AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 2004
Registration Statement No. 333-111855
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 4
to
FORM F-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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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)
ROOMS 3505-06, 35TH FLOOR
EDINBURGH TOWER, THE LANDMARK
15 QUEEN'S ROAD CENTRAL, HONG KONG
(852) 2736-2111
(Address and telephone number of Registrant's principal executive offices)
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WEBSITE EXPRESS
333 BREA CANYON ROAD, # 221
DIAMOND BAR, CA 91765
909-468-5577
(Name, address, and telephone number of agent for service)
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COPIES TO:
SIMON C. LUK, ESQ. STEPHEN DAVIS, ESQ.
HELLER EHRMAN WHITE & MCAULIFFE LLP HELLER EHRMAN WHITE & MCAULIFFE LLP
35TH FLOOR, ONE EXCHANGE SQUARE 120 WEST 45TH STREET
8 CONNAUGHT PLACE NEW YORK, NEW YORK 10036
CENTRAL, HONG KONG 212-832-8300
011-852-2292-2000
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Approximate date of commencement of proposed sale to the public: 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(2)
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(c)
under the Securities Act of 1933
(2) Previously paid.
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 NOVEMBER 5, 2004
PROSPECTUS
100,000 SHARES OF COMMON STOCK
MEDIA CENTURY INTERNATIONAL
LIMITED
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Media Century International Limited 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 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 "direct public offering, 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 any automated quotation
system.
We have arbitrarily determined the offering price of $1.00 per share
offered hereby. The offering price bears no relationship to our assets, book
value, or any other customary investment criteria.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS THAT ARE DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is November __, 2004.
BACK COVER PAGE
Except where specifically indicated in this prospectus, "dollars" and "$"
mean United States dollars.
Until ____________ (90 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealer's obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
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TABLE OF CONTENTS
PROSPECTUS SUMMARY.........................................................1
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RISK FACTORS...............................................................5
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INFORMATION CONTAINED IN THIS PROSPECTUS..................................10
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FORWARD-LOOKING STATEMENTS................................................11
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ENFORCEABILITY OF CIVIL LIABILITIES.......................................11
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USE OF PROCEEDS...........................................................11
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DETERMINATION OF OFFERING PRICE...........................................13
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DIVIDEND POLICY...........................................................14
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PLAN OF DISTRIBUTION......................................................14
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EXCHANGE RATE.............................................................16
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CAPITALIZATION AND INDEBTEDNESS...........................................17
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DILUTION..................................................................18
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.............................20
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BUSINESS..................................................................22
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MANAGEMENT................................................................26
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RELATED PARTY TRANSACTIONS................................................28
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PRINCIPAL SHAREHOLDERS....................................................28
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DESCRIPTION OF COMMON STOCK...............................................29
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MEMORANDUM AND ARTICLES OF ASSOCIATION....................................30
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TAXATION..................................................................33
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SHARES ELIGIBLE FOR FUTURE SALE...........................................34
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LEGAL MATTERS.............................................................35
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DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.........................35
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EXPERTS...................................................................35
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ADDITIONAL INFORMATION....................................................35
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INDEX TO FINANCIAL STATEMENTS............................................F-1
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PROSPECTUS SUMMARY
This summary is a materially complete summary but 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 British Virgin
Islands 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 are not, nor do we consider
ourselves, a "blank check" company as that term is defined in SEC Rule 419.
Presently, we have no intention of entering into a business combination, but we
do not preclude our entering into such a transaction in the future.
We aim to become a provider of information technology consulting and
outsourcing services in Hong Kong and may eventually expand our operations to
offer our services in the People's Republic of China. Our focus will be to
assist new and established companies in a wide range of industries to identify
their specific Information Technology requirements and to recommend and
implement cost efficient Information Technology solutions. We intend to serve as
outside consultants to our prospective client's internal Information Technology
staff, providing a wide range of Information Technology consulting services,
including assessing specific Information Technology requirements of the client,
providing technology infrastructure advisory services, designing and
implementing custom information systems and providing in-house training on the
system developed by our staff and Information Technology outsourcing services.
We believe that there will be a strong demand for our services based on the
number of small and medium sized enterprises established and expected to be
established in Hong Kong and the government support expected to be given to
those small and medium sized enterprises.
Apex Wealth Enterprises Limited, which has filed a registration statement
on Form F-1 (Registration Statement No. 333-110071) and is now a public
reporting company, has a business plan that is similar to ours. Apex Wealth
Enterprises Limited provides business advisory and management consulting
services, including strategic advisory services, business plan preparation,
marketing plan development, advice on mergers, acquisitions, restructurings and
the sales of businesses, and advising overseas investors on investments in Hong
Kong and China to mostly small and medium enterprises in Hong Kong and China.
Mr. Li Sze Tang, who is our Chief Executive Officer, Chairman of the Board of
Directors and one of our principal shareholders, is also the Chief Executive
Officer, Chairman of the Board of Directors and a principal shareholder of Apex
Wealth Enterprises Limited. Mr. Li Sze Tang has committed to work seven hours a
week at Apex Wealth Enterprises Limited.
Our principal executive offices are located at Room 3505-06, 35th Floor,
Edinburgh Tower, The Landmark, 15 Queen's Road, Central, Hong Kong, SAR and our
telephone number is (852) 2736-5511
THE OFFERING
We are offering 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 "direct
public offering, no minimum basis". There are no underwriters or broker-dealers
involved in the selling of the common stock. There are no promoters or
beneficial owners of our common stock other than the persons identified in this
prospectus. There is no minimum purchase requirement, and there are no
arrangements to place funds in an escrow, trust or similar account. As the funds
are raised, they will be made available to us 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
the registration statement that includes this prospectus. Since this offering is
not underwritten and is being offered on a no minimum basis, there is a
possibility that no proceeds will be raised or that if any proceeds are raised,
they may not be sufficient to cover the cost of this offering.
We have identified some of the prospective investors to whom this
prospectus may be delivered. These prospective investors are: Au Pui Ling,
Cheung Kin Wilson, Cheung Ting Kee, Chung Ka Yee, Li Ying Wah, Liu Yu, So Lai
Ming Liz, Tang So Yan Suzanne, Tsai Yiu Tong, Wong Lap Woon, Woo Chi Wai. None
1
of these prospective investors have any familial or business relationships with
any of our directors or executive officers. Our directors will likely distribute
the prospectus to these investors and to any other investors whom we believe may
be interested, or who contact us expressing an interest in evaluating an
investment in our common stock.
2
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; however, this is a "no minimum" offering, and we
may not receive any proceeds, and the proceeds we receive may be insufficient to
cover our offering costs. The net proceeds which we receive will be used for the
drafting of a comprehensive business plan, recruiting and hiring experienced
Information Technology professionals, general operating expenses and marketing
and advertising. In the event only $25,000 is received, all of the proceeds
would go towards the cost of this offering. The next $10,000 will be used to
draft the comprehensive business plan and the next $45,000 received would be
used to recruit and hire qualified professionals. If the full amount is raised,
the next $10,000 received will be used for marketing and advertising. $10,000
will be used for general operating expenses.
3
SUMMARY FINANCIAL INFORMATION
The following table presents summary information on our financial condition
and results of operations for the periods and as of the dates indicated. The
Summary Financial Information is qualified in its entirety by our financial
statements contained elsewhere in this prospectus.
July 18, 2002 Year ended Year ended July
(date of July 31, 2003 31, 2004
incorporation) to
July 31, 2002
STATEMENT OF OPERATIONS
Revenues 0 0 0
Net Loss ($1,317) ($1,410) ($1,717)
Net Loss Per Share $0.00 ($0.01) ($0.01)
Common Stock outstanding 200,000 200,000 200,000
BALANCE SHEET DATA As of As of As
July 31, 2002 July 31, 2003 of
July 31, 2004
Current Assets - $20,000 $18,668
TOTAL ASSETS - $20,000 $18,668
Total Liabilities $1,317 $2,727 $3,112
Shareholders' Equity ($1,317) $17,273 $15,556
4
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should carefully consider the material risks described below and elsewhere in
this prospectus before deciding to purchase our common stock. Any of the
following risks may materially and adversely affect our business, financial
condition or results of operations. The price of our common stock could decline
as a result of these risks, and you could lose all or part of your investment.
Additionally, as we are a company incorporated under BVI laws having its
principal business in Hong Kong, there are risks associated with investing in
our common stock not typical of investments in the securities of companies
incorporated and doing business in the United States.
WE HAVE NOT COMMENCED OPERATIONS, AND WE EXPECT TO INCUR OPERATING LOSSES FOR
THE FORESEEABLE FUTURE
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 EMPLOYEES, THE FAILURE
OF WHICH COULD RESULT IN A MATERIAL DECLINE IN OUR REVENUES
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. We compete for our employees with many other companies, most
of which have greater financial and other resources. 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 utilize the services of a significant number of
independent contractors to act as consultants, we believe 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. 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.
OUR OFFERING IS ON A "DIRECT PUBLIC OFFER, NO MINIMUM" BASIS, AND A SUBSTANTIAL
PERCENTAGE OF THE OFFERING PROCEEDS MAY BE USED TO PAY FOR THE EXPENSES OF THIS
OFFERING AND NOT FOR OUR BUSINESS OPERATIONS
This is a "direct public offer, no minimum" offering, in which the
directors will use their best efforts to sell the common stock that we are
offering. As a result, there is no firm commitment to sell any minimum number of
shares or dollar amount. To the extent we sell significantly less than the total
number of shares that we are offering through this prospectus, you may be one of
only a small number of investors or the only investor, and a substantial
percentage of the offering proceeds may be used to pay for the offering expenses
and not to further our business or initiate our business plan and may not even
be sufficient to cover the offering expenses.
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 securities including the delivery of a standardized
5
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 ARE RAISING A SMALL AMOUNT OF FUNDS IN THIS OFFERING, AND EVEN IF FULLY SOLD,
WE MAY NEED ADDITIONAL CAPITAL TO FUND OUR OPERATIONS AND FINANCE OUR GROWTH,
AND WE MAY NOT BE ABLE TO OBTAIN IT ON TERMS ACCEPTABLE TO US OR AT ALL, IN
WHICH CASE WE MAY BE UNABLE TO FUND ONGOING OPERATIONS AND YOU MAY LOSE YOUR
ENTIRE INVESTMENT
We are a consulting business and should not incur substantial expenses in
the early stages of our development. We believe that the net proceeds from this
offering, together with our existing assets will be sufficient to commence and
sustain our business operations for about one year. We are scheduled to begin
operations by the first quarter of 2005, irrespective of whether funds are
raised pursuant to this offering. However, if the offering is not fully sold or
we expand more rapidly than currently anticipated, our working capital needs may
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 and you may lose
your entire investment.
WE DEPEND ON THE SERVICES OF A LIMITED NUMBER OF PERSONNEL WHO WOULD BE
DIFFICULT TO REPLACE, AND IF NOT REPLACED COULD MATERIALLY AND ADVERSELY IMPACT
OUR PROFITABILITY
Our success depends significantly on the continued services of our senior
management. In particular, our success depends on the continued efforts of Mr.
Li Sze Tang, our Chief Executive Officer and Chairman of the Board of Directors,
and Mr. 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.
MR. LI SZE TANG WORKS FOR US ON A PART-TIME BASIS, AND HIS LIMITED PARTICIPATION
COULD ADVERSELY AFFECT OUR OPERATIONS AND OUR FINANCIAL CONDITION
Mr. Li Sze Tang is currently a director of several other companies and will
be working for us on a part-time basis. As a part-time director, he will only be
able to devote a limited number of hours working on our behalf to seek clients
and develop the business. Currently, Mr. Li devotes three hours a week working
on our behalf, and we believe that he will devote no more than five hours a week
working on our behalf once we begin providing consulting services. Additionally,
he may become more involved with his other business and decide to terminate his
employment and/or directorship. Since the business development and marketing
functions will primarily be performed by Mr. Li, his decision to resign as a
director or as Chief Executive Officer, or his inattention to our business, if
his functions are not replaced by others, will have a material adverse effect on
our business and our financial condition.
OUR BUSINESS STRATEGIES MAY NOT BE SUCCESSFUL, WHICH WOULD MATERIALLY AND
ADVERSELY IMPACT ON OUR FINANCIAL CONDITION
A key element of our strategy is dependant on the ability of our senior
management to identify the 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 AND OUR FAILURE TO MEET OUR CLIENTS
PERFORMANCE DEADLINES MAY DAMAGE OUR REPUTATION AND BUSINESS
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. For example, IT projects may need to go
6
"on line" at a specific time and if not met, the client could lose substantial
revenues. Similarly, our projects may involve improving the efficiency of a
particular IT system which will 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 WHICH COULD SUBJECT US TO CLAIMS AND LITIGATION AGAINST US
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 license 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 we will be able to detect unauthorized use and
take appropriate steps to enforce our 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 DEVELOP NEW SOLUTIONS, AND IF WE ARE UNABLE TO ADDRESS THESE CHANGING
TECHNOLOGIES, IT COULD ADVERSELY AFFECT OUR FUTURE BUSINESS OPERATIONS
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 AFFECTED BY OUR ABILITY TO MAINTAIN MARGINS
We will derive 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 will be 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.
MR. LI SZE TANG AND MR. LAU HING BUN, OUR CURRENT STOCKHOLDERS, WILL
COLLECTIVELY OWN APPROXIMATELY 66.66% OF THE OUTSTANDING SHARES OF OUR COMMON
STOCK AFTER THIS OFFERING, ASSUMING ALL OF THE SHARES ARE SOLD PURSUANT TO THIS
OFFERING. THEY WILL BE ABLE TO EXERCISE SUBSTANTIAL CONTROL AFTER THIS OFFERING,
AND YOU WILL HAVE NO EFFECTIVE VOICE IN DECISIONS MADE BY THE BOARD OF DIRECTORS
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, assuming
all of the shares are sold pursuant to this offering. In the event the offering
is not fully sold, the current shareholders' controlling interest may be much
higher. 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.
7
THIS IS OUR INITIAL PUBLIC OFFERING, AND OUR COMMON STOCK HAS NEVER BEEN
PUBLICLY TRADED; THEREFORE, INVESTORS MAY FACE DIFFICULTIES SELLING THEIR SHARES
There has been no public market for our common stock. We plan to apply to
have our common stock quoted on the OTCBB; however, no assurance can be given
that a market for our common stock will develop or that our common stock will be
quoted on OTCBB. Even if our common stock is eventually quoted on OTCBB,
sustaining a public trading market will require, among other things, the
participation of a qualified market maker who is willing to make a market in our
common stock. To date, no market maker has expressed any interest in our
company. No assurance can be given that any market making activities will
commence or, if commenced, that they will continue.
OUR BUSINESS MAY SUFFER IF WE ARE NOT ABLE TO EXPAND OUR BUSINESS IN CHINA,
WHICH WOULD ADVERSELY AFFECT OUR REVENUES AND OUR GROWTH
The Hong Kong market for our services is limited. 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 market 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. If we are unsuccessful, our revenues will become
stagnant and the cost of our expansion could have a material adverse effect on
our financial condition.
CHANGES IN HONG KONG'S POLITICAL AND LEGAL CONDITIONS COULD HARM OUR BUSINESS
OPERATIONS
Most of our assets and our initial business will be in Hong Kong, and we
will conduct most of our business activities there. As a result, our results of
operations and financial condition may be especially influenced by the political
situation in Hong Kong and by the general state of the Hong Kong economy. Hong
Kong is a special administrative region of China, but it has its own
legislature, legal and judicial system and economic autonomy until the year
2047. We do not expect that this autonomy will be altered. However, any changes
in political, legal or other conditions in Hong Kong altering this autonomy
could have an adverse effect on our business operations and our revenue.
OUR CHIEF FINANCIAL OFFICER, MR. LAU HING BUN, HAS VERY LIMITED FINANCE
EXPERIENCE, AND HIS LACK OF FINANCIAL EXPERIENCE MAY MATERIALLY HARM OUR
BUSINESS
Our Chief Financial Officer, Mr. Lau Hing Bun, has no experience acting as a
Chief Financial Officer. He has never before held a finance-related position,
nor has he received a degree in any finance-related field. His lack of financial
experience and training may have a material adverse effect on our business and
financial condition.
WE HAVE LIMITED REPORTING REQUIREMENTS UNDER THE SECURITIES EXCHANGE ACT OF
1934, WHICH MAKES US LESS TRANSPARENT THAN A U.S. ISSUER
As a foreign private issuer, the rules and regulations under the Securities
Exchange Act of 1934 provides us with certain exemptions. We are exempt from the
rules prescribing the furnishing and content of proxy statements, and our
officers, directors and principal stockholders are exempt from the reporting and
short-swing profit recovery provisions. Also, we are not required to publish
financial statements as frequently, as promptly or containing the same
information as United States companies. The result is that we will be less
transparent than a U.S. issuer.
THERE WILL BE IMMEDIATE AND SUBSTANTIAL DILUTION TO NEW INVESTORS IN THIS
OFFERING
The initial public offering price is substantially higher than the net
tangible book value per share of our common stock based on the 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 net tangible book value per share of $0.695 less than the price
you paid for the share, assuming an initial public offering price of $1.00 per
share of common stock.
8
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 effect 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."
9
INFORMATION CONTAINED IN THIS PROSPECTUS
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.
10
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; however, this is a "no minimum" offering, and we
may not receive any proceeds and the proceeds we receiver may be insufficient to
cover our offering costs. 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
Expenses of this offering $25,000 25%
General Operating Expenses $10,000 10%
Drafting the Comprehensive Business Plan $10,000 10%
Recruiting IT professionals $45,000 45%
Advertising, Market Research Seminars $10,000 10%
In the event that less than all the securities to be offered by this
prospectus are sold and there are insufficient funds to fully develop our
business plan, the first $25,000 will be used exclusively to pay the
11
costs and expenses of this offering. In the event only $50,000 is raised, the
next $25,000 will be used to draft our comprehensive business plan and to
recruit IT professionals and consultants for our business. Initially, our
general operating expenses are expected to be minimal as we will have no
offices, a limited number of employees, and because our consultants will be used
on a contract and as needed basis, and their remuneration will be paid out of
the fees which we receive from our clients.
12
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, have 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.
13
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.
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 "direct
public offering, no minimum basis". There are no underwriters or broker-dealers
involved in the selling of our common stock. There are no promoters or
beneficial owners of our common stock other than the persons identified in this
prospectus. There is no minimum purchase requirement, and there are no
arrangements to place funds in an escrow, trust or similar account. As the funds
are raised, they will be made available to us 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. We have identified
some of these prospective investors to whom this prospectus may be delivered.
They are: Au Pui Ling, Cheung Kin Wilson, Cheung Ting Kee, Chung Ka Yee, Li Ying
Wah, Liu Yu, So Lai Ming Liz, Tang So Yan Suzanne, Tsai Yiu Tong, Wong Lap Woon,
Woo Chi Wai. None of these prospective investors have any familial or business
relationships with any of our directors or executive officers. Our directors
will likely distribute the prospectus to these investors and to any other
investors whom we believe may be interested, or who contact 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 reside in Hong
Kong and to other persons who are not residents of the United States, but only
to the extent we may lawfully do so under the laws of the country where the
offeree resides. No offerings of shares of our common stock will be made in the
United States. We may sell our common stock in privately negotiated
transactions, or in the event our common stock is quoted on the OTCBB, in such
public market. We conducting this offering and registering the shares of common
stock issued in this offering so that we may be able to quote our common stock
on the OTCBB at some point in the future.
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.
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.
14
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 $24,000
15
EXCHANGE RATE
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
We will record our finances in Hong Kong dollars and report our operations
in U.S. dollars. Fluctuations in the exchange rate between Hong Kong dollars and
the U.S. dollars will affect the amount of dollars reported in our financial
statements. We do not expect to actively use derivative instruments to reduce
our exposure to foreign currency risk.
The following table sets forth certain information concerning the average
rates of exchange between Hong Kong dollars and U.S. dollars for the periods
indicated. It represents the noon buying rate in New York for cable transfers
payable in foreign currencies as certified for customs purposes by the Federal
Reserve Bank of New York. The average noon buying rate is determined by
averaging the rates on the last business day of each month during the relevant
period.
CALENDAR YEAR AVERAGE NOON
BUYING RATE
(HK$ PER US$)
1999 7.759
2000 7.792
2001 7.798
2002 7.798
2003 7.785
LAST SIX CALENDAR MONTHS
May 2004 7.793
June 2004 7.800
July 2004 7.799
August 2004 7.800
September 2004 7.800
October 2004 7.789
16
CAPITALIZATION AND INDEBTEDNESS
The following table sets forth our capitalization and indebtedness as of
July 31, 2004. Our capitalization and indebtedness are presented on an actual
basis and on a pro forma basis.
You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and our financial
statements and the notes thereto, included elsewhere in this prospectus. On a
pro forma as adjusted basis, cash equivalents will be US$0.00, total shares
issued and outstanding will be 200,000 and total stockholders' equity will be
($8,444) (assuming no shares are sold pursuant to the offering).
PRO FORMA
AS OF JULY 31, AFTER THIS
2004 OFFERING (1)
Cash $18,668 $0
Long-term debt: $0 $0
Common stock: $0.01 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: $20,000
Additional paid-in capital $0 $0
Accumulated deficit ($4,444) ($28,444)
Total stockholders' equity $15,556 ($8,444)
(1) Assuming no shares are sold pursuant to the offering.
17
DILUTION
Our net tangible book value as of July 31, 2004 was $15,556, or $0.078 per
common share. Net tangible book value per common share is determined by dividing
the amount of our total tangible assets less total liabilities by the number of
common shares 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 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, 2004,
would have been $91,556 or $0.305 per common share. This represents an immediate
increase in the pro forma net tangible book value of $0.227 per common share to
existing shareholders and an immediate dilution of $0.695 per common share to
new investors. The following table illustrates the per share dilution:
Assumed initial public offering price per share........................ $1.00
Net tangible book value per common share at July 31, 2004.............. $0.078
Pro forma increase in net tangible book value per common share
attributable to existing investors................................... $0.227
Pro forma net tangible book value per common share after this offering. $0.305
Pro forma dilution per common share to new investors................... $0.695
However, should the offering not be fully subscribed to, the dilution
effect would be more extreme. For example if only 50% of our offering were
purchased, after giving effect to the issuance and sale of 50,000 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 $26,000, our pro forma net tangible book value as of July 31, 2004,
would have been $41,556 or $0.166 per common share. Additionally, if only 25% of
our offering were purchased, after giving effect to the issuance and sale of
25,000 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 only $1,000, our pro forma net tangible book
value as of July 31, 2004, would have been $16,556 or $0.074 per common share.
18
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, 2004, July 31, 2003 and July 31, 2002
and the balance sheet data as of July 31, 2004, July 31, 2003 and July 31, 2002,
respectively, 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.
STATEMENT OPERATIONS DATA:
July 18, 2002 Year ended Year ended
(date of July 31, 2003 July 31, 2004
incorporation) to
July 31, 2002
Revenues: $0 $0 $0
Expenses:
Formation expenses $1,026 - -
General and administrative expenses $291 $1,410 $1,717
Net Loss ($1,317) ($1,410) ($1,717)
Number of shares outstanding 200,000 200,000 200,000
Basic and diluted loss per share of common stock $0.00 ($0.01) ($0.01)
BALANCE SHEET DATA:
Cash - $20,000 $18,668
Total assets - $20,000 $18,668
Total stockholders' equity ($1,317) $17,273 $15,556
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.
19
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, 2004, 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, 2004 and other financial information included elsewhere in this
prospectus. This prospectus contains forward-looking statements that contain
risks and uncertainties. Our actual results may differ significantly from the
results discussed in the forward looking statements.
Our operations in the upcoming year will vary based on the amount of funds
we raise. In the event only $25,000 is received, all of the proceeds would go
towards the cost of this offering. The next $10,000 received will be used to
formulate a comprehensive business plan. The next $45,000 received would be used
to recruit and hire qualified professionals. The next $10,000 received will be
used for marketing and advertising. $10,000 will be used for general operating
expenses. 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 begin operations by the first quarter of
2005. We will not incur expenses when we engage consultants to work on projects
because our consultants' remuneration, which is will be a substantial part of
our expenses, will be paid out of the fees we receive from our clients.
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, 2004 reflects total assets of $18,668 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 an
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 Mr. Li Sze Tang or Mr. Lau Hing Bun, our
shareholders. 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.
20
CONTRACTUAL OBLIGATIONS
We are in our early developmental stage, and to date we have no contractual
obligations.
21
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 are not, nor do we consider
ourselves, a "blank check" company as that term is defined in SEC Rule 419, and
we have no intention of entering into a business combination in the immediate
future.
We were founded by Mr. Li Sze Tang, who is presently our Chief Executive
Officer and Chairman of the Board and Mr. Lau Hing Bun, who is presently our
Chief Financial Officer and one of our Directors. 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 eight years of IT experience,
including developing networking systems and programming.
IT CONSULTING AND SYSTEMS INTEGRATION SERVICES
We aim to become a provider of IT consulting and outsourcing services in
Hong Kong and eventually expanding into China. Our focus will be on services to
Small and Medium Enterprises, or 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 its 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.
22
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.
APEX WEALTH ENTERPRISES LIMITED
Apex Wealth Enterprises Limited, which has filed a registration statement
on Form F-1 (Registration Statement No. 333-110071) and is now a public
reporting company, has a business plan that is similar to ours. Apex Wealth
Enterprises Limited provides business advisory and management consulting
services, including strategic advisory services, business plan preparation,
marketing plan development, advice on mergers, acquisitions, restructurings and
the sales of businesses, and advising overseas investors on investments in Hong
Kong and China to mostly SMEs in Hong Kong and China. Mr. Li Sze Tang, who is
our Chief Executive Officer, Chairman of the Board of Directors and one of our
principal shareholders, is also the Chief Executive Officer, Chairman of the
Board of Directors and a principal shareholder of Apex Wealth Enterprises
Limited. Mr. Li Sze Tang has committed to work seven hours a week at Apex Wealth
Enterprises Limited.
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. We believe 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 custom design IT
systems, 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 AND CHINA
According to statistics released by the Small and Medium Enterprises
Information Centre of the Trade and Industry Department of the Government of
Hong Kong, in March 2004, there were about 286,000 SMEs in Hong Kong alone. SMEs
accounted for over 98% of all businesses in Hong Kong and provided employment
opportunities to approximately 1.3 million persons (which is approximately 60%
of total employment, excluding the Hong Kong civil service). We believe that the
Hong Kong government considers SMEs to be the backbone of Hong Kong's economy
and the driving force of its economic development.
During the past few years, the Hong Kong government has been assisting SMEs
to grow and develop, particularly in the wake of the downturn in the Asian
economy and the challenges brought about by the SARS outbreak in the summer of
2003. In a policy address in October of 2001 by the Hong Kong Chief Executive,
the government indicated it would set aside HK$1.9 billion to establish four
funding schemes with a total commitment of HK$7.5 billion to help SMEs. The four
schemes which were set up in December 2001/January 2002 were the SME Loan
Guarantee Scheme, the SME Export Market Fund, the SME Training Fund and the SME
Development Fund.
According to a report by the People's Daily Paper, in 2001 the number of
SMEs in China exceeded 8 million, accounting for 99% of the country's total
enterprises. In 2002, the Chinese government promulgated a series of laws and
regulations to protect and promote the development of SMEs. The Laws of the
People's Republic of China on the Promotion of Small and Medium-Sized Enterprise
was adopted by the 28th Session of the Standing Committee of the Ninth National
People's Congress on June 29, 2002, which took effect on January 1, 2003. The
law contains seven sections and deals with funding assistance, business
establishment support, technology innovation, market development, social support
and preferential tax treatment.
23
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, we believe 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.
24
SALES AND MARKETING
We believe that to attract sufficient clients for our services, 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 this offering, we intend to hire
additional sales personnel in order to establish a strong client base. Once our
client base is firmly established, we intend to leverage that client base by
offering our clients additional IT consulting, software and training services.
Our success is dependent upon our ability to attract, develop, motivate and
retain highly qualified personnel. As a result, we will offer 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 will 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 believe we 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.
25
MANAGEMENT
EXECUTIVE OFFICERS AND DIRECTORS
The following sets forth certain information with respect to our directors
and executive officers as of the date of this prospectus.
NAME AGE POSITIONS ADDRESS
Li Sze Tang 46 Chief Executive Officer and Chairman of the Rooms 3505-06, 35th Floor,
Board of Directors Edinburgh Tower, The Landmark,
15 Queen's Road Central
Hong Kong
Lau Hing Bun 34 Chief Financial Officer and Director Rooms 3505-06, 35th Floor,
Edinburgh Tower, The Landmark,
15 Queen's Road Central
Hong Kong
The following is a brief account of the business experience of each of our
directors and executive officers.
Mr. Li Sze Tang is the founder and is currently an executive director of
First Asia Capital Investment Limited, an investment company listed on the Main
Board of the Stock Exchange of Hong Kong Limited, and has been a director since
July 4, 2002. From 1999 to 2002 he was an executive and a director of Thiz
Technology Group Limited, an IT company specializing in developing and providing
Linux solutions, which he founded and which is listed on the Growth Enterprises
Market of the Stock Exchange of Hong Kong Limited. He has worked in the banking
and finance field and computer industries for more than 18 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 specializing in the management of New
Ventures from the Imperial College of Science, Technology and Medicine,
University of London and a Master's Degree in Economic Law from Zhongshan
University of the People's Republic of China. 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
undergraduate computer courses at The Chinese University of Hong Kong.
DIRECTORS' ACTIVITIES OUTSIDE OF OUR BUSINESS AND THE PART-TIME NATURE OF THEIR
EMPLOYMENT
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 Limited. Each of these companies are affiliated. Mr. Li is the chief
executive officer and chairman of the board of directors of Apex Wealth
Enterprises Limited, and he is the chairman of First Asia Capital Investment
Ltd. and First Asia Finance Group Ltd. Mr. Lau is not employed with any other
company and hold no outside directorships.
26
Mr. Li will be working on our behalf on a part-time basis. Until we begin
providing consulting services to our clients, Mr. Li's initial involvement in
the every day operations of our business will be limited to three hours a week.
As the business develops, Mr. Li will increase his participation by marketing
our services and developing client relationships, and we believe that he will
devote no more than five hours a week to the every day operations of our
business.
BOARD OF DIRECTORS PRACTICES
Our directors serve a one-year term or until their successor is elected and
qualified. Our board of directors has not established an audit committee or a
remuneration committee at this time.
27
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, other than the issuance
of 100,000 shares of common stock to each of Mr. Li Sze Tang and Mr. Lau Hing
Bun.
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of November 5, 2004 by:
o each person who is known by us to own beneficially more than 5% of the
outstanding common stock,
o each of our current executive officers and directors,
o all of our current executive officers and directors as a group.
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
28
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, 2004, 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.
29
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.
30
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
31
not acted honestly and in good faith and with a view to the best interests of
the company. However, under our Articles of Association, we are authorized to
indemnify any director or officer who is made or threatened to be made a party
to a legal or administrative proceeding by virtue of being one of our directors
or officers, provided such person acted honestly and in good faith and with a
view to our best interests and, in the case of a criminal proceeding, such
person had no reasonable cause to believe that his conduct was unlawful.
Pursuant to our Articles of Association, if any director or officer is
successful in defense of any civil, administrative or criminal proceedings that
director or officer is entitled to be indemnified against all judgments, fines
and amounts paid in settlement and reasonably incurred by that director or
officer in connection with those proceedings.
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.
32
TAXATION
THE FOLLOWING IS A SUMMARY OF THE MATERIAL BVI 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.
33
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.
34
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 "Management," 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.
35
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2004 AND 2003 AND
PERIOD ENDED JULY 31, 2002
Page
Report of Independent Registered Public Accounting Firm F-2
Balance Sheets as of July 31, 2004 and 2003 F-3
Statements of Operations for the cumulative period and
year ended July 31, 2004, year ended July 31, 2003
and period ended July 31, 2002 F-4
Statements of Stockholders' Equity (Deficit) for the years ended
July 31, 2004 and 2003 and period ended July 31, 2002 F-5
Statements of Cash Flows for the cumulative period and
year ended July 31, 2004, year ended July 31, 2003
and period ended July 31, 2002 F-6
Notes to the Financial Statements F-7
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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, 2004 and 2003
and the related statements of operations, stockholders' equity (deficit) and
cash flows for the years ended July 31, 2004 and 2003 and for the period from
July 18, 2002 (date of incorporation) to July 31, 2004 and 2002. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States 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, 2004 and 2003, and the
results of its operations and its cash flows for the years ended July 31, 2004
and 2003 and for the period from July 18, 2002 (date of incorporation) to July
31, 2004 and 2002 in conformity with accounting principles generally accepted in
the United States of America.
PKF
Certified Public Accountants
Hong Kong
August 31, 2004
F-2
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
AS OF July 31, 2004 and 2003
2004 2003
Note US$ US$
ASSETS
Current assets
Cash and cash equivalents 1 18,668 20,000
---------------
--------------- ---------------
Total assets 18,668 20,000
=============== ===============
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Amount due to a director 2 1,445 1,445
Accrued expenses 1,667 1,282
--------------- ---------------
---------------
Total liabilities 3,112 2,727
--------------- ---------------
--------------- ---------------
Commitments and contingency 5 - -
Stockholders' equity
Common stock, US$0.1 par value :
500,000 shares authorised :
200,000 shares issued and outstanding
at July 31, 2004 and 2003 20,000 20,000
--------------- ---------------
20,000 20,000
Deficit accumulated during the development stage (4,444 ) (2,727 )
---------------
--------------- ---------------
Total stockholders' equity 15,556 17,273
--------------- ---------------
--------------- ---------------
Total liabilities and stockholders' equity 18,668 20,000
=============== ===============
See accompanying notes to financial statements.
F-3
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
FOR THE PERIOD AND YEAR ENDED JULY 31, 2004,
YEAR ENDED JULY 31, 2003 AND
PERIOD FROM JULY 18, 2002 TO July 31, 2002
July 18, 2002 July 18, 2002
(date of (date of
incorporation) Year ended Year ended incorporation)
to July 31, July 31, 2004 July 31, 2003 to July 31,
2004 2002
Note US$ US$ US$ US$
Revenue - - - -
Expenses
Formation expenses 1,026 - - 1,026
General and administrative
expenses 3,418 1,717 1,410 291
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ----------------
Loss from operations (4,444 ) (1,717 ) (1,410 ) (1,317 )
Income taxes 3 - - - -
--------------- ---------------- ---------------- ---------------
--------------- ---------------- ---------------- ---------------
Net loss (4,444 ) (1,717 ) (1,410 ) (1,317 )
=============== ================ ================
=============== ================ ================ ===============
Net loss per common share : 4
Basic (0.02 ) (0.01 ) (0.01 ) (0.00 )
=============== ================ ================ ===============
=============== ================ ================ ===============
Diluted (0.02 ) (0.01 ) (0.01 ) (0.00 )
=============== ================ ================
=============== ================ ================ ===============
Weighted average shares :
Basic 200,000 200,000 200,000 200,000
=============== ================ ================ ===============
=============== ================ ================ ===============
Diluted 200,000 200,000 200,000 200,000
=============== ================ ================ ===============
See accompanying notes to financial statements.
F-4
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED JULY 31, 2004 AND 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
Net loss - - (1,717) (1,717)
-------------- ------------ ------------------- --------------
-------------- ------------ ------------------- --------------
Balance, July 31, 2004 200,000 20,000 (4,444) 15,556
============== ============ =================== ==============
See accompanying notes to financial statements.
F-5
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
FOR THE PERIOD AND YEAR ENDED JULY 31, 2004,
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 Year ended incorporation)
to July 31, July 31, 2004 July 31, 2003 to July 31,
2004 2002
US$ US$ US$ US$
Cash flows from operating activities :
Net loss (4,444 ) (1,717 ) (1,410 ) (1,317 )
Changes in liabilities :
Increase/(decrease) in accrued
expenses 1,667 385 (35 ) 1,317
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net cash used in operating activities (2,777 ) (1,332 ) (1,445 ) -
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Cash flows from financing activities :
Proceeds from issuance of common 20,000 - 20,000 -
stock
Advance from a director 1,445 - 1,445 -
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Net cash provided by financing 21,445 - 21,445 -
activities
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ----------------
Net change in cash and cash equivalents 18,668 (1,332 ) 20,000 -
Cash and cash equivalents, beginning of
period - 20,000 - -
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Cash and cash equivalents, end of period 18,668 18,668 20,000 -
================ ================ ================ ================
See accompanying notes to financial statements.
F-6
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2004 AND 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 and outsourcing services provider. 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$0.1 par value.
The Company is a development stage enterprise and has not yet
generated any revenue during the reporting periods. During the
reporting periods, the sole activity of the Company is the issuance of
common stocks.
Cash and cash equivalents
Cash and cash equivalents are short-term, highly liquid investments
with original maturities of three months or less.
Income taxes
The Company accounts for income tax under the provisions of Statement
of Financial Accounting Standard No. 109, which requires recognition
of deferred tax assets and liabilities for the expected future tax
consequences of the events that have been included in the financial
statements or tax returns. Deferred income taxes are recognised for
all significant temporary differences between tax and financial
statements bases of assets and liabilities. Deferred tax assets are
reflected at the net realizable value.
F-7
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2004 AND 2003 AND
PERIOD ENDED JULY 31, 2002
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation and transactions
The Company uses Hong Kong dollars ("HK$") 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 the reporting period were not material.
Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the dates of financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. AMOUNT DUE TO A DIRECTOR
The amount is interest free, unsecured and repayable within one year.
F-8
3. INCOME TAXES
The Company has net operating loss at July 31, 2004, 2003 and 2002 for
Hong Kong profits tax purpose.
F-9
MEDIA CENTURY INTERNATIONAL LIMITED
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JULY 31, 2004 AND 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, 2004 and 2003.
6. CONCENTRATIONS OF CREDIT RISK
Cash and cash equivalents are financial instruments that potentially
subject the Company to concentrations of credit risk.
F-10
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 7/18/2002 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
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 Conyers Dill & Pearman
23.1 Consent of PKF, CPA.
23.2 Consents of Conyers Dill & Pearman (included in Exhibits 5.1
and 5.2)
* Previously filed
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
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 5th
day of November 2004.
Media Century International Limited
By: /s/ Li Sze Tang
---------------------------------------
LI SZE TANG
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF
THE BOARD OF DIRECTORS
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 5th day of November, 2004.
SIGNATURES CAPACITY DATE
/S/ LI SZE TANG
_____________________________ Chief Executive Officer and November 5,
LI SZE TANG Chairman of the Board 2004
(Principal Executive Officer)
/S/ LI SZE TANG Attorney-in-fact for Lau Hing
_____________________________ Bun, Chief Financial Officer November 5,
LAU HING BUN and 2004
Director (Principal Financial
and Accounting Officer)
/S/ LI SZE TANG
_____________________________ Attorney-in-Fact for Michael November 5,
MICHAEL LIN Lin 2004
Authorized Representative in
the United States
II-3
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 Conyers Dill & Pearman
23.1 Consent of PKF, CPA.
23.2 Consents of Conyers Dill & Pearman (included in Exhibits 5.1
and 5.2)
* Previously filed
II-4