10QSB/A 1 juneamnd2.htm FORM 10QSB AMENDMENT NO.2

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

 

 

FORM 10-QSB

<R>Amendment No. 2</R>

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2003

 

OR

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ______________________.

Commission file number 000-28345

China Broadband Corp.

(Exact name of small business issuer as specified in its charter)

NEVADA

 

72-1381282

(Jurisdiction of incorporation)

 

(I.R.S. Employer Identification No.)

1002, Building C, Huiyuan Apartment,

Asia Game Village, Beijing, China 100101

(Address of principal place of business or intended principal place of business)

86-10-6499-1255
(Issuer's telephone number)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]

The number of outstanding common shares, with $0.001 par value, of the registrant at June 30, 2003 was 22,513,801 and at November 19, 2003 was 23,196,603.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]

China Broadband Corp.

INDEX TO THE FORM 10-QSB

For the quarterly period ended June 30, 2003

 

 

 

PAGE

 

 

 

 

PART I

FINANCIAL INFORMATION

3

 

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

3

 

 

CONDENSED CONSOLIDATED BALANCE SHEET

3

 

 

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND DEFICIT

4

 

 

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

6

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

8

 

 

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10

 

ITEM 2.

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

15

 

ITEM 3.

CONTROLS AND PROCEDURES

19

PART II

OTHER INFORMATION

20

 

ITEM 1.

LEGAL PROCEEDINGS

20

 

ITEM 2.

CHANGES IN SECURITIES AND USE OF PROCEEDS

20

 

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

20

 

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

20

 

ITEM 5.

OTHER INFORMATION

20

 

ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K

21

 

 

SIGNATURES

24

 

 

<R>China Broadband Corp. is filing Amendment No. 2 to its Quarterly Report on Form 10-QSB for the period ended June 30, 2003 in order to correct an error in its unaudited condensed consolidated financial statements which is explained in Note 9 to the financial statements, and to make corresponding changes to Item 2. Management's Discussion and Analysis of Financial Condition and Results. Amendment No. 1 to China Broadband's Quarterly Report, which was filed on November 19, 2003, with the Securities and Exchange Commission via Edgar was prepared to make such corrections. However, due to a miscommunication with its filing agent, Amendment No. 1 was mistakenly filed prior to the inclusion of all of the noted corrections. Therefore, China Broadband Corp. has elected to re-file this entire Form 10-QSB as Amendment No. 2. </R>

 

 

PART I

ITEM 1. FINANCIAL STATEMENTS

CHINA BROADBAND CORP.

(a Development Stage Enterprise)

Condensed Consolidated Balance Sheet (unaudited)

(Expressed in United States Dollars) 

June 30, 2003
(restated - see Note 9)

December 31, 2002

ASSETS

CURRENT

Cash and cash equivalents

$

1,137,312

$

1,718,173

Interest and other receivable

92,895

200,880

Prepaid expenses

55,078

12,553

1, 285,285

1,931,606

Capital Assets

Property and equipment, net (Note 2)

375,696

456,252

$

1,660,981

$

2,387,858

LIABILITIES

CURRENT

Accounts payable and accrued liabilities

97,036

195,009

SHAREHOLDERS' EQUITY

Common stock

80,933

80,933

$0.001 par value, shares authorized:50,000,000;

shares issued and outstanding: 22,513,801

Additional paid in capital

23,180,868

22,908,005

Deferred compensation

(547,578)

(532,764)

Accumulated deficit

(21,150,278)

(20,263,325)

1,563,945

2,192,849

$

1,660,981

$

2,387,858

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

 

 

CHINA BROADBAND CORP.

(a Development Stage Enterprise)

Condensed Consolidated Statements of Operations & Deficit (unaudited)

(Expressed in United States Dollars)

Cumulative

Period From

Inception

Three Months Ended

Six Months Ended

February 1,

June 30,

June 30,

2000 to

2003

2002

2003

2002

June 30, 2003

(restated-see Note 9)

(restated-see Note 9)

(restated-see Note 9)

REVENUE

Internet Services

$

48,530

31,323

$

93,734

54,283

$

256,255

Technical consulting

--

--

--

--

208,333

Cost of Sales (exclusive of amortization

shown separately below)

(35,304)

(25,389)

(74,805)

(49,352)

(213,529)

GENERAL AND ADMINISTRATIVE

EXPENSES (including non-cash compensation of $171,646 (2002-$229,643) for the three months ended June 30, 2003 and $258,049 (2002-$299,900) for the six months ended June 30, 2003)

(480,459)

(732,743)

(829,932)

(1,095,314)

(8,056,561)

AMORTIZATION

(39,893)

(51,223)

(81,690)

(100,345)

(3,313,897)

IMPAIRMENT OF ASSETS

--

--

--

--

(8,628,623)

(507,126)

(778,032)

(892,693)

(1,190,728)

(19,748,022)

LOSS IN BIG SKY NETWORK

CANADA LTD.

--

--

--

--

(181,471)

LOSS IN SHEKOU JOINT

VENTURE (Note 3)

--

(48,657)

--

(97,180)

(609,607)

LOSS IN CHENGDU JOINT

VENTURE (Note 3)

--

--

--

--

(1,141,793)

GAIN ON SALE OF SHEKOU

--

--

--

--

125,798

INTEREST INCOME

1,033

537

5,740

1,063

404,817

NET LOSS

(506,093)

(826,152)

(886,953)

(1,286,845)

(21,150,278)

DEFICIT, BEGINNING OF

PERIOD

(20,644,185)

(18,132,538)

(20,263,325)

(17,671,845)

--

DEFICIT, END OF PERIOD

$

(21,150,278)

(18,958,690)

$

(21,150,278)

(18,958,690)

$

(21,150,278)

LOSS PER SHARE

Basic and diluted

$

(0.02)

(0.04)

$

(0.04)

(0.06)

SHARES USED IN

COMPUTATION

Basic and diluted

22,513,801

22,513,801

22,513,801

20,990,383

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

 

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Condensed Consolidated Statements of Stockholders' Equity (unaudited)
(Expressed in United States Dollars)

 

 

Additional

 

 

Total

Common Stock

Paid-in

Deferred

Accumulated

Stockholders'

 

Shares

Amount

Capital

Compensation

Deficit

Equity

 

 

$

$

$

$

$

 

 

 

(restated-see Note 9)

(restated-see Note 9)

(restated-see Note 9)

 

 

 

 

 

 

 

 

Balance,

1,509,850

59,971

-

-

-

59,971

 

February 1, 2000

 

 

 

 

 

 

 

 

 

 

 

 

 

Issue of common stock

 

 

 

 

 

 

 

for the outstanding shares

 

 

 

 

 

 

 

of China Broadband

 

 

 

 

 

 

 

(BVI) Corp.

13,500,000

13,500

696,529

-

-

710,029

 

 

 

 

 

 

 

Stock issued pursuant to

 

 

 

 

 

 

 

private placement

 

 

 

 

 

 

 

agreements at $0.20 per

 

 

 

 

 

 

 

share

500,000

500

98,835

-

-

99,335

 

 

 

 

 

 

 

Stock issued pursuant to

 

 

 

 

 

 

 

private placement

 

 

 

 

 

 

 

agreements at $1.00 per

 

 

 

 

 

 

 

share

1,530,000

1,530

1,518,289

-

-

1,519,819

 

 

 

 

 

 

 

Stock issued pursuant to

 

 

 

 

 

 

 

private placement

 

 

 

 

 

 

 

agreements at $7.50 per

 

 

 

 

 

 

 

share

1,301,667

1,302

9,696,236

-

-

9,697,538

 

 

 

 

 

 

 

Acquisition of the shares

 

 

 

 

 

 

 

of Big Sky Network

 

 

 

 

 

 

 

Canada Ltd.

1,133,000

1,133

8,496,367

-

-

8,497,500

 

 

 

 

 

 

 

Issuance of warrants

-

-

44,472

-

-

44,472

 

 

 

 

 

 

 

Non-cash compensation

-

-

15,235

-

-

15,235

 

 

 

 

 

 

 

Deferred compensation

-

-

65,381

(65,381)

-

-

 

 

 

 

 

 

 

Amortization of deferred

 

 

 

 

 

 

 

compensation

-

-

-

7,386

-

7,386

 

 

 

 

 

 

 

Net loss

-

-

-

-

(3,597,180)

(3,597,180)

 

 

 

 

 

 

 

Balance,

 

 

 

 

 

 

 

December 31, 2000

19,474,517

77,936

20,631,344

(57,995)

(3,597,180)

17,054,105

Deferred compensation

-

-

1,030,708

(1,030,708)

-

-

 

 

 

 

 

 

 

Issuance of warrants

-

-

277,775

-

-

277,775

 

 

 

 

 

 

 

Amortization of deferred

 

 

 

 

 

 

 

compensation

-

-

-

369,037

-

369,037

Net loss

-

-

-

-

(14,074,665)

(14,074,665)

 

 

 

 

 

 

 

Balance,

 

 

 

 

 

 

 

December 31, 2001

19,474,517

77,936

21,939,827

(719,666)

(17,671,845)

3,626,252

Amortization of deferred

 

 

 

 

 

 

 

compensation

-

-

-

326,191

-

326,191

 

 

 

 

 

 

 

Deferred compensation

-

-

139,289

(139,289)

-

-

 

 

 

 

 

 

 

Alternative Compensation

 

 

 

 

 

 

 

Plan

-

-

163,463

-

 

163,463

 

 

 

 

 

 

 

Issuance of common stock

 

 

 

 

 

 

 

to settle legal fees

42,124

-

21,062

-

-

21,062

 

 

 

 

 

 

 

Stock issued pursuant to

 

 

 

 

 

 

 

private placement

 

 

 

 

 

 

 

agreements at $0.25 per

 

 

 

 

 

 

 

share

2,997,160

2,997

644,364

-

-

647,361

 

 

 

 

 

 

 

Net loss

-

-

-

-

(2,591,480)

(2,591,480)

 

 

 

 

 

 

 

Balance,

 

 

 

 

 

 

 

December 31, 2002

22,513,801

80,933

22,908,005

(532,764)

(20,263,325)

2,192,849

 

 

 

 

 

 

 

Amortization of deferred

 

 

 

 

 

 

 

compensation

-

-

-

258,049

-

258,049

 

 

 

 

 

 

 

Deferred compensation

-

-

272,863

(272,863)

-

-

 

 

 

 

 

 

 

Net Loss

-

-

-

-

(886,953)

(886,953)

 

 

 

 

 

 

 

Balance,

 

 

 

 

 

 

 

June 30, 2003

22,513,801

80,933

23,180,868

(547,578)

(21,150,278)

1,563,945

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

 

 

CHINA BROADBAND CORP.

(a Development Stage Enterprise)

Condensed Consolidated Statements of Cash Flows (unaudited)

(Expressed in United States Dollars)

Cumulative

Period From

Date of

Inception

Three Months Ended

Six Months Ended

February 1,

June 30,

June 30,

2000 to

2003

2002

2003

2002

June 30, 2003

(restated)

(restated)

(restated)

CASH FLOWS RELATED TO THE

FOLLOWING ACTIVITIES

OPERATIONS

Net loss

$

(506,093)

(826,152)

$

(886,953)

(1,286,845)

$

(21,150,278)

Adjustment for:

Extinguishment of debt

--

--

--

--

(1,422,225)

Depreciation and amortization

39,893

51,223

81,690

100,345

3,313,897

Impairment of assets

--

--

--

--

8,628,623

Loss in Big Sky Network Canada Ltd.

--

--

--

--

181,471

Loss in Shekou joint venture (Note 3)

--

48,657

--

97,180

609,607

Loss in Chengdu joint venture (Note 3)

--

--

--

--

1,141,793

Gain on sale of Shekou joint venture

--

--

--

--

(125,798)

Non-cash stock compensation (Note 4)

171,646

229,643

258,049

299,900

1,183,832

Issuance of Common Shares for settlement

of legal fees

--

--

--

21,062

21,062

Changes in operating assets and liabilities

Interest and other receivable

450,678

11,198

107,985

56,056

21,105

Prepaid expenses

(38,521)

135,316

(42,525)

124,568

(55,078)

Accounts payable and accrued liabilities

16,883

(47,436)

(97,973)

(205,471)

(647,224)

134,486

(397,551)

(579,727)

(793,205)

(8,299,213)

FINANCING

Issue of common stock for cash

--

749,290

--

749,290

12,641,793

Stock issuance costs

--

(101,929)

--

(101,929)

(177,740)

--

647,361

--

647,361

12,464,053

INVESTING

Fixed asset additions

--

(87,623)

(1,134)

(150,074)

(702,510)

Proceeds from the sale of the Shekou joint

Venture (net of costs)

--

--

--

--

2,006,400

Investment in Chengdu joint venture

--

--

--

--

(1,935,590)

Acquisition of Big Sky Network Canada Ltd.

--

--

--

--

(2,395,828)

--

(87,623)

(1,134)

(150,074)

(3,027,528)

NET DECREASE (INCREASE) IN CASH

AND CASH EQUIVALANTS

$

134,486

162,187

$

(580,861)

(295,918)

$

1,137,312

CASH AND CASH EQUIVALENTS,

BEGINNING OF PERIOD

1,002,826

213,991

1,718,173

672,096

--

CASH AND CASH EQUIVALENTS,

END OF PERIOD

$

1,137,312

376,178

$

1,137,312

376,178

$

1,137,312

SUPPLEMENTAL CASH FLOW

INFORMATION:

Cash paid for income taxes

--

--

--

--

--

Cash paid for interest

--

--

--

--

115,290

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

 

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Notes to the Condensed Consolidated Financial Statements (unaudited)
(Expressed in United States Dollars)

 

1. BASIS OF PRESENTATION

The condensed consolidated financial statements included herein have been prepared by the Company without audit in accordance with accounting principles generally accepted in the United States of America and pursuant to the rules and regulations of the United States Securities and Exchange Commission. These financial statements are condensed and do not include all disclosures required for annual financial statements and accordingly, these financial statements and the notes thereto should be read in conjunction with the Company's Annual Report on Form 10-KSB for the year ended December 31, 2002. The consolidated financial statements for the year ended December 31, 2002 contained Note 2 on the Company's need for additional financing and profitable operations to be able to continue as a going concern. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of management, these financial statements reflect all adjustments, including normal recurring adjustments, considered necessary to present fairly the Company's condensed, consolidated financial position at June 30, 2003 and the condensed, consolidated results of operations and cash flows for the three and six month periods ended June 30, 2003 and 2002.

2. PROPERTY AND EQUIPMENT

Property and equipment consist of:

 

June 30, 2003

 

December 31, 2002

 

$

 

$

 

 

 

 

Furniture and fixtures

163,361

 

163,361

Computer hardware and software

480,113

 

478,980

Leasehold improvements

59,036

 

59,036

 

702,510

 

701,377

Accumulated amortization

(326,814)

 

(245,125)

 

375,696

 

456,252

3. INVESTMENT IN JOINT VENTURES

Big Sky Network Canada Ltd., a wholly owned subsidiary of China Broadband Corp., participated in both the Shekou joint venture and the Chengdu joint venture. The total investment in the Chengdu joint venture was written off in 2001 and Shekou joint venture was sold on September 13, 2002.

Prior to its sale, the Shekou joint venture was accounted for using the equity method. Included in the Company's statement of operations is its share of the equity method loss related to the Shekou Joint Venture for the three and six months ended June 30, 2002 of $48,657 and $97,180, respectively.

The Chengdu joint venture is accounted for on an equity basis. The loss in Chengdu joint venture, $46,035 (2002 - $31,638) for the three months ended June 30, 2003 and $86,248 (2002 - $84,561) for the six months ended June 30, 2003, has not been recognized into income as a result of the write down of the entire investment in Chengdu joint venture in 2001.

 

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Notes to the Condensed Consolidated Financial Statements (unaudited)
(Expressed in United States Dollars)

 

4. STOCK OPTION PLAN

Under the Stock Option Plan, the Company has reserved 8,000,000 common shares for issuance under options granted to eligible persons. As at June 30, 2003, 7,010,000 have been granted with 990,000 available for granting.

Under the Plan, options to purchase common shares may be granted to employees, directors and certain consultants at prices not less than the fair market value at date of grant for incentive stock options and not less than 110% of fair

market value for incentive stock options where the employee who, at the time of grant, owns stock representing more than 10% of the total combined voting power of all classes of stock of the Company. These options expire three to five years from the date of grant and may be fully exercisable immediately, or may be exercisable according to a schedule or conditions specified by the Board of Directors.

Option activity under the Plan is as follows:

 

 

2003

 

 

Number of

 

 

Options

 

 

 

Balance - December 31, 2002

 

6,810,000

 

 

 

Granted

 

800,000

Expired

 

-

Cancelled

 

(600,000)

 

 

 

Balance, June 30, 2003

 

7,010,000

Options available for granting

 

990,000

 

 

 

Option Plan Total

 

8,000,000

Additional information regarding options outstanding as of June 30, 2003 is as follows:

Options Outstanding and Exercisable

 

Range of
Exercise Prices

 

Number
Outstanding

Weighted Average
Remaining
Contractual Life
(Years)

Weighted
Average
Exercise
Price

 

 

 

 

$1.00

475,000

2.1

$1.00

$0.82

300,000

3.4

$0.82

$0.05

6,235,000

4.3

$0.05

 

7,010,000

4.0

$0.22

For the three months ended June 30, 2003, $171,646 non-cash compensation expense has been recognized (2002 - $229,643) in the consolidated financial statements for employee and non-employee stock option grants. For the six months ended June 30, 2003, $258,049 compensation expense has been recognized (2002 - $299,900). For the three and six months ended June 30, 2003, $81,123 (2002 - $Nil) has been recognized for stock-based employee compensation awards.

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Notes to the Condensed Consolidated Financial Statements (unaudited)
(Expressed in United States Dollars)

 

 

4. STOCK OPTION PLAN (continued)

The Company applies the intrinsic value method allowed by Accounting Practices Board Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") in accounting for its stock option plans. Under APB 25, compensation expense resulting from awards under variable plans is measured at each reporting period as the difference between the quoted market price and the exercise price; the cost is recognized over the period the employee performs related services.

The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provisions of Statement of Financial Accounting Standard ("SFAS") No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

 

 

Three Months ended

June 30,

Six Months ended

June 30,

 

 

2003

2002

2003

2002

 

$

$

$

$

Net loss, as reported

(506,093)

(826,152)

(886,953)

(1,286,845)

Add: Stock-based employee compensation

 

 

 

 

 

Expense included in reported net loss,

 

 

 

 

 

net of related tax effects

81,123

0

81,123

0

Deduct: Total stock-based employee

 

 

 

 

 

compensation expense determined under fair value based method for all

 

 

 

 

 

awards, net of related tax effects

(14,020)

(101,510)

(44,530)

(196,188)

 

 

 

 

 

 

Proforma net loss

(410,950)

(927,662)

(850,360)

(1,483,033)

 

 

 

 

 

Loss per share:

 

 

 

 

 

Basic and diluted - as reported

(0.02)

(0.04)

(0.04)

(0.06)

 

Basic and diluted - pro forma

(0.02)

(0.04)

(0.04)

(0.07)

5. ALTERNATIVE COMPENSATION PLAN

On March 22, 2002, the Board of Directors approved the Alternative Compensation Plan to provide opportunities for officers, directors, employees and contractors to receive all or a portion of their compensation in the form of common shares instead of cash. The Alternative Compensation Plan was approved by the shareholders at the Annual General Meeting on June 14, 2002. In the first six months of 2002, approximately 863,000 common shares recorded at $126,000 had been accrued for issue under the Alternative Compensation Plan. The Plan allowed for a maximum compensation of 2,000,000 shares, and this maximum was reached in the third quarter of 2002 with the associated expense totaling $163,463. Although the expense has been accrued, the shares will not be issued until requested by the beneficiaries. No such request has been received by the Company as of the date of these financial statements.

 

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Notes to the Condensed Consolidated Financial Statements (unaudited)
(Expressed in United States Dollars)

 

6. RELATED PARTY TRANSACTIONS

As of June 30, 2003, Matthew Heysel, our Chief Executive Officer owed us $6,768 for personal expenses incurred while traveling on business.

On July 11, 2003, the Company's Chief Executive Officer, through his privately held corporation, entered into a Stock Option Agreement with two of the Company's shareholders. Under this agreement, Mr. Heysel has the option to purchase 1,620,000 common shares of the Company held by two shareholders at a price of $0.10 per share. The option to purchase is valid for eighteen months from the date of the agreement. As well, an irrevocable proxy has been delivered to Mr. Heysel granting him the power to vote the shares at all annual and special meetings of the Company's shareholders until the expiry date of the agreement or the purchase of the shares, whichever occurs first.

7. LEGAL COSTS

During the three months ended June 30, 2003, the Company received $20,439 in legal costs which had been awarded to it by the Court of Queen's Bench of Alberta due to The Orbiter Fund Ltd., The Viator Fund Ltd., Lancer Offshore Inc. and Lancer Partners Limited Partnership (collectively, the "Plaintiffs") choosing to discontinue an action which had been filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary (Action No. 0101-07232) on March 29, 2001, naming Matthew Heysel, CEO and China Broadband Corp. as defendants.

8. NEW ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). In particular, it (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to the language used in FASB Interpretation No. ("FIN") 45, "Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45") and (4) amends certain other existing pronouncements. SFAS 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.

In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). SFAS 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in the balance sheets. Previously, many of those financial instruments were classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. The Company does not expect the adoption of SFAS 150 to have a material impact on its business, results of operations and financial condition.

Effective January 1, 2003, the Company adopted the provisions of SFAS 145: Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and technical corrections, which required the Company to reclassify an extraordinary item relating to extinguishment of debt to operating income. The extraordinary item in the amount of $1,422,225 was reclassified to general and administration expenses in the cumulative period from inception February 1, 2000 to June 30, 2003 on the condensed, consolidated statement of operations and deficit.

 

CHINA BROADBAND CORP.
(a Development Stage Enterprise)
Notes to the Condensed Consolidated Financial Statements (unaudited)
(Expressed in United States Dollars)

 

9. RESTATEMENT

Subsequent to the issuance of the Company's unaudited interim consolidated financial statements as at and for the three and six month periods ended June 30, 2003, the Company's management determined that the stock based compensation expense did not reflect the proper amounts for options subject to variable plan accounting. The effect of the adjustment was to increase additional paid in capital, deferred compensation and general and administrative expenses $256,950, $159,484, and $97,466, respectively.

Accordingly, the accompanying unaudited interim consolidated financial statements as at and for the three and six month periods ended June 30, 2003 have been restated from the amounts previously reported to reflect the proper amounts under variable plan accounting. A summary of the restatement is as follows:

Balance Sheet:

As previously reported

As restated

At June 30, 2003

 

 

Additional paid in capital

$22,937,864

$23,180,868

Deferred compensation

$(386,197)

$(547,578)

Accumulated Deficit

$(21,068,655)

$(21,150,278)

 

 

 

Statement of Operations:

 

 

 

 

 

For the three months ended June 30, 2003

 

 

General and administrative Expenses

$(398,836)

$(480,459)

Net Loss

$(424,470)

$(506,093)

Loss Per Share

 

 

 

Basic and diluted

$(0.02)

$(0.02)

 

 

 

For the six months ended June 30, 2003

 

 

General and administrative Expenses

$(748,309)

$(829,932)

Net Loss

$(805,330)

$(886,953)

Loss Per Share

 

 

 

Basic and diluted

$(0.04)

$(0.04)

 

 

 

Cumulative Period from Inception February 1, 2000 to June 30, 2003

 

 

General and administrative Expenses

$(7,974,938)

$(8,056,561)

Net Loss

$(21,068,655)

$(21,150,278)

 

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS

As discussed in Note 9 to our unaudited condensed consolidated financial statements, our June 30, 2003 financial statements have been restated. Management's Discussion and Analysis of Financial Condition and Results presented below gives effect to the restatement.

FORWARD-LOOKING STATEMENTS

Included in this report are various forward-looking statements, which can be identified by the use of forward looking terminology such as "may," "will," "expect," "anticipate," "estimate," "continue," "believe" or other similar words. We have made forward-looking statements with respect to the following, among others: our goals and strategies; our expectations related to growth of the Internet in China and our ability to earn sufficient revenues; the importance and expected growth of Internet technology and the demand for Internet services in China; our ability to continue as a going concern; and our future revenue performance and our future results of operations. These statements are forward-looking and reflect our current expectations. They are subject to a number of risks and uncertainties, including but not limited to, changes in the economic and political environments in China, economic and political uncertainties affecting the capital markets, changes in technology, changes in the Internet marketplace in China, competitive factors and other risks described in our annual report on Form 10-KSB which has been filed with the United States Securities and Exchange Commission. In light of the many risks and uncertainties surrounding China Broadband, China and the Internet marketplace, you should keep in mind that we cannot guarantee that the forward-looking statements described in this report will transpire and you should not place undue reliance on forward looking statements.

The following selected financial data is qualified in its entirety by reference to, and you should read them in conjunction with, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the consolidated financial statements and notes to such consolidated financial statements included in this report. We have derived the statements of operations data and the information as at and for the six months period ended June 30, 2003 and 2002 from unaudited condensed consolidated financial statements and from our audited consolidated financial statements for the period ended December 31, 2002. The data from incorporation (February 1, 2000) to June 30, 2003, that appears in this filing are qualified by reference to the unaudited condensed consolidated financial statements.

SUMMARY FINANCIAL DATA

Statement of Operations Data:

 

THREE MONTH PERIOD ENDED
JUNE 30, 2003
(restated)

THREE MONTH PERIOD ENDED
JUNE 30, 2002

SIX MONTH PERIOD ENDED
JUNE 30, 2003
(restated)

SIX MONTH PERIOD ENDED
JUNE 30, 2002

PERIOD FROM FEBRUARY 1, 2000 TO
JUNE 30, 2003
(restated)

Revenue

$48,530

$31,323

$93,734

$54,283

$256,255

Loss from operations

$506,093

$826,152

$886,953

$1,286,845

$21,150,278

Net loss

$506,093

$826,152

$886,953

$1,286,845

$21,150,278

Basic (loss) per share

($0.02)

($0.04)

($0.04)

($0.06)

--

Basic weighted average common shares outstanding

 

22,513,801

 

22,513,801

 

22,513,801

 

20,990,383

 

--

 

Balance Sheet Data:

 

June 30, 2003

December 31, 2002

Cash and cash equivalents

$1,137,312

$1,718,173

Working capital

$1,188,249

$1,736,597

Total assets

$1,660,981

$2,387,858

Total stockholders' equity

$1,563,945

$2,192,849

RESULTS OF OPERATIONS

Revenues

On a consolidated basis, we earned revenues of $48,530 for the three months ended June 30, 2003 (2002 - $31,323) and $93,734 for the six months ended June 30, 2003 (2002 - $54,283). The following discussion provides a breakdown of revenue within our corporate structure.

China Broadband Corp.

For the three and six months ended June 30, 2003, China Broadband Corp. did not earn revenues as we earn our revenues through our subsidiaries. We provided technical consulting services to Big Sky Network in the first half of 2001 pursuant to a Technical Services Agreement with Big Sky Network from May 1, 2000 to April 30, 2001. Our acquisition of the remaining 50% interest in Big Sky Canada required that the revenue from this arrangement be eliminated on consolidation.

We earn revenues through our subsidiary Chengdu Big Sky Technology Services Ltd.

Chengdu Big Sky Technology Services Ltd.

Chengdu Big Sky Network Technology Services Ltd., a wholly owned subsidiary, commenced operations in October 2001 and had 166 corporate subscribers and 99 residential subscribers connected at June 30, 2003 (82 at June 30, 2002). Big Sky Technology Services recorded gross sales of $48,530 in the second quarter of 2003 (2002 - $31,323), and $93,734 in the six months ended June 30, 2003 (2002 - $54,283) and $256,255since inception. If the operation becomes cash flow positive, we anticipate it will re-invest its after tax income, if any, in related business opportunities in China. We do not anticipate Big Sky Technology Services will pay any dividends in the foreseeable future.

We have invested approximately $568,715 in equipment and working capital in Big Sky Technology Services to date. We intend to add equipment and working capital based on an analysis of the potential return on investment from such equipment or working capital. Additional investments will be made based upon the potential for a short-term payback of such investment. Future growth is anticipated to be funded primarily by revenues from services.

Expenses

During the three and six months ended June 30, 2003, we incurred operating expenses of $520,352 (2002 - $783,966) and $911,622 (2002 - $1,195,659) respectively. The following table provides a breakdown of operating expenses by category.

 

General Operating Expenses

 

THREE MONTH PERIOD ENDED JUNE 30, 2003
(Restated)

THREE MONTH PERIOD ENDED
JUNE 30, 2002

SIX MONTH PERIOD ENDED JUNE 30, 2003
(Restated)

SIX MONTH PERIOD ENDED
JUNE 30, 2002

PERIOD FROM FEBRUARY 1, 2000 TO
JUNE 30, 2003
(Restated)

Calgary Office Costs

$133,054

$327,825

$234,794

$428,757

$2,782,479

Beijing Office Costs

$105,000

$105,105

$210,000

$195,720

$1,980,649

Big Sky Technology Services

$20,490

$31,571

$73,555

$63,019

$266,401

Professional Services

$44,605

$25,603

$47,870

$84,306

$1,889,664

Investor Relations

$5,664

$11,405

$5,664

$20,661

$1,163,647

Amortization

$39,893

$51,223

$81,690

$100,345

$3,313,897

Non Cash Compensation

$171,646

$229,643

$258,049

$299,900

$1,183,832

Miscellaneous

$-

$1,591

$-

$2,951

$212,114

TOTAL

$520,352

$783,966

$911,622

$1,195,659

$12,792,683

 

Calgary office expense includes the costs of executive management and administrative consultants, travel, rent, insurance, and general office costs associated with maintaining an investor relations/regulatory administration office in North America. For the three and six months ended June 30, 2003 Calgary office costs have decreased 59% and 45% over the same periods in 2002, primarily due to a reduction in staff in 2002 and sub-lease arrangements to recover rent expense.

Beijing office costs include the costs of maintaining business operations and our principal business office in China In the three and six months ended June 30, 2003, Beijing office costs have remained relatively stable over the same periods in 2002 despite significant reductions in salaries, contract fees, and travel expenses.

Professional services include accounting, audit and legal advisory costs. For the three months ended June 30, 2003, professional costs have increased 74% over the same period in 2002 due to the hiring of a third party accounting firm to process our accounting, as well as additional legal fees incurred in connection with the winding up of our legal proceeding and a trademark registration. For the six months ended June 30, 2003, professional fees have decreased by 43% primarily in legal and auditing fees which are attributable to the secondary registration statement on Form S-1 which we filed on May 3, 2002. As well, during the three months ended June 30, 2003, we received $20,439 in legal costs which had been awarded to us by the Court of Queen's Bench of Alberta due to The Orbiter Fund Ltd., The Viator Fund Ltd., Lancer Offshore Inc. and Lancer Partners Limited Partnership (collectively, the "Plaintiffs") choosing to discontinue an action which had been filed in the Court of Queen's Bench of Alberta, Judicial District of Calgary (Action No. 0101-07232) on March 29, 2001.

We made deliberate efforts to reduce our office and professional service costs over the first six months of 2003 and we expect to continue to minimize expenses through the year ended December 31, 2003.

Amortization and depreciation expense recorded during the first and second quarter of 2003, resulted from the depreciation of office equipment and leasehold improvements.

Non-cash stock compensation expense was $171,646 in the three months ended June 30, 2003 (2002 - $229,643) and $258,049 in the six months ended June 30, 2003 (2002 - $299,900).

 

Summary of Non-cash Compensation Expense for the three months ended June 30, 2003

 

 

Expense

Unamortized Deferred Compensation

Options

 

 

Options granted February 2, 2001

$59,209

$141,868

Options granted June 29, 2001

$391

$4,631

Options granted November 13, 2001

$10,710

$172,838

Options granted April 10, 2002

$14,352

$22,652

Options granted August 27, 2002

$483

$3,464

Options granted October 21, 2002

$83,841

$175,367

Options granted April 25, 2003

$2,660

$26,758

Total

$171,646

$547,578

On April 25, 2003 the board of directors approved the cancellation of 600,000 options previously issued to two past directors and a past consultant, all of whom are now members of our advisory board. Concurrently, the board of directors approved the issuance of 800,000 options to the same individuals. These options were priced at fair market value on the date of the grant with an exercise price of $0.05 per share. One-third of the options vested immediately upon issuance with one-third vesting one year from the date of grant and the last one-third vesting two years from the date of grant. All unexercised options expire on April 25, 2008.

Losses

The Chengdu joint venture is accounted for on an equity basis. The loss in Chengdu joint venture, $46,035 for the three months ended June 30, 2003 (2002 - $31,638) and $86,248 for the six months ended June 30, 2003 (2002 - $84,561) has not been recognized into income as a result of the write down of the entire investment in Chengdu joint venture in 2001.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2003 we had cash and cash equivalents of $1,137,312 and a working capital surplus of $1,188,249 compared to a working capital surplus of $1,736,597 at December 31, 2002. Funds used in operations for the three months ended June 30, 2003 decreased to $294,554 a decrease of 51% from $496,629 for the same period in 2002.

Since inception, we have financed operations primarily through sales of equity securities and have raised a total of $12,464,053, net of share issuance costs of $177,740. On a consolidated basis, our current operating cash expenditures are expected to be approximately $100,000 per month, however, we are working to bring the monthly expenditures down to approximately $80,000.

We anticipate that we will be required to raise an additional $1.0 million to fund growth and existing operations through December 31, 2003. Our principal source of capital has been equity financing from investors and our founders. We have explored opportunities for vendor financing, bank credit facilities and export credit agency arrangements without success. Meeting our future financing requirements is dependent on access to equity capital markets. We may not be able to raise additional equity when required or on favorable terms that are not dilutive to existing shareholders.

We did not raise any financing during the six months ended June 30, 2003.

RELATED PARTY TRANSACTIONS

As of June 30, 2003, Matthew Heysel, our Chief Executive Officer owed us $6,768 for personal expenses incurred while traveling on business.

On July 11, 2003, our Chief Executive Officer, through his privately held corporation, entered into a Stock Option Agreement with two of our shareholders. Under this agreement, Mr. Heysel has the option to purchase 1,620,000 of our common shares held by two shareholders at a price of $0.10 per share. The option to purchase is valid for eighteen months from the date of the agreement. As well, an irrevocable proxy has been delivered to Mr. Heysel granting him the power to vote the shares at all annual and special meetings of our shareholders until the expiry date of the agreement or the purchase of the shares, whichever occurs first.

In April, several of our Advisory Board members returned for cancellation option agreements representing options to acquire 600,000 common shares at $1.00 per share. No compensation was paid to the members for cancellation of the options.

On April 25, 2003, our Board of Directors approved the issuance of 800,000 options to several of our Advisory Board members. These options were priced at the fair market value on the date of grant with an exercise price of $0.05 per share. One-third of the options vested immediately upon issuance with one-third vesting one year from the date of grant and the last one-third vesting two years from the date of grant. All unexercised options expire on April 25, 2008.

NEW ACCOUNTING PRONOUNCMENTS

In April 2003, the FASB issued SFAS No. 149, "Amendment of SFAS No. 133 on Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). In particular, it (1) clarifies under what circumstances a contract with an initial net investment meets the characteristic of a derivative as discussed in SFAS 133, (2) clarifies when a derivative contains a financing component, (3) amends the definition of an underlying to conform it to the language used in FASB Interpretation No. ("FIN") 45, "Guarantor Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" ("FIN 45") and (4) amends certain other existing pronouncements. SFAS 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.

In May 2003, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" ("SFAS 150"). SFAS 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in the balance sheets. Previously, many of those financial instruments were classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. We do not expect the adoption of SFAS 150 to have a material impact on our business, results of operations and financial condition.

Effective January 1, 2003, we adopted the provisions of SFAS 145: Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and technical corrections, which required us to reclassify an extraordinary item relating to extinguishment of debt to operating income. The extraordinary item in the amount of $1,422,225 was reclassified to general and administration expenses in the cumulative period from inception February 1, 2000 to June 30, 2003 on the condensed, consolidated statement of operations and deficit.

ITEM 3. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon the foregoing, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective in connection with the filing of this Quarterly Report on Form 10-QSB for the quarter ended June 30, 2003.

 

As more fully described in Note 9 to the condensed consolidated financial statements, subsequent to the issuance of our financial statements for the quarter ended June 30, 2003, we determined that the stock based compensation expense did not reflect the proper amount for options subject to variable plan accounting. We are developing additional internal controls and procedures to better monitor non-cash compensation expense on a quarterly basis to improve our financial reporting and public disclosures.

PART II

ITEM 1. LEGAL PROCEEDINGS

There were no pending legal proceedings against us during the quarter ended June 30, 2003 and no legal proceedings against us currently pending.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

a) Sales of Unregistered Securities

None

b) Use of Proceeds from Sales of Registered Securities

Not Applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

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

The annual meeting of Shareholders was held on June 13, 2003, at which the following items were voted upon:

Item

For

Against

Abstain

1)

The following directors were elected to the Board of Directors to hold such position until the next annual meeting of the shareholders or until their successor is duly elected and qualified:

 

 

 

 

Matthew Heysel

11,797,897

0

6,000

 

Daming Yang

11,797,897

0

6,000

 

Thomas Milne

11,797,897

0

6,000

 

Danai Suksiri

11,797,897

0

6,000

 

 

 

 

 

2)

The shareholders ratified the appointment of Deloitte & Touche LLP as our auditors, who have been our auditors since September 22, 2000.

 

11,800,897

 

3,000

 

0

ITEM 5. OTHER INFORMATION

On June 13, 2003, at a meeting of the board of directors held subsequent to our Annual Meeting of the Shareholders, Danai Suksiri resigned from the board of directors of China Broadband Corp. and took a position on our Advisory Board.

 

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits.

Exhibit No.

Description

3.1 (1)

Certificate of Incorporation of the Company consisting of the Articles of Incorporation filed with the Secretary of the State of Nevada on February 9, 1993

3.2 (5)

Certificate of Amendment to Articles of Incorporation of Institute For Counseling, Inc. filed with the Secretary of the State of Nevada on March 22, 2000

3.3 (3)

Certificate of Amendment to Articles of Incorporation of Institute For Counseling, Inc. filed with the Secretary of the State of Nevada on April 14, 2000

3.4 (1)

By-Laws of the Company, dated November 9, 1993

3.5 (14)

Amended and Restated By-Laws of the Company, dated August 8, 2001

10.1(2)

Purchase Agreement for the Acquisition of China Broadband (BVI) Corp. among Institute For Counseling, Inc. and China Broadband (BVI) Corp.

10.2 (2)

Cooperative Joint Venture Contract For Shenzhen China Merchants Big Sky Network Ltd.

10.3 (4)

Common Stock Purchase Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp. and Big Sky Network Canada Ltd.

10.4 (4)

Termination Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp., Big Sky Network Canada Ltd. and Matthew Heysel, for himself and as attorney-in-fact for Daming Yang, Kai Yang, Wei Yang, Jeff Xue, Donghe Xue, Lu Wang, Wallace Nesbitt and Western Capital Corp.

10.5 (4)

Termination Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp., Big Sky Network Canada Ltd., China Broadband (BVI) Corp., Matthew Heysel and Daming Yang.

10.6 (5)

Cooperative Joint Venture Contract For Sichuan Huayu Big Sky Network Ltd. dated July 8, 2000

10.7 (5)

Strategic Partnership Agreement Between Chengdu Huayu Information Industry Co., Ltd. and Big Sky Network Canada Ltd.

10.8 (5)

Cooperative Joint Venture Contract For Deyang Guangshi Big Sky Ltd. dated November 25, 2000

10.9 (5)

Consulting Agreement MH Financial Management, for the services of Matthew Heysel

10.10 (5)

China Broadband Stock Option Plan

10.11 (5)

Form of Stock Option Agreement

10.12 (5)

Form of Restricted Stock Purchase Agreement

10.13 (5)

Letter Agreement dated July 25, 2000 by and between China Broadband Corp. and Canaccord International Ltd.

10.14 (5)

Joint Development Agreement of City-Wide-Area High Speed Broadband and Data Transmission Services Networks of China Between Big Sky Network Canada Ltd. and Jitong Network Communications Co. Ltd.

10.15 (5)

Consulting Agreement Daming Yang

10.16 (5)

Consulting Agreement and Precise Details Inc. for the services of Thomas Milne

10.17 (8)

Agreement to the Establishment of Cooperation Joint Venture between Big Sky Network Canada Ltd. and Zhuhai Cable Television Station, dated May 27, 1999

10.18 (8)

Letter of Intent, dated March 1, 2000, between Big Sky Network Canada Ltd. and Dalian Metropolitan Area Network Center

10.19 (8)

Letter of Intent, dated November 8, 2000, between Big Sky Network Canada Ltd. and Hunan Provincial Television and Broadcast Media Co. Ltd.

10.20 (8)

Preliminary Agreement to Form a Contractual Joint Venture, dated March 8, 2001 between Big Sky Network Canada Ltd. and Changsha Guang Da Television

10.21 (6)

Purchase and License Agreement, dated September 28, 2000, between China Broadband Corp. and Nortel Networks Limited

10.22 (6)

Amendment, dated January 1, 2001, to the Purchase and License Agreement between China Broadband Corp. and Nortel Networks Limited

10.23 (8)

Consulting Agreement, dated December 22, 2000, between China Broadband Corp and Barry L. Mackie

10.24 (8)

Consulting Agreement, dated October 1, 2000, between China Broadband Corp and Richard Lam

10.25 (8)

Consulting Agreement, dated October 1, 2000, between China Broadband Corp and Ping Chang Yung

10.26 (8)

Consulting Agreement, dated October 1, 2000, between China Broadband Corp and YungPC AP

10.27 (7)

Common Stock Purchase Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp. and Big Sky Network Canada Ltd.

10.28 (7)

Termination Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp., Big Sky Network Canada Ltd. and Matthew Heysel, for himself and as attorney-in-fact for Daming Yang, Kai Yang, Wei Yang, Jeff Xue, Donghe Xue, Lu Wang, Wallace Nesbitt and Western Capital Corp.

10.29 (7)

Termination Agreement dated September 29, 2000, among SoftNet Systems, Inc., China Broadband Corp., Big Sky Network Canada Ltd., China Broadband (BVI) Corp., Matthew Heysel and Daming Yang

10.30 (12)

Letter of Intent dated June 1, 2001 between Big Sky Network Canada Ltd. and Shanghai Min Hang Cable Television Center

10.31 (12)

Memorandum of Understanding dated June 18, 2001 between Big Sky Network Canada Ltd. and Beijing Gehua Cable TV Networks Co., Ltd.

10.32 (12)

Letter of Intent between Big Sky Network Canada Ltd. and Chong Qing Branch of Ji Tong Network Communications Co., Ltd.

10.33 (12)

Consulting Agreement dated April1, 2001 between China Broadband Corp. and Precise Details Inc.

10.34 (12)

Consulting Agreement dated April 1, 2001 between China Broadband Corp. and M.H. Financial

10.35 (12)

Consulting Agreement dated April 1, 2001 between China Broadband Corp. and Daming Yang

10.36 (12)

Indemnity Agreement dated June 29, 2001 between China Broadband Corp. and Matthew Heysel

10.37 (13)

Memorandum of Understanding between Big Sky Network Canada Ltd. and Fujian Provincial Radio and Television Network Co. Ltd. dated July 10, 2001

10.38 (14)

Note Cancellation Agreement between China Broadband Corp. and Canaccord International Ltd.

10.39 (15)

Consulting Agreement, dated July 1, 2001, between China Broadband Corp and Barry L. Mackie

10.40 (15)

Memorandum of Understanding between Chengdu Big Sky Network Technology Services Ltd. and Jitong Network Communications Co. dated October 15, 2001

10.41 (15)

Consulting Agreement, dated April 1, 2001 between China Broadband Corp. and Richard Lam

10.42 (17)

Joint Project Contract between the Chong Qing Branch of Jitong Network Communications Co. Ltd. and Chengdu Big Sky Network Technology Services Ltd. dated October 31, 2001

10.43 (17)

Alternative Compensation Plan

10.44 (17)

Fee Arrangement Agreement dated January 28, 2002 between China Broadband Corp. and Michael Morrison

10.45 (18)

Agency Agreement between China Broadband Corp. and Canaccord Capital (Europe) Limited dated March 13, 2002

10.46 (19)

Agreement of Cooperative Rights & Interests Assignment between Big Sky Network Canada Ltd. and Winsco International Limited dated September 13, 2002 - English Translation

16.1 (9)

Change in Auditor Letter of Amisano Hanson

16.2 (10)

Change in Auditor Letter of Arthur Anderson LLP

21.1 (20)

List of subsidiaries of registrant (see "Overview of Corporate Structure" in this Annual Report)

31.1

Section 302 Certification - Chief Executive Officer

31.2

Section 302 Certification - Chief Financial Officer

32.1

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer

32.2

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer

 

 

(1)

Previously filed on Form 10-SB on December 2, 1999.

(2)

Previously filed on Form 8-K filed on April 28, 2000.

(3)

Previously filed on Form 10-KSB on July 11, 2000.

(4)

Previously filed on Form 8-K filed on September 29, 2000.

(5)

Previously filed on Form S-1 filed on December 6, 2000.

(6)

Previously filed on Form 10-QSB on March 15, 2001, excluding schedules and exhibits. Amended to include schedules and exhibits and re-filed on Amendment No. 3 to Form S-1. Amended to mark omitted material and re-filed on Amendment No. 5 to Form S-1. Certain portions of the material have been omitted pursuant to an application for confidential treatment which has been filed with the United States Securities and Exchange Commission under Rule 406 of the Securities Exchange Act of 1933, as amended.

(7)

Previously filed on Form 8-K/A on December 12, 2000.

(8)

Previously filed on Form 10-KSB on March 28, 2001.

(9)

Previously filed on Form 8K on August 25, 2000.

(10)

Previously filed on Form 8K on September 26, 2000.

(11)

Previously filed on Form S-1, Amendment No. 1 on April 6, 2001.

(12)

Previously filed on Form S-1, Amendment No. 3 on July 2, 2001.

(13)

Previously filed on Form S-1, Amendment No. 4 on July 27, 2001.

(14)

Previously filed on Form S-1, Amendment No. 5 on August 10, 2001.

(15)

Previously filed on Form S-1, Amendment No. 7 on October 25, 2001.

(16)

Previously filed on Form 10-QSB on November 14, 2001.

(17)

Previously filed on Form 10-KSB on April 1, 2002.

(18)

Previously filed on Form S-1 on April 12, 2002.

(19)

Previously filed on Form 8-K/Amendment No. 1 on October 30 2002.

(20)

Previously filed in Form 10-KSB on April 16, 2003.

b) Reports on Form 8-K.

None.

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

China Broadband Corp. 

 

Date: November 19, 2003

By:

/s/ MATTHEW HEYSEL
Name: Matthew Heysel
Title: Chief Executive Officer (Principal Executive Officer)

 

 

Date: November 19, 2003

By:

/s/ THOMAS MILNE
Name: Thomas Milne
Title: Chief Financial Officer (Principal Accounting Officer)