SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report: (Date of earliest event reported): August 23, 2000
-----------------
S.W. LAM, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
0-22049
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(Commission file number)
Nevada 62-1563911
- ---------------------------------------------- -----------------------
(State or other jurisdiction of incorporation) (I.R.S. Employer
Identification Number)
Unit 25-32, 2nd Floor, Block B, Focal Industrial Centre
21 Man Lok Street, Hunghom, Hong Kong
--------------------------------------------------------
(Address of principal executive offices) (Zip code)
852-2766-3688
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
Item 5. Other Events
On August 23, 2000, Hang Fung Gold Technology Limited (HFGTL), a Company
listed on the Stock Exchange of Hong Kong and Quality Prince Limited
(collectively the "Group") closed a Sale and Purchase Agreement (the
"Agreement") with New Epoch Holdings International Limited relating to the sale
and purchase of 49.9% of the issued share capital of New Epoch Information (BVI)
Company Limited ("New Epoch"). New Epoch is engaged in developing and
facilitating e-commerce trading facilities between the People's Republic of
China (the "PRC") and the rest of the world, using offline trading services to
complement its Internet B2B platform. New Epoch, through a joint venture company
which is 49% owned by New Epoch and 51% by China International Electronic
Commerce Centre-an information technology arm of the Ministry of Foreign Trade
and Economic Co-operation of the PRC operates a portal under the domain name
www.chinatradeworld.com a B2B site designed to facilitate international trade
with the PRC.
Under the terms of the Agreement, the Group acquired a 49.9% interest
in New Epoch for approximately $24,000,000 (HK$187,000,000) which was satisfied
by issuing 1,632 million shares of HFGTL (the "New Epoch Transaction"). In
addition, HFGTL on August 28, 2000 placed 550 million shares of its common stock
with independent investors for approximately $8,000,000 (HK$62.7 million) (the
"HFGTL Placement").
As a result of the foregoing transactions:
1. The Registrant's indirect ownership interest in HFGTL decreased from
53.145% to 31.4%.
2. HFGTL and its subsidiaries results of operation are no longer consolidated
for financial statements purposes, but are recorded using the "equity
method" of accounting.
3. The Registrant reported a loss on disposal of subsidiaries, relating to the
decrease in the Registrant's ownership percentage in HFGTL based on the
difference in the Registrant's interest in the net assets value of HFGTL
prior to the New Epoch Transaction and the Registrant's interest in the net
assets value of HFGTL after the New Epoch Transaction.
4. The Registrant reported a gain on dilution of equity interest relating to
the HFGTL Placement based on the difference in the Registrant's interest in
the net assets value of HFGTL prior to and after the HFGTL Placement.
2
Item 7. Financial Statements and Exhibits
(a) Audited Financial Statements of New Epoch Information (BVI) Company Limited
for the period ended March 31, 2000 and unaudited financial statements for
the three months ended June 30, 2000.
(b) Proforma Consolidated Financial Statements (unaudited) for the year ended
March 31, 2000 and three months ended June 30, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
S.W. LAM, INC.
By: /s/ Lam Sai Wing
--------------------------------
Lam Sai Wing, President and
Chief Executive Officer
Date: January 29, 2001
3
Audited Financial Statements
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
Period from November 8, 1999 (inception) through
March 31, 2000 with report of the
independent auditors
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED AND SUBSIDIARY
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
-------
Report of the Independent Auditors F-1
Consolidated Balance Sheet of March 31, 2000 F-2
Consolidated Statement of Operations for the period from
November 8, 1999 (inception) through March 31, 2000 F-3
Consolidated Statement of Changes in Shareholders' Equity
for the period from November 8, 1999 (inception) through
March 31, 2000
F-4
Consolidated Statement of Cash Flows for the period
from November 8, 1999 (inception) through March 31, 2000
F-5
Notes to Consolidated Financial Statements
F-6
REPORT OF THE INDEPENDENT AUDITORS
The Board of Directors
New Epoch Information (BVI) Company Limited:
We have audited the accompanying consolidated balance sheet of New Epoch
Information (BVI) Company Limited and subsidiary as of March 31, 2000 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for the period from November 8, 1999 (inception) through March
31, 2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of New Epoch
Information (BVI) Company Limited and subsidiary as of March 31, 2000 and the
consolidated results of their operations and their cash flows for the period
from November 8, 1999 (inception) through March 31, 2000 in conformity with
accounting principles generally accepted in the United States of America.
/s/ Ernst & Young
Ernst & Young
Hong Kong
August 4, 2000
F-1
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000
March 31, 2000
HK$
ASSETS
Bank balances 60,641
Due from a shareholder 3 1,129,617
Due from an equity investee (allowance: HK$2,376,711) 4 141,757
--------------
Total current assets 1,332,015
Investment in an equity investee 4 -
--------------
Total assets 1,332,015
--------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued liabilities 60,000
--------------
Total liabilities 60,000
--------------
Ordinary shares: US$1 per share
Authorized shares - 50,000 ordinary shares
Issued - 1,000 ordinary shares at March 31, 2000 7,780
Additional paid-in capital 4,992,220
Accumulated deficit (3,727,985)
--------------
Total shareholders' equity 1,272,015
--------------
Total liabilities and shareholders' equity 1,332,015
==============
F-2
The accompanying notes form an integral part of these consolidated
financial statements.
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
Period from
November 8, 1999
(inception) through
March 31, 2000
HK$
Sales -
Cost of sales -
--------------
Gross profit -
Operating expenses:
General and administrative (861,274)
Provision for an amount due from an equity investee (2,376,711)
--------------
Operating Loss (3,237,985)
Share of net loss of an equity investee (490,000)
--------------
Loss before income taxes (3,727,985)
Provision for income taxes 5 -
--------------
Net loss (3,727,985)
==============
F-3
The accompanying notes form an integral part of these consolidated
financial statements.
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Ordinary Shares Additional Total
paid-in Accumulated shareholders'
Number Amount capital deficits equity
---------- ---------- ------------- ------------ --------------
HK$ HK$ HK$ HK$
Balance at November 8,
1999 (inception) - - - - -
Issuance of ordinary
shares 1,000 7,780 4,992,220 - 5,000,000
Net loss for the period - - - (3,727,985) (3,727,985)
--------- ---------- ----------- ------------- --------------
Balance at March 31, 2000
1,000 7,780 4,992,220 (3,727,985) 1,272,015
========= ========== =========== ============= ==============
F-4
The accompanying notes form an integral part of these consolidated
financial statements.
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
Period from
November 8,
1999
(inception)
through March
31, 2000
HK$
Cash flows from operating activities:
Net loss (3,727,985)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for an amount due from an equity investee
Share of net loss of an equity investee 2,376,711
Change in operating assets and liabilities: 490,000
Due from a shareholder
Accrued liabilities (1,129,617)
60,000
----------------
Net cash used in operating activities (1,930,891)
----------------
Cash flows from investing activities:
Investment in an equity investee (490,000)
Advance to an equity investee (2,518,468)
----------------
Net cash used in investing activities (3,008,468)
----------------
Cash flows from financing activities:
Issuance of ordinary share capital 5,000,000
----------------
Net cash provided by financing activities 5,000,000
----------------
Net increase in cash and cash equivalents 60,641
Cash and cash equivalents at beginning of period -
----------------
Cash and cash equivalents at end of period 60,641
================
Supplemental disclosure of cash flow information: Cash paid during
the period for:
Interest -
Income taxes -
================
F-5
The accompanying notes form an integral part of these consolidated
financial statements.
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
The Company was incorporated in the British Virgin Islands with limited
liability on November 8, 1999 for the purpose of investment in 49% of an
equity investee, China International Electronic Commerce (HK) Limited ,
which engages in the operation of portal sites and the provision of
advertising and content services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of consolidation
The consolidated financial statements include the accounts of the Company
and its subsidiary. Significant intercompany accounts and transactions have
been eliminated on consolidation. The Company's investment in an equity
investee, China International Electronic Commerce (HK) Limited, for the
period from November 19, 1999 (inception) to March 31, 2000 have been
accounted for by the equity method because the Company has the ability to
exercise significant influence over the equity investee's operating and
financial policies.
(b) Foreign currency translation
Foreign currency transactions are translated at the applicable rates of
exchange prevailing at the transaction dates. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are
translated at the applicable rates of exchange prevailing at that date.
Exchange differences are dealt with in the statements of operations. The
functional currency of the Company is the Hong Kong dollar.
(c) Income Taxes
The Company uses the asset and liability method of accounting for income
taxes. Under the asset and liability method, deferred tax assets and
liabilities are recognized for the estimated future tax consequences
attributable to differences between the financial statements carrying
amounts of existing assets and liabililties and their respective tax bases.
This method also requires the recognition of future tax benefits such as
net operating loss carry forwards, to the extent that realization of such
benefits is more likely than not. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.
(d) 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 amounts
reported in the financial statements and accompanying notes. Actual results
could differ from those estimates.
F-6
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3. DUE FROM A SHAREHOLDER
The amount due from a shareholder is unsecured, interest-free and has no
fixed terms of repayment.
4. INVESTMENT IN AN EQUITY INVESTEE
The investment in an equity investee represents the Company's 49% equity
interest in China International Electronic Commerce (HK) Limited. The
financial information of the equity investee is set out below.
March 31, 2000
HK$
Current assets 514,420
Non-current assets 873,676
Current liabilities
(3,764,807)
---------------
Total shareholders' equity
(2,376,711)
===============
Sales -
Net loss
(3,376,711)
===============
F-7
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. INCOME TAXES
Under the current laws of the British Virgin Islands, the Company and its
subsidiary are not subject to tax on income or capital gains, and no
British Virgin Islands withholding tax would be imposed upon payments of
dividends by the Company to its shareholders.
The subsidiary operating in Hong Kong is governed by the Inland Revenue
Ordinance and is subject to tax at a statutory tax rate of 16.0% in 2000.
Period from
November 8, 1999
(inception)
through March 31, 2000
HK$
Pre-tax loss:
British Virgin Islands -
Hong Kong (3,727,985)
-----------------
(3,727,985)
=================
A reconciliation of income taxes computed at the Hong Kong statutory rate
to the effective income tax provision recorded is as follows:
Period from
November 8, 1999
(inception)
through March 31, 2000
HK$
Income tax benefit computed at the statutory
rate 596,478
Non-deductible items (458,675)
Benefit from operating losses not recorded (137,803)
------------------
Total income taxes -
==================
F-8
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. INCOME TAXES (continued)
Significant components of the Company's deferred tax assets and liabilities
at March 31, 2000 consisted of the following:
March 31, 2000
HK$
Deferred tax assets:
Net operating loss carry forwards 137,803
Valuation allowances (137,803)
---------------
Net deferred taxes -
===============
The net operating loss carry forwards have no expiration date.
The Company does not believe that sufficient objective, positive evidence
currently exists to conclude that recoverability of its net deferred tax
assets is more likely than not. Consequently, the Company has provided a
valuation allowance covering 100% of its deferred tax assets.
6. RISKS AND UNCERTAINTIES
The Company's principal activity is an investment in 49% of an equity
investee. During the period, the Company has share of net loss of the
equity investee of HK$490,000 to the extent of the Company's investment and
made a provision for amount due from the equity investee of HK$2,376,711 to
the extent of the equity investee's net liabilities. The results of the
Company is dependent on the profitability of the equity investee.
F-9
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000
June 30, 2000
HK$
(unaudited)
ASSETS
Bank balances 808,815
Due from a shareholder -
Due from an equity investee -
----------------
Total current assets 808,815
----------------
Equipment 931,401
----------------
Investment in an equity investee 15,028
----------------
Total assets 1,755,244
================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued liabilities 527,180
Due to a director 2,688,728
----------------
Total liabilities 3,215,908
----------------
Ordinary shares - US$1 per share
Authorized shares - 50,000 ordinary shares
Issued - 1,000 ordinary shares at March 31, 2000 7,780
Additional paid-in capital 4,992,220
Accumulated deficit (6,460,664)
----------------
Total shareholders' deficit (1,460,664)
----------------
Total liabilities and shareholders' equity 1,755,244
================
F-10
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED STATEMENT OF OPERATIONS
Period from
April 1, 2000
through June 30, 2000
HK$
(unaudited)
Sales -
Cost of sales -
-------------
Gross profit -
Operating expenses:
General and administrative 1,313,266
Provision for an amount due from an equity
investee -
-------------
Operating loss 1,313,266
Share of net loss of an equity investee 1,419,413
-------------
Loss before income taxes 2,732,679
Provision for income taxes -
-------------
Net loss 2,732,679
=============
F-11
NEW EPOCH INFORMATION (BVI) COMPANY LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
Ordinary shares Additional Total
paid-in Accumulated Shareholders'
Number Amount capital deficit deficit
--------- -------- ------------ ------------- ---------------
HK$ HK$ HK$ HK$
Balance at March 31, 2000
1,000 7,780 4,992,220 (3,727,985) 1,272,015
Net loss for the period - - - (2,732,679) (2,732,679)
--------- -------- ----------- -------------- ---------------
Balance at June 30, 2000
1,000 7,780 4,992,220 (6,460,664) (1,460,664)
========= ======== =========== ============== ===============
F-12
S.W. LAM, INC. & SUBSIDIARY
PROFORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(On assumption the New Epoch Transaction and HFGTL Placement had
occured at April 1, 1999)
Year Ended March Three Months Ended
31, 2000 June 30, 2000
------------------- --------------------
US$`000 US$`000
(unaudited)
Total revenues 0 0
Cost of sales and services 0 0
------------- -------------
Gross profit 0 0
Selling, general and administrative expenses (39) 0
------------- -------------
Operating loss (39) 0
Share of profit of associates 3,443 749
Loss on disposal of subsidiaries - dilution of interest (5,810) 0
------------- -------------
(Loss) income before income taxes (2,406) 749
Provision for income taxes
Group 0 0
Associates 501 (64)
------------- -------------
Net (loss)/income (1,905) 685
============= =============
F-13
S.W. LAM, INC. & SUBSIDIARY
PROFORMA CONSOLIDATED BALANCE SHEET
(On assumption the New Epoch Transaction and HFGTL Placement had
occured at April 1, 1999)
March 31, 2000 June 30, 2000
----------------- ------------------
US$`000 US$`000
(unaudited)
Current assets
Cash and cash equivalents 91 91
----------------- ------------------
Total current assets 91 91
----------------- ------------------
Interest in associates 18,428 19,113
----------------- ------------------
Total assets 18,519 19,204
================= ==================
Current liabilities
Due to a director 395 395
----------------- ------------------
Total liabilities
395 395
----------------- ------------------
Shareholders' equity
Common stock 13 13
Preferred stock 0 0
Additional paid in capital 508 508
Retained earnings 17,603 18,288
----------------- ------------------
Total stockholders' equity
18,124 18,809
----------------- ------------------
Total liabilities & stockholders' equity
18,519 19,204
================= ==================
F-14