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 (Date of earliest event reported) August 18, 2001
Royal Coronado Co. Ltd.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-32505 91-2103949
(Commission File Number) (IRS Employer Identification No.)
26318 127th Ave., S.E., Kent, WA 98031-7970
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (253 ) 639 - 2406
Item 2. Acquisition or Disposition of Assets.
As of August 18, 2001, Royal Coronado Co. Ltd., a Nevada corporation (the
"Registrant") consummated a transaction, whereby the Registrant acquired all of
the issued and outstanding shares of L & L Investment Holdings, Inc., a British
Virgin Islands corporation ("LLI") in exchange for the issuance by the
Registrant of a total of 5,000,000 newly issued restricted shares of common
voting stock to LLI shareholders pursuant to the Agreement and Plan of
Reorganization, as amended (the "Agreement"), dated as of August 18, 2001, by
and between the Registrant and LLI (the "Closing"). As a condition of the
closing of the share exchange transaction, certain shareholders, officers and
directors of the Registrant cancelled 610,100 shares of common stock and then
effected a 2 for 1 forward stock split. Immediately prior to the share exchange,
there were 779,800 shares of the Registrant's common stock issued and
outstanding. As a result of the acquisition, there will 5,779,800 shares of
common stock issued and outstanding.
The share exchange transaction was a related party transaction since the
majority shareholder of Royal was also a majority shareholder of LLI. In
addition the officers and directors of Royal were also officers and directors of
LLI. The Board of Directors of Royal determined that the share exchange
transaction was fair and in the best interest of the shareholders of Royal.
1
The LLI was incorporated July 23, 1997 in the British Virgin Islands. Its
business was originally started in Hong Kong under the name of Lee & Lam
Financial Consultants Company Ltd. (a Hong Kong corporation) incorporated July
22, 1995. LLI acquired 100% ownership of Lee & Lam Financial Consultants
Company, LTD. company on April 10, 2001.
The LLI is a holding company, and is not directly involved in nor conducts
any business activities. Its business is conducted through its two (2) 100%
wholly owned subsidiaries. L&L Financial Investments Co. Ltd. (HongKong) and L&L
Financial Holdings Co. Ltd. (Nevada, US). LLI, through its Hong Kong subsidiary
performs due diligence and financial consulting services. LLI's other subsidiary
manages its own 19.5% investment interests in the companies located in China.
The detailed operations of its two (2) wholly-owned subsidiaries are set forth
below:
1. The Hong Kong subsidiary, L & L Financial Investments Co. Ltd. (original
name), is a licensed investment advisor and is regulated by the Hong Kong
Securities and Futures Commission, a government regulatory authority, similar to
that of the Securities and Exchange Commission in the United States. The Hong
Kong subsidiary operates as a financial advisor and performs due diligence
services for its Hong Kong and Chinese corporate clients. As of the closing
date, the income of LLI is 100% generated by the Hong Kong subsidiary.
2. The second subsidiary, L & L Financial Holdings Co. Ltd. owns and manages
its 19.5% investments interests in four companies located in China. As of the
date of Closing, the subsidiary incorporated in Nevada is not licensed with the
United States regulatory agencies, not involved in investment advisory
activities, and does not generate any income.
The name of each person known to the Registrant to own more than 5% of the
securities of the Registrant, persons issued shares pursuant to the Agreement,
the current directors and executive officers of the Registrant and the
percentage of the total issued and outstanding Common Stock (the only voting
securities) of the Registrant owned by such persons as of the Closing date, is
as follows:
Amount of
Name and Beneficial Percent of
Address Ownership * Class *
Dickson Lee (1) 2,550,000 (2) 44.12%
Chief Executive Officer, Chairman and Director
Kathy K.C. Au (1) 400,000 (3) 6.92%
President and Director
Ada Lau (1) 150,000 (4) 2.60%
Treasurer
Secretary and Director
Li Xiang (1) 400,000 6.92%
Yan Chuang (1) 300,000 5.19%
Han Ming (1) 300,000 5.19%
All Directors and Officers
as a Group (3 persons) 3,100,000 53.64%
_______________________________
* Based upon 5,779,800 shares of common stock outstanding after the Closing.
2
As used in this table, "beneficial ownership" is determined in accordance with
the rules of the US Securities and Exchange Commission and generally includes
voting or investment power with respect to the shares shown. Except as indicated
by footnote and subject to community property laws where applicable, to the
Company's knowledge the stockholders named in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(1) C/o L & L Investments Holdings, Inc., 26318 127th Ave., S.E., Kent, WA
98031.
(2) Based on 2,550,000 shares of common stock of LLI held by Mr. Lee, and the
exchange ratio of one (1) share of the Registrant for each share of common stock
of LLI.
(3) Based on 400,000 shares of common stock of LLI held by Ms.Au. Ms. Au is the
wife of Mr. Lee. Mr. Lee disclaims any ownership of the shares owned by his
wife.
(4) Based on 150,000 shares of common stock of LLI held by Ms. Lau.
As of August 18, 2001, there were approximately 33 shareholders of record.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Audit Report of Independent Certified Public Accountants for LLI as of
April 30, 2001.
(b) Pro-forma financial information.
(c) Exhibits
2. Agreement and Plan of Reorganization
2.1. Agreement and Plan of Reorganization dated as of August 18, 2001.
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 thereunto duly authorized.
Dated: August 18 , 2001 Royal Coronado Co., Ltd.
By: /s/ Dickson V. LEE
---------------------------
Dickson Lee
Chairman and Chief Executive Officer
3
Item. 7a
Audit Report of Independent Certified Public Accountants for L & L Investments
Holdings, Inc.
LEE & LAM FINANCIAL CONSULTANTS
COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 2001 AND 2000
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
TABLE OF CONTENTS
Page
Accountant's Report F-1
Consolidated Financial Statements:
Consolidated Balance Sheets F-2 - F-3
Consolidated Statements of Income and Retained Earnings F-4
Consolidated Statements of Comprehensive Income F-5
Consolidated Statements of Cash Flows F-6 - F-7
Notes to Consolidated Financial Statements F-8
4
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Lee & Lam Financial Consultants Company Limited & Subsidiaries
Wan Chai, Hong Kong
We have audited the accompanying consolidated balance sheets of Lee & Lam
Financial Consultants Company Limited & Subsidiaries as of April 30, 2001 and
2000, and the related consolidated statements of income, retained earnings,
comprehensive income, and cash flows for the years then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Lee & Lam Financial
Consultants Company Limited & Subsidiaries as of April 30, 2001 and 2000, and
the results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States of
America.
HMWC CPAs & BUSINESS ADVISORS
June 26, 2001
F-1
5
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 2001 AND 2000
ASSETS
---------
2001 2000
CURRENT ASSETS: ---------- ----------
Cash $ 129,993 $ 202,731
Accounts receivable 411,435 28,751
Prepaid expenses 7,829 7,829
Due from shareholders - 137,522
---------- ----------
TOTAL CURRENT ASSETS 549,257 376,833
---------- ----------
PROPERTY AND EQUIPMENT, net 168,547 42,540
---------- ----------
OTHER ASSETS:
Investments 1,190,000 -
---------- ----------
TOTAL OTHER ASSETS 1,190,000 -
---------- ----------
TOTAL ASSETS $1,907,804 $ 419,373
---------- ----------
See accompanying notes and accountant's report
F-2
6
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, continued
APRIL 30, 2001 AND 2000
LIABILITIES AND STOCKHOLDERS' EQUITY
2001 2000
CURRENT LIABILITIES: ---------- ----------
Accounts payable $ 110,000 $ -
Accrued expenses 23,272 95,463
Income taxes payable 3,557 54
Due to shareholders 52,903 -
Short-term debt 119,719 76,637
---------- ----------
TOTAL CURRENT LIABILITIES 309,451 172,154
---------- ----------
OTHER LIABILITIES:
Long-term debt, net of current portion - 15,200
---------- ----------
TOTAL OTHER LIABILITIES - 15,200
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000 shares
authorized, 5,000,000 shares issued and
outstanding 50,000 50,000
Paid-in capital 1,318,205 128,205
Retained earnings 235,951 60,153
Accumulated other comprehensive income (5,803) (6,339)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 1,598,353 232,019
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,907,804 $ 419,373
---------- ----------
See accompanying notes and accountant's report
F-3
7
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
FOR THE YEARS ENDED APRIL 30, 2001 AND 2000
2001 2000
--------------------- ---------------------
Percent of Percent of
Amount Revenue Amount Revenue
---------- ---------- ---------- ----------
REVENUES $ 505,754 100.0 $ 236,220 100.0
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 320,649 63.4 214,118 90.6
---------- ---------- ---------- ----------
INCOME FROM OPERATIONS 185,105 36.6 22,102 9.4
---------- ---------- ---------- ----------
OTHER INCOME (EXPENSES):
Interest income 6,853 1.4 6,006 2.5
Miscellaneous income - - 1,026 0.4
Interest expense (11,130) (2.2) (13,362) (5.7)
---------- ---------- ---------- ----------
TOTAL OTHER INCOME (EXPENSES) (4,277) (0.8) (6,330) (2.8)
---------- ---------- ---------- ----------
NET INCOME BEFORE INCOME TAXES 180,828 35.8 15,772 6.6
PROVISION FOR INCOME TAXES 5,030 1.0 - -
---------- ---------- ---------- ----------
NET INCOME 175,798 34.8 15,772 6.6
========== =========
RETAINED EARNINGS, Beginning of the year 60,153 44,381
RETAINED EARNINGS, End of the year $ 235,951 $ 60,153
========== ==========
See accompanying notes and accountant's report
F-4
8
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED APRIL 30, 2001 AND 2000
2001 2000
---------- ----------
Net income $ 175,798 $ 15,772
Other comprehensive income:
Foreign currency translation
adjustments, net of tax 536 (6,339)
---------- ----------
Comprehensive income $ 176,334 $ 9,433
See accompanying notes and accountant's report
F-5
9
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED APRIL 30, 2001 AND 2000
2001 2000
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 175,798 $ 15,772
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 29,812 29,064
Foreign currency translation adjustment 536 (6,339)
(Increase) decrease in:
Accounts receivable (382,684) 60,925
Prepaid expenses - 30,507
Due from stockholders - (87,522)
Prepaid income taxes - 1,721
Deposits - 46,658
Increase (decrease) in:
Accounts payable 110,000 -
Accrued expenses (72,191) 51,443
Income taxes payable 3,503 54
Due to stockholders 36,579 (124,182)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES (98,647) 18,101
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (1,973) -
Other - 433
---------- ----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (1,973) 433
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Debt reduction - long-term (15,200) (15,973)
Net change in short-term debt 43,082 (53,382)
Additional common stock issued - 126,915
Other - (2,965)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 27,882 54,595
NET INCREASE (DECREASE) IN CASH (72,738) 73,129
CASH, Beginning of the year 202,731 129,602
---------- ----------
CASH, End of the year $ 129,993 $ 202,731
========== ==========
See accompanying notes and accountant's report
F-6
10
LEE & LAM FINANCIAL CONSULTANTS COMPANY LIMITED & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
FOR THE YEARS ENDED APRIL 30, 2001 AND 2000
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
2001 2000
---------- ----------
Cash paid during the year for:
Interest $ 11,130 $ 13,362
========== ==========
Income taxes $ 1,528 $ (13,396)
========== ==========
NONCASH INVESTING AND FINANCING ACTIVITIES:
A) During the year ended April 30, 2001,
the Company received property contributed
from the Company shareholders personal assets:
Cost $ 153,846 $ -
Shareholder loan (153,846) -
---------- ----------
Cash paid $ - $ -
========== ==========
B) During the year ended April 30, 2001,
the Company acquired shares of four Chinese
Companies in a swap transaction of shares previously
held by the Company's majority shareholder:
Investments at cost $1,190,000
Paid in capital (1,190,000)
----------
Cash paid $ -
==========
See accompanying notes and accountant's report
F-7
11
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
- ------------------
Lee & Lam Financial Consultants Company Limited is a financial company
incorporated in the British Virgin Islands on July 23, 1997 (See Note 12-
Subsequent Event). The Business was originally started in Hong Kong under the
name of Lee & Lam Financial Consultants Company Ltd on July 22, 1995.
The Company is a holding company, and is not directly involved in nor conducts
any business activities. Its business is conducted through its two 100% wholly
owned subsidiaries. The Company, through its Hong Kong subsidiary performs due
diligence and financial consulting services. The Company's United States
subsidiary manages its own 19.5% investment portfolios (See Note 3 -
Investments) in the companies located in China.
The Hong Kong subsidiary, L & L Financial Investment Co. Ltd incorporated in
Hong Kong, is a licensed investment advisor and is regulated by the Hong Kong
Securities and Futures Commission, a government regulatory authority, similar to
that of the Securities and Exchange Commission in the United States. The Hong
Kong subsidiary operates as a financial advisor and performs due diligence
services for its Hong Kong and Chinese corporate clients. As of closing date,
the income of the Company is generated in the Hong Kong subsidiary.
The United States subsidiary, L & L Financial Holdings Co. Ltd incorporated in
the State of Nevada on December 8, 2000, owns and manages its 19.5% investment
interests in four companies located in China. As of April 30, 2001, the
subsidiary incorporated in Nevada, is not licensed with the United States
regulatory agencies. It is not involved in investment advisory activities, and
generates no income.
BASIS OF ACCOUNTING
- -------------------
The Company is on the accrual method of accounting. Revenue is recognized upon
completion of services, in accordance with the generally accepted accounting
principles of the United States of America.
BASIS OF CONSOLIDATION
- ----------------------
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All material inter-company balances and transactions have been
eliminated in consolidation.
PROPERTY AND EQUIPMENT
- ----------------------
The Company's property and equipment are stated at cost and are depreciated
using primarily the straight-line method over the estimated useful lives of the
related assets, which range from five to fifty years. Expenditures for major
improvements and betterments to fixed assets are capitalized and expenditures
for repairs and maintenance are expensed as incurred.
ECONOMIC DEPENDENCY
The Company derives all of its revenues from less than ten corporate customers.
Two customers represent approximately 60% of the Company's income.
12
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
OPERATING RISKS
- ---------------
The Company's main operations are conducted in Hong Kong and China. Accordingly,
the business, financial conditions, and results of operations may be influenced
by the political, economic and legal environment in these countries. The
Company's operations may be subjected to special considerations and risks not
typically associated with companies in North America.
RELIANCE ON KEY PERSONNEL
- -------------------------
The operations of the Company are dependent upon the services of its top ranking
executive. The possible loss of his service or inability to attract qualified
personnel could have a material adverse effect on the Company. Management
believes that it would be able to retain or attract qualified personnel to
maintain its operations.
CASH
- ----
The Company maintains cash balances with banks in Hong Kong and China. These
balances are not insured by any local government agencies to protect the
Company's cash assets. The banks in Hong Kong and China do not have a federal
deposit insurance corporation program similar to that available in the United
States.
As of April 30, 2001 and 2000, included in the cash balances, the Company has a
time bank deposit of $128,530 and $128,530 respectively (See Note 5 - Short-term
Debt).
For purposes of the statement of cash flows, the Company considers all
short-term items with maturity of three months or less to be cash equivalents.
USE OF ESTIMATES
- ----------------
The preparation of the financial statements in conformity with generally
accepted accounting principles 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 date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
- ----------------------------
The Company maintains its books and records in United States dollars. However,
its subsidiary in Hong Kong uses Hong Kong dollars as the functional currency
and translates Hong Kong dollars into United States dollars. The foreign
currency translation is performed for the balance sheet accounts using the
closing exchange rate in effect at the balance sheet dates, and for revenue and
expense accounts using an average exchange rate during each reporting period.
The gains or (losses) resulting from translation from Hong Kong dollars to
United States dollars are included in the stockholders' equity separately as
cumulative transaction adjustments. Transactions denominated in a currency other
than the functional currency are translated into the functional currency at the
applicable exchange rates at the time of transactions.
13
In recent years, the exchange of Hong Kong dollars into United States dollars
has been at approximately a rate of 7.80 to $1 and has remained stable. However,
if the current exchange rate policy is abandoned, the exchange rate may
fluctuate significantly, and may be a detriment to the Company's operational
results.
NOTE 2: ACCOUNTS RECEIVABLE
- ---------------------------
Management believes that the accounts receivable are considered collectible from
the customers as of April 30, 2001. Consequently, no allowance for bad debts is
deemed necessary at the present time. As of April 30, 2001 two customers
represent approximately 63% of the total accounts receivable balance.
NOTE 3: INVESTMENTS
- -------------------
Investments consist of stock of four non-public companies in distinct
industries, located in different geographic areas in China. Investments are
recorded at historical purchase costs, in accordance with APB Opinion No. 18.
The historical purchase costs represent the fair value of the stocks acquired as
determined by independent appraisers. Shares representing 25% of the Company's
stock were issued in exchange for the investments. Less then 20% of each
company's common stock is owned, and no significant influence can be
demonstrated. The investments are held on a long-term basis. The investments are
as follows:
Year of # Shares Percentage Cost at
Acquisition Owned Owned Acquisition
----------- -------- --------- -----------
Construction Co. 12/2000 195,000 19.5% $ 278,000
Flower Co. 12/2000 195,000 19.5% 278,000
Agriculture Co. 12/2000 195,000 19.5% 234,000
Software Co. 03/2001 195,000 19.5% 400,000
-----------
Total $ 1,190,000
===========
NOTE 4: PROPERTY AND EQUIPMENT
- ------------------------------
Property and equipment consist of the following:
2001 2000
---------- ----------
Buildings $ 153,846 $ -
Automobiles 54,487 54,487
Machinery and equipment 38,259 36,287
Furniture and fixtures 11,258 11,258
Leasehold improvements 26,333 26,333
---------- ----------
Total property and equipment 284,183 128,365
Less accumulated depreciation (115,636) (85,825)
---------- ----------
Property and equipment, net $ 168,547 $ 42,540
========== ==========
Depreciation expense for the years ended April 30, 2001 and 2000 was $29,812 and
$29,064, respectively.
14
NOTE 5: SHORT-TERM DEBT
- -----------------------
As a result of a time bank deposit of approximately $128,530, the Company was
given a line of credit, allowing it to borrow up to $128,530 with the bank to
finance daily operations (See Note 1). The balance of the short-term debt at
April 30, 2001 and 2000, is $119,719 and $76,637, respectively. The monthly
interest rate is based on the rate of Overnight Interbank Rate per annum or the
best lending rate of the bank. The interest rate on the line of credit at April
30, 2001 and 2000 was 7.5% and 9% respectively.
NOTE 6: LONG-TERM DEBT
- ----------------------
The long-term debt at April 30, 2001 and 2000, consists of the following:
2001 2000
---------- ----------
Note payable to C.E.C. Finance Limited,
secured by auto; payments due in monthly
installments of $1,468, including interest
at 12.92%, maturing in March, 2001. $ - $ 15,200
========== ==========
NOTE 7: INCOME TAX
- ------------------
The Company and its subsidiaries are subject to income taxes on an entity basis
on income arising in or derived from the tax jurisdictions in which they
operate. The current provision for income tax is provided at the applicable tax
rates in accordance with the relevant income tax laws and tax credits, when
applicable, which may be applied.
Normally, the Company is subject to income tax of 0.00% in British Virgin
Islands. Its Hong Kong subsidiary is subject to a flat income tax of 16.5% on
net income. A current tax provision of $5,030 was provided for the Hong Kong
operation profit. Since there is no income generated in China at the present
time, the Company is not subject to any Chinese tax as of April 30, 2001.
Similarly, no provision for the United States income taxes is provided for the
Nevada subsidiary as there is no income generated in Nevada as of April 30,
2001.
NOTE 8: COMPREHENSIVE INCOME
- ----------------------------
During the year ended April 30, 2000, the Company adopted Financial Accounting
Standards Statement No. 130, Reporting Comprehensive Income. Statement No. 130
requires the reporting of comprehensive income in addition to net income from
operations. Comprehensive income is a more inclusive financial reporting
methodology that includes disclosure of certain financial information that
historically has not been recognized in the calculation of net income.
The accumulated balance of comprehensive income is as follows:
Foreign Currency Translation Adjustment:
- ---------------------------------------
Balance at April 30, 1999 $ -
Fiscal year ended April 30, 2000 change (6,339)
----------
Balance at April 30, 2000 (6,339)
Fiscal year ended April 30, 2001 change 536
----------
Balance at April 30, 2001 $ (5,803)
==========
15
NOTE 9: OPERATING LEASE
- -----------------------
The Company leases its Hong Kong office space from an unrelated party. The lease
is dated May 20, 1997, and is renewed each year. The current renewal requires
monthly payments of $3,231 and expires in May, 2001. The Company is also
required to reimburse for monthly property taxes and property management fees.
Total lease expense for the years ended April 30, 2001 and 2000, was $44,188 and
$53,506, respectively.
Subsequent to year-end, the Company obtained an additional renewal through May
2002.
NOTE 10:RELATED PARTY TRANSACTIONS
- ----------------------------------
The Company provides office space, professional and technical personnel and
marketing leads to a U.S. CPA firm owned by the majority shareholder, Dickson
Lee. Per the agreement, the U.S. CPA firm agrees to pay 80% of its billings, as
well as reimburse 75% of the professional staff salary and 40% of the
administrative staff salary to the Company. For the years ended April 30, 2001
and 2000, the Company received total fees from the CPA firm, net of related
expenses charged of $175,524 and $157,620, respectively.
NOTE 11:RETIREMENT PLANS
- ------------------------
The Company's employees recruited in Hong Kong and People's Republic of China
are all hired on a contractual basis. All employees located in Hong Kong are
subject to the Hong Kong Mandatory Provident Fund (MPF) requirement, which is a
government monitored pension plan, similar to the Social Security fund in the
United States of America. The MPF stipulates that both Company and the employees
are to contribute 5% of the monthly employees income to the MPF. The employees
located in China are not subject to the MPF retirement plan. There is no
obligation for pension benefits to the Chinese employees. The Company has no
retirement or post-employment benefit plans.
NOTE 12:SUBSEQUENT EVENT
- ------------------------
Effective June 5, 2001, the Company changed its name to L&L Investments Holdings
Inc.
Pro-forma Financial Information
Item 7-b
(b) Selected Pro forma Financial Data of the Registrant (Royal Coronado Co.
Ltd.)
The selected historical financial and pro forma data presented below of
Registrant was derived form the historical and pro forma financial statements
and related notes included in this Form 8-K, the current report. The pro forma
financial data gives effect to the proposed reorganization (acquisition of LLI).
You should read the selected financial data together with those historical and
pro forma financial statements. Both the Registrant and LLI used the U.S.
generally accepted accounting principles to prepare its financial statements.
16
The unaudited pro forma financial information for the periods indicated below
were prepared by combining the historical results of Registrant and LLI using
the purchase method of accounting for business combinations. This is described
in notes accompanying the pro forma financial statements and related notes
included in this Form 8-K. The pro forma financial information is presented to
give a better picture of what Registrant's business might have looked like, if
Registrant had owned LLI during the periods indicated. Those companies may have
performed differently if their operations had been combined. You should not rely
on the unaudited pro forma information as being indicative of the historical
results that the Registrant would have had or the future results that Registrant
will experience after the Reorganization. The historical financial statements of
LLI and related notes are also included in this Form 8-K as Item 7a.
It should be noted that the LLI's fiscal period ending on April 30, which is
different from that of Registrant (ending February 28, 2001). An adjustment was
made to change LLI's accounting year ending to February 28, 2001, in order to
make the pro forma data presentation more meaningful.
Pro Forma Data
For For
For For three the
three the months year
months year ended ended
ended ended May 31, Feb. 28,
May 31, Feb. 28, 2001 2001
2001 2001 (unaudited) (unaudited)
------------ ------------ ------------ ------------
Statement of Operations Data
Income $ 0 $ 0 $ 188,125 $ 406,254
Operating Profit (Loss) ($5,460) ($10,200) $65,960 $142,187
Net Income (Loss) ($5,460) ($10,200) $60,761 $121,876
Gain (Loss) per share ($0.01) ($0.01)$ 0.01 $ 0.02
Weighted shares outstanding 1,000,000 1,000,000 5,779,800 5,779,800
Balance Sheet Data
Cash and cash equivalents $ 0 $ 0 $ 541,752 $ 521,833
Fixed Asset $ 0 $ 0 $ 1,965,666 $ 146,547
Total assets $ 0 $ 0 $ 2,507,418 $ 668,380
Current liabilities $ 10,555 $ 5,095 $ 310,709 $ 300,154
Long-term liabilities $ 0 $ 0 $ 0 $ 0
Stockholders' equity (deficit) ($10,555) ($50,958)$ 2,196,709 $ 368,226
Total liabilities & equity $ 0 $ 0 $ 2,507,418 $ 668,380
F-8
17