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, 2002

                         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.)

                     710 W. 24th St., Kansas City, MO 64108.
             -------------------------------------------------------
                    (Address of Principal Executive Offices)

                                 (877) 667-9377
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

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

                                                     Name of Each Stock Exchange
            Title of Each Class                          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 [X] NO [ ]

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant at December 31, 2002, was approximately $13,000.

         The  number of shares  of  Registrant's  Common  Stock  outstanding  on
December 31, 2002, was 9,395,788.

         The  Registrant's  total revenues for the year ended December 31, 2002,
were $0.00.




<PAGE>



                                TABLE OF CONTENTS

             PART I                                                   PAGE
                                                                      ----

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

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

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

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

             PART II

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

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

ITEM 7.      FINANCIAL STATEMENTS AND NOTES........................... 6

ITEM 8.      CHANGES IN AND DISAGREEMENTS WITH
             ACCOUNTANTS.............................................. 6

             PART III

ITEM 9.      DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
             AND CONTROL PERSONS;  COMPLIANCE WITH
             SECTION 16(a) OF THE EXCHANGE ACT........................ 7

ITEM 10.     EXECUTIVE COMPENSATION................................... 7

ITEM 11.     SECURITY OWNERSHIP OF BENEFICIAL OWNERS.................. 8

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED
             TRANSACTIONS............................................. 8

ITEM 13.     EXHIBITS AND REPORTS ON FORM 8-K......................... 9

             Exhibit 99         Certification - James A. Tilton

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

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












                                       2
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

Business Development:

         China Food and Beverage  Company,  a Nevada  corporation (the "Company"
or,  "Corporation"),  has executive offices at: 710 W. 24th St., Kansas City, MO
64108. The Company was incorporated in Nevada on November 6, 1981 under the name
Logos  Scientific  Inc. On May 5, 1992,  the  Company  changed its name to Logos
International,  Inc. On October 23, 1995,  the Company  changed its name to OMAP
Holdings Incorporated.  On March 31, 1997, the Company changed its name to China
Food and Beverage Company.

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

         Through a reverse merger recapitalization by which the Company acquired
100% of Victoria Beverage  Company,  Ltd., for 4,200,000 shares of the Company's
common stock,  resulted in the Company  owning 55% of Anhui Hao Dun Brewery Co.,
Ltd., situated in the People's Republic of China.

         In May 2000, the sellers claimed that the Company was in default of its
obligations  to  repurchase  or cause to be  repurchased  from  the  sellers,  a
significant majority of the shares of the common stock issued upon conversion of
the debentures  or, to provide  additional  capital.  As a result of the alleged
default,  they  refused to provide the Company  with any  financial  information
concerning the operations of the brewery and assumed control of the brewery.

         The  Company  believes  that the claims made by the sellers are without
merit.  However,  as the assets of the brewery are in the  Peoples'  Republic of
China  and the  Company  has no  effective  control  over  the  business  or the
financial concerns of the brewery, the Company has fully reserved against all of
its assets located in China.

         It is possible that, in addition to taking  control of the assets,  the
sellers may commence an action against the Company alleging, among other claims,
breach of contract.  Conversely, the Company is exploring its options, including
but not  limited  to,  initiating  legal  action of its own to  recover  what it
believes to be a wrongful conversion of its assets by the sellers.


                                       3
<PAGE>
         Unless the Company is able to resolve  this dispute and because it does
not  presently  have the financial  ability to continue in operation,  it may be
obligated to secure additional debt or equity financing to enable it to continue
as an on-going entity.

         Accordingly,  the Company  cancelled  2,100,000 shares of the 4,200,000
shares  previously  issued.  The  Company  has  placed  a  stop-transfer  on the
remaining  2,100,000  pending  resolution  of this issue  between the sellers of
Anhui Hao Dun Brewery and the Company.

         On September  2001,  the Company's  wholly owned  subsidiary,  Victoria
Beverage Company, was dissolved.  The only asset of the subsidiary was 6,000,000
shares of Gourmet's Choice Coffee Co., Inc. These shares were transferred to the
Company.  The  Company  will  carry  the  shares  at  Victoria's  cost of $0.00.
Gourmet's Choice is a related entity.

Business of Issuer:

         Since the disposition of Annu Hui Brewery, the Company will continue to
seek to acquire businesses both in China and other countries.

         The  Company  intends  to locate its  target  investment  opportunities
through  contacts which  management has in China and Southeast Asia. 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.

         On March 4, 2001, the Company entered into an investment agreement with
Tritradex,  Inc., a US based parent corporation of Shanghai Tritradex Machinery,
Inc., a  manufacturer  and  distributor  of gasoline  assemblies in the People's
Republic of China,  under  license  from the Wayne  Division  of Houston-  based
Dresser, Inc.

         Tritradex  was  incorporated  in the  state  of New  York in  1994  and
established a Sino-foreign venture in Pudong, Shanghai, the People's Republic of
China, named Shanghai Tritradex  Machinery,  Inc. ("STM").  The main business of
STM is designing  manufacturing and selling electronic fuel dispensing pumps and
related products for use in gasoline stations in China. In 1995 STM entered into
a license and technical  agreement  with Wayne  Division of Dresser  Industries,
Inc.  The  agreement  allowed  STM to  manufacture,  assemble,  sell and service
Wayne's products in China.

         Wayne is the  technological  leader in the  manufacture  and  supply of
retail petrol fuel  dispensers;  dispenser  control systems,  credit/debit  card
processing terminals and point-of-sale  systems for petroleum markets worldwide.
They are also the  industry  leader  in  developing  new  technologies.  Over 75
countries use their products.

         On September 17, 2001,  Tridradex,  Inc. re-paid an $80,000  investment
which the Company had previously  proffered on March 4, 2001.  The  negotiations
for the acquisition of Tritradex, Inc. have been discontinued.

         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.

                                       4
<PAGE>

ITEM 2.  DESCRIPTION OF PROPERTY

         The Company presently occupies office space, free of charge, at: 710 W.
24th St., Kansas City, MO 64108.

ITEM 3.  LEGAL PROCEEDINGS

         None

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

         On May 13, 2002 the company had their annual shareholder's meeting. The
shareholders  voted  to  nominate  current  board  members  for  one  year.  The
shareholders voted to nominate Gordon Wilson as the third member of the board of
directors.  In addition,  the shareholders did not renew the directorship of Li,
Lin Hu.

         As the final matter of business,  the  shareholders  voted to renew the
appointment of HJ & Associates,  LLC, as the Company's  auditors for yet another
year.


                                     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 2001 and 2002.  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.

             QUARTER                      HIGH                       LOW
             -------                      ----                       ---

Quarter Ending December 31, 2001          $ .21                     $ .08

Quarter Ending September 30, 2001         $ .35                     $ .25

Quarter Ended June 30, 2001               $ .34                     $ .06

Quarter Ended March 31, 2001              $ .19                     $ .09

Quarter Ended December 31, 2002           $ .04                     $ .01

Quarter Ended September 30, 2002          $ .03                     $ .01

Quarter Ended June 30, 2002               $ .07                     $ .01

Quarter Ended March 31, 2002              $ .16                     $ .06


Shareholders:

         There  were  approximately  303 record  holders  of Common  Stock as of
December 31, 2002,  holding a total of  9,395,788  outstanding  shares of Common
Stock.

                                       5
<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  generated no revenues  for the year ended 2002.  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.

Results of Operations:

         The Company had no revenues as a result from business operations during
the year ended 2002.  It  continued  to incur  operating  expenses,  general and
administrative  expenses in the amount of $274,037  for the year ended 2002,  as
opposed to $307,835 for the year ended 2001,  of which  $150,000 was for officer
salaries,  $19,759 was incurred for accounting costs, and $26,550 in legal fees.
In addition,  $31,314 was incurred as expenses related to warrants issued during
the year 2002.

         The Company's  "Total  Liabilities and  Stockholder's  Equity" for year
ending  2002 was  $217,703  of which,  as set forth on Page F-4 of the  attached
Financials.  The "Consolidated Statement of Operations" set forth on Page F-5 of
the  attached  Financial  Statements,  the Net Sales,  the Cost of Sales and the
Gross Margin were all $0.00.

Capital Resources and Liquidity:

         During 2002, the Company issued no shares of Common Stock. The negative
cash flow  reflected on the  "Consolidated  Statements of Cash Flow" Page F-5 of
the  attached  Financials,  is a result  of funds  used to pay  costs  and other
accrued expenses.

ITEM 7.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the audited  Financial  Statements  and Notes  attached  hereto and
numbered F-1 through F-15.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

         There are no changes or disagreements with our accountants who are HJ &
Associates, LLC., 50 S. Main St., Ste. 1450, Salt Lake City, Utah 84144.

                                       6
<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 A. Tilton            41        President, Chief Executive
                                              Officer, Treasurer & Director

       Jane Zheng                 40        Secretary, Director

       Gordon Wilson              60        Director


         James A. 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.

         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 A. 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.

         Gordon Wilson has been a successful senior  executive,  team leader and
trouble shooter having set up, developed and turned around UK and  International
trading  operations for major banking,  financial services and trading groups in
East and Western Europe,  Middle East, Africa and North America. He presently is
a director of a number of UK  companies  including  Wilton  Corporate  Finance a
member of the WiltonGroup.

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, 2002,  was a director,  officer,  or  beneficial
owner of more than ten  percent  of the  Common  Stock of the  Company,  and who
failed  to file on a timely  basis  reports  required  by  Section  16(a)of  the
Securities Exchange Act of 1934 during such fiscal year.

ITEM 10.  EXECUTIVE COMPENSATION

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

                                       7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                  Annual Compensation                         Long-Term Compensation
                  -------------------                         ----------------------
                                                                  Other      Restricted
                                                                 Annual        Stock         Other
                                                              Compensation     Awards    Compensation
                                                              ------------   ----------  ------------
Name and principal position           Year   Salary   Bonus
---------------------------           ----   ------   -----

<S>                                  <C>     <C>         <C>       <C>          <C>          <C>
James A. Tilton, President           2001    $75,000     $0        $0           $0           $0
         "                           2002    $75,000     $0        $0           $0           $0

Jane Zheng, Secretary                2001    $75,000     $0        $0           $0           $0
         "                           2002    $75,000     $0        $0           $0           $0
</TABLE>


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, 2002, 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  9,395,788
shares of Common Stock issued on December 31, 2002.
<TABLE>
<CAPTION>

                                            Name and Address
         Title of Class                     Amount and Nature of
         of Beneficial Owner                Beneficial Ownership              Percentage of Class
       ---------------------                --------------------              -------------------
<S>                                         <C>                                        <C>
Common Stock Par Value $0.001               Korkor Holdings, Ltd.                      34%
                                            3 Athol St.
                                            Douglas Isle of Man
                                            3,172,400

Common Stock Par Value $0.001               Calder Investments Limited                  32%
                                            Omar Hodge Bldg.
                                            Wicken Cay Road Town
                                            Tortula, BVI
                                            3,000,000

Common Stock Par Value $0.001               Anhui Liu An Beer Company                   11%
                                            1,050,000

Common Stock Par Value $0.001               Tiancheng China Corp, Ltd.(a)                6%
                                            530,000

Common Stock Par Value $0.001               Jane Zheng, Director &                       3%
                                            Secretary (c)
                                            82-66 Austin Street
                                            Kew Gardens, NY 11415
                                            281,586

Common Stock Par Value $0.001               James A. Tilton, Director,          less than 1%
                                            President & Treasurer(b)
                                            82-66 Austin Street
                                            Kew Gardens, NY 11415
                                            57,251
</TABLE>
(a) Includes 211 shares of common stock owned by ATJ,  Incorporated,  a Delaware
holding  company,  of which  James  A.  Tilton  is sole  officer,  director  and
shareholder.
                                       8
<PAGE>

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


ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

          Exhibit 99 - Certification, James A. Tilton

ITEM 14. CONTROLS AND PROCEDURES

         Within 90 days  prior to the date if this  report,  we  carried  out an
evaluation under the supervision and with the participation of our President and
Secretary/Treasurer,  of the  effectiveness  of the design and  operation of our
disclosure controls and procedures.  Based on this evaluation, our President and
Secretary/Treasurer  concluded that our  disclosure  controls and procedures are
effective  in  timely  alerting  them to  material  information  required  to be
included in our periodic SEC reports.  It should be noted that the design of any
systems of controls is based in part upon certain  assumptions of the likelihood
of future events, and there can be no assurances that any design will succeed in
achieving it stated goals under all potential future  conditions,  regardless of
how remote. In addition we have reviewed our internal  controls,  and there have
been no  significant  changes in our internal  controls or in any other  factors
that could  significantly  affect those control  subsequent to the date of their
last evaluation.






                                       9
<PAGE>




                                  CERTIFICATION

I, James A. Tilton, certify that:

         1. I have reviewed  this 2002  year-end  report on Form 10-KSB of China
Food and Beverage Company;

         2. Based on my knowledge,  this  quarterly  report does not contain any
untrue  statement of a material fact or omit to state a material fact  necessary
to make the  statements  made,  in light of the  circumstances  under which such
statements  were made, not misleading with respect to the period covered by this
quarterly report;

         3. Based on my knowledge, the financial statements, and other financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

         4. The registrant's other certifying officers and I are responsible for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-4 and 15d-14) for the registrant and we have: a) designed
such  disclosure  controls and  procedures to ensure that  material  information
relating to the registrant,  including its  consolidated  subsidiaries,  is made
known to us by others within those entities,  particularly  during the period in
which this quarterly report is being prepared; b) evaluated the effectiveness of
the registrant's  disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the "Evaluation  Date");  and
c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

         5. The  registrant's  other  certifying  officers and I have disclosed,
based on our most recent evaluation,  to the registrant's auditors and the audit
committee  of  registrant's  board  of  directors  (or  persons  performing  the
equivalent function): a) all significant deficiencies in the design or operation
of internal  controls which could adversely affect the  registrant's  ability to
record, process, summarize and report financial data and have identified for the
registrant's  auditors any material weaknesses in internal controls;  and b) any
fraud, whether or not material,  that involves management or other employees who
have a significant role in the registrant's internal controls; and

         6. The registrant's  other certifying  officers and I have indicated in
this quarterly report whether or not there were significant  changes in internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: April 11, 2003
                               /s/ James A. Tilton
                                ---------------------
                               James A. Tilton,
                               Chief Executive Officer
                               Chief Financial Officer





                                       10
<PAGE>




                                   SIGNATURES

         In  accordance  with  Section  13 or 15(d)  of the  Exchange  Act,  the
Registrant  caused  this  report to be signed on its behalf by the  undersigned,
thereunto duly authorized, this __ day of April, 2003.

         CHINA FOOD AND BEVERAGE COMPANY

         /s/ James A. Tilton
         ------------------------------
         James A. 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 A. Tilton
------------------------      President,                      April 11, 2003
James Tilton                  Chief Executive Officer,
                              Treasurer and Director
/s/ Jane Zheng
------------------------      Secretary and Director          April 11, 2003
Jane Zheng

/S/ Gordon Wilson
------------------------      Director                        April 11, 2003
Gordon Wilson






                                       11
<PAGE>

                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)

                              FINANCIAL STATEMENTS

                                December 31, 2002





















                                      F-1

<PAGE>







                                 C O N T E N T S


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

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

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

Statements of Stockholders' Equity.......................................  F-6

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

Notes to the Financial Statements........................................ F-10













                                      F-2



<PAGE>









                          INDEPENDENT AUDITORS' REPORT


To the Board of Directors
China Food and Beverage Company
(A Development Stage Company)
Kew Gardens, New York

We have  audited  the  accompanying  balance  sheet of China  Food and  Beverage
Company (a  development  stage  company) as of December 31, 2002 and the related
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended December 31, 2002 and 2001 and from inception of the development  stage on
January 1, 2000 through  December 31, 2002.  These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects, the financial position of China Food and Beverage Company
(a  development  stage company) as of December 31, 2002 and the results of their
operations  and their cash flows for the years ended  December 31, 2002 and 2001
and from the  inception  of the  development  stage on January  1, 2000  through
December 31, 2002 in conformity with accounting principles generally accepted in
the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 4 to the
consolidated  financial  statements,  the Company's recurring losses and lack of
operations  raises  substantial  doubt  about its ability to continue as a going
concern.  Management's plans concerning these matters are also described in Note
4. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.



/s/ HJ & Associates, LLC
----------------------------
Salt Lake City, Utah
April 3, 2003



                                      F-3
<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                                  Balance Sheet




                                     ASSETS
                                                                  December 31,
                                                                      2002
                                                                  ------------
CURRENT ASSETS

   Cash                                                           $     3,268
   Exchange credits                                                    19,819
   Note receivable - related party (Note 6)                            21,602
   Prepaid expenses                                                   172,441
                                                                  -----------

     Total Current Assets                                             217,130
                                                                  -----------

PROPERTY AND FIXED ASSETS (Note 3)

   Equipment                                                            2,149
   Accumulated depreciation                                            (1,576)
                                                                  -----------

     Total Fixed Assets                                                   573
                                                                  -----------

     TOTAL ASSETS                                                 $   217,703
                                                                  ===========


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

   Accounts payable and accrued expenses                          $    66,879
                                                                  -----------

     Total Current Liabilities                                         66,879
                                                                  -----------

     TOTAL LIABILITIES                                                 66,879
                                                                  -----------

STOCKHOLDERS' EQUITY

   Common stock; 100,000,000 preferred shares at $0.001
      par value; 9,395,788 shares issued and outstanding                9,396
   Additional paid-in capital                                       2,110,779
   Retained earnings accumulated prior to the development stage       633,605
   Deficit accumulated during the development stage                (2,602,956)
                                                                  -----------

     Total Stockholders' Equity                                       150,824
                                                                  -----------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                   $   217,703
                                                                  ===========

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


                                      F-4
<PAGE>


<TABLE>
<CAPTION>

                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                            Statements of Operations
                                                                          From
                                                                      Inception of
                                                                       Development
                                                                        Stage on
                                                                       January 1,
                                           For the Years ended        2000 Through
                                              December 31,            December 31,
-----------------------------------------------------------------------------------
                                           2002            2001           2002
                                       ------------    ------------    ------------

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

COSTS AND EXPENSES

   General and administrative              274,037         307,835         859,249
                                       ------------    ------------    ------------

     Total Costs and Expenses              274,037         307,835         859,249
                                       ------------    ------------    ------------

LOSS BEFORE OTHER EXPENSE                 (274,037)       (307,835)       (859,249)
                                       ------------    ------------    ------------

OTHER INCOME (EXPENSE)

   Refund of tax penalties                    --            16,237          16,237
   Interest expense                           (533)         (2,745)        (16,296)
   Interest income                           2,274           3,581           9,503
                                       ------------    ------------    ------------

     Total Other Income (Expense)            1,741          17,073           9,444
                                       ------------    ------------    ------------

LOSS BEFORE TAX, EXTRAORDINARY
   ITEM AND DISCONTINUED OPERATIONS       (272,296)       (290,762)       (849,805)

INCOME TAX EXPENSE                            --              --              --
                                       ------------    ------------    ------------

LOSS BEFORE DISCONTINUED OPERATIONS       (272,296)       (290,762)       (849,805)

LOSS ON DISCONTINUED OPERATIONS               --              --        (1,990,314)
                                       ------------    ------------    ------------

LOSS BEFORE  EXTRAORDINARY ITEM           (272,296)       (290,762)     (2,840,119)

GAIN ON DISPOSITION OF DEBT                   --              --           237,163
                                       ------------    ------------    ------------

NET LOSS                              $   (272,296)   $   (290,762)   $ (2,602,956)
                                       ============    ============    ============

BASIC LOSS PER SHARE                  $      (0.03)   $      (0.03)
                                       ============    ============

WEIGHTED AVERAGE NUMBER OF
   SHARES OUTSTANDING                     9,395,788      10,281,349
                                       ============    ============
</TABLE>
                  The accompanying notes are an integral part
                         of these financial statements.

                                      F-5
<PAGE>


<TABLE>
<CAPTION>
                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                       Statements of Stockholders' Equity



                                               Common Stock            Additional      Other        Retained
                                        --------------------------      Paid-In     Comprehensive   Earnings
                                           Shares         Amount        Capital        Income       (Deficit)
                                        -----------    -----------    -----------   -----------    -----------

<S>                                       <C>          <C>            <C>           <C>            <C>
Balance, December 31, 1999                5,546,505    $     5,547    $   872,070   $     8,421    $   633,605

Common stock issued for cash
   at $1.00 per share                        50,000             50         49,950          --             --

Common stock issued for cash
   at $1.00 per share                       200,000            200        199,800          --             --

Common stock issued for cash
   at $0.50 per share                       200,000            200         99,800          --             --

Common stock issued for cash
   at $0.25 per share                       400,000            400         99,600          --             --

Common stock issued for cash
   at $0.25 per share                       800,000            800        199,200          --             --

Common stock issued for cash
   at $0.25 per share                       800,000            800        199,200          --             --

Common stock issued for cash
   at $0.10 per share                     2,000,000          2,000        198,000          --             --

Common stock issued for cash
   at $0.10 per share                     1,000,000          1,000         99,000          --             --

Related party forgiveness of interest          --             --           11,244          --             --

Change in currency translation                 --             --             --          (8,421)          --

Net loss for the year ended
   December 31, 2000                           --             --             --            --       (2,039,898)
                                        -----------    -----------    -----------   -----------    -----------

Balance, December 31, 2000               10,996,505         10,997      2,027,864          --       (1,406,293)

Cancelled shares (Note 9)                      (717)            (1)          --            --             --

Common stock issued for cash
   At $0.10 per share                       500,000            500         49,500          --             --

Cancelled shares (Note 9)                (2,100,000)        (2,100)         2,100          --             --

Net loss for the year  ended
   December 31, 2001                           --             --             --            --         (290,762)
                                        -----------    -----------    -----------   -----------    -----------

Balance, December 31, 2001                9,395,788    $     9,396    $ 2,079,464          --      $(1,697,055)
                                        ===========    ===========    ===========   ===========    ===========
</TABLE>
                  The accompanying notes are an integral part
                         of these financial statements.

                                      F-6
<PAGE>


<TABLE>
<CAPTION>

                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                 Statements of Stockholders' Equity (Continued)


                                               Common Stock          Additional      Other        Retained
                                        --------------------------    Paid-In     Comprehensive   Earnings
                                           Shares         Amount      Capital        Income      (Deficit)
                                        -----------   -----------   -----------   -----------  -----------


<S>                                       <C>         <C>           <C>           <C>          <C>
Balance, December 31, 2001                9,395,788   $     9,396   $ 2,079,464   $     --     $(1,697,055)

Warrants granted at fair market value          --            --          31,315         --            --

Net loss for the year ended
 December 31, 2002                             --            --            --           --        (272,296)
                                        -----------   -----------   -----------   ----------   -----------

Balance, December 31, 2002                9,395,788   $     9,396   $ 2,110,779   $     --     $(1,969,351)
                                        ===========   ===========   ===========   ==========   ===========


Retained earnings accumulated prior to the development stage                                      $633,605
Deficit accumulated during the development stage                                                (2,602,956)
                                                                                               ------------
                                                                                               $(1,969,351)
                                                                                               ============
</TABLE>







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



                                      F-7
<PAGE>


<TABLE>
<CAPTION>

                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                            Statements of Cash Flows
                                                                                          From
                                                                                      Inception of
                                                                                       Development
                                                                                        Stage on
                                                                                       January 1,
                                                             For the Years Ended       2000 Through
                                                                 December 31,          December 31,
---------------------------------------------------------------------------------------------------
                                                             2002          2001            2002
                                                         -----------    -----------    -----------
CASH FLOWS FROM OPERATING ACTIVITIES

<S>                                                      <C>            <C>             <C>
   Net (loss)                                            $  (272,296)   $  (290,762)    (2,602,956)
   Adjustments to reconcile net (loss) to net cash
     used by operating activities:
       Depreciation                                              430            430          1,576
       Discontinued operations                                  --             --        1,990,314
       Gain on settlement of debt                               --             --         (237,163)
       Warrants issued below market                           31,315           --           31,315
   Changes in assets and liabilities:
     (Increase) in prepaid expenses                         (172,441)          --         (172,441)
     (Increase) in accounts receivable - related party          (502)        (1,100)        (1,602)
     (Increase) Decrease in exchange credits                    (983)           758           (225)
     Increase (Decrease) in accounts payable and
      accrued expenses                                        (3,368)       (57,397)      (509,957)
     Decrease in related party payable                          --           (4,077)        (4,077)
                                                         -----------    -----------    -----------

       Net Cash Used by Operating Activities                (417,845)      (352,148)    (1,505,216)
                                                         -----------    -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

     Increase in note receivable                                --          (80,000)       (80,000)
     Increase in note receivable - related party             (20,000)          --          (20,000)
     Receipt of payment on note receivable                      --           80,000         80,000
     Sales of exchange credits                               419,980           --          419,980
                                                         -----------    -----------    -----------

       Net Cash Provided by Investing Activities             399,980           --          399,980
                                                         -----------    -----------    -----------

CASH FLOWS FROM FINANCING ACTIVITIES

   Loss of cash from discontinued operations                    --             --         (424,757)
   Common stock issued for cash                                 --           50,000      1,200,000
   Proceeds from issuance of note payable                       --          100,000        100,000
   Payments on notes payable                                    --         (100,000)      (323,011)
                                                         -----------    -----------    -----------

       Net Cash Provided by Financing Activities                --           50,000        552,232
                                                         -----------    -----------    -----------

NET DECREASE IN CASH                                         (17,865)      (302,148)      (553,004)

CASH AT BEGINNING OF PERIOD                                   21,133        323,281        556,272
                                                         -----------    -----------    -----------

CASH AT END OF PERIOD                                    $     3,268    $    21,133    $     3,268
                                                         ===========    ===========    ===========
</TABLE>

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

                                      F-8
<PAGE>

<TABLE>
<CAPTION>

                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                      Statements of Cash Flows (Continued)
                                                                                          From
                                                                                      Inception of
                                                                                       Development
                                                                                        Stage on
                                                                                       January 1,
                                                             For the Years Ended       2000 Through
                                                                 December 31,          December 31,
---------------------------------------------------------------------------------------------------
                                                             2002          2001            2002
                                                         -----------    -----------    -----------
SUPPLEMENTAL SCHEDULE OF CASH FLOW
   ACTIVITIES:

Cash Paid For:

<S>                                                    <C>              <C>            <C>
   Income taxes                                        $     --         $     --       $     --
   Interest                                            $      533       $    3,000     $    3,000

SCHEDULE OF NON-CASH FINANCING ACTIVITIES:

   Warrants issued at fair market                      $   31,315       $     --       $   31,315
</TABLE>










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


                                      F-9
<PAGE>



                         CHINA FOOD AND BEVERAGE COMPANY
                          (A Development Stage Company)
                        Notes to the Financial Statements
                           December 31, 2002 and 2001
                                       15


NOTE 1 -      ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              a.  Business Organization

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

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

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

              The Company  reentered the development stage on January 1, 2000 as
              a result of the discontinued operations of Anhui (Note 7), and, as
              discussed  in  Note  8,  Victoria  was  completely   dissolved  in
              September 2001.

              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.



                                      F-10
<PAGE>




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

              d.   Estimates

              The  preparation  of  financial   statements  in  conformity  with
              accounting  principles  generally accepted in the United States of
              America 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.

              e.   Capital Assets and Amortization

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

                           Equipment                   5 years


              f.  Revenue Recognition

              The  Company   currently  has  no  source  of  revenues.   Revenue
              recognition  policies will be determined when principal operations
              begin.

              g.  New Accounting Pronouncements

              During the years ended  December 31, 2002, and 2001, the Financial
              Accounting  Standards  Board adopted the  following  Statements of
              Financial Accounting Standards:

              o    SFAS No. 141, Business Combinations;
              o    SFAS No. 142, Goodwill and Other Intangible Assets;
              o    SFAS No. 143, Accounting for Asset Retirement Obligations;
              o    SFAS No. 144,  Accounting  for the  Impairment or Disposal of
                   Long-Lived Assets;
              o    SFAS No.  145,  Recision  of FASB  Statements  4, 44, and 64,
                   amendment of Statement 13, and Technical Corrections;
              o    SFAS No. 146, Accounting for Exit or Disposal Activities;
              o    SFAS No. 147, Acquisitions of certain Financial Institutions;
                   and
              o    SFAS No. 148, Accounting for Stock Based Compensation.

              These newly issued accounting  pronouncements had no effect on the
              Company's  current  financial  statements  and did not  impact the
              Company.


                                      F-11
<PAGE>

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

              h.  Income Taxes

              Deferred taxes are provided on a liability method whereby deferred
              tax assets are recognized for deductible temporary differences and
              operating  loss and tax  credit  carryforwards  and  deferred  tax
              liabilities  are  recognized  for taxable  temporary  differences.
              Temporary  differences  are the  differences  between the reported
              amounts of assets and  liabilities  and their tax bases.  Deferred
              tax  assets are  reduced by a  valuation  allowance  when,  in the
              opinion  of  management,  it is more  likely  that not  that  some
              portion or all of the  deferred  tax assets will not be  realized.
              Deferred tax assets and  liabilities  are adjusted for the effects
              of changes in tax laws and rates on the date of enactment.

              Net deferred tax assets consist of the following  components as of
              December 31, 2002 and 2001:

                                       2002                    2001
                                    -----------            -----------

 Deferred tax assets
    NOL Carryover                   $ 1,815,527            $ 1,709,331

Deferred tax liabilities:                  --                     --

Valuation allowance                  (1,815,527)            (1,709,331)
                                    -----------            -----------
Net deferred tax asset              $      --              $      --
                                    ===========            ===========


              The income  tax  provision  differs  from the amount of income tax
              determined by applying the U.S.  federal income tax rate of 39% to
              pretax  income  from  continuing  operations  for the years  ended
              December 31, 2002 and 2001 due to the following:

                                       2002                   2001
                                     ---------              ---------

Book loss                            $(106,195)             $(114,400)
Valuation allowance                    106,195                114,400
                                     ---------              ---------
                                     $    --                $    --
                                     =========              =========


              At  December  31,  2002,   the  Company  had  net  operating  loss
              carryforwards  of  approximately  $4,655,000  that  may be  offset
              against  future taxable income from the year 2002 through 2022. No
              tax  benefit  has  been   reported  in  the   December   31,  2002
              consolidated  financial statements since the potential tax benefit
              is offset by a valuation allowance of the same amount.

              Due to the change in ownership provisions of the Tax Reform Act of
              1986,  net operating  loss  carryforwards  for Federal  income tax
              reporting  purposes  are subject to annual  limitations.  Should a
              change in ownership occur, net operating loss carryforwards may be
              limited as to use in the future.


                                      F-12
<PAGE>





NOTE 2 -      PROPERTY AND FIXED ASSETS

                                                                2002
                                               Accumulated    Net Book
                                    Cost      Depreciation      Amount
------------------------------------------------------------------------

              Equipment         $     2,149  $    (1,576)   $      573
                                ===========  ===========    ==========


              During the years ended  December  31,  2002 and 2001,  the Company
              expensed $430 and $430 in depreciation, respectively.

NOTE 3 -      CONCENTRATIONS OF RISK

              a.  Barter Exchange Credits

              The Company owns certain  barter  exchange  credits held with ITEX
              Corporation.  This  balance is not insured by the Federal  Deposit
              Insurance  Corporation.  The value of the credits is $19,819 as of
              December 31, 2002.

NOTE 4 -      GOING CONCERN

              The Company's  financial  statements are prepared using accounting
              principles  generally  accepted  in the  United  States of America
              applicable to a going concern which  contemplates  the realization
              of assets and  liquidation  of liabilities in the normal course of
              business.  However,  the Company does not have significant cash or
              other material assets,  nor does it have an established  source of
              revenues  sufficient to cover its operating  costs and to allow it
              to continue as a going concern. It is the intent of the Company to
              seek a merger  with an  existing,  operating  company.  Until that
              time,  the  stockholders  have committed to covering the operating
              costs of the Company.

NOTE 5 -      COMMON STOCK TRANSACTIONS

              Common Stock Issuances and Cancellations

              On January  29,  2001,  the  Company  cancelled  717 shares of its
              common   stock   pursuant  to  a  settlement   agreement   with  a
              shareholder.

              On April 25, 2001, the Company issued 500,000 shares of its common
              stock at $0.10 per share for a total of $50,000.

              On May 11, 2001,  the Company  cancelled  2,100,000  shares of its
              common  stock.  These shares were part of the  original  4,200,000
              issued in the acquisition of the Anhui Brewery.



                                      F-13
<PAGE>


NOTE 5 -      COMMON STOCK TRANSACTIONS (Continued)

              Issuance of Warrant

              On March 5, 2002, the Company issued a warrant to a  non-employee.
              The warrant allows the holder to purchase 550,000 shares of common
              stock at an  exercise  price of $0.06 per share,  and will  expire
              five years from the date of issuance.

              The  Company  applies  SFAS No.  123 for  warrants  issued,  which
              requires  the Company to estimate  the fair value of each  warrant
              issued at the grant date by using the Black-Scholes  pricing model
              with the following assumptions:

                      Risk-free interest rate                     3.50%
                      Expected life                             3 Years
                      Expected volatility                          1.71
                      Dividend yield                                0.0

              As a result of  applying  SFAS No. 123,  the  Company  recorded an
              expense of $31,315  during the year ended  December 31, 2002.  The
              expense is included in general and  administrative  expense in the
              statement of operations.

              As of  December  31,  2002,  this is the only  warrant  issued and
              outstanding.

NOTE 6 -      RELATED PARTY TRANSACTIONS

              Note Receivable

              On April 17, 2002, the Company  advances  $20,000 to the president
              and CEO of the  Company.  The  advance  is  payable  on demand and
              accrues interest at 12% per annum.  During the year ended December
              31, 2002,  the Company has  recognized  $1,602 of interest  income
              related to the note.

              Prepaid Expenses

              During the first quarter of 2002, the Company prepaid two years of
              salaries  to two  employees  and  officers of the  Company.  As of
              December 31, 2002, one half of the  prepayment,  representing  one
              year of salaries and payroll taxes,  has been fully expensed.  The
              remaining  prepaid  salaries  and  taxes,  of  $157,532,  will  be
              expensed during the year ended December 31, 2003.


                                      F-14
<PAGE>


NOTE 7 -      DISCONTINUED OPERATIONS

              Loss of Subsidiary

              The loss from discontinued  operations results from a dispute with
              the Anhui Liu An Beer Company  Ltd.  ("sellers")  who  represent a
              minority  interest  in the  entity  that  operated  the  Company's
              brewery in the Peoples'  Republic of China.  In December 1998, the
              Company  acquired a 55% interest in a Chinese brewery for which it
              issued 8% convertible  debentures in the total principal amount of
              $21 million. The debentures had a $5.00 conversion price. Pursuant
              to the  terms of the  debentures,  the  Company  had the  right to
              require  conversion of the debentures.  The Company  required said
              conversion and issued 4.2 million shares of its common stock, also
              in December 1998. The sellers, from whom the Company purchased its
              interest in the brewery, hold a 45% equity interest in the brewery
              and  agreed  to  maintain   responsibility   for  the   day-to-day
              operations of the brewery.

              The Company's Chinese asset, which was the brewery, was subject to
              liens which resulted in the borrowing of approximately $6 million,
              and the brewery had tax  liabilities  to the People's  Republic of
              China in excess of $4 million.

              In May 2000,  the sellers  claimed that the Company was in default
              of its  obligations to repurchase or cause to be repurchased  from
              the sellers,  a  significant  majority of the shares of the common
              stock  issued upon  conversion  of the  debentures  or, to provide
              additional  capital.  As a result  of the  alleged  default,  they
              refused to provide  the  Company  with any  financial  information
              concerning  the  operations of the brewery and assumed  control of
              the brewery.

              The  Company  believes  that the claims  made by the  sellers  are
              without  merit.  However,  as the assets of the brewery are in the
              Peoples'  Republic  of  China  and the  Company  has no  effective
              control  over  the  business  or  the  financial  concerns  of the
              brewery,  the Company has fully reserved against all of its assets
              allocated  in  China.  All  operations  have  been  classified  as
              discontinued  as they  relate to  activities  prior to  January 1,
              2000.

              It is possible  that, in addition to taking control of the assets,
              the sellers may commence an action  against the Company  alleging,
              among other claims, breach of contract. Conversely, the Company is
              exploring its options,  including  but not limited to,  initiating
              legal  action  of its  own to  recover  what it  believes  to be a
              wrongful conversion of its assets by the sellers.

              Since  there  is no  information  for  the  loss  on  discontinued
              operations  for the year ended  December 31, 2000,  the  remaining
              excess of net assets over  liabilities has been allowed for in the
              total loss on discontinued operations total of $1,990,314.

NOTE 8 -      DISSOLUTION OF SUBSIDIARY

              In September 2001, the Company's wholly owned subsidiary, Victoria
              Beverage,  was  dissolved.  The only asset of the  subsidiary  was
              6,000,000 shares of Gourmet's Choice Coffee Company.  These shares
              were transferred to the Company. The Company will carry the shares
              at Victoria's cost of $0.00. Gourmet's Choice is controlled by the
              President of the Company.


                                      F-15