-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HNhUD6FzHPw2X4pYLEnG0RTPI+Deh2NIJ4TaEgf62hZcEw4mTsLbAtUF4SgLGRqw xeSkJX1StTm1tn5wS+p5sQ== /in/edgar/work/20000905/0000912057-00-040170/0000912057-00-040170.txt : 20000922 0000912057-00-040170.hdr.sgml : 20000922 ACCESSION NUMBER: 0000912057-00-040170 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PREMIER BRANDS INC/UT CENTRAL INDEX KEY: 0001071355 STANDARD INDUSTRIAL CLASSIFICATION: [6770 ] IRS NUMBER: 330489616 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-29865 FILM NUMBER: 716867 BUSINESS ADDRESS: STREET 1: 268 WEST 400 SOUTH STREET 2: SUITE 300 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 8015758073 10QSB/A 1 a2024885z10qsba.txt 10QSB/A U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Amendement No.1) (MARK ONE) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM................TO.................. COMMISSION FILE NUMBER 000-29865 CATHAYONE INC. AND SUBSIDIARIES (FORMERLY PREMIER BRANDS, INC.) (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) DELAWARE 33-0489616 ------------------------------- ------------------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 437 MADISON AVENUE, NEW YORK, NEW YORK 10022 -------------------------------------------- (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 212/888-6822 ------------------------- (ISSUER'S TELEPHONE NUMBER) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Number of shares outstanding of each of the issuer's classes of common equity, as of June 30, 2000: Common 29,258,319 PART I FINANCIAL INFORMATION
Item 1. Financial Statements PAGE NO. Consolidated Balance Sheets as of June 30, 2000 3 (unaudited) Consolidated Statements of Operations for the three months ended June 30, 2000 and from Inception to June 30, 2000 (unaudited) 4 Consolidated Statements of Cash Flows from Inception to June 30, 2000 (unaudited) 5 Notes to Consolidated Financial Statements 6 Unaudited Pro Forma Statements of Operations for the twelve months ended June 30, 2000 7 Notes to Unaudited Pro Forma Statements 10 Item 2. Management's Discussions and Analysis 10 PART II OTHER INFORMATION 12 Item 1. Legal Proceedings 12 Item 2. Changes in Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 15 SIGNATURES 17
PART I FINANCIAL INFORMATION ITEM 1 FINANCIAL STATEMENTS CATHAYONE INC. & SUBSIDIARIES (A Development Stage Company) Consolidated Balance Sheets (Unaudited) As of June 30, 2000 ASSETS Current Assets Cash in Bank $ 4,087 Long-Term Assets Investments in Foreign Operations 2,216,139 ----------- Total Assets $ 2,220,226 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable $ 274,391 Accrued Expenses 12,607 Income Taxes Payable 800 ----------- Total Current Liabilities $ 287,798 ----------- Commitment and Contingencies 0 Stockholders' Equity Convertible Preferred Stock, 5,000,000 authorized shares, $.001 par value, none issued 0 Common Stock, 100,000,000 Shares Authorized $.001 par value, 29,258,319 and 4,208,319 shares issued and outstanding 29,258 Paid In Surplus 1,999,500 Retained Earnings (96,330) ----------- Total Stockholders' Equity $ 1,932,428 ----------- Total Liabilities and Stockholders' Equity $ 2,020,226 ===========
See Accompanying Notes to Consolidated Financial Statements 3 CATHAYONE, INC (A Development Stage Company) Consolidated Statement of Operations (Unaudited) For the Three Months Ended June 30, 2000 and the period of March 1, 2000 (inception) to June 30, 2000
Three Period of March 1, Months Ended 2000 (inception) to June 30, 2000 June 30, 2000* Operating Expenses: General and Administrative Expenses $ 33,055 $ 34,355 Costs associated with Reverse Merger--See Notes 59,303 59,303 Writedown of CMD acquisition 2,672 2,672 ----------- ----------- Total Expenses 95,030 96,330 Net Loss $ (95,030) $ (95,330) =========== =========== Net Loss Per Share $ (.011) $ (.016) =========== =========== Weighted Average Number of Shares Outstanding 8,032,495 6,120,407 ==============================
* Also "Cumulative to Date Loss Since Inception" See Accompanying Notes to Consolidated Financial Statements 4 CATHAYONE INC. (A Development Stage Company) Consolidated Statement of Cash Flows (Unaudited) For period of March 1, 2000 (Inception) to June 30, 2000 Cash Flows from Operating Activites Net Income (Loss) $ (96,330) Adjustments to reconcile net loss to net cash provided from operations: Common stock issued upon reorganization 24,658 Writedown of CMD acquisition 2,672 Increase (Decrease) in operating liabilities: Accounts payable 74,519 Accrued expenses 12,607 Taxes payable 800 ----------- Net Cash Provided By Operating Activities $ 18,926 ----------- Cash Flows from Investing Activities: Investment in Foreign Operations $ (16,139) ----------- Net Cash Used In Investing Activities $ (16,139) ----------- Cash Flows from Financing Activities: Sale of common stock and paid in surplus 1,300 ----------- Net Cash Provided By Financing Activities $ 1,300 ----------- Net Increase in Cash and Cash Equivalents $ 4,087 Cash and Cash Equivalents, Beginning of Period 0 ----------- Cash and Cash Equivalents, End of Period $ 4,087 =========== Non-cash Financing Activities Common stock issued relating To reverse merger ($.001 par value) $ 25,558 =========== Common stock issued for equity Investments in foreign operations $ 2,000,000 =========== Common stock issued for acquisition of subsidiary $ 2,800 ===========
See Accompanying Notes to Consolidated Financial Statements 5 CATHAYONE INC. Notes to Consolidated Financial Statements NOTE 1 BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements contain all adjustments consisting only of normal recurring accruals considered necessary to present fairly Cathayone Inc.'s (the "Company") financial position at June 30, 2000, the results of operations for the three months ended June 30, 2000 and the period of March 1, 2000 to June 30, 2000, and cash flows for the period of March 1, 2000 to June 30, 2000. The results for the period ended June 30, 2000, are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2000. NOTE 2 EARNINGS (LOSS) PER SHARE The following represents the calculation of earnings (loss) per share:
Three Period of March 1, Months Ended 2000 (inception) to JUNE 30, JUNE 30, 2000 2000* Basic & Fully Diluted Net Loss $ (95,030) $ (96,330) Less preferred stock dividends - - ---------- ---------- Net Loss $ (95,030) $ (96,330) Weighted average number of Common shares 8,032,495 6,120,407 ---------- ---------- Basic & Fully Diluted loss $ (.011) $ (.016) per share * ========== ==========
* The Company had no common stock equivalents during the periods presented NOTE 3 PRINCIPLES OF CONSOLIDATION The unaudited consolidated financial statements for June 30, 2000 and the six months then ended include the accounts of CathayOne Inc. (formerly Premier Brands, Inc.) and its wholly owned subsidiary, Cathay Bancorp.com Limited, a Hong Kong corporation. On June 30, 2000 the Company acquired all of the issued and outstanding common shares of CMD Capital Limited ("CMD"), a Hong Kong corporation. 6 NOTE 4 NATURE OF BUSINESS AND RECENT REORGANIZATION Pursuant to the share exchange agreement dated June 14, 2000, the Company acquired 100% of the issued and outstanding shares of Cathay Bancorp.com Limited ("Bancorp") in exchange for the issuance of 21,750,000 shares of the Company's common stock. Bancorp was incorporated on March 1, 2000 under the laws of Hong Kong. The transaction is treated as a reverse merger in accordance with Accounting Principles Board (APB) opinion No. 16, whereby the shareholders of Bancorp received approximately 83.8% of the then outstanding shares of the Company. The transaction has been accounted for using the purchase method of accounting, with Bancorp being identified as the acquirer for accounting purposes. The merger was treated as a tax-free reorganization for federal and state income tax purposes. The Company maintains the option to purchase between a 20% and 40% interest in WebShanghai.com Co., Ltd. ("WebShanghai") through Hong Kong Technologies Solutions, Limited. Upon the successful completion of the acquisition of WebShanghai, the Company will issue $650,000 worth of the Company's common stock to SNet Communications (HK) Limited. In addition, the Company is responsible for all related restructuring costs incurred in connection with the transaction. NOTE 5 ACQUISITION OF CMD CAPITAL LIMITED Pursuant to an agreement dated June 30, 2000, the Company acquired 100% of the issued and outstanding shares of CMD Capital Limited ("CMD"), a Hong Kong corporation, in exchange for the issuance of 2,800,000 shares of the Company's common stock valued at $4 per share. As at the date of purchase, CMD's assets included 70% of the common stock of PRC Investment Journal Inc. ("PRC") whose assets included 100% ownership of the PRCInvest.com website (the "PRC Website"). Pursuant to an underlying joint venture contract, CMD is required to provide funding of $3,000,000 to PRC for continued development of the PRC Website. Pursuant to a cooperation agreement, CMD is required to provide $2,000,000 to be used to develop a Hong Kong version of the PRC Website. The transaction has been accounted for using the purchase method of accounting. In accordance with Staff Accounting Bulletin ("SAB") Topic #5 and SAB #48, for accounting purposes the transaction has been recorded at the par value of the shares issued (2,800,000 at $.001 each) rather than their fair value at the date issued ($11,200,000). CMD hasn't yet commenced operations and at the date of acquisition had a net book value of $128 resulting in a writedown of $2,672. NOTE 6 COMMITMENTS On April 6, 2000, Bancorp entered into a Letter of Intent whereby Bancorp formed a limited liability company in Hong Kong under the name of Hong Kong Technologies Solutions Limited ("Limited") on June 9, 2000. This Company will be used as a vehicle to make investments or other acquisitions on behalf of itself or Bancorp. See Note 4 above for discussion of the Company's additional commitments. On May 5, 2000, Bancorp also entered into a Cooperation Agreement whereby it will cooperate in the establishment of a Sino-foreign equity joint venture ("the Joint Venture"). The Joint Venture will be responsible for constructing and managing a series of entertainment websites, including "estage" and "TalkShow". The Company will hold 50% of the joint venture's registered capital. On June 28, 2000 the Company entered into a Sino-Foreign Cooperative Joint Venture Contract, forming a joint venture named Capital Entertainment Limited. For its share of the equity, the Company and another equity holder will jointly contribute $10,000,000 cash in several installments. The specific date of each installment will 7 be determined by the needs of the project, provided that the first installment of $2,000,000 is contributed within 30 days after the issuance of the joint venture's business license, of which $250,000 is due within 10 working days of signing the contract. A second installment of $3,000,000 will be due within 90 days after the issuance of the business license, and the final installment of $5,000,000 will be due before January 31, 2001. Upon the formal establishment of the Joint Venture, the Company will pay $700,000 and 500,000 shares of common stock to SNet Communications (HK) Limited ("SNet") pursuant to an agreement between SNet and Bancorp dated June 15, 2000. Upon completion of the entertainment websites to be owned by the Joint Venture, the Company will issue 250,000 shares of common stock to SNet. Upon obtaining the necessary license to operate talk show programs, the Company will issue 250,000 shares of common stock to SNet. To date the Company has issued 500,000 shares of common stock, as discussed above, to SNet under this agreement. These shares were valued at $4 per share. Pursuant to a joint venture contract dated April 22, 2000, CMD agreed to establish a joint venture for the purpose of establishing an investment information portal in China, with a version to be created for Hong Kong. For its share of the equity, the Company will contribute $3,000,000. CMD will hold 70% of the joint venture's registered capital. The contributions will be determined by the needs of the project provided that for the China portal, $100,000 was paid within 10 working days after execution of the contract, $700,000 within 22 days of obtaining a business license, which includes the first $100,000, and $1,400,000 within 140 days after the launch of the website, and $900,000 within 280 days after receipt of a business license. Pursuant to a cooperation agreement dated April 22, 2000, CMD will contribute $200,000 to the Hong Kong version of the PRC Website, of which $100,000 must be paid within 10 days after the agreement takes effect and of which $600,000 must be paid within 22 working days after the agreement takes effect (this amount includes the initial $100,000). $600,000 must be paid within 70 working days and $800,000 within 140 working days after the official publication of the Hong Kong version. NOTE 7 SUBSEQUENT EVENTS Subsequent to June 30, 2000, the Company incorporated three new Hong Kong subsidiaries, Cathay B Trade Limited, Cathay Entertainment, Limited and Cathay Investment, Limited. Cathay Entertainment Limited will hold the Company's interest in the entertainment ventures on behalf of Bancorp and Cathay Investment Limited will hold the Company's interests in CMD Capital Limited. Cathay B Trade Limited will be used for future projects. The Company has moved from Utah to Delaware and has been renamed "CathayOne Inc." upon the effectiveness of its merger into CathayOne Inc., the Company's newly formed and wholly-owned Delaware subsidiary on August 29, 2000. Under the terms of the merger, CathayOne Inc. is the surviving company. CathayOne Inc. has succeeded to all of the assets and liabilities of the Company immediately prior to the merger, and the Company's Board of Directors and its incumbent officers immediately prior to the merger are the Board of Directors and officers of CathayOne Inc. immediately after the merger. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS On June 14, 2000, the Company acquired all of the issued and outstanding shares of Bancorp. The transaction was a reverse merger with Bancorp 8 treated as the acquiring entity for accounting purposes. On June 30, 2000, the Company also acquired all of the issued and outstanding shares of CMD Capital Limited ("CMD"). The transactions have been accounted for using the purchase method of accounting and are reflected in the financial statements of the Company contained elsewhere herein. The unaudited pro forma combined statement of operations presents the results of operations assuming that the acquisitions became effective for accounting purposes on July 1, 2000. The unaudited pro forma financial statements have been prepared by management. The pro forma adjustments include certain assumptions and preliminary estimates as discussed in the accompanying notes and are subject to change. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. These pro forma financial statements should be read in conjunction with the accompanying notes and historical financial information of the Company included in this Form 8-K. See "FINANCIAL STATEMENTS". CATHAYONE INC. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED JUNE 30, 2000
CathayOne Cathay CMD Inc. Bancorp.com Capital Pro forma Pro forma Limited Limited(1) Adjustments Total ------------------------------------------------------------------- Selling, General and Administrative Expenses $159,738 $98,129 $ -- $257,867 ------------------------------------------------------------------- Loss Before Taxes (159,738) (98,129) -- (257,867) ------------------------------------------------------------------- Net Loss ($159,738) ($98,129) $ -- ($257,867) =================================================================== Loss per share ($0.04) ($49,064) $ -- ($0.05) =================================================================== Weighted average shares outstanding 4,208,319 2 1,000 5,161,744 -------------------------------------------------------------------
- -------- (1) CMD Capital Limited is a development stage company that has not commenced operations as of June 30, 2000. See accompanying notes to unaudited pro forma combined financial statements NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS 1. FISCAL YEAR ENDS 9 The unaudited pro forma combined statements of operations for the year ended June 30, 2000, include the Company, Bancorp and CMD's operations on a common fiscal year. The financial statements of the Company have been conformed to the year ended June 30, 2000 by including the operations results of the Company for the period July 1, 1999 to June 30, 2000, the operating results of Bancorp from March 1, 2000 (Inception) to June 30, 2000, and the operating results of CMD from August 4, 1999 (Inception) to June 30, 2000. 2. PRO FORMA ADJUSTMENTS There are no anticipated adjustments to the statement of operations as a result of the merger. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS The following information should be read in conjunction with the consolidated financial statements and the accompanying notes thereto included in Item 1 of this Quarterly Report and the Form 10-SB of the Company for the year ended December 31, 1999. FORWARD LOOKING STATEMENTS When used in this Quarterly Report on Form 10-QSB the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including but not limited to changes in interest rates, the Company's dependence on debt financing and securitizations to fund operations, and fluctuations in operating results. Such factors, which are discussed in Management's Discussion and Analysis of Financial Condition and Results of Operations, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinion or statements expressed herein with respect to future periods. As a result, the Company wishes to caution readers not to place undue reliance on any such forward looking statements, which speak only as of the date made. The following financial review and analysis is intended to assist in understanding and evaluating the financial condition and results of operations of the Company and its subsidiaries for the three month period ended June 30, 2000. COMPANY OVERVIEW CathayOne Inc. (the "Company") is a publicly traded Delaware corporation organized to manage, take a controlling position in, and make strategic investments in technological and service companies in the Internet and e-commerce industries. The Company has positioned itself in the United States, through its principals, to take advantage of the growing Internet content and services market, and the growing broadband multimedia information dissemination opportunities, in China. The Company's principal objective is to maximize appreciation and achieve liquidity for its shareholders. Management believes that the best returns for investments in the next decade will be in the People's Republic of China, Hong Kong and Macau (collectively, "Greater China"). The Chinese market is increasingly utilizing Internet applications, and the Company believes it can capitalize on the growth in information technology. The Company 10 will initially focus on developing companies in the following markets: Business-to-business e-commerce; business-to-government-to-business e-commerce; Internet software application; Internet content provider; Internet content origination; and Internet information services. The Company will seek to take an active role in the day-to-day management of, and acquire a controlling equity interest in a limited number of e-commerce companies with emphasis in China. CathayOnline, Inc., a fully integrated Internet company serving the global Chinese community which is publicly traded in the US markets, will provide the Company with resources for potential investments from its pool of connections in the Greater China investment, finance and Internet communities. The Company will provide its North American expertise in management, new technologies and financial acumen to companies in China. As the companies mature, the Company will seek to enhance value and liquidity for its shareholders by bringing these companies to the public market, arranging merger and acquisition opportunities or negotiating private transactions for them. In the alternative, the Company may take an equity position or enter into joint ventures with such companies. The Company has moved from Utah to Delaware and has been renamed "CathayOne Inc." upon the effectiveness of its merger into CathayOne Inc., the Company's newly formed and wholly-owned Delaware subsidiary on August 29, 2000. Under the terms of the merger, CathayOne Inc. is the surviving company. CathayOne Inc. has succeeded to all of the assets and liabilities of the Company immediately prior to the merger, and the Company's Board of Directors and its incumbent officers immediately prior to the merger are the Board of Directors and officers of CathayOne Inc. immediately after the merger. RESULTS OF OPERATIONS General and administrative expenses for the three months ended June 30, 2000 and the period of March 1, 2000 to June 30, 2000 were $33,055 and $34,355, respectively. Costs associated with the reverse merger during the three months ended June 30, 2000 were $63,774. Such costs were partially offset by the issuance of the Company's common stock. LIQUIDITY AND CAPITAL RESOURCES On June 30, 2000, the Company had cash of $4,087 and a working capital deficit of $83,711. Factors attributable to the increase in the working capital deficit include an increase in the Company's accounts payable and an increase in accrued expenses. Net cash provided by operating activities was $18,927 for the period of March 1, 2000 (Inception) to June 30, 2000. Cash used in investing activities totaled $16,139 due to the Company's initial investment in an unrelated foreign entity. Cash provided by financing activities totaled $1,299 for the period of March 1, 2000 (Inception) to June 30, 2000 due to the issuance of common stock upon organization of Bancorp. Due to the development of the Company and the proposed commitments as outlined in the preceding notes, the Company will require additional cash funds within the next twelve months. The Company proposes to accomplish this through various debt and equity placements. If the Company fails to raise capital, it would materially and adversely affect the Company. 11 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company settled the matter involving Sports Heroes, Inc., which was disclosed in the Company's Form 10-SB for the fiscal year ending December 31, 1999 and the Company's Form 10-QSB for the quarter ending March 31, 2000, and paid all amounts owed and satisfied all of its obligations under the settlement agreement. Pursuant to a Release, dated June 12, 2000 (the "Release"), Volpone Stamp Company, Inc. (d/b/a Sports Stamps Collectors Association) ("Volpone") released the Company from any and all claims it has or may have against the Company arising from or related to any dealings between the Company and Volpone up until the date of the Release. Volpone specifically released the Company from any claim arising from or related to the pleadings and papers filed in the case of VOLPONE STAMP COMPANY, INC., D.B.A. SPORTS STAMPS COLLECTORS ASSOCIATION V. PREMIER BRANDS, INC. (the "Volpone Case"), filed in the United States District Court for the Central District of California (Case No. CV 97-6697 SVW). In consideration for Volpone's execution of the Release, the Company paid $12,500 to Volpone and a Satisfaction of Judgment was filed in the United States District Court for the Central District of California on June 22, 2000, attesting to the payment in full of the judgment in the amount of $25,000 which was entered in the Volpone Case on August 11, 1998. Information regarding this matter was also disclosed in the Company's Form 10-QSB, filed for the quarter ending on March 31, 2000. Pursuant to a Release, dated June 12, 2000 (the "Release"), Enviromint, Inc. (d/b/a Chicagoland Processing Corporation) ("Chicagoland") released the Company from any and all claims it has or may have against the Company arising from or related to any dealings between the Company and Chicagoland up until the date of the Release. Chicagoland specifically released the Company from any claim arising from or related to the pleadings and papers filed in the case of CHICAGOLAND PROCESSING CORPORATION V. PREMIER BRANDS, INC. (the "Chicagoland Case"), filed in the Municipal Court of the State of California, County of Orange, West Orange Judicial District (Case No. 227758). In consideration for Chicagoland's execution of the Release, the Company paid $5,000 to Chicagoland and a Satisfaction of Judgment was filed in the Municipal Court of the State of California, County of Orange, West Judicial District on June 30, 2000, attesting to the payment in full of the judgment in the amount of $17,354.93 for which a stipulation for entry of judgment was entered into in the Chicagoland Case on February 27, 1997. Information regarding this matter was also disclosed in the Company's Form 10-QSB, filed for the quarter ending on March 31, 2000. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS On June 23, 2000, pursuant to an Exchange Agreement dated June 14, 2000, among the Company and SNet and ShanghaiNet Technologies (H.K.) Company, Limited, the shareholders of Bancorp, the Company acquired 100% of the issued and outstanding shares of Bancorp. At the time of the transaction, the assets of Bancorp included: 1) an option to purchase between a 20% and 40% interest in WebShanghai through Hong Kong Technologies Solutions, Limited; 2) an option to purchase a 70% indirect interest in the PRCInvest.com website; and 3) an option to purchase a 50% interest in an entertainment 12 portal joint venture in China. In consideration for the Bancorp shares, the Company issued to the Bancorp shareholders an aggregate of 21,750,000 shares of the Company's common stock. The transaction is treated as a reverse merger, as the shareholders of Bancorp received approximately 83.8% of the then-outstanding shares in the Company. There are no material relationships between the Company, its associates, its officers or any of the officers or directors of any associates of the Company's and Bancorp, other than as previously disclosed in the Company's Current Report on Form 8-K, filed on June 23, 2000. On June 30, 2000, pursuant to a Share Purchase Agreement among CathayOnline Technologies (Hong Kong) Limited ("CTL"), SNet, Ting Kan Nok (collectively, the "Sellers"), CMD Capital Limited ("CMD"), Bancorp and the Company, the Company acquired 100% of the issued and outstanding shares (the "CMD Shares") of CMD. At the time of the transaction, CMD's assets included 70% of the shares of common stock of PRC Investment Journal Inc. (the "Journal") and the Journal's assets included 100% ownership of the PRCInvest.com website. Pursuant to the Share Purchase Agreement, CTL will transfer 62.5%, SNet will transfer 15% and Ting Kan Nok will transfer 22.5% of the CMD Shares to Bancorp, constituting 100% of the CMD Shares. In consideration for the CMD Shares, Bancorp agreed to cause the Company to deliver US$16.8 million to the Sellers in the form of shares of the Company's common stock as follows: the Company issued 630,000, 420,000 and 1,750,000 shares of the Company's common stock, valued at US$6 per share for purposes of the Share Purchase Agreement, to Ting Kan Nok, SNet and CTL, respectively. Pursuant to a Compensation Agreement, dated June 15, 2000, between Bancorp and SNet Communications (HK) Limited ("SNet") (the "SNet Compensation Agreement"), in connection with services provided to Cathay Bancorp.Limited, a wholly-owned subsidiary of the Company ("Bancorp"), the Company (through Bancorp) has agreed to provide SNet with the right to subscribe, on the same terms as are available to the relevant other purchasers or transferees, for 10% of the shares of any subsidiary of the Company or Bancorp upon a reverse merger, spinoff or public listing or offering of shares by such subsidiaries. Pursuant to the SNet Compensation Agreement, Bancorp will pay US$700,000 to SNet and caused the Company to issue 500,000 shares of the Company's common stock to SNet upon the establishment of a sino-foreign equity joint venture company (the "JV"). Information regarding the establishment of the JV was disclosed in the Company's Current Report on Form 8-K, filed on July 7, 2000. Also in connection with this agreement, upon the successful completion of the Company's acquisition (through Bancorp) of a 20% interest in a separate sino-foreign equity joint venture company, Bancorp will pay US$650,000 to SNet for its role in the acquisition. The Company will also issue up to 500,000 additional shares of common stock to SNet upon the JV reaching certain operational thresholds. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Pursuant to a written consent dated as of June 30, 2000, in lieu of a special meeting, a majority of the shareholders of the Company authorized a change in the Company's state of incorporation from Utah to Delaware, the merger of the Company into its wholly-owned subsidiary, CathayOne Inc., CathayOne Inc. being the surviving company. 13 ITEM 5. OTHER INFORMATION On June 8, 2000, by unanimous written consent, the Board of Directors of the Company elected S. David Cooperberg, Brian W. Ransom and Phillip L. Flaherty as directors. Simultaneously, the Board accepted the resignations of the three then-incumbent directors. Information regarding the new directors was disclosed in the Company's Current Report on Form 8-K, filed on June 23, 2000. Also on June 8, 2000, the Board appointed Mr. Cooperberg, Mr. Ransom and Mr. Flaherty as President, Secretary and Treasurer of the Company, respectively. On June 26, 2000, by unanimous written consent, the Board appointed Peter Lau as a director, David Ng as Vice President and Marc A. Berger to replace Mr. Ransom as Secretary of the Company. On July 26, 2000, by unanimous written consent, the Board appointed Mr. Lau as Chief Executive Officer of the Company. Mr. Lau previously served as Chief Financial Officer of CathayOnline, Inc., an Internet company, from November, 1999 until July 25, 2000, and continues to serve as Secretary of CathayOnline and on its Board of Directors. From 1996 to 1999, he served as the Managing Director of Corporate Finance, Manager of Special Projects, and Managing Director of United States operations for American Fronteer Financial, Inc., a United States registered securities brokerage firm, and Heng Fung Capital, Inc. and Heng Fung Equities, Inc., Hong Kong merchant banking companies with offices in Hong Kong and the United States. While with the Heng Fung group, Mr. Lau established a U.S. merchant banking and investment banking operation on Wall Street. From 1994 through 1996, Mr. Lau served as the Managing Director of Corporate Finance for Ridgewood Capital LLC, where he provided corporate financial and advisory services, negotiated and arranged equity and debt financing, and developed new business. Mr. Lau also is a director of Advanced Environmental Technology Inc. Mr. Lau is a certified public accountant by training and has been employed by Deloitte & Touche LLP as an accountant and a senior management consultant. Mr. Lau was awarded a Bachelors degree in accounting from University of Hartford in 1976 and a masters degree in accounting from the University of Hartford in 1978. Mr. Lau is 46 years old. Pursuant to a joint venture contract dated April 22, 2000, CMD agreed to establish a joint venture for the purpose of establishing an investment information portal in China, with a version to be created for Hong Kong. For its share of the equity, the Company will contribute $3,000,000. CMD will hold 70% of the joint venture's registered capital. The contributions will be determined by the needs of the project provided that for the China portal, $100,000 is paid within 10 working days after execution of the contract, $700,000 within 22 days of obtaining a business license, which includes the first $100,000, and $1,400,000 within 140 days after the launch of the website, and $900,000 within 280 days after receipt of a business license. Pursuant to a cooperation agreement dated April 22, 2000, CMD will contribute $200,000 to the Hong Kong version of the PRC Website, of which $100,000 must be paid within 10 days after the agreement takes effect and of which $600,000 must be paid within 22 working days after the agreement takes effect (this amount includes the initial $100,000). $600,000 must be paid within 70 working days and $800,000 within 140 working days after the official publication of the Hong Kong version. To date the amount contributed pursuant to both agreements is $700,000, of which $500,000 was advanced by another public company having directors in common with the Company, CathayOnline, Inc. The amount is repayable in cash and or shares of the Company and has no fixed repayment date. 14 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits 2.1 Exchange Agreement, dated June 14, 2000, among the Company and SNet and ShanghaiNet, incorporated herein by reference to the Company's Current Report on Form 8-K, filed on July 7, 2000. 2.2 Share Purchase Agreement, dated June 30, 2000, among CTL, SNet, Ting Kan Nok, CMD, Bancorp and the Company, incorporated herein by reference to the Company's Current Report on Form 8-K, filed on July 7, 2000. 3.1 (i) Articles of Incorporation of the Company, as amended, are incorporated herein by reference to the Company's Annual Report on Form 10-SB, filed on March 8, 2000. (ii) An amendment to the Articles of Incorporation of the Company, dated September 16, 1998, not previously filed, is hereby attached as Exhibit 3.1 (ii). (iii) Bylaws of the Company, incorporated herein by reference to the Company's Annual Report on Form 10-SB, filed on March 8, 2000. 10.1 Compensation Agreement between Bancorp, a wholly-owned subsidiary of the Company, and SNet, dated June 15, 2000. 10.2 Joint Venture Contract between CMD Capital Limited and China Investment Journal, dated April 22, 2000. 10.3 Sino-Foreign Cooperative Joint Venture Contract, dated June 28, 2000, among Cathay Entertainment, SNet and CCC, incorporated herein by reference to the Company's Current Report on Form 8-K, filed on July 7, 2000. 10.4 Cooperation Agreement between Hong Kong China Market Development Company Limited and China Investment Journal, dated April 22, 2000. 27 Financial Data Schedule b) Current Reports on Form 8-K 1) Form 8-K, dated June 8, 2000, was filed on June 23, 2000, regarding the election of new directors to the Board of Directors of the Company. 2) Form 8-K, dated June 23, 2000, was filed on July 7, 2000, regarding two acquisitions and one joint venture agreement of the Company. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CATHAYONE INC. By: /s/ S. David Cooperberg Date: September 5, 2000 --------------------------- Name: S. David Cooperberg Title: President By: /s/ Peter Lau Date: September 5, 2000 --------------------------- Name: Peter Lau Title: Chief Executive Officer and Principal Accounting Officer 16 EX-3.1 2 a2024885zex-3_1.txt EXHIBIT 3.1 EXHIBIT 3.1(ii) AMENDMENT TO ARTICLES OF INCORPORATION OF PREMIER BRANDS, INC. In accordance with Sections 16-10a-1003 and 16-10a-1006 of the Utah Revised Business Corporation Act, Premier Brands, Inc., a Utah Corporation (the "Corporation"), does hereby adopt the following amendment (the "Amendment") to the Articles of Incorporation. 1. The Corporation's Articles of incorporation are hereby amended to add a new Article XIII, which shall be and read as follows: ARTICLE XIII SHAREHOLDER ACTION WITHOUT A MEETING Pursuant to Sections 16-10a-704 and 16-10a-1704(4) of the Utah Revised Business Corporation Act, any action which may be taken at any annual or special meeting of shareholders may be taken without a meeting and without prior notice, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take action at a meeting at which all shares entitled to vote thereon were present and voted. 2. Except as specifically provided herein, the provisions of the Corporation's Articles of Incorporation shall remain unamended and shall continue in full force and effect. 3. By execution of this Amendment to the Articles of Incorporation, the President and Secretary of the Corporation do hereby certify that the foregoing Amendment to the Articles of Incorporation was adopted as an Amendment to the original Articles of Incorporation of the Corporation by the shareholders of the Corporation at a Special Meeting of the shareholders held on September 16, 1998, pursuant to proper notice. As of August 26,1998, the record date for the Shareholder action, there were 1,641,254 shares of the Corporation's Common Stock issued and outstanding, of which 851,056 shares of the Corporation's Common Stock (or, 52%) were present and voted for the adoption of the foregoing Amendment to the Articles of Incorporation, and no shares were voted against the Amendment. DATED: as of the 16th day of September 1998. PREMIER BRANDS, INC. /s/ Igor Fruman ----------------- Igor Fruman President ATTEST: /s/ Vyacheslav Fruman - ----------------------- Vyacheslav Fruman Secretary 2 EX-10.1 3 a2024885zex-10_1.txt EXHIBIT 10.1 EXHIBIT 10.1 COMPENSATION AGREEMENT This Agreement is dated this 15th day of June, 2000. BETWEEN CATHAYBANCORP.COM, LIMITED, a company incorporated under the laws of Hong Kong Special Administrative Region ("Hong Kong"), the People's Republic of China ("PRC") (the "Company") AND SNET COMMUNICATIONS (HK) LIMITED, a company incorporated under the laws of Hong Kong, PRC ("SNet") WHEREAS SNet has provided various services to the Company, including introducing the Company to various business opportunities and transactions, and the Company wishes to compensate SNet for such services rendered. IN CONSIDERATION OF mutual promises and other valuable considerations, the receipt and sufficiency of which are hereby recognised, the Parties agree as follows: 1. For the past services rendered by SNet for the Company and future services to be rendered by SNet to the Company that are agreed to be by Parties, some of which are more specifically described below, the Company agrees to compensate SNet in accordance with the following terms and conditions: (1) Upon any public offering or listing of shares, spin-off or acquisition by reverse merger of any subsidiaries of the Company or its parent company, Premier Brands, Inc. (together with any successors in interest, the "Parent"), SNet will have the right to acquire from such subsidiary on the same terms 10.0% of the shares so listed, offered to the public, spun off or acquired; provided that this shall not apply to public listings or offerings of shares subject to employer plans for the benefit of employees, consultants, directors, officers or other similarly situated persons; (2) Upon the successful completion of the acquisition by the Company of WebShanghai, the Company will pay US $650,000 to SNet for its role in the acquistion; (3) Upon the formal establishment of a sino-foreign joint venture company (the "JV"), which was contemplated by a co-operation agreement entered into in May 2000 among the Company, Sichuan Guo Xun Xin Xi Chan Ye You Xian Gong Si, TorchNet Co. Ltd., and Capital Culture Company (the "Co-operation Agreement"), the Company will pay SNet US $700,000 and cause the Parent to issue SNet 500,000 shares; (4) Upon the completion of the entertainment websites to be owned by the JV in accordance with the Cooperation Agreement, the Company will cause the Parent to issue to SNet 250,000 shares; (5) Upon the JV obtaining necessary to operate the talkshow programs in accordance with the Co-operation Agreement, the Company will cause the Parent to issue 250,000 shares to SNet. 2. This Agreement is governed by and construed in accordance with the laws of Hong Kong and the Parties hereby submit to the non-exclusive jurisdictions of the courts in Hong Kong. 3. Any provisions hereof held by a competent court or arbitration tribunal to be invalid or illegal shall not affect the validity of other provisions hereof which shall remain intact and legally binding. The Parties shall continue to implement such other provisions. 4. This Agreement shall be binding on and enure to the benefits of heirs, executors, administrators, successors and assigns of the Parties hereto. Executed by the Parties at the place and on the date first above mentioned. CathayBancorp.com, LIMITED Per: /s/ Peter Lau (corporate seal) --------------- SNET COMMUNICATIONS (HK) LIMITED Per: /s/ Peter Chin (corporate seal) --------------- 2 EX-10.2 4 a2024885zex-10_2.txt EXHIBIT 10.2 EXHIBIT 10.2 JOINT VENTURE CONTRACT BETWEEN CMD CAPITAL, LTD. AND CHINA INVESTMENT JOURNAL DATE: APRIL 22, 2000 JOINT VENTURE CONTRACT INDEX General Provisions .............................................................Chapter 1 The Parties of the Joint Venture Company .......................................Chapter 2 Establishment of the Company ...................................................Chapter 3 The Purpose, Scope and Scale of the Business ...................................Chapter 4 Share, Registered Capital and the Total Amount of Investment ...................Chapter 5 Obligations and Responsibilities of Each Party to the Joint Venture Company ....Chapter 6 The Board of Directors .........................................................Chapter 7 Business Management Office .....................................................Chapter 8 Labor Management ...............................................................Chapter 9 Taxes, Finance and Audit .......................................................Chapter 10 Distribution of Profits ........................................................Chapter 11 Protection for Secrecy, Special Technique and Intangible Property...............Chapter 12 Duration of Cooperation ........................................................Chapter 13 Termination and Liquidation of the Company .....................................Chapter 14 Insurance ......................................................................Chapter 15 The Amendment, Alteration and Discharge of the Contract ........................Chapter 16 Liabilities for Breach of the Contract .........................................Chapter 17 Effectiveness of the Contract and Miscellaneous ................................Chapter 18
JOINT VENTURE CONTRACT CHAPTER 1 GENERAL PROVISIONS In accordance with the "Law of the People's Republic of China on Chinese-Foreign Equity on Joint Ventures" ("JV Law") and other relevant Chinese laws, decrees and regulations, CMD Capital, Ltd. ("Party A"), China Investment Journal ("Party B"), adhering to the principle of equality and mutual benefit and through friendly consultations, agree to enter into this contract to jointly invest and set up a Company. CHAPTER 2 PARTIES OF THE COMPANY 2.1 Party A is an enterprise registered in Hong Kong with legal status for the performance of its legal obligations in accordance with the provisions of the laws of Hong Kong. Its location is Room 2406, Hong Kong Plaza, 188 Connaught Road West, Hong Kong Special Administrative Region. Its legal representative is Mr. Peter Chin, Office: Chairperson. Nationality: the United States of America. Party B is a journal published and registered in Beijing. It is a legal person under the Civil Code capable of entering legal obligations. Its location is No. 38, Bai Wan Zhuang Zi Qu, 100037 Beijing, the People's Republic of China ("China"). Legal Representative: Wang Xin, Nationality: China. CHAPTER 3 ESTABLISHMENT OF THE COMPANY 3.1 In accordance with the Law of the People's Republic of China on Sino-foreign Joint Equity Enterprises and other relevant Chinese laws, decrees and regulations, the parties of the Company agree to set up a joint venture limited liability company (the "Joint Venture Company") in Beijing. 3.2 The official name of the Joint Venture Company shall be otherwise consulted and determined by Party A and Party B. The name will be Limited Liability. Its English name is _______________. 3.3 The legal address of the Joint Venture Company shall be Room 803, Sunjoy Mansion, No. 6 Ritan Road, Chaoyang District, Beijing 100020 P.R. China. 3.4 All activities of the Joint Venture Company shall be governed and protected by the laws, decrees, and pertinent rules and regulations of China. 3.5 The organization form of the Joint Venture Company is a limited liability company. The profits of the Company shall be shared by the parties in proportion to their respective share in the Company's equity. 3 CHAPTER 4 THE PURPOSE, SCOPE, AND SCALE OF THE BUSINESS 4.1 The purpose of the Joint Venture Company is to establish an investment information portal in China ("Website"), to adequately utilize the advantages of each Party to provide comprehensive information and coverage concerning investment in China to various business enterprises and research institutes and other entities on the mainland of China and overseas. Through the combination of the Internet and the printed text journal, the Parties expect the Company to produce economic gains and ensure satisfactory economic benefits for each party. 4.2 Business scope of the Joint Venture Company: investment information provision, consulting service related to investment, technology development, advertisement service, investment promotion activities, and other operations such as providing business solutions for e-commerce, both B-to-B and B-to-C. The scope of the `Business of the Joint Venture Company shall be subject to the approval of the Administration for Industry and Commerce. 4.3 Party B has the rights to supervise and censor the content of the Website. Party B also has the rights to delete the contents which harm the national interests of China or violate the laws, regulations and policies of the Chinese government from the Website. CHAPTER 5 SHARE, REGISTERED CAPITAL AND THE TOTAL AMOUNT OF INVESTMENT 5.1 Party A shall pay in fund for 70% of the total equity of the Joint Venture Company. Party B shall pay in the form of good will for 30% of the total equity of the Joint Venture Company. The profits they shall receive will be distributed by the proportion of their respective equity. 5.2 The registered capital of the Company is $1,509,000, of which Party A shall pay the entire sum over a period of 12 months according to the relevant rules governing the establishment of companies in China. 5.3 The total amount of investment of Party A to the Joint Venture Company is approximately $3,000,000 U.S. dollars (including the registered capital). party A shall pay US$100,000 to the account nominated by Party B within ten (10) working days of execution of this Contract, such fund will be exclusively used for the Joint Venture Company's preparatory arrangement such as registration. Party A and Party B jointly stipulate that Party A should pay the total investment (including registered capital) for the establishment and maintenance of the Website and the operation of the Joint Venture Company in three payment periods. In the first installment, Party A should pay $700,000 US dollars, within twenty-two (22) business days after the Joint Venture Company receives temporary business license. Such shall include US$100,000 for the Joint Venture Company's preparatory arrangement such as registration. For the second payment installment, $1,400,000 U.S. dollars shall be paid to the special account of the Joint Venture Company jointly established by both parties within the 140 days after the Joint Venture Company has launched the Website. In the third installment, Party A should pay $900,000 US dollars to the special account of the Joint Venture Company jointly established by both parties within two hundred and eighty (280) working days of receipt of the business license. 4 5.4 In case Party A wants to transfer the possession of some or all its shares of the Company to a third party, which is neither Party A nor Party B, this decision must be approved by Party B. Vice versa if Party B wants to make such a transaction with a third party. If both Party A and Party B consent to the above decision, it should be reported to the specific governmental authority in charge of the examination and approval process. CHAPTER 6 OBLIGATIONS AND RESPONSIBILITIES OF EACH PARTY TO THE COMPANY 6.1 Party A shall be responsible for the following matters: 1. Providing a total investment of $3,000,000 U.S. dollars to the Joint Venture Company. 2. Helping the Joint Venture Company supervise its financial affairs. 3. Providing technical support and consulting services. 4. Providing financial (public listing) consulting service. 6.2 Party B shall be responsible for the following matters: 1. Handling applications for approval, registration, business license and other matters concerning the establishment of the Joint Venture Company with relevant departments of the Chinese government. 2. Responsible for the application to the relevant departments of the Chinese government and obtaining approval for the China Investment Information Website. 3. In the duration of the cooperation, Party B shall not cooperate with any other third party to set up web sites of similar nature. 4. Party A and Party B jointly set up this registered Website during the cooperation. Other related affairs should be acted in accordance with other rules and regulations made by the two parties. 5. Without violation of the confidentiality law and subject to the granting of priority and privileges to the Joint Venture Company, Party B shall provide the available information materials to the Joint Venture Company with compensation. CHAPTER 7 THE BOARD OF DIRECTORS 7.1 The date of registration of the Joint Venture Company shall be the date of the establishment of the board of directors of the Joint Venture Company. 5 7.2 The board of directors shall consist of five directors, among whom two directors shall be appointed by Party A, two directors shall be appointed by Party B and one independent director. The board of directors has a chairperson and a vice-chairperson. In the first term, the chairman of the board shall be appointed by Party A from its directors, and vice-chairperson by Party B from its directors. The independent director shall be selected by both parties by mutual consent. The term of office for chairperson, vice-chairperson and directors (except the independent director) is five years. The term of office of the independent director is two and a half (2-1/2) years. Their term of office may be renewed if approved by the board. Either party may remove a director it has appointed and the other party will not raise any objection to such removal. 7.3 The highest authority of the Joint Venture Company shall be its board of directors. It shall decide all major issues. As for the following issues, unanimous approval shall be required, such as: 1. Amendment to the articles of association of the Joint Venture Company; 2. Termination and dissolution of the Joint Venture Company; 3. Increase or assignment of the registered capital of the Joint Venture Company; 4. Merger, reorganization and consolidation of the Joint Venture Company with other economic organization; 5. Establishment of branches or subsidiaries; 6. Party A or Party B listing their respective equity ownership of the capital market and other issues, such as the issuance of new shares of the Joint Venture Company, reorganizing its assets, and changing the stock ownership. 7. The employ and discharge of the senior management staff of the Joint Venture Company such as the managing director, the general manager and chief financial officer. Other important operating affairs of the Joint Venture Company should be decided by the four-fifth (4/5) majority of the board of directors. 7.4 The chairperson is the legal representative of the Joint Venture Company. Should the chairperson be unable to exercise his or her responsibilities, he shall authorize others to represent the Company temporarily. As the legal representative of the Joint Venture Company, the chairperson signs the documents according to the resolution passed by the board of directors. 7.5 The board of directors shall convene at least once every year. The meeting shall be called and presided over by the chairperson of the board. The chairperson may convene 6 an interim meeting based on a proposal made by more directors. The quorum of the meeting is four (4) or more directors. Should the directors be unable to attend the board meeting, he/she may send a written authorization to the board appointing someone else to represent him/her and vote in his/her stead. Minutes of the meeting shall be placed on file. In case the attendees are fewer than the quorum, the meeting should be postponed for fifteen days or until such time when the quorum is met. 7.6 Board resolutions passed by the means of written consent. CHAPTER 8 BUSINESS MANAGEMENT OFFICE 8.1 The Joint Venture Company shall establish a management office which shall be responsible for its daily management. The management office shall have one (1) strategic managing director nominated by Party A, one (1) general manager nominated by Party B. The office also shall have a chief financial officer appointed by Party A. The above senior administrative personnel shall be employed by the board of directors. The term of office for the said personnel is three (3) years. In accordance with the approval of the board of directors, the office of the managing director and the financial supervisor may be renewed. 8.2 The obligation of the strategic managing director is to carry out the decisions of the board of directors, and to plan the development of the Joint Venture Company and the development of the Website. He shall also direct and supervise the work of the general manager. 8.3 The obligation of the general manager is to carry out the decisions of the board of directors. He shall organize and conduct the routine management of the Joint Venture Company under the direction of the managing director. The general manager shall submit monthly financial reports to the board, and quarterly comprehensive reports on the Company's activities. 8.4 In case of graft or serious dereliction of duty the administrative personnel, the board of directors should have the power to dismiss his/her post at any time. They shall be held responsible for the financial loss to the Company according to relevant laws and legal procedures. CHAPTER 9 LABOR MANAGEMENT 9.1 Labor contract covering the recruitment, dismissal and resignation, salaries, labor insurance, welfare, rewards, penalty and other matters concerning the staff and workers of the Joint Venture Company shall be in accordance with the labor legislation of China such as Regulations on Labor Management in Enterprises Involving Overseas Investment 7 and its detailed rules for implementation, and Provisional Regulations of the Levy and Payment for the Social Insurance. 9.2 The employment for the senior administrative personnel recommended by Party A or Party B, and their salary, social insurance, standard reimbursement policy for business travel and others will be decided by the board of directors. CHAPTER 10 TAXES, FINANCE AND AUDIT 10.1 The Joint Venture Company shall pay several kinds of taxes in accordance with the stipulations of Chinese laws and other relevant regulations. All matters concerning foreign exchange for the Joint Venture Company shall be handled according to the Interim Regulations on Foreign Exchange Control of China and relevant regulations. 10.2 Staff members and workers of the Joint Venture Company shall pay individual income tax according to the "Individual Income Tax Law of the People's Republic of China." 10.3 Allocations for reserve funds, expansion funds of the Joint Venture Company and welfare funds and bonuses for staff and workers shall be set aside in accordance with the stipulations in the "Law of the People's Republic of China for the Chinese-Foreign Equity Joint Venture." The annual proportion of allocations shall be decided by the board of directors according to the business situations of the Joint Venture Company. 10.4 The finance and accounting of the Joint Venture Company shall be handled according to the "Accounting Regulations of the People's Republic of China for Enterprise Set with Foreign Investment." The fiscal year of the Joint Venture Company shall begin from January 1 and end on December 31 of Gregorian calendar. All vouchers, receipts, accounting statements and reports, account books shall be written in Chinese and in English. 10.5 The Joint Venture Company shall employ an auditor registered in China, who has a prestigious reputation and credentials in the auditor profession to annually audit the Joint Venture Company's operations and financial status. The said auditing results shall be reported to the board of directors. If either Party A or Party B asks to employ its own auditor to audit the books of the Joint Venture Company, the other party shall not disagree for any reasons, but all the necessary fees should be shouldered by the party who hires its own auditor. 10.6 During the first month of every fiscal year, the general manager should organize employees to prepare the balance sheet, the income statement and the distribution plan for the previous year. These statements shall be submitted to the board of directors. CHAPTER 11 PROFIT SHARING 8 11.1 After paying the taxes in accordance with law and drawing the various funds, the net will be distributed by Party A and Party B according to the proportion of each party's share in the registered capital. 11.2 The Joint Venture Company shall distribute its profits once a year. The said distribution shall be handled according to the related laws and regulations. CHAPTER 12 SECRECY AND THE PROTECTION FOR SPECIAL TECHNIQUE AND INTANGIBLE PROPERTIES 12.1 Both Party A and Party B should keep the secret confidential information related to the Joint Venture Company or to the operation of the Joint Venture Company within three (3) years after the termination of the Joint Venture Company. 12.2 All the specific technologies developed by the Joint Venture Company and other intellectual properties such as copyright or trademarks, domain name of the Website and so forth are the assets of the Joint Venture Company. Without the permission from the board of directors, it cannot be sold or transferred. CHAPTER 13 DURATION OF THE COOPERATION 13.1 The duration of the Joint Venture Company is thirty (30) years. The establishment of the Joint Venture Company shall start from the date on which the business license of the Joint Venture Company is issued. An application for the extension of the duration, raised by one party, and unanimously approved by the board of directors, shall be submitted to the relevant administrative department of the Chinese government (or other relevant examination-and-approval authority authorized by the Ministry of Foreign Trade and Economic Cooperation) 180 days prior to the expiry date of the Company's term. CHAPTER 14 TERMINATION AND LIQUIDATION OF THE COMPANY 14.1 In case the Joint Venture Company's term shall expire or the Joint Venture Company terminates its operations, it should arrange liquidation according to related laws and regulations. The residual assets after liquidation should be distributed in accordance with the proportion of each party's share in the registered capital. CHAPTER 15 INSURANCE 15.1 Insurance policies of the Joint Venture Company on various kinds of risks shall be underwritten in China. Types, the value and duration of insurance policy shall be decided by the board of directors in accordance with the stipulations of Chinese laws and regulations. 9 CHAPTER 16 THE AMENDMENT, ALTERATION AND DISCHARGE OF THE CONTRACT 16.1 The amendment of the contract or other appendices shall come into force only after the written agreement signed by the parties and approved by original examining and approving authority. 16.2 During the validity of the contract, because of FORCE MAJEURE, which prevents the contract from being performed, or because of the consecutive deficit incurred by the Joint Venture Company, termination of the Company as well as rescinding this Contract before its term shall be executed after it is passed unanimously by the board of directors and approved by the examination-and-approval authority. CHAPTER 17 LIABILITIES FOR BREACH OF THE CONTRACT 17.1 In case either Party A or Party B cannot fulfill obligation and duties defined in the Contract or materially breaches the Contract or the by-laws of the Joint Venture Company in the operation of the Joint Venture Company or causes any material financial loss to the Joint Venture Company, that party will be taken as the violating party. The other party, however, who abides by the contract faithfully, has the right to claim for compensation. The non-violating party or parties also will have the right to report the modification or termination of the Contract to the relevant authorities. In this case, if both Party A and Party B will agree to operate the business further, the party which breaches the Contract shall compensate the financial loss to the Joint Venture Company. 17.2 Should all or part of the Contract and its appendices be unable to be fulfilled owing to the fault of either Party A or Party B, the breaching party shall bear the responsibilities for losses thus caused. Should it be the fault of both Party A and Party B, they shall bear their respective responsibilities according to actual situations. CHAPTER 18 EFFECTIVENESS OF THE CONTRACT AND MISCELLANEOUS 18.1 The contract shall come into force from the date of approval by the relevant department of the Chinese government upon the formal execution by both Party A and Party B. 18.2 This Contract shall be governed by the laws of China. Any dispute which cannot be resolved between Party A and Party B shall be submitted to China International Trade Arbitration Commission for arbitration in accordance with its arbitration rules. Each party shall cooperate with the other in making full disclosure of and providing complete access to all information and documents requested by the other party in connection with such proceedings, subject only to any confidentiality obligations binding on it. The arbitration shall be the exclusive way for resolving the dispute between the parties. The award of the arbitration panel shall be final and binding on the parties. Each party may apply to a court of competent jurisdiction for enforcement of such award. 10 18.3 The parties shall reach agreement on issues not covered hereunder in writing to supplement this Contract. In case of need, Party A and Party B shall be able to amend this Contract in writing. 18.4 The Contract shall be executed in five (5) counterparts in both Chinese and English. If there is any discrepancy between two versions, Chinese version shall prevail. Each Party shall hold two (2) copies. Other copies shall be filed with the relevant examination and approval authorities. 18.5 The legal representatives from Party A and Party B hereby sign this Contract in Beijing on April 22, 2000. Party A: for and on behalf of CMD CAPITAL LIMITED By: /s/ Peter Chin ------------------------------------ Peter Chin Position: Chairperson Party B: China Investment Journal By: /s/ Wang Xin ------------------------------------ Wang Xin Position: Chief Director 11 EX-10.4 5 a2024885zex-10_4.txt EXHIBIT 10.4 EXHIBIT 10.4 COOPERATION AGREEMENT Party A: Hong Kong China Market Development Company Limited Party B: China Investment Journal CHAPTER 1 GENERAL PROVISIONS 1.1 Hong Kong China Market Development Inc., ("Party A") and China Investment Journal ("Party B") shall jointly set up a Hong Kong version of China Investment Journal ("Journal") in accordance with the certain laws of Hong Kong special administrative regions. The partners hereby enter into this Cooperative Agreement ("Agreement"). 1.2 Party A and Party B shall respect each other's right and interests, shall comply with the laws and regulations of Hong Kong Special Administrative Regions. CHAPTER 2 THE PURPOSE, SCOPE, AND SCALE OF THE BUSINESS 2.1 The Hong Kong version of China Investment Journal and its electronic version will be invested and set up by both Party A and Party B, Party A and Party B shall jointly operate and manage the Journal. 2.2 The Hong Kong version of China Investment Journal can conduct its marketing operations and advertisement in Hong Kong, other areas other than Hong Kong including mainland of China. It cannot do any damage to the rights and interests of Party B. CHAPTER 3 INVESTMENT AND PROFITS 3.1 For the Journal (including electronic version) and its parent publishing company ("Company"), Party A shall be responsible for providing funds for seventy percent (70%) of the Company's total equity. Party B shall pay in the way as the reputation capital, which accounts for thirty percent (30%) of the total equity. 3.2 The total amount of investment committed by Party A to the Hong Kong version of China Investment Journal is $2,000,000 U.S. dollars. Party A and Party B jointly stipulate that Party A should pay the said money in three payment installments, which shall be used for the operations and management of both the printed Journal and the web site. In the first period, Party A should pay $600,000 U.S. dollars to a special account established for China Investment Hong Kong version, within 22 working days after this Agreement takes effect. Included in this sum, however, $100,000 U.S. dollars shall be paid into the special account of the Journal within the 10 days after this Agreement takes effect, which is for the preparation of the Journal. The second installment in the amount of $600,000 will be paid to the special account of China Investment Hong Kong version within seventy (70) working days after the official publication of the Journal. The third installment in the amount of $800,000 will be paid into the special account of China Investment Hong Kong version within one - ------------------------------------------------------------------------------ hundred forty (140) working days of the official publication of the Journal. 3.3 In case Party A wants to transfer the possession of some or all its shares of the Journal on the web site to a third party, which is neither Party A nor Party B, this decision must be approved by party B. Vice versa, if Party B wants to make such a transaction to a third party. It only shall only take effect when two parties make a written agreement on that. CHAPTER 4 OBLIGATIONS AND RESPONSIBILITIES OF EACH PARTY TO THE JOURNAL 4.1 Party A shall be responsible for the following matters: (1) Providing investment $2,000,000 U.S. dollars to the Journal in cash. (2) Responsible for the registration of the Journal in Hong Kong. (3) The registered Hong Kong version of China Investment Journal (including electronic version) and the publishing company to be provided on the web site is established and managed by both parties. In the duration of the cooperation, Party A shall protect all the rights and interests of Party B. It shall abide by other written rules and contracts agreed to by the parties. 4.2 Party B shall be responsible for the following matters: (1) Responsibilities for the final censorship to the content of the China Investment Hong Kong version (including electronic version). The principle of final censorship defines the contents that do no harm to the interests of the PRC and make no violation of the policies of the Chinese government. (2) Supporting and promoting the marketing operations and advertisement operations of the Journal, its electronic version and the web site in mainland of China. (3) Provide content to the web site and the Journal using the resources to which it has access. CHAPTER 5. BOARD OF DIRECTORS FOR THE MANAGEMENT AFFAIRS OF THE JOURNAL 5.1 The Journal shall establish a board of directors for the management affairs of the Journal, it shall be set up at the day that this Agreement takes effect. 5.2 The board of directors shall have five directors, among whom two directors shall be appointed by Party A, two directors shall be appointed by Party B and one independent director. The board of directors has a chairperson and a vice-chairperson. In the first term, the chairman of the board shall be appointed by Party B from its directors and vice-chairperson by Party A from its directors. The independent director shall be selected by both parties by mutual consent. The term of office for chairperson, vice-chairperson, and directors (except the independent director) is five years. The term of office of the independent director is two and a half (2-1/2) years. 2 - ------------------------------------------------------------------------------ Their term of office may be renewed if approved by the board. Either party may replace a director it has appointed and the other party will approve such replacement. 5.3 The chairperson of the board of directors, also known as the legal representative of the Journal and its parent publishing company, shall be appointed by Party B. The vice-chairperson of the board of directors shall be appointed by Party A. 5.4 The board of directors shall decide the important affairs regarding the development of the Journal. Should the chairperson be unable to exercise his/her responsibilities for some reason, he/she shall authorize others to represent the Journal temporarily. 5.5 The board of directors shall convene at least once every year. The meeting shall be called and presided over by the chairperson of the board. The director may convene an interim meeting based on a proposal made by more than two 2 directors. The quorum of the meeting is four directors. Should the director be unable to attend the meeting, he/she may send a written authorization to the board of directors appointing someone else to represent him and vote in his stead. 5.6 Resolutions in the board of directors meeting shall be signed by the directors. Any resolutions shall come into force as soon as they are signed by all of the directors attending the meeting. CHAPTER 6 BUSINESS MANAGEMENT AND OPERATIONS 6.1 The management office of the Journal shall have one executive director, one deputy executive-director plus a general manager, and one general editor. They shall be appointed by the board of directors. The term of office for them is three years. After approval, the term of office may be renewed. 6.2 The Journal shall have its own rules and regulations for management and operation. The chief financial officer in both the Journal and the Publishing Company shall be appointed by Party A. The Journal shall be audited on an annually basis by the accountant institute in accordance with Hong Kong related regulations. The audit result shall be reported to all members of the Board of Directors. 6.3 The obligation of the Executive Director is to carry out the decisions of the board of directors. He shall organize and conduct the routine management of the Journal (including electronic version) and the Publishing Company. The Executive Director shall submit monthly financial reports to the board, and quarterly comprehensive reports on the Journal's activities. 6.4 In case of any graft or serious dereliction of duty by the administrative personnel of the Journal (including electronic version) and the Publishing Company, the board of directors should have the power to dismiss his/her post at any time. They shall be held responsible for the financial loss according to relevant laws and legal procedures. CHAPTER 7 DURATION, ASSETS AND LIABILITIES FOR BREACH OF THE AGREEMENT 7.1 The term of the Journal is 30 years starting from the date of the official publication of the Journal. It shall be accounted from the day the Journal is published which can be 3 Letter of Agreement - 4 - - ------------------------------------------------------------------------------ extended in case both Parties so agree, but it is necessary to enter into a new cooperation agreement. 7.2 The assets of the Journal shall belong to Party A and Party B. In case the cooperation in connection with the Journal expires or terminates before the term, it should arrange liquidation according to related laws and regulations. The residuary assets after liquidation should be distributed in accordance with the proportion of each party's share in the equity. 7.3 In case any party will not fulfill obligation and duties defined herein, it will be responsible for the liabilities for breach. In case the liabilities are caused by both parties, Party A and Party B shall be responsible for itself separately. CHAPTER 8 COOPERATION AGREEMENT AND SO FORTH 8.1 This Agreement shall come into force beginning from the date it is signed by two parties. 8.2 The amendment of this Agreement or appendices shall be made only after it is approved by both two parties in writing. In this situation, it is necessary to sign an additional agreement. 8.3 In the period of validity of this Agreement, this Agreement cannot be fulfilled because of any FORCE MAJEURE events, or if the Journal has losses for a sustained period of time, then, both parties may terminate this Agreement after discussion. 8.4 Issues not covered in this Agreement can be agreed to by the parties in writing separately. 8.5 This Agreement is executed in six counterparts. Each Party shall hold three copies. This Agreement is signed in both Chinese and English. If there is any discrepancy between two versions, Chinese version shall prevail. Party A: for and on behalf of CMD CAPITAL LIMITED Hong Kong China Investment Company Limited Authorized Representative: /s/ PETER CHIN ---------------------------- Peter Chin Date: 22-4-00 Party B: China Investment Journal Authorized Representative: /s/ WANG XIN ---------------------------- Wang Xin Date: 2000.6.22 4 EX-27 6 a2024885zex-27.txt EXHIBIT 27
5 3-MOS DEC-31-2000 JUN-30-2000 4,087 0 0 0 0 4,087 0 0 2,020,226 287,798 0 0 0 29,258 1,999,500 2,020,226 0 0 0 0 95,030 0 0 95,030 0 95,030 0 0 0 95,030 (.011) (.011)
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