REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Together Again Limited
We have audited the accompanying balance sheets of Together Again Limited, a
British Virgin Islands limited liability company, (the "Company") as of December
31, 2003 and 2002, and the related statements of income, changes in
stockholders' equity, and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Company as of December 31,
2003 and 2002, and the results of its operations and its cash flows for the
periods indicated, in conformity with generally accepted accounting principles
in the United States of America.
Clancy and Co., P.L.L.C.
Phoenix, Arizona
December 21, 2004
1
TOGETHER AGAIN LIMITED
BALANCE SHEETS
DECEMBER 31
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
- -----------------------------------------
ASSETS 2003 2002
- ------ ---------------------------------
Current Assets
Cash and cash equivalents $ 546 $ 344
Trade receivables 64 -
Other receivables 35 118
Amount due from a shareholder. 505 810
---------------------------------
Total current assets 1,150 1,272
Total Assets $ 1,150 $ 1,272
=================================
LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Trade payables and accrued liabilities $ 167 $ 114
Customer deposits 473 1,056
Income taxes payable 75 34
---------------------------------
Total current liabilities 715 1,204
Commitments and contingencies - -
Stockholder's Equity
Share capital: par value $1; 50,000 shares authorized;
40,000 shares issued and outstanding 40 40
Retained earnings 395 28
---------------------------------
Total stockholders' equity 435 68
---------------------------------
Total liabilities and stockholders' equity $ 1,150 $ 1,272
=================================
The accompanying notes are an integral part of these financial statements.
2
TOGETHER AGAIN LIMITED
INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS) 2003 2002
- ---------------------------------------- ------------- -------------
Revenues, net $ 3,025 $ 1,469
General and administrative expenses (53) (53)
------------- -------------
Operating profit before income taxes 2,972 1,416
Provision for income taxes (Note 3) (41) (20)
------------- -------------
Profit from operations available to shareholders $ 2,931 $ 1,396
============= =============
Basic profit per share $ 73.28 $ 46.53
============= =============
Dividends $ 2,564 $ 3,590
============= =============
The accompanying notes are an integral part of these financial statements.
3
TOGETHER AGAIN LIMITED
STOCKHOLDERS' EQUITY STATEMENTS
FOR THE YEARS ENDED DECEMBER 31
RETAIND
SHARE EARNINGS
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS) CAPITAL (A DEFICIT) TOTAL
- ---------------------------------------- ------------------------------------------
BALANCE - JANUARY 1, 2002 (1 SHARE) $ 1 $ 2,222 $ 2,223
Issuance of shares 39 - 39
Net profit - 1,396 1,396
Dividends - (3,590) (3,590)
------------------------------------------
BALANCE - DECEMBER 31, 2002 (40,000 SHARES) 40 28 68
------------------------------------------
Net profit - 2,931 2,931
Dividends - (2,564) (2,564)
------------------------------------------
BALANCE - DECEMBER 31, 2003 (40,000 SHARES) $ 40 $ 395 $ 435
==========================================
The accompanying notes are an integral part of these financial statements.
4
TOGETHER AGAIN LIMITED
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
2003 2002
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,931 $ 1,396
----------------------------
Adjustments to reconcile net income to net cash flows provided by
operating activities
Changes in assets and liabilities
(Increase) decrease in trade receivables (64) -
(Increase) decrease in other receivables 83 227
Increase (decrease) in trade payables and accrued liabilities 53 60
Increase (decrease) in customer deposits (583) 936
Increase (decrease) in income taxes payable 41 19
----------------------------
Net cash flows provided by operating activities 2,461 2,638
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of shares - 39
Related party repayments (2,259) (2,764)
----------------------------
Net cash flows used in financing activities (2,259) (2,725)
----------------------------
Increase (decrease) in cash and cash equivalents 202 (87)
Cash and cash equivalents, beginning of year 344 431
----------------------------
Cash and cash equivalents, end of year $ 546 $ 344
============================
CASH PAID FOR INTEREST AND INCOME TAXES - -
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Dividends netted against outstanding loans to shareholders $ 2,564 $ 3,590
============================
The accompanying notes are an integral part of these financial statements.
5
TOGETHER AGAIN LIMITED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
(Expressed in thousands of U.S. dollars)
1. CORPORATE INFORMATION
The Company was incorporated in the British Virgin Islands on May 18,
2000 with limited liability. Its registered office is located at the
office of Offshore Incorporations Limited, P.O. Box 957, Offshore
Incorporation Centre, Road Town, Tortola, the British Virgin Islands. The
principal activities of the Company are the provision of artist
management services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The financial statements and accompanying notes are prepared in
accordance with accounting principles generally accepted in the United
States of America.
(b) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, deposits held at
banks, and short-term highly liquid investments with original maturities
of three months or less.
(c) FOREIGN CURRENCY TRANSLATION
The reporting currency of the Company is United States dollars ("US$").
The Company uses their local currency, Hong Kong dollars, as their
functional currency. Results of operations and cash flow are translated
at average exchange rates during the period, and assets and liabilities
are translated at the end of period exchange rates. Translation
adjustments resulting from this process are included in accumulated other
comprehensive income in the stockholders' equity statement. Transaction
gains and losses that arise from exchange rate fluctuations on
transactions denominated in a currency other than the functional currency
are included in the results of operations as incurred. These amounts are
immaterial to the financial statements.
(d) COMPREHENSIVE INCOME
The Company accounts for foreign currency translation adjustments
separately in its Statement of Stockholders' equity as other
comprehensive income. There were no such amounts for the periods
presented.
(E) INCOME TAXES
The Company has adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes ("SFAS 109"). SFAS 109 requires the
recognition of deferred income tax liabilities and assets for the
expected future tax consequences of temporary differences between income
tax basis and financial reporting basis of assets and liabilities.
Provision for income taxes consist of taxes currently due plus deferred
taxes. There are no deferred tax amounts at December 31, 2003 and 2002.
The charge for taxation is based on the results for the year as adjusted
for items, which are non-assessable or disallowed. It is calculated using
tax rates that have been enacted or substantively enacted by the balance
sheet date. Deferred tax is accounted for using the balance sheet
liability method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax basis used in the
computation of assessable tax profit.
6
In principle, deferred tax liabilities are recognized for all taxable
temporary differences, and deferred tax assets are recognized to the
extent that it is probably that taxable profit will be available against
which deductible temporary differences can be utilized.
Deferred tax is calculated at the tax rates that are expected to apply to
the period when the asset is realized or the liability is settled.
Deferred tax is charged or credited in the income statement, except when
it related to items credited or charged directly to equity, in which case
the deferred tax is also dealt with in equity. Deferred tax assets and
liabilities are offset when they relate to income taxes levied by the
same taxation authority and the Company intends to settle its current tax
assets and liabilities on a net basis.
(F) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of the assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those required.
(G) REVENUE RECOGNITION AND PROVISIONS FOR LOSSES
Service fee income from provision of artist management services is
recognized when services are rendered. In accordance with SEC Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements," the Company presents its revenue on a net basis as it acts
as an agent for the artists. Revenues on a gross basis for the year ended
December 31, 2003 were approximately $3,782,000 (2002: $1,887,000).
Provisions for losses are determined on the basis of loss experience and
current economic conditions. These financial statements do not include
any provision for losses.
(H) RELATED PARTY TRANSACTIONS
Parties are considered to be related if one party has the ability,
directly or indirectly, to control the other party or exercise
significant influence over the other party in making financial and
operating decisions. Parties are also considered to be related if they
are subject to common control or common significant influence. Related
parties may be individuals or corporate entities. A transaction is
considered to be a related party transaction when there is a transfer of
resources or obligations between related parties.
(I) FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company considers the carrying amount of cash, trade receivables,
deposits and other receivables, trade payables, accrued liabilities to
approximate fair values because of the short period of time between the
origination of such instruments and their expected realization and their
current market rate of interest.
(J) CONCENTRATION OF CREDIT RISK
Due to trade receivables - The balance in trade receivables at December
31, 2003 represents one customer.
7
Due to revenues and major customers - For the years ended December 31,
2003 and 2002, all of the Company's revenues were generated by one
artist, with the exception of one customer in 2003 only. During 2003, the
Company had two customers (2002: three customers) that each accounted for
more than 10% of its revenues.
Due to geographic sales - The Company's percentage of revenues by
geographic area follows:
2003 2002
------------ ------------
People's Republic of China 90% 86%
Hong Kong 9% 14%
United States of America 1% -
(K) EARNINGS PER SHARE
Basic earnings or profit per share are based on the weighted average
number of common shares outstanding. Diluted earnings or loss per share
is based on the weighted average number of common shares outstanding
(2003: 40,000 shares; 2002: 30,000 shares) and dilutive common stock
equivalents. All earnings per share amounts in these financial statements
are basic earnings per share as defined by SFAS No. 128, "Earnings Per
Share." There were no dilutive common stock equivalents for the periods
presented.
(L) RECENT ACCOUNTING PRONOUNCEMENTS
The Securities and Exchange Commission ("SEC") and the Financial
Accounting Standards Board ("FASB") issued the following new accounting
pronouncements during 2003 and 2004:
In January 2003, the FASB issued FASB Interpretation No. 46
"Consolidation of Variable Interest Entities - an interpretation of
Accounting Research Bulletin No. 51 ("FIN 46"). FIN 46 requires certain
variable interest entities to be consolidated by the primary beneficiary
of the entity if the entity investors in the entity do not have the
characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. FIN
46 is effective for all new variable interest entities created or
acquired after January 31, 2003. For variable interest entities created
or acquired prior to February 1, 2003, the provisions of FIN 46 must be
applied for the first interim or annual period beginning after June 15,
2003. FIN 46 does not have any impact on the financial position or
results of operations of the Company.
In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133
on Derivative Instruments and Hedging Activities," which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and
for hedging activities under SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement is generally
effective for contracts entered into or modified after June 30, 2003, and
all provisions should be applied prospectively. This statement does not
affect the Company.
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and
Equity," which establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances). This Statement is effective for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective
at the beginning of the first interim period beginning after June 15,
2003. It is to be implemented by reporting the cumulative effect of a
change in an accounting principle for financial instruments created
before the issuance date of the Statement and still existing at the
beginning of the interim period of adoption. Restatement is not
permitted. This statement does not affect the Company.
8
In December 2003, the SEC released Staff Accounting Bulletin ("SAB") No.
104, "Revenue Recognition," which supersedes SAB 101, "Revenue
Recognition in Financial Statements." SAB 104 clarifies existing guidance
regarding revenues for contracts that contain multiple deliverables to
make it consistent with Emerging Issues Task Force ("EITF") No.
00-21,"Accounting for Revenue Arrangements with Multiple Deliverables."
This statement does not affect the Company.
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs," which
clarifies the accounting for abnormal amounts of idle facility expense,
freight, handling costs, and wasted material (spoilage). This Statement
requires that those items be recognized as current-period charges
regardless of whether they meet the criterion of "so abnormal." In
addition, this Statement requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of
the production facilities. This Statement is the result of a broader
effort by the FASB to improve the comparability of cross-border financial
reporting by working with the International Accounting Standards Board
("IASB") toward development of a single set of high-quality accounting
standards. As part of that effort, the FASB and the IASB identified
opportunities to improve financial reporting by eliminating certain
narrow differences between their existing accounting standards. As
currently worded in Accounting Research Bulletin 43, the term "so
abnormal" was not defined and its application could lead to unnecessary
noncomparability of financial reporting. This Statement eliminates that
term. This statement does not affect the Company.
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment"
("SFAS 123R"), a revision to SFAS No. 123 "Accounting for Stock-Based
Compensation" ("SFAS 123"), and superseding APB Opinion No. 25
"Accounting for Stock Issued to Employees" and its related implementation
guidance. SFAS 123R establishes standards for the accounting for
transactions in which an entity exchanges its equity instruments for
goods or services, including obtaining employee services in share-based
payment transactions. SFAS 123R applies to all awards granted after the
required effective date and to awards modified, repurchased, or cancelled
after that date. Adoption of the provisions of SFAS 123R is effective as
of the beginning of the first interim or annual reporting period that
begins after June 15, 2005. This statement does not affect the Company.
In December 2004, the FASB issued SFAS No. 152, "Accounting for Real
Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66
and 67," which discusses the accounting and reporting of real estate
time-sharing transactions. This Statement is effective for financial
statements for fiscal years beginning after June 15, 2005, and
restatement of previously issued financial statements is not permitted.
This statement does not affect the Company.
In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets - an amendment of APB Opinion No. 29." The guidance in APB Opinion
No. 29, "Accounting for Nonmonetary Transactions," is based on the
principle that exchanges of nonmonetary assets should be measured based
on the fair value of the assets exchanged and provided an exception to
the basic measurement principle (fair value) for exchanges of similar
productive assets. That exception required that some nonmonetary
exchanges, although commercially substantive, be recorded on a carryover
basis. This Statement eliminates the exception to fair value for
exchanges of similar productive assets and replaces it with a general
exception for exchange transactions that do not have commercial
substance--that is, transactions that are not expected to result in
significant changes in the cash flows of the reporting entity. The
provisions of this Statement are effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005,
applied prospectively. This statement does not affect the Company.
9
3. INCOME TAXES
Hong Kong profits tax has been provided at a rate of 17.5% (2002: 16%) on
the estimated assessable profits arising in Hong Kong for the year ended
December 31, 2003 and 2002.
The following table reconciles the U.S. Statutory rates to the Company's
effective rate:
2003 2002
--------- ----------
U.S. statutory rate 34.0% 34.0%
Foreign income not recognized in United States (34.0) (34.0)
Hong Kong profits tax 17.5 16.0
--------- ----------
17.5% 16.0%
========= ==========
A reconciliation of the provision for Hong Kong profits tax for the years
ended December 31 consists of the following:
2003 2002
$ % $ %
-------------- -------- -------------- ---------
Profit before tax $ 2,972 $ 1,416
============== ======== ============== =========
Provision for Hong Kong profits tax $ 520 17.5 $ 226 16.0
Tax effect of income not taxable in determining taxable
profits (599) (20.2) (258) (18.2)
Tax effect of expenses not deductible in determining taxable
profits 120 4 52 3.7
-------------- -------- -------------- ---------
Provision for income taxes $ 41 1.3 $ 20 1.5
============== ======== ============== =========
4. STOCKHOLDERS' EQUITY
Dividends:
For the years ended December 31, 2003 and 2002, dividends of $64.10
(2002: $89.74) per share totaling $2,564,000 (2002: $3,590,000) were
declared to shareholders of record as of December 31, 2003 and 2002,
respectively, and were paid by netting these amounts against loans to
shareholders for both periods presented.
10
Share capital:
(i) Upon incorporation, the authorized share capital of the Company
was US$50,000 divided into 50,000 ordinary shares of US$1 each. On
June 8, 2000, 1 share was allotted and issued, credited as fully
paid.
(ii) On April 12, 2002, the Company issued 39,999 shares new ordinary shares
of US$1 each to Colima Enterprises Holdings Inc. at a price of US$1
per share.
5. RELATED PARTY TRANSACTIONS
Amount due from a shareholder (Colima Enterprises Holdings Inc.) is
unsecured, interest free and repayable on demand.
6. SIGNIFICANT SUBSEQUENT EVENTS
Subsequent to year-end, the Company underwent a series of corporate
reorganizations with both privately held companies and a publicly held company
as follows:
(i) Reorganization with privately held companies:
(a) On March 15, 2004, Colima Enterprises Holdings Inc., which was the
sole shareholder of the Company, transferred 15,480 shares of the
Company to China Star Entertainment (BVI) Limited for
consideration of HK$38,310,000 (approximately $4,900,000).
(b) On March 15, 2004, the Company entered into a sale and purchase
agreement with China Star Entertainment (BVI) Limited, pursuant to
which the Company purchased China Star Entertainment (BVI)
Limited's interest in the entire issued share capital of Imperial
International Limited in consideration for the Company issuing
8,080 shares to China Star Entertainment (BVI) Limited.
(c) Further to the reorganization completed on March 15, 2004, the
Company together with its subsidiaries acquired on March 15, 2004
(hereinafter referred as to the "Group") underwent another
reorganization scheme ("New Reorganization") to rationalize the
structure of the Group. Pursuant to the New Reorganization, the
Company became the holding company of the companies involved in
the New Reorganization on October 31, 2004 ("the New Group"). This
was accomplished by (i) transferring certain assets and
liabilities which are employed in the operation of the principal
activity of the Company (the "Business") to Metrolink Global
Limited ("MGL"), a company incorporated in the British Virgin
Islands in consideration of the HK$3,645,820 which shall be
satisfied by (a) the allotment and issue by 99 MGL ordinary shares
to Metrolink Pacific Limited ("MPL"), the immediate holding
company of MGL incorporated in the British Virgin Islands; (b) the
allotment and issue by MPL to Imperial of 99 MPL ordinary shares;
and (c) the allotment and issue of 98 ordinary shares of Imperial
to the Company, each issued and credited as fully paid; (ii)
allotment of 20 ordinary shares of MPL to Imperial as
consideration for acquiring the entire issued share capital of
China Star Management Limited ("CSML") and Anglo Market
International Limited ("AMIL") each issued and credited as fully
paid.
At the same time, the Company entered into several deeds of
novation with MGL for completion of the transfer of Business as
follow: (i) deed of novation in relation to amounts paid by CSML
on behalf of the Company; (ii) deed of novation in relation to
Artist Contract entered by the Company; and (iii) deed of novation
in relation to professional fees contracted to be paid by the
Company.
As a result of the above acquisitions, the principal activities of the
Company are investment holding and the provision of artist management
services. The accounting policies are the same as those of the Company.
Supplementary unaudited pro forma condensed financial data compiled with
the assumption that all of the above acquisitions tool place on January
1, 2002 is shown as follows:
11
UNAUDITED PRO FORMA CONDENSED BALANCE SHEETS
DECEMBER 31
(Expressed in thousands of U.S. dollars)
ASSETS 2003 2002
- ------
----------------------------
Current Assets
Cash and cash equivalents $ 816 $ 509
Trade receivables, deposits and other receivables 2,479 1,739
Amounts due from fellow subsidiaries 1,635 1,547
Amounts due from related companies - Colima Enterprises Holdings, Inc. 465 769
----------------------------
Total current assets 5,395 4,564
----------------------------
Total Assets $ 5,395 $ 4,564
============================
LIABILITIES AND STOCKHOLDER'S EQUITY
- ------------------------------------
Current Liabilities
Trade payables and other accruals $ 2,378 $ 1,703
Due to related parties 2,827 4,359
Income taxes payable 75 34
----------------------------
Total current liabilities 5,280 6,096
Commitments and contingencies - -
Stockholder's Equity 115 (1,532)
----------------------------
----------------------------
Total liabilities and stockholders' equity $ 5,395 $ 4,564
============================
UNAUDITED PRO FORMA CONDENSED INCOME STATEMENTS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of U.S. dollars)
2003 2002
----------------------------
Revenues, net $ 5,436 $ 1,860
Other income - 10
General and administrative expenses (1,184) (1,274)
----------------------------
Operating profit before income taxes 4,252 596
Provision for income taxes (41) (20)
----------------------------
Profit from operations available to shareholders $ 4,211 $ 576
============================
Basic profit per share $ 87.72 $ 12.00
============================
Dividends $ 2,564 $ 3,590
============================
12
UNAUDITED PRO FORMA CONDENSED STOCKHOLDERS' EQUITY STATEMENTS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of U.S. dollars)
ADDITIONAL
SHARE PAID-IN RETAIND
CAPITAL CAPITAL EARNINGS TOTAL
-----------------------------------------------------
BALANCE - JANUARY 1, 2002 $ - $ 128 $ 1,354 $ 1,482
Net profit - - 576 576
Dividends - - (3,590) (3,590)
-----------------------------------------------------
Balance - December 31, 2002 - 128 (1,660) (1,532)
Net profit - - 4,211 4,211
Dividends - - (2,564) (2,564)
-----------------------------------------------------
Balance - December 31, 2003 $ - $ 128 $ (13) $ 115
=====================================================
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
(Expressed in thousands of U.S. dollars)
2003 2002
-------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 4,211 $ 576
-------------------------------------
Adjustments to reconcile net income to net cash flows provided by
operating activities
Changes in assets and liabilities
(Increase) decrease in trade receivables and other receivables (740) 477
Increase (decrease) in trade payables and other accruals 675 850
Increase (decrease) in income taxes payable 41 20
-------------------------------------
Net cash flows provided by operating activities 4,187 1,923
-------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Related party advances (repayments) (3,880) (1,860)
-------------------------------------
Net cash flows used in financing activities (3,880) (1,860)
-------------------------------------
Increase in cash and cash equivalents 307 63
Cash and cash equivalents, beginning of year 509 446
-------------------------------------
Cash and cash equivalents, end of year $ 816 $ 509
=====================================
SUPPLEMENTAL NONCASH INVESTING AND FINANCING ACTIVITIES:
Dividends netted against outstanding loans to shareholders $ 2,564 $ 3,590
=====================================
13
THE FOLLOWING TABLE PRESENTS THE UNAUDITED RESULTS OF THE NEW GROUP'S
GEOGRAPHICAL SEGMENTS:
SEGMENT REVENUE: 2003 2002
---------------- ----------------
People's Republic of China $ 2,761 $ 1,314
Hong Kong 2,609 489
South East Asia 42 57
Others 24 -
---------------- ----------------
$ 5,436 $ 1,860
================ ================
SEGMENT RESULTS:
People's Republic of China $ 2,159 $ 415
Hong Kong 2,000 135
South East Asia 33 26
Others 19 -
---------------- ----------------
$ 4,211 $ 576
================ ================
(II) REORGANIZATION WITH A PUBLICLY HELD COMPANY.
Pursuant to a Share Exchange Agreement dated November 17, 2004, MPL agreed to
transfer all of its issued and outstanding shares in exchange for 109,623,006
shares (representing an 85% controlling interest after the acquisition) in
Interactive Marketing Technology, Inc. ("IAMK"), a U.S. public company that
trades on the Over-The-Counter Bulletin Board. MPL will become a wholly-owned
subsidiary of IAMK upon completion of the Share Exchange Agreement. After the
acquisition is concluded, MPL plans to change its corporate name to "China
Artists Agency, Inc." and to change the fiscal year end of the reporting company
to December 31.
To effect the reverse acquisition and comply with the terms of the Share
Exchange Agreement, IAMK will effect a reverse split of its issued and
outstanding common stock on a 1.69 to 1 basis and increase the authorized number
of shares of its common stock, $0.001 par value per share, from 60,000,000 to
200,000,000.
The accounting for this transaction is identical to that resulting from a
reverse acquisition, except that no goodwill or other intangible assets shall be
recorded. Accordingly, the financial statements of MPL will be the historical
financial statements of the Company.
Supplemental unaudited pro forma condensed financial statements have been
omitted as the resulting financial impact of the reverse acquisition represents
a change in the legal structure only of MPL since IAMK does not have any
operations for the periods presented and the financial statements of MPL will be
the historical financial statements of the Company.