As filed with the Securities and Exchange Commission on July 28, 2004
Registration Statement No. 333-110071
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 6
TO
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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Apex Wealth Enterprises Limited
(Exact name of Registrant as specified in its charter)
British Virgin Islands 8741 Not Applicable
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
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)
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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)
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Copies to:
Simon C. Luk, Esq. Stephen 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
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Approximate date of commencement of proposed sale to the public: Promptly
after the date of this prospectus.
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
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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
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Common Stock, par value $0.01 per share 2,000,000 $0.05 $100,000 $810
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(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.
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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 July 28, 2004
PROSPECTUS
2,000,000 Shares of Common Stock
APEX WEALTH ENTERPRISES
LIMITED
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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 commence promptly after the date of this prospectus and close no later than
90 days after the date of this prospectus. There are no underwriters or
broker-dealers involved in the selling of our common shares. We have made no
selling arrangements for the sale of the securities offered in this prospectus.
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.
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Offering Price Underwriting Discounts Proceeds to us (2)
and Commissions (1)
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Per share $0.05 -- $0.05
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TOTAL OFFERING (3) $100,000 -- $100,000
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is 28 July, 2004
[Back Cover Page]
You should rely only on the information contained in this prospectus.
We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. We are not making an offer to sell these securities
in any jurisdiction where the offer or sale is not permitted. You should assume
that the information appearing in this prospectus is accurate only as of the
date on the front cover of this prospectus. Our business, financial condition,
results of operation and prospects may have changed since that date.
The terms "we," "us," and "our" mean Apex Wealth Enterprises Limited.
Except where specifically indicated in this prospectus, "dollars"
and"$" mean United States dollars.
Until October 26, 2004 (90 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...............14
BUSINESS..................................................................15
MANAGEMENT................................................................19
RELATED PARTY TRANSACTIONS................................................20
PRINCIPAL SHAREHOLDERS....................................................20
DESCRIPTION OF COMMON STOCK...............................................22
MEMORANDUM AND ARTICLES OF ASSOCIATION....................................23
TAXATION..................................................................27
SHARES ELIGIBLE FOR FUTURE SALE...........................................29
LEGAL MATTERS.............................................................30
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES...............................................30
EXPERTS...................................................................30
ADDITIONAL INFORMATION....................................................30
INDEX TO FINANCIAL STATEMENTS..............................................1
Basic......................................................................4
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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. On September 18, 2003, we filed a
registration statement with no specific business plan and for the purpose of
creating a public shell that would attempt a business combination with another
company possessing a business history and operating assets. We revised our
business plan to focus on growing our company organically rather than through
acquisitions, and we withdrew our September 18, 2003 registration statement on
October 28, 2003. 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. Presently we have no intention of entering into
a business combination, but we do not preclude our entering into such a
transaction in the 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. The common stock will be sold on a "best efforts, no
minimum basis". There are no underwriters or broker-dealers involved in the
selling of the common stock. 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 audited
financial condition and results of operations as of the year ended May 31, 2004.
The Summary Financial Information is qualified in its entirety by our financial
statements contained elsewhere in this prospectus.
Year ended
May 31, 2004
(audited)
Statement of operations
Revenues 0
Net Loss $(2,943)
Net Loss Per Share $0.00
Common Stock outstanding 10,000,000
Balance Sheet Date As of
May 31, 2004
(audited)
Current Assets $94,267
Total Assets $94,267
Total Liabilities $1,282
Shareholders' Equity $92,985
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 are in the extreme early stages of
development and if we fail to develop our business you could lose your entire
investment
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 and you could lose your entire investment.
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.
3
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 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 and (c) the successful marketing of our professional
services. 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.
4
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
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 future 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.
Our offering price is substantially higher than the net asset value of our
common stock and therefore there will be an 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
Earnings, if any, will be retained and 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.
We are a BVI company and our officers and directors reside outside the United
States, therefore, 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."
One of our officers is also an officer in companies with similar operations, and
conflicts of interest may arise
Mr. Li Sze Tang serves as an officer in other companies and
entities, including Media Century International Ltd., whose business is similar
to ours and who intends to operate in the same territories in which we intend to
operate. We must compete for Mr. Li's time. Conflicts of interest may also arise
between Mr. Li's duties to our company and the other companies and entities
which could detract from his efforts on behalf of the company.
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 the our business operations
This is a "best efforts, no minimum" offering, in which the directors
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, in descending priority, assuming the offering is completely
subscribed for.
Use of Proceeds Amount to be Spent Percentage of Total
Proceeds
Expenses of this offering $24,000 24%
Recruiting consultants $40,000 40%
General Operating Expenses $16,000 16%
Advertising, Market Research Seminars $10,000 10%
Office in Hong Kong $10,000 10%
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 first be used first to pay for the cost and
expenses connected to this offering. Any excess funds will then be used for the
recruiting and hiring experienced business advisors. If any funds are still
available, those funds will be used for general operating expenses, advertising
and marketing and to establish an office in Hong Kong. We will use our current
cash assets to pay for various legal, accounting and general operating and
administrative expenses. The following table shows how we intend to use the
funds raised, in descending priority, assuming the offering is not completely
subscribed for.
7
Level of Subscription Use of Proceeds Amount to be Spent
25% Expenses of this offering $24,000
Recruiting consultants $1,000
50% Expenses of this offering $24,000
Recruiting consultants $26,000
75% Expenses of this offering $24,000
Recruiting consultants $40,000
General Operating Expenses $11,000
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. The common stock will be sold by our officers and
directors, for which they will receive no compensation. There is no minimum
purchase requirement and there are no arrangements to place funds in an escrow,
trust or similar account. As the funds are raised, they will be made available
to us. Our officers and directors will distribute the prospectus to prospective
investors whom they believe may be interested, or who have contacted them
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 promptly after the date of this prospectus for a period of 90
days. First Asia International Holdings Limited and their affiliates will not
participate in the distribution.
We intend to offer shares of our common stock to persons who reside in
Hong Kong and to other 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. No offerings of shares of our common stock will be made in the
United States. 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. We conducting this offering and registering the shares of common
stock issued in this offering so that we may be able to quote our common stock
on the OTCBB at some point in the future.
Nothing in this prospectus will prevent our common stock from being
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 $24,000
EXCHANGE RATE
Quantitative and Qualitative Disclosures About Market Risks
We will record our finances in Hong Kong dollars and report our
operations in U.S. dollars. Fluctuations in the exchange rate between Hong Kong
dollars and the U.S. dollars will affect the amount of dollars reported in our
financial statements. We do not expect to actively use derivative instruments to
reduce our exposure to foreign currency risk.
9
The following table sets forth certain information concerning the
average rates of exchange between Hong Kong dollars and U.S. dollars for the
periods indicated. It represents the noon buying rate in New York for cable
transfers payable in foreign currencies as certified for customs purposes by the
Federal Reserve Bank of New York. the average noon buying rate is determined by
averaging the rates on the last business day of each month during the relevant
period.
CALENDAR YEAR AVERAGE NOON
BUYING RATE
(HK$ PER US$)
1999 7.7594
2000 7.7924
2001 7.7997
2002 7.7997
2003 7.7876
January 2004 7.7663
February 2004 7.7748
March 2004 7.7930
April 2004 7.7970
May 2004 7.7971
June 2004 7.7980
10
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness as
of May 31, 2004. 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$70,267, total shares
issued and outstanding will be 10,000,000 and total stockholders' equity will be
US$68,985 (assuming no shares are sold pursuant to the offering).
PRO FORMA
AS OF MAY 31, AFTER THIS
2004 OFFERING (1)
Cash $94,267 $70,267
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 $(7,015) $(31,015)
Total stockholders' equity $92,985 $68,985
(1) Assuming no shares are sold pursuant to the offering.
11
DILUTION
Our net tangible book value as of May 31, 2004 was $92,985, or $0.0093
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 after this
offering would have been $168,985 or $0.0141 per common share. This represents
an immediate increase in the pro forma net tangible book value of $0.0048 per
common share to existing shareholders and an immediate dilution of $0.0359 per
common share to new investors. The following table illustrates the per share
dilution:
Assumed initial public offering price per share........................$0.05
Net tangible book value per common share at May 31, 2004...............$0.0093
Pro forma increase in net tangible book value per common share
attributable to new investors........................................$0.0048
Pro forma net tangible book value per common share after this offering.$0.0141
Pro forma dilution per common share to new investors...................$0.0359
Assuming 10% of the shares offered are sold pursuant of this offering,
and after deducting estimated offering expenses, our pro forma net tangible book
value after this offering would have been $78,985 or $0.0079 per common share.
This represents an immediate decrease in the pro forma net tangible book value
of $0.0014 per common share to existing shareholders. The following table
illustrates the per share dilution:
Net tangible book value per common share at May 31, 2004...............$0.0093
Pro forma net tangible book value per common share after this offering.$0.0079
Pro forma decrease in net tangible book value per common share
attributable to offering expenses....................................$0.0014
Assuming 20% of the shares offered are sold pursuant of this offering,
and after deducting estimated offering expenses, our pro forma net tangible book
value after this offering would have been $88,985 or $0.0089 per common share.
This represents an immediate decrease in the pro forma net tangible book value
of $0.0004 per common share to existing shareholders. The following table
illustrates the per share dilution:
Net tangible book value per common share at May 31, 2004...............$0.0093
Pro forma net tangible book value per common share after this offering.$0.0089
Pro forma decrease in net tangible book value per common share
attributable to offering expenses....................................$0.0004
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 year ended May 31, 2004 and the balance sheet data as of May
31, 2004 are derived from our audited financial statements included elsewhere in
this prospectus. 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, 2004 STATEMENT OPERATIONS DATA:
Revenues: $0
Expenses:
Formation expenses $1,026
General and administrative expenses $5,989
Net Loss $(7,015)
Number of shares outstanding 10,000,000
Basic and diluted loss per share of common stock $0.0017
AS OF MAY 31, 2004
BALANCE SHEET DATA:
Cash $94,267
Total assets $94,267
Total stockholders' equity $92,985
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, 2004, 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, 2004, 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 audited
balance sheet as of May 31, 2004 reflects total assets of $94,267 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. On September 18, 2003, we filed a
registration statement with no specific business plan and for the purpose of
creating a public shell that would attempt a business combination with another
company possessing a business history and operating assets. We revised our
business plan to focus on growing our company organically rather than through
acquisitions, and we withdrew our September 18, 2003 registration statement on
October 28, 2003. We have not engaged in any substantive business activities to
date. 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 for various industries, including trading, manufacturing and
high technology development companies. Initially we will concentrate 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 will provide various aspects of business advisory and management
consultant services to our clients. However, our management will not directly
provide such advisory services to our clients. Initially, we intend to retain
consultants, who will not be our employees, to provide advisory services to our
clients. We will only recruit and hire our business consultants when needed and
when a particular client has agreed to retain the consultant. Because our
consultants will only be retained with the approval of the client, the
qualifications and credentials of the consultant, as well as the compensation
for the consultant, will be determined by the client prior to hiring the
consultant. First Asia International Holdings Limited and their affiliates will
not have any role in our business, and we will not refer clients to First Asia
International Holdings Limited and their affiliates. We do not intend to retain
any of our affiliates to be consultants to our clients. As our business expands,
we intend to hire our own employees to service our clients.
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.
15
Business Plan Preparation
We believe that clients trying to obtain financing for a business
start up 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 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.
16
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,
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 before the end of 2004 for the purpose of collecting local
market and business information, promoting business connections and establishing
a core group of clients. We estimate that the costs of setting up such a
business information center to be between $20,000 to $30,000, and the funds for
its establishment will come from our own internal cash reserves.
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 believe these changes will create business opportunities for us.
However, there are no guarantees that such changes in governmental policies will
result in increased business opportunities for us.
17
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, and
publish newsletters and periodicals in conjunction with outside consultants.
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.
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, a pension fund and insurance
provider, and an associate director of HSBC Asset Management (Asia Pacific)
Limited, a manager of unit trusts, pension funds and private assets, overseeing
the management of eight principal departments. Mr. Li holds a Master's Degree in
Science specializing 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 the Associate Director at First Asia
Finance Group Limited. Mr. Cheung worked as an Executive with Oriental Patron
Asia Limited, an investment bank specializing in corporate finance from
September, 1999 to September 2000, as a Assistant Manager with Kingsway Capital
Limited, an investment bank specializing in corporate finance from October 2000
to May 2001 and as a Manager with 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.
Each of Messrs. Li and Cheung will devote approximately seven hours per
week on our operations.
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 Capital Investment 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. All of these entities are primarily engaged in services
related to corporate finance.
19
Mr. Li is also the Chairman of the Board of Directors and Chief
Executive Officer of Media Century International Limited ("Media Century"),
whose business is to provide IT consultancy services and who intends to operate
in the same territories in which we intend to operate. Media Century has filed a
registration statement with the United States Securities and Exchange Commission
on January 12, 2004. Mr. Li is the beneficial owner of 50% of the currently
outstanding shares in Media Century.
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
First Asia initially subscribed for 10,000 shares of our common stock,
par value $1.00, at par value, on April 8, 2002 for $10,000. We subsequently
divided our shares on a 1:10 basis on both August 1, 2002 and on May 12, 2003 so
that First Asia held 1 million shares of our common stock. On May 12, 2003 First
Asia again subscribed for 9 million shares of our common stock at $0.01 per
share, and paid $90,000 in cash.
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 May 31, 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.
20
There are no other persons other than those listed below who
beneficially own more than 5% of our outstanding common stock or are our
executive officers and directors.
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%
Wilson Cheung .............................. 0 0% 0 0%
Directors and executive officers as a group 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.
21
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, 2004, 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.
22
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.
23
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
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.
24
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.
25
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.
26
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 International Business Companies 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 International Business Companies
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.
United States Federal Income Taxation
The following discussion addresses the material United States federal
income tax consequences of the ownership and disposition of common stock that
are held as a capital asset by a "U.S. Investor." A "U.S. Investor" means a
person who or that is any of the following:
o a citizen or resident of the United States,
o a corporation or partnership created or organized in or under the
laws of the United States or any political subdivision thereof,
o an estate the income of which is subject to U.S. federal income
taxation regardless of its source,
o a trust that is subject to the supervision of a court within the
United States and the control of one or more U.S. persons, or
o a trust that has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a U.S. person.
This discussion assumes that any dividends will be payable, and sales
and exchanges of shares of common stock will be effected, in U.S. dollars. This
summary does not address the United States federal income tax treatment of the
following types of investors, each of whom may be subject to tax rules that
differ significantly from those summarized below:
o life insurance companies,
o tax-exempt investors,
o banks,
o broker-dealers,
27
o persons who or that hold 10% or more our voting shares,
o persons who or that hold our common stock as part of a straddle,
hedging, integrated or conversion transaction, or
o persons whose "functional currency" is not the U.S. dollar.
The tax law upon which this discussion is based is subject to change at
any time, and any change may be applied retroactively in a manner that could
adversely affect you. The Internal Revenue Service could take different
positions concerning the tax consequences of ownership and disposition of shares
of common share discussed below and such positions could be sustained. You are
advised to consult your own tax adviser with respect to the particular
consequences to you of owning a common share, and with respect to the effects of
state, local or foreign tax laws to which you may be subject.
Dividends
If a U.S. Investor receives a distribution with respect to a share of
common stock or (other than a pro rata distribution of additional common stock
or rights with respect to a common stock):
o you will be required to include the distribution in gross income
as a taxable dividend to the extent the distribution is paid from
our current or accumulated earnings and profits, as determined
for United States federal income tax purposes;
o distributions in excess of our current and accumulated earnings
and profits will be treated as a non-taxable return of capital to
the extent of your basis in the common stock, and will be applied
against and reduce your basis in the common stock; and
o distributions in excess of our current and accumulated earnings
and profits and also in excess of your basis in the common stock
will, to the extent of the excess, be treated as capital gain.
Dividends paid by us will not be eligible for the corporate dividends
received deduction. Dividends paid by us will generally constitute foreign
source "passive income" for foreign tax credit limitation purposes.
A distribution to you of additional shares of common stock or rights to
subscribe for additional shares of common stock should not be subject to United
States federal income tax if received as part of a pro rata distribution to all
of our shareholders.
Disposition of Common Stock
If you sell or otherwise dispose of shares of common stock you will
recognize capital gain or loss in an amount equal to the difference between your
adjusted basis in the common stock and your amount realized on the disposition.
Such capital gain or loss will be long-term capital gain or loss if you have
held the share of common stock for more than one year at the time of the
disposition. Gain or loss that you realize on the disposition of a share of
common stock will generally be treated as U.S. source gain or loss for foreign
tax credit purposes.
Information Reporting and Backup Withholding
Non-corporate U.S. Investors may be subject to information reporting
and backup withholding with respect to dividends on, or the proceeds from the
disposition of, common stock made within the United States. In order to avoid
backup withholding of 31% on amounts received, U.S. Investors may be required to
provide their taxpayer identification number and comply with certain other
requirements concerning information reporting, or otherwise qualify for an
exemption. Any amounts withheld will be allowed as a credit against or refund of
your U.S. federal income tax liability, provided you furnish the required
information to the Internal Revenue Service.
28
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.
29
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 also given us its tax opinion that the statements
under the caption "British Virgin Islands Taxation" in this prospectus, insofar
as they constitute statements of British Virgin Islands tax law or legal
conclusions, accurately summarize the material British Virgin Islands tax
consequences to a holder owning shares in us. 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 for the year ended May 31, 2004 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.
30
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.
31
F-1
INDEX TO FINANCIAL STATEMENTS
APEX WEALTH ENTERPRISES LIMITED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
INDEX
Page
Independent Auditors' Report F-2
Balance Sheets as of May 31, 2004 and 2003 F-3
Statements of Operations for the cumulative period and
year ended May 31, 2004, year ended May 31, 2003 and
period ended May 31, 2002 F-4
Statements of Stockholders' Equity (Deficit) for
the years ended May 31, 2004 and 2003 and period ended May 31, 2002 F-5
Statements of Cash Flows for the cumulative period and
year ended May 31, 2004, 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, 2004 and 2003 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the years ended May 31, 2004 and 2003 and for the period from April 8, 2002
(date of incorporation) to May 31, 2004 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 the standards of the Public Company
Accounting Oversight Board (United States). 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, 2004 and 2003, and the results of
its operations and its cash flows for the years ended May 31, 2004 and 2003 and
for the period from April 8, 2002 (date of incorporation) to May 31, 2004 and
2002 in conformity with U.S. generally accepted accounting principles.
/s/ PKF
------------------------------
PKF Certified Public Accountants
Hong Kong
[DATE]
F-2
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF May 31, 2004 and 2003
2004 2003
Note US$ US$
ASSETS
Current assets
Cash and cash equivalents 1 94,267 100,256
----------------
---------------- ----------------
Total assets 94,267 100,256
================ ================
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Amount due to a director 2 - 3,046
Accrued expenses 1,282 1,282
---------------- ----------------
----------------
Total liabilities 1,282 4,328
---------------- ----------------
---------------- ----------------
Commitments and contingency 5
Stockholders' equity
Common stock, US$0.01 par value :
100,000,000 (2003: 100,000,000; 2002 : 5,000,000)
shares authorised :
10,000,000 shares issued and outstanding
at May 31, 2004 and 2003 and 1,000,000 shares issued
and outstanding at May 31, 2002 100,000 100,000
Deficit accumulated during the development stage (7,015 ) (4,072 )
----------------
---------------- ----------------
Total stockholders' equity 92,985 95,928
---------------- ----------------
---------------- ----------------
Total liabilities and stockholders' equity 94,267 100,256
================ ================
"Note: See accompany notes to financial statements"
F-3
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD AND YEAR ENDED MAY 31, 2004,
YEAR ENDED MAY 31, 2003 AND
PERIOD FROM APRIL 8, 2002 TO May 31, 2002
April 8, 2002 April 8, 2002
(date of (date of
incorporation) Year ended Year ended incorporation)
to May 31, 2004 May 31, 2004 May 31, 2003 to May 31, 2002
Note US$ US$ US$ US$
Revenue - - - -
Expenses
Formation expenses 1,026 - - 1,026
General and administrative
expenses 5,989 2,943 3,046 -
----------------- ---------------- --------------- -----------------
----------------- ---------------- ---------------
Loss from operations (7,015 ) (2,943 ) (3,046 ) (1,026 )
Income taxes 3 - - - -
----------------- ---------------- --------------- -----------------
----------------- ---------------- --------------- -----------------
Net loss (7,015 ) (2,943 ) (3,046 ) (1,026 )
================= ================ ===============
================= ================ =============== =================
Net loss per common share : 4
Basic (0.00 ) (0.00 ) (0.00 ) (0.00 )
================= ================ =============== =================
================= ================ =============== =================
Diluted (0.00 ) (0.00 ) (0.00 ) (0.00 )
================= ================ ===============
================= ================ =============== =================
Weighted average shares :
Basic 4,007,833 10,000,000 1,468,493 1,000,000
================= ================ =============== =================
================= ================ =============== =================
Diluted 4,007,833 10,000,000 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 YEARS ENDED MAY 31, 2004 AND 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
Net loss - - (2,943) (2,943)
-------------- ------------ ------------------- --------------
-------------- ------------ ------------------- --------------
Balance, May 31, 2004 10,000,000 100,000 (7,015) 92,985
============== ============ =================== ==============
"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, 2004,
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 Year ended incorporation)
to May 31, 2004 May 31, 2004 May 31, 2003 to May 31, 2002
US$ US$ US$ US$
Cash flows from operating activities :
Net loss (7,015 ) (2,943 ) (3,046 ) (1,026 )
Changes in liabilities :
Increase in accrued expenses 1,282 - 256 1,026
---------------- ---------------- --------------- -----------------
---------------- ---------------- ---------------
Net cash used in operating activities (5,733 ) (2,943 ) (2,790 ) -
---------------- ---------------- --------------- -----------------
---------------- ---------------- --------------- -----------------
Cash flows from financing activities :
Proceeds from issuance of common
stock 100,000 - 100,000 -
Advance from (repayment to) a
director - (3,046 ) 3,046 -
---------------- ---------------- --------------- -----------------
---------------- ---------------- --------------- -----------------
Net cash provided by (used in)
financing activities 100,000 (3,046 ) 103,046 -
---------------- ---------------- --------------- -----------------
---------------- ---------------- ---------------
Net change in cash and cash equivalents 94,267 (5,989 ) 100,256 -
Cash and cash equivalents, beginning of
period - 100,256 - -
---------------- ---------------- --------------- -----------------
---------------- ---------------- --------------- -----------------
Cash and cash equivalents, end of period 94,267 94,267 100,256 -
================ ================ =============== =================
"Note: See accompany notes to financial statements"
F-6
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 2004 AND 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$0.01 par value.
The Company is a development stage enterprise and has not yet generated
any revenue during the reporting periods. During the reporting periods,
the sole activity of the Company is the issuance of common stocks.
Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments
with original maturities of three months or less.
Income taxes
The Company accounts for income tax under the provisions of Statement
of Financial Accounting Standard No. 109, which requires recognition of
deferred tax assets and liabilities for the expected future tax
consequences of the events that have been included in the financial
statements or tax returns. Deferred income taxes are recognised for all
significant temporary differences between tax and financial statements
bases of assets and liabilities. Deferred tax assets are reflected at
the net realizable value.
F-7
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 2004 AND 2003 AND
PERIOD ENDED MAY 31, 2002
1. Nature of business and significant accounting policies
Foreign currency translation and transactions
The Company uses Hong Kong dollars ("HK$") 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 the reporting periods 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.
F-8
Apex Wealth Enterprises LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED MAY 31, 2004 AND 2003 AND
PERIOD ENDED MAY 31, 2002
3. Income taxes
The Company has net operating loss at May 31, 2004, 2003 and 2002 for
Hong Kong profits tax purpose.
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, 2004 and 2003.
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 28th
day of July, 2004.
Apex Wealth Enterprises Limited
By: /s/ Li Sze Tang
Li Sze Tang
Chief Executive Officer
and Chairman of the Board of Directors
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby authorizes, constitutes and appoints Li Sze Tang as his true and
lawful attorney-in-fact, with full powers of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this registration
statement and to sign any registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, that relates to the offering of
securities covered by this registration statement, and to file the same with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact or his substitute, may lawfully do or cause to be done by
virtue hereof.
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 28th day of July, 2004.
Signatures Capacity Date
/s/ LI SZE TANG Chief Executive Officer 7/28/2004
Li Sze Tang and Chairman of the Board
/s/ LI SZE TANG Attorney-in-fact for Wilson Cheung 7/28/2004
Li Sze Tang Chief Financial Officer and
Director
/s/ LI SZE TANG Attorney-in-fact for Michael Lin 7/28/2004
Li Sze Tang Authorized Representative in
the United States
II-3
EXHIBIT INDEX
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)
* Previously Filed
II-4