UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-SB/A
GENERAL FORM FOR REGISTRATION OF SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
FIRSTCHINA CAPITAL, INC.
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(Name of Small Business Issuer in its charter)
New York 13-4153693
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
135-34 78 Avenue, Unit F
Kew Garden Hills, NY 11367
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (718) 591-7940
Securities to be registered under Section 12(b) of the Act:
None
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0005 par value per share
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(Title or class)
TABLE OF CONTENTS
Page
PART I
ITEM 1. DESCRIPTION OF BUSINESS . . . . . . . . . . . . . 3
ITEM 2. PLAN OF OPERATION. . . . . . . . . . . . . . . . . 8
ITEM 3. DESCRIPTION OF PROPERTY. . . . . . . . . . . . . . 14
ITEM 4. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . 14
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
AND CONTROL PERSONS . . . . . . . . . . . . . . . 14
ITEM 6. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . 16
ITEM 7. CERTAIN RELATIONSHIP AND
RELATED TRANSACTIONS . . . . . . . . . . . . . . . 17
ITEM 8. DESCRIPTION OF SECURITIES. . . . . . . . . . . . . 17
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS . . . . . . . . . . . . . .. . . . . . . . 17
ITEM 2. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . 19
ITEM 3. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE . . . . . . 19
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES. . . . . . 19
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS. . . . . 21
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS. . . . . . . . . 21
PART I
ITEM 1. DESCRIPTION OF BUSINESS
BUSINESS DEVELOPMENT
FirstChina Capital, Inc. (the "Company"), was incorporated on
January 21, 2001 in the State of New York, to engage in any lawful
act or activity for which corporation may be organized under the
Business Corporation Law, including, but not limited to, selected
mergers and acquisitions. Pursuant to the Articles of
Incorporation, the Company is authorized to issue 40,000,000 shares
of Common Stock at $.0005 par value. Each holder of the Common Stock
shall be entitled to one vote for each share of Common Stock held.
As of March 12, 2001, there are 20,000,000 shares of Common Stock
outstanding.
The Company has been in the developmental stage since inception and
has no operations to date. Other than issuing shares to its
shareholders, the Company never commenced any operational
activities. As such, the Company can be defined as a "shell"
company, whose sole purpose at this time is to locate and consummate
a merger or acquisition with a private entity. The Board of
Directors of the Company has elected to commence implementation of
the Company's principal business purpose, described below under
"ITEM 2 - PLAN OF OPERATION".
The Company is filing this registration statement on a voluntary
basis because the primary attraction of the Company as a merger
partner or acquisition vehicle will be its status as a reporting
public company. Any business combination or transaction may
potentially result in a significant issuance of shares and
substantial dilution to present stockholders of the Company.
The proposed business activities described herein classify the
Company as a "blank check" company. Many states have enacted
statutes, rules and regulations limiting the sale of securities of
"blank check" companies in their respective jurisdictions. The
Company has sold shares of its common stock to one non-U.S. person
in reliance on exemption provided by Regulation S of the Securities
Act of 1933, as amended. The Company will refuse to register any
transfer of the shares, during the two year distribution compliance
period unless sold in accordance to rule 144 for shares held for at
least one year. Management does not intend to undertake any other
offering of the Company's securities, either debt or equity, until
such time as the Company has successfully implemented its business
plan described herein. Relevant thereto, the primary shareholders
of the Company, have expressed their intention that they has no plan
to sell its respective shares of the Company's common stock until
such time as the Company has successfully consummated a merger or
acquisition and the Company is no longer classified as a "blank
check" company, and they has also expressed its intention not to
sell its shares unless the shares are subsequently registered or if
an exemption from registration is available.
RISK FACTORS
NO OPERATING HISTORY, REVENUE AND ASSETS. The Company has had no
operating history nor any revenues or earnings from operations. The
Company has little or no tangible assets or financial resources. The
Company will, in all likelihood, continue to sustain operating
expenses without corresponding revenues, at least until the
consummation of a business combination. This may result in the
Company incurring a net operating loss which will increase
continuously until the Company can consummate a business combination
with a profitable business opportunity. There is no assurance that
the Company can identify such a business opportunity and consummate
such a business combination.
SPECULATIVE NATURE OF COMPANY'S PROPOSED OPERATIONS. The success of
the Company's proposed plan of operation will depend to a great
extent on the operations, financial condition and management of the
identified business opportunity. While management intends to seek
business combination(s) with entities having established operating
histories, there can be no assurance that the Company will be
successful in locating candidates meeting such criteria. In the
event the Company completes a business combination, of which there
can be no assurance, the success of the Company's operations may be
dependent upon management of the successor firm or venture partner
firm and numerous other factors beyond the Company's control.
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES
Transferability of the shares of Common Stock of the Company is very
limited because a significant number of states have enacted
regulations pursuant to their securities or so-called "blue sky"
laws restricting or, in many instances, prohibiting, the initial
sale and subsequent resale of securities of "blank check" companies
such as the Company within that state. In addition, many states,
while not specifically prohibiting or restricting "blank check"
companies, would not register the securities of the Company for sale
or resale in their states. Because of these regulations, the Company
currently has no plan to register any securities of the Company with
any state. To ensure that any state laws are not violated through
the resale of the securities of the Company, the Company will refuse
to register the transfer of any securities of the Company, to
residents of any state, which prohibit such resale or if no
exemption is available for such resale. It is not anticipated that a
secondary trading market for the Company's securities will develop
in any state until subsequent to consummation of a Business
Combination, if at all.
SCARCITY OF AND COMPETITION FOR BUSINESS OPPORTUNITIES AND
COMBINATIONS. The Company is and will continue to be an
insignificant participant in the business of seeking mergers with,
joint ventures with and acquisitions of small private and public
entities. A large number of established and well-financed entities,
including venture capital firms, are active in mergers and
acquisitions of companies which may be desirable target candidates
for the Company. Nearly all such entities have significantly
greater financial resources, technical expertise and managerial
capabilities than the Company and, consequently, the Company will be
at a competitive disadvantage in identifying possible business
opportunities and successfully completing a business combination.
Moreover, the Company will also compete in seeking merger or
acquisition candidates with numerous other small public companies.
NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION - NO
STANDARDS FOR BUSINESS COMBINATION. The Company has no arrangement,
agreement or understanding with respect to engaging in a merger
with, joint venture with or acquisition of, a private or public
entity. There can be no assurance the Company will be successful in
identifying and evaluating suitable business opportunities or in
concluding a business combination. Management has not identified
any particular industry or specific business within an industry for
evaluation by the Company. There is no assurance the Company will be
able to negotiate a business combination on terms favorable to the
Company. The Company has not established a specific length of
operating history or a specified level of earnings, assets, net
worth or other criteria which it will require a target business
opportunity to have achieved, and without which the Company would
not consider a business combination in any form with such business
opportunity. Accordingly, the Company may enter into a business
combination with a business opportunity having no significant
operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative
characteristics.
CONTINUED MANAGEMENT CONTROL, LIMITED TIME AVAILABILITY. While
seeking a business combination, Weijun Yang, President of the
Company anticipates devoting up to ten hours per month to the
business of the Company. Weijun Yang will be the only person
responsible in conducting the day to day operations of the company
including searches, evaluations, and negotiations with potential
merger or acquisition candidates. The Company has not entered into
any written employment agreement with Weijun Yang and is not
expected to do so in the foreseeable future. The Company has not
obtained key man life insurance on Weijun Yang. The loss of the
services of Weijun Yang would adversely affect development of the
Company's business and its likelihood of continuing operations. See
"ITEM 5 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS."
CONFLICTS OF INTEREST. None of the officers of the Company will
devote more than a portion of his time to the affairs of the
Company. There will be occasions when the time requirements of the
Company's business conflict with the demands of the officers other
business and investment activities. Such conflicts may require that
the Company attempt to employ additional personnel. There is no
assurance that the services of such persons will be available or
that they can be obtained upon terms favorable to the Company.
The officers, directors and principal shareholders of the Company
may actively negotiate for the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. It is anticipated that a substantial
premium may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers, directors and principal
shareholders made as a condition to, or in connection with, a
proposed merger or acquisition transaction. The fact that a
substantial premium may be paid to members of Company management to
acquire their shares creates a conflict of interest for them and may
compromise their state law fiduciary duties to the Company's other
shareholders. In making any such sale, members of Company management
may consider their own personal pecuniary benefit rather than the
best interests of the Company and the Company's other shareholders,
and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular buy-out
transaction involving shares held by members of Company management.
LACK OF MARKET RESEARCH OR MARKETING ORGANIZATION. The Company has
neither conducted, nor have others made available to it, results of
market research indicating that market demand exists for the
transactions contemplated by the Company. Moreover, the Company
does not have, and does not plan to establish, a marketing
organization. Even in the event demand is identified for a merger
or acquisition contemplated by the Company, there is no assurance
the Company will be successful in completing any such business
combination.
LACK OF DIVERSIFICATION. The Company's proposed operations, even if
successful, will in all likelihood result in the Company engaging in
a business combination with a business opportunity. Consequently,
the Company's activities may be limited to those engaged in by
business opportunities which the Company merges with or acquires.
The Company's inability to diversify its activities into a number of
areas may subject the Company to economic fluctuations within a
particular business or industry and therefore increase the risks
associated with the Company's operations.
REGULATION. Although the Company will be subject to regulation
under the Securities Exchange Act of 1934, management believes the
Company will not be subject to regulation under the Investment
Company Act of 1940, insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event
the Company engages in business combinations which result in the
Company holding passive investment interests in a number of
entities, the Company could be subject to regulation under the
Investment Company Act of 1940. In such event, the Company would be
required to register as an investment company and could be expected
to incur significant registration and compliance costs. The Company
has obtained no formal determination from the Securities and
Exchange Commission as to the status of the Company under the
Investment Company Act of 1940 and, consequently, any violation of
such Act would subject the Company to material adverse consequences.
PROBABLE CHANGE IN CONTROL AND MANAGEMENT. A business combination
involving the issuance of the Company's Common Shares will, in all
likelihood, result in shareholders of a private company obtaining a
controlling interest in the Company. Any such business combination
may require management of the Company to sell or transfer all or a
portion of the Company's Common Shares held by them, or resign as
members of the Board of Directors of the Company. The resulting
change in control of the Company could result in the removal of
Weijun Yang and a corresponding reduction in or elimination of his
participation in the future affairs of the Company.
POTENTIAL REDUCTION OF PERCENTAGE SHARE OWNERSHIP FOLLOWING BUSINESS
COMBINATION. The Company's primary plan of operation is based upon
a business combination with a private concern which, depending on
the terms of merger or acquisition, may result in the Company
issuing securities to shareholders of any such private company. The
issuance of previously authorized and unissued Common Shares of the
Company would result in reduction in percentage of shares owned by
present and prospective shareholders of the Company and may result
in a change in control or management of the Company.
DISADVANTAGES OF BLANK CHECK OFFERING. The Company may enter into a
business combination with an entity that desires to establish a
public trading market for its shares. A business opportunity may
attempt to avoid what it deems to be adverse consequences of
undertaking its own public offering by seeking a business
combination with the Company. Such consequences may include, but
are not limited to, time delays of the registration process,
significant expenses to be incurred in such an offering, loss of
voting control to public shareholders and the inability or
unwillingness to comply with various federal and state laws enacted
for the protection of investors.
TAXATION. Federal and state tax consequences will, in all
likelihood, be major considerations in any business combination the
Company may undertake. Currently, such transactions may be
structured so as to result in tax-free treatment to both companies,
pursuant to various federal and state tax provisions. The Company
intends to structure any business combination so as to minimize the
federal and state tax consequences to both the Company and the
target entity; however, there can be no assurance that such business
combination will meet the statutory requirements of a tax- free
reorganization or that the parties will obtain the intended tax-free
treatment upon a transfer of stock or assets. A non- qualifying
reorganization could result in the imposition of both federal and
state taxes which may have an adverse effect on both parties to the
transaction.
REQUIREMENT OF AUDITED FINANCIAL STATEMENTS MAY DISQUALIFY BUSINESS
OPPORTUNITIES. Section 13 and 15(d) of the Securities Exchange Act
of 1934 (the "Exchange Act"), require companies subject thereto to
provide certain information about significant acquisitions,
including certified financial statements for the company acquired,
covering one, two or three years, depending on the relative size of
the acquisition. The time and additional costs that may be incurred
by some target entities to prepare such statements may preclude
consummation of an otherwise desirable acquisition by the Company.
Acquisition prospects that do not have or are unable to obtain the
required audited financial statements may not be appropriate for
acquisition so long as the reporting requirements of the 1934 Act
are applicable.
ITEM 2. PLAN OF OPERATION
The Company intends to seek to acquire assets or shares of an entity
actively engaged in business which generates revenues, in exchange
for its securities. The Company has no particular acquisitions in
mind and has not entered into any negotiations regarding such an
acquisition. None of the Company's officers, directors, promoters
or affiliates have engaged in any preliminary contact or discussions
on behalf of the Company with any representative of any other
company regarding the possibility of an acquisition or merger
between the Company and such other company as of the date of this
registration statement.
EMPLOYEES
The Company has no full time or part time employees. Weijun Yang
has agreed to allocate a portion of his time to the activities of
the Company, without compensation. The Company anticipates that the
business plan of the Company can be implemented through the efforts
of Weijun Yang, President of the Company, devoting up to 10 hours
per month to the business affairs of the Company, consequently,
conflicts of interest may arise with respect to the limited time
commitment by such officer. See "ITEM 5 - DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS."
INDEMNIFICATION
As permitted by New York law, the Company's Articles of
Incorporation provide that the Company will indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them
on account of their being, or having been, Company directors or
officers unless, in any such action, they are judged to have acted
with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, or persons controlling
the Company. Pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable. See PART
II, "ITEM 5 - INDEMNIFICATION OF DIRECTORS AND OFFICERS."
GENERAL BUSINESS PLAN
The Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business
opportunities presented to it by persons or firms who or which
desire to seek the perceived advantages of an Exchange Act
registered corporation. The Company will not restrict its search to
any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind
or nature. This discussion of the proposed business is purposefully
general and is not meant to be restrictive of the Company's
virtually unlimited discretion to search for and enter into
potential business opportunities. Management anticipates that it
may be able to participate in only one potential business venture
because the Company has nominal assets and limited financial
resources. See PART F/S, "FINANCIAL STATEMENTS AND EXHIBITS." This
lack of diversification should be considered a substantial risk to
shareholders of the Company because it will not permit the Company
to offset potential losses from one venture against gains from
another.
The Company may seek a business opportunity with entities which have
recently commenced operations, or which wish to utilize the public
marketplace in order to raise additional capital in order to expand
into new products or markets, to develop a new product or service,
or for other corporate purposes. The Company may acquire assets and
establish wholly-owned subsidiaries in various businesses or acquire
existing businesses as subsidiaries.
The Company may advertise and promote the Company in newspaper,
magazines and on the Internet. The Company has not yet prepared any
notices or advertisement.
The Company anticipates that the selection of a business opportunity
in which to participate will be complex and extremely risky. Due to
general economic conditions, rapid technological advances being made
in some industries and shortages of available capital, management
believes that there are numerous firms seeking the perceived
benefits of a publicly registered corporation. Such perceived
benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees,
providing liquidity (subject to restrictions of applicable
statutes), for all shareholders and other factors. Potentially,
available business opportunities may occur in many different
industries and at various stages of development, all of which will
make the task of comparative investigation and analysis of such
business opportunities extremely difficult and complex.
The Company has, and will continue to have, no capital with which to
provide the owners of business opportunities with any significant
cash or other assets. However, management believes the Company will
be able to offer owners of acquisition candidates the opportunity to
acquire a controlling ownership interest in a publicly registered
company without incurring the cost and time required to conduct an
initial public offering. The owners of the business opportunities
will, however, incur significant legal and accounting costs in
connection with acquisition of a business opportunity, including the
costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements and
related reports and documents. The Securities Exchange Act of 1934
(the "34 Act"), specifically requires that any merger or acquisition
candidate comply with all applicable reporting requirements, which
include providing audited financial statements to be included within
the numerous filings relevant to complying with the 34 Act.
Nevertheless, the officers and directors of the Company have not
conducted market research and are not aware of statistical data
which would support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The analysis of new business opportunities will be undertaken by, or
under the supervision of, Weijun Yang, who may not be considered a
professional business analyst. Weijun Yang, President of the Company
will be the key person in the search, review and negotiation with
potential acquisition or merger candidates. Management intends to
concentrate on identifying preliminary prospective business
opportunities which may be brought to its attention through present
associations of the Company's officer and director, or by the
Company's shareholder. In analyzing prospective business
opportunities, management will consider such matters as the
available technical, financial and managerial resources; working
capital and other financial requirements; history of operations, if
any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which
may be available and the depth of that management; the potential for
further research, development, or exploration; specific risk factors
not now foreseeable but which then may be anticipated to impact the
proposed activities of the Company; the potential for growth or
expansion; the potential for profit; the perceived public
recognition of acceptance of products, services, or trades; name
identification; and other relevant factors. Officers and directors
of the Company do not expect to meet personally with management and
key personnel of the business opportunity as part of their
investigation due to lack of capital. To the extent possible, the
Company intends to utilize written reports and investigation to
evaluate the above factors. The Company will not acquire or merge
with any company for which audited financial statements cannot be
obtained within a reasonable period of time after closing of the
proposed transaction.
Weijun Yang has limited experience in managing companies similar to
the Company and shall rely upon his own efforts and, to a much
lesser extent, the efforts of the Company's shareholder, in
accomplishing the business purposes of the Company. It is not
anticipated that any outside consultants or advisors will be
utilized by the Company to effectuate its business purposes
described herein. However, if the Company does retain such an
outside consultant or advisor, any cash fee earned by such party
will need to be paid by the prospective merger/acquisition
candidate, as the Company has no cash assets with which to pay such
obligation. There have been no contracts or agreements with any
outside consultants and none are anticipated in the future.
The Company will not restrict its search for any specific kind of
firms, but may acquire a venture which is in its preliminary or
development stage, which is already in operation, or in essentially
any stage of its corporate life. It is impossible to predict at
this time the status of any business in which the Company may become
engaged, in that such business may need to seek additional capital,
may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. However, the
Company does not intend to obtain funds in one or more private
placements to finance the operation of any acquired business
opportunity until such time as the Company has successfully
consummated such a merger or acquisition.
It is anticipated that the Company will incur nominal expenses in
the implementation of its business plan described herein. Because
the Company has no capital with which to pay these anticipated
expenses, Weijun Yang agreed to pay these charges with his personal
funds, as interest free loans to the Company. However, the only
opportunity which management has to have these loans repaid will be
from a prospective merger or acquisition candidate. Management has
agreed that the repayment of any loans made on behalf of the Company
will not impede, or be made conditional in any manner, to
consummation of a proposed transaction.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition,
the Company may become a party to a merger, consolidation,
reorganization, joint venture, or licensing agreement with another
corporation or entity. It may also acquire stock or assets of an
existing business. On the consummation of a transaction, it is
probable that the present management and shareholders of the Company
will no longer be in control of the Company. In addition, the
Company's directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote
of the Company's shareholders or may sell their stock in the
Company. Any terms of sale of the shares presently held by officers
and/or directors of the Company will not be afforded to all other
shareholders of the Company. Any and all such sales will only be
made in compliance with the securities laws of the United States and
any applicable state.
It is anticipated that any securities issued in any such
reorganization would be issued in reliance upon exemption from
registration under applicable federal and state securities laws. In
some circumstances, however, as a negotiated element of its
transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at
specified times thereafter. If such registration occurs, of which
there can be no assurance, it will be undertaken by the surviving
entity after the Company has successfully consummated a merger or
acquisition and the Company is no longer considered a "shell"
company. The issuance of substantial additional securities and their
potential sale into any trading market which may develop in the
Company's securities may have a depressive effect on the value of
the Company's securities in the future, if such a market develops,
of which there is no assurance.
While the actual terms of a transaction to which the Company may be
a party cannot be predicted, it may be expected that the parties to
the business transaction will find it desirable to avoid the
creation of a taxable event and thereby structure the acquisition in
a so-called "tax-free" reorganization under Sections 368(a)(1) or
351 of the Internal Revenue Code (the "Code"). In order to obtain
tax-free treatment under the Code, it may be necessary for the
owners of the acquired business to own 80% or more of the voting
stock of the surviving entity. In such event, the shareholders of
the Company, would retain less than 20% of the issued and
outstanding shares of the surviving entity, which would result in
significant dilution in the equity of such shareholders.
As part of the Company's investigation, officers and directors of
the Company may personally meet with management and key personnel,
may visit and inspect material facilities, obtain analysis of
verification of certain information provided, check references of
management and key personnel, and take other reasonable
investigative measures, to the extent of the Company's limited
financial resources and management expertise. The manner in which
the Company participates in an opportunity will depend on the nature
of the opportunity, the respective needs and desires of the Company
and other parties, the management of the opportunity and the
relative negotiation strength of the Company and such other
management.
With respect to any merger or acquisition, negotiations with target
company management is expected to focus on the percentage of the
Company which the target company shareholders would acquire in
exchange for all of their shareholdings in the target company.
Depending upon, among other things, the target company's assets and
liabilities, the Company's shareholders will in all likelihood hold
a substantially lesser percentage ownership interest in the Company
following any merger or acquisition. The percentage ownership may
be subject to significant reduction in the event the Company
acquires a target company with substantial assets. Any merger or
acquisition effected by the Company can be expected to have a
significant dilutive effect on the percentage of shares held by the
Company's then shareholders.
The Company will participate in a business opportunity only after
the negotiation and execution of appropriate written agreements.
Although the terms of such agreements cannot be predicted, generally
such agreements will require some specific representations and
warranties by all of the parties thereto, will specify certain
events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to
and after such closing, will outline the manner of bearing costs,
including costs associated with the Company's attorneys and
accountants, will set forth remedies on default and will include
miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with
any entity which cannot provide independent audited financial
statements within a reasonable period of time after closing of the
proposed transaction. The Company is subject to all of the
reporting requirements included in the 1934 Act. Included in these
requirements is the affirmative duty of the Company to file
independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon
consummation of a merger or acquisition, as well as the Company's
audited financial statements included in its annual report on Form
10-K (or 10-KSB, as applicable). If such audited financial
statements are not available at closing, or within time parameters
necessary to insure the Company's compliance with the requirements
of the 1934 Act, or if the audited financial statements provided do
not conform to the representations made by the candidate to be
acquired in the closing documents, the closing documents may provide
that the proposed transaction will be voidable, at the discretion
of the present management of the Company. If such transaction is
voided, the agreement may also contain a provision providing for the
acquisition entity to reimburse the Company for all costs associated
with the proposed transaction.
The Company does not intend to make any loans to any prospective
acquisition or merger candidates or to unaffiliated third parties.
The Company may make loans only to prospective acquisition or merger
candidates only when such fund is available, the Company has entered
into an acquisition or merger agreement and making a loan to the
acquisition or merger candidate is beneficial to the Company. The
criteria that will be used in determining whether to make loans is
the availability and the need of cash by the acquisition or merger
candidate in order to complete the acquisition or merger. The loan
may be either secured or non-secured depending on the result of
negotiation and there is no limitations as to the amounts that may
be loaned.
The Company does not intends to provide the Company's security
holders with any complete disclosure documents, including audited
financial statements, concerning an acquisition or merger candidate
and its business prior to the consummation of any acquisition or
merger transaction.
COMPETITION
The Company will remain an insignificant participant among the firms
which engage in the acquisition of business opportunities. There are
many established venture capital and financial concerns which have
significantly greater financial and personnel resources and
technical expertise than the Company. In view of the Company's
combined extremely limited financial resources and limited
management availability, the Company will continue to be at a
significant competitive disadvantage compared to the Company's
competitors.
ITEM 3. DESCRIPTION OF PROPERTY.
The Company currently maintains a mailing address at 135-34 78
Avenue, Unit F, Kew Garden Hills, NY 11367, which is the address of
Weijun Yang. The Company pays no rent for the use of this mailing
address. The Company does not believe that it will need to maintain
an office at any time in the foreseeable future in order to carry
out its plan of operations described herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPLE STOCKHOLDERS
The following table sets forth certain information as of February
28, 2001 regarding the beneficial ownership of the Company's Common
Stock by (i) each stockholder known by the Company to be the
beneficial owner of more than 5% of the Company's Common Stock, (ii)
by each Director and executive officer of the Company and (iii) by
all executive officer and Directors of the Company as a group. Each
of the persons named in the table has sole voting and investment
power with respect to Common Stock beneficially owned.
Number of Percentage of
Name and Address Shares Owned Shares owned
Liu Puxiang 18,288,000 91.44%
c/o 135-34 78 Avenue, Unit F
Kew Garden Hills, NY 11367
Weijun Yang 856,000 4.28%
c/o 135-34 78 Avenue, Unit F
Kew Garden Hills, NY 11367
Huakang Zhao 856,000 4.28%
18 Kimblerly Court
East Hanover, NJ 07936
All Directors & Officers as 856,000 4.28%
a group (1 person)
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
OFFICERS AND DIRECTORS
The following table sets forth certain information concerning each
of the Company's directors and executive officers:
Name Age Position
Weijun Yang 60 Chairman of the Board, President, Chief
Executive Officer, and Treasurer
Weijun Yang has served as President, Chief Executive Officer,
Treasurer and a Director of the Company since January 2001.
Before Mr. Weijun Yang retired in November 1998, Mr. Yang was Vice
Financial President of Hongxiang (USA), Inc. ("Hongxiang USA") from
December 1996 to November 1998. Hongxiang USA was a New York
subsidiary of China Hongxiang Group ("Hongxiang Group"), a company
in People's Republic of China ("P. R. China"). Mr. Yang was Vice
President and Director of Hongxiang Group (May 1990). Hongxiang Group
is an electronic manufacturer in P.R. China. Hongxiang USA was
intended to be a company providing financing to Hongxiang Group.
The Officer and Director identified in above table is the Company's
only promoter.
CONFLICTS OF INTEREST
None of the officers of the Company will devote more than a portion
of his time to the affairs of the Company. There will be occasions
when the time requirements of the Company's business conflict with
the demands of the officers other business and investment
activities. Such conflicts may require that the Company attempt to
employ additional personnel. There is no assurance that the services
of such persons will be available or that they can be obtained upon
terms favorable to the Company.
The officers, directors and principal shareholders of the Company
may actively negotiate for the purchase of a portion of their common
stock as a condition to, or in connection with, a proposed merger or
acquisition transaction. It is anticipated that a substantial
premium may be paid by the purchaser in conjunction with any sale of
shares by the Company's officers, directors and principal
shareholders made as a condition to, or in connection with, a
proposed merger or acquisition transaction. The fact that a
substantial premium may be paid to members of Company management to
acquire their shares creates a conflict of interest for them and may
compromise their state law fiduciary duties to the Company's other
shareholders. In making any such sale, members of Company management
may consider their own personal pecuniary benefit rather than the
best interests of the Company and the Company's other shareholders,
and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular buy-out
transaction involving shares held by members of Company management.
INVESTMENT COMPANY ACT OF 1940
Although the Company will be subject to regulation under the
Securities Act of 1933 and the Securities Exchange Act of 1934,
management believes the Company will not be subject to regulation
under the Investment Company Act of 1940 insofar as the Company will
not be engaged in the business of investing or trading in
securities. In the event the Company engages in business
combinations which result in the Company holding passive investment
interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such event,
the Company would be required to register as an investment company
and could be expected to incur significant registration and
compliance costs. The Company has obtained no formal determination
from the Securities and Exchange Commission as to the status of the
Company under the Investment Company Act of 1940 and, consequently,
any violation of such Act would subject the Company to material
adverse consequences. The Company presently desires to be exempt
from the Investment Company Act of 1940 via Regulation 3a-2 thereto.
INVESTMENT ADVISOR ACT OF 1940
The Company is not an "investment adviser" under the Federal
Investment Adviser Act of 1940, which classification would involve a
number of negative considerations. Accordingly, the Company will not
furnish or distribute advice, counsel, publications, writings,
analysis or reports to anyone relating to the purchase or sale of
any securities within the language, meaning and intent of Section
2(a)(11) of the Investment Adviser Act of 1940, 15 U.S.C.
ITEM 6. EXECUTIVE COMPENSATION.
None of the Company's current officer and/or director received any
compensation for their respective services rendered unto the
Company, nor have they received such compensation in the past.
Weijun Yang has agreed to act without compensation until authorized
by the Board of Directors, which is not expected to occur until the
Company has generated revenues from operations after consummation of
a merger or acquisition. As of the date of this registration
statement, the Company has no funds available to pay Weijun Yang.
It is possible that, after the Company successfully consummates a
merger or acquisition with an unaffiliated entity, that entity may
desire to employ or retain one or a number of members of the
Company's management for the purposes of providing services to the
surviving entity, or otherwise provide other compensation to such
persons. However, the Company has adopted a policy whereby the
offer of any post-transaction remuneration to members of management
will not be a consideration in the Company's decision to undertake
any proposed transaction. The management has agreed to disclose to
the Company's Board of Directors any discussions concerning possible
compensation to be paid to them by any entity which proposes to
undertake a transaction with the Company.
It is possible that persons associated with management may refer a
prospective merger or acquisition candidate to the Company. In the
event the Company consummates a transaction with any entity referred
by associates of management, it is possible that such an associate
will be compensated for their referral in the form of a finder's
fee. It is anticipated that this fee will be either in the form of
restricted common stock issued by the Company as part of the terms
of the proposed transaction, or will be in the form of cash
consideration. However, if such compensation is in the form of
cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has insufficient cash available. The
amount of such finder's fee cannot be determined as of the date of
this registration statement, but is expected to be comparable to
consideration normally paid in like transactions.
No retirement, pension, profit sharing, stock option or insurance
programs or other similar programs have been adopted by the Company
for the benefit of its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
There have been no related party transactions, or any other
transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-B.
ITEM 8. DESCRIPTION OF SECURITIES.
COMMON STOCK
The Articles of Incorporation currently authorizes the Company to
issue Forty Million (40,000,000) shares of Common Stock at $.0005
par value. Each holder of the Common Stock shall be entitled to one
vote for each share of Common Stock held. As of February 28, 2000
there are 20,000,000 shares of Common Stock outstanding.
Upon liquidation of the Company, each shareholder is entitled to
receive a proportionate share of the Company's assets available for
distribution to shareholders after the payment of liabilities and
after distribution in full of preferential amounts, if any. All
shares of the Company's Common Stock issued and outstanding are
fully-paid and nonassessable. Holders of the Common Stock are
entitled to share pro rata in dividends and distributions with
respect to the Common Stock, as may be declared by the Board of
Directors out of funds legally available therefor.
PART II
ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
There is no public trading market for the Company's Common Stock.
The Company plans to apply to have its Common Stock traded on the
over-the-counter market and listed on the OTC Bulletin Board. There
is no assurance that a trading market will ever develop or, if such
a market does develop, that it will continue.
DIVIDEND POLICY
The Company has not paid any cash dividends on its Common Stock and
presently intends to continue a policy of retaining earnings, if
any, for reinvestment in its business.
PENNY STOCK
Until the Company's shares qualify for inclusion in the Nasdaq
system, the trading of the Company's securities, if any, will be in
the over-the-counter markets which are commonly referred to as the
"pink sheets" or on the OTC Bulletin Board. As a result, an investor
may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of the securities offered.
Effective August 11, 1993, the Securities and Exchange Commission
adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity security
that has a market price of less than $5.00 per share or with an
exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless
exempt, the rules require: (i) that a broker or dealer approve a
person's account for transactions in penny stocks; and (ii) the
broker or dealer receive from the investor a written agreement to
the transaction, setting forth the identity and quantity of the
penny stock to be purchased. In order to approve a person's account
for transactions in penny stocks, the broker or dealer must (i)
obtain financial information and investment experience and
objectives of the person; and (ii) make a reasonable determination
that the transactions in penny stocks are suitable for that person
and that person has sufficient knowledge and experience in financial
matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any
transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight
form, (i) sets forth the basis on which the broker or dealer made
the suitability determination; and (ii) that the broker or dealer
received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of
investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities
and the rights and remedies available to an investor in cases of
fraud in penny stock transactions. Finally, monthly statements have
to be sent disclosing recent price information for the penny stock
held in the account and information on the limited market in penny
stocks.
The National Association of Securities Dealers, Inc. (the "NASD"),
which administers NASDAQ, has recently made changes in the criteria
for continued NASDAQ eligibility. In order to continue to be
included on NASDAQ, a company must maintain $2,000,000 in net
tangible assets or $35,000,000 in market capitalization or $500,000
net income in latest fiscal year or 2 or last 3 fiscal years, a
$1,000,000 market value of its publicly-traded securities and
500,000 shares in public float. In addition, continued inclusion
requires two market-makers and a minimum bid price of $1.00 per
share.
Management intends to strongly consider undertaking a transaction
with any merger or acquisition candidate which will allow the
Company's securities to be traded without the aforesaid limitations.
However, there can be no assurances that, upon a successful merger
or acquisition, the Company will qualify its securities for listing
on NASDAQ or some other national exchange, or be able to maintain
the maintenance criteria necessary to insure continued listing. The
failure of the Company to qualify its securities or to meet the
relevant maintenance criteria after such qualification in the future
may result in the discontinuance of the inclusion of the Company's
securities on a national exchange. In such events, trading, if any,
in the Company's securities may then continue in the over-the-
counter market. As a result, a shareholder may find it more
difficult to dispose of, or to obtain accurate quotations as to the
market value of, the Company's securities.
ITEM 2. LEGAL PROCEEDINGS.
The Company is not a party to any legal proceedings, and no such
proceedings are know to be contemplated.
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
The Company has not changed accountants since its formation and
there are no disagreements with the findings of said accountants.
ITEM 4. RECENT SALES OF UNREGISTERED SECURITIES.
On January 22, 2001, the Company issued 18,288,000 shares of Common
Stock to Liu Puxiang, a non-U.S. persons, for $3,474, which was
below the par value at $.0005 per common share a non-U.S. person in
reliance on Regulation S of the Securities Act of 1933, as amended.
All of these shares are "restricted" shares as defined by Regulation
S under the Securities Act of 1933, as amended (the "Act"). All of
these shares may not be offered for public sale except under
Regulation S, Rule 144, or otherwise, pursuant to the Act.
On January 22, 2001, the Company issued 856,000 shares of Common
Stock to Weijun Yang, President of the Company, for $260, which was
below the par value at $.0005 per common share. The Company relied
on exemption provided by Section 4(2) of the Securities Act of 1933,
as amended, for the issuance of 856,000 shares of Common Stock to
Weijun Yang.
On February 4, 2001, the Company issued 856,000 shares of Common
Stock each to a U.S. person for $160, which was below the par value
at $.0005 per common share. The Company relied on exemption
provided by Section 4(2) of the Securities Act of 1933, as amended,
for the transfer of the 856,000 shares to this US person. All of
these shares are "restricted" shares as defined in Rule 144 under
the Securities Act of 1933, as amended (the "Act") may not be
offered for public sale except under Rule 144, or otherwise,
pursuant to the Act.
As February 28, 2001, no shares of the Company's Common Stock
outstanding are eligible for sale in the US public market. All
outstanding shares are restricted under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act").
In general, under Rule 144, a person (or persons whose shares are
aggregated) who has satisfied a one year holding period, under
certain circumstances, may sell within any three-month period a
number of shares which does not exceed the greater of one percent of
the then outstanding Common Stock or the average weekly trading
volume during the four calendar weeks prior to such sale. Rule 144
also permits, under certain circumstances, the sale of shares
without any quantity limitation by a person who has satisfied a two-
year holding period and who is not, and has not been for the
preceding three months, an affiliate of the Company.
Regulation S provides generally that any offer or sale that occurs
outside of the United States is exempt from the registration
requirements of the Securities Act of 1933, provided that certain
conditions are met. Regulation S has two safe harbors. One safe
harbor applies to offers and sales by issuers, securities
professionals involved in the distribution process pursuant to
contract, their respective affiliates, and persons acting on behalf
of any of the foregoing (the "issuer safe harbor"), and the other
applies to resale by persons other than the issuer, securities
professionals involved in the distribution process pursuant to
contract, their respective affiliates (except certain officers and
directors), and persons acting on behalf of any of the forgoing (the
"resale safe harbor"). An offer, sale or resale of securities that
satisfied all conditions of the applicable safe harbor is deemed to
be outside the United States as required by Regulation S. The
distribution compliance period for shares sold in reliance on
Regulation S is two years.
The Company has complied with the requirements of Regulation S by
having no directed selling efforts made in the United States,
ensuring that the non-U.S. person has address in a foreign country
and having each persons made representation to the Company
certifying that he or she is not a U.S. person and is not acquiring
the Securities for the account or benefit of a U.S. person other
than persons who purchased Securities in transactions exempt from
the registration requirements of the Securities Act; and also agrees
only to sell the Securities in accordance with the registration
provisions of the Securities Act or an exemption therefrom, or in
accordance with the provisions of the Regulation.
ITEM 5. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by New York law, the Company's Articles of
Incorporation provide that the Company will indemnify its directors
and officers against expenses and liabilities they incur to defend,
settle, or satisfy any civil or criminal action brought against them
on account of their being, or having been, Company directors or
officers unless, in any such action, they are judged to have acted
with gross negligence or willful misconduct. Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers, or persons controlling
the Company. Pursuant to the foregoing provisions, the Company has
been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in that Act and is, therefore, unenforceable.
PART F/S
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS.
(a) The following financial statements of the Company are filed
as part of this Report:
(1) Financial Statements Page
Independent Auditor's Report F-1
Balance Sheet as of February 28, 2001 F-2
Income Statement, For the
Period From Inception January 21, 2001
to February 28, 2001 F-3
Statement of Cash Flows, For the
the Period From Inception January 21, 2001
to February 28, 2001 F-4
Statement of Changes in Stockholders' Equity
For the Period From Inception January 21,
2001, through February 28, 2001 F-5
Notes to Financial Statements as of
February 28, 2001 F-6
(2) Exhibits:
(1) Not Applicable
(2) Not Applicable
(3.0) Articles of Incorporation (3.1) By-laws
(4) Not Applicable
(5) Not Applicable
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Not Applicable
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Nelson, Mayoka & Company, P.C. Certified Public Accountants
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
(29) Not Applicable
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRSTCHINA CAPITAL, INC.
Date: March 8, 2001 By: /s/ Weijun Yang
---------------
Weijun Yang
President, Chief Executive Officer
Treasurer and Director
[GRAPHIC OMITTED]
Nelson, Mayoka and Company, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
100 Church Street 14th Floor
New York, New York
10007-2601
----------
Tel. (212) 697-7979
Fax (212) 697-8997
DIRECT LINE
INDEPENDENCE AUDITOR'S REPORT
To the Board of Directors and Shareholders of
FirstChina Capital, Inc. (A Development Stage Company)
Kew Garden Hills, New York
We have audited the accompanying balance sheet of FirstChina Capital
Inc. ( A Development Stage Company), as of February 28, 2001 and the
related statements of operations, stockholders' equity and cash
flows from inception January 21, 2001 through February 28, 2001.
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 audit.
We conducted our audit in accordance with general accepted auditing
standards. 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 audit provides 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
FirstChina Capital, Inc. ( A Development Stage Company), as of
February 28, 2001, and the results of its operations from inception
January 21, 2001 through February 28, 2001 in conformity with
generally accepted accounting principles.
March 8, 2001
New York, New York
/s/Nelson, Mayoka and Company, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
FIRSTCHINA CAPTIAL, INC.
( A DEVELOPMENT STAGE COMPANY )
BALANCE SHEET
February 28, 2001
CURRENT ASSETS:
Cash $ 3,660
INTANGIBLE ASSETS
Organization costs-net amortization 230
Total Asssets $ 3,890
=========
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES:
Accounts payable and accrued expenses $ 950
STOCKHOLDER'S EQUITY
Common stock-Par value $0.0005: 40,000,000 shares
Authorized 20,000,000 shares issued and outstanding $ 3,894
Deficit (954)
----------
TOTAL STOCKHOLDER'S EQUITY 2,940
---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 3,890
=========
The Accompanying Notes are an Integral part of the Financial Statements
FIRSTCHINA CAPTIAL, INC.
( A DEVELOPMENT STAGE COMPANY )
INCOME STATEMENT
FROM INCEPTION JANUARY 21, 2001 THROUGH FEBRUARY 28, 2001
Sales $ 0
Cost of sales 0
------
Gross profit $ 0
Selling general and administration
Other income (expense) net (954)
Net income (loss) before taxes (954)
Provision for income taxes
Net income (loss) $ (954)
==========
Net income (loss) per share $ (0.0001)
Average number of shares outstanding 20,000,000
----------
The Accompanying Notes are an Integral part of the Financial Statements
FIRSTCHINA CAPTIAL, INC.
( A DEVELOPMENT STAGE COMPANY )
STATEMENTS OF CASH FLOWS
FROM INCEPTION JANUARY 21, 2001 THROUGH FEBRUARY 28, 2001
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (1,184)
Changes in assets and liabilities
Increase (Decrease) in accounting payable 950
CASH PROVIDED (USED) BY OPERATING ACTIVITIES (234)
-----------
CASH FLOW FROM FINANCE ACTIVITIES
Issuance of Common Stock 3,894
NET INCREASE (DECREASE) IN CASH 3,660
CASH AT INCEPTION, JANUARY 21, 2001 0
----------
CASH AT END OF PERIOD $ 3,660
==========
The Accompanying Notes are an Integral part of the Financial Statements
FIRSTCHINA CAPTIAL, INC.
( A DEVELOPMENT STAGE COMPANY )
STATEMENT OF CHANGES TO STOCKHOLDERS' EQUITY
FROM INCEPTION JANUARY 21, 2001 THROUGH FEBRUARY 28, 2001
Common Stock Additional
------------------ paid in Accumulated
Number of Amount Capital (Deficit) Total
--------- ----- ---------- ----------- -----
ISSUANCE OF
COMMON STOCK 20,000,000 $ 3,894 $ $ $ 3,894
Net loss (954) (954)
---------- -------- --------- ----------- -------
Balance
- -February 28, 2001 20,000,000 $ 3,894 $ - $ (954) $(2,940)
========== ======== ========= ========== ========
The Accompanying Notes are an Integral part of the Financial Statements
FIRSTCHINA CAPTIAL, INC.
( A DEVELOPMENT STAGE COMPANY )
Notes to Financial Statements
February 28, 2001
Note 1. Organization and Summary of Significant Accounting Policies
Organization
On January 21, 2001 FirstChina Capital, Inc. (A Development Stage
Company) ("the Company") was incorporated under the laws of New
York. The Company is in the development stage and its intent is to
Located suitable business ventures to acquire. The Company has had
No significant business activity to date and has chosen December 31,
as year end.
Cash and Cash Equivalents
Cash and cash equivalents consists of cash in a bank deposit account.
The Company considers all highly liquid investments with an original
Maturity of three months or less to be cash equivalents.
Intangible Assets
Intangible assets consist of organization costs incurred and are
Amortized over a five year period.
Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently
due plus deferred taxes related primarily to differences between the
recorded book basis and tax basis of assets and liabilities for
financial and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled. Deferred taxes are
also recognized for operating losses that are available to offset
future taxable income and tax credits that are available to offset
federal income taxes.
Base upon the Company generating a loss no provision has been made
for Federal Income Taxes or New York State Income Taxes.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers
demand deposits and highly liquid-debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Net (Loss) Per Common Share
The net(loss) per common share is computed by dividing the net(loss)
for the period by number of shares outstanding at February 28, 2001.
Note 2. Capital Stock
Common Stock
The Company initially authorized 40,000,000 shares with a par value
$0.0005. The Company issued 20,000,000 shares par value for
$3,894.00. The Company has declared no dividends through February
28, 2001.
EXHIBIT 3.0
New York State
Department of State
Division of Corporations, State Records
and Uniform Commercial Code
Albany, NY 12231
(This form must be printed or typed in black ink)
CERTIFICATE OF INCORPORATION
OF
FirstChina Capital, Inc.
------------------------
(Insert corporate name)
Under Section 402 of the Business Corporation Law
FIRST: The name of the corporation is: FirstChina Capital, Inc.
SECOND: This corporation is formed to engage in any lawful act or
activity for which a corporation may be organized under the Business
Corporation Law, provided that it is not formed to engage in any act
or activity requiring the consent or approval of any state official,
department, board, agency or other body.
THIRD: The county within this state, in which the office of the
corporation is to be located is:New York
FOURTH: The total number of shares which the corporation shall have
authority to issue and a statement of the par value of each share or
a statement that the shares are with par value are: 40,000,000
shares at $0.0005 Par Value
FIFTH: The secretary of state is designated as agent of the
corporation upon whom process against the corporation may be served.
The address to which the Secretary of State shall mail a copy of any
process accepted on behalf of the corporation is:
SIXTH: (optional) The name and street address in this state of the
registered agent upon whom process against the corporation may be
served is: 135-34 78 Avenue, Unit F. Kew Garden Hills, NY 11367
SEVENTH: (optional)-if this provision is used, a specific date must
be stated which is not before, nor more than 90 days after the date
of filing) The date corporate existence shall begin, if other than
the date of filing, is:
/s/ Weijun Yang
- --------------
(Signature)
Weijun Yang
- -------------------
(Type or print name)
135-34 78 Avenue, Unit F
Kew Garden Hills, NY 11367
- --------------------------
(Address)
(City, State, Zip code)
135-34 78 Avenue, Unit F
Kew Garden Hills, NY 11367
EXHIBIT 3.1
BY-LAWS
OF
FirstChina Capital, Inc.
Incorporated under the Business Corporation Law of
the State of New York
1. PRINCIPLE OFFICE
(1.1) Initial Location. The principal office of the corporation
shall initially be located at 135-34 78 Avenue, Unit F, Kew
Garden Hills, NY 11367
(1.2) Change of Location. The board of directors may, upon
reasonable written notice to all shareholders, relocated the
principal office of the corporation.
(1.3) Other Offices. In addition to its principal office, the
corporation may have such other offices, either within or without
the state of incorporation, as the board of directors may designate.
2. DIRECTORS
(2.1) Number. The number of directors shall be that number as may
from time to time be fixed by the board of directors, but not less
than the minimum number required by law.
(2.2) Qualification. No person shall serve as a director unless
such person is at least 18 years of age.
(2.3) Notices. Upon taking office, each director shall file with
the secretary a written designation of the address that the director
desires to be used for the purpose of giving notices to him/her.
Until the director shall have effectively done so, he/she shall be
deemed to have designated either the principal office of the
corporation or any other address that the sender of the notice could
reasonably believe to be an appropriate address. Any designated
address may be redesignated by similar filing with the secretary.
The secretary shall give each of the other directors prompt notice
of every designation or re-designation filed. The designation or
re-designation shall be effective three business days after the
secretary's action or upon earlier receipt. Any notice to a
director shall be valid if sent to either (a) the director's
designated address or (b) any other address used in good faith
unless it be shown that prejudice resulted from use of such other
address. All notices must be in writing. Any notice may be
delivered by hand or sent by telecommunications device, by mail or
by similar means. If a notice is sent by registered mail or return
receipt requested, another copy shall at the same time be sent by
ordinary first class mail.
(2.4) Resignation. A director may resign at any time by giving
notice to each of the other directors. Unless otherwise specified,
the notice shall be effective immediately and acceptance shall not
be necessary to make it effective. A director need not assign cause
for resigning.
(2.5) Removal. A director may be removed by the shareholders
without cause or by the board of directors with cause.
3. BOARD OF DIRECTORS
(3.1) Regular Meetings. A regular meeting shall be held immediately
after and at the same place as the annual meeting of shareholders.
The board of directors may provide for other regular meetings.
Notice need not be given of any regular meeting.
(3.2) Special Meetings. The president or any two directors may call
a special meeting upon not less than 5 business days notice to every
director of the time and place of the special meeting. The special
meeting notice does not have to specify the business to be
transacted.
(3.3) Adjourned Meetings. Whether or not a quorum is present, a
majority of the directors present may adjourn any meeting to such
time and place as they shall decide. Notice of any adjourned
meeting need not be given. At any adjourned meeting, whether
adjourned once or more, any business may be transacted that might
have been transacted at the meeting of which it is an adjournment.
Additional business may also be transacted if proper notice shall
have been given.
(3.4) Organization. The chairperson of the meeting shall be the
president if taking part in the meeting or, if not, any director
elected by a majority of the directors present. The secretary of
the meeting shall be the secretary if taking part in the meeting or,
if not, any director appointed by the chairman of the meeting.
(3.5) Committees. The board of directors may, by resolution passed
by a majority of the full board of directors (a) designated three or
more of its number to constitute an executive committee, or one or
more other committees, which, so far as may be permitted by law and
to the extent and in that manner provided in said resolution, shall
have and may exercise, between meetings of the board of directors,
the powers of the board of directors in the management of the
affairs and business of the corporation, (b) at any time change the
members of any such committee, (c) fil vacancies in any such
committee, and (d) discharge any such committee, with or without
cause. The board of directors may provide for regular meetings o
any such committee with or without notice as the board of directors
may prescribe. To the extent authority of the board of directors
has been delegated to any such committee, any reference in these by-
laws to the board of directors shall be deemed a reference to such
committee.
(3.6) Telecommunications Participation. Any one or more directors
may participate in a meeting of the board or any committee by means
of a conference telephone or other type of telecommunications
equipment allowing persons participating in the meeting to hear each
other at the same time.
(3.7) Regulations. The board of directors may adopt rules and
regulations, not inconsistent with law, the certificate of
incorporation or these by-laws, for the conduct of its meetings and
the management of all aspects of the affairs of the corporation.
4. SHARES AND CERTIFICATES
(4.1) Form of Certificates. Certificates representing shares shall
be in the form determined by the board of directors. All
certificates issued shall be consecutively numbered or otherwise
appropriately identified.
(4.2) Share Transfer Ledger. There shall be kept a share transfer
ledger in which shall be entered full and accurate records including
the names and addresses of all shareholders, the number of shares
issued to each shareholder and the dates of issuance. All transfers
of shares shall be promptly reflected in the share transfer ledger.
Unless otherwise directed by the board of directors, the share
transfer ledger shall be kept at the principal office of the
corporation.
(4.3) Transfer of Shares. Upon (a) receipt of the certificate
representing the shares to be transferred, either duly endorsed or
accompanied by proper evidence of succession, assignment or
authority to transfer, (b) payment of any required transfer taxes,
and (c) payment of any reasonable charge the board of directors may
have established, the surrendered certificate shall be canceled and
a new certificate or certificates shall be issued to the person(s)
entitled to it.
(4.4) Replacement Certificates. Replacement certificates will be
issued at the request of the shareholder upon payment of any
reasonable charge the board of directors may have established. In
case of a lost, mislaid, destroyed or mutilated certificate, proof
of the facts, by affidavit or otherwise, may also be required, as
may be a bond or other proper indemnification for the corporation
and its agents.
(4.5) Record Owner to be Treated as Owner. Unless other wise
directed by a court of competent jurisdiction, the corporation shall
treat the holder of record of any share as the holder in fact and
accordingly shall not recognize any equitable or other claim to or
interest in the shares on the part of any other persons, whether or
not it shall have express or other notice of it.
5. SHAREHOLDERS' MEETINGS
(5.1) Annual Meeting. The annual meeting of the shareholders shall
be held on the 8th in the month of January in each year at the
principal office of the corporation. If the day fixed for the
annual meeting is a Saturday, Sunday or holiday at the place it is
to be held, the meeting shall be held on the following day that is
not such a day. Unless otherwise stated in the notice of meeting
pursuant to direction of the board of directors, the annual meeting
shall be held a the principle office of the corporation.
(5.2) Special Meetings. A special meeting of the shareholders may be
called by any two or more directors, the president or the holders of
no less than 10% of all entitled to vote at the meeting.
(5.3) Adjourned Meetings. Whether or not a quorum is present, a
majority in voting power of the shareholders present in person or by
proxy and entitled to vote may adjourn any meeting to a time and
place as they shall decide. Notice of any adjourned meeting need not
given. At any adjourned meeting, whether adjourned once or more, any
business may be transacted that might have been transacted at the
meeting of which it is an adjournment. Additional business may also
be transacted if proper notice shall have been given.
(5.4) Organization. The president shall be chairman of the meeting.
The secretary shall be secretary of the meeting. If neither the
president nor any vice president is present, the shareholders shall
choose a chairman of the meeting. If neither nor any assistant
secretary is present, the chairman of the meeting shall appoint a
secretary of the meeting.
(5.5) Order of Business. The order business shall be as determined
by the chairman of the meeting, but the order may be changed by a
majority in voting power of the shareholders present in person or by
proxy and entitled to vote. Unless otherwise determined as
aforesaid, the order shall be as follows:
1. Roll call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of officers.
5. Reports of committees.
6. Election of directors.
7. unfinished business.
8. New Business.
(5.6) Voting. Upon demand of any shareholder, voting shall be by
ballot, in which event each ballot shall be signed by the
shareholder or his proxy and shall state the number shares voted.
Otherwise, voting need not be in voting.
6. OFFICERS
(6.1) Additional Officers. In addition to the president, secretary,
treasurer and any other officers required by law, the corporation
may have one or more vice presidents elected by the board of
directors, one of whom may be designed as executive vice president.
The corporation may also have such other or assistant officers as
may be elected by, or appointed in a manner prescribed by, the board
of directors.
(6.2) Seniority. The executive vice president, if there is one,
shall be deemed senior to all other vice presidents. Unless
otherwise determined by, or under rules prescribed by, the board of
directors, seniority of any officer shall be determined by length of
continuous service in that office.
(6.3) Continuation in Office. Unless otherwise provided by the board
of directors, every officer shall serve until death, resignation or
removal by the board of directors. Any resignation or removal shall
be without prejudice to any contractual rights of the corporation or
the officer.
(6.4) Duties in General. Subject to these by-laws, the authority and
duties of all officers shall be determined by, or in the manner
prescribed by, the board of directors. Except as may be specifically
restricted by the board of directors, any officer may delegate any
of his/her authority and duties to any subordinate officer.
(6.5) Duties of President. The president shall be the principle
executive officer of the corporation and, subject to control of the
board of directors, shall in general supervise and control all of
the business and affairs of the corporation. The president may sign,
with the secretary or any other proper officer of the corporation
thereunto authorized by the board of directors, certificates for
share of the corporation, any deeds, mortgages, bonds, contracts, or
other instruments that the board of directors has authorized to be
executed, except in cases where the signing and execution shall be
expressly delegated by the board of directors or by these by-laws to
some other officer or agent of the corporation or shall be required
by law to be otherwise signed or executed, and in general shall
perform all duties incident to the office of president and such
other duties as may be prescribed by the board of directors from
time to time.
(6.6) Duties of Vice President. In the absence or incapacity of the
president, the senior vice president shall perform the duties of the
president and, when so acting, shall have all the powers of and be
subject to all the restriction upon the president. Each vice
president shall perform any other duties as may be assigned by the
president or by the board of directors.
(6.7) Duties of Secretary. The secretary shall keep the minutes of
the shareholders' and the directors' meeting in one or more books
provided for that purpose, see that all notices are duly given in
accordance with the provisions of these by-laws or as otherwise
required, be custodian of the corporate records and of the seal of
the corporation, keep a register of the post office addresses of
each shareholder, have general charge of the share transfer books of
the corporation, and in general perform all duties incident to the
office of secretary and other duties as may be assigned by the
president or by the board of directors.
(6.8) Duties of Treasurer. If required by the board of directors,
the treasurer shall give a bond for the faithful discharge of
his/her duties in a sum and with any surety or sureties as the board
of directors shall determine. The treasurer shall have charge and
custody of and be responsible for all funds and securities of the
corporation, receive and give receipts for monies due and payable to
the corporation from any source whatsoever, and deposit all such
monies in the name of the corporation in the banks, trust companies
or other depositories as shall be selected in accordance with these
by-laws, and in general perform all the duties incident to the
office of treasurer and such other duties as may be assigned by the
president or the board of directors.
(6.9) Salaries. No officer shall receive any salary unless provided
or authorized by the board of directors. No officer shall be
prevented from receiving a salary by reason of the fact that he/she
is director.
7. SEAL
(7.1) Form. The seal of the corporation shall be in the form
impressed in the margin.
(7.2) Use. The seal may be used by causing it to be impressed
directly on the instrument or writing to be sealed, or upon an
adhesive substance annexed. The seal on certificate for shares or
other documents may be a facsimile, engraved or imprinted.
8. AMENDMENTS
(8.1) By Board. These by-laws may be amended or repealed by the
board of directors.
EXHIBIT 24
[GRAPHIC OMITTED]
Nelson, Mayoka and Company, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
100 Church Street 14th Floor
New York, New York
10007-2601
----------
Tel. (212) 697-7979
Fax (212) 697-8997
DIRECT LINE
March 13, 2001
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form
10-SB of our report dated March 8, 2001 relating to the financial
statements of FirstChina Capital, Inc. as of February 28, 2001.
/s/ Nelson, Mayoka & Company, P.C.
Nelson, Mayoka & Company, P.C.
Certified Public Accountants