UNITED STATES
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 Quarterly Period Ended December 31, 1998
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 000-24999
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)
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 _____
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of January 31, 1999:
Class Number of Shares
Common Stock
Par Value $.001 Per Share 47,499,306
LOTUS PACIFIC, INC.
INDEX
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of December 31,
1998 (unauduited) and June 30, 1998 (audited)
Condensed Consolidated Statements of Operations (unaudited) for
the Three and Six Months Ended December 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flows (unaudited) for
the Six Months ended December 31, 1998 and 1997
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
PART II OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
LOTUS PACIFIC, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
December 31, 1998 June 30, 1998
(Unaudited) (Audited)
Current Assets
Cash $894,811 $3,193,127
Accounts Receivable 9,471,017 4,979,759
Notes Receivable 1,808,000 --
Inventory 13,650 --
Prepaid Expenses 9,036 833,087
Deposit 22,175 --
--------- ---------
Total Currents Assets 12,218,690 8,933,181
Property and Equipment 1,632,369 1,631,403
Leasehold Improvement 1,041 75,612
--------- ----------
1,633,410 1,707,015
Less: Accu. Depreciation 512,154 348,286
Investments -- 600,000
Intangible Assets, net of accumulated
amortization of $541,127 5,000,915 5,439,523
Total Assets $18,340,861 $16,404,225
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Account Payable $3,935,725 $1,755,654
Loans Payable -- 120,000
Salaries Payable 59,995 63,819
Payroll Taxes Payable 21,912 32,234
Income Taxes Payable -- 42,110
---------- ----------
Total Current Liabilities 4,017,632 2,013,817
Minority Interest in Equity of
Consolidated Subsidiary 6,062,483 6,569,544
Stockholders' Equity
Preferred Stock, Class A, $.001 par value,
4,300 shares authorized; 4,300 shares issued
and outstanding 4 4
Common Stock, $.001 par value, 60 million
shares authorized,47,499,304
shares issued and outstanding 47,499 47,387
Stock Warrants 80,000 80,000
Additional paid-in capital 11,050,628 10,240,740
Accumulated Deficit (2,917,385) (2,547,267)
------------ ------------
Total Stockholders' Equity 8,260,746 7,820,864
------------ ------------
Total Liabilities &
Stockholders' Equity $18,340,861 $16,404,225
============ ===========
The accompanying notes are an integral part of the financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
Dec. 31 Dec. 31
---------------------------- ----------------------------
1998 1997 1998 1997
----------- ------------- ---------- -----------
Net Revenue
Product sales $6,426,693 -- $8,846,693 --
Royalty income 124,125 $800,000 124,125 $1,800,000
---------- ---------- ---------- ----------
Total Revenue 6,550,818 800,000 8,970,818 1,800,000
Cost of Revenue 6,029,033 -- 7,227,033 --
Gross Profit 521,785 800,000 1,743,785 1,800,000
--------- ---------- ---------- -----------
Operating Expenses
Selling, general and
administrative 703,498 1,127,507 1,410,521 2,422,666
Research and development 483,995 210,105 1,049,738 267,558
--------- ---------- ---------- ---------
Total operating expenses 1,187,493 1,337,612 2,460,259 2,690,224
Operating Income (loss) (665,708) (537,612) (716,474) (890,224)
Other Income (Expenses)
Interest Income 4,793 1,426 13,440 1,893
Income from continuing operations
Before income taxes (660,915) (536,186) (703,034) (888,331)
Discontinued operations
Income from operation of LPF, net of tax -- -- -- --
Gain on disposal of discontinued LPF -- -- 100,000 --
Net Income before income taxes
and minority interests (660,915) (536,186) (603,034) (888,331)
Minority Interest of Income
Consolidated Subsidiaries (74,187) (37,032) (66,836) (59,597)
Net Income (586,728) (499,154) (536,198) (828,734)
========= ========= ========= =========
Earnings Per Share
Basic $(0.01) $(0.01) $(0.01) $(0.02)
======== ========= ======== =========
Diluted $(0.01) $(0.01) $(0.01) $(0.02)
======== ========= ======== =========
Weighted Average Shares 47,499,304 46,812,554 47,488,428 44,798,804
The accompanying notes are an integral part of the financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
STATEMENTS OF CASH FLOWS
For the Six Months Ended December 31, 1998
(Unaudited)
1998 1997
------------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $(536,198) $(828,911)
---------- ----------
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation & amortization 333,804 330,333
Common stock issued for service 135,000 --
Changes in assets & liabilities:
Increase in accounts receivable (4,491,258) (215)
Decrease in prepaid expenses 729,084 (22,694)
Increase in accounts payable 2,003,815 478,444
Increase in notes receivable (1,808,000) --
Increase in inventory (13,650) --
Increase in minority interest 498,466 65,906
----------- --------
Total adjustments (2,612,739) 851,774
Net cash used in operating activities (3,148,937) 22,863
----------- --------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of equipment -- (2,603)
Sale of equipment 1,050 --
Sale of leasehold improvement 74,571 --
Gain on sale of investment 100,000 --
--------- --------
Net cash provided in investing activities 175,621 (2,603)
CASH FLOW FROM FINANCING ACTIVITIES:
Increase in loan payable -- 220,000
Issuance of common stock 675,000 294,000
Issuance of stock warrants -- 80,000
-------- --------
Net cash provided by financing activities 675,000 594,000
-------- --------
Net increase (decrease) in cash (2,298,316) 614,260
Cash, beginning 3,193,127 268,679
Cash, ending $894,811 $882,939
=========== =========
Supplemental disclosure of non-cash financing activities:
Issuance of common stock for service $135,000
The accompanying notes are an integral part of the financial statements
LOTUS PACIFIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED
1. Description of business:
Lotus Pacific, Inc. (the "Company") is a holding company for Regent
Electronics Corp. ("Regent"). The Company, through its subsidiary, designs,
engineers, develops, provides and markets the Internet-related electronics
products and services to electronics manufactures, commercial cable TV
networks, hotels, and general individual customers. Regent also generates its
income from granting its technology or licenses to electronic manufactures
and commercial cable TV networks. The Company owns 87.3% of Regent's equity
interest.
2. Summary of significant accounting policies:
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission regarding interim financial reporting.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements
and should be read in conjunction with the financial statements and notes
included in the Company's Annual Report on Form 10-K/A filed on January 8,
1999 for the year ended June 30, 1998.
The accompanying condensed financial statements reflect all adjustments
(consisting of normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for the interim
periods presented. The results of operations for the quarter ended December 31,
1998 are not necessarily indicative of the results to be expected for a full
year.
Principle of Consolidation:
The accompanying financial statements include the accounts of Lotus Pacific,
Inc. and its 87.3% owned subsidiary, Regent Electronics Corp. The 12.7%
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.
Revenue recognition:
The revenue from product sales is recognized after the right of return
priviledge has expired; revenue from services rendered is recognized when
services have been performed; and revenue from royalty is recognized when the
technology (software products) of the Company is delivered. The Company
generally allows the sales of products to be returned within 15 business days.
LOTUS PACIFIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
Research and Development:
Research and development costs consist of expenditures incurred by the
Company during the course of planned search and investigation aimed at the
discovery of new knowledge that will be used to develop and improve its
Internet access products and services. The Company expenses all such research
and development costs as they are incurred.
Income Taxes:
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of balance sheet items
for financial and income tax reporting. There is no difference between the
basis for financial and income reporting.
Earnings (loss) Per Share:
Basic earnings per share are computed by dividing income (loss) available to
common stockholders by the weighted average number of common stock shares
outstanding during the period. Diluted earnings (loss) per share gives effect
to all dilututive potential common shares that were outstanding during the
period, such as stock options, warrants and other convertible securities.
2. Accounts Receivable:
The allowance for doubtful accounts is based on management's evaluation of
outstanding accounts receivable at the end of this fiscal quarter. No allowance
for doubtful accounts has been provided, since management believes all accounts
are collectable.
3. Discontinued Operations:
On September 30, 1998, the Company sold all of its ownership in LPF
International Corp. and Richtime Far East Ltd., including all assets and all
liabilities, to Clarinet Overseas Ltd. for an aggregate consideration of
$2,500,000.
4. Income Taxes Provision
For the quarter ended December 31, 1998, no income taxes have been provided
since those income taxes liabilities could be offset by the Company's net
operating losses (NOLs) incurred in previous years.
5. Significant customers:
For the quarter ended December 31, 1998, the Company's continuing operation
had two customers with billings in excess of 10% of total revenues.
LOTUS PACIFIC, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998 (UNAUDITED)
6. Commitments:
The Company leases its principal facilities of total approximately 9,400
square feet in Piscataway, New Jersey. Under the lease, the Company pays
$7,100 per month until expiration of lease in June 2000.
The Company also leases an additional space in Middlesex, NJ. The lease is
annually renewable and the monthly rent is $825.
7. Capital Stock:
Common stock - $.001 par value, 60,000,000 shares authorized, 47,499,304
shares issued and outstanding as of December 31, 1998.
Preferred stock - $.001 par value, 100,000 shares authorized, no shares issued
and outstanding as of December 31, 1998.
Preferred stock, Class A - $.001 par value, 4,300 shares authorized, 4,300
shares issued and outstanding as of December 31, 1998.
Common stock warrant - 8,000,000 warrants issued and outstanding. Each warrant
entitled the holder to purchase one share of the Company's common stock at
$3.00 per share. These warrants expire May 5, 2002. As of December 31, 1998,
no warrants have been exercised.
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Company's
Consolidated Financial Statements as of December 31, 1998 included herein this
10-Q Report.
GENERAL
The Company, through its subsidiary Regent Electronics Corp., designs,
engineers, develops, provides and markets Internet related electronics
products and services to electronics manufactures, commercial cable TV
networks, hotels, as well as general individual customers. Using its Internet
research and development capabilities, including the TeleWeb broadcasting
system and WonderTV set-top boxes.
The Company has primarily positioned itself as a developer and provider of
cable TV-based Internet access related consumer electronics products and
services, including hardware and software. The Company also licenses its
technologies to electronics manufacturers, commercial cable TV networks or
contracts to manufacturers for production.
The Company's products include the TeleWeb System and WonderTV set-top boxes.
The TeleWeb system is a WWW broadcasting system that sends Internet contents
and selected commercial information through the existing cable TV network
subscribers. WonderTV set-top box A9000 can be served either as a terminal on
TeleWeb systems, or worked by itself as an Internet access device using a
telephone line.
On February 12, 1999, the Company announced that it had signed agreements
to acquire US Securities & Futures Corp. ("USSF") and Professional Market
Brokerage, Inc. ("PMB"). The acquisitions of USSF and PMB are an important
part of the Company's strategy to integrate the Internet solutions with the
financial industry, and become an Internet-Wall Street company that combines
the Company's own set top box - WonderTV A9000 and the TeleWeb System with
online trading services. See "SUBSEQUENT DEVELOPMENT" below for detail.
RESULTS OF OPERATIONS
REVENUES For the quarter ended December 31, 1998 (the second quarter of
the Company's 1999 fiscal year), the Company's revenue from sales and royalty
fees increased $5.75 million, or 719%, to $6.55 million from $800,000 in the
second quarter of the fiscal 1998. The increase in revenue was mostly due to
the sale of chipsets, parts and accessories. On a year to date basis, revenue
increased 398% from the prior year to $8.97 million.
Gross profit in the second quarter of fiscal 1999, however, decreased to
$521,785 from $800,000 in the comparable quarter of the prior year. This was
due to the facts that the share of royalty fee earned in total revenue
decreased and the Company reduced its sale price in order to expand its
market share.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and
administrative expenses consist primarily of general and administrative
expenses, such as travel, selling, communications, employee benefits,
management, administrative and office rents. For the quarter ended
December 31, 1998, selling, general and administrative expenses decreased
$424,000, or 38%, to $703,498 from $1.12 million for the second fiscal
quarter of 1998. This decrease was primarily due to the reduction of
consulting expenses.
RESEARCH AND DEVELOPMENT For the quarter ended December 31, 1998, research
and development expenses increased 130% to $483,995, compared with $210,105
for the quarter ended December 31, 1997. For the six months ended December 31,
1998, the R&D expense of the Company was up 290% over the prior year. The big
increase in research and development expenses reflects the Company's continuing
commitment to the research and development of its Internet-related products
and services.
NET INCOME (LOSS) Even though the Company's operating expenses for the
quarter ended December 31, 1998 was $150,000 lower than its comparable quarter
of fiscal 1998, the Company's net loss from operations increased to $586,728
from $499,154 because of cost of revenue. On a year to date basis, net income
increased by 35% to $536,198 of loss, compared to $828,734 of loss for the
same period of the prior year. For the first half of fiscal 1999, the diluted
earning per shares was $0.01 of loss compared to $0.02 of loss in fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1998, the Company's liquid assets, consisting of cash and
cash equivalents, total $894,811 compared to $3.19 million at June 30, 1998.
Net cash used by operating activities was $3.15 million for the first six
months of fiscal 1999 compared with $22,863 of net cash provided by operating
activities during the first six months of fiscal 1998. This decrease was
largely due to the increases in accounts receivable and notes receivable.
The Company's investing activities provided $175,621 of cash for the six
months ended December 31, 1998, primarily due to gain of $100,000 on sale of
investment. Cash flow from financing activities was $675,000 in the first
six months of fiscal 1999 as compared to $594,000 provided by financing
activities for the first six months of fiscal 1998. This increase in financing
activities was primarily due to issuing the Company's common stock. As of
December 31, 1998 the Company had 47,499,306 shares of Common Stock with par
value $.001 per share and 4,300 shares of Class A Preferred Stock issued and
outstanding.
The Company currently believes that the anticipated funds from operations and
the existing cash and cash equivalents will be sufficient to meet its cash
requirements for at least the next twelve months. Although the Company's
operating activities may generate cash to cover its operating costs, the
Company's continuing operating and investing activities may require the
Company to obtain additional sources of financing. There can be no assurance
that any necessary additional financing will be available to the Company on
commercially reasonable terms, if at all.
The Company has no long-term debt and has trade credits available from many
corporations with each credit line up to $50,000, net 30 days. The Company
may raise its capital in the future either from the secondary offerings or
from private placements.
SUBSEQUENT DEVELOPMENT
On February 12, 1999, the Company announced that it had signed agreements to
acquire US Securities & Futures Corp. ("USSF") of New York, NY and
Professional Market Brokerage, Inc. (PMB) of Chicago, IL. Upon completion of
the acquisitions, the Registrant will own 100% of both USSF and PMB.
USSF is a full service brokerage firm with its headquarters on Wall Street
in New York, NY. With over 15 branches worldwide, USSF offers online
securities trading service and other financial and brokerage services to
individuals and institutions all around the world (www.ussecurities.com).
USSF is registered as a Futures Commission Merchant (FCM), and is a member
of the National Association of Securities Dealers (NASD), Securities Investor
Protection Corporation (SIPC), and National Futures Association (NFA).
PMB is a Chicago-based financial trading firm that provides online trading
service from its advanced Internet-based system (www.pmbinc.com) to self-
directed, broker-assisted, individuals, money managers, commodity trading
advisers, or introducing brokers. PMB is registered with the Commodity Futures
Trading Commission (CFTC) as a Futures Commission Merchant (FCM) and is a
member of the National Futures Association (NFA).
The acquisitions of USSF and PMB are an important part of the Company's
strategy to integrate the Internet solutions with the financial industry, and
become an Internet-Wall Street company that combines the Company's own set-top
box - WonderTV A9000 and the TeleWeb System with online financial trading
services. The acquisitions allow the Company to: (1) provide its own user-end
terminals to its financial trading customers; (2) constantly upgrade its
hardware and software based on market conditions and customer needs; and (3)
minimize its dependence on other high tech companies to maintain its online
trading systems, consequently, lower the probability of trading system
breakdown. By combining the Company's technology of new Internet terminal
unit, WonderTV A9000, with USSF's extensive customer base and PMB's innovative
online trading system, the Company is able to offer investors in stock and
futures market a powerful, simple online trading solutions.
YEAR 2000
The Company recognizes the need to ensure that its operations will not be
adversely impacted by "Year 2000" issue, which has arisen because many
existing computer programs and chip-based embedded technology systems may
recognize a date using "00" as the year 1900 rather than year 2000. This
could result in a system failure or miscalculations which may cause
disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices, or engage in similar normal
business activities.
The Company has assembled a team of internal staff to oversee the matter and
is underway in completing its Year 2000 assessment. Internally, the Company
has upgraded its business system to address the Year 2000 issue. Externally,
the Company has surveyed and will continue to survey its suppliers, financial
institutions, and other organizations to ensure that those parties have
appropriate plans to be "Year 2000 Compliant." Costs incurred to date and
estimated costs to complete the Company's Year 2000 compliance efforts are not
expected to be material.
The Company has substantially completed many procedures to test and replace
existing computer systems. Additionally, the Company continues to assess and
test newly engaged suppliers and their products for Year 2000 compliance as
part of the Company's normal business operations. The Company will continue
to monitor its Year 2000 Compliance program, address any material issues, and
develop contingency plan as it deems appropriate.
The failure to identify or correct a material Year 2000 problem could result
in an interruption in, or a failure of, certain business activities or
operations such as the Company's ability to service its customers. Such
failures could materially and adversely affect the Company's results of
operations, liquidity, and financial condition. The Company's Year 2000
assessment process is expected to significantly reduce the Company's level of
uncertainty about the Year 2000 problem and, in particular, about the Year
2000 compliance and readiness of its material suppliers and customers.
NEW ACCOUNTING STANDARDS
In June 1998, Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative and Hedging Activities", was issued. SFAS No. 133
requires companies to record derivatives on the balance sheet as assets or
liabilities at fair value. SFAS 133 is effective for all fiscal quarters of
fiscal years beginning after June 15, 1999. The Company expects the impact of
SFAS 133 on its future earnings and financial position are not material (see
Item. 3 "Quantitative and Qualitative Disclosure about Market Risk").
In April 1998, Statement of Position ("SOP") 98-5, "Reporting on the Costs of
Start-Up Activities", was issued. This SOP provides guidance on the financial
reporting of start-up and organization costs and requires that these costs be
expensed as incurred. The provisions of SOP 98-5 are effective for financial
statements for fiscal years beginning after December 15, 1998, although early
adoption is allowed. The adoption of SOP 98-5 is not expected to have a
material impact on the Company's financial statements. The Company will adopt
the provisions of this SOP on July 1, 1999.
In June 1997, SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information", were
issued. SFAS No. 130 establishes standards for reporting comprehensive income
and its components with the same prominence as other financial statements.
The Company adopted SFAS No. 130 on October 1, 1998; However, the Company does
not have any items of comprehensive income in the period presented. SFAS No.
131 establishes standards for reporting information about operating segments
in annual and interim financial statements, although this statement need not
be applied to interim financial statements in the initial year of its
application. SFAS No. 131 is effective for fiscal years beginning after
December 15, 1997. The Company will adopt its requirements in connection with
its annual reporting for the year ending June 30, 1999.
ITEM 3. Quantitative and Qualitative Disclosure about Market Risk
The Company has not entered into any transactions using derivative financial
instruments or derivative commodity instruments and believes that its exposure
to market risk associated with other financial instruments are not material.
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
At the Annual Meeting of Shareholders held on December 2, 1998, the following
proposal were adopted by a majority margin:
(1) to elect James Yao, David Leung, James Liu, Jeremy Wang, Simon Gu and Gary
Huang as member of the Board of Directors to hold office until the next
annual meeting of shareholders and until their successors are elected and
qualified; and (2) to ratify Schiffman, Hughes Brown as independent auditors
of the Company for the fiscal year ending June 30, 1999.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
On February 12, 1999, the Company filed a Form 8-K to report the
Company's acquisitions of US Securities and Futures Corp. and Professional
Market Brokerage, Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LOTUS PACIFIC, INC.
Date: February 16, 1999 By: /S/ James Yao
---------------------------------
James Yao, Chairman & President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
registrant and in capacities and on the dates indicated.
Date: February 16, 1999 By: /S/ Gary Huang
-----------------------------------
Gary Huang, Chief Financial Officer