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):
May 7
, 2008
CHINA
GROWTH DEVELOPMENT, INC.
(Exact
name of registrant as specified in Charter)
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Delaware
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333-109548
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13-4204191
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File No.)
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(IRS
Employee Identification No.)
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927
Canada Court
City of
Industry, California 91748
(Address
of Principal Executive Offices)
(626)
581-9069
(Issuer
Telephone number)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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CAUTIONARY
NOTE REGARDING FORWARD LOOKING STATEMENTS
The
Current Report on Form 8-K contains forward looking statements that involve
risks and uncertainties, principally in the sections entitled "Description of
Business,” “Risk Factors,” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations.” All statements other
than statements of historical fact contained in this Current Report on Form
8-K, including statements regarding future events, our future financial
performance, business strategy and plans and objectives of management for future
operations, are forward-looking statements. We have attempted to
identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,”
“may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of
these terms or other comparable terminology. Although we do not make
forward looking statements unless we believe we have a reasonable basis for
doing so, we cannot guarantee their accuracy. These statements are
only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under “Risk Factors” or elsewhere in this
Current Report on Form 8-K, which may cause our or our industry’s actual
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements. Moreover, we operate in a very
competitive and rapidly changing environment. New risks emerge from
time to time and it is not possible for us to predict all risk factors, nor can
we address the impact of all factors on our business or the extent to which any
factor, or combination of factors, may cause our actual results to differ
materially from those contained in any forward-looking statements.
We have
based these forward-looking statements largely on our current expectations and
projections about future events and financial trends that we believe may affect
our financial condition, results of operations, business strategy, short term
and long term business operations , and financial needs. These
forward-looking statements are subject to certain risks and uncertainties that
could cause our actual results to differ materially from those reflected in the
forward looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in this
Current Report on Form 8-K, and in particular, the risks discussed below and
under the heading “Risk Factors” and those discussed in other documents we file
with the Securities and Exchange Commission that are incorporated into this
Current Report on Form 8-K by reference. The following discussion
should be read in conjunction with our annual report on Form 10-K and our
quarterly reports on Form 10-Q incorporated into this Current Report on Form 8-K
by reference, and the consolidated financial statements and notes thereto
included in our annual and quarterly reports. We undertake no
obligation to revise or publicly release the results of any revision to these
forward-looking statements. In light of these risks, uncertainties
and assumptions, the forward-looking events and circumstances discussed in this
Current Report on Form 8-K may not occur and actual results could differ
materially and adversely from those anticipated or implied in the
forward-looking statement.
You
should not place undue reliance on any forward-looking statement, each of which
applies only as of the date of this Current Report on Form
8-K. Before you invest in our common stock, you should be aware that
the occurrence of the events described in the section entitled “Risk Factors”
and elsewhere in this Current Report on Form 8-K could negatively affect our
business, operating results, financial condition and stock
price. Except as required by law, we undertake no obligation to
update or revise publicly any of the forward-looking statements after the date
of this Current Report on Form 8-K to conform our statements to actual results
or changed expectations.
Item 1.01
Entry
Into A Material Definitive Agreement
As more
fully described in Item 2.01 below, on November 12, 2007, we entered into a
Stock for Stock Equivalent Exchange Agreement and Plan (the “Exchange
Agreement”) with Taiyuan Rongan Business Trading Company, Limited, a company
incorporated under the laws of the Peoples Republic of China (“TRBT”) and each
of the equity owners of TRBT (the “TRBT Shareholders”). The closing
of the transaction took place on May 7, 2008 (the “Closing Date”) and resulted
in the acquisition of TRBT (the “Acquisition”). Pursuant to the terms
of the Exchange Agreement, we acquired eighty percent (80%) of the outstanding
capital contributions in TRBT (the “Interests”) from TRBT and the TRBT
Shareholders. As consideration for the interests, we issued and
transferred an aggregate of 31,500,000 shares, or 90% of the Company’s common
stock.
Under the
terms of the agreement, as a condition precedent to closing we have undertaken a
one for 100 (1:100) reverse stock split of our outstanding common stock which
was declared effective on December 13, 2007. Taiyuan Rongan must have
received and delivered documentation of the approvals for the transaction from
the various divisions of the Chinese government. In addition, it is a condition
of closing of the agreement that an outstanding $200,000 principal amount
convertible promissory note be satisfied prior to closing by issuing 2,590,934
shares of our common stock (post-split). In anticipation of the
closing, Messrs. Brian John and Richard A. Miller, our executive officers and
directors, have terminated their employment agreements and forgiven all accrued
but unpaid compensation due each of them. The closing of the agreement is also
subject to customary closing conditions. At closing, our executive officers and
directors will resign and executive officers and
directors
designated by Taiyuan Rongan will be elected. We will also issue Mirador
Consulting, an affiliate of Messrs. John and Miller, a one year common stock
purchase warrant to purchase 500,000 shares of our common stock at an exercise
price of $1.00 per share.
TRBT is a
privately owned business entity registered in Taiyuan, Shanxi, China in December
2005 under the laws of the People’s Republic of China. TRBT holds
76.1% of the issued and outstanding capital contributions of companies organized
in China that owns and operates 6 shopping malls.
Prior to
the closing of the Exchange Agreement, TRBT was owned by 6 individuals: Mr.
Aizhong An, Mr. Jiming Zhu, Ms. Junhui, Mr. Tianming Wang, Mr. Renyu Zhang and
Mr. Fuxi Chen (the “TRBT Shareholders”). In addition, the board of
directors of TRBT consist of: Mr. Aizhong An, Ms. Junhui, Mr. Renyu Zhang, Mr.
Samuel Liu, Mr. Jimin Zhu, Mr. Tianming Wang and Mr. Fuxi Chen.
As a
result of the Exchange Agreement, the TRBT shareholders transferred 80% their
interest in TRBT to the Company and, as a result, TRBT became a subsidiary of
the Company.
As a
further condition of the Exchange Agreement, the current officers and directors
of the Company resigned and new officers and directors of the Company were
appointed.
The
Exchange Agreement contains customary terms and conditions for a transaction of
this type, including representations, warranties and covenants, as well as
provisions describing the consideration, the process of exchanging the
consideration and the effect of the acquisition.
This
transaction is discussed more fully in Section 2.01 of this Current
Report. This brief discussion is qualified by reference to the
provisions of the Exchange Agreement which is attached to this report as Exhibit
2.1.
Item 2.01
Completion
of Acquisition or Disposition of Assets
CLOSING
OF EXCHANGE AGREEMENT
As
described in Item 1.01 above, on November 12, 2007, we entered into the Exchange
Agreement with TRBT and on May 7, 2008 we officially met all the conditions to
close the transaction and allowed us to acquire 80% of the capital contributions
of TRBT, a company incorporated under the laws of the People’s Republic of
China, in accordance with the Exchange Agreement. Because of some
delays in satisfying certain conditions to Closing, the closing of the
transaction took place on May 7, 2008 (the “Closing Date”). On the
Closing Date, pursuant to the terms of the Exchange Agreement, we acquired 80%
of the outstanding capital contributions and ownership interests of TRBT from
the TRBT Shareholders; and the TRBT Shareholders transferred and contributed 80%
of their share interests in TRBT to us. In exchange, we issued to the
TRBT Shareholders 31,500,000 shares, or approximately 90% of our common
stock. On the Closing Date, TRBT became our
subsidiary.
BUSINESS
DESCRIPTION
OF BUSINESS
Our
previous business was marketing and distributing Teeka Tan(R) Suncare Products,
a broad line of high quality, value-priced sun care products. We also
distributed the Safe Sea Jellyfish Sting Protective Lotion under a licensing
agreement with its manufacturer. We sold these products directly to resorts,
hotels and retailers with beach locations in south Florida, the Bahamas,
Dominican Republic, Alabama, New Hampshire, Rhode Island, Connecticut, New York,
North Carolina, South Carolina, Maine, Maryland and New Jersey. Our
customers are primarily beach front stores and hotels with high volume tourist
traffic. We market our products through the use of our in house sales
representative as well as independent distributors.
The
company was formed in 2002 and during fiscal 2002 and fiscal 2003 our activities
were primarily limited to development of our business plan, launching our
TeekaTan product line, and development of our marketing model. We began to
report revenues during the last part of fiscal 2003 from sales of our TeekaTan
sun care products and exited development stage operations at the end of fiscal
2003. In February 2006, we entered into an agreement to distribute Safe Sea
Jellyfish Sting Protective Lotion, which is marketed by its manufacturer as the
world's only patented lotion that helps prevent against the stinging of most
Jellyfish, Man-o-war, Sea Lice, Sea Nettle and Fire Corals. Under the initial
terms of the agreement we had the exclusive right to distribute Safe Sea in the
retail consumer markets in the United States, the Caribbean and Mexico for a
period of five years. During the first quarter of fiscal 2007 at our request the
terms of the agreement were amended to provide that it is non-exclusive and
certain minimum quantity purchase requirements and obligation to spend marketing
funds were cancelled. While our total sales have increased as a result of sales
of the Safe Sea Jellyfish Sting Protective Lotion, we believe that the number of
legacy sales were not sufficient to justify the additional financial commitments
we made at the onset of the relationship.
In
September 2007 we announced that we had had signed a letter of intent to acquire
the Taiyuan Rongan Business Trading Company ("Taiyuan Rongan"), located in
Taiyuan, Shanxi Province, China, in a stock for stock exchange. Taiyuan Rongan
operates six shopping malls in the city of Taiyuan, China, of which it has 76%
ownership. On November 12, 2007 we entered into a Stock for Stock Equivalent
Exchange Agreement and Plan with Taiyuan Rongan and all of its current capital
contributors (the "Taiyuan Rongan Shareholders") pursuant to which at closing
the Taiyuan Rongan Shareholders will assign 80% of the 100% of capital
contributions in Taiyuan Rongan to our company in exchange for an aggregate of
31,500,000 shares of our common stock and common stock purchase warrants to
purchase an aggregate of 1,400,000 shares of our common stock at an exercise
price of $0.50 per share, both giving effect to the reverse stock split
described below.
BUSINESS
DEVELOPMENT OF TRBT
Overview
TRBT is a
company formed under the laws of the People’s Republic of China. TRBT
acquired all the capital contributions of Taiyuan Clothing Group Company Limited
which has a 76.1% ownership interest in six shopping malls located in the
Chaoyang Street area in the city of Taiyuan, Shanxi Province,
China.
Business
TRBT is a
real estate developer based in Taiyuan, Shanxi, China that owns and manages
commercial space valued at more than US$60 million. TRBT is engaged
in the business of leasing units in shopping malls to commercial tenants for
retail, wholesale and distribution of clothes, shoes, cosmetics, beddings and
other consumer products.
THE
MERGER
On
November 12, 2007, we entered into a Stock for Stock Equivalent Exchange
Agreement and Plan (the “Exchange Agreement”) with Taiyuan Rongan Business
Trading Company, Limited, a company formed under the laws of the Peoples
Republic of China (“TRBT”) and each of the equity owners of TRBT (the “TRBT
Shareholders”). The closing of the transaction took place on May 7,
2008 (the “Closing Date”) and resulted in the acquisition of TRBT (the
“Acquisition”). Pursuant to the terms of the Exchange Agreement, we
acquired eighty percent (80%) of the outstanding capital contributions in TRBT
(the “Interests”) from TRBT and the TRBT Shareholders. As
consideration for the interests, we issued and transferred an aggregate of
31,500,000 shares, or 90% of the Company’s common stock.
As a
condition precedent to closing we undertook a one for one hundred (1:100)
reverse stock split of our outstanding common stock and TRBT received and
delivered documentation of the approvals for the transaction from the various
divisions of the Chinese government. The Company approved the reverse
stock split on December 13, 2007 and it was announced and effective on December
13, 2007. TRBT received approval from the Chinese government to enter
into the transaction in January 2008. In addition, it is a condition
of closing of the agreement that an outstanding $200,000 principal amount
convertible promissory note be satisfied prior to closing by issuing 2,590,934
shares of our common stock (post-split). In anticipation of the
closing, Messrs. Brian John and Richard A. Miller, our executive officers and
directors, have terminated their employment agreements and forgiven all accrued
but unpaid compensation due each of them. The closing of the agreement is also
subject to customary closing conditions. At closing, our executive officers and
directors will resign and executive officers and directors designated by TRBT
will be elected. Additionally, we will also issue Mirador Consulting, an
affiliate of Messrs. John and Miller, a one year common stock purchase warrant
to purchase 500,000 shares of our common stock at an exercise price of $1.00 per
share.
PRINCIPAL
PRODUCTS
TRBT’s
principle product is its shopping malls. TRBT owns and operates five
shopping malls which it leases out space to other businesses.
MARKETING
AND DISTRIBUTION METHODS OF PRODUCTS AND SERVICES
TRBT
leases its real estate holdings by operating its own leasing work force, who
have offices in the relevant shopping malls. Because of the dominance
and desirability of these properties in the local commercial leasing market,
TRBT does not usually advertise its mall space for rent. Instead,
when there are vacancies, TRBT would access its files on a standby list of
potential lessees who have expressed interest in space available.
STATUS
OF PUBLICLY ANNOUNCED NEW PRODUCTS/SERVICES
We expect
that our company will grow over the next few years. Currently, we own
and operate six (6) shopping malls in the City of Taiyuan, in Shanxi Province of
China. Although TRBT has not announced any new shopping malls, we do
expect to acquire at least three more shopping centers within the next three (3)
years.
Specifically,
in the near future, we expect to break ground on two projects: (1) Taiyuan West
City Shopping Mall, Phase II; and (2) Taiyuan Royal City Shopping Mall, Phase
II. Taiyuan West City Shopping Mall, Phase II will be a 30,000 square
meter, five story shopping center which will include 21,000 square meters of
commercial space for retail stores. Taiyuan Royal City Shopping Mall,
Phase II will be a 40,000 square meter, six story shopping center which will
include 28,000 square meters of commercial space for retail stores.
Chinese
government policy is in favor of the growth of retail shops in Shanxi Province
because it will greatly stimulate the economic growth of the
region. TRBT intends to fund the new project by internal cash flow
and, depending on management’s assessment of available financing, a combination
of bank financing, government policy subsidies, outside private investors or
additional equity raised through public offerings.
INDUSTRY
AND COMPETITIVE FACTORS
The
commercial real estate industry in China is experiencing significant growth.
However, new competitors are entering these industries at a record pace.
Competition is increasing and it is beginning to become difficult to gain market
share and grow. As more companies begin to emerge and try to gain market share
from the already established businesses, there are certain factors that we
believe will be critical for our growth:
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Location:
our shopping malls are in prime locations where it provides consumers easy
access;
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Strong
Management Team: our management has exceptional experience in the
commercial real estate market and is driven to grow
TRBT;
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Innovative
Rent Payment Strategy: TRBT offers its tenants innovative
payment options and is able to maximize lease payments and reduce its debt
levels and accounts receivables;
and
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Access
to Exclusive Land Banks: through the contacts of its
management, TRBT expects to be able to acquire popular and profitable land
for future shopping malls.
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OUR
INTELLECTUAL PROPERTY
The
Company does not nor does it intend to own any patents or have any of its
products or services patented.
RESEARCH
AND DEVELOPMENT ACTIVITIES DURING THE PRIOR TWO FISCAL YEARS
TRBT is
involved in the commercial real estate market and, as such, does not have
significant research and development activities. Any research and/or development
that the Company worked on over the prior two fiscal years has been in
connection with analyzing market trends and valuing potential shopping malls in
anticipation of possible acquisitions. The Company did not spend significant
money or resources on research and development during the prior two fiscal
years.
COMPLIANCE
WITH ENVIRONMENTAL LAW
We comply
with the Environmental Protection Law of PRC as well as applicable local
regulations. In addition to statutory and regulatory compliance, we actively
ensure the environmental sustainability of our operations. Penalties would be
levied upon us if we fail to adhere to and maintain certain standards. Such
failure has not occurred in the past, and we generally do not anticipate that it
will occur in the future, but no assurance can be given in this
regard.
EMPLOYEES
As of the
Closing Date, we had approximately 400 full-time employees, including 10 senior
managers. The majority of our workforce is comprised of clerical and
accounting staff, mall security, maintenance staff and a leasing office
staff.
RISK
FACTORS
You
should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated
into this offering that are not historic facts are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those set forth in or implied by forward-looking
statements. If any of the following risks actually occurs, our business,
financial condition or results of operations could be harmed. In that case, the
trading price of our common stock could decline, and you may lose all or part of
your investment.
Risks
Relating to Our Business
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WE
NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND
ACHIEVE OUR EXPECTED REVENUES, AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE
A DISRUPTION OF OUR OPERATIONS RESULTING IN THE FAILURE TO GENERATE
REVENUE.
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In order
to maximize potential growth in our current and potential markets, we believe
that we must expand the scope of our services in the commercial real estate
market. This expansion will place a significant strain on our management and our
operational, accounting, and information systems. We expect that we
will need to continue to improve our financial controls, operating procedures,
and management information systems. We will also need to effectively
train, motivate, and manage our employees. Our failure to manage our
growth could disrupt our operations and ultimately prevent us from generating
the revenues we expect.
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WE
CANNOT ASSURE YOU THAT OUR INTERNAL GROWTH STRATEGY WILL BE SUCCESSFUL,
WHICH MAY RESULT IN A NEGATIVE IMPACT ON OUR GROWTH, FINANCIAL CONDITION,
RESULTS OF OPERATIONS AND CASH
FLOW.
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One of
our strategies is to grow internally through acquiring additional shopping malls
in the Shanxi Province and other regions of China and increasing the
productivity of our currently owned malls. However, many obstacles to
this expansion exist, including, but not limited to, increased competition from
similar businesses, trade and tariff barriers, unexpected costs, costs
associated with marketing efforts and maintaining attractive financing
rates. We cannot, therefore, assure you that we will be able to
successfully overcome such obstacles and establish our services in any
additional markets. Our inability to implement this internal growth
strategy successfully may have a negative impact on our growth, future financial
condition, results of operations or cash flows.
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WE
CANNOT ASSURE YOU THAT OUR ACQUISITION GROWTH STRATEGY WILL BE SUCCESSFUL,
RESULTING IN OUR FAILURE TO MEET GROWTH AND REVENUE
EXPECTATIONS.
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In
addition to our internal growth strategy, we have also explored the possibility
of growing through strategic acquisitions. We intend to pursue
opportunities to acquire businesses in PRC that are complementary or related in
product lines and business structure to us. We may not be able to locate
suitable acquisition candidates at prices that we consider appropriate or to
finance acquisitions on terms that are satisfactory to us. If we do
identify an appropriate acquisition candidate, we may not be able to negotiate
successfully the terms of an acquisition, or, if the acquisition occurs,
integrate the acquired business into our existing
business. Acquisitions of businesses or other material operations may
require debt financing or additional equity financing, resulting in leverage or
dilution of ownership. Integration of acquired business operations
could disrupt our business by diverting management away from day-to-day
operations. The difficulties of integration may be increased by the necessity of
coordinating geographically dispersed organizations, integrating personnel with
disparate business backgrounds and combining different corporate
cultures. We also may not be able to maintain key employees or
customers of an acquired business or realize cost efficiencies or synergies or
other benefits we anticipated when selecting our acquisition
candidates. In addition, we may need to record write-downs from
future impairments of intangible assets, which could reduce our future reported
earnings. At times, acquisition candidates may have liabilities or
adverse operating issues that we fail to discover through due diligence prior to
the acquisition. In addition to the above, acquisitions in PRC,
including state owned businesses, will be required to comply with laws of the
People's Republic of China ("PRC"), to the extent applicable. There can be no
assurance that any given proposed acquisition will be able to comply with PRC
requirements, rules and/or regulations, or that we will successfully obtain
governmental approvals which are necessary to consummate such acquisitions, to
the extent required. If our acquisition strategy is unsuccessful, we
will not grow our operations and revenues at the rate that we
anticipate.
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IF
WE ARE NOT ABLE TO IMPLEMENT OUR STRATEGIES IN ACHIEVING OUR BUSINESS
OBJECTIVES, OUR BUSINESS OPERATIONS AND FINANCIAL PERFORMANCE MAY BE
ADVERSELY AFFECTED.
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Our
business plan is based on circumstances currently prevailing and the bases and
assumptions that certain circumstances will or will not occur, as well as the
inherent risks and uncertainties involved in various stages of
development. However, there is no assurance that we will be
successful in implementing our strategies or that our strategies, even if
implemented, will lead to the successful achievement of our
objectives. If we are not able to successfully implement our
strategies, our business operations and financial performance may be adversely
affected.
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WE
DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES
COULD ADVERSELY AFFECT OUR
BUSINESS.
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We place
substantial reliance upon the efforts and abilities of our executive officers,
Aizhong An, Tianming Wang, Jiming Zhu, Renyu Zhang, Junhui and Fuxi
Chen. The loss of the services of any of our executive officers could
have a material adverse effect on our business, operations, revenues or
prospects. We do not maintain key man life insurance on the lives of
these individuals.
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WE
MAY NEVER PAY ANY DIVIDENDS TO
SHAREHOLDERS.
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We have
never paid any dividends and have not declared any dividends to date in
2007. Our board of directors does not intend to distribute dividends
in the near future. The declaration, payment and amount of any future
dividends will be made at the discretion of the board of directors, and will
depend upon, among other things, the results of our operations, cash flows and
financial condition, operating and capital requirements, and other factors as
the board of directors considers relevant. There is no assurance that
future dividends will be paid, and, if dividends are paid, there is no assurance
with respect to the amount of any such dividend.
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MANAGEMENT
EXERCISES SIGNIFICANT CONTROL OVER MATTERS REQUIRING SHAREHOLDER APPROVAL
WHICH MAY RESULT IN THE DELAY OR PREVENTION OF A CHANGE IN OUR
CONTROL.
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Our
executive managers, through their common stock ownership, currently have
majority voting power. As a result, management through such stock
ownership exercises significant control over all matters requiring shareholder
approval, including the election of directors and approval of significant
corporate transactions. This concentration of ownership in management
may also have the effect of delaying or preventing a change in control of us
that may be otherwise viewed as beneficial by shareholders other than
management.
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WE
MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES
CORPORATE GOVERNANCE AND ACCOUNTING
REQUIREMENTS.
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We may
incur significant costs associated with our public company reporting
requirements, costs associated with newly applicable corporate governance
requirements, including requirements under the Sarbanes-Oxley Act of 2002 and
other rules implemented by the Securities and Exchange Commission. We expect all
of these applicable rules and regulations to significantly increase our legal
and financial compliance costs and to make some activities more time consuming
and costly. We also expect that these applicable rules and
regulations may make it more difficult and more expensive for us to obtain
director and officer liability insurance and we may be required to accept
reduced policy limits and coverage or incur substantially higher costs to obtain
the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified individuals to serve on our board of
directors or as executive officers. We are currently evaluating and
monitoring developments with respect to these newly applicable rules, and we
cannot predict or estimate the amount of additional costs we may incur or the
timing of such costs.
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WE
MAY NOT BE ABLE TO MEET THE FILING AND INTERNAL CONTROL REPORTING
REQUIREMENTS IMPOSED BY THE SECURITIES AND EXCHANGE COMMISSION RESULTING
IN A POSSIBLE DECLINE IN THE PRICE OF OUR COMMON STOCK AND OUR INABILITY
TO OBTAIN FUTURE FINANCING.
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As
directed by Section 404 of the Sarbanes-Oxley Act, the Securities and Exchange
Commission adopted rules requiring each public company to include a report of
management on the company's internal controls over financial reporting in its
annual reports. In addition, the independent registered public
accounting firm auditing a company's financial statements must also attest to
and report on management's assessment of the effectiveness of the company's
internal controls over financial reporting as well as the operating
effectiveness of the company's internal controls. While we will not be subject
to these requirements for the fiscal year ended December 31, 2007, we will be
subject to these requirements beginning January 1, 2008.
While we
expect to expend significant resources in developing the necessary documentation
and testing procedures required by Section 404 of the Sarbanes-Oxley Act, there
is a risk that we may not be able to comply timely with all of the requirements
imposed by this rule. In the event that we are unable to receive a
positive attestation from our independent registered public accounting firm with
respect to our internal controls, investors and others may lose confidence in
the reliability of our financial statements and our stock price and ability to
obtain equity or debt financing as needed could suffer.
In
addition, in the event that our independent registered public accounting firm is
unable to rely on our internal controls in connection with its audit of our
financial statements, and in the further event that it is unable to devise
alternative procedures in order to satisfy itself as to the material accuracy of
our financial statements and related disclosures, it is possible that we would
be unable to file our Annual Report on Form 10-K with the Securities and
Exchange Commission, which could also adversely affect the market price of our
common stock and our ability to secure additional financing as
needed.
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WE
MAY HAVE DIFFICULTY RAISING NECESSARY CAPITAL TO FUND OPERATIONS AS A
RESULT OF MARKET PRICE VOLATILITY FOR OUR SHARES OF COMMON
STOCK.
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In recent
years, the securities markets in the United States have experienced a high level
of price and volume volatility, and the market price of securities of many
companies have experienced wide fluctuations that have not necessarily been
related to the operations, performances, underlying asset values or prospects of
such companies. For these reasons, our shares of common stock can
also be expected to be subject to volatility resulting from purely market forces
over which we will have no control. If our business development plans
are successful, we may require additional financing to continue to develop and
exploit existing and new products and services related to our industries and to
expand into new markets. The exploitation of our services may,
therefore, be dependent upon our ability to obtain financing through debt and
equity or other means.
Risks
Relating to the People's Republic of China
Our
business operations take place primarily in China. Because Chinese
laws, regulations and policies are continually changing, our Chinese operations
will face several risks summarized below.
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LIMITATIONS
ON CHINESE ECONOMIC MARKET REFORMS MAY DISCOURAGE FOREIGN INVESTMENT IN
CHINESE BUSINESSES.
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The value
of investments in Chinese businesses could be adversely affected by political,
economic and social uncertainties in China. The economic reforms in
China in recent years are regarded by China’s central government as a way to
introduce economic market forces into China. Given the overriding
desire of the central government leadership to maintain stability in China amid
rapid social and economic changes in the country, the economic market reforms of
recent years could be slowed, or even reversed.
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ANY
CHANGE IN POLICY BY THE CHINESE GOVERNMENT COULD ADVERSELY AFFECT
INVESTMENTS IN CHINESE BUSINESSES.
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Changes
in policy could result in imposition of restrictions on currency conversion,
imports or the source of suppliers, as well as new laws affecting joint ventures
and foreign-owned enterprises doing business in China. Although China
has been pursuing economic reforms for the past two decades, events such as a
change in leadership or social disruptions that may occur upon the proposed
privatization of certain state-owned industries, could significantly affect the
government’s ability to continue with its reform.
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WE
FACE ECONOMIC RISKS IN DOING BUSINESS IN
CHINA.
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As a
developing nation, China’s economy is more volatile than that of developed
Western industrial economies. It differs significantly from that of
the U.S. or a Western European country in such respects as structure, level of
development, capital reinvestment, resource allocation and
self-sufficiency. Only in recent years has the Chinese economy moved
from what had been a command economy through the 1970s to one that during the
1990s encouraged substantial private economic activity. In 1993, the
Constitution of China was amended to reinforce such economic
reforms. The trends of the 1990s indicate that future policies of the
Chinese government will emphasize greater utilization of market
forces. For example, in 1999, the Government announced plans to amend
the Chinese Constitution to recognize private property, although private
business will officially remain subordinated to the state-owned companies, which
are the mainstay of the Chinese economy. However, there can be no
assurance that, under some circumstances, the government’s pursuit of economic
reforms will not be restrained or curtailed. Actions by the central
government of China could have a significant adverse effect on economic
conditions in the country as a whole and on the economic prospects for our
Chinese operations.
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THE
CHINESE LEGAL AND JUDICIAL SYSTEM MAY NEGATIVELY IMPACT FOREIGN
INVESTORS.
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In 1982,
the National People’s Congress amended the Constitution of China to authorize
foreign investment and guarantee the “lawful rights and interests” of foreign
investors in China. However, China’s system of laws is not yet comprehensive.
The legal and judicial systems in China are still rudimentary, and enforcement
of existing laws is inconsistent. Many judges in China lack the depth of legal
training and experience that would be expected of a judge in a more developed
country. Because the Chinese judiciary is relatively inexperienced in enforcing
the laws that do exist, anticipation of judicial decision-making is more
uncertain than would be expected in a more developed country. It may be
impossible to obtain swift and equitable enforcement of laws that do exist, or
to obtain enforcement of the judgment of one court by a court of another
jurisdiction. China’s legal system is based on written statutes; a decision by
one judge does not set a legal precedent that is required to be followed by
judges in other cases. In addition, the interpretation of Chinese laws may be
varied to reflect domestic political changes.
The
promulgation of new laws, changes to existing laws and the pre-emption of local
regulations by national laws may adversely affect foreign investors. However,
the trend of legislation over the last 20 years has significantly enhanced the
protection of foreign investment and allowed for more control by foreign parties
of their investments in Chinese enterprises. There can be no assurance that a
change in leadership, social or political disruption, or unforeseen
circumstances affecting China’s political, economic or social life, will not
affect the Chinese government’s ability to continue to support and pursue these
reforms. Such a shift could have a material adverse effect on our business and
prospects.
The
practical effect of the Peoples Republic of China legal system on our business
operations in China can be viewed from two separate but intertwined
considerations. First, as a matter of substantive law, the Foreign Invested
Enterprise laws provide significant protection from government interference. In
addition, these laws guarantee the full enjoyment of the benefits of corporate
Articles and contracts to Foreign Invested Enterprise participants. These laws,
however, do impose standards concerning corporate formation and governance,
which are not qualitatively different from the general corporation laws of the
several states. Similarly, the Peoples Republic of China accounting laws mandate
accounting practices, which are not consistent with U.S. Generally Accepted
Accounting Principles. China’s accounting laws require that an annual “statutory
audit” be performed in accordance with Peoples Republic of China accounting
standards and that the books of account of Foreign Invested Enterprises are
maintained in accordance with Chinese accounting laws. Article 14 of the Peoples
Republic of China Wholly Foreign-Owned Enterprise Law requires a Wholly
Foreign-Owned Enterprise to submit certain periodic fiscal reports and
statements to designate financial and tax authorities, at the risk of business
license revocation.
Second,
while the enforcement of substantive rights may appear less clear than United
States procedures, the Foreign Invested Enterprises and Wholly Foreign-Owned
Enterprises are Chinese registered companies, which enjoy the same status as
other Chinese registered companies in business-to-business dispute resolution.
Generally, the Articles of Association provide that all business disputes
pertaining to Foreign Invested Enterprises are to be resolved by the Arbitration
Institute of the Stockholm Chamber of Commerce in Stockholm, Sweden, applying
Chinese substantive law. Any award rendered by this arbitration tribunal is, by
the express terms of the respective Articles of Association, enforceable in
accordance with the “United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (1958).” Therefore, as a practical
matter, although no assurances can be given, the Chinese legal infrastructure,
while different in operation from its United States counterpart, should not
present any significant impediment to the operation of Foreign Invested
Enterprises.
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CERTAIN
POLITICAL AND ECONOMIC CONSIDERATIONS RELATING TO THE PRC COULD ADVERSELY
AFFECT OUR COMPANY.
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The PRC
is transitioning from a planned economy to a market economy. While the PRC
government has pursued economic reforms since its adoption of the open-door
policy in 1978, a large portion of the PRC economy is still operating under
five-year plans and annual state plans. Through these plans and other economic
measures, such as control on foreign exchange, taxation and restrictions on
foreign participation in the domestic market of various industries, the PRC
government exerts considerable direct and indirect influence on the economy.
Many of the economic reforms carried out by the PRC government are unprecedented
or experimental, and are expected to be refined and improved. Other political,
economic and social factors can also lead to further readjustment of such
reforms. This refining and readjustment process may not necessarily have a
positive effect on our operations or future business development. Our operating
results may be adversely affected by changes in the PRC's economic and social
conditions as well as by changes in the policies of the PRC government, such as
changes in laws and regulations (or the official interpretation thereof),
measures which may be introduced to control inflation, changes in the interest
rate or method of taxation, and the imposition of additional restrictions on
currency conversion.
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THE
RECENT NATURE AND UNCERTAIN APPLICATION OF MANY PRC LAWS APPLICABLE TO US
CREATE AN UNCERTAIN ENVIRONMENT FOR BUSINESS OPERATIONS AND THEY COULD
HAVE A NEGATIVE EFFECT ON US.
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The PRC
legal system is a civil law system. Unlike the common law system, the civil law
system is based on written statutes in which decided legal cases have little
value as precedents. In 1979, the PRC began to promulgate a comprehensive system
of laws and has since introduced many laws and regulations to provide general
guidance on economic and business practices in the PRC and to regulate foreign
investment. Progress has been made in the promulgation of laws and regulations
dealing with economic matters such as corporate organization and governance,
foreign investment, commerce, taxation and trade. The promulgation of new laws,
changes of existing laws and the abrogation of local regulations by national
laws could have a negative impact on our business and business prospects. In
addition, as these laws, regulations and legal requirements are relatively
recent, their interpretation and enforcement involve significant
uncertainty.
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THE
APPROVAL OF THE CHINESE SECURITIES REGULATORY COMMISSION (“CRSC”) MAY BE
REQUIRED IN CONNECTION WITH THIS OFFERING UNDER A RECENTLY ADOPTED PRC
REGULATION; SINCE THIS OFFERING DID NOT COMMENCE PRIOR TO THE EFFECTIVE
DATE OF THE REGULATION, WE MAY BE REQUIRED TO OBTAIN CRSC APPROVAL FOR
THIS OFFERING AND WE CAN NOT CURRENTLY PREDICT THE CONSEQUENCES OF ANY
FAILURE TO OBTAIN SUCH APPROVAL.
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On August
8, 2006, six PRC regulatory agencies, including the Chinese Securities
Regulatory Commission, or CSRC, promulgated a regulation that became effective
on September 8, 2006. This regulation, among other things, purports to require
offshore special purpose vehicles, or SPVs, formed for listing purposes through
acquisitions of PRC domestic companies and controlled by PRC individuals to
obtain the approval of the CSRC prior to publicly listing their securities on an
overseas stock exchange.
While the
application of this new regulation is not yet clear, we believe, based on the
advice of our PRC counsel, that CSRC approval is not required in this
transaction because the Company does not control the Chinese operating entities.
They strictly have contractual arrangements with the Chinese companies. Although
the CSRC is expected to promulgate formal implementing rules and/or regulations
and possibly other clarifications, the procedures, criteria and timing for
obtaining any required CSRC approval have not been established and it is unclear
when these will be established. Since this offering did not commence prior to
the effective date of the regulation and our shares of common stock did not
commence trading prior to the effective date of the regulation, if the CSRC
determines that the Company exercises control over the Chinese operating
entities, we may be required to obtain CSRC approval for this offering and we
cannot currently predict the criteria, timing or procedures for obtaining the
CSRC approval or the consequences of any failure to obtain such
approval.
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RECENT
PRC REGULATIONS RELATING TO THE ESTABLISHMENT OF OFFSHORE SPECIAL PURPOSE
COMPANIES BY PRC RESIDENTS MAY SUBJECT OUR PRC RESIDENT SHAREHOLDERS TO
PERSONAL LIABILITY AND LIMIT OUR ABILITY TO INJECT CAPITAL INTO OUR PRC
SUBSIDIARIES, LIMIT OUR PRC SUBSIDIARIES’ ABILITY TO DISTRIBUTE PROFITS TO
US, OR OTHERWISE ADVERSELY AFFECT
US.
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SAFE
issued a public notice in October 2005, or the SAFE notice, requiring PRC
residents to register with the local SAFE branch before establishing or
controlling any company outside of China for the purpose of capital financing
with assets or equities of PRC companies, referred to in the notice as an
“offshore special purpose company.” PRC residents that are shareholders of
offshore special purpose companies established before November 1, 2005 were
required to register with the local SAFE branch before March 31, 2006. Our
current beneficial owners who are PRC residents have registered with the local
SAFE branch as required under the SAFE notice. The failure of these beneficial
owners to timely amend their SAFE registrations pursuant to the SAFE notice or
the failure of future beneficial owners of our company who are PRC residents to
comply with the registration procedures set forth in the SAFE notice may subject
such beneficial owners to fines and legal sanctions and may also limit our
ability to contribute additional capital into our PRC subsidiaries, limit our
PRC subsidiaries’ ability to distribute dividends to our company or otherwise
adversely affect our business.
Other
Risks
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CURRENCY
CONVERSION AND EXCHANGE RATE VOLATILITY COULD ADVERSELY AFFECT OUR
FINANCIAL CONDITION.
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The PRC
government imposes control over the conversion of Renminbi (“RMB”) into foreign
currencies. Under the current unified floating exchange rate system, the
People's Bank of China publishes an exchange rate, which we refer to as the PBOC
exchange rate, based on the previous day's dealings in the inter-bank foreign
exchange market. Financial institutions authorized to deal in foreign currency
may enter into foreign exchange transactions at exchange rates within an
authorized range above or below the PBOC exchange rate according to market
conditions.
Pursuant
to the Foreign Exchange Control Regulations of the PRC issued by the State
Council which came into effect on April 1, 1996, and the Regulations on the
Administration of Foreign Exchange Settlement, Sale and Payment of the PRC which
came into effect on July 1, 1996, regarding foreign exchange control, conversion
of Renminbi into foreign exchange by Foreign Investment Enterprises, or FIEs,
for use on current account items, including the distribution of dividends and
profits to foreign investors, is permissible. FIEs are permitted to convert
their after-tax dividends and profits to foreign exchange and remit such foreign
exchange to their foreign exchange bank accounts in the PRC. Conversion of
Renminbi into foreign currencies for capital account items, including direct
investment, loans, and security investment, is still under certain restrictions.
On January 14, 1997, the State Council amended the Foreign Exchange Control
Regulations and added, among other things, an important provision, which
provides that the PRC government shall not impose restrictions on recurring
international payments and transfers under current account items.
Enterprises
in the PRC (including FIEs) which require foreign exchange for transactions
relating to current account items, may, without approval of the State
Administration of Foreign Exchange, or SAFE, effect payment from their foreign
exchange account or convert and pay at the designated foreign exchange banks by
providing valid receipts and proofs.
Convertibility
of foreign exchange in respect of capital account items, such as direct
investment and capital contribution, is still subject to certain restrictions,
and prior approval from the SAFE or its relevant branches must be
sought.
Since
1994, the exchange rate for Renminbi against the United States dollar has
remained relatively stable, most of the time in the region of approximately
RMB8.28 to $1.00. However, in 2005, the Chinese government announced that it
would begin pegging the exchange rate of the Chinese Renminbi against a number
of currencies, rather than just the U.S. dollar. As a result, the exchange rate
for the Renminbi against the U.S. dollar became RMB8.02 to $1.00. As our
operations are primarily in PRC, any significant revaluation or devaluation of
the Chinese Renminbi may materially and adversely affect our cash flows,
revenues and financial condition. We may not be able to hedge effectively
against it in any such case. For example, to the extent that we need to convert
United States dollars into Chinese Renminbi for our operations, appreciation of
this currency against the United States dollar could have a material adverse
effect on our business, financial condition and results of operations.
Conversely, if we decide to convert Chinese Renminbi into United States dollars
for other business purposes and the United States dollar appreciates against
this currency, the United States dollar equivalent of the Chinese Renminbi we
convert would be reduced. There can be no assurance that future movements in the
exchange rate of Renminbi and other currencies will not have an adverse effect
on our financial condition. Our operating companies are FIEs to which the
Foreign Exchange Control Regulations are applicable. There can be no assurance
that we will be able to obtain sufficient foreign exchange to pay dividends or
satisfy other foreign exchange requirements in the future.
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IT
MAY BE DIFFICULT TO AFFECT SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL
JUDGMENTS UPON OUR COMPANY AND OUR OFFICERS AND DIRECTORS BECAUSE THEY
RESIDE OUTSIDE THE UNITED STATES.
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As our
operations are presently based in PRC and a majority of our directors and all of
our officers reside in PRC, service of process on our company and such directors
and officers may be difficult to effect within the United States. Also, our main
assets are located in PRC and any judgment obtained in the United States against
us may not be enforceable outside the United States.
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WE
MAY EXPERIENCE CURRENCY FLUCTUATION AND LONGER EXCHANGE RATE PAYMENT
CYCLES WHICH WILL NEGATIVELY AFFECT THE COSTS OF OUR PRODUCTS SOLD AND THE
VALUE OF OUR LOCAL CURRENCY
PROFITS.
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The local
currencies in the countries in which we sell our products may fluctuate in value
in relation to other currencies. Such fluctuations may affect the costs of our
products sold and the value of our local currency profits. While we are not
conducting any meaningful operations in countries other than PRC at the present
time, we may expand to other countries and may then have an increased risk of
exposure of our business to currency fluctuation.
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SINCE
MOST OF OUR ASSETS ARE LOCATED IN PRC, ANY DIVIDENDS OF PROCEEDS FROM
LIQUIDATION IS SUBJECT TO THE APPROVAL OF THE RELEVANT CHINESE GOVERNMENT
AGENCIES.
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Our
assets are predominantly located inside PRC. Under the laws governing foreign
invested enterprises in PRC, dividend distribution and liquidation are allowed
but subject to special procedures under the relevant laws and rules. Any
dividend payment will be subject to the decision of the board of directors and
subject to foreign exchange rules governing such repatriation. Any liquidation
is subject to the relevant government agency's approval and supervision as well
as the foreign exchange control. This may generate additional risk for our
investors in case of dividend payment and liquidation.
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OUR
SHARES OF COMMON STOCK ARE VERY THINLY TRADED, AND THE PRICE MAY NOT
REFLECT OUR VALUE AND THERE CAN BE NO ASSURANCE THAT THERE WILL BE AN
ACTIVE MARKET FOR OUR SHARES OF COMMON STOCK EITHER NOW OR IN THE
FUTURE.
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Our
shares of common stock are very thinly traded, and the price if traded may not
reflect our value. There can be no assurance that there will be an active market
for our shares of common stock either now or in the future. The market liquidity
will be dependent on the perception of our operating business and any steps that
our management might take to bring us to the awareness of investors. There can
be no assurance given that there will be any awareness generated. Consequently,
investors may not be able to liquidate their investment or liquidate it at a
price that reflects the value of the business. If a more active market should
develop, the price may be highly volatile. Because there may be a low price for
our shares of common stock, many brokerage firms may not be willing to effect
transactions in the securities. Even if an investor finds a broker willing to
effect a transaction in the shares of our common stock, the combination of
brokerage commissions, transfer fees, taxes, if any, and any other selling costs
may exceed the selling price. Further, many lending institutions will not permit
the use of such shares of common stock as collateral for any loans.
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WE MAY BE SUBJECT TO THE PENNY STOCK RULES WHICH WILL MAKE THE
SHARES OF OUR COMMON STOCK MORE DIFFICULT TO
SELL.
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We may be
subject now and in the future to the SEC’s “penny stock” rules if our shares of
common stock sell below $5.00 per share. Penny stocks generally are
equity securities
with a price of less than $5.00. The
penny stock rules require broker-dealers to deliver a standardized risk
disclosure document prepared by the SEC which provides information about penny
stocks and the nature and level
of risks in the penny stock
market. The broker-dealer must also provide the
customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson, and monthly account
statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the
broker-dealer and salesperson compensation information must be given to the
customer orally or in writing prior to completing the transaction and must be
given to the customer in writing before or with the customer's
confirmation.
In
addition, the penny stock rules require that prior to a transaction the broker
dealer make a special written determination that the penny stock
is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.
The penny stock rules
are burdensome and may reduce purchases of any offerings and reduce the trading
activity for shares of our common stock. As long as our shares of common stock
are subject to the penny stock rules, the holders of such
shares of common stock may find it more difficult to sell their
securities.
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SALES
OF OUR CURRENTLY ISSUED AND OUTSTANDING STOCK MAY BECOME FREELY TRADEABLE
PURSUANT TO RULE 144 AND MAY DILUTE THE MARKET FOR YOUR SHARES AND HAVE A
DEPRESSIVE EFFECT ON THE PRICE OF THE SHARES OF OUR COMMON
STOCK.
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A
substantial majority of our outstanding shares of common stock are "restricted
securities" within the meaning of Rule 144 under the Securities Act. As
restricted shares, these shares may be resold only pursuant to an effective
registration statement or under the requirements of Rule 144 or other applicable
exemptions from registration under the Act and as required under applicable
state securities laws. Rule 144 provides in essence that a person who has held
restricted securities for a period of at least one year may, under certain
conditions, sell every three months, in brokerage transactions, a number of
shares that does not exceed the greater of 1% of a company's outstanding shares
of common stock or the average weekly trading volume during the four calendar
weeks prior to the sale (the four calendar week rule does not apply to companies
quoted on the OTC Bulletin Board). There is no limit on the amount of restricted
securities that may be sold by a non-affiliate after the restricted securities
have been held by the owner for a period of two years or more and such owner has
not been an affiliate for the 90 day period prior to sale. A sale under Rule 144
or under any other exemption from the Act, if available, or pursuant to
subsequent registrations of our shares of common stock, may have a depressive
effect upon the price of our shares of common stock in any active market that
may develop.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Overview
The
following discussion is an overview of the important factors that management
focuses on in evaluating our businesses, financial condition and operating
performance and should be read in conjunction with the financial statements
included in this Current Report on Form 8-K. This discussion contains
forward-looking statements that involve risks and
uncertainties. Actual results could differ materially from those
anticipated in these forward looking statements as a result of any number of
factors, including those set forth under the section entitled “Risk Factors” and
elsewhere in this Current Report on Form 8-K.
Our
Business
TRBT
operates six (6) shopping malls all located in the Chaoyang Street
area in the city of Taiyuan, Shanxi Province, China.
Principal
Factors Affecting our Financial Performance
We
believe that the following factors affect our financial
performance:
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Ability
to successfully acquire new shopping malls and increase foot traffic to
these locations;
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Continue
to attract consumers to our shopping malls;
and
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Attract
profitable retailers to lease space in our shopping malls;
and
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Continue
to keep a low debt to asset ratio.
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In
addition, the following “global” factor will have an affect on our financial
performance:
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Growth
of the Economy in China
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China’s
economy has experience significant growth over the past few years and Chinese
consumers have been continuing to spend money at a record breaking pace with no
signs of a slowdown and TRBT expects this trend to continue.
Results
of Operations
The
following tables set forth key components of our results of operations for the
periods indicated, in dollars, and key components of our revenue for the period
indicated, in dollars.
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TAIYUAN
RONGAN BUSINESS TRADING COMPANY LTD. AND SUBSIDIARIES
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CONSOLIDATED
STATEMENTS OF OPERATIONS
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Years
Ended December 31,
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2007
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2006
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OPERATING
EXPENSES (INCOME)
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General
and administrative expenses
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NON-OPERATING
INCOME (EXPENSES)
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Total
non-operating expenses
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NET
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST
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PROVISION
FOR INCOME TAXES
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NET
INCOME BEFORE MINORITY INTEREST
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Net
Revenue:
Net
revenue increased by US$882,174 from US$11,901,951 for the year ended December
31, 2006 to US$12,784,125 for the year ended December 31, 2007.
Operating
expenses
:
Operating
expenses decreased by US$339,141, or 4.8%, from US$7,065,352 for the year ended
December 31, 2006 to US$6,726,211 for the year ended December 31,
2007.
Incomd from
operations
:
Income
from operations increased by US$1,221,315, or 25%, from US$4,836,599 for the
year ended December 31, 2006 to US$6,057,914 for the year ended December 31,
2007 mainly due to the increase in management services revenue and decrease in
operating expenses.
Total
Non-Operating Income Expenses:
Total
Non-Operating Expenses were US$121,612 for the year ended December 31, 2006,
compared to US$384,251 for the year ended December 31,
2007.
Net
Income Before Minority Interest:
Net
Income before Minority Interest was US$4,683,007 for the year ended December 31,
2006 and US$5,607,288 for the year ended December 31,
2007.
Net
Income:
Net
income was US$3,540,363 for the year ended December 31, 2006, compared to
US$4,267,146 for the year ended December 31, 2007, an increase of
US$726,783.
LIQUIDITY
AND CAPITAL RESOURCES
The
Company currently generates its cash flow through operations which it believes
will be sufficient to sustain current level operations for at least the next
twelve months. In 2008, we intend to continue to work to expand our
presence in the commercial real estate market, including the acquisition of
another shopping mall.
To the
extent we are successful in growing our business, identifying potential
acquisition targets and negotiating the terms of such acquisition, and the
purchase price includes a cash component, we plan to use our working capital and
the proceeds of any financing to finance such acquisition costs. Our
opinion concerning our liquidity is based on current information. If this
information proves to be inaccurate, or if circumstances change, we may not be
able to meet our liquidity needs.
2007
– 2008 Outlook
Over the
course of the next few years, we intend to grow and expand our commercial real
estate business. We expect to acquire an additional 3 shopping
centers within the next two years. These acquisitions will be
financed either through revenues of the Company or by financings and sales of
the Company’s stock or other securities. In addition, TRBT expects to
complete the acquisition of development rights to 3,000 square metric units of
prime commercial land.
PLAN
OF OPERATIONS
Related
Party Transactions
For a
description of our related party transactions see the section of the Current
Report entitled “Certain Relationships and Related Transactions.”
DESCRIPTION
OF PROPERTY
TRBT
currently owns majority interests in five wholesale and retail shopping malls
located in the Chaoyang Street district in the city of Taiyuan,
Shanxi Province, China. TRBT maintains onsite management in each of
the shopping centers:
|
1)
|
Yudu Minpin Shopping
Mall
(“Yudu”): is located on West Chaoyang Street. The
property is a five story building with total space of 14,000 square
meters. It has 500 commercial tenants engaged in the retail,
wholesale and distribution of clothes, shoes, cosmetics, beddings,
etc. Yudu started its business in October 1996 and has been
profitable since its inception. Yudu was voted one of the “Most
Trusted Markets” in Shanxi Province by the Provincial Consumer Union and
the Best Business Bureau every year since
2001.
|
|
2)
|
Jingpin Clothin
City
(“Jingpin”): is located on West Chaoyang
Street. It is a five story building with 7,000 total square
footage and 500 commercial tenants engaged in the retail, wholesale and
distribution of clothes, shoes, cosmetics, beddings,
etc. Jingpin started its business in December 193 and has been
voted the “Most Trusted Markets” in Shanxi Province by the Provincial
Consumer Union and the Best Business Bureau every year since
2001.
|
|
3)
|
Longma
Shoppin
g
Mall
(“Longma”): is located on Chaoyang
Street. The property is a five story building with a total
space of 17,000 square meters and 260 commercial tenants engaged in the
retail and wholesale of brand name clothing and apparel. Longma
began operations in October 2003 and has been profitable since inception
and has also been voted one of the “Most Trusted Markets” in Shanxi
province by the Provincial Consumer Union and the Best Business Bureau
every year since 2001.
|
|
4)
|
XinDongCheng Clothing
Distribution
Mall
(“XinDongCheng”): is
on Hao Zhuang Main Street which is adjacent to Chaoyang
Street. XinDongCheng is a five story building consisting of
48,000 square meters of space and an additional 11,600 square meters of
basement space. The property has 800 commercial tenants engaged
in the retail of clothing and footwear. Consumers have easy
access to the stores at XinDongCheng because of its close proximity to the
railroad station and parking for over 100 buses and trucks. It
is an ideal location for distribution centers in the
region.
|
|
5)
|
Taiyuan Clothing
City
(“ClothingCity”): is centrally located on Chaoyang
Street. It is a six story building with 43,000 square meters of
space. It houses about 1,600 commercial tenants engaged in the
retail, wholesale and distribution of clothes, shoes, cosmetics, beddings,
etc. ClothingCity began operations in 1992. It is
one of the largest clothing retail and distribution centers in Shanxi
Province. It is the most popular shopping center in Taiyuan
city, and averages about 100,000 visitors daily. ClothingCity
was voted the “Best Market” in Taiyuan City by the City Consumer Union and
the Best Business Bureau every year since 2000. Over the years,
ClothingCity has prospered despite the up and down of the market
economy. The property has been profitable since it began
operations. ClothingCity was elected by local and state
governments to be honored as the elite “Excellent non-State-run Enterprise
of Shanxi Province,” the “Excellent non-State-run Enterprise of
Nation” and one of the “Top 100 non-State-run Enterprises of Shanxi
Province.”
|
|
6)
|
Longma Shopping Mall
West Wing
(“Longma West”): is located on Chaoyang
Street. The property is a six story building with a total space
of 43,000 square meters and 400 commercial tenants engaged in the retail
and wholesale of brand name clothing and apparel. Longma West
was built in 2006 and has approximately $4,000 of average yearly revenue
per square meter.
|
MANAGEMENT
Appointment
of New Directors
In
connection with the Exchange Agreement, we appointed 5 new directors to our
board and hired 4 new officers. Furthermore, concurrent with the
closing of the Exchange Agreement, Mr. Brian John and Mr. Rich Miller
resigned as executive officers and directors of the Company.
Within 90
days of Closing, we expect to hire an English and Mandarin bilingual CFO who is
experienced or knowledgeable about U.S. GAAP and public company
responsibilities.
The
following table sets forth the names, ages, and positions of our new executive
officers and directors as of the Closing Date. Executive officers are elected
annually by our Board of Directors. Each executive officer holds his
office until he resigns, is removed by the Board, or his successor is elected
and qualified. Directors are elected annually by our stockholders at
the annual meeting. Each director holds his office until his
successor is elected and qualified or his earlier resignation or
removal.
|
NAME
|
AGE
|
POSITION
|
|
Aizhong
An
|
|
Director,
Chairman and CEO
|
|
Samuel
Liu
|
|
Director,
President, COO and Secretary
|
|
Jiming
Zhu
|
|
Director,
Vice-President, CFO and Treasurer
|
|
Junhui
An
|
|
Director
and Vice-President
|
|
Omar
J. Gonzalez
|
|
Director
|
A brief
biography of each officer and director are more fully described in Item
5.02(c). The information therein is hereby incorporated in this
section by reference.
The
Employment Contracts we have entered into with these Individuals are more fully
described in Section 5.02(e). The information therein is hereby
incorporated in this section by reference.
Family
Relationships
Aizhong
An is the parent of Junhui An. Other than this relationship, there
are no other family relationships between any of our directors or executive
officers and any other directors or executive officers.
Code
of Ethics
We
currently do not have a code of ethics that applies to our officers, employees
and directors, including our Chief Executive Officer and senior executives,
however, we intend to adopt one in the near future.
Conflicts
of Interest
Certain
potential conflicts of interest are inherent in the relationships between our
officers and directors, and us.
From time
to time, one or more of our affiliates may form or hold an ownership interest in
and/or manage other businesses both related and unrelated to the type of
business that we own and operate. These persons expect to continue to form, hold
an ownership interest in and/or manage additional other businesses which may
compete with ours with respect to operations, including financing and marketing,
management time and services and potential customers. These activities may give
rise to conflicts between or among the interests of us and other businesses with
which our affiliates are associated. Our affiliates are in no way prohibited
from undertaking such activities, and neither we nor our shareholders will have
any right to require participation in such other activities.
Further,
because we intend to transact business with some of our officers, directors and
affiliates, as well as with firms in which some of our officers, directors or
affiliates have a material interest, potential conflicts may arise between the
respective interests of us and these related persons or entities. We believe
that such transactions will be effected on terms at least as favorable to us as
those available from unrelated third parties.
With
respect to transactions involving real or apparent conflicts of interest, we
have adopted policies and procedures which require that: (i) the fact of the
relationship or interest giving rise to the potential conflict be disclosed or
known to the directors who authorize or approve the transaction prior to such
authorization or approval, (ii) the transaction be approved by a majority of our
disinterested outside directors, and (iii) the transaction be fair and
reasonable to us at the time it is authorized or approved by our
directors.
EXECUTIVE
COMPENSATION
CGDI
EXECUTIVE COMPENSATION SUMMARY
Summary
Compensation Table
The
following table sets forth all cash compensation paid by China Growth
Development, Inc., for the last fiscal year, specifically, the year ending
December 31, 2007. The table below sets forth the names and positions for each
person at Teeka Tan Products, Inc.. All amounts are in USD.
Name
and Principal Position
|
|
|
|
|
|
|
|
|
|
|
Brian
John (1)
|
2007
|
|
|
|
|
|
|
|
|
|
Rich
Miller (1)
|
2007
|
|
|
|
|
|
|
|
|
|
Aizhong
An (2)
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Samuel
Liu (2)
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Jiming
Zhu (2)
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Junhui
An (2)
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Omar
J. Gonzalez (2)
|
2007
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
(1)
On May 7, 2008, we
acquired Taiyuan Rongan Business Trading Company Limited in a stock for stock
equivalent exchange and in connection with that transaction, Mr. Brian John and
Rich Miller tendered their resignation from the board of directors and from all
offices held in the Company, effective
immediately.
(2)
In connection with the
stock for stock equivalent exchange between us and Taiyuan Rongan Business
Trading Company Limited on May 7, 2008, Aizhong An, Samuel Liu, Jiming Zhu,
Junhui An, and Omar Gonzalez were elected officers and directors of the Company
effective upon the resignation of Mr. Brian John and Mr. Richard
Miller.
Option
Grants
We do not
maintain any equity incentive or stock option plan. Accordingly, we
did not grant options to purchase any equity interests to any employees or
officers, and no stock options are issued or outstanding to any
officers.
Employment
Contracts
The
resigning officers and directors have cancelled, terminated and forgiven any
amounts owed under their employment contact. None of the newly appointed
officers and directors have entered into employment contracts.
PRINCIPAL
STOCKHOLDERS
The
following table sets forth certain information regarding our common stock
beneficially owned on May 7, 2008, for (i) each shareholder known to be the
beneficial owner of 5% or more of our outstanding common stock, (ii) each of our
officers and directors, and (iii) all executive officers and directors as a
group. In general, a person is deemed to be a "beneficial owner" of a
security if that person has or shares the power to vote or direct the voting of
such security, or the power to dispose or to direct the disposition of such
security. A person is also deemed to be a beneficial owner of any
securities of which the person has the right to acquire beneficial ownership
within 60 days. To the best of our knowledge, all persons named have
sole voting and investment power with respect to such shares, except as
otherwise noted. Except as set forth in this Information Statement,
there are not any pending or anticipated arrangements that may cause a change in
control. At May 7, 2008, 34,970,001 shares of our common stock were
outstanding immediately after the Closing.
|
|
|
|
|
|
Mandarin
Century Holdings, Ltd., BVI (2)
|
Common
Stock
|
18,991,000
|
54.26%
|
|
Master
Power Holdings Group, Ltd., BVI
|
Common
Stock
|
2,100,100
|
6%
|
|
Accord
Success Ltd., BVI
|
Common
Stock
|
3,150,000
|
9%
|
|
All
Possible Group, Ltd., BVI
|
Common
Stock
|
4,025,000
|
11.50%
|
|
Samuel
Liu
|
|
-
|
*
|
|
Jiming
Zhu
|
|
-
|
*
|
|
Junhui
An
|
|
-
|
*
|
|
Omar
Gonzalez
|
|
-
|
*
|
* denotes
less than 1% ownership
(1)
Unless otherwise indicated in the footnotes to the table, each shareholder shown
on the table has sole voting and investment power with respect to the shares
beneficially owned by him.
(2)
Mandarin Century Holdings, Ltd., BVI, is 100% owned by Aizhong
An.
Reorganization
Related Transactions
The
organization and ownership structure of the Company subsequent to the
consummation of the reorganization as summarized in the paragraphs above is as
follows:
DESCRIPTION
OF SECURITIES
As of May
7, 2008, our authorized capital stock consists of 200,000,000 shares of common
stock, par value $0.0001 per share, and 10,000 shares of preferred stock, par
value $0.0001 per share. As of May 7, 2008 and immediately after
Closing, an aggregate of 34,970,001 shares of Common Stock were issued and
outstanding, including shares issued pursuant to the Closing. In
addition, the Company has (i) 20,000 warrants issued to Charnin, Calhoun and
Long of which all are exercisable at $15.00 per share and expire on May 12,
2008; (ii) 10,000 share option to purchase common stock issued to Nidaria with
the exercise price of $5.00 and an expiration date of March 2011; (iii)
1,400,000 warrants issued to an entity designated by TRBT with an exercise
price of $0.50; and (iv) 500,000 warrants issued to Mirador Consulting with an
exercise price of $1.00 and an expiration date of one year from the
date of Closing.
There are
no shares of preferred stock outstanding.
Common
Stock
Subject
to preferences that may apply to shares of preferred stock outstanding at the
time, the holders of outstanding shares of Common Stock are entitled to receive
dividends out of assets legally available at times and in amounts as our board
of directors may determine. Each stockholder is entitled to one vote
for each share of Common Stock held on all matters submitted to a vote of the
stockholders. Cumulative voting is not provided for in our articles
of incorporation, or any amendments thereto, which means that the majority of
the shares voted can elect all of the directors then standing for
election. The Common Stock is not entitled to preemptive rights and
is not subject to conversion or redemption. Upon the occurrence of a
liquidation, dissolution or winding-up, the holders of shares of Common Stock
are entitled to share ratably in all assets remaining after payment of
liabilities and satisfaction of preferential rights of any outstanding preferred
stock. There are no sinking fund provisions applicable to the Common
Stock. The outstanding shares of Common Stock are, and the shares of
Common Stock to be issued upon conversion of the Warrants will be, fully paid
and non-assessable.
Preferred
Stock
Our board
of directors has the authority, within the limitations and restrictions in our
amended articles of incorporation, to issue 200,000,000 shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series or the designation
of any series, without further vote or action by the
stockholders. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in our control without further action
by the stockholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of Common
Stock, including voting rights, of the holders of Common Stock. In some
circumstances, this issuance could have the effect of decreasing the market
price of the Common Stock. We currently have no plans to issue any shares of
preferred stock.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common
stock, having $0.0001 par value per share ("Common Stock"), is traded on the
Over-The-Counter Bulletin Board ("OTCBB") under the symbol "CGDI."
Following the Merger, the combined Company will continue to be traded on
the OTCBB.
On May 7,
2008, the closing bid quotation for CGDI’s common stock as reported on the
OTCBB was $0.75. The bid price reflects inter-dealer quotations, do not
include retail markups, markdowns or commissions and do not necessarily reflect
actual transactions.
Transfer
Agent and Registrar
The
transfer agent is Florida Atlantic Stock Transfer Company and is located at 7130
Nob Hill Road in Tamarac, Florida 33321.
Dividend
Policy
Any
future determination as to the declaration and payment of dividends on shares of
our Common Stock will be made at the discretion of our board of directors out of
funds legally available for such purpose. We are under no contractual
obligations or restrictions to declare or pay dividends on our shares of Common
Stock. In addition, we currently have no plans to pay such dividends. However,
even if we wish to pay dividends, because our cash flow is dependent on dividend
distributions from our affiliated entities in PRC, we may be restricted from
distributing dividends to our holders of shares of our common stock in the
future if at the time we are unable to obtain sufficient dividend distributions
from and of TRBT. Our board of directors currently intends to retain all
earnings for use in the business for the foreseeable future. See “Risk
Factors.”
LEGAL
PROCEEDINGS
Neither
we, nor any of our controlled affiliates, including the TRBT Shareholders are
involved in any lawsuit outside the ordinary course of business, the disposition
of which would have a material effect upon either our results of operations,
financial position, or cash flows.
INDEMNIFICATION OF OFFICERS AND
DIRECTORS
The
General Corporation Law of Delaware, Section 102(b)(7) provides that directors,
officers, employees or agents of Delaware corporations are entitled, under
certain circumstances, to be indemnified against expenses (including attorneys’
fees) and other liabilities actually and reasonably incurred by them in
connection with any suit brought against them in their capacity as a director,
officer, employee or agent, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful. This statute provides
that directors, officers, employees and agents may also be indemnified against
expenses (including attorneys’ fees) actually and reasonably incurred by them in
connection with a derivative suit brought against them in their capacity as a
director, if they acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation, except that no
indemnification may be made without court approval if such person was adjudged
liable to the corporation.
Our
by-laws provide that we shall indemnify our officers and directors in any
action, suit or proceeding unless such officer or director shall be adjudged to
be derelict in his or her duties.
CHANGES
AND DISAGREEMENTS WITH ACCOUNTANTS
Webb
& Company, P.A. (“Webb”) has served as our independent auditor in connection
with the audits of our fiscal years ended December 31,
2007 and 2006. In connection with this Exchange Agreement,
our board of directors recommended and approved the appointment of United
International Accountancy Corp. (“UIAC”) as the independent auditor for our
subsidiary, TRBT for the fiscal years ended December 31, 2007 and 2006 and
during subsequent interim periods though the date of this
report.
During
the fiscal years ended December 31, 2007 and 2006 and through the date hereof,
neither us nor anyone acting on our behalf consulted UIAC with respect to (i)
the application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
CGDI’s financial statements, and neither a written report was provided to us or
oral advice was provided that UIAC concluded was an important factor considered
by us in reaching a decision as to the accounting, auditing or financial
reporting issue; or (ii) any matter that was the subject of a disagreement or
reportable events set forth in Item 304(a)(1)(iv) and (v), respectively, of
Regulation S-B.
Item 3.02
Unregistered
Sales of Equity Securities
Pursuant
to the Exchange Agreement, on
May 7,
2008
, we issued 31,500,000 shares of our Common Stock to
the entities designated by TRBT in exchange for 80% of the outstanding capital
contributions of TRBT. Such securities were not registered under the
Securities Act of 1933. The issuance of these shares was exempt from
registration, in part pursuant to Regulation S and Regulation D under the
Securities Act of 1933 and in part pursuant to Section 4(2) of the Securities
Act of 1933. We made this determination based on the
representations of the entities designated by TRBT which included, in
pertinent part, that such shareholders were either (a) "accredited investors"
within the meaning of Rule 501 of Regulation D promulgated under the Securities
Act, or (b) not a "U.S. person" as that term is defined in Rule 902(k) of
Regulation S under the Act, and that such shareholders were acquiring our common
stock, for investment purposes for their own respective accounts and not as
nominees or agents, and not with a view to the resale or distribution thereof,
and that the entities and individuals understood that the shares of our common
stock may not be sold or otherwise disposed of without registration under the
Securities Act or an applicable exemption therefrom.
Item
4.01 Changes in Registrant’s Certifying Accountant.
(1)
Previous Independent Auditors:
(i) On
May 14, 2008, Webb & Company, P.A. was dismissed as independent auditor for
the Company. On May 14, 2008, the Company engaged United
International Accountancy Corp. (“UIAC”) as its principal independent
accountant. This decision to engage UIA was ratified by the majority
approval of the Board of Directors of the Company.
(ii)
Management of the Company has not had any disagreements with UIAC related to any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure. For two the most recent fiscal years
and the subsequent interim period through Webb’s termination on May 14,
2008, there has been no disagreement between the Company and Webb on any matter
of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreement, if not resolved to the
satisfaction of Webb would have caused it to make a reference to the subject
matter of the disagreement in connection with its reports.
(iii) The
Company’s Board of Directors participated in and approved the decision to change
independent accountants.
(iv) In
connection with its audit of financial statements through December 31, 2007and
2006, there have been no disagreements with Webb on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Webb would
have caused them to make reference thereto in their report on the financial
statements.
(v)
During the most recent audit period and the interim period through May 14, 2008
there have been no reportable events with the Company as set forth in Item
304(a)(i)(v) of Regulation S-K.
(vi) The
Company requested that Webb furnish it with a letter addressed to the SEC
stating whether or not it agrees with the above statements. A copy of
such letter is filed as an Exhibit to this Form 8-K.
(2) New
Independent Accountants:
(i) The
Company engaged United International Accountancy Corp. (“UIAC”) as its new
independent auditors as of May 14, 2008. Prior to such date, the
Company, did not consult with UIAC regarding (i) the application of accounting
principles, (ii) the type of audit opinion that might be rendered, or (iii) any
other matter that was the subject of a disagreement between the Company and its
former auditor as described in Item 304(a)(1)(iv) of Regulation S-
B.
Item 5.01
Changes in Control of
Registrant.
As
explained more fully in Item 2.01, in connection with the Exchange Agreement, on
May 7, 2008, we issued 31,500,000 shares of our Common Stock to entities
designated by TRBT in exchange for the transfer of 80% of the outstanding
capital contributions of TRBT to us. As such, immediately following
the Closing of the Exchange Agreement, the entities designated by TRBT held
approximately 90% of the total combined voting power of all classes of our
outstanding stock entitled to vote.
In
connection with the Closing of the Exchange Agreement, and as explained more
fully in Item 2.01 above under the section titled “Management” and in Item 5.02
of this Current Report on Form 8-K, Brian John and Richard
Miller resigned as executive officers and members of our board of
directors. Further, effective May 7, 2008, Aizhong An, Samuel Liu, Jiming
Zhu, Junhui An and Omar J. Gonzalez (the “New Directors”) were appointed as
members of our board of directors. Finally, effective May 7, 2008,
our New Directors appointed Aizhong An as our Chairman and CEO, Samuel
Liu as our President, COO and Secretary, Jiming Zhu as our Vice President, CFO
and Treasurer and Junhui An as our Vice President.
Item 5.02
Departure of Directors or Principal
Officers; Election of Directors; Appointment of Principal
Officers.
(a) Resignation
of Directors
Effective
May 7, 2008, Brian John and Rich Miller resigned as members of our board of
directors. There were no disagreements between them and us or any officer or
director of the Company.
(b) Resignation
of Officers
Effective
May 7, 2008, Brian John and Rich Miller resigned as our executive
officers.
(c) Appointment
of Directors
Effective
May 7, 2008, the following persons were appointed as members of the Board of
Directors:
|
NAME
|
AGE
|
POSITION
|
|
Aizhong
An
|
|
Chairman
|
|
Samuel
Liu
|
|
Director
|
|
Jiming
Zhu
|
|
Director
|
|
Junhui
An
|
|
Director
|
|
Omar
J. Gonzalez
|
|
Director
|
The
business background descriptions of the newly appointed directors are as
follows:
Aizhong An, Chairman of
China Growth Development, Inc.
Mr.
Aizhong An, is a seasoned and well respected Chinese business executive. In
1969, after military service, Mr. An returned to his hometown Taiyuan Hao Zhuang
(Good Village), and worked as a deputy manager of a local business management
group. Mr. An founded privately owned TRBT Industry Co., Ltd. in 1985. He was
recognized as a business pioneer, as TRBT was a “non-state-run enterprise,” a
rarity in China in 1985. TRBT enjoys great success. In 1991, Mr. An founded
Taiyuan Clothing City Group Company Limited (“TCCG”). TCCG’s Main business was
and is the development and management of a shopping and distribution centers.
Mr. An serves as President & CEO of TCCG. In 2002, TCCG had over 5000
distributors and retailers in their centers. The group’s growth supported and
benefited from the growth of China’s consumer demands. By the end of 2004, TCCG
had five centers and 9 locations and assets that total over 800 million Yuan.
Mr. An’s leadership made TCCG the largest shopping and distribution center group
in Shanxi province. The properties managed under his leadership are the most
recognized distribution outlets in the northern China region.
Samuel Liu, Director of
China Growth Development, Inc.
Mr. Liu,
was a senior manager in a large trading company (annul revenues over 300 million
dollars) in America from 1986 – 1991. From 1994 – 2002 he was the president of a
nutri-ceuticals manufacturer (annual revenues over 80 million dollars). Mr. Liu
is active in founding, organizing and managing a number of foreign investment
projects to China, and he counsels China companies in doing business in US, and
in mergers with public companies in America. Mr. Liu has a Master of Arts degree
from Beijing University, 1984.
Jiming Zhu, Director of
China Growth Development, Inc.
Mr.
Jiming Zhu, started work as an accountant for local Hao Zhuang management group
in 1972. In 1983, he became one of managers in the group. In 1991, he joined
TRBT Industry group. He was co-founder of Taiyuan Royal City Shopping Mall and
worked as General manager since 1996. Mr. Zhu was elected as “Manager of the
year” of “non-state-run Enterprise” in Taiyuan every year since
1996
Junhui An, Director of China
Growth Development, Inc.
Ms.
Junhui An, started work as Human Resources manager in ClothingCity in 1996.
During 1996-2002, she did an excellent job of recruiting strong management teams
for ClothingCity and was named General Manager of ClothingCity in 2002 and she
was elected as one of the best Women worker in Taiyuan city in 2003
Family
Relationships
Aizhong
An is the parent of Junhui An. Other than this relationship, none of
the other officers or directors have any familial relationships with any other
officers or directors of the Company.
(d)
Appointment of
Officers
Effective
May 7, 2008, the newly appointed directors described above in Item 5.02(c)
appointed the following persons as our executive officers, with the respective
titles as set forth opposite his or her name below:
|
NAME
|
AGE
|
POSITION
|
|
Aizhong
An
|
|
Chairman
and CEO
|
|
Samuel
Liu
|
|
President/COO/Secretary
|
|
Jiming
Zhu
|
|
Vice-President/CFO/Treasurer
|
|
Junhui
An
|
|
Vice-President
|
Please
see Section 5.02(c) of this current report, whose information is herein
incorporated by reference.
(e)
Employment Agreements of the Executive Officers
The
Company has not entered into a formal employment arrangement with the Executive
Officers.
Item 9.
01
Financial
Statement and Exhibits.
(a)
FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The
Audited Consolidated Financial Statements of TRBT as of December 31, 2007 and
2006 are filed as Exhibit 99.1 to this current report and are incorporated
herein by reference.
(b)
PRO FORMA FINANCIAL INFORMATION.
The
following pro forma financial information is filed as Exhibit 99.2 to this
Current Report and is incorporated herein by reference:
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1.
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The
Unaudited Pro Forma Condensed Combined Balance Sheet of CGDI as of
December 31, 2007
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2.
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The
Unaudited Pro Forma Condensed Combined Statements of Operations of CGDI as
of December 31, 2007
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(c)
SHELL COMPANY TRANSACTIONS
None.
(d)
EXHIBITS
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Exhibit
No.
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Description
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Stock
for Stock Equivalent Exchange Agreement and Plan, dated November 12, 2007,
among the Company, the stockholders of the Company, and
TRBT
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16.1
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Letter
from Webb & Company, P.A.
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3.1*
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Articles
of Incorporation of the Company as filed with the Secretary of State of
Delaware
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The
Audited Consolidated Financial Statements of TRBT as of December 31, 2007
and 2006.
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The
Unaudited Pro Forma Condensed Combined Balance Sheet and Statement of
Operations of China Growth Development, Inc. as of December 31,
2007.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this Report on Form 8-K to be signed on its behalf by the
undersigned hereunto duly authorized.
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CHINA
GROWTH DEVELOPMENT, INC.
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Date: May
14, 2008
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By:
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/s/
Sam Liu
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Sam
Liu
Director
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26
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