As filed with the Securities and Exchange Commission on January 12, 2004
Registration Statement No. ______-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________________
Media Century International Limited
(Exact name of Registrant as specified in its charter)
British Virgin Islands 7370 Not Applicable
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification Code Number)
Unit 1502, 15th Floor
World Wide House
19 Des Voeux Road Central, Hong Kong
(852) 2736-2111
(Address and telephone number of Registrant's principal executive offices)
____________________
NATIONAL REGISTERED AGENTS, INC.
875 Avenue of the Americas,
Suite 501 New York, New York 10001
1-800-550-6724
(Name, address, and telephone number of agent for service)
____________________
Copies to:
Simon C. Luk, Esq. Stephen Davis, Esq.
Heller Ehrman White & McAuliffe LLP Heller Ehrman White & McAuliffe LLP
35th Floor, One Exchange Square 120 West 45th Street
8 Connaught Place New York, New York 10036
Central, Hong Kong 212-832-8300
011-852-2292-2000
____________________
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If any of the securities being registered on this Form is to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement of
the same offering. [ ] If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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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 $0.10 per share 100,000 $1.00 $100,000 $12.70
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(R) 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 ________, 2004
PROSPECTUS
100,000 Shares of Common Stock
MEDIA CENTURY INTERNATIONAL
LIMITED
_______________
Media Century International Limited (the "Company"), is a development stage
company established in the British Virgin Islands ("BVI") on July 18, 2002. We
are offering 100,000 new shares of our common stock, par value $0.10 each for
sale to the public at an offering price of $1.00 per common share. The offering
will close no later than 90 days after the effective date of this registration
statement that includes 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 $1.00 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 $1.00 -- $1.00
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- ------------------------------ --------------------------- --------------------------- ---------------------------
TOTAL OFFERING (3) $100,000 -- $100,000
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
_______________
The date of this prospectus is _____, 2004.
BACK COVER PAGE
You should rely only on the information contained in this prospectus. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer to sell these securities in any
jurisdiction where the offer or sale is not permitted. You should assume that
the information appearing in this prospectus is accurate only as of the date on
the front cover of this prospectus. Our business, financial condition, results
of operation and prospects may have changed since that date.
The terms "we," "us," and "our" mean Media Century International Limited.
Except where specifically indicated in this prospectus, "dollars" and"$"
mean United States dollars.
Until __________, 2004 (25 days after the commencement of this offering),
all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
____________________
TABLE OF CONTENTS
PROSPECTUS SUMMARY................................................................................................1
RISK FACTORS......................................................................................................3
FORWARD-LOOKING STATEMENTS........................................................................................7
ENFORCEABILITY OF CIVIL LIABILITIES...............................................................................7
USE OF PROCEEDS...................................................................................................7
DETERMINATION OF OFFERING PRICE...................................................................................8
DIVIDEND POLICY...................................................................................................9
SELLING SHAREHOLDERS..............................................................................................9
PLAN OF DISTRIBUTION..............................................................................................9
EXCHANGE RATE....................................................................................................10
CAPITALIZATION AND INDEBTEDNESS..................................................................................11
DILUTION.........................................................................................................12
SELECTED FINANCIAL INFORMATION...................................................................................13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION......................................................14
BUSINESS.........................................................................................................15
MANAGEMENT.......................................................................................................18
RELATED PARTY TRANSACTIONS.......................................................................................19
PRINCIPAL SHAREHOLDERS...........................................................................................19
DESCRIPTION OF COMMON STOCK......................................................................................20
TAXATION.........................................................................................................24
SHARES ELIGIBLE FOR FUTURE SALE..................................................................................26
LEGAL MATTERS....................................................................................................27
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..............................27
EXPERTS..........................................................................................................27
ADDITIONAL INFORMATION...........................................................................................27
FINANCIAL STATEMENTS.............................................................................................F-1
PROSPECTUS SUMMARY
This summary may not contain all of the information that may be important
to you. You should read the entire prospectus, especially the discussion of
"Risk Factors" and the consolidated financial data and related notes, before
making an investment decision.
Media Century International Limited
We are a development stage company incorporated in the BVI on July 18,
2002. As of the date of this prospectus, our only activities have been our
organization, raising our initial capital, developing a general business plan
and preparing this registration statement. We have not engaged in any
substantive business activities to date.
We aim to become a leading provider of information technology ("IT")
consulting and outsourcing services in Hong Kong and may eventually expanding
our operations to offer our services in the People's Republic of China
("China"). Our focus will be to assist new and established companies in a wide
range of industries to identify their specific IT requirements and to recommend
and implement cost efficient IT solutions. We intent to serve as outside
consultants to the prospective client's internal IT staff, providing a wide
range of IT consulting services, including assessing specific IT requirements of
the client; technology infrastructure advisory services, designing and
implementing custom information systems providing in-house training on the
system developed by our staff and IT outsourcing services.
We believe that there will be a strong demand for our services based on the
number of small and medium sized enterprises ("SMEs") established and expected
to be established in Hong Kong and the government support given to those SMEs.
Our principal executive offices are located at Unit 1502, 15th Floor, World
Wide House, 19 Des Voeux Road Central, Hong Kong, SAR and our telephone number
is (852) 2736-5511
The Offering
We are offering 100,000 new shares of common stock to the public at a price
of $1.00 per share. We will exclusively sell the common stock 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
effective date of this registration statement that includes 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 IT professionals and marketing and
advertising.
1
Summary Financial Information
The following table presents summary information on our financial condition
and results of operations as of July 31, 2003 and for the period from July 18,
2002 (inception) through July 31, 2003. It also presents unaudited pro forma
financial information which has been prepared as if this offering has occurred.
The Summary Financial Information is qualified in its entirety by our financial
statements contained elsewhere in this prospectus.
As of
July 31, 2003
Statement of operations
Revenues 0
Net Loss $(2,727)
Net Loss Per Share $0.0136
Common Stock outstanding 200,000
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Balance Sheet Date As of Pro Forma After
July 31, 2003 this Offering
Current Assets $20,000 $20,000
Total Assets $20,000 $20,000
Total Liabilities $2,727 $26,727
Shareholders' Equity $17,273 $0.0
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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
We were incorporated on July 18, 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 IT consulting and
outsourcing services industry. We are in the extreme early stages of our
development and could fail before formulating and implementing our business
plan. We expect to incur operating losses in future periods as we incur
significant expenses associated with developing our business in Hong Kong. We
cannot guarantee that we will be successful in realizing revenue or achieving or
sustaining positive cash flow in the future, and any such failure could have a
material adverse effect on our business, financial condition and results of
operations.
Our success depends on attracting and retaining qualified technical
professionals
Our intended business involves the delivery of professional IT services to
our clients. Therefore, our success will depend in large part upon our ability
to attract and retain highly skilled IT consultants, including project managers
and other technical specialists. Highly skilled IT consultants are in
particularly great demand and are likely to remain a limited resource for the
foreseeable future. There can be no assurance that we will be able to attract
and retain sufficient numbers of highly skilled IT consultants. The loss of some
or all of our IT consultants could have a material adverse impact on our ability
to secure and complete engagements. Although we intend to utilizes the services
of a significant number of independent contractors to act as consultants, we
believes we can obtain the services of a sufficient number of independent
contractors to fulfill our needs as new projects commence. These independent
contractors will not be our employees, however, there can be no assurance that
the services of these independent contractors will continue to be available to
us on terms acceptable to us.
Our success and future growth depends on our ability to attract and retain
qualified employees throughout our business, and in particular, experienced IT
consultants. Competition for qualified IT consultants in Hong Kong is intense.
We compete for our employees with many other companies, some of which 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 a limited number of personnel who would be difficult to replace
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. Lau Hing Bun, our Chief Financial Officer and one of our Directors. We
do not carry key-man life insurance policies for either Mr. Li or Mr. Lau.
Currently, we do not have any employment agreement with Mr. Li or Mr. Lau and
either individual or both may choose to leave us at any time. The loss of the
services of one or more of these persons could materially and adversely affect
our business or prospects, and there can be no assurance that such individuals
will continue in their present capacities for any particular period of time.
3
Our business strategies may not be successful
A key element of our strategy is dependant on the ability of our senior
management to identify the IT needs of our prospective clients and developing
business connections with them. Future growth will also depend upon many other
factors, including (a) the recruitment and retention of skilled IT consultants;
(b) the development of a solid client base and (c) the successful marketing of
our IT consulting and outsourcing 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.
Our engagements have inherent project risks.
We anticipate that many of our engagements will involve projects that are
critical to the operations of our clients' businesses and provide benefits that
may be difficult to quantify. Our failure or inability to meet a client's
expectations in the performance of its services could result in a material
adverse change to the client's operations and therefore could give rise to
claims against us or damage our reputation, adversely affecting our business,
results of operations and financial condition.
We may not be able to protect the intellectual property rights of our clients or
other third parties.
We anticipate that our business will include the development of custom
software applications in connection with specific client engagements. Ownership
of such software will generally be assigned to the client. We will rely upon a
combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect our proprietary rights and the
proprietary rights of third parties from whom we licenses intellectual property.
We intend to enter into confidentiality agreements with our employees and limit
distribution of proprietary information. However, there can be no assurance that
the steps we take in this regard will be adequate to deter misappropriation of
proprietary information or that the we will be able to detect unauthorized use
and take appropriate steps to enforce its intellectual property rights. We are
subject to the risk of litigation alleging infringement of third-party
intellectual property rights. Any such claims could require us to spend
significant sums in litigation, pay damages, develop non-infringing intellectual
property or acquire licenses to the intellectual property which is the subject
of the asserted infringement.
Our business is subject to rapidly changing technologies and is dependant on our
ability to development new solutions.
Our success will depend in part on our ability to develop IT solutions that
keep pace with continuing changes in IT, evolving industry standards, changing
client preferences and a continuing shift to outsourced solutions by clients.
There can be no assurance that we will be successful in adequately addressing
the outsourcing market or other IT developments on a timely basis or that, if
addressed, we will be successful in the marketplace. There can also be no
assurance that products or technologies developed by others will not render our
services uncompetitive or obsolete. Our failure to address these developments
could have a material adverse effect on our business, results of operations and
financial condition.
Our revenues will be effected by our ability to maintain margins.
We will derives our revenues primarily from the hourly billing of our IT
consultants' services and, to a lesser extent, from fixed-price projects. Our
most significant cost is project personnel cost, which consists of IT consultant
salaries and benefits. Thus, our financial performance is primarily based upon
billing margin (billable hourly rate less the consultant's hourly cost). We
anticipate that we will be able to maintain a reasonable billing margin by
offsetting increases in our consultant's salaries with increases in the hourly
rates charged to our clients. However, there can be no assurance that our
revenues will be billed primarily on a time and materials basis or that we will
be able to continue to pass along increases in our cost of services to our
clients.
4
Current stockholders will be able to exercise substantial control
After the offering, Mr. Li Sze Tang and Mr. Lau Hing Bun will collectively
own approximately 66.66% of the outstanding shares of our common stock. As a
result, they 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
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.
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
We believe that the net proceeds from this offering, together with our
existing assets will be sufficient to commence our business operations. 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.
Our business will suffer if we are not able to expand our business in China
We hope to expand our business client base and be able to offer our
services in China. This expansion will require significant management attention
and financial resources. Our ability to expand our services into the China
markets will be limited by our ability to market to, and attract, Chinese
clients. Accordingly, we expect to commit substantial time and development
resources to developing the China market. These efforts may not be successful,
and we may not be able to compete effectively in that market.
Changes in Hong Kong's political, legal and health conditions could harm our
business
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. Additionally, this past
summer Hong Kong suffered an outbreak of Severe Acute Respiratory Syndrome
("SARS"), and Hong Kong's economy suffered greatly because of this outbreak.
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.
5
Severe Acute Respiratory Syndrome and its effect on business in Asia
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.
We have limited reporting requirements under the Securities Exchange Act of 1934
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.
There will be immediate and substantial dilution to new investors in this
offering
The initial public offering price is substantially higher than the pro
forma net tangible book value per share of our common stock based on the pro
forma net tangible book value per share of what the outstanding common share
will be immediately after the offering. Any common shares you purchase in the
offering will have a post-offering pro forma net tangible book value per share
of $0.6891 less than the price you paid for the share, assuming an initial
public offering price of $1.00 per share of common stock.
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.
Our business could be harmed if management uses our proceeds from this offering
ineffectively
Our management will have significant flexibility in applying the net
proceeds of this offering that we receive. We intend to use the proceeds of this
offering for general operating expenses, the drafting of a comprehensive
business plan, recruiting and hiring experienced IT professionals and marketing
and advertising. However, as of the date of this prospectus, we cannot specify
with certainty the particular uses for the net proceeds to be received upon
completion of this offering. The failure of our management to apply these
proceeds effectively could have a material adverse affect on our business,
results of operations and financial condition.
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."
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 IT consulting and outsourcing
services, increased competition and the inability to recruit experienced IT
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 IT professionals and marketing and
advertising. There are no minimum requirements for the sale of our common stock.
There are no minimum amounts of proceeds that are required to be raised by us
before funds are made available to us, nor are any funds to be held in escrow.
The following table shows how we intend to use the funds raised assuming the
offering is completely subscribed for.
Use of Proceeds Amount to be Spent Percentage of Total
Proceeds
Recruiting IT professionals $50,000 50%
Advertising, Market Research Seminars $10,000 10%
General Operating Expenses $16,000 16%
Expenses of this offering $24,000 24%
In the event that less than all the securities to be offered by this
prospectus are sold and there are insufficient funds to fully develop our
business plan, the net proceeds will be used mainly for recruiting and hiring IT
professionals.
7
DETERMINATION OF OFFERING PRICE
The offering price of the common stock being offered has been determined
arbitrarily and has no relationship to any established criteria of value, such
as book value or earnings per share. Additionally, because we have not commenced
business operations, no significant operating history and have not generated any
revenues to date, the price of our common stock is not based on past earnings,
nor is the price of the common stock indicative of the current market value for
the assets owned by us. We make no representations as to any objectively
reasonable value of the common stock.
Since we have not retained an underwriter for purposes of this offering,
the offering price has not been subject to evaluation by any third party as
would be the case in an underwritten offering. Prices for the shares of our
common stock after this offering will be determined in the available market and
may be influenced by many factors, including the depth and liquidity of the
market for our common stock and general economic and market conditions.
8
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock and
we do not intend to pay any cash dividends on our common stock, or indirectly on
our common stock, for the foreseeable future. Our current policy is to retain
earnings, if any, to finance the expansion of our business and for general
corporate purposes. Future dividends, if any, will be determined solely by our
board of directors and will depend upon, among other things, our earnings,
financial condition, capital requirements, level of indebtedness, and other
factors the board of directors believes is relevant.
SELLING SHAREHOLDERS
There are no selling security holders.
PLAN OF DISTRIBUTION
The Offering
We are offering 100,000 new shares of common stock to the public at a price
of $1.00 per share. We will exclusively sell the common stock on a "best
efforts, no minimum basis". There are no underwriters or broker-dealers involved
in the selling of our 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. Our directors will personally distribute the prospectus to
prospective investors whom we believe may be interested, or who have contacted
us expressing an interest in evaluating an investment in our common stock. The
offer and sale of shares of our common stock offered pursuant to this prospectus
will commence after this registration statement is declared effective for a
period of 90 days.
We intend to offer shares of our common stock to persons who are not
residents of the United States, but only to the extent we may lawfully do so
under the laws of the country where the offeree resides. We may sell our common
stock in privately negotiated transactions, or in the event our common stock is
quoted on the OTCBB, in such public market.
Nothing in this prospectus will prevent our common stock from 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 $15
U.S. Legal Fees $20,000
BVI Legal Fees $1,500
Accounting Fees $2000
Printing $485
TOTAL $24,000
9
EXCHANGE RATE
Quantitative and Qualitative Disclosures About Market Risks
We will record our finances in Hong Kong dollars and report our operations
in U.S. dollars. Fluctuations in the exchange rate between Hong Kong dollars and
the U.S. dollars will affect the amount of dollars reported in our financial
statements. We do not expect to actively use derivative instruments to reduce
our exposure to foreign currency risk.
The following table sets forth certain information concerning the average
rates of exchange between Hong Kong dollars and U.S. dollars for the periods
indicated. It represents the noon buying rate in New York for cable transfers
payable in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York. the average noon buying rate is determined by
averaging the rates on the last business day of each month during the relevant
period.
CALENDAR YEAR AVERAGE NOON
BUYING RATE
(HK$ PER US$)
1999 7.7594
2000 7.7924
2001 7.7997
2002 7.7997
2003 7.7876
LAST SIX CALENDAR MONTHS HIGH LOW
July 2003 7.7998 7.7950
August 2003 7.7998 7.7920
September 2003 7.7999 7.7444
October 2003 7.7684 7.7085
November 2003 7.7690 7.7475
December 2003 7.7670 7.7628
10
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness as of
July 31, 2003. Our capitalization and indebtedness are presented on an actual
basis and on a pro forma basis as adjusted to reflect the successful sale of
100,000 of our shares of common stock in this offering.
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$0.00, total shares
issued and outstanding will be 200,000 and total stockholders' equity will be
US$0.00 (assuming no shares are sold pursuant to the Offering).
PRO FORMA
AS OF JULY 31, AFTER THIS
2003 OFFERING
Cash $20,000 $20,000
Long-term debt: $0 $0
Common stock: $0.10 par value;
Number of shares authorized:
200,000 shares issued and outstanding on an actual basis, $20,000
200,000 shares issued and outstanding on a pro forma as adjusted basis
(assuming no share are sold pursuant to this offering): $20,000
Additional paid-in capital $0 $0
Accumulated deficit $(2,727) $(26,727)
Total stockholders' equity $17,273 $(6,727)
11
DILUTION
Our pro forma net tangible book value as of July 31, 2003 was $17,273, or
$0.0864 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 100,000 shares in this
offering, at an assumed initial public offering price of $1.00 per share, and
after deducting estimated offering expenses, which would result in estimated net
proceeds of $76,000, our pro forma net tangible book value as of July 31, 2003,
would have been $93,273 or $0.3109 per common share. This represents an
immediate increase in the pro forma net tangible book value of $0.2245 per
common share to existing shareholders and an immediate dilution of $0.6891 per
common share to new investors. The following table illustrates the per share
dilution:
Assumed initial public offering price per share........................ $1.00
Pro forma net tangible book value per common share at July 31, 2003.... $0.0864
Pro forma increase in net tangible book value per common share
attributable to new investors........................................ $0.2245
Pro forma net tangible book value per common share after this offering. $0.3109
Pro forma dilution per common share to new investors................... $0.6891
12
SELECTED FINANCIAL INFORMATION
The following table sets forth our selected consolidated financial data.
You should read this information together with our consolidated financial
statements and the notes to those statements beginning on page F-1 of this
prospectus and the information under "Summary Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
The selected financial and other data set forth below should be read in
conjunction with our financial statements, including the notes thereto, and
"Managements Discussion, and Analysis of Financial Condition and Results of
Operations" included in this prospectus. The statement of operations data set
forth below for the period ended July 31, 2003 and the balance sheet data as of
July 31, 2003 are derived from our audited financial statements included
elsewhere in this prospectus, which have been audited by PKF Certified Public
Accountants. Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America.
FROM JULY 18, 2002 (INCEPTION) TO JULY 31, 2003
STATEMENT OPERATIONS DATA:
Revenues: $0
Expenses:
Formation expenses $1,026
General and administrative expenses $1,701
Net Loss $(2,727)
Number of shares outstanding 200,000
Basic and diluted loss per share of common stock $0.0136
AS OF JULY 31, 2003
BALANCE SHEET DATA:
Cash $20,000
Total assets $20,000
Total stockholders' equity $17,273
We are in our early developmental and promotional stages. To date, our only
activities have been organizational, raising our initial capital, preparing a
preliminary 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
July 18, 2002 (inception) to July 31, 2003, we have engaged in no significant
operations other than our organization, raising our initial capital, developing
a preliminary 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 July 31, 2003 and other financial information included elsewhere in this
prospectus. This prospectus contains forward-looking statements that contain
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward looking statements.
Our operations in the upcoming year will vary based on the amount of funds
we raise. Regardless of whether any funds are raised, we anticipate incurring a
significant loss as a result of organizational expenses, expenses related to the
filing of this registration statement and recruiting experienced business
consultants to begin implementing our business plan. Assuming no funds are
raised, we believe we will be able to meet our immediate cash requirements for
the upcoming year.
Liquidity and Capital Resources
We remain in the development stage and have experienced no significant
change in liquidity or capital resources or shareholders' equity. Our balance
sheet as of July 31, 2003 reflects total assets of $17,273 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 IT
consulting services have occurred and we feel that our revenues will support
such an expansion. Initially, we will recruit and hire our IT consultants on a
as needed project by project 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.
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 July 18,
2002. As of the date of this prospectus, our only activities have been our
organization, raising our initial capital, developing a preliminary business
plan and preparing this registration statement. We have not engaged in any
substantive business activities to date.
We were founded by Mr. Li Sze Tang, who is presently our Chief Operating
Officer and Chairman of the Board and Mr. Lau Hing Bun, who is presently our
Chief Financial Officer and our director. Mr. Li has over 20 years of business
experience in Hong Kong and China in various aspects of business finance and
investments. Mr. Lau has over 8 years of IT experience, including developing
networking systems and programming.
IT Consulting and Systems Integrations Services
We aim to become a leading provider of IT consulting and outsourcing
services in Hong Kong and eventually expanding into China. Our focus will be on
services to SMEs, which have a strong growth potential and which have increasing
IT requirements but insufficient resources to staff and maintain an IT
department. We intend to work closely with our clients to improve business
performance, increase shareholder value and create competitive advantages.
We intend to offer the following IT consulting and outsourcing services:
Review and Evaluation
We will perform an on-site review of the client's current IT infrastructure
to define their business requirements and evaluate its functionality. Upon
completion of the review, we will, independently or in conjunction with the
client's IT staff, develop an IT strategy that will enhance the client's
business revenues and/or lead to costs savings.
IT System Development and Design
Utilizing the information gathered in the review and evaluation phase of
the project and based on the IT strategy developed, we will design an IT
solution to meet the client's business requirements.
Testing and Implementation
When the IT solutions custom designed by our consultants is approved by the
client, the testing and implementation phase of the project will begin. Our
consultants will test the hardware we selected for the project. Once the testing
phase is finished, we will install the hardware and the software and verify that
the system is operating as outlined in our project specifications.
System Training and support
When strategy, design and implementation have been completed, it is crucial
to train the client's employees on the proper operations of the system developed
and to update and maintain the system. To assure training and prompt support, we
will work with the client to decide on custom support services needed to meet
the clients requirements.
Outsourcing
Our outsourcing services will include operating all or a portion of our
client's technology infrastructure, including systems analysis, application
development, network operations, and data center management.
15
Industry Background
IT Industry
The IT industry has experienced accelerating growth in recent years due to
rapid technological advances. These advances include more powerful and less
expensive computer technology and the transition from predominantly centralized
mainframe computer systems to open and distributed computing environments.
Additionally, information technology is becoming more critical to successful
business operations. IT services are no longer a peripheral component of most
organizations but instead are integral to many key business processes. At the
same time, managing information technology, especially distributed
architectures, has become more complex and expensive. Accordingly, organizations
are increasingly turning to external IT consulting services organizations to
develop, support and enhance their internal IT systems. By outsourcing IT
services, companies are able to (i) focus on their core business, (ii) access
specialized technical skills, (iii) implement IT solutions more rapidly, (iv)
benefit from flexible staffing, providing a variable cost solution to a fixed
cost issue, and (v) reduce the cost of recruiting, training, and adjusting the
number of employees as IT requirements change.
SMEs in Hong Kong:
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.
Strategy
Our growth over the next several years will depend primarily on our ability
to identify the IT consulting needs of SMEs in Hong Kong and to penetrate that
market. We intend to accomplish our objective by actively recruiting experienced
IT consultants to finalize our business plan and begin advertising and marketing
our services in Hong Kong.
As part of our growth strategy, we intend to form alliances with other
business consulting entities in Hong Kong which would complement the IT
consulting services we plan to offer. We believe that in order to achieve our
objective, we will need to establish a business network of local professionals
and business partners. We plan to form alliances with independent accounting and
business consulting firms in Hong Kong and China with an aim to obtain referral
business. Additionally, these alliances will offer us an opportunity to access a
wide range of market information and provide us with technical support, at
little or no cost to us.
16
Sales and Marketing
We believe that to attract the clients necessary to achieve our objective
of becoming a leading provider of IT consulting and outsourcing services in Hong
Kong, we must promote our corporate image and increase the public's awareness of
the services we will be providing. We will seek to develop client relationships
through targeted marketing initiatives, participation in local and national
trade shows, user group meetings and conventions, referrals from existing
clients and direct mail. With a portion of the proceeds of the Offering, we
intends to hire additional sales personnel in order to establish a strong client
base. Once our client base is firmly established, we intends to leverage that
client base by offering our clients additional IT consulting, software and
training services.
Our past and future success is dependent upon our ability to attract,
develop, motivate and retain highly qualified personnel. As a result, we will
offers attractive compensation and benefit packages and free training
opportunities to attract, develop, motivate and retain highly qualified IT
professionals. In addition to providing consultants with challenging project
opportunities and significant client responsibility, we plan to establish
in-house consultant training and mentoring programs.
Competition
The market for IT consulting services includes a large number of
international and local competitors, is intensely competitive and is affected by
rapid changes in technology. Our competitors include the consulting divisions of
international accounting firms, international IT systems consulting and
implementation firms such as International Business Machines' Global Services,
Electronic Data Systems Corporation and Computer Sciences Corporation, and
management consulting firms. Many of these competitors have significantly
greater financial, technical and marketing resources and greater name
recognition than we have. In addition, we also compete with our clients'
internal resources. We believe that the principal competitive factors in the IT
consulting services market include breadth of services offered, technical
expertise, knowledge and experience in the industry, quality of service and
responsiveness to client needs.
A critical component of our ability to compete in the marketplace will be
our ability to attract, develop, motivate and retain skilled professionals.
Although highly skilled technical employees, particularly project managers and
technical specialists, are in great demand, we believes it can compete favorably
in hiring such personnel by offering competitive compensation packages and
attractive assignment opportunities. 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. Lau Hing Bun. As part of
our business plan, we initially plan to hire IT consultants.
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 Unit 1502, 15th Floor,
World Wide House, 19 Des Voeux 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.
17
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
Li Sze Tang.......................................... 44 Chief Executive Officer and Chairman of the
Board of Directors
Lau Hing Bun......................................... 29 Chief Financial Officer and Director
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, a company listed on the Main Board of the
Stock Exchange of Hong Kong Limited, and has been a director since 2002. From
1999 to 2002 he was and executive and a director of Thiz Technology Group
Limited, a company he founded and which is listed on the Growth Enterprises
Market of the Stock Exchange of Hong Kong Limited. He has worked in the banking
and finance field and computer industries for more than eighteen years, with
extensive experience in investment banking, fund management, venture capital
financing and risk management. Mr. Li was the treasurer and finance director of
Carlingford Swire Assurance Group and an associate director of HSBC Asset
Management (Asia Pacific) Limited, overseeing the management of eight principal
departments. Mr. Li holds a Master's Degree in Science specialising in the
management of New Ventures from the Imperial College of Science, Technology and
Medicine, University of London and a Master's Degree in Economic Law from
Zhongshan University of the PRC. He is also a Fellow Member of Chartered
Institute of Management Accountants (FCMA), the United Kingdom and the Hong Kong
Society of Accountants (FHKSA) and an associate member of the Institute of
Management Consultancy, the United Kingdom.
Mr. Lau Hing Bun, has over eight years of experience in developing IT
networking system and programming. He graduated from The Chinese University of
Hong Kong with a Bachelor's Degree in Engineering. Mr. Lau was a System Manager
and Network Engineer with a number of hi-tech firms. He also lectured
under-gradate computer courses at The Chinese University of Hong Kong.
18
Directors' activities outside of our business
Other than his position as Chief Executive Officer and Director of Media
Century International Limited, Mr. Li Sze Tang is also employed as an executive
director of First Asia Capital Investment Limited. 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, iPacific Asset Management Limited, and Apex Wealth
Enterprises Ltd.
Board of Directors Practices
The sole subscriber to our Memorandum and Articles of Association appointed
Mr. Li Sze Tang and Mr. Lau Hing Bun as our first directors. Our directors serve
a one-year term or until their successor is elected and qualified.
Our board of directors have not established an audit committee or a
remuneration committee at this time.
Directors' and Officer's Compensation
None of our directors or officers has received any remuneration from us.
Although there is no current plan, it is possible that as our business develops,
we may adopt a plan to pay our directors and/or officers compensation for
services rendered to implement our business plan. Our directors and officers are
not currently subject to any service or employment contract with us. We have no
stock option plan, retirement scheme, incentive programs, pension or profit
sharing programs for the benefit of our director and officers, however, the
board of directors may adopt one or more of these programs in the future.
RELATED PARTY TRANSACTIONS
From July 18, 2002 (the date of inception) to the date of this prospectus,
we have not entered into any related party transactions
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of July 31, 2003 by:
o each person who is known by us to own beneficially more than 5% of
the outstanding common stock,
o each of our current executive officers and directors,
o all of our current executive officers and directors as a group.
The table has been prepared on a pro forma basis assuming:
As used in this table, "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition of
any common share.
Common stock Beneficially Common stock Beneficially
Owned Prior To This Offering Owned After This Offering
Beneficial Owner
Number Percent Number Percent
Li Sze Tang ................................ 100,000 50% 100,000 33.33%
Lau Hing Bun 100,000 50% 100,000 33.33%
Note:The principal place of business of Mr. Li and Mr. Lau is at Unit 1502,
15th Floor, Worldwide House, 19 Des Voeux Road Central, Hong Kong
19
DESCRIPTION OF COMMON STOCK
General
Our authorized share capital consists of 500,000 shares of common stock,
each with a par value of $0.10 per share. As of July 31, 2003, there were
200,000 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.
20
MEMORANDUM AND ARTICLES OF ASSOCIATION
Corporate Powers.
We have been registered as a limited liability company in the BVI since
July 18, 2002 under British Virgin Islands International Business Companies
number 505825. 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.
21
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
22
person had no reasonable cause to believe that his conduct was unlawful.
Pursuant to our Articles of Association, if any director or officer is
successful in defense of any civil, administrative or criminal proceedings that
director or officer is entitled to be indemnified against all judgments, fines
and amounts paid in settlement and reasonably incurred by that director or
officer in connection with those proceedings.
The above description of certain differences between BVI and U.S. corporate
laws is only a summary and does not purport to be complete or to address every
applicable aspect of such laws. However, we believe that all material
differences are disclosed above.
Changes in Capital
Requirements to effect changes in capital are not more stringent than is
required by law.
Material Contracts
We are in our early developmental stage and we have not entered into any
material contracts and specifically no material contracts outside the ordinary
course of our business.
Exchange Controls
BVI and Hong Kong
There are no material exchange controls restrictions on payment of
dividends, interest or other payment to the holders of our common stock or on
the conduct of our operations either in Hong Kong, where our principal executive
offices are located, or the BVI, where we are incorporated. There are no
material BVI laws which impose any material exchange controls on us or that
affect the payment of dividends, interest or other payment to nonresident
holders of our common stock. BVI law and our Memorandum and Articles of
Association imposes no material limitations on the right of non-residents or
foreign owners to hold or vote our common stock.
23
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,
24
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.
25
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 300,000 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 200,000
shares, and any shares purchased by affiliates in this offering, will be
"restricted shares" as defined in Rule 144.
26
LEGAL MATTERS
The law firm of Conyers, Dill & Pearman, British Virgin Islands, has given
us its opinion that upon issuance, the shares will be duly authorized, legally
issued, fully paid and non assessable common stock of our company. Conyers, Dill
& Pearman has not passed on any other legal matters in connection with this
offering.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described in Item 14 above, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than our payment of expenses
incurred or paid by our director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
EXPERTS
The financial statements included in this prospectus have been audited by
PKF, CPA, Hong Kong, certified public accountants, Member of the Hong Kong
Society of Accountants, 26/F, Citicorp Centre, 18 Whitfield Road, Causeway Bay,
Hong Kong, as indicated in their report on such financial statements, and are
included in this prospectus in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form F-1 under the Securities Act, including exhibits and
schedules, with respect to the common shares to be sold pursuant to this
prospectus. This offering circular does not contain all of the information set
forth in the registration statement or the exhibits and schedules which are part
of the registration statement. For further information with respect to us and
our common stock, reference is made to the registration statement and the
exhibits and schedules thereto.
Upon completion of this offering, we will be subject to the information
requirements of the Securities Exchange Act of 1934, as amended, applicable to
foreign private issuers. As a result, we will be required to file reports,
including annual reports on Form 20-F, reports on Form 6-K and other information
with the SEC. We also intend to submit to the SEC quarterly reports on Form 6-K
which will include unaudited quarterly financial information, for the first
three quarters of each fiscal year, in addition to our annual report on Form
20-F which will include audited annual financial information. These reports and
other information filed or to be filed by us can be inspected and copied at the
public reference facilities maintained by the SEC at:
Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549
Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450 Fifth Street, N.W., Washington D.C. 20549, at prescribed
rates or on the SEC website at www.sec.gov using the EDGAR system, free of
charge.
As a foreign private issuer, we will be exempt from the rules under the
Exchange Act prescribing the furnishing and content of proxy statements, and our
executive officers, directors, and principal shareholders will be exempt from
the reporting and short-swing profit recovery provisions contained in Section 16
of the Exchange Act.
27
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2003 AND
PERIOD ENDED JULY 31, 2002
INDEX
Page
Independent Auditors' Report F-2
Balance Sheets as of July 31, 2003 and 2002 F-3
Statements of Operations for the cumulative period
and year ended July 31, 2003 and period ended July 31, 2002 F-4
Statements of Stockholders' Equity (Deficit)
for the year ended July 31, 2003 and period ended July 31, 2002 F-5
Statements of Cash Flows for the cumulative period and
year ended July 31, 2003 and period ended July 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
Media Century International Limited
(A Development Stage Company)
We have audited the accompanying balance sheets of Media Century International
Limited (a development stage company) as of July 31, 2003 and 2002 and the
related statements of operations, stockholders' equity (deficit) and cash flows
for the year ended July 31, 2003 and for the period from July 18, 2002 (date of
incorporation) to July 31, 2003 and 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Media Century International
Limited (a development stage company) as of July 31, 2003 and 2002, and the
results of its operations and its cash flows for the year ended July 31, 2003
and for the period from July 18, 2002 (date of incorporation) to July 31, 2003
and 2002 in conformity with accounting principles generally accepted in the
United States of America.
/s/ PKF
______________________________
PKF Certified Public Accountants
Hong Kong
{24 November 2003}
F-2
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF July 31, 2003 and 2002
2003 2002
Note US$ US$
ASSETS
Current assets
Cash and cash equivalents 1 20,000 -
-----------------
----------------- ----------------
Total assets 20,000 -
================= ================
=================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Amount due to a director 2 1,445 -
Accrued expenses 1,282 1,317
----------------- ----------------
-----------------
Total liabilities 2,727 1,317
----------------- ----------------
----------------- ----------------
Commitments and contingency 5
Stockholders' equity (deficit)
Common stock, US$0.1 par value :
500,000 shares authorised :
200,000 shares issued and outstanding
at July 31, 2003 and 2002 20,000 20,000
Amount due from stockholder for issuance of common stock
- (20,000)
----------------- ----------------
----------------- ----------------
20,000 -
Deficit accumulated during the development stage (2,727) (1,317)
-----------------
----------------- ----------------
Total stockholders' equity (deficit) 17,273 (1,317)
----------------- ----------------
----------------- ----------------
Total liabilities and stockholders' equity (deficit) 20,000 -
================= ================
F-3
28
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD AND YEAR ENDED JULY 31, 2003 AND
PERIOD FROM JULY 18, 2002 TO July 31, 2002
July 18, 2002 July 18, 2002
(date of (date of
incorporation) Year ended incorporation)
to July 31, July 31, 2003 to July 31, 2002
2003
Note US$ US$ US$
Revenue - - -
Expenses
Formation expenses 1,026 - 1,026
General and administrative expenses 1,701 1,410 291
--------------- ---------------- -----------------
--------------- ----------------
Loss from operations (2,727) (1,410) (1,317)
Income taxes 3 - - -
--------------- ---------------- -----------------
--------------- ---------------- -----------------
Net loss (2,727) (1,410) (1,317)
=============== ================
=============== ================ =================
Net loss per common share : 4
Basic (0.00) (0.00) (0.00)
=============== ================ =================
=============== ================ =================
Diluted (0.00) (0.00) (0.00)
=============== ================
=============== ================ =================
Weighted average shares :
Basic 200,000 200,000 200,000
=============== ================ =================
=============== ================ =================
Diluted 200,000 200,000 200,000
=============== ================ =================
F-4
29
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED JULY 31, 2003 AND
PERIOD FROM JULY 18, 2002 TO July 31, 2002
Common stock
---------------------------
---------------------------
Accumulated
Shares Amount deficit Total
US$ US$ US$
Issuance of common stock on July 18, 2002 20,000 20,000 - 20,000
Less : Amounts due from stockholder
for issuance of common stock - (20,000) - (20,000)
Net loss - - (1,317) (1,317)
------------- ------------ ------------------- --------------
Balance, July 31, 2002 20,000 - (1,317) (1,317)
Sub-division of common stock :
on August 1, 2002 180,000 - - -
Payment of amount due from stockholder - 20,000 - 20,000
Net loss - - (1,410) (1,410)
------------- ------------ ------------------- --------------
------------- ------------ ------------------- --------------
Balance, July 31, 2003 200,000 20,000 (2,727) 17,273
============= ============ =================== ==============
============= ============ =================== ==============
F-5
30
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD AND YEAR ENDED JULY 31, 2003 AND
PERIOD FROM JULY 18, 2002 TO July 31, 2002
July 18, 2002 July 18, 2002
(date of (date of
incorporation) Year ended incorporation)
to July 31, July 31, 2003 to July 31, 2002
2003
US$ US$ US$
Cash flows from operating activities :
Net loss (2,727) (1,410) (1,317)
Changes in liabilities :
Increase/(decrease) in accrued expenses 1,282 (35) 1,317
--------------- ---------------- -----------------
--------------- ----------------
Net cash used in operating activities (1,445) (1,445) -
--------------- ---------------- -----------------
--------------- ---------------- -----------------
Cash flows from financing activities :
Proceeds from issuance of common stock 20,000 20,000 -
Advance from a director 1,445 1,445 -
--------------- ---------------- -----------------
--------------- ---------------- -----------------
Net cash provided by financing activities 21,445 21,445 -
--------------- ---------------- -----------------
--------------- ----------------
Net change in cash and cash equivalents and
cash and cash equivalents 20,000 20,000 -
Cash and cash equivalents, beginning of period - - -
--------------- ---------------- -----------------
--------------- ---------------- -----------------
Cash and cash equivalents, end of period 20,000 20,000 -
=============== ================ =================
F-6
31
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2003 AND
PERIOD ENDED JULY 31, 2002
1. Nature of business and significant accounting policies
The Company and basis of presentation
The purpose of Media Century International Limited ("the Company") is
IT consulting. The Company's fiscal year end is July 31.
The Company was incorporated under the International Business
Companies Act of the British Virgin Islands on July 18, 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$0.1 par value.
The Company is a development stage enterprise and has not yet
generated any revenue during the reporting periods. During the
reporting periods, the sole activity of the Company is the issuance of
common stocks.
Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments
with original maturities of three months or less.
Income taxes
The Company accounts for income tax under the provisions of Statement
of Financial Accounting Standard No. 109, which requires recognition
of deferred tax assets and liabilities for the expected future tax
consequences of the events that have been included in the financial
statements or tax returns. Deferred income taxes are recognised for
all significant temporary differences between tax and financial
statements bases of assets and liabilities. Deferred tax assets are
reflected at the net realizable value.
F-7
32
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2003 AND
PERIOD ENDED JULY 31, 2002
1. Nature of business and significant accounting policies
Foreign currency translation and transactions
The Company uses Hong Kong dollars ("HK$") as the functional currency.
Transactions denominated in currencies other than HK$ are translated
into HK$ at the applicable rates of exchange prevailing at the dates
of the transactions. Monetary assets and liabilities denominated in
other currencies are translated into HK$ at rates of exchange at the
balance sheet dates. Exchange gains or losses arising from changes in
exchange rates subsequent to the transactions dates for monetary
assets and liabilities denominated in other currencies are included in
the determination of net income for the respective period.
For financial reporting purposes, HK$ has been translated into United
States dollars ("US$") as the reporting currency. Assets and
liabilities are translated at the exchange rate in effect at period
end. Income statement accounts are translated at the average rate of
exchange prevailing during the period. Translation adjustments arising
from the use of different exchange rates from period to period are
included as a component of stockholders' equity as "Accumulated other
comprehensive income - foreign currency translation adjustments".
Gains and losses resulting from foreign currency transactions are
included in other comprehensive income (expenses). Foreign currency
translation adjustments in 2002 and 2003 were not material.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. Amount due to a director
The amount is interest free, unsecured and repayable within one year.
3. Income taxes
The Company has net operating loss at July 31, 2003 and 2002 for Hong
Kong profits tax purpose.
F-8
33
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED JULY 31, 2003 AND
PERIOD ENDED JULY 31, 2002
4. Net loss per common share
Net loss per common share is calculated on the basis of the weighted
average number of common shares outstanding during the reporting
periods.
5. Commitments and contingencies
There was no significant commitments or contingent liabilities as of
July 31, 2003 and 2002.
6. Concentrations of Credit Risk
Cash and cash equivalents are financial instruments that potentially
subject the Company to concentrations of credit risk.
F-9
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 6. Indemnification of Directors, Officers and Employees
Pursuant to BVI law, liability of a director to the company is basically
limited to cases of willful malfeasance in the performance of his duties or to
cases where the director has not acted honestly and in good faith and with a
view to the best interests of the company.
However, subject to the limitations provided below, we may indemnify
against all expenses, including legal fees, and against all judgments, fines and
amounts paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who (a) is or was a party
or is threatened to be made a party to any threatened, pending or completed
proceedings, whether civil, criminal, administrative or investigative, by reason
of the fact that the person is or was a director, an officer or a liquidator of
us; or (b) is or was, at our request, serving as a director, officer or
liquidator of or in any other capacity is or was acting for, another company or
a partnership, joint venture, trust or other enterprise.
We may only indemnify a person if the person acted honestly and in good
faith with a view to our best interests and, in the case of criminal
proceedings, the person had no reasonable cause to believe that his conduct was
unlawful. If a person to be indemnified has been successful in defense of any
proceedings referred to above the person is entitled to be indemnified against
all expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred by the person in connection with the
proceedings.
We may purchase and maintain insurance in relation to any person who is or
was a director, an officer or a liquidator of us, or who at our the request is
or was serving as a director, an officer or a liquidator of, or in any other
capacity is or was acting for, another company or a partnership, joint venture,
trust or other enterprise, against any liability asserted against the person and
incurred by the person in that capacity, whether or not we have or would have
had the power to indemnify the person against the liability as provided in our
Articles of Association.
Item 7. Recent Sales of Unregistered Securities
The following sets forth information relating to all of our securities
which we sold since July 18, 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 7/18/2002 100,000 (after stock split)
- ---------------------------------------------- ---------------- ---------------------------------------------------
- ---------------------------------------------- ---------------- ---------------------------------------------------
Lau Hing Bun 7/18/2003 100,000 (after stock split)
- ---------------------------------------------- ---------------- ---------------------------------------------------
- ---------------------------------------------- ---------------- ---------------------------------------------------
Total 200,000
- ---------------------------------------------- ---------------- ---------------------------------------------------
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 100,000 shares of common stock sold by us to First Asia International
Holding Limited and the 100,000 shares of common stock sold by us to Lau Hing
Bun 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 and Mr. Lau Hing Bun,
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
34
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 Media Century International Limited
3.2 Articles of Association of Media Century International Limited
3.3 Resolution to Amend the Authorized Share Capital of Media Century
International Limited
4.1 Specimen Certificate for shares of our common stock
5.1 Form of Legal Opinion of Conyers Dill & Pearman regarding the legality of
the common stock
5.2 Form of Tax Opinion of Heller Ehrman White & McAuliffe
5.3 Form of 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 the Registration Statement 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
35
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 12
day of January 2004.
Media Century International 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 24 day of November, 2003.
Signatures Capacity Date
____________/s/ Li Sze Tang________________________ Chief Executive Officer and 1/12/2004
Li Sze Tang Chairman of the Board
__________/s/ Lou Hing Bun_________________________ Chief Financial Officer and 1/12 /2004
Lau Hing Bun Director
_________/s/ Michael Lin___________________________ Authorized Representative in 1/12/2004
Michael Lin the United States
36
EXHIBIT INDEX
Exhibit Description of Exhibit
Number
3.1 Memorandum of Association of Media Century International Limited
3.2 Articles of Association of Media Century International Limited
3.3 Resolution to Amend the Authorized Share Capital of Media Century
International Limited
4.1 Specimen Certificate for shares of our common stock
5.1 Form of Legal Opinion of Conyers Dill & Pearman regarding the legality of
the common stock
5.2 Form of Tax Opinion of Heller Ehrman White & McAuliffe
5.3 Form of Tax Opinion of Conyers Dill & Pearman
23.1 Consent of PKF, CPA.
23.2 Consent of Conyers Dill & Pearman (included in Exhibit 5.1)