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, 2000

                         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.)

              240 Madison Ave., 7th floor, New York, New York 10016
             -------------------------------------------------------
                    (Address of Principal Executive Offices)

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

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

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

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-B is not contained herein and will not be contained, to
the  best  of  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [ ]

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

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant at December 31, 2000, was approximately $169,945.75.

         The  number of shares  of  Registrant's  Common  Stock  outstanding  on
December 31, 2000, was 10,996,505.

         The  Registrant's  total revenues for the year ended December 31, 2000,
were $0.00.

<PAGE>

                                TABLE OF CONTENTS

             PART I                                                        PAGE
                                                                           ----

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

ITEM 2.      DESCRIPTION OF PROPERTY......................................... 3

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

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

             PART II

ITEM 5.      MARKET FOR COMMON EQUITY AND RELATED
             STOCKHOLDER  MATTERS............................................ 4

ITEM 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF
             OPERATIONS...................................................... 5

ITEM 7.      FINANCIAL STATEMENTS................................... F-1 - F-14

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............................... 6

ITEM 10.     EXECUTIVE COMPENSATION.......................................... 6

ITEM 11.     SECURITY OWNERSHIP OF BENEFICIAL OWNERS......................... 7

ITEM 12.     CERTAIN RELATIONSHIPS AND RELATED
             TRANSACTIONS.................................................... 7

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

SIGNATURES................................................................... 8

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

<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: 240 Madison Ave, 7th floor, New York,
New York 10016. The Company was incorporated in Nevada on November 6, 1981 under
the name Logos  Scientific  Inc.  Until 1991,  the Company sold and  distributed
medical  diagnostic  equipment through its Volu-Sol  division.  The Company sold
that division in December 1991. On May 5, 1992, the Company  changed its name to
Logos International, Inc.

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

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

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

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

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

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

       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

                                       1
<PAGE>

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

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

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

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

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

       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.

                                       2
<PAGE>

       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.

       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.

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.

       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.

ITEM 2.   DESCRIPTION OF PROPERTY

       The Company presently leases office space at 240 Madison Ave., 7th floor,
New York, New York, 10016.

ITEM 3.   LEGAL PROCEEDINGS

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

       On January 10, 2000, Oasis received a check in the amount of $50,000 from
the Company.  On April 24, 2000,  the Supreme  Court of the State of New York in
the above-  referenced  matter,  entered an order of  Satisfaction  of Judgement
thereby effectively dismissing the case against the Company.

       Securities  and Exchange  Commission  v. China Food & Beverage,  James C.
Tilton,  et al. - On July 14,  1999,  the  Securities  and  Exchange  Commission
("SEC") in the United States District Court, Southern District of Florida, Civil
Action  No.  99-1968-CIV-GOLD,  filed  a  Complaint  for  Injunctive  and  Other
Equitable Relief, as well as a Temporary  Restraining Order against,  et al, the
Company and James C. Tilton  ("Tilton")  individually who is the Company's chief
executive  officer.  On April 15,  1999,  the Company  entered into a Consulting
Agreement with The Globus Group, Inc. ("Globus"), a Nevada corporation,  whereby
Globus was to act as a "...marketing consultant/promoter..." of the Company. The
complaint  alleges  that the  Company,  knowingly  or  unknowingly  disseminated
material to the public based on Globus'  false  representations  to the Company.

                                       3
<PAGE>

The complaint further
alleges that when informed  that Globus was engaging in this and other  improper
activities  that might  result in creating  false  impressions  with the public,
Tilton did not take appropriate corrective action quickly enough.

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

       An offer was made by the Company  and if  accepted by the SEC,  will have
the Company subject to a limited  Consent Decree.  The Company is confident that
this matter will be resolved  satisfactorily to all parties concerned,  however,
as of the date of this filing, the matter is still pending.

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

       During the year ended 2000, there were no matters  submitted to a vote of
the Company's shareholders.

                                     PART II

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

Market Information

       The following  table sets forth the prices of the Common Stock on the OTC
Bulletin  Board for each  quarter  during  fiscal  years  1999 and  2000.  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 Ended December 31, 2000            $  .43                      $ .12

Quarter Ended September 30, 2000           $  .43                      $ .15

Quarter Ended June 30, 2000                $ 1.62                      $ .37

Quarter Ended March 31, 2000               $ 4.25                     $ 1.00




Quarter Ending December 31, 1999           $ 4.50                     $ 1.50

Quarter Ending September 30, 1999          $ 4.50                     $ 2.37

Quarter Ended June 30, 1999                $ 9.75                     $ 3.50

Quarter Ended March 31, 1999               $ 5.00                     $ 3.00


Shareholders

       There  were  approximately  383  record  holders  of  Common  Stock as of
December 31, 2000,  holding a total of 10,996,505  outstanding  shares of Common
Stock.

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.

                                       4
<PAGE>

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

       The  Company's  analysis of its  financial  condition  and results of its
operations was addressed in the Company's 10-KSB,  filed, on or about, April 15,
2000.  Several  significant  events have occurred since that filing to date that
are set forth  below,  and may be  considered  material  changes  affecting  the
Company's position.

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

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

       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.

       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.

Results of Operations

       The  Company's  "Total  Liabilities  and  Stockholder's  Equity" for year
ending  2000 was  $764,288  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.

Capital Resources and Liquidity

       During 2000, the Company issued 5,450,000 shares of Common Stock for cash
valued at $.21 per share;  no shares  were  issued for  services  rendered.  The
negative cash flow reflected on the"Consolidated  Statements of Cash Flow" Pages
F-7 and F-8 of the attached  Financials,  is a result of funds used to pay costs
and other accrued expenses.

                                       5
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


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

                         CHINA FOOD AND BEVERAGE COMPANY
                                AND SUBSIDIARIES
                          (A Development Stage Company)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                December 31, 2000

                                       F-1
<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........................... F - 6

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

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

                                       F-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


Board of Directors
China Food and Beverage Company and Subsidiaries
(A Development Stage Company)
New York, New York


We have audited the  accompanying  consolidated  balance sheet of China Food and
Beverage Company and  Subsidiaries (a development  stage company) as of December
31, 2000 and the related  consolidated  statements of operations,  stockholders'
equity and cash flows for the years  ended  December  31, 2000 and 1999 and from
the inception of the development  stage on January 1, 2000 through  December 31,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material respects,  the consolidated  financial position of China
Food and Beverage Company and  Subsidiaries (a development  stage company) as of
December 31, 2000, and the  consolidated  results of their  operations and their
cash flows for the years ended December 31, 2000 and 1999 and from the inception
of the  development  stage on January 1, 2000  through  December  31,  2000,  in
conformity with generally accepted accounting principles.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 6 to the
consolidated  financial  statements,  the Company is a development stage company
with no significant  operating  results to date, which raises  substantial doubt
about its ability to continue as a going concern.  Management's  plans in regard
to these  matters  are also  described  in Note 6.  The  consolidated  financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.



HJ & Associates, LLC
Salt Lake City, Utah
March 27, 2001

                                       F-3
<PAGE>


<PAGE>



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

<TABLE>
<CAPTION>

                                     ASSETS

                                                                                  December 31,
                                                                                      2000
<S>                                                                             <C>
CURRENT ASSETS
   Cash and cash equivalent                                                     $         762,855
                                                                                -----------------
     Total Current Assets                                                                 762,855
                                                                                -----------------
PROPERTY AND FIXED ASSETS (Note 4)

   Equipment                                                                                2,149
   Accumulated depreciation                                                                  (716)
                                                                                -----------------
     Total Fixed Assets                                                                     1,433
                                                                                -----------------
     TOTAL ASSETS                                                               $         764,288
                                                                                =================
                      LIABILITIES AND STOCKHOLDERS' EQUITY

   Accounts payable                                                             $          66,706
   Related party payable                                                                    4,077
   Accrued expenses                                                                        70,088
                                                                                -----------------
     Total Current Liabilities                                                            140,871
                                                                                -----------------
     Total Liabilities                                                                    140,871
                                                                                -----------------
STOCKHOLDERS' EQUITY

   Common stock; 100,000,000 shares authorized of $0.001
    par value, 10,996,505 shares issued and outstanding                                    10,997
   Additional paid-in capital                                                           2,027,864
   Retained earnings accumulated prior to the development stage                           633,605
   Deficit accumulated during the development stage                                    (2,049,049)
                                                                                -----------------
     Total Stockholders' Equity                                                           623,417
                                                                                -----------------
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $         764,288
                                                                                =================
</TABLE>



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

                                       F-4
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Operations

<TABLE>
<CAPTION>

                                                                             From
                                                                          Inception of
                                                                          Development
                                                                            Stage on
                                            For the Years Ended            January 1,
                                                December 31,              2000 Through
                                     ---------------------------------    December 31,
                                          2000              1999             2000
                                     ----------------  ---------------  ---------------
<S>                                  <C>               <C>              <C>
NET SALES                            $           --    $          --    $          --

COST OF SALES                                    --               --               --
                                     ----------------  ---------------  ---------------
GROSS MARGIN                                     --               --               --
                                     ----------------  ---------------  ---------------
COSTS AND EXPENSES

   Selling expenses                              --               --               --
   General and administrative                 286,528             --            286,528
                                     ----------------  ---------------  ---------------
     Total Costs and Expenses                 286,528             --            286,528
                                     ----------------  ---------------  ---------------
INCOME (LOSS) BEFORE OTHER EXPENSE           (286,528)            --           (286,528)
                                     ----------------  ---------------  ---------------
OTHER INCOME (EXPENSE)

   Interest expense                           (13,018)            --            (13,018)
   Interest income                              3,648             --              3,648
                                     ----------------  ---------------  ---------------
     Total Other Income (Expense)              (9,370)            --             (9,370)
                                     ----------------  ---------------  ---------------
LOSS BEFORE TAX, EXTRAORDINARY
 ITEM AND DISCONTINUED OPERATIONS            (295,898)            --           (295,898)

INCOME TAX EXPENSE                               --               --               --
                                     ----------------  ---------------  ---------------
LOSS BEFORE EXTRAORDINARY ITEM               (295,898)            --           (295,898)

GAIN ON DISPOSITION OF DEBT                   237,163             --            237,163
                                     ----------------  ---------------  ---------------
LOSS BEFORE MINORITY INTEREST
 AND DISCONTINUED OPERATIONS                  (58,735)            --            (58,735)

MINORITY INTEREST                                --               --               --
                                     ----------------  ---------------  ---------------
LOSS ON DISCONTINUED OPERATIONS            (1,990,314)        (658,479)      (1,990,314)
                                     ----------------  ---------------  ---------------
NET LOSS                             $     (2,049,049) $      (658,479) $     2,049,049
                                     ================  ===============  ===============
BASIC LOSS PER SHARE                 $          (0.31) $         (0.12)
                                     ================  ===============
WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                         6,627,601        5,415,809
                                     ================  ===============
</TABLE>



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

                                       F-5
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>

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

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

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

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

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

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

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

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

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

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                          --              --            --              --               --        (2,049,049)
                                   -------------  --------------  ------------  --------------  ---------------  --------------
Balance, December 31, 2000            10,996,505  $       10,997  $  2,027,864  $         --       $       --    $   (1,415,444)
                                   =============  ==============  ============  ==============  ===============  ==============
</TABLE>



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

                                       F-6
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                                                                   From
                                                                                                Inception of
                                                                                                Development
                                                                                                  Stage on
                                                                       For the Years Ended       January 1,
                                                                           December 31,         2000 Through
                                                                  ---------------------------   December 31,
                                                                      2000          1999           2000
                                                                  ------------  -------------  --------------
<S>                                                               <C>           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net income (loss)                                              $ (2,049,049) $    (659,208) $   (2,049,049)
   Adjustments to reconcile net income (loss) to net cash
    used by operating activities:
     Depreciation and amortization                                         716        990,493             716
     Common stock issued for services                                     --           88,046            --
     Discontinued operations                                         1,990,314           --         1,990,314
     Gain on settlement of debt                                       (237,163)          --          (237,163)
Changes in assets and liabilities:
   (Increase) decrease in accounts receivable                             --         (316,445)           --
   (Increase) decrease in note receivable                                 --           35,952            --
   (Increase) decrease in other receivables                               --          (27,765)           --
   (Increase) decrease in inventory                                       --          812,706            --
   (Increase) in deferred and prepaid assets                              --         (701,842)           --
   (Increase) decrease in deposits                                        --          215,000            --
   Increase in accounts payable and accrued expenses                  (440,041)       204,101        (440,041)
   Increase (decrease) in customer prepayments                            --         (381,288)           --
   Increase (decrease) in taxes payable                                   --         (833,008)           --
   Increase (decrease) in payroll taxes payable                           --             --              --
   Increase (decrease) in accounts payable - related parties              --             --              --
   Increase in minority interest                                          --           68,010            --
                                                                  ------------  -------------  --------------
     Net Cash (Used) Provided by Operating Activities                 (735,223)      (505,248)       (735,223)
                                                                  ------------  -------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES

   Purchase of fixed assets                                               --         (449,243)           --
                                                                  ------------  -------------  --------------
     Net Cash (Used by Investing Activities                               --         (449,243)           --
                                                                  ------------  -------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES

   Loss of cash from discontinued operations                          (424,757)          --          (424,757)
   Proceeds to related party                                              --         (412,043)           --
   Common stock issued for cash                                      1,150,000        436,964       1,150,000
   Proceeds from notes payable                                            --        4,055,078            --
   Payments on notes payable                                          (223,011)    (2,555,343)       (223,011)
                                                                  ------------  -------------  --------------
     Net Cash Provided (Used) by Financing Activities             $    502,232  $   1,524,656  $      502,232
                                                                  ------------  -------------  --------------
</TABLE>



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

                                       F-7
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                Consolidated Statements of Cash Flows (Continued)

<TABLE>
<CAPTION>

                                                                                                   From
                                                                                                Inception of
                                                                                                Development
                                                                                                 Stage on
                                                                      For the Years Ended        January 1,
                                                                          December 31,          2000 Through
                                                                  ---------------------------   December 31,
                                                                      2000          1999            2000
                                                                  ------------  -------------  --------------
<S>                                                               <C>           <C>            <C>
NET INCREASE (DECREASE) IN CASH                                   $   (232,991) $     570,165  $     (232,991)

CASH AND CAST EQUIVALENTS AT BEGINNING OF
 PERIOD                                                                995,846        425,681         995,846
                                                                  ------------  -------------  --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                        $    762,855  $     995,846  $      762,855
                                                                  ============  =============  ==============
SUPPLEMENTAL SCHEDULE OF CASH FLOW
 ACTIVITIES

Cash Paid For:

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

SCHEDULE OF NON-CASH FINANCING ACTIVITIES

   Common stock issued for debt                                   $       --    $      17,700  $         --
</TABLE>



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

                                       F-8
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 1 -  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

          a.  Business Organization

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

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

          The Company  acquired 100% of the shares of Victoria which owns 55% of
          Anhui  for  4,200,000  shares  of  the  Company's  common  stock.  The
          acquisition  was  accounted  for  as a  recapitalization  of  Victoria
          because the shareholders of Victoria  controlled the Company after the
          acquisition.  Therefore, Victoria 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 2).

          b.  Accounting Method

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

          c.  Cash and Cash Equivalents

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

          d.  Basic (Loss) Per Share

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

                                                            For the Year Ended
                                                            December 31, 2000
                                           ----------------------------------------------------
                                              Gain/(Loss)         Shares           Per Share
                                              (Numerator)      (Denominator)         Amount
                                           ----------------  ----------------   ---------------
<S>                                        <C>               <C>                <C>
          Loss from operations             $       (295,898) $      6,627,601   $         (0.04)
          Gain on disposition of debt               237,163         6,627,601              0.03
          Loss on discontinued operations        (1,990,314)        6,627,601             (0.30)
                                           ----------------  ----------------   ---------------

          Total                            $     (2,049,049)        6,627,601   $         (0.31)
                                           ================  ================   ===============
</TABLE>



                                       F-9
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


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

          d.  Basic (Loss) Per Share (Continued)
<TABLE>
<CAPTION>

                                                             For the Year Ended
                                                              December 31, 1999
                                           ----------------------------------------------------
                                                Loss             Shares            Per Share
                                             (Numerator)      (Denominator)          Amount
                                           ----------------  ----------------   ---------------
<S>                                        <C>               <C>                <C>
          Loss on discontinued operations  $       (658,479)        5,415,809    $        (0.12)
                                           ----------------  ----------------   ---------------

          Total                            $       (658,479)        5,415,809    $        (0.12)
                                           ================  ================   ===============
</TABLE>


          e.  Principles of Consolidation

          The consolidated  financial statements include those of China Food and
          Beverage  Company  and  Victoria   Beverage   Company   Limited.   All
          significant   intercompany   accounts  and   transactions   have  been
          eliminated.

          f.  Estimates

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

          g.  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

          h.  Revenue Recognition

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

          i.  New Accounting Pronouncements

          The  Company  has adopted the  provisions  of FASB  Statement  No. 138
          "Accounting for Certain Derivative Instruments and Hedging Activities,
          (an amendment of FASB  Statement  No.  133.)"  Because the Company had
          adopted the  provisions of FASB  Statement No. 133,  prior to June 15,
          2000,  this statement is effective for all fiscal  quarters  beginning
          after June 15, 2000.  The adoption of this  principle  had no material
          effect on the Company's consolidated financial statements.

                                       F-10
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


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

          i.  New Accounting Pronouncements (Continued)

          The  Company  has adopted the  provisions  of FASB  Statement  No. 140
          "Accounting  for  Transfers  and  Servicing  of  Financial  Assets and
          Extinguishments  of  Liabilities  (a replacement of FASB Statement No.
          125.)" This statement  provides  accounting and reporting standard for
          transfers and  servicing of financial  assets and  extinguishments  of
          liabilities.  Those standards are based on consistent application of a
          financial-components  approach  that  focuses on  control.  Under that
          approach, the transfer of financial assets, the Company recognized the
          financial and servicing  assets it controls and the liabilities it has
          incurred,   derecognizes   financial  assets  when  control  has  been
          surrendered,  and  derecognizes  liabilities when  extinguished.  This
          statement provides consistent  standards for distinguishing  transfers
          of  financial  assets that are sales from  transfers  that are secured
          borrowings. This statement is effective for transfers and servicing of
          financial assets and  extinguishments  of liabilities  occurring after
          March 31,  2001.  This  statement  is effective  for  recognition  and
          reclassification  of  collateral  and  for  disclosures   relating  to
          securitization  transactions  and  collateral  for fiscal years ending
          after  December  15,  2000.  The  adoption  of this  principle  had no
          material effect on the Company's consolidated financial statements.

          The  Company  has adopted the  provisions  of FIN 44  "Accounting  for
          Certain  Transactions  Involving Stock Compensation (an interpretation
          of APB Opinion No.  25.)" This  interpretation  is  effective  July 1,
          2000.  FIN 44  clarifies  the  application  of Opinion No. 25 for only
          certain  issues.  It  does  not  address  any  issues  related  to the
          application of the fair value method in Statement No. 123. Among other
          issues,  FIN 44 clarifies  the  definition of employee for purposes of
          applying  Opinion  25, the  criteria  for  determining  whether a plan
          qualifies as a  noncompensatory  plan, the  accounting  consequence of
          various  modifications to the terms of a previously fixed stock option
          or award, and accounting for an exchange of stock compensation  awards
          in a business  combination.  The  adoption  of this  principle  had no
          material effect on the Company's consolidated financial statements.

NOTE 2 -  LOSS OF SUBSIDIARY

          The loss in the first  quarter  of 2000 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
          operates 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 is the brewery, is 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.

                                       F-11
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 2 -  LOSS OF SUBSIDIARY (Continued)

          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.

          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.

NOTE 3 -  LITIGATION

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

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

          An offer was made by the Company and if accepted by the SEC, will have
          the Company subject to a limited Consent Decree.

                                       F-12
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 3 -  LITIGATION (Continued)

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

          On January 10, 2000,  Oasis  received a check in the amount of $50,000
          from the Company. On April 24, 2000, the Supreme Court of the State of
          New  York  in  the  above-referenced   matter,  entered  an  order  of
          Satisfaction  of  Judgment  thereby  effectively  dismissing  the case
          against the Company.

NOTE 4 -  PROPERTY AND FIXED ASSETS
<TABLE>
<CAPTION>

                                                                                     2000
                                                               Accumulated         Net Book
                                                Cost           Depreciation          Value
                                           ----------------  ----------------   ---------------
<S>                                        <C>               <C>                <C>
          Equipment                        $          2,149  $           (716)  $         1,433
                                           ================  ================   ===============

</TABLE>

          During  the  years  ended  December  31,  2000 and 1999,  the  Company
          expensed $430 and $805,729 in depreciation, respectively.

NOTE 5 -  CONCENTRATIONS OF RISK

          a.  Cash and Cash Equivalents

          The Company had cash in money market funds which exceeds the federally
          insured limit. Additionally,  the Company has of cash equivalents held
          with ITEX  Corporation.  This  balance is not  insured by the  Federal
          Deposit  Insurance  Corporation.  The Company does not  anticipate any
          losses as a result of the concentrations of risk.

NOTE 6 -  GOING CONCERN

          The  Company's  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.  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.

                                       F-13
<PAGE>

                CHINA FOOD AND BEVERAGE COMPANY AND SUBSIDIARIES
                          (A Development Stage Company)
                 Notes to the Consolidated Financial Statements
                           December 31, 2000 and 1999


NOTE 7 -  DISCONTINUED OPERATIONS

          As discussed  in Note 2 to the  Financial  Statements  the Company has
          treated  the  loss  of  the  Chinese   subsidiary  as  a  discontinued
          operation.  The loss on  discontinued  operations  for the year  ended
          December 31, 1999 is summarized as follows:

          NET SALES                               $       15,122,886

          COST OF SALES                                    9,858,731
                                                  ------------------

          GROSS MARGIN                                     5,264,155
                                                  ------------------

          COSTS AND EXPENSES

            Selling expenses                                 323,089
            General and administrative                     2,046,149
                                                  ------------------

              Total Costs and Expenses                     2,369,238
                                                  ------------------

          INCOME BEFORE OTHER EXPENSE                      2,894,917

          OTHER EXPENSE

            Interest expense                                 770,607
                                                  ------------------

              Total Other Expense                            770,607
                                                  ------------------

          INCOME (LOSS) BEFORE TAX                         2,124,310

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

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

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

          NET INCOME (LOSS)                                 (659,208)

          OTHER COMPREHENSIVE INCOME

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

              Total Other Comprehensive Income                   729
                                                  ------------------

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


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

                                       F-14
<PAGE>

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.

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               39       President, Chief Executive Officer,
                                           Treasurer, Director

       Jane Zheng                 38       Secretary, Director

       Li Lin Hu                  56       Director

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

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

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

Compliance With Section 16(a)of the Exchange Act

       Based  solely upon a review of Forms 3, 4 and 5 furnished to the Company,
the  Company is not aware of any person  who, at any time during the fiscal year
ended December 31, 2000, was a director,  officer,  or beneficial  owner of more
than ten percent of the Common Stock of the Company, and who failed to file on a
timely basis reports required by Section 16(a)of the Securities  Exchange Act of
1934 during such fiscal year.

ITEM 10.  EXECUTIVE COMPENSATION

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

                                       6
<PAGE>

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                            Annual Compensation                         Long Term Compensation
                                            -------------------                         ----------------------
                                                                      Other          Restricted
                                                                     Annual            Stock             Other
Name and principal position           Year   Salary   Bonus       Compensation         Awards         Compensation
---------------------------           ----   ------   -----       ------------         ------         ------------
<S>                                  <C>     <C>         <C>            <C>              <C>              <C>
James Tilton, President              1999    $75,000     $0             $0               $0               $0
         "                           2000    $75,000     $0             $0               $0               $0

Jane Zheng, Secretary                1999    $75,000     $0             $0               $0               $0
         "                           2000    $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, 2000, 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  10,996,505
shares of Common Stock issued on December 31, 2000.
<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       Calder Investments Limited              37%
                                    Omar Hodge Bldg.
                                    Wicken Cay Road Town
                                    Tortula, BVI
                                    4,050,000

Common Stock Par Value $0.001       Korkor Holdings, Ltd.
                                    3 Athol St.
                                    Douglas Isle of Man                     24%
                                    2,672,400

Common Stock Par Value $0.001       Anhui Liu An Beer Company               19%
                                    2,100,000

Common Stock Par Value $0.001       Tiancheng China Corp, Ltd.(a)           10%
                                    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 Tilton, Director,                  1%
                                    President & Treasurer(b)
                                    82-66 Austin Street
                                    Kew Gardens, NY 11415
                                    57,251

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


(a) Tiancheng is an operating  entity  incorporated in the People's  Republic of
China of which Li Lin Hu is an officer and director.

(b) Includes 211 shares of common stock owned by ATJ,  Incorporated,  a Delaware
holding  company,  of  whichJames  A.  Tilton  is  sole  officer,  director  and
shareholder.

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

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

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

                                       7
<PAGE>

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

1.        Notice of Breech of Contract



                                   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 16th day of April, 2001.

       CHINA FOOD AND BEVERAGE COMPANY


       By: /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,                           April 16, 2001
    James Tilton          Chief Executive Officer,
                          Treasurer and Director
/s/ Jane Zheng
--------------            Secretary and Director               April 16, 2001
    Jane Zheng

/s/ Li, Lin Hu            Director                             April 16, 2001
--------------
    Li, Lin Hu



<PAGE>