8-K 1 doc1.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (Date of earliest event reported) April 25, 2001 ---------------- CHINA GATEWAY HOLDINGS, INC. ------------------------------------------------------ (Exact name of Registrant as Specified in Its Charter) Delaware 0-28819 ---------------------------- ------------------------ ------------------ (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) CLI Building 313 Hennessey Road, Suite 1003 Hong Kong ------------------------------------------ ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 852) 2519-3933 ----------------------------------------------------------- (Former name or former address, if changes since last report) ITEM 1. CHANGES IN CONTROL OF REGISTRANT. Not applicable. ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. Not applicable. ITEM 3. BANKRUPTCY OR RECEIVERSHIP. Not applicable. ITEM 4. CHANGES IN REGISTRANT'S CERTIFIYING ACCOUNTANTS. Not applicable. ITEM 5. OTHER EVENTS. On April 25, 2001 the Company reached a formalized Acquisition Agreement with The Glory Famous (Groups) Limited to acquire all the issued and outstanding stock of H.K. Giantrich International Groups, Limited, a Niue corporation with its corporate headquarters located in Hong Kong ("Giantrich") in exchange for 25,000,000 newly issued shares of China Gateway common stock. The acquisition of Giantrich was approved of the Board of Directors of both companies. After the intended acquisition, which will be in effect a reverse merger, the former owner of Giantrich will become the majority shareholder and thereby assume control of the Company. As part of the control, new management will be introduced to the Company. Giantrich owns all the rights to extract coal and other natural resources from a significant operating coal mine in the Shandong Province of China. On September 28, 2000, Giantrich acquired the coal mining rights from a state-owned enterprise in the Peoples Republic of China. The majority of the coal products produced in the mine are destined for local distribution in China. Small portion of its coal products are exported through an approved agent in the Peoples Republic of China. In accordance with the September 28, 2000 acquisition agreement between Giantrich and the state-owned enterprise in the Peoples Republic of China, the mining operation assets has been assessed to have a value of RMB267,999,600. The acquisition is now subject to a Special Shareholders meeting to approve the acquisition. The Company is scheduling a Special meeting of the shareholders for June 11, 2001 at 10:00a.m. at the Law Offices of Attorney Jerry Gruenbaum in New Haven, Connecticut. Proxy Statement and Notice will be sent on May 14, 2001 to the shareholders of record on April 30, 2001. Audits of the financial statements of Giantrich are being prepared by the Company's auditors for the acquisition as required by Regulation SB. As soon as the audited financial statements are completed they will be filed by amendment and be available to the shareholders. ITEM 6. RESIGNATIONS OF REGISTRANT'S DIRECTORS. Not Applicable. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. a. Financial Statements of business Acquired will be filed by amendment within the required time allotted by law. b. Pro Forma Financial Information will be included in the amendment within the required time allotted by law. c. Exhibits: Exhibit No. Document Description ----------- --------------------- 10.1 Acquisition Agreement with The Glory Famous (Groups) Limited to acquire H.K. Giantrich International Groups, Limited dated April 25, 2001. ITEM 8. CHANGE IN FISCAL YEAR. Not applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: April 26, 2001 China Gateway Holding, Inc. ----------------- ----------------------------- (Registrant) /s/ Wu Wai Leung, Danny ----------------------------- Wu Wai Leung, Danny President

CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2000 AND 1999 2000 2000 1999 ------------ ------------ ------------ US DOLLARS RMB RMB ASSETS Current assets: Cash $ 9,673 80,085 48,169 Deposits and other current assets 9,349 77,402 931,446 ------------ ------------ ------------ Total current assets 19,022 157,487 979,615 ------------ ------------ ------------ Property, plant and equipment, net of accumulated depreciation (Note 4) 8,046 66,615 88,820 Investment in Joint Venture - - 18,055,484 ------------ ------------ ------------ Total assets $ 27,068 224,102 19,123,919 ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 109,383 905,615 905,615 Other payable and accrued expenses 131,329 1,087,312 466,464 Due to Joint Venturer (Note 5) 2,360 19,546 19,546 Due to affiliates (Note 5) 373,290 3,090,580 779,322 ------------ ------------ ------------ Total liabilities (all current) 616,362 5,103,053 2,170,947 ------------ ------------ ------------ Shareholders' equity (deficit) (Note 6): Common stock, US $0.0001 par value, authorized 50,000,000 shares; issued and outstanding; 4,307,158 shares 431 3,568 3,568 Capital in excess of par 5,063,867 41,925,275 41,925,275 Deficit (5,663,974) (46,893,737) (24,958,332) Accumulated comprehensive income (loss) 10,382 85,943 (17,539) ------------ ------------ ------------ Total shareholders' equity (deficit) (589,294) (4,878,951) 16,952,972 ------------ ------------ ------------ Total liabilities and shareholders' equity (deficit) $ 27,068 224,102 19,123,919 ============ ============ ============

================================================================================ CHINA GATEWAY HOLDINGS, INC. ================================================================================ CONSOLIDATED STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 2000 AND 1999 2000 2000 1999 ------------ ------------ ----------- US DOLLARS RMB RMB Net sales $ - - - Cost of sales - - - ------------ ------------ ----------- Gross profit - - - General and administrative expenses 511,421 4,235,710 1,870,699 ------------ ------------ ----------- (511,421) (4,235,710) (1,870,699) ------------ ------------ ----------- Other income: Interest income 785 6,503 1,913 Commission income - - 767,689 Other 42,188 349,286 - ------------ ------------ ----------- 42,973 355,789 769,602 ------------ ------------ ----------- Loss from continuing operations (468,448) (3,879,921) (1,101,097) ------------ ------------ ----------- Discontinued operations (Note 1(c)) Loss from operations of Joint Venture net of income taxes of RMB1,077,238 in 1999 (663,786) (5,495,682) (5,656,472) Loss on disposal of Joint Venture (1,517,013) (12,559,802) - ------------ ------------ ----------- Loss from discontinued operations (2,180,799) (18,055,484) (5,656,472) ------------ ------------ ----------- Net loss $(2,649,247) (21,935,405) (6,757,569) ============ ============ =========== Basic and diluted loss per common share from continuing operations $ (0.11) (0.90) (0.26) ============ ============ =========== Basic and diluted loss per common share from discontinued operations $ (0.50) (4.19) (1.34) ============ ============ =========== Basic and diluted net loss per common share $ (0.61) (5.09) (1.60) ============ ============ =========== Weighted average number of common shares outstanding 4,307,158 4,307,158 4,241,426 ============ ============ ===========

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) AND COMPREHENSIVE INCOME (LOSS) YEARS ENDED DECEMBER 31, 2000 AND 1999 (Expressed in Chinese Renminbi) Foreign Common shares Capital Retained currency ----------------- in excess earnings translation Shares Amount of par (Deficit) adjustments Total --------- ------ ---------- ------------ ------------ ------------ RMB RMB RMB RMB RMB Balance at January 1, 1999 4,154,158 3,436 31,505,861 (18,200,763) 22,105 13,330,639 Issuance of common stock 153,000 132 621,559 - - 621,691 Extinguishment of debt by Joint Venturer - - 9,797,855 - - 9,797,855 Comprehensive income (loss): Net loss for the year ended December 31, 1999 - - - (6,757,569) - (6,757,569) Other comprehensive loss - - - - (39,644) (39,644) --------- ------ ---------- ------------ ------------ ------------ Comprehensive loss (6,797,213) --------- ------ ---------- ------------ ------------ ------------ Balance at December 31, 1999 4,307,158 3,568 41,925,275 (24,958,332) (17,539) 16,952,972 Comprehensive income (loss): Net loss for the year ended December 31, 2000 - - - (21,935,405) - (21,935,405) Other comprehensive income - - - - 103,482 103,482 --------- ------ ---------- ------------ ------------ ------------ Comprehensive loss (21,831,923) --------- ------ ---------- ------------ ------------ ------------ Balance at December 31, 2000 4,307,158 3,568 41,925,275 (46,893,737) 85,943 (4,878,951) ========= ====== ========== ============ ============ ============

CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2000 AND 1999 2000 2000 1999 ------------ ------------ ----------- US DOLLARS RMB RMB Cash flows from operating activities: Net loss $(2,649,248) (21,935,405) (6,757,569) Adjustments to reconcile net loss to net cash used in operating activities: Loss from discontinued operations 2,180,799 18,055,484 5,656,472 Provision for allowance for uncollectible Advances from shareholders and employees 71,307 590,348 Depreciation 2,682 22,205 15,266 (Increase) decrease in assets Deposits and other current assets 32,153 263,690 (664,518) Increase (decrease) in liabilities Accounts payable - - 44 Accrued expenses 75,289 620,848 (29,828) Due to Joint Venturer - - (24,773) ------------ ------------ ----------- Net cash used in operating activities (287,017) (2,382,824) (1,804,906) ------------ ------------ ----------- Cash flows from investing activities: Capital expenditures - - (99,143) ------------ ------------ ----------- Net cash used in investing activities - - (99,143) ------------ ------------ ----------- Cash flows from financing activities: Increase in due to affiliates $ 278,387 2,311,258 - Issuance of common stock - - 779,332 ------------ ------------ ----------- Net cash provided by financing activities 278,374 2,311,258 621,691 ------------ ------------ ----------- Effect of exchange rate changes on cash 12,498 103,482 1,401,013) ------------ ------------ ----------- Increase (decrease) in cash 3,855 31,916 (542,680) Cash, beginning 5,818 48,169 590,849 ------------ ------------ ----------- Cash, ending $ 9,673 80,085 48,169 ============ ============ ===========

2000 2000 1999 -------- -------- -------- US Dollars RMB RMB Office equipment $10,779 89,243 88,175 Leasehold improvements 4,064 33,647 33,647 -------- -------- -------- 14,843 122,890 121,822 Less : Accumulated depreciation (6,797) (56,275) (33,002) -------- -------- -------- $ 8,046 66,615 88,820 ======== ======== ========

Options Warrants ------------------------------------------------- --------------------------------------------- Exercise Exercise Exercise Exercise Shares Price Share Price Shares Price Shares Price US Dollars US Dollars US Dollars US Dollars Outstanding at December 31, 1998 - $ - - $ - 246,905 $ 0.10 235,316 $ 2.75 Granted 500,000 1 - - - - - - Exercised - - - - - - - - Forfeited 500,000 1 - - - - - - ---------- ------------ ---------- ------------ ------- ---------------- ------- --------- Outstanding at December 31, 1999 - - - - 246,905 0.10 235,316 2.75 Granted - - - - - - - - Exercised - - - - - - - - Forfeited - - - - 246,905 0.10 - - ---------- ------------ ---------- ------------ ------- ---------------- ------- --------- Outstanding at December 31, 2000 - $ - - $ - - $ - 235,316 $ 2.75 ========== ============ ========== ============ ======= ================ ======= =========

2000 1999 -------------- ------------- % of % of Pre-tax income Pretax income Computed "expected" tax benefit (34%) (34%) Operating losses for which a benefit has not been recognized 34 34 -------------- ------------- 0% 0% ============== =============

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