UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report: August 24, 2005
ANDEAN DEVELOPMENT CORPORATION
------------------------------
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of incorporation or organization)
33-90696 65-0420146
(Commission File Number) (IRS Employer Identification Number)
17870 E. Castleton Street, #335 City of Industry, CA 91748
(Address of principal executive offices)
(403) 256-6730
(Registrant's telephone number, including area code)
Item 1.01 Entry into a Material Definitive Agreement
Date and Parties
----------------
On July 29, 2005, Andean Development Corporation., a corporation
organized under the laws of the State of Florida ("Andean"); Perfect Dream
Limited, a corporation organized under the laws of British Virgin Islands
("Perfect Dream"); and each of the stockholders of Perfect Dream ("Perfect Dream
Stockholders") entered into an Agreement and Plan of Reorganization as amended
("Agreement"), a copy of which is attached to this report. Except for such
equity ownership and the Agreement there is no material relationship between
Andean or its affiliates and any of the parties to the Agreement.
Terms and Conditions
--------------------
The Agreement provides the terms and conditions pursuant to which
Andean acquired from the Perfect Dream Stockholders all of the issued and
outstanding common capital stock of Perfect Dream ("Perfect Dream Shares") in
exchange for 7,673,325 shares of restricted (as defined in Rule 144 of the
Securities Act of 1933, as amended) common stock of Andean.
The Agreement entered into is an ordinary stock-swap agreement
containing the standard representations, warranties, and covenants.
Item 2.01 Completion of Acquisition or Disposition of Assets
Date of Completion
------------------
The Agreement was effective on August 22, 2005 ("Effective Date"), upon
which date the transaction will be completed.
Brief Description of the Assets Involved
----------------------------------------
Pursuant to the Agreement, Andean received from the Perfect Dream
Stockholders all of the Perfect Dream Shares. Perfect Dream's only asset is its
100% ownership of Goldenway Nanjing Garments Co., Ltd ("Goldenway"), whose
business is described below.
Brief Description of Andean and Its Predecessors
------------------------------------------------
Incorporated in Florida on October 19, 1994, Andean was engaged in the
business of providing engineering and project management services for energy and
private works projects and sells, as agent, major electrical and mechanical
equipment. Andean also advises and assists large private utilities and
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government agencies in obtaining land easements from private owners for
installation of electrical lines, sewer plant infrastructure, piping and roads.
As of June 30, 2005, Andean had zero assets and liabilities of $57,000. As a
result of the reorganization, Andean will continue the business operation of
Perfect Dream.
Brief Description of Perfect Dream
----------------------------------
Perfect Dream was incorporated on July 1, 2004 in British Virgin
Islands. In January of 2005, Perfect Dream acquired 100% of Goldenway, which
conducts Perfect Dream's only business operation.
Goldenway is a limited liability company incorporated in the People's
Republic of China (the "PRC") on December 31, 1993. Prior to the acquisition by
Perfect Dream, Goldenway was owned by Jiangsu Ever-Glory International
Enterprise Group Corporation (51.29%) ("Jiangsu Ever-Glory") and Ever-Glory
Enterprises (H.K.) Ltd. (48.71%) ("Every-Glory HK"). Jiangsu Ever-Glory was
established in China in May 1994; and Every-Glory HK was incorporated in British
Virgin Island in 2000. Goldenway was a Sino-foreign equity joint venture subject
to the Foreign Invested Enterprises ("FIE") laws of China. Its Articles of
Association provide for a term of 30 years which can be renewed upon expiration.
Goldenway's registered capital was USD2,512,106 at the time of its
incorporation, which has been fully paid in.
On December 1, 2004, Perfect Dream entered into an Equity Interest
Transfer agreement with the shareholders of Goldenway. Under this agreement,
Perfect Dream purchased all of the equity interest in Goldenway held by Jiangsu
Every-Glory and Every-Glory HK, thus became the sole shareholder of Goldenway.
After its acquisition by Perfect Dream and effective as of April 20, 2005,
Goldenway has changed its status to become a wholly foreign owned enterprise.
Its legal structure is similar to a corporation and a limited liability company
organized under state laws in the United States. Also, Goldenway's registered
capital was increased to USD20,000,000. The increased registered capital shall
be paid-in in installments within three years of the issuance of Golenway's
updated business license. The first installment, USD 2,625,000, shall be paid by
October 31, 2005.
Goldenway is engaged in the design, manufacturing and sale of garment
and garment accessories. Its main products are men and women's casual wears and
children's clothes. All of its products are exported to Japan, Europe and the
United States. Major customers include international garment companies and most
of its products bear the brands owned or co-owned by these companies such as
EASY, LEE COOPER, Levi's, Edwin.
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Goldenway owns four Chinese trademarks: Goldenway, Gedunwei, Zekang and
Riheng used on its clothing products.
Description of Consideration
----------------------------
In connection with the acquisition, Andean effected a 1-for-30 reverse
split of its common stock, resulting in approximately 127,837 post split shares
outstanding, and certain note-holders converted debt of $57,000 into 2,500,000
restricted shares of common stock. As consideration for the Perfect Dream
Shares, Andean issued 7,673,325 shares of restricted (as defined in Rule 144 of
the Securities Act of 1933, as amended) common stock of Andean to Perfect Dream
Stockholders. There are two brokers or finders retained in connection with this
Agreement, the brokers or finders will be compensated with 210,226 shares in
total at the closing (63,068 and 147,158 Shares for King Ocean Overseas Holdings
Limited and Sino-Forpros International, Inc., respectively). In total, Andean
shall issue 7,883,551 shares of restricted (as defined in Rule 144 of the
Securities Act of 1933, as amended) common stock of Andean to Perfect Dream
Stockholders, King Ocean Overseas Holdings Limited and Sino-Forpros
International, Inc.
As a result, as of August 22, 2005 there are 10,511,388 shares of
common stock outstanding.
Principles Followed in Determining Consideration
------------------------------------------------
The consideration for the reorganization was determined through arms
length negotiations between the management of Andean and Perfect Dream. The
criteria followed in determining the consideration include the relative value of
the assets of Perfect Dream, Perfect Dream's present and past business
operations, and the future potential of Perfect Dream, Perfect Dream's
management, and the potential benefit to the shareholders of Andean. Perfect
Dream's only asset is its 100% ownership interest in Goldenway.
Source(s) of Funds for the Acquisition
--------------------------------------
Andean's acquisition of Perfect Dream Shares is funded by the new
issuance of 7,673,325 shares of its common stock.
Item 3.02 Unregistered Sales of Equity Securities
Andean sold 7,673,325 shares of restricted (as defined in Rule 144 of
the Securities Act of 1933, as amended) common stock of Andean to the
shareholders of Perfect Dream on the closing date of August 22, 2005, in
exchange for all of the issued and outstanding common capital stock of Perfect
Dream. No underwriter participated in the transaction. The transaction was
exempt from registration under the Securities Act of 1933, as amended, based
upon the provisions of Regulation S.
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In addition, Andean will issue 2,500,000 shares on conversion of five
convertible promissory notes aggregating $57,000 according to the Promissory
Note and the Agreement. The exemptions relied upon was Section 4(2) of the
Securities Act as a non public offering, and also Section 3(a)(9) of the
Securities Act which section exempts exchanges of securities with between an
issuer and its security holders.
Item 5.01 Changes in Control of Registrant
The information set forth above under "Item 2.01 -Completion of
Acquisition or Disposition of Assets" is incorporated herein by this reference.
Identity of Persons Acquiring Control of the Registrant
-------------------------------------------------------
One shareholder now controls Andean, namely, KANG Yi Hua. The new directors of
the reorganized Andean are KANG Yi Hua, YAN Xiao Dong, LI Ning, SUN Jia Jun, and
WEI Ru Qin.
Date and Description of the Transaction(s) Which Resulted in the Change
in Control
- --------------------------------------------------------------------------------
Pursuant to the Agreement and on the Effective Date, as consideration
for the exchange of the Perfect Dream Shares, Andean issued 7,673,325 restricted
shares of its common capital stock, par value $0.0001 per share, to the Perfect
Dream Stockholders, representing approximately 73% of the issued and outstanding
common capital stock of Andean following the time of the issuance. There are
currently 10,511,388 issued and outstanding shares of common stock of the
reorganized Andean.
Basis of the Control - Beneficial Ownership
-------------------------------------------
The following table sets forth the beneficial ownership of persons who
owned more than five percent of Andean's common capital stock following the
closing of the reorganization and the share holdings of the new members of
management to be appointed, based on 10,511,388 shares outstanding as of August
22, 2005.
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- --------------------- ---------------------------------- ------------ ----------
Name Positions Held Shares Percentage
Owned held
- --------------------- ---------------------------------- ------------ ----------
KANG Yi Hua Director/President/Chief 6,319,246 60.12%
Executive Officer/Secretary
- --------------------- ---------------------------------- ------------ ----------
YAN Xiao Dong Director 498,766 4.75%
- --------------------- ---------------------------------- ------------ ----------
SUN Jia Jun Chief Operating Officer/Director 230,200 2.19%
- --------------------- ---------------------------------- ------------ ----------
GUO Yan Chief Financial Officer 0 0%
- --------------------- ---------------------------------- ------------ ----------
WEI Ru Qin Director 115,100 1.10%
- --------------------- ---------------------------------- ------------ ----------
LI Ning Director 383,666 3.65%
- --------------------- ---------------------------------- ------------ ----------
Consideration and Sources of Funds
----------------------------------
Pursuant to the Agreement and on the Effective Date, as consideration
for issuing 7,673,325 shares of Andean to Perfect Dream Stockholders, Andean
received from the latter all of the Perfect Dream Shares.
Former Controlling Shareholders
-------------------------------
KANG Yi Hua obtained control of Andean through his purchase of
2,425,000 shares of common stock on or about August 22, 2005.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
Pursuant to the Agreement, Mr. Lance Larsen, the sole director and
executive officers, of the Andean resigned. The resignations were not a result
of disagreement with the Registrant on any matter relating to the Registrant's
operations, policies or practices.
Newly Appointed Directors and Executive Officers
------------------------------------------------
On the Effective Date, the following directors and executive officers
of the Registrant are newly elected:
- ------------- ------------------- ---- -------- --------------------------------
Name Title Age Term of Biography
Office
- ------------- ------------------- ---- -------- --------------------------------
KANG Yi Hua Director/ 42 3 From December 1993 to the
President/ present, he is the president and
Chief Executive chairman of board of directors
Officer/ of Goldenway. From January 2005
Secretary to now, he worked for Perfect
Dream as chairman of board of
directors. He has an
undergraduate degree from
Nanjing Aviation University in
China.
- ------------- ------------------- ---- -------- --------------------------------
SUN Jia Jun Director/Chief 32 3 From the year of 2001 to the
Operating Officer present, he is the director of
Goldenway. From July 1996 to
November 2002, he was the
general manager of international
trade department in Goldenway.
He has an undergraduate degree
from Wuhan Textile Industry
School in China.
- ------------- ------------------- ---- -------- --------------------------------
6
- ------------- ------------------- ---- -------- --------------------------------
GUO Yan Chief Financial 28 3 From July 1999 to 2004, she was
Officer the section chief of financial
department of Goldenway. She has
an undergraduate degree from
Nanjing Audit School in China.
- ------------- ------------------- ---- -------- --------------------------------
YAN Xiao Director 42 3 From the year of 1994 to the
Dong present, he is the director of
Goldenway. He has an
undergraduate degree from
Nanjing Aviation University in
China.
- ------------- ------------------- ---- -------- --------------------------------
LI Ning Director 42 3 From the year of 2001 to the
present, he is the director of
Goldenway. He has an
undergraduate degree from
Computer Science Department of
Nanjing Aviation University in
China.
- ------------- ------------------- ---- -------- --------------------------------
WEI Ru Qin Director 52 3 From the year of 2001 to the
present, he is the head of the
auditing department of
Goldenway.
- ------------- ------------------- ---- -------- --------------------------------
Item 9.01 Financial Statements and Exhibits
a) Audited Financial Statements for the years ended December 31, 2003,
2004 and for the quarter ended June 30, 2005 of Perfect Dream and
Goldenway will be filed separately by 8K/A;
b) Exhibits: [Revised to correspond with requirements of Item 601 of
Regulation SB]
The following exhibits are furnished in accordance with Item 601 of
Regulation S-B:
- ------------- ------------------------------------------------------------------
EXHIBIT NO. DESCRIPTION
- ------------- ------------------------------------------------------------------
2.1 Agreement and Plan of Reorganization as amended, dated as of July
29, 2005, by and among Andean, Perfect Dream and Perfect Dream
Stockholders.
- ------------- ------------------------------------------------------------------
4.1 Articles of Association of Perfect Dream.
- ------------- ------------------------------------------------------------------
4.2 Articles of Association of Goldenway.
- ------------- ------------------------------------------------------------------
10.1 Equity Interest Transfer Agreement between Perfect Dream and
Every-Glory Enterprises (H.K.) Ltd.
- ------------- ------------------------------------------------------------------
10.2 Equity Interest Transfer Agreement between Perfect Dream and
Jiangsu Ever-Glory International Enterprise Group Corporation.
- ------------- ------------------------------------------------------------------
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Pursuant to the requirements of the Securities and Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereto duly authorized.
Date: August 24, 2005
ANDEAN DEVELOPMENT CORPORATION
a Florida corporation
By: /s/ KANG Yi Hua
------------------------
KANG Yi Hua
President