<PAGE>2
As filed with the Securities and Exchange Commission on July 28, 1998
Commission File Number 33-97698
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT 11 TO FORM SB-2
REGISTRATION STATEMENT
Under The Securities Act of 1933
GLOBAL PACIFIC ENTERPRISES, INC.
Province of
British Columbia N/A
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdictions Classification Code Number) Identification Number)
of incorporation
or organization
523 Main Street
Vancouver, B.C. V6A 2V1
Telephone: 604-220-7225
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Jody M. Walker
7841 South Garfield Way
Littleton, Colorado 80122
Telephone: 303-850-7637
(Name, address and telephone number of agent for service.)
with copies to:
Jody M. Walker
Attorney At Law
7841 South Garfield Way
Littleton, Colorado 80122
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 133, check the following box: | |
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price fee
<S> <C> <C> <C> <C>
Common Stock 2,000,000 $2.00 $4,000,000(2) $1,379.31
$.10 par value
Common Stock(1) 344,367 $2.00 $688,734 $237.49
Total 2,344,367 $2.00 $4,688,734 $1,616.80
</TABLE>
(1)Represents Common Stock to be registered on behalf of Selling
Shareholders.
(2) All funds raised in U.S. Dollars.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>3
PRELIMINARY PROSPECTUS DATED July 28, 1998
SUBJECT TO COMPLETION
A Minimum Of 250,000 Common Shares and
Up to a Maximum of 2,000,000 Common Shares
GLOBAL PACIFIC ENTERPRISES, INC.
Common Stock
($.10 Par Value)
The Company is offering a minimum of 250,000 Common Shares and up to a
maximum of 2,000,000 Common Shares at the purchase price of $2.00 per Common
Share. There is no minimum investment amount. The Company is registering
344,367 common shares on behalf of its selling security holders.
The Company, through its officers and directors, will undertake a best
efforts self-underwritten offering at the same time as the selling
shareholders will be selling their registered shares. Officers and
directors of the Company are participating as selling shareholders and agree
to attempt to sell their shares only after the offering is completed. Other
selling shareholders have not agreed to delay any attempt to sell their
shares and may sell their shares at any time.
Prior to the date hereof, there has been no trading market for the Common
Stock of the Company. There can be no assurance, however, that the
Common Stock will be quoted, that an active trading and/or a liquid market
will develop or, if developed, that it will be maintained.
THERE ARE MATERIAL RISKS IN CONNECTION WITH THE PURCHASE OF THE SECURITIES.
SEE RISK FACTORS, PAGE 10.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold
nor may offers to buy be accepted prior to the time the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sales
of these securities in any State in which such offer, solicitation or sale
would be unlawful prior to registration or qualification under the securities
laws of any state.
The primary purpose of the Offering is to satisfy expenses to be spent while
trying to raise money for the Company's proposed project. The Company shall
be engaged in the real estate development and business management industries.
The Company, through its trustee company, Central Ocean International, Ltd.,
has signed an interim joint venture agreement with China to develop a site in
Chengdu, China upon which it intends to build a commercial/residential/hotel
complex.
The Joint Venture Agreement does not specifically specify the expiration date
of the Joint Venture partnership, nor does it stipulate any penalties for
late injection of funds into the joint venture account. If the Company is
unable to raise the funding within the offering period, the Company shall
notify the joint venture partner that the Company is unable to proceed.
<TABLE>
<CAPTION>
Price to Proceeds to
Public Commissions Corporation
<S> <C> <C> <C>
Per Common Share $2.00 $.20 $1.80
Minimum Offering(1)(2) $500,000 $50,000 $450,000
Maximum Offering(1)(2) $4,000,000 $400,000 $3,600,000
</TABLE>
(Footnotes on following page)
Page 4
[FN]
<F1>The Common Shares are being offered on a "best efforts" basis by the
Company (employees, officers and directors) and possibly selected
broker-dealers. No sales commission will be paid for Common Shares sold by
the Company. Selected broker-dealers shall receive a sales commission of up
to 10% for any Common Shares sold by them. The Company reserves the right to
withdraw, cancel or reject an offer in whole or in part. See "TERMS OF THE
OFFERING - Plan of Distribution and Offering Period."
This Offering will terminate on or before March 31, 1999. In the Company's
sole discretion, the offering of Common Shares may be extended for up to
three Thirty day periods, but in no event later than June 30, 1999.
Proceeds of this Offering are to be deposited into an escrow account with
Jody M. Walker, Attorney At Law until the total of Five Hundred Thousand
Dollars ($500,000) shall have been paid in by purchasers of the securities
offered hereby. No one has guaranteed to purchase any of the securities
offered hereby, and therefore no assurance can be given that the minimum
offering amount will be realized from this offering. All Common Shares
which have been subscribed for and whose subscription funds have cleared the
banking system will be considered "sold" for purposes of determining if the
minimum offering amount has been obtained prior to the termination of the
offering period. Should less than the minimum offering amount be obtained
prior to the termination of the offering, the entire amount paid in will be
refunded in full to each purchaser without interest thereon or deduction
therefrom. The costs of such refund will be borne by the Corporation. See
"TERMS OF THE OFFERING - Plan of Distribution."
<F2>The amount as shown in the preceding table does not reflect the
deductions of (1) general expenses payable by the Company; and (2) fees
payable in connection with legal and accounting expenses incurred in this
Offering. These expenses are estimated to be $40,433 if the total offering
amount is obtained.
ENFORCEABILITY OF CIVIL LIABILITIES AGAINST FOREIGN PERSONS
The Company is organized as an International Business Company under the
laws of British Columbia Canada where the Company's principal executive
office is located. The Company has appointed Jody Walker, an attorney
engaged in the private practice of law in Colorado, U.S.A. as its agent
upon whom process may be served in any action brought against the Company
under the securities laws of the United States. However, outside the
United States, it may be difficult for investors to enforce judgments
against the Company obtained in the United States in any such actions,
including actions, predicated upon civil liability provisions of Federal
securities laws. In addition, all of the Company's officers and most of
its directors reside outside the United States and nearly all of the
assets of these persons and of the Company are located outside of the
United States. As a result, it may not be possible for investors to
effect service of process within the United States upon such persons, or
to enforce against the Company or such persons judgments predicated upon
the liability provisions of the U.S. securities laws. The Company has
been advised by its Canadian counsel, that there is substantial doubt as
to the enforceability against the Company or any of its directors and
officers located outside the United States in original actions or in
actions of enforcement of judgments of U.S. courts of liabilities
predicated on the civil liability provisions of U.S. federal securities
laws.
Certain Legal Consequences of Incorporation in British Columbia, Canada.
The Company is organized under the laws of British Columbia, Canada.
Principles of law relating to matters affecting the validity of corporate
procedures, the fiduciary duties of the Company's management, directors
and controlling shareholders and the rights of Global Pacific's
shareholders differ from, and may not be as protective of shareholders
as, those that would apply if the Company were incorporated in a
jurisdiction within the United States. Directors of the Company have
the power to take certain actions without shareholder approval, including
an amendment of the Company's Memorandum or Articles of Incorporation, a
change on the Company's authorized capital, and certain fundamental
corporate transactions, including reorganizations, certain mergers or
consolidations, and the sale or transfer of assets. In addition, there
is doubt that the courts of British Columbia, Canada would enforce
liabilities predicated upon U.S. federal securities laws.
REPORTS TO SECURITY HOLDERS
Although the Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith
will file reports and other information with the Securities and Exchange
Commission, the Company has not yet filed any reports with the Securities
and Exchange Commission. The reports and other information filed by the
Company can be inspected and copied at the public reference facilities
maintained by the Commission in Washington, D.C. and at the Chicago
Regional Office, Citicorp Center, 500 West Madison Street, Suite 1400,
<PAGE> 5
Chicago, Illinois 60661-2511 and the New York Regional Office, 7 World
Trade Center, New York, New York 10048. Copies of such material can
be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates.
The Company will furnish to shareholders: (i) an annual report containing
financial information examined and reported upon by its certified public
accountants; (ii) unaudited financial statements for each of the first three
quarters of the fiscal year; and (iii) additional information concerning the
business and operations of the Company deemed appropriate by the Board
of Directors.
The Company will voluntarily file periodic reports in the event its
obligation to file such reports is suspended under Section 15(d0 of the
Exchange Act.
The Commission maintains a Web site -- //www.sec.gov -- that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the Commission.
UNTIL _____ , 1998 (90 DAYS AFTER THE DATE OF THE PROSPECTUS), ALL
PERSONS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THE OFFERING, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF SUCH PERSONS
TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
NO DEALER, SALESMAN, AGENT OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, OR THE
UNDERWRITER, IF AN UNDERWRITER ASSISTS IN THE SALE OF THE SECURITIES.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION
BY ANYONE TO ANY PERSON IN ANY STATE, TERRITORY, OR POSSESSION
OF THE UNITED STATES IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED BY
THE LAWS THEREOF, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY
CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF.
<PAGE>6
<TABLE>
TABLE OF CONTENTS
<S> <C>
PROSPECTUS SUMMARY 7
RISK FACTORS 8
SELLING SECURITY HOLDERS 13
SOURCE AND USE OF PROCEEDS 14
DILUTION 15
THE COMPANY 16
PROPOSED ACTIVITIES 17
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION 23
Trends and Uncertainties
Capital and Source of Liquidity
Results of Operations
MANAGEMENT 25
Officers and Directors
Remuneration
Indemnification
CERTAIN TRANSACTIONS 26
PRINCIPAL SHAREHOLDERS 27
SHARES ELIGIBLE FOR FUTURE SALE 27
MARKET FOR REGISTRANT'S COMMON EQUITY 28
TERMS OF THE OFFERING 28
DESCRIPTION OF SECURITIES 30
LEGAL MATTERS 30
LEGAL PROCEEDINGS 30
EXPERTS 30
INTERESTS OF NAMED EXPERTS AND COUNSEL 30
</TABLE>
<PAGE>7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, financial statements and notes to the financial statements
including the notes thereto appearing elsewhere in this Prospectus.
The Company. The Company was incorporated in November 24, 1994 in
the Province of British Columbia. Pursuant to the Certificate of
Incorporation, the Company has the authority to issue an aggregate of
100,000,000 common shares, .10 par value.
The Company's executive offices of approximately 1,600 square feet are
located at 523 Main Street, Vancouver, B.C., V6A 2V1. The Company's
premises are provided free of charge from Landtek International Corporation,
an affiliated company. The Company can alternatively rent its own office
space separately in the same business area as there are many available.
There could be a material adverse impact on the Company upon the termination
of the arrangement with Landtek International Corporation.
The Company shall engaged in the real estate and high technology development
and business management industries in China and other countries yet to be
determined. The Company, through its trustee company, Central Ocean
International, Ltd., has signed an interim China joint venture agreement to
develop a site in Chengdu, China upon which it intends to build a
commercial/residential/hotel complex.
<TABLE>
<S> <C>
The Offering. The Company hereby offers a
minimum of 250,000 Common Shares
and up to 2,000,000 Common Shares
at $2.00 per Common Share.
If subscriptions exceed 2,000,000
shares, all excess subscriptions
will be promptly returned to
subscribers without interest and
without deduction for commissions
or expenses.
Common Shares outstanding
prior to Public Offering 3,443,667
Common Shares to be outstanding
after Offering Minimum - 3,693,887
Maximum - 5,443,667
Percent of Common Shares owned by
current shareholders after Minimum
Offering 93.23%
Percent of Common Shares owned by
current shareholders after Maximum
Offering 63.26%
Gross Proceeds After Minimum Offering $ 500,000
Gross Proceeds After Maximum Offering $4,000,000
Use of Proceeds. The Company intends to utilize
the sale of its Common Shares
mainly to offset its expenses
in obtaining additional funds
to finance strata-titled
residential and office units
for sale, retail/commercial units
for rental and a hotel tower
and for other administrative
expenses. See "Source and Use
of Proceeds."
If the Company only receives the
minimum offering amount, such
level of proceeds would
significantly restrict the
Company's operation and would have
a substantial adverse effect on
the Company and investors.
This Prospectus also relates to
securities being registered on
behalf of selling security holders
and the Company will not receive
any cash or other proceeds in
connection with the subsequent
sale. See "Source and Use of
Proceeds."
<PAGE>8
Certain Factors to be Considered This Offering involved a high
degree of risk. See "Risk
Factors."
RESALES BY SELLING
SHAREHOLDERS. This Prospectus relates to
Common Shares being registered
on behalf of selling security
holders. The Company will not
receive any cash or other
proceeds in connection with the
subsequent sale. officers and
directors do not plan on selling
their Common Shares until the
Company's offer is fully
subscribed or terminated. The
Company is not selling any
Common Shares on behalf of
Selling Shareholders and has no
control or affect on these
Selling Shareholders. See
"Selling shareholders."
Absence of Dividends; Dividend Policy The Company does not currently
intend to pay regular cash
dividends on its Common Stock;
such policy will be reviewed by
the Company's Board of Directors
from time to time in light of,
among other things, the Company's
earnings and financial position.
The Company does not anticipate
paying dividends on its Common
Stock in the foreseeable future.
See "Risk Factors."
Transfer Agent Nevada Agency & Trust Company is
the Transfer Agent for the
Company's securities.
</TABLE>
RISK FACTORS
In analyzing this offering, prospective investors should read this entire
Prospectus and carefully consider, among other things, the following Risk
Factors:
Inability to Obtain Future Necessary Funding. The proceeds of
the Offering will be used primarily to offset the Company's expenses in
obtaining additional funds for the project and for administrative expenses.
If insufficient funds are raised pursuant to this Offering, the Company will
attempt to obtain additional funds from private lenders, venture capital,
contractor subsidies or by mortgaging for all or part of the project.
There can be no assurance that the Company will be successful in obtaining
funds from any of these sources. The Company estimates that $52,000,000 will
be needed in order complete the Chengdu project. The Company estimates
that approximately $6,000,000 will be needed in order to build just the
residential tower. Any profit generated would then be used to complete the
project. There can be no assurance that adequate funds to complete just a
portion of the project could be obtained. See "SOURCE AND USE OF PROCEEDS,"
"PROPOSED ACTIVITIES" and MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION."
If the amount of proceeds received from the offering is only the minimum
amount or nominally more, the Company will attempt to meet its liquidity
needs be seeking related party loans or will be minimally subsidized by the
officers and directors of the Company until such time as sufficient funds can
be raised. The officers and directors will subsidize the Company's
liquidity needs only in the form of providing office space, office equipment
needs and administrative capabilities until such time as sufficient funds can
be raised. The officers and directors can sustain this form of subsidy for
at least 12 months. The related parties would be parties directly or
indirectly involved with the project such as friends and acquaintances of
either joint venture partner or potential contractors and suppliers for the
project. There can be no assurance that any of these related parties would
have the resources to loan any amounts to the Company. The scale of
operation and activities of the Company will be down-sized appropriately to
reflect the Company's financial situation. See "PROPOSED ACTIVITIES."
The Joint Venture Agreement does not specifically specify the expiration date
of the Joint Venture partnership, nor does it stipulate any penalties for
late injection of funds into the joint venture account. If the Company is
unable to raise the funding within the offering period, the Company shall
notify the joint venture partner that the Company is unable to proceed. See
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION" and "PROPOSED
ACTIVITIES."
<PAGE>9
Possible Adverse effects due to contemporaneous primary offering by the
Company and secondary offering by Selling Shareholders. The Company, through
its officers and directors, will undertake a direct participation self-
underwritten offering at the same time as the selling shareholders will be
selling their registered shares. Officers and directors of the Company are
participating as selling shareholders. Current officers and directors have
entered into written agreements not to sell their Common Shares until the
Company's offer is fully subscribed or terminated. The Company is not
selling any Common Shares on behalf of Selling Shareholders and has no
control or affect on the Common Shares of these Selling Shareholders which
are not subject to any lock-up agreement. The offering of securities by
these Selling Shareholders will occur regardless of the outcome of the
primary offering by the Company.
Other than the written agreements with the current officers and directors,
the Company has not taken any measures to delay the offering by Selling
Shareholders until after the completion of the primary offering by the
Company. The demand for the Company's Common Stock may be decreased due to
the large number of Common Shares being sold in the secondary offering by the
Selling Shareholders. Due to the fact that the secondary offering will be
conducted contemporaneously with a primary offering by the Company, the
market price of the Company's common stock (upon commencement of trading) may
be less than the offering price of $2.00. Conflicts of interests may arise
due to the fact that the primary offering of the Company and the secondary
offering of the Selling Shareholders will be conducted contemporaneously.
In the event the stock price falls below $2.00, the primary offering will be
terminated. There is a strong risk that the primary offering will never be
fully concluded.
Possible Restrictions on Foreign Corporation Doing Business In China.
Currently, China's policy regarding foreign corporations doing business in
China does not restrict the import and export of capital and the remittance
of dividends. However, there can be no assurance that government policies
concerning foreign joint ventures in China will not change in the future to
restrict such activities. See "PROPOSED ACTIVITIES."
Possibility of Political Uncertainty in China. There have been concerns
that there may be political upheaval with the death of China's paramount
leader Deng Shiao Ping. Now, one year after his death, China's political
structure remains stable and his successor Jiang Jemin appears to be fully
supported by Congress and the people of China. However, there can be no
assurance that Jiang Jemin will continue to have the necessary support for
his current policies on economic and political reforms. The economic reform
initiated by the new Prime Minister Chu Rongji has fostered many supporters
world-wide. Again, there is no assurance that this Prime Minister will
continue to be in power or will be able to complete his political objectives.
In any kind of reform, many friends and foes are created at the same time.
Serious and open criticism of the Communist Party and its national or
international policies is not welcome and individuals doing so may be
detained for questioning.
The recent Asian financial crisis which occurred in early 1998 has
detrimentally affected Japan, Thailand, Korea, Indonesia, Malaysia,
Philippines and to smaller extent affected Hong Kong, Taiwan and China. The
least being affected by the crisis is China itself. Chu Rongji predicted
that China will achieve a 8% growth in 1998 and maintains that the Chinese
currency will not be depreciated. Billions of dollars have poured into Hong
Kong to support the Hong Kong dollar from depreciation. By mid 1998, Taiwan,
Hong Kong and China seemed to be shouldering the economic crisis effectively
with growth and national revenue down just slightly. However, there is no
assurance that this present situation will not worsen and that China will not
experience severe financial crisis. Chu Rongji has demonstrated his ability
to control the overheated economy of China in the past, There is no
guarantee that he will do equally well to avoid the current financial crisis
devastating Southeast Asia.
Political upheaval has not occurred upon the death of Tang Shio Ping, but
there can be no assurance that political upheaval will not occur at a later
date and negatively effect the project and that political upheaval will not
materially impact the operations of the Company. See "PROPOSED ACTIVITIES."
Other Risks Related to Doing Business with Chinese Government. There is no
absolute guarantee that the Chinese government will honor its contracts to
the minute details, if at all. There can be no assurance that the Chinese
government will not pass a bill or other form of legislature to discontinue
the various benefits that a China-foreign joint venture project now enjoys
such as free-from-profit taxes in the first three years and 50% tax in the
next two years, etc. There is also the risk that the Chinese Government
may, in the future, nationalize private industries. See "PROPOSED
ACTIVITIES."
Any military and political maneuvers over the Taiwan issue and various border
disputes among neighboring countries heighten tension in everyday life
and in the investment climate. There is the risk that such tension will
affect all investments in China including the Sichuan Province. See
"PROPOSED ACTIVITIES."
<PAGE>10
There is a risk that the international arena of politics may change or a
situation could arise (such as human rights violations, etc.) where the
United States and Canada may boycott, place a trade embargo or prevent
their nationals from investing into China. Additionally, there can be no
assurance that if foreign policies changed or relationships became strained,
China will not retaliate by nationalizing all foreign investments, by
preventing foreign profits from the leaving the country or by disallowing
further investment into China. See "PROPOSED ACTIVITIES."
Risks Related to the Chinese Economy. The Chinese economy, for
China as a whole and in the Sichuan Province, is affected by the poor
economical climate. The extent to which specific areas are affected will
depend on the present affluence of the area governments, the various local
industries and working units, the residents and the availability of and the
demand of the living necessities to these areas. The City of Chengdu has a
population of over 15 million compared to Chongqing (population 17 million)
and Shanghai (population 19 million). There can be no assurance that the City
of Chengdu will not be grossly affected by a poor economy in other areas.
See "PROPOSED ACTIVITIES."
Risks Related to the Chinese Legal System. The legal system in
China is not as complete as that of more developed countries, There may be
many gray areas or areas which have not been addressed adequately in the
protection of foreign investors and their interests. Because the legal
system is still in its infantile stage pertaining to and involving
international trades, investments, foreigners, problems arising out of joint
ventures, etc., there is the risk that litigation involving these issues may
take a long period of time to resolve, if at all. The risk is further
magnified because such litigation would be between a private foreign
corporation or individuals and official agents of the Chinese government.
While the former has limited financial resources, the latter has an abundance
of funds to continue the legal proceedings. See "PROPOSED ACTIVITIES."
Current Transportation System and Infrastructure. Chengdu is a
transportation hub for travelers making connecting flights and rails to other
destinations inside and outside of the Province. The current transportation
system in Chengdu is adequate to handle large number of daily visitors since
the completion of the highway, rail and air-link network in 1997. There can
be no assurance that the current transportation system and infrastructure
will continue to be adequate for future needs of the general public in
Sichuan Province or the Company due to an increase in the local population or
tourism. See "PROPOSED ACTIVITIES."
Exchange Rate Risks. Any proceeds from the sale of real estate and income
from retail/commercial unit rentals and profit (if any) from hotel and
business operations will be a mixture of local currency and foreign
currencies. However, the majority of the income will be in the form of local
currency. During the recent months, spokesmen for the Chinese Government
have repeatedly declared that the Chinese yen will not be depreciated,
however, there is still a risk that the local currency will depreciate in
value as it is being converted into foreign currencies.
There are foreign exchange centers run by both the government and by
government approved organizations in most major cities in China. The
charge by the government ranges from 2% to 5%. There can be no assurance
that a certain exchange rate will remain stable for any period of time or
that the fees for foreign currency exchange will remain at current prices.
Additionally, the fact that the People's Bank of China, not market forces,
establishes the exchange rate at which local currency can be exchange into
foreign currencies, could have a negative effect on the ability of the
Company to import or export capital and remit dividends. See "PROPOSED
ACTIVITIES."
Dependence on Joint Venture Partner for Successful Completion of the Project.
Estate Exploitation Corporation, a government owned development company
located in Jinniu District of Chengdu, (the "Joint Venture Partner") has
already expended its portion of the investment in appropriation of land, land
use contract, costs for relocating existing residents, development capital
costs and design and soil exploration. If the joint venture partner should
back out of the project, the project may be temporarily slowed down or halted
until additional funds are obtained to buy out the joint venture partner's
interest. There can be no assurance that the Company would be able to obtain
the additional necessary funds. The Company has estimated that an amount of
approximately US$10 million would be needed to buy out the Chinese joint
venture partner's interest. This amount is based on the actual amount of
money spent by the Chinese joint venture partner plus the interest losses and
the loss of future profit that the project may generate. In China, there
are three agreements which must be entered into before actual commencement of
any venture, the letter of intent, the interim joint venture agreement and
the final joint venture agreement. There can be no assurance that the Joint
Venture Partner will enter into the final joint venture agreement. See
"PROSPECTUS SUMMARY" and "PROPOSED ACTIVITIES."
Risk of Utilizing Trustee Company as Signatory on Interim Joint Venture
Agreement. The interim joint venture agreement was entered into through the
use of a Hong Kong trustee company because, at the time of negotiations, the
Company had not been duly incorporated.
<PAGE>11
Alan Kwong, one of the principals of the Company controls the trustee
company. The Company has entered into a contract with the trustee company
which provides that the Company's name only shall be in the final joint
venture agreement. There may be the risk that the Joint Venture Partner
will not endorse the Company as its rightful partners. There is no written
consent regarding the substitution. See "PROSPECTUS SUMMARY" and "PROPOSED
ACTIVITIES."
Possible Regulatory Delays. The Company may experience delays or other
problems in the issuance of the necessary permits and/or licenses to
complete the joint venture project in Chengdu, China, including
environment issues, if any. There can be no assurance that the Company
will be able to obtain the necessary licenses or permits in a reasonable
time. See "PROPOSED ACTIVITIES."
Possible Contracting Delays. There may be delays in obtaining
suitable contractors for the construction of the buildings, however, the
Chinese government allows contractors from other provinces or cities to
help in any shortage. There are no labor unions in China. The developer
seeking outside work forces must submit a notice to the district
government's labor department that it is unable to hire local qualified
workers due to shortage and must seek workmen from other provinces.
However, there can be no assurance that the Company's request would be
approved or that the Company will be able to obtain suitable contractors
in a reasonable time or at a reasonable price. See "PROPOSED ACTIVITIES."
Competition. Through a joint venture, the Company will compete in the
real estate development industry. Currently there are no 5-star hotels,
casinos, luxury strata-titled office rentals or sales and no strata-titled
retail/commercial units for sale in Chengdu and outlying areas. Additionally,
due to the fact that the City of Chengdu just opened its doors for foreign
joint ventures three years ago and, as such, major joint venture project
development is still in its infancy, there is little or no actual competition
to the Company's proposed operations. Chengdu's population is over
15,000,000 people. The average space per person allotted by the government
is 30 square feet per person. Development such as proposed by the Company
is only the second one of its kind in Chengdu (the other is the Toyan Group
project), both of which contain a large number of residential units, pre-sell
a set number of units prior to construction and both utilize the idea of
mortgages provided by foreign banks. Additionally, statistics from the news
media in China indicate that the residents of the Sichuan Province on the
average have a higher spending power than the residents of Shanghai or
Beijing. See "THE COMPANY, - Competition."
Real Estate Development Co. Ltd. with an "International Metropolitan"
residential project which is located 20 miles out of Chengdu. There are other
smaller real estate developers of both local and foreign groups, however, to
date, there has not been a development of the proposed size and type.
Mortgage financing is not available locally and has
been introduced by foreign developers. Small local developers do not have
the connections to foreign banks which are willing to finance and provide
mortgage funds to local prospective buyers. There can be no assurance that
other similar projects will not be commenced in the future which will provide
competition to the Company's proposed operations. See "THE COMPANY -
Competition."
In China, before any project is approved by the government for foreign joint
venture, a thorough feasibility study, market research and backing by
different levels of government must first be obtained. There are many
foreign businessmen coming to Chengdu to do business, but the city of Chengdu
does not have any hotels suitable for foreigners. Mr. Alan Kwong, the
Company's president has been in Chengdu continually for 4-5 years. He has
personally studied the environment and the city of Chengdu's needs in terms
of facilities and accommodations for tourism and business. Although the
Company is not in possession of official government documents pertaining to
many of its requirements prior to its official approval of the project,
newspaper clippings, Mr. Kwong's personal encounters with government
officials of different levels and informal conversations with different
bankers in Asia confirm the Company's choice of this project. There can be
no assurance that the Company's choice will, in fact, be successful.
Possible Inability to Obtain Mortgage Financing. The Company does not
currently have available mortgage funding. The Company has had
preliminary meetings with banking institutions in Hong Kong and
Singapore. However, to date, no written agreements have been entered into
and there is a risk the meetings may not result in actual commitments.
See "THE COMPANY."
The lack of mortgage financing will affect the sale of the strata-title units
in that not all potential buyers will have sufficient cash to purchase the
units out right. Additionally, there is risk associated with substantial
leverage. There can be no assurance that the market value of the units will
not drop. See "PROPOSED ACTIVITIES."
Possible Loss of Entire Investment. Upon obtaining the minimum offering
amount, all proceeds of this Offering received from the sale of the Company's
common stock shall be deposited into the operating account of the Company.
Even in the event the Company sells the maximum number of securities offered
herein and raises additional capital, the investor may still lose his entire
<PAGE>12
investment, particularly in light of the fact that the Company will need to
raise approximately $50,000,000 in order to complete the project. See "THE
COMPANY" and "USE OF PROCEEDS."
Uncertainty of Future Financial Results. The Company has experienced
accumulated losses from research and development costs to date and future
financial results are uncertain. See "FINANCIAL STATEMENTS."
As such, there can be no assurance that the Company can be operated in a
profitable manner. Profitability depends upon many factors, including the
ability to obtain further financing, the maintenance or reduction of expense
levels and the success of the Company's business activities. To date, the
Company has accumulated losses from operations as of March 31, 1998 of
$(344,367) U.S. Dollars. Even with future profitable operations, the
Company will require additional capital. See "MANAGEMENT'S DISCUSSION AND
ANALYSIS" and "USE OF PROCEEDS."
Control of Current Shareholders and Management. The majority
shareholders and the officers and directors of the Company as a group will
own over 38% of all of the outstanding common shares of the Company
upon completion of the offering. As a result, these individuals may have
the ability to control the affairs of the Company. The operations of the
Company could be adversely affected by their control if key employees such
as a president, financial officer and reporting secretary with experience in
running a public company and a project manager, rental unit manager, etc.
for operations are not obtained and current management, which is
inexperienced, continued to run the operations of the Company. See
"MANAGEMENT" and "PRINCIPAL SHAREHOLDERS".
Dependence on Key Individuals. The future success of the Company
is highly dependent upon the Company's ability to attract and retain
qualified key employees in the management of the Company itself and in its
operation of the joint venture project. The inability to obtain and employ
these individuals would have a serious effect upon the business of the
Company. See "COMPANY - Employees" and "MANAGEMENT."
Experience of Officers and Potential Conflicts of Interests. The financial
success of the Company is dependent upon the management expertise, judgment
and experience of its officers. The death, disability or resignation of such
officers may adversely affect the financial performance of the Company. The
Company intends to apply for key man life insurance of Alan Kwong, Ken Wong
and Robin Young. The officers and directors have the exclusive authority to
manage and control and make all decisions regarding the business and affairs
of the Company. All of the officers devote approximately 50% of their time
to the affairs of the Company. Some of the officers and directors of the
Company are currently principals of other businesses. Although none of the
officers and directors are principals of competing business, the officers and
directors use their best efforts to resolve equitably any time conflicts that
might result from acting as principals for a number of businesses, but there
can be no assurance that such other activities will not interfere with the
officers' and directors' ability to discharge their obligations herein. See
"MANAGEMENT."
No Assets or Record of Earnings or Operations. The Company has no assets
and no operating history, has not generated any operating revenues to date
and must be considered promotional in its early embryonic and developmental
stages embarking on a brand new business venture. Potential investors should
be made aware of the difficulties encountered by a new enterprise in its
embryonic stage. See "THE COMPANY".
Substantial and Immediate Dilution. As a result of this Offering, the
Company will have up to 5,443,667 outstanding Common Shares. The
Corporation may issue additional preferred and common shares in private
business transactions or pursue an additional public offering. In
addition, due to the fact that the currently outstanding Common Shares were
issued by the Corporation for only $344,367, the investors in this Offering
may experience immediate dilution of $1.35 or 67.5% (from an offering price
of $2.00 per Common Share to a net tangible book value after the offering of
$.65) upon completion of the maximum offering of Common Shares. See
"DILUTION" and "FINANCIAL STATEMENTS."
Future Sales of and Market for the Shares. Upon successful completion of
the Offering of Common Shares herein the Company will have 5,443,667 common
shares outstanding, of which 2,344,367 Common Shares will be freely tradable
without restriction or further registration under the Securities Act of 1933
(the "Securities Act") Note, this does not include any Common Shares being
issued on behalf of Selling Shareholders. No assurance can be given that
the availability of such Common Shares for sale will not have an adverse
impact on the market price of the Company's
Common Shares. Additionally, in light of the fact that the Common Shares
will be traded in the "pink sheets", difficulty in determining the market
price of the Common Shares may occur. Further, management of the Company
cannot predict to what extent a secondary market in the Shares will develop
and provide liquidity for holders of the Common Shares. See "SALES OF
SHARES PURSUANT TO RULE 144" and "MARKET FOR REGISTRANTS COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS."
<PAGE>13
Lack of Public Market. Prior to this Offering, there has been no
public market for the securities of this Company. Management of the
Company cannot predict to what extent a secondary market in the Shares
will develop and provide liquidity for holders of the Common Shares. See
"SALE OF SHARES PURSUANT TO RULE 144" and "MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS."
"Penny" Stock Regulation of Broker-Dealer Sales of Company Securities.
The Company intends to list its Common Shares on NASDAQ upon meeting the
requirements for a NASDAQ listing, if ever. Upon completion of this
offering, the Company will not meet the requirements for a NASDAQ listing.
Until the Company obtains a listing on NASDAQ, if ever, the Company's
securities may be covered by a Rule 15g-9 under the Securities Exchange Act
of 1934 that imposes additional sales practice requirements on broker-dealers
who sell such securities to persons other than established customers and
institutional accredited investors (generally institutions with assets in
excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 jointly with their spouse). For
transactions covered by the rule, the broker-dealer must furnish to all
investors in penny stocks, a risk disclosure document required by Rule 15g-9
of the Securities Exchange Act of 1934, make a special suitability
determination of the purchaser and have received the purchaser's written
agreement to the transaction prior to the sale. In order to approve a
person's account for transactions in penny stock, the broker or dealer must
(i) obtain information concerning the person's financial situation,
investment experience and investment objectives; (ii) reasonably determine,
based on the information required by paragraph (i) that transactions in penny
stock are suitable for the person and that the person has sufficient
knowledge and experience in financial matters that the person reasonably may
be expected to be capable of evaluating the rights of transactions in penny
stock; and (iii) deliver to the person a written statement setting forth the
basis on which the broker or dealer made the determination required by
paragraph (ii) in this section, stating in a highlighted format that it is
unlawful for the broker or dealer to effect a transaction in a designated
security subject to the provisions of paragraph (ii) of this section unless
the broker or dealer has received, prior to the transaction, a written
agreement to the transaction from the person; and stating in a highlighted
format immediately preceding the customer signature line that the broker or
dealer is required to provide the person with the written statement and the
person should not sign and return the written statement to the broker or
dealer if it does not accurately reflect the person's financial situation,
investment experience and investment objectives and obtain from the person a
manually signed and dated copy of the written statement. A penny stock
means any equity security other than a security (i) registered, or approved
for registration upon notice of issuance on a national securities exchange
that makes transaction reports available pursuant to 17 CFR 11Aa3-1 (ii)
authorized or approved for authorization upon notice of issuance, for
quotation in the NASDAQ system; (iii) that has a price of five dollars or
more or . . . . (iv) whose issuer has net tangible assets in excess of
$2,000,000 demonstrated by financial statements dated less than fifteen
months previously that the broker or dealer has reviewed and has a reasonable
basis to believe are true and complete in relation to the date of the
transaction with the person. Consequently, the rule may affect the ability
of broker-dealers to sell the Company's securities and also may affect the
ability of purchasers in this Offering to sell their shares in the secondary
market. See "MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS - Broker-Dealer Sales of Company's Securities."
Lack of Dividends. There can be no assurance that the continued
operations of the Company will result in any revenues or will be profitable.
To date, the Company has not paid a dividend to its shareholders. At the
present time, the Company intends to use any earnings which may be
generated to finance the growth of the Company's business. Accordingly,
while payment of dividends rests within the discretion of the Board of
Directors, the Company does not presently intend to pay dividends and
there can be no assurance that dividends will ever be paid. See
"DIVIDEND POLICY."
Vulnerability to Fluctuations in Economy. Demand for the Company's proposed
operations is dependent on, among other things, general economic conditions
in China and other countries which are cyclical in nature. Prolonged
recessionary periods may be damaging to the Company's ability to attract
investors for future funding and lease holders for its commercial and
residential portions of its joint venture properties. Benefit to Management.
Although currently, the officers and directors have received no compensation
and common shares for their services, the Company may, in the future,
compensate the Company's management with salaries and other benefits. Even
though no compensation plan has been proposed or agreed upon, the payment of
future salaries, and the costs of these benefits, may be a burden on the
Company and may prevent the Company from achieving profitable operations in
the future. See "MANAGEMENT - Remuneration."
SELLING SECURITY HOLDERS
The Company shall register pursuant to this prospectus 344,367 Common
Shares currently outstanding for the account of the following individuals or
entities. The percentage owned prior to and after the offering reflects all
of the then outstanding common shares. The amount and percentage owned
after the offering assumes the sale of all of the Common Shares being
registered on behalf of the selling shareholders.
<PAGE>14
<TABLE>
Name and Amount Total Number % Owned Number of % Owned
Being Registered Owned Prior to Shares Owned After
Currently Offering After Offering Offering
<S> <C> <C> <C> <C>
C.L. Ng - 7,600 76,000 2.21% 68,400 1.26%
Kam Ping Lui - 1,200 12,000 .35% 10,800 .25%
Brenda Kayi Kong - 4,000 40,000 1.16% 36,000 .66%
Alan Kwong<F1> - 60,542 605,417 17.58% 544,875 10.01%
Mok Wah Keung - 3,000 30,000 .87% 27,000 .50%
Tsang Hung Po - 3,000 30,000 .87% 27,000 .50%
T.C. Lee - 3,000 30,000 .87% 27,000 .50%
Paul Yu - 3,000 30,000 .87% 27,000 .50%
Phillip Ee - 3,000 30,000 .87% 27,000 .50%
Dr. Kay Ho - 6,000 60,000 1.74% 54,000 .99%
Violet Ho - 6,000 60,000 1.74% 54,000 .99%
Kong Beng Wong - 6,000 60,000 1.74% 54,000 .99%
Jap Chong Young<F2> - 60,486 604,858 17.56% 544,372 10.00%
Weymann Cheng - 7,856 78,559 2.30% 70,703 1.29%
David Darren Young - 5,000 50,000 1.45% $45,000 .83%
Landtek Properties, Inc.-7,642 76,417 2.22% 68,775 1.26%
Margaret Wong - 6,000 60,000 1.74% 54,000 .99%
Sin Ming Chiu - 9,000 90,000 2.61% 81,000 1.49%
Robin Y. Young<F3> - 47,021 546,625 15.87% 491,962 9.04%
Ken K. Wong(4) - 44,021 516,625 15.00% 464,962 8.54%
Fred R. Umayam - 10,000 100,000 2.90% 90,000 1.65%
Mark Alan Mannhalt - 6,000 60,000 1.75% 54,000 .99%
Donald Tom Prechitt - 3,000 30,000 .87% 27,000 .50%
Huan Wa Xu - 8,000 80,000 2.32% 72,000 1.32%
Pollysol Investments, Ltd
- 10,000 100,000 2.90% 90,000 1.65%
He Rong Hui - 2,000 20,000 .58% 18,000 .33%
Lee Shick Por - 2,000 20,000 .58% 18,000 .33%
William Lo - 10,000 100,000 2.90% 90,000 1.65%
</TABLE>
[FN]
<F1>Mr. Alan Kwong has been President of the Company since inception.
<F2>Mr. Jap Chong Young has been a Director of the Company since March
25, 1995.
<F3>Mr. Robin Young has been Secretary and a Director of the Company
since inception.
<F4>Mr. Wong has been Vice-President of the Company since inception.
SOURCE AND USE OF PROCEEDS
Minimum Net Proceeds. The net proceeds to be received by the Company from
the sale of the Common Shares offered hereby, are estimated to be $409,567
after expenses and commissions if the minimum number of Units are sold.
This assumes expenses of approximately $40,433 and commissions of $50,000.
See "TERMS OF THE OFFERING".
Principal Purposes. The principal purposes for which the proceeds of this
Offering will be utilized are as follows:
<TABLE>
<S> <C>
Gross Proceeds of Offering $500,000
Less: Commissions 50,000
Offering Expenses 40,433
Net Proceeds of Offering $409,567
Application of Proceeds
Obtaining Additional Funds<F1> $250,000
Project travel and field expenses 50,000
Working Capital 109,567
Total Application of Proceeds $409,567
</TABLE>
[FN]
<F1>Includes commissions and expenses which may be incurred to obtain the
balance of the funds needed to complete the Chengdu
commercial/residential/hotel complex project (estimated to be a minimum of an
additional $2,000,000 and up to a maximum of an additional $48,000,000).
Maximum Net Proceeds. The net proceeds to be received by the Company from
the sale of the Common Shares offered hereby, are estimated to be $3,559,567
after expenses and commissions if the maximum number of Units are sold.
This assumes expenses of approximately $40,433 and commissions of $400,000.
See "TERMS OF THE OFFERING".
Principal Purposes. The principal purposes for which the proceeds of this
Offering will be utilized are as follows:
<TABLE>
<PAGE>15
<S> <C>
Gross Proceeds of Offering $4,000,000
Less: Commissions 400,000
Offering Expenses 40,433
Net Proceeds of Offering $3,559,567
Application of Proceeds
Obtaining Additional Funds<F1> $1,000,000
Certificate of Deposit<F2> 1,000,000
Project travel and field
expenses 150,000
Legal & Accounting
costs of project 100,000
Office upgrade 50,000
Contingency fund<F3> 1,000,000
Working Capital 259,567
Total Application of Proceeds $3,559,567
</TABLE>
[FN]
<F1> Includes commissions and expenses which may be incurred to obtain the
balance of the funds needed to complete the Chengdu
commercial/residential/hotel complex project (estimated to be a minimum of an
additional $2,000,000 and up to a maximum of an additional $48,000,000).
includes commissions and expenses which may be incurred to obtain the
balance of the funds needed to complete the project.
<F2>The certificate of deposit will be put into the lawyer's trust account to
signify that the Company has the funds and fully intends to complete the
joint venture agreement with China.
<F3>Will be invested in certificates of deposit, short term (6 months or
less) government obligations and money market funds until needed.
Given the above use of proceeds, management is of the opinion that the
minimum offering proceeds will satisfy cash requirements for at least six
months and the maximum offering proceeds will satisfy cash requirements for
at least twelve months during which the Company shall pursue additional
financing. In the event that only the minimum offering proceeds is
obtained, the Company will seek other types of financing such as private
equity funding, loans from private lenders, contractor subsidies or financing
and mortgages, etc. Even in the event the Company obtains the maximum
proceeds of the offering, the Company will still need to obtain substantial
additional financing before it can begin construction on even a small portion
of the proposed project.
The figures set forth above are estimates and cannot be precisely calculated.
However, there are no material amounts of funds which will be utilized by
the Company in conjunction with the net proceeds of this Offering other
than for the purposes enumerated above. To the extent additional funds are
necessary for operation of the Company's business or the expansion of the
additional equity financing, there can be no assurance that such additional
financing with be available or that, if available, it can be obtained on
terms which management deems reasonable and any debt financing could require
the Company to mortgage, pledge or hypothecate its assets. Securities are
also being registered on behalf of the selling security holders
and the Company will not receive any cash or other proceeds in connection
with the subsequent sale.
DILUTION
Dilution. Assuming completion of minimum offering amount, there will
be a total of 3,693,667 Common Shares outstanding. The following table
illustrates the per Share dilution as of the date of this Prospectus, which
may be experienced by investors upon reaching the maximum offering.
Offering price $2.00
Net tangible book value per
Share before offering $0.00
Increase per Share .11
attributable to investors
Pro forma net tangible
book value per Common
Share after offering .11
-----
Dilution to investors 1.89
Dilution as a percent of
offering price 94.50%
Dilution. Assuming completion of maximum offering amount, there will
be a total of 5,443,667 Common Shares outstanding. The following table
illustrates the per Share dilution as of the date of this Prospectus, which
may be experienced by investors upon reaching the maximum offering.
<PAGE>16
Offering price $2.00
Net tangible book value per
Share before offering $0.00
Increase per Share .65
attributable to investors
Pro forma net tangible
book value per Common
Share after offering .65
-----
Dilution to investors 1.35
Dilution as a percent of
offering price 67.5%
Comparative Per Common Share Data.
<TABLE>
Minimum Offering Amount
Total Price
Number of Paid Per Consider-
Shares % Share ation Paid %
<C> <S> <S> <S> <S> <S>
Existing Shareholders 3,443,667 93.23% $.10 $344,367 40.78%
New Investors
of Common Shares 250,000 6.77% $2.00 $500,000 59.22%
Maximum Offering Amount
Total Price
Number of Paid Per Consider-
Shares % Share ation Paid %
<C> <S> <S> <S> <S> <S>
Existing Shareholders 3,443,667 63.26% $.10 $344,367 7.93%
New Investors
of Common Shares 2,000,000 36.74% $2.00 $4,000,000 92.07%
</TABLE>
Further Dilution. The Company may issue additional restricted Common Shares
pursuant to private business transactions. Any sales under Rule 144 after
the applicable holding period may have a depressive effect upon the market
price of the Company's Common Shares and investors in this offering upon
conversion. See "SALES OF STOCK PURSUANT TO RULE 144."
THE COMPANY
The Company. The Company was incorporated on November 24, 1994 under the
name of Global Pacific Enterprises, Inc. Pursuant to the Articles of
Incorporation, the Company has the authority to issue an aggregate of
100,000,000 common shares, .10 par value.
The Company owns no real property. The Company's executive offices of
approximately 1,600 square feet are located at 523 Main Street, Vancouver,
B.C., V6A 2V1. Telephone: (604) 220-7225. The Company's premises are
provided free of charge from Landtek International Corporation, an affiliated
company. The Company can alternatively rent its own office spaces
separately in the same business area as there are many available. There
could be a material adverse impact on the Company upon the termination of the
arrangement with Landtek International Corporation.
The Company shall engage in the real estate development and business
management industries. On July 20, 1994, the Company, through its
trustee company, Central Ocean International, Ltd. (which holds all rights
for the Company prior to the proper registration of the Company in British
Columbia, Canada) has signed a foreign China interim joint venture
agreement to develop a site in Chengdu, China upon which it intends to
build a commercial/residential/hotel complex. Alan Kwong, the current
president of the Company is one of the principals of the Company controls the
Central Ocean International, Ltd. Mr. Kwong owns 65% of the controlling
shares of Central Ocean International, Ltd. and is also its president. To
resolve any possible conflict of interest, Mr. Kwong will relinquish his
entire share ownership to the other shareholder for the consideration of one
dollar ($1.00) once the final joint venture agreement is signed between the
Company and the Chinese counterpart. The Company shall enter into a final
joint venture agreement. The Company has entered into an agreement with
Central Ocean International, Ltd. which states that the Company's name only
shall be in the final joint venture agreement. The Chinese Government has
been aware of this agreement. Upon the effective date of this registration
statement, the Company intends to go to Chengdu to sign the final joint
venture agreement. If the Company is unable to raise the funding within the
offering period, the Company shall notify the joint venture partner that the
Company is unable to proceed. The Joint Venture Agreement does not
specifically specify the expiration date of the Joint Venture partnership,
nor does it stipulate any penalties for late injection of funds into the
joint venture account. If the Company is unable to raise the funding within
the offering period, the Company shall notify the joint venture partner that
the Company is unable to proceed.
There are presently outstanding 3,443,667 Common Shares. See "DESCRIPTION OF
SECURITIES".
<PAGE>17
Employees. In addition to management, the Company currently employs no
full time employees and three part time employees. Upon receipt of
funding, the Company shall hire employees and independent contractors as
necessary to complete the project.
Competition. Through a joint venture, the Company will compete in the
real estate development industry. Currently there are no 5-star hotels,
casinos, luxury strata-titled office rentals or sales and no strata-titled
retail/commercial units for sale in Chengdu and outlying areas.
Additionally, due to the fact that the City of Chengdu just opened its doors
for foreign joint ventures five years ago and, as such, major joint venture
project development is still in its infancy, there is little or no actual
competition to the Company's proposed operations. The only land
developer with available mortgage funding to the buyers is Toyan Group
(Chengdu) Real Estate Development Co. Ltd. with an "International
Metropolitan" residential project which is located 20 miles out of Chengdu.
The project is only residential. There are other smaller real estate
developers of both local and foreign groups, however, to date, there has not
been a development of the proposed size and type. Mortgage financing is not
available locally and has been introduced by foreign developers. Small
local developers do not have the connections to foreign banks which are
willing to finance and provide mortgage funds to local prospective buyers.
There can be no assurance that other similar projects will not be commenced
in the future which will provide competition to the Company's proposed
operation,
In China, before any project is approved by the government for foreign joint
venture, a thorough feasibility study, market research and backing by
different levels of government must first be obtained. There are many
foreign businessmen coming to Chengdu to do business, but the city of Chengdu
does not have any hotels suitable for foreigners. Mr. Alan Kwong, the
Company's president has been in Chengdu continually for 4-5 years. He has
personally studied the environment and the city of Chengdu's needs in terms
of facilities and accommodations for tourism and business. Although the
Company is not in possession of official government documents pertaining to
many of its requirements prior to its official approval of the project,
newspaper clippings, Mr. Kwong's personal encounters with government
officials of different levels and informal conversations with different
bankers in Asia confirm the Company's choice of this project.
Federal, State and Local Laws and Regulations. For commercial development
projects such as the Company's current project, if such project is less than
$100 million and if such project is located in a provincial capital or in an
city designated by the central government as a Special Economic Zone, then
the project does not require central or provincial government approval. The
Joint Venture does not require central or provincial government approval.
Chengdu is the capital city of Sichuan Province. The total project cost is
less than $100 million. As a result, the current project and the
registration of the Joint Venture do not require the approval of the central
and the provincial government. However, the City of Chengdu must approve the
project and the joint venture company must be registered with the City of
Chengdu.
The project has been approved by all the relevant departments of the City of
Chengdu. The joint venture company will need to be registered and a
business license issued prior to the commencement of the project. The
Company shall proceed with the necessary licensing as soon as the final joint
venture agreement has been signed and capital is available for the
registration of the joint venture company.
Construction permits will be obtained once construction plans have been
submitted for approval. Construction plans for the current project have not
yet been prepared and, as a result, no building permits have been issued.
The current project does not infringe into any existing environmental laws
and regulations either during construction or under normal business
operations as it is a residential and commercial/retail project and not an
industrial project. During the foundation piling stage, work may be limited
to a certain window time to control the noise level during piling.
Seasonal Nature of Business Activities. The Company's business activities
are not seasonal.
Future Financing. If insufficient funds are raised in this Offering, the
Company will attempt to obtain additional funds from other sources. To this
end, the Company has approached a private offshore entity which is willing to
lend against a first charge on the project provided the Company also puts up
an equal amount of capital for the project. This entity will match finance
to whatever amount the Company puts aside for the project, a minimum to be
$1,250,000.
The Company has also approached an European entity for a private loan of the
entire amount necessary. The Company is currently preparing the necessary
loan application together with business plans and relevant Company
information and documents.
The Company has also had meetings with a local contractor situated in
Kamloops, British Columbia, Canada who has indicated interest in funding and
participating in the construction of the joint venture project. However,
none of these companies is willing to provide written commitment prior to the
<PAGE>18
Company achieving the minimum funds requirements. There is a risk that the
Company cannot even raise the $1,250,000 required. And even if the
requirement is achieved, there are no assurances that such match financing
would still be available by that time.
After the completion of this Offering, the Company shall modify its
investment strategy to reflect the financial situation then prevailing. If
sufficient funds were raised to start one residential tower, the Company will
remain focused in developing the real estate project in Chengdu. If
insufficient funds were raised for the real estate development project, the
Company will, depending on the funds raised, engage in either one or more
smaller joint ventures yet to be determined, if any. If the receipt of
funds is less than $1,000,000, the Company could pursue an equity partnership
with companies to go into joint venture projects.
PROPOSED ACTIVITIES
General Background. As a provincial capital, Chengdu is the political,
economic and cultural center of Sichuan Province. In 1992, the Central
Government of China granted "open coastal cities" status to the City of
Chengdu, Sichuan Province, in the People's Republic of China. This
status allows the city to invite foreign participation in joint ventures with
local government agencies, to grant special tax incentives, to allow an
agreed percentage of the products to be marketed domestically and to
guarantee joint venture rights and privileges such tax incentives on profits
applied and imported plants and equipment at no tax or at a discount. In
March, 1994, the central government commissioned Chengdu to be a pilot
city to test out the impact of total reform in the areas of finance, taxes,
wages, habitation, Medicare, education, technology, administrative
structures, stocks and shares, contracting, land use rights and transfers,
pawning and auctioning, etc. The central government has dedicated its
resources to establish Chengdu as a middle-class well-to-do model city by the
year 2,000.
With a population of 130 million and land area of 570,000 square
kilometers, Sichuan province accounts for approximately 9.4% of China's
population and 5.9% of its total land area, ranking first and fifth
respectively among all provinces. Lying in the upper reaches of the
Yangtze River, Sichuan Province will benefit from the Three Gorges dam
project, which is projected to increase China's electricity by 84 billion
KWH per year.
At present, four major railways link Sichuan with other provinces. To
increase rail transport capacity, several projects have been completed since
1995. Of these, three new railways have linked Chengdu to other cities in
the province. At the end of 1992, Sichuan's road network totaled about
10,000 km, of which just over 100 km was first grade highways. A World Bank
loan have been used to finance the construction of a 340 km highway between
Chengdu and Chongqing, the other major city in the province.
The total mileage of air freight increased by 33% to 80 million km. In
1992, plans to improve air links included expansion of Chengdu's airport
and construction or renovation of airports in most localities. In 1997, all
these projects were completed. Chengdu's international airport is one of
the busiest in the country with as many as six flights daily to Beijing and
Guangzhou. Direct flights to Hong Kong, Singapore, Bangkok and Hiroshima
are available. Sichuan Province's access to sea is via Shanghai, Hong Kong
and Beihai, China's major sea ports.
In recent years, communication facilities have improved rapidly in Sichuan
province. By the end of 1997, more than 700,000 telephone lines have
been installed, direct dialing to major Chinese cities, Hong Kong and
overseas countries are available in Chengdu and Chongqing. In Chengdu
alone, there are an estimated 180,000 registered users of pager and cellular
phones.
With its many scenic spots and significant historic areas and local cuisine,
Chengdu is a popular tourist destination. In 1992, overseas tourist
arrivals topped 300,000. By 1994, this figure has almost doubled to
500,000. By 1997, the number of overseas tourists was well over one million.
The city is the starting point for traveling to Juizhaigou and Emei mountain.
Because of its central location and the availability of rail and air links,
the city is also a major stopover for tourists for Tibet, Xian and other
tourist attractions in the Sichuan Province.
Benefits permitted by the central government as listed in the foreign-China
joint venture rules and regulations are in general terms Details of
benefits could be precisely stipulated in the joint venture contract.
Examples of benefits achieved could be (I) no development charges for water,
sewer, roadwork and electricity connections; (ii) required water,
electricity, raw material, freight and communication facilities, etc.,
charged similar to local developers and given top priority; (iii) concession
on property taxes such as free for four years or at a reduced rate, etc.;
(iv) exemption from revenue taxes for three years beginning from the first
profit year. Thereafter fifty (50) percent on revenue taxes for the next two
years; (v) if the investor utilizes his profits to re-invest into projects
involving export products, hi-tech industries, etc., the government will
<PAGE>19
refund the remitted taxes to the investor in full. Other similar benefits
may at least be negotiated between the joint venture partners under the
guidelines of the joint venture rules and regulations.
There has not been a political upheaval with the death of China's paramount
leader Deng Shiao Ping. China's President, Jiang Jimin seems to be upholding
the ideals and philosophy of his predecessor Deng Shiao Ping. Jiang thus far
seems to have the support of the Chinese mass. The political climate appears
to be calm and at peace. However, there still can be no assurance that Jiang
or his successor in the future will continue to support the current policies
regarding economic and political reforms. The political reforms have
allowed limited democracy within the communist country. Minor degree of
political discussions and criticism are tolerated. More freedom of speech
is allowed to the general public in respect to civil matters. Serious
criticism of the Communist Party and its national or international politics
openly is not welcome and individuals doing so may be detained for
questioning. There are no opposition parties and nationalism is still
emphasized. However, provincial public servants (including the provincial
premier, ministers of different ministries down to department heads) are not
openly recruited based on qualifications. The maximum term of these offices
is now 7 years. Formerly, these positions were appointed with no time limit
as to the terms of office. Also, more power has been passed down to lower
levels of government in respect to operating state-owned businesses and in
approving civic projects. Formerly, projects over US$2 million required
central government approval and now only projects over US$10 million require
such approval.
The economic reforms have allowed freedom of enterprise to individuals
and corporations except in areas deemed by the government as detrimental
to the country's security and economic stability. There are now many
businesses in all sectors of the industries owned and operated by private
individuals and corporations at a more profitable level than those previously
operated by the State. Many government owned and operated businesses
have been sold to private corporations in the form of negotiations or in
auctions. Some are contracted out to individuals to run for a fixed annual
income. Any profit earned from the operations in excess of the fixed
annual income and operating expenses belongs to the individuals operating
the business. Before 1990, the State regulated and rigidly controlled the
domestic market prices of consumer goods. After 1990, the government
has allowed a free domestic market where prices are self-regulating and
adjust in accordance with prevailing market conditions. Goods and
merchandise may be freely exported or imported, except for items deemed
by the government to be strategic. The government is currently working
on having its own currency (Reminbi) link up with the United States
Dollars. This would prevent large fluctuations and depreciation of the
Reminbi. At the present, the currency floats free as to its exchange rate
where previously, the government controlled the exchange rate in the
international market. The entire country is now opened to foreign
investments. Different localities will have different tax incentives to the
foreign investors. In the last three years, a few stock exchanges have been
established and successfully operated. These are currently exchanges in
Shenzen, Shanghai and Beijing. Other major cities are contemplating
setting up similar exchanges. The State has relaxed its control on real
estate developments. Mortgages have been introduced into the country. As
reported in Chinese newspapers in Hong Kong and North America in the
advertisements for Chinese residential condominium projects in Hong
Kong, Hong Kong and Shanghai Bank have mortgage financing of up to
70% of the value, while local banks in Shenzhen have allowed financing of
up to 75% of the value. According to daily news reports emanating from
China, Hong Kong and local television and radio stations as well as
periodic articles from Chinese language newspapers attainable locally, most
developers now arrange mortgage financing for purchasers buying either
residential properties or buying retail/commercial properties. East Asian
Bank has allowed mortgages for the secondary real estate market. While
most infra-structures owned by the government are 100% financed by the
State, larger infra-structure projects, such as subway systems in major
cities such as Guangzhou, Shanghai and Beijing; highway networks connecting
developing cities, airports and power plants, are now financed by issuing
government bonds and debentures or through underwritten public offerings.
The Central Government, the Provincial Government and the City
Government have announced through the local news media that it supported
the Chengdu project as a necessary contribution to the modernization of
Chengdu. Although it is doubtful that any political changes will affect the
Chengdu project to any great extent due to the fact that development is a
necessary contribution to the modernization of the Chengdu that the Central
Government has supported, there can be no assurance that political upheaval
will not occur and negatively effect the project. Although China's
governing central committee has repeatedly stated through its official
government and local newspapers communications as well as through its
Hong Kong and Macau Affairs office in Hong Kong that current policies
will not be changed, there can be no assurance that political uncertainty
will not materially impact the operations of the Company.
Proposed Business Activities. The Company, through its trustee
company, Central Ocean International, Ltd of Hong Kong, has entered into
an interim joint venture agreement with a government owned development
<PAGE>20
company, Estate Exploitation Corporation, Jinniu District of Chengdu, to
develop a site in the City of Chengdu, China upon which it intends to build
a commercial/residential/hotel complex to be known as the "Royal Plaza",
on a 6.6 acre parcel in the heart of Chengdu.
In China, there are three agreements which must be entered into before
actual commencement of any venture, the letter of intent, the interim joint
venture agreement and the final joint venture agreement. Due to the costs
already expended by the Joint Venture Partner and the fact that the Joint
Venture Partner entered into the letter of intent and then the interim joint
venture agreement, the Company is of the opinion that there is limited risks,
if any, posed by the fact that the final joint venture agreement has not yet
been entered into. However, there can be no assurance that the Joint
Venture Partner will enter into the final joint venture agreement. There
will be some expenses in signing the final joint venture agreement. These
costs would include travel expenses and costs relating to arrangements of
the signing ceremony and the ceremonial banquet that customarily follows
such formal signing. The Company intends to go to Chengdu to enter into
the final joint venture agreement upon the effective date of this
registration statement.
The interim joint venture agreement states that certain amounts were to be
deposited into the project by the parties within a limited time frame. To
date, the amounts stipulated in the interim joint venture agreement were not
deposited by the joint venture parties. The Company was verbally informed
by the Joint Venture Partner that it had contacted the Hong Kong based
Linjin Syndication (previously a party to the interim joint venture
agreement) and that Linjin is considered as voluntarily withdrawn from the
joint venture due to its inability to make any deposits or to communicate
with the Joint Venture Partner. The Company has been in continuous
communication with the Joint Venture Partner regarding the status of this
registration statement. The Joint Venture Partner has verbally agreed that
the fact the Company was not able to deposit the required funds into the
joint venture within the required time period will not affect the validity of
the interim joint venture agreement or the Company's relationship with the
Joint Venture Partner.
The Company shall receive a 80% distribution of all profits in the joint
venture. The Royal Plaza shall consist of one 30 story hotel tower, one 30
story office tower, one 28 story service apartment, two 28 story residential
towers, one 15 story multi-functional tower, four levels of shopping arcade
and two levels of basement parking. To date, this is the largest real
estate development project in the 2300 year history of the City of Chengdu
totaling 175,000 square meters of floor area. The joint venture will sell
the two 28 story residential towers, the 28 story service apartment tower,
the 15 story multi-functional tower (three stories of the 15 story multi-
functional tower must be given to the government as compensation for
expropriating the government building when assembling the site) and ten
stories of the 30 story officer tower to pay off any development costs
relating to the project. These buildings will be sold in the open local and
international markets or in private contracts to companies doing business in
the city or other interested buyers. The Company estimates that the
following amounts could be received through the sale of the properties.
<TABLE>
<S> <C>
1/3 of the office tower (11460M2) at $US820 per square meter = $9,397,000
2 residential towers (44,676M2) at $US520 per square meter = $23,231,000
1 service residential tower (22,338M2) at $US700 per square meter = $15,637,000
1 multi-functional tower (10,000M2) at $410 per square meter = $4,100,000
Parking spaces (656) at $940 per unit = $617,000
</TABLE>
The remaining buildings, the four level shopping arcade, 20 stories of the
office tower and the 30 story hotel tower shall remain as the joint venture
holdings. The joint venture will also hold the "right of use" to the 6.6
acres of land for a period of 70 years. All land in China is state-owned.
An entity can acquire only the "right of use" for a period of time. The
price for the land is derived from the length of this "right of use".
The Chinese Government has approved and appropriated the said land for
the use of this Joint Venture Partner and the development project. The
Joint Venture Partner is required to find a foreign partner to develop this
project (the Company). The project is located in the downtown core of the
City of Chengdu. Land of approximately 6.6 acres has been appropriated, its
residents have been relocated and rehoused in new buildings constructed by
the Joint Venture Partner and each relocated resident has been paid the
required amount of appropriation fees amounting to US$4,000 each,
aggregating over US$7 million. The Company is not required to contribute
to the relocation cost. The project has been exposed and advertised
throughout the country. The project must go ahead to save credibility for
all the government officials involved such as the provincial premier, the
city mayors, various representatives of the central government and the Joint
Venture Partner. With so many people involved and so much money spent
on this project, particularly the Joint Venture Partner, it is not likely
that the original parties involved will now cease to support the project.
The proposed project was initially going to be developed solely by the
Chinese partner. However, due to the "Austerity Program", as described
below, the Chinese partner was unable to borrow from local or foreign banks.
As a result, the Chinese partner must seek capital through other means and
was forced to joint venture with a foreign investment partner in order to
proceed with the project.
<PAGE>21
The "Austerity Program" was initiated by Chu Rongji when he became the
President of the People's Bank of China which controls all of the banks in
the country. on August 14, 1994, due to over-lending by banking
institutions and the default of several unsecured loans, Chu Rongji, the
general manager of the central bank and President of the People's Bank of
China, ordered a halt to all lending and recalled all of its outstanding
loans and future lending from state banks of any kind was restricted. The
Program was intended to stop the over-heated economy and the senseless use
and waste of funds. Major loans were immediately recalled when the program
was activated. All loans to domestic developments, except state infra-
structures were terminated. Foreign borrowing for projects, except state-
owned infra-structures, was strictly prohibited or had to be approved by the
state. The intention was to avoid the increase in the amount of foreign
debts. Today, Chu Rongji is China's Prime Minister. The "Austerity Program"
is still in effect but has been somewhat relaxed. The state has given its
approval on more projects that it considers a necessity an beneficial to the
betterment of the country. With such approval, the developer may borrow
either locally or abroad to finance the project. Unfortunately, such
approval is mainly given to infra-structure developments which involve
communication, telecommunication, transportation and shipping, power and
energy, highways and railroads, etc. State-owned industries or private
developments must still obtain funding from other outside sources. This
current economic restraint by the central banks require a foreign investor in
most projects, except infra-structure projects where funds are allocated by
the central government, since central banks have discontinued extending loans
to real estate projects. Mortgage financing is not available through state
banks of China. The mortgage financing offered to purchasers are being
arranged by foreign developers and foreign banks outside of China.
The People's Bank of China establishes the exchange rate at which local
currency can be exchange into foreign currencies and not market forces could
have a negative effect on the ability of the Company to import or export
capital and remit dividends.
If the Chinese Government withdraws support from the Joint Venture Partner,
i.e., reclaims the land and re-assigns it to another Chinese joint venture
partner, this new partner must likewise seek a foreign partner. Management
of the Company is of the opinion that it would be the most logical choice due
to its knowledge of the project, its relationship with the Joint Venture
Partner over the last four years, the time it would take to locate another
suitable joint venture partner and renegotiate another joint venture
agreement. There can be no assurance, however, that the Company would, in
fact, be chosen.
The estimated cost of the project as of mid 1995 is $52,000,000. The local
construction cost today in 1998 has remained constant due to the Austerity
Program. Many projects were suspended, abandoned, or shelved at the planning
stage, due to the lack of funding. As a result, contractors are hungry for
work. Cheap labour poured into major booming cities from the less developed
regions and the rural countryside. In all major cities, cheap skilled
construction laborers are in abundance, thus driving down the cost of
construction. Much of the construction materials and finishing products are
now made domestically and of good quality. Very little imported materials
are now necessary. All these factors help to maintain the stability of cost
of construction.
The Company is required to deposit US$6,000,000 into the joint venture. The
Company intends to obtain the necessary funds through the sale of its
securities, both publicly and privately, private loans, contractor
loans/subsidies and mortgages on the project. The Company has no
commitments for any funds and there can be no assurance that it will obtain
the necessary funding.
The Company, through the joint venture, intends to pre-sell the two
residential and one service apartment tower to a minimum of 80% prior to
the actual construction of these towers. Mortgage funding of up to 60% of
the retail cost of the units will be available through the Company's
arrangements with financing banks. The apartment owners will be required
to make a deposit of the remaining 40% of the retail costs. Currently, the
Company has had preliminary dialogues with banking institutes located in
Hong Kong and Singapore. One of the banks, Far East Bank, has expressed
interest in providing the necessary mortgage financing to prospective
apartment buyers. However, no written commitment will be issued from the
Far East Bank prior to the Company obtaining sufficient funds to start on the
construction of that part of the project which requires such mortgage
financing. There is no guarantee that the Far East Bank will continue to
show interest in providing the proposed mortgage financing.
In a densely populated city like Chengdu, the average two-bedroom
apartment unit will be approximately 570 square feet while a three bedroom
unit will be approximately 670 square feet. The former will have 3 to 4
working adults and the latter will most likely house 4 working adults and 1
or 2 children. The market price for the two bedroom will be approximately
US$31,000 and the three bedroom with be US$36,000. There will also be
larger units to cater to the more affluent entrepreneur. There are many of
this type of people in cities "opened" for foreign investments. For these
people, income of several thousands a month is not uncommon. For the
average working family, with 4 working adults, their combined income is
<PAGE>22
approximately US$700 per month. Additionally, an average worker receives
about $200 per year bonus. With a 60% mortgage of US$21,600, the monthly
debt service charge is about US$110. If the principal were to be repaid in
five years, the total monthly debt will be approximately US$470. A family
in China pays about US$6.00 per month in rent, $100 a month for food and
miscellaneous expenses. It also receives free medicare and subsidies in food
and traveling. Savings are encouraged in China. After payment of all
related living expenses, the average worker has over $550 per month or $6,840
per year for savings. As the family income increases every year and
together with their annual bonuses (which depends on the annual profit of the
companies worked for) the average working family should not have difficulty
serving this debt. The 40% downpayment for the units will be approximately
US$14,400.
Chengdu has the highest Gross Domestic Products ("GDP") in the Province.
Its GDP is 50% higher than the neighboring city of Chongqing which has a
population of over 17 million. Since Chengdu acquired "open city" status
from the Central Government, the GDP has increased significantly. The
skilled labor and educated workers in most interior cities now earn
approximately US$180-250 per month. Consumer spending in Chengdu is unlike
any other cities. The inhabitants in Chengdu always seem to be able to
spend more than they can make. It is this consumer attitude that makes
Chengdu so unique.
The office tower and shopping arcade are to be leased and managed by
professional management teams under strict control by the joint venture
partners. The hotel tower shall also be managed by internationally
recognized names such as Hilton, Sheraton, Hyatt, Four Seasons, etc. To
date, no agreements have been reached with any of these entities and there
can be no assurance that such agreements will ever be obtained. The joint
venture also intends to develop a casino. The casino, with entry by means
of passports, has been proposed to relevant government officials and met
with wide support. Similarly, the Company has approached several casino
operators who are interested in financing the casino operation for a portion
of the profits. Currently, there are no 5-star luxury hotels or casinos in
the city of Chengdu and there are no known proposals to build any such
facilities in the city of Chengdu.
Marketing Plan. Currently there is a similar project (residential and
shops only) with approximately 560 dwelling units underway at a location
20 miles west of the city. The developer, Toyan Group (Chengdu) Real
Estate Development Co. Ltd. from Hong Kong ("Toyan"), introduced 60%
mortgage financing for those purchasers who needed it. The project was
marketed through newspaper advertising three days before the actual public
sale. Limiting the public offer between July 20, 1994 to July 28, 1994, a
total of 9 days, 95% of the 560 units were pre-sold.
Similar to Toyan, mortgage financing will be provided to allow the
purchaser, after the down payment, to make subsequent payments regularly
over a five year period. The Company has received preliminary approval
from Far East Bank located in Hong Kong and China. However, no written
commitment will be issued from the Far East Bank prior to the Company
obtaining sufficient funds to start on the construction of that part
of the project which requires such mortgage financing. There is no
guarantee that the Far East Bank will continue to show interest in providing
the proposed mortgage financing.
The Company will utilize similar marketing techniques employed by the
Toyan Group to sell its dwelling units. The joint venture will also pre-sell
the units on a limited time basis and will require a 20% down payment with
another 20% due within twelve months after a purchase agreement has been
entered into. Additionally, however, the Company intends to extend the
marketing endeavor to include cities such as Hong Kong, Singapore, Kuala
Lumpur, Jarkata, Manila, London England, Vancouver Canada or other
major cities where a large Chinese population and a large China trade
business exist. The extent of such marketing will be dependent on how
easily the units sell and the success of obtaining the necessary marketing
and development funds.
Model units will be set up at the site prior to the public offering of the
units. There will be four suite types ranging from two bedrooms to four
bedrooms and areas from approximately 58 to 125 square meters.
The remainder of the complex, namely, the 30 story hotel tower, the 20
stories of the office tower and the four levels of retail space are to be
leased and maintained for cashflow purposes.
Time Schedule. The following is the preliminary time table of when the
Company believes the various parts of the Chengdu complex will be
completed and when the Company intends to begin leasing space in its
office tower and retail space. Year 0 commences after financing for the
entire development is obtained and design drawings and permits are
completed and issued. Pre-selling and pre-renting of the units will not
begin until financing is in place. All of the following is contingent upon
the Company's ability to obtain the necessary financing.
<PAGE>23
<TABLE>
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5
<S> <C> <C> <C> <C> <C> <C>
Hotel Construction -----------------------------
Recruiting Operator ----------
Design, Decor,
Outfitting --------------------
Install Support
Facilities --------------------
Finishing/Landscaping ----------
Test Run ----------
Grand Opening -------
Continuous Business ----------------------------
Office Tower Construction
--------------------
Sale/Rental of strata units ----------------------------
Installation/Finishing -----------
Grand Opening -------
Continuous Business ----------------------------
Residential Tower
Construction --------------------
Rental/Sale
of strata units -----------------------------
Finishing/Landscaping -----------
Retail/Commercial
Construction. -------------------------------
Retail/Sale
of strata units ------------------------------------
Finishing/Protection
during Construction --------------------------
Prepare for Business ----------------------------
</TABLE>
As an example, if US$6,000,000 is raised, either one residential tower or the
retail/commercial complex may commence activities in Year 0, the former,
proceeding to pre-sell and the latter proceeding to construction. The
$6,000,000 includes $1,000,000 to $1,500,000 to be raised in this offering.If
only a minimum amount ($6,000,000) is raised, it is not probable that the
Company will start pre-selling the residential tower right away as this
portion of the project will tie up the least amount of capital. However,
the decision will be dependent on the residential market conditions then
prevailing. If, at that time, there is a higher demand for retail/commercial
facilities than residential units, the joint venture partners may then decide
to start on the retail/commercial portion first.
All of the above information was extracted from statistics issued by the
Administration Department of the People's Government of the City of Chengdu,
various newspaper articles from "Wenhui Pao" of Hong Kong and "Chengdu
Evening Post" of the City of Chengdu and the "Market Report on Sichuan
Province" by The Hong Kong Trade Development Council, August, 1993, pp. 1-28.
MANAGEMENT'S DISCUSSION OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Trends and Uncertainties. There can be no assurance that this Offering will
be successful and the Company can finance, with its joint venture partner,
the Royal Plaza project. The Company will attempt to reduce the major
variables of interest rates and operating expense. However, as the Company
has little or no control as to the demand for its products and services,
inflation, governmental intervention and changing prices could have a
material effect on the future profitability of the Company.
Capital Resources and Source of Liquidity. To date, the Company
has not yet commenced operations. The Company shall be dependent upon
the proceeds of this offering, future private equity offerings and debt
financing to fund its proposed joint venture project and begin to receive
revenues. Short term liquidity has been achieved through the capital
contributions of the current officers and directors.
On a long term basis, liquidity is dependent on revenues from operations
and additional infusions of capital and debt financing. The Company
believes that additional capital and debt financing in the short term will
allow the Company to move forward with its joint venture and thereafter
result in revenue and greater liquidity in the long term. However, there can
be no assurance that the Company will be able to obtain additional equity or
debt financing in the future, if at all.
Plan of Operations. If the Company is unable to obtain financing of the $52
million for the project or alternatively $6 million for a portion of the
project, it will have to temporarily down-size the Company's operation and
investment objectives to reflect the current funds available. Project
traveling and field expenses will be reduced to the bare minimum. Office
upgrading will not be carried out, contingency funds will be minimal, if
available at all. The number of staff will be cut down and the directors
will have to contribute more free time to the Company. The Company's
<PAGE>24
direction of initially investing into real estate development may have to be
changed to investing into facilities to produce construction materials for
the real estate and construction industries or other industries. The re-
entry into real estate development will be postponed until such time that the
Company has acquired sufficient financing for such activities. It is
unlikely that the original Interim Joint Venture Agreement with Chengdu will
remain valid unless the Company negotiates new terms and conditions with the
Chinese joint venture partner.
The Company intends to continue fundraising efforts through the sale of its
securities, both publicly and privately, private loans, contractor
loans/subsidies and mortgages on the project. The Company shall approach
private lenders for loans based on the merit of the project. Said loans
shall be repaid through equity funding and/or future revenues, if any. The
Company shall also approach various venture capitalists or large construction
firms to be equity partners. The Company shall also attempt to raise funds
through pre-sales of its units and construction mortgages. The Company has no
commitments for any funds and there can be no assurance that it will obtain
the necessary funding.
After the completion of this Offering, the Company shall modify its
investment strategy to reflect the financial situation then prevailing. If
sufficient funds were raised to start one residential tower, the Company will
remain focused in developing the real estate project in Chengdu. If
insufficient funds were raised for the real estate development project, the
Company will, depending on the funds raised, engage in either one or more
smaller joint ventures mentioned above. If the receipt of funds is less
than $1,000,000, the Company could pursue an equity partnership with
companies to go into joint venture projects.
The Company has approached the following entities for joint venture
partnerships involving investments from $500,000 to $2,000,000 range:
1. Jinsha City Special Optics Factory in Hubei Province in
China, investment of $2,000,000 for 60% ownership interest. This is an
existing plant owned by the City Government. The joint venture partnership
would oversee the modernization of the optical plant in the fields of
accounting and administration, installation and implementation of new plant
facilities, training of skill workers and staff and product exports.
2. Shashi Special Fibre Company in Hubei Province in China
(Manufactures cigarette filters), investment of $3 million for 60% ownership
interest. Shashi Special Fibre Company is an existing company with a plant
manufacturing cigarette filters. The joint venture partnership would be
responsible for the installation and implementation of the newest technology
and equipment as well administration and management.
3. Full Comforts, Ltd. of Hong Kong, (Living Water
Technologies in environmental and energy conservation industry), investment
of $2 million for 60% ownership interest. The joint venture partnership
would pursue capital raising efforts for continual expansion and marketing
needs.
4. Bio-Therapeutics Computers, Ltd. of Hong Kong (health and
beauty, cosmetics industry), investment of $500,000 for 60% ownership
interest. The joint venture partnership would pursue capital raising
efforts for continual expansion and machine up-grading.
5. Hy Potential Technologies of Vancouver (high-tech metal
recovery from ores in mining industry), investment of $1,000,000 for 80% of
marketing rights for China. Hy Potential Technologies has the proprietary
rights to a metal recovery system from ores in the mining industry. The
joint venture partnership would search out prospective clients and market
the process on behalf of the company.
6. Modco Specialty Coatings, Ltd. of Vancouver (construction
specialty coatings), investment of $500,000 for 50% ownership interest of
China joint venture. The joint venture partnership would provide market
analysis, sale and marketing of the product and administration and
management of the factory as appropriate.
7. Great Union Industries, Ltd. in Shenzhen, China for
construction normal coatings. Investment of $300,000 for 25% of China
joint ventures. The joint venture partnership would purchase net
technologies in the manufacturing of coatings so that Great Union Industries,
Ltd. would keep current in the industry. Additionally, the investment would
be used to increase the production through an increase in raw material
inventory and marketing and promotion.
8. Iotron Industries, inc. of Vancouver (high-tech
sterilization processing using newest Atomic Energy Canada equipment to
process food, medical equipment, precious gems, etc.), investment of
$2,000,000 for 40% of consortium for joint venture in Asia. The joint
venture partnership would be responsible for establishing a market share in
Asia and carrying on the operation after all staff and workers have been
properly trained.
The above companies have indicated a willingness to enter into joint venture
contracts with the Company. However, the Company has postponed its decisions
pending the outcome of the Offering.
If the Company is unable to raise the funding within the offering period, the
Company shall notify the joint venture partner that the Company is unable to
proceed. The Joint Venture Agreement does not specifically specify the
expiration date of the Joint Venture partnership, nor does it stipulate any
<PAGE>25
penalties for late injection of funds into the joint venture account.
If the Company is unable to raise the funding within the offering period, the
Company shall notify the joint venture partner that the Company is unable to
proceed.
The Company shall conduct seminars on the Company's project to increase
awareness. The Company shall search for and recruit individuals to join the
management team of the Company and its Board of Directors to upgrade the
Company's public perception of the Company's credibility.
The Company shall travel to the project site to obtain up-to-date status of
current economic and political information and then revise as necessary the
Company's plan of operation to reflect the changes. Consequently, the
priority of various parts of the project may change. One building may need
to be built first while others may need to be re-scheduled for a later date
to Compromise for local conditions prevailing at that time.
The Company shall establish a firm commitment with the joint venture
partner prior to commencement of construction of the project, taking into
account thorough research with current data. The Company shall then
update and finalize all terms and conditions of the Interim and Final Joint
venture Agreement.
The Company anticipates that the proceeds of the offering will be sufficient
to cover the expenses described above as well as general and administrative
expenses for a twelve month period.
Results of Operations. The Company has not yet commenced operations. The
expenditures for the research and development which resulted in the choice of
the property and project in Chengdu, China were paid for by current
shareholders of the Company. These cash transactions have been recorded by
the Company and the current shareholders were issued Common Shares at the
average price of $.10 per Common Shares.
MANAGEMENT
Officers and Directors. Pursuant to the Bylaws, each Director shall
serve until the annual meeting of the stockholders, or until his successor is
elected and qualified. It is the intent of the Company to support the
election of a majority of "outside" directors at such meeting. The Company's
basic philosophy mandates the inclusion of directors who will be
representative of management, employees and the minority shareholders of the
Company. Directors may only be removed for "cause". The term of office of
each officer of the Company is at the pleasure of the Company's Board.
The principal executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Name Position Term(s) of Office
<S> <C> <C>
Alan Kwong, age 35 President From Inception
Director to present
Ken Wong, age 40 Vice-President From Inception
Director to present
Robin Young, age 55 Secretary/Treasurer From Inception
Director to present
Jap Chong Young, age 86 Director From March 25, 1995
to present
</TABLE>
Family Relationships. There are no family relationships between any
director or executive officer or person nominated or chosen by the Company
to become a director or executive officer.
Business Experience. The following is a brief account of the business
experience during at least the past five years of the directors and executive
officers, indicating their principal occupations and employment during that
period, and the names and principal businesses of the organizations in
which such occupations and employment were carried out.
Alan Kwong. Mr. Kwong is currently President and a Director of the
Company. He received a Bachelor of Arts degree in fine arts from the State
University of New York in 1985. He studied advertising design at the
Fashion Institute of Technology in New York and also received a master's
degree in computer graphics from the New York Institute of Technology in
1987. Mr. Kwong is currently a 60% owner of Central Ocean International,
Ltd. which is acting as the trustee company. From May 1985 to October 1987,
Mr. Kwong was Operation Manager for AM-CALL COMMUNICATIONS. From October
1987 to December 1994, Mr. Kwong was the President of PACIFIC STAR INT'L INC.
which engaged in project research and development. Mr. Kwong has also been
involved in various China trades in the form of imports and exports.
Ken Wong. Mr. Wong is currently Vice President and a Director of the
Company. He received a degree in architecture from the University of
British Columbia in 1984, a B.I.D. degree in interior design from the
University of Manitoba in 1979. Mr. Wong is an associate member of
<PAGE>26
Ontario Association of Architects and is a registered member of the
Association of Registered Interior Designers of Ontario and Interior
Designers of Canada. Mr. Wong has over Fifteen (15) years of
architectural design and building construction. Mr. Wong has been a
principal of Insite Architects, Inc. since 1985. Mr. Wong is also a
cofounder of Landtek Properties, Inc., a land development company in
Vancouver BC which was incorporated in 1990.
Robin Young. Mr. Young is currently the Secretary/Treasurer and a
Director of the Company. He received a B.A.Sc. degree in Civil
Engineering from the University of British Columbia in 1963. He
conducted his post graduate studies at Concordia University and received a
Master's Degree in Civil and Structural Engineering in 1970. Mr. Young
has taken various advancement studies in subject matters such as business
management, negotiation skills, computers, China trades, import and
export, etc. Mr. Young is a member of the Association of Professional
Engineers and Geologists of British Columbia, the American Society of
Civil Engineers, the Canadian Society of Civil Engineers and the
Engineering Institute of Canada. Since 1975, Mr. Young has been a
principal of Young Engineering Corporation. He was the Principal of
Coreng Construction Ltd. from 1976 to 1990 and co-founder and managing
director of Landtek Properties, Inc. from 1994 to present.
Jap Chong Young. Mr. Young is currently a Director of the Company.
Mr. Young retired in August, 1987. From 1949 to 1987, Mr. Young
managed and owned a retail produce business, Young Produce, in
Vancouver, British Columbia. Prior to that, from 1939 to 1949, Mr.
Young worked in the import and export business.
Identification of Certain Significant Employees. The Company does not
employ any other persons who make or are expected to make significant
contributions to the business of the Company.
Directorships. Mr. Ken Wong is a director of Affiance, Inc., a public
company which is subject to the requirements of Section 15(d) of the
Securities Act of 1933. No other director or nominee holds a directorship
in any other company with a class of securities registered pursuant to
Section 12 of the Securities Exchange Act of 1934 or subject to the
requirements of Section 15(d) of such Act or any company registered as an
investment company under the Investment Company Act of 1940. There
are no nominees for director at this time.
Remuneration. Since inception and as of the date of filing this report, no
compensation has been paid. Compensation arrangements or plans to
compensate for services in the past or future shall be determined by the
Board of Directors at a later date.
Compensation Pursuant to Plans. The Company has no plan pursuant to
which cash or non-cash compensation was paid or distributed during the
last fiscal year, Compensation to be paid or distributed in the future, to
the
individuals and group described above in this Item shall be determined by
the Board of Directors at a later date when it deems necessary.
Compensation of Directors. Directors of the Company who are not
employees of the Company may receive a fee of $25 per meeting for their
attendance at meetings of the Company's Board of Directors, and are
entitled to reimbursement for reasonable travel expenses.
Termination of Employment and Change of Control Arrangement. Except
as noted in the next paragraph, the Company has no compensatory plan or
arrangements, including payments to be received from the Company, with
respect to any individual named above for the latest or the next preceding
fiscal year, if such plan or arrangement results or will result from the
resignation, retirement or any other termination of such individual's
employment with the Company, or from a change in control of the Company or a
change in the individual's responsibilities following a change in control.
CERTAIN TRANSACTIONS
Related Party Agreement. On July 20, 1994, the Company, through its
trustee company, Central Ocean International, Ltd. (which holds all rights
for the Company prior to the proper registration of the Company in British
Columbia, Canada) has signed a foreign China interim joint venture
agreement to develop a site in Chengdu, China upon which it intends to
build a commercial/residential/hotel complex. Alan Kwong, the current
president of the Company is one of the principals of the Company controls the
Central Ocean International, Ltd. Mr. Kwong owns 65% of the controlling
shares of Central Ocean International, Ltd. and is also its president. To
resolve any possible conflict of interest, Mr. Kwong will relinquish his
entire share ownership to the other shareholder once the final joint venture
agreement is signed between the Company and the Chinese counterpart. The
Company shall enter into a final joint venture agreement. The Company has
entered into an agreement with Central Ocean International, Ltd. which states
that the Company's name only shall be in the final joint venture agreement.
The Chinese Government has been aware of this agreement. Upon the effective
<PAGE>27
date of this registration statement, the Company intends to go to Chengdu to
sign the final joint venture agreement. If the Company is unable to raise the
funding within the offering period, the Company shall notify the joint
venture partner that the Company is unable to proceed.
Changes in Control. There are no arrangements, known to the Company,
including any pledge by any person of securities of the Company, the
operation of which may at a subsequent date result in a change of control of
the Company.
PRINCIPAL SHAREHOLDERS
There are currently 3,443,667 Common Shares outstanding. The following
tabulates holdings of shares of the Company by each person who, subject to
the above, at the date of this Memorandum, holds of record or is known by
Management to own beneficially more than 5.0% of the Common Shares
and, in addition, by all directors and officers of the Company individually
and as a group.
Shareholdings at Date of
This Prospectus
<TABLE> Amount
Name and Address Amount of
of of Common Shares
Beneficial Owner Common Shares Owned After
Currently Owned Percent Offering Percent
Minimum/Maximum
<S> <C> <C> <C> <C>
Alan Kwong
16793 NE 35th Street
Bellevue, WA 605,417 17.58% 544,875 14.74% 10.01%
Ken Wong<F1>
6257 Yew Street
Vancouver, BC 516,625 15.00% 464,962 12.59% 8.54%
Robin Young<F2>
757 Howard Avenue
Burnaby, BC 546,625 15.87% 491,962 13.32% 9.04%
Jap Chong Young
21112 - 123rd Avenue
Maple Ridge, BC 604,858 17.56% 544,372 14.74% 10.00%
All Directors & Officers
as a group (4) 2,297,108<F3> 66.71% 2,046,171 55.4% 37.59%
</TABLE>
Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power (including the power to vote or direct the voting) and/or sole
or shared investment power (including the power to dispose or direct the
disposition) with respect to a security whether through a contract,
arrangement, understanding, relationship or otherwise. Unless otherwise
indicated, each person indicated above has sole power to vote, or dispose or
direct the disposition of all shares beneficially owned, subject to
applicable community property laws.
[FN]
<F1>Includes Landtek Properties, Inc. (76,417 common shares), and Ken
Wong (440,208 common shares), a cofounder of Landtek Properties, Inc.,
who together constitute a "group", as that term is defined in Section 13D of
the Securities Exchange Act of 1934, as amended.
<F2>Includes Landtek Properties, Inc. (76,417 common shares), and Robin
Young (470,208 common shares), a cofounder of Landtek Properties, Inc.,
who together constitute a "group," as that term is defined in Section 13D of
the Securities Exchange Act of 1934, as amended.
<F3>Includes all of the directors and officers solely owned common shares
and the 76,417 common shares held by Landtek Properties, Inc.
SHARES ELIGIBLE FOR FUTURE SALE
The Company currently has 3,443,667 shares of Common Stock outstanding.
Other securities may be issued, in the future, in private transactions
pursuant to an exemption from the Securities Act are "restricted securities"
and may be sold in compliance with Rule 144 adopted under the Securities Act
of 1933, as amended. Rule 144 provides, in essence, that a person who has
held restricted securities for a period of two years may sell every three
months in a brokerage transaction or with a market maker an amount equal to
the greater of 1% of the Company's outstanding shares or the average weekly
trading volume, if any, of the shares during the four calendar weeks
preceding the sale. The amount of "restricted securities" which a person who
is not an affiliate of the Company may sell is not so limited: Non-
affiliates may each sell without limitation shares held for three years. The
<PAGE>28
Company will make application for the listing of its Shares in the over-the-
counter market. Sales under Rule 144 may, in the future, depress the price
of the Company's Shares in the over-the-counter market, should a market
develop. Prior to this offering there has been a limited public market for
the Common Stock of the Company. The effect, if any, of a public trading
market or the availability of shares for sale at prevailing market prices
cannot be predicted. Nevertheless, sales of substantial amounts of shares
in the public market could adversely effect prevailing market prices.
MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Prior to this Offering, there has been no market for the Company's common
stock. Upon successful completion of this offering, the Company intends
to apply to have its common stock traded in the over-the-counter market and
listed on the OTC Bulletin Board.
Holders. The approximate number of holders of record of the Company's
.10 par value common stock, as of March 31, 1997 was twenty-eight (28).
Dividends. Holders of the Company's common stock are entitled to
receive such dividends as may be declared by its Board of Directors.
Broker-Dealer Sales of Company Securities. Upon successful application for
the trading of its securities on the over-the-counter market and until the
Company successfully obtains a listing on the NASDAQ quotation system, if
ever, the Company's securities may be covered by Rule 15g-2 under the
Securities Exchange Act of 1934 that imposes additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
spouse). For transactions covered by the rule, the broker-dealer must make
a special suitability determination of the purchaser and have received the
purchaser's written agreement to the transaction prior to the sale. In order
to approve a person's account for transactions in designated securities, the
broker or dealer must (i) obtain information concerning the person's
financial situation, investment experience and investment objectives; (ii)
reasonably determine, based on the information required by paragraph (i) that
transactions in designated securities are suitable for the person and that
the person has sufficient knowledge and experience in financial matters that
the person reasonably may be expected to be capable of evaluating the rights
of transactions in designated securities; and (iii) deliver to the person a
written statement setting forth the basis on which the broker or dealer made
the determination required by paragraph (ii) in this section, stating in a
highlighted format that it is unlawful for the broker or dealer to effect a
transaction in a designated security subject to the provisions of paragraph
(ii) of this section unless the broker or dealer has received, prior to the
transaction, a written agreement to the transaction from the person; and
stating in a highlighted format immediately preceding the customer signature
line that the broker or dealer is required to provide the person with the
written statement and the person should not sign and return the written
statement to the broker or dealer if it does not accurately reflect the
person's financial situation, investment experience and investment objectives
and obtain from the person a manually signed and dated copy of the written
statement. A designated security means any equity security other than a
security (i) registered, or approved for registration upon notice of
issuance on a national securities exchange that makes transaction reports
available pursuant to 17 CFR 11Aa3-1 (ii) authorized or approved for
authorization upon notice of issuance, for quotation in the NASDAQ system;
(iii) that has a price of five dollars or more or . . . (iv) whose issuer has
net tangible assets in excess of $2,000,000 demonstrated by financial
statements dated less than fifteen months previously that the broker or
dealer has reviewed and has a reasonable basis to believe are true and
complete in relation to the date of the transaction with the person.
Consequently, the rule may affect the ability of broker-dealers to sell the
Company's securities and also may affect the ability of purchasers in this
Offering to sell their shares in the secondary market.
TERMS OF OFFERING
Plan of Distribution. The Company hereby offers a minimum of 250,000 Common
Shares and up to 2,000,000 Common Shares at the purchase price of $2.00 per
Common Share. The Common Shares are being offered on a direct participation
basis by the Company (employees, officers and directors) and possibly
selected broker-dealers. No sales commission will be paid for Common Shares
sold by the Company. Selected broker-dealers shall receive a sales
commission of up to 10% for any Common Shares sold by them. The Company
reserves the right to withdraw, cancel or reject an offer in whole or in
part.
The Common Shares offered hereby will not be sold to insiders, control
persons, or affiliates of the Company. There are no plans, proposals,
arrangements or understandings with any potential sales agent with respect to
participating in the distribution of the Company's securities. When, in the
future, assuming such participation develops, the registration statement will
be amended to identify such persons. The Company, through its officers and
<PAGE>29
directors, will undertake a best efforts self-underwritten offering at the
same time as the selling shareholders will be selling their registered
shares. Officers and directors of the Company are participating as selling
shareholders.
The Selling Shareholders may sell the Common Shares offered hereby in one or
more transactions (which may include "block" transactions in the over-the-
counter market, in negotiated transactions or in a combination of such
methods of sales, at fixed prices which may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Shareholders may effect such
transactions by selling the Shares directly to purchasers, or may sell to or
through agents, dealers or underwriters designated from time to time, and
such agents, dealers or underwriters may receive compensation in the form of
discounts, concessions or commissions from the Selling Shareholders and/or
the purchaser(s) of the Common Shares for whom they my act as agent or to
whom they may sell as principals, or both. The Selling Shareholders and
any agents, dealers or underwriters that act in connection with the sale of
the Common Shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any discount or commission received
by them and any profit on the resale of the Common Shares as principal might
be deemed to be underwriting discounts or commissions under the Securities
Act.
The Company will receive no portion of the proceeds from the sale of the
Common Shares by the selling shareholder and will bear all of the costs
relating to the registration of this Offering (other than any fees and
expenses of counsel for the Selling Shareholders). Any commissions,
discounts or other fees payable to a broker, dealer, underwriter, agent or
market maker in connection with the sale of any of the Common Shares will be
borne by the Selling Shareholders.
The Company, through its officers and directors, will undertake a direct
participation self-underwritten offering at the same time as the selling
shareholders will be selling their registered shares. Officers and
directors of the Company are participating as selling shareholders. Current
officers and directors have entered into written agreements not to sell their
Common Shares until the Company's offer is fully subscribed. The Company is
not selling any Common Shares on behalf of Selling Shareholders and has no
control or affect on the Common Shares of these Selling Shareholders which
are not subject to any lock-up agreement. The offering of securities by
these Selling Shareholders will occur regardless of the outcome of the
primary offering by the Company.
Other than the written agreements with the current officers and directors,
the Company has not taken any measures to delay the offering by Selling
Shareholders until after the completion of the primary offering by the
Company. The demand for the Company's Common Stock may be decreased due to
the large number of Common Shares being sold in the secondary offering by the
Selling Shareholders. Due to the fact that the secondary offering will be
conducted contemporaneously with a primary offering by the Company, the
market price of the Company's common stock (upon commencement of trading) may
be less than the offering price of $2.00. Conflicts of interests may arise
due to the fact that the primary offering of the Company and the secondary
offering of the Selling Shareholders will be conducted contemporaneously.
The Company shall concentrate its sales efforts in the period immediately
after the effective date of the offering until the Company's Common Stock is
listed on the OTC Bulletin Board. Additionally, the Company may pursue
alternate financing to avoid said conflict of interests once trading of its
Common Stock commences.
The Company is not aware of any current or future plans, proposals,
arrangements or understandings by any Selling Shareholders to distribute
their registered shares of Common Stock of the Company to their respective
outstanding shareholders or partners.
The Company is not aware of any plans, arrangements or understandings by any
Selling Shareholders to sell their registered shares of Common Stock to any
particular individual(s) or to use such registered shares to satisfy
contractual obligations.
Determination of Offering Price. The offering price and other terms
of the Common Shares were arbitrarily determined by the Company after
considering the total offering amount needed and the possible dilution to
existing and new shareholders.
Offering Procedure. This Offering will terminate on or before
June 30, 1998. In the Company's sole discretion, the offering of
Common Shares may be extended for up to three Thirty day periods, but in
no event later than September 30, 1998.
Subscription Procedure. The full amount of each subscription will be
required to be paid with a check payable to the Company in the amount of
the subscription. Such payments are to be remitted directly to the Company
by the purchaser or by the soliciting broker/dealer before 12:00 noon, on the
following business day, together with a list showing the names and
addresses of the person subscribing for the offered Common Shares or
copies of subscribers confirmations.
<PAGE>30
Escrow Account. Proceeds of this Offering are to be deposited into an
escrow account with Jody M. Walker, Attorney At Law until the total of Five
Hundred Thousand Dollars ($500,000) shall have been paid in by purchasers of
the securities offered hereby. No one has guaranteed to purchase any of the
securities offered hereby, and therefore no assurance can be given that the
minimum offering amount will be realized from this offering. All Common
Shares which have been subscribed for and whose subscription funds have
cleared the banking system will be considered "sold" for purposes of
determining if the minimum offering amount has been obtained prior to the
termination of the offering period. Should less than the minimum offering
amount be obtained prior to the termination of the offering, the entire
amount paid in will be refunded in full to each purchaser without interest
thereon or deduction therefrom. The costs of such refund will be borne by
the Corporation.
DESCRIPTION OF SECURITIES
Qualification. The following statements constitute brief summaries of the
Company's Certificate of Incorporation and Bylaws, as amended. Such
summaries do not purport to be complete and are qualified in their entirety
by reference to the full text of the Certificate of Incorporation and Bylaws.
The Company's articles of incorporation authorize it to issue up to
100,000,000 Common Shares, .10 par value. The currently outstanding
3,443,667 Common Shares are fully paid and non-assessable.
Common Stock. Holders of Common Shares of the Company are entitled to cast
one vote for each share held at all shareholders meetings for all purposes,
excluding the election of directors (see "Cumulative Voting" below), and to
share equally on a per share basis in such dividends as may be declared by
the Board of Directors out of funds legally available therefor. Upon
liquidation or dissolution, each outstanding Common Share will be entitled to
share equally in the assets of the Company legally available for distribution
to shareholders after the payment of all debts and other liabilities. Common
Shares are not redeemable, have no conversion rights and carry no preemptive
or other rights to subscribe to or purchase additional Common Shares in the
event of a subsequent offering. All outstanding Common Shares are, and the
shares offered hereby will be when issued, fully paid and non-assessable.
Cumulative Voting. The Common Shares have cumulative voting rights.
Cumulative voting is a method that improves minority shareholders'
chances of naming representatives to the board of directors. Each
shareholder is entitled to vote none, a portion or all of its Common Shares
for each director.
Dividends. There are no limitations or restrictions upon the rights of the
Board of Directors to declare dividends out of any funds legally available
therefor. The Company has not paid dividends to date and it is not
anticipated that any dividends will be paid in the foreseeable future. The
Board of Directors initially may follow a policy of retaining earnings, if
any, to finance the future growth of the Company. Accordingly, future
dividends, if any, will depend upon, among other considerations, the
Company's need for working capital and its financial conditions at the time.
Transfer Agent. Nevada Agency & Trust Company acts as its transfer agent for
the securities of the Company.
LEGAL MATTERS
The due issuance of the Common Shares offered hereby will be opined
upon for the Company by Godinho, Sinclair in which opinion Counsel will
rely on the validity of the Certificate of Incorporation issued by the
Province of British Columbia and the representations by the management of the
Company that appropriate action under Canadian law has been taken by the
Company.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings as of the date of this
Prospectus.
EXPERTS
The audited financial statements included in this Prospectus have been so
included in reliance on the report of Thomas J. Harris, Certified Public
Accountants, on the authority of such firm as experts in auditing and
accounting.
INTERESTS OF NAMED
EXPERTS AND COUNSEL
None of the experts or counsel named in the Prospectus are affiliated with
the Company.
<PAGE>31
Global Pacific Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
APrIL 30, 1998 and 1997
Assets
<TABLE>
1998 1997
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash on Hand $ -0- $ -0-
TOTAL CURRENT ASSETS $ -0- $ -0-
PROPERTY & EQUIPMENT:
TOTAL FIXED ASSETS $ -0- $ -0-
OTHER ASSETS
TOTAL ASSETS $ -0- $ -0-
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
DUE TO SHAREHOLDERS $ -0- $ -0-
LOANS PAYABLE $ -0- $ -0-
---------- ----------
TOTAL LIABILITIES $ -0- $ -0-
Stockholder's Equity:
Common Stock, $.10 par value;
100,000,000 shares authorized and
3,443,367 shares issued $344,367 $344,367
Deficit accumulated during the
development stage (344,367) (344,367)
---------- ----------
TOTAL STOCKHOLDER'S EQUITY $ -0- $ -0-
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $ -0- $ -0-
========== ==========
</TABLE>
It is the opinion of management that all necessary adjustments have been made
to the interim statements so that they are not misleading.
<PAGE>32
GLOBAL PACIFIC ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statement of Earnings (Deficit) and Retained Deficit
For the six Months ended April 30, 1998 and 1997
and Accumulated during the Development Stage
<TABLE>
Accumulated
1998 1997 during the
development
stage
<S> <C> <C> <C>
REVENUE $ -0- $ -0- $ -0-
EXPENSES:
Research and Development Costs $ -0- $ -0- $ 344,367
----------- ----------- -----------
NET LOSS FOR THE PERIOD $ -0- $ -0- $(344,367)
Retained Deficit
Balance beginning of period $(344,367) $(344,367) $ -0-
----------- ----------- -----------
Balance end of period $(344,367) $(344,367) $(344,367)
=========== =========== ===========
</TABLE>
It is the opinion of management that all necessary adjustments have been made
to the interim statements so that they are not misleading.
<PAGE>33
GLOBAL PACIFIC ENTERPRISES, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Three Months ended April 30, 1998 and 1997
<TABLE>
Accumulated
During the
Development
1998 1997 Stage
------------ ------------ ------------
<S> <C> <C> <C>
Operating Activities
Net Income (Loss) $ -0- $ -0- $ (344,367)
Noncash transactions $ -0- $ -0- $ 344,367
Cash Provided (used)
by Operations $ -0- $ -0- $ (344,367)
---------- ------------ -------------
Investing Activities
Net Cash Provided (used)
by Investing Activities $ -0- $ -0- $ -0-
Financing Activities
Shareholder loans $ -0- $ -0- $ -0-
Loans payable -0- -0- -0-
---------- ----------- ------------
Net Cash provided (used)
by Financing Activities $ -0- $ -0- $ -0-
----------- ----------- ------------
Increase (Decrease) in Cash $ -0- $ -0- $ -0-
Cash Balance Beginning $ -0- $ -0- $ -0-
----------- ----------- ------------
Cash Balance Ending $ -0- $ -0- $ -0-
=========== =========== ============
</TABLE>
It is the opinion of management that all necessary adjustments have been made
to the interim statements so that they are not misleading.
<PAGE>34
GLOBAL PACIFIC ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
Note A - Summary of Significant Accounting Policies
BUSINESS ACTIVITY
GLOBAL PACIFIC ENTERPRISES, INC. was incorporated November
24, 1994 in the Province of British Columbia, Canada and has elected an
October 31, fiscal year end. The Company, through its trustee company,
Central Ocean International Ltd. of Hong Kong has signed an interim
foreign-China joint venture agreement to develop a site in Chengdu, China
upon which it intends to build a commercial/residential/hotel complex.
Alan Kwong, the current president of the Company is one of the principals of
the Company controls the Central Ocean International, Ltd. Mr. Kwong owns
65% of the controlling shares of Central Ocean International, Ltd. and is
also its president. Geordie Chin of Hong Kong owns the remaining 35% of the
shares of Central Ocean International, Ltd. To resolve any possible conflict
of interest, Mr. Kwong will relinquish his entire share ownership to Mr. Chin
once the final joint venture agreement is signed between the Company and the
Chinese counterpart. Most of the predevelopment has been done and the
company is attempting to obtain financing in order to begin construction.
The company has expended approximately $345,000 US in the research and
project development in the form of site and project selections which resulted
in the choice of the property and project in Chengdu, China. This amount
has been expensed on these financial statements because until the financing
for the project is completed there is little value in these expenditures.
Since it is anticipated that the costs expended above will either be
capitalized or written off with no future benefit, no deferred tax asset has
been computed per FAS #109.
The Company currently has no operations other than the continuing offering as
explained in Note G.
NOTE B - RELATED PARTY TRANSACTIONS
The expenditures for the research and development which resulted in the
choice of the property and project in Chengdu, China were paid for by
shareholders of the company. These transactions have been recorded by
the company and the shareholders have been issued shares of common
stock, at a rate of $.10 per common share, its par value. It was assumed
that the par value approximates fair value. The amount expended for
research and development cost equals the amount expended by shareholders.
NOTE C - INCOME TAXES
The company may have unused net operating loss carryforwards to use in future
years assuming it will have profitable operations in those years, if not used
these loss carryforwards will expire in 2009 through 2011. No deferred tax
assets have been computed because the valuation allowance would eliminate the
amount accrued.
NOTE D - RESEARCH AND DEVELOPMENT COSTS
The research and development costs consisted of the following:
Special consultants $87,500
Advances* 217,233
Travel 34,478
Office 3,127
Auto 1,365
Promotion 664
--------
Total $344,367
========
*Payments and costs advanced toward acquisition of the property.
Since acquisition of the property will not be probable until after financing
is secured per SFS 67, the costs have been expensed and not capitalized. The
company intends to account for research and development costs in accordance
with SFAS 67.
NOTE E - CASH TRANSACTIONS
Since none were actually paid by the company and were paid by the
shareholders, there are no cash receipts or disbursements shown on these
financial statements. There have been no cash transactions since inception.
NOTE F - JOINT VENTURE
The Interim Joint Venture Agreement was signed between the Company's trustee
company, Central Ocean International Ltd. of Hong Kong acting on the
Company's behalf and the Chinese Party, Real Estate Exploitation Corporation
Hinniu District. The terms are that the company shall inject 80% of the
registered capital and be responsible for raising the necessary funds for the
<PAGE>35
development of the project all for 80% of the joint venture shares. Thee
Chinese Party, which has spent $2,320,000 toward appropriation costs,
relocation costs, leasehold fees, design and soil explorations, development
capital costs, advertising and promotion costs, shall retain 20% of the share
of the joint venture company.
The Company, with consent of the Chinese counterpart, intends to commission
an independent accounting firm to structure accounting policy suitable for a
joint venture project. This firm shall remain on site until the project is
completed and the joint venture's proposed business is well on track. This
firm shall also be responsible for training an able accounting team for the
joint venture. The joint venture will be accounted for consolidating the
accounts of the joint venture with those of the company.
NOTE G - COMMON STOCK REGISTRATION
The Company is currently in the process of registering shares of its common
stock with the U.S. Securities and Exchange Commission under Regulation S-B.
It is anticipated that current expenses, if any, will be included as expenses
of the offering.
<PAGE>36
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
GLOBAL PACIFIC ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Vancouver, BC Canada
We have audited the accompanying balance sheet of Global Pacific
Enterprises, Inc. (A Development Stage Company) as of October 31, 1996 and
1997 and the related statements of earnings (deficit) and retained deficit
and cash flows for the period from inception November 24, 1994 to October 31,
1997 and 1996. These financial statements are the responsibility of
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Pacific Enterprises,
Inc., as of October 31, 1997 and 1996, and the results of its operations and
cash flows for the periods then ended, in conformity with generally accepted
accounting principles.
/s/ Thomas J. Harris
November 2, 1997
Seattle, Washington
<PAGE>37
Global Pacific Enterprises, Inc.
(A Development Stage Company)
Balance Sheet
October 31, 1997 and 1996
Assets
<TABLE>
1997 1996
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash on Hand $ -0- $ -0-
TOTAL CURRENT ASSETS $ -0- $ -0-
PROPERTY & EQUIPMENT:
TOTAL FIXED ASSETS $ -0- $ -0-
OTHER ASSETS
TOTAL ASSETS $ -0- $ -0-
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
TOTAL CURRENT LIABILITIES $ -0- $ -0-
---------- ----------
TOTAL LIABILITIES $ -0- $ -0-
Stockholder's Equity:
Common Stock, $.10 par value;
100,000,000 shares authorized and
3,443,367 shares issued $344,367 $344,367
Deficit accumulated during the
development stage (344,367) (344,367)
---------- ----------
TOTAL STOCKHOLDER'S EQUITY $ -0- $ -0-
---------- ----------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $ -0- $ -0-
========== ==========
</TABLE>
See accompanying notes and accountants' report
<PAGE>38
GLOBAL PACIFIC ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statement of Earnings (Deficit) and Retained Deficit
For the Years ended October 31, 1997 and 1996
and Accumulated during the Development Stage
<TABLE>
October 31 October 31 Accumulated
1997 1996 during the
development
stage
<S> <C> <C> <C>
REVENUE $ -0- $ -0- $ -0-
EXPENSES:
Research and Development Costs $ -0- $ -0- $ 344,367
NET LOSS FOR THE PERIOD $ -0- $ -0- $(344,367)
Retained Deficit
Balance beginning of period $(344,367) $ (344,367) $ -0-
----------- ----------- -----------
Balance end of period $(344,367) $(344,367) $(344,367)
=========== =========== ===========
</TABLE>
See accompanying notes and accountants' report
<PAGE>39
GLOBAL PACIFIC ENTERPRISES, INC.
(A DEVELOPMENT STAGE COMPANY)
Statement of Stockholders' Equity
For the Years ended October 31, 1997 and 1996
And Accumulated during the development stage
<TABLE>
Common Stock Deficit
------------------- Accumulated
Additional
Number during the
of Shares Paid-in Development
Issued Amount Capital Stage
--------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Shares issued at par
June, 1995 to
reimburse expenses 2,568,667 $256,867
Shares issued at par
June, 1995 to reimburse
expenses for special
consultants 875,000 $ 87,500
Net Loss $(344,367)
-------------------------------------------------
Totals October 31, 1995 3,444,367 $344,367 $(344,367)
================================================
Totals October 31, 1996 3,444,367 $344,367 $(344,367)
================================================
Totals October 31, 1997 3,444,367 $344,367 $(344,367)
================================================
</TABLE>
See accompanying notes and accountants' report
<PAGE>40
GLOBAL PACIFIC ENTERPRISES, INC.
(A Development Stage Company)
Statement of Cash Flows
For the Years ended October 31, 1997 and 1996
and Accumulated during the Development Stage
<TABLE>
Accumulated
During the
October October 31 Development
1997 1996 Stage
------------ ------------- ------------
<S> <C> <C> <C>
Operating Activities
Net Income (Loss) $ -0- $ -0- $ (344,367)
Noncash transactions $ -0- $ -0- $ 344,367
Cash Provided (used)
by Operations $ -0- $ -0- $ -0-
---------- ------------ -----------
Investing Activities
Net Cash Provided (used)
by Investing Activities $ -0- $ -0- $ -0-
Financing Activities
Net Cash provided (used)
by Financing Activities $ -0- $ -0- $ -0-
----------- ----------- -----------
Increase (Decrease) in Cash $ -0- $ -0- $ -0-
Cash Balance Beginning $ -0- $ -0- $ -0-
----------- ----------- -----------
Cash Balance Ending $ -0- $ -0- $ -0-
=========== =========== ===========
</TABLE>
See accompanying notes and accountants' report
<PAGE>41
GLOBAL PACIFIC ENTERPRISES, INC.
(A Development Stage Company)
Notes to Financial Statements
For the Years Ended October 31, 1997 and 1996
and Accumulated during the Development Stage
Note A - Summary of Significant Accounting Policies
BUSINESS ACTIVITY
GLOBAL PACIFIC ENTERPRISES, INC. was incorporated November
24, 1994 in the Province of British Columbia, Canada and has elected an
October 31, fiscal year end. The Company, through its trustee company,
Central Ocean International Ltd. of Hong Kong has signed an interim
foreign-China joint venture agreement to develop a site in Chengdu, China
upon which it intends to build a commercial/residential/hotel complex.
Alan Kwong, the current president of the Company is one of the principals of
the Company controls the Central Ocean International, Ltd. Mr. Kwong owns
65% of the controlling shares of Central Ocean International, Ltd. and is
also its president. To resolve any possible conflict of interest, Mr. Kwong
will relinquish his entire share ownership to the other shareholder once the
final joint venture agreement is signed between the Company and the Chinese
counterpart. Most of the predevelopment has been done and the company is
attempting to obtain financing in order to begin construction. The trustee
company is 65% owned by the Company's president. It's the intention of all
parties that the president relinquish his interest after completion of the
final agreement with the Chinese partner.
The company has expended approximately $345,000 US in the research and
project development in the form of site and project selections which resulted
in the choice of the property and project in Chengdu, China. This amount
has been expensed on these financial statements because until the financing
for the project is completed there is little value in these expenditures.
Since it is anticipated that the costs expended above will either be
capitalized or written off with no future benefit, no deferred tax asset has
been computed per FAS #109.
The Company currently has no operations other than the continuing offering as
explained in Note G.
NOTE B - RELATED PARTY TRANSACTIONS
The expenditures for the research and development which resulted in the
choice of the property and project in Chengdu, China were paid for by
shareholders of the company. These transactions have been recorded by
the company and the shareholders have been issued shares of common
stock, at a rate of $.10 per common share, its par value. It was assumed
that the par value approximates fair value. The amount expended for
research and development cost equals the amount expended by shareholders.
NOTE C - INCOME TAXES
The company may have unused net operating loss carry forwards to use in
future years assuming it will have profitable operations in those years, if
not used these loss carry forwards will expire in 2009 and 2011. No
deferred tax assets have been computed because the valuation allowance would
eliminate the amount accrued.
NOTE D - RESEARCH AND DEVELOPMENT COSTS
The research and development costs consisted of the following:
<TABLE>
<S> <C>
Special Consultants $87,500
Advances* 217,233
Travel 34,478
Office 3,127
Auto 1,365
Promotion 664
------------
Total $344,367
============
</TABLE>
*Payments and costs advanced toward acquisition of the property.
Since acquisition of the property will not be probable until after financing
is secured per SFAS 67 the costs have been expensed and not capitalized.
The Company intends to account for research and development costs in
accordance with SFAS 67.
NOTE E - CASH TRANSACTIONS
Since none were actually paid by the company and were paid by the
shareholders, there are no cash receipts or disbursements shown on these
financial statements. There have been no cash transactions since inception.
<PAGE>42
NOTE F - JOINT VENTURE
The Interim Joint Venture Agreement was signed between the Company's
trustee company, Central Ocean International Ltd. of Hong Kong acting on
the Company's behalf and the Chinese Party, Real Estate Exploitation
Corporation Jinniu District. The terms are that the Company shall inject
80% of the registered capital and be responsible for raising the necessary
funds for the development of the project all for 80% of the joint venture
shares. The Chinese Party, which has spent $2,320,000 toward
appropriation costs, relocation costs, leasehold fees, design and soil
explorations, development capital costs, advertising and promotion costs,
shall retain 20% of the share of the joint venture company.
The Company, with consent of the Chinese counterpart, intends to
commission an independent accounting firm to structure accounting policy
suitable for a joint venture project. This firm shall remain on site until
the project is completed and the joint venture's proposed business is well on
track. This firm shall also be responsible for training an able accounting
team for the joint venture. The joint venture will be accounted for using
the consolidation method. The joint venture will be accounted for
consolidating the accounts of the joint venture with those of the Company.
Note G - COMMON STOCK REGISTRATION
The Company is currently in the process of registering shares of its common
stock with the U.S. Securities and Exchange Commission under Regulation SB.
It is anticipated that current expenses, if any, will be included in expenses
of the offering.
<PAGE>43
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 24. Indemnification of Officers and Directors.
The By-Laws of the Corporation provides that a director of the registrant
shall have no personal liability to the Registrant or its stockholders for
monetary damages for breach of a fiduciary duty as a director, except for
liability (a) for any breach of the director's duty of loyalty to the
Registrant or its stockholders, (b) for acts and omissions not in good faith
or which involve intentional misconduct or a knowing violation of law, and
(c) pursuant to Canadian law for any transaction form which the director
derived an improper personal benefit. Registrant's By-Laws exculpates and
indemnifies the directors, officers, employees, and agents of the registrant
from and against certain liabilities. Further the By-Laws also provides that
the Registrant shall indemnify to the full extent permitted under Canadian
law any director, officer employee or agent of Registrant who has served as
a director, officer, employee or agent or the Registrant or, at the
Registrant's request, has served as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE CORPORATION FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution.
Other expenses in connection with this offering which will be paid
by Global Pacific Enterprises, Inc. (hereinafter in this Part II referred to
as the "Corporation") are estimated to be substantially as follows:
<TABLE>
Amount
Payable
Item By Corporation
<S> <C>
S.E.C. Registration Fees $ 1,616.80
State Securities Laws (Blue Sky) Fees and Expenses 3,500.00
Printing and Engraving Fees 7,500.00
Legal Fees 15,000.00
Accounting Fees and Expenses 5,500.00
Transfer Agent's Fees 1,500.00
Miscellaneous 5,816.20
$ 34,616.80
</TABLE>
Item 26. Recent Sales of Unregistered Securities.
Since inception, the Corporation has issued common shares at $.10 to the
following individuals for cash (aggregating $344,367). These issuances
were made in reliance on Section 4(2) by Registrant's management and no
commissions or other remuneration was paid.
<TABLE>
Name Date Issued Total Number
Issued of Shares Consideration
<S> <C> <C> <C>
C.L. Ng 5/13/94 76,000 $7,600
Kam Ping Lui 5/13/94 12,000 $1,200
Brenda Kayi Kong 5/13/94 40,000 $4,000
Alan Kwong 8/13/93 605,417 $60,417
Mok Wah Keung 12/2/94 30,000 $3,000
Tsang Hung Po 12/2/94 30,000 $3,000
T.C. Lee 12/2/94 30,000 $3,000
Paul Yu 12/2/94 30,000 $3,000
Phillip Ee 12/2/94 30,000 $3,000
Dr. Kay Ho 12/2/94 60,000 $6,000
Violet Ho 12/2/94 60,000 $6,000
Kong Beng Wong 12/2/94 60,000 $6,000
Jap Chong Young 5/13/94 604,858 $60,486
Weymann Cheng 12/2/94 78,559 $7,856
David Darren Young 6/19/94 50,000 $5,000
Landtek Properties, Inc. 12/2/94 76,417 $7,642
Margaret Wong 12/2/94 60,000 $6,000
Sin Ming Chiu 12/2/94 90,000 $9,000
Robin Y. Young 8/13/93 546,625 $47,021
Ken K. Wong 8/13/93 516,625 $44,021
Fred R. Umayam 3/9/94 100,000 $10,000
Mark Alan Mannhalt 3/9/94 60,000 $6,000
Donald Tom Prechitt 6/19/94 30,000 $3,000
Huan Wa Xu 6/19/94 80,000 $8,000
Pollysol Investments, Ltd. 8/15/94 100,000 $10,000
He Rong Hui 6/19/94 20,000 $2,000
Lee Shick Por 6/19/94 20,000 $2,000
William Lo 8/15/94 100,000 $10,000
</TABLE>
<PAGE>44
<TABLE>
Item 27. Exhibit Index. Page
<S> <C>
(1) Not Applicable
(2) Not Applicable
(3) Certificate of Incorporation incorporated
by reference to Form SB-2
filed October 3, 1995 - File No. 33-97698
(3.1) Bylaws - to be filed by amendment
(4) Specimen certificate for Common Stock incorporated by
reference to Form SB-2 filed October 3, 1995 - File
No. 33-97698
(5) Consent and Opinion of Godinho, Sinclair regarding
legality of securities registered under this
Registration Statement (opinion incorporated by reference
to Form SB-2 filed October 10, 1996) and to the
references to such attorney in the Prospectus filed
as part of this Registration Statement 47
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10.1) Trustee Agreement Between the Company and Central
International, Ltd. incorporated by reference to Amendment 1
to Form SB-2 filed December 28, 1995 - File No. 33-97698
(10.2) Interim Agreement on the Joint Venture to Develop "Royal
Plaza" incorporated by reference to Amendment 1 to Form SB-2
filed December 28, 1995 - File No. 33-97698
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Not Applicable
(24) Consent of Thomas J. Harris, Certified Public Accountant 48
(25) Not Applicable
(26) Not Applicable
(27) Financial Data Schedule 49
(28) Not Applicable
(99) Lease between Landtek, International Corporation
and MSS Hen incorporated by reference to Form SB-2
filed on October 3, 1995 File No. 33-97698
(99.1) Sublease Agreement between the Corporation and Landtek
International Corporation incorporated by reference to
Form SB-2 filed on October 3, 1995 - File No. 33-97698
(99.2) FORM OF Lock-Up agreement between officers and directors
and Company incorporated by reference to Amendment 10 to
Form SB-2 filed on June 20, 1998
</TABLE>
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the formation set forth in the Registration
Statement.
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Delivery of Certificates.
The undersigned registrant hereby undertakes to provide to the
Transfer Agent at the closing, certificates in such denominations and
registered in such names as are required by the Transfer Agent to permit
prompt delivery to each purchaser.
<PAGE>45
(c) Indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions set forth in
the Corporation's Articles of Incorporation or otherwise, the registrant has
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
<PAGE>46
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements of filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
City of Vancouver, in the Province of British Columbia, Canada on the 28th
day of July, 1998.
Global Pacific Enterprises, Inc.
/s/ Alan Kwong
--------------------------------
By: Alan Kwong, President
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
and on the dates stated.
<TABLE>
Signature Capacity Date
<S> <C> <C>
/s/ Alan Kwong Chairman of the Board of Directors 7/28/98
- ------------------- Authorized Representative in the
Alan Kwong United States
/s/ Ken Wong Principal Executive Officer 7/28/98
- ------------------- Principal Financial Officer
Ken Wong Controller/Director
/s/ Robin Young Director 7/28/98
- -------------------
Robin Young
</TABLE>
<PAGE>47
GODINHO, SINCLAIR
Business Lawyers*
10th Floor, Montreal Trust Centre
*Associated in the practice 510 Burrard Street
of law. Some lawyers are Vancouver, British Columbia, V6C 3A8
practicing as law corporations. Telephone (604) 689-9930
Direct Line (604) 687-8800
Reply Attention of Bruce Bragagnolo Facsimile (604) 689-9940
July 28, 1998
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Dear Sirs:
Re: CONSENT OF COUNSEL TO USE OF NAME IN REGISTRATION STATEMENT ON
FORM SB-2 OF GLOBAL PACIFIC ENTERPRISES, INC.
We are the special securities counsel in the Province of British Columbia,
Canada for the above mentioned corporation. We hereby consent to the
inclusion and reference to our name in the Registration Statement on Form
SB-2 for Global Pacific Enterprises, Inc., dated July 28, 1998
Yours very truly,
GODINHO, SINCLAIR
Per:
Bruce Bragagnolo
<PAGE>48
THOMAS J. HARRIS Certified Public Accountant
===================================================
3901 Stone Way North, Suite 202, Seattle, Washington 98103
(206) 547-6050
INDEPENDENT AUDITOR'S CONSENT
I, Thomas J. Harris, CPA, of 3901 Stone Way North, Suite # 202,
Seattle, Wa. 98103, do hereby consent to the use of my report dated November
2, 1997 on the financial statements Global Pacific Enterprises, Inc. as of
October 31, 1997 included in and made part of the amendment to the
registration statement of Global Pacific Enterprises, Inc. dated July 28,
1998.
Date this 28th day of July, 1998
/s/ Thomas J. Harris
Thomas J. Harris
Certified Public Accountant
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-END> APR-30-1998
<CASH> $0
<SECURITIES> $0
<RECEIVABLES> $0
<ALLOWANCES> $0
<INVENTORY> $0
<CURRENT-ASSETS> $0
<PP&E> $0
<DEPRECIATION> $0
<TOTAL-ASSETS> $0
<CURRENT-LIABILITIES> $0
<BONDS> $0
<COMMON> $344,367
$0
$0
<OTHER-SE> (344,367)
<TOTAL-LIABILITY-AND-EQUITY> $0
<SALES> $0
<TOTAL-REVENUES> $0
<CGS> $0
<TOTAL-COSTS> $0
<OTHER-EXPENSES> $0
<LOSS-PROVISION> $0
<INTEREST-EXPENSE> $0
<INCOME-PRETAX> $0
<INCOME-TAX> $0
<INCOME-CONTINUING> $0
<DISCONTINUED> $0
<EXTRAORDINARY> $0
<CHANGES> $0
<NET-INCOME> $0
<EPS-PRIMARY> $0
<EPS-DILUTED> $0
</TABLE>
