As filed with the Securities and Exchange Commission on February 12, 2004
Registration Statement No. 333-110071
-------------------------------------------------------------------------------
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
AMENDMENT NO. 2
TO
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------
Apex Wealth Enterprises Limited
(Exact name of Registrant as specified in its charter)
British Virgin Islands 8741 Not Applicable
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
Room 3505-06, 35th Floor
Edinburgh Tower, The Landmark
15 Queen's Road Central, Hong Kong
(852) 2736-2111
(Address and telephone number of Registrant's principal executive offices)
--------------------
NATIONAL REGISTERED AGENTS, INC.
875 Avenue of the Americas,
Suite 501 New York, New York 10001
1-800-550-6724
(Name, address, and telephone number of agent for service)
--------------------
Copies to:
Simon C. Luk, Esq. Stephen M. Davis, Esq.
Heller Ehrman White & McAuliffe LLP Heller Ehrman White & McAuliffe LLP
35th Floor, One Exchange Square 120 West 45th Street
8 Connaught Place New York, New York 10036
Central, Hong Kong 212-832-8300
011-852-2292-2000
--------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form is to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement of
the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
----------------------------------------------- ---------------------- ----------------------- ------------------ -----------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered Offering Price Aggregate Registration Fee
Per Share (1) Offering Price
----------------------------------------------- ---------------------- ----------------------- ------------------ -----------------
----------------------------------------------- ---------------------- ----------------------- ------------------ -----------------
Common Stock, par value $0.01 per share 2,000,000 $0.05 $100,000 $810
----------------------------------------------- ---------------------- ----------------------- ------------------ -----------------
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
===============================================================================
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion
Preliminary Prospectus dated February___, 2004
PROSPECTUS
2,000,000 Shares of Common Stock
APEX WEALTH ENTERPRISES LIMITED
---------------
Apex Wealth Enterprises Limited (the "Company"), is a development stage
company established in the British Virgin Islands ("BVI") on April 8, 2002. We
are offering 2,000,000 new shares of our common stock, par value $0.01 each for
sale to the public at an offering price of $0.05 per common share. The offering
will close no later than 90 days after the date of this prospectus. There are no
underwriters involved in the selling of our common shares. We will pay sales
commissions of up to 10% to registered broker-dealers willing to sell our common
shares. The common shares are being offered by us on a "best efforts no minimum
basis." There is no minimum purchase requirement and no arrangements to place
funds in an escrow, trust or similar account. The net proceeds from the
anticipated sale of the common shares will be for our benefit.
This is our initial public offering, and no public market currently exists
for the common shares. Prior to this offering there has been no public market
for our shares of common stock, and there can be no assurance that such a public
market will develop or be sustained after this offering is completed. Our common
stock is not listed on any securities exchange or the Nasdaq Stock Market. We
intend to apply to have our common stock included for quotation on the Over the
Counter Bulletin Board ("OTCBB").
We have arbitrarily determined the offering price of $0.05 per share
offered hereby. The offering price bears no relationship to our assets, book
value, or any other customary investment criteria.
Investing in our common stock involves risks that are described in the "Risk
Factors" section beginning on page 3 of this prospectus.
---------------
---------------------- --------------------------- --------------------------- ---------------------------
Offering Price Underwriting Discounts Proceeds to us (2)
and Commissions (1)
---------------------- --------------------------- --------------------------- ---------------------------
---------------------- --------------------------- --------------------------- ---------------------------
Per share $0.05 -- $0.05
---------------------- --------------------------- --------------------------- ---------------------------
---------------------- --------------------------- --------------------------- ---------------------------
TOTAL OFFERING (3) $100,000 -- $100,000
---------------------- --------------------------- --------------------------- ---------------------------
----------------------------------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
---------------
The date of this prospectus is _____ February, 2004
[Back Cover Page]
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operation and prospects may have changed since that date.
The terms "we," "us," and "our" mean Apex Wealth Enterprises Limited.
Except where specifically indicated in this prospectus, "dollars"
and"$" mean United States dollars.
Until __________, 2004 (25 days after the commencement of this
offering), all dealers that effect transactions in these securities, whether or
not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
TABLE OF CONTENTS
PROSPECTUS SUMMARY.......................................................1
RISK FACTORS.............................................................3
FORWARD-LOOKING STATEMENTS...............................................7
ENFORCEABILITY OF CIVIL LIABILITIES......................................7
USE OF PROCEEDS..........................................................7
DETERMINATION OF OFFERING PRICE..........................................8
DIVIDEND POLICY..........................................................9
SELLING SHAREHOLDERS.....................................................9
PLAN OF DISTRIBUTION.....................................................9
EXCHANGE RATE............................................................9
CAPITALIZATION AND INDEBTEDNESS.........................................11
DILUTION................................................................12
SELECTED FINANCIAL INFORMATION..........................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...............................................14
BUSINESS................................................................15
MANAGEMENT..............................................................19
RELATED PARTY TRANSACTIONS..............................................20
PRINCIPAL SHAREHOLDERS..................................................20
DESCRIPTION OF COMMON STOCK.............................................21
MEMORANDUM AND ARTICLES OF ASSOCIATION..................................22
TAXATION................................................................26
SHARES ELIGIBLE FOR FUTURE SALE.........................................27
LEGAL MATTERS...........................................................28
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES..............................................28
EXPERTS.................................................................28
ADDITIONAL INFORMATION..................................................28
INDEX TO FINANCIAL STATEMENTS...........................................F-1
--------------------
PROSPECTUS SUMMARY
This summary may not contain all of the information that may be important
to you. You should read the entire prospectus, especially the discussion of
"Risk Factors" and the consolidated financial data and related notes, before
making an investment decision.
Apex Wealth Enterprise Limited
We are a development stage company incorporated in the BVI on April 8,
2002. As of the date of this prospectus, our only activities have been our
organization, raising our initial capital, developing a general business plan
and preparing this registration statement. We have not engaged in any
substantive business activities to date. We are not, nor do we consider
ourselves, a "blank check" company as that term is defined in SEC Rule 419 and
we have no intention of entering into a business combination in the immediate
future.
We aim to provide business advisory and management consulting services in
greater China, initially concentrating on the Hong Kong market and eventually
expanding into the People's Republic of China ("China"). Our focus will be on
small to medium size enterprises ("SMEs"), in Hong Kong and China. We intend to
work closely with our clients to improve their business performance, increase
shareholder value and create competitive advantages.
We intend to offer business advisory and management consulting services
which will include strategic advisory services, business plan preparation,
marketing plan development, advice on mergers, acquisitions, restructurings and
the sales of businesses, and advising overseas investors on investments in Hong
Kong and China.
We believe that there will be a strong demand for our services based on the
number of SMEs established and expected to be established in Hong Kong and China
and the government support given to those SMEs. Additionally, we believe that
the expected increased foreign investment in China coupled with China's
accession into the World Trade Organization ("WTO") will generate substantial
business opportunities for our services.
Our principal executive offices are located at Rooms 3505-06, 35th Floor,
Edinburgh Tower, The Landmark, 15 Queen's Road Central, Hong Kong, SAR and our
telephone number is (852) 2736-5511.
The Offering
We are offering 2,000,000 new shares of common stock to the public at a
price of $0.05 per share. We will sell the common stock on a "best efforts, no
minimum basis". There are no underwriters involved in the selling of our common
shares. We will pay a sales commission of up to 10% to registered broker-dealers
willing to sell our common shares. There is no minimum purchase requirement and
no arrangements to place funds in an escrow, trust or similar account. As the
funds are raised, they will be made available to us for our use. There is no
minimum amount of funds which must be raised by us before the funds are made
available to us. The offering will close no later than 90 days after the date of
this prospectus.
Use of Proceeds
We will receive the proceeds of the sale of the common stock. We expect to
receive an aggregate of up to $100,000 in gross proceeds from this offering, and
we expect to pay approximately $24,000 in out-of-pocket costs and expenses in
connection with this offering. The net proceeds which we receive will be used
for our general operating expenses, the drafting of a comprehensive business
plan, recruiting and hiring experienced business advisors and management
consultants and marketing and advertising.
1
Summary Financial Information
The following table presents summary information on our financial condition
and results of operations as of May 31, 2003 and for the period from April 8,
2002 (inception) through May 31, 2003. It also presents unaudited pro forma
financial information which has been prepared as if this offering has occurred.
The Summary Financial Information is qualified in its entirety by our financial
statements contained elsewhere in this prospectus.
As of
May 31, 2003
Statement of operations
Revenues 0
Net Loss $(4,072)
Net Loss Per Share $0.00
Common Stock outstanding 10,000,000
---------------------
Balance Sheet Date As of Pro Forma After
May 31, 2003 this Offering
Current Assets $100,256 $100,256
Total Assets $100,256 $100,256
Total Liabilities $4,328 $28,328
Shareholders' Equity $95,928 $71,928
============== ============ ============== =============
2
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the risks described below and elsewhere in this
prospectus before deciding to purchase our common stock. The risks described
below are not the only ones that we face. Any of the following risks may
materially and adversely affect our business, financial condition or results of
operations. The price of our common stock could decline as a result of these
risks, and you could lose all or part of your investment. Additionally, as we
are a company incorporated under BVI laws having its principal business in Hong
Kong, there are risks associated with investing in our common stock not typical
of investments in the securities of companies incorporated and doing business in
the United States.
WE HAVE NOT COMMENCED OPERATIONS, AND WE EXPECT TO INCUR OPERATING LOSSES
FOR THE FORESEEABLE FUTURE
We were incorporated on April 8, 2002 and have not yet commenced our
proposed business operations or realized any revenues. We have no operating
history upon which an evaluation of our future prospects can be made. Such
prospects must be considered in light of the substantial risks, expenses and
difficulties encountered by new entrants into the competitive business advisory
and management consulting industry. We are in the extreme early stages of our
development and could fail before implementing our business plan. We expect to
incur operating losses in future periods for the foreseeable future as we incur
significant expenses associated with developing our business in Hong Kong and
China. We cannot guarantee that we will be successful in realizing revenue or
achieving or sustaining positive cash flow in the future, and any such failure
could have a material adverse effect on our business, financial condition and
results of operations.
OUR SUCCESS DEPENDS ON ATTRACTING AND RETAINING QUALIFIED EMPLOYEES, THE
FAILURE OF WHICH COULD RESULT IN A MATERIAL DECLINE IN OUR REVENUES
We are a professional services company and our success and future growth
depends on our ability to attract and retain qualified employees throughout our
business, and in particular, experienced business advisors and management
consultants. This is especially relevant as most of our revenues will be
generated from the professional services provided by our business advisors and
consultants. Competition for qualified business advisors and management
consultants in Hong Kong and China is intense. We will compete for our employees
with many other companies, some of which will have greater financial and other
resources. We may have difficulty recruiting and retaining sufficient numbers of
qualified personnel, which could result in a material decline in our revenues.
In addition, increased compensation levels could materially and adversely affect
our financial condition or results of operations.
WE DEPEND ON THE SERVICES OF A LIMITED NUMBER OF PERSONNEL WHO WOULD BE
DIFFICULT TO REPLACE, AND IF NOT REPLACED COULD MATERIALLY AND ADVERSELY IMPACT
OUR PROFITABILITY
Our success depends significantly on the continued services of our
senior management. In particular, our success depends on the continued efforts
of Mr. Li Sze Tang, our Chief Executive Officer and Chairman of the Board of
Directors, and Mr. Wilson Cheung, our Chief Financial Officer and one of our
Directors. Mr. Li and Mr. Cheung have significant contacts with the Hong Kong
business community and are crucial for our business development. Currently, we
do not have any employment agreements with Mr. Li or Mr. Cheung and both may
choose to leave our employment at any time. Additionally, neither Mr. Li or Mr.
Cheung has entered into a non-compete or confidentiality agreement with us.
Finally, we do not carry key-man life insurance policies for either Mr. Li or
Mr. Cheung. There can be no assurance that either Mr. Li or Mr. Cheung will
continue in their present capacities for any particular period of time. The loss
of the services of Mr. Li or Mr. Cheung could materially and adversely affect
our ability to attract clients and to employ and retain qualified business
advisors and consultants which would have an adverse impact on our
profitability.
OUR BUSINESS STRATEGIES MAY NOT BE SUCCESSFUL, WHICH WOULD MATERIALLY AND
ADVERSELY IMPACT ON OUR FINANCIAL CONDITION
A key element of our strategy is dependant on the ability of our senior
management to identify the business advisory needs of our prospective clients
and developing business connections. Future growth will also depend
3
upon many other factors, including (a) the recruitment and retention of
qualified business and management consultants and other professional personnel;
(b) the development of a solid client base; (c) the successful marketing of our
professional services and (d) the formation of business alliances in Hong Kong
and China. If any one or more of our strategic elements are not achieved, our
financial condition or results of operations could be materially and adversely
affected.
MR. LI SZE TANG, A CURRENT STOCKHOLDER, WILL BE ABLE TO EXERCISE SUBSTANTIAL
CONTROL AFTER THIS OFFERING AND YOU WILL HAVE NO EFFECTIVE IN DECISIONS MADE BY
THE BOARD OF DIRECTORS
In the event the offering is fully subscribed to, Mr. Li Sze Tang will own
approximately 83.33% of the outstanding shares of our common stock. As a result,
he will have the ability to exercise substantial control over our affairs and to
elect a sufficient number of directors to control the board of directors. If you
invest in us, you will have no effective voice in decisions made by our board of
directors.
THIS IS OUR INITIAL PUBLIC OFFERING AND OUR COMMON STOCK HAS NEVER BEEN
PUBLICLY TRADED, INVESTORS MAY FACE DIFFICULTIES SELLING THEIR SHARES
There has been no public market for our common stock. We plan to apply to
have our common stock quoted on the OTCBB; however, no assurance can be given
that a market for our common stock will develop or that our common stock will be
quoted on OTCBB. Even if our common stock is eventually quoted on OTCBB,
sustaining a public trading market will require, among other things, the
participation of a qualified market maker who is willing to make a market in our
common stock. To date, no market maker has expressed any interest in our
Company. No assurance can be given that any market making activities will
commence or, if commenced, that they will continue. Investors may therefore have
difficulties selling their shares.
BECAUSE OUR SECURITIES ARE SUBJECT TO PENNY STOCK RULES, YOU MAY HAVE
DIFFICULTY RESELLING YOUR SHARES
Our shares as penny stocks are covered by Section 15(g) of the Securities
Exchange Act of 1934 which imposes additional sales practice requirements on
broker/dealers who sell the our securities including the delivery of a
standardized disclosure document; disclosure and confirmation of quotation
prices; disclosure of compensation the broker/dealer receives; and, furnishing
monthly account statements. For sales of our securities, the broker/dealer must
make a special suitability determination and receive from its customer a written
agreement prior to making a sale. The imposition of the foregoing additional
sales practices could adversely affect a shareholder's ability to dispose of his
shares.
WE MAY NEED ADDITIONAL CAPITAL TO FUND OPERATIONS AND FINANCE OUR GROWTH,
AND WE MAY NOT BE ABLE TO OBTAIN IT ON TERMS ACCEPTABLE TO US OR AT ALL, IN
WHICH CASE WE MAY BE UNABLE TO FIND ONGOING OPERATIONS
We believe that the net proceeds of approximately US$76,000 from this
offering, together with our existing assets will be sufficient to commence our
business operations and initiate our expansion as described in our business
plan. However, if we expand more rapidly than currently anticipated, our working
capital needs will exceed our current expectations, and we will need to raise
additional capital from equity or debt sources. If we cannot obtain financing on
terms acceptable to us or at all, we may be unable to fund ongoing operations.
IF WE ARE NOT ABLE TO EXPAND OUR BUSINESS IN CHINA, WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY
We expect to expand our business client base and be able to offer our
services in China. This expansion will require significant management attention
and financial resources. Our ability to expand our services into the China
markets will be limited by our ability to market to, and attract, Chinese
clients. Accordingly, we expect to commit substantial time and development
resources to developing the China market. These efforts may not be successful,
and we may not be able to compete effectively in that market.
CHANGES IN HONG KONG'S POLITICAL AND LEGAL CONDITIONS COULD HARM OUR
BUSINESS OPERATIONS
Most of our assets and our initial business will be in Hong Kong, and we
will conduct most of our business activities there. As a result, our results of
operations and financial condition may be especially influenced by the
4
political situation in Hong Kong and by the general state of the Hong Kong
economy. Hong Kong is a special administrative region of China, but it has its
own legislature, legal and judicial system and economic autonomy until the year
2047. We do not expect that this autonomy will be altered. However, any changes
in political, legal or other conditions in Hong Kong altering this autonomy
could have an adverse effect on our business operations and our revenue.
A REOCCURRENCE OF THE SEVERE ACUTE RESPIRATORY SYNDROME OUTBREAK MAY LEAD TO A
DECLINE IN OUR CLIENT BASE AND ADVERSELY IMPACT OUR REVENUES
This past summer Hong Kong and most of Asia suffered an outbreak of Severe
Acute Respiratory Syndrome ("SARs"), and Hong Kong's economy suffered greatly
because of this outbreak. The economic forecasts of SARs' impact on Hong Kong's
GDP growth range widely, however, nearly all agree that SARs will have at least
0.5 percentage point off Hong Kong's originally projected growth for 2003 with
some economists putting this figure as high as 1.3 percentage point. During the
SARs' outbreak, a number of multinational companies decided to establish their
headquarters in other parts of Asia, rather than Hong Kong. In the event of
another SARs' outbreak, our client base may decline which would have an adverse
impact on our revenues. There can be no assurance that another SARs' outbreak
will not occur or that if it does occur, it will not have a material negative
impact on the Hong Kong and China economies and our revenues.
CHINA'S LEGAL SYSTEM HAS UNCERTAINTIES WHICH COULD HARM OUR JOINT VENTURE
INTERESTS IN CHINA
A number of our future business projects and plans are expected to be
located in China. As a consequence, the economic, political, legal and social
conditions in China could have an adverse effect on our business, results of
operations and financial condition. The legislative trend in China over the past
decade has been to enhance the protection afforded to foreign investment and
allow for more active control by foreign parties of foreign invested
enterprises. There can be no assurance, however, that legislation directed
towards promoting foreign investment will continue. More restrictive rules on
foreign investment could adversely affect our ability to expand our operations
into China or repatriate any profits earned there.
RESTRICTIONS ON CURRENCY EXCHANGE MAY LIMIT OUR ABILITY TO UTILIZE OUR
REVENUES EFFECTIVELY
Although the Chinese government introduced policies in 1996 to allow
greater convertibility of the Renminbi, the unit of currency in China,
significant restrictions still remain. We can provide no assurance that the
Chinese government will not impose greater restrictions on the convertibility of
the Renminbi. Because some of our future revenues may be in the form of
Renminbi, any future restrictions on currency exchanges may limit our ability to
expand our business into the Chinese market which may have an adverse impact on
our future financial condition.
WE HAVE LIMITED REPORTING REQUIREMENTS UNDER THE SECURITIES EXCHANGE ACT OF
1934, WHICH MAKES US LESS TRANSPARENT THAN A U.S. ISSUER
As a foreign private issuer, the rules and regulations under the Securities
Exchange Act of 1934 provides us with certain exemptions. We are exempt from the
rules prescribing the furnishing and content of proxy statements, and our
officers, directors and principal stockholders are exempt from the reporting and
short-swing profit recovery provisions. Also, we are not required to publish
financial statements as frequently, as promptly or containing the same
information as United States companies. The result is that we will be less
transparent than a U.S. issuer.
THERE WILL BE IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS IN THIS
OFFERING
The initial public offering price is substantially higher than the pro
forma net tangible book value per share of our common stock based on the pro
forma net tangible book value per share of what the outstanding common share
will be immediately after the offering. Any common shares you purchase in the
offering will have a post-offering pro forma net tangible book value per share
of $0.0357 less than the price you paid for the share, assuming an initial
public offering price of $0.05 per share of common stock.
5
WE WILL NOT PAY DIVIDENDS FOR THE FORESEEABLE FUTURE
We anticipate that earnings, if any, will be retained for the development
of our business and that no cash dividends will be declared on our common stock
for the foreseeable future.
CERTAIN JUDGMENTS OBTAINED AGAINST US BY OUR SHAREHOLDERS MAY NOT BE
ENFORCEABLE IN THE BVI
We are a BVI company. All of our officers and directors reside outside of
the United States. All or substantially all of our assets and the assets of
these persons are located outside of the United States. As a result, it may not
be possible for investors to effect service of process within the United States
upon us or such persons or to enforce against us or these persons the United
States federal securities laws, or to enforce judgments obtained in United
States courts predicated upon the civil liability provisions of the federal
securities laws of the United States, including the Securities Act of 1933 and
the Securities Exchange Act of 1934. See "Enforcement of Civil Liabilities."
OUR OFFERING IS ON A "BEST EFFORTS, NO MINIMUM" BASIS AND A SUBSTANTIAL
PERCENTAGE OF THE OFFERING PROCEEDS MAY BE USED TO PAY FOR THE EXPENSES OF THIS
OFFERING AND NOT FOR OUR BUSINESS OPERATIONS
This is a "best efforts, no minimum" offering, in which the directors
through registered broker-dealers will use their best efforts to sell the common
stock that we are offering. As a result, there is no firm commitment to sell any
minimum number of shares or dollar amount. To the extent we sell significantly
less than the total number of shares that we are offering through this
prospectus, you may be one of only a small number of investors or the only
investor and a substantial percentage of the offering proceeds may be use to pay
for the offering expenses and not to further our business or initiate our
business plan.
6
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements that include risks and
uncertainties. We use words such as "anticipates," "believes," "plans,"
"expects," "future," "intends" and similar expressions to identify such
forward-looking statements. This prospectus also contains forward-looking
statements attributed to certain third parties relating to their estimates
regarding the operation and growth of our business and spending. You should not
place undue reliance on these forward-looking statements, which apply only as of
the date of this prospectus. We have based these forward-looking statements on
our current expectations and projections about future events.
The forward-looking statements included in this prospectus are also
subject to risks, uncertainties and assumptions about us. Our actual results of
operations may differ materially from the forward-looking statements as a result
of, among other things, lack of demand for our business advisory and consulting
services, increased competition and the inability to recruit experienced
consultants and the other risk factors described under "Risk Factors." We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this prospectus might not occur.
ENFORCEABILITY OF CIVIL LIABILITIES
We are a BVI company. All of our officers and directors reside outside of
the United States. All or substantially all of our assets and the assets of
these persons are located outside of the United States. As a result, it may not
be possible for investors to effect service of process within the United States
upon such persons or us or to enforce against us or these persons the United
States federal securities laws, or to enforce judgments obtained in United
States courts predicated upon the civil liability provisions of the federal
securities laws of the United States, including the Securities Act of 1933 and
the Securities Exchange Act of 1934. We have been advised by our BVI counsel,
Conyers Dill & Pearman, that civil liabilities predicated solely upon such
securities laws, whether in original actions or in actions for enforcement of
judgments of United States courts, may not be enforceable in the BVI. We have
appointed National Registered Agents, Inc., 875 Avenue of the Americas, New
York, New York, 10011 as our agent to receive service of process in the United
States.
USE OF PROCEEDS
We will receive the proceeds of the sale of the common stock. We expect to
receive an aggregate of up to $100,000 in gross proceeds from this offering, and
we expect to pay approximately $24,000 in out-of-pocket costs and expenses in
connection with this offering. The net proceeds which we receive will be used
for our general operating expenses, the drafting of a comprehensive business
plan, recruiting and hiring experienced business advisors and management
consultants and marketing and advertising. There are no minimum requirements for
the sale of our common stock. There are no minimum amounts of proceeds that are
required to be raised by us before funds are made available to us, nor are any
funds to be held in escrow. The following table shows how we intend to use the
funds raised assuming the offering is completely subscribed for.
Amount to Percentage of
Use of Proceeds be Spent Total Proceeds
Recruiting consultants $40,000 40%
Advertising, Market Research Seminars $10,000 10%
Office in Hong Kong $10,000 10%
General Operating Expenses $16,000 16%
Expenses of this offering $24,000 24%
In the event that less than all the securities to be offered by this
prospectus are sold and there are insufficient funds to fully develop our
business plan, the net proceeds will be used mainly for recruiting and hiring
experienced business advisors and management consultants.
7
DETERMINATION OF OFFERING PRICE
The offering price of the common stock being offered has been determined
arbitrarily and has no relationship to any established criteria of value, such
as book value or earnings per share. Additionally, because we have not commenced
business operations, no significant operating history and have not generated any
revenues to date, the price of our common stock is not based on past earnings,
nor is the price of the common stock indicative of the current market value for
the assets owned by us. We make no representations as to any objectively
reasonable value of the common stock.
Since we have not retained an underwriter for purposes of this offering,
the offering price has not been subject to evaluation by any third party as
would be the case in an underwritten offering. Prices for the shares of our
common stock after this offering will be determined in the available market and
may be influenced by many factors, including the depth and liquidity of the
market for our common stock and general economic and market conditions.
8
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and
we do not intend to pay any cash dividends on our common stock, or indirectly on
our common stock, for the foreseeable future. Our current policy is to retain
earnings, if any, to finance the expansion of our business and for general
corporate purposes. Future dividends, if any, will be determined solely by our
board of directors and will depend upon, among other things, our earnings,
financial condition, capital requirements, level of indebtedness, and other
factors the board of directors believes is relevant.
SELLING SHAREHOLDERS
There are no selling security holders.
PLAN OF DISTRIBUTION
The Offering
We are offering 2,000,000 new shares of common stock to the public at a
price of $0.05 per share. We will sell the common stock on a "best efforts, no
minimum basis". There are no underwriters involved in the selling of our common
stock. We will pay sales commissions of up to 10% to registered broker-dealers
willing to sell our common shares. There is no minimum purchase requirement and
no arrangements to place funds in an escrow, trust or similar account. As the
funds are raised, they will be made available to us for our use. There is no
minimum amount of funds which must be raised by us before the funds are made
available to us. Our directors will personally distribute the prospectus to
prospective investors whom we believe may be interested, or who have contacted
us expressing an interest in evaluating an investment in our common stock. The
offer and sale of shares of our common stock offered pursuant to this prospectus
will commence after this registration statement is declared effective for a
period of 90 days.
We intend to offer shares of our common stock to persons who are not
residents of the United States, but only to the extent we may lawfully do so
under the laws of the country where the offeree resides. We may sell our common
stock in privately negotiated transactions, or in the event our common stock is
quoted on the OTCBB, in such public market.
Nothing in this prospectus will prevent our common stock from may also be
sold in compliance with the Securities and Exchange Commission Rule 144 of the
Securities Act of 1933. Our Officers and Directors do not intend to subscribe
for shares in this offering.
Offering Expenses
The expenses payable by us in connection with the issuance and
distribution of the securities being registered are estimated as follows:
Securities and Exchange Commission Registration Fee $810
U.S. Legal Fees $20,000
BVI Legal Fees $1,500
Accounting Fees $1,500
Printing $190
TOTAL $24,000
EXCHANGE RATE
Quantitative and Qualitative Disclosures About Market Risks
We will record our finances in Hong Kong dollars and report our operations
in U.S. dollars. Fluctuations in the exchange rate between Hong Kong dollars and
the U.S. dollars will affect the amount of dollars reported in our
9
financial statements. We do not expect to actively use derivative instruments to
reduce our exposure to foreign currency risk.
The following table sets forth certain information concerning the average
rates of exchange between Hong Kong dollars and U.S. dollars for the periods
indicated. It represents the noon buying rate in New York for cable transfers
payable in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York. the average noon buying rate is determined by
averaging the rates on the last business day of each month during the relevant
period.
CALENDAR YEAR AVERAGE NOON
BUYING RATE
(HK$ PER US$)
1999 7.7594
2000 7.7924
2001 7.7997
2002 7.7997
2003 7.7876
LAST SIX CALENDAR MONTHS HIGH LOW
July 2003 7.7998 7.7950
August 2003 7.7998 7.7920
September 2003 7.7999 7.7444
October 2003 7.7684 7.7085
November 2003 7.7690 7.7475
December 2003 7.7670 7.7628
10
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness as of
May 31, 2003. Our capitalization and indebtedness are presented on an actual
basis and on a pro forma basis.
You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and the notes thereto, included elsewhere in this prospectus. On a
pro forma as adjusted basis, cash equivalents will be US$71,928, total shares
issued and outstanding will be 10,000,000 and total stockholders' equity will be
US$71,928 (assuming no shares are sold pursuant to the offering).
PRO FORMA
AS OF MAY 31, AFTER THIS
2003 OFFERING (1)
Cash $100,256 $100,256
Long-term debt: $0 $0
Common stock: $0.01 par value;
Number of shares authorized:
10,000,000 shares issued and outstanding on an actual basis, $100,000
10,000,000 shares issued and outstanding on a pro forma as adjusted basis: $100,000
Additional paid-in capital $0 $0
Accumulated deficit $(4,072) $(28,072)
Total stockholders' equity $95,928 $71,928
(1) Assuming no shares are sold pursuant to the offering.
11
DILUTION
Our pro forma net tangible book value as of May 31, 2003 was $95,928, or
$0.0096 per common share. Pro forma net tangible book value per common share is
determined by dividing the amount of our total tangible assets less total
liabilities by the pro forma number of common share outstanding at that date.
Dilution in net tangible book value per common share represents the difference
between the amount per common share paid by purchasers of common stock in this
offering and the pro forma net tangible book value per common share immediately
after the completion of this offering.
After giving effect to the issuance and sale of 2,000,000 shares in this
offering, at an assumed initial public offering price of $0.05 per share, and
after deducting estimated offering expenses, which would result in estimated net
proceeds of $76,000, our pro forma net tangible book value as of May 31, 2003,
would have been $171,928 or $0.0143 per common share. This represents an
immediate increase in the pro forma net tangible book value of $0.0047 per
common share to existing shareholders and an immediate dilution of $0.0357 per
common share to new investors. The following table illustrates the per share
dilution:
Assumed initial public offering price per share........................ $0.05
Pro forma net tangible book value per common share at May 31, 2003..... $0.0096
Pro forma increase in net tangible book value per common share
attributable to new investors........................................ $0.0047
Pro forma net tangible book value per common share after this offering. $0.0143
Pro forma dilution per common share to new investors................... $0.0357
12
SELECTED FINANCIAL INFORMATION
The following table sets forth our selected consolidated financial data.
You should read this information together with our consolidated financial
statements and the notes to those statements beginning on page F-1 of this
prospectus and the information under "Summary Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The selected financial and other data set forth below should be read in
conjunction with our financial statements, including the notes thereto, and
"Managements Discussion, and Analysis of Financial Condition and Results of
Operations" included in this prospectus. The statement of operations data set
forth below for the period ended May 31, 2003 and the balance sheet data as of
May 31, 2003 are derived from our audited financial statements included
elsewhere in this prospectus, which have been audited by PKF Certified Public
Accountants. Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America.
FROM APRIL 8, 2002 (INCEPTION) TO MAY 31, 2003 STATEMENT OPERATIONS DATA:
Revenues: $0
Expenses:
Formation expenses $1,026
General and administrative expenses $3,046
Net Loss $(4,072)
Number of shares outstanding 10,000,000
Basic and diluted loss per share of common stock $0.0004
AS OF MAY 31, 2003
BALANCE SHEET DATA:
Cash $100,256
Total assets $100,256
Total stockholders' equity $95,928
We are in our early developmental and promotional stages. To date, our only
activities have been organizational, raising our initial capital, preparing a
business plan and preparing this registration statement. We have not commenced
commercial operations. As a result, the selected financial data presented above
bear no resemblance to the results that we expect when we begin operations
13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
our consolidated financial statements and related notes included elsewhere in
this prospectus. The following discussion contains forward-looking statements
that involve risks and uncertainties. Our actual results may differ materially
from those anticipated in those forward-looking statements as a result of
certain factors, including, but not limited to, those set forth under "Risk
Factors" and other information contained in this prospectus.
RESULTS OF OPERATIONS
We are a newly incorporated company in a development stage. To date, we
have not commenced business operations and have not generated any revenues. From
April 8, 2002 (inception) to May 31, 2003, we have engaged in no significant
operations other than our organization, raising our initial capital, developing
a general business plan and preparing this prospectus and registration
statement.
The following discussion and analysis should be read in conjunction with
our audited financial statements and notes thereto for the period of inception
to May 31, 2003 and other financial information included elsewhere in this
prospectus. This prospectus contains forward-looking statements that contain
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward looking statements.
Our operations in the upcoming year will vary based on the amount of funds
we raise. Regardless of whether any funds are raised, we anticipate incurring a
significant loss as a result of organizational expenses, expenses related to the
filing of this registration statement and recruiting experienced business
consultants to begin implementing our business plan. Assuming no funds are
raised, we believe that cash on hand will meet our immediate cash requirements
for the upcoming year.
LIQUIDITY AND CAPITAL RESOURCES
We remain in the development stage and have experienced no significant
change in liquidity or capital resources or shareholders' equity. Our balance
sheet as of May 31, 2003 reflects total assets of $100,256 in cash. With our
cash on hand, we expect to carry out the operations set forth in our business
plan even in the event we are unable to raise funds through this offering.
We do not intend to expand our operations until the sales of our services
have occurred and we feel that our revenues will support such an expansion.
Initially, we will recruit and hire our business consultants on as needed basis
and only when a particular client has agreed to retain the consultant. We
believe that most of our consultants will work at the client's site, and we will
only require a small administrative office. We have no specific long term
capital requirements other than those which would vary from the sale of our
services and no material borrowings. In our opinion, our working capital is
sufficient for our present requirements for the next twelve months.
In the event that we require more working capital, no commitment to provide
the additional capital has been made by our sole shareholder. Accordingly, there
can be no assurance that any additional funds will be available on terms
acceptable to us, or at all. In the event we require more working capital, we do
not have any plans to engage in any debt financing or further equity financing
and we may be forced to suspend our expansion plans and our business operations.
OFF-BALANCE SHEET ARRANGEMENTS
Since our inception, we have not engaged in any off-balance sheet
arrangements.
CONTRACTUAL OBLIGATIONS
We are in our early developmental stage and to date we have no
contractual obligations.
14
BUSINESS
OVERVIEW
We are a development stage company incorporated in the BVI on April 8,
2002. As of the date of this prospectus, our only activities have been our
organization, raising our initial capital, developing a general business plan
and preparing this registration statement. We have not engaged in any
substantive business activities to date. We are not, nor do we consider
ourselves a "blank check" company as that term is defined in SEC Rule 419 and we
have no intention of entering into a business combination in the immediate
future.
We were founded by Mr. Li Sze Tang, who is presently our Chief Operating
Officer and Chairman of the Board. Mr. Li has over 20 years of business
experience in Hong Kong and China in various aspects of business finance and
investments.
BUSINESS ADVISORY AND MANAGEMENT CONSULTING SERVICES
We aim to provide business advisory and management consulting services in
greater China, initially concentrating on the Hong Kong market and eventually
expanding into China. Our focus will be on SMEs in Hong Kong and China. We
intend to work closely with our clients to improve business performance,
increase shareholder value and create competitive advantages. We will attempt to
make our client's businesses operate in the most efficient manner.
We intend to offer the following business advisory and management
consulting services:
STRATEGIC ADVISORY SERVICE
We believe that in today's highly competitive business environment, it is
more important than ever for businesses to identify their long-term goals and
objectives. We hope to assist businesses to analyze their current business
activities and assess future opportunities to help them achieve their long-term
objectives. Through our independent analysis and objective assessment, we
believe that we can help businesses develop effective investment and growth
strategies, successful business portfolios and increase revenues, profitability
and shareholder value. We expect to combine the commercial experience and
business specific knowledge of our future employees and consultants with our
extensive market research to provide comprehensive information for clients
seeking to capitalize on business opportunities.
BUSINESS PLAN PREPARATION
We believe that clients trying to obtain financing for a business startup
or growing their existing businesses need to prepare a professionally written
business plan specifically tailored for their businesses. We believe that the
process of developing a business plan (i) ensures that a business will consider
weaknesses in its operations that may be otherwise overlooked and (ii)
highlights a company's strengths to make it attractive to investors. The
business plan often serves as a company's first introduction to potential
investors. We intend to offer a business plan preparation service to help
clients through the process of drafting an effective business plan.
DEVELOP A MARKETING PLAN
We believe that a company needs to develop an effective marketing plan to
increase revenues. We intend to offer clients market analysis services,
including research into the size, segment, growth potential, competitors,
customers and buying behaviors of a particular market. With the results of our
market analysis, we intend to help our clients develop marketing strategies and
tactics to assist them to reach targeted markets, segments and customers.
MERGERS, ACQUISITIONS, RESTRUCTURINGS AND SALES OF BUSINESSES
We believe that many business will request advice from us on the purchase,
sale or merging of a business. Additionally, when a company is not achieving its
long or short-term goals, it may need to reassess and restructure its entire
business operations. We intend to offer services ranging from identifying
15
prospects for purchasers and sellers, coordinating acquisition and sale
opportunities, assisting in due diligence investigations, determining a fair
price for a sale, purchase or merger, structuring and closing transactions and
assisting with business integration following the completion of a merger,
acquisition or sale.
ADVISING OVERSEAS INVESTORS ON INVESTMENTS IN HONG KONG AND CHINA
China has been one of the largest recipients of foreign direct investment
of all developing countries for the last several years. We believe that many
foreign investors choose to invest in China through Hong Kong because of Hong
Kong's developed business and legal systems. Therefore, we intend to offer
overseas investors advisory services on the procedures to establish business
operations in Hong Kong and China.
INDUSTRY BACKGROUND
THE BUSINESS ADVISORY AND MANAGEMENT CONSULTING MARKET:
Hong Kong is a leading business advisory and management consultancy center
in Asia. We believe its status as one of the world's leading business centers,
its well developed legal system, easy access to international skills and
technology and the number of experienced consultants in Hong Kong has attracted
many internationally renowned business advisory and management consultancy firms
to build their presence there. Additionally, we believe China is regarded as
offering one of the highest growth potentials for management consulting
services. Hong Kong's management consulting sector should further benefit from
China's liberalization due to its expected accession into the WTO and the
recently signed CEPA agreement, under which Hong Kong management consulting
companies will be permitted to establish wholly-owned enterprises in China.
According to the Hong Kong Trade Development Council, as of March 2003,
there were 3,312 business management and consultancy firms in Hong Kong,
employing approximately 18,923 individuals. The services these firms offer can
be broadly categorized into six sectors:
General Management: including corporate and business strategy, business
process re-engineering and management reorganization.
Financial Management: including analysis of capital investment proposals,
development of accounting and budgetary control systems and business valuations.
Marketing Management: including the formation of marketing strategy and
customer service policies.
Production Management: including logistic studies, supply chain management,
material requirement planning, manufacturing resource planning and efficient
production procedures.
Human Resource Management: including salary survey, job evaluation, pay
scale assessment and performance management training.
Information Technology Management: strategic study and system development.
SMES IN HONG KONG AND CHINA:
According to statistics released by the Small and Medium Enterprises
Information Centre of the Trade and Industry Department of the Government of
Hong Kong, in June 2003, there were about 290,000 SMEs in Hong Kong alone. SMEs
accounted for over 98% of all businesses in Hong Kong and provided employment
opportunities to approximately 1.3 million persons (which is approximately 60%
of total employment, excluding the Hong Kong civil service). We believe that the
Hong Kong government considers SMEs to be the backbone of Hong Kong's economy
and the driving force of its economic development.
During the past few years, the Hong Kong government has been assisting SMEs
to grow and develop, particularly in the wake of the downturn in the Asian
economy and the challenges brought about by the SARS outbreak in the summer of
2003. In a policy address in October of 2001 by the Hong Kong Chief Executive,
16
the government indicated it would set aside HK$1.9 billion to establish four
funding schemes with a total commitment of HK$7.5 billion to help SMEs. The four
schemes which were set up in December 2001/January 2002 were the SME Loan
Guarantee Scheme, the SME Export Market Fund, the SME Training Fund and the SME
Development Fund.
According to a report by the People's Daily Paper, in 2001 the number of
SMEs in China exceeded 8 million, accounting for 99% of the country's total
enterprises. In 2002, the Chinese government promulgated a series of laws and
regulations to protect and promote the development of SMEs. The Laws of the
People's Republic of China on the Promotion of Small and Medium-Sized Enterprise
was adopted by the 28th Session of the Standing Committee of the Ninth National
People's Congress on June 29, 2002, which took effect on January 1, 2003. The
law contains seven sections and deals with funding assistance, business
establishment support, technology innovation, market development, social support
and preferential tax treatment.
STRATEGY
Our growth over the next several years will depend primarily on our ability
to identify the business advisory and management consulting needs of SMEs in
Hong Kong and China and to penetrate these markets. We intend to accomplish our
objective by actively recruiting experienced business consulting personnel to
finalize our business plan and begin advertising and marketing our services in
Hong Kong and China. We plan to establish a business information center in Hong
Kong for the purpose of collecting local market and business information,
promoting business connections and establishing a core group of clients.
As part of our growth strategy, we intend to form alliances with other
business consulting entities in Hong Kong and China which would complement the
services we plan to offer. We believe that in order to achieve our objective, we
will need to establish a business network of local professionals and business
partners. We plan to form alliances with independent accounting and business
consulting firms in Hong Kong and China with an aim to obtain referral business.
Additionally, these alliances will offer us an opportunity to access a wide
range of market information and provide us with technical support, at little or
no cost to us.
EXPANDING INTO CHINA
While we initially intend to focus on the Hong Kong market, we believe
that there will be a strong demand for our services in China.
With China's expected accession to the WTO, the Chinese government is
required to make significant changes to its economic system and its market
liberalization policies in order to meet the WTO requirements. We believe that
these changes in Chinese policies will generate increased opportunities for
investors, both foreign and domestic, to enter the Chinese business market and
as a result, we expect these changes will create business opportunities for us.
SALES AND MARKETING
We believe that to attract the clients necessary to achieve our objective
of becoming a provider of business advisory and management consulting in Hong
Kong and China, we must promote our corporate image and increase the public's
awareness of the services we will be providing. To promote our services, we
intend to organize and hold seminars in Hong Kong and China, publish newsletters
and periodicals and develop our website.
COMPETITION
We expect to face competition from many businesses, including those with
greater name recognition, more resources (both human and financial), a wider
range of services and a longer operating history than we do. Our competitors may
also leverage their existing relationships with companies, expertise and
established reputations to increase their share of the market. Furthermore, we
consider the barriers to entry in our expected market to be low since
substantial capital investment is not required, so it is likely that we will
face many additional competitors in the future. Although we believe that we will
be able to compete successfully in this market, we cannot assure you that we
will be able to do so.
17
EMPLOYEES
We are a development stage company and currently have no employees other
than our executive officers, Mr. Li Sze Tang and Mr. Wilson Cheung. As part of
our business plan, we initially plan to hire a business advisors and management
consultants who have extensive experience in Hong Kong advising SMEs.
LITIGATION
We are not currently subject to any material legal proceedings
FACILITIES
We have no real property and currently operate from limited office space
provided to us by First Asia International Holdings Limited ("First Asia"), for
which we pay no rent. First Asia's address is located at Rooms 3505-06, 35th
Floor, Edinburgh Tower, The Landmark, 15 Queen's Road, Central, Hong Kong, SAR.
We do not believe that it will be necessary to obtain additional office space
within the foreseeable future until our business plan is more fully developed,
at which time we may need additional office facilities.
18
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following sets forth certain information with respect to our
directors and executive officers as of the date of this prospectus.
Name Age Positions Address
Li Sze Tang 44 Chief Executive Officer and Chairman of the Rooms 3505-06, 35th Floor,
Board of Directors Edinburgh Tower, The Landmark,
15 Queen's Road Central
Rooms 3505-06, 35th Floor,
Wilson Cheung 29 Chief Financial Officer and Director Edinburgh Tower, The Landmark,
15 Queen's Road Central
The following is a brief account of the business experience of each of
our directors and executive officers.
Mr. Li Sze Tang is the founder and is currently an executive director of
First Asia Capital Investment Limited, an investment company listed on the Main
Board of the Stock Exchange of Hong Kong Limited, and has been a director since
July 4, 2002. From 1999 to 2002 he was and executive and a director of Thiz
Technology Group Limited, an IT company specializing in developing and providing
Linux solutions, which he founded and which is listed on the Growth Enterprises
Market of the Stock Exchange of Hong Kong Limited. He has worked in the banking
and finance field and computer industries for more than eighteen years, with
extensive experience in investment banking, fund management, venture capital
financing and risk management. Mr. Li was the treasurer and finance director of
Carlingford Swire Assurance Group and an associate director of HSBC Asset
Management (Asia Pacific) Limited, overseeing the management of eight principal
departments. Mr. Li holds a Master's Degree in Science specialising in the
management of New Ventures from the Imperial College of Science, Technology and
Medicine, University of London and a Master's Degree in Economic Law from
Zhongshan University of the PRC. He is also a Fellow Member of Chartered
Institute of Management Accountants (FCMA), the United Kingdom and the Hong Kong
Society of Accountants (FHKSA) and an associate member of the Institute of
Management Consultancy, the United Kingdom.
Mr. Wilson Cheung has gained more than five years' working experience in
the investment banking and corporate finance areas. He began his employment on
December 2001 with and, is currently working at First Asia Finance Group
Limited. Mr. Cheung worked with Oriental Patron Asia Limited from September,
1999 to September 2000, Kingsway Capital Limited from October 2000 to May 2001
and Core Pacific - Yamaichi International (H.K.) Limited in Hong Kong from June
2001 to November 2001, engaging in the provision of corporate finance, financial
advisory, and securities placement and underwriting services. During the course
of his employment, Mr. Cheung had successfully assisted a number of companies to
list on both of the Main Board and GEM board of the Stock Exchange of Hong Kong
Limited. Mr. Cheung holds a Bachelor of Business degree from Swinburne
University of Technology, Melbourne of Australia.
DIRECTORS' ACTIVITIES OUTSIDE OF OUR BUSINESS
Other than his position as Chief Executive Officer and Director of Apex
Wealth Enterprises Ltd., Mr. Li Sze Tang is also employed as an executive
director of First Asia Capital Investment Limited being appointed on July 4,
2002. He is also currently a director of First Asia Finance Group Limited, First
Asia Private Equity Investment Limited, First Asia Nominees Limited, First Asia
International Holdings Limited, First Asia Asset Management Limited and iPacific
Asset Management Limited and Media Century International Limited, being
appointed on February 21, 1994, May 18, 1999, May 18, 1999, April 24, 2002, May
25, 2002, March 2, 2001 and July 18, 2002, respectively.
19
Other than his position as Chief Financial Officer and Director of Apex
Wealth Enterprises Ltd., Mr. Wilson Cheung is also employed at First Asia
Capital Investment Limited.
Mr. Li and Ms. Wong Lap Woon (Mr. Li's wife) owns 100% of the share capital
of First Asia International Holdings Limited, which in turn owns 100% of our
share capital, 100% of the share capital of First Asia Finance Group Limited and
20% of the share capital of First Asia Capital Investment Limited.
BOARD OF DIRECTORS PRACTICES
The sole subscriber to our Memorandum and Articles of Association appointed
Mr. Li Sze Tang as one of our first directors. Mr. Wilson Cheung was appointed
by the board of directors to fill a vacancy of a resigning director. Our
directors serve a one-year term or until their successor is elected and
qualified.
Our board of directors have not established an audit committee or a
remuneration committee at this time.
DIRECTORS' AND OFFICER'S COMPENSATION
None of our directors or officers has received any remuneration from us.
Although there is no current plan, it is possible that as our business develops,
we may adopt a plan to pay our directors and/or officers compensation for
services rendered to implement our business plan. Our directors and officers are
not currently subject to any service or employment contract with us. We have no
stock option plan, retirement scheme, incentive programs, pension or profit
sharing programs for the benefit of our director and officers, however, the
board of directors may adopt one or more of these programs in the future.
RELATED PARTY TRANSACTIONS
From April 30, 2002 (the date of inception) to the date of this prospectus,
we have not entered into any related party transactions except for a no interest
loan granted by First Asia International Holdings Limited in the amount of
US$3,046.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of February 3, 2004 by:
o each person who is known by us to own beneficially more than 5% of the
outstanding common stock,
o each of our current executive officers and directors,
o all of our current executive officers and directors as a group.
The table has been prepared on a pro forma basis assuming:
As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition of
any common share.
Common stock Beneficially Common stock Beneficially
Owned Prior To This Offering Owned After This Offering
Beneficial Owner
Number Percent Number Percent
Li Sze Tang (1)............................. 10,000,000 100% 10,000,000 83%
(1) These shares are held of record by First Asia international Holdings
Limited, of which Mr. Li Sze Tang owns 50% and his wife Ms. Wong Lap Woon owns
50%. Mr. Li Sze Tang is our CEO and Chairman of the Board. The principal
business address of First Asia International Holdings Limited is at Rooms
3505-06, 35th Floor, Edinburgh Tower, The Landmark, 15 Queen's Road Central,
Hong Kong SAR.
20
DESCRIPTION OF COMMON STOCK
GENERAL
Our authorized share capital consists of 100,000,000 shares of common
stock, each with a par value of $0.01 per share. As of May 31, 2003, there were
10,000,000 common stock issued and outstanding. We have no authorized preferred
shares.
Each share of common stock is entitled to one vote on all matters submitted
to a vote by shareholders, including the election of directors. There are no
cumulative voting rights in the election of directors. All shares of common
stock are equal to each other with respect to liquidation and dividend rights
and are entitled to receive dividends if and when our board declares them out of
funds legally available for distribution under BVI law. Upon our liquidation,
all assets available for distribution are distributable among shareholders
according to their respective holdings. There are no preemptive rights to
purchase any additional, unissued shares of common stock.
IMPACT OF THE "PENNY STOCK" RULES ON BUYING OR SELLING OUR COMMON STOCK
We anticipate that the initial trading in our Common Stock will be subject
to the "penny stock" rules. The Securities and Exchange Commission has adopted
regulations that generally define a penny stock to be any equity security that
has a market price of less than $5.00 per share. These rules require that any
broker-dealer who recommends our securities to persons other than prior
customers and accredited investors, must, prior to the sale, make a special
written suitability determination for the purchaser and receive the purchaser's
written agreement to execute the transaction. In addition, unless an exception
is available, the broker-dealer must deliver a disclosure schedule explaining
the penny stock market and the risks associated with trading in the penny stock
market prior to any transaction. Further, broker-dealers must disclose
commissions payable to both the broker-dealer and the registered representative
and current quotations for the securities they offer. The additional burdens
imposed upon broker-dealers by such requirements may discourage them from
transactions in our Common Stock, which could severely limit the market price
and liquidity of our securities.
21
MEMORANDUM AND ARTICLES OF ASSOCIATION
CORPORATE POWERS.
We have been registered as a limited liability company in the BVI since
April 8, 2002 under British Virgin Islands International Business Companies
number 490452. Pursuant to Clause 4 of our Memorandum of Association the objects
for which we are established are to engage in any act or activity that is not
prohibited under any law for the time being in force in the BVI.
DIRECTORS.
No agreement or transaction between us and one or more of our directors or
any person in which any director has a financial interest or to whom any
director is related, including as a director of that other person, is void or
voidable for this reason only or by reason only that the director is present at
the meeting of directors or at the meeting of the committee of directors that
approves the agreement or transaction or that the vote or consent of the
director is counted for that purpose if the material facts of the interest of
each director in the agreement or transaction and his interest in or
relationship to any other party to the agreement or transaction are disclosed in
good faith or are known by the other directors. A director who has an interest
in any particular business to be considered at a meeting of directors or members
may be counted for purposes of determining whether the meeting is duly
constituted.
With the prior or subsequent approval by a resolution of members, the
directors may, by a resolution of directors, fix the emoluments of directors
with respect to services to be rendered in any capacity to us.
The directors may by resolution of directors exercise all the powers of the
company to borrow money and to mortgage or charge our undertakings and property
or any part thereof, to issue debentures, debenture stock and other securities
whenever money is borrowed or as security for any debt, liability or obligation
of us or of any third party.
There is no age limit requirement for retirement or non-retirement of
directors. A director shall not require a share qualification. Directors are not
required to stand for election at staggered intervals.
SHARE RIGHTS, PREFERENCES AND RESTRICTIONS.
Dividends. We may by a resolution of directors declare and pay dividends in
money, shares, or other property, but dividends shall only be declared and paid
out of surplus. In the event that dividends are paid in specie, the directors
shall have responsibility for establishing and recording in the resolution of
directors authorising the dividends, a fair and proper value for the assets to
be so distributed. All our shares have the same rights with regards to dividends
and distribution upon our liquidation. All dividends unclaimed for three years
after having been declared may be forfeited by resolution of the directors for
our benefit.
Voting Rights and Redemption. We only have one class of common shares. All
common shares have one vote each and are subject to redemption, purchase or
acquisition by us for fair value. We may purchase, redeem or otherwise acquire
and hold our own shares but only out of surplus or in exchange for newly issued
shares of equal value.
CHANGING SHARE RIGHTS.
If at any time the authorized capital is divided into different classes or
series of shares, the rights attached to any class or series (unless otherwise
provided by the terms of issue of the shares of that class or series) may,
whether or not we are being wound up, be varied with the consent in writing of
the holders of not less than three-fourths of the issued shares of that class or
series and of the holders of not less than three-fourths of the issued shares of
any other class or series of shares which may be affected by such variation.
22
SHAREHOLDERS' MEETINGS.
The directors may convene meetings of our members at such times and in such
manner and places within or outside the BVI as the directors consider necessary
or desirable. The directors shall convene such a meeting upon the written
request of members holding ten percent or more of our outstanding voting shares.
The directors shall give not less than seven days' notice of the meeting to
those persons whose names on the date the notice is given appear as members in
the share register and are entitled to vote at the meeting.
RESTRICTIONS ON RIGHTS TO OWN SECURITIES.
There are no limitations on the rights to own our securities.
CHANGE IN CONTROL PROVISIONS.
There are no provisions of our Memorandum of Association and Articles of
Association that would have an effect of delaying, deferring or preventing a
change in our control and that would have operate only with respect to a merger,
acquisition or corporate restructuring involving us.
DISCLOSURE OF SHARE OWNERSHIP.
There are no provisions in our Memorandum of Association and Articles of
Association which require that shareholder ownership must be disclosed.
CERTAIN DIFFERENCES BETWEEN U.S. AND BVI COMPANY LAWS
In most U.S. jurisdictions, majority and controlling shareholders of a
company generally have certain "fiduciary" responsibilities to its minority
shareholders. Corporate actions taken by majority and controlling shareholders
which are patently unreasonable and materially detrimental to minority
shareholders may be declared null and void. Minority shareholder protection
under BVI law may not be as protective in all circumstances as the law
protecting minority shareholders in U.S. jurisdictions.
Unlike most U.S. jurisdictions, our Memorandum of Association allows our
directors to take certain actions without shareholder approval, including
amending our Memorandum and Articles of Association or increasing or reducing
our authorized share capital. In most U.S. jurisdictions, these actions which
would require shareholder approval. Additionally, unlike most U.S.
jurisdictions, the directors of a BVI company, subject in certain cases to court
approval but without shareholder approval, may, among other things, implement a
reorganization, certain mergers or consolidations, the sale, transfer, exchange
or disposition of any assets, property, part of the business, or securities of
the company, or any combination, if they determine it is in the best interests
of the company, its creditors, or its shareholders.
Similar to the laws of most U.S. jurisdictions, BVI law does permit
shareholder derivative actions against its directors. However, the circumstances
in which any such action may be brought, and the procedures and defenses that
may be available in respect of any such action, may result in the rights of
shareholders of a BVI company being more limited than those of shareholders of a
company incorporated and/or existing in the U.S.
As with most U.S. jurisdictions, the business and affairs of a company
established in the BVI are managed by the company's board of directors. In most
U.S. jurisdictions, directors owe a fiduciary duty to the company and its
shareholders, including a duty of care, under which directors must properly
apprise themselves of all reasonably available information, and a duty of
loyalty, under which they must protect the interests of the company and refrain
from conduct that injures the company or its shareholders or that deprives the
company or its shareholders of any profit or advantage. Under BVI law, liability
of a director to the company is primarily limited to cases of willful
malfeasance in the performance of his duties or to cases where the director has
not acted honestly and in good faith and with a view to the best interests of
the company. However, under our Articles of Association, we are authorized to
indemnify any director or officer who is made or threatened to be made a party
to a legal or administrative proceeding by virtue of being one of our directors
or officers, provided such person acted honestly and in good faith and with a
view to our best interests and, in the case of a criminal proceeding, such
23
person had no reasonable cause to believe that his conduct was unlawful.
Pursuant to our Articles of Association, if any director or officer is
successful in defense of any civil, administrative or criminal proceedings that
director or officer is entitled to be indemnified against all judgments, fines
and amounts paid in settlement and reasonably incurred by that director or
officer in connection with those proceedings.
The above description of certain differences between BVI and U.S.
corporate laws is only a summary and does not purport to be complete or to
address every applicable aspect of such laws. However, we believe that all
material differences are disclosed above.
CHANGES IN CAPITAL
Requirements to effect changes in capital are not more stringent than is
required by law.
MATERIAL CONTRACTS
We are in our early developmental stage and we have not entered into any
material contracts and specifically no material contracts outside the ordinary
course of our business.
EXCHANGE CONTROLS
BVI and Hong Kong
There are no material exchange controls restrictions on payment of
dividends, interest or other payment to the holders of our common stock or on
the conduct of our operations either in Hong Kong, where our principal executive
offices are located, or the BVI, where we are incorporated. There are no
material BVI laws which impose any material exchange controls on us or that
affect the payment of dividends, interest or other payment to nonresident
holders of our common stock. BVI law and our Memorandum and Articles of
Association imposes no material limitations on the right of non-residents or
foreign owners to hold or vote our common stock.
China
China imposes control over the convertibility of Renminbi into foreign
currencies. Under the current unified floating exchange rate system, the
People's Bank of China ("PBOC") publishes a daily exchange rate for Renminbi, or
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 issued by the State
Council on April 1, 1996 and the Administration of Settlement, Sale and Payment
of Foreign Exchange Regulations which came into effect on July 1, 1996 regarding
foreign exchange control, or the Regulations, conversion of Renminbi into
foreign exchange by foreign investment enterprises for current account items,
including the distribution of dividends and profits to foreign investors of
joint ventures, is permissible. Foreign investment enterprises are permitted to
remit foreign exchange from their foreign exchange bank account in China on the
basis of, inter alia, the terms of the relevant joint venture contracts and the
board resolutions declaring the distribution of the dividend and payment of
profits. Conversion of Renminbi into foreign currencies and remittance of
foreign currencies for capital account items, including direct investment,
loans, security investment, is still subject to the approval of the State
Administration of Foreign Exchange, or SAFE, in each such transaction. On
January 14, 1997, the State Council amended the Foreign Exchange Control
Regulations and added, among other things, Article 5 provides that the Chinese
Government shall not impose restrictions on recurring international payments and
transfers.
Under the Regulations, foreign investment enterprises are required to open
and maintain separate foreign exchange accounts for different types of foreign
exchange transactions, and the permitted scope of receipts and expenditures for
such accounts is limited to the type of foreign exchange transactions designated
for such accounts. In addition, foreign investment enterprises may only buy,
sell and/or remit foreign currencies at those banks authorized to conduct
foreign exchange business upon the production of valid commercial documents and,
in the case of capital account item transactions, document approval from the
SAFE.
24
Currently, foreign investment enterprises ("FIEs") are required to apply to
the SAFE for foreign exchange registration certificates. These certificates are
subject to review and renewal by the SAFE on an annual basis, Once an FIE
obtains this certificate or a foreign exchange sales notice from the SAFE (which
is obtained on a transaction-by-transaction basis), upon fulfilling certain
other conditions, the FIE may enter into foreign exchange transactions at banks
authorized to conduct foreign exchange business to obtain foreign exchange for
their needs.
25
TAXATION
The following is a summary of the material BVI and United States federal
income tax consequences of an investment in our common stock based upon laws and
relevant interpretations thereof in effect as of the date of this prospectus,
all of which are subject to change. This summary does not deal with all possible
tax consequences relating to an investment in our common stock, such as the tax
consequences under state, local and other tax laws.
BRITISH VIRGIN ISLANDS TAXATION
Currently, there is no income tax treaty or convention in effect between
the United States and the BVI.
Pursuant to the Income Tax Act of the British Virgin Islands in effect as
of the date of this prospectus, holders of common stock who are not residents of
the BVI are exempt from BVI income tax on dividends paid with respect to the
common stock, and all holders of common stock are not liable for BVI income tax
on gains realized during that year on sale or disposal of such shares. The BVI
does not impose a withholding tax on dividends paid by a company incorporated
under the International Business Companies Act.
There are no capital gains, gift or inheritance taxes levied by the BVI
government on companies incorporated under the Income Tax Act. In addition,
transfers of the common stock of a BVI company is not subject to transfer taxes,
stamp duties or similar charges or levies.
26
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has not been any public market for our shares
of common stock, and no prediction can be made as to the effect, if any, that
market sales of common stock or the availability of shares for sale will have on
the market price of the common stock prevailing from time to time. Nevertheless,
sales of substantial amounts of our common stock in the public market, or the
perception that such sales could occur, could adversely affect the market price
of our common stock and could impair our future ability to raise capital through
the sale of our equity securities.
Upon completion of this offering, we will have outstanding 12,000,000
shares of common stock. Of these shares of common stock, the common stock sold
in this offering will be freely transferable without restriction or further
registration under the Securities Act, except for any shares held by our
"affiliates", as such term is defined by Rule 144 under the Securities Act. The
remaining 10,000,000 shares, and any shares purchased by affiliates in this
offering, will be "restricted shares" as defined in Rule 144.
27
LEGAL MATTERS
The law firm of Conyers, Dill & Pearman, British Virgin Islands, has given
us its opinion that upon issuance, the shares will be duly authorized, legally
issued, fully paid and non assessable common stock of our company. Conyers, Dill
& Pearman has not passed on any other legal matters in connection with this
offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described in Item 14 above, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
EXPERTS
The financial statements included in this prospectus have been audited by
PKF, CPA, Hong Kong, certified public accountants, Member of the Hong Kong
Society of Accountants, 26/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay,
Hong Kong, as indicated in their report on such financial statements, and are
included in this prospectus in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 under the Securities Act, including exhibits and
schedules, with respect to the common shares to be sold pursuant to this
prospectus. This offering circular does not contain all of the information set
forth in the registration statement or the exhibits and schedules which are part
of the registration statement. For further information with respect to us and
our common stock, reference is made to the registration statement and the
exhibits and schedules thereto.
Upon completion of this offering, we will be subject to the information
requirements of the Securities Exchange Act of 1934, as amended, applicable to
foreign private issuers. As a result, we will be required to file reports,
including annual reports on Form 20-F, reports on Form 6-K and other information
with the SEC. We also intend to submit to the SEC quarterly reports on Form 6-K
which will include unaudited quarterly financial information, for the first
three quarters of each fiscal year, in addition to our annual report on Form
20-F which will include audited annual financial information. These reports and
other information filed or to be filed by us can be inspected and copied at the
public reference facilities maintained by the SEC at:
Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates or on the SEC website at www.sec.gov using the EDGAR system, free of
charge.
As a foreign private issuer, we will be exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements, and our
executive officers, directors, and principal shareholders will be exempt from
the reporting and short-swing profit recovery provisions contained in Section 16
of the Exchange Act.
28
INDEX TO FINANCIAL STATEMENTS
APEX WEALTH ENTERPRISES LIMITED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2003 AND
PERIOD ENDED MAY 31, 2002
INDEX
Page
Independent Auditors' Report F-2
Balance Sheets as of May 31, 2003 and 2002 F-3
Statements of Operations for the cumulative period and
year ended May 31, 2003 and period ended May 31, 2002 F-4
Statements of Stockholders' Equity (Deficit) for
the year ended May 31, 2003 and period ended May 31, 2002 F-5
Statements of Cash Flows for the cumulative period and
year ended May 31, 2003 and period ended May 31, 2002 F-6
Notes to the Financial Statements F-7 - F-9
F-1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Apex Wealth Enterprises Limited
(A Development Stage Company)
We have audited the accompanying balance sheets of Apex Wealth Enterprises
Limited (a development stage company) as of May 31, 2003 and 2002 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the year ended May 31, 2003 and for the period from April 8, 2002 (date of
incorporation) to May 31, 2003 and 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Apex Wealth Enterprises
Limited (a development stage company) as of May 31, 2003 and 2002, and the
results of its operations and its cash flows for the year ended May 31, 2003 and
for the period from April 8, 2002 (date of incorporation) to May 31, 2003 and
2002 in conformity with accounting principles generally accepted in the United
States of America.
/s/ PKF
------------------------------
PKF Certified Public Accountants
Hong Kong
08 September 2003
F-2
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF May 31, 2003 and 2002
2003 2002
Note US$ US$
ASSETS
Current assets
Cash and cash equivalents 1 100,256 -
----------------
---------------- ----------------
Total assets 100,256 -
================ ================
================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Amount due to a director 2 3,046 -
Accrued expenses 1,282 1,026
---------------- ----------------
----------------
Total liabilities 4,328 1,026
---------------- ----------------
---------------- ----------------
Commitments and contingency 5
Stockholders' equity (deficit)
Common stock, US$0.01 par value :
100,000,000 (2002 : 5,000,000) shares authorised :
10,000,000 shares issued and outstanding
at May 31, 2003 and 1,000,000 shares issued
and outstanding at May 31, 2002 100,000 10,000
Amount due from stockholder for issuance of common stock
- (10,000)
---------------- ----------------
---------------- ----------------
100,000 -
Deficit accumulated during the development stage (4,072) (1,026)
----------------
---------------- ----------------
Total stockholders' equity (deficit) 95,928 (1,026)
---------------- ----------------
---------------- ----------------
Total liabilities and stockholders' equity (deficit) 100,256 -
================ ================
"Note: See accompany notes to financial statements"
F-3
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD AND YEAR ENDED MAY 31, 2003 AND
PERIOD FROM APRIL 8, 2002 TO May 31, 2002
April 8, 2002 April 8, 2002
(date of (date of
incorporation) Year ended incorporation)
to May 31, 2003 May 31, 2003 to May 31, 2002
Note US$ US$ US$
Revenue - - -
Expenses
Formation expenses 1,026 - 1,026
General and administrative expenses 3,046 3,046 -
---------------- ---------------- -----------------
---------------- ----------------
Loss from operations (4,072) (3,046) (1,026)
Income taxes 3 - - -
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Net loss (4,072) (3,046) (1,026)
================ ================
================ ================ =================
Net loss per common share : 4
Basic (0.00) (0.00) (0.00)
================ ================ =================
================ ================ =================
Diluted (0.000 (0.00) (0.00)
================ ================
================ ================ =================
Weighted average shares :
Basic 1,408,115 1,468,493 1,000,000
================ ================ =================
================ ================ =================
Diluted 1,408,115 1,468,493 1,000,000
================ ================ =================
"Note: See accompany notes to financial statements"
F-4
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED MAY 31, 2003 AND
PERIOD FROM APRIL 8, 2002 TO May 31, 2002
Common stock
----------------------------
----------------------------
Accumulated
Shares Amount deficit Total
US$ US$ US$
Issuance of common stock on April 8, 2002 10,000 10,000 - 10,000
Less : Amounts due from stockholder
for issuance of common stock - (10,000) - (10,000)
Net loss - - (1,026) (1,026)
-------------- ------------ ------------------- --------------
Balance, May 31, 2002 10,000 - (1,026) (1,026)
Sub-division of common stock :
on August 1, 2002 90,000 - - -
on May 12, 2003 900,000 - - -
Payment of amount due from stockholder - 10,000 - 10,000
Issuance of common stock on May 12, 2003 9,000,000 90,000 - 90,000
Net loss - - (3,046) (3,046)
-------------- ------------ ------------------- --------------
-------------- ------------ ------------------- --------------
Balance, May 31, 2003 10,000,000 100,000 (4,072) 95,928
============== ============ =================== ==============
============== ============ =================== ==============
"Note: See accompany notes to financial statements"
F-5
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD AND YEAR ENDED MAY 31, 2003 AND
PERIOD FROM APRIL 8, 2002 TO May 31, 2002
April 8, 2002 April 8, 2002
(date of (date of
incorporation) Year ended incorporation)
to May 31, 2003 May 31, 2003 to May 31, 2002
US$ US$ US$
Cash flows from operating activities :
Net loss (4,072) (3,046) (1,026)
Changes in liabilities :
Increase in accrued expenses 1,282 256 1,026
---------------- ---------------- -----------------
---------------- ----------------
Net cash used in operating activities (2,790) (2,790) -
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Cash flows from financing activities :
Proceeds from issuance of common stock 100,000 100,000 -
Advance from a director 3,046 3,046 -
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Net cash provided by financing activities 103,046 103,046 -
---------------- ---------------- -----------------
---------------- ----------------
Net change in cash and cash equivalents and
cash and cash equivalents 100,256 100,256 -
Cash and cash equivalents, beginning of period - - -
---------------- ---------------- -----------------
---------------- ---------------- -----------------
Cash and cash equivalents, end of period 100,256 100,256 -
================ ================ =================
"Note: See accompany notes to financial statements"
F-6
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2003 AND
PERIOD ENDED MAY 31, 2002
1. Nature of business and significant accounting policies
The Company and basis of presentation
The purpose of Apex Wealth Enterprises Limited ("the Company") is
investment holding. The Company's fiscal year end is May 31.
The Company was incorporated under the International Business Companies Act
of the British Virgin Islands on April 8, 2002 as a company with limited
liability with authorised capital of US$50,000 divided into 50,000 shares
of common stock at US$1 par value.
On August 1, 2002, the authorised capital had been subdivided into 500,000
shares of common stock at US$0.1 par value. On May 12, 2003, the authorised
capital was increased to US$1,000,000 divided into 100,000,000 shares of
common stock at US$0.01 par value.
The Company is a development stage enterprise and has not yet generated any
revenue during the reporting periods. During the reporting periods, the
sole activity of the Company is the issuance of common stocks.
Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments with
original maturities of three months or less.
Income taxes
The Company accounts for income tax under the provisions of Statement of
Financial Accounting Standard No. 109, which requires recognition of
deferred tax assets and liabilities for the expected future tax
consequences of the events that have been included in the financial
statements or tax returns. Deferred income taxes are recognised for all
significant temporary differences between tax and financial statements
bases of assets and liabilities. Deferred tax assets are reflected at the
net realizable value.
F-7
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2003 AND
PERIOD ENDED MAY 31, 2002
1. Nature of business and significant accounting policies
Foreign currency translation and transactions
The Company uses Hong Kong dollars ("HK$") as the functional currency.
Transactions denominated in currencies other than HK$ are translated into
HK$ at the applicable rates of exchange prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in other
currencies are translated into HK$ at rates of exchange at the balance
sheet dates. Exchange gains or losses arising from changes in exchange
rates subsequent to the transactions dates for monetary assets and
liabilities denominated in other currencies are included in the
determination of net income for the respective period.
For financial reporting purposes, HK$ has been translated into United
States dollars ("US$") as the reporting currency. Assets and liabilities
are translated at the exchange rate in effect at period end. Income
statement accounts are translated at the average rate of exchange
prevailing during the period. Translation adjustments arising from the use
of different exchange rates from period to period are included as a
component of stockholders' equity as "Accumulated other comprehensive
income - foreign currency translation adjustments". Gains and losses
resulting from foreign currency transactions are included in other
comprehensive income (expenses). Foreign currency translation adjustments
in 2002 and 2003 were not material.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America 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 dates of financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from those estimates.
2. Amount due to a director
The amount is interest free, unsecured and repayable within one year.
3. Income taxes
The Company has net operating loss at May 31, 2003 and 2002 for Hong Kong
profits tax purpose.
F-8
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED MAY 31, 2003 AND
PERIOD ENDED MAY 31, 2002
4. Net loss per common share
Net loss per common share is calculated on the basis of the weighted
average number of common shares outstanding during the reporting periods.
5. Commitments and contingencies
There was no significant commitments or contingent liabilities as of May
31, 2003 and 2002.
6. Concentrations of Credit Risk
Cash and cash equivalents are financial instruments that potentially
subject the Company to concentrations of credit risk.
F-9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors, Officers and Employees
Pursuant to BVI law, liability of a director to the company is basically
limited to cases of willful malfeasance in the performance of his duties or to
cases where the director has not acted honestly and in good faith and with a
view to the best interests of the company.
However, subject to the limitations provided below, we may indemnify
against all expenses, including legal fees, and against all judgments, fines and
amounts paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who (a) is or was a party
or is threatened to be made a party to any threatened, pending or completed
proceedings, whether civil, criminal, administrative or investigative, by reason
of the fact that the person is or was a director, an officer or a liquidator of
us; or (b) is or was, at our request, serving as a director, officer or
liquidator of or in any other capacity is or was acting for, another company or
a partnership, joint venture, trust or other enterprise.
We may only indemnify a person if the person acted honestly and in good
faith with a view to our best interests and, in the case of criminal
proceedings, the person had no reasonable cause to believe that his conduct was
unlawful. If a person to be indemnified has been successful in defense of any
proceedings referred to above the person is entitled to be indemnified against
all expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred by the person in connection with the
proceedings.
We may purchase and maintain insurance in relation to any person who is or
was a director, an officer or a liquidator of us, or who at our the request is
or was serving as a director, an officer or a liquidator of, or in any other
capacity is or was acting for, another company or a partnership, joint venture,
trust or other enterprise, against any liability asserted against the person and
incurred by the person in that capacity, whether or not we have or would have
had the power to indemnify the person against the liability as provided in our
Articles of Association.
Item 7. Recent Sales of Unregistered Securities
The following sets forth information relating to all of our securities
which we sold by since April 8, 2002, the date of our inception. All of such
shares of common stock were purchased at a price of $.01 per share, which was
paid for in cash.
---------------------------------------------- ---------------- ---------------------------------
Name Date Number of common stock
---------------------------------------------- ---------------- ---------------------------------
---------------------------------------------- ---------------- ---------------------------------
First Asia International Holdings Limited 4/21/2002 1,000,000 (after stock split)
---------------------------------------------- ---------------- ---------------------------------
---------------------------------------------- ---------------- ---------------------------------
First Asia International Holdings Limited 5/12/2003 9,000,000
---------------------------------------------- ---------------- ---------------------------------
---------------------------------------------- ---------------- ---------------------------------
Total 10,000,000
---------------------------------------------- ---------------- ---------------------------------
Note: Mr. Li Sze Tang owns of 50% and his wife owns the other 50% of all
the issued and outstanding share capital of First Asia International Holdings
Limited.
The 10,000,000 shares of common stock sold by us to First Asia
International Holding Limited were not registered under the Securities Act of
1933. All of the shares of common stock were offered and issued outside the
United States, pursuant to Regulation S under the Securities Act of 1933. First
Asia International Holdings Limited, and its beneficial owner Mr. Li Sze Tang,
respectively, are entities and/or individuals who were not citizens or residents
of the United States. None of these sales involved participation by an
underwriter or a broker-dealer.
II-1
Item 8. Exhibits and Financial Statement Schedules
(a) The following is a list of exhibits filed as a part of this
registration statement:
Exhibits
Exhibit Description
Number
3.1 Memorandum of Association of Apex Wealth Enterprises Limited
3.2 Articles of Association of Apex Wealth Enterprises Limited
3.3 Resolution to Amend the Authorized Share Capital of Apex Wealth
Enterprises Limited
4.1 Specimen Certificate for shares of our common stock
5.1 Legal Opinion of Conyers Dill & Pearman regarding the
legality of the common stock
5.2 Tax Opinion of Conyers Dill & Pearman
23.1 Consent of PKF, CPA.
23.2 Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
Schedules
All schedules have been omitted because either they are not required,
are not applicable or the information is otherwise set forth in the consolidated
financial statements and notes thereto.
Item 9. Undertakings
We hereby undertake that we will:
(1) File, during any period in which we offer or sell securities, a
post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) reflect in the prospectus any facts or events arising after the
effective date of this prospectus which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement.
(2) For the purpose of determining any liability under the Securities Act of
1933, treat each such post-effective amendment as a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time to be the initial bona fide offering thereof;
(3) Remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering; and
(4) File a post-effective amendment to the registration statement to include
any financial statements required by section 210.3-19 at the start of any
delayed offering or throughout a continuous offering.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form F-1 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Hong Kong, People's Republic of China, on this 12th
day of February, 2004.
APEX WEALTH ENTERPRISES LIMITED
By: /s/ LI SZE TANG
______________________________
Li Sze Tang
Chief Executive Officer and
Chairman of the Board of Directors
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities indicated on this 12th day of February, 2004.
SIGNATURES CAPACITY DATE
/s/ LI SZE TANG
___________________________________ Chief Executive Officer and 2/12/2004
Li Sze Tang Chairman of the Board
/s/ WILSON CHEUNG
___________________________________ Chief Financial Officer and 2/12/2004
Wilson Cheung Director
/s/ Li Sze Tang (as attorney
for Michael Lin)
___________________________________ Authorized Representative in 2/12/2004
Michael Lin the United States
II-3
EXHIBIT INDEX
Exhibit Description of Exhibit
Number
3.1 Memorandum of Association of Apex Wealth Enterprises Limited *
3.2 Articles of Association of Apex Wealth Enterprises Limited *
3.3 Resolution to Amend the Authorized Share Capital of Apex
Wealth Enterprises Limited *
4.1 Specimen Certificate for shares of our common stock *
5.1 Legal Opinion of Conyers Dill & Pearman regarding the
legality of the common stock
5.2 Tax Opinion of Conyers Dill & Pearman
23.1 Consent of PKF, CPA
23.2 Consent of Conyers Dill & Pearman (included in Exhibit 5.1)
* Previously Filed
II-4