10QSB 1 v050441_10qsb.txt United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------- FORM 10-QSB |X| Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2006 |_| Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____ to ___ Commission File No.: 000-50005 ---------------- TECHEDGE, INC. (Exact name of small business issuer as specified in its charter) Delaware 04-37033348 (State of Incorporation) (IRS Employer Identification No.) 33 Wood Avenue South, 7F Iselin, New Jersey 08830 (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number, including area code: (732) 632-9896 ---------------- Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of August 10, 2006, there were 85,520,000 shares of Common Stock outstanding. TABLE OF CONTENTS PART I- FINANCIAL INFORMATION.................................................1 Item 1 Financial Statements................................................1 Item 2 Management's Discussion and Analysis or Plan of Operation...........9 Item 3 Controls and Procedures............................................12 PART II- OTHER INFORMATION...................................................13 Item 1 Legal Proceedings..................................................13 Item 2 Unregistered Sales of Equity Securities and Use of Proceeds........13 Item 6 Exhibits and Reports on Form 8-K...................................13 PART I- FINANCIAL INFORMATION Item 1. Financial Statements Report of Independent Registered Public Accounting Firm To the Board of Directors Techedge Inc. and Subsidiaries: We have reviewed the accompanying consolidated balance sheet of Techedge Inc. and Subsidiaries (a Delaware corporation in the development stage) as of June 30, 2006, and the related consolidated statements of operations and cash flows for the six-month period ended June 30, 2006. These financial statements are the responsibility of the company's management. We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with accounting principles generally accepted in the United States of America. Lodi, New Jersey August 8, 2006 1 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED BALANCE SHEET JUNE 30, 2006 (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ 2,769 Accounts receivable, net of bad debt reserve of $39,294 55,094 Due from related parties 418,793 Prepaid expenses and other current assets 7,968 ----------- Total Current Assets 484,624 ----------- PROPERTY AND EQUIPMENT, NET 54,488 ----------- OTHER ASSETS 1,657 ----------- Total Assets $ 540,769 =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Accounts payable and accrued expenses $ 1,410,290 Other Liabilities 106,682 Due to officers 874,442 ----------- Total Current Liabilities 2,391,414 STOCKHOLDERS' EQUITY (DEFICIT) Common stock, stated value $.0001, 100,000,000 shares authorized; 85,520,000 shares issued and Outstanding 8,552 Additional paid-in capital 6,699,373 Deficit accumulated during development stage (8,610,770) Accumulated other comprehensive income 52,200 ----------- Total Stockholders' Equity (Deficit) (1,850,645) Total Liabilities and Stockholders' Equity (Deficit) $ 540,769 =========== See notes to consolidated financial statements. 2 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three Months Ended For the Period From JUNE 30, September 13, 2000 ---------------------------- (Date of Inception) 2006 2005 to June 30, 2006 ------------ ------------ ------------ REVENUE $ -- $ 127,614 $ 1,537,958 COSTS AND EXPENSES Cost of sales -- 68,221 764,741 Research and development -- 341,820 2,274,698 General and administrative (including share-based payment of $-, $148,300 and $182,153, respectively) 32,452 970,525 6,567,372 Depreciation and amortization 6,229 34,013 360,680 ------------ ------------ ------------ Total Costs and Expenses 38,681 1,346,358 9,967,491 ------------ ------------ ------------ (LOSS) FROM OPERATIONS (38,681) (1,286,965) (8,429,533) ------------ ------------ ------------ OTHER INCOME (EXPENSE) Loss from unconsolidated subsidiary -- -- (60,134) Loss from disposal of subsidiary, net of tax -- -- (48,142) Sale of subsidiary's net operating losses -- -- 216,247 Gain (loss) on foreign currency -- 594 660 Interest income (expense), net -- 239 34,299 ------------ ------------ ------------ Total Other Income (Expense) -- 833 142,930 ------------ ------------ ------------ (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (38,681) -- (8,286,603) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX -- -- (324,167) NET (LOSS) (38,681) (1,286,132) (8,610,770) ------------ ------------ ------------ UNREALIZED GAIN (LOSS) ON FOREIGN CURRENCY TRANSLATION, NET OF TAX -- -- (3,526) ------------ ------------ ------------ COMPREHENSIVE (LOSS) ($ 38,681) ($ 1,286,132) ($ 8,614,296) ============ ============ ============ LOSS PER COMMON SHARE, BASIC AND DILUTED ($ 0.00) ($ 0.00) ($ 0.02) ============ ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED 85,520,000 80,614,588 80,614,588 ============ ============ ============
See notes to consolidated financial statements 3 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the six Months Ended For the Period From JUNE 30, September 13, 2000 ---------------------------- (Date of Inception) 2006 2005 to JUNE 30, 2006 ------------ ------------ ------------ REVENUE $ -- $ 127,614 $ 1,537,958 COSTS AND EXPENSES Cost of sales -- -- 764,741 Research and development -- 410,041 2,274,698 General and administrative (including share-based payment of $168,542, $148,300 and $182,153, respectively) 302,292 970,525 6,567,372 Depreciation and amortization 12,768 34,013 360,680 ------------ ------------ ------------ Total Costs and Expenses 315,060 1,414,579 9,967,491 ------------ ------------ ------------ (LOSS) FROM OPERATIONS (315,060) (1,286,965) (8,429,533) ------------ ------------ ------------ OTHER INCOME (EXPENSE) Loss from unconsolidated subsidiary -- -- (60,134) Loss from disposal of subsidiary, net of tax (48,142) -- (48,142) Sale of subsidiary's net operating losses -- -- 216,247 Gain (loss) on foreign currency -- 594 660 Interest income (expense), net -- 239 34,299 ------------ ------------ ------------ Total Other Income (Expense) (48,142) 833 142,930 ------------ ------------ ------------ (LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE (363,202) -- (8,286,603) CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE, NET OF TAX -- -- (324,167) NET (LOSS) (363,202) (1,286,132) (8,610,770) ------------ ------------ ------------ UNREALIZED GAIN (LOSS) ON FOREIGN CURRENCY TRANSLATION, NET OF TAX -- -- (3,526) ------------ ------------ ------------ COMPREHENSIVE (LOSS) ($ 363,202) ($ 1,286,132) ($ 8,614,296) ============ ============ ============ LOSS PER COMMON SHARE, BASIC AND DILUTED ($ 0.00) ($ 0.00) ($ 0.02) ============ ============ ============ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC AND DILUTED 85,520,000 80,614,588 80,614,588 ============ ============ ============
See notes to consolidated financial statements. 4 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months Ended For the Period From JUNE 30, September 13, 2000 ---------------------------- (Date of Inception) 2006 2005 to JUNE 30, 2006 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net loss ($ 363,202) ($ 1,286,132) ($ 8,610,770) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 12,768 48,129 330,396 Provision for doubtful accounts -- -- 14,326 Loss on unconsolidated subsidiary -- -- 60,134 Loss on foreign currency translation -- -- (3,526) Loss on sale of subsidiaries, net of tax 48,142 -- 48,142 Stock-based compensation 173,542 148,300 468,453 Changes in assets and liabilities: Accounts receivable 25,731 (1,626) (55,094) Due from related parties (159,050) (30,728) (418,793) Prepaid expenses and other current assets 40,239 8,125 (7,968) Other assets 43,372 -- (1,657) Accounts payable and accrued expenses 256,702 406,807 944,130 Other liabilities (136,167) (260,000) 106,682 ------------ ------------ ------------ Net Cash Used In Operating Activities (57,923) 967,045 (6,171,139) ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Investment in unconsolidated subsidiary -- -- (409,832) Purchase of property and equipment (5,876) (16,663) (249,639) ------------ ------------ ------------ Net Cash Used In Investing Activities (5,876) (16,663) (659,471) ------------ ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from private placement of common stock -- 855,000 1,897,651 Purchase of treasury stock (432) Net proceeds from private placement of common stock 2,000 -- 4,002,000 Net repayments for officers advances -- 84,282 874,442 ------------ ------------ ------------ Net Cash Provided By Financing Activities 2,000 939,282 6,773,661 EFFECT OF FOREIGN CURRENCY CONVERSION ON CASH 960 -- 54,180 ------------ ------------ ------------ NET INCEASE (DECREASE) IN CASH (60,839) (44,426) 2,769 CASH AND CASH EQUIVALENTS - BEGINNING 63,608 54,876 -- ------------ ------------ ------------ CASH AND CASH EQUIVALENTS - ENDING $ 2,769 $ 10,450 $ 2,769 ============ ============ ============
See notes to consolidated financial statements. 5 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2006 AND 2005 NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS The financial statements should be read in conjunction with a reading of the Company's annual Report on Form 10-KSB for the fiscal year ended December 31, 2005 The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accounting principles applicable to interim financial information and with the requirements of Form 10-QSB and Item 310 of Regulation S-B of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. Interim results are not necessarily indicative of results for a full year. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position and the results of operations and cash flows for the interim periods have been included. NOTE 2 - ADOPTION OF NEW ACCOUNTING STANDARDS On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R) "Share-Based Payment" using the modified prospective application. The Company has been expensing share based awards granted after January 1, 2003 under the provisions of SFAS No. 123 "Accounting for Stock-Based Compensation". For the six months ended June 30, 2006 and 2005, included in net loss is expense of $168,542 and $148,300 after tax, respectively, of stock based compensation related to stock options granted. If the Company had followed the fair value recognition provisions of SFAS 123(R) for all outstanding and unvested stock options and other stock-based compensation for the six months ended June 30, 2005, there would have been no material impact on the Company's financial statements. NOTE 3 - LOSSES DURING THE DEVELOPMENT STAGE AND MANAGEMENT'S PLANS Through June 30, 2006 the Company had incurred development stage losses totaling $8,610,770, and net cash used in operating activities of $57,923. At June 30, 2006, the Company had $2,769 of cash and cash equivalents and $55,094 of net trade receivables to fund short-term working capital requirements. The Company's ability to continue as a going concern and its future success is dependent upon its ability to raise capital in the near term to: (1) satisfy its current obligations, (2) continue its research and development efforts, and (3) successfully develop, deploy and market its products on a wide scale. 6 TECHEDGE INC. AND SUBSIDIARIES (A DEVELOPMENT STAGE COMPANY) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2006 AND 2005 NOTE 4 - STOCKHOLDERS' EQUITY During the quarter ended June 30, 2006, the Company entered into a consulting agreement whereby Ludlow Capital Inc. would provide corporate Investor Relations advisory services. In exchange for these services, the Company issued 50,000 restricted shares of Techedge common stock. During the quarter ended June 30, 2006, the Company entered into a Share Exchange Agreement for the purpose of acquiring 100% of the outstanding capital stock of China BioPharma Limited (CBP) a Cayman Islands Company, which has majority ownership of Tianyuan Bio-Pharmaceuticals Company, Ltd. The transaction is subject to the final approval by the government of China. In exchange for 100% of the outstanding capital of CBP, the Company issued a total of 3,000,000 shares of restricted common stock. NOTE 5 - RELATED PARTY TRANSACTIONS The Company records material related party transactions. The Company incurs costs for certain administrative expenses from a company owned 100% by the Company's CEO. Those charges are included in general and administrative expenses. The Company also provides services to a related party and those amounts are included in revenue. The Company also purchases equipment used in Research and Development from a company owned 100% by the Company's CEO. The Company also engages in advances to and advances from related parties. The advances have no stated terms of repayment and carry no interest. Following is a summary of transactions and balances with affiliated entities and related parties 2006 and 2005 Three Months Ended JUNE 30, --------------------- 2006 2005 -------- -------- Revenues from related parties $ -- $ -- ======== ======== Purchases and expenses from related parties $ 1,200 $ 21,780 ======== ======== Due from related parties $433,678 $248,986 ======== ======== Amounts due to officers consist of advances from the Company's CEO to fund the Company's operations. It also includes compensation deferred by the Company's CEO, CFO, CTO and COO. No written repayment agreements exist with either officer. Amounts are unsecured, non-interest bearing and due upon demand. 7 NOTE 6 - SUBSEQUENT EVENTS On July 6, 2006, the board of directors unanimously approved to change its name to China Biopharma Inc. On July 31, 2006, the board of directors unanimously approved to convert some of its current debt into restricted common stocks at open market price. The total debt to be converted is $1,234,502, and consists of loans, and accrued salaries of the Company's key personnel. 8 Item 2. Management's Discussion and Analysis or Plan of Operation NOTE REGARDING FORWARD-LOOKING STATEMENTS You should read the following discussion together with the more detailed business information and consolidated financial statements and related notes that appear elsewhere in this report and in the documents that we incorporate by reference into this report. This report may contain certain "forward-looking" information within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by our use of words such as "may," "will," "should," "could," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential" or "continue" or the negative or other variations of these words, or other comparable words or phrases. This information involves risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in Part I, Item 1 of our annual report on Form 10-KSB under the caption "Business--Risk Factors," which annual report was filed on March 28, 2006. Unless the context requires otherwise, references to "we," "us," "our," "Techedge" and the "Company" refer to Techedge, Inc. and its consolidated subsidiaries. CRITICAL ACCOUNTING POLICIES See "Summary of Significant Accounting Policies" in the Notes to Consolidated Financial Statements December 31, 2005 in our annual report on Form 10-KSB filed on March 28, 2006 for our critical accounting policies. These policies include revenue recognition, determining our allowance for doubtful accounts receivable, accounting for cost of revenue, valuation of long-lived assets and research and development costs. ADOPTION OF NEW ACCOUNTING STANDARDS On January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 123(R) "Share-Based Payment" using the modified prospective application. The Company has been expensing share based awards granted after January 1, 2003 under the provisions of SFAS No. 123 "Accounting for Stock-Based Compensation". For the six months ended June 30, 2006 and 2005, included in net loss is expense of $168,542 and $148,300 after tax, respectively, of stock based compensation related to stock options granted. If the Company had followed the fair value recognition provisions of SFAS 123(R) for all outstanding and unvested stock options and other stock-based compensation for the six months ended June 30, 2005, there would have been no material impact on the Company's financial statements. BUSINESS OVERVIEW Techedge, Inc. ("Techedge"), is a fast growing developer, producer, and distributor of biopharmaceutical products in China. It has wholly owned subsidiary, China Biopharma Limited and owns the majority interest of Zhejiang Tianyuan Biotech Co., Ltd ("ZTB"). The Company's current products consist of human vaccines against influenza, epidemic hemorrhagic fever (HFV), and Japanese Encephalitis (JEV) with high reputation and market shares among Chinese made vaccines. Through its investment and ownership of leading Chinese biopharmaceutical companies, the company plans to build the most efficient and most profitable biopharmaceutical company in China by introducing the most advanced technology, best product, and experienced management team. With a fast growing market, newly completed production facility, and several other new vaccines in the pipeline, it is expected to have a steady business growth. 9 On April 7, 2006, the Company signed a Definitive Agreement to acquire China BioPharma Limited (CBP), a Cayman island Company, which has majority ownership rights to Tianyuan Bio-pharmaceuticals Co. Ltd., based out of Zhejiang Province, China, pending on the Chinese government's final approval. According to the agreement, Techedge Inc. will acquire 100% of the outstanding capital stock of CBP in exchange for 3,000,000 unregistered shares of Techedge's common stock to be issued. In exchange for 100% of the outstanding capital of CBP, the Company issued a total of 3,000,000 shares of restricted common stock. On May 29, 2006, the Company announced that China BioPharma Limited, a wholly owned subsidiary of the Company, has received approval from Zhejiang Provincial government of the Peoples Republic of China for its investment into Zhejiang Tianyuan Bio-Tech Co., Ltd. China BioPharma Limited will invest US$3,900,000 into Zhejiang Tianyuan Bio-Tech Co., Ltd. for 65% of the ownership. The investment is to be made within 180 days from May 24, 2006, when the operating license of Zhejiang Tianyuan Bio-Tech Co., Ltd. was issued by the government. Peter Wang, the Chairman of the Board of Directors of Techedge Inc., will be the Chairman of the Board of Directors of Zhejiang Tianyuan Bio-Tech Co., Ltd. On June 20, 2006, the Company announced that China BioPharma's subsidiary Zhejiang Tianyuan Biotech Co., has signed a letter of intent to acquire Hainan CITIC Biopharmaceutical Development Co. ("Hainan CITIC"). Under the agreement Zhejiang Tianyuan Biotech Co. would acquire over 90% interest in Hainan CITIC Biopharmaceutical Development Co., with the remaining interest being owned by China CDC (China's Center for Disease Control). On July 6, 2006, the Company announced that its board of directors has unanimously approved to change its name to the new name as China Biopharma Inc. On July 31, 2006, the Company announced that its Board of Directors has unanimously approved to convert some of its current debt into restricted company shares at open market price. The total debt to be converted is $1,234,502.29 and consists of loans, payments and accrued salaries for the company's key managers. The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto: RESULTS OF OPERATIONS Revenues As a result of the Company's re-positioning for bio-pharmaceutical opportunities in China and its exit from value-added communications services in the U.S., there is no revenue in the 2nd quarter of 2006. Revenue was $127,614 in the 2nd quarter of 2005. No customer represented more than 10% of our total revenues for the 1st quarter of 2006 or 2005. Comprehensive Loss Comprehensive loss decreased to $(38,681) in the 2nd quarter of 2006 from $(1,286,132) in the 2nd quarter of 2005. The decrease in loss is due to a decrease in general and administrative, and research and development expenses. Cost of Revenues There was no cost of revenue incurred in the 2nd quarter of 2006 as the Company had no revenue in the period. 10 The cost of revenues for the 2nd quarter of 2005 was $68,221. The cost of service revenues consists of costs primarily associated with network operations and related personnel, telephony origination and termination services provided by third-party carriers, and indirect costs associated with purchasing, scheduling and quality assurance. Research and Development Expenses The Company incurred no Research and development ("R&D") expenses in the 1st quarter of 2006. Research and development ("R&D") expenses for 2005 consist primarily of personnel for system design, implementation, and testing, and equipment costs associated with IP-PCS systems and solutions development. R&D expenses were $341,820 in the 2nd quarter of 2005. R&D costs, including software development costs and system integration costs, were expensed as incurred. General and Administrative Expenses General and administrative ("G&A") expenses consist primarily of personnel and related overhead costs for sales, marketing, finance, legal, human resources and general management. Such costs also include sales commissions, trade show, advertising and other marketing and promotional expenses. G&A expenses decreased to $32,452 in the 2nd quarter of 2006 from $970,525 in the 2nd quarter of 2005. The Company experienced significant decrease in marketing, sales, and personnel expenses, as it exited from value-added communications services in the U.S. The Company continues to incur significant expenses in legal, accounting, finance, and SEC filing fees associated with being a publicly traded firm. The Company anticipates that G&A expenses to increase as it carries out its re-positioning plan for bio-pharmaceutical opportunities in China. Other Income (Expense) There was no Other loss/income in the 2nd quarter of 2006 compared to an income of $167 in the 2nd quarter of 2005. Income Taxes No tax provision has been recorded for 2006 or 2005, as a result of the cumulative operating losses we have generated. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents; working capital deficit. As of June 30, 2006, we had cash and cash equivalents of $2,769 and a working capital deficit of $(1,906,790), as compared to $5,341 and $(1,880,629), respectively, at March 31, 2006. The increase in our working capital deficit reflects a decrease in current assets and an increase in current liabilities. Our current liabilities of $2,391,414 include $874,442 in non-secured loans from and deferred compensation due to the officers of the Company which are payable on demand. Net cash provided by operating activities. Net cash used by operating activities was $57,923 in the 2nd quarter of 2006, as compared to $967,045 net cash provided by operating activities in the 2nd quarter of 2005. Net cash used in investing activities. Net cash used in investing activities was $5,876 in the 2nd quarter of 2006, as compared to $16,663 in the 2nd quarter of 2005. Net cash provided by financing activities. Net cash provided by financing activities was $2,000 in the 2nd quarter of 2006, compared to $939,282, including $855,000 through issuance of common stock, and $84,282 from officers' advances in the 2nd quarter of 2005. 11 Capital Stock Transactions. During the quarter ended June 30, 2006, the Company entered into a consulting agreement whereby Ludlow Capital Inc. would provide corporate Investor Relations advisory services. In exchange for these services, the Company issued 50,000 restricted shares of Techedge common stock. During the quarter ended June 30, 2006, the Company entered into a Share Exchange Agreement for the purpose of acquiring 100% of the outstanding capital stock of China BioPharma Limited (CBP) a Cayman Islands Company, which has majority ownership of Tianyuan Bio-Pharmaceuticals Company, Ltd. The transaction is subject to the final approval by the government of China. In exchange for 100% of the outstanding capital of CBP, the Company issued a total of 3,000,000 shares of restricted common stock. Currency exchange fluctuations. For the purpose of funding operations of our Chinese subsidiary, we have implemented simple currency hedging against fluctuations in the Chinese Renminbi to United States dollar exchange rate. Need for current financing. Our ability to continue as a going concern is dependent upon our ability to raise capital in the near term to: (1) satisfy our current obligations, and (2) continue our planned re-positioning for bio-pharmaceutical opportunities in China. We do not have sufficient capital to fund our operations at the current level unless we receive additional capital either through external independent or related party funding, revenues from sales, further expense reductions or some combination thereof. SUBSEQUENT EVENTS On July 6, 2006, the Company announced that its board of directors has unanimously approved to change its name to the new name as China Biopharma Inc. On July 31, 2006, the Company announced that its Board of Directors has unanimously approved to convert some of its current debt into restricted company shares at open market price. The total debt to be converted is $1,234,502.29 and consists of loans, payments and accrued salaries for the company's key managers. OFF-BALANCE SHEET ARRANGEMENTS We do not have any off-balance sheet arrangements. Item 3. Controls and Procedures The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company's "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act)) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective, in making known to them on a timely basis, material information relating to the Company and the Company's consolidated subsidiaries required to be disclosed in the Company's reports filed or submitted under the Exchange Act. There has been no change in the Company's internal control over financial reporting during the three months ended June 30, 2006 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. 12 PART II- OTHER INFORMATION Item 1. Legal Proceedings From time to time, the Company may be subject to legal proceedings, which could have a material adverse effect on its business. At June 30, 2006 and through the date of this filing, the Company was not a party to any litigation matter. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds N/A. Item 6. Exhibits The following exhibits are being filed herewith pursuant to Item 601 of Regulations S-B: 31.1 Rule 13a-14(a)/15d-14(a) Certification, executed by Peter Wang, Chairman of the Board of Directors and Chief Executive Officer of Techedge 31.2 Rule 13a-14(a)/15d-14(a) Certification, executed by Ya Li, Chief Financial Officer of Techedge 32.1 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Peter Wang, Chairman of the Board of Directors and Chief Executive Officer of Techedge 32.2 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Ya Li, Chief Financial Officer of Techedge 13 SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TECHEDGE, INC. Date: August 13, 2006 By: /s/ Peter Wang ----------------------------- Peter Wang Chief Executive Officer (Principal Executive Officer) 14 EXHIBIT INDEX Exhibit No. Description of Exhibit 31.1 Rule 13a-14(a)/15d-14(a) Certification, executed by Peter Wang, Chairman of the Board of Directors and Chief Executive Officer of Techedge 31.2 Rule 13a-14(a)/15d-14(a) Certification, executed by Ya Li, Chief Financial Officer of Techedge 32.1 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Peter Wang, Chairman of the Board of Directors and Chief Executive Officer of Techedge 32.2 Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Ya Li, Chief Financial Officer of Techedge 15