FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the month of April, 2004
Commission File Number 000-21919
DF CHINA TECHNOLOGY INC.
Units 3207-08, West Tower, Shun Tak Centre
168-200 Connaught Road
Central, Hong Kong, China
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
| Form 20-F [X] | Form 40-F [ ] |
Indicate by check mark if registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
| Yes [ ] | No [X] |
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-
| NOTICE AND CALL OF SHAREHOLDERS’ MEETING | ||||||||
| PROXY SOLICITED BY THE BOARD OF DIRECTORS | ||||||||
| SIGNATURES | ||||||||
Information Distributed to Securityholders
On or about April 28, 2004, DF China Technology Inc. mailed to all shareholders the following proxy statement and the notice and call of special meeting of shareholders to be held in Hong Kong, China on May 28, 2004.
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DF CHINA TECHNOLOGY INC.
NOTICE AND CALL OF SHAREHOLDERS’ MEETING
To: Shareholders of DF China Technology Inc.
NOTICE IS HEREBY GIVENthat a General Meeting of Shareholders of DF China Technology Inc. (the “Company”) will be held at 2:30 p.m., Hong Kong time, on Friday, May 28, 2004 at the Company’s office at Units 3207-08, 32nd Floor, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong, China for the purpose of voting on the following two resolutions:
“RESOLVED, that the stockholders of the Company approve and ratify the action of the Company taken by it on February 4, 2004 when it sold 21.5 million shares of the Company’s common stock at US$0.20 a share, for a total of US$4.3 million, which sale was at a price of 50 percent of the market value of the stock the day of the sale and was in excess of 20 percent of the outstanding shares of common stock the day of the sale.”
and
“RESOLVED, provided (i)only ifa determination is made by a Nasdaq Hearing Panel that, for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market, the Company will be required to have a minimum bid price of $1.00,or(ii)only ifa determination is made by a Nasdaq Hearing Panel that, should the Company acquire all the outstanding voting stock of DiChain Software Systems (Shenzhen) Limited, for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market, the Company will be required to have a minimum bid price of $4.00 for its common stock,then in either eventthe stockholders of the Company approve a stock consolidation (“reverse stock split”) pursuant to which each shareholder of our Company will be issued one new share of common stock to replace each five shares of common stock now outstanding.”
Only the shareholders of record at the close of business on April 21, 2004, will be entitled to vote at the meeting.
Your attention is called to the enclosed Proxy Statement and the Proxy solicited by the board of directors.Shareholders who do not expect to be personally present at the meeting are urged to fill in, date and return the accompanying Proxy, in the enclosed self-addressed envelope.
By Order of the Board
Dr. Fan Di
Chairman & Chief Executive Officer
Date: April 21, 2004
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Proxy Statement
This Proxy Statement is being sent to the shareholders ofDF China Technology Inc.(“our company,” “we”, “us” or “the company”) in connection with a General Meeting of Shareholders to be held for the purpose of voting on the following two resolutions:
“RESOLVED, that the stockholders of the Company approve and ratify the action of the Company taken by it on February 4, 2004 when it sold 21.5 million shares of the Company’s common stock at US$0.20 a share, for a total of US$4.3 million, which sale was at a price of 50 percent of the market value of the stock the day of the sale and was in excess of 20 percent of the outstanding shares of common stock the day of the sale, the proceeds of such stock sale to be utilized for working capital purposes by the Company.”
and
“RESOLVED, provided (i)only ifa determination is made by a Nasdaq Hearing Panel that, for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market, the Company will be required to have a minimum bid price of $1.00,or(ii)only ifa determination is made by a Nasdaq Hearing Panel that, should the Company acquire all the outstanding voting stock of DiChain Software Systems (Shenzhen) Limited (“DiChain Software”), for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market, the Company will be required to have a minimum bid price of $4.00 for its common stock,then in either eventthe stockholders of the Company approve a stock consolidation (“reverse stock split”) pursuant to which each shareholder of our Company will be issued one new share of common stock to replace each five shares of common stock now outstanding.”
Date, Time and Place
The meeting will be held at 2:30 p.m., Hong Kong time, on Friday, May 28, 2004 at the Company’s office at Units 3207-08, 32nd Floor, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong, China.
The approximate date on which this proxy statement and form of proxy are first sent to our stockholders is April 22, 2004.
Revocability of Proxy
A stockholder giving a proxy has the right to revoke it at any time before it is exercised. If a stockholder that has given a proxy should attend the General Meeting, he or she should notify the company’s secretary, Mr. Y S Kwok, at the meeting whether he or she intends to revoke the proxy and personally vote on matters properly brought before the meeting or whether he or she will allow the proxy holder to vote the shares.
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Persons Making the Solicitation
This solicitation of proxies is made by the company by the use of the mails. Should the directors consider it necessary to personally solicit a proxy from a stockholder, such a solicitation would be made by telephone by a director of the company. The company would bear any cost associated with such a personal solicitation, such as a toll charge by the telephone company.
Interest of Certain Persons in Matters to be Acted Upon
No person has a substantial interest, direct or indirect, in the matter to be acted upon other than an interest arising from the ownership of common stock of the company where the stockholder receives no extra or special benefit not shared on a pro rata basis by all other stockholders.
Voting Securities and Principal Holders Thereof
The record date for determining who has the right to vote, either in person or by proxy, at this stockholders’ meeting is April 21, 2004. As of such date, there are 52,820,712 shares of common stock issued and outstanding and entitled to one vote for each share of common stock held of record.
The names of persons known by our management beneficially to own five percent or more of the common stock of our company and the names of the officers and directors of our company and the number of shares of common stock beneficially owned by each of such persons are as follows as of April 20, 2004:
| No. of Shares | ||||||||||||
| Beneficially | ||||||||||||
| Owned | Percent of | |||||||||||
| Name of Beneficial | (Please see Note | Total Number | ||||||||||
| Owner | (1)) | of Shares | Remarks | |||||||||
FAN Di | 1,059,838 | 2.00 | % | Please see Note (2) | ||||||||
| ZHU Xiaojun | 1,059,838 | 2.00 | % | Please see Note (2) | ||||||||
| KWOK Yam Sheung | 0 | Nil | — | |||||||||
| ZHOU Liyang | 0 | Nil | — | |||||||||
| Robert FUNG Hing Piu | 2,582,458 | 4.89 | % | Please see Note (3) | ||||||||
| Godwin WONG | 0 | Nil | — | |||||||||
| Michael J. Reiser | 0 | Nil | — | |||||||||
| Iain F. BRUCE | 0 | Nil | — | |||||||||
| Gush Intelligence Limited | 3,800,000 | 7.19 | % | * | ||||||||
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| No. of Shares | ||||||||||||
| Beneficially | ||||||||||||
| Owned | Percent of | |||||||||||
| Name of Beneficial | (Please see Note | Total Number | ||||||||||
| Owner | (1)) | of Shares | Remarks | |||||||||
| Global China Enterprises Limited | 3,100,000 | 5.87 | % | * | ||||||||
| Asian Century Development Limited | 3,900,000 | 7.38 | % | * | ||||||||
| Sino Castle Holdings Limited | 1,000,000 | 1.89 | % | * | ||||||||
| Host Glory Limited | 3,000,000 | 5.68 | % | * | ||||||||
| Kinetic Point Limited | 3,500,000 | 6.63 | % | * | ||||||||
| Poly Crown Limited | 3,200,000 | 6.06 | % | * | ||||||||
| Squadram Limited | 5,200,000 | 9.84 | % | * | * | |||||||
Note:
| (1) | A person “beneficially owns” shares (i) if he has the right or power to determine how the shares are to be voted on shareholder voting matters or (ii) if he has the right or power to determine whether the shares should be held or disposed of. It is not necessary that a beneficial owner be a record owner of the shares. A trustee is said to be a beneficial owner of securities held by the trust, because the trustee has the power to vote such securities and, usually, the power to determine when to sell the securities. Each director of a company that holds stock in another company is said to be the beneficial owner of the stock of the other company, because the directors of the company holding the stock of the other company are the persons that have the voting and disposition power over such shares of stock. | |||
| Shares held beneficially but not of record are usually marked with a footnote that also identifies the record owner and explains the nature of the beneficial ownership by the person listed in the table. | ||||
| (2) | Dransfield Holdings Limited is the record owner of these 1,059,838 shares of common stock of the Company. Both Dr. Fan Di and Zhu Xiaojun, directors of our Company, are also directors of DiChain Holdings and are thereby deemed to be beneficial owners of these shares. | |||
| (3) | Grandom Asia Trading Limited is the record owner of these 2,582,458 shares of common stock of the Company. Dr. Robert Fung Hing Piu, director of our Company, is also director of Grandom Asia Trading Limited and thereby deemed to be beneficial owners of these shares. | |||
| * | These are part of the 21.5 million shares issued on February 4, 2004. | |||
| ** | These are the 5.2 millions shares new issue of shares closed on April 20, 2004. | |||
Proposal No. 1: Ratification of an Earlier Issuance of Shares of Our Common Stock
On March 25, 2004, the Nasdaq Staff notified our company that it had determined to deny our request for a continued listing on The Nasdaq SmallCap Market for a failure to comply with the minimum $2,500,000 stockholders’ equity requirement for continued listing set forth in Nasdaq’s Marketplace Rule 4320 (e) (2) (B).
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In an effort to raise stockholders’ equity from US $454,797 to higher than minimum continued listing standards, we had held a stockholders’ meeting on January 6, 2004 approving a non-specific transaction authorizing the company to sell all or any of its authorized capital –
| • | at prices in an aggregate amount not to exceed $5 million, | |||
| • | at prices not below 50 percent of the fair market value of the stock at the time the shares are paid for, and | |||
| • | in transactions completed before December 31, 2004. | |||
The shareholders at the January 6, 2004 shareholders’ meeting approved such sales of our common stock. On February 4, 2004 we sold 21.5 million shares at US$0.20 a share, a price equal to 50 percent of the market price, and raised $4.3 million. However, we had failed to tell our stockholders that eight days before the January 6 vote was taken – which was after the notice of the meeting and proxy cards had been mailed, our directors – pursuant to BVI law and our articles of association – had increased our authorized capital from 40 million shares of common stock to 250 million shares of common stock. When the notice of the meeting had been mailed, there were 26,120,712 shares of common stock outstanding. The issuance of 21.5 million shares on February 4, 2004 to raise $4.3 million exceeded by 7,620,712 the number of authorized but unissued shares that were available when notice of the meeting had been sent.
The Nasdaq Staff determined that we had failed to provide our stockholders with sufficient information for them to make a meaningful decision, that the issuance of the 21.5 million shares on February 4, 2004 therefor violated Marketplace Rule 4350 (i) (1) (D) (ii), and that the Staff was unable to consider either the $4.3 million proceeds from, or the shares issued pursuant to, the private placement for purposes of determining compliance with the $2.5 million minimum stockholders’ equity or the $35 million market value of listed securities requirements as specified under Marketplace Rule 4320 (e) (2) (B).
The Nasdaq Staff advised the company in its letter dated March 25, 2004 that in order to meet the stockholder approval requirements of Marketplace Rule 4350(i) for a non-specific equity financing, a company must disclose the following: (1) the maximum number of shares to be issued; (2) the maximum dollar amount of the issuance; (3) the maximum discount to the market; (4) the purpose of the transaction; and (5) the timeframe to complete the transaction, which must not exceed 90 days following the stockholder vote. The Nasdaq Staff determined that the company did not comply with Nasdaq requirements because the timeframe to completion exceeded 90 days and the company did not include the purpose of the transaction nor did it include the maximum number of shares to be issued in light of the increase in the number of authorized shares of the company.
The purpose of the special stockholders’ meeting to be held on May 28, 2004 isto seek ratificationby our stockholders of the sale by our company on February 4, 2004 of the 21.5 million shares at US$0.20 a share, or $4.3 million, which share price was 50 percent of the market price of the stock on the day it was subscribed by the purchaser and was a number of shares that exceeded 20 percent of the 26,120,712 shares outstanding when the notice was mailed regarding the January 6, 2004 stockholders’ meeting that authorized the sale. The proceeds from the sale of the shares of our stock will be utilized for working capital purposes by the company.
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It is our belief that when the May 28, 2004 stockholders’ meeting is held, a Nasdaq Hearing Panel will already have determined, in a hearing set for April 22, 2004, that our company is in compliance with the requirements for continued listing on the Nasdaq SmallCap Market. We hold this belief because our directors have obtained the subscription of an additional 5.2 million shares of our common stock for US$2.1 million, an amount that will increase our stockholders’ equity over the $2.5 million minimum amount required for a continued listing. This sale of stock closed on April 20, 2004, two days before the Nasdaq hearing. Nevertheless, we seek ratification of the February 4, 2004 sale of stock in order to support our request to Nasdaq that Nasdaq will consider the funds acquired in such sale for purposes of compliance with Nasdaq’s continued or initial listing requirements.
A failure of the stockholders to ratify the February 2004 sale could result in Nasdaq’s continued refusal to count $4.3 million of our stockholders’ equity for purposes of determining whether we comply with Nasdaq’s listing requirements or Nasdaq’s continued demand that we place restrictions on the voting or transferability of such shares. Such refusal or demand could lead to a delisting of our common stock on the Nasdaq SmallCap Market or the inability of our company to meet initial listing requirements at a time when we would otherwise qualify for a move up to a listing on the Nasdaq National Market.
For the reasons set forth above, your directors recommend a vote FOR ratification of this earlier issuance of shares of our common stock
Proposal No. 2: Approval of a stock consolidation (“reverse stock split”) pursuant to which each shareholder of our Company will be issued one new share of common stock to replace each five shares of common stock now outstanding.
The Nasdaq staff has taken the position that, should our Company acquire all the capital stock of DiChain Software – which acquisition was approved by our stockholders on March 25, 2004 but has not as yet been effected, then this acquisition would be regarded as a change of control of the Company and we would have to meet the more stringentinitialrequirements for a listing on the Nasdaq SmallCap Market. In this regard, the staff of Nasdaq is taking the position that,even though its Marketplace Listing Rules do not require such, our common stock would have to trade at prices higher than $4.00 for our Company to qualify for an initial listing.
Further, at the time this proxy statement is mailed to our stockholders, our common stock trades on the Nasdaq SmallCap Market at prices less than $1.00. The staff of Nasdaq has not taken the position that,our common stock should be removed from continued trading on the Nasdaq SmallCap Market unless it trades at prices higher than $1.00 but given the Nasdaq Staff’s position with respect to the $4.00 minimum for an initial listing in the event our Company should acquire DiChain Software, it is possible the Nasdaq Staff may take such a position,even though Nasdaq’s Marketplace Listing Rules do not require such. Since this matter could arise at the hearing before the Nasdaq Hearing Panel or in its decision thereafter, we believe it is prudent to obtain stockholder authorization for this proposed stock consolidation.
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The directors of our Company believe that a continued listing of our common stock on the Nasdaq Stock Market is important to the future of our Company – as is the acquisition of DiChain Software. Should we be delisted by Nasdaq, our stock would trade on the OTC Bulletin Board. But a Bulletin Board listing is significantly inferior to a listing on Nasdaq – particularly so for a company not incorporated in the United States. Timely quotes on the stock for brokers are not always available on the Bulletin Board for a non-U.S. company. Bulletin Board stocks that trade below $5.00 are called “penny stocks,” and regulations of the U. S. Securities and Exchange Commission impose trading restrictions on “penny stocks” that inhibit trading in the stocks. Such regulations do not apply to stocks that are listed on the Nasdaq stock markets. We should take every reasonable step to remain listed on the Nasdaq SmallCap Market.
In a special stockholders meeting held March 25, 2004, our stockholders overwhelmingly approved our acquisition of DiChain Software. DiChain Software is the first company in China integrating GIS (Geographic Information System), GPS (Global Positioning System), Wireless and Web technologies, providing complete IT and consultancy solutions for the logistics operations and supply chain management. DiChain Software’s products and solutions have been deployed by more than 300 customers in China and Hong Kong, including some of the largest logistics, manufacturing, and distribution companies. DiChain Software was ranked by IDC (International Data Corporation), a U.S. based leading IT consulting firm, as one of the leading IT solution providers in logistics and supply chain management in China in 2002 and 2003. We believe it is positioned to become the major IT solution provider in China in the next 3 to 5 years.
The directors of our Company have already received stockholder approval to acquire all the capital stock of DiChain Software. They propose to acquire such stock whether or not the stockholders now approve the stock consolidation (reverse stock split) proposal. But please note the stock consolidation will only be effected if the Nasdaq Hearing Panel rules that our Company is subject to either a minimum bid price for our common stock of $1.00 for a continued listing on the Nasdaq SmallCap Market or a minimum $4.00 bid price for an initial listing determination to be made after our acquisition of all the capital stock of DiChain Software.
The Nasdaq ruling should be known by the time of the May 28, 2004 special stockholders’ meeting. The vote on Proposal No. 2 is, essentially, a vote whether to stay on the Nasdaq SmallCap Market or to drop down to the Bulletin Boardbut only in the event thatthe Nasdaq Hearing Panel rules that our company will be subject to either the $1 continued listing qualification requirement or the $4 initial listing qualification requirement.
For the reasons set forth above, your directors recommend a vote FOR the adoption of the stock consolidation resolution to be voted on at the May 28 meeting.
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How the Vote Will Be Counted
All shareholders of record on April 21, 2004 are eligible to vote, in person or by proxy, on the two resolutions to be presented at the meeting and set forth first above. However the voting will be counted in two ways –
| • | by the total votes cast either in person or by proxy, and | |||
| • | by eliminating all votes of the holders of the 21.5 million shares issued on February 4, 2004 and the holders of any other shares issued after the January 6, 2004 stockholders’ meeting, such as the 5.2 million shares sold on or about April 20, 2004. | |||
To adopt the resolutions, we will require an approving vote from a majority of the votes cast in both methods of counting the votes.
Financial Information
The financial statements of our company for the fiscal year that ended March 31, 2004 are attached hereto but are not yet audited. They are “pro forma” financial statements in that they do not include entries for the $4.3 million cash raised in the February 4, 2004 sale that is the subject of the ratification proposal to be voted on at the May 28, 2004 stockholders’ meeting or for the $4.3 million increase in stockholders’ equity that resulted from such sale.
As for our audited financial statements for the fiscal year that ended over a year ago on March 31, 2003, we incorporate these financial statements by reference to the Form 20-F Annual Report we filed at the Securities and Exchange Commission on October 15, 2003, SEC File No. 000-21919.
By order of the directors:
Dr. Fan Di
Chairman & Chief Executive Officer
Date: April 21, 2004
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DF China Technology Inc. FY 2004 Pro Forma Balance Sheet, as of March 31, 2004
(in US dollar)
| Period Ending: | 3/31/2004 | Apr-03 | May-03 | Jun-03 | Jul-03 | Aug-03 | Sep-03 | |||||||||||||||||||||
| Cash & bank balances | 401,783 | 7,731 | 10,633 | 13,106 | 10,262 | 4,228 | 400,193 | |||||||||||||||||||||
| Accounts receivable | 64,000 | 94,000 | 90,000 | 77,000 | 78,000 | 80,000 | 75,000 | |||||||||||||||||||||
| Inventory | 23,000 | 40,000 | 55,000 | 52,000 | 44,000 | 47,000 | 51,000 | |||||||||||||||||||||
| Other Current Assets | $ | 6,000 | 16,000 | 16,000 | 16,000 | 16,000 | 16,000 | 16,000 | ||||||||||||||||||||
| Total Current Assets | 504,783 | 157,731 | 171,633 | 158,106 | 148,262 | 147,228 | 542,193 | |||||||||||||||||||||
| Long Term Assets | ||||||||||||||||||||||||||||
| Long Term Investments | ||||||||||||||||||||||||||||
| Fixed Assets | 42,000 | 4,326,000 | 4,325,000 | 4,324,000 | 4,323,000 | 4,322,000 | 4,321,000 | |||||||||||||||||||||
| Other Assets | ||||||||||||||||||||||||||||
| Total Assets | 546,783 | 4,483,731 | 4,496,633 | 4,482,106 | 4,471,262 | 4,469,228 | 4,863,193 | |||||||||||||||||||||
| Current Liabilities | ||||||||||||||||||||||||||||
| Accounts Payable | 69,000 | 70,000 | 77,000 | 64,000 | 55,000 | 55,000 | 52,000 | |||||||||||||||||||||
| Accrued liabilities and other payable | 0 | 1,004,000 | 1,009,000 | 1,004,000 | 1,000,000 | 1,004,000 | 999,000 | |||||||||||||||||||||
| Other Payable(interco) | 36,000 | 856,000 | 856,000 | 856,000 | 157,000 | 182,000 | 292,000 | |||||||||||||||||||||
| Total Current Liabilities | 105,000 | 1,930,000 | 1,942,000 | 1,924,000 | 1,212,000 | 1,241,000 | 1,343,000 | |||||||||||||||||||||
| Long Term Debt | ||||||||||||||||||||||||||||
| Total Liabilities | 105,000 | 1,930,000 | 1,942,000 | 1,924,000 | 1,212,000 | 1,241,000 | 1,343,000 | |||||||||||||||||||||
| Stock Holders Equity | ||||||||||||||||||||||||||||
| Common Stocks | 32,406,000 | 31,019,000 | 31,019,000 | 31,019,000 | 31,756,000 | 31,756,000 | 32,149,000 | |||||||||||||||||||||
| Capital Surplus | 600,000 | 600,000 | 600,000 | 600,000 | 600,000 | 600,000 | 600,000 | |||||||||||||||||||||
| Retained Earnings | (32,564,217 | ) | (29,065,269 | ) | (29,064,367 | ) | (29,060,894 | ) | (29,096,738 | ) | (29,127,772 | ) | (29,228,807 | ) | ||||||||||||||
| Other Equity | ||||||||||||||||||||||||||||
| Total Equity | 441,783 | 2,553,731 | 2,554,633 | 2,558,106 | 3,259,262 | 3,228,228 | 3,520,193 | |||||||||||||||||||||
| Total Liabilities and Equity | 546,783 | 4,483,731 | 4,496,633 | 4,482,106 | 4,471,262 | 4,469,228 | 4,863,193 | |||||||||||||||||||||
[Continued from above table, first column(s) repeated]
| Period Ending: | Oct-03 | Nov-03 | Dec-03 | Jan-04 | Feb-04 | Mar-04 | ||||||||||||||||||
| Cash & bank balances | 409,805 | 212,232 | 476,264 | 441,951 | 350,299 | 401,783 | ||||||||||||||||||
| Accounts receivable | 70,000 | 81,000 | 84,000 | 73,000 | 74,000 | 64,000 | ||||||||||||||||||
| Inventory | 27,000 | 20,000 | 34,000 | 36,000 | 35,000 | 23,000 | ||||||||||||||||||
| Other Current Assets | 16,000 | 16,000 | 16,000 | 16,000 | 16,000 | 16,000 | ||||||||||||||||||
| Total Current Assets | 522,805 | 329,232 | 610,264 | 566,951 | 475,299 | 504,783 | ||||||||||||||||||
| Long Term Assets | ||||||||||||||||||||||||
| Long Term Investments | ||||||||||||||||||||||||
| Fixed Assets | 4,320,000 | 4,319,000 | 4,318,000 | 4,317,000 | 43,000 | 42,000 | ||||||||||||||||||
| Other Assets | ||||||||||||||||||||||||
| Total Assets | 4,842,805 | 4,648,232 | 4,928,264 | 4,883,951 | 518,299 | 546,783 | ||||||||||||||||||
| Current Liabilities | ||||||||||||||||||||||||
| Accounts Payable | 60,000 | 51,000 | 81,000 | 62,000 | 63,000 | 69,000 | ||||||||||||||||||
| Accrued liabilities and other payable | 974,000 | 972,000 | 972,000 | 972,000 | 0 | 0 | ||||||||||||||||||
| Other Payable(interco) | 394,000 | 294,000 | 336,000 | 423,000 | 0 | 36,000 | ||||||||||||||||||
| Total Current Liabilities | 1,428,000 | 1,317,000 | 1,389,000 | 1,457,000 | 63,000 | 105,000 | ||||||||||||||||||
| Long Term Debt | ||||||||||||||||||||||||
| Total Liabilities | 1,428,000 | 1,317,000 | 1,389,000 | 1,457,000 | 63,000 | 105,000 | ||||||||||||||||||
| Stock Holders Equity | ||||||||||||||||||||||||
| Common Stocks | 32,149,000 | 32,149,000 | 32,406,000 | 32,406,000 | 32,406,000 | 32,406,000 | ||||||||||||||||||
| Capital Surplus | 600,000 | 600,000 | 600,000 | 600,000 | 600,000 | 600,000 | ||||||||||||||||||
| Retained Earnings | (29,334,195 | ) | (29,417,768 | ) | (29,466,735 | ) | (29,579,049 | ) | (32,550,701 | ) | (32,564,217 | ) | ||||||||||||
| Other Equity | �� | |||||||||||||||||||||||
| Total Equity | 3,414,805 | 3,331,232 | 3,539,265 | 3,426,951 | 455,299 | 441,783 | ||||||||||||||||||
| Total Liabilities and Equity | 4,842,805 | 4,648,232 | 4,928,265 | 4,883,951 | 518,299 | 546,783 | ||||||||||||||||||
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DF China Technology Inc. FY 2004 Pro Forma Income Statement, for year ended March 31, 2004
(in US dollar)
| Period Ending: | Apr-03 | May-03 | Jun-03 | Jul-03 | Aug-03 | Sep-03 | ||||||||||||||||||
| Total Revenue | 65,415 | 50,178 | 61,425 | 61,670 | 41,000 | 43,251 | ||||||||||||||||||
| Cost of Revenue | 49,560 | 38,860 | 51,319 | 48,440 | 34,809 | 29,835 | ||||||||||||||||||
| Gross Profit | 15,856 | 11,317 | 10,106 | 13,230 | 6,191 | 13,416 | ||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||
| Sales, General and Admin. | (13,125 | ) | (10,415 | ) | (6,633 | ) | (49,075 | ) | (37,226 | ) | (114,451 | ) | ||||||||||||
| Travel | (215 | ) | (125 | ) | (235 | ) | (319 | ) | (115 | ) | (230 | ) | ||||||||||||
| Legal & Professional | 0 | 0 | 0 | (31,601 | ) | (25,273 | ) | (6,512 | ) | |||||||||||||||
| Warehouse & delivery | (4,138 | ) | (2,853 | ) | (3,583 | ) | (3,940 | ) | (2,486 | ) | (1,596 | ) | ||||||||||||
| Taxes | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Salaries & commission | (3,628 | ) | (3,573 | ) | (4,837 | ) | (4,837 | ) | (4,992 | ) | (4,804 | ) | ||||||||||||
| Office Supplies | (1,030 | ) | (875 | ) | (706 | ) | (4,129 | ) | (1,198 | ) | (1,338 | ) | ||||||||||||
| Management fee | 0 | 0 | 0 | 0 | 0 | (96,154 | ) | |||||||||||||||||
| Others | (4,114 | ) | (2,989 | ) | 2,728 | (4,248 | ) | (3,162 | ) | (3,818 | ) | |||||||||||||
| Non-Recurring Items | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Other Operating Items | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Operating Income | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
| Add’l income/expense items | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Earnings Before Interest and Tax | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
| Earnings Before Tax | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
| Net Income-Cont. Operations | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
| Net Income | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
| Net Income Applicable to Common Shareholders | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||
[Continued from above table, first column(s) repeated]
| Period Ending: | Oct-03 | Nov-03 | Dec-03 | Jan-04 | Feb-04 | Mar-04 | Total 2004 | |||||||||||||||||||||
| Total Revenue | 27,114 | 40,537 | 50,474 | 44,284 | 43,464 | 51,213 | 580,026 | |||||||||||||||||||||
| Cost of Revenue | 22,411 | 35,236 | 43,937 | 39,096 | 38,547 | 44,663 | 476,714 | |||||||||||||||||||||
| Gross Profit | 4,703 | 5,301 | 6,536 | 5,188 | 4,917 | 6,550 | 103,312 | |||||||||||||||||||||
| Operating Expenses | ||||||||||||||||||||||||||||
| Sales, General and Admin. | (110,092 | ) | (88,874 | ) | (55,503 | ) | (117,502 | ) | (116,569 | ) | (20,066 | ) | (739,529 | ) | ||||||||||||||
| Travel | (656 | ) | (1,409 | ) | (531 | ) | (377 | ) | (406 | ) | (454 | ) | (5,072 | ) | ||||||||||||||
| Legal & Professional | 0 | (36,664 | ) | (3,331 | ) | (20,437 | ) | (71,000 | ) | 0 | (194,817 | ) | ||||||||||||||||
| Warehouse & delivery | (1,095 | ) | (2,562 | ) | (2,985 | ) | (2,047 | ) | (2,149 | ) | (2,038 | ) | (31,471 | ) | ||||||||||||||
| Taxes | 0 | 0 | 0 | (1,004 | ) | (1,004 | ) | (1,004 | ) | (3,013 | ) | |||||||||||||||||
| Salaries & commission | (58,434 | ) | (27,625 | ) | (25,784 | ) | (13,545 | ) | (13,079 | ) | (13,448 | ) | (178,584 | ) | ||||||||||||||
| Office Supplies | (27,517 | ) | (1,275 | ) | (1,995 | ) | (422 | ) | (352 | ) | (1,002 | ) | (41,839 | ) | ||||||||||||||
| Management fee | (19,231 | ) | (19,231 | ) | (19,231 | ) | (76,923 | ) | (25,641 | ) | 0 | (256,410 | ) | |||||||||||||||
| Others | (3,158 | ) | (109 | ) | (1,648 | ) | (2,746 | ) | (2,937 | ) | (2,119 | ) | (28,321 | ) | ||||||||||||||
| Non-Recurring Items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Other Operating Items | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Operating Income | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (111,652 | ) | (13,516 | ) | (636,217 | ) | ||||||||||||||
| Add’l income/expense items | 0 | 0 | 0 | 0 | (2,860,000 | ) | 0 | (2,860,000 | ) | |||||||||||||||||||
| Earnings Before Interest and Tax | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | (3,496,217 | ) | ||||||||||||||
| Earnings Before Tax | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | (3,496,217 | ) | ||||||||||||||
| Net Income-Cont. Operations | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | (3,496,217 | ) | ||||||||||||||
| Net Income | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | (3,496,217 | ) | ||||||||||||||
| Net Income Applicable to Common Shareholders | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | (3,496,217 | ) | ||||||||||||||
12
DF China Technology Inc. FY 2004 Pro Forma Cash Flow, for year ended March 31, 2004
(in US dollar)
| Period Ending: | 3/31/2004 | Apr-03 | May-03 | Jun-03 | Jul-03 | Aug-03 | Sep-03 | |||||||||||||||||||||
| Net Income | (3,496,217 | ) | 2,731 | 902 | 3,473 | (35,844 | ) | (31,035 | ) | (101,035 | ) | |||||||||||||||||
| Cash Flows-Operating Activities | ||||||||||||||||||||||||||||
| Net Income Adjustments | ||||||||||||||||||||||||||||
| Changes in Operating Activities | ||||||||||||||||||||||||||||
| Accounts Receivable | 15,000 | (7,000 | ) | 4,000 | 13,000 | (1,000 | ) | (2,000 | ) | (5,000 | ) | |||||||||||||||||
| Inventory | 15,000 | (8,000 | ) | (15,000 | ) | 3,000 | 8,000 | (3,000 | ) | 4,000 | ||||||||||||||||||
| Other Operating Activities | 27,376 | 3,731 | 5,902 | 882 | 3,362 | 4,174 | 2,005 | |||||||||||||||||||||
| Other Liabilities | 3,178,624 | 3,269 | 98 | (4,882 | ) | 31,639 | 25,826 | 105,994 | ||||||||||||||||||||
| Accounts Payable | 4,000 | 5,000 | 7,000 | (13,000 | ) | (9,000 | ) | 0 | (3,000 | ) | ||||||||||||||||||
| Net Cash Flow-Operating | (256,217 | ) | (269 | ) | 2,902 | 2,473 | (2,843 | ) | (6,035 | ) | 2,964 | |||||||||||||||||
| Cash Flows-Investing Activities | ||||||||||||||||||||||||||||
| Capital Expenditures | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Other Investing Activities | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Net Cash Flows-Investing | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Cash Flows-Financing Activities | ||||||||||||||||||||||||||||
| New issue shares of Common Stock | 650,000 | 0 | 0 | 0 | 0 | 0 | 393,000 | |||||||||||||||||||||
| Net Borrowings | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Net Cash Flows-Financing | 650,000 | 0 | 0 | 0 | 0 | 0 | 393,000 | |||||||||||||||||||||
| Net Cash Flow | 393,783 | (269 | ) | 2,902 | 2,473 | (2,843 | ) | (6,035 | ) | 395,964 | ||||||||||||||||||
| Cash at the beginning of the period | 8,000 | 8,000 | 7,731 | 10,633 | 13,106 | 10,263 | 4,228 | |||||||||||||||||||||
| Cash at the end of the period | 401,783 | 7,731 | 10,633 | 13,106 | 10,263 | 4,228 | 400,193 | |||||||||||||||||||||
[Continued from above table, first column(s) repeated]
| Period Ending: | Oct-03 | Nov-03 | Dec-03 | Jan-04 | Feb-04 | Mar-04 | ||||||||||||||||||
| Net Income | (105,388 | ) | (83,573 | ) | (48,967 | ) | (112,314 | ) | (2,971,652 | ) | (13,516 | ) | ||||||||||||
| Cash Flows-Operating Activities | ||||||||||||||||||||||||
| Net Income Adjustments | ||||||||||||||||||||||||
| Changes in Operating Activities | ||||||||||||||||||||||||
| Accounts Receivable | 5,000 | (11,000 | ) | (3,000 | ) | 11,000 | 1,000 | 10,000 | ||||||||||||||||
| Inventory | 24,000 | 7,000 | (14,000 | ) | (2,000 | ) | (1,000 | ) | 12,000 | |||||||||||||||
| Other Operating Activities | 1,749 | 3,522 | 946 | 779 | 247 | 77 | ||||||||||||||||||
| Other Liabilities | 76,251 | (104,521 | ) | 42,053 | 87,221 | 2,879,753 | 35,923 | |||||||||||||||||
| Accounts Payable | 8,000 | (9,000 | ) | 30,000 | (19,000 | ) | 0 | 7,000 | ||||||||||||||||
| Net Cash Flow-Operating | 9,612 | (197,572 | ) | 7,032 | (34,314 | ) | (91,652 | ) | 51,484 | |||||||||||||||
| Cash Flows-Investing Activities | ||||||||||||||||||||||||
| Capital Expenditures | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Other Investing Activities | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Net Cash Flows-Investing | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Cash Flows-Financing Activities | ||||||||||||||||||||||||
| New issue shares of Common Stock | 0 | 0 | 257,000 | 0 | 0 | 0 | ||||||||||||||||||
| Net Borrowings | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Net Cash Flows-Financing | 0 | 0 | 257,000 | 0 | 0 | 0 | ||||||||||||||||||
| Net Cash Flow | 9,612 | (197,572 | ) | 264,032 | (34,314 | ) | (91,652 | ) | 51,484 | |||||||||||||||
| Cash at the beginning of the period | 400,193 | 409,805 | 212,233 | 476,265 | 441,951 | 350,299 | ||||||||||||||||||
| Cash at the end of the period | 409,805 | 212,233 | 476,265 | 441,951 | 350,299 | 401,783 | ||||||||||||||||||
13
DF CHINA TECHNOLOGY INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned shareholder of DF China Technology Inc. hereby appoints Dr. FAN Di, Mr. Aaron ZHU Xiaojun and Mr. KWOK Yam Sheung, and any of them, the lawful attorneys and proxies of the undersigned, with several powers of substitution, to vote all shares of Common Stock of DF China Technology Inc. that the undersigned is entitled to vote at a General Meeting of Shareholders to be held at 2:30 p.m. on May 28, 2004, and at any and all adjournments thereof, as follows:
| 1. | To vote on the adoption of the following resolution: |
| RESOLVED, that the stockholders of the Company approve and ratify the action of the Company taken by it on February 4, 2004 when it sold 21.5 million shares of the Company’s common stock at US$0.20 a share, for a total of US$4.3 million, which sale was at a price of 50 percent of the market value of the stock the day of the sale and was in excess of 20 percent of the outstanding shares of common stock the day of the sale, the proceeds of such stock sale to be utilized for working capital purposes by the Company. |
FOR __ AGAINST __ ABSTAIN __
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
| 2. | To vote on the adoption of the following resolution: |
| RESOLVED, provided (i)only ifa determination is made by a Nasdaq Hearing Panel that, for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market, the Company will be required to have a minimum bid price of $1.00,or(ii)only ifa determination is made by a Nasdaq Hearing Panel that, should the Company acquire all the outstanding voting stock of DiChain Software Systems (Shenzhen) Limited, for the Company’s continued inclusion for trading on the Nasdaq SmallCap Stock Market the Company will be required to have a minimum bid price of $4.00 for its common stock,then in either eventthe stockholders of the Company approve a stock consolidation (“reverse stock split”) pursuant to which each shareholder of our Company will be issued one new share of common stock to replace each five shares of common stock now outstanding. |
FOR __ AGAINST __ ABSTAIN __
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
| 3. | To vote on any other matters that could properly come before the meeting. |
FOR __ AGAINST __ ABSTAIN __
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
Shares represented by all properly executed proxies will be voted in accordance with instructions appearing on the proxy.IN THE ABSENCE OF SPECIFIC INSTRUCTIONS, PROXIES WILL BE VOTED FOR APPROVAL OF THE FIRST TWO ABOVE MATTERS AND IN THE DISCRETION OF THE PROXY HOLDERS AS TO ANY OTHER MATTERS.
14
Dated: , 2004
| (Signature) | (Name of Shareholder) |
SHAREHOLDERS IN THE UNITED STATES, please fill out, execute and return this Proxy in the enclosed, postage pre-paid, self-addressed envelope addressed to George Johnson, Securities Transfer Corporation, 2591 Dallas Parkway, Suite 102, Frisco, TX 75034, USA in sufficient time to be received by the Company at least two days before the shareholders’ meeting to be held on May 28, 2004.
SHAREHOLDERS IN CHINA AND HONG KONG, please fill out, execute and return this Proxy in the enclosed self-addressed envelope addressed to Mr. Y S Kwok at Units 3207-08, West Tower, Shun Tak Centre, 168-200 Connaught Road Central, Hong Kong in sufficient time to be received by the Company at least one day before the shareholders’ meeting to be held on May 28, 2004.
SHAREHOLDERS who have questions in relation to the resolutions to be considered at the General Meeting of Shareholders to be held on May 28, 2004 are advised to contact our company at: Mr. Aaron Zhu Xiaojun at email aaronzhu@dichain.com or telephone (852) 2255 0688 or fax (852) 2851 3660.
15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DF China Technology Inc. | ||||
| By | /s/ Yam Sheung KWOK | |||
| Yam Sheung KWOK, | ||||
| Executive Director and Company Secretary | ||||
Date: April 29, 2004
16
