SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended December 31, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 33-3272-W
LOTUS PACIFIC, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Organization)
52-1947160
(I.R.S. Employer Identification Number)
200 Centennial Avenue, Suite 201, Piscataway, New Jersey 08854
(Address of principal executive offices)
(732) 885-1750
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the proceeding 12
months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
(1) Yes __X__ No ___
(2) Yes __X__ No ___
As of December 31, 1997, the Registrant had outstanding
46,828,554 shares of Common Stock, par value $.001
per share and 4,300 shares of Series A Preferred Stock.
Part I, Financial Information
Item 1, Consolidated Financial Statements
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information
and the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting
principles for completing financial statements.
In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for
a fair presentation have been included.
LOTUS PACIFIC, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1997
(Unaudited)
ASSETS
December 31, 1997 December 31, 1996
Current Assets
Cash $882,939 $ 215,254
Accounts receivable 215 0
Prepaid expenses 2,874 0
Utilities Deposits 22,174
Total Currents Assets 908,202 215,254
Property and Equipment, net 1,408,674 0
Leasehold Improvement, net 757 0
Total Property & Equip. 1,409,431
Investments 600,000 172,395
Intangible Assets, net of accumulated
amortization of $199,363 in 1997 5,342,679
Total Assets 8,260,312 387,649
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Account Payable $517,846 0
Payroll Taxes Payable 24,707 0
Purchase Deposit 100,000 0
Total Current Liabilities 642,553 0
long-term Liabilities
Loan Payable 220,000
Minority Interest in Equity of
Consolidated Subsidiary 497,795 0
Stockholders' Equity
Preferred Stock, 100,000 shares authorized,
4,300 shares issued and outstanding 4 4
Common Stock, 50 million shares authorized,
46,828,554 shares issued and
outstanding 46,829 26,937
Additional paid-in capital 8,008,298 367,717
Stock Warrants 80,000 0
Accumulated Deficit (1,235,167) (7,009)
Total Stockholders' Equity 6,899,964 387,649
Total Liabilities &
Stockholders' Equity $8,260,312 387,649
see notes to financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the Quarter Ended December 31, 1997
(Unaudited)
December 31, 1997 December 31, 1996
Revenue
Royalty Income $800,000 $ 0
Interest Income 1,426 631
Total Revenue 801,426 631
Operating Expenses 1,127,507 0
Research and Development 210,105 0
Net Income (loss) before income taxes
and minority interest in income
of consolidated subsidiary (536,196) 631
Minority Interest in Loss of Income
Consolidated Subsidiary 37,032 0
Net Income (499,164) 631
Earning Per Share ($0.01) $0.00
Weighted Average Shares 46,812,554 26,937,054
see notes to financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
For the Quarter Ended December 31, 1997
(Unaudited)
December 31, 1997 December 31, 1996
CASH FLOW FROM
OPERATING ACTIVITIES
Net Income $(499,164) $631
Adjustments to reconcile net income to
net cash provided by operating activities:
Increase in accumulated depreciation 79,737 0
Increase in accumulated amortization 85,441
Decrease in accounts receivable 256 0
Decrease in accounts payable 127,365 0
Increase in accounts payable 43
Decrease in minority interest 74,421
Net cash provided by operating activities (535,516) 674
CASH FLOW FROM
INVESTING ACTIVITIES:
Net cash used in investing activities 0 0
CASH FLOW FROM
FINANCING ACTIVITIES:
Increase in loan payable 220,000 0
Issuance of common stock 78,000 0
Net cash provided in financing activities 298,000 0
Net increase in cash (237,516) 674
Cash, beginning 1,120,455 214,579
Cash, ending $882,939 $215,254
see notes to financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
1.Organization:
As of December 31, 1997, the Company conducts business
operations through its two subsidiaries: Regent Electronics
Corp. and Richtime Far East, Ltd. Regent Electronics Corp.,
92.3% equity owned by the Company, is a multimedia
oriented high-tech corporation based in New Jersey. Richtime
Far East Ltd. is wholly owned by the Company and is
operated in Hong Kong in garment business.
2.Summary of significant accounting policies:
The accompanying financial statements include the accounts
of Lotus Pacific, Inc. and its 92.3% owned subsidiary,
Regent Electronics Corp. The 7.6% non-owned portion of
Regent Electronics Corp. appear as minority interest in
subsidiary on the balance sheet in accordance with
generally accepted accounting principles. All intercompany
transactions have been eliminated in consolidation.
Richtime Far East, Ltd., operated in Hong Kong, is not
consolidated with Lotus Pacific, Inc. in accordance with
generally accepted accounting principles.
Intangible asset consists of the acquisition of patents
by the Company in June 1997. The patents are carried
at cost and amortized over the useful life of 17 years.
3.Issuance of Stock:
On November 21, 1997 and December 31, 1997, the Company
issued 19,500 shares of common stock to, through a
private placement, to two individuals for total
consideration of $78,000. As of December 31,
1997 the Company has 46,828,554 shares of common
stock outstanding.
4.Condensed Financial Statements for Regent Electronics
Corp. on December 31, 1997:
BALANCE SHEET
ASSETS
Current assets $ 886,388
Property and equipment 1,407,476
Other assets 5,342,679
7,636,543
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities 635,213
Long-term Liabilities 530,000
Stockholders' Equity:
Common stock 26,000
Additional paid-in capital 7,494,042
Accumulated deficit (1,048,712)
Total Stockholders' Equity 6,471,330
$ 7,636,543
STATEMENT OF OPERATIONS
For the Quarter ended December 31, 1997
Revenue $ 801,125
Operating costs and expenses (1,072,438)
Research & Development 210,105
Net Loss $ (481,418)
STATEMENT OF CASH FLOW
Cash flows used in operating activities $ (569,399)
Cash flows used in investing activities 0
Cash flows from financing activities 330,000
Net increase in cash $ (239,399)
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
1. Results of Operations
Regent, a subsidiary of the Company, started to market
Wonder TV A6000 offshore and particularly in China
in the last quarter. Wonder TV A6000 is an Amiga technology
based multimedia and multi-functional TV set top box
developed by Regent. It features an all-in-one box system
with combined functions of a multimedia personal computer,
a fax machine, a Karaoke machine, an Internet box, an
audio CD player, a video CD player and an electronic
game machine.
In the past quarter, Regent has a gross income of $ 800,000
from continuing operation. The lump sum of $ 800,000 was
a license fee of Wonder TV A6000 technology received from
a New Jersey company that markets the product in China.
The net income was, excluding operation cost, $499 thousand
for the past quarter. In research and development, Regent
is looking into application of internet broadcast to
China's regional cable TV networks.
Richtime Far East Ltd., a whole subsidiary of the Company
incorporated and operated in Hong Kong, is in the
business of import and export in garment. The Company
had a total sales of $3.21 million and a net income
of $276,591 for the quarter ended December 31, 1997.
2. Liabilities and Capital Resources
The company issued 19,500 shares of common stock with
par value of $0.001 per share to two individuals on
November 21, 1997 and December 31, 1997 for an aggregate
consideration of $78,000. As of December 31, 1997, the
Company had outstanding 46,828,554 shares of Common
Stock, par value $.001 per share and 4,300 shares of
Series A Preferred Stock.
Part II
Other Information
Item 1. Legal Proceedings
None.
Item 2. Changes in the Rights of the Registrant's Holders
None.
Item 3. Defaults by the Registrants on its Senior Securities
None.
Item 4. Submission of Matters to A Vote of Securities Holders
None.
Item 5. Other Information
None.
Signature
Pursuant to the requirements of Section 12 of the
Securities Exchange Act of 1934, the registrant had
duly caused this registration statement to be signed
on its behalf by the undersigned, thereto duly authorized.
Date: February 10, 1998
Lotus Pacific, Inc.
/S/ James Yao, Chairman & President
/S/ Gu Huang, Secretary & Treasurer
Pursuant to the requirements of the Securities Exchange
Act 1934, this report has been signed below by the
following persons on behalf of the registrants and
in capacities and on the dates indicated.
/S/ James Liu, Director & Vice President
/S/ Jeremy Wang, Director
/S/ David Leung, Director & Vice President