loss from discontinued operations.
The  loss  for  1995  was  retroactively  restated  to  loss  from  discontinued
operations to reflect the Company's  decision to write off  investments  in Kohl
and the paper collator business.

Capital Resources and Liquidity
-------------------------------

      During  1997,  the Company  issued  869,677  shares of its Common Stock to
compensate  its  employees,  directors and  consultants.  The Company issued the
Common Stock to these  individuals in lieu of cash salaries  because the Company
lacked the cash flow necessary to otherwise  compensate  them. In addition,  the
Company issued 628,958 shares of Common Stock for cash at approximately $0.24 in
the fiscal year 1997.

      The Company has also been dependent on offering  shares of Common Stock in
order to raise capital.  At the end of 1995, the Company had net working capital
of $149,668.  On December 31, 1996, the Company's working capital deficiency was
$207,951.  The increase in deficiency is primarily attributable to the Company's
outstanding 1996 payroll taxes.



--------------------------------------------------------------------------------
ITEM 7.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
--------------------------------------------------------------------------------


      See the audited  financial  statements  attached  hereto and  numbered F-1
through F-14.
<PAGE>

                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company

                        Consolidated Financial Statements

                                December 31, 1997


<PAGE>











                                 C O N T E N T S


Independent Auditors' Report.............................................. F - 3

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

Consolidated Statements of Operations .................................... F - 5

Consolidated Statements of Stockholders' Equity (Deficit) ................ F - 6

Consolidated Statements of Cash Flows..................................... F - 7

Notes to the Consolidated Financial Statements............................ F - 9



<PAGE>







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



Board of Directors
China Food and Beverage Company
(Formerly OMAP Holdings Incorporated and Subsidiaries)
A Development Stage Company
Las Vegas, Nevada


We have audited the  accompanying  consolidated  balance sheet of China Food and
Beverage Company and (formerly OMAP Holdings  Incorporated  and  Subsidiaries)(a
development stage company) as of December 31, 1997 and the related  consolidated
statements of operations,  stockholders' equity (deficit) and cash flows for the
years ended December 31, 1997 and 1996. 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   (formerly   OMAP   Holdings   Incorporated   and
Subsidiaries)(a  development  stage  company) as of December 31,  1997,  and the
consolidated  results  of their  operations  and their  cash flows for the years
ended  December  31,  1997 and  1996,  in  conformity  with  generally  accepted
accounting principles.

The accompanying  consolidated  financial statements have been prepared assuming
the Company  will  continue as a going  concern.  As  discussed in Note 3 to the
consolidated  financial statements,  the Company has incurred significant losses
which have resulted in an accumulated  deficit,  raising substantial doubt about
its  ability to  continue as a going  concern.  Management's  plans in regard to
these  matters  are  also  described  in  Note  3.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.



Jones, Jensen & Company
April 7, 1998


<PAGE>



<TABLE>
                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                           Consolidated Balance Sheet


                                     ASSETS
<CAPTION>

                                                                            December 31,
                                                                               1997
                                                                         ------------------

CURRENT ASSETS

<S>                                                                      <C>               
  Cash and cash equivalents                                              $              947
                                                                         ------------------

     Total Current Assets                                                               947
                                                                         ------------------

     TOTAL ASSETS                                                        $              947
                                                                         ==================

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

  Accounts payable                                                       $           77,682
  Accounts payable - related party (Note 9)                                          47,382
  Payroll taxes payable                                                             158,364
  Note payable (Note 7)                                                             160,000
  Accrued interest (Note 7)                                                          53,000
                                                                         ------------------

     Total Current Liabilities                                                      496,428
                                                                         ------------------

     TOTAL LIABILITIES                                                              496,428
                                                                         ------------------

COMMITMENTS AND CONTINGENCIES (Note 5)

STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock: 100,000,000 shares authorized
   of $0.001 par value, 3,699,288 shares issued and
   2,931,546 outstanding                                                              2,930
  Additional paid-in capital                                                     15,997,741
  Accumulated deficit                                                           (16,496,152)
                                                                         ------------------

     Total Stockholders' Equity (Deficit)                                          (495,481)
                                                                         ------------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                $              947
                                                                         ==================
</TABLE>

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


                                       F-4

<PAGE>



<TABLE>
                                            CHINA FOOD AND BEVERAGE COMPANY
                                (Formerly OMAP Holdings Incorporated and Subsidiaries)
                                              A Development Stage Company
                                         Consolidated Statement of Operations
<CAPTION>

                                                                                          From the
                                                                                         Beginning of
                                                                                         Development
                                                                                           Stage on
                                                     For the Years Ended                  January 1,
                                                         December 31,                    1997 Through
                                          ----------------------------------------        December 31,
                                                 1997                  1996                  1997
                                          ------------------    ------------------    ------------------

<S>                                       <C>                   <C>                   <C>          
NET SALES                                 $           -         $           -         $           -

COST OF SALES                                         -                     -                     -
                                          ------------------    ------------------    ------------------

GROSS MARGIN                                          -                     -                     -

COSTS AND EXPENSES

  Salaries and wages                                 130,700                -                    130,700
  General and administrative                         558,515                -                    558,515
                                          ------------------    ------------------    ------------------

LOSS FROM CONTINUING OPERATIONS                      689,215                -                    689,215

Other (expense)

  Interest expense                                   (55,962)               -                    (55,962)
                                          ------------------    ------------------    ------------------

     Total Other (Expense)                           (55,962)               -                    (55,962)
                                          ------------------    ------------------    ------------------

NET LOSS FROM CONTINUING OPERATIONS
 BEFORE LOSS ON INVESTMENT AND LOSS
 FROM DISCONTINUED OPERATIONS                       (745,177)               -                   (745,177)

LOSS ON INVESTMENT                                (1,600,000)               -                 (1,600,000)

LOSS FROM DISCONTINUED OPERATIONS                     -                 (6,851,350)               -
                                          ------------------    ------------------    ------------------

NET (LOSS)                                $       (2,345,177)   $       (6,851,350)   $       (2,345,177)
                                          ==================    ==================    ==================

NET (LOSS) PER SHARE                      $            (1.17)   $            (7.22)
                                          ==================    ==================

WEIGHTED AVERAGE NUMBER OF SHARES                  2,001,948               948,745
                                          ==================    ==================
</TABLE>

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


                                       F-5

<PAGE>



<TABLE>
                                              CHINA FOOD AND BEVERAGE COMPANY
                                  (Formerly OMAP Holdings Incorporated and Subsidiaries)
                                                A Development Stage Company
                                 Consolidated Statements of Stockholders' Equity (Deficit)
                                                December 31, 1997 and 1996

<CAPTION>

                                                    Common Stock             Additional       Currency
                                              ------------------------         Paid-in       Translation      Accumulated
                                              Shares            Amount         Capital        Adjustment        Deficit
                                              ------            ------         -------        ----------        -------

<S>                                             <C>         <C>            <C>               <C>            <C>           
Balance, December 31, 1995                      599,398     $       599    $  12,586,990     $    17,108    $  (7,299,625)

Common Stock issued for services
 valued at approximately $1.23 per
 share                                          514,834             515          634,920          -                -

Common Stock issued for cash
 valued at approximately $3.91
 per share                                      183,919             184          719,816          -                -


Issuance of fractional shares                        41          -                -               -                -


Currency translation adjustment                  -               -                -              (17,108)          -


Net loss for the year ended
 December 31, 1996                               -               -                -               -            (6,851,350)
                                          -------------     -----------    -------------     -----------    -------------

Balance, December 31, 1996                    1,298,192           1,298       13,941,726          -           (14,150,975)

Common Stock issued for services
 valued at approximately $0.85 per
 share                                          869,667             870          735,030          -                -

Common Stock issued for cash at
 approximately $0.24 per share                  628,958             629          153,268          -                -


Common Stock issued for the
 acquisition of subsidiary                      666,667             667        1,599,333          -                -

Cancellation of Common Stock
 issued for services                           (416,669)           (417)        (271,733)         -                -


Cancellation of Common Stock
 issued for cash (Note 7)                      (116,667)           (117)        (159,883)         -                -

Fractional shares issued                          1,398          -                -               -                -


Net loss for the year ended
 December 31, 1997                               -               -                -               -            (2,345,177)
                                          -------------     -----------    -------------     -----------    -------------

Balance, December 31, 1997                    2,931,546     $     2,930    $  15,997,741     $    -         $ (16,496,152)
                                          =============     ===========    =============     ===========    =============

</TABLE>


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


                                       F-6

<PAGE>



<TABLE>
                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                      Consolidated Statements of Cash Flows

<CAPTION>
                                                                                                      From the
                                                                                                    Beginning of
                                                                                                     Development
                                                                                                       Stage on
                                                                                                      January 1,
                                                               For the Years Ended                   1997 Through
                                                                   December 31,                      December 31,
                                                            1997                  1996                  1997
                                                     ------------------    ------------------    ------------------

CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                  <C>                   <C>                   <C>               
Net (Loss)                                           $       (2,345,177)   $       (6,851,350)   $      (2,345,177)
Adjustments to Reconcile Net (Loss)  to
 Net Cash Used by Operating Activities:
   Amortization expense                                          -                  2,170,833                -
   Loss of investment value                                   1,600,000                10,000             1,600,000
   Loss on disposition of subsidiary                             -                  3,200,000                -
   Common stock issued for services -
     net of cancellations                                       463,750               635,435               463,750
   Forgiveness of debt                                           -                    (26,861)
 Changes in Assets and Liabilities:
   (Increase) decrease in accounts receivable                   431,951              (426,702)              431,951
   Increase (decrease) in accounts payable
    and accrued expenses                                         29,456               (44,515)               29,456
   Increase (decrease) in accounts payable -
    related parties                                            (333,077)               -                   (333,077)
                                                     ------------------    ------------------    ------------------

         Net Cash (Used) by Operating Activities               (153,097)           (1,333,160)             (153,097)

CASH FLOWS FROM INVESTING ACTIVITIES:

   Purchase of investments                                       -                    (10,000)               -
                                                     ------------------    ------------------    ------------------

         Net Cash (Used) in Investing Activities     $           -         $          (10,000)   $           -
                                                     ------------------    ------------------    ------------------
</TABLE>

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


                                       F-7

<PAGE>



<TABLE>
                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                Consolidated Statement of Cash Flows (Continued)
<CAPTION>

                                                                                                     From the
                                                                                                   Beginning of
                                                                                                    Development
                                                                                                     Stage on
                                                                                                     January 1,
                                                               For the Years Ended                 1997 Through
                                                                   December 31,                     December 31,
                                                           1997                  1996                  1997
                                                    ------------------    ------------------    ------------------


CASH FLOWS FROM FINANCING ACTIVITIES:

<S>                                                 <C>                   <C>                   <C>               
  Common stock issued for cash                      $          153,898    $          720,000    $          153,898
                                                    ------------------    ------------------    ------------------

     Net Cash Provided by Financing Activities                 153,898               720,000               153,898
                                                    ------------------    ------------------    ------------------

NET INCREASE (DECREASE) IN CASH                                    801              (623,160)                  801

CASH AND CASH EQUIVALENTS AT
  BEGINNING OF YEAR                                                146               623,306                   146
                                                    ------------------    ------------------    ------------------

CASH AND CASH EQUIVALENTS AT
  END OF YEAR                                       $              947    $              146    $              947
                                                    ==================    ==================    ==================


SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

     CASH PAID FOR:
       Interest                                     $           -         $           -         $           -
       Income taxes                                 $           -         $           -         $           -

NON-CASH FINANCING ACTIVITIES

  Common stock issued for acquisition
    of subsidiary                                   $        1,600,000    $           -         $        1,600,000

</TABLE>

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


                                       F-8

<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


NOTE 1 -       ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

               a.  Organization

               The consolidated financial statements include those of China Food
               and Beverage Company  (formerly OMAP Holdings  Incorporated)  and
               its wholly-owned  subsidiaries  OMAP  International,  Inc. (OII),
               OMAP  S.A.  (OSA)  and  American  China  Development  Corporation
               (ACDC).  Collectively,  they  are  referred  to  herein  as  "the
               Company".  At January 1, 1997,  the Company  became a development
               stage Company.

               OMAP Holdings Incorporated was incorporated under the laws of the
               State of  Nevada  on  November  6,  1981  under the name of Logos
               Scientific,  Inc.  to  sell  and  distribute  medical  diagnostic
               instruments and related supplies.  Such operations of the Company
               commenced in 1982 and continued through  December,  1991 at which
               time the  operations  were  sold.  On June 4, 1992,  the  Company
               changed  its name to Logos  International,  Inc.  During 1992 and
               1993, new operations  including those relating to art,  printing,
               automotive,  computers  and  consulting  were  carried on through
               subsidiaries.  During 1993 all active operations were terminated.
               By the end of 1994 all of those  subsidiaries  were  disposed of.
               The Company  changed its name to OMAP  Holdings  Incorporated  on
               October 23, 1995.  During 1995, the Company acquired OII, OSA and
               Kohl.  The Company  was engaged  (through  its  subsidiaries)  in
               investment  activities relating to the acquisition and production
               of technology and the  development  of paper  collators and other
               related industrial items.

               On  November  7,  1995,  the  Company  purchased  OII by  issuing
               13,014,144  shares of Common  Stock in  exchange  for 100% of the
               issued and  outstanding  stock of OII. Prior to the  acquisition,
               OSA was a  wholly-owned  subsidiary  of OII.  The purchase of OII
               resulted in the creation of goodwill of $80,540 in 1995 which has
               been written off to loss from discontinued operations in 1996.

               OMAP International, Inc. (OII) was incorporated under the laws of
               the  State of  Nevada  on  August  30,  1995 for the  purpose  of
               acquiring  existing   technology  and  patents  relating  to  the
               development of paper collators.

               OMAP S.A. (OSA) was  incorporated  on November 23, 1993 under the
               laws of Belgium for the purpose of developing technology relating
               to the  construction of paper  collators.  OSA had  substantially
               ceased operations at the time of its acquisition by OII.

               American China Development Corporation (ACDC) was incorporated on
               April 22, 1995 in Nassau,  Bahamas  for the purpose of  financing
               and investing in beer distribution centers in China, specifically
               a brewing facility in Quidong, China.






                                       F-9

<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


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

               a.  Organization (continued)

               On December 15, 1995, the Company  purchased  Establissements  R.
               Kohl (Kohl) for  $3,000,000.  This $3,000,000 was paid by issuing
               571,429 restricted shares of the Company's Common Stock which was
               valued at $3.50 per share at the time of  issuance  and by paying
               $1,000,000 in cash. In November,  1996, the French  Administrator
               of Kohl applied for and received  bankruptcy  protection from the
               French  Government.  Kohl was  subsequently  purchased by another
               French  company in 1997.  The investment in Kohl has been written
               off to loss  from  discontinued  operations.  Kohl is no longer a
               subsidiary as of November 1996.

               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.  Net (Loss) Per Share

               The  computations  of net  (loss)  per share of Common  Stock are
               based on the weighted average number of shares outstanding.

               e. Principles of Consolidation

               The December 31, 1997 consolidated  financial  statements include
               those of China Food and Beverage Company  (Formerly OMAP Holdings
               Incorporated)   and   its   wholly-owned    subsidiaries,    OMAP
               International,  Inc.,  OMAP S.A. and American  China  Development
               Corporation.    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.



                                      F-10

<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


NOTE 2 -       PATENTS AND RELATED TECHNOLOGY

               Patents and related  technology at December 31, 1997 consisted of
               the following:

                    Patents and related technology              $  2,200,000
                    Less accumulated amortization                 (2,200,000)
                                                                ------------- 

                    Patents and related technology - net        $        -
                                                                =============

               The  patents and related  technology  have been fully  amortized.
               Amortization  expense  for the year ended  December  31, 1997 was
               $-0- and $2,170,833,  respectively,  and is included in loss from
               discontinued operations.

NOTE 3 -       GOING CONCERN

               The  Company's  consolidated  financial  statements  are prepared
               using generally accepted  accounting  principles  applicable to a
               going concern which  contemplates  the  realization of assets and
               liquidation of liabilities in the normal course of business.  The
               Company has historically  incurred significant losses, which have
               resulted in an accumulated deficit of $16,496,152 at December 31,
               1997, which raises  substantial doubt about the Company's ability
               to continue as a going  concern.  The  accompanying  consolidated
               financial  statements do not include any adjustments  relating to
               the  recoverability  and classification of asset carrying amounts
               or the amount and classification of liabilities that might result
               from  the  outcome  of  this  uncertainty.  It is the  intent  of
               management to create additional  selling avenues through food and
               beverage  operations in China and to rely upon additional  equity
               financing if required to sustain operations.

NOTE 4 -       INCOME TAXES

               The  Company   accounts  for  income  taxes  under  Statement  of
               Financial  Accounting  Standards  No.109,  "Accounting for Income
               Taxes" (FAS 109),  which  requires use of the asset and liability
               method for calculating deferred income taxes.

               For federal  income tax  purposes,  the Company has net operating
               loss   carryforwards  of  approximately   $13,148,000.   The  net
               operating loss  carryforwards  will expire between the years 2007
               and 2012. Use of these loss  carryforwards  may be limited due to
               changes  in  ownership  and  changes  in  the  type  of  business
               operations.

               Due to a history of losses,  the Company's deferred tax asset for
               the benefit of the loss  carryovers has been reserved 100%,  thus
               resulting  in a net  deferred  tax asset of zero at December  31,
               1997.

                                      F-11

<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


NOTE 5 -       COMMITMENTS AND CONTINGENCIES

               The  Company  may be liable for  certain  payroll and other taxes
               relating to the  disposition of its  subsidiaries.  The estimated
               amount  could be as much as  $114,000 if the Company is forced to
               pay the obligations of the subsidiaries which were disposed of in
               1994.

               In 1995,  the  Company  acquired  OMAP  S.A.  which  the  Company
               believes  had  substantially  ceased  operations  at the  time of
               acquisition.  In February 1996,  OMAP S.A. filed for  bankruptcy.
               Management believes that there are no claims from creditors which
               are  pending  or  threatened  against  OMAP  S.A.;   however,  no
               assurance can be made until the local Belgium authorities release
               the Company from all claims.

               The Joint Venture  Agreement between ACDC and its Chinese partner
               requires the Company to invest  $2,000,000 in the beer brewery in
               China.  During the second quarter of 1997, the Company executed a
               loan  agreement with an  unaffiliated  third party to provide the
               Company  with a  $2,000,000  loan.  On July 7, 1997,  the Company
               issued  1,500,000  shares of its common  stock to Epimed  Inc. in
               order to obtain a  $300,000  letter of credit to pay for the loan
               processing  fee. The shares served as collateral on the letter of
               credit.  On July 11, 1997,  the Company  became aware that Epimed
               failed to deliver the letter of credit as  promised  and placed a
               stop transfer order on the 1,500,000  shares issued.  The Company
               is in the process of  obtaining a court order to cancel the stock
               certificate.  The Company believes that it will be able to cancel
               the stock certificate and, therefore, did not record the issuance
               of  1,500,000   shares.   Consequently,   the  shares  have  been
               subtracted  from  the  total  number  of  shares  outstanding  as
               recorded by the transfer agent.

               The Company has signed a marketing  agreement  with Fifth  Avenue
               Communications   which  calls  for  the  issuance  of  $5,000  of
               restricted common stock monthly as well as covering all of pocket
               expenses.

               The  Company  has signed an  agreement  with  Tiancheng  Co. Ltd.
               (Tiancheng),   wherein  Tiancheng  will  find  between  2  and  8
               additional beer breweries and beverage  companies for the Company
               to acquire. Upon meeting certain criteria, Tiancheng will be paid
               $150,000 and 500,000 shares of common stock. The trading value of
               the  stock  must  stay  over  $5.00  or the  Company  must  issue
               additional shares to make up the difference.

NOTE 6 -       INVESTMENT

               On March 14, 1997,  the Company issued  20,000,000  shares of its
               common stock,  $0.001 par value, to Dizon Investments Limited for
               100% of the  issued  and  outstanding  shares of  American  China
               Development Corporation,  a Bahamian corporation.  The 20,000,000
               shares  of  common  stock  are  not  registered.  American  China
               Development  Corporation  is the owner of 60% of a certain  joint
               venture in the Peoples Republic of China,  more  specifically,  a
               Brewery  located  in  Qidong  city,  Jiangsu  province,  known as
               Nantong Aitesi Beer Company Ltd.  James Tilton,  President of the
               Company,   was  an  officer  and   director  of  American   China
               Development  Corporation until December 1995. The Company has not
               provided  the  financing  which  is a part  of  the  acquisition.
               Accordingly,  the value of the  investment  has been  reduced  to
               zero.


                                      F-12

<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


NOTE 7 -       NOTE PAYABLE

               In 1996,  the Company  received  $160,000 of cash for the sale of
               regulation  S stock.  However,  the Company  would not remove the
               restrictive  legend on the stock.  The  investors and the Company
               settled this dispute by having the Company execute a note payable
               for  $160,000  with  interest  accruing  at 19.50% from April 16,
               1996. The note is due October 18, 1998. Additionally, the Company
               issued 767,742 shares of common stock as collateral for the note.
               The 767,742  shares of common  stock are listed as issued but not
               outstanding.  In the event that 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 $52,000.  The Company
               canceled the 3,500,000 pre-split, 116,667 post-split shares which
               were issued in 1996.

NOTE 8 -       REVERSE STOCK SPLIT

               On April 15, 1997, the Company  effected a reverse stock split of
               1-for-30  shares.  All  references  to  common  stock  have  been
               retroactively restated to reflect he reverse stock split.

NOTE 9 -       RELATED PARTY TRANSACTIONS

               A shareholder has provided accounting and consulting services for
               the Company.  The amount due to this  shareholder at December 31,
               1997 was $47,382.

NOTE 10 -      OPTION AGREEMENTS

               On September  2, 1997,  the Company  granted  options to purchase
               common stock to two of its officers  and  directors.  The Company
               granted an option to purchase 1 million shares of common stock to
               James Tilton, the Company's  president,  chief executive officer,
               treasurer and director.  The Company granted an additional option
               to purchase  1,000,000  shares of common stock to Jane Zheng, the
               Company's  secretary  and director.  The exercise  price for each
               option was set at $0.31, the bid price of the common stock on the
               date the  options  were  granted.  The  options  were  granted to
               compensate  Mr.  Tilton  and Ms.  Zheng  as a  bonus  and for the
               services they perform as the Company's only employees.

               On  September  25,  1997,  the  Company   executed  a  Consulting
               Agreement with a company known as The Hayden Group, Inc. Pursuant
               to the Consulting Agreement,  the Company will receive consulting
               services   related  to   management,   marketing   and  corporate
               structure.  The  consultant was also retained to help the Company
               more effectively disseminate corporate information to the public.
               As  consideration  for the services to be performed,  the Company
               granted to the consultant  options to purchase  600,000 shares of
               common stock. The exercise prices for the options are as follows:
               (i) 150,000 shares  exercisable at $0.15 per share;  (ii) 150,000
               shares  exercisable  at $0.30 per  share;  (iii)  150,000  shares
               exercisable   at  $0.50  per  share;   and  (iv)  150,000  shares
               exercisable at $0.90 per share. All options are exercisable for a
               period of three years.  The consulting  agreement was canceled in
               1998.




                                      F-13

<PAGE>


                         CHINA FOOD AND BEVERAGE COMPANY
             (Formerly OMAP Holdings Incorporated and Subsidiaries)
                           A Development Stage Company
                 Notes to the Consolidated Financial Statements
                           December 31, 1997 and 1996


NOTE 11 -     SUBSEQUENT EVENTS

               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 of 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 or
               about February 13, 1998.  Closing of this  transaction is pending
               upon the submission of verifiable financials from Victoria.

                                      F-14

<PAGE>





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


      On December 30, 1995, the Company  received a notice of  resignation  from
its independent auditor Smith & Company. The Company filed a Form 8-K on January
5, 1996 to disclose this  occurrence.  There were no  disagreements  between the
Company and its auditor regarding  accounting  principles,  financial  statement
disclosure, or auditing scope either before or at the time of resignation. Smith
& Company resigned because, as a small accounting firm, it would have difficulty
auditing the Company's newly acquired foreign operations.

      Smith & Company's  report on the financial  statements  for 1994 contained
neither an adverse  opinion nor a disclaimer  of opinion.  The reports were also
unmodified as to uncertainty,  audit scope, and accounting principles.  However,
the financial  statements  included in the Company's  annual report on Form 10-K
for the year ended December 31, 1994 included a single sentence expressing Smith
& Company's doubt as the Company's ability to continue as a going concern.  This
doubt was based on the Company's losses from operations and its need for working
capital.

      On May 17, 1996, the Company retained Jones, Jensen & Company to audit the
Company's  financial  statements  for the fiscal years ended  December 31, 1995,
December 31, 1996 and December 31, 1997. There were no consultations between the
Company and the new auditor concerning the application of accounting principles,
disagreements  with the former  auditor,  or any of the other items specified in
Item 304(a)(2) of Regulation S-B under the Securities Exchange Act of 1934.


                                       12
<PAGE>

                                    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          36       President, Chief Executive Officer, 
                                     Treasurer, Director

      Jane Zheng            35       Secretary, Director

      Stanley Merdinger     55       Director

      Kitty Chow            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.

      Stanley  Merdinger  was  appointed as a director of the Company in January
1997. Over the past five years, Mr.  Merdinger has been extensively  involved in
international finance and consulting.

      Kitty Chow was  appointed as a director of the Company in September  1997.
From 1989 through 1990,  Ms. Chow was the vice  president of First  Westminister
Mortgage  Bank.  From 1991  through  1997,  Ms. Chow was the vice  president  at
American Chinese Broadcast Corp., T&L Advantage Corp., and Provident  Consulting
Corp.,  was president of Yen Ting Consulting  Corp.,  and was a director of both
U.S.A. University Council and ACC Jin Tai Industrial Group.

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, 1997, 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.


                                       13
<PAGE>

--------------------------------------------------------------------------------
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>
                           SUMMARY COMPENSATION TABLE

                                         Annual Compensation Awards         Long Term Compensation
                                         --------------------------         ----------------------
<CAPTION>

Name and Principal Position      Year     Salary($)     Bonus($)    Other   Restricted    Options/    LTIP       Other
                                                                    Annual    Stock       SARs (#)    Payout
                                                                    Comp.     Awards
----------------------------------------------------------------------------------------------------------------------
<S>                              <C>      <C>            <C>         <C>        <C>           <C>       <C>        <C>
James Tilton,                    1997     68,500+       -0-         -0-        -0-           -0-       -0-        -0-
President and Chief              1996     31,200*       -0-         -0-      101,580**       -0-       -0-        -0-
Executive Officer
</TABLE>

      + This dollar  figure  represents  48,000 shares of Common Stock that were
issued as compensation as the Company's director and officer for the fiscal year
1997,  as follows:  13,000  shares  valued at $1.50 per share issued on or about
January 29, 1997,  and, 35,000 shares issued on or about November 3, 1997 valued
at $49,000.

      * This dollar  figure  represents  8,000  shares of Common Stock that were
issued to Mr.  Tilton on November  16,  1996 as  compensation  for Mr.  Tilton's
services as the  Company's  director the 1996 fiscal year.  Each of these shares
was  valued at $3.90,  representing  the  average of the  closing  bid and asked
prices for the Common Stock on the day the  corporation  approved this issuance.
The shares were registered  pursuant to a Form S-8 Registration  Statement filed
by the Company on November 18, 1996.

      ** This dollar figure represents  200,000 shares of Common Stock that were
issued to Mr. Tilton on December 9, 1996. These shares were issued to Mr. Tilton
as compensation  for his services as president and chief  executive  officer and
were issued in lieu of the $60,000 cash salary to which Mr.  Tilton was entitled
under his  Employment  Agreement  with the Company (see below).  The shares were
restricted pursuant to Rule 144 promulgated under the Securities Act of 1933.

      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. For 1996, the Company issued 8,000 shares of Common Stock to
James Tilton and an additional 13,000 shares to Jane Zheng. Based on the average
bid and ask prices on the days when these shares were issued, the Company valued
the issued shares at $31,200 and $19,500, respectively.

      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.  The Agreement was
initially for a term of one year,  but has been renewed for an additional  year.
On December 9, 1997,  the Company  issued Mr.  Tilton  200,000  shares of Common
Stock (see the table directly above) in lieu of his cash salary.


                                       14
<PAGE>

--------------------------------------------------------------------------------
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, 1997, 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  3,699,288
shares of Common Stock issued on December 31, 1997.

<TABLE>
<CAPTION>

                                              Name and Address              Amount and Nature of     Percentage of
          Title of Class                    of Beneficial Owner             Beneficial Ownership         Class
          --------------                    -------------------             --------------------         -----
<S>                                           <C>                                <C>                     <C>
   Common Stock Par Value $0.001              ADS Group, Ltd.                     341,786                 9.%
                                           18 ST. Georges Street
                                         Douglas, Isle of Man IM11PC
   Common Stock Par Value $0.001            Jane Zheng, Director                  204,322+                5.5%
                                            82-66 Austin Street
                                           Kew Gardens, NY 11415
   Common Stock Par Value $0.001           James Tilton, Director                 221,033*                6.%
                                            82-66 Austin Street
                                           Kew Gardens, NY 11415
   Common Stock Par Value $0.001                Epimed, Inc.                     1,500,000**             40.5%
   Common Stock Par Value $0.001           Dizon Investments Ltd.                 666,667                 18.%
   Common Stock Par value $0.001                Pienne Chow                       767,742                 21%
                                             #70 Fickus Gardens
                                           Fotau 5, WT Hong Kong
</TABLE>

 +The number provided in the table includes 18,404 shares registered in the name
of ZJ,  Incorporated,  a  Delaware  corporation  of which Ms.  Zheng is the sole
officer, director and shareholder.

 *The number provided in the table includes 21,033 shares registered in the name
of ATJ,  Incorporated,  a Delaware  corporation  of which Mr. Tilton is the sole
officer, director and shareholder.

**These shares were issued by the Company as security  for a $300,000  letter of
credit which Epimed, Inc. was contractually obligated to deliver to the Company.
Epimed breached its commitment to deliver the letter of credit.  The Company has
placed a stop transfer  order on the 1.5 million shares and is in the process of
obtaining a court order to cancel the shares.  For purposes of this Form 10-KSB,
however, the 1.5 million shares are treated as issued and outstanding.  For more
information  on this  transaction,  see "Item 6 -  Management's  Discussion  and
Analysis of Financial Condition and Results of Operations."

--------------------------------------

           On September 2, 1997, the Company  granted options to purchase Common
Stock to two of its officers  and  directors.  The Company  granted an option to
purchase  1 million  shares  of  Common  Stock to James  Tilton,  the  Company's
president,  chief executive officer, treasurer and director. The Company granted
an additional option to purchase 1 million shares of Common Stock to Jane Zheng,
the Company's secretary and director. The exercise price for each option was set
at  $0.31,  the bid  price of the  Common  Stock on the  date the  options  were
granted.  The options were granted to  compensate  Mr. Tilton and Ms. Zheng as a
bonus and for the services they perform as the Company's only employees.

Changes in Control
------------------

      The Company knows of no immediate arrangements or understandings which may
result in a future  change in control of the Company.  However,  as set forth in
the Section titled "Events Subsequent to the Fiscal Year," pursuant to the terms

                                       15
<PAGE>

and conditions of the aforementioned  Agreement between the Company and Victoria
Beverage  Company  Ltd.  ("Victoria"),  should the  debenture  be  exercised  by
Victoria,  it may result in the  shareholders  of Victoria  obtaining a majority
interest in the Company and therefore,  be able to influence the policy decision
making of the Company.



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


      On December 20, 1995,  the Company  entered into separate  Stock  Exchange
Agreements with BRIA  Communications  Corporation,  Tianrong  Building  Material
Holdings,  Inc.  ("TBMH")  and  Eurotronics  Holdings,  Inc.  Pursuant  to these
Agreements,  the  Company  acquired a quantity of common  stock in each  company
equivalent to $300,000 divided by the average bid and asked prices for the stock
of each  company on the date of  issuance.  In return,  the Company  issued each
public entity a quantity of Common Stock  equivalent to $300,000  divided by the
average bid and asked prices for the Common Stock on the date of issuance. James
Tilton,  Aster De  Schrijver,  and Jane Zheng were the  Company's  officers  and
directors  when  these  transactions  occurred.  At the same  time,  Tilton,  De
Schrijver,  and Zheng also served as officers and directors of BRIA,  TBMH,  and
Eurotronics.  Accordingly,  these Stock  Exchange  Agreements  may not have been
negotiated at arm's length.

      In its financial  statements  for the fiscal year ended December 31, 1995,
the Company booked the value of the BRIA common stock at $114,814,  the value of
the TBMH common stock at $100,000, and the value of the Eurotronics common stock
at $101,886. The adjustment to the value of these investment securities accounts
for the fact that all shares  acquired  by the  Company  through the three Stock
Exchange  Agreements were  restricted  pursuant to Rule 144 under the Securities
Act of 1933.

      Subsequent  to  the  Stock  Exchange  Agreements,   the  Company  acquired
additional  shares  of  common  stock  in  BRIA  and  Eurotronics  through  cash
transactions.  On December  31, 1995,  the Company  acquired  290,323  shares of
BRIA's  common stock in exchange for  $90,000,  or $0.31 per share.  On the same
day,  the  Company  acquired  111,111  shares of  Eurotronic's  common  stock in
exchange for $20,000, or $0.18 per share. The shares acquired through these cash
transactions were also restricted pursuant to Rule 144.



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


(a)   Index  to  Exhibits.  Exhibits  required  to be  attached  by Item  601 of
      Regulation S-B are listed in the Index to Exhibits beginning on page 19 of
      this Form 10-KSB, which is incorporated herein by this reference.
(b)   Reports  on Form 8-K.  The  Company  did not make any  filings on Form 8-K
      during the fourth quarter of the fiscal year ending  December 31, 1997. On
      May 23, 1997 and  subsequent to fiscal year ended  December 31, 1996,  the
      Company  filed a Form 8-K  disclosing  the  bankruptcy  sale of its former
      subsidiary,  Establissements  R. Kohl,  and the sale of 100,000  shares of
      Common Stock pursuant to Regulation S.



                                       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, this 13TH day of April, 1998.

      China Food and Beverage Company

        /s/ James Tilton
        -----------------------
        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, Chief Executive Officer,     April 13, 1998
 -----------------------  Treasurer and Director
  James Tilton


                          Secretary and Director                  April __, 1998
 -----------------------
  Jane Zheng


  /s/Stanley Merdinger    Director                                April 13, 1998
 -----------------------
  Stanley Merdinger


  /s/Kitty Chow           Director                                April 13, 1998
 -----------------------
  Kitty Chow








                                       17
<PAGE>


                                LIST OF EXHIBITS
                                ----------------

 Exhibit No.                       Exhibit                               Page #:
 -----------                       -------                               -------
                                               

A(1)     Agreement  between  the Company and Dizon  Investments  Limited,  dated
         March 15, 1997.

B(1)     Consulting  Agreement  between the Company and The Hayden Group,  dated
         September 25, 1997.

C(1)     Joint Venture Contract of American China Development Corporation, dated
         November 11, 1997.





































                                       18




<PAGE>


                                  EXHIBIT A(1)

      AGREEMENT  made  this  15th  day  of  March  1997  by  and  between  DIZON
INVESTMENTS  LIMITED,  a British Virgin Islands  Corporation  ("Dizon") and OMAP
HOLDINGS INCORPORATED, a Delaware corporation.

      WHEREAS,  Dizon  owns all of the issued and  outstanding  common  stock of
American China Development Corporation (the "ACDC Stock"); and

      WHEREAS,  Dizon  wishes  to sell the ACDC  stock to OMAP on the  terms and
conditions set forth herein below; and

      WHEREAS,  OMAP wishes to  purchase  the ACDC Stock from Dizon on the terms
and conditions set forth herein below;

      NOW,  THEREFORE,  in consideration of the premises and promises  contained
herein the signatory parties agree hereto as follows:

      1.   Dizon  represents  and  warrants  that it is the  owner of all of the
           outstanding  stock of any kind issued by American  China  Development
           Corporation ("American China");

      2.   Dizon  represents  and  warrants  that it is aware of no claim of any
           type or kind  made as of the date  hereof  or  reasonably  to be made
           hereinafter by any person or entity against American China or against
           Dizon's ownership of the ACDC Stock.

      3.   Dizon has all the rights, corporate and otherwise, to enter into this
           Agreement pursuant to which the ACDC Stock is sold to OMAP.

      4.   Dizon  agrees to sell all of its  interest in the ACDC Stock to OMAP.
           Dizon agrees that in addition to this Agreement,  it will execute all
           such documents as may be necessary to transfer  ownership of the ACDC
           Stock to OMAP.

      5.   OMAP agrees to pay Dizon as the full and total purchase price for the
           ACDC Stock and Dizon  agrees to accept from OMAP as full  payment for
           the ACDC Stock  20,000,000  shares of the  common  stock of OMAP (the
           "OMAP  Shares").  It is agreed,  understood and accepted by Dizon and
           OMAP that the OMAP Shares when issued to Dizon will (a) not have been
           registered with the Securities and Exchange Commission;  and (b) bear
           a  restrictive  legend in form and  substance  advising that the OMAP
           Shares  cannot be sold or  otherwise  hypothecated  without  either a
           registration  statement  then being in effect or an opinion letter of
           counsel that such registration need not be had.

      6.   All  representations and warranties set forth in this Agreement shall
           surmise the closing of the transaction contemplated hereby.

      7.   This Agreement may be signed in one or more counterparts.

      8.   This Agreement may be signed in one or more counterparts.

      IN WITNESS  WHEREOF,  the parties  have set their hands and seal the first
day, month and year above written.



DIZON INVESTMENTS LIMITED                 OMAP HOLDINGS INCORPORATED

By:/s/ Joyce Fayle                        By: /s/ James Tilton



                                       19
<PAGE>


                                  EXHIBIT B(1)

                              CONSULTING AGREEMENT

THIS CONSULTING  AGREEMENT  ("Agreement") is made and entered into this 25th day
of  September,  1997,  by and between The Hayden Group Inc., of 12 N.E. 5th Ave.
Delray Beach,  Florida 33483,  hereinafter  referred to as "the  Consultant" and
China Food and Beverage  Company,  8 West 38th Street,  9th Floor,  New York, NY
10018, hereafter referred to as the "Company"

WHEREAS,  the  Consultant is desirous of being  engaged by the Company,  and the
Company has agreed to engage the  Consultant  upon certain terms and  conditions
contained in this  Agreement,  one of which is the execution of the Agreement by
both parties;

WHEREAS,  the Consultant,  by virtue of the Consultant's  relationship  with the
Company  has  become  familiar  with  the  Company's  business  pursuant  to the
Non-Circumvention  and Non  Disclosure  Agreement,  executed on September  25th,
1997, which document is part of this Agreement and is included as Attachment I;

WHEREAS, the Company requires financial public relations services and desires to
employ Consultant to provide such services as an independent consultant.

9.    ENGAGEMENT.  The Company  hereby  engages the Consultant to provide public
      relations assistance to the Company and the Consultant hereby accepts such
      engagement, upon the terms and conditions hereinafter set forth.

10.   TERM. The term of this  Agreement  shall begin upon execution and continue
      for a period of one year.  The Agreement  shall be extended  automatically
      upon the mutual consent of the parties.  Non-renewal  will require written
      notice sixty (60) days prior to the  anniversary  date of the Agreement or
      upon the anniversary date of any renewals. Changes in terms and conditions
      (if any) shall be  submitted in writing at least thirty (30) days prior to
      any renewal.  Mutual  agreement must be reached in writing before any such
      changes will be binding upon the parties.

11.  COMPENSATION.  The Company shall compensate the Consultant according to the
     following:

      a)    The Company  hereby grants to Consultant  option (the  "Options") to
            purchase a total of Six Hundred  Thousand  (600,000)  fully paid and
            nonassessable  shares of its common stock (the  "Option  Shares") at
            the following rate. One Hundred and Fifty Thousand shares  (150,000)
            at  Fifteen  cents per share  ($.15) for a period of Three (3) years
            from option  registration.  One Hundred  and Fifty  Thousand  shares
            (150,000) at Thirty Cents per share ($.30) for a period of Three (3)
            Years from option registration One Hundred and Fifty Thousand shares
            (150,000)  at Fifty Cents per share ($.50) for a period of Three (3)
            Years from  option  registration.  One  Hundred  and Fifty  Thousand
            shares  (150,000)  at Ninety  Cents per share ($.90) for a period of
            Three (3) Years from option registration.  The Option grant provides
            that if, prior to the  Expiration  Time,  the number of  outstanding
            shares of the  Company's  Common  Stock are  increased  or decreased
            through a stock  split,  stock  dividend,  stock  consolidation,  or
            otherwise,  without consideration to the Company, an appropriate and
            proportionate  adjustment  must be made in the  number  and  kind of
            shares as to which the  Option  Shares may be  exercised.  By way of
            example, if the Company should make a two-for-one stock split of its
            outstanding  shares of common stock, the number Shares for which the
            Consultants  options may be exercised would thereupon  increase from
            100,000  to  200,000  shares,  with a  corresponding  change  in the
            exercise price applicable to the Consultant's Options, and

      b)    The Company  agrees that it will, at its own cost and expense,  file
            to register the  Consultant's  common  stock,  warrants,  or options
            within 30 days from the signing of the Consulting Agreement.  If the
            Company  for  any  reason  defaults  in  this  responsibility,   the
            Consultant  shall  have the right to hire its own legal  counsel  to
            complete the appropriate filings. Fees and expenses will be borne by
            the Company.

12.   SERVICES  OF THE  CONSULTANT.  The  Consultant  shall  provide  consulting
      services in any or all of the following areas:


                                       20
<PAGE>

      a)    Technical   and   analytical   consulting   concerning   management,
            marketing,  corporate  organization  and  structure and expansion of
            services.
      b)    Acting  as a liaison  between  the  Company  and  broker-dealers  to
            establish broker-dealer awareness
      c)    Acting as liaison  with  respect to existing  and  potential  market
            makers
      d)    Preparation   and   fax   distribution   of   Company   profile   to
            broker-dealers
      e)    Introduction to Internet stock investment groups

13.   LIMITATIONS   ON   SERVICES.    The   parties   recognize   that   certain
      responsibilities  and  obligations  are  imposed  by  federal  and  states
      securities  laws and by the  applicable  rules  and  regulations  of stock
      exchanges,  the National Association of Securities Dealers,  inc. in-house
      "due  diligence" or  "compliance"  departments of brokerage  houses,  etc.
      Accordingly,  Consultant  agrees.  
      a)    Consultant  shall not release any financial or other  information or
            data about the  Company  without  the  advance  written  consent and
            approval of the Company
      b)    Consultant  shall not conduct any meeting  with  financial  analysts
            without informing the Company in advance of the proposed meeting and
            the format or agenda of such  meeting  and the  Company may elect to
            have a representative of the Company attend such meetings.
      c)    Consultant  shall not  release  any  information  or data  about the
            Company to any selected or limited  person(s),  entity,  or group if
            Consultant  is  aware  that  such  information  or data has not been
            generally released or promulgated.
      d)    Consultant   acknowledges  that  non-public   information  plans  of
            operations  and  potential  acquisitions  or mergers prior to public
            announcement  are  confidential  and  proprietary  to  the  Company.
            Consultant  covenants  and  agrees  that it will  not  disclose  any
            confidential  information to any person,  firm or entity without the
            express   advance   written   consent  of  Company,   and  that  any
            unauthorized  disclosure  or  use  of  confidential  information  by
            consultant   constitutes   misappropriation  of  trade  secrets  and
            confidential information. Consultant further agrees that proprietary
            rights to the confidential  information shall be retained by Company
            and that Consultant shall claim no right of ownership  therein.  The
            terms and  conditions of the  Non-Circumvention  and  Non-Disclosure
            /Agreement  (if any) are  applicable  and  remain in effect  for the
            entire term of said Agreement.

14. ACTIONS OF COMPANY.  The Company  accepts  responsibility  for the following
    activities:
      a)    Company  shall supply  Consultant  on a regular and timely basis all
            approved data and information about the Company, its management, its
            products,  and its operations,  and Company shall be responsible for
            advising  Consultant of any facts which would affect the accuracy of
            any prior data and information  previously supplied to Consultant so
            that Consultant may take corrective action.
      b)    Company  shall  promptly  supply  Consultant  with full and  compete
            copies of all and any  filings 30 days prior to  registration.  Such
            filings would include but not be limited to, Regulation S, SB-2, S-8
            and Preferred  Stock with all federal and state  agencies;  full and
            complete  copies  of all  shareholder  reports  and  communications,
            whether or not prepared with Consultant's assistance;  with all data
            and  information  supplied  to any  analyst,  broker-dealer,  market
            maker,  other  member  of the  financial  community,  and  with  all
            products/services brochures, sales materials, etc.
      c)    Company  shall  promptly  notify  Consultant  of the  filing  of any
            registration statement 5 days prior to the sale of securities and of
            any other event which triggers any restrictions on publicity.
      d)    Company shall contemporaneously notify Consultant if any information
            or data being supplied to Consultant has not been generally released
            or promulgated.

15.   REPRESENTATION AND INDEMNIFICATION.
      a)   The Company  shall be deemed to make a continuing  representation  of
           the accuracy of and any and all material facts, material information,
           and  data  which  it   supplies  to   Consultant,   and  the  Company
           acknowledges   its  awareness  that  Consultant  will  rely  on  such
           continuing  representation  in  disseminating  such  information  and
           otherwise performing its public relations functions.
      b)   Consultant  in the absence of notice in writing from the Company will
           rely on  continuing  accuracy  of  material,  information,  and  data
           supplied by the Company.


                                       21
<PAGE>

8.    TIME AND EFFORT. The Consultant shall devote time and effort in performing
      services hereunder as is reasonably required and at reasonable times.

9     TERMINATION. This Agreement may not be terminated by either party prior to
      the expiration of the term except as follows:
      a)   upon the bankruptcy of either party
      b)   upon either party having applied or applying for a receiver appointed
           for all or a substantial part of such party's assets or business;
      c)   upon a material  breach by either party;  d)  upon  the assignment of
           this agreement by either party.

10.   SELECTION OF ENTITIES.  The Consultant in its sole and absolute discretion
      shall hire, retain or employ such individuals, corporations,  partnerships
      or other  entities to perform  services  as  Consultant  deems  necessary.
      Consultant shall hold Company harmless and indemnify  Company from any and
      all claims relating to said parties.

11.   COSTS AND EXPENSES. All costs and expenses that the Consultant shall incur
      as a result of the aforementioned  services on behalf of the Company shall
      be the sole  responsibility  of the Consultant  unless otherwise  provided
      herein.

      Expenses to be reimbursed by the Company to the  Consultant  include those
      costs and expenses included in the Lead Generation Program,  which will be
      submitted  to,  approved,  and paid in  advance  by the  Company  prior to
      expenses being incurred. Attachment II is an overview of the components of
      a Lead Generation Program. A Lead Generation Program specific to the needs
      of the Company  will be developed  and  submitted  upon  execution of this
      Agreement.

12.   RELATIONSHIP  OF THE PARTIES.  The Consultant  shall not by reason of this
      agreement or the performance of duties  hereunder  unless otherwise agreed
      between the parties, be or be deemed to be, an employee,  agent,  partner,
      co-venturer,  or controlling  person of the Company.  The Consultant shall
      have no power to enter into any  agreement on behalf of or otherwise  bind
      the  Company.  The  Consultant  shall not have or be  deemed to have,  any
      fiduciary  obligation  or duties to the Company and is not an agent to the
      Company  except as set forth herein.  Neither  party to this  agreement is
      intended to have any  interest  in the  business or property of the other.
      Consultant shall be deemed to be an Independent Contractor.

13.   ASSIGNABILITY. This contract is not assignable by the Consultant but shall
      be  assignable  by the Company in  connection  with the sale,  transfer of
      other  disposition  of its business,  to any of the  Company's  affiliates
      controlled by or under common control with the Company.

14.   HOLD HARMLESS. In the event that any of the signatories become involved in
      any action,  proceeding or  investigation  in connection  with the matters
      referred to in this agreement,  each of the undersigned  signatories  will
      indemnify,   defend,   save  and  hold  harmless  the  other   undersigned
      signatories and their affiliated partners,  officers,  employees,  agents,
      control persons and associates against any and all losses,  claims damages
      or liabilities,  to the full extent lawful,  including reasonable attorney
      fees of counsel chosen by the undersigned  signatories and the cost of any
      investigation  and  preparation  incurred  in  connection  therewith  such
      losses,  claims,  etc.,  hereafter  referred  to  as  "damages",  provided
      however,  each of the undersigned  signatories,  its agents, or severally,
      their other  associates  shall not be entitled to  indemnification  by the
      other  undersigned  signatories  thereunder  with  respect to any  damages
      arising  out  of,  or  based  upon,  the  gross  negligence  of any of the
      undersigned   signatories   as   determined   by  a  court  of   competent
      jurisdiction.

15.   SEVERABILITY.  If any part of this agreement is adjudged invalid, illegal,
      or unenforceable, the remaining parts shall be enforceable.


                                       22
<PAGE>

16.   PARAGRAPH  HEADINGS.  The  headings of the  paragraphs  contained  in this
      agreement are for convenience only.

17.   LAW. Any dispute  between the  consultant  and the Company  involving  the
      interpretation  of  application of any provision of this contract shall be
      governed by the laws of the State of Florida.  Venue will be in Palm Beach
      County, Florida.

18.   ATTORNEY'S  FEES,   COSTS.   Should  any  litigation,   including  breach,
      enforcement,  or  interpretation,  arise of this contract,  the prevailing
      party  in  such  litigation  shall  be  entitled  to  recover   reasonable
      attorney's fees, costs and expenses.

19.   OTHER AGREEMENTS.  The parties represent that no other agreement,  oral or
      written,  exists  between  them.  This  Agreement  sets  forth the  entire
      Agreement   between  the   parties   hereto  and  cannot  be  modified  or
      supplemented orally. The Non-Circumvention and Non-Disclosure Agreement is
      included As Attachment I of this Agreement.

20.   NOTICES. Any notice required or permitted to be given under this Agreement
      shall be  sufficient if in writing and if sent by certified  mail,  return
      receipt  requests,  to the  President  of  each  entity  at  the  entity's
      principal office.

21.   COUNTERPARTS.  This Agreement may be executed in two or more counterparts,
      each  of  which  shall  be  deemed  an  original  but all of  which  shall
      constitute but one  Agreement.  Any  counterpart  must contain an original
      signature of each signatory to be considered an original Agreement.

IN WITNESS  WHEREOF,  the parties  hereto,  intending to be legally bound,  have
executed this agreement this 25th day of September.

CHINA FOOD AND BEVERAGE, COMPANY


/s/James Tilton
----------------------------------
By: James Tilton, President

THE HAYDEN GROUP, INC.

/s/ Robert Gartzman                          /s/Peter J. Fantegrossi
----------------------------------           -----------------------------------
By: Robert Gartzman, Principal               By: Peter J. Fantegrossi, Principal


                                       23
<PAGE>


                        


                                  EXHIBIT C(1)


--------------------------------------------------------------------------------




                             JOINT VENTURE CONTRACT






                               NOVEMBER 11TH, 1996




--------------------------------------------------------------------------------







                                      24

<PAGE>


--------------------------------------------------------------------------------
                                TABLE OF CONTENTS
--------------------------------------------------------------------------------

CHAPTER 1  GENERAL PROVISION

CHAPTER 2  PARTIES TO THE JOINT VENTURE

CHAPTER 3  ESTABLISHMENT OF THE JOINT VENTURE

CHAPTER 4  PURPOSES, SCOPE AND SCALE OF PRODUCTION AND BUSINESS

CHAPTER 5  TOTAL AMOUNT OF INVESTMENT AND REGISTERED CAPITAL

CHAPTER 6  RESPONSIBILITIES OF THE PARTIES

CHAPTER 7  SALES OF PRODUCTS

CHAPTER 8  BOARD OF DIRECTORS

CHAPTER 9  BUSINESS MANAGEMENT ORGANIZATION

CHAPTER 10 PURCHASE OF EQUIPMENT, RAW MATERIALS, LAND LEASING

CHAPTER 11 LABOR MANAGEMENT

CHAPTER 12 TAXES, FINANCE AND AUDIT

CHAPTER 13 FOREIGN EXCHANGE CONTROL

CHAPTER 14 DURATION OF THE JOINT VENTURE

CHAPTER 15 DISPOSAL OF ASSETS UPON EXPIRATION OF THE DURATION

CHAPTER 16 INSURANCE

CHAPTER 17 AMENDMENT, ALTERATION AND TERMINATION OF THE CONTRACT

CHAPTER 18 LIABILITIES FOR BREACH OF THE CONTRACT

CHAPTER 19 FORCE MAJEURE

CHAPTER 20 APPLICABLE LAW

CHAPTER 21 DISPUTE RESOLUTION

CHAPTER 22 LANGUAGE

CHAPTER 23 EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS


                                       25
<PAGE>


--------------------------------------------------------------------------------
                          CHAPTER 1: GENERAL PROVISIONS
--------------------------------------------------------------------------------

ART. 1.1   In accordance  with the "Law of the P.R. China on Joint Venture Using
           Chinese and Foreign Investment" and other relevant published laws and
           regulations of China, the following Parties

           Party A: Chinese Party:
           Party B: Foreign Party:

           have agreed to invest in the Joint Venture Enterprise:

--------------------------------------------------------------------------------
                     CHAPTER 2: PARTIES TO THE JOINT VENTURE
--------------------------------------------------------------------------------

ART. 2.1   Parties to the Joint Venture under this contract are as follows:

           Party A: Chinese Party:

           legal representative:
           nationality:
           title:

           Party B: Foreign Party:

           legal representative:
           nationality:
           title:

           Parties A and B may as the contract requires be herein after referred
           to individually as a "Party" and collectively as the "Parties."

           Each of the Parties  hereby  presents and warrants to the other Party
           that it has full  legal  authority  and the power to enter  into this
           contract  and  perform  its   obligations   hereunder  and  that  its
           representation  named above is duly  authorized to sign this contract
           and other relevant documents on behalf of such Party.

--------------------------------------------------------------------------------
                  CHAPTER 3: ESTABLISHMENT OF THE JOINT VENTURE
--------------------------------------------------------------------------------

ART. 3.1   In accordance  "Law of the P.R.  China on Joint Venture Using Chinese
           and  Foreign  Investment"  and  other  relevant  published  laws  and
           regulations,  the Parties agree to establish a Joint Venture  Limited
           Liability Company (hereinafter referred to as "Joint Venture") within
           the Chinese territory.

ART. 3.2   The name of the Joint Venture in English shall be:

           The legal address of the Joint Venture shall be in:

           If needed,  through the  discussion  and the decision of the Board of
           Directors,  the Joint Venture will establish  offices in other places
           of China, Hong Kong or other countries and regions.

ART. 3.3   All activities of the Joint Venture in China shall be governed by the
           laws,  decrees and  relevant  rules and  regulations  of the People's
           Republic of China.



                                       26
<PAGE>

ART. 3.4   The form of  organization  of the  Joint  Venture  shall be a limited
           liability  company.  The liability of each Party is limited to making
           contribution  to the registered  capital in accordance with CHAPTER 5
           of this  contract,  including each Party's stake in all other capital
           increases decided in compliance with the Chinese regulations,  and no
           Party  shall  have  any  liability  of any  sort  for the  debts  and
           obligations  of the Joint  Venture.  The profits of the Joint Venture
           shall be shared by the  Parties  in  proportion  to their  respective
           subscribed  contributions  to the  registered  capital  of the  Joint
           Venture.  During the first  three (3) years of the Joint  Venture the
           profits  shall be  shared  33.3% by Party A and 67.7% by Party B. The
           liability  of each  Party to the Joint  Venture  is limited up to the
           Parties  respective  contribution  of the  registered  capital of the
           Joint Venture.

--------------------------------------------------------------------------------
         CHAPTER 4: PURPOSES, SCOPE AND SCALE OF PRODUCTION AND BUSINESS
--------------------------------------------------------------------------------

ART. 4.1   The  purposes  of  the  Joint Venture  shall be, in  conformity  with
           the  wish  of  strengthening   economic   cooperation  and  technical
           exchanges,   to  improve  the  product  quality  and  the  production
           capacity,  develop new products and gain competitive position in both
           the domestic and international markets in quality,  variety and price
           by  adopting  advanced  technology  in the  production  of beer,  and
           scientific  management  methods,  so as to constantly  raise economic
           results and ensure satisfactory economic benefits for each Party.

ART. 4.2   The  scope  of  production  and  business  of the Joint Venture shall
           be to  produce  and sell  beer in  glass  bottles  and in  cans.  The
           products  made by the  Joint  Venture  shall be sold on the  domestic
           market. The Joint Venture will, on a best efforts basis,  investigate
           the  possibilities  of selling some of the  production  on the export
           market.

ART. 4.3   The production scale of the Joint Venture shall be as follows:
           -  Rehabilitation  of  the  existing  brewery  which  has  a  current
              production capacity of 14,000 metric tons a year.
           -  Improvement of the beer currently produced.
           -  Production increase from 14,0000 tons to 30,000 tons a year.
           The future  expansion  shall be decided in future  board of directors
           and will depend upon the evolution of the national  beverages market.
           The board of  directors  of the Joint  Venture  shall  have  complete
           autonomy in formulating and executing the Joint Venture's  investment
           and  marketing  policies  in order to achieve  these  goals,  and may
           expand  or  reduce  the  Joint   Venture's  scale  of  production  in
           accordance with its business situation and market demands.

--------------------------------------------------------------------------------
               CHAPTER 5: TOTAL INVESTMENT AND REGISTERED CAPITAL
--------------------------------------------------------------------------------

ART. 5.1   The total amount of the investment and the registered  capital of the
           Joint Venture is three million  three hundred  thousand U.S.  DOLLARS
           ($3,300,000 US DOLLARS).  Party A shall  contribute one million three
           hundred thousand US DOLLARS  ($1,300,000  U.S.  DOLLARS) and hold 40%
           shares. Party B shall contribute two million U.S. DOLLARS ($2,000,000
           US DOLLARS) and hold 60% shares.  Without the written  consent of the
           other  Party,  no Party shall pledge the interest of the other Party.
           Without the permission of the one Party, any Party cannot be required
           to guarantee  the loans of the Joint  Venture or to  implement  other
           responsibilities.

ART. 5.2   Contribution to the registered capital:
           Party A: by  existing  fixed  assets,  including  a beer  brewery  as
           described in annex 1 for a total value of one million  three  hundred
           thousand  US  DOLLARS  ($1,300,000  US  DOLLARS)  with  is 40% of the
           registered  capital.  Party  B: by cash  seven  hundred  thousand  US
           DOLLARS ($700,000 US DOLLARS), machines and technical equipment for a
           value of one  million  two  hundred  and fifty  thousand  US  DOLLARS
           ($1,250,000 US DOLLARS) which is 60% of the registered capital.


                                       27
<PAGE>

ART. 5.3   Party  A  shall  pay  its  equity  contribution  in kind to the Joint
           Venture by transferring  its ownership and using rights  described in
           annex 1 from the "Qidong  Brewery"  to the Joint  Venture for a total
           value of one million three hundred  thousand US DOLLARS  ($1,3000,000
           US DOLLARS).  Such payment in kind to occur after the issuance of the
           Business License.

ART. 5.4   Party B shall be under no obligation  to subscribe to the  registered
           capital unless and until the  conditions as described  hereafter have
           been fully fulfilled: in each case in form and substance satisfactory
           to the Party B after having received all the necessary approvals from
           the relevant Chinese authorities:

           a.     Establishment of the Joint Venture Company.

           b.     This contract and its annex have been approved by the relevant
                  Chinese Authorities.

           c.     Issuance  of the  Business  Licence  to the  relevant  Chinese
                  Authorities,  duly  certified as a true copy by an  authorized
                  officer of Party A.

           d.     Transfer of ownership and using rights of the "Qidong Brewery"
                  in favor of the newly  formed  Joint  Venture  Company  ... as
                  stated in ART. 5.2.

           e.     After  receipt of the  Business  Licence as  referred  in ART.
                  5.4(c),  receipt by the  Parties of a copy of the  approval of
                  the State  Administration of Exchange Control  authorizing the
                  Joint Venture to have access to the SWAP CENTERS, and granting
                  the Joint  Venture,  during  the Joint  Venture,  the right to
                  convert  Renmimbi (RMB) into US DOLLARS at a foreign  exchange
                  bank  authorized by the P.R. China  government,  sufficient to
                  pay all amounts in foreign  currency due by the Joint Venture,
                  such as raw materials,  dividends,  debt service installments,
                  salaries of expatriate staff, fees, transfer of technology. If
                  any of the above mentioned  conditions is not fulfilled within
                  three months after the Business License issuance date, and the
                  Parties  do not  agree in  writing  to waive  such  conditions
                  precedent or to extend the time for their fulfillment,  either
                  Party  shall have the right to  terminate  this  contract,  in
                  which case neither  Party shall have the right  whatsoever  to
                  require  the  other  Party  to make  any  contribution  to the
                  registered  capital  or to claim  any  damages  from the other
                  Party.

ART. 5.5   The payment to be made by Party B regarding its  contribution  to the
           registered  capital  of the  Joint  Venture  Company  will be made as
           follows:
           
           a. 75% of its  capital  contribution  within  three (3) months of the
           fulfillment of all the conditions as stipulated in ART. 5.4 above.
           
           b. 25% shall be effected in accordance with requirements of the Joint
           Venture capital expenditures,  to occur not later than six (6) months
           after the payment as mentioned in ART. 5.5(a).

ART. 5.6   After the registered capital is paid up by the Parties, an accounting
           firm  registered in China  appointed by the Parties shall verify that
           contributions  of this contract have been made in accordance with the
           terms  and  conditions  of this  Contract  and  issue a  verification
           report,  based on which the Joint  Venture  shall issue an investment
           certificate  to each  Party.  This  report will be signed by both the
           President and the Vice President of the Joint Venture.

ART. 5.7   Should a Party  intend to assign all or part of its  interest  in the
           Joint Venture to a third Party, written consent must be obtained from
           the other Party and an affirmative decision by the Board of Directors
           and approval from the appropriate  examination and approval authority
           shall be required. The registration  procedures for the changes shall
           be dealt with. In this procedure,  the Parties will have a preemption
           right.  The  Parties  however  will  have the right to  transfer  the
           ownership of their  shares to any  subsidiary  or holding  company in
           which they have the majority of the shares.


                                       28
<PAGE>

--------------------------------------------------------------------------------
                   CHAPTER 6: RESPONSIBILITIES OF THE PARTIES
--------------------------------------------------------------------------------


ART. 6.1   Responsibilities of the Chinese Party:
           a. In charge of applying for and obtaining the approval, registration
           and Business License and dealing with other formalities with relevant
           Chinese Governmental  Departments for the establishment and operation
           of the Joint Venture and for obtaining the best advantages granted to
           sino-foreign joint ventures.  
           b. Making capital  contributions  at the specified time in accordance
           with ART. 5.2 and ART. 5.3 hereof.
           c. At the request of the Joint Venture Company, assisting to purchase
           equipment,  materials,  office facility,  transportation facility and
           communication facility.
           d. At the request of the Joint Venture Company, assisting to purchase
           equipment,  materials,  office facility,  transportation facility and
           communication facility.
           e. Assisting foreign staff in applying for entry visas, work permits,
           and processing their travel documents.
           f.  Assisting to recruit for the Joint Venture the local staff in all
           level of management and workers.
           g.  Assisting  the Joint  Venture  Company in obtaining a loan from a
           local bank for the working capital.
           h.  Assisting  the Joint  Venture in  selling  and  distributing  the
           products  in  the  local  market.  Assisting  the  joint  venture  in
           purchasing  the necessary  quantities of raw materials  annually,  at
           prices not higher than other factories in the region.
           i.  Dealing  with  affairs  under  this  contract  and other  affairs
           entrusted by the Joint Venture Company.
           j. Party A guarantees  that it will not enter into  competition  with
           the Joint Venture Company.

ART. 6.2   Responsibilities of the Foreign Party.
           a. Making capital contributions in accordance with ART. 5.2, ART. 5.4
           and ART. 5.5.
           b. Assisting the Joint Venture in purchasing equipment, raw materials
           and other items outside China.
           c. Making its best effort in assisting the Joint Venture in exporting
           its products and assisting the Joint Venture with  information  about
           the international market for similar and related products.
           d.  Providing the Joint Venture with foreign  experienced  management
           personnel,  including the General Manager, the production manager and
           the  financial  manager  and  participating  in  the  production  and
           business activities of the Joint Venture Company.
           e.  Causing  the Joint  Venture  to  obtain  equipment  and  detailed
           engineering  design of the Joint Venture  factory within the scope of
           total  investment  and  registered  capital  set  forth in  CHAPTER 5
           hereof.
           f.  Assisting  the  Joint  Venture  in  purchasing   equipment,   raw
           materials,  articles for office use, means of  transportation,  all o
           the best terms and prices attainable.
           g.  Assisting the Joint  Venture in recruiting  the local and foreign
           staff in all levels of the management and workers.
           h. Handling other matters entrusted by the Joint Venture Company.
           i. Transfer of technology  and know how: as the know how has not been
           valued as fixed  assets,  a  Technical  Assistance  Contract  will be
           concluded upon the signing of the Technical  Assistance  Contract the
           Foreign Party will be  responsible  for the training of the personnel
           working in the Joint Venture Company.

--------------------------------------------------------------------------------
                          CHAPTER 7: SALES OF PRODUCTS
--------------------------------------------------------------------------------

ART. 7.1   The  products  of the  Joint  Venture  shall  be sold on the  Chinese
           markets  and the best  efforts  will be made in order to sell part of
           the production on the overseas markets.

ART. 7.2   The  products  of the  Joint  Venture  shall be sold  throughout  the
           People's Republic of China without geographic  restriction and may be
           sold by the Joint Venture  directly or by  appropriate  distributors.
           The sales  methods  and prices  shall be  determined  by the  General
           Manager's decision following recommendation of the board of directors
           with respect to domestic market  conditions,  competitiveness  of the
           prodecuts and the economic situation of the Joint Venture.  The Joint


                                       29
<PAGE>

           Venture shall be free to determine  and raise the selling  prices of,
           and sell at its own  discretion,  in  accordance  with the  preceding
           provisions.

ART. 7.3   The sales of its products,  both on Chinese and on overseas  markets,
           shall be managed by the Joint  Venture.  The Joint  Venture  Company,
           with the  assistance  of the  Foreign  Party,  will  endeavor to seek
           export markets for the Joint Venture products.

--------------------------------------------------------------------------------
                          CHAPTER 8: BOARD OF DIRECTORS
--------------------------------------------------------------------------------

ART. 8.1   The board of directors  shall be  established  within one month after
           the date of issuance of the Business License.

ART. 8.2   The board of directors  shall  consist of five (5) directors of which
           two (2)  shall  be  appointed  by  Party A and  three  (3)  shall  be
           appointed by the foreign partner.  The chairman of the board shall be
           appointed  by Party A and the vice  chairman  by Party B. The term of
           the  directors is four (4) years.  This term of office may be renewed
           upon reappointment by the appointing party.

ART. 8.3   The  highest  authority  of the Joint  Venture  shall be its board of
           directors.  It shall  decide all major  issues  concerning  the Joint
           Venture.  In handling all important  matters,  the board of directors
           shall reach its decision through  consultation among the participants
           in the  principle  of equity  and mutual  benefit.  All issues of the
           Joint  Venture  shall be discussed  and approved by two thirds of the
           members of the board of directors.

           The following major issues will require the unanimous approval of all
           the members of the board:
           a.  Amendment of the articles of association of the joint venture.
           b. Termination and dissolution of the Joint Venture.
           c. An increase of the  registered  capital of the Joint Venture and a
           transfer  of the  ownership.  
           d. Merger of the Joint Venture with another economic organization.

ART. 8.4   The  chairman of the board is the legal  representative  of the joint
           venture.   Should   the   chairman   be   unable  to   exercise   his
           responsibilities,  he should authorize the vice chairman of the board
           of directors to represent the Joint Venture.

ART. 8.5   The board of directors  shall convene at least on meeting every year.
           The meeting  shall be called and presided over by the chairman of the
           board.  The general  manager  and the deputy  general  manager  could
           attend the meeting. The board meeting can be held at a site as agreed
           upon by the Parties to the Joint Venture. The Chairman may convene an
           interim  meeting based on proposal made by more than one third of the
           directors.  The  minutes of all  meetings  will be kept on file.  The
           directors  will  have the  right to be  represented  by a  designated
           representative.

ART. 8.6   A decision  signed by all the members of the board of  directors  has
           the same  validity  as a  decision  taken  during an  official  board
           meeting.

--------------------------------------------------------------------------------
                   CHAPTER 9: BUSINESS MANAGEMENT ORGANIZATION
--------------------------------------------------------------------------------

ART. 9.1   The Joint Venture shall establish a management  office which shall be
           responsible  for its daily  management.  The management  office shall
           have a general  manager  and a deputy  general  manager.  The general
           manager shall be recommended by the Foreign Party; the deputy general
           manager shall be recommended by the Chinese Party. The term of office
           shall be three (3) years.


                                       30
<PAGE>

ART. 9.2   The responsibilities of the general manager shall be to carry out the
           decisions  of the  board,  and  to  organize  and  direct  the  daily
           management of the Joint Venture in accordance  with the provisions of
           this  contract and the articles of  association.  The deputy  general
           manager shall assist the general manager in such duties.
           The  department  managers  shall be  responsible  for the work in the
           respective departments of production, technology, business operation,
           finance and  administration,  handle the  matters  handed over by the
           general  manager and the deputy  manager and shall be  accountable to
           them.
           The general  manager  shall be present  for  approval by the board of
           directors  organizational  structure of the Joint  Venture and budget
           for the coming year,  including  proposed  appointments of department
           managers as well as their remuneration.

ART. 9.3   The general  manager and deputy  general  manager  shall not serve as
           employees of other entities,  and shall not serve or act on behalf of
           other economic  entities in competition with the Joint Venture except
           that either of them may be an officer,  director or employee of their
           respective  Party.  The board of  directors  shall  have the power to
           dismiss the general  manager  and the deputy  general  manager in the
           event of graft or serious dereliction of duty.

--------------------------------------------------------------------------------
         CHAPTER 10: PURCHASE OF EQUIPMENT, RAW MATERIALS, LAND LEASING
--------------------------------------------------------------------------------

ART. 10.1  The Joint Venture will  purchase  required  equipment  transportation
           facilities,  fuels and  articles  for office use in China and abroad,
           but shall give first  priority to  purchase in China when  conditions
           (quality, price, time of deliver, compatibility and so forth) are the
           same.

ART. 10.2  The Joint  Venture  will  purchase  abroad  equipment  which has been
           approved by all Parties.  The equipment should be in line with 1990's
           technology  and the price  should be lower than or same as the one of
           similar equipment.

ART. 10.3  The Joint  Venture  will  sign  after  three  (3) years a Land  Lease
           Agreement with Party A which is annexed to this contract as Annex 2.

--------------------------------------------------------------------------------
                          CHAPTER 11: LABOR MANAGEMENT
--------------------------------------------------------------------------------


ART. 11.1  Policies  relating  to  matters  as  the  total  number  of  workers,
           recruitment,  dismissal,  wages, welfare,  benefits, labor insurance,
           bonuses  and labor  discipline  shall be  determined  by the  general
           manager in accordance with Labor Law of the P.R. China, the "People's
           Republic  of China  Administration  on Labor  Management  of  Foreign
           Investment  Enterprises  Provisions" and other  promulgated  relevant
           P.R. China laws and regulations, the policies stipulated by the board
           of  directors,  and the  actual  financial  conditions  of the  Joint
           Venture.

ART. 11.2  The Joint Venture shall have the right to recruit and hire  employees
           directly from any available  sources in the P.R. China. In all cases,
           the  Joint  Venture  shall  employ  only  those   employees  who  are
           sufficiently  qualified for employment,  as determined  through tests
           and/or examinations.

ART. 11.3  The Joint  Venture,  acting  through the general  manager,  will sign
           individual  labor  contracts with each of its  employees.  Each labor
           contract shall include type of work,  technical  ability and wages of
           such employee,  according to the framework duly approved by the board
           of  directors,  and shall be filed for  reference  at the local labor
           management department.



                                       31
<PAGE>

ART. 11.4  The  employees of the Joint Venture shall have the right to establish
           a labor  union  in  accordance  with  relevant  P.R.  China  laws and
           regulations.  The labor union shall have the right to  represent  the
           interest of employees in signing labor  agreement and in  supervising
           the execution of labor contracts.  It shall have the right to protect
           the legal rights and material  benefits of the  employees,  and shall
           assist in the  mediation  of labor  disputes  when  requested  by the
           relevant employee or the Joint Venture.

ART. 11.5  The  labor  contracts  of all  staff and  workers  likely to  receive
           confidential  information  and/or particular  training from the Joint
           Venture or from Party B shall include, in addition to confidentiality
           undertakings,  non-competition  clauses  pursuant to which they shall
           not be entitled to work for an enterprise or organization in the same
           field for a period of two (2) years after leaving the Joint Venture.

--------------------------------------------------------------------------------
            CHAPTER 12: TAXES, FINANCE, AUDIT AND PROFIT DISTRIBUTION
--------------------------------------------------------------------------------

ART. 12.1  The Joint Venture shall pay various taxes in accordance with relevant
           Chinese laws and regulations.

ART. 12.2  Staff members and workers of the Joint  Venture shall be  responsible
           for  paying  their  own  individual  income  tax or  personal  income
           adjustment  tax  in  accordance   with  relevant   Chinese  laws  and
           regulations. After paying their taxes, the ex patriate members of the
           Joint Venture can remit their money abroad.

ART. 12.3  In accordance with the "Laws of the People's Republic of China on the
           Joint Ventures using Chines and Foreign Investment,"  allocations for
           a reserve  fund,  an  enterprise  expansion  fund and a  bonuses  and
           welfare fund for the staff and workers  shall be decided by the board
           of directors each year according to the actual business situation and
           profitability of the Joint Venture of the after tax profit (the total
           of these 3 funds will not exceed 8% of the total  profit).  The Joint
           Venture will benefit of all the best fiscal  privileges  available in
           Jiangsu  Province  and namely the statute of an  advanced  technology
           enterprise.

ART. 12.4  Finance  and  accounting  of the Joint  Venture  shall be  handled in
           accordance with the "Regulations of the People's Republic of China on
           the Financial  Administration for Foreign Investment Enterprises" and
           the "Accounting System for the Foreign  Investment  Enterprises." The
           fiscal year of the Joint  Venture shall be from January 1 to December
           31 of each year.  All  vouchers,  receipts,  statistical  statements,
           reports and account books shall be written in Chinese,  provided that
           any such documents  upon request of Party B shall be translated  into
           English.  Monthly,  quarterly and annual  financial  reports shall be
           prepared  in  Chinese  and  English  and  submitted  to the  board of
           directors.

ART. 12.5  The Joint  Venture  shall engage an  accountant  registered  in China
           agreed upon by both Parties to conduct its annual financial audit and
           examination  and to provide a report for  submission  to the board of
           directors  and  the  general  manager,  in the  event  that  Party  B
           considers it necessary, a foreign auditor may be engaged to conduct a
           separate annual financial audit.

ART. 12.6  All  disbursements  shall be signed  by the  general  manager  or his
           authorized personnel.

ART. 12.7  Within the first  three (3) months of each fiscal  year,  the general
           manager  shall  organize  the  preparation  of a balance  sheet and a
           profit and loss statement in respect of the preceding year as well as
           a proposal regarding the allocation and distribution of profits,  and
           submit  them to the  board of  directors  for  approval  after  being
           examined and signed by the  auditor.  Dividends to be paid to Foreign
           Party shall be transferred in foreign currencies.

ART. 12.8  Upon the decision of the board of  directors,  the Joint Venture will
           distribute  dividends to the  shareholders  proportionately  to their
           shareholding.  During the first three (3) years of the Joint Venture,
           the profits will be shares 67.7% by Party B and 33.3% by Party A.


                                       32
<PAGE>

--------------------------------------------------------------------------------
                      CHAPTER 13: FOREIGN EXCHANGE CONTROL
--------------------------------------------------------------------------------

ART. 13.1  All foreign exchange matters of the Joint Venture shall be handled in
           accordance with the provision of the "Provisional  Regulations of the
           People's  Republic  of China on  Foreign  Exchange  Conto"  and other
           relevant regulations. The Joint Venture shall remit the profit due to
           the Foreign  Party to bank  accounts  designated by the Foreign Party
           respectively  in  accordance  with the  "Regulations  of the People's
           Republic of China on the Foreign Exchange Control."

ART. 13.2  The Joint  Venture  is  entitled  to open  foreign  exchange  deposit
           accounts  and  Renminbi  deposit  accounts  with the Bank of China or
           other designated  banks.  All foreign exchange  receipts of the Joint
           Venture (including capital  contributions made by Party B, loans from
           foreign banks,  export revenues,  and so forth) shall be deposited in
           the Joint Venture's  foreign  exchange  deposit  account.  All normal
           foreign exchange disbursements,  as listed here below but not limited
           to, by order of priority:
           - principal and interest repayments for foreign bank loans.
           - import of raw materials.
           - salaries of foreign staff, overseas traveling expenses.
           - technical assistance contract.
           - transportation expenses.
           - dividends to the Foreign Party.

ART. 13.3  Based on its business  needs,  the Joint  Venture may borrow  foreign
           exchange  funds from banks abroad or in Hong Kong,  provided that the
           Joint Venture  shall file such matters with the local  Administration
           of Foreign  Exchange  Control for the record within fifteen (15) days
           of borrowing as required by law.

ART. 13.4  Renminbi  shall  generally be used in the  settlement of accounts for
           transactions  between the Joint  Venture  and the  Chinese  entities,
           enterprises or  individuals  unless  otherwise  approved by the local
           Administration   of  Foreign   Exchange  Control  or  where  relevant
           government  regulations  permit  the  Joint  Venture  to use  foreign
           exchange in the settlement of accounts.

ART. 13.5  The Joint  Venture  will be  entitled  to utilize  all legal means in
           order to obtain the foreign currencies needed such as swap centers or
           all other legal exchange structure.

--------------------------------------------------------------------------------
                    CHAPTER 14: DURATION OF THE JOINT VENTURE
--------------------------------------------------------------------------------

ART. 14.1  The  duration  of the Joint  Venture  shall be 50 years.  The date of
           establishment  of the Joint  Venture shall be the date of issuance of
           the  business  license.  The  duration  can be prolonged if one Party
           suggests  it  before  six  months of the  expiring  date and if it is
           approved by the board of directors.

--------------------------------------------------------------------------------
      CHAPTER 15: DISPOSAL OF ASSETS UPON LIQUIDATION OF THE JOINT VENTURE
--------------------------------------------------------------------------------

ART. 15.1  Upon termination of the Joint Ventures,  liquidation shall be carried
           out according to relevant laws and regulations. The liquidated assets
           shall be distributed in proportion to the capital  contribution  made
           by Party A and the Foreign Party.

--------------------------------------------------------------------------------
                              CHAPTER 16: INSURANCE
--------------------------------------------------------------------------------

ART. 16.1  The Joint Venture shall maintain appropriate  insurance policies with
           an insurance company in P.R. China. The types,  value and duration of
           insurance  shall be decided by the board of directors  in  accordance


                                       33
<PAGE>

           with the standards of the insurance  company in P.R. China. The Joint
           Venture  should  maintain the  insurance for all staff and workers in
           the local labor management department.

--------------------------------------------------------------------------------
          CHAPTER 17. AMENDMENT, ALTERATION AND TERMINATION OF CONTRACT
--------------------------------------------------------------------------------

ART. 17.1  Any  amendment  to this  contract or its  appendices  shall come into
           force only by  written  agreement  signed by Party A and the  Foreign
           Party  and  approved  by  the  original   examination   and  approval
           authority.

ART. 17.2  Should it become  impossible  to fulfill this contract as a result of
           force  majeure,  or should it become not  possible  to  continue  the
           operations of the Joint Venture as a result of heavy losses sustained
           by the Joint Venture in successive  years, the Joint Venture and this
           contract  may be  terminated  prior  to the  date  of  expiration  if
           unanimously  decided by the board of  directors  and  approved by the
           original examination and approval authority.  The registration of the
           Joint  Venture  must then be  canceled at the  original  registration
           office.  The Joint Venture may be terminated  prior to its expiration
           date in the event that both  Parties  agree that  termination  of the
           Joint Venture is the mutual and the best interest of the Parties.

ART. 17.3  If due to any one Party being  unable to fulfill the  obligations  of
           this contract and the articles of association, and if for that reason
           the Joint  Venture  Company  cannot  continue its normal  business or
           cannot reach its target mentioned in the contract,  then the contract
           would be  deemed  to have  been  stopped  by the  Party  who made the
           violation. The other Party has the right to claim damage and to apply
           for the  termination  of the  contract.  If the other Party agrees to
           continue  the  business,  the  Party  who made the  violation  should
           compensate  the economic  damage.  The other Party would have in that
           case a buying option for the shares owned by the defaulting Party.

ART. 17.4  In the event that the Joint Venture  intends to merge with or acquire
           another production enterprise or economic organization in the future,
           approval by all the Parties shall be required.

--------------------------------------------------------------------------------
                 CHAPTER 18: LIABILITIES FOR BREACH OF CONTRACT
--------------------------------------------------------------------------------

ART. 18.1  Should  any of the  Parties  fail  to pay  on  schedule  its  capital
           contributions  subscribed as herefore, it shall, from the first month
           of delay,  pay monthly  interest to the Joint Venture  Company at the
           rate  of 10%  per  annum  and a 0.5%  penalty  to  the  other  Party,
           calculated on the default amount. If more than three months the Party
           still fails to pay its capital contributions, the other Party has the
           right to claim according to the ART 17.3.

ART. 18.2  Should it become  impossible  to fulfill all or part of this contract
           and its annexes due to the fault of either Party,  the Party at fault
           shall bear the responsibilities  for such breach of contract.  Should
           both Parties be at fault, each Party shall bear its  responsibilities
           according to the actual situation.

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                            CHAPTER 19: FORCE MAJEURE
--------------------------------------------------------------------------------

ART. 19.1  Should the  performance  of this  contract  be  directly  affected or
           should it become  impossible  to perform this  contract in accordance
           with the  prescribed  terms as a result of a force majeure event such
           as  earthquake,   typhoon,   flood,   fire,   war,  civil   disorder,
           unforeseeable  events  where the  occurrences  and  consequences  are
           unpreventable and unavoidable without limitation,  the Party affected
           by such event shall  notify the other Party by telegram or  facsimile
           without any delay and, within fifteen (15) days  thereafter,  provide
           the  detailed  information  on such  event and a valid  certification
           document giving reasons for such Party's  inability to perform all or
           part of this contract or its delay of the performance.


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<PAGE>

ART. 19.2  If possible,  the said  document  shall be issued by a notary  public
           office at the location  where the force  majeure  event  occurs.  The
           Parties shall decide through  consultations whether to terminate this
           contract or to waive part of the  obligations  to be performed  under
           this contract or to delay the performance of this contract  according
           to the effects of the force majeure event on the  performance of this
           contract.

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                           CHAPTER 20: APPLICABLE LAW
--------------------------------------------------------------------------------

ART. 20.1  The  execution,  validity,  interpretation  and  performance  of this
           contract and dispute resolution under this contract shall be governed
           and protected by the laws of the P.R. China.

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                         CHAPTER 21: DISPUTE RESOLUTION
--------------------------------------------------------------------------------

ART. 21.1  Any disputes arising from the execution of or in connection with this
           contract  shall  first  be  settled  through  friendly  consultations
           between the Parties.  In the event that no settlement  can be reached
           through  consultations,  the disputes shall be first submitted to the
           China  International  Economic and Trade  Arbitration  Commission for
           conciliation. If no settlement can be reached within six months after
           the  beginning of this  procedure,  the claim will be  submitted  and
           definitely  settled  through  the  rules  and  the  procedure  of the
           International  Chamber of Commerce  (Paris).  The arbitration will be
           held in Paris,  France and the  English  language  will be used.  The
           arbitration fee shall be borne by the losing Party.

ART. 21.2  When  the  dispute,  controversy  or  claim  arising  out  of  or  in
           connection  with this  contract  are being  resolved  either  through
           friendly consultation or through arbitration, the Parties should take
           the interest of the whole into account and shall not hinder or affect
           the  performance  of the provisions  other than in dispute,  so as to
           guarantee  the smooth  operation  of the Joint  Venture to the extent
           possible.

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                              CHAPTER 22. LANGUAGE
--------------------------------------------------------------------------------

ART. 22.1  The  contract  is written  in  Chinese  and  English  versions,  both
           languages are equally authentic.

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             CHAPTER 23: EFFECTIVENESS OF CONTRACT AND MISCELLANEOUS
--------------------------------------------------------------------------------

ART. 23.1  The following annexes formulated in accordance with the principles of
           this contract shall be integral part of this contract:
           Annex 1: existing fixed assets
           Annex 2: rent agreement
           Annex 3: performance guarantee
           In the event of any discrepancy between this contract and the annexes
           hereto, the provisions of this contract shall prevail.

ART. 23.2  This contract and its annexes shall become effective upon approval by
           the original examination and approval authority.  The same applies in
           event of amendment.

ART. 23.3  This  contract  together  with  its  annexes  constitute  the  entire
           agreement of the Parties with respect of the subject  matters  hereof
           and shall  supersede  all prior  agreements  between the Parties with
           respect to the matters hereof.


                                       35
<PAGE>

ART. 23.4  The Parties  shall take all such efforts to carry out the purposes of
           this  contract and its annexes.  Neither  Party shall take any action
           that might have an adverse  competitive effect of adverse consequence
           on the operation of the Joint Venture.

ART. 23.5  Any  waiver  by  either  Party at any time of a breach of any term or
           provision of this contract  shall not be construed as a waiver b such
           a  Party  of any  subsequent  breach,  its  rights  to  such  term or
           provision, or any of its other rights hereunder.

ART. 23.6  If any one or more of the  provisions  contained in this  contract or
           the annexes hereto shall be invalid,  illegal or unenforceable in any
           respect  under  any  applicable   law,  the  validity   legality  and
           enforceability of the remaining provision contained herein or therein
           shall not in any way be affected or impaired.

ART. 23.7  Unless   otherwise   specifically   provided,    notices   or   other
           communications to either Party required or permitted  hereunder shall
           be: (a) personally  delivered;  (b)  transmitted  by postage  prepaid
           registered airmail or by international courier; or (c) transmitted by
           telex or facsimile with answerback or followed by registered  airmail
           or air courier.  The addresses of the Parties listed in this contract
           shall be their  respective  mailing  addresses  and their  respective
           facsimile numbers.

ART. 23.8  In witness  whereof the Parties have signed this contract on November
           11, 1996 in Qidong by their duly authorized  representatives  in four
           originals, each Party receiving one original in each version, Chinese
           and English.



The Chinese Party                         The Foreign Party


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/s/                                       /s/







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