MINGHUA GROUP INTERNATIONAL HOLDINGS LIMITED
Guangdong Bian Fang Building
10th Floor
Fujing Road
Futian District, Shenzhen, 518033
People's Republic of China
---------
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF THE
SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or before April 28, 2004, to
holders of record on April 20, 2004, of shares of Common Stock ("Common Stock")
of Minghua Group International Holdings Limited, a New York corporation (the
"Company"), in connection with an anticipated change in a majority of the
members of the Company's Board of Directors. The information contained in this
Information Statement regarding the persons designated to become directors of
the Company has been furnished to the Company by third parties and the Company
assumes no responsibility for its accuracy or completeness. The information
contained in this Information Statement is being provided pursuant to Section
14(f) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 14f-1
of the Securities and Exchange Commission (the "SEC") thereunder.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
The consummation of the transactions described in this Information
Statement (the "Closing") will result in a change in control of the Company. As
a result, three current directors of the Company will resign, and persons
designated by Qiang Long Real Estate Development Co., Ltd. ("Qiang Long") will
be appointed as the new officers and directors of the Company.
This Information Statement is being delivered to provide information
regarding anticipated changes in the membership of the Board of Directors of the
Company in conjunction with the completion of the proposed stock sale, and is
provided for information purposes only. You are urged to read this Information
Statement carefully. However, no action on your part is sought or required.
TERMS OF THE ACQUISITION AGREEMENT
The Company and Qiang Long are parties to the following contracts which
will result in a change of control of the Company as reported in the current
report of the Company on Form 8-K filed by the Company on February 12, 2004: (i)
that certain Regulation S Subscription Agreement, dated September 29, 2003 (the
"September 29 Contract"), between the Company and Qiang Long and (ii) that
certain contract, dated January 29, 2004 (the "January 29 Contract" and together
with the September 29 Contract, the "Contracts"), between the Company and Qiang
Long.
1
Pursuant to the September 29 Contract Qiang Long is obligated to purchase
15,000,000 shares of the Company's Common Stock for US$6,000,000, in the
aggregate. Upon signing the September 29 Contract Qiang Long funded US$602,410
of the subscription price and the Company issued to Qiang Long 1,511,488 shares
of its Common Stock for such funds. Qiang Long then funded an additional
US$1,204,820 on January 9, 2004 and received 3,023,998 additional shares of the
Company's Common Stock for such funds. The September 29 Contract also required
that Qiang Long fund US$4,192,770 on February 29, 2004. To date, Qiang Long has
not made this final payment (the "February Payment").
Pursuant to the January 29 Contract, Qiang Long agreed to purchase
140,000,000 shares of the Company's Common Stock at an aggregate purchase price
of US$29,400,000. The January 29 Contract requires that the acquisition of these
shares take place in two installments. On April 15, 2004, Qiang Long is required
to pay (the "April Payment") US$12,600,000 for 60,000,000 shares of the
Company's Common Stock. Thereafter, the Company was to hold an annual
stockholders meeting at which the stockholders would vote upon an amendment to
the Company's Certificate of Incorporation that would increase the number of
authorized shares to a higher number such that the Company would have enough
authorized shares to satisfy its obligations under the January 29 Contract.
Qiang Long would then pay (the "Final Payment") the second installment of
US$16,800,000 within 15 days of the effective date of such amendment and receive
the remaining 80,000,000 shares of the Company's Common Stock at that time.
On April 14, 2004, the Company and Qiang Long entered into a letter
agreement (the "Qiang Long Letter Agreement") providing for an extension of the
time within which Qiang Long is required to make each of the February Payment,
the April Payment and the Final Payment. The due date for the February Payment
was extended from February 29, 2004 to May 31, 2004. The due date for the April
Payment was extended from April 15, 2004 to October 15, 2004 and the due date
for the Final Payment was extended to November 30, 2004.
At the Closing of the transaction contemplated by the Contracts, Qiang
Long will own a majority in interest in the Company's Common Stock. As of the
date of this information statement there are 80,567,976 shares of the Company's
Common Stock outstanding. At the closing (assuming that no other shares of the
Company's Common Stock are issued between now and the Closing) there will be
231,032,490 shares outstanding, of which Qiang Long will own 155,000,000 or
67.09%. Qiang Long's percentage ownership interest will be diluted by certain
other stock issuances that the Company has committed to make and has previously
disclosed.
2
AGREEMENT OF DIRECTORS TO RESIGN
In connection with entering into the Qiang Long Letter Agreement, Chu Quan
Li, the Company's Chairman, Albert Wong, the CEO and a director of the Company,
and Kuen Kwong Chan, a director of the Company, each agreed to resign as
directors of the Company and from all other offices that they hold with the
Company. At Qiang Long's request, Albert Wong has agreed to continue to serve as
an interim CEO until Qiang Long is able to fill the position. However, the
resignation of Chu Quan Li, Kuen Kwong Chan and Albert Wong, in his capacity as
director of the Company, will become effective upon the tenth day following the
mailing to the stockholders of this information statement.
DESCRIPTION OF SECURITIES
The following description is a summary and is qualified in its entirety by
the provisions of the Company's Amended Articles of Incorporation and Bylaws,
copies of which have been filed as exhibits to the Company's registration
statement on Form 10-KSB filed on April 15, 2002 in Commission file number
0-30183, and available electronically on EDGAR at www.sec.gov.
COMMON STOCK
General: The Company's Articles of Incorporation, as amended, authorizes
the issuance of 200,000,000 shares of Common Stock par value $.01. As of March
15, 2004, 80,567,976 shares of Common Stock are outstanding. All shares of
Common Stock outstanding are validly issued, fully-paid and non-assessable.
Voting: Each record holder of Common Stock is entitled to one vote for
each share held on all matters properly submitted to the stockholders for their
vote. The Articles of Incorporation, as amended, do not permit cumulative voting
for the election of directors.
Dividend Policy: Holders of outstanding shares of Common Stock are
entitled to such dividends as may be declared from time to time by the Board of
Directors out of legally available funds. The Company has not paid any dividends
since inception and presently anticipates that all earnings, if any, will be
retained for development of its business. Any future dividends will be at the
discretion of the Company's Board of Directors and will depend upon, among other
things, the Company's future earnings, operating and financial condition,
capital requirements, and other factors. Therefore, there can be no assurance
that any dividends on the Common Stock will be paid in the future.
3
Miscellaneous Rights and Provisions: In the event of liquidation,
dissolution or winding up of the affairs of the Company, holders are entitled to
receive, ratably, the net assets of the Company available to stockholders. No
holder of any shares of Common Stock has a preemptive right to subscribe for any
of the Company's securities, nor are any common shares subject to redemption or
convertible into other of the Company's securities. All of the issued and
outstanding shares of Common Stock are, and all unissued shares when offered and
sold will be, duly authorized, validly issued, fully-paid and non-assessable. To
the extent that additional shares of the Company's Common Stock are issued, the
relative interests of then existing stockholders may be diluted.
PREFERRED STOCK
The Company's Articles of Incorporation, as amended, does not authorize
the issuance of any preferred stock.
4
PRINCIPAL STOCKHOLDERS OF THE COMPANY
The following tables set forth the beneficial ownership of the Company
prior and immediately following the Closing:
The following table sets forth, as of December 31, 2003, the number of
shares of Common Stock owned of record and beneficially by any person who holds
5% or more of the outstanding Common Stock of Minghua.
- --------------------------------------------------------------------------------------------------------
Name and Address Of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
- --------------------------------------------------------------------------------------------------------
Chuquan Li 23,700,000 29.41%
Chairman
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033, China
- --------------------------------------------------------------------------------------------------------
Kingsrich Development Limited 24,036,269 29.83%
Sincere Insurance Building
4 - 6 Hennessey Road
Wanchai, Hong Kong
- --------------------------------------------------------------------------------------------------------
Beijing Qiang Long Real Estate Development 4,535,486 5.63%
Co. Ltd.
No. 95 Kangxi Road
Ba Da Xia Industrial Development Zone
Yanqing County, Beijing
China
- --------------------------------------------------------------------------------------------------------
5
The following table sets forth, as of December 31, 2003, the number of
shares of Common Stock owned of record and beneficially by all directors, each
of the named officers in the Summary Compensation Table, and the directors and
executive officers of the Company as a group.
- --------------------------------------------------------------------------------------------------------
Name and Address Of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership of Class
- --------------------------------------------------------------------------------------------------------
Chuquan Li 23,700,000 29.41%
Chairman
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033
China
- --------------------------------------------------------------------------------------------------------
Kuen Kwong Chan 2,800,000 3.48%
Director
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033, China
- --------------------------------------------------------------------------------------------------------
Albert Wong 500,000 0.62%
Chief Executive Officer, President,
Secretary and Treasurer
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033, China
- --------------------------------------------------------------------------------------------------------
Ji-Kuan Li 300,000 0.37%
Director
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033, China
- --------------------------------------------------------------------------------------------------------
Wen-Zhi Zhou 300,000 0.37%
Director
Guangdong Bian Fang Building, 10th Floor
Futian District, Shenzhen, 518033, China
- --------------------------------------------------------------------------------------------------------
All Directors and Executive Officers as a 27,600,000 34.26%
Group (5 people)
- --------------------------------------------------------------------------------------------------------
6
Section 16(a) of the Exchange Act requires the Company's executive
officers and directors, and any person who beneficially owns more than ten
percent of the Company's equity securities, to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Officers,
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. Based on the Company's review of the copies of such forms it received, the
Company believes that during the year ended December 31, 2003, all such filing
requirements applicable to its officers and directors were complied with, except
that various directors, officers and others were late in filing Form 3, Form 4
and other reports during the fiscal year ended December 31, 2003.
MANAGEMENT OF THE COMPANY
CURRENT BOARD OF DIRECTORS AND MANAGEMENT
The directors and executive officers of Minghua are as follows:
- --------------------------------------------------------------------------------
Name Age Position
- --------------------------------------------------------------------------------
Li Chuquan 46 Chairman of the Board
- --------------------------------------------------------------------------------
Albert Wong 52 Director, Chief Executive Officer, Secretary and
Treasurer
- --------------------------------------------------------------------------------
Chan Kuen Kwong 41 Director
- --------------------------------------------------------------------------------
Yun Dong Luan 67 Director
- --------------------------------------------------------------------------------
Jie Chen 48 Director
- --------------------------------------------------------------------------------
7
LI CHUQUAN was appointed Chairman of the Board of Directors on June 23,
2001. Mr. Li, in addition to serving as Chairman of the Board of Minghua and the
Shenzhen Minghua Environmental Protection Vehicles Co., Ltd, also acts as
Chairman of the Minghua Real Estate (Shenzhen) Ltd. and other related companies.
Mr. Li also owns various businesses engaged in property development, hotel
operations and trading. Mr. Li's primary responsibilities involve business
acquisitions, business development and strategic planning. Prior to establishing
the Minghua companies in the early 1990's, he was general manager of various
companies engaged in manufacturing, shipping, trading and service industries.
ALBERT WONG has served as Chief Executive Officer, President, Secretary
and Treasurer of Minghua since April 30, 2002. Since October 16, 2002, he has
also served as a director. Mr. Wong is a Canadian national and a qualified
professional accountant and registered financial planner with various related
professional designations. For the past 5 years prior to joining us, Mr. Wong
worked for Charise Financial Consultants Limited, a corporate financial planning
company, as its Managing Director and Chief Executive Officer.
CHAN KUEN KWONG became a director on August 2, 2001. He is responsible for
marketing and business development activities. From October 1994 to July 2001,
Mr. Chan worked for KYW Steel Co Ltd as a sales manager.
YUN DONG LUAN became a director in February 2004. He is the Vice Chairman
of the Zhang Xue-Liang Fund Association and has held various positions with such
Association over the past five years. The Zhang Xue-Liang Fund Association is in
the business of arranging meetings, conferences and exhibitions. It also
provides public relations and investor relations support to its clients.
JIE CHEN became a director in February 2004. She is the Vice Secretary of
the Zhang Xue-Liang Fund Association and has held such position and other
positions with such Association over the past five years. The Zhang Xue-Liang
Fund Association is in the business of arranging meetings, conferences and
exhibitions. It also provides public relations and investor relations support to
its clients. Prior to joining the Zhang Xue-Liang Fund Association, Ms. Chen
held various key positions with television stations and public relations
companies in China.
KEY EMPLOYEES
MR. JIN GUO DONG, technical principal of Shenzhen Minghua Environmental
Protection. Mr. Jin is the Professor and engineer and is well-known in electric
hybrid vehicle research manufacturing field in China.
8
LIAO CUI QUAN, Assistant Chief Engineer. Prior to becoming the Assistant
Chief Engineer he was the technical manager of an electronics company. He was
involved in the making process of two prototype vehicles, the MH6720 and MH6120.
On the tenth day following the mailing of this information statement to
the Company's stockholders, Albert Wong, Chan Kuen Kwong, and Li Chu Quan will
resign as officers and directors of the Company. Li Change De will then become
Chairman of the Board of Directors and Han Li Ping and Li Hong Liang will be
appointed as directors of the Company.
COMMITTEES OF THE BOARD OF DIRECTORS
The Company has no standing audit, nominating or compensation committee.
The Company does not have any audit committee financial expert serving on the
Company's Board of Directors other than Albert Wong, the Company's Chief
Executive Officer, who is not independent. After the Company is successful in
either closing the Company's capital raising transaction with Qiang Long or
otherwise raising capital, it will seek to retain an independent audit committee
financial expert.
MANAGEMENT AND BOARD OF DIRECTORS AFTER THE RESIGNATIONS BECOME EFFECTIVE
From and after the tenth day subsequent to the mailing of this information
statement to the Company's stockholders, the Company's board will be comprised
of Yun Dong Luan, Jie Chen, Li Chang De, Han Li Ping and Li Hong Liang.
Information regarding Yun Dong Luan and Jie Chan, who are already members of the
board, is provided above under "Management of the Company - Current Board of
Directors and Management". Information regarding the directors to be appointed
following the mailing of this Information Statement appears below.
None of the directors to be appointed following the mailing of this
Information Statement are currently an officer or director of or holds any
position with the Company, nor are they known to own any shares of the Company's
Common Stock. The following table identifies the directors to be appointed
following the mailing of this Information Statement.
9
- -----------------------------------------------------------------------------
PROPOSED POSITION(S) WITH
NAME AGE THE COMPANY
- -----------------------------------------------------------------------------
Li Chang De 46 Chairman of the Board of Directors
- -----------------------------------------------------------------------------
Han Li Ping 45 Director
- -----------------------------------------------------------------------------
Li Hong Liang 42 Director
- -----------------------------------------------------------------------------
LI CHANG DE
Li Chang De has acted as the chairman of Board of Directors of Beijing
Qiang Long Real Estate Development Co. Ltd., a real estate development and
investment company, since 1993. During his tenure as chairman he has led the
company to develop many holiday villages, hotels and business centers throughout
China.
HAN LI-PING
Han Li-Ping acted as general manager of China Manzhouli TianRui Ltd., a
real estate development and investment company, from 1993 to 1999 and acted as
vice general manager from 1999 to 2003. Ms. Ping has served as vice general
manager of Chuang Sheng Ltd., a securities investment company, since 2003.
LI HONG LIANG
Li Hong-Liang acted as vice general manager of Beijing JiuFa Industry
Ltd., a company engaged in commerce and trade, from 1994 to 2003. He served as
vice general manager of China Cardinal Ltd. from 2003 to 2004.
INVOLVEMENT IN LEGAL PROCEEDINGS
The Company is not aware of any material proceeding to which any of the
directors, officers, employees or director nominees (the "Designees") is a party
adverse to the interests of the Company or has a material interest adverse to
the Company. During the past five years, none of the Designees have:
10
(1) Petitioned for bankruptcy or had a bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time;
(2) Been convicted in a criminal proceeding or is currently subject to a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
(3) Been subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities or banking activities; or
(4) Been found by a court of competent jurisdiction (in a civil action),
the SEC or the Commodity Futures Trading Commission to have violated a federal
or state securities or commodities law, and the judgment has not been reversed,
suspended or vacated.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We rent the office at 10th Floor, Guangdong Bianfang Building, Fu Jing
Road, Fu Tian District, Shenzhen, People's Republic of China. The office is
owned by Minghua Real Estate (Shenzhen) Ltd. which is owned by a British Virgin
Island company whose sole shareholder is the Company's Chairman, Chu Quan Li. We
pay Minghua Real Estate (Shenzhen) Ltd. an annual rental of $153,600 under the
Company's leasing arrangement for such space.
On January 19, 2004, the Company's wholly-owned subsidiary, Minghua Hong
Kong and Jinmou Li, the son of the Company's Chairman, Chu Quan Li, entered into
a stock purchase agreement relating to the sale by Jinmou Li to Minghua Hong
Kong of 100% of the equity in Asia Key Group Ltd., a Hong Kong corporation, for
a purchase price of RMB 8,200,000 (approximately, US$990,709) and 28,210,000
shares of the Company's Common Stock.
The parties agreed upon a valuation of SZ Minghua of RMB 273,000,000
(approximately, US$32,983,363.34), which was calculated based upon the paid-up
capital, accumulated funds and the value of the production project and stock
value. The parties further agreed that RMB 40,980,000 (approximately,
US$4,951,121) constitutes the value of the 15% interest that Minghua Hong Kong
acquired. The Company's shares that were issued as partial consideration for the
15% equity interest were valued at a price of $0.14 per share.
11
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
None of the Designees have received any compensation from the Company, and
there have been no transactions between the Company and any of the Designees
other than as set forth in this Information Statement.
The following table sets forth information concerning all cash and
non-cash compensation awarded to, earned by or paid to the Company's Chairman,
the Company's Chief Executive Officer and each of the next four highly
compensated executive officers for services in all capacities to us, the
Company's subsidiaries and predecessors.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG-TERM COMPENSATION
------------------- ----------------------
AWARDS PAYOUTS
------ -------
SECURITIES
OTHER UNDER-LYING ALL
ANNUAL RESTRICTED OPTIONS/ OTHER
COMP- STOCK SARS LTIP COMPEN
ENSATION AWARDS (#) PAYOUTS SATION
YEAR SALARY($) BONUS($) ($) ($) ($) ($)
- ---------------------- -------- ---------------- ---------- ----------- ------------- -------------- ------------ -------------
Albert Wong, Chief 2003 30,769 2,564 0 0 500,000 0 0
Executive Officer 2002 23,077 2,564 0 60,000 0 0 0
and President 2001 0 0 0 0 0 0 0
Chuquan Li, Chairman 2003 153,846 12,821 0 0 2,000,000 0 0
2002 153,846 12,821 0 0 0 0 0
2001 153,846 12,821 0 0 0 0 0
Kuen Kwong Chan, 2003 61,538 5,128 0 0 500,000 0 0
Director 2002 61,538 5,128 0 0 0 0 0
2001 61,538 5,128 0 0 0 0 0
Ji-Kuan Li 2003 21,951 0 0 0 500,000 0 0
Director 2002 14,634 0 0 36,000 0 0 0
2001 0 0 0 0 0 0 0
Wen Zhi Zhou 2003 26,927 0 0 0 500,000 0 0
Director 2002 26,927 0 0 36,000 0 0 0
2001 26,927 0 0 0 0 0 0
12
OPTION/SARS GRANTS IN LAST FISCAL YEAR
The following table sets forth the grant of stock options and stock
appreciation rights (SARs) made during the year ended December 31, 2003, to the
persons named in the Summary Compensation Table:
- ---------------------------------------------------------------------------------------------------------
Name Number of Percent of Total Exercise of Expiration
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Base Price
Granted Fiscal Year ($/Sh) Date
- ---------------------------------------------------------------------------------------------------------
Albert Wong 500,000 12.5% $0.12 2/29/04
Chief Executive
Officer, President,
Secretary and
Treasurer
- ---------------------------------------------------------------------------------------------------------
Chuquan Li 2,000,000 50% $0.12 2/29/04
Chairman
- ---------------------------------------------------------------------------------------------------------
Kuen Kwong Chan 500,000 12.5% $0.12 2/29/04
Director
- ---------------------------------------------------------------------------------------------------------
Ji-Kuan Li 500,000 12.5% $0.12 2/29/04
Director
- ---------------------------------------------------------------------------------------------------------
Wen Zhi Zhou 500,000 12.5% $0.12 2/29/04
Director
- ---------------------------------------------------------------------------------------------------------
13
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information with respect to unexercised
stock options held by the persons named in the Summary Compensation Table at
December 31, 2003. No stock options were exercised in 2003 by those persons.
- -------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Unexercised In-The-Money
Securities Underlying Option/SARs at
Shares Options/SARs at FY-End FY-End ($)
Acquired on Value Realized (#) Exercisable/ Exercisable/
Exercise ($) Unexercisable Unexercisable
- -------------------------------------------------------------------------------------------------------------
Albert Wong 0 0 500,000 $60,000
Chief Executive
Officer, President,
Secretary and
Treasurer
- -------------------------------------------------------------------------------------------------------------
Chuquan Li 0 0 2,000,000 $240,000
Chairman
- -------------------------------------------------------------------------------------------------------------
Kuen Kwong Chan 0 0 500,000 $60,000
Director
- -------------------------------------------------------------------------------------------------------------
Ji-Kuan Li 0 0 500,000 $60,000
Director
- -------------------------------------------------------------------------------------------------------------
Wen Zhi Zhou 0 0 500,000 $60,000
Director
- -------------------------------------------------------------------------------------------------------------
14
LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR
The following table sets forth information with respect to awards made to
persons named in the Summary Compensation Table pursuant to a long-term
incentive plan in the fiscal year ending December 31, 2003.
- -----------------------------------------------------------------------------------------------------------
Name Number of Performance or Estimated Future Payouts Under Non-Stock
Shares, Units Other Period Price-Based Plans
or Other Rights Under Maturation
or Payout
--------------------------------------------------
Threshold Target Maximum
- -----------------------------------------------------------------------------------------------------------
Albert Wong 0 0 0 0 0
Chief Executive
Officer,
President,
Secretary and
Treasurer
- -----------------------------------------------------------------------------------------------------------
Chu Quan Li 0 0 0 0 0
Chairman
- -----------------------------------------------------------------------------------------------------------
Kuen Kwong Chan 0 0 0 0 0
Director
- -----------------------------------------------------------------------------------------------------------
Ji-Kuan Li 0 0 0 0 0
Director
- -----------------------------------------------------------------------------------------------------------
Wen Zhi Zhou 0 0 0 0 0
Director
- -----------------------------------------------------------------------------------------------------------
15
COMPENSATION OF DIRECTORS
All directors are reimbursed for out-of-pocket expenses in connection with
attendance at board of director's and/or committee meetings, but are not
otherwise compensated.
EMPLOYMENT AGREEMENTS
On April 16, 2002 the Company entered into an employment agreement with
Mr. Albert Wong as Chief Executive Officer. The agreement expired on April 9,
2003 and has been extended for a further year. Mr. Wong receives monthly
compensation under the agreement equal to HK$20,000 (approximately US$2,564) and
is reimbursed for any expenses that he incurs on behalf of the Company. In
addition, on October 16, 2002, the Board of Directors agreed to issue 500,000
shares of the Company 's Common Stock to Mr. Wong.
We do not have employment agreements with any of the Company's other
executive officers or directors.
INDEMNIFICATION POLICY
The Company's directors and officers are indemnified as provided by the
New York Business Corporation Law and the Company's bylaws. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to the Company's directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities is asserted by one of the Company's directors, officers, or
controlling persons in connection with the securities being registered, the
Company will, unless in the opinion of the Company's legal counsel the matter
has been settled by controlling precedent, submit the question of whether such
indemnification is against public policy to a court of appropriate jurisdiction.
We will then be governed by the court's decision.
NO STOCKHOLDER ACTION REQUIRED
This Information Statement is being provided for informational purposes
only, and does not relate to any meeting of stockholders. Neither applicable
securities laws, nor the corporate laws of the State of New York require
approval of the transactions contemplated by the Contracts. NO VOTE OR OTHER
ACTION IS BEING REQUESTED OF THE COMPANY'S STOCKHOLDERS. THIS INFORMATION
STATEMENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY.
16
This Information Statement has been filed with the Securities and Exchange
Commission and is available electronically on EDGAR at www.sec.gov.
On the tenth day following the mailing of this Information Statement to
the Company's stockholders, Li Chang De, Han Li Ping and Li Hong Liang, will
become members of the board of the directors of the Company. At such time the
Company will file a Current Report on Form 8-K with the SEC reflecting the fact
that the Closing has occurred and that the aforementioned individuals have taken
office.
The Board of Directors
April 28, 2004